TRANSUNION LTD v. HONGKONG TAIJIN INDUSTRY LTD AND OTHERS
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HCA 1353/2019
[2021] HKCFI 484
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1353 OF 2019
________________________
| BETWEEN | ||
| TRANSUNION LIMITED | Plaintiff | |
and | ||
| HONGKONG TAIJIN INDUSTRY LIMITED | 1st Defendant | |
| MEIBAOYING TRADE CO., LIMITED | 2nd Defendant | |
| STAR UNION TRADING DEVELOP LIMITED | 3rd Defendant | |
| HO YU XIN TRADE LIMITED | 4th Defendant | |
| HONG KONG JUFENGLI TRADE CO., LIMITED | 5th Defendant | |
| KA MA TECHNOLOGY CO., LIMITED | 6th Defendant | |
| LIU DONGJIE | 7th Defendant | |
| MERIT TOP ENTERPRISES CORPORATION | 8th Defendant | |
| YANG KUNLING | 9th Defendant | |
| HONG KONG YUGUI TRADING CO., LIMITED | 10th Defendant | |
| HK BEAUTY FOREST INTERNATIONAL LIMITED | 11th Defendant | |
| YANGHUA TECHNOLOGY CO., LIMITED | 12th Defendant | |
| WANG XIN HK TECHNOLOGY CO., LIMITED | 13th Defendant | |
| MISS DONG YING | 14th Defendant | |
| HONGKONG RIQING TRADING LIMITED | 15th Defendant | |
| HK HENGXUAN TRADE LIMITED | 16th Defendant | |
| HONGKONG HUAER ELECTRONIC TRADE LIMITED | 17th Defendant | |
| BOREN TRADE LIMITED | 18th Defendant | |
| SINOIF TRADING LIMITED | 19th Defendant | |
| DEEP TRADE LIMITED | 20th Defendant | |
| BILLION PERFORMANCE LIMITED | 21st Defendant | |
| TENGYUN TRADING CO., LIMITED | 22nd Defendant | |
| SH XUYI TRADE LIMITED | 23rd Defendant | |
| EASYSALE INTERNATIONAL TRADE CO., LIMITED | 24th Defendant | |
| ZALL HOLDINGS COMPANY LIMITED | 25th Defendant | |
| WU LEUNG LEE MAN YICK JEWELLERY CO | 26th Defendant | |
| HK FMEI TRADE CO., LIMITED | 27th Defendant | |
| JAPAN MITSUI INVESTMENT COMPANY LIMITED | 28th Defendant | |
| HUANG WEIQUN | 29th Defendant | |
| CHENGZI TRADING CO., LIMITED | 30th Defendant | |
| LONG RICH (HK) SHIPPING CO., LIMITED | 31st Defendant | |
| HONG KONG WPT TECHNOLOGY CO., LIMITED | 32nd Defendant | |
| SSC EXOTICS CO., LIMITED | 33rd Defendant | |
| HONGKONG JIANPING TRADING LIMITED | 34th Defendant | |
| GOLDENLUX CO., LIMITED | 35th Defendant | |
| MORE PROFIT INTERNATIONAL HOLDINGS LIMITED | 36th Defendant | |
| HONGKONG CHENGYUAN TRADING LIMITED | 37th Defendant | |
| HK WEALTH ELECTRONIC COMMUNICATION CO., LIMITED | 38th Defendant | |
| NI CHANGYU | 39th Defendant | |
________________________
Before: Deputy High Court Judge MK Liu (Paper Disposal)
Date of Plaintiff’s Written Submissions: 22 February 2021
Date of Garnishee’s Written Submissions: 17 & 24 February 2021
Date of Decision: 25 February 2021
________________________
DECISION
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1. On 1 February 2021, I handed down a decision (“Main Decision”)[1], in which I allowed P’s applications and made absolute the 1st and the 2nd Garnishee Order Nisi. This decision should be read together with the Main Decision. For ease of reference, the abbreviations used in the Main Decision are adopted herein.
2. On 5 February 2021, Zall’s solicitors wrote to the court and sought a direction that Zall might lodge an appeal against the Decision as of right and without leave. On 8 February 2021, I directed that it would be necessary for Zall to take out a summons for a determination on whether leave to appeal is required; and if leave is required, for leave to appeal. On 10 February 2021, Zall took out a summons for a determination of these issues (“the Leave Summons”). Originally, the Leave Summons was fixed to be heard on 15 April 2021.
3. On 10 February 2021, Zall’s solicitors wrote to the court and sought an interim stay of the Decision pending the determination of the Leave Summons. For the purpose of expediting the determination of the Leave Summons, on 11 February 2021, I directed that the Leave Summons be determined on paper without an oral hearing. I required the parties to provide written submissions to the court in accordance with the timetable laid down in the directions. With the said timetable, it can be sure that the Leave Summons would be determined within a relatively short period of time. With this in mind, I granted an interim stay of the Decision (“the interim stay”) pending the outcome of Zall’s application as per the Leave Summons.
LEAVE REQUIRED
4. The first question is whether leave to appeal is required. In my view, the answer is in the affirmative.
5. Section 14AA of the High Court Ordinance (“the HCO”) provides that:
“(1) Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted by the Court of First Instance or the Court of Appeal.
(2) Rules of court may specify a judgment or order of any prescribed description to which subsection (1) does not apply and accordingly an appeal lies as of right from the judgment or order.” (Emphasis added)
6. Order 59 rule 21 provides that:
“(1) Judgments and orders to which section 14AA(1) of the Ordinance (leave to appeal required for interlocutory appeals) does not apply and accordingly an appeal lies as of right from them are the following—
(a) a judgment or order determining in a summary way the substantive rights of a party to an action; ……” (Emphasis added)
7. Counsel for Zall fairly accepts that the Decision is an interlocutory decision, for it is not a decision disposing of the whole or part of the originating process. Counsel also accepts that, save and except Order 59 rule 21(1)(a), the Decision does not fall within a specific category specified in Order 59 rule 21[2]. However, counsel submits that the Decision is a decision that determines in a summary way the substantive rights of Zall[3], and hence by virtue of Order 59 rule 21(1)(a), Zall may lodge an appeal against the Decision as of right and without leave.
8. Counsel for Zall submits:
(1) By the Decision, I have made absolute the 1st and the 2nd Garnishee Orders Nisi. Once the Garnishee Orders are made absolute, Zall’s substantive rights are engaged in that it was ordered to pay (in a final manner) part of its debt to satisfy the judgments against D1, D20 and D22 obtained by P.
(2) Such an obligation to pay is no longer conditional or tentative or reversible. Accordingly, it falls within Order 59 rule 21(1)(a), such that an appeal lies as of right from the Decision, and no leave is required.
(3) It does not appear that leave was required in previous appeals against orders making absolute garnishee orders: eg Ying Fat Plastic Factory Ltd v Hegner Ltd[4], and Rooke & Anor v HV Construction Services Ltd[5].
9. With respect, I am unable to accept these submissions.
10. First of all, I am of the view that the authorities cited by counsel in his submissions may not shed any light on this issue, for those cases are pre-CJR decisions. S.14AA of the HCO was introduced in the CJR and came into operation on 2 April 2009. The cases relied upon by counsel for Zall were decided long time before the introduction of s.14AA of the HCO.
11. As to the purpose and the effect of s.14AA of the HCO, in Bright Shipping Ltd v Changhong Group (HK) Ltd[6], Lam VP (giving the reasons for judgment of the Court of Appeal) said:
“14. There are many cases in which a party cannot proceed further or would be placed under constraints in the future conduct of an action or a set of proceedings by virtue of interlocutory decisions, e.g. decisions on security for costs, decisions on admission of evidence, case management decisions, decisions refusing extension of time to do certain acts. Since the introduction of the Section 14AA leave requirement, this Court has regarded these decisions as interlocutory by nature even though the decision has the practical effect of debarring further proceedings: see e.g. Kwok Cheuk Kin v Leung Chun Ying [2018] 4 HKC 440; Leung So Hung Siem v Mr Carson Wen[2019] HKCA 94. Thus, we cannot accept [counsel]’s submission that the stay decision is a critical one due to its profound effect on the parties.
……
18. It is perhaps useful to remind ourselves of the purpose of the Section 14AA leave requirement. The requirement was introduced to curtail unmeritorious interlocutory appeals which would delay the litigation process and escalate costs of the proceedings. It was introduced to promote the proper and efficient use of judicial resources and the avoidance of oppressive and unproductive appeals. It is a filtering process instead of an absolute bar. For meritorious appeals which serve useful purposes, leave would be granted. An intended appellant is given adequate opportunity to advance submissions in the application for leave. After a failure to obtain leave at the court below, an applicant can renew the application in the Court of Appeal. Thus, a similar leave requirement (in the context of District Court cases) has been held by the Court of Final Appeal in Incorporated Owners of Po Hang Building v Sam Woo Marine Works Ltd (2017) 20 HKCFAR 240 to be a proportionate measure.”
12. In Bright Shipping, the issue before the Court of Appeal is whether a decision dismissing an application for a stay of proceedings on the ground of forum non conveniens is a decision in respect of which the unsuccessful party may lodge an appeal as of right and without leave. The Court of Appeal answered the question in the negative. Lam VP said:
“11. …… the issue in question has to be an issue on the merits as opposed to the procedural steps for bringing or preparing a case before it is presented to the court for final determination on the merits.
12. …… the decision on stay did not finally determine any issue on the substantive rights between the parties. It only determines if proceedings should be entertained in the courts of Hong Kong. Even assuming that a stay is granted, it would not bar the Plaintiff from suing elsewhere.”
13. I appreciate that the Decision has a profound impact on the respective interests of P and Zall. However, as said by Lam VP in [14] of Bright Shipping, from time to time, there are interlocutory decisions in many cases which would have direct and substantial impacts on the interests of the parties in those cases. However, unless these interlocutory decisions are within the scope of Order 59 rule 21, these interlocutory decisions would be caught by the leave requirement in s.14AA of the HCO.
14. Counsel for Zall has accepted that the Decision is an interlocutory decision. I am of the view that the Decision does not have the effect of determining the substantive rights of P and Zall.
(1) On the jurisdiction ground, assuming that there is a ruling in favour of Zall, that would only mean that P may not enforce the judgment debts by way of garnishee proceedings against Zall in Hong Kong. However, that does not mean that P may not commence garnishee proceedings against Zall elsewhere, for example, in BVI.
(2) On the double jeopardy ground, assuming that the court is with Zall and refuses to make absolute the two Garnishee Orders Nisi, that does not mean that P may not commence garnishee proceedings against Zall again at a later time. Once the factor constituting the alleged double jeopardy disappears (ie, Cui’s alleged liability under the Personal Guarantees has been extinguished or has disappeared for some reason), P may re-apply for garnishee orders against Zall.
(3) Further, as to the double jeopardy ground put forward by Zall, I do not see how the substantive rights of Zall would be affected by the court’s ruling on this ground. Even if Zall’s argument is accepted, making the 2 garnishee orders nisi absolute would only affectCui’s interest. However, Cui is not a party in the garnishee proceedings.
15. In my judgment, the Decision is not within the scope of Order 59 rule 21(1)(a). Zall may only lodge an appeal against the Decision if leave to appeal is granted.
LEAVE APPLICATION
16. The second question is whether leave to appeal should be granted to Zall. For the reasons set out below, I would refuse leave.
17. Zall has filed the 3rd and the 4th Affirmations of Zhu Guohui dated 10 February 2021 and 24 February 2021 respectively in support of the Leave Summons. These 2 affirmations were not the evidence before the court in the hearing on paper leading to the Main Decision. For the purpose of considering whether leave to appeal should be granted to Zall, the matters set out in these 2 affirmations should not be considered.
The principles
18. Leave to appeal would only be granted if the appeal has a reasonable prospect of success (which means that the prospect of success is reasonable and more than fanciful, without having to be probable), or there is some other reason in the interests of justice why the appeal should be heard[7].
The “reasonable prospect of success” limb
19. Counsel for Zall submits that I have erred in ruling against Zall on both the Jurisdiction Ground and the Double Jeopardy Ground. With respect, I am unable to agree.
20. As to the Jurisdiction Ground, counsel for Zall does not dispute the law as summarized in [13] of the Main Decision. However, counsel submits that my finding that Zall has a residence in Hong Kong is based upon insufficient evidence. Counsel argues that:
(1) there is no evidence to the effect that Zall has established and maintained at its own expense a fixed place of business of its own in Hong Kong (which is more than the mere correspondence address). There is also no evidence that Zall has carried out any business at or from such a fixed place of business for a sufficiently substantial period of time;
(2) there is no evidence to the effect that Zall was “here” in Hong Kong by a person or entity who carries on business for it in Hong Kong; and
(3) the non-exclusive jurisdiction clause in the Loan Agreements has no relevance in determining whether Zall was present in Hong Kong.
21. In [14] to [18] of the Main Decision, I have explained why I found that Zall had a residence in Hong Kong for the purpose of the garnishee proceedings. The Hong Kong Address is a fixed place of business. There is evidence showing that Zall has conducted activities relating to its investment holding business in Hong Kong[8]. The existence of Clause 5 in each of the Loan Agreement, in the context of other matters identified in [17(3)] of the Main Decision, is a factor indicating that Zall has conducted business in Hong Kong. In my view, my finding is based upon sufficient evidence before the court. I am not persuaded that I have erred in any aspect in my ruling.
22. Counsel for Zall also submits that I have erred in finding that the place for repayment of the loan under each Loan Agreement is Hong Kong. In his written submissions dated 17 February 2021, counsel submits at [18.8]:
“It is difficult to see why a place of payment would be necessary at all where parties are in fact free to choose from whatever way of payment they see fit. While the Court considered factors that related Zall to Hong Kong, and it may well be plausible for Zall to repay the loan in Hong Kong, that is far from it being necessary that the loan must be repaid in Hong Kong. The contract is commercially and practically coherent without such a term. In fact, the contract would not even be improved by the addition of such a term, seeing as it would deprive the parties of the right to choose where and the method by which they wish to make repayment anywhere in the world. There is a world of difference between it being likely that Zall will repay in Hong Kong as a matter of fact, and that Zall is not permitted to repay anywhere else other than Hong Kong under the terms of the contract.”
23. Counsel in fact is trying to argue that in each Loan Agreement, the parties have not agreed a place for repayment of the loan. In other words, the loan has no situs. With respect, I am unable to accept these submissions. For the reasons set out in [19] to [21] of the Main Decision, I am of the view that the situs of the loan under each Loan Agreement is in Hong Kong. Of course, each Loan Agreement could be varied by consent of the parties thereto. If the parties agree, the place for repayment of the loan could be varied by a subsequent agreement.
24. As to the Double Jeopardy Ground, counsel for Zall is re-running the arguments previously advanced to this court. With respect, I am of the view that there is no merit in those points.
25. In my judgment, there is no reasonable prospect of success in the appeal proposed by Zall.
The “some other reason in the interests of justice” limb
26. Counsel for Zall is not relying upon the “some other reason in the interest of justice” limb to seek leave to appeal. In any event, I do not see any reason to grant leave under this limb.
DISPOSITION
27. For the reasons above, in my judgement, leave to appeal from the Decision is required. However, leave to appeal should be refused. I therefore dismiss the Leave Summons.
28. There be a costs order nisi that costs of the Leave Summons be paid by Zall to P forthwith and be summarily assessed on paper. There be leave to P to file and serve a bill of costs for summary assessment within 7 days after the costs order nisi becoming absolute, and leave to Zall to file and serve a written reply to the said bill within 7 days thereafter.
29. I appreciate that Zall may consider to take the matter to the Court of Appeal. I would continue the interim stay for 14 days to give Zall some leeway. However, since I have held that leave to appeal is required and refused to grant leave, no further stay would be granted by me after the said 14-day period.
30. I thank the parties for the assistance rendered to the court.
| ( MK Liu ) Deputy High Court Judge |
Written submissions of Mr Randall Arthur of Kobre & Kim, for the plaintiff
Written submissions of Mr Ernest CY Ng, instructed by P. C. Woo & Co, for the Garnishee
[2] Zall’s written submissions dated 17 February 2021, [8]
[3] Zall’s written submissions dated 17 February 2021, [9]
[4] [1998] 1 HKC 691
[5] [1998] 2 HKLRD 319
[6] [2019] 2 HKLRD 220
[7] High Court Ordinance, section 14AA; SMSE v KL [2009] 4 HKLRD 125, [17]; Hong Kong Civil Procedure 2021, Volume 1, §59/2A/4
[8] See [17(2) and (3)] of the Main Decision