HUANG LI v. HADY HARTANTO AND OTHERS

HCA 2322/2014

[2018] HKCFI 237

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2322 OF 2014

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DECISION

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1.  The 1^st and 2^nd defendants applied for leave to appeal my order, made on 7 June 2017, dismissing their respective applications for a stay of these proceedings on the ground of forum non conveniens. I have decided not to grant leave for the reasons set out below.

2.  Pursuant to section 14 of the High Court Ordinance, Cap 4, leave to appeal shall not be granted unless I am satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  The prospects of succeeding must be reasonable, therefore more than fanciful, without having to be probable.  Even if the threshold is met, I still retain a discretion whether to grant leave and I might refuse leave in the interests of procedural economy and proportionality.  (Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887, at §§29 and 30)

3.  The defendants accept that my order was made in the exercise of discretion and that leave to appeal would only be granted if: (1) I had misdirected myself with regard to principle; (2) I had taken into account matters which I ought not to have taken into account or that I had failed to take into account matters which I ought to have taken into account; or (3) my decision is plainly wrong.  (Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454 at §68)

4.  The first ground of appeal set out in the draft Notice of Appeal is that I did not give any significant weight to Clause 12 of a sale and purchase agreement, which is a subject of this action (“the Agreement”).  Clause 12 is a non-exclusive jurisdiction clause, naming Singapore.  The defendants submitted that I simply loaded up certain other factors, which were relied upon by the plaintiff as more significant factors in favour of Hong Kong as the more appropriate forum.  The defendants submitted that these other factors are either irrelevant or insignificant.  In any event, the defendants submitted, I did not hold that those factors were more significant than Clause 12.

5.  I do not consider this ground has reasonable prospects of success.  In paragraph 38 of my Decision, dated 7 June 2017, I stated that I considered “… Clause 12 and the agreed governing law and nominated jurisdiction to be factors, which are significant connecting factors, pointing in favour of Singapore as the natural and appropriate forum for the resolution of this dispute.”

6.  However, with regard to other factors, which I set out in paragraph 41 of my Decision, I considered that “… notwithstanding the significance of Clause 12, there are other factors which tilt the balance in favour of Hong Kong as the more appropriate forum.”  After setting out those factors in paragraph 41, I concluded: “In my view, [the other factors] are more significant factors in the context of this case than those relied upon by the 2^nd defendant ….”

7.  I refer to paragraphs 13 to 45 of my Decision. I have given proper, significant weight to Clause 12.  I have considered the various factors which each party submitted demonstrated the appropriateness of either Singapore or Hong Kong as the forum.  I was reminded, as set out in paragraph 12 of my Decision, that, in respect of an application based on forum non conveniens, the question to be decided was whether Hong Kong is another available forum, having competent jurisdiction, which is the appropriate forum for the trial, ie, in which the action may be tried more suitably for the interests of the parties and the ends of justice.

8.  I was also reminded, as set out in paragraph 12 of my Decision,that the defendants had to establish that first, Hong Kong is not the natural or appropriate forum (“appropriate” meaning the forum has the most real and substantial connection with the action) and second, there is another available forum, which is clearly or more distinctly more appropriate than Hong Kong.  In paragraph 45 of my Decision, I concluded: “Accordingly, the 2^nd defendant has failed to establish that Hong Kong is not the appropriate forum and that Singapore is clearly or distinctly more appropriate than Hong Kong.  …”

9.  The second ground of appeal is that I erred in holding that the plaintiff bringing this action in Hong Kong as of right is a significant factor in itself which tilts the balance in favour of Hong Kong as the more appropriate forum.  The defendants submitted the following.  Service in Hong Kong does not by itself constitute a connecting factor in favour of Hong Kong.  It is an inherent feature in every stay application on the ground of forum non conveniens that the plaintiff brings the action in Hong Kong as of right.  Such feature has already been reflected in the starting point of a stay application by placing the burden on the defendants to show a more appropriate forum.  It is not an additional, independent connecting factor in favour of Hong Kong.

10.  For the following reason, I do not consider the second ground of appeal has a reasonable prospect of success.  The consideration of the right to bring an action should not be confined to establishing where the burden lies.  In my view, because it is a right to bring an action in a particular jurisdiction, it is also a factor to be considered when determining which jurisdiction has the most real and substantial connection with the action.    Lok J in High Hope Zhongding Corporation v 廈門墩峰進出口有限公司, unreported, HCA 2485/2015, 16 January 2017, §§37 – 41, when considering which forum had the most real and substantial connection with the action, emphasized that an action commenced as of right should not be lightly dislodged and must be given recognition.  His Lordship observed that, where a jurisdiction is established as of right, considerable weight and serious recognition should be given to that right.

11.  The third ground of appeal is that I erred in holding that the factors set out in paragraph 41 of my Decision, are independent connectingfactors in favour of Hong Kong.  The defendants submitted that, by the time the plaintiff executed the Agreement and agreed to Clause 12, she must have taken into consideration: (1) that both she and the 1^st defendant are Hong Kong residents; (2) the witnesses who can be identified are Hong Kong residents; (3) alleged representations were made in Wanchai; and (4) money would be paid into a Hong Kong bank account and money paid out of that account.  The defendants submitted that, as the plaintiff had considered those factors before executing the Agreement, they must be subsumed in her agreement to Clause 12 and do not give rise to independent connecting factors in favour of Hong Kong in the context of this case.  No authority was cited in support of this proposition. 

12.  Mr Leung SC, for the plaintiff, did not accept that the plaintiff addressed her mind to jurisdiction and he referred me to paragraphs 9 and 10 of the 1^st defendant’s fourth affirmation, which state, in essence, that neither the plaintiff nor the 2^nd defendant gave consideration to the Hong Kong courts as an appropriate forum.

13.  It is not possible to resolve at this stage, and on an affirmation alone, whether the plaintiff turned her mind to which would be the more appropriate forum, Hong Kong or Singapore, but having agreed to submit to the jurisdiction of Singapore, she must be taken to have recognized that Singapore must be an appropriate forum for the trial of this action.  (Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631, §28)

14.  The defendants also submitted that any contractual party mayescape from her contractual bargain on jurisdiction by simply pointing to pre-‌contractual matters as “strong reasons” to establish an “exceptional case” where the contractual bargain may be ignored.  The defendants submitted this would effectively render the validity of all jurisdiction clauses in international contracts uncertain and open to argument and could not have been the intention of the parties when agreeing to a jurisdiction clause.

15.  I do not consider the third ground of appeal has a reasonable prospect of success.  As I noted above, a party must be taken to have recognized that the named forum must be an appropriate forum for the trial of this action.  The authorities have not gone further to conclude that a party must be taken to have recognized that a named jurisdiction is the appropriate forum.

16.  A non-exclusive jurisdiction clause, such as Clause 12, leaves the parties free to bring proceedings elsewhere without committing any breach of contract.  A non-exclusive jurisdiction clause is a contract by each party to submit to the jurisdiction of a named forum if the other chooses to bring an action in the named forum.  Although neither party binds itself to bring an action in the named forum, each of them does agree to submit to the jurisdiction if an action is brought against it in the named forum.  (Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd, supra, §§27 – 28)

17.  The difference in principle between an exclusive jurisdiction clause and a non-exclusive jurisdiction clause is that, in the former case both parties are contractually bound to the chosen forum whereas in the latter case only the defendant is so bound.  (Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd, supra, §29)

18.  A defendant seeking a stay of proceedings brought in a named non-exclusive jurisdiction is required to demonstrate strong reasons or an exceptional case establishing another jurisdiction as the appropriate forum.  On the other hand, proceedings brought in a jurisdiction other than the named non-exclusive jurisdiction may be stayed upon application of the principles of forum non conveniens, after considering whether there are connecting factors which indicate that there is another available forum which is clearly or distinctly more appropriate than the named jurisdiction and in which the case may be tried more suitably for the interests of the parties and for the ends of justice.

19.  Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd concerned a non-exclusive jurisdiction clause which provided that the parties submitted to the non-exclusive jurisdiction of Hong Hong.  The plaintiff issued proceedings in Hong Kong, which a Recorder set aside upon the defendant’s application, approaching the application on the basis of forum non conveniens, weighing up the connecting factors and holding that Japan was the more appropriate forum.  The Court of Appeal allowed the plaintiff’s appeal, holding that, in approaching the matter on the basis of forum non conveniens, the Recorder had not taken the correct approach:  it was not a matter of weighing up the connecting factors to determine whether there existed another forum which was clearly or distinctly more appropriate.  The defendant had to demonstrate strong reasons or exceptional circumstances which allowed it to escape the effect of the non-exclusive jurisdiction clause.

20.  Ma CJHC (as he then was) set out in paragraph 33 of the judgment three illustrations of situations concerning non-exclusive jurisdiction clauses.  The situations described in paragraph 33(1) and (3) are relevant:

“ (1) A sues B in Hong Kong. Hong Kong is named as a non-exclusive jurisdiction to which the parties have agreed to submit in the event of their being sued. The burden on B, if he contests the appropriateness of the Hong Kong courts, is a heavy one.

…

(3) A sues B in Hong Kong.  …, Hong Kong is not named as the non-‌ exclusive jurisdiction but the courts of Japan are.  … the parties have not agreed to submit to any jurisdiction other than the Japanese courts.  In other words, while the parties have agreed to submit to Japanese jurisdiction in the event that they are sued there, and while they have also agreed that they are at liberty to institute proceedings in a jurisdiction other than Japan, no positive obligation exists for a party to submit to any jurisdiction other than Japan.  Here, the burden on B is less heavy.”

21.  In respect of the example in paragraph 33(1), the Chief Judge set out the following approach:

“ 35. … It is clear in my view that where, as in the present case, proceedings are commenced in Hong Kong and the courts here are named as a non-exclusive jurisdiction to which the parties are contractually bound to submit in the event they are sued here (in other words, the para.33(1) situation), strong reasons must be shown by the party sued if he wishes to challenge the appropriateness of Hong Kong jurisdiction.

36. The extent of the burden can be put in several ways but the following provides a ready guide: strong or overwhelming reasons or exceptional circumstances must be shown, such as the existence of factors not contemplated by the parties at the time the relevant agreement was made. … strong reasons must be demonstrated to the court before it allows the parties to be freed from their contractual bargain. …

37. Thus analyzed, in the situation referred to in para.33(1), the effect of a non-exclusive jurisdiction clause in terms of a challenge to the appropriateness of a forum, is in practice the same as an exclusive jurisdiction clause.  …”

22.  The present case is of the type set out in paragraph 33(3), the approach in respect of which the Chief Judge set out as follows:

“ 38. This approach is to be contrasted with the approach of the courts in applications for stay based on forum non conveniens. Where an application is made to stay proceedings on this basis, the test is to enquire whether there exists another available forum which is clearly or distinctly more appropriate than the forum in which the proceedings are sought to be stayed and in which the case may be tried more suitably for the interests of all the parties and for the ends of justice: ….

42. Thus far, I have concentrated on the applicable principleswhen proceedings are commenced in the very jurisdiction whichis identified in a non-exclusive jurisdiction clause (the para.33(1) situation). As I have said, different considerations may well apply in the type of situation identified in para.33(3). In this situation (wherein the parties have not agreed actually to submit to the relevant jurisdiction), the existence of a non-exclusive jurisdiction clause may well carry far less weight, and cannot betreated in the manner as where the parties have agreed to submit to a named forum. …

44. … Both T & K Electronics Ltd v Tai Ping Insurance Co Ltdand Peregrine Fixed Income Ltd v JP Morgan Chase Bank were cases in which proceedings were commenced in Hong Kong, but the relevant non-exclusive jurisdiction clause named other jurisdictions ….  It was therefore not surprising that Stone J dealt with the applications before him on the basis of forum non conveniens principles.  …”

23.  If a plaintiff is not bound to bring proceedings in a named non-‌ exclusive jurisdiction, there is no reason to limit the determination as to which is the more appropriate forum to a consideration of matters which were not within the plaintiff’s contemplation at the time of the agreement. I do not agree that this would effectively render the validity ofall jurisdiction clauses in international contracts uncertain.  The difference in principle between exclusive jurisdiction clauses and non-exclusive jurisdiction clauses is recognized by the courts and must be acknowledged by parties to a contract when they come to choose between an exclusive jurisdiction clause and a non-exclusive jurisdiction clause.

24.  In paragraph 27 of my Decision, I noted that the defendants’ application was of the type identified in the example set out in paragraph 33(3) and, accordingly, I approached the application on the basis of forum non conveniens.  Moreover, both of the defendants’ respective applications were made on the basis of forum non conveniens.  Approaching the application on the basis of forum non conveniens was the correct approach and, in the search for connecting factors, it was open to me to consider the factors set out in paragraph 41 of my Decision.

25.  The fourth ground of appeal is that I erred in taking into account the possibility of any tracing exercise in Hong Kong as a significant factor in favour of the Hong Kong court.  Tracing is a remedy claimed in the Statement of Claim. 

26.  The defendants submitted that, tracing is a remedy only available to the plaintiff if she succeeds in proving at trial a breach of trust by the 3^rd defendant and dishonest assistance in such breach of trust by the 1^st defendant.  In an earlier decision, dated 5 May 2015, discharging an ex parte worldwide Mareva injunction over the 3^rd defendant’sassets, Madam Recorder Linda Chan SC decided (obiter) that the plaintiff did not have a good arguable case in her trust claim against the 3^rd defendant.  The defendants submitted that it must follow that the plaintiff does not have a good arguable case in her dishonest assistance claim against the 1^st defendant, which is a claim for accessory liability based on the 3^rd defendant’s alleged breach of trust.  Given the lack of merits in these claims, the possibility of any tracing in Hong Kong is a “red herring”, let alone a significant factor in favour of the Hong Kong court, the defendants submitted.

27.  Mr Leung SC, for the plaintiff, submitted that paragraph 23 ofthe Statement of Claim includes a plea of fraud which, if proved, arguablygives rise to a claim that the subject money is held on trust for the plaintiff.Mr Lam SC replied that there is no plea that a trust has arisen, rather, paragraph 23(e) of the Statement of Claim asks for rescission.

28.  My approach was to treat the claim based on constructive trust and the remedy of tracing as extant issues, and I refer to paragraphs 17, 18 and 19 of my Decision, and to include tracing as a significant factor in favour of the Hong Kong court in paragraph 41.

29.  Whilst tracing remains an extant issue I do not consider it correct to categorise it as a “red herring”, ie, something which draws attention away from the matter in issue.  As an extant issue, tracing remains a matter in issue in the stay application.  The issue is the weight to be accorded to the possibility of a tracing exercise in Hong Kong when determining the appropriate forum for the trial of this case.

30.  Taken on its own, I can see the defendants’ submission is reasonably arguable but I need to consider my Decision in its entirety.  If I had not considered tracing to be a significant factor, would the balance have tilted in favour of Hong Kong as the appropriate forum?  The answeris “yes”.  I remain of the view that the other factors set out in paragraph 41are more significant factors in the context of this case than those relied upon by the 2^nd defendant.  I remain of the view that the 2^nd defendant failed to establish that Hong Kong is not the appropriate forum and that Singapore is clearly or distinctly more appropriate than Hong Kong and I refer to paragraphs 40 to 44 of my Decision.  For this reason, I consider that the fourth ground of appeal does not have a reasonable prospect of success.

31.  For the above reasons, I dismiss the defendants’ application for leave to appeal.

32.  Costs should follow the event and I order the 1^st and 2^nd defendants to pay the plaintiff’s costs of the application.