BEIJING RENJI REAL ESTATE DEVELOPMENT GROUP CO., LTD v. ZHU MIN

CACV 182/2022, [2024] HKCA 1148

On Appeal from [2022] HKCFI 1027

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 182 OF 2022

(ON APPEAL FROM HCMP NO 361 OF 2020)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

1.  This is the Plaintiff’s application for leave to appeal against the judgment of this Court dated 2 October 2024 (“the CA Judgment”), whereby the Court dismissed the Plaintiff’s appeal against the order of G Lam JA (sitting as an additional judge of the Court of First Instance) dated 7 April 2022 setting aside the registration of a Mainland judgment obtained by the Plaintiff against the Defendant under the Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap 597 (“the Ordinance”).

2.  For the purpose of this judgment, we shall continue to use the expressions and abbreviations as defined in the CA Judgment.

3.  The basic facts of this case and the Court’s reasons for dismissing the Plaintiff’s appeal are fully set out in the CA Judgment and will not be repeated here.

4.  In the Plaintiff’s Notice of Motion dated 30 October 2024 seeking leave to appeal, the Plaintiff raises the following question involved in the intended appeal which it contends ought to be submitted to the Court of Final Appeal for decision by reason of its great general or public importance:

“What is the proper construction of the phrase ‘choice of Mainland law agreement’ in the context of sections 3(2) and 5(2)(b) of the MJERO[1]? In particular:

2.1 Where an exclusive jurisdiction agreement in favour of Mainland courts in a principal contract (here Clause 90 of the Partnership Agreement between the Plaintiff and Hainan Zhongtou) is incorporated into a subsidiary contract (here the Guarantee issued by the Defendant, as shareholder, director and legal representative of Hainan Zhongtou, in favour of the Plaintiff) by operation of Mainland law as its proper governing law, whether that constitutes a ‘specification’ by the parties to the subsidiary contract that the courts in the Mainland or any of them have/has exclusive jurisdiction to determine a dispute which has arisen or may arise in connection with the subsidiary contract for the purposes of section 3(2) of the MJERO?

2.2 Whether an exclusive jurisdiction agreement in favour of Mainland courts in a principal contract, which applies by operation of law to the subsidiary contract, satisfies the requirement of a ‘choice of Mainland court agreement’ for the purposes of section 5(2)(b) of the MJERO when a Mainland judgment is given pursuant to such ‘choice of Mainland court agreement’ and in respect of the subsidiary contract, when section 5(2)(b) does not require that the judgment debtor must be a party to the relevant ‘choice of Mainland court agreement’ (cf. the argument recorded in CA Judgment §36(2)-(3)).”

The above two sub-questions will hereinafter be referred to as “Question 1(a)” and “Question 1(b)”.

5.  The Plaintiff also seeks leave to appeal based on the “or otherwise” limb of Section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap 484 (see §3 of the Notice of Motion).

6.  Under Section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, an appeal shall lie to the Court of Final Appeal at the discretion of the Court of Appeal or the Court of Final Appeal in any civil cause or matter if, in the opinion of the Court of Appeal or the Court of Final Appeal (as the case may be), the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the Court of Final Appeal for decision.

7.  Plainly, leave to appeal should not be given in respect of the bare or general question of the proper construction of the phrase “choice of Mainland law agreement” in the Ordinance. The focus of the present application should be on the two sub-questions raised in the Notice of Motion.

8.  Question 1(a) is essentially a re-run of the arguments advanced by the Plaintiff before the Court, with a new point being raised at §11 of Skeleton Submissions of the Plaintiff dated 13 November 2024 (namely, that “it is at least reasonably arguable that the express reference to the Partnership Agreement in paragraphs A and B of the recitals to the Guarantee …, and the fact that the Guarantee was in respect of obligations under the Partnership Agreement … is sufficient to constitute a ‘choice’ of Mainland courts and to ‘specify the courts in the Mainland … as the court to determine a dispute’ within the meaning of section 3(2)”). We have already explained in the CA Judgment our reasons for rejecting the Plaintiff’s construction of the expression “choice of Mainland court agreement” in the Ordinance, and do not propose to repeat those reasons here. As regards the new point raised by the Plaintiff, since the statutory definition of “choice of Mainland court agreement” requires it to be one “specifying the courts in the Mainland or any of them as the court to determine a dispute …”, we fail to see how the fact that in the recitals to the Guarantee, there were some references to the Partnership Agreement can mean that there was incorporation of Clause 90 (being the choice of Mainland court agreement in the Partnership Agreement) into the Guarantee thereby satisfying the “specification” requirement. The simple fact of the matter is that nowhere in the Guarantee did the parties designate or specify the Mainland courts, or any of them, as having (exclusive) jurisdiction to determine any disputes between them arising in connection with the Guarantee.

9.  Question 1(b) is based on the premise that the Partnership Agreement (instead of the Guarantee) is the “specified contract” for the purpose of Section 3(2) of the Ordinance[2]. Quite apart from the fact that this is a new argument that was not run before either G Lam JA or this Court, it has no merit:

(1)  Under the Ordinance, a “choice of Mainland court agreement” is defined to mean “an agreement concluded by the parties to a specified contract and specifying the courts in the Mainland or any of them as the court to determine a dispute which has arisen or may arise in connection with the specified contract to the exclusion of courts of other jurisdictions”, while a “specified contract” is defined to mean “a contract other than – (a) an employment contract; and (b) a contract to which a natural person acting for personal consumption, family or other non-commercial purposes is a party”. It is clear that the purpose of the “specified contract” requirement is to exclude from the regime for registration and enforcement under the Ordinance those Mainland judgments on disputes arising in connection with certain specific types of contract. This ground of exclusion has no relevance in the present case.

(2)  On the other hand, for a Mainland judgment to be registrable under Section 5(2)(b) under the Ordinance, there must be in existence a relevant choice of Mainland court agreement which, by definition, means an agreement concluded by the parties to a specified contract and specifying the courts in the Mainland or any of them as having exclusive jurisdiction to determine a dispute which has arisen or may arise in connection with the specified contract.

(3)  It seems to us clear that the Partnership Agreement cannot be the relevant “specified contract” in the present case because (i) the Partnership Agreement was not concluded between the Plaintiff and the Defendant (it was concluded between the Plaintiff and Hainan Zhongtou instead), and (ii) there was no dispute between the Plaintiff and the Defendant arising in connection with the Partnership Agreement (their dispute arose in connection with the Guarantee instead).

10.  In short, we are not satisfied that the intended appeal is reasonably arguable.

11.  We are also not satisfied that Questions 1(a) and/or 1(b) fulfil the requirement of “great general or public importance” under the Hong Kong Court of Final Appeal Ordinance.

12.  The focal question that was determined by the Court was set out at §1 of the CA Judgment, namely:

“… whether, in relation to a claim by a creditor against a guarantor founded upon a written contract of guarantee governed by Mainland law, although the contract does not contain any express designation of the Mainland court(s) as having exclusive jurisdiction to determine any dispute arising in connection with the contract, there exists nevertheless a ‘choice of Mainland court agreement’ within the meaning of the [Ordinance] between them because, by the operation of a substantive rule of Mainland law, an exclusive jurisdiction clause in favour of the Mainland court(s) contained in the principal contract between the creditor and principal debtor is applicable to the legal relationship between the creditor and guarantor arising under the contract of guarantee which, under Mainland law, is regarded as being subordinate or subsidiary to the principal contract”.

13.  As submitted by Mr Man, SC (for the Defendant), this question arose in fact-specific, featuring unusual factual, circumstances, namely, (i) the application of specific Mainland law provisions (Article 5 of the Guarantee Law of the PRC and Paragraph 1 of Article 129 of the SPC Interpretation), (ii) on incorporating a specific exclusive jurisdiction clause (Clause 90) in a principal contract (Partnership Agreement), (iii) into a specific type of subsidiary contract (viz. guarantee contracts), (iv) where the subsidiary contract (Guarantee) is governed by Mainland law, (v) where the parties to the Partnership Agreement and the Guarantee are different, and (vi) where the drafters of the Guarantee have omitted to include a choice of court clause[3].

14.  Further, the regime for the registration and enforcement of Mainland judgments under the Ordinance has application only where the relevant choice of Mainland court agreement was made on or after the commencement date of the Ordinance [1 August 2008] but before the commencement date of the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance, Cap. 645 (“the New Ordinance” [29 January 2024]. In the New Ordinance, the requirement of “choice of Mainland court agreement” has been abolished. In other words, the old regime under the Ordinance is now “transitional”, and will in due course be totally replaced by the regime under the New Ordinance. Taking into account the time limit for making an application for registration of a Mainland judgment under Section 5(1) of the Ordinance, namely, 2 years from the date of required performance or from which the judgment takes effect[4], it is clear that any potential importance or significance of the two sub-questions is limited and will fade with the passage of time. The Plaintiff’s assertion that “[i]t is very likely that there will still be a significant amount of Mainland Judgments that would fall within the scope of the [Ordinance] notwithstanding the passing of Cap 645”[5] is a bare assertion not supported by evidence.

15.  We also fail to see how the proper interpretation of the expression “choice of Mainland court agreement” in the Ordinance would be relevant “internationally for jurisdictions that have acceded to the 2005 Hague Convention on Choice of Court Agreements … and the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters”[6]. Those conventions are international conventions entered into by multiple State parties. Very little information has been provided as to the extent to which those conventions (with or without modifications) have been adopted in different jurisdictions domestically. Footnote 5 to the Skeleton Submissions of the Plaintiff refers only to the position in the UK briefly. It is far-fetched to suggest that an interpretation of an expression (“choice of Mainland court agreement”) appearing in an unique local legislation, which itself contains a specific definition of that expression, by the Hong Kong court could or would have international relevance or significance.

16.  In all, we are not satisfied that leave to appeal ought to be granted in respect of the two sub-questions identified by the Plaintiff in the Notice of Motion.

17.  Finally, it is the well-settled practice of this Court to defer to the Appeal Committee of the Court of Final Appeal for consideration of whether leave to appeal ought to be granted under the “or otherwise” limb. We see no good reason to depart from this practice in the present case.

18.  Accordingly, the Notice of Motion is dismissed with costs to the Defendant. In the Defendant’s Statement of Costs dated 27 November 2024, the Defendant claims the total sum of HK$584,520 as costs of the application. The application is a straight-forward one, and the Defendant’s lawyers, who also represented the Defendant in the appeal, should be thoroughly familiar with the papers, the relevant facts and the issues in the present case. Our provisional view is that the amount of costs claimed by the Defendant is wholly disproportional and cannot be justified. We make an order that the Plaintiff shall pay to the Defendant the sum of HK$250,000 as costs upon summary assessment. This assessment is an order nisi, which shall become absolute unless an application is made to vary it within 14 days from the date of this judgment.