深圳市高時小額貸款有限公司 v. 深圳市園山物業發展有限公司 AND OTHERS

HCRE 80/2024

[2026] HKCFI 3643

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

RECIPROCAL ENFORCEMENT CASE NO 80 OF 2024

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J U D G M E N T

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A.  INTRODUCTION

1.  This is the 4^th and 5^th Respondents’ Summons (“R4-R5 Summons”) to apply to set aside Master Hui’s Order dated 4 March 2025 (“Order”).

2.  Under the Order, the learned Master registered a Mainland Judgment dated 4 November 2022 of The Primary People’s Court of Qianhai Cooperation Zone of Shenzhen City of Guangdong Province (“Qianhai Court”) in case number (2022) 粵0391 民初6370 號 (“Mainland Judgment”) as a Hong Kong Judgment under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) (“Ordinance”).

3.  Briefly stated, on 24 November 2020, the Applicant advanced a RMB50 million loan to the 1^st Respondent (“Loan”) with interest, which was secured by guarantees from the 2^nd to 5^th Respondents.

4.  On 18 April 2022, the Applicant sued the Respondents for repayment of the Loan and interest and on 4 November 2022, the Mainland Judgment was delivered where the 4^th and 5^th Respondents were held jointly and severally liable for the debt owed by the 1^st Respondent under the Mainland Judgment to the Applicant including amongst other things (a) principal loan of RMB49.6 million (b) contractual interest calculated at 15% per annum on the various stated bases and periods (c) legal costs of RMB270,000 and (d) statutory enhanced interest if payment were late (“Enhanced Interest”).

5.  At the hearing, the 4^th and 5^th Respondents appeared through Mr Peter Zhu and the Applicant was represented by Mr Joseph Wong and Ms Jocelyn Tang. At the end of the hearing, I reserved judgment, which I now give.

B.  ANALYSIS

6.  Section 18 of the Ordinance (and section 5(2)(a) - (e), which supplements the ground stipulated in section 18(1)(a)) stipulates the grounds on which the registration of registered judgments may be set aside.

7.  The burden is on the judgment debtor to satisfy the Court that the grounds relied upon are made out. The standard of proof is the civil standard of proof, i.e. on the balance of probabilities. China Citic Bank Corporation Ltd (Quanzhou Branch) v Li Kwai Chun [2019] HKCFI 2540 at §§38-40 (Keith Yeung J).

8.  Mr Zhu relied on 5 grounds

8.1.  First, it is said the Mainland Judgment ordered the payment of penalty and thus its enforcement would be contrary public policy (sections 5(2)(e), 18(1)(a), 18(1)(j)).

8.2.  Second, it is said the 1^st Respondent (being the principal debtor under the Loan) was not summoned to appear, or was not given sufficient time to defend the proceedings, before the Qianhai Court according to Mainland law (sections 18(1)(f) and 18(1)(j)).

8.3.  Third, it is said the sums ordered to be paid under the Mainland Judgment are uncertain because (1) as the Mainland Judgment was not served on the 1^st Respondent, its liability qua debtor is unclear and it follows that the secondary liability of the 4^th and 5^th Respondents is also unclear and (2) the Respondents are proposing to commence separate Mainland proceedings against the Applicant to claim for the restitution of certain intermediary fees (“Proposed Mainland Action for Intermediary Fees”), which would give rise to a deduction or set off against the sums payable under the Mainland Judgment (sections 5(2)(e) and 18(1)(a)).

8.4.  Fourth, it is said the debt under the Mainland Judgment has been fully satisfied by the Respondents (section 18(1)(d)).

8.5.  Fifth, it is said the Applicant was guilty of material non-disclosure in its ex parte application before the learned Master who gave the Order.

B1.  Ground 1: Penalty

9.  This ground concerns Order §4, which deals with the Enhanced Interest. Specifically, the Enhanced Interest is stipulated under Article 260 of the PRC Civil Procedural Law (2021).

10.  Hong Kong Courts have consistently regarded such Enhanced Interest as penalty and unenforceable under Hong Kong law: Hung Fung Enterprises Holdings Ltd v Agricultural Bank of China [2012] 3 HKLRD 679 at §§86-92 (Kwan JA); Tianjin Jinrong Investment Services Group Co Ltd v Jinan Muhe Enterprises Management Co Ltd [2026] 1 HKLRD 1104 at §§25-41 (DHCJ Gary CC Lam).

11.  Following the practice in Tianjin Jinrong at §65 and 乐推(上海)文化传播有限公司 v 深圳市麦凯莱科技有限公司 [2026] HKCFI 3204 at §§47-49 (DHCJ Alan Kwong), I would set aside §4 of the Order.

B2.  Ground 2: Notice of Proceedings

12.  Mr Zhu complained the 1^st Respondent (being the principal debtor) was not summoned to appear, or was not given sufficient time to defend the proceedings, before the Qianhai Court according to Mainland law. It should be said he did not complain about service against his clients.

13.  Mr Zhu pointed to what appears to be internal records of the relevant Mainland authorities (“Internal Records”) which apparently recorded that postal service of the court documents and the Mainland Judgment to the 1^st Respondent had failed. He also pointed to the Mainland law expert report adduced by his clients where after referring to the Internal Records the expert opined that in light of the defective service of court documents against the 1^st Respondent (qua principal debtor) there was also defective service vis-à-vis the 4^th and 5^th Respondents and as a result a question arose as to whether the Mainland Judgment was valid against them. Lastly, counsel pointed to the fact that there was no evidence in this case that the relevant authorities had attempted service by way of public announcement.

14.  On the other hand, Mr Wong referred me to the Mainland Judgment (especially page 3), which expressly recorded that the Qianhai Court had summoned the Respondents who refused to come to court to participate in the litigation without justification. Consequently, the Qianhai Court proceeded in their absence and decided the case against them.

15.  In China Citic Bank at §§41-45, Keith Yeung J – following Walker J in Malicorp Limited v Government of the Arab Republic of Egypt [2015] EWHC 361 (Comm) at §25 – held whether the judgment debtor was summoned to defend and whether, if so summoned, was given sufficient time to defend the proceedings are to be decided according to the relevant foreign law (Mainland law in the China Citic Bank case) and would thus necessarily require proof of the relevant foreign law. Relevant evidence (such as expert evidence on foreign law) would have to be examined and weighed by the Court. In particular, some evidence carries much higher weight than others. In this connection, it makes perfect sense to accord particular weight as a matter of evidence to the opinion of the foreign court on the issue as the determination of foreign law is a matter for the foreign court and the Hong Kong Court ought not lightly reach the conclusion that a foreign court is wrong unless possibly that there exists evidence that the determination is clearly perverse.

16.  It follows that Mr Zhu’s submission that he must succeed as the Applicant has not adduced any evidence to counter his evidence must be rejected. The Mainland Judgment is clear evidence that the Qianhai Court regarded that the Respondents had been properly summoned but they chose not to appear without justification.

17.  Mr Zhu submitted that given his clients have adduced the Internal Records and the expert report on Mainland law, the evidentiary burden has shifted to the Applicant. Whether that is correct would depend on the quality of the evidence of the 4^th and 5^th Respondents. For reasons outlined below, none of the evidence even begin to justify a finding by this Court that the Qianhai Court’s finding in the Mainland Judgment on the issue at hand is “clearly perverse”.

18.  In terms of the Internal Records, two points arise. First, there was no explanation whether the documents produced were a complete record. Mr Zhu confirmed there was no evidence that the Internal Records produced were the complete record. Mr Zhu pointed me to certain passages in his clients’ application to the Mainland Prosecutorial Authorities (where his clients complained about the invalidity of service of court documents against the 1^st Respondent). But that was a draft application, which has never been filed. It would not be right to place any reliance on it. Second, there was also no evidence to provide the context necessary to properly understand the Internal Records produced.

19.  The Mainland law expert report offered no assistance as well especially on either of the two points above. Mr Zhu specifically acknowledged that the expert was only able to point to the Internal Records and she did not say in her opinion that service was invalid according to Mainland law. Indeed, I would go further and say the expert report failed to explain and elaborate why service of court documents against the 1^st Respondent should be regarded as defective notwithstanding the Qianhai Court’s clear record in the Mainland Judgment that the Respondents were properly summoned but chose not to appear without justification.

20.  In this connection, even though the Mainland Judgment made no specific reference to the Internal Records, I am satisfied that if there were any issue with the proper summoning of the Respondents, that point would not have escaped the attention of the Qianhai Court. That it had made a specific finding that the Respondents were properly summoned should be regarded as a decision that there was no defect with the summoning process: Guangzhou Green-Enhan Bio-Engineering Co Ltd v Green Power Health Products International Co Ltd [2004] 3 HKLRD 223 at §2(d) (Lam J) referred to in 蘇州高新文旅集團有限公司 v 電競國際集團有限公司 [2025] HKCFI 1015 at §45(3) (DHCJ Alan Kwong).

21.  That there was no evidence whether service by public announcement was attempted does not assist Mr Zhu either. The burden is on the party alleging defective service (i.e. the 4^th and 5^th Respondents here) to prove how the service was defective and it cannot discharge that burden by pointing to, without evidential foundation, certain problems that may exist in the service process: 浙江大通輕紡有限公司 v He Bin [2025] 3 HKC 1056 at §§16-18 (DHCJ Phoebe Man).

22.  At bottom, the evidentiary threshold that the 4^th and 5^th Respondents must meet in order to succeed on Ground 2 is on a balance of probabilities (which is higher than a prima facie or arguable case): China Citic Bank at §§38-40. In my judgment, they have failed to cross that threshold and as a result I reject Ground 2.

B3.  Ground 3: Uncertain Sum of Money

23.  As mentioned, there are two prongs to Ground 3. The first prong premised on the alleged failure to serve the Mainland Judgment on the 1^st Respondent. Mr Zhu relied on both the Internal Records and the expert report on Mainland law I have alluded to above.

24.  I have discussed the difficulties I have with the Internal Records. As for the expert report, Mr Zhu referred me to §9 which made the point that according to Mainland law a judgment would only become valid (生效) on the date of service. But the expert did not say that in her opinion the Mainland Judgment was not properly served on the 1^st Respondent as a matter of Mainland law.

25.  More to the point, there is simply no evidence at present that the 1^st Respondent was not served with the Mainland Judgment properly according to Mainland law. Mr Zhu accepted there was no direct evidence on this but prayed in aid of the fact that it would be difficult for his clients to prove the negative. With respect, that cannot be right. The 4^th and 5^th Respondents cannot even muster an affirmation from a representative of the 1^st Respondent, or any expert evidence on Mainland law, to the effect that the Mainland Judgment was not properly served on the 1^st Respondent.

26.  Mr Zhu also suggested I should regard R4-R5’s Summons as being made on behalf of the 1^st Respondent. He submitted I could draw the inference that the 1^st Respondent did not know the Mainland Judgment was not properly served on it until the Internal Records were discovered. I reject the submission. First, there is no evidence on when the Internal Records were discovered. Second, there is no evidence from the 1^st Respondent that it wished to join in this application and the reason for that. Third, no application has ever been made to amend R4-R5’s Summons to include the 1^st Respondent as an applicant.

27.  Further, Mr Zhu submitted the Mainland Judgment cannot help the Applicant as it did not make any finding regarding the service of the Mainland Judgment. Counsel also pointed out there is no evidence that the Qianhai Court has attempted proper service of the Mainland Judgment on the 1^st Respondent. However, the burden lies with the 4^th and 5^th Respondents to establish to a civil standard of proof that the Mainland Judgment was not properly served on the 1^st Respondent according to Mainland law. For reasons explained, I do not consider they have discharged that burden.

28.  As for the second prong under Ground 3, which concerns the Proposed Mainland Action for Intermediary Fees, it is in my view a non-starter.

29.  According to the evidence filed by the 4^th and 5^th Respondents, the Respondents have yet to instigate the Proposed Mainland Action for Intermediary Fees. Mr Zhu submitted in his Skeleton Submissions that the action has been brought. But he was unable to say anything about its progress.

30.  Mr Wong complained Mr Zhu’s submission was unsupported by any evidence. That much Mr Zhu accepted. But critically, insofar as the Respondents intend to but have not issued the Proposed Mainland Action for Intermediary Fees, I fail to see how that would impugn the fact that the Mainland Judgment was a final judgment on liability of inter alios the 1^st, 4^th and 5^th Respondents for the payment of the sums stated therein. Even if the Respondents have indeed issued proceedings, I am unable to see how the analysis would be affected.

31.  In the circumstances, Ground 3 is rejected.

B4.  Ground 4: Mainland Judgment Debt Fully Satisfied

32.  Mr Zhu submitted that the Respondents had paid RMB88,075,725.11 to the Applicant, which would be more than sufficient to satisfy the judgment debt under the Mainland Judgment. On the other hand, Mr Wong submitted that the Applicant has only received partial satisfaction of the judgment debt to the tune of RMB19,467,987.76 because the balance had been used to repay sums due to the Applicant from the Respondents in two other Mainland judgments.

33.  Mr Zhu pointed to the Mainland Judgment, which ordered that the priority of proceeds from the sale and auction of properties in question should be applied to satisfy the judgment debt of the Mainland Judgment first up to RMB50 million.

34.  That order was not disputed by Mr Wong who relied on the Applicant’s Mainland law expert report which referred to Article 414 of the PRC Civil Code, which provides that if the same property is mortgaged to more than two creditors, and if the mortgages are registered, the proceeds of sale must be applied in accordance with the order of the registration. Mr Wong pointed me to the evidence (including the findings made in the judgments themselves) that the mortgage, which the Mainland Judgment was concerned with, was registered after the mortgages in two other judgments. Counsel also referred me to the Applicant’s expert evidence articulating how the proceeds of sale from the mortgaged properties were attributed to the repayment of the respective judgment debts of the two other judgments and the Mainland Judgment.

35.  Mr Zhu accepted he has no expert evidence to counter the Applicant’s expert evidence. Counsel was only able to refer me to the 5^th Respondent’s 2^nd Affirmation §§18-19 and the 5^th Respondent’s 3^rd Affirmation §§12-15. I have considered the evidence carefully. It seems to me they do no more than assert the 5^th Respondent’s belief, without any substantiation, that the judgment debt under the Mainland Judgment has been fully satisfied. In my view, they are nowhere near sufficient to counter the Applicant’s evidence and to discharge the 4^th and 5^th Respondents’ burden to show on a balance of probabilities that the judgment debt under the Mainland Judgment has been fully paid. For these reasons, Ground 4 is rejected.

B5.  Ground 5: Material Non-Disclosure

36.  Mr Zhu asserted two instances of material non-disclosure. First, it is said the Applicant failed to disclose the Internal Records. Second, it is said the Applicant failed to disclose the Enhanced Interest is not enforceable under Hong Kong law. I reject both submissions.

37.  As regards the Internal Records, there is no evidence that the Applicant was aware of their existence at the time the ex parte application for registration was made. Therefore, even if there were any non-disclosure in this respect, it would be unintentional and excusable. Further, for reasons explained above, I do not consider the Internal Records would have any material impact to the case.

38.  As regards the Enhanced Interest, for reasons explained at Section B1 above, I would set aside §4 of the Order. Therefore, any non-disclosure in this respect would not have impacted the case.

C.  CONCLUSION

39.  In the premises, I only set aside §4 of the Order in relation to the enforcement of the Enhanced Interest.

40.  As to costs, the Applicant is obviously the successful party. Mr Zhu submitted there should be some apportionment to reflect his clients’ success in respect of Ground 1. I agree. On a broad brush assessment, I make a costs order nisi that the 4^th and 5^th Respondents shall pay 80% of the Applicant’s costs of the Originating Summons dated 4 March 2025 and R4-R5’s Summons to be taxed if not agreed with certificate for one counsel. I would also disallow the 4^th and 5^th Respondents’ costs of preparing the physical hearing bundles, which with respect were not prepared properly.