CHAN CHOW YUEN v. NANGYANG COMMERCIAL BANK TRUSTEE LTD AND OTHERS

HCAP 4/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PROBATE ACTION NO. 4 OF 2002

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J U D G M E N T

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1. I have before me a summons by the Plaintiff to stay the present action, which has been commenced by the Plaintiff to revoke a grant of letters of administration that has been issued in favour of the 1st Defendant as attorney for the 2nd and 3rd Defendants. Further Defendants have been joined as parties after the commencement of action.

2. There is a parallel action pending in the People's court in the Mainland, concerning more or less the same parties. The dispute between the parties relates to the entitlement to certain shares in a company incorporated in Hong Kong, which were no doubt owned by a Mr Chan Ming Po prior to his death in 1935. The parties, apart from the 1st Defendant, are all related in blood or by marriage to Mr Chan. In a nutshell, it is alleged by the Plaintiff that the shares had been gifted by the deceased prior to his death to his only son, who had, prior to his own death in 1948, gifted the shares to others. It is thus argued that the determination of the present title to the shares should be made by reference to the gifts in question. The parties also argue amongst themselves as to who should be beneficially entitled to the shares in case the gifts alleged were invalid and the deceased died intestate. In short, the parties dispute over the present ownership of the shares, the entitlement to future dividends and the entitlement to the past dividends that have been declared by the company. Entitlement to representation of the estate in Hong Kong is thus also affected.

3. There is no dispute that the action in the People's court in the Mainland has reached an advanced stage. A first instance judgment has been rendered and an appeal and a cross-appeal have been taken out by three of the parties involved. One of them, a third party in the Mainland proceedings, is not a party to the present action. The appeal and cross-appeal have been heard and judgment is pending. On the other hand, in the local action, pleadings have closed and a summons for directions has been taken out.

4. The Plaintiff argues that the People's court is a more natural and appropriate forum for trying the disputes between the parties. Based on the usual principles applicable in this type of applications (see for instance, The Abidin Davor [1984] 1 AC 398), the Plaintiff asks me to consider a number of advantages in staying the present action in favour of the action in the Mainland.

5. At this juncture, I should add that in the local action, apart from the claim made by the Plaintiff against the Defendants, the Defendants have also commenced a counterclaim against the Plaintiff. So although at first glance, the Plaintiff is the plaintiff in the two actions, in fact, so far as the local action is concerned, the Plaintiff stands in the position of a defendant in the counterclaim, which raises substantively the same issues as that raised in the Mainland proceedings.

6. The Plaintiff argues that the People's court is a more natural and appropriate forum, given that the events in question took place or allegedly took place in the Mainland, the parties and the witnesses or at least most of them are resident in the Mainland, and the past dividends have all been paid by the Hong Kong company to parties residing in the Mainland.

7. But there is no question of the Hong Kong court lacking jurisdiction in the subject matter. Mr Hui, appearing for the Plaintiff, does not go so far as to suggest that. After all, a Hong Kong grant is involved in the Plaintiff's own action here. Moreover, one is concerned with shares in a limited company incorporated in Hong Kong.

8. Mr Hui in his submission refers me to the obvious advantages in terms of costs, convenience, the avoidance of any risk of inconsistent judgments and the fact that the Mainland proceedings have reached a really advanced stage, in support of his application for a stay of the local proceedings. I wish to say that I have fully borne in mind these factors.

9. But there is one complication in the present case arising from the fact that the foreign proceedings in question take place in the Mainland. As has been illustrated by a number of first instance and Court of Appeal judgments, arising from the litigations between林哲民v. 林志滔 (HCA 9585/1999) and林哲民 v. 張順連 (HCA 9827/2000), such as CACV 354/2001 (18 December 2001); CACV 1046/2001 (12 July 2001) and CACV 95/2003 (11 September 2003), and the parties are in agreement, despite the fact that there is no specific evidence or expert evidence to that effect in the papers filed for the purpose of the present application, that there exists under the civil procedure in the Mainland a system of protest, which in short renders a civil judgment given by the People's courts in the Mainland, at least in theory, not final and conclusive. I will not go into the system of protest here. It has been referred to and explained by the Court of Appeal in its repeated judgments in the林哲民cases.

10. Insofar as Mr Hui submits that unless and until a protest has been made by the relevant authority in the Mainland, a judgment rendered by the People's court in the Mainland is final and conclusive or should be treated as such, I disagree. Rather my reading of the series of judgments is that unless and until it can be demonstrated to the satisfaction of the court that no such protest would be made by the relevant authority, any such judgment by the People's court is not final and conclusive.

11. Now as to whether such a judgment will become final and conclusive after a confirmation to that effect is obtained from the relevant authority, I need not express any definite view, save to say that the proposition is arguable.

12. I cannot, given my analysis of the system of protest above, exclude the possibility that in the present case, notwithstanding the system, eventually a judgment obtained in the Mainland may become a final and conclusive one for the purpose of enforcement in Hong Kong. But that may take time. Moreover, that would be subject to uncertainties. More important still, that result (i.e. that the Mainland judgment should eventually become final and conclusive) may not be arrived at without further litigation in Hong Kong. Put at the lowest, given the uncertainty regarding the status of Mainland judgments in Hong Kong for enforcement purposes, further litigation between the parties may be required in order to resolve the question of whether such a judgment obtained in the Mainland by one side against the other has eventually become final and conclusive and thus can be enforced in Hong Kong to resolve the present disputes between the parties. So, the matter is not as simple and straightforward as Mr Hui would like it to be, and the advantages that he has pointed out may not be as clear-cut as they may first seem.

13. Given that complication, the advantages relied on by Mr Hui in support of the present application may or may not be real because if the Mainland judgment is not final and conclusive, it will not be enforced locally. And thus the parties would still need to proceed with the local action in order to resolve their disputes.

14. It is not the situation here that the parties need not come to Hong Kong to litigate or obtain an order from this court in order to resolve fully their disputes. As I say, after all I am concerned with a claim to revoke a Hong Kong grant. Moreover, in order to claim title to the shares, a determination that is either made by the local court or is recognised by it would be required in order to have any practical binding effect on the local company itself.

15. On the other hand, I must bear in mind other factors that are not so favourable to Mr Hui's application. Apart from the system of protest that I have already alluded to, there is also the very material question of the choice of laws and applicable law. As I said, the parties' disputes relate to a deceased who passed away prior to 1949 when the People's Republic was founded.

16. Mr Chan Ming Po died, as I said, in 1935. His only son, to whom allegedly he gifted the shares prior to his death, passed away in 1948. If the matter is tried in Hong Kong, under our rules on conflict of laws, the validity of the alleged gift, or alternatively, if the alleged gift did not take place or was not valid, the devolution of the shares upon intestacy - there being no dispute that Mr Chan Ming Po died intestate - would be determined by Hong Kong law in relation to the alleged gift or the law of the domicile of Mr Chan Ming Po if the gift was somehow not valid or never took place.

17. There is no dispute that Mr Chan Ming Po was domiciled in the Mainland when he passed away in 1935, and there can be no dispute that at that time, the applicable law governing devolution of estate in the Mainland was the Civil Code. Depending on the findings of fact and so forth, the Hong Kong court may have to apply the Civil Code in order to decide the question of devolution of the shares after the death of Mr Chan Ming Po in 1935. Similarly, the Hong Kong court may also have to apply the Civil Code to determine the devolution of the shares upon the death of Mr Chan's son in 1948.

18. The Plaintiff accepts that if the Civil Code were to be applied, it would give rise to a result more favourable to the Defendants, in contrast with the position if the case is tried in the Mainland. The evidence and material before this Court make clear that the People's courts in the Mainland do not recognise the Civil Code even in relation to matters that took place prior to the founding of the People's Republic in 1949. To be more specific, in the present case in dealing with the question of succession of Mr Chan Ming Po's estate who died in 1935 and the question of succession regarding the estate of Mr Chan's son who died in 1948, the Succession Law of the People's Republic would be applied as opposed to the Civil Code.

19. Again, it is common ground that if the Succession Law of the People's Republic is relied on or applied, the result would be more favourable to the Plaintiff than the Defendants.

20. That, in my judgment, is a material judicial disadvantage to the Defendants if the local action (including the counterclaim) is stayed with the net result that the parties' disputes are to be decided by the People's court according to the Succession Law of the People's Republic, as opposed to the Civil Code.

21. In my judgment, the judicial disadvantage relating to the application of the Civil Code constitutes unfairness to the Defendants. I say this from the angle of a Hong Kong court and in the context of Hong Kong law, which requires the application of the lex domicilii at the time of death to decide questions of succession relating to movables. The application of law made years after the event to determine questions of succession in a retrospective manner is, save in very exceptional circumstances, quite foreign to this court. The attitude and position adopted by the People's courts are fully understandable in the context of the People's courts, but so far as Hong Kong courts are concerned, whether before or after the resumption of sovereignty in 1997, the Civil Code has been applied here in appropriate circumstances with no difficulty.

22. Mr Hui argues that in fact the Defendants have, prior to the commencement of the two actions in Hong Kong and in the Mainland by the Plaintiff, threatened to sue the Plaintiff in the Mainland. Therefore, counsel argues that the Defendants cannot now complain about losing a judicial advantage if the local action is stayed and the disputes are decided by the People's court in the Mainland according to the Succession Law of the People's Republic.

23. But the fact remains that the Defendants never carried out what they said they intended to do; they never sued the Plaintiff in the Mainland. In fact, it was the Plaintiff who commenced both actions in Hong Kong and in the Mainland. I do not think what counsel has submitted can to any material extent affect the judicial disadvantage that the Defendants have pointed out to this Court that they would suffer if the local action is stayed in favour of the Mainland proceedings.

24. Another matter that I must bear in mind is the fact that the individual Defendants in the present action are legally aided. That is a personal advantage that the Court should bear in mind.

25. Yet another matter that I must bear in mind is the fact that there is no identity of parties here. As I said, the Mainland proceedings involve a third party, Chan Hung Siu, who is not a party to the local action. In fact, the third party has appealed against the first instance judgment given in the People's court.

26. I have borne all the above matters in mind. I wish to say that I have also borne in mind all the arguments advanced by counsel on both sides in their oral as well as written submissions. It is quite unnecessary for me to repeat them here. I have also borne in mind the material circumstances and underlying facts; again there is no need for me to repeat them here.

27. Having borne all relevant matters and considerations in mind, I have come down against the present application. In those circumstances, I dismiss the application.