Yang v Yue
[2022] VSC 489
•26 August 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2020 04101
| ZHILONG YANG & ANOR (according to the Schedule attached) | Plaintiffs |
| v | |
| JUN YUE & ORS (according to the Schedule attached) | Defendants |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 August 2022 |
DATE OF JUDGMENT: | 26 August 2022 |
CASE MAY BE CITED AS: | Yang & Anor v Yue & Ors |
MEDIUM NEUTRAL CITATION: | [2022] VSC 489 |
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CONTRACT – Whether agreement confers exclusive jurisdiction on the courts of the People’s Republic of China to determine all matters in dispute between the parties – Application for permanent stay of proceeding – Agreement confers the right to commence proceedings in the People’s Republic of China or Victoria – Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P Collinson QC with Mr L Magowan | Lin Legal & Associates |
| For the Defendants | Mr M Singh, solicitor | Dhillon Legal |
HIS HONOUR:
Introduction
By summons filed 3 December 2021 the defendants apply for a permanent stay of proceedings and a declaration that the most appropriate court to determine all matters in issue between the parties is a court from the State or Territory of the People’s Republic of China.
The primary issue for determination is whether an agreement entered into between the plaintiffs and the defendants on 31 May 2018 (‘2018 Agreement’) confers exclusive jurisdiction upon the courts of the People’s Republic of China to resolve any dispute between the parties.
For the reasons which follow I have concluded that the 2018 Agreement does not confer exclusive jurisdiction upon the courts of the People’s Republic of China. The 2018 Agreement does confer on the parties the right to submit disputes to courts in China. However, the 2018 Agreement does not preclude the plaintiffs from commencing proceedings against the defendants in the Supreme Court of Victoria.
Background
The plaintiffs are a married couple currently residing in China. They own a property in Southbank, Victoria, and formerly held Australian permanent residency. The first and second defendants are the registered proprietors of three properties in Victoria, and the second defendant is the registered proprietor of a fourth property in Southbank where the first and second defendants reside. The third defendant is their son. The fourth defendant, Jin Xin Australia Pty Ltd, is an Australian company owned by them with a registered office in Victoria, which owns the Magnolia Court Boutique Hotel in East Melbourne.[1]
[1]I gratefully adopt the background to this dispute as set out in the judgment of Gorton J dated 26 October 2021: Yang v Yue [2021] VSC 740, [2]–[10] (‘Yang’).
The parties have entered into several agreements including written agreements made in 2013 and 2016, and the 2018 Agreement. The plaintiffs allege that the defendants are liable to them by reason of their failure to repay loans advanced under the agreements. The plaintiffs allege that the unpaid loans are accruing interest at a rate of 24% per annum. The plaintiffs contend that as at November 2021 the defendants were indebted to them for in excess of $900,000.[2] The 2018 Agreement is in Chinese. Each of the parties provided English translations of the 2018 Agreement prior to the hearing of the stay application. It is common ground that it was drafted by the plaintiffs personally without the involvement of lawyers. It is also common ground that it was signed at the Magnolia Court Boutique Hotel in East Melbourne.
[2]Ibid [11].
Construction Issue
The task of the Court is to determine whether the 2018 Agreement confers exclusive jurisdiction upon the Chinese courts. As the 2018 Agreement is written in Chinese, the construction of the Agreement is reliant upon English translations. Two English translations are before the Court:
·The translation of Ms Yun Xia Wu, contained in the plaintiffs’ affidavits of Yun Xia Wu dated 18 February 2022 and 7 August 2022 (‘plaintiffs’ translation’); and
·The translation of Mr Kai Ming Tan, contained in the defendants’ affidavit of Jun Yue dated 21 December 2020 (‘defendants’ translation’).
Clauses 8 and 9 of the 2018 Agreement are critical to resolving the question of whether exclusive jurisdiction is conferred upon the Chinese courts. The respective translations of Ms Wu and Mr Tan are set out below and are Annexures A and B of this judgment.
Ms Wu translates clauses 8 and 9 as follows:
Eight. Any dispute arising out of this agreement is subject to the jurisdiction of the Chinese courts where Party B is located, and is to be dealt with by Chinese laws and regulations.[3]
Nine. All parties confirm at the same time that, for convenience and better enforcement effect of the rights claimed, when it is permitted by the proceeding laws where Jin Xin Australia Pty Ltd is located, Party B can issue legal proceeding at the local court where Jin Xin Australia Pty Ltd is located, or make application to that local court to acknowledge and enforce the judgement made by the Chinese court as stated in Clause Eight, both to be governed by Chinese laws and regulations.[4]
[3]Exhibits to the affidavit of Yun Xia Wu dated 18 February 2022, 3.
[4]Affidavit of Yun Xia Wu dated 18 February 2022, 2 [11] (emphasis added); Affidavit of Yun Xia Wu dated 7 August 2022, 2 [6] (emphasis added).
Mr Tan translates clauses 8 and 9 as follows:
Clause 8
Any dispute arising from this agreement should be dealt with by a law court of China where Party B is located in accordance with Chinese laws.Clause 9
At the same time, all parties agree that, for convenience and better enforcement outcome, lawsuits may be submitted to a local court of the location of JIN XIN AUSTRALIA PTY LTD or permits may be applied for from a local court near the location of JIN XIN AUSTRALIA PTY LTD to enforce the decision or decisions made by a Chinese court as mentioned in Clause 8. Chinese laws should apply in these circumstances.[5]
[5]Exhibits to Affidavit of Jun Yue dated 21 December 2020, 8.
In addition both parties filed expert reports of Chinese law experts:
·The report of Mr Meng Tang, contained in the plaintiffs’ affidavit of Meng Tang dated 14 February 2022 (‘plaintiffs’ expert report’);
·The report of Ms Zhang Ying contained in the defendants’ affidavit of Zhang Ying dated 15 July 2022 (‘defendants’ expert report’).
These expert reports each contain translations of sections of the May 2018 Agreement. However they are not translations prepared by certified translators.
The defendants submit that the 2018 Agreement contains an exclusive jurisdiction clause in favour of the Chinese courts. The defendants rely primarily on clause 8 of the 2018 Agreement. They submit that regardless of which of the competing translations is preferred, the language of clause 8 is clear: any dispute arising from the 2018 Agreement is to be dealt with by or is subject to the jurisdiction of the Chinese courts.[6] The defendants submit:
The defendants’ translation of clause 8 of the 2018 Agreement provides that ‘any dispute arising from this agreement should be dealt with by a law court of China’. Furthermore, the plaintiffs’ translation of the same clause provides that ‘any dispute arising out of this agreement is subject to the jurisdiction of the Chinese courts where Party B is located, and is to be dealt with by Chinese laws and regulations’.[7]
(emphasis in original)
The defendants submit that ‘the language used in both translations strongly imply [sic] that the agreement is not to be “dealt with” by a court’.[8] They also submit that the language used in clause 8 is transitive in the sense of subjecting ‘any’ disputes to the Chinese courts, as opposed to allowing parties to submit themselves to the jurisdiction of Chinese courts or alternatively to initiate proceedings elsewhere.[9]
[6]Defendants’ Submissions dated 15 July 2022, [13].
[7]Ibid.
[8]Ibid.
[9]Ibid [16], [18].
The defendants submit that clause 9 concerns the enforcement of decisions of the Chinese courts.[10] They note that in Yang, Gorton J stated that ‘[t]he reference to issuing proceedings in clause nine could well be a reference in this context to a proceeding seeking the enforcement of the decision of the Chinese court under common law principles, rather than the issue of a proceeding to establish the underlying claim in Victoria.’[11]
[10]Ibid [19].
[11]Yang (n 1) [18].
The plaintiffs submit that the 2018 Agreement provides for co-ordinate jurisdiction as between the Chinese and Victorian courts.[12] They submit that the proper construction of the 2018 Agreement requires clauses 8 and 9 to be construed together rather than separately.[13]
[12]Plaintiffs’ Submissions dated 31 July 2022, [2], [28].
[13]Transcript of Proceedings, T 34 L 7–8 (8 August 2022).
Analysis
Whether the 2018 Agreement confers exclusive jurisdiction on the Chinese courts to resolve disputes between the parties is a matter of construction.[14] The construction of jurisdiction agreements is governed by the proper law of the contract,[15] which at common law is taken to correspond to the law of the forum in the absence of proof otherwise.[16] There is no evidence before the court that Chinese law concerning the interpretation of jurisdiction clauses differs from the law of Victoria. The presumption of similarity operates.
[14]Faxtech Pty Ltd v ITL Optronics Ltd [2011] FCA 1320, [5].
[15]Hoerter v Hanover Telegraph Works (1893) 10 TLR 103, 104; Nova (Jersey) Knit Ltd v Kammgarn Spinnerei GmbH [1977] 1 WLR 713, 718, 730. See generally Martin Davies et al, Nygh’s Conflict of Lawsin Australia (LexisNexis Butterworths, 10th ed, 2020) 178 [7.62].
[16]Neilson v Overseas Projects Corp of Victoria Ltd (2005) 223 CLR 331, 372 [125], 416–7 [267]; Parnell Manufacturing Pty Ltd v Lonza Ltd [2017] NSWSC 562, [21] (‘Parnell Manufacturing’).
As is apparent from the emphasised sections of the translations set out above there are differences between the translations of Ms Wu and Mr Tan. I have concluded that irrespective of which translation is relied upon the 2018 Agreement does not confer exclusive jurisdiction upon the courts of the People’s Republic of China.
In some circumstances, express submission to a foreign jurisdiction may carry an implication that the submission is exclusively to that jurisdiction.[17] However, that consideration carries greater force where the parties have expressly submitted to the jurisdiction of a neutral forum in which neither party resides.[18] That is not the case in the present proceeding.
[17]Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577, 587; Akai Pty Ltd v The People’s Insurance Co Ltd (1996) 188 CLR 418, 444.
[18]Parnell Manufacturing (n 16) [25].
Jurisdiction clauses should be construed liberally. Courts will not readily infer that the parties intend their disputes to be resolved in different fora.[19] The absence of the word ‘exclusive’ from clause 8 is not determinative of its proper construction.[20] Clause 8 provides that ‘any’ dispute arising from the 2018 Agreement ‘should be dealt with’ (on the defendants’ translation) or ‘is subject to’ (on the plaintiffs’ translation) the jurisdiction of the Chinese courts. I accept the defendants’ submission that insofar as clause 8 provides that ‘any’ disputes may be submitted to the Chinese courts, this supports a finding that clause 8 is an exclusive jurisdiction clause.[21]
[19]Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) (2010) 79 ACSR 383, 398–400 [60]–[70].
[20]GAI General Insurance Co Ltd v Ocean Marine Mutual Protection and Indemnity Association (1997) 41 NSWLR 117, 126; Parnell Manufacturing (n 16) [23].
[21]British Aerospace Plc v Dee Howard Co [1993] 1 Lloyds Rep 368; Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724.
However, clause 8 cannot be read in isolation. The phrase ‘at the same time’ is found in the opening words of both translations of clause 9. These are words of qualification,[22] the effect of which is that clause 9 must be read together with clause 8. When clauses 8 and 9 are read together the 2018 Agreement confers upon the parties the right to commence proceedings seeking substantive relief in the Victorian courts, as opposed to mere enforcement of the judgment of a Chinese court. Both translations of clause 9 include the phrase ‘for convenience and better enforcement’.[23] This phrase manifests an objective intention that the parties can bring proceedings in the Victorian courts to enforce the judgment of a Chinese court (‘for… better enforcement’), or alternatively, bring substantive proceedings in a Victorian court (‘for convenience’). Notwithstanding that clause 8 provides for any dispute arising from the 2018 Agreement to be heard by the Chinese courts, the parties may elect to commence substantive proceedings in the Victorian courts.
[22]Cf Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 442 [25].
[23]The plaintiffs’ translation includes ‘for convenience and better enforcement effect of the rights claimed’. The defendants’ translation includes ‘for convenience and better enforcement outcome’.
This construction of clauses 8 and 9 is consistent with the evidence of Mr Tang, who states in the plaintiffs’ expert report:
In my opinion, the above two clauses, according to the Chinese interpretation, is coordinative rather than exclusive. That is, Party B, as the plaintiff, has the right to choose one of the two different jurisdictions to file a lawsuit. Reading between the lines before and after the word "或" in Article 9, the parties have made a more specific agreement, namely:
(a) Party B has the right to file a lawsuit with the Chinese court where Party B is domiciled and apply for the approval of the court where Jin Xin Australia Pty Ltd is located (here is Victorian Court of Australia) after obtaining the effective ruling in China. Or,
(b) Party B has the right to sue directly to the Victorian court where Jin Xin Australia Pty Ltd is located.[24]
[24]Affidavit of Meng Tang dated 14 February 2022, 7 [19].
In addition, the plaintiffs’ translator Ms Wu states in her affidavit dated 8 August 2022:
I reaffirm my translation of clause 9 in my affidavit affirmed on 16 [sic] February 2022. From my view, for convenience and better enforcement effect, the clause 9 has given two options to the Party B, firstly it allows the Party B to issue a proceeding at the local court where Jin Xin Australia Pty Ltd is located, secondly it allows the Party B to make an application at the local court where Jin Xin Australia Pty Ltd is located to acknowledge and enforce the judgement made by the Chinese court as stated in clause 8, both to be governed by the Chinese laws and regulations. In other words, it is not limited to the second alternative, being enforcement of a judgment of the Chinese court in the location where Jin Xin Australia Pty Ltd is.[25]
[25]Affidavit of Yun Xia Wu dated 8 August 2022, 2–3 [14]
On the other hand, Ms Ying states in the defendants’ expert report:
Article 8 of 2018 Repayment Agreement
Like the 2016 Memo, the plaintiff and the first two defendants clearly agreed on the jurisdiction in the agreement. As opinions provided in the 2016 Memo, here Chinese court where Party B is located in China has the jurisdiction. Thus, it can be seen that the true intention of both parties is that Chinese courts have the jurisdiction of the repayment agreement.
Article 9 of the Repayment Agreement
… In fact, Articles 9 stipulated the choice of jurisdiction of court and agreed to apply Chinese law. Since the agreement was drafted in Chinese, I make the following explanation from the perspective of Chinese interpretation.
The expressions in Articles 9 are ambiguous and not clear, and there could be different understanding for different persons.
My understanding is, according to the Chinese interpretation, Party B, as the plaintiff, could only bring a lawsuit to the court where the guarantor (Jin Xin Australia Pty Ltd) is located with the permissions of the guarantor and the local law.
And, Jin Xin Australia Pty Ltd is a guarantor who has a guarantee contractual relationship with the plaintiffs. It is a foreign company registered in Victoria, Australia.[26]
[26]Exhibits to the affidavit of Zhang Ying dated 15 July 2022, 5–6 [16]–[21].
Ms Ying favours a more confined interpretation according to which the plaintiffs can commence proceedings against Jin Xin Australia Pty Ltd (but not the first, second and third defendants) in the Victorian courts. Mr Collinson QC, who appeared with Mr Magowan for the plaintiffs, submitted that Ms Ying’s interpretation, whereby only Jin Xin Australia Pty Ltd can be the subject of substantive proceedings in the Victorian courts, is illogical because both the third defendant and Jin Xin Australia Pty Ltd are guarantors under the May 2018 Agreement.[27] I accept this submission. Further, neither translation of clause 9 contains words which support a finding that the plaintiffs are confined to commencing proceedings in the Victorian courts against Jin Xin Australia Pty Ltd.
[27]Transcript of Proceedings, T 38 L 29 – T 39 L 13 (8 August 2022).
The 2018 Agreement does not confer exclusive jurisdiction upon the courts of the People’s Republic of China. In light of this finding it is not necessary to consider the plaintiffs’ alternative submission that if the 2018 Agreement confers exclusive jurisdiction on the Chinese courts, the application for a stay should be dismissed on discretionary grounds. It follows from the reasons set out above that the defendants’ application for declaratory relief should also be refused. The defendants’ summons will be dismissed. I shall provide the parties with an opportunity to make submissions on costs. My provisional view is that the defendants should be ordered to pay the plaintiffs’ costs of and incidental to the summons filed 3 December 2021 on a standard basis, to be taxed in default of agreement.
SCHEDULE OF PARTIES
S ECI 2020 04101
BETWEEN:
| Yang, Zhilong | First Plaintiff |
| Zhang, Meiling | Second Plaintiff |
| v | |
| Yue, Jun | First Defendant |
| Hu, Yun | Second Defendant |
| Yue, Qiaoxi | Third Defendant |
| Jin Xin Australia Pty Ltd (ACN 133 695 987) | Fourth Defendant |
| Registrar of Titles | Fifth Defendant |
ANNEXURE A
Affidavit of Yun Xia Wu dated 18 February 2022
Affidavit of Yun Xia Wu dated 7 August 2022
ANNEXURE B
Exhibits to Affidavit of Jun Yue dated 21 December 2020
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