TANG GANG AND OTHERS v. WONG SAI CHUNG

HCA 1354/2018

[2022] HKCFI 3011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1354 OF 2018

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DECISION

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THE APPLICATION

1.  This is the plaintiffs’ application for summary judgment against the defendant made by virtue of a summons filed on 10 November 2021 (“the Summons”), to enforce a Judgment dated 4 December 2013 made by the Intermediate People’s Court of Sichuan Province (‘IPC’) of the People’s Republic of China (‘IPC’s No.729 Judgment’). 

JUDICIAL PROCESS IN THE PRC

2.  Upon the pronouncement of the IPC’s No.729 Judgment, the defendant appealed to the Higher People’s Court of Sichuan Province (‘HPC’) of the People’s Republic of China.  The appeal was dismissed by virtue of its Judgment dated 14 October 2014 (‘HPC’s No.187 Judgment’).

3.  The defendant then appealed further to the Supreme People’s Court (‘SPC’) of the People’s Republic of China.  By its Judgment dated 8 June 2015 (‘SPC’s No.305 Judgment’), the appeal was allowed, and SPC ordered a re-retrial by the HPC.

4.  After rehearing the case, HPC delivered its Judgment on 17 March 2017 (‘HPC’s No.19 Judgment’), pursuant to which the defendant’s appeal was dismissed again.

5.  The defendant then applied for a revocation of the HPC’s No.19 Judgment.  He was subsequently informed that the People’s Procuratorate of the Sichuan Province had initiated the protest procedure (‘the Protest Application’) on 8 June 2018.

6.  By a Decision dated 29 June 2021 (‘the SPP’s Decision’), the Supreme People’s Procuratorate (‘SPP’) decided not to support the Protest Application.

THE LEGAL PRINCIPLES

7.  It is undisputed that the legal principles applicable to a common law action brought upon a foreign judgment have been correctly summarised by Ng J in Sang Cheol Woo v Yoo Shin Choi [2022] HKCFI 1163 as follows:

‘48. The starting point is that, subject to a number of well-established exceptions, including those referred to at paragraph 51 below, a foreign judgment which is final and conclusive on the merits is conclusive as to any matter thereby adjudicated upon and cannot be impeached for any error either of fact or of law: Dicey, Morris & Collins, The Conflict of Laws (15^th ed) Vol 1 Rule 48 at para 14R-118.

49. A foreign default judgment may be “final and conclusive” for the purpose of its enforcement in the local jurisdiction, provided that the judgment must be one given by a court of competent jurisdiction on the merits.  The local courts draw no distinction between a judgment after trial and a judgment by default: Fabiano Hotels Ltd v Profitmax Holdings Inc & Ors [2017] 6 HKC 414 at [19] - [21], [25].

50. A foreign judgment on the merits means the judgment pronounced by a foreign court of competent jurisdiction according to its established procedure in which the whole merits of the case were open to the parties, however much they may have failed to take advantage of them, or may have waived any of their rights, and cannot thereafter be disputed: Fabiano Hotels Ltd at [44].

51. A foreign judgment which is “final and conclusive” will be enforced in Hong Kong, unless, for instance, the foreign proceedings offend against Hong Kong notions of substantial/natural justice or the enforcement of the foreign judgment would be contrary to Hong Kong notions of public policy: Dicey, Morris & Collins, The Conflict of Laws Rule 52 at para 14R-162, Rule 51 at para 14R-152; Pemberton v Hughes [1899] 1 Ch 781 at 790; Adams v Cape Industries Plc [1990] Ch 433, 559E-F; Fabiano Hotels Ltd at [17] - [18].  The public policy exception is a narrow one that must be necessarily confined in line with the comity of nations principle - simply because a case could have been decided differently in Hong Kong is not a weighty enough factor to invoke it: Reeves v One World Challenge LLC [2006] 2 NZLR 184 at [56].

52. A foreign judgment which is arguably or even manifestly wrong on the merits is not impeachable on the ground that it would offend Hong Kong concepts of substantial justice.  Further, a mere procedural irregularity would not offend Hong Kong concepts of substantial justice: Dicey, Morris & Collins, The Conflict of Laws at paras 14-163 & 14-165;Adams v Cape Industries Plc at 567H; Nintendo of America Inc v Bung Enterprises Ltd [2000] 2 HKC 629 at 637A-B.’

THE DEFENDANT’S ARGUMENTS

8.  The defendant submitted that the plaintiff is not entitled to summary judgment because:

(1)  the HPC’s No.19 Judgment is not final and conclusive on the merits;

(2)  the HPC’s No.19 Judgment was procured or obtained by fraud.

9.  The defendant further contended that even if the IPC’s No.729 Judgment or the HPC’s No.19 Judgment may be enforced in Hong Kong, the plaintiffs had failed to discharge their burden to show that they could claim for the amount of interest which they did herein.

DISCUSSION

Final and conclusive Judgment

10.  Insofar as the defendant is relying on the Protest Application to say that the IPC’s No.729 Judgment is still not yet final or conclusive, this argument is misconceived in the light of the SPP’s Decision.  I have not lost sight of the defendant’s evidence that he has not received the SPP’s Decision.  However, the defendant has not adduced any expert evidence to assert that the Protest Application should still be regarded as pending until it was validly served on the defendant.

11.  On the other hand, the plaintiff has adduced expert evidence to the effect that in the light of the SPP’s Decision, the IPC’s No.729 Judgment is final and conclusive as a matter of PRC law.  The defendant has not adduced any evidence to prove the contrary. 

12.  However, the defendant alleged that his PRC lawyers had advised him that he could resort to a mechanism called ‘Letter and Visits (信訪)’ to appeal and overturn the IPC’s No.729 Judgment and the HPC’s No.19 Judgment.

13.  Such an allegation is not supported by any expert opinion. 

14.  While the defendant had mentioned a number of laws and regulations in his Affirmation, he did not quote those provisions nor place them before this Court.  

15.  In these circumstances, it is plain that the defendant has failed to raise any triable issue on the finality and conclusiveness of the IPC’s No.729 Judgment at all.

IPC’s No.729 Judgment obtained by fraud

16.  In the judicial proceedings in the PRC, the plaintiffs’ case was based on the following documents:

(1)  An agreement dated 26 August 2000 between Seechain Investments Ltd (‘Seechain Ltd’) and the 1^st plaintiff (‘the Agreement’).  The Agreement was allegedly signed by the defendant’s brother (‘Brother’) on behalf of Seechain Ltd; 

(2)  A Power of Attorney which was purportedly signed by the defendant (‘the PoA’) appointing Brother as his attorney;

(3)  An undertaking which Brother allegedly signed in August 2001 (‘the Undertaking’).

17.  It was the plaintiffs’ case that the defendant had breached the Undertaking, and as a result he was liable to pay the plaintiffs the price of certain shares in a listed company in Hong Kong.  This case was accepted by the IPC, as reflected in the IPC’s No.729 Judgment.

18.  Mr Hu for the defendant had made a number of arguments so as to persuade this Court that the judgment which the plaintiffs obtained in the PRC was obtained by fraud, and therefore the matter should be tried at the trial of this action.  His arguments may be summarised as follows:

(1)  It had been found by the PRC Court that the signature on the PoA was in fact a forged signature which was purported to be the defendant’s signature;

(2)  That being the case, the PRC Court should have accepted the defendant’s case that the signature on the Undertaking was also a forged one;

(3)  The PRC Court had wrongly and erroneously refused the defendant’s application for a forensic examination of the Undertaking merely because it was considered that it would be difficult to identify its provenance due to lapse of time.  This is contrary to the concept of natural justice, and the issue of fraud has not been fully ventilated in the PRC Court;

(4)  Having refused the defendant’s application for forensic examination, the PRC Court unreasonably held that the defendant had failed to adduce evidence to prove that the 1^st plaintiff had made use of a signed blank paper which Brother had given to the plaintiffs for the purpose of making the Undertaking.

19.  I must point out right away that Mr Hu’s aforesaid attacks were focused on HPC’s No.187 Judgment.  Those attacks are totally beside the point, because the defendant had subsequently appealed against such a decision to the SPC and successfully obtained an order for retrial.  As a result, there was a retrial at the HPC, which led to the handing down of the HPC’s No.19 Judgment.  For the purpose of the retrial, HPC had accepted the defendant’s application to conduct a forensic examination on the Undertaking by one of the top 10 institutions in the field in the PRC so as to ascertain the time when the words on the Undertaking were printed.  However, upon such examination, it was opined by the expert that such timing could not be confirmed by the current level of technology. 

20.  That being the case, the main basis of the defendant’s complaint herein has gone.

21.  Mr Hu has made a number of other arguments in an attempt to show the Court that the defendant’s case that the Undertaking was forged should be accepted.   

22.  In WFM Motors Pty Ltd. v Maydwell [1996] 1 HKC 444, it was held by the Court of Appeal that:

‘For the purposes of this appeal the principles to be applied are as follows. First, the court is not re-trying the case. The question is not whether the decision of the foreign court was correct. Secondly, however, where fraud is alleged it is permissible in an appropriate case to examine the evidence to consider whether or not the evidence given at the trial was fraudulent. Thirdly, it follows that this can be done even when the very points that are put forward have already been considered and dismissed by the foreign court. An allegation of fraud is always serious and the Defendant must particularise the fraud with precision and then establish it to the appropriate standard.

There appears to be little authority on that standard but there is no reason to doubt that it must be as high as that necessary to prove fraud in any case. Mr. Ma was only able to locate two decisions, both upon the question of the standard necessary before the trial of an issue should be ordered. The first is Syal v. Heyward (1948) 2 KB 443. At page 450, Cohen, L.J., said,

“In proceedings under the Act of 1933, the Court is not bound to direct an issue. It should not do so unless in a case of an application based on an allegation of fraud, it is satisfied that a prima facie case of fraud on the Court is established.”

In Svirskis v. Gibson (1977) 2 NZLR 4, the Defendant had failed in his application to set aside the registration of a judgment and the Court of Appeal ordered an issue to be tried. At page 10, Cooke, J. (as he then was) said,

“..... it would be only in the rarest of cases, if ever, that the court would be satisfied on contested affidavit evidence that fraud had been proved. The power ..... to direct an issue is discretionary. In deciding whether a case strong enough to justify such a direction has been made out, the court would be entitled, we think, to have regard to all the circumstances of the case : including whether the defendant is merely seeking to try again on substantially the same evidence issues already adjudicated on in the overseas court; and whether the defendant refrained from appearing in that court. If he did refrain, another relevant consideration must be what he should have foreseen as the probable consequences. If a defendant had adequate notice of the nature of the evidence likely to be given by the Plaintiff yet did not avail himself of the opportunity of contradicting it, he may have difficulty in persuading the New Zealand Court to exercise the discretion in his favour. In Syal v. Heyward (1948) 2 KB 443, 450 ..... it was said that in proceedings under the Act of 1933 the court is not bound to direct an issue and should not do so in the case of an alleged fraud unless satisfied that a prima facie case of fraud on the foreign court is established. We do not regard this general statement as proposing any mechanical or rigid test or as excluding the kind of consideration just mentioned.”

These are words of common sense. Whether it be for the purposes of showing a prima facie case so that an issue may be ordered or whether it be to establish the fraud and so to set aside the registration of the judgment immediately, fraud must be demonstrated to a standard commensurate with the gravity of the allegations.’ (at 449C – 450C) (emphasis added)

23.  In Hong Kong Huihuang Industrial Co. Ltd. V Allahabad Bank (CACV 144/2016, unreported, 25 October 2016), Kwan JA had the following to say:

‘33. A foreign judgment relied on as such in proceedings in Hong Kong is impeachable for fraud. Such fraud may be either fraud on the part of the party in whose favour the judgment is given, or fraud on the part of the court pronouncing the judgment (Dicey, Morris & Collins on The Conflict of Laws, 15^th ed (2012), rule 50). It seems that the fraud of another party to the foreign lawsuit, or of a witness or other person, will not suffice (The Conflict of Laws in Hong Kong by Graeme Johnston, 2^nd ed (2012), §9.032).

34. As stated in WFM Motors Pty Ltd v Maydwell [1996] 1 HKC 444 at 449C to E, the principles to be applied are as follows:

“First, the court is not retrying the case. The question is not whether the decision of the foreign court was correct. Secondly, however, where fraud is alleged it is permissible in an appropriate case to examine the evidence to consider whether or not the evidence given at the trial was fraudulent. Thirdly, it follows that this can be done even when the very points that are put forward have already been considered and dismissed by the foreign court. An allegation of fraud is always serious and the defendant must particularize the fraud with precision and then establish it to the appropriate standard.”

35. To establish fraud for this purpose, fraud must be demonstrated to a standard commensurate with the gravity of the allegations.  Where allegations of fraud have been made and determined abroad, summary judgment or striking out in subsequent proceedings are appropriate remedies in the absence of plausible evidence disclosing at least a prima facie case of fraud (WFM Motors Pty Ltd v Maydwell at 450B to C; Owens Bank Ltd v Etoile Commerciale S.A. [1995] 1 WLR 44 at 51C).

36. As to what level of causation may justify impeaching the foreign judgment, the same approach to causation as is applicable in respect of domestic judgments should be adopted, namely, whether the alleged fraud would in all probability have had a material effect on the judgment (The Conflict of Laws in Hong Kong, §9.036, and footnote 115).’ (emphasis added)

24.  It can be seen that it is within the discretion of this Court as to whether the issue of fraud should be allowed to be tried again in Hong Kong. 

25.  In my view, the Court should not exercise this discretion in favour of the defendant in the present case:

(1)  The same issues had been considered extensively and thoroughly by different levels of the PRC Courts on no less than 4 occasions.  The defendant’s attempt to challenge the HPC’s decision in the retrial via the Protest Application had also failed.  The defendant should not be allowed to re-argue the same again in Hong Kong, in the hope that the final decision of the PRC Court may be overturned here.  It must be borne in mind that the first principle which the Court of Appeal emphasised in WFM Motors Pty Ltd (supra) was that the Court should not be retrying the case;

(2)  I agree with the analysis of the whole matter in the HPC’s No.19 Judgment.  As the defendant appears to be relying herein on the same evidence which he relied on in the PRC Court and has not adduced any new evidence in support of his case in the Hong Kong Court, I do not think he has established his case of fraud to the required standard;

(3)  The defendant has not adduced any expert evidence herein to contradict the expert opinion from one of the top 10 institutions in the PRC that it is impossible to ascertain the age of the printed words on the Undertaking with the current level of technology.

26.  This ground is therefore rejected[1].

Calculation of interest

27.  Lastly, the defendant challenged the plaintiffs’ calculation of the interest payable pursuant to the IPC’s No.729 Judgment.

28.  It was ordered by the IPC that:

‘利息以人民幣44444633.2元為基數，自2009年9月6日起按照中國人民銀行同期存款利率計算至該款付清之日止’

29.  The defendant stated in paragraph 81 of his Affirmation that:

‘I am duly advised by [my PRC legal representative] and made aware by [the plaintiff’s PRC legal opinion] that there were (and still are) several tiers of interest rate according to the deposit period, such as: 3 months, 6 months, 1 year, 2 years, 3 years and 5 years. From 22 November 2014 onwards, the 5 years deposit rate was abolished and the highest tier of interest rate is 3 years. I verily believe that the Plaintiffs are not entitled to adopt the highest tier of interest rate as they have done presently. The Plaintiffs have not adduced any evidence to support their claim to adopt the highest tier of interest rate.’

30.  While the defendant stated that he had been advised by his PRC lawyers that there are several tiers of interest rate according to the deposit period (as to which it is undisputed herein), it is not apparent from his Affirmation that he was also advised by his PRC lawyer that the plaintiffs are not entitled to adopt the highest tier of interest rate in the present case.

31.  Even if it is his case that he had indeed been so advised, such advice is not supported by any written legal opinion given by his PRC lawyer.

32.  On the other hand, the plaintiffs’ adoption of the highest tier of interest rate is supported by the opinion of the plaintiffs’ PRC law expert as follows:

‘由於中國人民銀行公布的同期存款利率存在多個檔次，故取與本案債務時間最接近的檔次進行計算。中國人民銀行公布的存款利率，在2014年11月22日之前，最高利率為5年定期利率。在2014年11月22日之後，不再公布5年期定期存款利率，只公布3年期定期存款利率。比照本案債務的時間， 2009年9月6日至2014年11月22日，應當按中國人民銀行公布的5年期定期存款利率標準計算利息； 2014年11月22日至2021年7月31日應當按中國人民銀行公布的3年期定期存款利率標準計算利息。’

33.  I accept such expert evidence, and therefore reject the defendant’s argument in this respect.

34.  Mr Hu for the defendant then argued that:

‘Judgment No.729 has granted 15 days to pay, if Ps are entitled to the Additional Interest (which is denied), it should be calculated only after the 15 days period, i.e. from 1 April 2017 (i.e. 15 days after Judgment No.19 dated 17 March 2017), but not from 20 December 2014[2] (i.e. 15 days after Judgment No.729 on 4 December 2014[3]), because Judgment No.729 was superseded by Judgment No.19.’[4]

35.  From paragraph 2(c) of the Summons, it can be seen that the plaintiffs are now claiming additional interest calculated from 20 December 2013.

36.  Hence, the issue here is whether such additional interest should be calculated from the 16^th day after the date of the IPC’s No.729 Judgment or 16^th day after the date of the HPC’s No.19 Judgment.

37.  Mr Hu argued that additional interest should only be calculated from the 16^th day after the date of the HPC’s No.19 Judgment, because IPC’s No.729 Judgment was “superseded” by HPC’s No.19 Judgment.

38.  Apart from the fact that this submission is not supported by any PRC law expert opinion, this submission, with greatest respect, is made in total disregard of the conclusion of HPC’s No.19 Judgment which reads ‘維持本院(2014)川民終字第187號民事判決’ (i.e. HPC’s No.187 Judgment), which in turn concluded: ‘維持原判’.  In other words, IPC’s No.729 Judgment had been left intact at the end of the day.

39.  The defendant’s argument in this regard is therefore rejected.

40.  Finally, Mr Hu submitted that:

‘Even if Ps are entitled to the Additional Interest from 20 December 2014 (i.e. 15 days after Judgment No.729 on 4 December 2014) as claimed in the Summons (which is denied), the present amount of the Additional Interest is wrong, because it is calculated based upon the starting date on 4 December 2014, as shown on page 5 of Ps’ alleged expert report.’[5]

41.  In paragraph 2(c) of the Summons, the plaintiffs asked for:

‘RMB18,915,635.89 representing additional interest incurred from 20 December 2013 until 31 July 2021.’

42.  The figure of RMB18,915,635.89 was adopted from the PRC law expert report which the plaintiffs produced.  It appears that the expert had calculated this figure by adopting 4 December 2014 as the commencement date of the additional interest because, for reason which is not apparent from the content of the expert report (the expert did not refer to any specific section of the Civil Procedure Code), the expert opined that the effective date of IPC’s No.729 Judgment was 18 November 2014[6].

43.  Hence, even if Mr Hu is right that the expert’s calculation was incorrect, the plaintiffs had understated rather than overstated the amount of additional interest in their claim herein.    

44.  Despite Mr Hu’s argument, Mr Yip and Mr Chan for the plaintiffs did not seek to amend the Statement of Claim or the Summons.  In their reply submissions, they simply asked the Court to reject the defendant’s argument in this regard.

45.  I will therefore reject Mr Hu’s argument accordingly, and will treat the figures adopted in the Statement of Claim and the Summons as correct.

CONCLUSION

46.  For reasons of the aforesaid, I accede to the plaintiffs’ application for summary judgment and make order in terms of paragraphs 1 and 2 of the Summons.

COSTS

47.  I make a costs order nisi that the defendant shall bear the plaintiffs’ costs of the action (including the costs of the Summons), to be taxed if not agreed.

48.  The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on the papers) within 14 days hereof.