LAM CHIT MAN t/a YAT CHEONG ELECTRIC CO v. CHEUNG SHUN LIN

[English Translation – 英譯本]

CACV 1046/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1046 OF 2001

(ON APPEAL FROM HCA NO. 9827 OF 2000)

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BETWEEN

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JUDGMENT

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Hon Chung J (delivering the judgment of the Court):

1. The plaintiff (appellant) appeals to this Court against a judgment given by Yam J on 9 May 2001, by which the Statement of Claim in this action was struck out and this action was dismissed.  To facilitate understanding of the reasons behind the above judgment and our decision on this appeal, we begin by outlining the nature of this action and the events leading to this appeal, as follows.

2. The plaintiff commenced this action on 6 November 2000, claiming that the defendant (respondent) had acted in breach of a lease over factory premises in Heng Gang Town, Long Gang District, Shenzhen City and incited the inhabitants of Heng Gang Town to occupy the plaintiff’s factory equipment and assets.  The plaintiff claimed damages against the defendant accordingly.

3. On 28 November 2000, the defendant applied to strike out the plaintiff’s Statement of Claim pursuant to O. 18 r. 19 of the Rules of the High Court.  On 16 January 2001, the application was heard before a Master, who made the following order:

Unless the plaintiff successfully sets aside the judgment of the People’s Court of Long Gang District, Shenzhen City, Guangdong Province within 28 days, items 1 to 4 of the claim (i.e. the Statement of Claim within the meaning of the Rules of the High Court) shall be struck out.

Items 1 to 4 of the plaintiff’s Statement of Claim were as follows:

1.   Refund of paid rent, RMB 7,500.00

2.   Expenses for renovating the factory, RMB 10,871.00

3.   Moving costs, RMB 4,000.00

4.   Maintenance of wages, RMB 16,000.00

The total claim was HK$35,860.00.  Items 5 to 8 of the Statement of Claim was not included in the aforesaid order.  On 3 February 2001, the plaintiff appealed to the Court of First Instance against the order.

4. The appeal was heard before Yam J on 9 May 2001.  A few days before the hearing, on 5 May 2001, the defendant filed with the court a document headed “Notice of cross-appeal”, which requested the Court of First Instance to “re-hear the defendant’s application by way of summons on 28 November 2000 to strike out the plaintiff’s claim (i.e. the Statement of Claim within the meaning of the Rules of the High Court) and dismiss this action” on 9 May 2001.

5. It follows that, at the hearing on 9 May 2001, Yam J had to deal with two matters, namely the appeal brought by the plaintiff on 3 February 2001 and the so-called “Notice of cross-appeal” issued by the defendant on 5 May 2001.

6. In his Judgment on 9 May 2001, Yam J did not clearly state how the court dealt with the so-called “Notice of cross-appeal” issued by the defendant.  Order 58 r. 1(2) of the Rules of the High Court provides that an appeal from a judgment, order or decision of a Master must be brought by serving a notice on the other party; and O. 58 r.1(3) provides as follows:

Unless the Court otherwise orders, the notice must be issued within 14 days after the judgment, order or decision appealed against was given or made and must be served within 5 days after issue …

7. Therefore, the defendant’s “Notice of cross-appeal” was issued after the expiry of the prescribed time limit.  Under O.3 r.5(1), the Court has power to extend or abridge the relevant time period.  However, as stated above, Yam J did not in his Judgment clearly state that he had exercised the discretion to extend the time of appeal.

8. Where the Court of First Instance has not exercised its discretion, this Court may, in light of the circumstances, decide how to exercise that discretion.  Paragraph 3/5/2 of Hong Kong Civil Procedure 2002 states that:

… application to enlarge the time for an appeal when the litigant has had his trial and lost, will not generally be granted unless there is material on which the court can exercise its discretion (Ratnan v Cumarasamy [1965] 1 WLR 8; [1964] 3 All ER 933 (PC) and see Chiu Sin-chung v Yu Yan-yan Angela [1993] 1 HKLR 225).

9. The defendant has never provided any reason for not issuing the so-called “Notice of cross-appeal” within the statutory time limit.  At the hearing of this appeal, Mr Lau, Counsel for the defendant, very fairly conceded that the defendant might have issued the Notice upon a misunderstanding of the relevant statutory provisions.  For the above two reasons, we take the view that if the Court of First Instance dismissed this action on the basis of the aforesaid “Notice of cross-appeal”, then that decision was unfounded.  For this reason alone, the order of the Court of First Instance on 9 May 2001 dismissing this action is erroneous and this appeal should therefore be allowed.

10. Apart from the so-called “Notice of cross-appeal” issued by the defendant, the only matter for the Court of First Instance to deal with at the hearing on 9 May 2001 was the appeal brought by the plaintiff on 3 February 2001.  That appeal was against the Master’s order of 16 January 2001 striking out items of claim 1 to 4 in the plaintiff’s Statement of Claim.  The plaintiff argued that, even if the Court of First Instance dismissed his appeal, it had no valid reason for striking out all claims in the Statement of Claim and/or dismissing this action.  Therefore, insofar as the order of the Court of First Instance purported to strike out items of claim 5 to 8 in the Statement of Claim, the order has to be set aside.

11. In his Judgment of 9 May 2001, Yam J did not clearly state whether the Master’s order of 16 January 2001 was correct.  Nevertheless, as Yam J dismissed this action on 9 May 2001, he should be taken to have concurred with the Master’s order of 16 January 2001.

12. In his Judgment, Yam J had this to say:

At first sight, this [Statement of Claim] should not fall within the jurisdiction of Hong Kong, or, put another way, it is inappropriate to have the claim for breach of contract determined in the jurisdiction of Hong Kong, because the events relevant to the claim occurred in Shenzhen. …

The judgment of the People’s Court of Long Gang District on 15 December 2000 contained the following declaration:

Having been lawfully summoned by this Court, the defendant [i.e. the plaintiff in the present action] failed to appear in this Court without reason, and the hearing of this case is now concluded.

… In my view, it is inappropriate to have this case tried by Hong Kong courts, because its subject matter is real property in Shenzhen and the matter has been litigated in Shenzhen …

13. In Lam Chit Man t/a Yat Cheong Electric Co (transliteration) v Lam Chi To (CACV 354/2001), this Court determined the question whether a dispute over leases of real property in the PRC should be litigated in Hong Kong.  In that case, the plaintiff also commenced proceedings in Hong Kong against the defendant for breach of an oral lease.  Before the case was heard in Hong Kong, the dispute had been determined by Dongguan People’s Court.  This Court considered an earlier decision of Chiyu Banking Corporation Ltd v Chan Tin Kwan (HCA 1186/1995) and held that the judgment of Dongguan People’s Court was not a final and conclusive judgment and therefore the Court of First Instance could not dismiss the plaintiff’s action on the ground of estoppel.

14. In the present action, the Master did not dismiss the action on 16 January 2001 but, rather, made an order requiring the plaintiff to seek to set aside the judgment of the People’s Court of Long Gang District.  Therefore, in determining this appeal, we have to consider whether the Master correctly exercised his discretion in making the above order.

15. The judgment of the Court of First Instance in Chiyu Banking Corporation was made on the basis of the “system of protest” in the PRC.  The relevant part of the judgment reads as follows:

Under the legal system in PRC, another state organ, the Procuratorate exercises a supervisory function over civil adjudication by the courts: Article 14 of the Civil Procedure Law of 1991 (‘the Civil Procedure Law’).  Under Article 185, the Procuratorate may lodge a protest to the court in respect of a judicial decision.  The circumstances in which the protest may be lodged are set out in Article 185, namely,

(i)         the main evidence to substantiate the original judgment or ruling was insufficient;

(ii)        the law which was applied in the original judgment or ruling was incorrect;

(iii)       the People’s Court was in violation of the statutory procedure which have affected the correctness of the judgment or ruling;

(iv)       the judicial members in trying the case committed embezzlement, accepted bribes, practised favouritism or made a judgment that perverted the law.

It is for the Supreme People’s Procuratorate to lodge the protest but under Article 185, the Fujian People’s Procuratorate is entitled to refer the matter to the Supreme People’s Procuratorate for it to lodge a protest.

Under Article 187, the court, upon receipt of the protest, is required to conduct a retrial of the action.

This procedure is well recognised.  Mr Li Ping, the Plaintiff’s expert on Chinese law, stated at para. 11 of his affidavit that ‘if such protest is made a retrial will be ordered.’  Legal literature on this topic can be found in –

A Comprehensive Law Book on PRC’s Legal Procedure System by Yang Bing Zhi and Li Chun Lin.  Published by the Falu Publishing House, and

PRC’s System on Protest against the People’s Court – General Discussion by Shou Shi Min.  Published by University of Politics & Law Publishing House.

What is a final and conclusive judgment

One must apply Hong Kong law to determine whether a judgment is final and conclusive.  In Gustave Nouvion v Freeman & Another [1889] 15 AC 1, the Privy Council considered what is a final and conclusive judgment.  Lord Herschell at page 9 had this to say:

… it must be shown that in the court by which it was pronounced conclusively, finally, and for ever established the existence of the debt of which it is sought to be made conclusive evidence in this country, so as to make it res judicata between the parties.  If it is not conclusive in the same court which pronounced it, so that notwithstanding such a judgment the existence of the debt made between the same parties be afterwards contested in that court, and upon proper proceedings being taken and such context being adjudicated upon, it may be declared that there exists no obligation to pay the debt at all, then I do not think that a judgment which is of that character can be regarded as finally and conclusively evidencing the debt, and so entitling the person who has obtained the judgment to obtain a decree from a court for the payment of that debt.

And at page 10, the law lord continued:

… Although an appeal may be pending, a court of competent jurisdiction has finally and conclusively determined the existence of a debt, and it has nonetheless done so because the right of appeal has been given whereby a superior court may overrule that decision.  There exists at the time of the suit a judgment which must be assumed to be valid until interfered with by a higher tribunal, and which conclusively establishes the existence of the debt which is sought to be recovered in this country.  That appears to be in altogether a different position from a ‘remate’ judgment where the very court which pronounced the ‘remate’ judgment (not the Court of Appeal) may determine, if proper proceedings are taken, that the debt for which this ‘remate’ judgment is sought to be used as conclusive evidence has no existence at all.

Not final and conclusive

Based on the material before me, the supervisory function of the Supreme People’s Procuratorate and the protest system are not simply an appeal process.  The Intermediate Court judgment is final in the sense that it is appealable and it is enforceable in China, but it is not final and conclusive for the purpose of recognition and enforcement by the Hong Kong Courts because in the words of Lord Watson, it ‘is not final and unalterable in the court which pronounced it’.  It is liable to be altered by the Intermediate Court on a retrial if the Supreme People’s Procuratorate lodge a protest in accordance with the Civil Procedure Law.  If upon protest being made, rare the circumstances may be, a Chinese Court has to retry the case, then clearly it retains the power to alter its own decision.  As Lord Watson said at page 13 of Nouvion:

There is no real difference in principle between the case of a court retaining power to alter a decree by an order in the same suit and the case of its retaining power to defeat the operation of that decree by an order pronounced in another suit relating to the same debt.

16. Under common law, the law of a country or territory outside Hong Kong is to be determined as a fact by the Hong Kong court.  This is explained in Phipson on Evidence (15^th Edition, 2000) at paragraph 37-58, as follows:

Foreign law must, in general, be proved on oath, either orally or, in some cases, by affidavit; and not by the mere certificates of experts, though this strictness has occasionally been relaxed …

Formerly, in all cases, previous decisions upon the same point of foreign law and even between the same parties were not admissible, for being a question of fact it must be decided on evidence and not on authority, in addition to which the law is continually liable to change.  However, in civil proceedings, a previous decision on a question of foreign law is now given some status as a precedent.  By section 4(2) to (5) of the Civil Evidence Act 1972 a previous decision of a superior court on a question of foreign law (which is reported in a citable form) may be tendered as evidence of that law and will be presumed to be a correct statement of the law until the contrary is proved.

17. Phipson refers to how UK law (in particular, the Civil Evidence Act 1972) deals with foreign law.  Hong Kong does have provisions similar to those of the UK Act.  Section 59 of the Evidence Ordinance (Cap. 8) provides as follows:

(2)        Where any question as to the law of any country or territory outside Hong Kong with respect to any matter has been determined (whether before or after the commencement of this Part) in any such proceedings as are mentioned in subsection (4), then in any civil proceedings (not being proceedings before a court which can take judicial notice of the law of that country or territory with respect to such matter) ―

(a)        any finding made or decision given on that question in the first-mentioned proceedings shall, if reported or recorded in citable form, be admissible in evidence for the purpose of proving the law of that country or territory with respect to that matter; and

(b)        if that finding or decision, as so reported or recorded, is adduced for that purpose, the law of that country or territory with respect to that matter shall be taken to be in accordance with that finding or decision unless the contrary is proved …

(5)        For the purposes of this section a finding or decision on any such question as is mentioned in subsection (2) shall be taken to be reported or recorded in citable form if, but only if, it is reported or recorded in writing in a report, transcript or other document which, if that question had been a question as to the law of Hong Kong, could be cited as an authority in legal proceedings in Hong Kong.

18. The English version of Section 59(4)(a) provides that:

(4)        The proceedings referred to in subsection (2) are the following, whether civil or criminal, namely ―

(a)        Proceedings at first instance in the High Court or in the Supreme Court of England as constituted by section 1 of the Courts Act 1971 (1971 c.23 UK);

19. Section 3 of the Interpretation and General Clauses Ordinance (Cap. 1) provides that:

‘High Court’ (高等法院) means the High Court of the Hong Kong Special Administrative Region established by section 3 of the High Court Ordinance (Cap. 4).

20. And Section 3 of the High Court Ordinance (Cap. 4) provides that:

There shall be a High Court of the Hong Kong Special Administrative Region consisting of the Court of First Instance and the Court of Appeal.

21. In light of the above provisions, although there is no evidence on the “system of protest” in the present case, we can, by virtue of Section 59 of Cap. 8, adopt the decision of the Court of First Instance on this matter in Chiyu Banking Corporation as evidence in support of our judgment in this appeal.

22. It should, however, be noted that there is a difference between the Chinese and English texts of Section 59(4)(a) of Cap. 8.  The Chinese text reads as follows:

在由《1971年法院法令》（1971 c. 23 UK）第1條所組成的英格蘭高等法院或最高法院中的原訟法律程序；

In the Chinese text, “英格蘭高等法院或最高法院” refers to the High Court of England and Supreme Court of England, and not the High Court of Hong Kong and the Supreme Court of England.  If the Chinese text represents the true meaning of Section 59(4)(a), then we cannot adopt the decision of the Court of First Instance in Chiyu Banking Corporation as evidence of the “system of protest”.

23. In our view, the difference between the Chinese and English texts of Section 59(4)(a) is to be resolved in favour of the latter; in other words, the true meaning of the section is that “High Court” means the High Court of the Hong Kong Special Administrative Region.  The reasons are as follows:

(1)     The English text of Section 59(4)(a) expressly provides that the relevant proceedings are “proceedings at first instance”.  It also expressly provides that the relevant court is “… the High Court or the Supreme Court of England …”.  Section 1 of the Courts Act 1971 of England provides that:

The Supreme Court shall consist of the Court of Appeal and the High Court, together with the Crown Court established by this Act.

In England, the courts within the Supreme Court that deal with proceedings at first instance are essentially the High Court and the Crown Court.  Therefore, if Section 59(4)(a) were intended to cover only proceedings at first instance in the courts of England (whether they be proceedings in the High Court or proceedings in the Crown Court), it would have been sufficient for that section to stipulate that the relevant proceedings were:

proceedings at first instance in the Supreme Court of England as constituted by section 1 of the Courts Act 1971

On the other hand, if Section 59(4)(a) were intended to cover proceedings at first instance in the High Court of England, it would have been unnecessary for that section to stipulate that the relevant proceedings at first instance were in “… the High Court or the Supreme Court of England …”; instead, it could simply have stated that the relevant proceedings at first instance were in “… the Supreme Court of England …”;

(2)     Section 59(4)(b) and (c) are respectively concerned with “appeals arising out of proceedings as are mentioned in [subsection (4)(a)]” and “proceedings before the Court of Final Appeal”.  Therefore, the proceedings referred to in subsection (4)(a) to (c) should respectively be proceedings in the two levels of courts within the Hong Kong High Court and proceedings before the Hong Kong Court of Final Appeal.

24. Section 10B(3) of Cap. 1 provides as follows:

Where a comparison of the authentic texts of an Ordinance discloses a difference of meaning which the rules of statutory interpretation ordinarily applicable do not resolve, the meaning which best reconciles the texts, having regard to the object and purposes of the Ordinance, shall be adopted.

25. As explained above, in our judgment, the true meaning of the English text of Section 59(4)(a) is that the finding or decision of the Court of First Instance may be admitted as evidence of the law of a country or territory outside Hong Kong.

26. In this connection, we also consider that there is a difference in meaning between the Chinese and English texts of Section 59(4)(a).  We hereby exercise the power conferred upon us by Section 10B(3) and adopt the meaning of the English text of Section 59(4)(a) as the true meaning of that subsection.

27. According to the judgment in Chiyu Banking Corporation, since the law of the PRC allows the relevant authorities to lodge a “protest” against an original judgment, and once a “protest” is lodged, the court that made the judgment may have to retry the case in question, therefore, that judgment is not a final and conclusive judgment under Hong Kong law. 

28. Section 59(3) of Cap. 8 provides that a party to the proceedings cannot adduce the relevant finding or decision without leave of the court.  The plaintiff in the present case is not legally represented and had not received any legal training, and therefore it is understandable that he did not apply for leave of the court prior to the present hearing.  In order for us to be able to consider the matters relevant to this appeal, we decide to grant leave under Section 59(3).

29. Furthermore, there is no provision in PRC law regarding the time limit for lodging a “protest”.  For the above reasons, we see no basis to support the Master’s order of 16 January 2001 requiring the plaintiff to seek to set aside the judgment of the People’s Court within 28 days from the date of the order.  Yam J did not set out the reasons for dismissing the plaintiff’s appeal against the order of 16 January 2001.

30. Accordingly, we allow the plaintiff’s appeal and set aside Yam J’s order of 9 May 2001 and the Master’s order of 16 January 2001.

31. Finally, mention has to be made of the following two matters relating to this appeal:

(a)      At the hearing of this appeal, the defendant applied for leave to adduce further evidence which basically went to show that enforcement of the judgment of the People’s Court of Long Gang District had been completed.   This, however, is not relevant to the question of whether that judgment is a final and conclusive judgment.  We therefore held that the further evidence was not relevant to this appeal and refused the defendant’s application for leave.

(b)     Mr Lau, Counsel for the defendant, contended that the defendant in Chiyu Banking Corporation had lodged a “protest” by the time of the hearing, whereas the plaintiff in the present case had never lodged a “protest”.  This notwithstanding, in the absence of evidence that the PRC law provides for a time limit for lodging a “protest”, Mr Lau’s contention by itself does not provide a sufficient reason for concluding that the decision in Chiyu Banking Corporation does not apply to this appeal.

32. We make an order nisi that the defendant is to bear the plaintiff’s costs of this appeal and of the proceedings before the Master and the Court of First Instance insofar as they related to the issues in this appeal.