SONG LIHUA v. LEE CHEE HON (FORMER NAME: QUE WENBIN)

HCCT 111/2022

[2023] HKCFI 2578

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 111 OF 2022

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BETWEEN

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D E C I S I O N

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1.  On 21 September 2023, this Court directed the application made by the Respondent (“Lee”) by his summons of 30 August 2023 (“Summons”) to be dealt with on the papers, and for written submissions to be filed and served by Lee and the Applicant in these proceedings (“Song”).

2.  The Summons is for payment out to Lee of a sum of HK$38,400,000 which he had paid into court on 23 December 2022. The payment made was for the discharge of a Mareva injunction made by the Court on 12 December 2022, on Song’s application in these proceedings, which injunction applied to Lee’s assets in Hong Kong. These proceedings were commenced by Song on 9 December 2022, seeking leave to enforce an arbitral award made by the Chengdu Arbitration Commission on 11 October 2021 (“Award”). The Award was for Lee’s payment to Song of approximately RMB 337 million, with interest and costs. On 12 January 2023, this Court granted leave to Song, on ex parte basis, to enforce the Award as a judgment of the Court (“Enforcement Order”), with leave granted to Lee to apply to set aside the Enforcement Order within 14 days.

3.  The setting aside application was made by Lee on 26 January 2023, and was heard on 24 August 2023. At the end of the hearing, this Court discharged the Enforcement Order, with reasons to be handed down (“Setting Aside Order”). The Reasons were duly handed down on 5 October 2023.

4.  In the interim between 24 August 2023 and 5 October 2023, Lee issued the Summons for payment out, and on her part, Song applied on 6 September 2023 for leave to appeal against the Setting Aside Order.

5.  The Summons is opposed by Song on 3 grounds. First, it was claimed that reasons had yet to be handed down for the Setting Aside Order, and it would be inappropriate or unnecessary to make an order for payment out before that.

6.  Secondly, it is claimed that there is a pending application for leave to appeal against the Setting Aside Order, and the merits of the application for leave and the consequent appeal, if leave is granted, would have impact on whether orders should be made for payment out to Lee. It is contended that Song should be able to consider the reasons for the Setting Aside Order, in deciding how to respond to the Summons.

7.  Thirdly, Song contends that she has not had the fair and proper opportunity to make full submissions on the basis of evidence which she intends to file in opposition to the Summons.

8.  Substantively, Song argued that the payment into court was made by Lee, in order to be released from the Mareva injunction, which injunction was granted by the Court on the basis that there was a risk of dissipation on the part of Lee, to avoid the consequences of the Award. Song referred to the evidence she had filed in support of the Mareva injunction, including the fact that Lee had been put on the List of Dishonest Judgment Directors on the Mainland since 2018, was involved in numerous court cases, and there has been a significant number of instances where enforcement by creditors on the Mainland against Lee has failed. Song contends that Lee is of low commercial morality with a tendency to dissipate his assets in order to frustrate her recovery efforts under the Award.

9.  The reasons advanced by Song as to why the Summons should not be determined at this stage are rejected.

10.  I cannot see how or why Song would not be able to respond to the Summons before the reasons for the Setting Aside Decision are handed down. The Reasons for the Setting Aside Order are relevant only for the purposes of her intended appeal. Whatever the reasons, the fact remains that the Enforcement Order has been set aside, and enforcement of the Award in Hong Kong has been refused by this Court. The grounds for the setting aside, now indicated in the Reasons, are that it would be contrary to the public policy of Hong Kong to enforce the Award.

11.  There is no need to file factual evidence for determination of the Summons. In this case, whether payment out should be made to Lee at this stage is decided on questions of law and matters which can be dealt with by submissions. Song has been given the opportunity to file submissions in opposition to the Summons, which she has done through her lawyers, and I see no injustice as contended. The case of Dunbar Assets Pie v Dorcas Holdings Ltd [2013] EWCA Civ 864 cited by Counsel for Song is totally distinguishable, as it refers to the need for the Court to invite and to hear submissions on a claim before summary disposal without a trial. Written submissions have been filed by Counsel for both parties in this case for the Summons. In Counsel’s submissions for Song, reference has been made to the evidence filed by her in support of the Mareva injunction, as to Lee’s lack of commercial morality and the risk of dissipation of his assets. I have, for the purpose of determining the Summons, considered these affirmations and assumed the facts stated therein to be true, and in favor of Song.

12.  To the extent that the merits of the intended application for leave to appeal are relevant to determination of the Summons, the Setting Aside Decision is one on the exercise of the Court’s discretion. The threshold for obtaining leave to appeal against such a decision is high. It must be shown that the exercise of discretion was made under a mistake of law, or under a misapprehension as to the facts, or that the judge had taken into account irrelevant matters or failed to take into account relevant matters, such that the conclusion reached was outside the generous ambit within which reasonable disagreement is possible. The appellate court may disagree with the conclusion, but that does not mean that the decision of the 1^st instance judge is wrong and can be set aside. I am not satisfied that there are reasonable prospects of success in Song’s application for leave to appeal against the Setting Aside Order, or that the merits are so strong that they would have an impact on the determination of the Summons.

13.  The fact that there is an appeal does not operate as a stay of any decision or judgment, or the effect of such decision or judgment. Even if there was a pending appeal against the Setting Aside Award, the fact remains that the Enforcement Order has been set aside, and enforcement of the Award has been refused in Hong Kong.

14.  The payment into court was made for the discharge of the Mareva injunction. The Mareva injunction was in support of the claim for enforcement of the Award in Hong Kong. It was granted on the basis that there was a good arguable case that Song would be able to obtain leave to enforce the Award as a judgment in Hong Kong. With the Enforcement Order set aside since 24 August 2023, there is simply no basis and no cause to support the Mareva injunction if it had been continued (Essilor Manufacturing (Thailand) Co Ltd v G Doulatram and Sons (HK) Ltd [2021] HKCI 30). The payment into court made under and for the purpose of discharging the Mareva injunction likewise ceases to have support, and there is no reason not to permit repayment of the money to Lee.

15.  On behalf of Song, it was argued that the Award has not been set aside on the Mainland, and that it would somehow be unfair if Lee’s assets in Hong Kong should be released from the Mareva injunction granted by the Hong Kong Court in respect of his assets and funds in Hong Kong. There is no merit in this contention. The fact that there is an award which may be enforced on the Mainland, or elsewhere, does not mean that Lee’s assets in Hong Kong should be subject to an injunction in Hong Kong, where the Award is unenforceable. Song will simply have to look to other assets of Lee, on the Mainland or outside Hong Kong, for recovery under the Award. There is no injustice. An award does not guarantee successful recovery.

16.  For all the above reasons, I accede to the Summons and make the orders sought therein. As correctly pointed out by Counsel for Lee, the Enforcement Order made on the Originating Summons has been set aside, and enforcement of the Award has been refused. For completeness, an order can be made to dismiss the Originating Summons. The sum of HK$38,400,000 paid into court on 23 December 2022, with interest accrued, should be paid out to Lee through his solicitors. The summons issued by Song for payment to her of the money paid into court should be dismissed.

17.  An order nisi will be made, that the costs of the Summons and of the dismissal of Song’s application for payment of the funds to her (made prematurely on 14 June 2023) are to be paid by Song to Lee, with certificate for counsel. Such order shall be made absolute unless application for variation is made within 14 days.