RE CHINA PROPERTIES GROUP LTD

CACV 197/2023, [2025] HKCA 1139

On Appeal From [2023] HKCFI 1500

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2023

(ON APPEAL FROM COMPANIES

(WINDING-UP) PROCEEDINGS NO. 67 OF 2022)

________________________

________________________

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D E C I S I O N

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Hon Cheung JA (giving the Decision of the Court) :

I.  Introduction

1.  On 18 March 2025, we dismissed the appeal by China Properties Group Limited (the ‘Company’) against the judgment of Anthony Chan J dated 31 May 2023 (the ‘Appeal’) and the Company’s application to adduce new evidence for the appeal and to amend the notice of appeal.

2.  By an order dated 7 May 2025 (the ‘7 May 2025 Costs Order’) pursuant to the Petitioner’s Summons dated 1 April 2025, we gave the following orders in relation to the costs of the proceedings incurred so far :

1)  The Company and Lo, Wong & Tsui (the solicitors acting for the Company) (‘LWT’) do provide the name(s) and address(es) of the person(s) who instigated or funded or are funding this Appeal (including interlocutory matters) on behalf of the Company (the ‘Funders’) within three days from the date hereof ([1]);

2)  Upon the information as stated in [1] above being provided, the Funders be joined, without further order, as parties to this Appeal for the purposes of costs only ([2])).

3)  The costs order previously made by the Court of Appeal (including orders dated 27 February 2025; 25 March 2025) be varied, such that the Funders do pay to the Petitioner all costs of and occasioned by the Appeal, the Petitioner’s Summons filed on 12 October 2023 (for strike out), the Company’s Summons filed on 1 November 2023 (to adduce new evidence and amend the Notice of Appeal), the Petitioner’s Summons filed on 26 June 2024 (for security for costs), the Company’s Summons filed on 13 February 2025 (to adduce further new evidence) and the Petitioner’s Summons filed on 1 April 2025 (for variation of costs order), on an indemnity basis, with certificate for two counsel, to be summarily assessed and payable forthwith ([4]).

4)  Directions were given for the Petitioner to file and serve statement of costs for summary assessment, the Company to file and serve written submissions on costs and/or statement of objections ([5]).

5)  The issues of whether and what costs should be ordered against the Funders, the amount on summary assessment, and the apportionment of such amount between the Funders would be determined on paper ([6]).

3.  The Company/LWT purportedly provided the name(s) of the Funders and the parties filed their respective costs submissions.

4.  By Notice of Motion dated 15 April 2025, the Company applied for leave to appeal to the Court of Final Appeal (‘Leave Application’).

5.  By our Decision dated 8 July 2025 (‘Leave Decision’), we dismissed the Leave Application. In our Decision, we criticized the Company’s application for verging on being an abuse of process for: 1) advancing new grounds which were previously not canvassed before us, offending the Flywin principle; and 2) adopting a stance that completely reversed the concession previously made by counsel that its appeal would have no proper basis to stand on if this Court rejected its application to adduce new evidence. We considered the approach of the Company to be a blatant ‘try‑on’ by the Company who had already failed twice before two levels of the Court. We refused to address each of the questions individually and refused leave for the three questioned posed before us.

6.  In our Leave Decision, we made the following order in relation to costs (‘8 July 2025 Costs Order’) :

1)  The Company to pay the costs of the Leave Application to the Petitioner; and

2)  As per our costs order made in respect of the appeal proper and other interlocutory proceedings (further discussed below), the Funders of the Leave Application be identified and joined for the purposes of costs.

7.  By Summons dated 17 July 2025, the Petitioner applies to vary the 8 July 2025 Costs Order as follows :

1)  The person(s) who instigated or funded or are funding the Company’s Leave Application do pay the costs of and occasioned by the Leave Application and the Summons;

2)  Costs be awarded on an indemnity basis; and

3)  Costs be summarily assessed and payable forthwith.

II.  7 May 2025 Costs Order

8.  This is the summary assessment of the costs pursuant to the 7 May 2025 Costs Order. The Petitioner claims a total of $2,427,538. Its statement of costs consists of five parts. Part 1 is for the costs of the appeal at $889,074 (of which $410,000 is counsel fee). Part 2 is for the Petitioner’s summons to strike out and the Company’s summons to adduce new evidence and amendment of the Notice of Appeal at $935,804 (of which $410,000 is counsel fee). Part 3 is for the Petitioner’s summons for security for costs and consent summons at $356,227.20 (of which $148,000 is for counsel). Part 4 is for the Company’s summons to adduce further evidence at $103,488.60. Part 5 is for the Petitioner’s application to join the Funders at $142,945.10 (of which $64,000 is for counsel fee). We will summarily assess the costs at $2,100,000.

III.  Variation of the 8 July 2025 Costs Order

1)  The parties’ submissions

9.  The Petitioner, represented by Mr Keith Chan, contends that in light of the strong criticisms of this Court that the Leave Application was entirely devoid of merit, and bearing in mind the previous conduct of the Company, where in the proceedings below the Courts and this Court had already made similar scathing remarks and ordered indemnity costs in the previous occasions, the present circumstances similarly warrant an order for indemnity costs, summarily assessed and to be paid forthwith.

10.  Mr Chan submitted that although the 8 July 2025 Costs Order is not a costs order nisi, the present circumstances warrant strong reasons and/or exceptional circumstances for the Court’s exercise of discretion to vary the costs order, which the Court has inherent jurisdiction to do so where the costs order has not yet been sealed, citing Kung Kwok Wai David v Commissioner of Estate Duty [2022] 1 HKLRD 965 at [15]‑[16].

11.  Mr Chan also brought to our attention that LWT appeared to have failed to comply with the 8 July 2025 Costs Order to identify the Funder of the Leave Application. The Petitioner complains that LWT was not forthcoming in the correspondence between the parties, where, in relation to the substantive appeal proper, LWT had initially disclosed only Mr Wong Sai Wa as the sole person who funded the appeal, but upon being pressed by the Petitioner’s solicitors, YTL LLP, LWT disclosed some further entities/persons in Hong Kong who funded the appeal. In relation to the Leave Application, LWT again only disclosed Mr Wong Sai Wa as the person who funded the Leave Application, and upon being pressed by YTL to confirm if there are other persons or entities who funded or are funding the Leave Application, failed to provide a direct response.  

12.  Mr Chan thus requests for an order to direct the Company and LWT to disclose the names and address of all other persons and/or companies, apart from  Mr Wong Sai Wa, who have transferred funds to LWT to pay for the costs in respect of the Leave Application within three days.

13.  LWT submits on behalf of the Company that the present case does not fall under the exceptional circumstances or strong reasons for variation of a costs order absolute. LWT submits that the Petitioner has already filed submissions on costs in their written submissions before the Court for the Leave Application and the 8 July 2025 Costs Order was made after the Court’s consideration of such submissions.

14.  LWT claims that they have properly identified the Funder of the Leave Application in their letter dated 18 July 2025, i.e. being Mr Wong Sai Wa. LWT claims that they have properly complied with our order and that the Petitioner’s ‘contention that the Company/LWT must identify all persons through whom monies have passed or who have transferred funds’ is ‘misconceived and goes beyond what has been ordered.’

2)  Our view

15.  It was our intention to impose an indemnity costs in the first place in view of the way the Company conducted the Leave Application. It verged on being an abuse of process. In any event, this Court has inherent jurisdiction to vary the 8 July 2025 Costs Order, where there are exceptional circumstances or strong reasons to do so. We will order indemnity costs which are summarily assessed at $500,000 (which includes counsel fee of $364,500).

16.  It is plain that LWT had refused to confirm with the Petitioner the full list of persons/entities that transferred funds to LWT to pay for the costs in respect of the Leave Application. It is plain from our 8 July 2025 Costs Order that the Company and LWT are to provide the names and addressees of all the Funders of the Leave Application, i.e. all of the persons who instigated or funded or are funding the Leave Application. That would include all the persons who transferred funds to LWT for the purpose of the Leave Application. Accordingly, we order the Company and LWT do disclose the name(s) and address(es) of all other persons and/or companies, apart from Mr Wong Sai Wa, who have transferred funds to them to pay for the costs in respect of the Leave Application, within three days of this order. These persons together with Mr Wong Sai Wa are to pay the assessed costs of $500,000.

Mr Keith Chan, instructed by YTL LLP, for the Petitioner

Lo, Wong & Tsui, for the Company

CACV 197/2023, [2025] HKCA 636

On Appeal From [2023] HKCFI 1500

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2023

(ON APPEAL FROM COMPANIES

(WINDING-UP) PROCEEDINGS NO. 67 of 2022)

________________________

________________________

________________

DECISION

________________

Hon Cheung JA (giving the Decision of the Court) :

I.  Introduction

1.  On 18 March 2025, we dismissed the appeal by China Properties Group Limited (‘the Company’) against the judgment of Anthony Chan J dated 31 May 2023 who, upon the amended petition (‘the petition’) presented by JIC Trust Co., Ltd (‘the Petitioner’), ordered the winding-up of the Company. We also dismissed the Company’s application to adduce new evidence for the appeal and to amend the notice of appeal.

2.  On 25 March 2025, we handed down our reasons for judgment (‘Judgment’). Unless otherwise stated, we will adopt the terms and expressions in the Judgment.

3.  By a Notice of Motion dated 15 April 2025 (‘Notice of Motion’), the Company applied for leave to appeal to the Court of Final Appeal. We will deal with the application on paper.

II.  The grounds

4.  The Company relies on three questions said to be of great general or public importance.

1)  Question 1 :

(1)  Whether the Court has jurisdiction to grant or uphold a winding‑up order in circumstances where it is not disputed or indisputable that the petitioner, having assigned the debt to a third party, has ceased to be a creditor of the company for the purpose of sections 177(1)(d) and 178 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) (‘CWUMPO’) (even though the company did not challenge the locus standi of the petitioner at the time when the winding‑up proceedings were commenced and/or when the winding‑up order was made)?

(2)  In any event, when it becomes aware that that the petitioner has ceased to be a creditor of the company, whether the Court should proceed to investigate the question of whether the petitioner has the requisite locus standi to commence or maintain the winding‑up proceedings, regardless of whether an application by the company for leave to adduce fresh evidence should be allowed (since locus standi is a question that goes to the jurisdiction of the Court under section 177(1)(d) of CWUMPO, or at least gives rise to bona fide dispute)?

2)  Question 2 :

5.  In view of the approach expounded in Anan Group (Singapore) Pte Ltd v VTB Bank [2019] SGCA 41 (especially [34], [35], [46] and [55]‑[59]), whether the requirements laid down in Ladd v Marshall [1954] 1 WLR 1489 (‘Ladd v Marshall Requirements’) should be relaxed by the Hong Kong courts in the context of winding‑up proceedings; and if so, how and to what extent?

3)  Question 3 :

6.  Regardless of the answer to Questions 1 and/or 2 above and in any event :

(1)  Whether undisputed or indisputable evidence showing that the petitioner has ceased to be a creditor and thus has no locus standi to commence or maintain any winding‑up proceedings should be admitted even if the Ladd v Marshall Requirements cannot be satisfied, since a refusal to admit such evidence (which goes to the Court’s very jurisdiction to make a winding‑up order) :

i)  would affront common sense or a sense of justice (see, e.g.: Mulholland v Mitchell [1971] AC 666, at 680A; and Solicitor (529/2018) v Law Society of Hong Kong (No. 2) [2021] 5 HKLRD 445, at [19]‑[21] and [24])? and/or

ii)  would be inconsistent with the underlying objectives set out in Order 1A of the Rules of the High Court (Cap. 4A) (see, e.g. : Evans v Tiger Investments Ltd [2002] 2 BCLC 185, at [23] and [44])?

(2)  Whether the Court should decline to grant or uphold a winding‑up order on the ground that it would be contrary to the public policy of Hong Kong in circumstances where :

i)  since the relevant debt is based on a consent judgment entered into by a foreign court, the granting or upholding of a winding‑up order on the basis of such a debt would be tantamount to recognizing and/or enforcing the foreign judgment; and

ii)  on the petitioner’s own case: a) it does not deny that the petitioner has assigned the debt to a third party (even though the company did not raise objection at the time of the consent judgment); and b) the petitioner chose not to give notice of assignment to the company (Judgment [8])?

(3) In considering the second limb of the Ladd v Marshall Requirements (i.e. the evidence, if believed, would or might have an important influence on the result of the case, though it need not be decisive), is the Court entitled to take into account matters extrinsic to the evidence sought to be adduced (especially when the same is not in dispute) (cf: Judgment [21])?

7.  The Company further relies on the ‘or otherwise limb’ as follows :

8.  Further or alternatively, Questions 1 to 3 as set out above (whether considered individually or collectively) ought to be submitted to the Court of Final Appeal for determination under the ‘or otherwise’ limb under section 22(1)(b) of the HKCFAO bearing in mind, among others :

(1)  It is not and cannot be disputed that: i) the Petitioner had assigned the debt to an unidentified third party prior to the winding‑up order, ii) the Petitioner had chosen not to give notice of the Assignment to the Company before the order was made, and iii) the Judge below did not consider the effect of the Assignment (i.e. lack of locus standi on the part of the Petitioner) before granting the winding‑up order.

(2)  In these exceptional circumstances, grave injustice arose when the Court of Appeal refused to admit the fresh evidence regarding the Assignment, and consequently failed to consider or find that : i) the Petitioner has no locus standi to see a winding‑up order; and/or ii) there were bona fide disputes as to the petitioning debt.

III.  Our view

9.  We will not grant leave for the three questions. As admitted by Mr Yuen SC and Kok for the Company, the three questions are new grounds not previously canvassed at all before us. This is a complete reversal of the stand of the Company before us that its appeal would have no proper basis to stand on if we rejected its application to adduce new evidence. We had refused that application and the appeal was dismissed. There is no issue that the concession was not properly made by counsel who then represented the Company. With respect to counsel, the Company’s application that advances these three questions verges on being an abuse of process. It ignores its previous concession that now renders the three questions academic. It offends the Flywin principle recently reaffirmed by the Court of Final Appeal in Secretary for Justice v Timothy Wynn Owen KC (2002) 25 HKCFAR 288 at [25]‑[26]. It is a blatant ‘try‑on’ by the Company who had failed twice before two levels of court.

10.  In view of the fact that the matters raised in the three questions were not canvassed before us, we are not prepared to address them individually.

11.  As to the ‘otherwise’ ground, the practice of the Court is to defer the matter to the Court of Final Appeal for its consideration. We will only repeat what we have said earlier.

IV.  Conclusion

12.  Accordingly, the Notice of Motion is dismissed. We order the Company to pay the costs of this application to the Petitioner. Mr Li SC and Mr Chan for the Petitioner asked for an order that the funder of the application be identified and joined for the purposes of costs. As we have already given directions on this matter in the appeal itself, it is appropriate that the same directions should be granted to the Petitioner.

Mr Laurence Li, SC and Mr Keith Chan, instructed by YTL LLP, for the Petitioner/Respondent

Mr Rimsky Yuen, SC and Mr Martin Kok, instructed by Lo, Wong & Tsui, for the Company/Appellant

CACV 197/2023, [2025] HKCA 302

On Appeal From [2023] HKCFI 1500

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2023

(ON APPEAL FROM COMPANIES

(WINDING-UP) PROCEEDINGS NO. 67 OF 2022)

________________________

________________________

_____________________________

REASONS FOR JUDGMENT

_____________________________

Hon Cheung JA (giving the Reasons for Judgment of the Court) :

I.  The appeal

1.  This is an appeal against the judgment of Anthony Chan J dated 31 May 2023 who, upon the amended petition (‘the petition’) presented by JIC Trust Co., Ltd (‘the Petitioner’), ordered the winding‑up of China Properties Group Limited (‘the Company’). The Company appealed and issued a summons to adduce new evidence for the appeal and to amend the notice of appeal. The Petitioner also issued a summons to strike out the appeal. At the conclusion of the hearing we dismissed the Company’s application to adduce fresh evidence and dismissed the appeal. We now give our reasons.

II.  Basis of the petition

2.  The following is the relevant background extracted from the judgment below.

3.  The petition was based on the failure of the Company to repay a debt of RMB 731,801,596.56 (‘the Debt’) arising out of a Consent Judgment dated 3 April 2020 granted by the Higher People’s Court of the Zhejiang Province (the ‘Zhejiang Court’) in the Mainland where the Petitioner commenced the proceedings against Shanghai Jingan Concord Real Estate Co. Ltd (‘JAC’) and the Company to recover the Debt (‘the Zhejiang proceedings’).

4.  The Debt arose out of an ‘entrusted’ loan agreement (and supplement) between the Petitioner as lender and JAC, a subsidiary of the Company, as borrower dated 27 September 2017 for RMB 1.2 billion. It was guaranteed by the Company pursuant to a guarantee dated 28 September 2017.

5.  Following defaults, the loan became due in 2019. It was not repaid, and the Zhejiang proceedings were commenced as a consequence. This was followed by a settlement embodied in the Consent Judgment to which the Company was a party, and it confirmed that the Company was jointly and severally liable for the loan. Under the Consent Judgment, the Company agreed to repay the loan, accrued interest, accrued default interest, court fees and litigation expenses as well as late performance fee.

6.  There was an attempt by the Company to reopen the Consent Judgment on 7 November 2022 (nearly nine months after the filing of the original petition herein), which was rejected by the Zhejiang Court on 22 December 2022.

7.  It was not disputed that the Debt was owed by the Company. In the Court below, the Company challenged the petition on the ground that there was a bona fide dispute of the Debt based on an alleged substantial cross‑claim against the Petitioner by JAC. JAC claimed that the properties charged for the loan had been sold by auction at an undervalue (‘the auction issue’). The Judge rejected the Company’s challenge to the petition and ordered it to be wound up.

III.  The appeal and the new evidence

8.  The appeal by the Company is based on an entirely new ground. It claims that there is a bona fide dispute of the Debt because at the time of the presentation of the petition, the Petitioner had already assigned the Debt to a third party and therefore did not have the necessary standing to present the petition. Mr Ho SC (together with Mr Kok) for the Company stressed that that it was the Petitioner’s own case that it had chosen not to serve the notice of assignment on the Company. The Company claimed it was only after the winding‑up order was made on 31 May 2023 that it discovered the Debt had in fact already been transferred or assigned by the Petitioner to a third party (‘the Assignment’). The Assignment only became known to the Company on or around 8 June 2023, when a staff of the Company’s Mainland subsidiary came across the announcement made by the Petitioner’s parent company, China Jianyin Investment Co. Ltd (‘China Jianyin’), dated 27 March 2023 (the ‘Announcement’).

9.  The Announcement was a disclosure statement in respect of China Jianyin’s business operation. It made reference to the proceedings brought by JAC against the Petitioner in 2023 in Hangzhou in the Mainland (‘the Hangzhou proceedings’) in which JAC relied on the auction issue. It said that JAC had previously raised the auction issue and the issue was rejected by different levels of courts including the Supreme People’s Court. The Announcement said that the auction issue had been rejected by the Supreme People’s Court, the original debt had been assigned to a third party, [the Petitioner] merely acted on instructions to respond to the litigation 「原始信託債權已轉讓給第三方，中建投信託僅為依指令代為應訴」.

10.  The Judge had briefly referred to the earlier proceedings by JAC against the Petitioner on the auction issue between 2021 and 2022 including the rejection of JAC’s claim by the Supreme People’s Court.

11.  The Company’s case is that the Announcement showed that the Debt had been assigned and the Petitioner therefore had no standing to present the winding‑up petition. This constitutes a bona fide dispute of the Debt. Mr Ho relying on this Court’s decisions in Re Tam Mei Kam CACV 87/2012 and Re Sun Fung Timber Company Limited[2021] HKCA 1660 submitted that although the Consent Judgment is prima facie evidence that the Company is indebted to the Petitioner upon which the petition is based, this Court may go behind the Consent Judgment in situations where there is fraud, collusion or miscarriage of justice.

12.  The Company in support of its appeal sought leave to adduce the following four items of evidence relating to the Assignment :

1)  A copy of the Announcement made by China Jianyin.

2)  A copy of the 「民事訴訟監督申請書」(Translation: Application for supervision of civil litigation) made by JAC against the Petitioner to the Zhejiang Province People’s Procuratorate (‘Zhejiang Procuratorate’) on 23 October 2023 (the ‘Procuratorate Application’).

3)  The Legal Opinion of Mr Zhongda Wu (‘Mr Wu’) of Gao Kai Law Firm dated 30 October 2023 in the Mainland.

4)  The first affirmation of Wong Sai Chung (‘Mr Wong’), the managing director of the Company on matters relating to Items 1) to 3) above.

IV.  Our view

13.  We will deal with the Company’s application to adduce new evidence first. In our view the application does not satisfy the first and second limbs of Ladd v Marshall, namely, 1) the evidence could not have been obtained at the hearing below with reasonable diligence; and 2) the evidence would or might, if believed, have an important influence on the result of the case, though it need not be decisive.

14.  The Petitioner in response to the Company’s application to adduce new evidence produced the transcript of the Zhejiang proceedings dated 3 April 2020. As recorded in the transcript, the Petitioner (as plaintiff), JAC and the Company (as defendants) were parties to the proceedings. The latter two were represented by a lawyer Mr Wu Wenxiang. As shown in the transcript, the Company was well aware of the issue of assignment of the Debt. In fact, it was the Company and JAC who raised the issue that the Petitioner had assigned the Debt and had no standing to sue and they requested the Zhejiang Court to resume the proceedings. The Zhejiang Court, pursuant to this request, had fixed a date to investigate the matter but the parties then agreed to settle the dispute. The transcript revealed that Mr Wu, the lawyer for JAC and the Company, was asked by the Zhejiang Court whether he would persist with the position that the Petitioner had no right to sue and whether he would need to seek clarification from the Petitioner. The lawyer answered no and stated that he would withdraw the application concerning the Assignment and the Petitioner’s standing to sue. As a result the parties agreed to the Consent Judgment. The relevant part of the transcript read as follows :

「                浙江省高級人民法院

                     調查質證、調解筆錄

案號：(2019)浙民初15號

案由：金融借款合約糾紛

時間：2020年4月3日下午2時30分

地點：本院第五法庭

審： 本案在2020年3月9日公開開庭審理後，我們收到了被告要求恢復庭審的申請，主要理由是認為原告債權進行了轉讓，涉案信託進行了清算，認為原告不具有訴訟主體資格。因此，根據被告的申請，原定於4 月7 日下午進行調查質証，進一步查明相關事實。但是事後與雙方律師進行溝通的過程中，很高興地得知雙方就本案有調解的願望和方案，而且主要的條款內容已經達成，這也是法院表示歡迎和樂見的。今天召集雙方過來一方面就相關事實作進一步了解，另一方面將調解方案和協議作最後的敲定。法庭注意到今天到場的人員兩被告特別授權的委託訴訟代理人吳律師到場了，原告的一般授權的委託訴訟代理人丁律師、馮律師沒有到場，兩位律師向我們表示了歉意，因為北京的疫情防控措施比較嚴格，以及兩律師回去後還要隔離報備，對工作帶來不利，經與中建投充分溝通，中建投委託公司的法務經理作為特別授權簽署相關調解協議的人員到場，本庭也予以准許。

審： 被告對原告不具有訴訟主體資格的請求是否還堅持？是否需要對方作適當的釋明？

吳： 不需要。鑑於目前已達成調解情況，我們對原告債權轉讓以及不具有訴訟主體資格的請求予以撤回。

審： 根據主審人與雙方律師分別溝通的情況以及提交的調解協議的初稿，以及經過背靠背的進一步工作和引導，雙方在法院的主持下，本著互諒互讓的原則，自願達成了如下調解 協議：

［協議內容］

(劃線後加)

」

Translation

「                Zhejiang Provincial High People’s Court

Investigation, Examination of Evidence and Mediation Transcript

Case Number: (2019) ZheMinChu 15

Cause of Action: Contractual disputes of financial loans

Time: 2:30pm, 3^rd April 2020

Place: Court No.5 of this Court

Court: Having heard the present case in open court on 9^th March 2020, we received the application from the Defendants to restore court proceedings. The main reason is that they have assigned the debt, the trust in question was liquidated, and the Plaintiff has no right to sue. Consequently, upon the application of the Defendant, it was originally scheduled to conduct investigation and examination of evidence in the afternoon of 7^th April in order to further examine the relevant facts of the case. However, in the communication process with the lawyers of both parties at a later time, the Court was very pleased to know that both parties had the intention to mediate and make proposals to settle this case. Moreover, the contents of the major terms were already agreed. This is also something that the Court will welcome and is pleased to see. Today, both parties have been summoned to attend so that we can have a further understanding of the relevant facts on one hand, and to finalize the mediation proposals and agreement on the other hand. The Court noticed that the agent of the litigation specially authorized and appointed by the two Defendants, Lawyer Wu is present. Lawyer Ding and Lawyer Feng, the agent of litigation who were given general authorization and appointed by the Plaintiff, have not come to court. The two lawyers expressed their apologies to the Court as the prevention and control measures against pandemic in Beijing are rather stringent and that the two lawyers will be required to quarantine and report upon their return which will adversely affect their work. Therefore, having fully communicated with JIC, JIC appointed the legal manager of the company as specially authorized person to sign the relevant mediation agreement to come to court. This Court also gives permission to it.

Court: Do the Defendants still insist to pursue the application concerning the Plaintiff having no right to sue? Will the Defendants require the opposite party to make appropriate clarification?

Wu: No need. In view of the present circumstances of reaching settlement, we will withdraw our application regarding the Plaintiff’s assignment of debts and no right to sue.

Court: Upon respective communication between the presiding judge and lawyers of both parties, the draft of agreement upon mediation as submitted, and back to back further work and guidance, both parties, in the presence of the presiding judge, based on the principle of mutual understanding and accommodation, reach the following settlement agreement voluntarily:

[Terms of the Settlement]

(emphasis added)

」

15.  JAC had also sought to challenge the Consent Judgment and had applied for a retrial of the Petitioner’s claim. The Zhejiang Court by a decision dated 7 September 2023 dismissed the application. As can be seen from that judgment, JAC repeated the contention that the Petitioner had assigned the Debt to a third party. This point was expressly rejected by the Zhejiang Court which held that JAC had previously withdrawn this contention and hence had no basis to seek a retrial.

16.  A further attempt by JAC to invoke the jurisdiction of the Zhejiang Procuratorate to challenge the Consent Judgment on the basis that the Debt had been assigned to a third party was likewise rejected by the Zhejiang Procuratorate. In its decision dated 22 January 2024, it held that JAC and the Company had withdrawn their reliance on the Assignment of the Debt and hence JAC had no proper basis to further challenge the Consent Judgment.

17.  The Company had not joined JAC in the latter’s applications to challenge the Consent Judgment by reason of the Assignment of the Debt and had not explained why it did not do so.

18.  One would have been more sympathetic to the Company’s application if the evidence supports its contention that it only became aware of the Assignment when it came across the Announcement. However, this is not the case. From the information gleaned from the transcript of the Zhejiang proceedings, the Company’s explanation for adducing the new evidence at this late stage of the proceedings just does not bear scrutiny. It showed that the Company already had knowledge of the Assignment by the Petitioner and its standing to sue in April 2020. Mr Wong in his second affirmation dated 29 December 2023 attempted to gloss over this by saying that the Company only had suspicion then.

‘ (2) For the avoidance of any doubt, I understand from JAC that whilst it did raise a query as to the Petitioner’s locus standi during the Zhejiang Proceedings, this was merely prompted by an unverified suspicion which was gleaned in those proceedings. Importantly, I understand that during the entire course of the Zhejiang Proceedings, JAC and the Company never had any knowledge or awareness of the Assignment, nor were they privy to any documents or information relating to the Assignment. As the Petitioner has now confirmed, such matters were deliberately withheld from JAC and the Company throughout.’

19.  This is a feeble response because the Company’s concern about the Assignment and the standing to sue was serious enough in 2020 for it to request a resumption of the Zhejiang proceedings for the matter to be investigated. If indeed the Debt had been assigned then the Company would not have been liable at all. After all, the Debt was a huge sum of more than RMB 731 million. It could have with reasonable diligence found out more about the Assignment. However it had decided not to pursue the matter further and chose to settle the dispute with the Petitioner which resulted in the Consent Judgment. Plainly it was a considered decision. With this factual background, we do not accept that the evidence relating to the Assignment could not have been obtained with reasonable diligence before the winding‑up order. On the contrary, the clear impression that one is entitled to come to is that the Company’s present dispute on the Petitioner’s standing is a desperate last ditch attempt to salvage an impossible situation when it found that it was unable to repay the Debt.

20.  In any event, Mr Wong’s explanation on how the Company came to know the Announcement is patchy and lacks credibility. He said in his first affirmation dated 31 October 2023 that, after the winding‑up order was made, he was informed on 8 June 2023 by Ms Xiao Liyuan, a staff of the Company’s subsidiary, that she had just come across an announcement made by the Petitioner’s parent company (i.e. China Jianyin), which related to the relevant underlying debts allegedly owed to the Petitioner. Upon further enquiry, Ms Xiao sent him a copy of the Announcement made by China Jianyin dated 27 March 2023. Ms Xiao did not give an affirmation to explain the circumstances in which she came across the Announcement and no explanation was given why she did not do so.

21.  In respect of the second limb of Ladd v Marshall, if the Company could not even properly explain why it had chosen to withdraw its complaint about the Assignment, then clearly it could not satisfy the requirement that the new evidence would or might have an important influence on the result of the case.

22.  As the appeal by the Company is dependent upon the new evidence being accepted, our dismissal of the application to adduce new evidence means that the appeal cannot get off the ground. Mr Ho properly accepted that to be the position.

23.  The parties have raised many other topics such as the Mainland law on assignment and the ‘principle of voluntariness’ for the purpose of reaching a settlement, the common law position on the effect of a foreign judgment and whether the Company is insolvent. It is not necessary for us to discuss these topics as the Petitioner had failed to cross the threshold in adducing the fresh evidence upon which the appeal against the winding‑up order is based.

24.  As observed by the Court during the hearing in recent years there is an increasing number of cases where the parties seek leave to adduce new evidence for the appeal. This is an unacceptable trend because it generates satellite litigations which cause delays and affect the resources of the Court and the other party. An appeal from a first instance decision in Hong Kong is not in the nature of a ‘second trial’ where fresh evidence may be adduced. The Court of Appeal deals with the appeal solely on the evidence that was presented at the first instance proceedings. Admission of new evidence for the appeal is the exception rather than the rule and is only allowed if stringent conditions are fulfilled as all relevant evidence should be properly adduced at the first instance proceedings. It behoves lawyers to firmly advise their clients of the requirement to provide a complete discovery of all relevant documents and to bring forward all the evidence at one go in the first instance proceedings. The Court of Appeal takes a strict approach on attempts to introduce new evidence and will impose sanctions by way of punitive costs order against unmeritorious applications.

V.  Conclusion

25.  Accordingly the Company’s summons and its appeal were dismissed. We have also made an order to strike out the appeal pursuant to the Petitioner’s summons even though it was strictly not necessary.

VI.  Costs

26.  The Company is to pay the Petitioner costs of the appeal and the summonses respectively issued by the Company and the Petitioner on an indemnity basis by reason of the unmeritorious nature of the appeal and application. Certificate for two counsel is granted.

27.  Mr Li SC and Mr Chan for the Petitioner had informed the Court that they intend to ask for costs against the funder of the present proceedings. We have, in accordance with the approach in Penta Investment Advisers Limited v. Allied Weli Development Limited (formerly known as Hennabun Capital Group Limited) (CACV 58/2016), given directions for the conduct of the intended application.

Mr Laurence Li, SC and Mr Keith Chan, instructed by YTL LLP, for the Petitioner/Respondent

Mr Ambrose Ho, SC and Mr Martin Kok, instructed by Lo, Wong & Tsui, for the Company/Appellant

The Officer Receiver did not appear

CACV 197/2023, [2024] HKCA 443

On Appeal From [2023] HKCFI 1500

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2023

(ON APPEAL FROM COMPANIES

(WINDING-UP)  PROCEEDINGS NO. 67 of 2022)

________________________

________________________

________________________

DECISION

________________________

Hon Cheung JA (giving the Decision of the Court)  :

1.  There are two summonses before this Court :

1)  By summons filed on 12 October 2023, the petitioner applies to strike out the Company’s notice of appeal dated 28 June 2023 (‘NOA’)  against the order of Anthony Chan J dated 31 May 2023 to wind up the Company (‘Striking-Out Application’); and

2.  By summons filed on 1 November 2023, the Company applies for (1) leave to admit further evidence in support of its appeal against the order of Anthony Chan J dated 31 May 2023 (‘New Evidence Application’)  and (2) to amend its NOA as per the draft amended notice of appeal annexed to the summons (‘Amendment Application’).

2.  Submissions have been made on the substantive merits as well as the further conduct of the applications.  Having considered the matter, we are of the view that the Striking-Out Application, the New Evidence Application and the Amendment Application should be heard at the same time as the appeal proper. 

3.  The petitioner has intimated that if the New Evidence Application is allowed, the petitioner should have a chance to file further evidence in response to the evidence adduced by the Company. 

4.  In consequence, we will make the following directions :

1)  The petitioner’s summons filed on 12 October 2023 and the Company’s summons filed on 1 November 2023 be heard at the same time as the Company’s appeal against the order of Anthony Chan J dated 31 May 2023;

2)  Without prejudice to the petitioner’s right to oppose the Company’s summons filed on 1 November 2023, the petitioner be granted leave to file further evidence (if any)  in opposition to the further evidence intended to be adduced by the Company in the appeal within 21 days hereof; and

3)  Costs of the applications be reserved.

Mr. Anson Wong, SC and Mr. Martin Kok, instructed by the Kobre & Kim (HK)  LLP, for the Company

Mr. Laurence Li, SC and Mr. Keith Chan, instructed by YTL LLP, for the Petitioner