WANG QIAN WEI v. 郭文雨 AND ANOTHER

HCMP 2700/2017

[2018] HKCFI 818

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2700 OF 2017

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DECISION

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1.  By an Originating Summons dated 13 December 2017, the plaintiff seeks to have a judgment of Fujian Xiamen Intermediate People’s Court dated 15 September 2015 (“the Judgment”) registered in Hong Kong under the Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap 597 (“Cap 597”).  The Judgment was against five defendants, two of whom being the defendants herein (“D1 and D2”).  The total of the judgment sum involved was RMB 31,100,000 (HK$36,853,500 at the exchange rate of RMB 1 to HK$1.185 (as at 8 December 2017)) together with interest.

2.  On 26 March 2018, the plaintiff took out an inter partes summons (“the Mareva Summons”) for a Mareva injunction against the 1^st defendant.  This is the hearing of the same.

The background leading to the Originating Summons

3.  The genesis of the dispute between the parties can be traced back to an Investment Agreement dated 3 June 2010 (“the Investment Agreement”).  It was signed between Xiamen Xiaxin Investment Group Co, Ltd (“Xiaxin”) as “Party A”, D1 and D2 as “Party B”, and three companies which they (D1 and D2) had invested in as “Party C”.  The purpose of the agreement was for Xiaxin to inject cash into Party B for theintended public listing of Party C in the United States.  The parties further agreed that should the intended listing fail to materialize within an agreed period, specific sums would have to be repaid to Xiaxin.  As it turned out, the public listing failed to materialize within the agreed period.  What happened then was that the parties entered into a new written agreement extending the time for the listing of Party C by one year.  This new agreement contained similar repayment terms as in the Investment Agreement if the public listing failed to take place within the extended period.  At the expiry of the extended period, there was still no public listing.  At that stage, the parties decided to and did enter into a second written agreement (“the 2^nd Agreement”).  The parties reached agreement thereby on the terms upon which Parties B and C should effect certain repayments to Xiaxin.  D1 and D2 failed to adhere to that repayment schedule.  That led ultimately to the court proceedings in the Mainland.

4.  There was however one complication. Rather than litigating itself, Xiaxin decided to and did assign its rights under the 2^nd Agreement to the plaintiff.  With the benefit of the assignment, the plaintiff initiated proceedings before the Fujian Xiamen Intermediate People’s Court against Parties B and C.  He was successful and obtained the Judgment.  According to the law in the Mainland, D1 and D2 had the right to appeal.  But rather than to appeal, they (together with Party C) decided to seek a retrial.  That duly took place.  The judgment upon retrial was handed down on 23 November 2017.The defendants’ liability under the Judgment was confirmed.

5.  In December 2017, the plaintiff decided to seek enforcement of the Judgment in Hong Kong.  That led to the filing of the Originating Summons on 13 December 2017.  The plaintiff filed his affirmation in support of the Originating Summons on the same day.  D1 filed his affirmation in opposition on 23 February 2018.  Two main points were taken, that (1) the assignment by Xiaxin of its interest under the 2^ndAgreement to the plaintiff was invalid; and (2) the 2^nd Agreement contained no agreement between the parties conferring jurisdiction over the matter on the Fujian Xiamen Intermediate People’s Court to the exclusion of courts of other jurisdictions.

6.  Hearing of the Originating Summons has been set down to take place on 6 December 2018.

Alleged risk of dissipation leading to the present application

7.  Before the plaintiff decided to initiate the present proceedings in Hong Kong, he caused searches to be conducted on D1 and D2.  He found out that D1 and a third party were (and still are) co-owners of a duplex unit with flat roofs at a development called The Panorama at Tsuen Wan, Hong Kong (“the Property”).  After the Originating Summons had been taken out, the plaintiff instructed his legal advisers to cause the Originating Summons to be registered against the Property.  There can beno dispute that the Originating Summons is not registrable as a lis pendens.  The registration though withheld was apparently pending nonetheless in the Land Registry.  In the meantime, the legal advisors of D1 and D2 somehow found out about the attempted registration and wrote to the plaintiff’s legal advisers on 16 March 2018 demanding that the registrationbe withdrawn on the basis that it did not relate to the Property or any interest in the same.  In his affirmation filed in support of the Mareva Summons (“the plaintiff’s 2^nd Affirmation”), the plaintiff alleges:

“ 29. I am advised that the registration of the Originating Summons in the Land Registry will need to be removed, but I worry that the 1^st Defendant would sell the Property and dissipate the only asset that he appears to have in Hong Kong, which again will render the judgment to have no effect.

…

31. The registration of the Originating Summons against theProperty in the Land Registry was made on 13 December 2017,3 months has passed, the 1^st Defendant never made any requestto have it removed until last week which indicated strongly hisintention to dissipate the Property. In fact, I was surprised that the 1^st Defendant’s solicitors suddenly asked me to withdraw the registration as my solicitors have never told them that we registered the Originating Summons.

32. Moreover, a recent property advertisement has attractedmy attention in that the description of the flat match greatly to thatof the 1^st Defendant’s Property. Copy of the screen capture ofthe web site of Centaline Property Agency Limited showing the advertisement is now produced and marked as ‘WQW-11’.

…

40. The 1^st Defendant has incurred huge debts in China and there are still creditors seeking to enforce judgments against him. I have recently noticed an advertisement for a property, the description of which greatly resembles the 1^st Defendant’s Property (a duplex at the same housing estate).

41. My solicitors have never disclosed to the 1^st Defendant’ssolicitors that a pending registration against the 1^st Defendant’sproperty at the Land’s Registry has been put in, the fact that the 1^st Defendant has knowledge about this pending registration points to a risk of dissipation, or at least the fact that the 1^st Defendant has plans to deal with his property at the moment.” 

8.  I have read and considered “WQW-11”.  The exact address ofthe property advertised for sale was not made clear.  It was not even dated. 

D1’s objection to the Mareva Summons

9.  D1 objects to the Mareva Summons on a number of grounds: (1) the Judgment was not registrable under Cap 597 as (a) there was no “choice of Mainland court agreement”, in the sense that the 2^nd Agreementcontained no agreement conferring jurisdiction over the matter on the Fujian Xiamen Intermediate People’s Court to the exclusion of courts of other jurisdictions, and (b) in any event, given the assignment, the 2^nd Agreement was in any event not between the plaintiff and D1; and (2) there was no evidence showing any risk of dissipation.

Consideration of the evidence and the submissions

10.  I consider first of all the issue of risk of dissipation.

11.  It is trite that to support an application for a Mareva injunction,the onus is on the applicant to adduce solid evidence on risk of dissipation —see Hong Kong Civil Procedure 2018, paragraph 29/1/70 and Crete Maritime Corp v Emirates Shipping Line DMCEST [2017] 5 HKLRD 345, per A Chan J at paragraphs 9 – 14 and 16 – 17.

12.  In the present case, the evidence in my view falls far short.  The plaintiff accepts that the Originating Summons is not registrable against the Property.  D1’s legal advisers were entitled to demand its withdrawal.  Any attempt to construe that demand as showing any intention on the part of D1 to sell the Property is speculative.

13.  I place no weight on “WQW-11”.  It bears no date.  At paragraph 32 of the plaintiff’s 2^nd Affirmation, the plaintiff describes the advertisement as being “recent”.  He chose not to tell the Court when exactly he saw it.  The advertisement gave no address of the property concerned.  The plaintiff asserts that “the description of the flat match greatly to that of the 1^st Defendant’s Property.”  No reasons or particulars have been given to support the assertion.  No evidence has been adduced to show how many duplex flats there are in the development.  The plaintiff could have made arrangement with Centaline to view the property.  He would then have known the exact address of the property.  He did not do that.  The evidence is again speculative.

14.  It was asserted that D1 had incurred huge debts in China and other creditors have been seeking him out.  Again, no particulars have been provided.

15.  Mr Pun SC who appeared for the plaintiff this morning relied heavily on the alleged low commercial morality on the part of D1.  The following conduct was specifically relied upon: (1) D1’s refusal to honour his obligation under the 2^nd Agreement; (2) his unwillingness to participate in the Mainland proceedings; and (3) his attempt to evade his debt owed under the 2^nd Agreement by blaming Xiaxin for sending the Notice of Transfer of Debt to the incorrect address.  I have scrutinized D1’s conductcarefully.  No dishonesty or fraud was involved. Whilst I am not sayingthat dishonesty or fraud is necessarily and always required, I am of the viewthat D1’s conduct is not of the nature which justifies any inference of risk of dissipation sufficient to support the granting of a Mareva injunction.  As A Chan J has observed at paragraph 17 of his judgment in Crete, “it is self-evident that applying Honsaico[1] too readily will result in grave injustice.” 

16.  Mr Pun has also submitted that D1 has failed to file any affirmation confirming that he has no intention of selling his Property.  He indeed has not, but the onus remains on the plaintiff to adduce solid evidence to prove risk of dissipation.  As I have found above, the evidence falls far short.

17.  Having considered the evidence, and by reason of the above, I find that there is no sufficient evidence to prove any risk of dissipation.  On this basis alone, I dismiss the Mareva Summons.

Other grounds

18.  As I have stated above, D1 seeks to resist the Mareva Summons on other grounds.  However, I am conscious of the fact that although evidence has been filed in support and opposition of the Originating Summons, no specific evidence in opposition of the Mareva Summons has been filed on those grounds.  The Mareva Summons was only taken out three days ago on 26 March 2018.  I observe in particular that whether the 2^nd Agreement contained any “choice of Mainland court agreement” involves an interpretation issue, which can be fact-sensitive—see Bank of China v Yang Fan [2016] 3 HKLRD 7.  I am also conscious of the fact that those other grounds will be relevant to the substantive hearing of the Originating Summons which is scheduled to take place on 6 December 2018.  In the circumstances, I do not deem it prudent to comment on them in any details at this stage.

Conclusion

19.  By reason of the above, I dismiss the Mareva Summons.  I will hear the parties on costs. 

(Counsel submissions re costs)

20.  Having heard parties, I order that the costs of this application be D1’s costs in the cause of the Originating Summons.  I further, upon request of the plaintiff, expedite the hearing of the Originating Summons, which will now take place on 21 September 2018.

21.  I thank counsel for their assistance.