CROSS HARBOUR CAPITAL LP v. SHA MINGJUN

HCA 274/2024

[2026] HKCFI 4177

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 274 OF 2024

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D E C I S I O N

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Background

1.  Les Ambassadeurs Club Limited (“LAC”) owns and operates a casino in London (“Casino”). United London Services Limited (“ULS”) is wholly owned by LAC and is utilized by the Casino primarily for the purpose of providing payment facilities to customers.

2.  In June 2008, the Defendant issued a cheque for the amount of HK$40,547,088 (“Cheque”) payable to ULS from his personal bank account with HSBC in Hong Kong (“HSBC Account”) in respect of gambling losses he incurred at the Casino in May 2018.  In July 2018, ULS was notified by its bank that the Cheque was dishonoured.

3.  In October 2018, LAC and ULS commenced an action in the English court against the Defendant for the sum under the dishonoured Cheque.  They obtained summary judgment against the Defendant[1] (“English Judgment”) in April 2019 for the total sum of HK$46,065,935.48 (“Judgment Debt”) with interest and costs.  The English Judgment states that judgment was entered “for the Claimants” (i.e. LAC and ULS) and the Defendant “shall pay the Claimants” the Judgment Debt.  There is no dispute that the English Judgment gave rise to a single obligation owed by the Defendant jointly to LAC and ULS in respect of the Judgment Debt.

4.  In November 2023, LAC assigned all its rights and interest in the Judgment Debt to the Plaintiff (“Assignment”).  The Assignment is governed by English law.

5.  In February 2024, the Plaintiff commenced this action by writ against the Defendant to enforce the English Judgment, claiming the Judgment Debt, costs of the English action, interest and costs.

6.  The Plaintiff obtained leave from a Master to serve the writ out of jurisdiction on the Defendant in the Chinese Mainland.[2]  Leave was granted pursuant to Order 11, rule 1(1)(m) of the Rules of the High Court (Cap 4A) – conveniently termed gateway (m) – permitting service out if the claim is brought to enforce any judgment or arbitral award. 

7.  The Defendant was unsuccessful in setting aside the service out order before a Master.[3] He now appeals before me.

Applicable principles for service out

8.  The principles granting leave to serve out are set out in Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454 at [29].  The Plaintiff must show:

(1)  There is a good arguable case that its pleaded claim falls within one of the gateways under Order 11, rule 1;

(2)  There is a serious issue to be tried on the merits of the case; and

(3)  Hong Kong is the appropriate forum under the principle governing forum conveniens for the trial of the action.

9.  The parties disagree over the application of (2) and (3):

(1)  The Plaintiff argues that it is not necessary to show a serious issue to be tried in gateway (m) cases where it seeks leave to serve out to enforce a foreign judgment.  If the requirement applies, there is disagreement over whether the threshold is satisfied – specifically, whether the Assignment was valid in assigning the Judgment Debt to the Plaintiff such that it has the locus standi to sue the Defendant.

(2)  On the question of forum conveniens, parties disagree whether there is a real prospect of a legitimate benefit if the Plaintiff is allowed to enforce the English Judgment in Hong Kong against the Defendant.

Serious issue to be tried

10.  Ms Prisca Cheung (appearing for the Plaintiff) submits that the serious issue to be tried threshold does not apply when a plaintiff seeks leave to serve out under gateway (m) to enforce a foreign judgment.  The court therefore needs not examine the validity of the Assignment. 

11.  Ms Cheung relies on the following extract in Zhang Rui Kang & Ors v Tunghsu Group Co Ltd & Ors [2023] HKCFI 1866 at [30(2)]:

“Under gateway (m), there is no determination of issues to take place in Hong Kong. The very purpose of service out of the jurisdiction is for the enforcement in the jurisdiction.”

12.  Ms Cheung also refers me to the following commentaries in the Hong Kong Civil Procedure 2026:

(1)  (§11/4/20.1): Gateway (m) will not require the applicant to address the merits of the dispute or place for trial;

(2)  (§11/1/55): Gateway (m) is unique in that no determination of issues will take place in Hong Kong and the very purpose of the service out is enforcement, usually in the jurisdiction; and

(3)  (§11/4/346-346.1): Forum conveniens issues do not arise under gateway (m).  The foreign judgment or award is itself a sufficient ground for the grant of leave where there is a real prospect of a legitimate benefit.

13.  In Zhang Rui Kang (CFI), parties did not engage in the question of whether there is a need to show a serious issue to be tried over the plaintiff’s claim.  That is clear from [31] of the judgment where the court noted that the dispute was whether there would be a real prospect of a legitimate benefit if leave to serve out was granted.  That was the central question in the case: on appeal ([2024] HKCA 361) at [9].

14.  I have considered the passages in Motorola Solutions Credit Co LLC v Kemal Uzan & Ors (HCA 2232/2013, 16 April 2014) at [24] and [27], referred to in footnote 3 in Zhang Rui Kang (CFI) [30].  They concern the issue of legitimate benefit.  I do not derive assistance on how the serious issue to be tried threshold applies in gateway (m) cases.

15.  It is important to understand why in gateway (m) cases, there is no need to show a serious issue on the underlying merits of the claim leading to the foreign judgment.  Where a matter has been determined by the foreign court in respect of the same parties, the Hong Kong court will not reopen it by reason of res judicata or issue estoppel.  This is to ensure that parties raise all their possible arguments at first instance, avoid inconsistent judgments between courts, and preserve comity between jurisdictions.  That is why the Hong Kong court will not look at the merits of the underlying dispute in the foreign action in an enforcement claim,[4] and a fortiori at the service out stage.  The extracts set out in [11] and [12] above must be understood in this light.

16.  The present case is different.  The Plaintiff has to rely on the rights and interest assigned to it under the Assignment to claim against the Defendant for the Judgment Debt.  The Assignment was executed long after the English Judgment was entered.  Its validity in assigning the Judgment Debt to the Plaintiff was not a matter dealt with by the English court leading to the English Judgment.  For the purpose of enforcing the Judgment Debt in Hong Kong, the Plaintiff has to demonstrate a serious issue to be tried on its locus standi to claim against the Defendant based on the Judgment Debt by reason of the Assignment.  In practice, this means a serious issue to be tried that the Assignment is valid and effective in assigning the Judgment Debt to the Plaintiff.  This has no bearing on the merits of the underlying claim in the English action.  The principles of res judicata or issue estoppel have no application.

17.  Ms Cheung advances the alternative contention that even if the court does not assess whether there is a serious issue to be tried over the validity and effect of the Assignment at the service out stage, this could be dealt with at the trial or substantive determination of the action.  I disagree.  The purpose of imposing the serious issue to be tried threshold at the service out stage is to ensure that meritless claims would be filtered out before the Hong Kong court grants leave to serve out and exercises its long-arm jurisdiction over a foreign defendant.  If there is no serious issue to be tried, a foreign defendant should not be troubled to defend the action in Hong Kong, and the Hong Kong court should not be asked to spend time and resources dealing with the matter.

18.  In my view, for gateway (m) cases, the court still needs to be satisfied that there is a serious issue to be tried on the Plaintiff’s claim based on the foreign judgment (which the court would assume to be valid and binding unless and until it is set aside on appeal).  I do not understand the Defendant to be asking the court to go beyond that in determining the validity of the Assignment.

Whether the Plaintiff has standing to sue

19.  Both parties have adduced evidence on English law in the form of legal opinion from English counsel[5] on the effect of the Assignment.  Where the foreign law in issue is a matter of common law, the Hong Kong court is well-positioned, and indeed obliged, to draw on its own knowledge of the common law if it bears on the resolution of the dispute, notwithstanding that it is framed as an issue of foreign law.  The legal opinion on English law is no different from submissions made by counsel and shall be treated as such.

20.  The Defendant contends that in the case of joint creditors of a judgment debt, each of them is a trustee for the two and for the other, citing Ellis v Kerr [1910] 1 Ch 529 at 540.  He says that neither of the joint owners of a debt is entitled to demand separate payment of any part of the debt for their own benefit, and they must act unanimously, citing Re Maud (No 2) [2019] Ch 15 at [108], [109] and [113].  The Plaintiff has no disagreement with the above principles.[6]

21.  In Ellis v Kerr, the court explained that where a debt is owed to joint creditors, they are joint trustees to each other.  As to whether one trustee can take action without the consent of the other, the court said at 540:

“It is perfectly true that authorities have been cited in support of the well-known practice and doctrine in the Court of Chancery, that if a covenant is entered into with two persons jointly by a third person, and one of those joint covenantees refuses to sue at law, the Court will allow one of them to sue the covenantor, making his co-covenantee a party to the action. But that seems to me to depend upon a perfectly well-known principle of equity, and to arise, as do so many equitable principles, out of the doctrine of trusts. I think it arises from this notion, that if a covenant to pay a sum of money is made with two jointly, each of them is trustee for the two and for the other, and if one as such trustee refuses to join in the action which in all honesty he is bound to bring for the benefit of his co-covenantee, then his co-covenantee is entitled to make him a party to the action in order that he may be bound, and to recover the moneys secured by the covenant. It seems to me that that is the principle upon which those cases depend.”

22.  Ellis v Kerr stands for the proposition that joint creditors or covenantees are joint trustees, and in principle are required to act unanimously.  Where one of the trustees refuses to take action, the other trustee may seek to sue while joining the other as a defendant.

23.  Here, the Judgment Debt is jointly owed to LAC and ULS.  Only one of the joint judgment creditors, LAC, executed the Assignment.  The Defendant therefore contends that the Assignment was invalid in that it does not give the Plaintiff alone the right to enforce the English Judgment and claim the Judgment Debt against the Defendant.

24.  The Plaintiff accepts that LAC and ULS as joint owners of the Judgment Debt with no divided interest in it could not bring any separate action for any part of the debt, and as joint creditors neither was entitled to demand separate payment of any part of the Judgment Debt for their own benefit and each will be in the position of trustee for both of them.[7]

25.  The Plaintiff contends that the Assignment may be construed as providing a transfer of LAC’s rights as joint owner to the Plaintiff, with the consequence that the Plaintiff and ULS are then the parties with joint rights and ownership of the Judgment Debt who could, together, sue to enforce it.  In effect, the Plaintiff substituted LAC and succeeded to its rights as trustee and joint beneficial owner of the Judgment Debt.[8]

26.  I reject the Plaintiff’s contention:

(1)  As a joint trustee, LAC cannot unilaterally decide that the Plaintiff would take its place.  The beneficiaries must consent if a new trustee is to replace the previous one.  The substitution theory does not work without the consent of all the beneficiaries. There is no evidence that ULS consented to the Assignment.  Even if ULS is wholly owned by LAC, they remain two separate companies and legal entities. The consent of LAC could not be treated as that of ULS.  In my view, the consent of both LAC and ULS is required for the Assignment to be effective in assigning the legal interest in the Judgment Debt to the Plaintiff.

(2)  Even if the Plaintiff and ULS are now the joint trustees of the Judgment Debt, ULS’s consent is required for the prosecution of an action based on the Judgment Debt: Ellis v Kerr at 540.  As the court made clear in Ellis v Kerr, this is not just a matter of form.  ULS, as the other trustee, is entitled to be heard on whether this action should go ahead.  The Plaintiff can only continue unilaterally if it can show that this action is one which in all honesty ULS is bound to bring for the benefit of its co-covenantee, in which case the Plaintiff has to make ULS a party to the action in order that it may be bound.

27.  I reject the other contentions put forward by the Plaintiff:

(1)  The Plaintiff contends that LAC may be treated as executing the Assignment for itself and as agent for and on behalf of ULS.[9] I do not agree.  The question of whether a signatory executed a document as principal or as agent involves primarily looking at the language of the document itself.  The Assignment made no reference to LAC acting as the agent of ULS.  There is no evidence that LAC has executed the Assignment as ULS’s agent.  Even if ULS is wholly-owned by LAC and functions as its payment-facility subsidiary, they are two separate entities with their own rights and interest.

(2)  The Plaintiff also suggests that the Judgment Debt may be treated as being severed by the Assignment.[10] As a start, the Plaintiff is not only seeking to recover a part of the Judgment Debt against the Defendant, so one does not see how the severance argument assists the Plaintiff.  In any case, the Assignment did not mention the transfer of only a divided share of the Judgment Debt, or that LAC intended to sever its joint ownership in the Judgment Debt with ULS.

28.  Ms Cheung impresses upon me that at this stage the court’s function is confined to determining whether the Plaintiff’s claim against the Defendant is arguable. The court should not be drawn into a merits inquiry and risk pre-judging the principal issue.  That would conflate the jurisdictional inquiry with a striking-out exercise.

29.  It is clear from my analysis above that the Plaintiff alone cannot enforce the English Judgment against the Defendant.  Ms Cheung submits that this could be ratified, for example by adding ULS as an additional plaintiff or party.  But this was not done.  In any case, having obtained leave to serve out at the ex parte stage, the Plaintiff may not put forward a different case at the inter partes stage to improve the basis on which leave to serve out was granted.  Fresh leave for service out must be obtained, either by making another ex parte application before the Master or to seek leave to amend the pleading before the Judge at the inter partes stage and re-apply for leave to serve out: Winland Enterprises Group Inc v Wex Pharmaceuticals Inc [2012] 2 HKLRD 757 at [31].

30.  I am of the view that the Plaintiff has failed to satisfy the court that there is a serious issue to be tried that the Plaintiff has the standing to enforce the English Judgment and recover the Judgment Debt against the Defendant.  For this reason alone, the service out order should be set aside.

Legitimate benefit and forum conveniens

31.  The requirement of showing a real prospect of a legitimate benefit to the Plaintiff stems from the notion that great care should be taken before requiring a foreign litigant to answer proceedings in Hong Kong.  The court should not automatically exercise its discretion in favour of permitting service out of jurisdiction unless it is just to do so, and it will ordinarily not be just to do so unless there is a real prospect of a legitimate benefit to the Plaintiff from the Hong Kong proceedings.  Otherwise, there would be no useful purpose in allowing the action to proceed in Hong Kong: Fonu v Demirel [2007] 1 WLR 2508 at [26]-[29].

32.  In assessing the question of legitimate benefit, there is no need to show that the foreign defendant has assets in Hong Kong.  The benefit to the Plaintiff can be indirect or prospective.  The court applies a pragmatic approach, bearing in mind the reality that judgment debtors are often reluctant to advertise the nature and whereabouts of their assets, especially where judgments are obtained in large amounts.  It suffices that there is some useful purpose serving the legitimate interest of the plaintiff in litigating in Hong Kong, even if the benefit is somewhat speculative: Fonu v Demirel at [27], [29] and [39]; Zhang Rui Kang (CFI) at [32].

33.  Where the plaintiff seeks leave to serve out under gateway (m), the court needs not engage in a separate forum conveniens analysis.  If there is a real prospect of a legitimate benefit in enforcing a judgment in Hong Kong, it must follow that Hong Kong is an appropriate forum to bring the claim within Order 11, rule 1: Fonu v Demirel at [45].

34.  When applying for leave for service out before the Master, the Plaintiff relies on the Defendant’s holding of the HSBC Account as indicating that he has assets in Hong Kong against which the Plaintiff can enforce a judgment obtained from the Hong Kong court.  This was impressed upon the Master as the real prospect of a legitimate benefit arising from the Plaintiff’s action in Hong Kong.

35.  The account opening documents obtained by the Plaintiff from HSBC through a banker’s record order show that the HSBC Account was opened in May 2018.  The Defendant was named as a director of a company called Hongbo Machinery Co.  His work and residential addresses were both stated to be in the Chinese Mainland.

36.  When applying to set aside the service out order, the Defendant claims that the HSBC Account has been closed.  He has never used the account or its related services since it was opened, and there was never any transaction or transfer of funds in the account.

37.  The Defendant did not explain to the Master when the HSBC Account was closed.  Nor did he produce any correspondence with HSBC as to account closure.  It was only on the day before the hearing before me that the Defendant adduced a letter from HSBC, attached to the reply submissions of Mr Michael Ng (appearing for the Defendant), stating that the HSBC Account had been closed on 9 October 2020.

38.  I have some misgivings about the way in which the Defendant has presented his evidence in a piecemeal fashion.  It appears that it was only in January 2026, after he failed to set aside the service out order before the Master, that his legal representatives wrote to HSBC to ask for proof that the HSBC Account was closed.  HSBC’s reply came on 20 April 2026, two days before the hearing before me.  Ms Cheung made the point that the new evidence should not be admitted for failing to satisfy the first condition under the Ladd v Marshall rule which applies to a Master’s appeal, in that the Defendant has not demonstrated that he could not with reasonable diligence obtain the evidence for use before the Master.  At the same time, Ms Cheung fairly accepts that the court should not take a blinkered view on material evidence and ignore a confirmation from HSBC that the HSBC Account was closed 6 years ago.  In the end, the parties reached a compromise that the court could take it as the agreed position that the HSBC Account was closed on 9 October 2020.

39.  I note that the Defendant did not explain why despite his claim of lack of connection to Hong Kong, he had at one stage maintained the HSBC Account and used that account to issue the Cheque to ULS.  It is also disingenuous for the Defendant to claim that he has never used the HSBC Account and conducted no transaction through it, when he does not deny the Cheque.  However, this would not provide sufficient basis for the court to draw an inference that the Defendant is concealing his continued connection with Hong Kong.

40.  Ms Cheung argues that it matters not that the HSBC Account was closed.  Proof of existing assets is unnecessary.  She submits that the Defendant’s use of Hong Kong’s banking system as evidenced by the Cheque issued from the HSBC Account creates a realistic prospect of locating or tracing assets in Hong Kong or elsewhere, for example through procedural aids such as oral examination. 

41.  I disagree.  There is no evidence that the Defendant has any assets in Hong Kong that are capable of being traced further.  Also, if the Defendant is not present in Hong Kong, it is difficult to see how he can be subject to oral examination.  It does not appear that the Defendant is present in Hong Kong or has sufficient (or any) connection to Hong Kong such that the Plaintiff can commence bankruptcy proceedings against him based on a Hong Kong judgment. 

42.  Since there is no evidence that the Defendant has any business presence in Hong Kong, I do not see how any commercial leverage can be generated by enforcement.

43.  Ms Cheung refers to the fact that the Defendant is listed on a global business information website as the key principal and legal representative of a company called Nantong Hongbo Machinery Co Ltd (as at 12 August 2025), which has an active online and business presence.  The company has a Chinese Mainland address. 

44.  It is not clear whether this is the same company named in the HSBC Account opening form.  There is no suggestion that it operates in (or through) Hong Kong.  Even if it has assets in Hong Kong, those are not the Defendant’s assets.

45.  For the above reasons, I am not satisfied that there is no real prospect of a legitimate benefit to the Plaintiff if leave to serve out of jurisdiction is granted.

Material non-disclosure

46.  An application for leave to serve out is made ex parte.  It is incumbent on the applicant to comply with the duty to make full and frank disclosure.  This is particularly so when the court will scrutinize most jealously any factor which provides the basis to exercise its long-arm jurisdiction that has the effect of compelling a foreign defendant to submit to adjudication by the Hong Kong court or suffer judgment and execution in default.  Given the extraordinary nature of the jurisdiction, the court insists on special care on the plaintiff’s part and acts on the faith of the plaintiff’s full disclosure of the basis upon which that jurisdiction is invoked.  The requirement is a strict one.  See Altrans Fast Cargo Ltd & Anor v Liu Yugang & Ors [2023] HKCFI 1579 at [13]-[14].

47.  As summarized in Altrans at [44], an applicant for ex parte relief must give full and frank disclosure of all material facts which are necessary for the proper disposal of the application.  Materiality is to be decided by the court and not by the assessment of the applicant or his legal advisors.  The applicant must identify any defences, which although not yet taken, would be available to be taken by the defendant.  Hence, the applicant must make all proper inquiries before making the application.  The duty extends to matters of both fact and law.  A relevant matter must be disclosed even if the court’s decision may have been the same.

48.  When vetting the service out application, the Master raised a requisition on whether ULS has also assigned the Judgment Debt to the Plaintiff.  Obviously the Master was alive to the fact that LAC and ULS are joint judgment creditors under the English Judgment, and the Assignment only purported to assign LAC’s rights and interest in the Judgment Debt to the Plaintiff.

49.  In answer to the Master’s requisition, the Plaintiff’s handling solicitor stated the following in affirmation:

“[ULS] have not assigned their rights and interests in the [Judgment Debt] to the Plaintiff herein. [ULS] is wholly owned by [LAC] and is utilized by [LAC] for the purpose of providing payment facilities to customers (see paragraph 1 of [Particulars of Claim]). They are related companies who are jointly entitled to the fruit of the [Judgment Debt]. In such circumstances, there is no need for the wholly owned subsidiary to assign its rights and interests in the [Judgment Debt] to the Plaintiff.”

50.  The unequivocal representation to the Master that there is “no need” for ULS to assign its rights and interest in the Judgment Debt to the Plaintiff is wholly inconsistent with the Plaintiff’s own position that it is “well arguable” that there was no valid assignment of the Judgment Debt to the Plaintiff because “LAC was not the exclusive owner of the chose which on one interpretation it purported to assign”.[11]

51.  I disagree with Ms Cheung’s description that the Plaintiff has “fairly summarized the transaction” to the Master.  Far from it.  At the very least, the reasoned analysis on the Plaintiff’s standing to enforce the English Judgment based on the Assignment, including possible arguments that the Assignment was invalid in assigning the Judgment Debt to the Plaintiff alone, clearly ought to be placed on the weighing scale of the Master in deciding whether to grant leave to serve out, especially when the Master has raised a specific requisition.  This was not done.

52.  There is clear material non-disclosure to the Master leading to the grant of the service out order.  In such case, the general rule is for the court to discharge the ex parte order and refuse a re-grant, even if the non-disclosure was innocent: Altrans at [46], citing Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642 at [56]-[58]. 

53.  In considering whether to order a re-grant, the court has to conduct a multifactorial exercise to balance competing interests.  There is no explanation from the Plaintiff for the material non-disclosure.  Since the Plaintiff does not accept that there has been any material non-disclosure, there will be no room for it to claim that any such non-disclosure is in any way innocently made as may justify a re-grant: Altrans at [46]. 

54.  In any event, given my conclusion above that leave to serve out ought not have been granted by reason that the Plaintiff has failed to satisfy the jurisdictional thresholds, it is not in the interest of justice to order a re-grant.

Disposition

55.  The Defendant’s appeal is allowed.  The service out order made by the Master and service of the concurrent writ on the Defendant are set aside.[12] I also set aside the costs order made by the Master below.

56.  Costs should follow the event.  I make a costs order nisi that the Plaintiff do pay the Defendant’s costs of and occasioned by his summons dated 20 May 2025, including the costs of the hearing before the Master on 26 November 2025 and any costs reserved.

57.  Whilst the HSBC letter confirming the closure of the HSBC Account was not before the Master, I am of the provisional view that this should not be a reason not to award the Defendant’s costs of the hearing before the Master.  As could be seen above, irrespective of the closure of the HSBC Account, I allowed the appeal and set aside the service out order also because the Plaintiff has not demonstrated a serious issue to be tried, and by reason of material non-disclosure.

58.  In the absence of any application to vary the costs order nisi by summons within 14 days from the date of this Decision, I shall proceed with assessing costs on papers, based on the Defendant’s statement of costs and the Plaintiff’s list of objections which have been lodged.

59.  I thank counsel for their assistance.