FOUR TREASURE ZHUHAI LTD v. ZHUHAI GREENERY HOTEL COMPANY LTD

HCMP 2109/2022

[2025] HKCFI 1296

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2109 OF 2022

________________________

________________________

________________

_______________

D E C I S I O N

_______________

1  Introduction

1.1  In these proceedings, the Plaintiff (“P”) principally seeks specific performance of a Property Transfer Agreement dated 25 September 2009 (“PTA”). As set out at Amended Originating Summons (“AOS”) §2, P seeks an order requiring the Defendant (“D”) to take a number of steps to effectively vest and transfer a property in the Mainland (“Property”)[1] to it. AOS §§3-7 seek a number of other relief, including delivery up of possession of the Property, an account, and an injunction restraining D from disposing, dealing with and/or parting possession with the Property. AOS §8 seeks damages in lieu of or in addition to specific performance.

1.2  Although (1) P and D are both Mainland companies and (2) the Property is situate in the Mainland, the PTA contains a non‑exclusive jurisdiction clause in favour of the Hong Kong court and is governed by Hong Kong law. As canvassed further below, the PTA was executed pursuant to schemes of arrangement approved by the Hong Kong court. Clause 20.1 of the PTA provides:

“This Agreement shall be interpreted and operated in accordance with the Laws of Hong Kong and the Parties shall submit themselves to the non-exclusive jurisdiction of the Courts of Hong Kong.”

1.3  There is no dispute that, by reason of PTA Clause 20.1: (1) P’s claims fall within RHC Order 11, rules 1(1)(d)(iii) and (iv) and (2) P’s application for leave to serve out of the jurisdiction was made and obtained on the foregoing bases. D acknowledged service of the AOS on 16 August 2023, expressly reserving its right in the Acknowledgment of Service to challenge the jurisdiction of the Hong Kong Court.

1.4  On 24 November 2023, Master Lai made an unless order, the effect of which was that unless D filed and served its evidence in opposition by 4 pm on 5 January 2024, it would be debarred from adducing evidence to contest P’s claims (“Unless Order”).

1.5  On 5 January 2024, D issued a summons (“Jurisdiction Summons”) for the following orders:

(1)  The present proceedings against D be stayed on the ground of forum non conveniens in favour of the relevant People’s Court in the Mainland;

(2)  A declaration that the Hong Kong court should not exercise jurisdiction over P’s claims in the present proceedings;

(3)  In the event that the Hong Kong Court declines to stay the present proceedings, and notwithstanding the Unless Order, D do have leave to file and serve a further affirmation in opposition to the AOS within 28 days after the final determination of the Summons.

1.6  The Jurisdiction Summons is led by the 1^st Affirmation of Mr Li Wan Jun (“Li 1^st” and “Mr Li”) and is opposed by the 2^nd Affirmation of Mr Wong Man Hoi (“Wong 2^nd” and “Mr Wong”). D filed its evidence in reply (Li 2^nd) on 18 July 2024. On 31 July 2024, P issued a Summons (“Evidence Summons”) to strike out Li 2^nd or alternatively for leave to file Wong 3^rd.

1.7  The Jurisdiction Summons, the Evidence Summons and the AOS came before me on 22 August and 15 October 2024. At the hearings, P was represented by Mr Edward Chan SC (leading Mr Kenny Lin) and D by Mr Johnny Mok SC (leading Mr John Hui and Mr Howard Wong).

2.  Preliminary matters

2.1  Before I deal with the substantive issues identified by counsel, I should first address a number of preliminary matters.

2.2  First, in relation to the Evidence Summons, upon Mr Mok’s confirmation that D would not rely on Li 2^nd Section E (and the referenced expert evidence on tax evasion), Mr Chan did not persist with the application.

2.3  Secondly, in relation to the Jurisdiction Summons, in the light of the arguments advanced, Mr Mok confirmed that D wished to also rely on RHC Order 12, rule 8(1)(g), namely for a declaration that in the circumstances of the case, the court has no jurisdiction over D in respect of the subject-matter of the claim or the relief or remedy sought in the action (as opposed to only a declaration that the court should not exercise any jurisdiction it may have). Commendably, Mr Chan was keen to deal with the Jurisdiction Summons on the substantive merits and did not take procedural points to oppose the foregoing.

2.4  Thirdly and also in relation to the Jurisdiction Summons, no issue was taken by Mr Chan that Jurisdiction Summons §1 does not expressly identify a specific court. As pointed out by Mr Mok, depending on the quantum of P’s claims, it is the evidence of D’s expert that three different levels of Mainland court (but all by reference to the location of the Property) may assume jurisdiction (珠海市香洲区人民法院、珠海市中级人民法院、广东省高级人民法院[2]). This is not a case where D is contending for more than one forum conveniens. As pointed out at The Conflict of Laws in Hong Kong, 3^rd Ed §3.087 (in particular footnote 287), it seems to me that some leniency should be shown given the inability to identify a specific court is occasioned by the uncertainty in the quantum of P’s claim.

2.5  Fourthly, Mr Chan initially suggested that, should the Jurisdiction Summons fail, I should grant the orders sought in the AOS, not least because of the Unless Order. As I understand Mr Chan, whilst P maintained that D should not be permitted to file further evidence to contest the AOS, the position that the court should, were the Jurisdiction Summons unsuccessful, immediately grant the orders sought in the AOS was not maintained. See P’s Supplemental Skeleton Submissions §§45-46, at which it was said that further submissions would be made depending on the further development of the present case.

2.6  In the light of the foregoing preliminary matters, the principal issues which fall for determination are those pursued in the Jurisdiction Summons (as clarified by Mr Mok to include reliance on RHC Order 12, rule 8(1)(g)), namely (1) effectively whether the present proceedings should be stayed and (2) if not, whether an order should be granted in terms of Jurisdiction Summons §3 to allow D to adduce further evidence to contest the AOS.

2.7  I should further point out that D’s evidence reveals that it advances a number of defences. As summarized by Mr Mok[3], and taking into account that the issue of tax evasion is no longer relied upon, it is D’s case that:

(1)  Under Mainland law, D is not entitled to transfer the Property directly to P. Instead, D can only transfer the Property to Sei Pou Real Estate Development Ltd (“Sei Pou”), and should D transfer to any other entity, Sei Pou may hold D responsible (“Restriction Defence”);

(2)  D was induced by Sei Pou’s misrepresentation(s) to enter into the PTA (“Misrepresentation Defence”);

(3)  P is guilty of unreasonable and inexcusable delay in prosecuting these proceedings (“Delay Defence”).

2.8  In the course of arguments, Mr Mok confirmed that, for the purpose of the Jurisdiction Summons, the court is only concerned with the Restriction Defence, such concession no doubt (and in my view sensibly) made having regard to the principles applicable to a non-exclusive jurisdiction clause (as will be further canvassed below).

3.  Factual background

3.1  Although the factual background dates back to 1998, in the light of the arguments ventilated, the relevant facts are not in serious dispute between counsel and are documented in the contemporaneous documents. Unless otherwise stated, the matters set out in this section are either undisputed or indisputable.

3.2  Zhu Kuan (Hong Kong) Company Limited (“Zhu Kuan HK”) and Zhu Kuan Group company Limited ("Zhu Kuan Macau" and together with Zhu Kuan HK “Zhu Kuan Group”) were business enterprises set up by the Municipal Government of Zhuhai City ("ZMG") respectively in Hong Kong and Macau as its "window companies". D was at all material times a company controlled by Zhu Kuan Macau and the registered owner of the Property.

3.3  In August 1998, D mortgaged the Property, by way of a first mortgage to the Hong Kong branch of 金城銀行 (“Jincheng Bank”) and by way of a second mortgage to 京城財務(香港)有限公司 (“Jingcheng Finance”).

3.4  The Zhu Kuan Group ran into financial difficulties. On 13 August 2003, Mr Cosimo Borrelli and Mr David John Kennedy were appointed the provisional liquidators to Zhu Kuan HK and Zhu Kuan Macau by orders of the Hong Kong Court.

3.5  On 2 June 2004, Zhu Kuan Macau was wound up in Macau and Mr Wu Chun Sang Nelson was appointed the liquidator by an order of the Macau court ("Macau Liquidator").

3.6  On 4 October 2004, winding-up orders were made against Zhu Kuan HK and Zhu Kuan Macau in Hong Kong and the respective provisional liquidators of Zhu Kuan HK and Zhu Kuan Macau became the joint and several liquidators in Hong Kong ("Liquidators")[4]. Since then, the Liquidators and the Macau Liquidator worked together to restructure Zhu Kuan HK and Zhu Kuan Macau.

3.7  In addition to P and D, the parties relevant to the Jurisdiction Summons are as follows:

(1)  珠海市國源投資有限公司 (“Investor”): The Investor was appointed by ZMG to handle the debt restructuring of the Zhu Kuan Group;

(2)  Super Auto Investments Limited (“Super Auto”): Super Auto formerly owned the entire shareholding of Four Treasure HK (as defined below) which in turned owns the entire shareholding in P;

(3)  Four Treasure Limited (“Four Treasure HK”): Four Treasure HK is the holding company of P and is currently owned by Keep Bright (as defined below);

(4)  Sei Pou: Under the Restructuring Agreement and the Schemes (as defined below) sanctioned by the Hong Kong court, Sei Pou (or its nominee) was to be transferred the Property. Pursuant to a LOI (as defined below), the Property received by it was to be transferred to P;

(5)  Keep Bright Limited (“Keep Bright”): Keep Bright is a company within the New World group of companies (“New World Group”) and the subsidiary which the New World Group intended to use to acquire the Property held by D which was to be carried out by the acquisition of Four Treasure HK;

(6)  New World Infrastructure Limited (“New World Technology”): New World Technology is a company within the New World Group and a creditor of ZMG’s various business enterprises.

3.8  The evidence reveals the following chronology.

3.9  As at the date of liquidation of the Zhu Kuan Group (ie 4 October 2004), 中銀集團投資有限公司 had acquired the creditors’ rights held by Jincheng Bank and Jingcheng Finance including the mortgage rights to the Property (“BoC Rights”).

3.10  On 31 December 2005, Sei Pou successfully acquired the BoC Rights at a public auction (“Public Auction”). As I understand the evidence, one of the conditions for the Public Auction was that the successful bidder would enter into an agreement on specified terms with the Investor[5].

3.11  On 12 January 2006, in compliance with foregoing condition, the Investor and Sei Pou entered into an agreement (“12/1/06 Agreement”)[6], by which it was agreed that the Investor would transfer to Sei Pou various target assets, including the Property. Clause 10.2 thereof prohibits the transfer of the rights and liabilities of the 12/1/06 Agreement:

“雙方在本協議內各自之權利和義務皆不得轉讓。受讓公司不可通過改變終極或實益股東的方式間接轉讓其在本協議項下的權利及義務。”

3.12  At that time, ZMG was indebted to New World Technology. Therefore, if land was to be acquired and developed by the New World Group in Zhuhai, indebtedness owed to New World Technology could be utilized to set off against any land premium payable on the development of the acquired land. As such, the New World Group was minded to acquire the Property through Keep Bright. To that end, a letter of intent was signed by Keep Bright, Super Auto, Four Treasure HK and P[7] on 12 April 2006 (“LOI”) whereby Keep Bright was to pay HK$208,000,000 to Super Auto to purchase:

(1)  The Property which was going to be vested in P by Sei Pou;

(2)  All of Super Auto’s shareholding in Four Treasure HK and hence all of its shareholding in P.

3.13  Although Sei Pou was not a party to the LOI, Recital 2 thereof provides that Sei Pou had agreed to sell its rights to the Property to Four Treasure HK and assist in transferring the Property to P[8] and Recital 5 thereof further provides that Super Auto, Four Treasure HK and P warranted that they were able to procure Sei Pou to transfer the Property to P within 12 months[9]. Clause 2.1 of the LOI makes provisions for a 3-step mechanism for the completion of the transaction contemplated therein.

3.14  On 18 May 2006, Four Treasure HK entered into an agreement with Sei Pou (“Participation Agreement”) which made provisions for the acquisition of the Property. Clause 3.3 thereof provides:

“Subject to compliance by the Participant [ie Four Treasure HK] with its obligations under the Participation, on or after the Participation Commencement Date, the Grantor [ie Sei Pou] shall, upon receipt of any Greenery Interest [ie interest in the Property] hold it entirely for the sole benefit of the Participant separate from its other assets, and, as soon as practical at the Participant’s expense and to the extent permitted by the terms and conditions applicable to the Greenery Interest, have the Participant’s interest in the Greenery Interest registered in the name of or transferred to the Participant (or such party as the Participant may reasonably direct). Until such registration or transfer, the Participant’s interest in the Greenery Interest shall form part of the Participation and the Grantor shall (a) account to the Participant for the full economic benefit thereof and (b) to the extent it is able to do so without breaching any law or the terms and conditions applicable to the Greenery Interest and subject to the terms of this Agreement, exercise any voting rights or discretions in accordance with the direction of the Participant.”

3.15  Pausing here, although Mr Mok has confirmed that the court should not be concerned with the Misrepresentation Defence, for completeness, I should record that it is D’s case that the ZMG was not aware of the fact that P was in fact owned by the New World Group and Sei Pou was to have no interest in P or the fact that the New World Group was the ultimate purchaser of the Property. It is said that the PTA was induced by the misrepresentations that P was related to or a member of the group of Sei Pou.

3.16  On 16 October 2006, various secured creditors of the Zhu Kuan Group including Sei Pou entered into an agreement with the Liquidators for restructuring the debts of the Zhu Kuan Group (“Restructuring Agreement”)[10]. As stated in the Restructuring Agreement:

(1)  The Secured Financial Creditors, including Sei Pou, are set out at the First Schedule;

(2)  The Secured Assets, including the Property, are set out at Parts II and V of the Sixth Schedule. The Property is recorded to have been charged to Sei Pou (by way of first charge) and Guoyuan Investment Limited (“Guoyuan”) (by way of second charge);

(3)  The Property was to be transferred by D to Sei Pou or its nominee;

(4)  Clause 16.1 provides “in consideration of the Investor procuring the payment of the Restructuring Proceeds… each Property Obligor shall transfer such rights, title and interest as it may have in the Property to the Investor or its nominee on or before Closing in accordance with the terms of the Property Transfer Documentation”;

(5)  Clause 16.2 provides “The Property Transfer Documentation shall provide, inter alia, that the Property Obligors shall transfer their respective rights, title and interests in the Exchange property to the relevant Assignee as specified in Part VI of the Sixth Schedule… which transfer shall occur upon Closing save in the case of the Macau Land which the Investor shall procure the transfer of such property to Sei Pou”.

3.17  On 10 September 2007, the schemes of arrangement designed to implement the Restructuring Agreement were approved by the creditors of Zhu Kuan HK and Zhu Juan Macau. On 30 October 2007, the Hong Kong court sanctioned the schemes (“Schemes”).

3.18  The PTA was executed between D, the Liquidators in their capacities as the Scheme Administrators, the Investor and P. I shall return to the relevant terms later, but for present purposes, suffice it to note that, as recorded in the Recitals:

(1)  It is a condition of the Restructuring Agreement and each of the Schemes that D shall, inter alia, enter into the PTA for the purpose of agreeing to the transfer of the Property to P (Recital B);

(2)  Pursuant to the Exchange Arrangements entered into by P and the Investor immediately upon Closing, the rights of P to receive any Distribution from or under the terms of the Schemes as a result of the completion of the SPA shall be transferred and/or assigned absolutely to the Investor in exchange for the Investor procuring the transfer of the Property to P in accordance with the terms of the PTA (Recital C);

(3)  Sei Pou has nominated P to be the sub-purchaser of the Property in accordance with Part VI of the Sixth Schedule of the Restructuring Agreement (Recital G);

(4)  The Parties thereto now enter into the PTA pursuant to which D shall transfer the Property to P and the Investor consents thereto (Recital H).

3.19  Contemporaneous with the execution of the PTA, on 25 September 2009, a Deed of Release was entered into between Zhu Kuan HK, Zhu Kuan Macau, the Scheme Administrators, the Secured Financial Creditors (as defined therein) and the Chargors (as defined therein) and a Closing Notice was issued by the Scheme Administrators and the Investor.

3.20  On 28 December 2009, all encumbrances on the Property were discharged. Thereafter on 5 January 2010, the impounding of the Property upon liquidation was released.

3.21  In early January 2010, Super Auto purported to terminate the LOI.

3.22  After a series of litigation in arbitration, the Hong Kong court and the PRC court between 2010 and 2019 to enforce the LOI, Keep Bright was finally able to gain control of Four Treasure HK and P in 2020.

3.23  After all litigation had concluded in 2021, P wrote to D on or about 21 June and 16 July 2021 requiring D to take the necessary steps to complete the transfer of the Property from D to P and/or cause the Property to be registered in the name of P pursuant to the PTA.

3.24  As D has failed to take any action, P commenced these proceedings on 14 December 2022.

3.25  The matters stated at §§3.22 and 2.23 above are relevant to the Delay Defence, as D complains that although the PTA was entered into in 2009, the AOS was only served on D out of jurisdiction on 2 August 2023. However, as pointed out above, the Delay Defence is no longer an issue relied on by D in the Jurisdiction Summons.

3.26  On 19 June 2023, Sei Pou issued a letter confirming that (1) P is its nominee under the Restructuring Agreement to be assigned the Property from D and (2) P was authorized by Sei Pou to enter into the PTA (“Confirmation Letter”).

4.  The issues in the Jurisdiction Summons

4.1  As clarified by Mr Mok, the Jurisdiction Summons has 2 limbs.

4.2  As D’s primary position, it is contended that the Hong Kong court does not have jurisdiction to determine the present dispute by reason of the Mocambique rule (name after British South Africa Co v Companhia de Mocambique [1893] AC 602) (“Primary Issue”).

4.3  In the alternative, on forum non conveniens, it is D’s case that there are strong, overwhelming and/or exceptional reasons why the present proceedings should be stayed despite the existence of PTA Clause 20.1 (“Alternative Issue”).

4.4  The issues identified by counsel may be broadly described as follows.

4.5  In relation to the Primary Issue:

(1)  Whether the Mocambique rule applies in Hong Kong;

(2)  Assuming that the rule applies in Hong Kong, whether the present case, as a matter of proper characterization, falls within the rule , and as a result, the court has no jurisdiction over the present case;

(3)  Even if the present case falls within the Mocambique rule, whether the court may still assume jurisdiction on the basis that the personal obligation exception applies.

4.6  In relation to the Alternative Issue, two main arguments are advanced by D:

(1)  Whether a judgment granted by the Hong Kong court in these proceedings can be enforced in the Mainland, and if not, whether the foregoing constitutes a strong reason to stay the present proceedings notwithstanding PTA Clause 20.1;

(2)  Whether the Mainland court will assume exclusive jurisdiction over the present dispute, and if so, whether considerations of comity require the Hong Kong court to refrain from granting the orders sought by P.

5.  The Primary Issue

5.1  The Mocambique rule is described by the learned editors of The Conflict of Laws in Hong Kong as a subject-matter exclusion:

“[4.038] … English and Hong Kong courts are traditionally regarded as being precluded from resolving certain issues concerning foreign immovable….

[4.039] Although there is no direct authority in Hong Kong law for [the Mocambique rule]…, the orthodox understanding, following the leading English and other Commonwealth authorities, is that Hong Kong courts have no jurisdiction to determine:

1. disputes concerning title to or interests in immovable property outside Hong Kong;

2. claims of trespass to immovable property outside Hong Kong and, semble, other claims of wrongdoing where the essence of the complaint is one of damage to, entry upon or occupation of such property, even though no dispute arises concerning title to or interests in such property.

[4.040] A brief history of the developments of the law in England and other Commonwealth jurisdictions is as follows. In 1893, the House of Lords established that English courts have no jurisdiction over claims of trespass to foreign land. Other Commonwealth courts have extended the jurisdictional bar to torts concerning foreign land other than trespass, and to any other proceedings for the determination of title to or interests in foreign immovables. In 1978, the House of Lords [in Hesperides Hotels Ltd v Muftizade [1979] AC 508], whilst questioning the rationality of the Mocambique rule, decided that it was too long-established to overrule and, moreover, that it ought to be construed relatively widely so as to deny jurisdiction in a case where the tort claim was not framed in trespass and, more significantly, where no dispute as to title had been raised. The House of Lords refused, however, to extend the rule to goods. Subsequently, however, limb (2) of the rule as summarised above has been reversed in part by statute in England, so as to permit English courts to exercise jurisdiction over claims for trespass to, or any other tort affecting, immovable property outside the jurisdiction unless the proceedings are principally concerned with a question of the title to, or the right to possession of, that property. There has been no such statutory provision in Hong Kong.” (emphasis added)

(i)  Whether the Mocambique rule applies in Hong Kong

5.2  Mr Chan observes that there is no direct appellate authority in Hong Kong law for the Mocambique rule, the existence of the rule was conceded at Chang Wing Ka John v Chang Wing Dee & Ors, CACV 47/2021, 14 July 2023 §70. He submits at P's Further Submissions that in the absence of any direct authority in Hong Kong affirming the Mocambique rule, and in view of the rapid subsequent development of private international law in this area, there is no good reason for the Hong Kong Courts to be shackled with this unattractive and illogical residuum of the common law, which does not apparently serve any material policy purpose and, indeed, could be seen as operating to deprive plaintiffs with valid claims of a suitable remedy, and it is high time for the Hong Kong Courts to depart from it.

5.3  Mr Chan relies on Lord Faser’s observations at Hesperides 543F-544F (referred to at The Conflict of Laws §4.040 above):

“Lord Herschell held that actions for trespass to land were local and that for that reason the English courts had no jurisdiction to try them if the land was outside England. No criticism was made in the argument before us of that historical explanation. The decision was criticised on the ground that, however historically correct it might be, it was illogical and was liable to produce injustice in practice. I recognise that there is force in these criticisms, and particularly in the criticism that it may lead to a plaintiff being left without a remedy. Indeed the instant appeal is one where the plaintiffs, if they have no remedy in the English courts, will probably be left with no remedy at all.

Those who seek to justify the [Mocambique rule] on its merits, apart from its historical origin, have done so mainly on two grounds. The first is that it is "a legitimate application or extension of the principle of effectiveness"… that is the principle that a court has jurisdiction only over matters in which it can give an effective judgment. The second is that it is in accord with the comity of nations. Neither of these justifications seems to me wholly convincing. As regards effectiveness, a judgment awarding damages against a defendant is generally regarded as effective if the defendant is subject to the court's jurisdiction, because it can normally be enforced against him by order of the court. The effectiveness of the award has nothing to do with the ground on which it was made; an award of damages for trespass to foreign land is no less effective than an award for damages for any other wrong. Moreover the courts both in England and in Scotland have asserted jurisdiction in actions to enforce' contracts relating to foreign land although enforcement can only be by indirect means.. Actions of that sort seem to affect the foreign land itself hardly less than actions for damages for trespass to the land. So far as comity of nations is concerned, this may afford some support for the rule although I doubt whether rule 79 (2) represents one which is generally recognised by the international community…

For these reasons I have serious doubt whether the law as laid down in the Mozambique case [1893] A.C. 602 is either logical or satisfactory in its result. If the matter were free from authority, there would be much to be said for what Mr. Kemp suggested was the true rule to be extracted from the Mozambique case, videlicet that the English court has jurisdiction to entertain an action for damages for trespass to foreign land against a person within the jurisdiction in a case where title is not in dispute and where there is no real dispute as to the plaintiff's right to possession of the land. But the matter is not free from authority and, in my opinion, this is not one on which it would be right for the House to depart from its earlier decisions. The main reason is that I do not think that the House in its judicial capacity has enough information to enable it to see the possible repercussions of making the suggested change in the law…” (emphasis added)

5.4  Mr Chan points out that the unconvincing justification has led to reform in England where the Mocambique rule was partially abrogated by section 30(1) of the Civil Jurisdictions and Judgments Act 1982 (as set out at The Conflict Laws in Hong Kong §4.040 reproduced above).

5.5  Reliance is further placed by Mr Chan on The Conflict of Laws in Hong Kong §§4.042-4.043:

“[4.042] It is revealing to consider the reasons given by Lord Wilberforce in [Hespiredes] for declining to overrule the [Mocambique rule] which established the jurisdictional bar:

“ First, the rule is accepted, with differing degrees of force and emphasis in other jurisdictions of the common law...

Secondly the nature of the rule itself, involving, as it clearly must, possible conflict with foreign jurisdictions, and the possible entry into and involvement with political questions of some delicacy, does not favour revision (assuming such to be logically desirable) by judicial decision, but rather by legislation…

Thirdly, revision of the rule may necessitate consequential changes in the law. In order to prevent ‘forum shopping’ and overlapping, one such change would have to relate to ‘forum non conveniens’, a principle not yet fully developed in England... and, if English courts were to be given an extended jurisdiction, requiring legislative definition.

Fourthly, it cannot be said that since 1893 there has been such a change of circumstances as to justify this House in changing the rule…”

[4.043] Applying these four objections to present-day Hong Kong law, it may be noted, with reference to the first point, that the rule has been qualified in, inter alia, England since 1978; with reference to the second and third points, that the doctrine of forum conveniens is now well-established and, it is suggested, well able to cope with potential comity problems: cases concerning immovable property are not, it is suggested, in some uniquely difficult category requiring a blanket exclusionary rule. As to the fourth objection, the House of Lords in 1893 and in 1978 was, of course, considering circumstances in England, not Hong Kong; notwithstanding the Court of Final Appeal’s usual adherence even after 1997 to English authority, it is suggested that this may be one of those rare cases in which there is good reason to depart from the English case law. That is certainly not to say that jurisdiction should be taken lightly in cases where the essential dispute concerns title to foreign land: that will often be a very powerful factor weighing in favour of exercising the discretion so as to decline to exercise Hong Kong jurisdiction. Nevertheless, rather than continue to approach the matter by way of technical and unsatisfactory exceptions, it seems best, as in virtually every other legal context, to approach the matter in a less legalistic manner, by the application of the doctrine of forum conveniens. To allow the matter to continue to be governed in Hong Kong by, in effect, the historical procedural distinction between “local” and “transitory” actions and venues would be as unattractive as what was described, in a different context, as “the forms of action successfully clanking their spectral chains”. Lord Mansfield’s view that there was no exclusionary rule seems much more attractive in modern times than its rejection by later English judges in the intervening years.” (emphasis added)

5.6  I do not accept Mr Chan’s submissions, which are premised on the observations only tentatively advanced by the learned editors of The Conflict of Laws in Hong Kong. Those tentative views have not addressed adequately the case law in England post Hesperides, one of which is Hamed v Stevens [2013] EWCA Civ 911.

5.7  As acknowledged by the learned editors at The Conflict of Laws in Hong Kong §40.040, section 30(1) of the Civil Jurisdictions and Judgments Act 1982 only has the effect of affecting limb (2) of the Mocambique rule. As explained at Hamed §§11-13:

“[11] The current formulation of the Mocambique rule…is, in relevant part, as follows:

“ Subject to the Brussels I Regulation and the Lugano Convention, the court has no jurisdiction to entertain proceedings for the determination of the title to, or the right to possession of, immovable property situated outside England, except where:

a) the claim is based on a contract or equity between the parties;…”

In [Hesperides] the House of Lords declined to depart from that part of the rule which precluded actions for damages for infringement of property rights in land abroad and, in fact, extended it by holding that it would apply when no question of title was involved. However, the exclusionary rule has more recently been modified and its scope significantly reduced. Following the decision of the House of Lords in [Hesperides], Parliament enacted section 30, Civil Jurisdiction and Judgments Act 1982 which provides in relevant part:

" The jurisdiction of any court in England and Wales … to entertain proceedings for trespass to, or any other tort affecting, immovable property shall extend to cases in which the property in question is situated outside that part of the United Kingdom unless the proceedings are principally concerned with a question of the title to, or the right to possession of, that property"

[12] On behalf of the Respondent, Mr. Randall QC relied heavily on observations in this court in Re Polly Peck (No. 2) [1998] 3 All E R 812 and in the Supreme Court in Lucasfilm Limited v Ainsworth [2012] 1 AC 208 as to the present scope of the Mocambique rule. In Polly Peck the Court of Appeal gave a wide reading to section 30. It concluded that while the proceedings did give rise to questions of title and possession of land situated abroad, there were other issues which could not be said to be merely incidental to those questions. Accordingly, the proceedings were not principally concerned with a question of the title to, or the right to possession of that property…. However, Polly Peck was concerned with torts allegedly committed against immovable property situated in the Turkish Republic of Northern Cyprus, by way of illegal occupation and exploitation of that land. It seems therefore that these observations were concerned only with the scope of section 30 and were not intended to apply beyond that aspect of the Mocambique rule which addresses proceedings for trespass and other torts in relation to foreign land.

[13] The combined judgment of Lord Walker JSC and Lord Collins in Lucasfilm Limited v Ainsworth [2012] 1 AC 208, with which the other members of the Supreme Court agreed on this issue, includes statements on the present status of the Mocambique rule which may at first sight be wider in their scope. They observed (at para. 76) that the consequence of section 30(1) is that the trespass aspect of the Mocambique rule can only apply to foreign land where a question of title is involved. Later they observed:

" It is clear that much of the underpinning of the Mocambique rule and the decision in Potter v Brokenhill Pty Co. Ltd. has been eroded. All that is left of the Mocambique rule (except to the extent that it is modified by the Brussels I Regulation) is that there is no jurisdiction in proceedings for infringement of rights in foreign land where the proceedings are "principally concerned with a question of the title to, or the right to possession of, that property" (at para 105)

However, once again, these observations must be considered in the context of those proceedings, which were concerned with the infringement of rights situated abroad. This fact and the citation of the wording of section 30 suggest that the statement may not have been intended to apply to all aspects of the Mocambique rule.” (emphasis added)

5.8  Secondly, the learned editors have not dealt with the more recent justifications for the Mocambique rule as identified by the English court. The following observations are set out at Hamed §§14 and 16:

“[14] Nevertheless, it has long been established that, before the Mocambique rule can apply, the proceedings must raise directly the issue of title to foreign land. In Mocambique itself, Lord Herschell observed:

" It is quite true that in the exercise of the undoubted jurisdiction of the Courts it may become necessary incidentally to investigate and determine the title to foreign lands; but it does not seem to me to follow that because such a question may incidentally arise and fall to be adjudicated upon, the Courts possess, or that it is expedient that they should exercise, jurisdiction to try an action founded on a disputed claim of title to foreign lands." (at p. 626)

In St. Pierre v. South American Stores (Gath & Chaves Ld.) [1936] 1 KB 382, Scott L.J. referred to this passage and continued:

" By these words I understand him to have meant that it is the action founded on a disputed claim of title to foreign lands over which an English Court has no jurisdiction, and that where no question of title arises, or only arises as a collateral incident of the trial of other issues, there is nothing to exclude the jurisdiction." (at p. 397)

[16] These recent developments in the common law rule… suggest that the Mocambique rule is now relatively narrowly confined. In Lucasfilm Lord Walker and Lord Collins drew attention to what may now be regarded as the rationale for what remains of the Mocambique rule. They pointed to the observations by the House of Lords in Mocambique itself that such controversies should be decided in the country of the situs of the property because the right of granting it is vested in "the ruler of the country". They also drew attention to the observations of Lord Wilberforce in Hesperides Hotels that the purpose of the rule is the maintenance of comity and the avoidance of conflict with foreign jurisdictions (Lucasfilm at para 106.). In addition, the exclusionary rule can be justified on the ground that a judgment in rem given by an English court would be ineffective unless it were accepted and implemented by the authorities where the land is situated ...” (emphasis added)

5.9  For the above reasons, I am not inclined to accept Mr Chan’s sweeping submissions, premised on the views tentatively expressed by the learned editors of The Conflict of Laws in Hong Kong, that the Mocambique rule should not be applied in Hong Kong.

(ii)  Whether the Mocambique rule applies in the present case

5.10  There is no dispute between counsel that (1) whether the Mocambique rule has any application in the present case is to be answered by reference to the proper characterization of the substantive dispute and (2) the approach to characterization is that set out in Macmillan Inc v Bishopsgate Investment Trust Plc [1996] 1 WLR 387. However, the parties disagree fundamentally on what is the proper characterization.

5.11  At Macmillan 407B-D, Auld LJ observed as follows:

“Subject to what I shall say in a moment, characterisation or classification is governed by the lex fori. But characterisation or classification of what? It follows from what I have said that the proper approach is to look beyond the formulation of the claim and to identify according to the lex fori the true issue or issues thrown up by the claim and defence. This requires a parallel exercise in classification of the relevant rule of law. However, classification of an issue and rule of law for this purpose, the underlying principle of which is to strive for comity between competing legal systems, should not be constrained by particular notions or distinctions of the domestic law of the lex fori, or that of the competing system of law, which may have no counterpart in the other's system. Nor should the issue be defined too narrowly so that it attracts a particular domestic rule under the lex fori which may not be applicable under the other system.” (emphasis added)

5.12  At The Conflict of Laws in Hong Kong §§2.049-2.050, the learned editors note that there is an absence of Hong Kong authority directly on the issue of characterization, and having referred to English authorities such as Macmillan, the learned editors observe as follows:

“This is rather vague, but faithfully reflects the fact that the courts have, when faced with such problems, addressed them in a pragmatic way with an eye to the overall justice. This seems, with respect, entirely appropriate, albeit that certain specific applications will no doubt to continue to emerge as and when hard cases arise… On a practical note, it is suggested that a thoughtful review of the case law will review many instances in which characterisation was a latent but crucial issue in defining success and victory in the litigation: it simply was not identified as such, at least not by name in the judgement; some careful thought about characterisation at the outset of the case can sometimes pay dividend.” (emphasis added)

5.13  On D’s part, it is contended that the substantive dispute is about title to foreign land (ie the Property) therefore engaging the Mocambique rule. Conversely, on P’s part, it is contended that the substantive dispute is contractual in nature.

Overview of D’s submissions

5.14  D’s position is as follows:

(1)  By the AOS, P is asking for D to take steps to “effectively vest” the title to the Property in P;

(2)  The Restriction Defence contends that D cannot vest title in P under Mainland law, since Sei Pou holds the proprietary rights in the Property and is entitled to call upon D to transfer the Property to it, and D is not entitled to transfer the Property to anyone other than Sei Pou;

(3)  D’s defence is premised on Mainland law because, under Hong Kong conflict of laws, the right to alienate real estate depends entirely on the law of the country where the estate is situated, ie the lex situs: Cheshire, North & Fawcett: Private International Law, 15^th Ed, at page 1256;

(4)  Whilst P seeks to present the characterization of the relevant issue as a rigid choice between: (a) enforcement of a personal contractual obligation or (b) claim relating to title of or proprietary interest in the Property, this is a false dichotomy. A claim, like the present one brought by P, can seek enforcement of a personal contractual obligation which requires effective conveyance of title to foreign land. The two are not mutually exclusive. This is consistent with the Court of Appeal’s judgment at Chang Wing Ka John §71.1, which envisages that there would be claims for personal obligations “which… depend for its existence on the law of locus of the immovable property”;

(5)  Under Mainland law, where a purchaser has entered into a sale and purchase agreement to buy a property from the vendor and the title to the property has not been vested in the purchaser through registration, he is not entitled to sub-sell the property to a third party. If he does, the third party has no right against the vendor to have the title vested in him;

(6)  Further, this case concerns a dispute over whether P is entitled to have the title over the Property vested in it without the Property being first vested in Sei Pou. Such a dispute falls within the exclusive jurisdiction of the Mainland court;

(7)  As such, title to foreign land (and whether it can be effectively conveyed from D to P) is at the centre of the present dispute, despite the origin of the claim being contractual in nature. Therefore, the Mocambique rule applies as a hard bar precluding the Hong Kong Court from assuming jurisdiction.

Overview of P’s submissions

5.15  P's claim is for specific performance of the PTA. The relief asked for are: (1) an order for specific performance and (2) orders (a) for execution of all necessary documents in order to effectively vest the Property in P, (b) taking all necessary steps to complete all procedures for obtaining the tax payment certificate for the transfer of the Property to P, and (c) taking all necessary steps to effect the transfer of the registration of the Property to P. It is to be noted that the requested execution of all necessary document under prayer 2(a) and taking of all steps to effectively vest the Property in P under prayer 2(c) are derived from PTA Clause 8.2;

5.16  The relevant operative clauses in the PTA and, by extension, the specific remedies sought by P do not impose an absolute duty on D to ensure that the competent Mainland authority actually registers P as the legal owner of the Property. Logically, that is not a matter over which D would have any direct control. It merely requires D to take all necessary steps as would be required by the Mainland competent authority without prejudice to the ultimate outcome of the application;

5.17  P’s claim for a decree of specific performance is strictly a remedy in personam for the proper performance of the PTA;

5.18  Thus, the present dispute is plainly not on title to land, as the Court is not required to order any Mainland authority to do anything, nor to disturb the laws or administrative practice governing the registration of property in that jurisdiction;

5.19  In any event, even if any part of the operative provision governing the obligation of D to transfer the Property to P were in fact a question of title as a matter of Mainland law, which is denied, the operative clause of the PTA for which P seeks specific performance is severable, pursuant to clause 17.6 of the PTA, such that the Court would have jurisdiction to decree specific performance for those operative provisions that are severable and capable of specific performance, albeit not necessarily all of them.

Analysis

5.20  For the following reasons, I agree with Mr Chan that the proper characterization of the substantive dispute between the parties in the present case is one which does not involve the determination of the title to the Property.

5.21  First, in my view, adopting the phraseology in Macmillan reproduced above, “the true issue or issues thrown up by the claim and defence” are these:

(1)  On the issue of “liability”, D is seeking to challenge P’s reliance on the PTA on the bases of the Misrepresentation Defence and the Delay Defence. However, as pointed out above, Mr Mok does not argue that the Misrepresentation Defence and Delay Defence are relevant for the purpose of the Jurisdiction Summons. Were D successful in those grounds of defence in the Hong Kong court, P’s claims would fail as a consequence;

(2)  However, were D to fail on the Misrepresentation Defence and the Delay Defence (and hence the PTA is as a result enforceable), in my view, there can be no further justification for D not to transfer the Property. The only residual argument is on how and to whom that transfer is to be effected, namely whether P is entitled to have the title of the Property vested in it without the Property being first vested in Sei Pou[11];

(3)  As Mr Mok accepted at the hearing, were the present action one for the transfer of the Property brought by Sei Pou, it would be a matter of contract over which the Hong Kong court could exercise jurisdiction;

(4)  It must be emphasized that on D’s own case, Sei Pou has acquired the proprietary rights to the Property. It is therefore the case that it is D’s position that it is obliged to transfer the Property to Sei Pou. Were the Misrepresentation Defence unsuccessful, there can be no further challenge to the propriety of Sei Pou’s nomination of P as the transferee of the Property pursuant to the Restructuring Agreement and under the PTA;

(5)  Viewed thus, it seems to me that the Restriction Defence does not involve the determination of the title to the Property, but only a dispute on the mechanism to effect the transfer of the Property. In that sense, the disagreement on the mechanism is at best relevant to the terms of the order for specific performance.

5.22  Secondly, I do not agree with Mr Mok that the disagreement between the parties is whether the PTA is effective in vesting the tile of the Property to P. To the contrary, the express terms of the PTA do not mandate that there must be an effective vesting or transfer (underlining below supplied):

(1)  Clause 2.2: “Upon Closing, [D] shall immediately cease to be entitled to all the right, title and interest in the Property and cease to be bound by all obligations arising from, in respect of or in connection with the Property”;

(2)  Clause 2.3 “In the event that any part or all of the Property is incapable of being transferred for whatever reason [D] shall irrevocably and unconditionally hold [the Property] on trust absolutely for [P] and act according to the directions of [the Investor]”;

(3)  Clause 7.1: “Upon the issuance of the Closing Notice by the Scheme Administrators in accordance with the terms of the Restructuring Agreement, Closing will be deemed to have occurred”;

(4)  Clause 7.2: “The transfer of the Property by D to P under this Agreement will be deemed to become effective upon Closing”;

(5)  Clause 8.1: “Subject to Clause 8.2, [P] shall be solely responsible for completing whatever steps, procedures and formalities (including, without limitation, all relevant consents, approvals, permits, licenses and other documents which may be issued or required by any entity or authority in the jurisdiction where the Property is located) that may be required in order to procure that it is legally and beneficially entitled to the Property… For the avoidance of doubt, [P] shall be solely responsible for all fees and costs in relation to such steps procedures and formalities whatsoever”;

(6)  Clause 8.2: “Upon Closing (and as soon as practicable thereafter), [D] shall, upon receiving reasonable notice from [P] and at the sole costs and expenses of [P] execute or procure the execution of all other necessary instruments, deeds and documents (in an agreed form) and take whatever actions in order to effectively vest the Property in [P] (but always subject to the terms of this Agreement)”;

(7)  Clause 8.3: “For the avoidance of doubt, [D] … shall have no personal liability whatsoever if, for whatever reason (save where such reason is due to any gross negligence or wilful default on the part of [D] …) the [Investor] or [P] failed to be registered as the owner of the property or are unable to obtain the transfer of the Property”;

(8)  Clause 10.2: “For the avoidance of doubt, [D] have no obligation to give or procure good title to the Property. Upon the execution of this agreement by the [Investor] and [P], [the Investor] and [P] shall be deemed to have accepted title to the Property and shall not raise any requisition in respect of its title whatsoever”;

(9)  Clause 17.6: “If any term or provision of this Agreement shall be held to be illegal or unenforceable, in whole part, under any enactment or rule of law, the term or provision shall to that extent be deemed not to form part of this Agreement and the impossibility of the remainder of the Agreement shall not be affected”.

5.23  In my view, the effect of the above provisions is that, whilst the transfer of the Property is deemed to have become effective upon Closing, P itself is ultimately responsible to perfect its legal title but D is required to cooperate to execute the necessary documents and take the necessary steps to effectively vest the Property in P. The PTA itself does not make specific provisions for the mechanism. Viewed in that light, even if Mr Mok is right in his contention, namely D can only transfer the Property at first instance to Sei Pou, that is part of the necessary documentation and necessary step to effectively vest the Property in P. How P then liaise with Sei Pou to effect the further transfer does not concern D.

5.24  Thirdly, as pointed out by Mr Chan, AOS §2 seeks specific performance of PTA Clause 8.2. In my view, the phrase “effectively vest” must be understood in the light of the terms of the PTA. I agree with Mr Chan that the order sought in the AOS is plainly a remedy in personam.

5.25  My conclusion that the Mocambique rule has no application in the present case is supported by Hamed.

5.26  In Hamed, the claimant is a British national and a resident in England. The respondent is an Egyptian national and domiciled in Egypt. The claimant claimed that in January 2007 he transferred a sum of money to the respondent’s account in Egypt on the basis that the respondent would hold the sum pending the formalities of the proposed sale by the respondent to the claimant of an apartment in Egypt. Proceedings were commenced in England. The claimant claimed that the defendant failed to transfer the title of the property and sought to recover the sum as money had and received. The respondent, as here, sought a declaration that the court did not have jurisdiction over the subject matter of these proceedings on the ground that the claim raises a disputed question of title to foreign land. Alternatively he sought an order that the court should decline jurisdiction on the ground of forum non conveniens.

5.27  On the applicability of the Mocambique rule, it is stated at Hamed §17:

“If Mr Hamed does plead, by way of defence, a case that there was completion under the contract, the court may well have to decide as an issue of contractual performance whether that took place. However, to my mind that is not sufficient to bring the present proceedings within the exclusionary rule. First, these are not proceedings for the determination of the title to or the right to possession of land situated outside England in the sense that that is the object of the proceedings…. Thirdly, in the present case the court would not be required to adjudicate upon a current disputed claim of title, it being common ground that the title to the apartment is now vested in a subsequent purchaser. As a result, there is no question of a judgment in the present proceedings having any effect on title to land situated abroad. Any remedy which may be awarded to Mr Stevens would be a personal remedy for the recovery of monies from Mr Hamed and there is no basis for the suggestion by Mr Pennock on behalf of Mr Hamed that any determination by the English courts of whether the original transaction was completed or not may affect the validity of subsequent transactions in Egypt and the validity of the ownership of the current owner.” (emphasis added)

5.28  The above observations inform on under what circumstances would attract the application of the Mocambique rule. Like Hamed, save the contractual Misrepresentation Defence which Mr Mok accepts should be tried in Hong Kong, the court is not required to determine a disputed claim of title. Even if Mr Mok is correct that the ultimate transfer of the Property would require the intermediate transfer of the Property at first instance to Sei Pou and an order for specific performance is made on that basis, such an order of the Hong Kong court does not have the effect of affecting the validity of the ownership of the Property. On D’s own case, Sei Pou has acquired the proprietary interest in the Property and as evidenced by the Confirmation Letter, it has not been suggested that Sei Pou would not cooperate in effecting the onward transfer of the Property to P.

5.29  For avoidance of doubt, the above should not be understood as any indication that the court in hearing the AOS would not order specific performance to effect the direct transfer of the Property to P. Even in that scenario, given the Confirmation Letter and the terms of the PTA, the court, in the process, is still not required to determine in a disputed claim of title.

5.30  For the above reasons, I am of the view that the Mocambique rule has no application in the present case and therefore D’s application in reliance on RHC Order 12, rule 8(1)(g) is dismissed.

(iii)  Whether the personal obligation exception to the Mocambique rule applies

5.31  In the light of the conclusion that the present case falls within the scope of the Mocambique rule, it is strictly unnecessary for me to deal with whether the personal obligation exception to the Mocambqiue rule applies.

5.32  For completeness and in the event this matter goes further, I also express my view on this issue.

5.33  As explained at Dicey, Morris and Collins on the Conflict of Laws §24-037, the principle on which the personal obligation exception rests is that though the court has no jurisdiction to determine rights over foreign land, yet where the court has jurisdiction over a person from his or her presence in the jurisdiction, or from his or her submission to the jurisdiction, or (as here) from its power to serve him or her with a writ, though he or she is out of the jurisdiction, the court has jurisdiction to compel him or her to dispose of, or otherwise deal with, his or her interest in foreign land so as to give effect to obligations which he or she has incurred with regard to the land.

5.34  Mr Mok submits that the Hong Kong court cannot exercise jurisdiction pursuant to the personal obligation exception if: (1) the lex situs would prohibit the enforcement of the decree and/or (2) the court cannot effectively supervise the execution of its decree.

5.35  In relation to the former exception to the personal obligation exception, Dicey §24-041 states that it is difficult to determine what constitutes a prohibition by the lex situs sufficiently stringent to prevent the English (Hong Kong) court from granting the decree, but where there is no impediment, the “courts of this country, in the exercise of their jurisdiction over contracts made here… act upon their own rules and are not influenced by any consideration of what the effect of such contracts might be in the country might be in the country where the lands are situate, or of the manner in which the courts of such countries might deal with such equities.” In the present case, Mr Mok relies on the opinion of D’s expert that under Mainland law, there cannot be any direct transfer of the Property from D to P. Even if that is right, and it constitutes a sufficiently stringent prohibition, by reason of the analysis in the previous subsection, that may be catered to making provisions in the terms of the order for specific performance for D to effect an intermediate transfer to Sei Pou.

5.36  In relation to the latter exception to the personal obligation exception, I am not satisfied that the Hong Kong court cannot effectively supervise the execution of an order for specific performance. As explained in the preceding subsection, I do not regard that the relief in the AOS should be understood to mean that D is to vest the title of the Property in P but instead is an order in personam to execute necessary documents and to take necessary steps to enable P to perfect its legal title as envisaged expressly by PTA Clause 8.1.

5.37  For the above reasons had it been necessary, I would have concluded that the personal obligation applies in the present case. As explained at Hamed §§19-21:

“[19] In any event, I consider that this case clearly falls within a long-established exception to the Mocambique rule. As Lord Mance observed in Pattni v Ali [2006] UKPC 51, [2007] 2 AC 85 at para 26, [2007] 2 All ER (Comm) 427 “. . . it has long been accepted in England that an English court may, as between parties before it, give an in personam judgment to enforce contractual or equitable rights in respect of immovable property situated in a foreign country: . . .” This exception has its origin in the practice of Court of Chancery which was willing to exercise jurisdiction over a Defendant within its jurisdiction so as to compel him to give effect to obligations he had incurred in relation to land situated abroad. (See eg Penn v Baltimore (1750) 1 Ves Sen 444, 27 ER 1132, [1558-1774] All ER Rep 99) In Deschamps v Miller [1908] 1 Ch 856, 77 LJ Ch 416, 98 LT 564 Parker J stated, with regard to the obligations which the court will enforce in this way:

“They all depend upon the existence between the parties to the suit of some personal obligation arising out of contract or implied contract, fiduciary relationship or fraud, or other conduct which, in the view of the Court of Equity in this country, would be unconscionable, and do not depend for their existence on the law of the locus of the immovable property.” (At p 863)[12]

[20] In this regard there is a growing recognition in the case law that, in the case of disputes relating to foreign land between parties who are both amenable to the jurisdiction of the English courts, certain issues which might previously have been regarded as going to jurisdiction may more appropriately be regarded as going to choice of law. In Lightning v Lightning Electrical Contractors Ltd (Court of Appeal, 23 April 1988, [1988] NPC 71) Peter Gibson LJ, referring to the judgment of Millett J in Macmillan Inc v Bishopgate Trust (No 3) [1995] 3 All ER 747, [1995] 1 WLR 978 at p 989, observed:

“ ... where a Plaintiff invokes the in personam jurisdiction of the English court against a Defendant amenable to the jurisdiction and there is an equity between the parties which the court can enforce, the English court will accept jurisdiction and apply English law as the applicable law, even though the suit relates to foreign land. In contrast if the equity which is asserted does not exist between the parties to the English litigation, for example where there has been a transfer of the property to a third party with notice of an equity but by the lex situs governing the transfer, the transfer extinguished the Plaintiff's equity, the English court could not then give relief against the third party even though he is within the jurisdiction.”

Similarly, in Griggs Group Ltd v Evans [2004] EWHC 1088 (Ch), [2005] Ch 153, [2005] 2 WLR 513Mr Peter Prescott QC, sitting as a deputy High Court judge, observed “Private international law has moved on. Today we should treat the fact that the land is situated abroad as affecting the choice of law, not jurisdiction, if the case is one in which it is sought to enforce an equitable claim in personam.” (At para 110).

[21] The present dispute seems to me to fall within this exception. If the English courts may order specific performance of personal obligations to transfer land situated abroad, I can seen no reason why they should not exercise jurisdiction over a claim in restitution for the repayment of a contractual payment where the consideration is said to have failed. Indeed, the latter is a stronger case because the ruling will have no effect, even indirectly, on the ownership of or the right to possess foreign land.”

6.  The Alternative Issue

6.1  It is common ground where, as here, there is a non-exclusive jurisdiction clause, absent exceptional reasons, the contractual nomination of Hong Kong as the non-exclusive jurisdiction serves effectively to preclude argument that Hong Kong is not a clearly convenient forum and it would be wrong to evaluate the stay proceedings in terms of Spiliada factors: Noble Power Investments Limited v Nissei Stomach Tokyo Co Ltd, CACV 398 of 2007, 27 June 2008 §§62 and 83. As stated at the outset, it seems to me that Mr Mok’s position that the court is not required to be concerned with the Misrepresentation Defence and the Delay Defence is sensibly taken, as any Spiliada factors relevant to the resolution of those defences cannot amount to the type of exceptional reasons to oust PTA Clause 20.1.

6.2  Two factors are relied on by Mr Mok as exceptional reasons.

6.3  First, if the Hong Kong judgment cannot be enforced in the jurisdiction in which D’s assets are located, it is said that this may amount to a strong reason not to enforce PTA Clause 20.1 and to stay the present proceedings. Reliance is placed on two decisions in Impala Warehousing and Logistics (Shanghai) Ltd v Wanxiang Resources (Singapore) Ltd [2015] EWHC 811 (Comm) (“Blair J’s Decision”) and [2015] EWHC 25 (Comm) (“Teare J’s Decision”).

6.4  In Impala, the defendant claimed to be the owner of certain goods stored in a warehouse in the Mainland and had commenced proceedings in the Mainland against the plaintiff seeking delivery of the goods. The English court granted the plaintiff an interim anti‑suit injunction restraining the defendant from continuing the proceedings in Shanghai, on the basis that the contractual arrangement contained an exclusive jurisdiction clause in favour of the English court. Teare J’s Decision is concerned with the plaintiff’s application seeking a final anti-suit injunction coupled with a mandatory injunction ordering the defendant to discontinue the proceedings in Shanghai.

6.5  At Teare J’s Decision §29, it is observed (obiter):

“Lastly, it was said that Wanxiang would suffer prejudice if they had to litigate in England because any judgment of the English court would not be enforceable in China. This is because there is no reciprocal enforcement arrangement between England and China. A similar point was made at the last hearing but no specific reference was made to the absence of a reciprocal enforcement arrangement. I did not consider that the point then made was a strong reason for not enforcing the jurisdiction clause because I expected the parties to respect a decision of this court. However, an inability to enforce a judgment is a form of prejudice specifically mentioned by Brandon J. in The Eleftheria. The question which therefore arises is whether Wanxiang’s inability to enforce any judgment of this court in its favour against Impala Shanghai in China would be a strong reason for not giving effect to the exclusive jurisdiction clause. Having reflected upon this matter, and in the absence of any suggestion as to how this prejudice could be reliably avoided, I have reached the conclusion that it would be such a reason.” (emphasis added)

6.6  Blair J’s Decision is concerned with the speedy trial of the action of the plaintiff’s claim for final mandatory injunction requiring the defendant to discontinue the Shanghai proceedings. The learned judge found that the plaintiff was entitled to rely on the relevant exclusive jurisdiction clause (§103). At §138, it is observed (echoing Teare J’s Decision §29):

“In my view, a situation which could potentially arise as a “strong reason” for refusing to grant an anti-suit injunction is where the claim involves property, particularly a claim to recover property, and a judgment of the English court would not be recognised or enforced by the courts of the situs to the defendant’s detriment. As a practical matter, the courts of the situs will decide what happens to property situated. there. Wanxiang submits that this is the position in the present case.”

6.7  In my view, I do not regard D can derive any assistance from the Impala decisions. Unlike the defendant in Impala, D does not suggest that it has a counterclaim which needs to be enforced in the Mainland. As such, there can be no suggestion that it would suffer any prejudice such that it would constitute a strong reason for not giving effect to PTA Clause 20.1.

6.8  Secondly, Mr Mok relies on considerations of comity. It is said that considerations of comity require the Hong Kong court to refrain from making orders which infringe the exclusive jurisdiction of the courts of other countries. He relies on the fact that it is common ground between parties’ experts that, under Mainland law, disputes arising from immovable property fall within the exclusive jurisdiction of the place where the property is situated. From that, reliance is placed by Mr Mok on Masri v Consolidated Contractors International (UK) Ltd & Ors (No 2) [2009] QB 450 §36:

“That was why Lord Donaldson of Lymington MR confirmed that the Mareva injunction should not conflict with “the ordinary principles of international law” and that “considerations of comity require the courts of this country to refrain from making orders which infringe the exclusive jurisdiction of the courts of other countries””: Derby & Co Ltd v Weldon (Nos 3 and 4) [1990] Ch 65, 82. It was for this reason also that it has been suggested that the extension of the Mareva jurisdiction to assets abroad was justifiable in terms of international law and comity provided that the case had some appropriate connection with England, that the court did not purport to affect title to property abroad, and that the court did not seek to control the activities abroad of foreigners who were not subject to the personal jurisdiction of the English court…”

6.9  As set out in the analysis above, the Hong Kong court in the present proceedings is not required to determine an issue which falls within the jurisdiction of the Mainland court.

6.10  I therefore do not regard considerations of comity are engaged.

6.11  For the above reasons, I dismiss Jurisdiction Summons §§1 and 2.

7.  Jurisdiction Summons §3

7.1  In my view, the Unless Order, although stated to be a time order for D to file evidence to oppose the AOS, should be construed as having the effect of setting a time limit for D to make an application to challenge the jurisdiction of the Hong Kong court.

7.2  As is established, under RHC Order, 12 rules 8(1) and (2), a jurisdictional challenge must be made within the time limited for service of a defence. These proceedings are of course commenced by an originating summons, and, in my view, by reason of RHC Order 12, rule 9, the time to serve an affirmation to oppose the AOS should be construed as the time limit to make an application to make a jurisdiction challenge: Aspial Investment Ltd v Mayer Holdings Ltd, HCMP 2906 of 2013, 12 September 2014 §§21, 25 and 29. This D has done.

7.3  By reason of RHC Order 12, rule 6(A), where, as here, a jurisdiction challenge is unsuccessful, the court may give such directions as may be appropriate for service of a defence and the conduct of the proceedings.

7.4  As such, it seems to me that I should accede to Jurisdiction Summons §3.

8.  Conclusion

8.1  I dismiss D’s application for a declaration pursuant to RHC Order 12, rule 8(1)(g), Jurisdiction Summons §§1 and 2 but accede to Jurisdiction Summons §3.

8.2  I make no order on the Evidence Summons.

8.3  The parties are to jointly propose directions on the AOS by letter within 7 days hereof. Where there are disagreements, the respective proposals should be set out in the joint letter, with appropriate justifications.

8.4  As to costs, I make the following nisi order:

(1)  D is to pay to P 90% of the costs of the Jurisdiction Summons;

(2)  Save as aforesaid, the costs of the Evidence Summons and the costs of the hearings be in the cause of the AOS.