PENG YU YAN also known as REGINA PENG v. STAVROS P. PAPADOPOULOS also known as STEVE PAPPS AND ANOTHER

HCCL 26/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 26 OF 2007

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BETWEEN

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J U D G M E N T

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This application

1.  This is an application by the 1^st defendant, by summons dated 31 March 2008, that the proceedings herein be stayed on the ground of forum non conveniens in favour of the Brazilian High Court (or such other court in Brazil having competent jurisdiction), on the basis that the Hong Kong High Court is not the natural or appropriate forum for the trial of this action, and that the Brazilian court is clearly and distinctly (sic) the most natural and appropriate forum for the trial of this dispute.

2.  The parties to this application are the 1^st defendant applicant, and the plaintiff, who resists this attempt to prise this litigation away from Hong Kong and send it to Brazil.

3.  The 2^nd defendant does not appear.  On 15 January 2009 the plaintiff, Regina Peng Yu Yan, obtained default judgment against the 2^nd defendant, Mr Chang Ya Ching, who is her former husband; the court is told that they divorced in Taiwan in 2002.

The nature of this case

4.  The nature of the plaintiff’s action is straightforward.

5.  By a writ issued out of the High Court Registry on 18 September 2007, with the Statement of Claim endorsed thereon, the plaintiff sues the 1^st and 2^nd defendants under an Agreement, said to be made partly orally and partly in writing, under which it is alleged that, in consideration of the plaintiff releasing her residual 14.5% entitlement in a Brazilian alexandrite mine ‑ her share therein allegedly being held on her behalf by the 2^nd defendant, her then husband, whose shareholding then was 29% of the mine ‑ she was to receive US$10 million by way of 60 monthly instalments of US$125,000 during the period from June 2004 to May 2009 (totalling US$7.5 million), with the balance of US$2.5 million to be paid by an additional 20 monthly instalments from June 2009 to January 2011 provided that the alexandrite mine continued to be in production as at June 2009.

6.  On the pleading, the case is advanced that both defendants have primary liability for such payments, alternatively that the 1^st defendant, Mr Stavros Papadopoulos, a mutual friend of the plaintiff and the 2^nd defendant, is the guarantor of the 2^nd defendant’s primary obligation under the Agreement.

7.  This claim clearly will depend for its success as much upon the viva voce evidence led as upon written documentation: the written part of the Agreement which is relied upon is somewhat sparse, consisting of a document dated 10 April 2004 as signed in Hong Kong by the three parties thereto, the document being witnessed and signed by one Vera Pak Wan Nar, whom I am told is an employee of the 1^st defendant, Mr Papadopoulos.

8.  This document is so brief that conveniently it can be reproduced herein.  It simply reads:

“We, Mr. Stavros P. Papadopoulos, Mr Chang Ya-Ching and Madam Peng Yu Yen hereby agree that Madam Peng Yu Yen will release her right (50% on Mr. Chang Ya-Ching’s 29% shares of the Mine) under the payment of USD125,000.00 per month for 60 months.

In case the Mine produce more than 60 months, Madam Peng Yu Yen has the right to receive another 20 months in addition and makes a total of USD10,000,000.00 and in case the Mine is not producing any more, Mr Chang Ya-Ching will continue to pay 20 months by his own.”

9.  In terms of actual payment of money, the plaintiff received 24 monthly instalments, in the sum of US$3 million, between the period June 2004 to May 2006 (the 24^th instalment being paid on 12 May 2006), but she has received nothing since.

10.  Accordingly, paragraph 10 of the Statement of Claim recites that by letters dated 21 August 2006 and 22 January 2007 she demanded payment from the defendants of US$1.625 million “being 13 Monthly Instalments due and owing from the First and/or the Second Defendant pursuant to the Agreement”, and it is this specific sum, which represents but 13 of the original 60 instalments, which is the subject of the claim in these proceedings.

11.  It appears not to be in dispute that some at least of the monies received by the plaintiff to-date have been forwarded to the plaintiff, who now resides in Taiwan, through the medium of Mr Papadopoulos’ Hong Kong company, Emerald Mines Limited (‘EML’).

12.  It also is undisputed on the evidence, and indeed appears to be accepted by the 1^st defendant, that the Agreement under which the plaintiff now sues is in the nature of a settlement following her divorce from the 2^nd defendant.

Jurisdiction as of right

13.  There is no dispute but that the 1^st defendant was properly served in Hong Kong; Mr Papadopoulos has a residential and business address in the territory, and his company, EML, which has acted as conduit for funds sent to the plaintiff, is incorporated in Hong Kong.

14.  There is thus no dispute but that this is a situation in which the jurisdiction of the Hong Kong court is established as of right and, that being the case, the burden in an fnc application such as the present lies squarely on the applicant, and that the discretion to depart from a jurisdiction established as of right is not lightly exercised: see the observations of Litton VP (as he then was) in The Kapitan Shvetsov [1997] 1 HKC 485, at 491G-H.

The correct approach

15.  Nor is there any dispute as to the correct approach of the court towards applications of this nature, which have been the subject of many decisions of this court over the past decade: see the principles adumbrated in Spiliada [1987] AC 460, at 475C ‑ 478E, per Lord Goff, as applied in Hong Kong by Hunter JA in The Adhiguna Meranti [1987] HKLR 904, at 907E.

16.  In the context of the present case, Mr Sussex SC, for the applicant, submits that the sole issue for the court is whether ‘stage one’ of Hunter JA’s formulation can be established, namely whether it can be shown that Hong Kong is not only not the natural or appropriate forum for the trial, but that there is another available forum ‑ in this instance the Brazilian court ‑ which is “clearly or distinctly more appropriate” than Hong Kong.

17.  To this submission of principle Mr Yuen SC does not demur, save that his answer to the question as thus posed does not coincide with that posited by Mr Sussex.

Decision

18.  In support of his submission, Mr Sussex opened by noting that the three parties are all naturalized Brazilians, and that by far the majority of the ‘connecting factors’ in this case point to a trial in Brazil: he noted that Portuguese is the common language of the three parties, that the source of the funds the subject of the alleged Agreement emanated from the production of the Brazilian alexandrite mine, in which his client then was (but no longer is) a 30% shareholder, that the relevant documentation relating to the mine is in Brazil and is in Portuguese, and that given this factual matrix there inevitably will be required to be expert evidence as to Brazilian law; indeed, in this latter context an affidavit from a Brazilian lawyer/expert already has found its way into the evidence.

19.  In the course of his submission, Mr Sussex referred to the Articles of Association of the Brazilian mine, and made reference also to Article 88 of the Brazilian Civil Procedure Code, which stipulates that Brazilian Courts have jurisdiction over actions which are based on underlying facts or acts taking place in Brazil.  In addition, Article 89 of that Code stipulates that the Brazilian courts shall have exclusive jurisdiction over disputes in connection with real estate in Brazil.

20.  Thus, he argued, in the instant case the plaintiff’s claim inevitably involves the determination of facts such as the plaintiff’s beneficial interest in the Brazilian mine, and that mine’s productivity, whilst the aforesaid Article 88 confers jurisdiction on the Brazilian High Court if the defendant is domiciled in Brazil, and in this case it was prima facie evident that the 2^nd defendant was located in Brazil.

21.  In fact, concluded Mr Sussex, when looked at in the round, “the essential Brazilianness of this claim” mandated the exercise of the discretion to send the present case to Brazil, where in fact his client, the 1^st defendant, already had commenced proceedings for declaratory relief in a Brazilian court ‑ albeit after having been served in Hong Kong with the current High Court action ‑ and thus it would make sense for this case to be consolidated with that existing Brazilian action.

22.  The only “tenuous link” with Hong Kong, he suggested, was that the 1^st defendant was a permanent resident and had been served here, but that this bare fact had nothing whatever to do with the plaintiff’s cause of action in the present proceedings.

23.  Hence, senior counsel argued, it could readily be seen that not only was Hong Kong not the natural and appropriate forum for this trial, but that the Brazilian court was clearly or distinctly more appropriate than Hong Kong; whilst naturally he accepted that in the fnc instance, wherein jurisdiction is established as of right in Hong Kong, the burden was upon his client so to establish this fact, nevertheless he submitted that in the particular circumstances of this case the factual matrix placed the matter beyond doubt.

24.  Notwithstanding the considerable forensic skill which Mr Sussex ‑ whom I understand had been briefed late in the day to argue this case ‑ invested in the argument, with respect I am unable to agree.

25.  I have no intention whatever of exercising my discretion and sending this case off to Brazil.

26.  Default judgment having been entered against the 2^nd defendant, the plaintiff’s former husband, his whereabouts is nothing to the point.  The only real ‘player’ in this litigation is the 1^st defendant.  Mr Papadopoulos lives in Hong Kong, he has been served in Hong Kong, his company, EML, which has remitted at least part of the funds thus far sent to the plaintiff (presumably pursuant to the alleged Agreement) is a Hong Kong company, and Ms Vera Pak, who was witness to that part of the Agreement which is in writing ‑ namely the document dated 10 April 2004 ‑ also is a resident of Hong Kong.

27.  At the end of the day this could not be a simpler case: either the 1^st defendant was primarily liable under the Agreement, or he acted as guarantor of the 2^nd defendant’s obligations thereunder, or he was not and did not.

28.  The cause of action maintained against the 1^st Defendant is maintained solely under the Agreement, the written part of which was signed in Hong Kong.

29.  This Agreement provides for the payment of sums certain to the plaintiff; she has not claimed for any sum other than the amount outstanding at the date of the writ, namely the 13 unpaid monthly instalments, and for present purposes it seems to me to matter not one jot whether the origin of the monies so promised reflected the plaintiff’s alleged entitlement to a 50% share of her former husband’s shareholding in the Brazilian mine, or the fruits of some other commercial enterprise.

30.  All that the plaintiff seeks to prove is the terms of the Agreement, and more particularly the liability of the 1^st defendant to make good the deficiencies of payment thereunder.

31.  Either she is able to establish this, or she is not, and I very much doubt whether this simple case will take more than one day, or two at most in the Commercial List.

32.  What this claim as pleaded most certainly does not involve is any claim against, or the plaintiff seeking to enforce any rights against, the Brazilian mine or the Brazilian company owning the mine; as Mr Yuen SC has pointed out, the plaintiff sues solely under the tripartite Agreement made between the plaintiff and the 1^st and 2^nd defendants in Hong Kong, and I fail to discern any Brazilian law issues which are relevant for the purpose of this action, notwithstanding the 1^st defendant’s attempts to inject into this entirely straightforward litigation an overwhelming Brazilian element which, through his leading counsel, he maintains is so crucial to a decision in this case.

33.  Mr Sussex also observed that in any event a move to Brazil clearly would be in the plaintiff’s favour, because it appeared that she would be unable to enforce any Hong Kong judgment (such as already has been obtained against the 2^nd defendant) in Brazil.  As to that, it seems to me that any such consideration is entirely a matter for her; she has chosen to sue the 1^st defendant in Hong Kong, where presumably he has assets sufficient to satisfy any judgment, and I have no intention of placing that consideration, as helpfully advanced by Mr Sussex, into the balance against her.

34.  In the course of his skeleton argument in opposition to this application Mr Yuen SC further developed a submission that in any event the 1^st defendant has put up only a bare denial of liability, and that such bare denial does not sit well with the parties’ contemporaneous conduct; he goes on to say that such explanations as have been put forward by the 1^st defendant are “inconsistent and inherently unbelievable”, and he provides chapter and verse for this submission.

35.  That is as may be, and clearly is a matter for the trial court, and the trial court alone.  What is abundantly clear to me, however, is that in the prevailing circumstances such trial is to take place in Hong Kong.

36.  It is difficult to view this application, taken together with the 1^st defendant’s self-serving issuance of proceedings in Brazil subsequent to the issuance of these Hong Kong proceedings upon him, as anything other than a tactic specifically designed to obfuscate and delay.

37.  At the end of the day, in my judgment this application has no substance, and the applicant has failed to discharge the burden upon him.  Accordingly the application is rejected.

Order

38.  It follows from the foregoing, therefore, that this court makes the following Order:

(1)	The application by the 1st defendant by summons dated 31 March 2008 is dismissed;
(2)	There be an order nisi that the costs of and occasioned by this application be to the plaintiff, such costs, if not agreed, to be taxed and paid forthwith.