DU GUORONG v. BANK OF CHINA INTERNATIONAL LTD AND ANOTHER

HCA 467/2017

[2022] HKCFI 2777

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 467 OF 2017

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BETWEEN

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DECISION

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INTRODUCTION

1.  This is the Plaintiff’s Summons filed on 25 April 2022 for an order for further security for costs. As shall be seen below, an issue arises as to whether for the purpose of an application for an order for security for costs, there is any difficulty in enforcing a costs order in the PRC under the various agreements between the jurisdiction of the PRC and the jurisdiction of the HKSAR, to be detailed below. It is this issue which I think warrants the publication of this Decision.

2.  The plaintiff has twice provided security for costs in this action, the first one by Consent Order filed on 17 April 2019 for HK$3.3m covering up to close of pleadings, and the second one by Master Sabrina Ho’s Order dated 20 July 2021 upon the opposed summons filed on 24 March 2021, for HK$4m covering from close of pleadings to filing further interlocutory applications. Now, the defendants seek further security for costs from the deadline for filing further interlocutory applications up to the last day of the trial, in the sum of HK$12 million odd.

3.  Before I go further, I should point out that normally one would think that the plaintiff would only dispute the quantum, given that there was the consent order and Master Sabrina Ho’s order. That is why at the call-over hearing on 27 May 2022, Master Phoebe Man indicated, and I agree with her, that should the Plaintiff continue to contest his liability to provide security for costs without raising any new grounds other than those already raised in opposition to the pervious summons before Master Sabrina Ho, the Court would be ready to order costs on an indemnity basis.

ANALYSIS

4.  Ms Bonnie Y K Cheng, counsel for the Defendants, submits that on the evidence, the Plaintiff is ordinarily resident out of jurisdiction. Mr Tony Ko, counsel for the Plaintiff, rightly, does not advance any submissions on this point. Having considered the evidence and the submissions, I am satisfied that the Plaintiff is ordinarily resident out of jurisdiction.

5.  Counsel also make submissions on the merits of the parties’ respective cases. The parties have exchanged witness statements. Suffice for me to say that both parties’ cases are arguable.

6.  Mr Ko also submits that the order being sought would stifle the Plaintiff’s claim. However, while it is trite that the burden lies upon the plaintiff to prove the stifling effect with evidence, there is none produced by the Plaintiff. Thus, I do not accept this as a valid ground of opposition.

7.  The main ground of opposition, as I see it, seems to be that the Defendants have failed to prove difficulty in enforcing a Hong Kong costs order in the PRC. Mr Ko makes three points:-

(1) Under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597), the Court recognised that a reciprocal enforcement mechanism of court orders between Hong Kong and the PRC is readily in place, referring to ICBC (Asia) Ltd v Wisdom Top International Ltd [2020] HKCFI 322.

(2) Under the Arrangement of the Supreme People's Court between the Mainland and the HKSAR on Reciprocal Recognition and Enforcement of the Decisions on Civil and Commercial Cases under Consensual Jurisdiction in 2008 (the “2008 Arrangement”), there is little difficulty in the enforcement of a Hong Kong costs order in the PRC.

(3) Further, under the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region in 2019 (the “2019 Arrangement”), there will be little difficulty in the enforcement of a Hong Kong costs order in the PRC.

8.  Ground (1) and (2) above can be easily disposed of. In order to invoke the recognition, a choice of court agreement in writing is required. This requirement is also noted in the PRC legal opinion produced by the Plaintiff. In the present case, there is no such agreement in writing. Thus, the Plaintiff cannot avail itself of these two grounds.

9.  In respect of Ground (3), the 2019 Arrangement has not become effective yet, and no date has been appointed for it to become effective. Mr Ko submits that by the end of the trial, it is likely that the 2019 Arrangement would have become effective. However, without any evidence, such submission is a mere speculation which I cannot accept.

10.  Further, there are no details as to how one will be able to enforce a Hong Kong order in the PRC under the 2019 Arrangement. Unlike in common law jurisdictions, with which Hong Kong Courts are familiar, where a judgment of another common law jurisdiction may simply be registered in the Court and then enforced, no details or even framework of rules, as of now, have been made known in respect of the 2019 Arrangement. In this connection, Tronic International Pte Ltd v Topco Scientific Co Ltd & ors, CACV 235/2013, 20 June 2014, on which Mr Ko relies in support of the proposition that where the defendant fails to prove difficulty in enforcement of the costs order in the foreign jurisdiction, the Court should refuse an order for security for costs, is distinguishable. The foreign jurisdiction involved in that case was Singapore, where a Hong Kong costs order could simply be registered as a judgment of the Singapore court pursuant to the Reciprocal Enforcement of Foreign Judgment Act. Such registration process, of course, is well known to the Hong Kong Courts, which have a good feel of how much costs and time would be incurred in enforcing such a registered foreign judgment. It was in such context that the Court there required more evidence as to the difficulty in enforcement of the costs order in Singapore. I note my view is consistent with the annotation in Hong Kong Civil Procedure 2022 Vol 1 at §23/3/4, where it is stated that “If the plaintiff is resident in a jurisdiction which has a common law system similar to that in Hong Kong, and there is an arrangement for the reciprocal enforcement of judgments between Hong Kong and that jurisdiction, more evidence about the difficulties in enforcing a judgment may be required before the court exercises its discretion to order security for costs”.

11.  In the present case, the “foreign” jurisdiction involved is the PRC jurisdiction. The Courts have as a matter of practice taken the position that there would be difficulty in enforcement of a Hong Kong court orders in the PRC. While the 2019 Arrangement may have an impact on such position, given that it has not become effective and in any event no details as to how the 2019 Arrangement would be implemented (and in this regard, the PRC legal opinion produced by the Plaintiff only states the general framework of the 2019 Arrangement, namely, who would be the parties, which courts would have the jurisdiction and the time limitation), I do not accept that the Court should refuse security for costs simply because of the existence or even the effectiveness of the 2019 Arrangement.

12.  For the avoidance of doubt, I do not rule out that in the future, when the 2019 Arrangement would become effective, and details of how it would be implemented would be available, with appropriate evidence, the Court’s position as a matter of practice as mentioned above may change. However, this has not happened yet here.

CONCLUSION

13.  In the circumstances, I find that the Plaintiff is liable to pay further security for costs. I shall hear submissions on the quantum and then costs of the application.