CHINA CITIC BANK CORPORATION LTD (QUANZHOU BRANCH) v. LI KWAI CHUN AND OTHERS

HCMP 1439/2017

[2019] HKCFI 2540

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1439 OF 2017

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DECISION

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A. Introduction

1.  This is the hearing of the summons dated 28 September 2017 (the “Setting Aside Summons”) taken out by the defendants (“D1” “D2” “D3”, and collectively “Ds”) for an Order that the Order of Master Hui dated 28 August 2017 (the “Registration Order”) registering two Judgments obtained against them by the plaintiff (“P”) from the Intermediate People’s Court of Quanzhou City, Fujian Province ^[1] (the “Quanzhou IPC”) be set aside.  The Judgments, both dated 17 February 2017, were handed down by the Quanzhou IPC in (a) Action (2016) 閩05民初1896号 (the “Quanzhou IPC 1896 Action” and the “Quanzhou IPC 1896 Judgment”) and (b) (2016) 閩05民初1897号 (the “Quanzhou IPC 1897 Action” andthe “Quanzhou IPC 1897 Judgment”) (collectively the “Quanzhou IPC Proceedings” or “Quanzhou IPC Actions”, and the “Quanzhou IPC Judgments”).  The issue turns on whether Ds had been “summoned to appear according to the law of the Mainland” to defend the Quanzhou IPC Actions.

B.      HCMP 1408/2017

2.  In a separate action (ie HCMP 1408/2017), P has sought and obtained against Ds under sections 21M and 21N of the High Court Ordinance a Mareva Injunction in aid of the Quanzhou IPC Actions (the “Mareva Injunction”).  P first obtained the same on an ex parte basis from Deputy Judge To on 16 June 2017.  The parties subsequently came before me for its continuation/discharge.  On 3 August 2018, I handed down my Decision (the “3/8/2018 Decision”) allowing P’s Continuation Summons and dismissing Ds’ Discharge Summons.  I refer to that Decision for the background of the case. 

3.  When dealing with the Mareva Injunction, I was not concerned with the Setting Aside Summons ^[2], as Ds were content that it be heard on another day.  I now am.

C.      The affirmatory evidence

4.  The application for the Registration Order was supported by the two affirmations of Tang Ka Leung Jack filed on 21 June 2017 (“Tang#1”) and 14 July 2017 (“Tang#2”), and that of Huen Ho Yin dated 3 August 2017 (“Huen#1”).  Tang#2 and Huen#1 were filed in answer to certain queries which Master Hui had raised in respect of the application.

5.  In support of the Setting Aside Summons, D3 has made 4 affirmations of 28 September 2017, 4 December 2017, 30 January 2018 and 31 May 2018 (“D3#1 to D3#4” respectively).  She did so on behalf of all Ds.

6.  In response, P has filed the affirmation of Wu Yixin of 4 January 2018 (“Wu Aff”) and the 2^nd affirmation of Huen Ho Yin (“Huen#2”).

7.  In her affirmations, D3 has said on a number of occasions[3] that in making their application to set aside, Ds sought to rely on sections 18(1)(a), (f) and 19 of the Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap 597 (the “Ordinance”), and/or the ground of material non‑disclosure.  In particular, D3 has adduced before this Court quite some evidence on the issue as to whether the Quanzhou IPC Judgments were final and conclusive.  However, both in his written submissions and in the course of the hearing, Mr Anson Wong SC, who together with Mr Martin Kok appeared for Ds, confirmed that the only statutory ground which Ds would rely upon was section 18(1)(f) of the Ordinance.  A lot of facts which D3 has deposed to are therefore no longer relevant.

D.      The background facts

8.  The facts of relevant to this application may be summarised as follows.

9.  P is a licensed bank and a sub‑branch of China Citic Bank Corporation Limited (“Citic Bank”).  The latter is a publicly listed corporation both in the Shanghai Stock Exchange and Hong Kong Stock Exchange.

10.  D2 and D3 are husband and wife.  D1 is D2’s mother.  They are all Hong Kong residents.

11.  D1 was the founder of Jiayi (Fujian) Import and Export Trading Company Limited (“Jiayi”) and Jinjiang Zhenxing Shoes and Plastics Company Limited (“Zhenxing”).  They were incorporated in the Mainland.  Jiayi carried on trading business, whilst Zhenxing carried on manufacturing business.  Ds were their ultimate beneficial owners.

12.  P started its business relationship with D1 in 2007 when she applied for loans from P for her companies in the Mainland. 

13.  By two lines of credit agreements dated 26 June 2015, P extended a credit line facility to each of Jiayi (the “Jiayi Line”) and Zhenxing (the “Zhenxing Line”). Each of the two lines was up to RMB 31.5 million, and for the period between 26 June 2015 and 25 June 2016.  The purposes of the credit agreements were for repayment of previous loans which P had provided to them.

14.  Also on 26 June 2015, Ds entered into personal guarantees to secure Jiayi’s and Zhenxing’s indebtedness to P.  Those guarantees were all called “Maximum Guarantee Agreements”, and had similar terms.  D1 entered into two, one in respect of the Jiayi Line and one in respect of the Zhenxing Line.  D2 and D3 as husband and wife together also similarly entered into two.  I set out some of their relevant terms are as follows:

(a)  In the Maximum Guarantee Agreements, Ds’ address (the “MGA Address”), postal code and work unit were stated as follows, but the postal code had been left blank:

「住所	：晉江梅嶺街道竹樹下工業區[4]
郵政編碼	：362200[5]
工作單位	：晉江振興鞋塑有限公司」

(b)  Articles 18.2.3 and 18.2.4 provided that:

「18.2.3 司法機關或仲裁機構亦可按本款約定的地址、聯繫方式向甲方發送相關（法律）文書，無人簽收或甲方拒收的，則（法律）文書退回之日視為送達之日；如直接送達時甲方拒收的，送達人可採取拍照、錄像方式記錄送達過程，並將（法律）文書留置，亦視為送達。甲方提供錯誤聯繫方式或未及時告知變更後聯繫方式的，導致（法律）文書未能送達或退回的，則（法律）文書退回之日視為送達之日。

18.2.4   如果甲方提供的上述聯繫方式發生變更的，應在變更後三日內書面通知乙方；在本合同項下債務進入訴訟或仲裁階段後，則須以書面方式告知審理機關。否則按原聯繫方式發出的通知或其他文書，即使變更方沒有收到，仍視為送達。」 

15.  Pursuant to the two lines of credit agreements, and by two RMB working capital loan agreements dated 16 November 2015, P granted to Jiayi and Zhenxing loans in the respective total amount of RMB 28,952,742 and RMB 30,817,595.  The loans were repayable with interest by 15 November 2016.  The Maximum Guarantee Agreements covered those loans.

16.  Jiayi and Zhenxing were unable to repay those loans.

17.  On about 9 December 2016, P commenced the Quanzhou IPC Actions against Jiayi and Zhenxing.  Ds were also sued as guarantors. 

18.  According to Tang#1:

“32. On around 9^th December 2016, [P] commenced two civil actions in the [Quanzhou IPC].

...

35. In the course of the two [Quanzhou IPC Actions], the [Quanzhou IPC] issued Notice to the parties in accordance with the PRC law, including [D1, D2, and D3], at their addresses for service provided in the respective Maximum Guarantee Agreements informing them of the claims.

36. On or around 18^th January 2017, the [Quanzhou IPC] issued a freezing under [sic] order over, inter alia, the property of the [Ds] up to maximum of RMB 31 million to preserve assets pending litigation.

37.  On or around 17^th February 2017, the hearings of the two [Quanzhou IPC Actions] was [sic] held.  Even though the necessary documents in the [Quanzhou IPC Actions] have duly served by the [Quanzhou IPC] on [Ds], [Ds] have failed to appear or take part in the two [Quanzhou IPC Actions].”

19.  It is not in dispute that the Court documents sent to Ds at the MGA Address had been returned to the Quanzhou IPC undelivered[6].

20.  On 17 February 2017, the Quanzhou IPC handed down the Quanzhou IPC 1896 Judgment and Quanzhou IPC 1897 Judgment. They were in favor of P.  The principal amounts which Ds were held liable for were RMB 28,952,742.41 and RMB 30,817,595.23 respectively.

21.  In the Quanzhou IPC 1896 Judgment, the Quanzhou IPC observed and held that:

「...[D1]、[D2]、[D3] 均未到庭也未提出書面答辯意見，視為放棄抗辯權利。[7]

...因 [D1]、[D2]、[D3] 均係香港特別行政區居民，本案屬涉港民商事案件，應參照涉外案件處理。[8]

...[D1]、[D2]、[D3] 經本院合法傳喚，未到庭參加訴訟，本院依法缺席判決。[9]」

22.  In the Quanzhou IPC 1897 Judgment, the Quanzhou IPC similarly observed and held that:

「...[D1]、[D2]、[D3] 經本院依法傳喚，均無正當理由未到庭參加訴訟。本案現已審理終結。[10]

...[D1]、[D2]、[D3] 經本院合法傳喚，未到庭參加訴訟，本院依法缺席判決。[11]」

23.  On 11 April 2017, the Quanzhou IPC certified that the Quanzhou IPC Judgments had taken effect on 25 March 2017.

24.  On 21 June 2017, P issued the Originating Summons herein for registration of the Quanzhou IPC Judgments pursuant to s 5(1) of the Ordinance.

25.  On 12 July 2017, Ds applied to the Higher People’s Court of Fujian Province (the “Fujian HPC”) for retrial of the Quanzhou IPC Actions.

26.  On 28 August 2017, Master Hui granted the Registration Order.

27.  On 13 September 2017, P issued a Notice of Registration of the Quanzhou IPC Judgments.

28.  On 26 September 2017, the Fujian HPC dismissed Ds’ application for retrial of the Quanzhou IPC 1897 Action.  It is important to note that when seeking a retrial, one of the points relied upon by Ds was the alleged unlawful service of the hearing notices.  As recorded by the Fujian HPC in its judgment (“Fujian HPC 1897 Retrial Judgment”):

「再審申請人[D1]、[D2]、[D3] 申請再審稱: 一...二...三、原審法院適用程序違法。原審法院直接適用被申請人提供的地址進行送達錯誤，直接採用郵寄送達也是錯誤的，一審未在公告後給予合法的答辯期、舉證期，剝奪了當事人權利。」[12]

On that point, the Fujian HPC expressed its view that:

「本院經審查認為...關於程序問題，原審法院根據再審申請人確認的送達地址進行送達，符合法律規定，並未剝奪當事人權利。」[13]

29.  On 28 September 2017, Ds issued the present Summons.

30.  On 29 September 2017, the Fujian HPC further dismissed Ds’ application for retrial of the Quanzhou IPC 1896 Action. When seeking a retrial of the Quanzhou IPC 1896 Action, Ds similarly sought to rely on the alleged unlawful service of the hearing notices.  P argued otherwise.  In its judgment (“Fujian HPC 1896 Retrial Judgment” ^[14]), the Fujian HPC recorded that:

「[D1]、[D2]、[D3] 申請再審稱: 1...2...3...4. 原審法院適用程序違法。原審法院直接適用被申請人提供的地址進行送達錯誤，直接採用郵寄送達是錯誤的，一審未在公告後給予合法的答辯期、舉證期，剝奪了當事人權利...

[P] 答辯稱，1. 一審法院各項程序均嚴格依法進行，申請人主張一審法院程序違法不符合事實，依法不應予以支持。一審法院將訴訟的法律文書均按照申請人所提供的《確認函》確認的送達地址進行郵寄送達，符合法律要求，不存在任何法律瑕疵。」[15]

On that point, the Fujian HPC expressed its view that:

「本院經審查認為...三申請人簽訂的《最高額保證合同》中第18.2.3條款約定，『司法機關或仲裁機構亦可按本款約定的地址、聯繫方式向甲方發送相關（法律）文書，無人簽收或甲方拒收的，則（法律）文書退回之日視為送達之日』，且三申請人向被申請人出具了《確認函》確認了送達地址，一審法院據此向當事人約定的送達地址郵寄相關法律文書，送達程序並無不當。」[16]

31.  On 30 October 2017, Ds made civil protest applications (the “Civil Protest Applications”) to the People’s Procuratorate of Fujian Province (“PPFP”) for review of Quanzhou IPC Judgments. 

32.  On 25 December 2017, the PPFP dismissed the Civil Protest Applications in respect of both of the Quanzhou IPC Actions.  In its decisions (the “PPFP Decisions” ^[17]), the PPFP expressed the view that:

「在上述《最高額保證合同》、《確認函》中，莊瓊珍代蕭嘉欣簽名同意，司法機關或仲裁機構可按約定地址、聯繫方式發送相關法律文書，原審法院按蕭嘉欣代理人事先確認的地址送達相關法律文書，沒有剝奪蕭嘉欣的辯論權利。申請人關於原審法院送達程序違法，剝奪蕭嘉欣辯論權利的主張不能成立，依法不應予以支持。」[18]

33.  Subsequent civil actions and appeals brought in the Mainland by D3 to set aside her Maximum Guarantee Agreements have also been unsuccessful ^[19].

E.  Bases of the application

34.  Wong summarized the bases of Ds’ application as follows[20]:

“...it is submitted that Ds were not summoned to appear before the [Quanzhou IPC] to defend the [Quanzhou IPC Proceedings], and accordingly the Registration Order ought to be set aside under S 18(1)(f) of the [Ordinance]. Moreover, Ds submit that the Registration Order is liable to be set aside on the further ground of P’s material non‑disclosure.”

35.  I will look at the two grounds in turn.

F.       The ground based upon s 18(1)(f) of the Ordinance

F.1.    SECTION 18(1)(F) OF THE ORDINANCE

36.  Section 18(1)(f) of the Ordinance provides that:

“ Cases in which registration of registered judgments shall be set aside

(1) On an application in that behalf made by any party against whom a registered judgment may be enforced, the registration of the judgment shall be set aside if the Court of First Instance is satisfied that—

...

(f) the judgment debtor who did not appear in the original court to defend the proceedings—

(i)   was not summoned to appear according to the law of the Mainland; or

(ii)  was so summoned but was not given sufficient time to defend the proceedings according to the law of the Mainland;”

F.2.    ONUS AND STANDARD OF PROVING THE GROUNDS UNDER S 18(1)

37.  On the question of onus of proof, s 18(1) may usefully be contrast with s 5 of the Ordinance.  S 5(1) of the Ordinance permits a judgment creditor under a Mainland judgment to apply to have the judgment registered in the Court of First Instance.  S 5(2) stipulates that:

“On an application made under subsection (1), the Court of First Instance shall order the Mainland judgment to be registered in accordance with this Ordinance if the judgment creditor has proved to the satisfaction of the Court of First Instance that the following requirements are satisfied...”

38.  Contrasting the wordings of the ss 5(2) and 18(1), it is in my view clear that (1) the onus of proving the grounds under s 5(2) when registration is being sought is on the judgment creditor, whilst (2) the onus of proving the grounds under s 18(1) is on the party seeking to have the registration of the judgment set aside.  This view is consistent with the contents of the Report of the Bills Committee on Mainland Judgments (Reciprocal Enforcement Bill) dated 21 April 2008, that:

“25.   Under clause (2) of the Bill, a Mainland Judgment will be registered by the Court of First Instance if the judgment creditor has proved to the satisfaction of the court that...

...

106.  Under the Bill, all the grounds (including ‘public policy’) against enforcement of judgments are set out in clause 18(1).  A judgment debtor is required to ‘prove to the satisfaction of the Court of First Instance’ that a judgment should not be enforced...”

39.  Hence, in the context of an application to set aside on the basis of s 18(1)(f)(i), the onus is not on the judgment creditor to show that the judgment debtor was summoned to appear, but is on the judgment debtor to show so as to satisfy the Court of First Instance that he “was not summoned to appear according to the law of the Mainland”.

40.  On the question of standard of proof, the wording of s 18(1) is in my view also clear.  The grounds will have to be established, not just on any prima facie or arguable basis, but on the usual civil standard.  In the context of s 18(1)(f)(i), the judgment debtor has to establish on the balance of probabilities that he “was not summoned to appear according to the law of the Mainland”.

F.3.    PROOF OF MAINLAND LAW

41.  In deciding the issues as to whether the judgment debtor was summoned to defend and whether, if so summoned, was given sufficient time to defend the proceedings are to be decided “according to the law of the Mainland”, proof of the relevant law of the Mainland is necessarily required.

42.  On the approach which the Court should adopt when receiving and considering Mainland law, Deputy Judge Lam (as the learned V‑P then was) observed in Shenzhen Development Bank Company Limited v New Century Int’l (Holdings) Limited & Anor HCA 2976/2001, unrep, 31 July 2002 as follows:

“ 25. ...In the resolution of conflicts in the expert evidence on foreign law, a judge is entitled and indeed obliged to use his legal training insofar as it may have a bearing on the resolution of dispute. The proper approach has been held by the English Court of Appeal in MCC Proceeds Inc. v Bishopsgate Investment Trust [1999] CLC 417 at p 421 [13] to be as follow,

‘In our judgment, the answer varies according to the nature of the issue which arises in the particular case and the kind of decision which the trial judge and now the Court of Appeal is called upon to make. Sometimes the foreign law, apart from being in a foreign language, may involve principles and concepts which are unfamiliar to an English lawyer...The English judge’s training and experience in English law, therefore, can only make a limited contribution to his decision on the issue of foreign law. But the foreign law may be written in the English language; and its concepts may not be so different from English law. Then the English judge’s knowledge of the common law and of the rules of statutory construction cannot be left out of account. He is entitled and indeed bound to bring that part of his qualifications to bear on the issue which he has to decide, notwithstanding that it is an issue of foreign law. There is a legal input from him, in addition to the judicial task of assessing the weight of the evidence given.’

And further at p 423 [19],

‘[The judge] is entitled, indeed bound, to contribute his own legal skill and experience in reaching his conclusion, so much so that he may, in a suitable case, form his own view of the meaning of a statute which the expert witness tells him is the governing foreign law, even if the expert’s opinion as to its meaning is different from his own ...’

And on the same page, [20],

‘ ...whether the judge is only entitled to reject the expert’s opinion evidence as to the meaning of the statute when the witness has put forward an ‘impossible view’...in our judgment, the trial judge’s powers are not so limited...in a case where the English court interprets the statute in accordance with English rules of construction, there being no evidence that different rules would govern the foreign court’s interpretation, and where there is no suggestion that any of the words of the statute has a special meaning, different from its ordinary meaning, in the foreign context.’

...

27.  ...the court is not bound to accept that the views of an expert are credible.  The court is entitled to examine the views of the expert against the primary source of foreign law.  In the present context, as a bilingual judge, I regard myself as duty bound to use my knowledge in the Chinese language and legal training, insofar as permissible in accordance with the principles set out in Bishopsgate Investment to examine the relevant legislations, directives and other authorities referred to by the experts...”

43.  Whilst the trial judge has his contributions to make in the process, it is not to be lost sight of that Mainland law is to be proved as a fact.  Strictly speaking, it is a fact finding exercise.  For that purpose, evidence has to be examined and weighed. 

44.  In that examination and weighing exercise, some evidence carries much higher weight than others.  The case of Bankers & Shippers Insurance Co v Liverpool Marine & General Insurance Co (1926) 24 Ll L Rep 85 illustrates the point.  In that case, the gist of the matter was the meaning and effects of certain provisions in the Arbitration Act of 1920 of the State of New York.  The trial judge made his finding.  On appeal, the Court of Appeal disagreed and made a different finding.  In the meantime, before the case reached the House of Lords, the very same issue came before the Court of Appeals in the State of New York (which was the Court of last resort in that State) in a different case.  The English Court of Appeal decision in Bankers & Shippers Insurance was cited to the New York Court of Appeals.  The New York Court of Appeals disagreed with the English Court of Appeal, and expressed its opinion that the trial judge was indeed correct.  The opinion of the New York Court of Appeals was ultimately adduced as additional evidence when Bankers & Shippers Insurance reached the House of Lords.  The additional evidence was accepted and the English Court of Appeal reversed.  Lord Sumner at p 93 of the judgment observed that the question of foreign law is a question of fact in the English Court.  His Lordship then at p 94 observed that:

“Evidence of the opinion of the highest Court of the foreign State whose law happens to form the subject‑matter of proof in this country, is obviously for an English Court the best available evidence upon the question, and is such that, if it is clearly directed to the point in dispute and in unsusceptible of any but one interpretation, other evidence of that law could hardly be set against it.” (emphasis added)

45.  According weight as a matter of evidence to the opinion of the foreign court on the issue in question makes perfect sense.  The determination of foreign law is a matter for the foreign court.  A domestic court ought not lightly reach the conclusion that a foreign court is wrong unless possibly that there exists evidence that the determination is clearly perverse. As explained by Walker J in Malicorp Limited v Government of the Arab Republic of Egypt [2015] EWHC 361 (Comm) (at [25]):

“ Malicorp’s objection (3) can be dealt with shortly. As observed by Egypt, an assertion that a foreign judgment is ‘wrong’ is not a sufficient basis to refuse to recognise it. When considering whether to recognise a foreign judgment this court acknowledges that the determination of foreign law is a matter for the foreign court. Thus evidence relied on by Malicorp that the 2012 Cairo Court of Appeal decision is wrong does not address the relevant issues. As Egypt points out, there is no suggestion in that evidence that the 2012 Cairo Court of Appeal decision is perverse. Allegations that there was a failure ‘to take account of’ Malicorp’s submissions merely because those submissions were not repeated in the judgment, or that the judgment gave reasons which were ‘insufficient and contradictory’ do not assist Malicorp in this regard.”

46.  I adopt the above approaches when considering the issues below.

F.4.    SERVICE OF THE NOTICES OF THE QUANZHOU IPC PROCEEDINGS

47.  I have set out above the relevant parts of Tang#1 in relation to the issue and service of the Notices of the Quanzhou IPC Proceedings (the “Hearing Notices”). 

48.  I have also set out above the MGA Address as set out in the Maximum Guarantee Agreements, and clauses 18.2.3 and 18.2.4 thereof.

49.  There is no dispute that the Quanzhou IPC issued the Hearing Notices to Ds at the MGA Address.  There is further no dispute that the Ds did not appear before the Quanzhou IPC to defend the proceedings.  The issues are therefore, given the way the Hearing Notices were made, whether Ds could prove on balance of probabilities that:

(a)  Ds were “not summoned to appear according to the law of the Mainland”; or

(b)  if Ds were so summoned, they were “not given sufficient time to defend the proceedings according to the law of the Mainland”.

F.5.    EXPERT EVIDENCE ON THE LAW OF THE MAINLAND

50.  P has engaged Professor 趙威 (“Professor Zhao”).  He has produced one report dated 31 July 2018 (“Zhao Report”).  Ds have engaged Professor Zhang Xianchu (張憲初) (“Professor Zhang”).  He has produced two reports of 29 May 2018 and 27 September 2018 (“Zhang Report #1” and “Zhang Report #2” respectively).  Together they have prepared one joint report dated 18 January 2019 (the “Joint Report”). Large portions of their respective reports relate to the issue as to whether the Quanzhou IPC Judgments were final and conclusion.  I am no longer concerned with that.  I am only concerned with Issue 3, which was framed as follows:

“In respect of the [Quanzhou IPC Judgments], according to paragraph 35 of [Tang#1], after [P] commenced the proceedings therein on or around 9 December 2016, the [Quanzhou IPC] purportedly issued Notice to [Ds] to their addresses contained in the certain [Maximum Guarantee Agreements] (the ‘Address’). On 17 February 2017, the hearing of the proceedings was held in [Ds’] absence, and the [Quanzhou IPC] handed down the judgments in [P’s] favour. On the basis that [Ds] could not be reached at the Address, as a matter of PRC law, (i) were [Ds] duly summoned to appear before the [Quanzhou IPC]? (ii) If so, were they given sufficient time to defend the proceedings?”

51.  The two Professors agreed that in the Mainland, service of court process is effected by the People’s Court ^[21].  They however differed as to whether, by the Quanzhou IPC posting the Hearing Notices to Ds at the MGA Address for service provided in the relevant Maximum Guarantee Agreements, Ds had been “summoned to appear according to the law of the Mainland Law”.  I will come back to their views.

F.6.    THE MGA ADDRESS BAD ON ITS FACE?

52.  One initial point made by Mr Wong was that the MGA Address was bad on its face.  He submitted that ^[22]:

“Even on the face of the [Maximum Guarantee Agreements], it is obvious that the purported addresses set out therein are defective. The stated ‘residence’ (住所) for each of the [Maximum Guarantee Agreements] does not refer to any specific address of Ds, but rather refers to an entire industrial district...”

53.  I readily reject this submission of Mr Wong. Whilst Professor Zhang has commented that “the domicile of [D3] recorded in both the guarantee contracts was Zhushuxia Industrial District, which apparently was the address of [Zhenxing], not a civil residence”, I have before me no evidence on the nature (eg size and population) of the District. I add that whilst Professor Zhang is an expert in Mainland Law, he is not held out as a factual witness with knowledge of the Zhushuxia Industrial District.  I note on the other hand that the MGA Address was indeed the address as displayed in the company registration of Zhenxing ^[23]. There is simply no evidence before me in support of Mr Wong’s submission that the MGA Address “does not refer to any specific address of Ds”. 

54.  Nor is this submission of Mr Wong supported by any Mainland law provision.  I note that at §3.2 of Zhang Report #1, Professor Zhang makes the observation that the MGA Address “were written as Zhushuxia Industrial District (竹樹下工业区)”.  He then makes reference to clause 18.2.3 of the Maximum Guarantee Agreements and proceeded to make a different point, that “In this regard even assume that [D3] agreed to use the Zhushuxia Industrial District as her address to receive correspondence of legal proceedings such agreement would not change the nature of the present case as a Hong Kong related case...”.  Even Professor Zhang has not sought to say that the MGA Address was per se and on its face bad so that Ds had not been summoned according to Mainland law.

F.7.    DECISIONS OF THE FUJIAN HPC AND THE PPFP

55.  In the Zhao Report, at §18, Professor Zhao highlights the fact that in the Fujian HPC Retrial Judgments, the Fujian HPC held that the service of process by the Quanzhou IPC was in accordance with the law.  He also points out that the PPFP in the PPFP Decisions reached the same conclusions.  I have set out the relevant part of those Judgments and Decisions above. 

56.  I accord considerable weight to the holdings of the Fujian HPC.  Ds specifically raised before it as a ground for re‑trial the question of service of process by the Quanzhou IPC.  The issue was argued by the parties.  Having heard argument, and “經審查 ”, the Fujian HPC reached those conclusions.  Those conclusions have not been upset.

57.  Applying the observations of Walker J in Malicorp, the determination of Mainland law is a matter for the Mainland Court.

58.  I also accord substantial weight to the PPFP Decisions.  Mr Wong criticized and described them as “administrative and not judicial decision[s]”[24]. Seeking to categorize the PPFP Decisions as “administrative decisions”does not assist Ds’ case.  Whilst PPFP may not be a judicial tribunal as common law lawyers understand it, it has specific statutory functions in the civil litigation process in the Mainland according to the PRC Civil Procedure Law ((中華人民共和國民事訴訟法), and in particular Art 209 thereof [25]).  The PPFP Decisions were indeed made by the PPFP in the course of the its discharge of those functions, and in relation to the Quanzhou IPC Proceedings.

59.  Mr Wong further submitted that “insofar as the Fujian [HPC] Judgments had ruled that there had been valid service on Ds, these were (at most) rulings on matters of procedure, and the Fujian [HPC] did not purport to make any decisions on the merits” [26].

60.  The issue before me is whether Ds had been “summoned to appear according to the law of the Mainland”.  The Fujian HPC has in the Fujian HPC 1897 Retrial Judgment and Fujian HPC 1896 Retrial Judgment ruled respectively that the service effected by the Quanzhou IPC “符合法律規定，並未剝奪當事人權利” and “符合法律要求，不存在任何法律瑕疵”.  Calling them “rulings on matters of procedure” does not alter the fact that they are rulings by the Fujian HPC and hence evidence highly relevant to the issue as to whether Ds had been “summoned to appear according to the law of the Mainland”.

61.  Professor Zhang at page 2 of the Joint Report[27] expresses the view that:

「內地法院判決對於被告方提出的關於送達問題的訴求，沒有任何論述就作出『並無不當』的結論」

In this regard, I reiterate the observations made by Walker J in Malicorp which I have cited above, and in particular the observations that “Allegations that...the judgment gave reasons which were ‘insufficient and contradictory’ do not assist Malicorp in this regard”.

62.  In most cases where expert evidence on Mainland law is sought to be adduced, the purpose is to assist the court to predict the likely decision of the courts in the Mainland.  In the present case, we have more than prediction.  This Court has before it evidence on how the very issue in this very case has been decided upon by the Fujian HPC and PPFP.  Not according considerable and substantial weight to their decisions would in my view be nonsensical.

F.8.    THE COMPETING OPINIONS OF PROFESSOR ZHANG AND PROFESSOR ZHAO

63.  Professor Zhang’s view is that Ds were not duly summoned to appear before the Quanzhou IPC according to Mainland laws[28].  That view of his, as summarized by Mr Wong[29], goes like this:

(a)  As Ds are all Hong Kong residents, and as the Quanzhou IPC Proceedings concerned Hong Kong civil/commercial matters, they should be dealt with as foreign‑related cases;

(b)  Since Ds are Hong Kong residents, the Supreme People’s Court’s Provisions on Certain Issues Concerning Service of Judicial Documents on Hong Kong/Macao Related Civil and Commercial Cases (“最高人民法院關於涉港澳民商事案件司法文書送達問題若干規定”[30], “SPC Service Provisions”);

(c)  None of the modes of service set out in the SPC Service Provisions are applicable in the present case.  In particular, even though Article 7 of the same provides for service by mail, the said Article is not engaged in his case.  Under the said Article 7 (subject to Article 12), service by mail would be regarded as invalid where the certification for receipt of service is not received within 3 months of mailing.

64.  Professor Zhao holds a different view.  He is of the view that:

(a)  the application of the SPC Service Provisions in this case was permissive rather than mandatory, and the Quanzhou IPC were permitted to adopt other mode of service as circumstances required ^[31];

(b)  Under Mainland law:

「法庭對被告方『適當的傳喚』並不取決於被告方事實上是否收到傳喚通知，法院只要按照內地法律規定的程序進行了送達即可。」[32]

(c)  In the circumstances of this case, service by the Quanzhou IPC of the Hearing Notices upon Ds at the MGA Address constituted appropriate summon (“適當傳喚”), and was in compliance with Article 12 of the SPC Service Provisions.

65.  I have considered the views of the two Professors and their reports.  For the reasons set out in the following paragraphs, I accept on balance the opinion of Professor Zhao.

66.  According to Article 551 (“Article 551”) of the SPC Judicial Interpretation on Civil Procedure Law (最高人民法院關於適用《中華人民共和國民事訴訟法》的解釋):

「人民法院審理涉及香港、澳門特別行政區和台灣地區的民事訴訟案件，可以參照適用涉外民事訴訟程序的特別規定。」

67.  As highlighted by Professor Zhao ^[33], the words used in Article 551 are “可以參照適用”.  Those words convey the literal meaning of being permissive but not mandatory.  Indeed, in Zhang Report #1 ^[34], even Professor Zhang said that:

“According to Art 551...the service rules applicable to foreign related cases may also be applied to Hong Kong and Macao related cases by reference (參照適用).”

68.  In Zhang Report #2[35], Professor Zhang argues that the words “參照適用” are in fact meant to convey a mandatory duty.  He refers to the “one country, two systems” principle and background.  He also makes reference to recent judicial reforms in the Mainland which “不允許有法外的自由裁量權”.  Those matters are in my view at best equivocal.  On the other hand, Professor Zhang himself accepts that:

「對何為『參照適用』含義的討論中，根據內地法官的詮釋，適用法律可以單獨作為審判的直接依據...；而參照是指一些規范不能單獨作為審判依據，而只能作為輔助資料，對審判的合法性起補充作用。」

69.  I have considered those arguments of Professor Zhang.  In my view, they are not sufficient to counter the plain and literal meaning of the words “可以參照適用”, which is permissive.

70.  Even if the SPC Service Provisions are mandatory, I am of the view that Article 12 thereof has been complied with.

71.  Article 12 of the SPC Service Provisions stipulates that:

「受送達人未對人民法院送達的司法文書履行簽收手續，但存在以下情形之一的，視為送達：

（一）  受送達人向人民法院提及了所送達司法文書的內容；

（二）  受送達人已經按照所送達司法文書的內容履行；

（三）  其他可以確認已經送達的情形。」

72.  Professor Zhao’s opinion is that according to Mainland law, the validity of the process of summoning (傳喚) is not dependent upon the person being summoned having actual notice of the same.  He makes reference to Article 85 of the Civil Procedure Law, which permits service upon an authorized agent ^[36].

73.  I accept Professor Zhao’s view in this regard.  Under discussion is a process of service and summoning.  It is not a process of effecting actual notice.  This is quite clear from reading the SPC Service Provisions as a whole.  While actual notice can be deemed good service (see eg Art 12(1) of the SPC Service Provisions), it is not a prerequisite for good service.  If actual notice were indeed required, the Mainland legislature could easily have made express provisions to that effect.  I have been shown none.

74.  Not making actual notice a perquisite for good service makes perfect common and policy sense, or else the system could grind to a complete halt as a result of litigants deliberately avoiding service. 

75.  There is no dispute that the Hearing Notices sent to Ds were returned to Quanzhou IPC undelivered.  But that risk has been envisaged by the parties.  I have set out the terms of clauses 18.2.3 and 18.2.4 of the Maximum Guarantee Agreements.  Ds provided to P the MGA Address.  It is the same address as displayed in the company registration of Zhenxing.  The mode of service has been agreed upon by Ds, part and parcel of which being that “甲方提供錯誤聯繫方式或未及時告知變更後聯繫方式的，導致（法律）文書未能送達或退回的，則（法律）文書退回之日視為送達之日”.

76.  There is no evidence before me that establishes to my satisfaction that under Mainland law, service by the Mainland Courts of hearing notices or other related documents upon a contractually agreed service address and pursuant to a contractually agreed mode of service is unlawful or otherwise invalid.

77.  Mr Wong pointed out that the Quanzhou IPC had recorded in the Quanzhou IPC Judgments that Ds had an address different from the MGA Address.  However, as stated by Professor Zhao ^[37], and not disputed by Professor Zhang ^[38], the Mainland Courts have no obligation to serve on each and every addresses of the defendants known to the Courts. 

78.  Mr Wong attacked the Fujian HPC Retrial Judgments and the PPFP Decisions for having failed to deal with the provisions and rules referred to by Professor Zhang ^[39]。  On the face of those Judgments and Decisions, there is nothing which suggests that the arguments now put forward by Professor Zhang have been raised before the Fujian HPC and PPFP on behalf of Ds.  I in any event repeat paragraph 61 above. 

79.  Mr Wong, relying on the opinion of Professor Zhang, argued that Article 12(3) of the SPC Service Provisions was not engaged in the present case.  He submitted that:

“...The Article expressly requires confirmation that the documents had been served ‘確認已經送達’, and there was no such confirmation in the present case. [40]

As observed by PRC Supreme People’s Court Judge Ren Xuefeng in the Court’s 《審判指導》(‘Trial Guide’), Article 12(3) of the SPC Service Provisions shall be construed strictly (‘必須...從嚴掌握’), and cannot be applied expansively (‘不能隨意擴大該項的適用’). [41]

On any sensible analysis, Article 12(3) of the SPC Service Rule cannot be applicable in the present case, since there was no confirmation that the documents had been served (確認已經送達).[42]

Rather, Article 12(3) expressly requires confirmation that the documents had been served ‘確認已經送達’.^[43]”

80.  The first thing which should be noted in respect of those submissions of Mr Wong is this.  Article 12(3) does not just contain the words “確認已經送達”.  It refers to “其他可以確認已經送達的情形”.  It is a catch‑all provision in the context of a summoning (送達) system which is not prerequisite upon actual notice (as I have found above).  On the facts of this case, and in particular the scope of clause 18.2.3 of the Maximum Guarantee Agreements, I accept Professor Zhao’s opinion that Article 12(3) of the SPC Service Provisions are applicable to this case.  I accept further in this regard Mr Jat’s submission ^[44] that there has not been any arbitrary expansion of established principles on service as Mr Wong was seeking to argue at §26.3 of his submissions.

81.  I come back to the Fujian HPC Retrial Judgments and the PPFP Decisions.  On the evidence before me, I am of the view that the conclusions reached by the Fujian HPC and the PPFP on the question of service are, with respect, correct.  There is no basis to suggest that they were “perverse” [45].

F.9     CONCLUSION

82.  For the above reasons, I find that Ds have failed to discharge the burden on them to prove that they were “not summoned to appear according to the law of the Mainland”.  I find that they have in fact been so summoned.

G.      Not given sufficient time to defend?

83.  Ds’ primary case is based upon s 18(1)(f)(i) of the Ordinance.  I have ruled against them in that regard.

84.  Whether Ds were given sufficient time to defend the proceedings is a fact‑sensitive issue.  Matters relevant to that issue include what steps Ds say they would have taken to defend the proceedings, whether they would have had sufficient time to undertake those steps, if not why not, and whether they could have sought from the Quanzhou IPC any extension of any deadline or even any adjournment of the trials.  I have before me no such evidence.

85.  I find that Ds have failed to prove that they were not given sufficient time to defend the Quanzhou IPC Proceedings.

H.      Material non‑disclosure?

86.  I accept Mr Jat’s submission ^[46] that at the registration stage, s 18(1)(f) of the Ordinance is not engaged.  Further, when seeking the Registration Order, P did inform the Court that Ds did not take part in the Quanzhou IPC Proceedings ^[47]. In the circumstances, and given my further my conclusion above, I am of the view that there has been no material non‑disclosure.

I.       Disposition

87.  For the reasons set out above, I dismiss Ds’ Setting Aside Summons.

J.       Costs

88.  I make a cost order nisi that the costs of and occasioned by the Setting Aside Summons be borne by Ds, with certificate for two counsel, to be taxed if not agreed.   Any party who seeks any variation or summary assessment should file its submissions within 14 days from the date hereof, submissions in opposition within 14 days of receipt, and reply within 7 days thereafter.