Kok Wai, thank you for mentioning this. A 4xx response means that it is a temporary issue and that SmarterMail should continue trying to deliver the message. A 5xx response means that it is a permanent issue and to stop trying. For 5xx responses, we currently display the given response in the returned message. Because you received a 4xx response, it means SmarterMail continued trying to deliver the message until the specified attempts had been reached then the generic message "Failed all attempts to connect to recipients mail server" is returned. I see had the verbage and be confusing--since SmarterMail did fail to connect but failed to deliver.
Since this is currently functioning as designed, it is not a bug. However, I have added it to a features request list to change the verbage slightly on this message and also to include the last attempt response message (in this case "The email account that you tried to reach is over quota...").
I am changing this thread to an Idea and marking it as Planned.