Yangpu Huigu Pharmaceutical Corporation Limited v He

Supreme Court of NSW|2025-02-05

Judgment

HER HONOUR: In this matter, the plaintiff seeks leave to enforce a Chinese Judgment.
The plaintiff is Yangpu Huigu Pharmaceutical Corporation Limited. The defendant is Gaogeng He. The plaintiff was represented by A Hopkins of counsel. The defendant was called three times outside court. There was no appearance of the defendant.
The plaintiff relied upon a Court Book ("Ex A").
By way of summons filed on 16 July 2024, the plaintiff relevantly seeks: 1. Judgment for the Plaintiff in the sum of RMB 10,705,796.08, or the equivalent in Australian dollars, being the recognition and enforcement of a judgment of 30 November 2022 of the First Intermediate People's Court of Hainan Province of the People's Republic of China in proceedings (2020) Q. 96. M. C. No. 13.
I have largely adopted the counsel for the plaintiff's submission in approval.

Substituted Service

To date the defendant has not entered an appearance in the proceedings.
Previously, by way of a motion filed on 5 August 2024 the plaintiff applied for, and was subsequently granted, orders for substituted service. The motion was supported by an affidavit of Yao Fu filed on 5 August 2024. That affidavit annexed two affidavits from process servers deposing to attempts made to serve the originating process.

Background

The judgment relates to the recovery of monies lent by the plaintiff to two companies, one being a Chinese company, and the other an Australian company. The sum lent was RMB 6,000,000.00. Interest on the monies lent was 10% per annum.
The defendant was the director of one of the borrowers, and a guarantor of the loan.
On 2 January 2020 the plaintiff initiated legal proceedings in China in respect of the loan.
The defendant actively participated in the hearing that led to the judgment. He represented himself at the hearing. He appeared at the hearing by way of audio visual link.
The judgment ultimately found the defendant to be "jointly and severally" liable for the outstanding amounts.
No appeal was filed within the time provided in the judgment, nor has there been any appeal filed since.
To date the plaintiff has not received any payment towards the loan, or in satisfaction of, or part satisfaction of, the judgment.

Legal principles

The plaintiff seeks to have the Chinese judgment enforced as a judgment of the Supreme Court of New South Wales.
The plaintiff's application is made pursuant to Australia's common law principles for recognition and enforcement of foreign judgments. This is necessary because the Courts of China are not prescribed by the Foreign Judgments Regulations 1992 (Cth) for the purpose of registration under the Foreign Judgments Act 199 (Cth).
The common law principles establish four conditions which must be satisfied in order for a foreign judgment to be recognised and enforced at common law. In Bao v Qu; Tian (No 2) [2020] NSWSC 588 ("Bao"), Rothman J summarised those principles at [23]-[29]: "Foreign judgments may be enforced in Australia either at common law or pursuant to the statutory regime under the Foreign Judgments Act 1991 (Cth). The statutory regime applies where a country has been designated as a jurisdiction of substantial reciprocity under the Regulations. The People's Republic of China has not been so designated: see the Foreign Judgments Regulations 1992 (Cth), sch 1. Thus, the judgments of Chinese courts are not enforceable in Australia through statutory means. However, decisions of Chinese courts may be enforceable in Australia under the common law procedure for the enforcement of foreign judgments. At common law, a foreign judgment is prima facie capable of recognition and enforcement if the following requirements have been met: (1) the foreign court must have exercised jurisdiction of the requisite type over the defendant (also known as jurisdiction "in the international sense"); (2) the judgment must be final and conclusive; (3) there must be identity of parties between the judgment debtors and the defendants in any enforcement action; and (4) the judgment must be for a fixed, liquidated sum. See Benefit Strategies Group v Prider (2005) 91 SASR 544; [2005] SASC 194 per Bleby J at [18]; Schnabel v Yung Lui [2002] NSWSC 15 per Bergin J at [75]; RDCW Diamonds Pty Ltd v Da Gloria [2006] NSWSC 450 per Rothman J at [28]-[32]; M Davies et al, Nygh's Conflict of Laws in Australia (LexisNexis, 10th ed, 2020) at [40.2]. … The onus rests on the party seeking to enforce the foreign judgment to establish these four requirements: Carl Zeiss Stiftung v Rayner & Keele Ltd [1967] 1 AC 853, Schnabel at [74]-[76]. Once they are established, however, the judgment is prima facie enforceable as a valid obligation: Stern v National Australia Bank; National Australia Bank Ltd v Pollack [1999] FCA 1421 at [133] (Tamberlin J); Suzhou Haishun Investment Management Co. Ltd v Yue'e Zhao & Ors [2019] VSC 110 at [92]."

Principles for Enforcement of Foreign Judgments

As stated in Bao, in Australia, foreign judgments may be enforced either at common law or pursuant to the statutory regime under the Foreign Judgments Act 1991 (Cth). The statutory regime applies where the Foreign Judgment Regulations 1992 (Cth) designate a country as a jurisdiction of substantial reciprocity. This is not the case with judgments of the courts of the People's Republic of China. Accordingly, it is necessary in this case to apply common law principles.
At common law, a foreign judgment is prima facie capable of recognition and enforcement if the following requirements have been met: 1. the foreign court must have exercised jurisdiction of the requisite type over the defendant (also known as jurisdiction 'in the international sense'); 2. the judgment must be final and conclusive; 3. there must be identity of parties between the judgment debtors and the defendants in any enforcement action; and 4. the judgment must be for a fixed, liquidated sum.
The above statement of principles has been adopted and applied in various subsequent decisions of this Court involving Chinese Judgments, including Bank of China Ltd v Chen [2022] NSWSC 749 at [8]; Tianjin Yingtong Materials Co Ltd v Young [2022] NSWSC 943 at [13]; Bank of China Ltd v Chen (No 2) [2022] NSWSC 1168 at [11]; and Anna Zhou v Xiaoli Jing [2023] NSWSC 214 at [15][16]; and Zhengzhou Lvdu Real Estate Group Co Ltd v Shu [2024] NSWSC 58. ("Zhengzhou")
Where the above four conditions have been established, the defendant may only challenge the recognition and enforcement of the foreign judgment on limited grounds. Given the defendant has not appeared and has therefore not mounted any positive defence in these proceedings those considerations do not arise in this case.

(1) Foreign court exercised jurisdiction in the international sense shall address the four requirements in turn

In Bao at [27], Rothman J stated that: "As to the first requirement that the foreign court have jurisdiction in the international sense, this is satisfied where the defendant is personally served with originating process within the jurisdiction of the foreign court: see Herman v Meallin (1891) 8 WN (NSW) 38; Nygh at [40.6]. Moreover, it is clear that a defendant who was served outside the jurisdiction of the foreign court, but has nonetheless appeared to argue the merits of the case, has submitted to the jurisdiction of that court: City of Swan v McGraw-Hill Companies Inc (2014) 223 FCR 295; [2014] FCA 442 at [113]; Nygh at [40.12-13]."
In this case there is evidence that the defendant was served in the Chinese proceedings via registered mail. In any event, the defendant appeared at the hearing and argued the merits of the claim. As such he voluntarily submitted to jurisdiction.
Having regard to those matters, the Court would be satisfied that the defendant appeared before the Chinese Court, without objecting to jurisdiction, and argued the merits of the case. It follows that the plaintiff has established that the Chinese Court exercised jurisdiction in the requisite "international" sense.

(2) Foreign judgment final and conclusive

In Bao at [28], Rothman J stated that: "On the second requirement, the foreign court's judgment must be final, in that it must put to an end the proceedings concerned and quell the controversy between the parties to the dispute: Nouvion v Freeman (1889) 15 App Cas 1 at 9; Doe v Howard [2015] VSC 75 at [67] per J Forrest J; Schnabel at [77] and [133]. A foreign judgment is final where it is treated as res judicata by the courts of the country in which it is made, in respect of the issues determined: Schnabel at [77], [133]; Bank Polska Kasa Opieki Spolka Akcyjna v Opara (2010) 238 FLR 309; [2010] QSC 93. In that regard, the fact that a judgment may be subject to appeal does not, in principle, affect the finality of the judgment: Colt Industries Inc v Sarlie (No 2) [1966] 1 WLR 1287; Lewis v Eliades [2003] EWCA Civ 1758."
The Court recently considered a similar judgment to the judgment in this case in Zhengzhou.
As in Zhengzhou, the judgment in these current proceedings in this Court: 1. was headed "Civil Judgment", 2. was stamped by the Court 3. states that the case "has now been heard and concluded". 4. Sets out the contentions advanced by each of the parties and the determinations of the Court regarding the factual matters and legal matters in issue. 5. Makes orders disposing of all the plaintiffs' claims in the proceedings. 6. Notes that there is a right of appeal which is limited temporally and is required to be made to the Henan Provincial High People's Court.
As such the judgment is final and conclusive, in that it put an end to the proceedings and quelled the controversy between the parties, subject only to a right to appeal to the Henan Provincial High People's Court, which was not exercised.
Interestingly, the judgment set out 2 different temporal requirements to appeal the matter. The plaintiff was provided with fifteen days to appeal but the defendants were provided with 30 days from the date of the judgment to appeal.

(3) Identity of parties

The third requirement is that there must be identity of parties between the judgment debtors and the defendants in any enforcement action.
If the foreign judgment is expressed to be against several defendants acting as separate legal entities, enforcement proceedings may be brought in Australia against any or all of them: see Zhengzhou at [48] citing M Davies et al, Nygh's Conflict of Laws in Australia (10th ed, 2020) at [40.37], and the cases there cited.
It is not necessary to seek enforcement and recognition against the borrower companies, in order to seek enforcement and recognition against the defendant. The Australian company Dong Yuan Investment Pty Ltd was a defendant in the Chinese proceedings. It is in liquidator.
The plaintiff has led evidence that the defendant in these proceedings, is the same defendant in the Chinese proceedings. This has been done by way of ASIC company searches for one of the borrower companies which lists the defendant as a director, and the address of that individual is the address of the defendant.

(4) Judgment for a liquidated sum

The final requirement for recognition and enforcement is that the judgment must be for a fixed, liquidated sum. In this case the judgment is for a specific sum.
The fact that interest continues to accrue according to some formula which is specified in the foreign judgment does not prevent the foreign judgment being for a fixed, liquidated sum. In the ordinary course, it is appropriate to make an order for pre-judgment interest in accordance with the foreign judgment: Bao at [59].
The fourth requirement for recognition and enforcement at common law is satisfied.

Any reason not to enforce?

Because the plaintiff has established each of the four requirements for recognition and enforcement at common law, the judgment is prima facie enforceable. It then falls to the defendant to establish any basis on which that judgment should not be recognised and enforced.
Since the defendant has not participated in these proceedings, no contention has been advanced that any such basis has been established.
Further, and in any event, as in Zhengzhou at [60]- [68], there does not appear to be, on the material before the Court, any material capable of making out any of the limited bases for declining to recognise and enforce a foreign judgment.

Resolution

The Chinese judgment should be enforced in this Court.
The judgment sum is comprised of: 1. The principal amount of the loans as ordered by the Chinese Court, being RMB 6,000,000. 2. Interest to date of judgment in these proceedings, being at the rate 10% per annum from 18 September to the date of the hearing on 5 February 2025, being RMB 5,033,424.66. 3. The sum of RMB 22,221 as ordered by the Chinese Court for the travel expenses. 4. The sum of RMB 64,397 for the Court acceptance fees as ordered by the Chinese Court, and the sum of RMB 5,000 "preservation fee", being RMB 69,397.

Judgment

The defendant is to pay the plaintiff in the sum of RMB 11,125,042.66, being the recognition and enforcement of a judgment of 30 November 2022 of the First Intermediate People's Court of Hainan Province of the People's Republic of China in proceedings (2020) Q. 96. M. C. No. 13.

The Court Orders that 1. The defendant is to pay the plaintiffs costs of the proceeding as agreed or assessed.

The Court Notes that 1. Interest on the sum in Order 1 will accrue in accordance with s 101 of the Civil Procedure Act 2005 (NSW).

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 February 2025

Foreign Judgment Regulations 1992(Cth)

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Judgment (15 paragraphs)

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Legislation Cited (4)

Cases Cited (17)