XCHRX MEI YU LAU v. SHIU LI LAU and Others

1995 No. A1063

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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REASONS FOR JUDGMENT

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1. The plaintiff sought summary judgment against the first defendant only under Order 14 on the basis of a debt constituted by a final judgment of the Superior Court of New Jersey, Chancery Division, Essex County in the State of New Jersey, United States of America in the total sum of US$4,168,771.15. The plaintiff's application was refused by the Master. The plaintiff appealed.

2. In the action, the plaintiff alleges that the other defendants are holding property on behalf of the first defendant, alleges that these defendants will dispose of this property unless restrained, and claims injunctions against them. No relief against these defendants was sought in the Order 14 application before me.

3. At the conclusion of the hearing on 11 September 1995, I allowed the appeal, entered final judgment against the first defendant in the sum of US$4,168,771.15, with costs of the appeal and the application before the Master. I also awarded interest to the plaintiff from 30 November 1994 to 11 September 1995 at the agreed rate of 9¾ %, and thereafter at the judgment rate. I said then that I would hand down my reasons at a later date. These are the reasons.

4. Mr Clough said as much as could be said in support of what I considered to be a hopeless case. As I understood him, he rested his argument on two bases -

a) that summary judgment should be refused because there was, in the words of Order 14, "some other reason" why there ought to be a trial; and

b) that the foreign judgment was "fatally flawed", and its enforcement in our courts would be contrary to natural justice.

5. The "some other reason" was the involvement of the other defendants in the action. The foreign judgment was made on the basis that certain property belonged to the first defendant. The trial of the matter between the plaintiff and the other defendants will involve the determination of whether or not this same property, or at least some of it, is the property of the first defendant. Mr Clough argues that it would be "inappropriate and contrary to principle" to enforce a foreign judgment resting on the determination of an issue that is still being litigated in our courts. I see no difficulty here. The foreign judgment is in personam; it has determined the issue as between the plaintiff and the first defendant; it does not affect the other defendants at all. The other defendants may, whether as parties in this action or in any other proceedings, whether they are parties or not, in which the question of the ownership of the property may arise, seek to establish that they are the true beneficial owners. I did not accept that this point was "some other reason" for ordering a trial of an issue as between the plaintiff and the first defendant; an issue that, as between them, has already been determined by the foreign judgment.

6. On the point of natural justice, there was some suggestion in the papers that the first defendant was alleging the foreign judgment was obtained "contrary to natural justice and the requirements of natural justice" in that he had not had proper notice of the relief being sought, that he did not have sight of certain documents, that others were not given the opportunity to be heard, and that the New Jersey court failed to have before it foreign evidence. There is nothing in these points, and Mr Clough, very wisely, did not seek to argue them. He rested his argument entirely on the point that the foreign judgment was "palpably wrong on the face of it so that it offends against substantial justice" and that "no one looking at the judgment could support it."

7. Mr Clough argued that the New Jersey judge had, for the purpose of making an equitable distribution of the matrimonial assets, counted a particular asset three times.

8. I asked Mr Clough how he distinguished between an allegation that a foreign judgment was wrong (an allegation that our courts will not consider) and the allegation here that he was asking me to use to justify a refusal to enforce it. He responded by saying that here the judgment was not simply wrong, but "fatally flawed". This, I have to say, I did not find convincing. Of course it is so that it can be said that a judgment with which does not agree is unjust, but this is not the subject of my inquiry. This is made clear in a passage from the judgment of the Court of Appeal in Adams v. Cape Industries Plc [1990] 1 Ch. 433, at 569E, a case much relied upon by Mr Clough; indeed it was the only case that he could cite in support.

"It is well established that a defendant, shown to have been subject to the jurisdiction of a foreign court, cannot seek to persuade our court to examine the correctness of the judgment, whether on the facts, or as to the application by the foreign court of its own law or, when relevant, of the law of this country. A foreign judgment is not impeachable merely because it is "manifestly wrong:" . . . In any such case it could be said that there has been a breach of natural justice, but it is not a type of breach which our courts will consider relevant. In effect, their attitude is that the only way in which the defendant can seek to correct an error of substance made by the foreign court is by using such means for correction of error as may be provided under the foreign system."

9. Mr Clough pointed out that, in Adams, the Court of Appeal found that there had been substantial injustice if the foreign proceedings, but that case does not help the first defendant. What happened in that case was that the foreign judge did not make a judicial finding at all. At page 565F, the judgment reads: "The defect in the procedure was . . . that the total award was not in any real sense based upon an objective assessment by the judge upon evidence . . . It seems to us that, in truth, [the judge] was applying to the process of assessment of damages in default, when only the plaintiffs were represented before him, the process and technique appropriate to a settlement negotiated between the plaintiffs and defendants with the intervention of the judge". There is no suggestion or evidence in the case before me that the New Jersey judge did not make a judicial decision; clearly he did. The most that can be said is that, in the process of making that judicial decision, he got it wrong; he made, it is said, an error of substance, not a procedural error amounting to a breach of natural justice. That does not take the case out of the general rule.

10. Accordingly, I found that there was no basis on which summary judgment could be refused.