KING BUN LTD AND OTHERS v. LAU MAN SANG, JAMES AND OTHERS

HCA 1711/2023

[2025] HKCFI 5085

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1711 OF 2023

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REASONS FOR DECISION

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A. INTRODUCTION

1.  By Notice of Appeal of 5^th March 2025, the Defendants sought to appeal against the decision of Master Bonnie Cheng of 29^th February 2025 (“the Decision”), ordering that summary judgment be granted in favour of the Plaintiffs for US$1,091,150.44, together with interest.

2.  At the hearing, I dismissed the appeal.  I now set out my reasons for so doing.

B.  BACKGROUND

3.  The Plaintiffs brought the present proceedings to enforce four costs orders (“the Costs Orders”)  obtained in the BVI High Court of Justice (“the BVI Court”)  against the Defendants in the total amount of US$1,091,150.44 (“the Sum”), together with interest.  The Costs Orders were obtained between November 2022 and February 2023, following a judgment on liability in favour of the Plaintiffs against the Defendants (and others)  in proceedings in the BVI Court (“the BVI Action”).

4.  No appeal was brought by the Defendants against the Costs Orders, and the deadlines for appealing each of the orders have passed.

5.  Subsequently, in November 2023, the Defendants were ordered to pay the Plaintiff’s substantial equitable compensation plus interest, following a trial to determine quantum and relief (“the Quantum Order”).

6.  In December 2023, the Defendants filed an application to set aside the Quantum Order (“the Quantum Setting Aside Application”).  They then further filed an appeal against the Quantum Order (“the Quantum Appeal”).

7.  In April 2024, the BVI Court dismissed the Quantum Setting Aside Application.

8.  In May 2024, the Defendants filed an application for leave to appeal against the BVI Court’s dismissal of the Quantum Setting Aside Application.

9.  In the present proceedings, the Plaintiffs filed evidence exhibiting legal opinions from BVI lawyers, explaining and opining that:

9.1  the Costs Orders established, on a final basis, the Defendants’ liability to the Plaintiffs for the costs which have been assessed and adjudged to be payable, and were res judicata between the parties on the issue;

9.2  the Costs Orders were not liable to be varied or set aside by the BVI Court and could only have been challenged on appeal, although the time period for seeking leave to appeal had long expired (being fourteen days from the date of each of the Costs Orders);

9.3  what constituted a final and conclusive order from a BVI law perspective was generally informed by common law principles as established in English case law on the subject.  The Costs Orders were final and conclusive orders from a BVI perspective.

10.  The Defendants did not file any evidence as to BVI law.

C.  ENFORCEMENT OF FOREIGN JUDGMENT AT COMMON LAW

11.  There was no dispute that a foreign judgment may be enforced at common law if it is:

11.1  for a debt or definite sum of money;

11.2  made by a court of competent jurisdiction over the parties and the subject matter;

11.3  between the same parties or their privies on an identical issue;

11.4  final and conclusive on the merits;

11.5  not impeachable according to the rules on conflict of laws of Hong Kong.

See Jiang Xi An Fa Da Wine Co Ltd v Zhan King [2019] HKCFI 2411 at [52] (Lisa Wong J).

12.  The phrase “final and conclusive” was considered in Fabiano Hotels Ltd v Profitmax Holdings Inc & ors [2017] 6 HKC 414 at [19], in which DHCJ To, after citing Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853 at 946 where Lord Reid approved the test of finality as formulated by Lord Herschell in Nouvion v Freeman (1889)  15 App Cas 1 at 9, said:

“The phrase ‘final and conclusive’ is therefore understood to mean ‘final and conclusive on the merits’ of the cause. If a judgment is provisional or nisi in that the judicial system provides for a procedure to enable the parties to re-argue their case before the same court pronouncing their judgment which would enable the same court to set aside the judgment or alter it, such a judgment is not final. But the possibility of appeal to a higher court and the fact that the judgment is currently under appeal do not alter its finality. The test of finality is therefore the treatment of the judgment by the tribunal pronouncing it as res judicata between the parties and putting it beyond its power to abrogate or alter its decision.”

D.  THE GROUNDS OF APPEAL

13.  The Defendants’ grounds of appeal were as follows.

13.1  Rule 42.9 of the Civil Procedure Rules of the Eastern Caribbean Supreme Court (“CPR”)  provides for a mechanism to vary the time for compliance with the Costs Orders, as well as the mode of payment of the Sum.  The Costs Orders are therefore not final and conclusive.[1]

13.2  The BVI Action is ongoing, as the Defendants still have unlitigated cross-claims, and the Sum is liable to be subject to set-off.

D1.  Ground of appeal (1): CPR r.42.9

14.  CPR r.42.9 provides as follows.

“Time for complying with judgment or order

42.9 A party must comply with a judgment or order immediately, unless the –

(a)  …

(b)  court varies the time for compliance, including specifying payment by instalments; or

(c)  judgment or order specifies some other date for compliance.”

15.  Mr Christopher Law, counsel for the Defendants, submitted that since CPR r.42.9 allows the Costs Orders to be altered by the court that pronounced them, without having to appeal, the Costs Orders are not final and conclusive.  He relied on Jiang Xi An Fa Da Wine Co Ltd, Nouvion, and Lee Yau Wing v Lee Shui Kwan [2007] 2 HKLRD 750.

16.  Nouvion was a case where, as Mr Law submitted, under Spanish law, in certain cases a party could take summary or “executive” proceedings to recover a debt, obtaining a “remate” judgment.  The unsuccessful party could, however, then take further ordinary or “plenary” proceedings in the same court and in respect of the same subject matter.  The scope of the defences which could be taken differed between the two types of proceedings.  In the “plenary” proceedings, the “remate” judgment could not be set up as res judicata, and a “plenary” judgment would render the “remate” judgment inoperative and require the restoration of monies paid thereunder.  The suggestion was that there is a mechanism to vary the Costs Orders under CPR r.42.9 and they are therefore not final and conclusive.[2]

17.  However, CPR r.42.9 does not suggest that a judgment or order can be re-opened and re-argued on the merits.  It merely provides for the possibility of varying the time for compliance with the judgment or order.  In fact, the rule confirms that the judgment or order in question stands on the merits, since the premise of the rule is that the party in question must indeed comply with the judgment or order, whether immediately or according to some other time frame.

18.  The Defendants have not put forward any BVI legal opinion to suggest that CPR r.42.9 in fact enables the re-opening and re-arguing of the Costs Orders on their merits.

19.  In Lee Yau Wing, the Court of Appeal considered the question of whether the “trial supervision” system in mainland law, which could lead to a retrial by the same court, meant that a mainland judgment was not final and conclusive.  The majority of the court considered that this was an issue of public importance and involved complicated legal questions that could not be determined in the absence of trial.  Mr Law relied on this authority (and Jiang Xi An Fa Da Wine Co Ltd)  for the submission that whether or not the Costs Orders could be considered as “final and conclusive” could only be determined after cross-examination of the Plaintiffs’ expert.[3]

20.  I do not agree.  There is no evidence – whether of BVI law or otherwise – to suggest that any complicated legal question arises as regards the interpretation of CPR r.42.9, such as to require cross-examination of the Plaintiffs’ expert.

21.  Mr Law also submitted that the Plaintiffs’ BVI legal opinion did not go into the details of how CPR r.42.9 applied, when it applied, and its limitations, and that it simply referred to this (and other)  rules and said that they did not apply in the present case.[4]

22.  However, the BVI legal opinion explained that (1)  what constituted a “final and conclusive” order under BVI law was generally the same as that under English law, (2)  the mechanism for challenging an assessment of costs was by appeal under rule 65.18 of the CPR, (3)  the Costs Orders were not liable to be varied or set aside by the BVI Court and could only be challenged on appeal, although the time for doing so had expired.  It is tolerably clear from this that the opinion being expressed was that CPR r.42.9 did not provide a means of challenging the Costs Orders on their merits, and what the reasons were for such an opinion.

23.  Mr Law further submitted that the expert evidence had not been filed pursuant to expert directions, and that the BVI lawyers in question had acted for the Plaintiffs in the BVI Action, so that less weight should be accorded to the evidence.  However, it remains the case that the Defendants have not filed any contrary evidence to suggest that the opinion expressed by the Plaintiffs’ lawyers – which in any event accords with the language of CPR r.42.9 – is incorrect.

D2.  Ground of appeal (2): set-off

24.  Mr Law submitted that as the BVI Action was still ongoing – as (1)  the Quantum Setting Aside Appeal and (2)  the Quantum Appeal were still “un-litigated” – there might be “future costs orders” in favour of the Defendants to be set-off against the Sum.[5] Mr Law then referred to various authorities for a number of general propositions,[6] but with respect, it is not apparent that any of them have particular application to the present case, so I hope I will be forgiven for not dealing with those propositions, and for turning directly to the arguments and authorities which were said to apply in the present case.

25.  Mr Law cited Derham on the Law of Set-Off, 5^th ed., paragraph 2.104 in support of a submission that any interlocutory costs which the Plaintiffs were ordered to pay to the Defendants in the course of the BVI Action would “in equity impeach the right of [the Plaintiffs] to recover from [the Defendants] costs of the action ordered to be paid by the Defendants”.[7]

26.  However, in this part of Derham, the learned authors were discussing the particular situation of a set-off of judgments and orders against each other (see paragraph 2.101, where reference was made to the practice, originating in the eighteenth century, of the courts allowing a judgment or order for the payment of a sum of money to be set off against another such judgment or order).  The learned authors discussed the issue of the nature of this type of “set-off”, and expressed the view that it was quite different in nature to the defence of equitable set-off to an action; rather, the court could direct such a set-off pursuant to its inherent jurisdiction, in the exercise of its discretion (see paragraphs 2.106, 2.108).  The learned authors also referred to the current provision in the English rules of court which specifically provides for the setting-off of costs where one party entitled to costs is also liable to pay costs (see paragraph 2.100).

27.  In the present case, there is simply no costs order in the BVI Action in favour of the Defendants against the Plaintiffs which can be set off against the Costs Orders.  Moreover, even if there were such a costs order, whether or not there is to be any setting-off would be a matter for the discretion of the BVI Court according to BVI law or rules of court (assuming that BVI law in this regard does provide for this type of “set-off” of one costs order against another).

28.  Accordingly, the authorities relied on by Mr Law in his skeleton in this context (Alliance Bank of London and Liverpool Ltd v Holford (1864)  16 CB(NS)  460, said to be the same as the present case; [8] Lockley v National Blood Transfusion Service [1992] 1 WLR 492, for the proposition that a set-off is “natural and equitable”; and Adelekun v Ho [2021] 1 WLR 5132, for the proposition that it is for the Plaintiffs to give a special reason to object to the set-off)  do not assist.  Similarly for Re A Debtor, No.21 of 1950 (No.2) [1951] 1 Ch 612, which Mr Law referred to at the hearing.  The fact that (as highlighted by Mr Law)  there, the set-off under consideration[9] was between judgments between the parties in different actions does not change the fact that in the present case, there is no order in favour of the Defendants which could be used for setting-off (whether in the BVI Action or other proceedings in the BVI Court), and that even if there were, the nature of the set-off which Mr Law seeks would be one for the BVI Court to consider, rather than for the Hong Kong court in the present (Hong Kong)  proceedings.

29.  It was (rightly)  not suggested that the Defendants have any current cross-claim in the present Hong Kong proceedings based on possible future costs orders which may (or may not)  be made by the BVI Court against the Plaintiffs.  This would be no more than mere speculation.

30.  At the end of the day, what Mr Law’s submission on Ground 2 amounted to is, in effect, the proposal he put forward in concluding his submissions: why not wait until the conclusion of the BVI Action, to see what order might be made by the BVI Court?  However, this is simply not an arguable defence for the purposes of resisting an application for summary judgment based on the Costs Orders.

E.  DISPOSITION

31.  As neither ground of appeal disclosed an arguable defence, I dismissed the appeal, and further ordered that the Defendants pay costs to the Plaintiff, summarily assessed at $160,000.