CHOW MAN v. WANG HONG CHUN AND ANOTHER

HCA 1458/2020

[2022] HKCFI 746

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1458 OF 2020

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JUDGMENT

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INTRODUCTION

1.  The writ herein (endorsed with the statement of claim) was issued on 27 August 2020.  Presently before this Court are two summonses, one issued by the defendants under Order 12 rule 8(1)and/or rule 8(2) of the Rules of the High Court, Cap 4A (RHC) to dispute jurisdiction of the Hong Kong courts over this action (“Jurisdiction Summons”) and the other one taken out by the plaintiff under Order 20 Rules 5, 8, and 10 of RHC for leave to amend the statement of claim (“Amendment Summons”).

2.  Counsel Mr Frederick HF Chan appeared on behalf of the plaintiff (“P”) and Counsel Mr Jerome Liu appeared on behalf of the defendants (collectively “Ds”, or respectively “D1” and “D2”).

THE AMENDMENT SUMMONS

3.  At the hearing, it was submitted by Mr Chan that in fact the Amendment Summons was redundant as technically P did not require leave of the Court to amend the statement of claim. 

4.  It is set out in Order 20 rule 3 of the RHC that a party may amend his pleading without leave once at any time before the pleadings are deemed to be closed.  This Court accepts that in the present case, as the parties are still disputing over jurisdiction and service, and no defence has yet been filed by Ds, pleadings cannot be said to be deemed to be closed and thus P does not require leave to amend. 

5.  Whilst Ds accept that P does not need leave to amend the SOC, it was their complaint that P’s stance that the leave was redundant was only made known to Ds in P’s written submissions, and that P should have conveyed to them his stance earlier and further Ds could have taken out a summons under Order 20 rule 4 to apply to disallow the amendment, by reason of abuse of process and “abusing the Limitation Ordinance Cap 347”.

6.  Although P’s stance was only made clear in Mr Chan’s written submissions, there was no reason why Ds should not have been aware of the rules and to take out any summons under Order 20 rule 4 earlier. As it is not necessary for this Court to make any order in relation to the Amendment Summons, this Court does not intend to do so.

7.  With the Amendment Summons out of the way, the dispute on jurisdiction will centre upon the draft amended statement of claim (“ASOC”).

P’S CLAIMS

8.  In the statement of claim (“SOC”), P essentially claims against Ds for payment/repayment of various sums. 

9.  It was P’s pleaded case in the SOC that on about 6 September 2009, D1 owed a casino in Macau, namely the Jimei International Club of SJM Holdings Limited[1] (“Jimei”) a sum totalling HKD 75,500,000.  Subsequently, at D1’s request, P repaid the entire sum of HKD 75,500,000 to Jimei on D1’s behalf on various occasions and thereafter D1 had failed to repay P the sum of HKD 75,500,000 (“1^st Loan”).

10.  It was P’s pleaded case in the SOC that thereafter P, D1 and D2 came to an agreement that RMB 3,600,000 of the 1^st Loan be converted into shares of RMB 15 per share in a Jiangsu environmental company called 鵬鷂環保股份有限公司 (“Penyao Environmental”) which was to be publicly listed and/or its shares would be offered to public, and which D1 would procure D2 to transfer to P.  As a result, an agreement was signed on 10 February 2015 by P and D2 as parties to the agreement and by D1 as guarantor guaranteeing D2’s obligations under the agreement (“Share Transfer Agreement”)[2].

11.  According to P’s 1^st affirmation filed herein, D1 was at material times the legal representative and executive director of 宜興鵬鷂投資有限公司 (Yixing Penyao Investment Company Limited), which was the largest corporate shareholder of Penyao Environmental[3], and that D2 is a relative of D1.

12.  It was provided in the Share Transfer Agreement that (i) the then outstanding loan of RMB 36,000,000 from D1 to P was to be converted into 2,400,000 shares in Penyao Environmental at RMB 15 per share, which shares were at that time being held for D2 (though a nominee) was to be transferred to P by D2; and (ii) P was to acquire an additional 1,600,000 shares in Penyao Environmental held by D2 (through a nominee) at RMB 15 per share by paying RMB 24,000,000 to D2 within one week upon the signing of the Share Transfer Agreement.  Further, if Penyao Environmental failed to be publicly listed and/or was to abandon the public listing and/or public offering prior to 1 June 2016, D2 would re-purchase all P’s 4,000,000 shares at RMB 60,000,000 plus interest at 10% per annum.  D1 provided a personal guarantee for D2’s obligations under the Share Transfer Agreement.

13.  The shares of Penyao Environmental failed to be publicly listed and/or offered to public by the deadline of 1 June 2016, although it was eventually publicly listed on the Shenzhen Stock Exchange in January/February 2018[4].  As the deadline stipulated in the Share Transfer Agreement failed to be met, in the SOC P claimed the return of RMB 36,000,000 of the 1^st Loan from D1 and D2 jointly and severally.

14.  It was also P’s pleaded case in the SOC that separately on 23 September 2014, he had at D1’s request repaid on behalf of D1 a sum of HKD 15,000,000 which D1 owed to Jimei and that D1 had agreed to repay P this sum which was still outstanding as at date of the SOC (“2^nd Loan”).  P thus claimed repayment of the 2^nd Loan in the SOC.

15.  As it turned out, prior to commencing the present action in Hong Kong, P had issued a legal action on 28 October 2019 in the Yixing People’s Court in Jiangsu Province to claim against D1 and D2 the total sum of RMB 60,000,000 plus interests from D1 and D2 pursuant to the Share Transfer Agreement.  On 20 July 2020, a decision was handed down by the Yixing People’s Court under (2019) Su 0282 Civil No 12490 ordering D2 to pay P the sum of RMB 24,000,000 plus interests and that D1 was to be jointly liable for the payment and dismissing P’s other claims including P’s claim in relation to the alleged outstanding loan of RMB 36,000,000 for which P had failed to provide sufficient evidence (“1^st Decision”)[5]. D2 appealed against the 1^st Decision, and on 30 December 2020, under (2020) Su 02 Civil Final No 4656, the Wuxi Intermediate People’s Court in Jiangsu province allowed D2’s appeal and dismissed the 1^st Decision of the Yixing Court and further dismissed all of P’s claims (“2^nd Decision”)[6].  On 20 May 2021, P requested for a retrial from the Jiansu Higher People’s Court and such request was accepted on 20 May 2021 under (2021) Su Civil Claim No 4369[7] (“Retrial Request”).

16.  Presently, as seen in the ASOC, P is no longer pursuing his claim for the return of the RMB 36,000,000 portion of the 1^st Loan in this action, but reserves his rights to claim upon determination of his action in the Mainland.  

17.  Instead, P now claims against D1 in the ASOC for the remaining balance of the 1^st Loan, namely about HKD 39,500,000. It is P’s claim in the ASOC that it was only around middle of 2016 that he had paid off the entire sum of HKD 75,500,000 on behalf of D1 as D1’s guarantor[8]. 

18.  Further, in the ASOC, P has abandoned his claim in relation to the 2^nd Loan.  P’s explanation in his 1^st affirmation is that the sum of HKD 15,000,000 of the 2^nd Loan was part of the HKD 39,500,000 of the 1^st Loan[9].  However, P now claims repayment of the following loans from D1:

(1)     On 6 September 2009, D1 borrowed a sum of HKD 30,000,000 from P which was evidenced by a loan note signed by D1 on 6 September 2009[10].  P alleges that D1 promised to repay after Penyao Environmental was publicly listed in 2018 on the Shenzhen Stock Exchange, but D1 failed to do so (“3^rd Loan”).

(2)     On 10 November 2013, upon P’s personal guarantee, D1 borrowed gambling chits totalling HKD 20,000,000 from the MGM Guangdong Club Sky Club 3 永卓俱樂部國際娛樂有限公司 (“Wing Cheuk”)[11] which D1 had promised to repay within 30 days from 10 November 2013.  D1 failed to repay and pursuant to P’s personal guarantee, P repaid to Wing Cheuk the amount of HKD 20,000,000 on behalf of D1and the amount is owing from D1 to P (“4^th Loan”).

19.  To summarise, P is no longer pursuing his claim against D1 and D2 over the RMB 36,000,000 portion of the 1^st Loan, and P’s present claim is only against D1 for the remaining part of the 1^st Loan, the 3^rd Loan and the 4^th Loan.  In other words, P no longer makes any claims against D2 in the ASOC.  This was confirmed by Mr Chan at the hearing.  

20.  Mr Chan accepts that the burden is on P to satisfy the gateway under Order 11 in the first place, and in any event, P will need to effect service of the ASOC on D1.  Mr Chan has further clarified at the hearing that the relevant gateway P now relies on is only Order 11(1)(e) of RHC (“Gateway E”).

GENERAL LEGAL PRINCIPLES

21.  As summarised in paragraph 23 of Queeny Au-Yeung J of her judgment in Securities and Futures Commission v Isidor Subotic [2021]3 HKLRD 777, citing Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD (at [29] per Cheung JA), under Order 11 rule 1(1), the plaintiff must satisfy 3 main requirements:

“(1) There is a good arguable case that its case falls within one or other of the gateways under O.11;

(2) There is a serious issue to be tried on the merits of the case; and

(3)  Hong Kong is the appropriate forum under the principle governing forum conveniens for the trial of the action.”

22.  Further, Order 11 rule 4(2) states that no leave shall be granted unless it shall be made sufficiently to appear to the Court that the case is a proper one for service out of the jurisdiction.

23.  To satisfy Gateway E, P has to satisfy the court that the claim is brought in respect of a breach committed within the jurisdiction of a contract made within or out of the jurisdiction, and irrespective of the fact, if such be the case, that the breach was preceded or accompanied by a breach committed out of the jurisdiction that rendered impossible the performance of so much of the contract as ought to have been performed within the jurisdiction.

24.  Mr Chan has referred the Court to Komala Deccof & Co SA v Perusahaan Pertam bangan Minyik Dan Gas Bumi Negara (Permatina) [1982] 1 HKLR 158 , in which the issue raised in the appeal was whether the plaintiffs had a good arguable case for contending that by failing to pay the sums claimed under those oral contracts the defendant had committed a breach within the jurisdiction because the defendant’s obligation was to pay in Hong Kong and that this issue could be said to depend upon the answers to two questions, namely:

(1)     Question 1: have the plaintiffs a good arguable case for contending that they formed an associated group of companies whose trading activities vis-à-vis the defendant were conducted from Hong Kong;

(2)     Question 2: If so, have the plaintiffs a good arguable case for contending that the defendant’s obligation under the relevant contracts was to pay at the place from which plaintiff’s activities were conducted, namely Hong Kong.  

25.  On Question 2, ie the question of whether the plaintiffs had established a good arguable case that the place of payment was Hong Kong, Hunter J ( as he then was) who gave the unanimous judgment of the Court adopted and preferred the approach of Mr Gatehouse QC (appearing for the plaintiff in Komala Deccof of a 3 stage inquiry, namely[12]:

“The purpose of stage 1 was to enquire whether the parties had expressly agreed a place of performance.

The purpose of stage 2 was to investigate whether the parties had impliedly agreed such a place. This stage was governed by the usual principles covering the implication of terms into a contract with the object of ascertaining the parties’ real but unexpressed intentions.

Stage 3 was only reached if the inquiries at stages 1 and 2 produced no result. At this stage the court applied a rule of law, namely that a debtor had to pay the creditor at the creditor’s place of business”.

26.  There is no dispute over the above general legal principles.

27.  The 2 questions posed in Komala Deccof will be referred to herein as “Question 1” and “Question 2” and the 3 stages respectively “Stage 1”, “Stage 2”, and “Stage 3”.   

THE CORE DISPUTES 

28.  It is submitted by Mr Liu that the ASOC concerns 3 new distinct causes of actions and that the cores disputes are:

(1)     Whether P has proved a ‘good arguable case’ that the 3 new causes of action falls within Gateway E (“Core Issue 1”);

(2)     Whether P has proved that Hong Kong is ‘clearly’ the proper forum for the 3 new causes of action (“Core Issue 2”).

CORE ISSUE 1 - WHETHER A GOOD ARGUABLE CASE 

Question 1

29.  So far as Question 1 in Komala Deccof is concerned, there is very little evidence as to P’s own background or occupation.  D1 has alleged that P is a middleman for casinos (賭博中介人) commonly known as “疊馬仔”[13].

30.  It is P’s evidence in his 2^nd affirmation that he mainly carries out securities trading and investment businesses in Hong Kong.  According to P, between 6 July 2007 and 20 June 2018, (i) he held a property at Grand Promenade in Sai Wan Ho; (ii) he held in his personal name bank accounts in Hong Kong including an account at ICBC, an account at UBS AG, and an account at Bank of East Asia. It is also P’s evidence that he is the sole shareholder of a company called Wudaokou Capital Limited (“Wudaokou”) which maintains various bank accounts in Hong Kong.  P also claims to be the sole shareholder of a company called China Integrate Investment Limited (“China Integrate”) which holds various bank accounts in Hong Kong.

31.  In P’s 2^nd affirmation, P explained that in the beginning of 2008, he participated in Hong Kong’s Investors Scheme (“Investors Scheme”) and started to reside in Hong Kong in compliance with the requirements of the scheme and in 2015 he acquired permanent residence in Hong Kong through the Investors Scheme.  However, P admitted that due to his business needs, he had to frequently travel to Mainland and other countries.  P had produced copies of extracts of his Mainland Chinese passport and claimed he was resident in Hong Kong at all material times.  He has given his residential address at Cambridge Road, Kowloon Tong in Hong Kong (“Cambridge Road Address”) and he explained that he was physically in Yixing at the time of his two affirmations due to the Covid 19 pandemic and the tight quarantine restrictions in Hong Kong and that is why he has been residing in the Mainland for awhile.

32.  According to P, he and D1 came from the same village and that he and D1 are good friends for over 20 years, and that it was under those circumstances that he had guaranteed D1’s gambling debts.  According to a transcript of what P stated to the Yixing Court during the hearing there on 5 June 2020 (“Transcript”)[14], after D1 lost HKD 75,500,000 to Jimei, he was detained in Macau and was not able to return to the Mainland.  D1 telephoned P to seek help to repay, and P then went to Macau to help D1.  According to P, he knew the boss of Jimei very well and he provided his personal guarantee for D1’s gambling debts so that D1 could be released.

33.  Although P bought the Grand Promenade property in Hong Kong on 6 July 2007 at a consideration of HKD 7,783,000, he had sold this property on 20 June 2018.  It appears that P bought the property several months before he participated in the Investors’ Scheme and then sold it about 3 years after he acquired the Hong Kong Permanent Identity Card.  Wudaokou is a BVI company, and although it appears that it shares the Cambridge Road Address in Hong Kong as P himself, there is no supporting documentary evidence that P is its sole beneficial owner, nor have there been any details or supporting evidence of its business activities in Hong Kong.  As for China Integrate, one of the bank advices in 2018 produced by P indicated that the address of China Integrate was in Beijing[15].  Again, there have been no details or supporting evidence of the business activities of China Integrate in Hong Kong.  P has produced an application for outward remittance dated 12 June 2019 from his bank account at Bank of East Asia in Hong Kong for HKD 60,000,000 to be remitted to his securities account at ICBC in Hong Kong[16] ,and a monthly statement of his securities account at ICBC showing a cash balance of some HKD 8.95m and listed securities of about HKD 52.5m as at 30 July 2021(“ICBC Statement”)[17].  These bank documents only show that P was buying and selling publicly listed shares on the Hong Kong stock market.

34.  The agreement for the 1^st Loan, namely D1 requesting P to help in securing D1’s release and P guaranteeing D1’s repayment of the gambling debt of HKD 75,500,000 was arrived at on 6 September 2009 in Macau. Thus the 1^st Loan arose out of transactions (gambling activities) in Macau.  It was also on the same day that the 3^rd Loan was said to arise, and the transaction in relation to the 4^th Loan (also for gambling activities) arose on 10 November 2013 in Macau.

35.  P was not a Hong Kong permanent resident at the time of the above 3 relevant loan transactions in the ASOC.  There is no evidence that P has held any fixed assets in Hong Kong after he sold his Grand Promenade property in 2018.  The only evidence of trading and/or investment activities P has in Hong Kong is buying and selling publicly listed shares in Hong Kong.

36.  Moreover, more importantly, P’s own evidence is that he entered into the 3 loan transactions with D1 not for any business reasons or business activities but out of his friendship with D1 of over 20 years.  There is no evidence of any business/trading activities between P and D1 conducted in Hong Kong.  Having considered all the evidence, in my view, Question 1 cannot be answered in P’s favour.  I am not satisfied P has a good arguable case for contending that his trading activities vis-à-vis D1 were conducted from Hong Kong.

Question 2

Stage 1

37.  As to Question 2, for Stage 1, there is no evidence that the parties had expressly agreed a place of performance to be in Hong Kong.

Stage 2

38.  As for Stage 2, all the evidence showed that P and D1 had sought each other out in Macau or in Mainland China and had dealt with each other in Macau or in Mainland China. 

39.  The 1^st Loan was evidenced by a loan note dated 6 September 2009 signed by D1 to Jimei[18] in Macau.  P’s evidence was that he repaid the sum of HKD 75,500,000 to Jimei on behalf of D1 by instalments and he had produced 4 receipts issued by Jimei for his payments as follows[19]:

(1)     31 August 2014 - HKD 5,000,000 (by cheque)

(2)     23 September 2014 – HKD 15,000,000 (of which P had claimed as the 2^nd Loan, or a separate loan in the SOC) (by bank)

(3)     12 November 2014 – HKD 45,000,000 (by bank)

(4)     28 July 2016 – HKD 10,500,000 (by bank)

40.  According to the Transcript, P had said that after he returned to Mainland, he then demanded D1 to repay[20], and eventually, RMB 36,000,000 was agreed to be repaid by D1 through the share transfer pursuant to the Share Transfer Agreement.  It was thus P’s own evidence that he had requested for repayment of the 1^st Loan from D1 in Mainland China after he returned to the Mainland.  Further, P has produced some telephone call records and WeChat messages between him and D1 July 2014 and September 2019[21].  Most of those telephone calls appeared to have been made by P within the Mainland.

41.  In any event, P had himself agreed that the RMB 36m portion of the 1^st Loan be repaid through the share transfer which all took place in Mainland China for which he had also commenced litigation there.  There is no evidence that one part of the 1^st Loan is to be repaid in the Mainland and another part in Hong Kong.  There is in any event no sufficient evidence to imply that any part of the 1^st Loan is to be repaid in Hong Kong.

42.  As for the 3^rd Loan, the loan note bore the letterhead of Penyao Environment and was signed by D1 and dated the same day as the loan note signed by D1 to Jimei in Macao in relation to the 1^st Loan.  There is no evidence that the sum is to be repaid in Hong Kong or sufficient evidence to imply it is to be repaid in Hong Kong.  On the contrary, it was P’s own evidence that he and D1 had reached an oral agreement that the HKD 30m would be repaid to P after Penyao Environment was listed and when he cashed in his shares.  As Penyao Environment is listed in Shenzhen, and the cashing in or selling of the shares would seem to be likely in Shenzhen, or the Mainland. 

43.  The 4^th Loan was for settling another gambling debt of D1’s in Macau.

44.  As set out above, the dealings, communications, country of residence and background leading to the 1^st Loan, the 3^rd and the 4^th Loan were all conducted in either Macau or Mainland China.  The fact that there was/is foreign exchange control in Mainland China does not mean the parties had impliedly agreed to Hong Kong being the place of performance.  I do not find there is sufficient evidence for any inference to be drawn that the parties had impliedly agreed to the place of performance, or the repayment of those 3 loans was to be in Hong Kong.

45.  As for Stage 3, Mr Chan has referred the Court to what was said by Hunter J in Komala Deccof that at that stage of the enquiry under Question 2, the court applied a rule of law, namely that a debt had to pay the creditor at the creditor’s place of business.  Mr Chan has also referred the Court to Drexel v Drexel [1916] 1 Ch 25, and in that case Mrs Drexel being in England had a right to have payment made to her in England and to issue her writ in England, and if so desired and that the debtor must seek his creditor and must pay him[22].

46.  It is not disputed that in 2009 and 2013, both P and D1 were Mainland residents.  Although according to P, D1 holds assets in Hong Kong through a company Lionguard Investments Limited or his relative D2, D1 has remained a Mainland resident, and P only became a Hong Kong permanent resident in 2015. 

47.  What is clear is that notwithstanding P acquiring a Hong Kong Permanent Identity card, thereafter, P has continued to maintain his Mainland resident card and a residential address in Yixing[23].  P has not provided his movement record from the Immigration Department of Hong Kong, and P’s Mainland passport does not show the dates of his physical presence in Hong Kong or indeed whether he had actually resided in Hong Kong or not.  Further, as said earlier, the address of P stated on the ICBC Statement of 30 July 2021 was P’s address in Yixing. 

48.  There is no sufficient evidence that P’s place of business is in Hong Kong as his share trading activities in Hong Kong can be conducted from a place outside Hong Kong.

49.  I do not find that Stage 3 can be satisfied.

Conclusion under Core Issue 1

50.  Having considered all the above, P has not satisfied this Court that there is a good arguable case that his case falls within Gateway E, or that D1’s breach of his respective agreement to repay P loans was committed within the jurisdiction of Hong Kong.  It is thus not necessary for this Court to consider Core Issue 2, but I will set out briefly my views below.

CORE ISSUE 2- WHETHER HONG KONG IS CLEARLY THE PROPER FORUM FOR THE 3 NEW CAUSES OF ACTION

51.  P’s case is based on that he is a Hong Kong resident, and that he had paid Jimei and also Wing Cheuk from his bank accounts in Hong Kong.

52.  P’s solicitors has in her 1^st affirmation filed in support of the application for service out produced a remittance application form dated 23 September 2014 for the sum of HKD 15,000,000 to be remitted to Jimei as supporting evidence that the payment was from P’s HSBC bank account in Hong Kong[24].  At that time, the remittance form was produced in support of the then alleged 2^nd Loan.  Anyway, it is now P’s evidence that the 2^nd Loan was part of the 1^st Loan and that he had made repayments for the 1^st Loan on behalf of D1 from Hong Kong, and that he produced 4 receipts from Jimei.  The 1^st of P’s payments was stated on the receipt to be by cheque and the rest by bank.  However, apart from that HSBC remittance form, there is no sufficient evidence that the other 3 payments were made from Hong Kong. 

53.  In any event, even if P had paid Jimei or Wing Cheuk from Hong Kong, this is neither here nor there, as P could arrange for remittance to Jimei or Wing Cheuk from other countries and this would not necessarily be indicative of his residence in that country or that country would be the appropriate forum for the determination of any dispute.  As mentioned earlier, there is no sufficient evidence as to the amount of time P has resided in Hong Kong since 2015 after he obtained his permanent residence under the Investors Scheme, and that it appears from the evidence that he has not been in Hong Kong after the Covid-19 outbreak.  Further, P has maintained his Mainland identity card and a residential address in the Mainland throughout.

54.  D1 and D2 both reside in Mainland China.  There is no evidence as to where the representatives /potential witnesses for Jimei or Wing Cheuk reside save that they were working for Jimei or Wing Cheuk in Macau.  As for Penyao Environmental, again there is no evidence as to where the representative/potential witness is going to be, but such representative/potential witness would be working for Penyao Environmental in Shenzhen or Mainland China. Although the banking documents may be in Hong Kong, if indeed the payments on behalf of D1 were all made from Hong Kong, it is unlikely that their authenticity is going to be challenged.  What is clear is there has been litigation in Mainland China over the 1^st Loan, or at least part of it, which led to the 1^st and the 2^nd Decision, and it is still ongoing in Mainland China.

55.  It is submitted on behalf of P that he will suffer a juridical disadvantage or be deprived of a juridical advantage in the Mainland as gambling debts are not enforceable in the Mainland.

56.  In this respect, P has produced a copy of an expert opinion from Hylands Law Firm in Beijing[25].  The expert opinion is that as D1 resides in Yixing and that even though payment of the loan(s) took place outside the Mainland, both the court of D1’s residence and also the court of the place where the obligations of the loan agreement are to be performed will have jurisdiction.  However, according to the expert opinion, under the Mainland laws, D1’s gambling debts are not enforceable as between D1 and the casino(s), and as the loans provided by P to D1 were for gambling debts, this would most probably affect P’s rights to claim the loans from D1, which would result in those loans not being enforceable under the Mainland law.

57.  The expert opinion is said to be based on Regulation 70 of the PRC Security Management Offences (2012) (中華人民共和國治安管理處罰法), Regulation 52 of the PRC Contract Law (1999) (中華人民共和國合同法), and Regulation 153 of the PRC Civil Law Code (中華人民共和國民法典).

58.  Regulation 50 of the PRC Security Management Offences states that:

“第七十条 以营利为目的, 为赌博提供条件的, 或者参与赌博赌资较大的, 处五日以下拘留或者五百元以下罚款；情节严重的,处十日以上十五日以下拘留, 并处五百元以上三干元以下罚款。”

(emphasis added)

59.  As pointed out by Mr Liu, the guarantee provided by P for the 1^st Loan was for the purpose of the release of D1 and not for D1 to gamble, nor is there any evidence that it was made for profit, since no interest was charged for the HKD 75,500,000.  Further as the agreement for the loan was made in Macau, there is no evidence that it will not be enforceable there.

60.  As for the 3^rd Loan, P has not alleged that he would suffer any juridical disadvantage and there is no sufficient evidence that the 3^rd Loan had anything to do with gambling.

61.  Regarding the 4^th Loan of $20 million, again the applicable law is likely to be Macau and/or there is no evidence that it will not be enforceable in Macau.

62.  In fact, as mentioned earlier, the evidence shows that the agreement for all the 3 loans arose in Macau.  In any event, there is no reason nor evidence as to why the loans are not enforceable in Macau.

63.  Having considered all the evidence, I am of the view that P has not satisfied this Court that Hong Kong is clearly the appropriate forum.

WHETHER THERE IS A SERIOUS ISSUE TO BE TRIED ON THE MERITS OF THE CASE 

64.  As P has not been able to meet the 1^st and 3^rd main requirements as summarised by Au-Yeung J in the Isidor Subotic case cited earlier, the Court does not need to consider the 2^nd main requirement as to the merits of the case.  Suffice to say, P has not satisfied this Court that this case is a proper one for service out of the jurisdiction under Order 11.

THE JURISDICTION SUMMONS 

65.  In view of this Court’s conclusion on P’s application for service out, this Court does not need to deal with the Jurisdiction Summons.  I propose to adjourn this summons sine die with liberty to restore.

ORDER

66.  The effect of my order is as follows:

(1)     Leave for P to serve the writ with the ASOC on D1 outside jurisdiction of Hong Kong is refused;

(2)     No order is made in relation to the Amendment Summons;

(3)     The Jurisdiction Summons is adjourned sine die with liberty to restore.   

67.  As P has conceded that the Amendment Summons was redundant, and that P has failed to satisfy Gateway E, there is no reason why P should not pay Ds’ costs of and incidental to the Amendment Summons and the present application.  I order such costs be summarily assessed, and that Ds to submit their statement of costs within 14 days, and that P to submit any list of objections within 14 days thereafter.  P should pay such costs assessed within 21 days of the summary assessment.