VENETIAN MACAU LTD v. CHEN MEI HUAN

HCA 1440/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 1440 OF 2012

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D E C I S I O N

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1.  The plaintiff (“Venetian”) claims for unpaid debts against the defendant (“Chen”), who borrowed from it and gambled at its casino in Macau in 2010. Venetian applies for summary judgment; but Chen counters by applying to, amongst others, stay the action on the ground that Hong Kong court has no jurisdiction or should defer to the jurisdiction of the Macau court over the dispute. Both have been adjourned to be heard at the same time.

BACKGROUND

2.  By a written credit application agreement between Venetian and Chen dated 17 March 2010, the former granted credit facilities to Chen up to the limit of HK$30,000,000.

3.  By a written revision agreement between the parties dated 31 March 2010, the credit limit was increased to HK$90,000,000.  The Revision Agreement was expressly made as part of and subject to the terms of the earlier agreement.

4.  Chen signed both agreements as the borrower (collectively “the Agreement”).

5.  Chen drew down on her credit line pursuant to the Agreement, which was evidenced by various casino markers also signed by Chen.

6.  Both the Agreement and the casino marker provided that any amount loaned not paid on due date would carry default interest at 18% per annum until payment.

7.  A reconciliation of Chen’s indebtedness was entered into on 9 May 2010.  As at that date, the total advances reached the credit limit of HK$90,000,000.  The due date for repayment was 24 May 2010.

8.  Chen has since made various repayments to Venetian; but has stopped repayment since 31 May 2012.

9.  As at 13 August 2012, Chen’s indebtedness to Venetian stood at the principal sum of HK$54,990,570.  Contractual interest accumulated to HK$28,168,443.04.

10.  On 14 August 2012, Venetian commenced the present action for the above outstanding principal with interest at the contractual rate or alternatively pursuant to section 48 of the High Court Ordinance, Cap 4.

11.  Venetian served the writ on Chen at her address in Hong Kong last known to it.  By summons filed on 24 September 2012, Venetian applies for summary judgment pursuant to O.14, r.1 of the Rules of the High Court (“RHC”).

12.  Chen disputes the jurisdiction of the Hong Kong court.  She filed her summons on 18 October 2012 pursuant to O.12, r.8(1) and (2) of the RHC; and applies for:

(1)   declaration that the court has no jurisdiction over her in respect of the subject matter of the claim or the relief or remedies sought against her in this action, or alternatively declaration that the court should not exercise any jurisdiction it may have;

(2)   order that the writ be set aside or discharged and the service thereof on her be set aside and all subsequent proceedings in this action be stayed;

(3)   order that all proceedings herein be stayed or dismissed in favour of the Court of First Instance in Macau.

13.  The parties have filed their respective affirmations.  The applications first came before Deputy Judge Sakhrani on 5 March 2013.  Chen applied to adduce expert evidence on Macau law; and the hearing was thus adjourned.  Directions were given for Chen to do so with leave to Venetian to file its expert evidence in reply.  It was directed that no further affirmation should be filed without leave of the court.

14.  By summons filed on 8 April 2013, Chen applies for leave to file another affirmation for adducing further expert evidence on Macau law, now also before me.

CHEN’S APPLICATION TO FILE FURTHER AFFIRMATION

15.  Mr Maurellet for Venetian submitted that whilst the directions in March 2013 might have left room for applying to file further affirmation, O.32, r.11A(4) says:

“Where the determination of the application is adjourned for the hearing of the summons, no further evidence may be adduced unless it appears to the Court that there are exceptional circumstances making it desirable that further evidence should be adduced.”

16.  Mr Pun (appearing with Mr Yip) for Chen did not argue otherwise.

17.  According to the affirmation in support of this latest summons, the purpose of the further expert opinion is to comment on the opponent’s expert evidence.  That was not to assert a case or to adduce evidence that would take the opponent by surprise.  For the just disposal of the applications before me, I am prepared to allow that.

18.  Whilst he opposed Chen’s such application, Mr Maurellet was prepared that I take into account the further expert evidence on a de bene esse basis.  No time was therefore wasted in argument in this respect.

APPLICATION FOR STAY

19.  Chen put forward the following grounds in her application:

(1)   The Hong Kong court has no jurisdiction over her.

(2)   Macau is clearly and distinctly the natural and appropriate forum; and considering the best interest and convenience of the parties and the witnesses, the proceedings should be conducted in the Macau court (O.12, r.8(2A)(a)).

(3)   There is an exclusive jurisdiction clause in the Agreement (O.12, r.8(2A)(b)).

20.  In the event that the court here assumes jurisdiction over the dispute, Mr Pun argued that his client has a bona fide defence.

The jurisdiction clause

21.  Clause 13 of the Agreement (“the Jurisdiction Clause”) reads:

“Any disputes arising from this agreement shall be subject to the exclusive jurisdiction of the courts of the Macau SAR. This shall not preclude the institution of legal proceedings against the Borrower to the Lender in the Court of any other jurisdiction……”

In essentially the same terms, each casino marker signed by Chen acknowledging the drawing down of the loan provided:

“I agree that the present instrument and all matters relating to the debt herein acknowledged …… will be subject to the exclusive jurisdiction of the Courts of the Macau SAR. I acknowledge that this shall not preclude the institution of legal proceedings against me by Venetian Macau Limited in the courts of any jurisdiction.”

22.  The following provisions[1] of the Macau Code of Civil Procedure (“the Macau Code”) have been studied by the parties’ respective experts:

Article 15

(General circumstances which determine the jurisdiction of Macau Court)

Macau courts have jurisdiction where any of the following circumstances occurs:

a) The fact that constitutes the cause of action or any of the facts that are part of such cause of action having been carried out in Macau;

b) The defendant being a non resident and the plaintiff a resident provided that, if a similar claim were filed by the defendant in the courts of his place of residence, the plaintiff could be sued at such courts;

c) The right not becoming effective but through a claim filed with a Macau court provided that there is ponderous personal connection or connection in rem between the claim and Macau.

Article 20

(Exclusive jurisdiction of Macau courts)

The jurisdiction of Macau courts shall be exclusive to hear:

a) Actions relative to rights in rem in property situation in Macau;

b) Actions intended to declare the bankruptcy or the insolvency of legal entities with registered office in Macau.

Article 29

(Pacts removing and ascribing jurisdiction)

1. The parties may covenant the jurisdiction that is competent to hear a specific dispute or any disputes that may arise from a specific legal relationship provided that the subject matter of the dispute has a connection with more than one jurisdiction.

2. The covenant that does such designation may involve ascribing jurisdiction exclusively or alternative to the courts of Macau, it being presumed if doubt that such jurisdiction is alternative.

3. Such designation shall only be valid if the following requisites are cumulatively satisfied:

c) The designation is in respect of a dispute over disposable rights;

d) The designation being accepted by the law of the court so designated;

e) The designation being supported by a serious interest of the parties or one of them provided it does not involve a grave inconvenience for the other party;

f) The designation not failing on a matter that the subject of exclusive jurisdiction of Macau courts;

g) The designation being agreed upon in writing or confirmed in writing, an express mention of the competent jurisdiction being required.

4. For the purpose of paragraph e) of the preceding number, there shall be deemed to be in writing an agreement inserted in a document signed by the parties or resulting from an exchange of letters or other means of communication which there is written evidence of, whether such instruments contain the agreement directly or by reference to some document that contains it.

23.  The expert engaged on behalf of Chen, Rui Pinto Procenca (“Chen’s Expert”), opines that the Jurisdiction Clause fails to comply with art 29 and is thus ineffective in ascribing jurisdiction to the Hong Kong court over the dispute arising out of the Agreement.  The expert engaged on behalf of Venetian, Henrique Saldanha (“Venetian’s Expert”), disagrees and the Jurisdiction Clause remains intact as it reads.

24.  Whilst this is not supposed to be a mini-trial on affidavit, the question before me is one of construction of statue and contractual document.  This I should be able to do as much as a judge at the trial could, with reference to the expert evidence adduced by the parties.  A similar observation was made in Wynn Resorts (Macau) SA v Mong Henry, HCA 192/2009 (12 February 2010) (at §32 per Chu J, as she then was).

25.  Mr Pun accepted that in the circumstances of the present case.  But he added that the court must determine the meaning and effect of the Jurisdiction Clause by itself and not merely rely on the opinion of the expert.  I propose to do no less.

26.  Art 15 of the Macau Code provides for the circumstances in which the Macau court assumes jurisdiction over a matter.  Art 20 specifies the 2 scenarios in which the Macau court’s jurisdiction becomes exclusive.

27.  Pursuant to art 15, the Macau court has competent jurisdiction over the dispute between the parties arising out of the Agreement.  Art 20 does not apply; but the first part of the Jurisdiction Clause serves to render the jurisdiction of Macau court over such dispute exclusive.  The experts are apparently in agreement to this extent.

28.  The second part of the Jurisdiction Clause qualifies by stating that Venetian is not prevented (by the first part) from bringing proceedings against Chen in any jurisdiction other than Macau.  In other words, whilst any proceedings by Chen must be brought in Macau, Venetian remains at liberty to bring proceedings against Chen in Macau or any other jurisdiction.

29.  The argument on behalf of Chen is two-fold:

(1) The second part of the Jurisdiction Clause contradicts the first part by rendering it non-exclusive in effect.

(2) The second part of the Jurisdiction Clause is invalid and ineffective for failure to comply with art 29.  In particular, art 29(3)(e) requires the jurisdiction to be named in the agreement but no such alternative jurisdiction is named at all in the clause.

30.  I do not agree with (1) above.  Reading the second part as contradiction against the first part of the Jurisdiction Clause, in my view, is flawed.  The Jurisdiction Clause must be read as one whole clause made of 2 integral parts in defining the scope of the exclusive jurisdiction of the Macau court over the dispute arising out of the Agreement.  The nature of the second part being a qualification or limitation of the first part of clause is obvious from the way it is worded.  The same is true in the wordings of similar provisions in the casino marker.

31.  This was how the parties to the Agreement model their contractual arrangement.  Venetian’s Expert opines that the parties are free under the law of Macau to so.  This must be right.

32.  Reading the second part of the Jurisdiction Clause as an independent clause, it appears to me, also paves the way for the argument on Chen’s behalf under (2) above.

33.  Mr Maurellet submitted that Venetian entertains gamblers at its casinos from all over the World; and queried whether Venetian could sensibly be expected to set out in the standard agreement all the possible jurisdictions that may be involved.  However the query raised by Venetian’s Expert is more fundamental than that.

34.  As a result of the second part of the Jurisdiction Clause, Venetian may bring proceedings in or out of Macau.  Venetian’s Expert opines that the clause does not seek to remove the jurisdiction of the Macau court.  Nor does it seek to remove any exclusive jurisdiction of the Macau court whether conferrable or conferred under art 20. Venetian’s Expert therefore takes the view that this is not a pact removing jurisdiction of the Macau court for the purpose of art 29.

35.  I agree.  Again it only takes one to note how the second part of the clause is worded to realise that.  By stipulating that the first part does not preclude Venetian from bringing proceedings against Chen in any other jurisdictions, the second part does not seek to ascribe jurisdiction to any particular jurisdiction either.  If Venetian brings proceedings in Macau, whether the Macau court assumes jurisdiction will be a matter of applying the other articles of the Code, particularly art 15.  If Venetian brings proceedings in another jurisdiction, it will be for that other jurisdiction to determine whether it is competent to adjudicate according to its rules.

36.  Chen’s Expert criticised the opinion of Venetian’s Expert as being convoluted.  I do not share that view.  I prefer the opinion of Venetian’s Expert.  It follows that the consideration by Chen’s Expert of whether the second part of the Jurisdiction Clause in isolation satisfies the pre-requisites under art 29 is without basis.

37.  Mr Maurellet also submitted that even in a case of exclusive jurisdiction clause, it remains the discretion of the court, though one that should be exercised by granting a stay unless there is strong cause for not doing so after taking into account all the circumstances of the case: See The Eleftheria [1970] P 94 (at 99G-100C per Brandon J); The El Amria [1981] 2 Lloyds Rep 119 (at 123-124 per Brandon LJ), both referred to in Bali Hospitality Utama v Mathias Echene & Ors, HCA 604/2009 (5 February 2010) (at §9 per DHCJ Carlson).  In view of my reading of the Jurisdiction Clause, I need not go that far.

38.  Without the Jurisdiction Clause in the way, I still need to consider other aspects of forum non conveniens.  The 3-stage consideration originated from The Spiliada [1987] AC 460 is not in dispute.

Natural and appropriate forum

39.  Venetian is a company with limited liability formed under the laws of Macau SAR.  It is not registered as an overseas company in Hong Kong under Part XI of the Companies Ordinance, Cap 32.

40.  As to Chen, she is a US citizen said to be residing in Macau.  Her address in Macau is that of a room in a hotel. In her credit application form to Venetian, Chen stated that she was the chief operation officer of Greek Mythology (Macau) Entertainment Group Corporation Ltd.

41.  However, the public records show that Chen is shareholder, director and secretary of numerous Hong Kong companies.  One of them is Greek Mythology (Macau) Entertainment Group Limited, in which she was and still is the secretary and director.  Her addresses, be they commercial or residential, for the registration were all in Hong Kong.

42.  Directly or indirectly, Chen was and still is the registered owner of numerous residential properties in Hong Kong.  The evidence shows that she also operated bank accounts in Hong Kong.

43.  The above is not disputed; but Chen claims that she has been retreating from her businesses in Hong Kong since 2012.  But the recent search into the public records conducted by the solicitors for Venetian revealed no substantial change in her particulars or interests in the companies and properties.

44.  The timing of Chen’s so called retreat is actually telling.  The fact is that Chen has been named as defendant in various other legal proceedings in Hong Kong, all commenced in 2012.  They include claims for dishonoured cheques drawn by Chen for sums of tens of millions, rescission of agreements for the sale and purchase of most of Chen’s residential properties (all of the same date in August 2012) as well as the government’s claim against her company that used to run ferry service from Tuen Mun to Macau for pier rental in arrears in millions and re-entry.

45.  Personal connection between Chen and Hong Kong is therefore not lacking.

46.  As to what gave rise to the dispute, the Agreement and each transaction represented by the casino markers that gave rise to the alleged liability for the debt were indeed contracted in Macau.

47.  However for the purpose of repayment and the Agreement, Chen chose to provide her checking account in a bank in Hong Kong.  Up to August 2011, Chen has made repayments to Venetian by cheques drawn on such account.

48.  These are the connecting factors; but the exercise is not merely to load up the factors which point to one or the other jurisdiction but to focus on the appropriateness of a forum from the point of view of the matters actually likely to arise in the trial: see Dynasty Line v Sukamto Sia [2009] 4 HKLRD 454 (at §59); Hong Kong Civil Procedure 2014 (Vol.1) at 11/1/10D. What are likely to arise for trial?

49.  The claim is straightforward.  The dispute raised by Chen, according to her affirmations, are:

(1)   her denial of ever drawing down on the loan and thus liability; and

(2)   her dispute as to quantum.

50.  As to adjudicating such dispute in Hong Kong, the mere fact that Macau law need to be applied does not per se mean that the case should be heard there: see Rambas Marketing v Chow Kam Fai [2001] 3 HKC 250 (at 266F-267E).  Hong Kong court is known to be accustomed to deal with foreign law.  That included the application of Macau law in context similar to the present case: see MGM Grand Paradise Limited v Wong Sing Wa, HCA 2140/2011 (21 May 2012) (at §17 per DHCJ Lok); MGM Grand Paradise Limited v Chiu Tak Wah, HCA 259/2012 (8 October 2012) (at §§57-59 per DHCJ B Chu).

51.  The location and thus convenience of witnesses should not be a real concern, given its likely number and the ease of movement of persons between Macau and Hong Kong. I see no evidence to the contrary.

52.  In the circumstances, the appropriateness or convenience of adjudicating the dispute in Hong Kong should not be doubtful.

Personal and juridical advantage

53.  Chen’s ordinary residence in Macau apparently takes the form of lodging at a hotel room, which was the address she chose to provide.  There is no evidence of her assets, if any, in Macau.

54.  On the contrary, as mentioned, Chen has various assets in Hong Kong, albeit subject to litigations against her.  The advantage to Venetian seeking to obtain a judgment here with a view to saving another action here necessary for the enforcement of a judgment in Macau has been recognised by the court in the exercise of the discretion: see Chiu Tak Wah (above) (at §§61-62).

55.  There is no evidence of the likely deprivation of Chen of some juridical or personal advantage if the dispute is tried in Hong Kong instead of Macau.

Balancing

56.  Nothing else operates to militate against the above 2 stages of the Spiliada considerations.

57.  Mr Maurellet further submitted that the issues in dispute raised by Chen are not really triable.  This, he submitted, further operates against the exercise of discretion to stay on the ground of forum non conveniens: see Bayer Polymers Co Ltd v Industrial and Commercial Bank of China [2000] 1 HKC 805 (at 807F-808F); Chow Fu Hsien v K Vision, HCA2884/2004 (13 November 2006 (at §14, per DHCJ Carlson); Bromley v CIC, HCMP 2623/2005 (11 July 2006) (at §8, per Kwan J (as she then was)).

58.  By her 1^st affirmation, Chen disputed liability on the basis that no proof was provided that she has ever drawn down the credit.  Such assertion amounted to nothing and, more importantly, was contradicted by the documentary evidence. Amongst them, there were the casino markers signed by her and the evidence of her repayments to Venetian during the period between 2010 and 2012.

59.  By her 2^nd affirmation, Chen disputed the quantum, which is also her current position according to Mr Pun’s submission.  The following issues of quantum are raised:

(1)   There was said to be agreement not to charge interest.

(2)   Some of her cash repayments have not been taken into account.

(3)   Commissions payable to her have not been taken into account.

60.  As to (1) above, the assertion of a simultaneous agreement to waive interest is directly contradicted by the terms of the Agreement as mentioned.   The assertion is also a bare one without any particular such as how, where and when the alleged agreement came about as well as with whom the alleged agreement was entered into.

61.  Mr Pun suggested in court that it was the drawing down of the credit that mattered; and certain (partial) numerical prints on some of the casino markers might well be evidence of the alleged agreement to waive interest on the amount drawn down.  The short answer to that is Chen actually said nothing of that sort whatsoever in her affirmation.  That made Mr Pun’s suggestion a bold one without any evidential basis.

62.  As to (2) above, Venetian has explained and provided evidence of all the repayments to Venetian, by cheques and by cash, so far made by Chen up to 2012.  The assertion that some cash repayments have not been taken into account is again a bare one without any particular or evidence in support whatsoever.

63.  As to (3) above, Venetian’s documentary evidence, I accept, well explained the rate of commissions and the payments of the commissions to Chen, both acknowledged by Chen at the time.  Credit has also been given to the balance of the commissions payable to Chen in the calculation of the amount that Venetian claims.

64.  There is no material before me that suggests that the consideration of the above issues of fact raised by Chen would have been considered differently under Macau law.

65.  I therefore agree with Mr Maurellet that what Chen raised are not really triable issues.

SUMMARY JUDGMENT

66.  For the above reasons, I must also conclude that there is no bona fide and credible defence to the claim for the purpose of O.14.

67.  As at the date of writ, the outstanding principal sum is HK$54,990,570 with interest in the sum of HK$28,168,443.04 (being interest on the outstanding principal from time to time at the contractual rate of 18% per annum from 24 May 2010 up to 13 August 2012).  Venetian claims interest at the same rate up to judgment only; and thereafter at the judgment rate.

ORDER

68.  I allow Chen’s summons to file the further affirmation for the purpose of adducing the supplemental opinion of her expert.  But I dismiss her summons for stay.

69.  Upon Venetian’s application, I give judgment in favour of Venetian for the sum of HK$83,159,013.04 (being the aforesaid outstanding principal and interest) with interest on the principal sum at the contractual rate of 18% per annum since 14 August 2012 until today.  Interest thereafter accrues at the judgment rate until full payment.

70.  Following the above event, I make a nisi order that Chen do pay Venetian its costs of this action, including those of and occasioned by the various summons.  Costs shall be taxed, if not agreed, with certificate for counsel.