CHENG HANG CHU AND OTHERS v. CHINA TREASURE ENTERPRISE LTD.

HCA 7145/1999
& HCA 7702/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7145 OF 1999

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J U D G M E N T

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1. At the end of the hearing of the Plaintiffs' O.14 and O.14A applications, final judgment with interest thereon and costs was entered against the same Defendant in both actions. I indicated that reasons for the decision would be handed down later. These are the reasons.

2. The facts giving rise to these two actions were the same. HCA No. 7145/99 was commenced by 10 Plaintiffs (4 of whom are joint Plaintiffs) while HCA 7702/99 was commenced by 2 other joint Plaintiffs. Both are brought against the same Defendant and arise from exactly the same facts.

3. All the Plaintiffs were previously purchasers of real properties in the mainland. The Defendant (a Hong Kong Company) and 3 other mainland companies were joint developers and vendors who entered into respectively sale and purchase agreements with the Plaintiffs. The Plaintiffs considered that the vendors were in breach of their agreements while the developers maintained that they were not. In accordance with the provisions of the agreements the parties submitted the dispute to arbitration by the Shenzhen sub-board of the China International Economic and Trade Arbitration Board. Awards were made in the Plaintiffs' favour by the Board and the Plaintiffs commenced these two actions to seek enforcement of the Awards against the Defendant.

4. Further, the Plaintiffs took out O.14 & O.14A applications against the Defendant contending that the Defendant has no defence to their claim herein.

5. The Defendant argues on the other hand that there is a triable issue because the arbitration awards relied upon were defective in that there was:-

"nothing said or fallen from the Awards [which] goes near to ... suggesting that the Defendant (to the exclusion of all other Respondents named in the Awards) should be solely responsible for payment of the Awards or ... should be shared equally with other Respondents ... or that the Defendant alone should pay a specific sum ...": see para.11 of the Defendant's written submissions.

For this reason, the Defendant contends that it is triable as to whether the Awards were certain and therefore valid.

6. Further, since the Awards were made in the mainland, and the applicable law in the arbitration was Chinese law, the issue of uncertainty (and resultant invalidity) of the Awards is to be decided according to Chinese law. This is a question of fact. The Defendant's Chinese law experts have given the following opinion in Chinese:-

"一. 就仲裁裁決內容而言，裁決部分存在以下問題：

1. 所有的裁決均未明確各被申請人在承担還款責任中的責任大小。

2. 裁決未清晰明白指出各被申請人承担的是一般清償責任抑或是連帶責任：未明確該問題，直接影响各被申請人責任分担是否公平合理。

以上問題，仲裁庭應予以解釋清楚。

二. 就仲裁裁決的執行而言，貴公司可能因以下原因而避免被首先強制執行：除貴公司以外，其餘申請人均是國內註冊的公司，現實上，這些公司會被作為優先考慮執行的對像。"

This was translated in the certified translation provided by defence solicitors as:-

"1. As regards the contents of the award, the findings have the following defects:-

(1) All of the findings fail to specify the degree of liability of each respondent for payment.

(2) The findings also fail to state clearly and definitely whether the liability of the respondents is a general liability to satisfy the claim or a joint liability. The uncertainty in this respect would directly affect the fair apportionment of individual respondents' liability.

The tribunal ought to clarity the above issues.

2. As regards the enforcement of the arbitration awards, it is likely that your company may avoid being mandatorily enforced first on the grounds that save for your company, other respondents are companies incorporated in mainland China. Realistically speaking, those companies would be considered the primary target of any enforcement action."

7. As a matter of fact, the Defendant's experts were clearly wrong in relation to the Awards regarding P1 and P5. These two awards expressly stated that each Respondent (including the Defendant) was to bear "連帶責任" for the respective sums awarded to P1 and P5.

8. I considered the term "連帶責任" to be a term of ordinary Chinese language which means "joint liability". Ms Tong for the Defendant, however, disagreed and argued that it was a technical term in Chinese law the meaning of which can only be ascertained through proper evidence. The 2 actions ought to be tried for this reason alone. I do not accept her argument because:-

(a) her solicitors have drafted a translation of that term for certification by the Court Interpreter. Both the solicitors and the Court Interpreter have no apparent difficulty in translating the term as "joint liability" in English;

(b) in "The English-Chinese Dictionary", Vol. 1 published in August, 1989 by "上海譯文出版社" (The Shanghai Translation Publisher), the English word "joint" was given the following meaning in Chinese: " 'joint' ... IIIa. ... 4. 連帶的 ~ liability (或responsibility)連帶責任 ..." Further, "jointly" was defined as " 'jointly' ... ad.聯合地、共同地、連帶地 ..." in the same dictionary;

(c) in "A Chinese-English Dictionary of Law" published in 1995 by the Foreign Languages Press Beijing (at p.476) "連帶責任" was given the meaning "joint liability; joint and several liability ...".

In coming to this conclusion, I have taken into consideration that "joint" or "jointly" was more commonly translated in Hong Kong as "共同": see, for example, "Lin Yu Tong's Chinese-English Dictionary of Modern Usage" published in 1972 by the Chinese University of Hong Kong (see p.243, Column B, line 53).

9. The concept of "joint liability" in Hong Kong law is similar to that in English law: see, for example, the discussion of this aspect in contract law in 9(1) Halsbury's Laws of England (1998) 4th Ed. Reissue, para. 1079 the relevant parts of which stated:-

"1079. ....

Joint liability arises where two or more persons jointly promise to do the same thing; for instance, B and C jointly promise to pay ￡100 to A. In the case of a joint promise, there is only one obligation, namely a single payment of ￡100. Each of B and C is liable for the performance of the whole promise but payment of ￡100 by one discharges the other. Joint liability is subject to a number of strict and technical rules of law which are discussed below. ...

Joint and several liability arises where two or more persons join in the same instrument in making a promise to the same person, and at the same time each of them individually makes the same promise to that same promisee; for instance B and C jointly promise to pay ￡100 to A, but both B and C also separately promise A that ￡100 will be paid to him by either B or C. Joint and several liability is similar to joint liability in that the co-promisors are not cumulatively liable, so that payment of ￡100 by B to A discharges C; but it is free of most of the technical rules governing joint liability.

Where two or more persons are liable in contract or tort in respect of the same damage (whether jointly or otherwise), any person liable may obtain a contribution from any of those others."

10. The position of persons jointly liable under a judgment or order made in Hong Kong is summarised in 17 Halsbury (1976) 4th Ed., para. 419:-

"Where a judgment or order is against persons jointly, execution may issue against their joint property or the property of any one or more of them" (text to n.9).

11. If Hong Kong law was applicable to the Awards in question, I do not consider that the Awards were uncertain whether they expressly stated that the liabilities of the Respondents were joint or not. Even if none of the Awards expressly stated this, I consider that the way in which the Respondents' liabilities (including those of P1 and P5) were set out therein should be understood to mean that the Respondents are jointly and severally liable for the sums awarded in the Plaintiffs' favour.

12. However, as stated earlier, the Awards regarding P1 and P5 in fact expressly stated the Respondents' liabilities were "joint". It will be explained in later paragraphs herein that the only proper inference is that the same conclusion was reached in the other Awards. In light of the Plaintiffs' right to seek enforcement against any of the 4 Respondents (under Hong Kong law), I do not consider Ms Tong's argument (at para. 11 of her written submission) to be a valid defence.

13. Despite Ms Tong's contention, I do not consider the Defendant's Chinese lawyers have given any legal opinion which supports Ms Tong's argument that the Awards were uncertain (and therefore invalid) under Chinese law. This is because:-

(a) para. 1.1 therein only stated a fact (which is incorrect in relation to P1 and P5) and did not deal with its legal effect (if any) on the Awards under Chinese law;

(b) para. 1.2 therein contains 2 points. The first point amounted to the stating of a fact only. The second point was only a complaint that there had not been any indication to enable a fair apportionment of the liabilities among the Respondents; but it does not state (directly or indirectly) that the Plaintiffs' rights to enforce the Awards are thereby affected.

14. In these circumstances, I regard that the Defendant has not adduced any proper expert evidence on Chinese law regarding the certainty (or validity) or otherwise of the Awards.

15. Dicey & Morris: The Conflict of Laws (2000) 13th Ed., Vol. 1 para. 9-025 stated that:-

"(4) Burden of proof. The burden of proving foreign law lies on the party who bases his claim or defence on it. If that party adduces no evidence, or insufficient evidence, of the foreign law, the court applies English law. This principle is sometimes expressed in the form that foreign law is presumed to be the same as English law until the contrary is proved. ...".

A similar observation was also made in 8(1) Halsbury (1996) 4th Ed. Reissue, para. 1093, text to n.6.

16. Thus, even if Chinese law is applicable to the enforcement of the Awards (in the absence of evidence to the contrary), the Plaintiffs are not barred from enforcing the Awards against the Defendant alone: see the propositions in 9(1) Halsbury para. 1079 and 17 Halsbury para. 419 referred to above relating to joint liability.

17. The same conclusion (under Chinese law) can be reached in an alternative way. When one examines the contents of the Awards and the reasons given therein, the following are clear:-

(a) the relevant facts in each Award were the same;

(b) the issues raised by the parties to the arbitration were the same;

(c) the reasoning adopted by the individual arbitrators in arriving at their conclusion for each award was very similar (if not the same).

In these circumstances, although the other Awards did not expressly deal with the nature/extent of the Defendant's liability, I find it an irresistible inference that the same finding that there was a joint liability to pay (similar to the Awards made regarding P1 & P5) must have been made in these Awards.

18. For the above reasons, I find that the Defendant has not been able to show that there are triable issues of fact or law in these two actions or that they ought otherwise be tried.