CHINA EVERGRANDE GROUP (IN LIQUIDATION) v. HUI KA YAN AND OTHERS

HCA 551/2024 and HCMP 1080/2024

[2026] HKCFI 739

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024 AND

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

(Consolidated by the Order of the Honourable
Mr Justice Coleman dated 12 February 2025)

________________________

________________________

DECISION

________________________

A.  INTRODUCTION

1.  By a decision dated 16 September 2025 ([2025] HKCFI 4327)  (“the Decision”)[1], this Court made a receivership order against Hui, and ordered him to bear the Group’s costs of the Receivership Summons to be summarily assessed (“the Costs Order”).  Such costs were subsequently assessed on 21 October 2025 as HK$1,200,000 (“the Assessed Costs”).  Pursuant to the order made under the Decision, the Assessed Costs should have been paid by 4 November 2025. However, Hui has failed to pay so far.

2.  By summons filed on 18 December 2025 (“the Summons”), the Group applies for an order that unless Hui pays the Assessed Costs within 5 days, he shall be debarred from defending this consolidated action. 

B.  LEGAL PRINCIPLES

3.  There is no dispute that the Court has discretion to make the sort of order which is now sought by the Group.  In Beijing Songxianghu Architectural Decoration Engineering Co., Ltd v Kitty Kam also known as Wang Yuzhi[2025] HKCA 1134, G Lam JA had the following to say at [62]:

“Whilst the court must exercise caution in making orders that have the potential effect of depriving a litigant of a trial on the merits, it is entitled to take into account whether the litigant’s conduct ‘is liable to subvert the overall fairness of the proceedings.’ The cases show that the courts have readily made unless orders with the sanction of entering judgment, in order to secure compliance with orders that have no direct relation to the fairness of the adjudicatory process in the trial itself, such as orders requiring disclosure of assets ancillary to freezing orders […]”

4.  The jurisdiction extends to the making of unless orders to enforce compliance with costs orders.  There is no dispute that this has been confirmed in Michael Wilson & Partners Ltd v Sinclair and Others [2017] 5 Costs LR 877 in which Sir Richard Field has set out the following principles at [29]:

“In my judgment, the following principles are applicable when dealing with an application that a party to ongoing litigation should be debarred from continuing to participate in the litigation by reason of having failed to pay an order for costs made in the course of the proceedings:

(1)  The imposition of a sanction for non-payment of a costs order involves the exercise of a discretion pursuant to the court’s inherent jurisdiction.

(2)  The court should keep carefully in mind the policy behind the imposition of costs orders made payable within a specified period of time before the end of the litigation, namely, that they serve to discourage irresponsible interlocutory applications or resistance to successful interlocutory applications.

(3)  Consideration must be given to all the relevant circumstances including: (a)  the potential applicability of Article 6 ECHR; (b)  the availability of alternative means of enforcing the costs order through the different mechanisms of execution; (c)  whether the court making the costs order did so notwithstanding a submission that it was inappropriate to make a costs order payable before the conclusion of the proceedings in question; and where no such submission was made whether it ought to have been made or there is no good reason for it not having been made.

(4)  A submission by the party in default that he lacks the means to pay and that therefore a debarring order would be a denial of justice and/or in breach of Article 6 of ECHR should be supported by detailed, cogent and proper evidence which gives full and frank disclosure of the witness’s financial position including his or her prospects of raising the necessary funds where his or her cash resources are insufficient to meet the liability.

(5)  Where the defaulting party appears to have no or markedly insufficient assets in the jurisdiction and has not adduced proper and sufficient evidence of impecuniosity, the court ought generally to require payment of the costs order as the price for being allowed to continue to contest the proceedings unless there are strong reasons for not so ordering.

(6)  If the court decides that a debarring order should be made, the order ought to be an unless order except where there are strong reasons for imposing an immediate order.”

5.  As far as [29(4)] of Michael Wilson & Partners Ltd is concerned, Ms Ha for Hui submitted that the party in default only has the obligation to make full and frank disclosure on his financial position if he is contending that he lacks the means to pay, but he has no such obligation if “lack of means” is not relied on as an explanation of non-compliance.  With greatest respect, I disagree.  In my view, the party in default would always have to give full and frank disclosure in his explanation for the non-compliance of the court order because he is asking for an indulgence of the court.  If he elects to be selective in his disclosure of information and the circumstances leading to his non-compliance of the court order, he should not expect the court to have any mercy on him.

6.  It is also trite that the court, when imposing an unless order, has to bear proportionality in mind.  The sanction has to be commensurate with the gravity of the “crime”: Schenker International (HK)  Limited v Natural Dairy (NZ)  Holdings Limited (HCA 1755/2011, unreported, 22 November 2013), at [49].

C.  DISCUSSION

7.  It is undisputed that Hui has failed to pay the Assessed Costs.  

8.  In such circumstances, and in light of the parties’ respective submissions, the Court has to consider the following questions when dealing with the Summons:

(1)  Is Hui’s explanation of non-payment acceptable?

(2)  If not, should the Court impose an unless order against Hui?

(3)  If an unless order should be made, what should be the appropriate sanction in the event of non-compliance with the unless order?

(4)  Insofar as it is applicable, what should be the deadline for payment?

C1.  Hui’s explanation

9.  By way of the 4^th Affirmation of Chow Justin Ting Fun (“Mr Chow”), Hui’s solicitor gave the following explanation for Hui’s non-compliance with the Costs Order:

(1)  Hui is currently in custody in the PRC. All communications with Hui are strictly scrutinised and he is only able to give instructions generally;

(2)  Hui has HK$20 million costs on account (“the $20m COA”)  with his former solicitors – Messrs. Baker & McKenzie (“B&M”);

(3)  Hui’s current solicitors (“JC LLP”)  have attempted to confirm that the $20m COA is currently with B&M, so that steps can be taken to access the same.  However, B&M has not given any such confirmation so far because JC LLP cannot provide “direct evidence from Mr. Hui showing [JC LLP’s] instructions to make the relevant inquiry with [B&M]”[2].

10.  In gist, it is suggested that Hui would like to use the $20m COA to pay the Assessed Costs, but he has not been able to do so, and that this causes Hui’s non-compliance of the Costs Order.

11.  I do not accept this explanation.

12.  No matter whether the $20m COA exists or not, it can be inferred by the objective facts that Hui has used undisclosed funds to pay off his legal fees:

(1)  Hui has engaged his current solicitors (JC LLP)  since 8 October 2024 to act for him in the present proceedings;

(2)  Since then, he has also engaged:

(a)  Mr Barrie Barlow SC and Mr Vincent Chen to oppose the Group’s Receivership Summons (the substantive hearing was held on 2 September 2025);

(b)  Mr Barrie Barlow SC and Mr Vincent Chen to apply for leave to appeal against the Decision, and they have lodged their written submissions in support on 18 December 2025;

(c)  Ms Terri Ha to oppose the Summons.

(3)  There is no evidence that JC LLP has acted pro bono for Hui.  Mr Chow does not suggest that his firm has not been paid a single cent since the commencement of the engagement more than 14 months ago;

(4)  Neither is there evidence that any of the aforementioned counsel has acted pro bono for Hui.  Indeed, Ms Ha has frankly admitted in Court that she does not so act for Hui;

(5)  It is common ground that solicitors have the obligation to settle counsel’s fee notes within 2 months from the date of issuance;

(6)  There is no evidence that Hui has not been able to settle his own counsel’s fees, in particular, the fees which are payable for Mr Barlow SC and Mr Chen for their attendance at the hearing held on 2 September 2025.  Neither has Mr Chow suggested in his 4^th Affirmation that any of the counsel has withheld the issuance of fee notes to his firm;

(7)  Although Hui is entitled to spend HK$50,000 per month on “legal fees and representation” pursuant to the Injunction Order, it is undisputed that Hui (whether through JC LLP or otherwise)  has never made any request to the Group or the Receivers for the release of any funds for payment of legal fees.

13.  Mr Chow’s allegation that Hui has not been able to give instructions to deal with his assets must therefore be rejected.

14.  If Hui has been able to use undisclosed funds to pay his own legal team, there is no reason why he should not use the same funds to pay the Assessed Costs.

C2.  Should an unless order be made

15.  Ms Ha submitted that there are 3 reasons why an unless order should not be made herein against Hui:

(1)  The Liquidators are in a better position to make applications for the settlement of the Costs Order with Hui’s assets which have been collected by the Receivers.

(2)  There are alternative means to enforce the Costs Order.

(3)  There are pending applications for leave to appeal against the Decision and stay of execution of the order made thereunder.

16.  The 3^rd reason is no longer valid, as this Court has dismissed Hui’s applications for leave to appeal and stay of execution (see [2026] HKCFI 723).  Ms Ha has confirmed at the hearing that she would not rely further on this reason in such event.

17.  The 1^st and 2^nd reasons may be considered together.

18.  In my view, these reasons are made to be rejected.  In the circumstances where it can be inferred that Hui has used undisclosed funds for his own legal costs, it is really not up to him to ask the Group to incur further costs for the recovery of legal costs to which it is entitled.

19.  Considering all the facts in the round, it is clear that Hui has made a deliberate decision not to comply with the Costs Order.

20.  It would be an affront to the Court’s sense of justice not to impose an unless order in the circumstances of the present case.

C3.  The appropriate sanction

21.  The next question is what the appropriate sanction should be if an unless order is made.

22.  Mr Chan SC suggested that the sanction in the event of Hui’s non-compliance with the unless order should be debarring him from defending this consolidated action.

23.  Ms Ha submitted that such a sanction is disproportionate.  However, she has not proposed any alternative sanction.

24.  In my view, such a sanction is proportionate. Although the draconian consequence of non-compliance would be that Hui becomes immediately liable for the full sum of around RMB 43.318 billion irrespective of the substantive merits of his defence, the fact is that he deserves no mercy for deliberately flouting a court order.  As a matter of fact, this is not the first time that he has paid no respect to a court order – he has adopted the same attitude towards the Disclosure Order.

25.  It should also be borne in mind that the policy underpinning the Court’s discretion to order summary assessment and immediate payment of parties’ costs of interlocutory applications is to discourage the irresponsible making of interlocutory applications or resistance to meritorious interlocutory applications: Wing Fai Construction Co Ltd v Yip Kwong Robert (2012)  15 HKCFAR 454 at [5].  It is of utmost importance that, to make good this policy objective and protect its own procedures, the Court must be able to enforce an order for immediate payment which it was thought right to make.  In Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd & Another (HCA 1934/2011, unreported, 21 June 2013), To J also has the following to say at [18]:

“As part of the system of justice, court orders are made for the parties to comply. Various orders are made in the course of civil litigation. All orders, including costs orders, are made for the ultimate purpose of achieving justice as between the parties. It is therefore in the interests of justice that all orders are complied with. In JSC BTA Bank v Mukhtar Ablyazov, Rix LJ said in paragraphs 168 and 171, the jurisprudence is replete with confirmation of the court’s power to make such orders as are necessary to make its own orders effective and it is impossible to argue that the court lacks jurisdiction under its own inherent jurisdiction to do what is just and convenient and necessary to protect its own orders and to give effect to the interest of justice. Though the issue in that case was about the court’s power to make ancillary orders to enforce compliance of a disclosure order, I can see no reason why the principle does not apply with the same force in ensuring compliance of a costs order. In JSC BTA Bank v Mukhtar Ablyazov, the sanction of loss of freedom was more draconian than summary judgment. Hence, I think this court has inherent jurisdiction to make ancillary orders to enforce compliance of its costs orders. Such ancillary jurisdiction includes a power to order a party to pay the costs which he was ordered to pay as a condition of his being allowed to continue with the conduct of his defence or claim.”

26.  As pointed out above, Ms Ha has not been able to make any alternative proposal as far as the sanction is concerned.  All she would like to achieve is to have the whole Summons dismissed.  If the Court goes along that route, that means there would be no consequence for Hui’s non-compliance with the Costs Order.  That simply cannot be right.  In the present case, Hui’s conduct is liable to subvert the overall fairness of the proceedings.  Hence, the imposition of the proposed sanction must in my view be fair, necessary and proportionate.

C4.  The deadline for payment

27.  Mr Chan SC for the Group asked the Court to impose a 5-day deadline for the payment of the Assessed Costs.

28.  On that matter, upon this Court’s enquiry, Ms Ha suggested that 42 days should be given.  However, she has very frankly admitted that she does not have any particular reason for picking this number.  She would just want to ask for a period as long as possible so that steps could be taken for the purpose of payment.

29.  In my view, given the draconian effect of the order, the Court should not accede to the Group’s request for imposing a 5-day deadline which is relatively short.

30.  On the other hand, there is no reason why the Court should give a period as long as 42 days for Hui to take further steps in complying with the Costs Order.  After all, he has already had more than 2 months to do so.

31.  In my view, Hui should only be given another 14 days to pay the Assessed Costs.

D.  THE ORDER

32.  For the above reasons, I hereby order that unless Hui pays to the Group the amount of HK$1,200,000 being the summarily assessed costs payable by him to the plaintiff pursuant to paragraph 20 of the Order dated 16 September 2025 by 4pm on 20 February 2026, he shall be debarred from defending this consolidated action.

E.  COSTS

33.  Costs should follow the event.  I make a costs order nisi that Hui shall bear the Group’s costs of the Summons. 

34.  The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper)  within 14 days hereof.

35.  The Group’s costs of the Summons shall be summarily assessed in lieu of taxation.  Unless any application for variation of the aforesaid costs order nisi is made within time, the Group shall lodge and serve its statement of costs within 7 days after the expiry of the said 14-day period.  Hui shall lodge and serve his statement of objection within 7 days thereafter.  Summary assessment of the costs of the Summons will be conducted on paper (no matter whether any statement of objection is lodged by Hui within time)  thereafter.  The costs assessed shall be paid by Hui within 14 days after assessment.

F.  POSTSCRIPTS

36.  By a letter dated 13 January 2026 (which was lodged with the Court on 14 January 2026 at 10:43am)  (“the 13 January Letter”), Hui’s solicitors (JC LLP)  informed this Court that Hui has filed a summons on 9 January 2026 (returnable on 27 March 2026)  (“the Variation Summons”), pursuant to which Hui seeks leave to vary the terms of the Injunction Order, such that he can make use of the $20m COA for the purpose of paying the Assessed Costs.  On that basis, he asks this Court to “take this into consideration for the timeline of the Unless Order (if any is to be granted)  or defer judgment until the Variation Summons is dealt with”.

37.  On 14 January 2026 at 5:04pm, this Court sent a facsimile message to JC LLP and raised the requisition as to whether the 13 January Letter has been copied to the Group’s solicitors.

38.  At 5:33pm on the same day, the Group’s solicitors confirmed by letter (which was copied to JC LLP)  that they have not been served with the 13 January Letter.  They also stated that JC LLP did not serve the Variation Summons until the morning on 14 January 2026.

39.  By another letter dated 15 January 2026:

(1)  JC LLP confirmed that the 13 January Letter was only sent to the Group’s solicitors by fax on 14 January 2026 at 5:38pm.  They further alleged that there was an “inadvertent omission of the Plaintiff’s solicitors from the copy line”;

(2)  JC LLP also alleged that while the Variation Summons was filed on 9 January 2026, they only obtained a sealed copy thereof “from the Court Box in the late afternoon of 12 January 2026”.

40.  The handling of the matter by JC LLP is apparently unsatisfactory:

(1)  There is simply no excuse not to include the name of the solicitors’ firm engaged by the opponent in a letter sent to the Court;

(2)  Neither is there any excuse not to serve the Variation Summons on the Group’s solicitors right away when this is relied on by Hui in his further (uninvited)  submissions (see [36]);

(3)  It has been emphasized time and again by the court that it is inappropriate to make applications by letter (see Holinail H.K. Limited v Matthias Pou & Others[2025] HKCFI 1157 at [36] and [39]).

41.  In any event, given this Court’s findings that Hui has used undisclosed funds to pay off his legal fees, and that there is no reason why he should not use the same funds to pay the Assessed Costs (see [12] and [14] above), the taking out of the Variation Summons has no bearing on the outcome of the Summons.  I therefore do not think it is necessary to withhold the handing down of this Decision.

Mr Abraham Chan SC, instructed by Karas So LLP, for the plaintiff

Ms Terri Ha, instructed by Chow de Bedin LLP, for the 1^st defendant

HCA 551/2024 and HCMP 1080/2024

[2026] HKCFI 723

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024 AND

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

(Consolidated by the Order of the Honourable
Mr Justice Coleman dated 12 February 2025)

________________________

________________________

DECISION

________________________

A.  INTRODUCTION

1.  By a Decision handed down on 16 September 2025[1] (“the Decision”), this Court appointed Mr Edward Simon Middleton and Ms Wing Sze Tiffany Wong as Joint and Several Receivers and Managers over the entire assets and undertaking of the 1^st defendant (“Hui”)  with costs (“the Orders”). 

2.  By a summons re-filed[2] on 17 October 2025 (“the Leave to Appeal Summons”), Hui and the 4^th defendant apply for leave to appeal against the Decision.

3.  By another summons filed on the same day, Hui and the 4^th defendant also apply to stay the Orders pending the determination of the Leave to Appeal Summons, and if leave to appeal is granted, to stay the Orders until the final determination of their appeals or until further order of the Court (“the Stay Summons”).

4.  By consent, the Leave to Appeal Summons and the Stay Summons have been ordered to be disposed of on paper.

5.  Unless otherwise stated, abbreviations used in the Decision will be adopted herein.

B.  APPLICABLE LEGAL PRINCIPLES

B1. Leave to appeal

6.  The requirement for granting leave to appeal is set out in section 14AA(4)  of the High Court Ordinance (Cap 4, Laws of Hong Kong).  It is trite that leave to appeal shall not be granted unless the court is satisfied that the intended appeal has a reasonable prospect of success or there is some other reason in the interest of justice why the appeal should be heard. 

7.  It is also well established that a reasonable prospect of success means an appeal with prospects that are more than fanciful without having to be probable (SMSE v KL [2009] 4 HKLRD 129, at [17]).

8.  The making of the Orders concerns the exercise of discretion of this Court.  It is well established that the Court of Appeal will not interfere with an exercise of judicial discretion unless the appellant can show that the judge erred in law or misapplied the law by failing to take account of relevant considerations or taking account of irrelevant considerations, or that the decision is plainly wrong, namely that the exercise of discretion is outside the generous ambit within which reasonable disagreement is possible: Target Insurance Company Ltd v Ng Yu & Others[2025] HKCA 150 at [38].

9.  Further, it has been emphasized time and again that the Court of Appeal will not entertain an appeal simply because an appellant wishes to regurgitate arguments already considered in the court below with the hope that the appeal court may come to a different assessment of the situation.  The appeal court must defer to the judge’s exercise of discretion and not interfere with it save on the well-established grounds: China Evergrande Group (in liquidation)  v Hui Ka Yan & Others[2026] HKCA 15, at [53].

B2.  Stay pending appeal

10.  The relevant principles are trite. 

11.  In Star Play Development Limited v Bess Fashion Management Co. Ltd. [2007] 5 HKC 84, Ma J (as his Lordship then was)  held that the existence of an arguable appeal (that is, one with reasonable prospect of success)  is the minimum requirement before a court would even consider granting a stay.  However exceptional the circumstances may be otherwise justifying a stay of execution, if there exist no arguable grounds of appeal, no stay will be granted.

12.  In the event the court is satisfied that there is a strong likelihood that the appeal would succeed, that in itself would enable a stay to be granted because this would constitute a good reason for a stay.

13.  If there is just an arguable appeal instead of a strong one, the appellant has to provide additional reasons as to why a stay is justified.  The demonstration of an appeal being rendered nugatory in the absence of a stay is a common example.

C.  THE DRAFT GROUNDS OF APPEAL

14.  The draft Notice of Appeal contains 10 paragraphs.  In Hui’s written submissions, they have been categorised into 3 questions as follows:

“4. […] Has the Judgment erroneously misidentified and/or misapplied the legal test or threshold governing principles (the ‘Governing Test’)  for the appointment, pending the determination of the Action, of Interim Receivers in aid of a Mareva injunction, over a defendant’s entire assets?

[…]

11. […] In the absence of any Mareva Injunction Order (or Chabra type Order restraining D4 and/or the 14 other ‘Schedule 1 Companies’ (each a non-party herein and 11 of the 14, like D4, being, off-shore companies)  from dealing with their own (on-shore and off-shore)  assets upon the ground that they are ‘associated with [D1]’, was there any jurisdictional source for the Receivership Order’s terms (which exceed the ambit of the Mareva Injunction Order itself)  empowering the Interim Receivers to:-

•  ‘to take all steps that they consider necessary or desirable … to … take possession of … and manage … the Assets [of D4 plus the 14 other ‘Schedule 1 Companies’]; or

•  ‘to … Investigate the affairs of the … Schedule 1 ‘Companies’; or

•  ‘to … take possession of the property of ….. the Schedule 1 Companies … [including their] property or books and records’; or

•  ‘to demand and receive all debts which may fall due to … the Schedule 1 Companies’; or

•  ‘to take control of and exercise all rights … [of] the Schedule 1 Companies … whether in Hong Kong or overseas …’; or

•  ‘to … bring proceedings in the name of … the Schedule 1 Companies.’?

[…]

15. […] Could the Judge legitimately:-

(1)  Appoint as Interim Receivers over D1’s and D4’s entire assets, their hostile litigation adversaries within the Action that those adversaries had caused to be brought against D1 and D4?

(2)  In the absence of those litigation adversaries undertaking to work without payment?”

15.  The aforementioned questions will be referred to as “the Governing Test Ground”, “the Jurisdictional Ground” and “the Litigation Adversaries Ground” respectively.

16.  The arguability of these grounds will be considered in turn below.

D.  THE LEAVE TO APPEAL SUMMONS – DISCUSSION

D1.  The Governing Test Ground

17.  Under this ground, Hui contends that the threshold for the appointment of interim receivers is that notwithstanding the considerable protection which the Injunction Order already afforded, there nonetheless was an imminent danger of loss or dissipation of assets if a receiver was not appointed.

18.  In support of his argument, Hui has placed reliance on National Australia Bank Ltd & Others v Bond Brewing Holdings Ltd & Others [1991] 1 VR 386, Wallace Kevin James v Merrill Lynch International Bank Ltd [1998] 1 SLR 785, Macau First Universal International Limited v Ding Xiaohong & Others (CACV 193/2011, unreported, 31 July 2012)  and Wong Luen Hang & Another v Chan Yuk Lung & Others (HCMP 2906/2016, unreported, 12 January 2017).

19.  These case authorities have been considered in [10] – [24] of the Decision.

20.  Despite Hui’s repeated arguments, I am not persuaded that it is reasonably arguable that this Court has erred in the identification of the legal test or threshold.  In my view, the key question is “necessity”, and the asking of this question leads to the issue of “whether there is no or no current effective protective regime, and some form of interim protection should be given to preserve the status quo”.  This was one of the matters which had been taken into account by the first instance judge in Macau First Universal International Limited v Ding Xiaohong & Others (CACV 193/2011, unreported, 31 July 2012).  As mentioned in [22] of the Decision:

“The Court of Appeal’s Judgment in Macau First Universal International Limited also shows that there is no merit in the defendant’s submission that the American Cyanamid principles are inapplicable, for it did not doubt the learned Deputy Judge’s formulation of the test as quoted in [17] above. The first instance decision was set aside only because the Court of Appeal took the view that the learned first instance Judge had failed to take a relevant matter into account when considering whether effective protection was in place.”

21.  Although some of the authorities had considered, in light of the respective facts of those cases, whether there was “imminent danger of loss or dissipation of assets”, I am of the view that the question of “imminent danger” as referred to in those cases was no more than a way to consider the question of “necessity”.

22.  In this regard, I should specifically refer to Hui’s arguments in relation to the case of Wallace Kevin James (supra). His counsel suggest that:

(1)  the Singapore Court of Appeal set aside a High Court order appointing an interim receiver in that case because the court below had adopted the wrong test (i.e. the “just and convenient” test)[3]; and

(2)  “mere non-compliance with an asset disclosure order” is not enough for satisfying the threshold for the appointment of receivers[4].

23.  These submissions must be rejected if the case of Wallace Kevin James (supra) is properly understood:

(1)  Firstly, it is clear from a reading of the Singapore Court of Appeal’s Judgment that the appeal was allowed not because of any “wrong test” identified by the court below as such, but because the appellate court, despite the two breaches of the Mareva injunction therein (the alleged breach of the disclosure order was not one of them – see below), took the view that the circumstances in the case did not justify the extreme remedy of a receivership order.  In other words, the decision turned on its facts.[5]

(2)  Secondly, although the disclosure made by the defendant in that case was admittedly late and incomplete, it was held that the disclosure was a “fairly comprehensive one” and that the finding of the court below that the disclosure was “quite unsatisfactory” was wrong.  It was therefore held that there was no breach of the Mareva injunction order in this regard.[6]

24.  Hence, the Wallace Kevin James (supra)  case cannot assist Hui.

25.  In paragraph 9(2)  of Hui’s reply submissions, his counsel referred to paragraph 45 of his submissions dated 29 August 2025, which in turn quoted [19] – [20] of Wong Luen Hang & Another v Chan Yuk Lung & Others (HCMP 2906/2016, unreported, 12 January 2017), and asserted that these paragraphs contain “Court of Appeal’s express conclusion of law as to the governing test – which is not mere ‘non-compliance with an asset disclosure order’ ”.  Those paragraphs in Wong Luen Hang read:

“19. The plaintiffs contended that the judge was wrong in principle to hold that interim receivers should be appointed only if the court is convinced of its necessity and not otherwise (ground 5). They submitted this is far too stringent and the test is not necessity but whether it is ‘just or convenient’ to do so, applying the wording in section 21L(1)  of the High Court Ordinance, Cap.4.

20.  We do not accept this submission.  Section 21L(1)  is a general provision relating to the granting of an injunction and the appointment of receivers, whether on an interlocutory or final basis.  For further guidance on the application of this provision to specific situations, it is necessary to look to decided cases.  We are here concerned with the appointment of an interim receiver, not of a particular asset, but over the entire assets and undertaking of 3 companies and at least one of them is a trading company.  It is well established by authorities that for such an extremely drastic remedy to be granted, the court’s jurisdiction is to be exercised with great circumspection and only when it is convinced of the necessity of making such an order instead of other forms of less intrusive and more reversible relief. Bond Brewing Holdings Ltd v National Australia Bank Ltd (1990)  1 ACSR 445 at 456 to 458 has often been cited by our courts in this regard.  See also Macau First Universal International Ltd v Ding Xiaohong & Ors, CACV 193/2011, 31 July 2012, §42; Wong Luen Hang & Anr v Chan Yuk Lung & Ors, HCMP 2481/2015, 5 November 2015, §13.”

(counsel’s emphasis)

26.  As pointed out in [24] of the Decision, I cannot see how this case can assist Hui, as all Kwan JA (as she then was)  emphasised in the above paragraphs was the requirement of “necessity”. 

27.  Hui’s counsel also referred this Court to “the ancient principle of our law concerning contempt of court (whether civil or criminal)  that the disobedience element of contempt is not made out if the defendant’s failure to comply with a court order was ‘casual or accidental and unintentional’ ”. This submission is not understood, for the Court is not dealing with contempt proceedings here. 

28.  To conclude, this ground is not reasonably arguable.

D2.  The Jurisdictional Ground

29.  This ground concerns the scope of the Orders, particularly, in relation to assets held by the 4^th defendant and the Schedule 1 Companies.

30.  The same arguments have been dealt with in [55] – [60] of the Decision.

31.  With respect, this ground is unarguable because the Orders were made on the basis of the Injunction Order which covers all the assets held by the 4^th defendant and the Schedule 1 Companies.  The Injunction Order is a valid order against which no appeal has been lodged.  It is futile for Hui and the 4^th defendant to argue at this stage that those assets should not be caught by the Injunction Order in the first place.

D3.  The Litigation Adversaries Ground

32.  Under this ground, Hui challenges the appointment of the Liquidators as the Receivers.

33.  Such appointment involves the exercise of discretion of this Court.

34.  In his proposed appeal, Hui relies again on his assertion that the appointment of the Liquidators may render the action against himself and the 4^th defendant incapable of being fairly tried.  This matter has been considered in [66] – [72] of the Decision. 

35.  As it has been pointed out above, the purpose of an appeal is not for the appellant to regurgitate arguments which have already been considered in the court below with the hope that the appellate court may come to a different assessment of the situation.

36.  This ground is therefore not reasonably arguable.

37.  Before I leave this topic, I should also specifically refer to Hui’s argument as follows:

“That serious error [of appointing Hui’s and the 4^th defendant’s hostile litigation adversaries], which the Plaintiff instigated in their application, may have rendered the Action against D1/D4 incapable of being fairly tried (and see para.s 24-28 below)  – as the Hon. Coleman, J. appears to have recognised in his 19 September 2025 Decision herein concerning D2.”[7]

(emphasis added)

38.  It is indeed true that, by virtue of the said decision dated 19 September 2025 ([2025] HKCFI 4415), Coleman J did not appoint the Liquidators as the receivers and managers of the 2^nd defendant’s assets and undertakings.  However, Hui’s counsel have gone too far (and they should not have speculated)  to say that his Lordship had made the decision because the proposed appointment “may have rendered the Action against D1/D4 incapable of being fairly tried”.

D4.  Remuneration of the Receivers

39.  Paragraph 10 of the draft Notice of Appeal reads:

“The Judge also erred and acted in disregard of established principle in allowing the Plaintiff’s Liquidators later to apply to vary the Court’s Order concerning the ultimate liability for the costs of the Interim Receivership, potentially to place the burden on the 1^st Defendant – in breach of the established principle that a litigation adversary should never be appointed receiver over his opponent’s property unless he agrees to take the appointment without reward (which the Plaintiff’s Liquidators refuse to do).”

40.  Under this ground (which Hui’s counsel categorised as part of the 3^rd ground under Section D3 above), Hui argues that:

“Additionally, in further breach of the established principles (here, those, which apply to the circumstances cited in brackets in para. 16 above), the Receivership Order also acceded to the Plaintiff’s (improper)  request that D1/D4’s hostile litigation adversaries be fully remunerated (and potentially at the future expense of D1/D4)  instead of following the long established rule of practice that they be required to work without reward e.g. DSkel#49-51; Kerr & Hunter (supra)  at para. 4.4; and Re Prytherch (1889)  42 Ch. D. 590 at 601”

41.  The same argument has been made by Hui before and it has been dealt with by this Court in the following way in [77] of the Decision:

“Hui’s counsel further contended that Hui should not be exposed to the possibility that he may be required to pay for the entire receivership. That is not a matter which Hui should be worrying at the moment, because the Group’s proposal is that the remuneration of the receivers shall be paid out of the assets of the Group. While it is also proposed that the Group would be at liberty to apply to vary this arrangement, the matter can be further debated when there is such an application.”

42.  Insofar as Re Prytherch (1889)  42 Ch. D. 590 (on the basis of which the learned author of Kerr & Hunter wrote that “[a] party to the claim will not usually be appointed receiver, unless he undertakes to act without salary”)  was relied on to support Hui’s argument that there is a “long established rule of practice that they be required to work without reward”, I am afraid that reliance is misplaced.  This is because the view in Re Prytherch was apparently expressed by reason of its own facts.  In that case, a Mr Bishop was for a time receiver in possession for some other persons who were mortgagees, but he ceased to fill that character when those persons were no longer mortgagees, and he himself became mortgagee in possession. Having remained voluntarily in possession of the property for 11 years, he applied for an order to give up possession and to appoint a receiver.  It was in such peculiar situation that the court held that the court’s discretion in appointing a receiver should not be exercised because under the law, a mortgage cannot go into and out of possession whenever he likes.  It was also in such circumstances that the court held that the mortgagors should not be put to the expense of a receivership.  At the end of the day, the court appointed Mr Bishop as receiver without salary and without security.  It can thus be seen that this authority is nothing other than another example in which the court had exercised its discretion in the circumstances of a particular case, and cannot assist Hui in the present case.

E.  THE STAY SUMMONS – DISCUSSION

43.  Counsel for Hui and the 4^th defendant do not dispute that stay would not be granted if there is no arguable appeal.

44.  It follows from the conclusion under Section D above that no stay should be granted.

F.  ORDER

45.  For the above reasons, the Leave to Appeal Summons and the Stay Summons are hereby dismissed.

G.  COSTS

46.  Costs should follow the event.  I make a costs order nisi that Hui and the 4^th defendant shall bear the Group’s costs of the Leave to Appeal Summons and the Stay Summons. 

47.  The Group’s costs of the Leave to Appeal Summons and the Stay Summons shall be summarily assessed in lieu of taxation.  Unless any application for variation of the aforesaid costs order nisi is made within time (as to be provided in the following paragraph), the Group shall lodge and serve its statement of costs within 7 days after the expiry of the 14-day period as referred to in the paragraph below.  Hui and the 4^th defendant shall lodge and serve their statement of objection within 7 days thereafter.  Summary assessment of the costs of the aforesaid Summonses will be conducted on paper (no matter whether any statement of objection is lodged within time)  thereafter.  The costs assessed shall be paid by Hui and the 4^th defendant within 14 days after assessment.

48.  The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper)  within 14 days hereof.

Karas So LLP, for the plaintiff

Mr Barrie Barlow SC leading Mr Vincent Chen, instructed by Chow de Bedin LLP, for the 1^st and 4^th defendants

HCMP 1080/2024

[2025] HKCFI 5618

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

________________________

________________

AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

________________________

________________

(Consolidated pursuant to the Order of Honourable Mr Justice Coleman
dated 12th February 2025)

___________________

D E C I S I O N

___________________

A.  Introduction

1.  The background – factual and procedural – of these proceedings has been canvassed in a number of previous Decisions, and needs not be repeated at any length here. For present purposes, the focus is on the position as between the Plaintiff (“CEG”) and 3^rd Defendant (“Ms Ding”).

2.  By its Summons filed on 27 September 2024 (“Jurisdiction Variation Summons”), CEG made an application for variation (“Variation”) of the undertakings given in paragraphs 6 and 7 of Schedule 2 to the Proprietary and Mareva Injunction dated 29 July 2024 (as varied) as against Ms Ding (“HK Injunction Order”).

3.  The undertakings restrict CEG from commencing proceedings against Ms Ding (except for in Hong Kong, the UK, the Cayman Islands, and the BVI), using information obtained as a result of the HK Injunction Order in any proceedings, and seeking to enforce the HK Injunction Order or obtain an order of similar nature.

4.  The gist of the Variation sought by CEG is to permit it to commence proceedings in any of Jersey, Gibraltar, Canada and Singapore (“Identified Jurisdictions”) against Ms Ding, who holds substantial assets in those jurisdictions as known to CEG by her disclosure, for the aim of enforcing, recognising or seeking other relief mirroring the terms of the HK Injunction Order, and to use information obtained as a result of the HK Injunction Order for the purpose of those proceedings.

5.  By my directions dated 2 October 2024, the Jurisdiction Variation Summons is to be determined on paper.

6.  In support of the Jurisdiction Variation Summons, CEG filed the 1^st, 2^nd and 3^rd Affirmations of Jordan George Moulds on 27 September 2024, 18 November 2024 and 3 January 2025 respectively (“Moulds 1”, “Moulds 2” and “Moulds 3”). In opposition, Ms Ding relies on the 2^nd and 4^th Affirmations of Chan Mei Yuk filed on 28 October 2024 and 5 December 2024 respectively (“Chan 2” and “Chan 4”).

7.  CEG filed its skeleton submissions on 17 January 2025 and reply submissions on 14 February 2025 respectively. Mr Vincent Chen, Counsel for Ms Ding, filed his skeleton submissions on 7 February 2025.

8.  Having considered the materials filed by the parties concerned, this is my Decision.

B.  Background

9.  The Jurisdiction Variation Summons comes about against the following factual background, much of which has been helpfully summarised in the parties’ skeleton submissions.

10.  After obtaining the HK Injunction Order, CEG sought and obtained injunctive relief in the High Court in London (“UK Injunction Order”) in substantially similar terms to the HK Injunction Order.

11.  Pursuant to the UK Injunction Order, Ms Ding gave asset disclosure in the UK proceedings on 9 and 21 August 2024. The same asset disclosure was given by Ms Ding in this action by her 2^nd Affirmation filed on 5 September 2024 (“Asset Disclosure”), which disclosed that she has various assets of an individual value of or above £150,000 in the UK, Jersey, Gibraltar, Canada, Singapore, Hong Kong and Mainland China.

12.  Following the Asset Disclosure, CEG’s solicitors in Hong Kong and the UK have written to, among others, the banks identified in the Asset Disclosure to notify them of the HK and UK Injunction Orders, with a view to having them to freeze Ms Ding’s account held with them, to give effect to the HK and UK Injunction Orders.

13.  Certain banks in the Identified Jurisdictions, holding significant assets of Ms Ding, have either replied that they require local court orders for compliance with the terms of the HK and/or UK Injunction Orders, or did not acknowledge or respond to the letters from CEG’s solicitors, which are summarised in the table below in CEG’s skeleton submissions (with bank account details omitted):

Jurisdiction	Bank	Approximate Total Value	Responses
Canada	Bank of Montreal	CAD 9 million	Local order required for the bank to comply with the HK Injunction Order.
	Canadian Imperial Bank of Commerce (“CIBC”)	CAD 28 million	Local order required for the bank to comply with the HK Injunction Order.
	Royal Bank of Canada	CAD 100 million	Local order required for the bank to comply with the HK and UK Injunction Orders.
Gibraltar	Bank J. Safra Sarasin (Gibraltar) Limited	USD 57.6 million	Local order required for the bank to comply with the HK and UK Injunction Orders.
Jersey	Barclays Bank Plc	GBP 675,593.61	No response received.
Singapore	Bank J. Sarasin Limited Singapore	USD 71 million	Local order required for the bank to comply with the UK Injunction Order. No response received in respect of the HK Injunction Order.

C.  Legal Principles

14.  The undertakings require CEG to obtain the leave from the Court to seek to enforce the HK Injunction Order outside Hong Kong or seek an order of a similar nature (except for the UK, the Cayman Islands, and the BVI), which is in the standard form language.

15.  The primary justification as relied upon by CEG for seeking grant of leave to enforce abroad a Mareva injunction is that doing so will render the injunction effective in safeguarding the applicant’s position in respect of assets located abroad: Dadourian Group International Inc v Simmons and Ors [2006] 3 All ER 48 at §27.

16.  Second, in the determination as to whether to grant permission, the following guidelines (i.e. Dadourian guidelines), which have been recognised and adopted by the Hong Kong Courts in RACP Pharmaceutical Holdings v Li Xiaobo [2007] 2 HKLRD 331 at §9 and Agritrade Resources v Ashok Kumar Sahoo[2021] HKCFI 685 at §138), will be taken into consideration by the Court, in particular:

(1)  The grant of permission should be just and convenient for the purpose of ensuring the effectiveness of the worldwide freezing order and in addition that it is not oppressive to the parties to the local proceedings or to third parties who may be joined to the foreign proceedings;

(2)  All relevant circumstances and options need to be considered. In particular, consideration should be given to granting relief on terms, for example, terms as to the extension to third parties with the undertaking to compensate for costs incurred as a result of the worldwide freezing order and as to the type of proceedings that may be commenced abroad, proportionality of the steps proposed to be taken abroad and in addition to the form of any order; and

(3)  There must be evidence of a risk of dissipation of the assets in question.

17.  Third, in respect of the issue on risk of dissipation, the following principles are relevant:

(1)  Where it can be demonstrated that there is a real prospect that the assets in relation to which the applicant wishes to bring foreign proceedings are assets beneficially owned by the defendant, the burden on the applicant to show risk of dissipation is likely to be satisfied by the evidence in support of the original injunction order: Dadourian Group at §48;

(2)  The fact that the defendant has been compliant with the injunction order is not a bar to relief, because there is no guarantee that the defendant will continue to be compliant in the future and the plaintiff could be left unprotected: Arcadia Petroleum Ltd v Bosworth [2015] EWHC 3700 (Comm) at §71.

18.  Mr Chen firstly emphasised that there are “twin concerns” – see Bankas Snoras AB (a company incorporated pursuant to the laws of the Republic of Lithuania) v Antonov [2018] EWHC 887 (Comm) at §44 – as addressed by the undertakings, mainly:

(1)  the avoidance of the oppression of the defendant by the institution of multiple proceedings for the enforcement of the local freezing order in several countries at the expense of the ability of the defendant to defend the local proceedings;

(2)  the prevention of the enforcement of the freezing order in a foreign jurisdiction having a more far-reaching effect in that jurisdiction than locally, for example by creating a security interest in favour of the claimant.

19.  In Agritrade Resources Limited through the Joint Provisional Liquidators Ng Kian Kiat, Oon Su Sun and E Alexander Whittaker [2021] HKCFI at §122, it was further added that:

The theme is to prevent abuse of this exceptional and extreme relief (i.e. Worldwide Mareva injunction) from being used as a means of oppression on the defendant. To address these concerns, the undertakings are imposed to ensure the court’s jurisdiction is not being abused or invoked on a temporary basis for tactical reasons or ulterior purposes; to ensure that a defendant will not be harassed more than necessary; and to enable the court to police the circumstances in which the applicant sought to use the relief obtained, in particular the disclosures, as a means to obtain further or greater or oppressive relief against the defendant abroad. It is these concerns which gave rise to the undertaking.

20.  Second, the Court has to consider whether it is “just and convenient” to grant the relaxation sought (Dadourian Group International; Agritrade Resources at §138), and in particular “there must be evidence of a risk of dissipation of the assets in question” (Agritrade Resources at §138(7)).

21.  Third, the Dadourian guidelines are not intended to be a straitjacket. They revolve around the general principles discussed earlier, namely, abuse of this form of exceptional and extreme relief, multiplicity of proceedings and oppression to the defendant (Agritrade Resources at §139).

D.  Just and convenient

22.  Having considered the arguments relied upon and affirmation evidence filed by the parties, I accept CEG’s submission that the order sought is necessary for ensuring the effectiveness of the HK Injunction Order for the following reasons.

23.  First, Ms Ding has disclosed assets exceeding US$220 million across the four Identified Jurisdictions (see above table), which are subject to the HK Injunction Order prohibiting her from in any way disposing of, dealing with, or diminishing the value of, any (1) Dividend Assets and (2) assets up to a value of US$358.5 million. Without enforcing the HK Injunction Order in each of the Identified Jurisdictions, the Plaintiff has no way to ensure that the HK Injunction Order is effective as against the US$220 million identified in those jurisdictions.

24.  Second, it is plain from the nature of the responses received or absent from the banks (see table above) that the only way to ensure the effectiveness of the HK Injunction Order as against the US$220 million in the Identified Jurisdictions is to obtain local orders in those jurisdictions and enforce them against the banks holding Ms Ding’s behalf.

25.  Third, in response to the above, the two points made in the affirmation evidence filed on behalf of Ms Ding do not provide adequate assurance that the HK Injunction Order is effective in respect of the US$220 million in the identified Jurisdictions because:

(1)  In a letter from CIBC’s solicitors dated 11 November 2024, it is stated that CIBC has frozen Ms Ding’s accounts and intends to keep them frozen pending clarification of what steps she intends to take with respect to the applicability of the Mareva Injunction to her CIBC accounts, which provide no sufficient comfort where it appears to anticipate that any freeze on assets applied by CIBC might be lifted at its election and without first obtaining its agreement. CEG does not have any control over what “clarifications” Ms Ding may provide to CIBC, and it is unclear whether CIBC may unfreeze the accounts in future. The grant of local relief remains necessary, just and appropriate in circumstances where: (a) CIBC’s clear response is that CIBC requires a Canadian court order; and (b) CIBC is only one of the three banks which holds Ms Ding’s assets in Canada.

(2)  Ms Ding’s promise is merely self-policing (as offered in Chan 4 at §11).

26.  As regards the alleged uncooperative and unnecessarily defensive approach taken by Ms Ding, the main thrust of CEG’s argument is that additional time and costs are required to ascertain whether Ms Ding has properly complied with the Injunction Orders and that Ms Ding’s reluctance to address the Plaintiff’s reasonable enquiries makes it difficult for the Plaintiff to rely on her self-policing of the Injunction Orders.

27.  I find it fair for CEG to assert that Ms Ding has adopted a “generally uncooperative approach” (in the solicitors for CEG’s words) to the proceedings in Hong Kong and England, which poses difficulties for CEG to ascertain if Ms Ding is complying with the terms of the Order, as illustrated by the following matters:

(1)  Ms Ding’s abrupt change in position in respect of Carnation Way Properties owned by her and managed by Jones Lang Lasalle (“JLL”) shows, at best, a lack of understanding of the UK and Injunction Orders, or at worst, a blatant disregard for their terms.

(2)  Ms Ding’s account with Sarasin: despite CEG’s requests, Ms Ding has refused to provide any information that would verify the circumstances and timing of the redemption of the settlement sum about 23 July 2024 (i.e. just a week after she was served with the Chabra injunction).

(3)  Ms Ding’s accounts with CIBC: the Plaintiff has encountered difficulties in verifying information regarding Ms Ding’s compliance with the HK Injunction Order, as illustrated by the correspondence relating to Ms Ding’s accounts with CIBC, the details of which need not be repeated herein.

E.  Risk of dissipation

28.  CEG has emphasised that this Court has already determined in granting the HK Injunction Order (as has the English Court in granting the UK Injunction Order) that there exists a real risk of dissipation by Ms Ding, and that determination was made after receiving CEG’s evidence which in line with Dadourian Group is relied upon by CEG to demonstrate the continued risk of dissipation by Ms Ding. That risk of dissipation is even stronger in the light of the matters relied upon by CEG as set out above.

29.  I acknowledge that in response, Mr Chen submitted that the matters as relied upon by CEG do not even show Ms Ding had any intention to dissipate her assets in the Identified Jurisdictions for the following reasons:

(1)  Whether the banks in the Identified Jurisdiction, which had their own concerns and were presumably advised by their lawyers on what to do, responded to CEG’s request is beyond Ms Ding’s control.

(2)  CEG’s prior speculation on Ms Ding’s change in travel plan as part of any plan to dissipate her assets is entirely unfounded and unjustified.

(3)  As to the alleged lack of co-operation by Ms Ding, CEG and Ms Ding are engaged in a hotly contentious litigation, and the latter’s duty is just to comply with court orders.

30.  As to CEG’s alleged difficulty in ascertaining if Ms Ding is complying with the terms of the Order and will continue to do so (regarding three matters, namely Ms Ding’s (a) alleged abrupt change of position in respect of JLL’s management of the Carnation Way Properties, (b) account with Sarasin and (c) account with CIBC), Mr Chen provided submissions in reply at some length, but I do not think they need to be rehearsed at that same length in this Decision.

31.  The submissions of Mr Chen are in summary that:

(1)  there is no basis to infer that Ms Ding has any intention to dissipate her assets or not to comply with orders of any courts;

(2)  it is factually incorrect and unfair for CEG to make submission that Ms Ding has refused to provide information required for verification of her assertions, circumstances and timing in relation to the redemption of a Senior Loan Fund, and in particular CEG’s request for documentation showing the source of fund is entirely unjustified as such documents are wholly irrelevant to whether the Senior Loan Fund (and the proceeds) forms part of the non-Dividends Assets; and

(3)  CEG’s complaint is entirely unjustified as it has only presented a partial picture, which cannot be taken to infer any intention of Ms Ding to dissipate assets or any failure of Ms Ding in providing explanation as regards CEG’s “concerns”.

32.  Ms Ding’s application for discharge of the HK Injunction Order (“Discharge Application”) was heard by this Court on 21 March 2025. I have reserved my decision to be handled down later. Mr Chen submits that because of the interaction between the real risk of dissipation for the purposes of this Variation of Jurisdiction application and those of Ms Ding’s Discharge Application, the determination of this application should wait until determination of the Discharge Application. With respect, I do not agree that as a matter of better case management, this application should only be determined after the result of Ms Ding’s Discharge Application is known.

33.  I accept CEG’s submission that unless and until Ms Ding succeeds in the Discharge Application, the HK Injunction Order is in effect and CEG should be entitled to ensure its effectiveness in the Identified Jurisdictions. In particular, it seems to me that there is a proper basis for CEG to suggest that without enforcing the HK Injunction Order in the Identified Jurisdictions, it has no way to ensure that the HK Injunction Order is effective as against the US$220 million identified in those jurisdictions.

F.  Asserted Prejudice and Proportionality

34.  Mr Chen’s submissions on the prejudice and potential oppression to Ms Ding can be summarised as follows:

(1)  substantial legal costs will be incurred by Ms Ding to instruct legal representatives and seek legal assistance in the Identified Jurisdictions (in view of the scale of the litigation between CEG and her and the fact that she is not residing in those jurisdictions), which causes funding issues to her due to the current sole useable source of funds and will make her end up undefended – a prospect is highly oppressive and will lead to substantial prejudice to her;

(2)  as Ms Ding is currently subject to both the HK Injunction Order and the UK Injunction Order, she simply had and has no intention not to obey either of them, which in particular will make her liable to be prosecuted for contempt of court for breaching the UK Order (as she is currently residing in the UK); and

(3)  Ms Ding was informed by some banks in those jurisdictions that they would require consent from CEG before proceeding with handling the funds in the relevant accounts, for example CIBC.

35.  Though I see some force in Mr Chen’s submissions, I am of the view that the balance of convenience is in favour of granting the Variation sought.

36.  In consideration of the applicable legal principles and evidence filed by the parties, I accept the following submissions made by CEG:

(1)  the issues of proportionality and oppression to the other parties ought to be weighted in the balance against the interests of the Plaintiff in enforcing the HK Injunction Order;

(2)  the Variation sought is proportionate as a tailored response to Ms Ding’s asset disclosure, will not cause any undue oppression or prejudice to Ms Ding or others and is to ensure the HK Injunction Order is effective;

(3)  the Variation sought is limited in the following ways:

(a)  it does not enable CEG to bring any type of civil or criminal proceedings in the Identified Jurisdictions and is expressly limited to enabling CEG to commence proceedings to enforce, recognise or seek other relief mirroring the terms of the HK Injunction Order, and to use information obtained as a result of the HK Injunction Order for the purpose of those proceedings; and

(b)  it does not entitle CEG to commence proceedings in any possible jurisdiction and is limited to the Identified Jurisdictions on the grounds that (i) there is available in each of those jurisdictions relief equivalent to the relief granted by the HK Injunction Order and (ii) there is a need for such relief in those jurisdictions in order to give effect to the HK Injunction Order.

37.  As to Mr Chen’s point about substantial legal costs to be incurred by Ms Ding in requiring legal assistance, with respect, I disagree for the following reasons as relied upon by CEG in its Reply:

(1)  There is no reason to suggest that CEG would, without leave of the Hong Kong Court, seek orders in the Identified Jurisdictions which are beyond or different in scope to the HK Injunction Order.

(2)  The fact that CEG will need to apply afresh rather than by way of direct recognition of the HK Injunction Order in certain of the jurisdictions may well increase costs to be incurred by CEG (though I am also of the view that it would be impossible that there is no impact at all on Ms Ding if CEG commences proceedings in the Identified Jurisdictions).

G.  Result

38.  For the reasons given above, I make an order in terms of the Jurisdiction Variation Summons (as amended by consent).

39.  The costs of the Jurisdiction Variation Summons shall be paid by Ms Ding to the Plaintiff, to be taxed if not agreed.

Karas So LLP, solicitors for the plaintiff

Mr Vincent Chen, instructed by Lam & Co, for the 3^rd defendant in HCMP1080/2024 and the 5^th defendant in HCA 551/2024

HCMP 1080/2024

[2025] HKCFI 4415

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

________________________

________________

AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

________________________

________________

(Consolidated pursuant to the Order of Honourable Mr Justice Coleman

dated 12nd February 2025)

___________________

D E C I S I O N

___________________

A.  Introduction

1.  The background – factual and procedural – of these proceedings has been canvassed in a number of previous Decisions, and need not be repeated at any length here. For present purposes, the focus is on the position as between the Plaintiff (“CEG”) and 2^nd Defendant (“Mr Xia”) and the 8^th Defendant (“Madam He”). Madam He is the (only very recently divorced) wife of Mr Xia.

2.  On 24 June 2024, Mr Xia was made subject to a Mareva injunction, and required to give ancillary asset disclosure (“Asset Disclosure Order”). Though time for compliance was extended pending an application to discharge the injunction (which failed), I subsequently set 21 February 2025 as the extended date for compliance with the Asset Disclosure Order.

3.  As there was no such compliance, I issued two subsequent unless orders requiring compliance, failing which Mr Xia would be debarred from filing a Defence and defending the action. There were failures to comply with the unless orders, and the sanction was triggered.

4.  For reasons explained in my previous Decisions, I then set 25 April 2025 and 17 June 2025 as extended dates for compliance. In purported compliance with the Asset Disclosure Order, Mr Xia filed his 3^rd and 4^th affirmations.

5.  Since they were filed, it has become absolutely clear that neither the 3^rd affirmation nor 4^th affirmation in fact complied with the Asset Disclosure Order, and there were significant and deliberate non-disclosures. I accept Mr Manzoni’s submission that the disobedience extended far beyond the initial reluctance to give disclosure. Mr Xia has since acknowledged those facts, though he has offered an explanation and an apology.

6.  However, on the basis that the 3^rd and 4^th affirmations had effected compliance with the Asset Disclosure Order, Mr Xia had applied by summons dated 7 July 2025 for relief from the sanction imposed, and for him to have leave to file and serve his Defence (“Relief Summons”). Substantive argument on the Relief Summons was fixed for 17 September 2025.

7.  On 1 August 2025, I granted CEG’s ex parte Chabra application (“Chabra Injunction”) to enjoin certain assets held in the name of Madam He, a non-cause of action defendant (“NCAD”).

8.  Subsequently, a further 8 summonses have been issued, also made returnable on or listed for argument on 17 September 2025. Therefore, the 9 summonses dealt with at that hearing were, listed by chronological reference to their date of issue:

(1)  Mr Xia’s Relief Summons.

(2)  CEG’s summons dated 1 August 2025, seeking the continuation of the Chabra Injunction (“Chabra Continuation Summons”).

(3)  CEG’s summons dated 4 August 2025, seeking (a) a declaration that Mr Xia had failed to comply with the Asset Disclosure Order, (b) a further affirmation from Mr Xia to give full and proper compliance with the Asset Disclosure Order obligations, (c) specific details and documentation and summaries in addition to or in the provision of the further affirmation, (d) an order for cross-examination of Mr Xia on matters of asset disclosure, (e) certain amendments to the original Injunction Order, and (f) an order that funds currently held in the account of Mr Xia’s solicitors be paid into Court (“Further Disclosure Summons”).

(4)  CEG’s summons dated 4 August 2025, seeking the appointment of the Liquidators of CEG as joint and several receivers and managers over the entire assets of Mr Xia (“Receivership Summons”).

(5)  Mr Xia’s summons dated 5 September 2025, seeking leave to file his reply affirmation out of time in further support of the Relief Summons (“EOT Summons”).

(6)  CEG’s summons dated 9 September 2025, seeking variations and extension of the Chabra Injunction (“Chabra Extension Summons”).

(7)  Mr Xia’s summons dated 10 September 2025, seeking leave to withdraw his Relief Summons (“Withdrawal Summons”).

(8)  Mr Xia’s summons dated 12 September 2025, seeking a variation of the Injunction Order in relation to the provision for spending on legal fees and representation (“Fees Provision Summons”).

(9)  Madam He’s summons dated 16 September 2025, seeking to set aside the Chabra Injunction (and various ancillary orders) (“Chabra Discharge Summons”).

9.  At the end of the hearing, I indicated that I would give my decisions within two days, with reasons to be provided subsequently.

10.  Including my orders and directions which I gave during the hearing, the following are my decisions and/or directions on each of the 9 summonses.

B.  Relief Summons

11.  The Relief Summons is dismissed, with costs to CEG.

12.  The question of the scale of costs, and any other ancillary points relating to costs, will be decided on paper, with submissions to be filed in accordance with a timetable to be agreed between Mr Manzoni and Mr Jat.

C.  Chabra Continuation Summons

13.  The Chabra Injunction will be continued until the determination of the Chabra Discharge Summons, or until further order.

14.  All questions of costs are reserved.

D.  Further Disclosure Summons

15.  I decline to make the direction and/or declaration sought by paragraph 1 of the Further Disclosure Summons. Nevertheless, I record that it is clear – and it appears to have been correctly recognised by Mr Xia – that the sanction imposed under the unless orders has been triggered, and Mr Xia is debarred from filing a Defence and from defending the action.

16.  I make an order in the terms of paragraphs 2 and 4.1 and 4.3 (save for a small amendment in the preamble to paragraph 4 to delete the reference to paragraph 3). For the avoidance of doubt, the relevant date for the required disclosure is on or before 4pm on 3 October 2025.

17.  Whilst I decline to make an order in the terms of paragraph 3, the matters there set out can be treated as providing useful guidance to the ability for Mr Xia to provide full and proper compliance with the Asset Disclosure Order obligations.

18.  Paragraphs 5 and 6 are adjourned sine die, with liberty to restore after the provision of the further disclosure required by the order made under paragraph 2 (and 4.1 and 4.3).

19.  I make an order in the terms of paragraph 7.

20.  I decline to make an order in the terms of paragraph 8. But I do so expressly on the basis that I do not preclude a renewed application in similar terms, should circumstances appear to warrant it.

21.  The costs of the Further Disclosure Summons shall be paid by Mr Xia to CEG forthwith on an indemnity basis, to be taxed if not agreed.

E.  Receivership Summons

22.  As to paragraph 1 of the Receivership Summons, I make an order for the appointment of joint and several receivers and managers over the entire assets and undertaking of Mr Xia in the terms of the amended annexure 1 to the summons, save with the following changes:

(1)  The Liquidators of CEG are not appointed as the receivers and managers. Instead, CEG should nominate two sets of receivers and managers independent from the Liquidators. The nomination should be made by 4pm on 24 September 2025, for any comment to be made by Mr Xia by 4pm on 26 September 2025, as to the identity of the receivers and managers to be appointed. I will then choose which of the nominated persons will be appointed.

(2)  Therefore, the names of the receivers and managers ultimately appointed by me shall be set out (in place of the names of the Liquidators in the current draft).

(3)  Any references to Madam He and assets held or registered in her name shall be deleted.

(4)  The reference to “by force, if necessary,” in paragraph 4.7 of the powers shall be deleted.

(5)  All references to the appointment of a supervising solicitor and any powers or interactions between such a person and the receivers shall be deleted.

(6)  The reference to the New Life Revocable Trust in item 3 of Schedule 2 shall be deleted.

23.  In the circumstances of the appointment of independent receivers, there is no need for a supervising solicitor, and I therefore decline to make an order in the terms of paragraph 2 of the Receivership Summons.

24.  I make orders in the terms of paragraphs 3, 4, 5, and 6 of the Receivership Summons.

25.  That part of the Receivership Summons which – whether originally or by proposed amendment to the annexure – seeks the Receivership Order to cover or be extended in relation to the Chabra Assets or any other assets of Madam He or the New Life Revocable Trust is adjourned to the hearing of the Chabra Continuation Summons, paragraphs 1.1 and 1.4 of the Chabra Extension Summons, and the Chabra Discharge Summons.

26.  I make an order in the terms of paragraph 7, relating to the costs of the application.

F.  EOT Summons

27.  I dispose of the EOT Summons by making no order, as no order is necessary in light of the non-pursuit and the dismissal of the Relief Summons.

G.  Chabra Extension Summons

28.  I make an order in terms of paragraphs 1.2, 1.3 and 2 of the Chabra Extension Summons.

29.  Paragraphs 1.1 and 1.4 are adjourned to be dealt with together with and at the same hearing of the Chabra Discharge Summons.

30.  All questions of costs are reserved.

H.  Withdrawal Summons

31.  The Withdrawal Summons is dismissed, with costs to CEG.

32.  The question of the scale of costs, and any other ancillary points relating to costs, will be decided on paper, with submissions to be filed in accordance with a timetable to be agreed between Mr Manzoni and Mr Jat.

I.  Fees Provision Summons

33.  I dispose of the Fees Provision Summons by making no order, as no order is necessary in light of the agreement between the parties.

J.  Chabra Discharge Summons

34.  The Chabra Discharge Summons shall be adjourned for argument (together with the Chabra Continuation Summons and paragraphs 1.1 and 1.4 of the Chabra Extension Summons) (together “Chabra Summonses”), which argument is fixed for 10am on 17 November 2025 (with one day reserved).

35.  Madam He shall file her affirmation evidence as regards the Chabra Summonses, and that part of the Receivership Summons relating to her, by 4pm on 8 October 2025.

36.  CEG shall file any affirmation evidence in opposition/reply by 4pm on 24 October 2025.

37.  Madam He shall file her affirmation evidence limited to a reply on the Chabra Discharge Summons by 4pm on 7 November 2025.

38.  No further affirmation evidence shall be filed without leave of the Court.

39.  All questions of costs in respect of the matters to be argued on 17 November 2025 are reserved.

Mr Charles Manzoni SC, instructed by Karas So LLP, for the plaintiff

Mr Jat Sew Tong SC and Mr Martin Ho, instructed by ONC Lawyers, for the 2^nd defendant

Mr Christopher Chain SC and Mr Lai Chun Ho, instructed by Deacons, for the 8^th defendant

HCA 551/2024 and HCMP 1080/2024

[2025] HKCFI 4327

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024 AND

MISCELLANEOUS PROCEEDINGS NO.1080 OF 2024

_________________

BETWEEN

(Consolidated by the Order of the Honourable
Mr Justice Coleman dated 12 February 2025)

_________________

_________________

DECISION

_________________

A.  INTRODUCTION

1.  The background of the present case has been set out in a number of Decisions including China Evergrande Group v Hui Ka Yan & Others[2025] HKCFI 689 and Re China Evergrande Group [2024] 1 HKLRD 1128, [2024] HKCFI 363.

2.  In gist, China Evergrande Group (“the Group”) was ordered to be wound up by Linda Chan J on 29 January 2024, and upon which Mr Edward Simon Middleton and Ms Wing Sze Tiffany Wong were appointed joint and several liquidators thereof (“theLiquidators”). On 22 March 2024, the Group commenced HCA 551/2024 against the 1^st defendant (“Hui”) and others. On 24 June 2024, Coleman J made a Mareva injunction against Hui, which prohibited him from disposing of, inter alia, his assets worldwide up to the sum of US$7.7 billion (“the Injunction Order”). Hui was also ordered to inform the Group, inter alia, of the following information, to be confirmed in an affidavit filed within 7 days:

“all [of his assets] of an individual value of HK$50,000 or more, whether in or outside Hong Kong, whether in [his] own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets”

(“the Disclosure Order”)

3.  There is no dispute that the Disclosure Order had not been complied with by Hui at all.

4.  The Group therefore took out a summons on 3 April 2025 (“the Receivership Summons”), and applied for, inter alia, an order that the Liquidators of the Group be appointed as the joint and several receivers and managers over the entire assets and undertaking of Hui on the terms set out in the draft order attached to the Receivership Summons.

B.  LEGAL PRINCIPLES

5.  Section 21L(1) of the High Court Ordinance (Cap. 4, Laws of Hong Kong) (“the Ordinance”) stipulates that:

“The Court of First Instance may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the Court of First Instance to be just or convenient to do so.”

6.  Mr Abraham Chan SC submitted that, as to what would amount to “just or convenient”, this Court should follow the approach adopted by Stone J in Akai Holdings Limited & Others v Ho Wing On, Christopher & Others (HCCL 37/2005 and HCCL 40/2005, unreported, 1 September 2009) as follows:

“41. I accept the proposition that there is long and well-established authority that where a Mareva Order is breached, or there is a real risk of such breach, the appropriate remedy is the appointment of a receiver over assets which are subject to the Mareva order: see Derby v Weldon (No’s 3 & 4) [1990] Ch 65 and Derby v Weldon (No 6) [1990] 1 WLR 1139.

42. As Gee on Commercial Injunctions (5^th ed) expresses the position, at paragraph 16.08:

‘If (1) assets are liable to be dissipated or are otherwise in jeopardy and (2) cannot satisfactorily be preserved by injunction, then it may be appropriate to appoint a receiver. This arises where the defendant controls a network of overseas trusts or companies and it appears that he has arranged his affairs in such a complicated way that if the step were not to be taken he might be judgment proof. The appointment of a receiver would be effective relief when an injunction, on its own, would not be…  Other examples of situation calling for the appointment of a receiver are where the defendants are likely to act in disregard of an injunction or have already done so…’ ”

7.  In my view, the following parts of the Judgment in Akai are also relevant:

“44. It is also appropriate to record that Mr Wright has argued strongly that there is a fundamental difference between the principles applicable to the grant of Mareva relief and an application for the appointment of a receiver in a case such as this: ‘the American Cyanamid approach should not be taken’, and that there must be considerable emphasis upon an ‘umbrella principle’ of justice and convenience, particularly in instances in which the court has not yet had the opportunity finally to determine factual matters.

45. With respect, I disagree, at least in terms of disavowing a primary American Cyanamid approach. In this regard I respectfully agree with the views of Kwan J in Re Chime Corporation, HCMP 4146 of 2001, judgment dated 25 June 2003, wherein the learned judge was considering the power to appoint receivers upon interlocutory application; she observed as follows:

‘39. The power to appoint receivers on an interlocutory application is a discretionary power to be exercised flexibly on a similar basis to that of an interlocutory injunction, and the principles in American Cyanamid Co v Ethicon Ltd [1975] AC 396 apply (Chinese United Establishments Ltd v Cheung Siu Ki [1997] 2 HKC 212 at 223; Re Niceline Co. Ltd, HCCW No. 423 of 2002, 22 January 2003, paras 50 to 53; Re Full Bullion Shipping Ltd, HCMP No. 2423 of 2002, 28 March 2003, paras 17 and 18).

40. The approach I adopt here… is to assess and balance the following matters:

(a) If there is a serious question to be tried;

(b) the alleged risk of dissipation of assets of the estate;

(c) the current protective regime and its efficacy; and

(d) the risk of damage to the Chime Group and Mrs Wang’s interest if the appointment is made, and whether it can be adequately compensated by a cross-undertaking in damages.’ ”

8.  Mr Chan SC also relied on the case of China Metal Recycling (Holdings) Limited (in compulsory liquidation) & Another v Chun Chi Wai & Others (HCA 1412/2013, unreported, 5 February 2016). In this case, the plaintiffs were in compulsory liquidation, and their action against the defendants therein was continued by the plaintiffs’ liquidators, who alleged that, inter alia, the 1^st and 13^th defendants had fraudulently conspired with other defendants to inflate the value of the plaintiffs’ business by the creation of a series of fictitious transactions and a fictitious flow of funds. As a result of this fraud, it was said that the plaintiffs had suffered loss and damage in excess of HK$5 billion. What was in issue before the court was the plaintiffs’ application for the appointment of interim receivers over the assets of a particular company, together with three of its subsidiaries and its parent company, on the basis that the company had been used to dissipate the assets of the said 1^st and 13^th defendants. In his Decision, Deputy High Court Judge Keith had the following to say:

“16. […] The power may be exercised when it is just or convenient to do so (see section 21L(1) of the High Court Ordinance (Cap 4)), and the court would usually regard it as just or convenient to do so if there is good evidence of a failure to comply with a Mareva injunction.[…]

17. The evidential test which the court applies, rightly in my opinion, is the conventional American Cyanamid test. That was confirmed by Kwan J (as she then was) in Tan Man Kou v Chime Corporation Ltd and others (HCMP 4146/2001), unreported, 25 June 2003, and followed by Stone J in Akai Holdings Limited (in compulsory liquidation) and others v Ho Wing On Christopher and others (HCCL 37/2005), unreported, 1 September 2009. Accordingly, the court will determine whether there is a serious issue to be tried and a risk of dissipation of assets, it will take into account the efficacy of the current regime for protecting the interests of the party seeking the appointment of a receiver, it will assess the risk of damage to any party if a receiver is appointed and whether that damage can be adequately compensated for by a cross‑undertaking as to damages, and whether a less drastic remedy is suitable in the particular circumstances of the case. On that last issue, Stone J in Akai held that where a defendant has deliberately withheld disclosure such as to deny the plaintiff information about its assets which the plaintiff is otherwise entitled to under the Mareva injunction as a means to police it, the court will be unlikely to entertain any suggestion that a lesser remedy or partial receivership will suffice, since (i) the court and the plaintiff are simply not in a position to assess, given the lack of disclosure, whether the lesser remedy is sufficient to protect the plaintiff’s interests, and (ii) it is entirely within the power of the defendant to put an end to the receivership by giving full disclosure or putting up security.”

(emphasis added)

9.  However, despite the above authorities, Mr Barrie Barlow SC (together with Mr Vincent Chen) submitted that the conventional American Cyanamid test is not the correct test to be adopted. It was contended that the applicant for an appointment of interim receiver has to satisfy the Court that such an appointment is necessary and that there is an imminent danger of loss or dissipation of assets.

10.  To support their submission, they firstly referred to the Singapore Court of Appeal case of Wallace Kevin James v. Merrill Lynch International Bank Ltd [1998] 1 SLR 785, in which it was held at [18] that:

“[…] The additional remedy of appointment of a receiver would only be justified if, notwithstanding the considerable protection already afforded by the worldwide Mareva injunctions, there, nonetheless, was an imminent danger of loss or dissipation of the assets of the appellant and/or his wife, if a receiver was not appointed. The whole purpose was to prevent the dissipation of any assets by the appellant and preserve them until the outcome of the proceedings. The granting of a worldwide Mareva injunction, pre-judgment, is in itself a draconian measure to be ordered in very exceptional circumstances: Republic of Haiti & Ors v Duvalier & Ors [1990] 1 QB 202 at p 215; SSAB Oxelosund AB v Xendral Trading Pte Ltd [1992] 1 SLR 600 at p 607; and an order of appointment of receivers is even the more exceptional.”

(counsel’s emphasis)

11.  The Singapore Court of Appeal cited a decision of the full court of the Supreme Court of Victoria in National Australia Bank Ltd & Others v Bond Brewing Holdings Ltd & Others [1991] 1 VR 386 in which it was held at 541 that:

“The drastic nature of the power to appoint a receiver is emphasised in the decisions mentioned in 65 American Jurisprudence (2d) para 20, where authority is cited for the propositions that the power is a drastic, harsh and dangerous one and should be exercised with care and caution, that receivership is a drastic course allowed only under pressing circumstances and granted only with reluctance and caution and that the appointment of a receiver is an extraordinary and drastic remedy, to be exercised with utmost care and caution and only where the court is satisfied there is an imminent danger of loss if it is not exercised.”

(counsel’s emphasis)

12.  As the Singapore Court of Appeal took the view that there was no imminent danger of loss or dissipation of any assets in that case, it was ultimately held that receivers should not have been appointed by the court below.

13.  It cannot be disputed that an appointment of receiver is drastic and that the power to do so should be exercised by the Court with care and caution. However, I do not think such a power can only be exercised if “imminent danger of loss or dissipation of assets” is proved.  In my view, the Singapore Court of Appeal had referred to such “imminent danger” because it was considering, on the facts of that case, whether the exercise of discretion on appointment of receiver was justified in the circumstances of that case. At the end of the day, the court should consider whether further steps should be taken for the purpose of preserving the respondent’s assets. That is the reason why the Singapore Court considered whether “the considerable protection already afforded by the worldwide Mareva injunctions” was sufficient (see [18] of the Judgment as quoted in [10] above).

14.  It should also be noted that the Singapore Court of Appeal had also quoted the case of Derby & Co Ltd & Others v Weldon & Others (15 November 1988) (which was described in their Judgment as “well known”) in which Nicolas Browne-Wilkinson VC said at page 27:

“The first question of law, which does not give me much trouble … is whether a receiver can be appointed in aid of Mareva injunction. In my judgment, it plainly can be done. If the proper preservation of the assets frozen under Mareva order requires the introduction of a receiver to hold certain assets, I can see no reason why such a receiver should not be appointed as a matter of law.”

(emphasis added)

15.  It can therefore be seen that the question is whether proper preservation of assets can be achieved without the appointment of a receiver.

16.  Hui’s counsel then referred to Macau First Universal International Limited v Ding Xiaohong & Others (CACV 193/2011, unreported, 31 July 2012) which was an appeal from a then Deputy Judge’s order to appoint receiver ([2011] 3 HKLRD 27).

17.  In the Court of First Instance’s Decision, it was held by the learned Deputy Judge that:

“10. In substance, the Application [for the appointment of a receiver and manager to preserve the assets pending final determination of the disputes] was premised on [the applicant]’s assertion that he, instead of DG, provided the funding and has been the sole beneficial owner of the Land, Citigroup Tower and the Companies. The Application is necessary to guard against the clear risk of dissipation of assets by DG despite the existence of the DG Undertakings.

[…]

35. [The applicant for the appointment of a receiver and manager to preserve the assets pending final determination of the disputes] relies on the following heads of risk of dissipation of the assets of Shanghai Bading and/or mismanagement of the Companies or Shanghai Bading in support of his application:

[…]

38. The Court has jurisdiction under section 21L(1) of the High Court Ordinance, Cap.4, to appoint a receiver ‘in all cases in which it appears to the Court of First Instance to be just or convenient to do so’.

39. The power to appoint receivers on an interlocutory application is a discretionary power to be exercised flexibly on similar principles to grant an interlocutory injunction and the principles in American Cyanamid apply. Chinese United Establishments Ltd v. Cheung Siu Ki & Anr [1997] 2 HKC 212; Re Niceline Co. Ltd. [2003] 2 HKLRD 725. In other words, the court needs to consider the following question:

(i) Whether there is a serious question to be tried;

(ii) Whether there is a real risk of dissipation of assets;

(iii) Whether there is no or no current effective protective regime and some form of interim protection should be given to preserve the status quo;

(iv) The risk of damage to the company if the appointment is made, and whether it can be adequately compensated by a cross-undertaking in damages.”

(emphasis added)

18.  Heavy reliance had been placed by Hui’s counsel on what Yuen JA stated in the Judgment by which the learned Deputy Judge’s order of appointment was set aside:

“42. It is well-established law that the appointment of receivers is a remedy of last resort. As the judge rightly said (and Mr Chan SC has not challenged this), the appointment of receivers would only be justified if ‘notwithstanding the considerable protection the DG Undertakings already afforded, there nonetheless was an imminent danger of loss or dissipation of the assets if a receiver was not appointed’ (para. 46).”

(Yuen JA’s emphasis)

19.  It was submitted that the above Court of Appeal’s Judgment shows that “imminent danger of loss or dissipation of assets” is a prerequisite which must be in existent before a receiver may be appointed.

20.  With respect, I disagree.

21.  In my view, what was said by Yuen JA should not be interpreted in isolation and out of context. One must bear in mind, as pointed out in [10] and [35] of the Court of First Instance’s Decision (quoted and highlighted in [17] above), that “risk of dissipation of assets” was relied on as the ground in support of the application for appointment of receiver in that case. That is the reason why Yuen JA focused on that particular aspect of the case.

22.  The Court of Appeal’s Judgment in Macau First Universal International Limited also shows that there is no merit in the defendant’s submission that the American Cyanamid principles are inapplicable, for it did not doubt the learned Deputy Judge’s formulation of the test as quoted in [17] above. The first instance decision was set aside only because the Court of Appeal took the view that the learned first instance Judge had failed to take a relevant matter into account when considering whether effective protection was in place.

23.  Lastly, Hui relied on Wong Luen Hang & Another v Chan Yuk Lung & Others (HCMP 2906/2016, unreported, 12 January 2017), in which Kwan JA (as she then was) had the following to say:

“19. The plaintiffs contended that the judge was wrong in principle to hold that interim receivers should be appointed only if the court is convinced of its necessity and not otherwise (ground 5). They submitted this is far too stringent and the test is not necessity but whether it is ‘just or convenient’ to do so, applying the wording in section 21L(1) of the High Court Ordinance, Cap.4.

20. We do not accept this submission. Section 21L(1) is a general provision relating to the granting of an injunction and the appointment of receivers, whether on an interlocutory or final basis. For further guidance on the application of this provision to specific situations, it is necessary to look to decided cases. We are here concerned with the appointment of an interim receiver, not of a particular asset, but over the entire assets and undertaking of 3 companies and at least one of them is a trading company. It is well established by authorities that for such an extremely drastic remedy to be granted, the court’s jurisdiction is to be exercised with great circumspection and only when it is convinced of the necessity of making such an order instead of other forms of less intrusive and more reversible relief. Bond Brewing Holdings Ltd v National Australia Bank Ltd (1990) 1 ACSR 445 at 456 to 458 has often been cited by our courts in this regard. See also Macau First Universal International Ltd v Ding Xiaohong & Ors, CACV 193/2011, 31 July 2012, §42; Wong Luen Hang & Anr v Chan Yuk Lung & Ors, HCMP 2481/2015, 5 November 2015, §13.”

(counsel’s emphasis)

24.  With respect, I cannot see how the Wong Luen Hang case may assist Hui’s argument that the Group has put forward a wrong test for the Court to consider. To the contrary, I am of the view that this case authority further supports the Group’s submission on the applicable legal principles, as it can be seen that Kwan JA had expressly referred (without any adverse comment) to Deputy High Court Judge Le Pichon’s adoption of the American Cyanamid test[1].

25.  Having considered the authorities cited by the parties, I accept Mr Chan SC’s submissions that they in fact are consistent in terms of adopting the applicable legal principles for appointment of receivers.

26.  I summarise the applicable legal principles as follows:

(1)  Pursuant to section 21L(1) of the Ordinance, the Court of First Instance may appoint a receiver if it is just or convenient to do so;

(2)  The power to appoint receivers on an interlocutory application is a discretionary power to be exercised flexibly on similar principles to grant an interlocutory injunction and the principles in American Cyanamid apply;

(3)  Hence, the Court would consider the following questions:

(1)  whether there is a serious question to be tried;

(2)  whether there is a real risk of dissipation of assets;

(3)  whether there is no or no current effective protective regime, and some form of interim protection should be given to preserve the status quo; and

(4)  the risk of damage to the respondent if the appointment is made, and whether it can be adequately compensated by a cross-undertaking in damages.

27.  It was submitted on behalf of Hui that appointing receivers and managers of his assets is a drastic measure to adopt, and that the Court should therefore exercise this discretion carefully, and make an appointment only if it is necessary. I agree. Having said that, I am of the view that the so-called requirement of “necessity” has already been covered by the 3^rd question under the American Cyanamid principles (see [26(3)] above). The question is whether the current protective regime is effective enough to preserve the status quo, which is the original purpose of the Mareva injunction.

C.  SHOULD RECEIVERS BE APPOINTED

C1.  Serious question to be tried and real risk of dissipation

28.  In granting the Injunction Order and continuing the same subsequently against Hui, the Court has been satisfied that there is serious question to be tried, and that there is a real risk of dissipation on his part. Hui has not appealed against the Injunction Order. I therefore do not have to say anything further on these two criteria.

C2. Effectiveness of the current protective regime

29.  It is trite that a disclosure order may be made as an ancillary order of the Mareva injunction so as to render the injunction effective.

30.  However, in the present case, it is undisputed that there is a total failure on the part of Hui to comply with the Disclosure Order. There is therefore a breach of the court order.

31.  As a result, it is submitted on behalf of the Group (which I accept) that there is no way to police the Injunction Order, and that appointing receivers is the only way the Group can obtain the information that should otherwise have been disclosed by Hui.

32.  Hui has made a number of points to counter the above arguments.

33.  Firstly, it was said that while Hui has admittedly failed to comply with the Disclosure Order, it is common ground that that is because he has been detained in the Mainland. Hence, his non-compliance was not “wilful” and therefore not culpable.

34.  The foundation of such submissions was the affirmation of Hui’s solicitor, Mr Justin Chow, who deposed on the basis of what he had been told by allegedly Hui’s PRC lawyer (who was not even named), inter alia, that, since Hui has been detained, he has not been able to deal with any of his assets or assets under his control, and is prohibited by the Mainland authorities from discussing with anyone about the same at all. I am afraid I cannot accept such evidence for the following reasons:

(1)  While Mr Chow’s evidence was hearsay evidence, he did not name the source of the information other than saying that he had been informed about the matter by “Hui’s PRC lawyer”, and it is unclear how that PRC lawyer obtained the alleged information;

(2)  Assuming that Mr Chow had been properly authorised by Hui to defend this application and to make his affirmation (there is no reason why I should assume otherwise), it is difficult to understand (and Mr Chow has failed to explain) why Hui would be prohibited from discussing about his assets.

35.  In any event, I do not think the culpability on the part of Hui is relevant. After all, the question is whether it is necessary to make the appointment in the present circumstances where there has been absolutely no disclosure provided by Hui, for the purpose of making the Injunction Order effective in maintaining the status quo.

36.  Secondly, it was submitted on behalf of Hui that the appointment of receivers is not necessary, because despite the non-disclosure, the Liquidators have been able to identify quite a number of assets belonging to Hui.

37.  I am afraid this argument is made to be rejected. While a number of assets have indeed been identified, the Group simply has no idea what Hui’s total assets are (insofar as the value thereof does not exceed the ceiling of the Injunction Order).

38.  Thirdly, as far as real properties and bank accounts are concerned, it was submitted by Hui’s counsel that once the property registries and the banks were served with the Injunction Order, the scope for any dissipation of those assets must effectively be non-existent, therefore appointment of receivers is unnecessary.

39.  In this regard, I agree with Mr Chan SC for the Group that:

(1)  Simply serving the property registries would be of no effect, as the present action does not concern any claim relating to land or interest therein;

(2)  Hui’s argument presupposes that all his bank accounts are held under his own name. However, according to the evidence of Mr Middleton, the Liquidators’ investigation have revealed a clear pattern of Hui and his associates using nominee companies to hold assets. Indeed, it can be seen that a large number of bank accounts of which Hui is not the registered holder have also been freezed by the Injunction Order.

40.  Fourthly, as far as the BVI companies are concerned, although they have been struck off, it was submitted that their restoration can be done even without a receivership order.

41.  However, in order to preserve Hui’s assets, restoring the BVI companies back to the BVI company register is not enough. This is particularly so when it is evident that Hui is not in a position to maintain those companies. Steps should therefore be taken so as to avoid those companies being struck off again.

42.  Furthermore, these BVI companies are all “Schedule 1 Companies” (see [55] – [56] below). Investigation into the affairs of these companies is justified and necessary.

43.  Having considered the arguments advanced by the parties, I am satisfied that, in the circumstances where Hui has totally failed to disclose his assets, it is necessary to appoint receivers as a last resort, otherwise the Injunction Order cannot be effective enough for preserving the status quo.

44.  In fact, it seems to me that the submission made on behalf of Hui are contrary to the terms of the Disclosure Order in that it is now alleged that despite the total non-compliance thereof, the Court needs not do anything about it. If that submission is accepted, then it is equivalent to saying that the Disclosure Order needs not be made in the first place. That plainly cannot be right.

C3. Balance of convenience

45.  The question here is the risk of damage to Hui if the appointment is made, and whether he can be adequately compensated by a cross-undertaking in damages.

46.  As I see it, even if Hui would suffer any damage by reason of the proposed appointment of receivers, he can be adequately compensated by the Group’s cross-undertaking in damages.

47.  Hui’s solicitor, Mr Justin Chow, deposed that, given the powers to be conferred upon the Liquidators, Hui’s ability to defend this action would be seriously prejudiced.

48.  It was further alleged that:

“[…] insofar as our firm is concerned, given the Liquidators’ power under [4.11] of the draft Receivership Order, there would be difficult issues concerning legal professional privilege between our firm and Mr Hui/his PRC lawyer and compliance with the relevant PRC laws if the Liquidators do invoke such power to give our firm ‘instructions’ pursuant to the same.”[2]

49.  While Hui’s counsel did submit that “within hostile civil litigation like this, it is practically unthinkable that the Court would appoint [Hui]’s hostile litigation adversaries to be Receivers of all his (remaining) assets”[3], counsel did not see fit to go further and rely on the prejudice as alleged by Mr Chow.

50.  Be that as it may, for the sake of completeness, I should emphasise that I do not agree that Hui’s defence of this action would be prejudiced at all by the proposed receivership order. Even if receivers are appointed, they would only be empowered to identify, secure and preserve Hui’s assets, but would not have power to interfere with Hui’s defence herein. In my view, Mr Chow’s concern over paragraph 4.11 of the draft receivership order stemmed from his incorrect interpretation of the said sub-paragraph which should be read together with paragraph 2 and the main part of paragraph 4 of the draft order, which in turn have made it clear that the purpose of the appointment is to preserve and secure the assets pending the determination of the action herein, and to ensure compliance of the Injunction Order.

51.  Hui’s counsel also submitted that the proposed appointment is intrusive in nature. It was even suggested that the receivership order, if made, would amount to a breach of Article 105 of the Basic Law which, inter alia, “protects the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property”.  

52.  The intrusive nature of the proposed receivership order is always recognised by the Court. That is the reason why it is trite that such an order should only be made as a last resort, and that the Court should consider whether a lesser remedy would suffice. However, the problem here is that Hui has not given any disclosure at all. There is no way that the Group can effectively police the compliance of the Mareva injunction.

53.  As to Hui’s right under the Basic Law, the short answer to such an argument is that his right is not absolute. Indeed, his right to deal with his own properties has been ordered to be curtailed by virtue of the Injunction Order, which he has not appealed against.

54.  To conclude, I hold that receivers should be appointed in principle. The remaining issues are the scope of the receivership order and the identity of the receivers, which I will further deal with below.

D.  SCOPE OF THE ORDER

55.  As far as the scope of the receivership order is concerned, in gist, it is Hui’s argument that:

(1)  The Injunction Order was made against Hui, the 2^nd defendant, the 5^th defendant and the 8^th defendant only;

(2)  The Court has exercised Chabra jurisdiction only over the 5^th defendant (Hui’s ex-wife);

(3)  No Mareva injunction has been made against the 4^th defendant nor any of the other 14 companies listed under Schedule 1 of the Receivership Summons (together, “the Schedule 1 Companies”);

(4)  Therefore, the Court should not appoint receivers in respect of the 4^th defendant’s own assets and charged them with the management and affairs of the 4^th defendant;

(5)  The Court should also refrain from appointing receivers to exercise rights or powers which go beyond the scope of the Injunction Order, such as:

(1)  To investigate the affairs of the Schedule 1 Companies;

(2)  To register in the names of the receivers or their nominee all or any part of the Schedule 1 Companies’ assets;

(3)  To seize the books, records and documents of the Schedule 1 Companies;

(4)  To do whatsoever they think “necessary or desirable” in respect of the foregoing.

56.  Hui’s arguments are rejected, because, contrary to his counsel’s submissions, the Schedule 1 Companies (which include the 4^th defendant) have all been defined as “companies associated with [Hui]” under “Annexure C” of the Injunction Order, and, importantly, it has been provided in paragraph 1 of the Injunction Order that:

“The 1^st Defendant […] must not, whether by himself or through his servants or agents:-

(1) […]

(2) in any way dispose of or deal with or diminish the value of any of his assets, whether within or outside Hong Kong, whether in his own name or not, and whether solely or jointly owned, up to the value of [HKD60,000,000,000]. This prohibition includes, but is not limited to, the following assets:

(a) […]

(b) […]

(c) the properties and assets of the companies listed in Annexure C herein, or the sale proceeds thereof if any of them have been sold;

(d) any money in the bank accounts listed in Annexure D herein.”

(emphasis added)

57.  Further, as far as the Disclosure Order is concerned, Hui together with the 2^nd defendant have been ordered under paragraph 7 of the Injunction Order to:

“[…] inform the Plaintiff in writing at once of all their assets of an individual value of HK$50,000 or more, whether in or outside Hong Kong, whether in their own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets including, but not limited to:

(a) […]

(b) the assets of the companies listed in Annexure C herein, or the current whereabouts of the sale proceeds thereof if any of them have been sold.

[…]”

(emphasis added)

58.  It can therefore be seen that the Injunction Order clearly covers the Schedule 1 Companies (including the 4^th defendant). The Group is therefore, pursuant to the Injunction Order, entitled to know what have become of the assets of the Schedule 1 Companies. In the circumstances where there has been complete non-disclosure of the assets of those companies, it is necessary for the receivers to be granted power to look into the papers of those companies so as to ensure that the Injunction Order has been complied with. In short, the powers sought are not beyond the scope of the Injunction Order as alleged, and Hui’s arguments on “party autonomy” is misconceived in the circumstances of the present case.

59.  My attention has also been drawn to the following views expressed by Deputy Judge Edward Bartley Jones QC in Dadourian Group & Others v Azuri Ltd [2005] EWHC 1768 which have been referred to by the Court of Appeal in its Reasons for Judgment in Akai (HCMP 1718, 1720 & 1722/2009, unreported, 24 September 2009) (which dismissed the application for leave to appeal against the receivership order made by Stone J):

“26 The jurisdiction to make a freezing injunction against a third party is undoubted. The jurisdiction is exercised as, in effect, ancillary relief granted by the court in aid of, and as part of, the freezing relief granted against the defendant to the substantive claim. Exercise of the jurisdiction can occur where there is good reason to suppose that the assets of the third party are, in truth, the assets of the injuncted defendant (see, eg, SCF Finance Co Limited v Masri [1985] 1 WLR 876 per Lloyd LJ at 884 B-F). A classic case where there would be good reason for supposing that the assets are, in truth, the assets of the defendant is where there is good reason for supposing that the assets are held by the third party on bare trust (or as nominee) for the defendant. But I would reject any suggestion that the ‘Chabra’ jurisdiction is limited to such a case. In International Credit and Investment Co (Overseas) Limited v Adham [1998] BCC 134 at 136 Robert Walker J pointed out that it had become increasingly clear, as the English High Court regrettably had to deal more and more often with major international fraud, that the court would, on appropriate occasions, take drastic action and would not allow its orders to he evaded by the manipulation of shadowy offshore trusts and companies formed in jurisdictions where secrecy was highly prized and official regulation was at a low level. The present is undoubtedly a case of shadowy trusts and companies (although I hasten to add that I make no adverse comment, whatsoever, about the level of official regulation or level of secrecy in a country such as Liechtenstein). Robert Walker J went on to indicate that a freezing injunction may indeed, in appropriate circumstances, be justified and necessary where parties have the ability to switch real assets from one shadowy hand to another in such a way that it is difficult to keep track of where they are. That, he said, was the justification for orders which looked through offshore companies in order to find the real assets -- or which did, if you looked, pierce the corporate veil (to use that vivid, but imprecise, metaphor which is sometimes used). Robert Walker J then went on to consider the decision in Re a Company [1985] BCLC333 where Cumming-Bruce LJ (at 337-38) indicated that the court would use its powers to pierce the corporate veil if it were necessary to achieve justice, irrespective of the legal efficacy of the corporate structure under consideration.”

“30 For my part, I do not believe it is necessary to establish beneficial ownership in a strict trust law sense. Clearly, if assets are held on a bare trust then the Chabra jurisdiction can be exercised. But, in my judgment, even if the relevant defendant to the substantive claim has no legal or equitable right to the assets in question (in the strict trust law sense) the Chabra jurisdiction can still be exercised if the defendant has some right in respect of, or control over, or other rights of access to, the assets. The important issue, to my mind, is substantive control. The view expressed in Gee on Commercial Injunctions 5th Edition 2004 at 13.007 is that if a network of trusts and companies has been set up by a defendant to hold assets over which that defendant has control and that this has, apparently, been done to make himself judgment-proof, then such would be an appropriate case for the granting of freezing relief against a relevant non-party. I agree. What needs to be considered is the substantive reality of control, not a strict trust law analysis as to whether the third party is a bare trustee. Thus, in my judgment, placing assets in a discretionary trust would not prevent the Chabra jurisdiction being exercised against that discretionary trust if the substantive reality were that the relevant defendant controlled the exercise of the discretionary trust. Any other analysis 'would entirely defeat the ability of the English courts to take drastic action and would allow the court's orders to be evaded by manipulations, entirely contrary to the court's powers and duties as identified by Robert Walker J in International Credit and Investment Co (Overseas) Limited v Adham (above). Whether this be described as identifying the discretionary trust as a ‘sham’, as piercing the corporate veil, or as seeking to identify a controlled discretionary trust as a bare trust does not, to my mind, particularly matter. Certainly, at the interim stage, all that matters is to ascertain whether there is good reason to suppose that the relevant defendant controlled the assets in the discretionary trust.”

60.  In the present case, it should be noted that all the Schedule 1 Companies are 100% beneficially owned by Hui. I am therefore not surprised that, as a matter of justice, the assets of those companies have all been caught by the Injunction Order. For the same reason, it must be equally just and convenient for the receivers to be given powers in relation to those assets.

61.  For the sake of completeness, I should also mention about the bank accounts listed under Schedule 2 of the Receivership Summons. Some of those bank accounts are not held under the name of Hui but some limited companies (“the Other Account Holders”). Be that as it may, it is noted that:

(1)  Those accounts were included in Annexure D of the Injunction Order and therefore have been freezed as a result (see [56] above);

(2)  The Other Account Holders are all listed under Annexure C of the Injunction Order.

62.  Another complaint made by Mr Barlow SC is in relation to paragraph 5.7 of the draft receivership order which provides that:

“5. In order to pursue the purpose identified in paragraph 2 above, and to the extent to which it is reasonably necessary for them to do so, the Receivers shall be authorised to:-

[…]

5.7 do all other acts and things which they may consider necessary or desirable for realising any of the Assets or incidental or conducive to any of the rights, powers and discretions conferred on them by virtue of this Order.”

63.  He has quite rightly raised the concern that this sub-paragraphs will give the receivers power to dispose of Hui’s assets.

64.  In reply, Mr Chan SC for the Group informed this Court that he is happy to have this sub-paragraph deleted from the final order to be made. I will therefore not grant such a power to the receivers to be appointed by the Court.

E.  IDENTITY OF THE RECEIVERS

65.  The Group proposed that the Liquidators be appointed as the receivers for the following reasons:

(1)  Hui’s personal affairs appear to have been closely entwined with those of the Group, and a significant proportion of Hui’s personal wealth has evidently been derived from the Group;

(2)  The Liquidators have actively investigated into the Group’s affairs (which are exceedingly complex) for nearly 2 years;

(3)  Given the Liquidators’ accumulated knowledge on the case:

(a)  They will be able to commence work immediately given their familiarity with the relevant background;

(b)  Duplication of investigation costs to date can be avoided;

(c)  Duplication of future work can also be avoided.

66.  The proposed identity of the receivers is met with strong objection from Hui. It was submitted that it is inappropriate to appoint Hui’s hostile litigation adversaries to be receivers of all his remaining assets.

67.  Reliance has been placed by Mr Barlow SC and Mr Chen on Kerr & Hunter on Receivership and Administration (22^nd edition), in which the learned authors stated in paragraph 2.1 that:

“Overview A court-appointed receiver is:

(a) an impartial individual, independent from the parties to a dispute; [The general rule is that ‘some entirely indifferent person ought to be appointed’: Fripp v. Chard Railway (1853) 11 Hare 241 at 260 per Page Wood VC; See further Chapter 4.]

(b) appointed by the court on the application of a party;

(c) before proceedings, during proceedings, or after judgment;

(d) to collect, protect, and receive assets of the respondent.”

(counsel’s emphasis)

68.  While it is recognised that the aforesaid is described as the “general rule”, I do not think it should be treated as if it is an inflexible rule as such. After all, the appointment of receivers involves the Court’s exercise of discretion. The Court should consider the whole circumstances and decide what order suits the case most. Indeed, in Kerr & Hunter, the learned authors also stated at paragraph 4-4 that it is open to the court, in a proper case, to appoint as receiver a person who is interested in the subject-matter of the claim, if it is satisfied that the appointment will be attended with benefit to the estate.

69.  In Re Orient Power Holdings Ltd [2008] 2 HKLRD 494, Kwan J (as she then was) faced a situation regarding appointment of liquidator, and the issue which her Ladyship had to resolve was whether a Mr Sutton who was one of the receivers and managers of the company appointed by the secured creditors should be appointed a liquidator in conjunction with two proposed independent appointees of a different firm of accountants. The Official Receiver opposed to the proposed appointment, as it was considered that the potential for conflict of interest was too great and it would set a bad precedent. Her Ladyship had the following to say in [34] of her Judgment:

“In large group insolvencies, the potential for conflicts of interest may arise in a variety of matters, such as inter-company balances, competing claims to assets, allocation of liabilities, guarantee and indemnity claims, issues of set-off or double proof, the validity of security, tax and avoidance or recovery actions. It is recognised that by and large, it is prima facie in the interests of the general body of creditors to appoint a common liquidator for the companies in the group than to have a separate liquidator for each. Instead of a rigid requirement to avoid conflict and not allowing the same individual to act, the courts have taken a common sense approach and made appointments where it is possible to manage the conflict effectively by appropriate measures depending on the circumstances of each case. Examples of such measures include obtaining independent legal advice, the appointment of an additional partner from the same firm, the appointment of an independent partner from a different firm. It matters not if the conflict is potential or actual; the question is whether such conflict is capable of being effectively managed. If it cannot be managed, then the appointment would not be made. The above is a summary of the discussion in Sisu Capital Fund Ltd. & Ors. v. Tucker & Ors. [2005] EWHC 2170 (Ch) at paras. 91 to 120.”

70.  Although we are not dealing with exactly the same situation in the present case, I cannot see why the same “common sense” approach should not be adopted herein. In the circumstances where there are obvious advantages for the Liquidators to be appointed as receivers, the questions are whether it is likely that any conflict of interest would arise upon such appointments, and even if so, whether such conflict is manageable.

71.  In my view, it is not likely that there would be any conflict of interest as such. This is because the powers to be given to the receivers are only to identify, secure and preserve the assets pursuant to the Injunction Order. They will not be in a position to interfere with Hui’s defence of the present action in any way. For example, if Hui makes a request for release of fund for settlement of his legal expenses pursuant to the terms of the Injunction Order, there is no reason why (neither did Hui’s counsel make such a suggestion) that the receivers, who are officers of the court, would refuse his request.

72.  In any event, even if there would be any conflict, that can be managed by the appointment of a “supervising solicitor” as proposed by the Group. According to the draft order, the receivers would be required to report to the “supervising solicitor” on a regular basis and answer all questions reasonably raised by the “supervising solicitor”. If any conflict of interest or potential conflict of interest is identified, the receivers and the “supervising solicitor” would have to agree on the steps which should be taken to address such (potential) conflict. If they cannot reach consensus on the matter, the receivers shall be entitled to take the matter to the court for directions. Most importantly, it is proposed that the receivers shall not take any further steps in respect of the matter before the (potential) conflict is resolved.

73.  I therefore conclude that the Liquidators should be appointed.

74.  As to the identity of the “supervising solicitor”, the Group has put forward 4 names for this Court to choose from. It seems that it has no preference as to who should be appointed. On the other hand, Hui’s counsel did not make any adverse comment against any of those candidates.

75.  Out of those 4 candidates, the appointment of one of them is not at all straight forward, as further clearance (which may or may not be forthcoming) has to be obtained from some of that particular solicitor’s current clients. Given the Court has been given 3 other candidates to choose from, I prefer not to select that particular solicitor.

76.  In relation to the remaining candidates, they are all very experienced solicitors, and their expertise is not doubted. Having considered their background and seniority, I am of the view that Mr Keith Ho of Messrs. Wilkinson & Grist should be appointed.

77.  Hui’s counsel further contended that Hui should not be exposed to the possibility that he may be required to pay for the entire receivership. That is not a matter which Hui should be worrying at the moment, because the Group’s proposal is that the remuneration of the receivers shall be paid out of the assets of the Group. While it is also proposed that the Group would be at liberty to apply to vary this arrangement, the matter can be further debated when there is such an application.

F.  ORDER

78.  For the above reasons, I make an order in terms of the draft receivership order[4] (except paragraph 5.7 thereof). Particulars of the “supervising solicitor” should be filled in in paragraph 7 thereof accordingly.

G.  COSTS

79.  Costs should follow the event. I make a costs order nisi that Hui shall bear the Group’s costs of the Receivership Summons.

80.  The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper) within 14 days hereof.

81.  The Group’s costs of the Receivership Summons shall be summarily assessed in lieu of taxation. Unless any application for variation of the aforesaid costs order nisi is made within time, the Group shall lodge and serve its statement of costs within 7 days after the expiry of the said 14-day period. Hui shall lodge and serve his statement of objection within 7 days thereafter. Summary assessment of the costs of the Receivership Summons will be conducted on paper (no matter whether any statement of objection is lodged by Hui within time) thereafter. The costs assessed shall be paid by Hui within 14 days after assessment.

Mr Abraham Chan SC, instructed by Karas So LLP, for the plaintiff

Mr Barrie Barlow SC leading Mr Vincent Chen, instructed by Justin Chow & de Bedin Solicitors LLP, for the 1^st defendant

HCMP 1080/2024

[2025] HKCFI 3470

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

________________________

________________

AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.551 OF 2024

________________________

________________

(Consolidated pursuant to the Order of Honourable Mr Justice Coleman
dated 12nd February 2025)

_______________

R U L I N G

_______________

A.  Introduction

1.  This litigation has been ongoing for some time, and it includes Mareva injunctive relief granted by me against the second defendant (“CEO Xia”), and a series of related or ancillary orders made by me seeking to enforce his obligation to give proper asset disclosure. I think it fair to say that CEO Xia has demonstrated extreme reluctance to provide the ordered asset disclosure, and for a significant period of time deliberately refused to comply with orders that he should do so. Eventually, CEO Xia provided that asset disclosure, he says, in his 3^rd and 4^th affirmations.

2.  Whether those affirmations in fact contain full and frank disclosure in accordance with the court-ordered obligations is likely to be the subject of future inter partes dispute. However, as I will touch on in a moment, on the materials presented to me today there is at least a strong argument that there has been significant and deliberate non-disclosure of assets held by, and/or in reality owned and controlled by, CEO Xia.

3.  These materials have been generated as a result of the plaintiff’s wholly understandable scepticism about the asset disclosure so far provided by CEO Xia. The plaintiff has pursued lines of inquiry and investigation, including in the United States, first to test and secondly to throw at least significant doubt on the disclosure thus far provided – and on CEO Xia’s unequivocal assertions that other than those assets disclosed in his 3^rd and 4^th affirmations that he does not possess any asset of an individual value of HK$50,000 or more, regardless of whether the asset is located inside or outside Hong Kong or held solely by himself or jointly with others.

4.  The results or fruits of the enquiries and investigation – coming from both physical surveillance and documentary investigations – are set out in the 11^th affidavit of Mr Middleton and the affidavit of Mr William Waldie.

5.  Part of the fruits of the investigation are the discoveries of significant assets held by CEO Xia’s wife (“Ms He”), mainly in the form of three real properties and four motor vehicles in California, USA, as well as assets owned by Ms He in her capacity as a trustee of a trust. Together those various assets – which I will individually describe later – can conveniently be termed the “He Chabra Assets”. They have a combined asset value of around US$24 million.

6.  As a result, the plaintiff comes before the Court today so as to invoke the Court’s Chabra jurisdiction, seeking orders to restrain Ms He from dealing with the He Chabra Assets (as well as various ancillary orders).

7.  The application is made ex parte, and it is convenient first to consider whether that is a proper basis of application, in circumstances where ordinarily applications are made, and should be made, on an inter partes basis. The plaintiff relies on the confidentiality limb – and not the urgency limb – as justifying an ex parte application. On the materials, some of which I will make reference to in a moment, but which I have considered in total, I am in the exercise of my discretion wholly satisfied that it is appropriate for this application to have been brought and heard on an ex parte basis. I accept that there is a very real risk that, if CEO Xia and/or Ms He are given any notice of this application, they will act swiftly to seek to derail or defeat the making of appropriate orders, and the further very real risk that there will be attempts to dissipate assets (including the He Chabra Assets).

8.  As to the principles applicable on what is normally referred to as the Chabra Jurisdiction – derived from a number of cases including TSB Private Bank International SA v Chabra [1992] 1 WLR 231 – they are well settled. The circumstances when the Chabra Jurisdiction might be exercised can be summarised as follows:

(1)  the plaintiff must identify that there is good reason to suppose that assets held in the name of a defendant against whom the plaintiff has no cause of action (“NCAD”) holds, is using, or has exercised, or is exercising a power of disposition over, or is otherwise in possession of, assets of the defendant whom the plaintiff asserts to be liable on his substantive claim (“CAD”) – the 1^st Limb;

(2)  the plaintiff must also identify that there is good reason to suppose that the assets held in the name of the NCAD would be amenable to execution of some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment against the CAD – the 2^nd Limb;

(3)  the test of “good reason to suppose” is to be equated with a good arguable case, meaning one which is more than barely capable of serious argument, but not yet necessarily one which the judge believes to have a better than 50% chance of success;

(4)  the plaintiff must also demonstrate that there is a real risk of dissipation of the assets (where the conduct of both the NCAD and CAD may be relevant); and

(5)  it must be just and convenient to grant the injunction – keeping well in mind that the jurisdiction is exceptional and should be exercised with caution, taking care that it should not operate oppressively to innocent third parties who are not substantive defendants and have not acted to frustrate the administration of justice.

9.  I adopt those principles.

10.  The He Chabra Assets comprise a property in Irvine, California (“58 Boulder View”); another property in Irvine, California (“62 Como”); a property in Newport Coast, California (“15 Rim Ridge”); four vehicles – 3 Teslas and a Mercedes SUV – with California license plates; and any and all assets beyond 15 Rim Ridge held by Ms He in her capacity as trustee of the ‘New Life Trust’. All of those assets are legally registered in the name of Ms He. (Incidentally, the plaintiff says that the name of the trust is at least consistent with CEO Xia seeking to establish a new life for himself and his family in the USA.)

11.  However, the plaintiff submits that – on the materials now available to the Court – there is at least good reason to suppose that the He Chabra Assets are, in reality, the assets of CEO Xia and held by Ms He as nominee and that CEO Xia as the ability to, and does in fact, exercise substantial control over those assets tending to show him to be the true owner of them. It is also submitted that there is also at least good reason to suppose the He Chabra Assets would be amenable to execution through some process, by which those assets would be or become available to satisfy a judgment obtained against CEO Xia.

12.  I accept those submissions.

13.  I do so essentially for the reasons advanced by the plaintiff, being as to the 1^st Limb in summary:

(1)  There is little doubt that Ms He is CEO Xia’s wife, where he has described her as such in his evidence and various other documents (including tax returns showing her to have no taxable income in Hong Kong), and where they gave the 62 Como address as the joint marital address, when CEO Xia purchased a property in Nevada – on a date six months after the injunction order made against him, and which he has not disclosed.

(2)  CEO Xia appears – including on his own evidence filed in these proceedings – to have been the sole source of funds for himself and his family, and therefore the sole source of funds used to purchase each of the He Chabra Assets.

(3)  CEO Xia has demonstrated continued and apparently unrestricted use and control of the He Chabra Assets for his own purposes.

(4)  The timing of the purchase or transfer of some of the assets, coinciding with other significant events, suggests that they form part of CEO Xia’s establishing a new life for himself and his family in the USA.

(5)  CEO Xia has demonstrated the tendency to conceal and not disclose ownership of, and interest in, other assets and companies, including those held in his own name.

14.  In a little more detail:

(1)  58 Boulder View was purchased for US$6.3 million on 22 April 2022, in the sole name of Ms He. However, as a matter of California law, CEO Xia had an equal interest in the property, which he sought to dispose of by exercising an inter-spousal transfer grant deed on 4 May 2022 (backdated to 22 April 2022). However, it seems likely that CEO Xia provided all the funding, and he remains connected to the property having fairly recently been seen arriving there with Ms He in a vehicle registered in CEO Xia’s name (which he has not disclosed as part of his assets). The purchase was also close in time to the market announcement that an independent investigation committee was established to investigate the matter of certain deposits of approximately RMB13.4 billion, apparently a fraudulent scheme in which CEO Xia was involved, and for which involvement he was later asked to resign from the plaintiff.

(2)  62 Como was purchased for approximately US$1.2 million on 7 November 2011, in the joint names of CEO Xia and Ms He (rather earlier than the purchase of the other assets). It seems likely that CEO Xia provided all the funding. However, on 31 August 2013 (again I note rather earlier than the other events), he executed a quitclaim deed to record an inter-spousal transfer to Ms He for no consideration. Despite the quitclaim, CEO Xia and Ms He appear to have continued jointly to reside at the property, and in internal documents found by the plaintiff, it was described as “his residence” – as it was again in December 2024, when CEO Xia purchased the Nevada property which he has also failed to disclose.

(3)  15 Rim Ridge was purchased for US$14.5 million, by Ms He in her capacity as trustee of the ‘New Life Revocable Trust’ established on 1 December 2023 (shortly after the property was in fact purchased on around 8 November 2023). The revocable trust is apparently a document allowing a person to transfer ownership of assets into a trust during the person’s lifetime, whilst retaining control over those assets. As the sole trustee, Ms He cannot be the sole beneficiary, and it is reasonable to infer that CEO Xia is at least one of the beneficiaries of the trust. The trust was also established at a time of various developments in the collapse of the plaintiff, and the investigations into the conduct of those associated with the plaintiff’s pre-collapse affairs, as well as just before a Court hearing when it was widely thought the plaintiff might be ordered to be wound up.

(4)  The four motor vehicles are registered in the name of Ms He, but surveillance evidence identifies that CEO Xia has apparent full access to at least one of the vehicles. He is also the joint owner of the 2023 Mercedes SUV (but has failed to disclose it as an asset).

15.  I also accept that the evidence produced in the materials for this application tend to show, strongly, that CEO Xia is ordinarily resident in California, USA – and not at the Canadian address given by him as his residential address in his 3^rd and 4^th affirmations. This fact is also consistent with CEO Xia’s extreme reluctance ever to reveal his residential address for fears which he has explained, but which I did not accept as justifying not complying with the usual requirement found in RHC Order 41. It is also notable that CEO Xia has failed to disclose any assets in either Canada or the USA, which – in addition to the ownership shown of several assets – is improbable where he appears to be living ordinarily in California, including regularly attending a sports club and buying grocery items, and living with his 12-year-old son who is enrolled in and attends a fee-paying school. I also again note that CEO Xia and Ms He have given the 62 Como address as their joint place of residence.

16.  The various facts set out above are sufficient for the 2^nd Limb to establish good reason to suppose that the He Chabra Assets would be amenable to some process by which they would be or become available for enforcement of a judgment obtained against CEO Xia. I also take into account the submissions made by the plaintiff relating to a provision of the California Uniform Voidable Transactions Act, which apparently provides a statutory basis for creditors to set aside a transfer if it was made, or an obligation was incurred, either with actual intent to hinder, delay or defraud any creditor of the debtor, or without receiving a reasonably equivalent value in exchange for the transfer or obligation, if the debtor was insolvent or became insolvent as result of the transfer or incurring of the obligation.

17.  As to risk of dissipation, little needs to be said in the light of my previous decisions in this case. That there is clearly a serious risk of dissipation of assets by CEO Xia is made even more apparent by the seemingly blatant failure to have disclosed various assets held by him in his own name in the USA. I also take into account that CEO Xia appears to have concealed his true ordinary residential whereabouts, and has purchased a real property in the USA after the grant of the Injunction Order against him. I also take account of the apparent attempts to distance himself from other assets or companies, such as Advanced Power and Star city Holdings LLC, the latter of which is the holder of the property where he may currently live with his son in California. All these matters point to a pattern of attempted distancing from, or non-disclosure of, assets by CEO Xia.

18.  I accept that, by allowing the He Chabra Assets to be held in her name, and by taking steps to assist in obscuring any interest of CEO Xia in those assets (including as to the company Uni-Land Ltd), and because of the circumstances of funding and the marital relationship, there is a real and substantial risk that Ms He would receive and act upon instructions from CEO Xia to dissipate the assets, unless otherwise restrained from doing so.

19.  The circumstances overall also seem to me clearly to identify that the making of the Chabra injunction sought would be both just and convenient. In saying so, I expressly acknowledge and have taken into account the matters of full and frank disclosure put forward by the plaintiff for weighing in the balance as to whether or not to grant the orders sought.

20.  In those circumstances, I grant leave for the plaintiff to join Ms He as a party, the 8^th defendant, to this action and to amend the writ of summons accordingly. Service of the further amended writ upon the 1^st to 7^th defendants is dispensed with, and they need not file any acknowledgement of service to it.

21.  I also grant the Chabra injunction in the form of the proposed amendment to the Injunction Order as first made on 24 June 2024 and variously amended since that date (and as draft has been amended by me).

22.  I am satisfied that the appropriate gateway is opened under RHC Order 11 rule 1 for the Court materials including the further amended writ, the further amended Injunction Order, and the inter partes summons to be served on Ms He out of the jurisdiction, at the 62 Como address or wherever she may be found in the United States of America.

23.  The inter partes summons will have a return date fixed in the first instance at 10am on 17 September 2025, but I expressly permit Ms He to apply for an earlier return date should she wish to do so (which she may do by issue of a summons or by writing to the Court).

24.  Service of the inter partes summons on the 1^st to 7^th defendants is dispensed with, and they are excused from the hearing on the return date.

25.  Consistent with my view on the ex parte procedure as being appropriate in the circumstances, I also accept confidentiality is appropriate and make an order in the terms of the confidentiality orders sought by paragraphs 9 and 10 of the ex parte summons, and now reflected in the draft order.

26.  I make an order in the terms of the draft as amended by me during the hearing. I am satisfied in the exercise of my discretion that the terms of that order also make the appropriate provision as to costs.

Mr Jordan Moulds of Karas So LLP, for the plaintiff

HCMP 1080/2024

[2025] HKCFI 1644

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

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________________________

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AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

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________________

(Consolidated pursuant to the Order of Honourable Mr Justice Coleman

dated 12^nd February 2025)

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REASONS FOR DECISION

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A.  Introduction

1.  A defendant to a claim made in civil proceedings who wishes actively to defend the proceedings (including, perhaps, by an application to strike out the claim) cannot pick and choose which rules of procedure and which Court orders he is minded to obey. The 2^nd defendant to these consolidated proceedings (“Xia”) seems to believe otherwise. Any such belief is entirely mistaken.

2.  The need to make that clear arises in the broad circumstances following the making of a Mareva Injunction Order first made against Xia on 24 June 2024, which also required him to provide ancillary asset disclosure (“Asset Disclosure Order”). Xia later made applications (1) to discharge the Injunction Order made against him (“Discharge Summons”), and (2) to oppose continuation of the Asset Disclosure Order, alternatively to seek an extension of time within which to comply.

3.  By my decision dated 12 July 2024, with Reasons for Decision dated 18 July 2024 [2024] HKCFI 1854, I fixed a hearing date of 2 October 2024 for the determination of the Discharge Summons, and I extended the time for compliance by Xia with the Asset Disclosure Order until a new compliance date to be set on 2 October 2024, or until further order.

4.  On the timetable following the Statement of Claim, Xia was due to file his Defence on 30 September 2024. On that date, Xia filed a summons seeking to strike out the Statement of Claim and entire action (“Strike-out Summons”), and also seeking an extension of time to file any Defence until after 28 days after the determination of the Strike-out Summons. Obviously, the logic of seeking that extension was because Xia should not be required to file a Defence to a Statement of Claim which he said should be, and so might be, struck out. Subsequently, and over the objection made by CEG, I extended the time for filing any Defence as requested.

5.  By my Decision dated 12 February 2025 [2025] HKCFI 689 (“Discharge Decision”), I dismissed Xia’s application to discharge the Injunction Order, and I set 21 February 2025 as the extended date for compliance with the Asset Disclosure Order. Xia did not comply with that order.

6.  On 21 February 2025, Xia issued a summons (“1^st LTA Summons”), seeking leave to appeal from, and a stay of, the Discharge Decision.

7.  On 7 March 2025, CEG issued a summons seeking an ‘unless order’. I heard that summons on 14 March 2025. On 19 March 2025, I gave my ruling that unless Xia were to comply with the Asset Disclosure Order by 28 March 2025, Xia should be debarred from filing a Defence in this action (“Unless Ruling”). Xia did not comply with that order.

8.  However, on 27 March 2025, Xia filed a Defence, but at the time it had no Statement of Truth. Indeed, only later was a Statement of Truth dated 1 April 2025 provided, and it was filed on 8 April 2025.

9.  On 28 March 2025, Xia issued a summons (“2^nd LTA Summons”), seeking leave to appeal from, and a stay of, the Unless Ruling.

10.  On 31 March 2025, CEG issued a summons seeking (1) to strike out the Defence as having been filed without verification by Statement of Truth and/or as an abuse of the Court’s process, and (2) a further unless order that unless Xia comply with the Asset Disclosure Order within 48 hours, he should be debarred from defending this action (“Further Unless Summons”).

11.  It is worth noting at this juncture that it cannot be gainsaid that, throughout this procedural chronology and continuing to date, Xia (1) has refused to provide his current address to the Court, and (2) has chosen deliberately not to comply with the Asset Disclosure Order.

12.  Because of the clear overlap between the 1^st LTA Summons, the 2^nd LTA Summons and the Further Unless Summons, I brought the three matters together and directed that they be heard on 17 April 2025.

13.  At the hearing, CEG was represented by Mr Jordan Moulds of Karas So LLP (in part adopting and relying on written skeleton submissions signed by Mr Charles Manzoni SC), and Xia was represented by Mr Barrie Barlow SC leading Ms Terri Ha of Counsel (who had also filed written skeleton submissions).

14.  At the end of the hearing on 17 April 2025, I indicated that I would give my decision on each of the Summonses on the next working day, namely 22 April 2025 – and that the decisions might be fully reasoned, or might be decisions with reasons to be provided later.

15.  This is my reasoned Decision.

B.  Relevant Background

16.  Patterns can be persuasive.

17.  Under the terms of the Injunction Order as granted on 24 June 2024, Xia was required to comply with the Asset Disclosure Order by 5 July 2024. Xia did not do so, and instead, on the last day for compliance, he issued the Discharge Summons and the application to oppose or extend the time for compliance with the Asset Disclosure Order.

18.  Under the terms of the procedural rules relating to the timing of pleadings, Xia was required to file his Defence by 30 September 2024. Xia did not do so, and instead, on the last day for compliance, he issued the Strike-out Summons, which also sought the extension of time to file any Defence until after the determination of the Strike-out Summons.

19.  Under the terms of the Discharge Decision, Xia was required to comply with the Asset Disclosure Order by 21 February 2025. Xia did not do so, and instead, on the last day for compliance, he issued the 1^st LTA.

20.  Under the terms of the Unless Ruling, Xia was required to comply with the Asset Disclosure Order by 28 March 2025. Xia did not do so, and instead, on the last day for compliance, he issued the 2^nd LTA.

21.  Of course, it can be said that Xia has simply made applications open to him to make, within the times for so doing. But I think the pattern persuasively identifies a defendant consistently choosing not to comply with the requirements of rules or court orders, and awaiting the last possible date for compliance before issuing an application which in part is intended at least to put off or further delay compliance.

22.  This is not inconsistent with Xia’s approach to compliance with the mandatory requirements for the form of affidavit/affirmation evidence set out in Rules of the High Court (“RHC”) Order 41 rule 1(4), except in this regard Xia has not even acted within the rule.

23.  That rule requires that every affidavit/affirmation must, unless the Court otherwise directs, state the place of residence of the deponent and his occupation. However, without even seeking – let alone obtaining – a direction from the Court otherwise, Xia has simply chosen to ignore that mandatory requirement. Instead, in his 1^st affirmation dated 30 August 2024, filed in support of his Discharge Summons, he stated that he is “formerly of 32A, Tower 6, Pavilia Hill, 18A Tin Hau Temple Road, Hong Kong, but presently living outside of Hong Kong”. He has made a similar statement in his signed but unattested “2^nd affirmation” filed in support of the 1^st and 2^nd LTAs and to oppose the Further Unless Summons.

24.  Whilst Order 41 rule 4 permits the Court to take into account an affirmation notwithstanding its irregularity or defective nature, and I have done so, though no formal leave has been sought as the rule requires. But that does not cure nor excuse the irregularity or defective nature. I put down the marker now that I will almost certainly not grant such leave in future, or permit the use of an irregular affirmation.

C.  Hadkinson Order

25.  It is convenient first to deal with the question of a potential so-called Hadkinson order, which was sought by CEG on the basis that, where Xia is in clear contempt of the Disclosure Orders, the Court ought not to hear or entertain applications or submissions made on his behalf.

26.  By my listing of the two LTAs together with the Further Unless Order Summons, and at the beginning of the hearing itself, I made clear that I did not think it appropriate in the present circumstances to shut out Xia from being heard on the LTAs. Indeed, full argument on them was then dealt with by me (with the benefit of the written skeleton submissions filed by the parties in advance).

27.  In those circumstances, I do not think there is any great need to engage with the principles relating to the circumstances in which a Hadkinson order might be made.

D.  1^st LTA Summons

28.  There is no dispute that an applicant for leave to appeal must establish that the appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice why the appeal should be heard. The test does not require success to be probable, but does require that the prospects of success are more than fanciful.

29.  In the context of decisions involving the exercise of discretion in deciding whether to grant, continue or set aside an injunction, or the exercise of case management discretion, it is also important that an appellate court will only interfere with the exercise of a judge’s discretion where either: (1) the judge has misdirected himself with regard to the applicable principles; (2) the judge has taken into account matters which he ought not to have done, or failed to take into account matters which he ought to have done; or (3) the judge’s decision is plainly wrong.

30.  The 1^st LTA Summons seeks leave to appeal from, and a stay of, the Discharge Decision.

31.  As explained by Mr Barlow in his submissions, though in a greater number of paragraphs, the draft notice of appeal from the Discharge Decision proposes the following three broad grounds of appeal:

(1)  the absence of an ex parte “good arguable case”;

(2)  CEG’s ex parte abuses of process; and

(3)  the absence of an inter partes “good arguable case”.

32.  However, there is some force in Mr Moulds’ submission that stripped of “appellate” language, the draft notice of appeal plainly seeks to reargue afresh the same arguments run unsuccessfully at first instance – when the Discharge Decision is a detailed 67-page judgment setting out at length the arguments raised by both sides, with analysis of those arguments by reference to the law and the evidence before the Court.

33.  As to the suggested absence of a good arguable case at the ex parte stage, Mr Barlow again referred to Fourie v Le Roux [2007] 1 WLR 320, and suggested that: (1) CEG had advanced no formulated claim or cause of action against Xia; (2) the Court confused the issue by citing materials which were not before the Court at the ex parte hearing; and (3) there was no admissible supporting evidence advanced where reliance was placed on the CSRC Report (rightly ruled inadmissible) and the inadmissible opinions of an agent of CEG.

34.  However, with respect, I subjected the Fourie case to detailed analysis, and distinguished it on what I saw in the exercise of my discretion were the materials available to the Court. I did indeed hold the CSRC Report to be inadmissible. But I held that the statements of information and belief advanced by the Liquidators were not merely inadmissible “opinions”, but rather constituted admissible and relevant evidence to which appropriate weight could be accorded as I saw fit. I thought the claim was sufficiently formulated.

35.  As to the suggested ex parte abuses of process, Mr Barlow suggested the Court had distracted itself with the legally irrelevant consideration of whether or not it perceived that there had been any tactical advantage to be gained or sought from not giving notice to Xia, when the absence of any tactical advantage would provide no justification for proceeding on a wholly ex parte basis, if that course cannot be justified by extreme urgency or secrecy.

36.  However, in fact I approached the question of lack of prior notice by reference to well-settled principles which are not challenged on the proposed appeal, and where I acknowledged the force in the submissions made on behalf of Xia but balanced them against the overall circumstances as seemed to me to be necessary to weigh in the discretionary balance. With respect, I do not think it is fair to suggest that I concentrated only on – or based my decision solely on – whether there was or was not any tactical advantage to be gained or sought from not giving notice to Xia. Further, I made express that, even had I thought that there was such procedural error as should lead to the ex parte order being set aside, I would in the overall exercise of my discretion nevertheless have re-imposed a fresh injunction order, so as to achieve the right balance of fairness between the overall interests of the parties to the case, including in light of the other matters dealt with by me in the Discharge Decision.

37.  Mr Barlow also submitted that Xia would reasonably contend on the proposed appeal that there were various material misrepresentations, in particular about the nature of the cause of action, and whether Xia was actually or physically involved in the drawing up of the consolidated financial statements. In that regard, where each director is to be judged separately and the extent of and potential breach of a director’s duty of care is dependent upon the facts, Mr Barlow submitted that the subjective factual circumstances of Xia’s role were material and ought to have been disclosed.

38.  Firstly, the principles relating to questions of materiality are well-settled, and were applied by me. Secondly, that latter submission itself seems to identify that the ultimate question is a factual one, suitable for determination at trial. At the stage of grant or refusal of interlocutory injunctive relief, no final determination is either possible nor required. Indeed, on the Discharge Summons, it was no part of the Court’s function to try to resolve conflicts of evidence on affidavit, nor to decide difficult questions of law which call for detailed argument and mature consideration. Instead, my focus was that – even if it be correct that Xia had no actual or physical involvement in the preparation of the consolidated financial statements (a matter which was not accepted by CEG) – nevertheless the crux of the case turned on Xia’s knowledge, experience and position as CEO and director of the company consolidating the accounts. In the exercise of my discretion, and by reference to legal principles which are settled and would not be challenged on appeal, including that the statutory provisions do not require direct or physical involvement in the compilation of accounts for a director to be under a relevant duty, I held that there was at least a good arguable case that Xia both owed and had breached the duty to exercise reasonable skill, care and diligence.

39.  As to the absence of a good arguable inter partes case, Mr Barlow submitted that the Discharge Decision mis-stated the law concerning the statutory responsibility of company directors. In particular, he submitted that the lawfulness or otherwise of a dividend distribution is governed by the objectively-ascertainable criteria set out in the Companies Ordinance, and expressly determined by the provisions of sections 291, 297, 302 and 304.

40.  The main element of that argument was not actually run at first instance on the hearing of Discharge Summons, and so was not addressed in the Discharge Decision. It is an argument that has been run on the Strike-out Summons, and so will be dealt with by me in my decision on that application (yet to be handed down). Nevertheless, my preliminary view is that the argument based on those sections would not lead to a strike-out of the claim, nor would it remove the good arguable case. It seems to me that the statutory provisions relied on by Mr Barlow presuppose that the relevant financial statements represent a true and fair view, and were not materially misstated. But it is CEG’s case, which I have held to be a good arguable case, that the financial statements did not represent a true and fair view and were materially misstated for the reasons advanced. In any event, I held that there was at least persuasive authority to the effect that breaching a director’s duty, in failing to ensure accurate financial statements and then paying out dividends on the profits stated in those accounts, is strict.

41.  I have also borne in mind that the fact that a defendant may raise viable defences, which mainly and ultimately succeed after trial, does not necessarily mean that there is no good arguable case on the claim. Indeed, these points seem to me to be found also in the authority on which Mr Barlow sought to place some reliance, In Re Burnden Holdings (UK) Ltd (in liquidation) [2019] Bus LR 2878. In a lengthy analysis of director’s duties, and potential liability for payment of unlawful dividends, Zacaroli J concluded at §139 that, by 1901, the law had been established as follows:

First, directors, although not trustees, were to be treated as if they were trustees in relation to the company’s funds. Second, if they knew the facts which constituted an unlawful dividend, then they would be liable as if for breach of trust irrespective of whether they knew that the dividend was unlawful. Third, however, if they were unaware of the facts which rendered the dividend unlawful then provided they had taken reasonable care to secure the preparation of accounts so as to establish the availability of sufficient profits to render the dividend lawful, they would not be personally liable if it turned out that there were in fact insufficient profits for that purpose. Fourth, they were entitled to rely in this respect upon the opinion of others, in particular auditors, as to the accuracy of statements appearing in the company’s accounts. Fifth, nothing in the authorities cited as the leading authorities for the strict-liability view … undermines that conclusion.

42.  It seems to me that the second and third points in particular emphasise the argument may turn on the actual state of knowledge of the director and whether the director had indeed taken reasonable care to secure the preparation of accounts so as to establish the availability of sufficient profits to render the dividend lawful. At §158 of the same decision, it was identified that the question whether there were sufficient distributable profits may turn on fine questions of accounting judgment. Of course, directors are not required to be accountants, and the entitlement to rely on the judgment of others whom they appoint to carry out specialist financial roles within the company remains pertinent, but whether the director’s duty has been met in the particular circumstances is ultimately a trial issue, and an argument to the contrary does not mean that there is no good arguable case. Indeed, the judgment in the Burnden case itself followed a 10-day trial.

43.  In the circumstances, I respectfully refuse to grant the requested leave to appeal from the Discharge Decision.

44.  As I have determined paragraph 1 of the 1^st LTA Summons against Xia, paragraph 2 falls away. However, I would make express the following two points.

45.  First, it is trite that the making of an application for leave to appeal, even if it also requests a stay of the order the subject of the intended appeal, does not operate as a stay of the order. Therefore, there has been no stay of the Asset Disclosure Order in place flowing merely from the making of the 1^st LTA.

46.  Secondly, even had I been minded to grant leave to appeal, I would have refused to grant a stay of the Asset Disclosure Order. This is for reasons which I think are apparent from my Unless Ruling, perhaps in particular at §17(9), where I noted that the fact that there is a pending challenge to a Mareva/freezing order is not of itself a ground for suspending the operation of the disclosure of assets order in the interim, so that still less so would be the existence of a proposed appeal from the dismissal of a discharge application after full argument. For similar reasons, I do not think it is correct to suggest that the proposed appeal from the Discharge Decision would be rendered nugatory if the operation of the Asset Disclosure Order is not stayed. In short, against the circumstances already canvassed, and had it been necessary to say so, I would still have been of the view that the greater risk of prejudice lies in putting off any further the asset disclosure required, even if there is to be an appeal from the Discharge Decision.

E.  2^nd LTA Summons

47.  The 2^nd LTA Summons primarily seeks leave to appeal from, and a stay of, the Unless Ruling. In the alternative, it seeks an extension of 28 days from the date of the order to be made, for Xia to comply with the Asset Disclosure Order, and relief to be granted from the sanction imposed under the Unless Order. It also seeks – as has happened anyway – for the matter to be dealt with at the same time as the 1^st LTA Summons.

48.  As explained by Mr Barlow in his submissions, the draft notice of appeal from the Unless Ruling proposes grounds of appeal which in summary are that:

(1)  the Court made a summary ruling upon the basis of the judicial misapprehension that Xia’s solicitors had delayed the fixing of the hearing date for the 1^st LTA Summons, when it was the Court’s office that had done so;

(2)  in the absence of evidence, there was no legitimate basis upon which the Court could infer or conclude that the 1^st LTA Summons was not made in good faith, or that the interim failure to comply with the Asset Disclosure Order constituted contumelious disobedience of that order;

(3)  contrary to the Court’s criticism, it has always been Xia’s case that, in the absence of any good arguable case against him, the requirements of the Ancillary Disclosure Order are unreasonable and disproportionate to him because of the extreme danger that the Liquidators’ Mainland associates would leak any disclosure revealing Xia’s whereabouts to the Mainland Authorities who would like to detain him; and

(4)  the Court erred in adopting CEG’s improper proposals that Xia be denied the opportunity of adducing evidence and being provided a meaningful hearing in respect of the claim that Xia’s interim non-compliance with the Asset Disclosure Order constituted contumelious disobedience, and in precipitously making the summary Unless Ruling.

49.  With respect, not least in the context of a case management decision, none of these points seem to me to identify any reasonably arguable grounds of appeal, or any other reason why there ought to be an appeal.

50.  As to the first proposed ground of appeal, it is not correct to suggest that I made the Unless Ruling on the basis of a judicial misapprehension that Xia’s solicitors had delayed the fixing of the hearing date for the 1^st LTA Summons. All I stated, in the context of the various other matters I took into account in the exercise of my discretion, was that Xia had taken no steps to expedite addressing the questions raised by the 1^st LTA Summons, when he and his solicitors must have known that the mere issue of the summons did not operate to extend time or as a stay. Even if the explanation now proffered is correct, namely that when issuing the summons the solicitors had sought an early date but had been told to await the direction of the Court, they took no further step in the subsequent 3 weeks between that date of issue and the hearing on 14 March 2025. I do not think it was unfair for me to say that it did not seem as if Xia was pushing for an early resolution of the matter. In any event, where applications for leave to appeal are ordinarily dealt with on paper, had expedition been requested, the appropriate course would have been to write to the Court directly drawing attention to the issue of the summons and requesting that it be dealt with expeditiously. That is particularly so where this litigation has in effect been reserved to or docketed with me, and none of the parties have shown any reticence about writing to the Court directly.

51.  As to the second proposed ground of appeal, there was no necessity to infer nor conclude an absence of good faith. Indeed, I did not make the Unless Ruling on any basis relating to the absence of good faith. Instead, I simply pointed out that the extended deadline had expired without any request for an extension of time within which to comply, and without Xia having identified any practical difficulty in having performed the task of disclosure, whether within that time or at all. This was all against the timeline that the disclosure was originally required by 5 July 2024, some seven months prior to the extended deadline of 21 February 2025, and Xia must have contemplated at least the possibility that the Court might not discharge the Injunction Order and ancillary Asset Disclosure Order. I would also push back against Mr Barlow’s use of the phrase “interim failure to comply with” the Asset Disclosure Order. There was nothing “interim” about the failure. Compliance with the Asset Disclosure was required by the deadline set, and there was no such compliance. That was a failure in compliance – quite clearly deliberately so – and it is not open to a litigant to think he can ignore the Court’s order for some supposed self-created and self-defined “interim” period.

52.  Indeed, in the absence of any further explanation – and my having ordered disclosure after having considered Xia’s evidence filed as long ago as August 2024 – it was and remains obvious that the non-compliance was deliberate. As it happens, on Xia’s own evidence now advanced, he has revealed that he deliberately chose not to make even a start to collating the materials necessary for compliance with the Asset Disclosure Order until 19 March 2025 (i.e. the date of the Unless Ruling itself). If nothing else, that demonstrates that Xia felt he could ignore the Court’s order with impunity, until the making of the unless order showed the Court ‘meant business’. Where a party intentionally flouts a court order, he can ordinarily expect little mercy. Xia has plainly chosen deliberately not to comply with the Asset Disclosure Order, merely on the basis that he says there is a reasonable reason for him to choose not to do so, or for him not to be forced to do so. On that, I have disagreed.

53.  As to the third proposed ground of appeal, I had found a good arguable case against Xia in the Discharge Decision. I had also concluded that ancillary asset disclosure was appropriate in the circumstances, notwithstanding the matters advanced by Xia in his evidence. I explained why I did not think the matters advanced by Xia, on my assessment of the materials either in his original evidence or in the materials filed in support of the 1^st LTA Summons (which essentially repeated or expanded on the same points already made), were based largely upon media reports, speculative and somewhat vague. The weight to be given to Xia’s expressed concerns did not seem to me to come close to overbalancing the requirement for the Asset Disclosure Order.

54.  As to the fourth proposed ground of appeal, I explained in the Unless Ruling why, in the exercise of my discretion, I dealt with the application over the objections of Mr Barlow. First, it should be trite that it does not necessarily follow that the first hearing of any summons, even one marked for 15 minutes, is merely a directions hearing with the substantive hearing to be deferred until sometime later. Secondly, I explained that I saw no reason to adjourn the matter, or to await any evidence, in the circumstances that: (1) they could be no misunderstanding as to the deadline for compliance by Xia with the Asset Disclosure Order; (2) it was an incontrovertible fact that Xia had not complied with the order, within the deadline set or at all; (3) Xia had not made any application for further time needed to effect compliance; and (4) the 1^st LTA Summons did not operate either to extend time or as a stay.

55.  Further, none of the applicable legal principles now advanced by Mr Barlow reasonably arguably suggest that an incorrect legal approach was adopted in the Unless Ruling. I specifically, if broadly, identified the applicable principles relating to the use of unless orders, which are themselves well-settled and need no lengthy rehearsal (though I can touch on them again below). I also dealt with the principles applicable to whether or not to stay or extend time for compliance with an asset disclosure order. Lastly, from §19 of the Unless Ruling, it is clear that I had considered potential alternative sanctions, but formed the view that in the present circumstances the only sensible sanction would be to debar Xia from filing a Defence, should he fail to comply with the Court’s order.

56.  In the circumstances, I respectfully refuse to grant the requested leave to appeal from the Unless Ruling.

57.  I would also again make express that, even had I thought it appropriate to grant leave to appeal from that ruling, I would nevertheless not have granted some general extension of time or stay for compliance with the Asset Disclosure Order. In my view, any grant of leave to appeal would only have been as to the use of an unless order in an attempt by the Court to ensure compliance with its own prior order, where no practical difficulty in compliance with that order has been offered.

E.  Further Unless Summons

58.  The Further Unless Summons seeks an order that Xia’s Defence filed on 27 March 2025 be struck out pursuant to RHC Order 41A rule 6 and/or Order 18 rule 19. It also seeks a further unless order that, unless Xia complies with the Asset Disclosure Order within two days after the order to be made, he should be debarred from defending the action.

59.  The Unless Ruling set 28 March 2025 as the deadline for Xia to comply with the Asset Disclosure Order, failing which the sanction would be triggered that he would be debarred from filing any Defence. On 27 March 2025, Xia filed a Defence, but it was not verified by a Statement of Truth as required by Order 18 rule 20A and Order 41A rule 2.

60.  Only after Xia filed the Further Unless Summons on 31 March 2025 did Xia’s solicitors send a letter to CEG’s solicitors enclosing a signed Statement of Truth in respect of the Defence. That Statement of Truth was dated only 1 April 2025, and it was subsequently filed on 8 April 2025.

61.  It is argued on behalf of Xia that the subsequent, albeit late, provision of the Statement of Truth satisfactorily deals with paragraph 1.1 of the Further Unless Summons. Mr Moulds argues otherwise. Of course, he accepts that in an ordinary case without the overlay of an intentional breach of an unless order, the filing of a Defence and a later filing of a Statement of Truth may be excused, and the Defence may nevertheless be taken as procedurally compliant. But, he submits, the present case is quite different. This is because it has the additional factor that the Statement of Truth, without which the Defence is liable to be struck out under Order 41A rule 2, was provided and filed only after the coming into effect of the prohibition on filing the Defence contained in the unless order (when there was such non-compliance as triggered the sanction). Mr Moulds submits that the coming into effect of the sanction severed any link that the Court might otherwise be able to use to excuse the non-compliance with Order 41A. To put it another way, the Statement of Truth dated 1 April 2025, and filed only on 8 April 2025, cannot save a defective act after the sanction built into the unless order had already been activated.

62.  I agree. But, in any event, I have no doubt that the filing of the Defence on 27 March 2025 was an abuse of process.

63.  First, the fact that it did not have a Statement of Truth – and that one was not even signed until four days later – suggests that the filing of the Defence was done in a rush, to beat an apparent deadline. But, secondly, the only relevant deadline for filing the Defence had been specifically extended at the request of Xia himself, until after the determination of his Strike-out Summons. As stated, the logic for extending the deadline until after the determination of the Strike-out Summons was because it was Xia’s position that he ought not be put to the trouble and expense of filing a Defence to a Statement of Claim which he said should and would be struck out.

64.  In the circumstances, it is plain that the only reason to file a Defence on 27 March 2025 was to seek to render nugatory the sanction which would be triggered the very next day upon Xia’s failure to comply with the unless order set by the Unless Ruling, in circumstances when (1) Xia knew that he had no intention whatsoever to comply with the Asset Disclosure Order by that deadline (if at all), and (2) he had already been in breach of previous orders. That was a deliberate and calculated decision to seek to circumvent the effect of the unless order.

65.  That seems to me to be a clear abuse of the process, and in circumstances that the Court should have no hesitation summarily to prevent its machinery from being abused. It is properly recognised that there is an immense public interest in protecting the court system from being abused, and in ensuring that orders are complied with. The Court’s powers are necessarily extensive so as to be truly effective.

66.  Mr Barlow submits that it is not an abuse to file a defence “within time” and which is not demurrable, and he focuses on the “it” in RHC Order 18 rule 19 to make the submission that “it” is the defence which must be by its content itself an abuse. I disagree, as that seems to me to read the rule too narrowly, because a defence may be an abuse in the particular circumstances in which it was filed. But, whether or not this abuse is one which strictly falls under Order 18 rule 19 – and, as said, I think it does – the Court can deploy its powers under its inherent jurisdiction to deal with what might be an infinite variety of abuses, and to do so in a timely manner as soon as the abuse arises.

67.  I accept that striking out is a remedy of last resort and should only occur in plain and obvious cases. This is, to my mind, a plain and obvious case. I expressly take into account that, on his own evidence, Xia had made no attempt whatsoever to seek to comply with the Asset Disclosure Order until after the Unless Ruling, and instead chose deliberately not to comply with it. I also take into account that Xia may still seek to re-file a Defence, if he makes an application to seek relief from sanction. But, any such application will be dealt with on its merits in the circumstances then pertaining – including taking into account whether the breach which triggered the sanction has been cured (a point relevant to the appropriate sanction if there is to be any further unless order).

68.  Hence, I strike out the Defence filed by Xia. I can turn then to the next aspect of the Further Unless Summons.

69.  In my Unless Ruling, I briefly canvassed what I think are well-settled principles relating to when the Court will make an unless order – and I did so also in the context of the well-recognised importance and purposes of asset disclosure ancillary to a Mareva/freezing order. There is no need for me to rehearse at length those principles again in this Decision.

70.  It may be possible to identify previous cases where unless orders were or were not granted on the individual facts, or where any particular sanction was imposed upon a default. But each case is always decided on its own particular set of facts and considerations, with the Court being guided by the general principles and assessing those facts and considerations as appears appropriate to the circumstances.

71.  Mr Barlow submitted that an unless order should not be made in the absence of a breach so serious that it would give rise to a risk of injustice in the adjudication of the trial of the issues in the action, such as might make a fair trial impossible, citing cases including Raja v Hoogstraten [2004] EWCA Civ 968 at §§112-113. However, I agree with the analysis of Popplewell J in ORB arl v Ruhan [2016] EWHC 850 (Comm) at §178, when he stated that the proposition is unsound in principle and unsupported by the authority cited. I also do not think that the other cases cited by Mr Barlow change the analysis.

72.  Essentially, focusing only on the trial itself may be too narrow a focus. Of course, the Court’s orders are made with a view to promoting a fair and effective trial, as well as a fair and effective interlocutory process to get to the trial. But, in the context of Mareva/freezing orders, the Court’s orders are made with an emphasis on an effective trial so as to enable the applicant’s rights to be vindicated by enforcement, not merely judgment. The interest of a party in seeking an effective and realistic outcome to his litigation, if he succeeds, may be as important in the balance of things as the interest of the other party in preserving his right of access to trial despite his refusal to abide by orders of the Court. Moreover, the Court’s orders are to be obeyed, and the proper administration of justice depends on that. Hence, maintaining public confidence in the Court’s ability and willingness to secure compliance with its orders is an important and legitimate objective of an unless order in itself.

73.  Indeed, the Court regularly makes debarring orders where the failure which triggers the debarring does not directly impact on the substantive issues which fall to be decided at trial. The classic examples may be when proceedings are stayed for failure to provide security for costs, or striking out for want of prosecution. There are also many authorities, for example as referred to in the ORB case, which show it to be well established that unless or debarring orders may be justified by failure to comply with a freezing order and ancillary disclosure order. Similarly, such debarring orders may be made without there being any need for a prior finding of contempt under the Order 52 procedure.

74.  I also agree with the comments made by DHCJ KC Chan in Beijing Songxianghu Architectural Decoration Engineering Co Ltd v Kitty Kam[2024] HKCFI 3614 at §§10-11, that when it comes to proportionality in this context, it is not be measured by merely comparing ‘dollar to dollar’ (as he put it). The Court can look at the overall circumstances of the case, and need not impose an unless order with a sanction so narrowly restricted to merely ensuring that there would be a fair trial procedurally. Rather, the use of an unless order is to ensure and attain overall justice, including as an important and equally material part of it, whether the party aggrieved would have an effective and realistic outcome and real recovery. In any given case – and this case is one of them – those considerations may be weighty factors.

75.  I accept that it can be ordinarily recognised that it is not in the interests of the administration of justice that serious findings go by way of default against a party. After all, RHC Order 1 rule 2(2) requires the Court to exercise its powers with the primary aim of securing the just resolution of disputes in accordance with the substantive rights of the parties. But the just resolution does not seem to me to be narrowly limited to having a fair procedural trial. It would obviously not be acceptable, and it would not be correct, if a party were to think that he or she is entitled to a trial of his or her substantive rights, notwithstanding that the party has chosen to be in consistent breach of procedural rules or Court orders. Nor does it matter that the party can say he has complied with some rules or orders at the same time as choosing to be in breach of others.

76.  As I have already stated, each case must turn on its own facts and circumstances, and the test in every case must be what is just and proportionate. It is perfectly possible for a party to act in such a way as will forfeit the right to have a claim or defence determined.

77.  In this case, the only offered alternative to an order debarring defending the action was the suggestion from Mr Barlow that there could be contempt proceedings. But I do not see that as a suitable and realistic alternative in the present circumstances, where Xia is not only not present in Hong Kong, he refuses even to state where he is present or ordinarily resident. Further, Xia’s involvement so far has been to challenge the Injunction Order and Asset Disclosure Order, and to seek to strike out the entire action against him. Though it can be said that he has filed a Defence, I have found that step was taken in an attempt to thwart the requirement for compliance with the Asset Disclosure Order.

78.  I have taken into account Mr Barlow’s point that numerous contempt proceedings are brought against persons not physically present in Hong Kong. However, in the exercise of my discretion in the present circumstances, I do not think the possibility of contempt proceedings being conducted in the absence of the alleged contemnor really suggests that this is a realistic alternative remedy as might compel Xia to comply with the Asset Disclosure Order, or might provide sufficient enforcement ‘encouragement’ as will properly demonstrate the Court’s resolve that its orders must be obeyed for the proper administration of justice.

79.  It seems to me that the threshold for granting a debarring order is essentially repeated non-compliance, in circumstances where that non-compliance is deliberate or may be deemed contumelious. I have considered other possible sanctions, but I remain of the view that the appropriate sanction to be triggered by Xia’s continued non-compliance with the Asset Disclosure Order is that he be debarred from defending the proceedings. That seems to me to be proportionate, in the circumstances of this case, and to strike the appropriate balance amongst the various and competing interests.

80.  I have, of course, also taken into account the evidence filed by Xia, or on his behalf by his solicitor, which seeks to raise his own justification for non-compliance, and proposed alternatives to full compliance (although those alternatives are not sought in the 1^st and 2^nd LTA Summonses). In doing so, I keep in mind the well-established principle in private international law that allegations of political, governmental or judicial impropriety in other jurisdictions should not be made and will be rejected out of hand unless there is clear and cogent evidence to support them: see Dornoch Ltd v Mauritius Union Assurance Co Ltd [2005] EWHC 1887 (Comm) at §97 (affirmed on appeal). But, in any event, I do not accept the materials offered by or on behalf of Xia amount to or evidence genuine and grave concerns as might justify not making, or revoking, the Asset Disclosure Order.

81.  The suggestion based upon an alleged connection between the Liquidators and Mainland Authorities is simply misplaced, as has been fully explained. There is insufficient basis to conflate the current CEG Group management with the Mainland authorities, or to identify any improper cooperation between the Liquidators and CEG staff. Insofar as Xia complains that certain Mainland Property assets of his have been appropriated or frozen without due process, the evidence is insufficient to support those assertions. Further, there is no proper basis to impute the knowledge of whoever conducted those actions (if they happened) to the Liquidators of CEG – not least where it seems that Xia had not sought to hide his ownership of those assets, held in his own name. Repeating the allegations about the CSRC investigation, and the detention of CEO Hui do not add to their merit, and I considered that merit (or lack or merit) in my previous decisions. Lastly, I give no weight to the materials produced by Mr Yan in his 6^th affirmation, which is said to reproduce information given to him by Mr Chen Fen (the maker of another affirmation in these proceedings). On Mr Yan’s own evidence, Mr Chen refused to swear or affirm to the truth of the matters, and even refused to consent to permit Mr Yan to relay them to the Court. Indeed, I confess I find it surprising that Mr Yan somehow felt it appropriate to include that material, and then say that he believes it to be true. In any event, what is said is not sufficiently precise (or with any sufficient reference to named individuals) as to be given any real weight.

82.  As to Xia’s alternative proposal, offered by him as an alternative to actual compliance with the Asset Disclosure Order, I reject the offered undertaking as inappropriate and insufficient. The proposal is that Xia would undertake to provide disclosure to the Court, but placed in a sealed envelope not available for inspection by anyone until after resolution of all the appeals in relation to the Discharge Decision and Unless Decision, together with further obligations of confidentiality thereafter. As I understood it, even though Mr Barlow said that the Court would be able to look inside a sealed envelope, Xia would still not provide his address in his affirmation of disclosure – though he says the disclosure will reveal his whereabouts.

83.  I accept Mr Moulds’ submissions that (1) there is no justification for such a modification to the obligations under the Asset Disclosure Order in circumstances where I have not accepted that Xia’s purported fears are genuine and cogently advanced, and (2) there is no application to vary the terms of the Injunction Order in this way. Further, proceeding in this way would deprive CEG from seeing any asset disclosure (full or otherwise) for even longer than the substantial delay already suffered, and it would deprive CEG and its legal representatives from assessing the adequacy of the disclosure and/or the ability effectively to police the Injunction Order.

84.  I also take into account that the undertaking is for all practical purposes of little value. Even if the Court were to look inside the sealed envelope, it is difficult to see how the Court would be able to form any real view as to whether disclosure has been proper or not. If it is discovered, likely only possibly by CEG after exhaustion of any attempted appeals, that the disclosure given to the Court was inadequate, it may be too late to do anything about it. Further, if the view is taken that that was a breach of the undertaking offered, any steps to deal with that breach of undertaking appear unlikely to have any practical value in the present or likely future circumstances.

85.  I am prepared to allow a little further time for compliance with the Asset Disclosure Order than the two days as was suggested in the Further Unless Summons. As I indicated at the hearing, and as was in effect offered by Mr Barlow when pressed by me, that additional time would if granted be an extension of 7 days running from the time of the hearing (and not this Decision). Hence, the new deadline under the Further Unless Order which I grant is 12 noon on 25 April 2025. Therefore, unless Xia complies with the Asset Disclosure Order by that deadline, he shall (without further order) be debarred from defending the action.

F.  Costs

86.  I make the following costs orders on a nisi basis, which will become absolute if no variation application is made within 14 days. Any variation application will be dealt with on paper.

87.  I see no reason why the costs of the 1^st and 2^nd LTA Summonses should not be payable to CEG, to be taxed and paid forthwith. The applications have failed.

88.  I see no reason why the costs of the Further Unless Summons should not be payable to CEG, to be taxed and payable on the indemnity basis forthwith. The opposition to the application has failed, and Xia has been granted the indulgence of a further extension within which to comply with the Asset Disclosure Order.

Mr Jordan Moulds of Karas So LLP, for the plaintiff

Mr Barrie Barlow SC and Ms Terri Ha, instructed by ONC Lawyers, for the 2^nd defendant

HCMP 1080/2024

[2025] HKCFI 898

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

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________________

AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

________________

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R U L I N G

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A. Introduction

1.  On 24 June 2024, I granted to the plaintiff (“CEG”) an ex parte order for a Mareva/freezing injunction and ancillary asset disclosure orders against two defendants, including the 2^nd defendant (“Xia”).  The order was slightly amended on 26 June 2024. 

2.  Those orders were made in the HCMP proceedings, which have subsequently been consolidated with the HCA proceedings on 12 February 2025, as the title to this Decision identifies.  But nothing turns on that point. 

3.  On 12 July 2024, I dealt with the first return date of CEG’s inter partes application for continuation of the orders made ex parte.  Prior to that, on 5 July 2024 – the last day of the deadline set by the ex parte order for Xia to provide asset disclosure – Xia issued an application seeking the discharge of the orders made against him (“Discharge Application)”, as well as interim variations of the orders pending the substantive hearing of the discharge application.  The interim variations sought included the stay of, or an extension of time for compliance with, the asset disclosure obligations until 21 days after the determination of the Discharge Application. 

4.  Amongst the orders I made at the hearing were: (1) fixing the hearing date of 2 October 2024 for the determination of the Discharge Application, and giving directions for a timetable of evidence and skeleton arguments prior to that hearing; and (2) extending the time for compliance by Xia with the asset disclosure obligations until a new compliance date would be set on 2 October 2024, or until further order. 

5.  My Reasons for Decision dated 18 July 2024 [2024] HKCFI 1854 (“Disclosure EOT Decision”), set out the reasons why I thought it appropriate in the then prevailing circumstances to extend the asset disclosure deadline. 

6.  I heard the Discharge Application on the date fixed, 2 October 2024.  Somewhat later than I had originally envisaged or intended, I gave my decision on 12 February 2025 [2025] HKCFI 689 (“Discharge Decision”).  For the reasons explained in the Discharge Decision, I dismissed the Discharge Application and reinstated Xia’s disclosure obligations under the Injunction Order, with such disclosure to be made on or before the extended deadline of 21 February 2025.  Against the chronology of the proceedings, and as I stated, I worked on the basis that Xia and those acting for him must have contemplated the potential need to provide this disclosure, and so should have been gathering the necessary materials.  Obviously, I remained of the view that ancillary asset disclosure was appropriate to the circumstances, albeit by reference to an extended deadline, and I saw no reason to grant any longer period of time. 

7.  Xia has made no application to extend that time.  He has simply failed to comply with my order. 

8.  Instead of complying with my order, Xia issued an application – again on the last day for compliance, 21 February 2025 – seeking leave to appeal from the Discharge Decision.  The summons also seeks an order that, pending the determination of the application for leave to appeal and/or the appeal, the asset disclosure order is to be stayed.  Nevertheless, no date has been set for the application – nor has it been agreed that it can be dealt with on paper – and it does not seem as if Xia is pushing for an early resolution of the matter.  Anyway, it is trite that neither the application for leave to appeal nor the paragraph of the summons seeking a stay actually operate as a stay.  Therefore, Xia remains in breach of my disclosure order, and obviously deliberately so. 

9.  In the circumstances, CEG issued a summons dated 7 March 2025 (“Unless Order Application”) seeking an ‘unless order’, that unless by 4pm on the day which is five days from the date of the order to be made, Xia complies with the disclosure obligations to be performed under the terms of the Injunction Order, Xia be debarred from filing a Defence in this action. 

10.  I heard the Unless Order Application on 14 March 2025, after the conclusion of the argument on Xia’s application to strike out the entire claim against him.  As with that argument, Mr Charles Manzoni SC acted for CEG, and Mr Barrie Barlow SC (leading Ms Terri Ha) acted for Xia. 

11.  I heard the Unless Order Application over the objections of Mr Barlow, who asked me instead to direct a timetable for evidence and to adjourn the Unless Order Application for hearing in the future.  However, I saw no reason to adjourn the matter, or to await any evidence, in the circumstances that: (1) there can be no misunderstanding as to the deadline for compliance by Xia with the asset disclosure order; (2) it is an incontrovertible fact that Xia has not complied with the asset disclosure order, either within that deadline or at all; (3) Xia has not made any application for further time needed to effect compliance; and (4) Xia’s application for leave to appeal and a stay pending appeal, issued on the last date for compliance, does not operate either to extend time or as a stay.

12.  This is my Ruling. 

B.     Consideration

13.  The applicable principles which underpin the use of ‘unless orders’ are well-settled, and need not be rehearsed at length.  The essence is that such orders are made when there is a history of failure to comply with earlier orders, and where the potential imposition of a sanction is a necessary forensic weapon which the broader interests of the administration of justice require to be deployed.  If an unless order is made, but there is still no compliance with it, then the identified sanction will occur, unless the most compelling arguments are advanced to exonerate the failure.  It is almost axiomatic that if a party intentionally flouts such an order, that party can expect no mercy, and sufficient exoneration would almost invariably require the Court to be satisfied that something beyond that party’s control had caused the failure. 

14.  The applicable principles relating to whether to stay or extend time for compliance with an asset disclosure order are, it seems to me, also well-settled – and I ventilated my own attempted summary of them in my Stay of Disclosure Decision, as follows:

(1)     Asset disclosure ancillary to a Mareva/freezing order is properly recognised as the normal provision, so that the freezing order can be properly policed and effective. 

(2)     Indeed, the disclosure requirement is intimately involved in the effectiveness of the Mareva/freezing order, and gives it teeth.

(3)     Hence, the fact that there is a pending challenge to the Mareva/freezing order is not of itself a ground for suspending the operation of the disclosure of assets order in the interim. 

(4)     This is in part because an interim injunction may be granted on assumptions of fact and law, so that it follows that an interlocutory injunction may be granted on an assumption that there is jurisdiction or a proper basis for it – such as the inherent jurisdiction to grant an asset disclosure order ancillary to and in furtherance of another order. 

(5)     Though an asset disclosure order is, as a matter of legal principle, ancillary to the Mareva/freezing order, there can be a different link in practice. 

(6)     In many cases – in particular in international cases leading to a worldwide Mareva/freezing order – it is likely to be the disclosure order which will be the most useful in practical terms. 

(7)     In such cases, it may be that the disclosure order made in Hong Kong will be the main remedy in Hong Kong, and the Mareva/freezing order can be seen as a ‘holding’ injunction, to give the plaintiff time to apply to the relevant foreign court for appropriate orders relating to the foreign assets disclosed. 

(8)     But the Hong Kong Court is given the power to control the plaintiff’s exercise of his right to seek appropriate orders in foreign countries, by taking the standard form undertakings from the plaintiff that he will not without leave of the Court either (a) begin proceedings against the defendant in any other jurisdiction or use information obtained as a result of an order of the Court in Hong Kong for the purpose of civil or criminal proceedings in any other jurisdiction, and (b) seek to enforce the Hong Kong order or seek an order of a similar nature including orders conferring a charge or other security against the defendant or the defendant’s assets. 

(9)     So, a defendant has no general entitlement to a stay of an asset disclosure obligation ancillary to a Mareva/freezing order pending the determination of the defendant’s application to discharge that order. 

(10)     However, there is no authority to support a proposition that a defendant will always be refused a stay of the obligation to make disclosure pending the final determination of his application to set aside the Mareva/freezing order. 

(11)     In a normal case, a stay of the disclosure obligations pending the determination whether the freezing order is to stand is likely to be refused. 

(12)     But, each case must be judged by reference to its own particular situation. 

(13)     There will inevitably be situations where a view may be taken with regard to the appropriateness of the freezing order remaining in place during the interim period pending determination of the discharge application, yet for a stay to be granted on the disclosure order. 

(14)     The Court must strike a balance between (a) the prejudice to the defendant if he is required (incorrectly, as it may turn out) to disclose assets and (b) the prejudice to the plaintiff if the defendant is not required (incorrectly, as it may turn out) to disclose assets. 

(15)     This is similar to the ordinary balancing exercise when considering interim orders, in assessing where the greater risk of prejudice lies. 

(16)     When dealing with an interim application, a broad brush approach necessarily has to be taken – lest on the application for a stay the Court determines the very issues which are to be determined later. 

(17)     Relevant to the discretionary balancing exercise will be matters including (but not limited to):

(a)     the fact that disclosure obligations can be onerous and, in some cases, potentially damaging to the defendant;

(b)     the length of time that a discharge application is likely to take to be determined (being the period of time the plaintiff will be without the information it needs to police the order, if the order is ultimately not discharged);

(c)     whether there is a good arguable case that a fraud has been perpetrated; and

(d)     whether the defendant has at least an arguable case that the injunction will be discharged. 

(18)     Lastly, there is no authority for any general proposition that a defendant who has made a timely application should not be heard on that application (or on the question of an interim stay) until he has first made the disclosure to which he objects.

15.  Though time has moved on, I think those principles remain broadly applicable.  They identify the appropriate balancing exercise to be performed.  But, of course, a significant change to the previous circumstances is that I have now heard and dismissed the Discharge Application. That necessarily changes the balancing exercise, or the weight which might be attached to individual elements of that exercise.  Further, the dismissal of the Discharge Application has brought to an end the extension of time previously granted for complying with the asset disclosure order, which extension was dependant on the determination of the Discharge Application. 

16.  Though I have taken the view that dealing with this Unless Order Application need not await further evidence, I have taken the trouble to look at the evidence filed on behalf of Xia in support of the application for leave to appeal and the stay pending appeal.  The following matters are apparent:

(1)     Xia is not seeking to explain why he should have more time than already allowed for the purposes of compliance with the asset disclosure order. 

(2)     Indeed, Xia simply does not address any potential practical difficulty in complying with, or having already complied with, the asset disclosure order. 

(3)     Instead, Xia is in effect opposing the making of any asset disclosure at all. 

(4)     This is on the basis that it would render Xia’s proposed appeal from my Discharge Decision nugatory, and that it would cause him serious and disproportionate prejudice. 

(5)     The prejudice identified stems from the fact that disclosure of the precise locations and details of his worldwide assets “would reveal his current location”, and his stated “genuine and grave concerns about making any disclosure which could reveal [his] current whereabouts”. 

(6)     Without going into the detail, which I have read and considered, the thrust of the stated concerns is that (a) Xia may suffer the same fate as he says has befallen the 1^st defendant (“Chairman Hui”), who widespread media reports describe as being in indefinite detention in Mainland China, despite his not having been charged with any crime, and (b) Xia may be seized outside of mainland China, but having ended up (without due process being followed) in detention in Mainland China. 

(7)     The thrust of these points was made in Xia’s affidavit dated 30 August 2024 filed in the HCMP action as part of his Discharge Application, and was available for consideration in reaching the decision on that application. 

(8)     There would be little prejudice to CEG if disclosure is not provided, since the Injunction Order will continue to be in place and the Pavilia Hill Proceeds (as defined, for example, in the Discharge Decision) will continue to be frozen in safe custody within Hong Kong. 

17.  However, in addition to the principles I have set out above, it seems to me that:

(1)     When I first granted the Injunction Order, albeit on the ex parte basis, it seemed to me to be appropriate also to grant the typical ancillary asset disclosure order. 

(2)     I was prepared to extend the time for compliance with that ancillary asset disclosure order pending the determination of the Discharge Application, on the basis and for the reasons given by me in the Discharge Decision. 

(3)     Logically, once the Discharge Application was dismissed, the ancillary asset disclosure order once again fell to be complied with, within the extension of time then set. 

(4)     By the extended deadline of 21 February 2025, Xia had had at least seven months within which to have compiled the necessary materials for disclosure. 

(5)     Xia has not identified any practical difficulty in having performed that task, whether within that time or at all. 

(6)     Xia chose not to apply for any extension of time within which to comply. 

(7)     Whilst Xia chose instead to seek leave to appeal from the Discharge Decision, and to seek a stay of the disclosure obligation pending the proposed appeal, the issuing of that application does not operate to extend time or as a stay. 

(8)     Xia has taken no steps to expedite addressing those questions. 

(9)     The fact that there was a pending challenge to the Mareva/freezing order was not of itself a ground for suspending the operation of the disclosure of assets order in the interim.  Still less so is the existence of a proposed appeal from the dismissal of the Discharge Application after full argument. 

(10)     Indeed, where in a normal case a stay of the disclosure obligations pending the first instance determination whether the freezing order is to stand is likely to be refused, that must be a fortiori where the challenge to the order has been dismissed (notwithstanding any right of appeal). 

(11)     This case is indeed an international case leading to a worldwide Mareva/freezing order.  Here, it is likely to be the disclosure order which will be the most useful in practical terms, where proper identification of assets through disclosure may give time to apply to any relevant foreign court for appropriate orders relating to the foreign assets disclosed. 

(12)     Here, I assess that the greater risk of prejudice lies in putting off any further the asset disclosure required:

(a)     Xia is not complaining about the onerous nature of actually providing the required disclosure. 

(b)     There has already been a significant passage of time – a period of 8 months since the asset disclosure order was originally made – during which CEG has been without the information it needs to police the order. 

(c)     I have already determined that the asset disclosure order should not be discharged. 

(d)     The length of time before the conclusion of the intended next steps is unknown, and may be significant. 

(e)     The suggested prejudice to Xia is largely based upon media reports, speculative and somewhat vague.  (For example, where Xia refuses even to tell the Court where he is currently located, it is impossible fairly to assess any likelihood or degree of the risks upon which he seeks to rely.)

18.  Perhaps put more simply, as matters presently stand:

(1)     the asset disclosure obligation remains in place;

(2)     the issue of the application for leave to appeal and a stay does not operate to grant any extension of time, nor as a stay;

(3)     no practical difficulty in compliance has been identified; and

(4)     the deployment of a potential sanction to seek to encourage or ensure compliance with the Court’s order is appropriate to the circumstances of this case, as well as to the broader interests of the administration of justice. 

19.  The appropriate sanction in the present circumstances can only sensibly be to debar Xia from filing a Defence, should he fail to comply with the Court’s order. 

20.  I have taken into account the possibility that Xia may be granted leave to appeal from the Discharge Decision (if not by me, by the Court of Appeal upon a renewed application), and also that I have reserved my decision on the Strike-Out Application (which might – though, on my present preliminary view, unlikely would – lead to an order striking out the entire action as brought against Xia).  Neither of those points seems to me to change the balance in favour of refusing to grant the ‘unless order’ sought. 

C.     Result

21.  In the circumstances, I grant an order in the terms of paragraphs 1 and 2 of the Unless Order Summons, with the deadline set under paragraph 2 as 4pm on 28 March 2025. 

22.  I see no reason why cost should not follow the event, and therefore the costs of the application are to be payable by Xia to CEG, to be summarily assessed.  The summary assessment will be conducted by me on paper in accordance with a timetable which I leave to be agreed between Mr Manzoni and Mr Barlow. 

HCMP 1080/2024

[2025] HKCFI 897

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

________________________

________________________

_________________

D E C I S I O N

_________________

A. Introduction

1.  On 28 February 2025, I heard two applications as between the plaintiff (“CEG” or “Liquidators”) and the 5^th defendant (“Ms Ding”), being, in chronological order of issue:

(1)     Ms Ding’s summons dated 11 December 2024 (“Clarification Summons”), seeking the variation or clarification of the injunction order made by me on 29 July 2024, as amended (“Injunction Order”); and

(2)     Ms Ding’s summons dated 19 February 2025 (“Confidentiality Summons”), seeking that the hearing of the Clarification Summons be closed to the public, and that Ms Ding’s affirmations filed in these proceedings be in a sealed envelope not open to inspection. 

2.  The Confidentiality Summons was heard by me first, in Chambers (not open to the public).  After the argument, I dismissed the application, with reasons to be provided later. Those reasons are given below. 

3.  I then heard the Clarification Summons, in Chambers (open to the public).  At the end of that hearing I reserved my decision, which I also now give below. 

4.  Both summonses arise out of proceedings involving the Liquidator’s claim against various directors/officers of China Evergrande Ltd (“CEG”), a company in insolvent liquidation as a result of the winding up ordered by Linda Chan J: see Re China Evergrande Group(中國恒大集團) [2024] 1 HKLRD 1128 at §§1 & 49.  Linda Chan J also appointed Ms Wing Sze Tiffany Wong and Mr Edward Simon Middleton as the joint and several liquidators of CEG (i.e. the Liquidators).  The claim brought by the Liquidators essentially relates to the declaration and payment of dividends paid out from CEG (and the assets now represented by them). 

5.  Much of the further relevant background and context has been set out by me in a previous decision [2025] HKCFI 689 at §§6-13.  It can be read, and need not be repeated here. 

6.  It suffices to say for present purposes that one of the directors of CEG was the 1^st defendant (“Chairman Hui”), to whom Ms Ding was married during most of the material period, though they are now divorced.  The claim brought by the Liquidators has been extended to Ms Ding (and relevant corporate vehicles), and comprises both a proprietary claim as well as other claims.  The Liquidators sought and obtained the Injunction Order, which comprises orders for a Proprietary Injunction, a Worldwide Mareva/Freezing Injunction, and ancillary asset disclosure.  Similar orders have also been made against Ms Ding by the High Court of Justice of England and Wales (“English Injunction Order”).  The English Injunction Order has also been subject to variations, and certain applications. 

7.  At the hearing before me, the Liquidators were represented by Mr Charles Manzoni SC, and Ms Ding was represented by Ms Terri Ha of Counsel. 

B.     Confidentiality Summons

B.1    Applicable Principles

8.  In support of Ms Ding’s confidentiality request, Ms Ha relied on the ground that the “interest of the private lives of the parties so requires” under Article 10 (“BOR 10”) of the Hong Kong Bill of Rights Ordinance Cap 383 (“BORO”), and the consideration of the relevant principles in Asia Television Ltd v Communications Authority [2013] 2 HKLRD 354 at §§19-36. 

9.  From that case, the following propositions can be highlighted:

(1)     Justice should not only be done, but should manifestly and undoubtedly be seen to be done.  This is because the open administration of justice is a fundamental principle of the common law. 

(2)     From the litigants’ perspective, open justice also gives effect to their rights to a public hearing guaranteed in BOR 10. 

(3)     From the public’s point of view, open justice – which carries with it the freedom to attend proceedings and to report on them – gives substance to the media’s right to freedom of expression including the freedom to seek and impart knowledge.  Likewise, it enables the public to enjoy their right to seek and be imparted with knowledge.  Both rights are guaranteed under Article 16(2) of the BORO. 

(4)     Any restriction on open administration of justice necessarily represents a compromise between these important interests, rights and freedoms, and must be justified by considering and balancing all pertinent interests, rights and freedoms. 

(5)     Publicity of litigation leading to embarrassment and inconvenience and possible damage to reputation would not by themselves justify any restriction on open administration of justice.  This is because unwanted publicity, embarrassment and so forth are some of the normal incidents of litigation, and the inevitable consequences of open justice. 

(6)     The right to privacy underlying some of these considerations or matters is in itself insufficient to justify a departure from the general rule. 

(7)     Where open administration of justice in a particular case would frustrate the ultimate aim of doing justice, that may be an important factor to take into account when balancing the relevant interests, to decide whether open justice should be restricted, and if so by what means and to what extent. 

(8)     This requirement can be expressed as one of “necessity”, and where justice would be frustrated if open administration of justice is not restricted, the restriction on doing justice openly may be imposed to the extent necessary to prevent the frustration of justice. 

(9)     This requirement of “necessity” is founded on the common law and BOR 10. 

(10)     BOR 10 also mentions “reasons of morals, public order (ordre public) or national security in a democratic society, or when the interest of the private lives of all parties so requires” as exceptions to the requirement of a public hearing. 

(11)     Where an open hearing might jeopardise some right or interest of one or both of the parties outside of the case, whether open justice should be restricted, and if so to what extent, must be considered by conducting the balancing exercise described above. 

(12)     One common example is a case concerning a refugee or torture claimant where it is said that the life, limb or liberty of the refugee or torture claimant or their family is or may be put at risk in the absence of some form of restriction on open justice. 

10.  It is also settled that where an applicant seeks to justify restrictions on open justice by reference to a risk to life or safety, whether of himself or others, that should be clearly articulated. 

11.  I also accept Mr Manzoni’s submission that, in addition to these principles of general application, the action against Ms Ding takes place against the backdrop of the liquidation of CEG, where there is a separate public interest in ensuring that liquidations are performed with open transparency.  This is not to say that liquidators are necessarily in any different position than other litigants, but the ordinary transparency of liquidations is a matter to be taken into any balancing exercise. 

B.2    Application of Principles to this Case

12.  In her affidavit evidence, repeated in the evidence of her solicitor, Ms Ding essentially relied on the following matters:

(1)     Ms Ding lives with her two minor children and two minor grandchildren. 

(2)     The way in which she may conduct her banking activities may put her safety at risk. 

(3)     The evidence contains detailed and sensitive information about Ms Ding’s personal assets. 

(4)     An open hearing would result in the public having this information, and the ability to locate her and her assets, which might risk the safety of herself and the four minor children. 

(5)     Ms Ding’s personal circumstances have received high media attention and scrutiny, affecting her and the four minor children. 

13.  Ms Ha submitted that those factors justified appropriate restrictions on open justice in this case, so that the hearing should be closed to the public.  Alternatively, Ms Ha submitted, even if the hearing is not ordered to be closed, then the hearing might at least be conducted so as not to reveal to the public personal information about the parties more than that which is already in the public domain. 

14.  Partly in response to Ms Ding’s evidence, the Liquidators sought to rely on an affidavit of Scott William Alston, an investigator and process server in England, and aspects of Mr Middleton’s 7^th affidavit (“Middleton 7”), which was not filed in support of the Liquidators’ opposition to either the Clarification Summons or Confidentiality Summons, but instead in opposition to M  Ding’s application to discharge the Injunction Order (fixed for hearing on 21 March 2025). Ms Ha objected to both affidavits being deployed in the context of the Confidentiality Summons. 

15.  At the hearing, I decided that I would not admit or have regard to the affidavit of Mr Alston.  I also indicated that I would consider what approach to take to Middleton 7, reading it on a de bene esse basis.  Having considered that matter, it does not seem to me to be necessary or helpful to refer to any part of Middleton 7 so as to be able properly to decide the Confidentiality Summons. 

16.  This is because I agree with the submission made by Mr Manzoni that, even if Ms Ding’s evidence is accepted at face value, it falls short of the high threshold to justify a departure from open administration of justice.  Most of the stated concerns are in reality no more than normal incidents of litigation.  Further, the concerns about risk to personal safety do not seem to me in context to identify the necessary clear articulation of a fear or risk to life or safety. With respect, Ms Ding’s personal situation is far removed from that of a refugee or torture claimant whose circumstances might justify a restriction on open justice (often effected by the making of an anonymity order). 

B.3    Conclusion

17.  Therefore, after careful consideration of the various matters to be brought into the balancing exercise, I dismissed the Confidentiality Summons. 

18.  By way of postscript, there was also force in Mr Manzoni’s submission that, if there is no basis for the Court to be closed to the public, there is no basis for a restriction of what might be said in Court.  Nevertheless, as is only appropriate, Mr Manzoni said he would refer to those matters no more frequently than was necessary.  That is simply an aspect of good advocacy, in which Ms Ha also joined – as did I – during the conduct of the hearing of the Clarification Summons. 

19.  As to costs, I see no reason why the costs should not follow the event.  Therefore, CEG’s/Liquidators’ costs of the Clarification Summons will be paid by Ms Ding.  As the matter is ‘stand-alone’, it is appropriate to deal with those costs (if the quantum cannot be agreed) by way of summary assessment, to be made on paper, on a timetable which I permit Mr Manzoni and Ms Ha to agree. 

C.     Clarification Summons

C.1    Introduction

20.  As already indicated, the Clarification Summons was issued on 11 December 2024.  The battleground at the hearing related to 4 paragraphs of the summons, whereby Ms Ding has sought:

(1)     an amendment to the Injunction Order to reflect that the definition of Dividend Assets does not include a particular United States dollar amount in one of Ms Ding’s bank accounts (“Paragraph 1”);

(2)     a direction and/or declaration that the Injunction Order does not require Ms Ding to answer the Liquidators’ requests as contained in §§6 and 12 to 14 of the letter dated 6 November 2024 (“6 November Letter”) from CEG’s London solicitors to Ms Ding’s London solicitors, and/or that the 6 November Letter has been satisfactorily answered (“Paragraph 2”);

(3)     a direction and/or declaration that the Injunction Order does not extend to how Jones Lang Lasalle (“JLL”), the lettings and management agent of the “Carnation Way Properties”, manages those properties during the term of its appointment, including but not limited to how JLL applies income derived from the Carnation Way Properties towards their management, upkeep and rental, and does not require Ms Ding and/or JLL to provide an account of all income derived from and expenditure incurred in relation to the Carnation Way Properties on a monthly basis or at all (“Paragraph 3”); and

(4)     a direction and/or declaration that the Injunction Order does not extend to and/or require Ms Ding to give ongoing and/or continuing updates to CEG in respect of the disclosure already made (“Paragraph 4”). 

21.  By the time of the hearing, the Liquidators had given consent to the making of the amendment proposed by Ms Ding under Paragraph 1.  Therefore, the only issue arising from that Paragraph 1 is the question of costs.

22.  Paragraphs 2, 3 and 4 are fully disputed. 

C.2    Overview of Parties’ Positions

23.  Ms Ding’s position is that:

(1)     The intended clarification is sought in the form of a modification of the terms of the Injunction Order.

(2)     The Court can apply the relevant principles as to the grant of discretionary declaratory relief, where the variations seek to specify the existing obligations or restrictions under the Injunction Order. 

(3)     There is practical utility in granting the directions and/or declarations sought. 

(4)     The Liquidators ought to have consented to the amendment sought by Paragraph 1 on the materials provided to the Liquidators in September 2024, and Paragraph 1 was necessitated in those circumstances, and costs should follow the event following the Liquidators’ eventual approval of the amendment. 

(5)     As to Paragraphs 2 and 4, Ms Ding has complied with the Disclosure Orders, yet the Liquidators continue to ask for further information including by the 6 November Letter, and by its solicitors’ letter dated 9 October 2024 to give continuous updates and which states that Ms Ding is in continuing breach of the Order for failing to respond. 

(6)     The questions posed are onerous and wide in scope, exceeding the scope of the Injunction Orders, and the provision of “details” cannot conceivably mean every single minute detail about a particular asset. 

(7)     There is no obligation pursuant to the Injunction Order to provide continuing updates as to asset disclosure. 

(8)     The position of JLL has not been sufficiently resolved by the Order made in the English Court on 20 December 2024, because it made only variations to allow specified exemptions for JLL to carry on with the management of the Carnation Way Properties. 

(9)     Hence, as sought by Paragraph 3, it is appropriate to have a wholesale removal of the restrictions on JLL’s management of the Carnation Way Properties. 

24.  The Liquidators’ position is that:

(1)     The Injunction Orders apply to both Dividend Assets (as defined in both the Injunction Order and the English Injunction Order) and assets which are not Dividend Assets (“Non-Dividend Assets”). 

(2)     The Injunction Orders permit Ms Ding to spend a capped amount per month towards her ordinary living expenses, to spend a reasonable sum of money per month on legal advice and representation, and to make payments in the ordinary and proper course of business, save that such sums must not be paid from Dividend Assets. 

(3)     If Ms Ding wishes to make payments in excess of those limits, then she requires a variation of the Injunction Orders, which can be made by agreement with the Liquidators. 

(4)     Ms Ding has made many requests to vary the Injunction Order and/or the English Injunction Order to permit payment of expenses in excess of the prescribed limits.  In each case, the Liquidators have requested that Ms Ding provide information to justify the variation request. 

(5)     The matters dealt with in the 6 November Letter were a compendium of matters already raised, in part in response to requests for variation. 

(6)     Where Ms Ding has provided sufficient information to allow the Liquidators to determine the reasonableness and necessity of the request, the Liquidators have demonstrated that they are willing to approve Ms Ding’s variation requests. 

(7)     Where Ms Ding has refused to provide the necessary information, the Liquidators are unable to approve her requests to vary the Injunction Orders. 

(8)     Ms Ding and her advisers have, on several occasions, failed to exercise a level of reasonable diligence in relating to the monitoring and reporting of her financial affairs, and it is therefore necessary and appropriate for the Liquidators to ensure that this monitoring is undertaken. 

(9)     Ms Ding has apparently spent US$4 million since August 2024, thereby demonstrating that even with careful oversight and limits on her expenditure, she is capable of spending vast amounts of money in a very short period. 

(10)     The Liquidators’ request for further information to justify payments over the limit set are reasonable and proportionate, particularly considering the vast sums of money involved. 

(11)     Even if the direction sought by Paragraphs 2 and 4 of the Clarification Summons are ordered, they should not operate in effect to force the Liquidators to consent to Ms Ding’s requests. 

(12)     One of the approval agreements is relevant to Paragraph 1 of the Clarification Summons, and the approval and consent to the relevant amendment was properly withheld until satisfactory information and documentation was provided.  There is no proper basis to order costs against CEG. 

(13)     Paragraph 3 seeks an inappropriate use of declaratory relief, and in any event the issue has already been dealt with by the English Court which (with the Liquidators’ consent) varied the English Injunction Order to enable JLL to perform certain specified acts in connection with their management of the Carnation Way Properties. 

25.  Before turning to the detail of these points, it is necessary to consider the relevant applicable principles. 

C.3    Law on Declaratory Relief

26.  Ms Ha pointed to my recent summary and consideration of the principles for granting declaratory relief in Convoy Global Holdings Ltd v Kwok Hiu Kwan [2020] 4 HKLRD 222, at §§49, 53, 65-67, and 81. Ms Ha highlighted the following points:

(1)     The power of the Court to grant declaratory relief is discretionary. 

(2)     There must, in general, be a real and present dispute between the parties before the Court as to the existence or extent of a legal right between them.  However, the claimant does not need to have a present cause of action against the defendant. 

(3)     Each party must, in general, be affected by the Court’s determination of the issues concerning the legal right in question. 

(4)     In all cases, assuming that the other tests are satisfied, the Court must ask: is this the most effective way of resolving the issues raised?  In answering that question, it must consider the other options of resolving the issue. 

(5)     A party will have standing to seek declaratory relief if he can establish that the acts of the defendant may affect its private rights. 

(6)     An applicant seeking to invoke the court’s jurisdiction to grant relief must show: (a) that he has a real interest in the subject matter of the declaration (the ‘real issue requirement’); (b) that he has a real interest in obtaining a declaration against the adverse party (the ‘real interest requirement’); and (c) that the adverse party is a proper contradictor (the ‘proper contradictor requirement’). 

(7)     The Court should adopt a practical utility approach, by asking the question whether the Court’s jurisdiction to grant declaratory relief is properly exercisable, instead of applying nice tests as if it were raising a strict jurisdictional issue. 

(8)     The Court does not grant declarations as to criminality. 

27.  Mr Manzoni accepted that the Court has a wide discretion to grant declaratory relief, as part of its inherent jurisdiction.  But he sought to emphasise the strict limits to the situations in which the Court will typically be prepared to grant declaratory relief. Though accepting that the above principles have broad application, Mr Manzoni referred to the decision of Anthony Chan J in S v G[2020] HKCFI 2201 §§33-46 (amid other decisions, which probably need not be individually cited), where the relevant principles were summarised in a way consistent with that in the Convoy decision.  For example, and by way of additional emphasis to the points made in the Convoy decision:

(1)     The Court is unlikely to grant a declaration that does not serve any practical or useful purpose. 

(2)     The Court is unlikely to regard a declaration as of sufficient utility if it may not finally settle the dispute between the parties. 

(3)     The Court is unlikely to grant a declaration that is sought solely for use in foreign proceedings, and the declaration must serve a useful purpose in Hong Kong. 

(4)     The Court is unlikely to grant declarations concerning academic or hypothetical disputes which are not directed at specific facts, or to make “advisory” or “anticipatory” declarations as to the meaning or effect of documents, laws or orders. 

(5)     The Court is unlikely to grant a negative declaration sought in anticipation of, or with a view to foreshadowing or counteracting, future proceedings – a negative declaration being a declaration that one party does not have a valid claim or right against the other. 

28.  As a specific example relevant to the circumstances of potential declarations in the context of a freezing injunction, Ms Ha referred to the case of Click Above Corben Mews Ltd v 381 Southwark Park Road RTM Co Ltd [2025] EWHC 105 (TCC), at§§10 and 75. In that case, Jefford J considered an application by the applicant for, amongst various possible relief, (1) a declaration that dealings of specific properties would not fall within the terms of the freezing injunction; and, in the alternative (2) variation of the freezing injunction to allow such dealings of the specific properties. 

29.  The Court did not exercise its discretion to make the declaration, because it could not be proved that the specific properties did not belong to the claimant.  It nevertheless granted the variation to clarify that the applicants are permitted to deal with and dispose of the properties.  It did so on the basis that whether or not the claimant has any beneficial interest in the properties, a prior charge over the property would take priority.  Therefore even if the properties fell within the scope of the freezing injunction, that would be no benefit to the respondents, making it appropriate that the injunction should be varied to clarify that dealing with the specific properties was permitted. 

30.  But, that means that the case was an example of a court making a variation (not granting a declaration) on the particular facts, to cater for a discrete and well-defined issue as to whether particular property was or was not within the terms of the injunction – and, even if it was, whether the existence of the prior charge meant that there would be no benefit to the respondents in maintaining the injunction from dealing in that property.  Therefore, I do not think the Click Above case lends any particular assistance as to how to resolve Ms Ding’s Clarification Summons. 

31.  There is no dispute that, even though the Injunction Order did not contain the words “liberty to apply”, this is implied.

C.4    Law on Ancillary Disclosure Orders

32.  By virtue of the Injunction Order, Ms Ding was required to disclose to CEG and the Court the “value, location and details” of all of her assets exceeding US$150,000 in value, whether in her own name or not, and whether solely or jointly owned.  That disclosure must be made to the best of Ms Ding’s knowledge, information and belief following reasonable enquiries.  If enquiries have been made, but there is as yet no proper or full response to those enquiries, provision of further information, if received, is within the scope of the existing obligation. 

33.  I accept that disclosure obligation is subject to the principle of strict construction and must be interpreted purposively. In a previous decision in this same litigation, [2024] HKCFI 1854, I attempted my own summary of the applicable principles, which included points materially relevant to the purpose of the disclosure obligation, such as in the current situation, as follows:

(1)     Asset disclosure ancillary to a Mareva/freezing order is properly recognised as the normal provision, so that the freezing order can be properly policed and effective. 

(2)     Indeed, the disclosure requirement is intimately involved in the effectiveness of the Mareva/freezing order, and gives it teeth.

(3)     Hence, the fact that there is a pending challenge to the Mareva/freezing order is not of itself a ground for suspending the operation of the disclosure of assets order in the interim. 

(4)     Though an asset disclosure order is, as a matter of legal principle, ancillary to the Mareva/freezing order, there can be a different link in practice. 

(5)     In many cases – in particular in international cases leading to a worldwide Mareva/freezing order – it is likely to be the disclosure order which will be the most useful in practical terms. 

(6)     In such cases, it may be that the disclosure order made in Hong Kong will be the main remedy in Hong Kong, and the Mareva/freezing order can be seen as a ‘holding’ injunction, to give the plaintiff time to apply to the relevant foreign court for appropriate orders relating to the foreign assets disclosed. 

(7)     A defendant has no general entitlement to a stay of an asset disclosure obligation ancillary to a Mareva/freezing order pending the determination of the defendant’s application to discharge that order. 

34.  Further, the standard of compliance required in respect of the disclosure obligation ancillary to a Mareva injunction is much higher than that in the ordinary discovery context: see China Metal Recycling v Chun Chi Wai [2014] 6 HKC 190 at §§50-51.  The whole purpose of Mareva injunctions and consequent disclosure orders is to protect and secure assets in order to ensure that a judgment obtained in litigation will not go unsatisfied.  Therefore, if there is to be compliance with the Mareva order disclosure provision, it must be virtually complete compliance.  Put another way, the disclosure must be made in good faith and disclosure of an extent that can fairly be judged to be full disclosure.  It must not be illusory. 

35.  As to what value of any asset is to be disclosed, reference can be made to ADM International Sarl v Grain House International SA [2024] 1 WLR 3263 §§67-68, 71-72.  There, the question identified was whether a claimant’s purpose in getting disclosure of assets to assist in enforcement is better served by knowing in the first instance only the market value, or by knowing only the unencumbered value.  The conclusion was that it is the former.  Of course, a well-drawn disclosure order might properly require expressly both gross value and any encumbrances or beneficial interests of others which are said to reduce that value to a lesser one in which the defendant has a beneficial interest. 

36.  The ADM case at §68 is also useful for confirming the point that disclosure of value only has to be made at the snapshot time required by the terms of the court order, and is not subject to constant updating.  On the other hand, it seems to me that where a person is subject to a freezing order but requests to amend its terms – for example, to permit greater spending than the cap imposed in the order, or to permit spending from a particular asset – then it may be appropriate to look at an updated snapshot taken at the time of the request. 

C.5    Costs of Paragraph 1

37.  There is little need to refer to any authority dealing with the Court’s discretion on costs.  It is trite that the Court may consider if there is, and who is, the “effective winner”.  But the Court takes a broad brush approach, referring to all matters, and with the objective of doing justice between the parties without incurring unnecessary Court time and consequently additional cost. 

38.  Hence, though ventilated at rather greater length, I think the argument boiled down to the following points. 

39.  Ms Ha submitted that Ms Ding is the “effective winner”, in that she obtained what she sought by Paragraph 1, even if by consent.  Hence, the usual order should be made, namely that Ms Ding be granted her costs.  On 17 October 2024, Ms Ding’s solicitors provided to CEG’s solicitors a confirmation letter from the relevant bank dated 9 October 2024 which demonstrated that the relevant units in a fund were acquired prior to the payment of the dividends which might have created the Dividend Assets.  The letter also stated that Ms Ding had instructed the bank on 23 July 2024 that all units in the fund should be redeemed, as they were on 7 October 2024. Hence the US dollar amount in the bank account was generated from the proceeds of the redemption. 

40.  On the other hand, Mr Manzoni submitted that it was only on the provision of a further letter from the bank dated 4 February 2025 that the necessary confirmation of the link between the monies used to acquire the units in the fund and the redemption proceeds, and that those original assets were traceable to the redemption proceeds.  Then, relatively quickly after the provision of that further letter, the Liquidators gave approval to the proposed amendment sought by Paragraph 1. 

41.  Looking at the two letters, and bearing in mind that the Liquidators were in my view entitled to be cautious, even suspicious, about what they were told unless wholly clear and supported by independent documentary evidence, I do not think the Liquidators are to be criticised for awaiting the information provided in the further letter before giving their approval to the amendment.  That is also in the context that by an earlier solicitors’ letter dated 16 September 2024, the Liquidators had previously requested evidence that the US dollar amount disclosed in the bank was a Non-Dividend Asset.  As it was put, the Liquidators were seeking better materials than had been provided up to that date, which shed no light on the source of the funds initially used for investment, how the investment was subsequently dealt with – for example whether the units, or further units, were traded, and the source of the funds for the units in the fund the redemption of which generated the US dollar amount held in the account.  As the Liquidators pointed out, those matters would be shown by the transfer details and account statements previously requested.  Notwithstanding that those materials ought to have been readily available to Ms Ding, and obtainable at virtually no cost to her, she chose to withhold them – and continues to do so. 

42.  Ms Ding, or the solicitors instructed by her, may have formed the view that sufficient information had been provided, but it is clear that the Liquidators were exercising the appropriate degree of caution in making sure that point A could be seen to be linked directly to point B.  They were entitled to test and see if the dots joined up. 

43.  I reject the argument that it would be reasonable to infer that the Liquidators would not have consented even if the further letter was provided prior to the issuing of the Clarification Summons, or that there was any misconduct on the part of the Liquidators for withholding their consent until receipt of the further letter.  I also reject the suggestion that there has been any inconsistency in what information was being sought by the Liquidators, as that has been clear from the outset.  Further, whilst it may be true that Ms Ding had a real need for an order in the terms of Paragraph 1, there would have had to have been an application for the amendment in any event (even if made by consent). 

44.  Indeed, it seems to me that the time taken and costs incurred in obtaining the further letter from the bank are likely negligible compared to the time taken and costs incurred in originally refusing to provide that information, having the debate in correspondence, and in issuing Paragraph 1 with the subsequent argument on it, even if limited to costs.  As I have also stated, the debate might have been resolved by the transfer details and account statements which must have been readily available to Ms Ding. 

45.  In the above circumstances, and in the exercise of my discretion, I see no good reason to order the costs of Paragraph 1 against the Liquidators. The only question is whether there should be no order as to costs, or whether the Liquidators’ costs should be paid by Ms Ding.  On balance, the latter order seems to me to be appropriate in the circumstances.  Therefore, the Liquidators’ costs of Paragraph 1, including the costs of the argument on costs, shall be borne by Ms Ding. 

C.6    Paragraph 2

46.  Paragraph 2 of the Clarification Summons seeks a direction or declaration that Ms Ding is not required to answer certain queries raised by the Liquidators in correspondence, or that she has already satisfactorily answered those queries.  As previously indicated, the context for the queries raised by the 6 November Letter is that it is in essence summarised and repeated for Ms Ding’s new English solicitors the questions first raised in a letter dated 9 October 2024 from CEG’s English solicitors.  The purpose of those queries was expressly stated as to ensure that the Injunction Order is complied with, and to consider taking any further steps necessary to protect against dealings with the Dividend Assets or asset dissipation.  The queries themselves arose out of Ms Ding’s updated asset disclosure given on occasions between 9 August 2024 and 2 October 2024. 

47.  I do not think it is necessary to go into the detail of the queries – such as to why they arose, whether they are or were reasonable, whether they have already been answered, and if so whether satisfactorily, etc – as it is not appropriate to grant the declaratory relief as sought by Ms Ding.  That relief is in the form of a negative declaration. 

48.  It is clear that Ms Ding is either seeking to ‘get in her retaliation in advance’, or seeking anticipatorily to neutralise any potential application that CEG may bring to compel her to answer the queries, or to neutralise any possible proceedings CEG may bring against Ms Ding for failing to comply with the terms of the Injunction Order and/or the English Injunction Order.  Indeed, as Mr Manzoni pointed out, that much is clear from Ms Ding’s own evidence, where she stated her view that she had properly complied with the terms of the Injunction Order, but given the breaches of that order are punishable by contempt of Court, there is a real and genuine need for her to obtain proper clarification on the scope and/or terms of disclosure. 

49.  I also accept that the perceived potential applications concerning Ms Ding would likely be brought in the English Court, not in Hong Kong.  The queries were expressly raised in correspondence between the London solicitors relating to the English Injunction Order.  It does not matter that the terms of the Injunction Order in essence mirror those of the English Injunction Order.  The point of importance is as to the likely jurisdiction for any subsequent steps.  In my view, it is utterly inappropriate to seek to pre-empt what might occur on any application made to the English Court.  Indeed, any declaration that I might make in Hong Kong would unlikely assist, let alone bind, the English Court in its own decision-making process. 

50.  Therefore, the negative declaration sought does not serve any useful purpose – not least when it might be entirely premature. Now is not the time to take up precious judicial resources to make any ruling as would require the Court to go into the intricate historical detail as to the background to any particular request, and any response to it in that context – and in what remains the hypothetical scenario of potential enforcement or contempt proceedings. 

51.  As I ventured during the hearing, both CEG and Ms Ding have the benefit of legal representation in two jurisdictions.  Each side is well able to seek advice and decide what further steps, if any, are appropriate.  For example, if Ms Ding takes the view that she has done all that is required, she can stand on that view.  If CEG takes the view that Ms Ding is in breach of the disclosure order and should be sanctioned for her contempt, it can bring proceedings in the appropriate jurisdiction. But there are other potential factual scenarios which arise, and I see no benefit to the Court or to the parties to seek somehow to second-guess which potential factual scenario will arise, and somehow to rule on that on an anticipatory basis. 

52.  Though it is not necessary to decide the point, I think there is force in the submission made on behalf the Liquidators that the queries made of Ms Ding have been triggered by Ms Ding’s approach to the Injunction Order more generally, tending to delay, obfuscation, and unnecessary resistance to reasonable enquiries.  I would also state in passing that, albeit on only a high level review, the arguments put forward by Ms Ding are far from compelling. 

53.  In any event, I refuse to exercise my discretion to grant the relief sought by Ms Ding in Paragraph 2. 

C.7    Paragraph 3

54.  The Carnation Way Properties are rental properties, owned by Ms Ding, and managed by the third-party professional service provider, JLL.  Ms Ding suggests that JLL has not, however, been able to manage the Carnation Way Properties freely, given the Injunction Order – and she says this causes her prejudice. 

55.  However, in September 2024, Ms Ding sought CEG’s consent to a variation of the English Injunction Order to allow JLL to continue to provide services in relation to the Carnation Way Properties, notwithstanding that order.  It seemed that the terms of the draft Consent Order to facilitate that variation were largely agreed between JLL, Ms Ding and CEG.  However, after the appointment of her new solicitors, Ms Ding changed her position, and stated that no such variation was required at all, such that she would not consent to the matter which had arisen out of her own proposal. 

56.  Nevertheless, JLL considered the variation was necessary for it to be able safely to continue providing management services without the risk of contravening the English Injunction Order.  In brief, JLL asked the English Court for variations intended to enable JLL (1) to apply income derived from the Carnation Way Properties towards payments relating to the management of the properties and towards its own fees, and (2) to provide letting services, including marketing the properties to new potential tenants, and the receipt and return of rental deposits. 

57.  It can safely be presumed that permission was sought to perform the limited and specified acts which JLL thought it needed a variation to perform.  Contrary to Ms Ha’s submission, it does not seem to me to matter that JLL did not achieve, or even ask for, all of what it originally wanted.  Whatever it originally wanted, JLL asked for and got what it needed. 

58.  The English Court granted the variation in the form sought by JLL, and ordered Ms Ding to pay the costs of both JLL and CEG.  In his decision to make the order, [2024] EWHC 3400 (Comm), Mr Paul Stanley KC (sitting as a Deputy High Court Judge) noted at §§24-28 the following material points, amongst others:

(1)     Determining JLL’s application need not await the determination by the Hong Kong Court of the Clarification Summons, issued in Hong Kong just two days after JLL’s application was issued in London. 

(2)     The JLL application was not one which depended on the substance of the underlying dispute, but was about the discretionary effect of an injunction on property in England in respect of third parties also in England, matters which the Injunction Order recognises were not for the Hong Kong Courts but for the English Court. 

(3)     The Hong Kong Court is not best placed to decide the issues. 

(4)     To require JLL to participate in a hearing in Hong Kong would be directly contrary to the purposes of the ‘Babanaft’ proviso, not least where CEG (the claimant in both jurisdictions) did not dispute the variation sought by JLL. 

59.  It may be thought significant that, rather than taking the stance that the terms of the variation proposed by JLL were too narrow, and asking the English Court for an order in different terms, Ms Ding simply opposed even those variations.  She did not, for example, consent to those variations on the basis that they were a useful start.  Nor did she ask for what Ms Ha described as the “wholesale removal of restrictions on JLL’s management of the Carnation Way Properties”, which she seeks by Paragraph 3 of the Clarification Summons.  It is therefore odd that the submission is now made on her behalf that the JLL situation has not been sufficiently resolved by the English order, when Ms Ding must be taken to have chosen not to widen the resolution of the matter when before the English Court. 

60.  I would also point out that the stance taken by Ms Ding reeks of seeking to cause obfuscation and delay.  Rather than pursue the precise form of order she says she wants, when the matter was before the English Court already seized with the relevant issue on JLL’s summons dated 9 December 2024, Ms Ding instructed her Hong Kong solicitors to issue a summons in Hong Kong two days later, on 11 December 2024. 

61.  In the circumstances, it is plain that the declaratory relief sought by Paragraph 4 is not appropriate.  As a result of the determination by the English Court, JLL is able to perform the specific acts for which it considered it needed clear permission.  There remains no live issue pertaining to whether the Injunction Order extends to how JLL “manages” the Carnation Way Properties. 

62.  Further, I respectfully agree with DHCJ Stanley KC that the Hong Kong Court is plainly not the court best placed to decide any issue relating to how JLL provides its professional services as regards to the Carnation Way Properties.  As he pointed out, the application leading to his variation order was about the discretionary effect of an injunction on property in England, in respect of third parties in England.  It is also obvious that the variation sought was a variation to the English Injunction Order.  It might further be pointed out that Ms Ding, the owner of the relevant properties, is also in England. 

63.  The declaration sought by Paragraph 3 is not useful. 

64.  I refuse to exercise my discretion to grant the declaration sought by Ms Ding in Paragraph 3. 

C.8    Paragraph 4

65.  Paragraph 4 of the Clarification Summons seeks a direction or declaration that the Injunction Order does not extend to and/or require Ms Ding to give ongoing and/or continuing updates to CEG in respect of the disclosure already made. 

66.  I have already accepted that ordinarily the disclosure to be made in compliance with the disclosure order is to provide information up-to-date at the date of service, and that the Injunction Order does not of itself require constant updating thereafter.  However, those matters do not make the declaration sought in any way appropriate – even leaving aside that the declaration sought at least overlaps with the declaration sought by Paragraph 2, which I have already refused. 

67.  Indeed, the declaration sought by Paragraph 4 is extremely broad.  It would, if granted, permit Ms Ding to refuse to provide any updating information, even the updating information which she has herself recognised in her evidence that she should give, and said that she would give. 

68.  In any event, there are a number of potential circumstances where updating information will be required.  If the basis of her original knowledge, information and belief following reasonable enquiries changes from when she made disclosure on that basis, that may require updating for Ms Ding to remain compliant with the Injunction Order.  As noted, that fact has been recognised by Ms Ding and her solicitors, and dealt with in her evidence.  There have also been updates provided in correspondence to correct or change previous descriptions of matters and estimated values.  Further, if Ms Ding were to request variations to the Injunction Order on an ongoing basis, it may also require her to give updated information for the ability of CEG, and the Court, to consider whether such a request should be approved at that time. 

69.  I take into account that Mr Manzoni has confirmed in his submissions that CEG/Liquidators are obviously not suggesting that Ms Ding is required to give updates in the sense that was being suggested in the ADM case. 

70.  I also take into account that asset disclosure is in any event ongoing, and that there remains an issue as to whether the disclosure provided to date is compliant.  It would not be correct to make a declaration which might in effect preclude an appropriate argument, on the appropriate application, made in the appropriate jurisdiction, as to whether compliance has been achieved or not.  There is also force in Mr Manzoni’s submission that it is difficult to understand why Ms Ding seeks a declaration which in part would state that she is not required to do something which she has already agreed to do. 

71.  I refuse to exercise my discretion to grant the relief sought by Ms Ding in Paragraph 4. 

C.9    Conclusion

72.  In order to identify how the Injunction Order would be amended, if I were to grant any of the declarations sought by the Clarification Summons, Ms Ha hopefully provided a draft amended order.  I note that some of the amendments put forward are likely not controversial, for example flowing from my order to consolidate the two sets of proceedings.  But, other than the variation resulting from Paragraph 1 of the Clarification Summons (which variation is made by consent), I do not make the contested variations which would result from Paragraphs 2, 3 and 4 of the Clarification Summons. 

73.  I see no reason why the costs should not follow the event.  Therefore the Liquidators’ costs of all of Paragraphs 1, 2, 3 and 4 of the Clarification Summons also be paid by Ms Ding. In this regard also, I think it is appropriate to deal with those costs (if the quantum cannot be agreed) by way of summary assessment, to be made on paper, on a timetable which I permit Mr Manzoni and Ms Ha to agree. 

D.     Result

74.  Both the Confidentiality Summons and the Clarification Summons have been dismissed, with the Liquidators’ costs payable by Ms Ding, to be summarily assessed.

Mr Charles Manzoni SC, instructed by Karas So LLP, for the plaintiff

Ms Terri Ha, instructed by Lam & Co, for the 3^rd defendant in HCMP 1080/2024 and the 5^th defendant in HCA 551/2024

HCMP 1080/2024

[2025] HKCFI 689

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

________________________

________________________

________________

AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

________________________

________________

(Heard together)

_________________

D E C I S I O N

_________________

A.  Introduction

1.  This Decision concerns matters as between the plaintiff (“CEG”) and the 2^nd defendant to the two actions (“Xia”), arising from a worldwide Mareva injunction made against Xia on 24 June 2024 and since amended (“Injunction Order”).

2.  Four summonses came before me for argument:

(1)  A summons dated 25 June 2024 (“Continuation Summons”), by which the liquidators (“Liquidators”) of CEG seek the continuation of the Injunction Order against Xia.

(2)  A summons dated 5 July 2024 (“Discharge Summons”), by which Xia seeks the discharge of the Injunction Order.

(3)  A summons dated 20 September 2024 (“Variation Summons”), by which Xia seeks to vary the Injunction Order, in particular to increase the allowance for his legal fees up to 2 October 2024.

(4)  A summons dated 17 September 2024 (“Consolidation Summons”), by which CEG seeks to consolidate the HCMP 1080/2024 proceedings (“HCMP Action”) with the HCA 551/2024 proceedings (“HCA Action”).

3.  In the event that the Court would uphold the Injunction Order, either by way of ordering its continuance or, if discharged, by re-grant, CEG seeks consequential directions in respect of the Continuation Summons, that (1) D2’s disclosure obligations under the Injunction Order be reinstated, and (2) such disclosure to be made within 7 days of continuation/re-grant of the Injunction Order.

4.  At the hearing, CEG was represented by Mr Charles Manzoni SC, and Xia was represented by Mr Barrie Barlow SC, leading Ms Terri Ha. For the limited matter relating to consolidation, the 3^rd defendant in the HCMP Action / 5^th defendant in the HCA Action (“Ms Ding”) was represented by Mr Vincent Chen. Following argument, I reserved my decision to be handed down later.

5.  This is my Decision.

B.  Relevant Background

B.1  China Evergrande Group

6.  CEG was incorporated in the Cayman Islands on 26 June 2006. It is an investment holding company and is the ultimate holding company of many subsidiaries, collectively comprising the Group.

7.  From 19 December 2006 onwards, CEG was registered as an overseas company under the old Companies Ordinance Cap 32 and now as a registered non-Hong Kong company under the new Companies Ordinance Cap 622.

8.  On 5 November 2009, CEG’s shares were listed on the Main Board of the Stock Exchange of Hong Kong Limited (“HKEX”).

9.  CEG was one of largest property developers in Mainland China since October 2009. For over a decade, CEG reported explosive growth in regard to all its reported financial metrics until the end of 2020. This rapid growth was funded mostly by large amounts of debt incurred by CEG, both offshore and onshore the Mainland.

10.  Over time, CEG became increasingly reliant on raising new debt to pay off its existing debt. Despite reporting that it consistently had sufficient assets to meet liabilities between 2009 and 2020, by 2021 through 2023 CEG encountered worsening severe cash flow issues, as a result of which CEG defaulted on a number of its debts. CEG’s financial situation deteriorated to the point that by 31 December 2021 its liabilities exceeded its assets by RMB473 billion.

11.  Trading of CEG’s shares was first suspended on 28 September 2023, resumed on 3 October 2023, and again suspended on 29 January 2024, on which date CEG was ordered to be wound up by Linda Chan J: see Re China Evergrande Group (中國恒大集團) [2024] 1 HKLRD 1128 at §§1 & 49. Linda Chan J also appointed Ms Wing Sze Tiffany Wong and Mr Edward Simon Middleton as the joint and several liquidators of CEG (i.e. the Liquidators).

12.  The winding up order was made on a creditor’s petition, where CEG did not dispute its inability to pay the debt. After numerous adjournments, due to this inability to pay Linda Chan J had no other choice but to order the winding up of CEG on the basis (at §19) that it was “balance sheet insolvent”.

13.  As a result of its investigations, the Liquidators say they have identified five heads of misstatements (“Five Misstatements”) in respect of CEG’s consolidated financial statements (“CFSs”) prior to its collapse, and which occurred during the direction and management of Xia and the 1^st defendant (“Hui”):

(1)  First, CEG overstated its reported revenues from sale of properties by hundreds of billions of RMB, due to CEG’s aggressive approach to the timing of recognising revenues. This overstatement resulted in a dramatic reversal of RMB664 billion in revenues recorded by CEG in its audited CFSs for the financial year ended 31 December 2021.

(2)  Second, CEG overstated its completed properties held for sale and properties under development. In CEG’s audited CFSs for the year ended 31 December 2021, these assets were written down by a total of RMB373 billion.

(3)  Third, CEG inappropriately classified properties as investment properties and overstated their values. In its audited CFSs for the year ended 31 December 2021 CEG recorded an RMB31 billion write-down in value of these properties and a RMB40 billion reclassification of the latter as properties under development.

(4)  Fourth, CEG overcapitalised its interest expenses – an accounting method in which (1) the cost of borrowing is directly added to the cost of a long-term asset and (2) the “capitalised interest” appears in instalments on the company’s income statement as periodic depreciation expense on the asset over its useful life.

(5)  Fifth, CEG made inappropriate assumptions regarding its ability to continue as a going concern.

B.2  Hengda and the CSRC Decision

14.  CEG’s principal subsidiary is Hengda Real Estate Group Co. Ltd (“Hengda”), which engaged in the business of property development in the Mainland, and whose financial statements were consolidated into, and represented a significant part of, the CFSs.

15.  CEG argues that the Five Misstatements were “confirmed” by the findings and penalties concerning Hengda after an investigation by the China Securities Regulatory Commission (“CSRC”).

16.  In its decision dated 21 May 2024 (“CSRC Decision”), the CSRC published the Administrative Penalty Decision, which decided, amongst other things, that: (1) Hengda implemented financial fraud; and (2) Hengda’s 2019 and 2020 annual reports contained false records. The CSRC Decision also noted that Xia had taken no part in the proceedings, and at that point in time the CSRC had not penalised Xia directly.

17.  It was not until 27 August 2024 that the CSRC issued another Administrative Penalty Decision against Xia directly. Its contents are not important to the present application. What needs to be said however is that CEG only became aware of this later decision from news reports on or around 25 September 2024.

B.3  Xia’s history and role within the Group

18.  Xia has a background in economics. In 1998, he graduated from Jinan University with a master’s degree in business administration, and then in 2001 a doctorate in industrial economy from the same university.

19.  After university, Xia began work in the aluminium processing industry. He then entered the property field. He eventually attained the rank of deputy general manager and accumulated a reputation as a result (for instance, he was recognised as a senior economist by the Human Resources Bureau of Guangdong Province, China in 2000).

20.  Around June 2007, Xia joined CEG. During this time, CEG was at its relative infancy (approximately one year since its incorporation in 2006). Xia was recruited by CEG as a “Vice Chairman and Deputy Vice President”. The job meant Xia was responsible for sales, marketing and administrative management, amongst other matters. During this period, Xia was one of three Vice Chairmen and Deputy Vice Presidents. The other two were responsible for finance and construction projects. Three months later, in or about August or September 2007, Xia became the Chief Executive Officer (“CEO”) of CEG.

21.  In 2008, CEG attempted but failed to have its shares publicly listed in the HKEX. To ensure a successful attempt, Xia was transferred to Hong Kong to take charge of CEG in this respect. In 2009, CEG’s shares were finally listed in Hong Kong. Afterwards, Xia continued to be CEG’s executive director, CEO and Vice Chairman until his retirement.

22.  Until about November 2013, Xia’s role was to assist Hui in the administration and management of information technology, brand building, real estate sales and group-wide matters of a major kind. From November 2013 to October 2016, Xia was assigned further duties in funds and financial management.

23.  By 2016, CEG had become the largest property developer in Mainland China, with the highest turnover, largest land reserve and the highest number of projects in second-tier cities across the Mainland.

24.  Around October 2016, CEG adopted a proposal to spin-off Hengda (including its hundreds of subsidiaries) as a separate entity to be listed on the Shenzhen Stock Exchange. Because of this, and as a requirement of the HKEX, the management of CEG and Hengda had to be segregated and operated independently by unconnected teams. Hui was granted an exemption from HKEC upon application. Xia, however, did not seek an exemption, resulting in his non-involvement directly in Hengda from 2016 onwards.

25.  On 24 January 2017, Xia’s responsibilities were confined to CEG at a top level. He was responsible for overseeing CEG’s and its group’s financial management and funds mobilisation. Necessarily, this apparently excluded Hengda since its proposed spin-off in 2016.

26.  During Xia’s time at CEG, as director and member of CEG’s board, Xia took part in meetings that approved the CFSs and the dividends paid on the faith of the profits stated therein.

27.  Xia retired from CEG in July 2022.

28.  From 2009 to 2022, Xia earned a total RMB1,855,493,000 as emoluments. At least between 2020 and 2021, he earned ten-times more than any of his fellow directors.

29.  The main dispute between the parties in respect of Xia’s involvement in CEG and its group relate to the preparation and publication of the CFSs. It is not disputed that he took part in CEG’s board meetings where the CFSs were discussed and approved. What is disputed is Xia’s physical and direct involvement in the preparation of the CFSs and, importantly, his knowledge of CEG’s financial position throughout.

B.4  Facts leading up to the present applications

30.  CEG issued a writ of summons (“Writ”) on 22 March 2024, thereby commencing the HCA Action, against its former directors, including Xia. The claims made in the Writ are further covered below.

31.  This Writ was issued on a protective basis in order to preserve CEG’s rights in pursuing claims against Hui, Xia and the other defendants. But the fact of its issue was originally kept confidential.

32.  Between March and June 2024, CEG had not served the Writ or a statement of claim on the defendants. During June 2024, the Liquidators discovered Xia was in the process of selling a property in Hong Kong called the Pavilia Hill Property, which he had acquired in 2019.

33.  CEG’s solicitors Karas So LLP (“KS”) immediately initiated communications with Xia’s solicitors Cheung & Liu (“C&L”) on 19 June 2024. In gist, KS requested an undertaking that C&L would not deal with the assets contrary to certain other requests made by KS. This led to a chain of correspondence between the two camps, eventually leading KS to acquire a greater sense of urgency when, in a letter dated 24 June 2024, C&L informed KS that completion might be expedited before the planned completion date on 27 June 2024. As it turned out, completion did take place earlier, on 25 June 2024.

34.  On 24 June 2024, immediately after receipt of C&L’s letter, CEG applied ex parte for a worldwide Mareva injunction against Xia. I heard the application, and granted the Injunction Order as a result. Because the Writ had not been served, and remained confidential at that time, the application for the injunction was made in new miscellaneous proceedings, i.e. the HCMP Action. This explains the two sets of proceedings.

35.  The terms of the Injunction Order included, amongst other things, orders to restrict Xia (1) from removing from Hong Kong any asset within the jurisdiction up to a value of HKD60 billion (approximately USD7.7 billion), and (2) from disposing of or dealing in the proceeds arising from the Pavillia Hill Property sale.

36.  CEG filed the Continuation Summons on 25 June 2024. Xia filed his Discharge Summons on 5 July 2024.

37.  At the first return date hearing on 12 July 2024, I ordered that:

(1)  The Injunction Order be continued against Xia, up to and including the adjourned hearing of the Discharge Summons set for 2 October 2024.

(2)  Xia’s obligation to provide asset disclosure (as per the Injunction Order) be suspended until further order.

(3)  Xia be permitted to spend living expenses of HK$50,000 per month, and the sum of up to HK$1.2 million on legal fees and representation until and including 2 October 2024. Such expenses were permitted to be paid out of the net proceeds from the sale of the Pavilia Hill Property.

38.  The making of those orders was explained by me in my Reasons for Decision dated 18 July 2024, [2024] HKCFI 1854.

39.  CEG served the Writ and its statement of claim (“SOC”) on 1 and 8 August 2024 respectively. Xia filed his Acknowledgement of Service indicating his intention to defend the HCA Action. The deadline for serving Xia’s defence (“Defence”) was on 30 September 2024. But, by the adjourned hearing on 2 October 2024, Xia had still to serve his Defence.

C.  Worldwide Mareva injunctions

40.  The principles underlying a grant of a worldwide Mareva injunction are not controversial, and no authority need be cited to support them. The requirements are for the applicant plaintiff to show that:

(1)  the plaintiff has a good arguable case on its claim;

(2)  there are no or insufficient within the jurisdiction to satisfy the plaintiff’s claim;

(3)  there are assets outside the jurisdiction; and

(4)  there is a real risk of dissipation or secretion of those assets to render nugatory any judgment that a plaintiff may eventually obtain.

41.  A “good arguable case” requires an applicant to show a case that is more than barely capable of serious argument but need not be one the judge believes to have a better than 50% chance of success. The applicant need not go so far as to persuade a court that he or she is likely to win.

42.  In assessing the risk of dissipation of assets, the Court should adopt a holistic approach, taking into account all circumstances relevant to the risk of dissipation for the purpose of determining whether a solid basis for concluding a real risk of unjustified dissipation of assets by a defendant has been shown. A mere inference or generalised assertion is not sufficient, though proving risk of dissipation is often discharged by means of inferential evidence. Examples of where inferences have been made include where the defendant has exhibited “low commercial morality”, and where there is a good arguable case that the defendant has been guilty of dishonest or fraudulent conduct, or other serious wrongdoings, provided that in the first place this is indicative of or relevant to the risk.

43.  Often, to be effective, a Mareva injunction needs to be both swift and secret. But, like any other ex parte application, the appropriateness of the ex parte procedure must be demonstrated in the circumstances. It is sometimes said that extreme urgency is when there is literally no time to warn the defendant of what is proposed or where the purpose of the injunction will or may well be frustrated if the defendant is informed of what is proposed or where the defendant simply cannot be found.

44.  The Court has a power to set aside ex parte orders under Order 32 rule 6 of the Rules of the High Court Cap 4A. Such orders may be reviewed in light of new evidence and arguments adduced by the opposing party, which is reflective of the provisional nature of such orders.

45.  Grounds for setting aside an ex parte injunction relevantly (as raised by Xia) include (1) material non-disclosure during the ex parte hearing in breach of the duty of full and frank disclosure imposed upon ex parte applicants, and (2) a procedural impropriety, such as failing to give prior notice of the hearing date to the opposing party when circumstances demand it.

46.  In the event that an ex parte order is discharged or set aside due to material non-disclosure or lack of prior notice, the Court nonetheless possesses a residual discretion to re-grant the order in the same or different terms.

D.  Outline of the Parties’ Cases

47.  Briefly, CEG seeks a continuation of the Injunction Order for the same reasons that supported its ex parte application. It argues there is a good arguable case that:

(1)  The CFSs were massively misstated between 2017 and 2020.

(2)  Xia knew or should have known about the parlous situation of CEG’s finances given his top role in the company.

(3)  Xia was in breach of his fiduciary duties as director of CEG during this period.

48.  Xia meanwhile seeks to discharge it on various grounds, being in summary that:

(1)  CEG failed to give notice to Xia prior to the ex parte hearing, when it should have done.

(2)  CEG failed to give full and frank disclosure in its evidence and during the hearing.

(3)  CEG has not shown a good arguable case on its claim, because (a) the claim is vague and unformulated, (b) reliance on the CSRC Decision is impermissible because it is inadmissible evidence, and (c) no reliance can be placed on the Liquidators’ findings which were mere opinions.

49.  Further, Xia argues that there was no risk of dissipation. He also accuses CEG of having changed its case in the present application compared to its ex parte case, where (he says) it has dropped a fundamental plank by foregoing references to Xia’s involvement in preparing the CFSs.

50.  There is no dispute that there would be insufficient assets in Hong Kong to meet a successful claim.

E.  Lack of prior notice

51.  Mr Barlow argues that CEG’s failure to give prior notice of the ex parte hearing to Xia, which denied Xia of any opportunity to be heard, was an abuse of process. Because of this, he argues, the Injunction Order ought to be discharged.

52.  He cites numerous authorities supporting this proposition, including Ho Tak Eng v Fame Brilliant Ltd [2006] 1 HKLRD 34 at §10, and National Commercial Bank of Jamaica Ltd v Olint Corp Ltd [2009] 1 WLR 1405 at §§13-15. Based on the various authorities, the following principles seem to me to be well-settled:

(1)  The Court will ordinarily not hear an application where no notice of it has been given by the applicant to the respondent.

(2)  This is a feature of the principle of natural justice audi alteram partem – where an opposing party should usually be afforded some opportunity to be heard on an application that may potentially adversely affect his or her rights.

(3)  In most cases, there will be no scope for giving no notice at all – as such a procedure is against the principles of natural justice – and any notice is better than none.

(4)  Hence, even when time does not permit full notice to be given, it is highly desirable to inform the other party that the application is to be made ex parte so that he can attend if he wishes and make such representations as he wishes.

(5)  Giving short notice may in practice be as simple as doing so by telephone or email (or other appropriate instantaneous modes of communication in current use).

(6)  Ex parte applications without notice should only be made where either (a) the delay would cause injustice to the applicant and/or (b) the defendant would take action which would nullify the effect of the injunction.

(7)  Examples of the later typically involve applications for a Mareva injunction or Anton Piller order.

(8)  Urgency and secrecy are different things, though they might occur together, and the applicant should identify which one(s) is/are said to justify an application made wholly without notice to the respondent.

(9)  Each application will be judged on its own circumstances and the applicant who seeks an ex parte injunction without notice must satisfy the threshold.

(10)  The Courts will seek to ensure that applicants do not try to obtain a tactical advantage from the Court and legal process.

53.  Turning to the facts of this case, and as touched on above, relevant communications were initiated approximately five days before the ex parte hearing on 24 June 2024.

54.  On 19 June 2024, the Liquidators’ solicitors KS wrote to Xia’s then solicitors C&L, after KS learned of the impending sale of the Pavilia Hill Property. The letter notified that the Liquidators were taking steps to identify, safeguard and realise value from the assets of CEG, as well as to investigate the causes of its failure and the conduct of those concerned in its affairs, including Xia. It referred to the decision of the CSRC and its suggested findings of financial fraud committed by Xia in relation to Hengda’s financial statements. The letter suggested that Xia purchased the Pavilia Hill Property at the time when, on the CSRC’s findings, Xia was engaged in the financial fraud. Hence, the Liquidators were concerned that the sale of the Pavilia Hill Property is part of an attempt by Xia to put his assets beyond the reach of the Liquidators, which should otherwise be available to satisfy claims that CEG has against him.

55.  The letter identified that the Liquidators had filed, on a confidential basis, a writ in Hong Kong naming Xia as a defendant. KS requested C&L (the firm, not their client) to give an undertaking not to deal with any of the sale proceeds contrary to KS’s other requests and without prior consent from the Liquidators.

56.  On 21 June 2024, C&L informed KS that the sale was due for completion within the month, on 27 June 2024. There is, perhaps, some ambiguity as to when exactly completion was to take place since the letter variously referred to completion being “on or before 27 June 2024”, but also “on 27 June 2024”. Anyway, it seems what was said led KS to think at that time that completion was to take place no earlier than 27 June 2024.

57.  In the same letter, C&L advised KS that if the Liquidators claim the Pavilia Hill Property sale proceeds, they should first make an urgent application for necessary court orders. In the event that KS were to obtain such orders, C&L represented that they “would of course comply” with them. C&L also maintained its professional duties first to take instructions from Xia before making any disclosures to CEG’s side. It was, therefore, clear at that point that KS’s request was to be disclosed to Xia in order to obtain those instructions.

58.  A few days later, in a letter dated 24 June 2024, C&L reiterated its position that absent an injunction order it would deal with the sale proceeds in accordance with the sale and purchase agreement, and made clear that completion may take place before 27 June 2024.

59.  Mr Manzoni refers to this chain of communications as the reason for the Liquidators’ sense of urgency, applying for and subsequently obtaining the ex parte Injunction Order. Specifically, following receipt of C&L’s second letter, CEG was of the view that Xia was aware of the correspondence and that completion was to take place any time before 27 June 2024. At the ex parte hearing, that had been explained. Mr Manzoni further points out that the deliberate choice to forgo giving any notice to Xia was vindicated by the earlier completion of the Pavilia Hill Property sale on 25 June 2024. Indeed, he says, had CEG done otherwise, the Liquidators would not have been able to preserve the proceeds of the sale (which remains the only asset of Xia known to the Liquidators, and pertinently within Hong Kong).

60.  On the other hand, Mr Barlow points out that none of CEG’s reasons indicate any urgency or secrecy, principally because Xia’s solicitors already floated the idea of court proceedings and injunctions by C&L’s letter of 21 June 2024. Mr Barlow’s submission is further that, between first contact on 19 June 2024 and its letter on the 24 June 2024, C&L advised Xia and were instructed by him to require an injunction from CEG before C&L would accede to CEG’s demands in respect of the property. Therefore, the argument runs, there was no need for secrecy nor any urgency that CEG could capitalise on in order to justify lack of notice from 21 June 2024 onwards.

61.  Mr Barlow also seeks to emphasise that CEG’s grounds said to justify lack of notice have since changed from both urgency and secrecy (as put forward at the ex parte hearing) to only urgency (as put forward in the present application).

62.  There is obviously great force in the submission that CEG should have given notice to Xia, however informal or short, at some point prior to the ex parte hearing:

(1)  First, as to secrecy, it is not unrealistic to think that Xia, through C&L, might have expected CEG and KS to proceed to apply for an injunction when such an application had been canvassed or threatened by KS, and it might be thought had in effect been invited by C&L.

(2)  Second, as to urgency, it might be said that CEG was not in a position where it could have given no notice at all, where even if the trigger for the making of the application was receipt of C&L’s letter on 24 June 2024 at 2:49 pm, the application was not made until 4:30 pm, and some time was taken to prepare the papers for it and arrange for the hearing. There was nothing as would have prevented giving at least some short notice.

63.  However, I do not think there was really any tactical advantage to be gained (or sought) from not notifying Xia during this stretch of time. It seems CEG was preparing to make the application anyway, but brought forward the making of it when greater need for speed seemed to have arisen. I think it understandable from the correspondence that the perception of the degree of any urgency changed in the afternoon of 24 June 2024; indeed, CEG/KS had no means of knowing whether completion of the sale of the Pavilia Hill Property might even take place that afternoon.

64.  Where the concern was about an early completion (in fact, a concern that completion was being moved earlier following and as a result of the correspondence), and the possibility of the proceeds of sale being moved at once, that seems to me to have justified the making of the application ex parte.

65.  Moreover, although it may be said that CEG/KS had already ‘tipped off’ Xia/C&L about a likely application for an injunction, the focus of the correspondence was on the particular asset in Hong Kong, and indeed on the proceeds of its sale – and not on a potentially much wider freezing injunction on a world-wide basis. This seems to me to have brought the application closer to a more usual application for a Mareva injunction, typically appropriately sought on an ex parte basis.

66.  Various other matters raised by Mr Barlow are without merit. He submits that:

(1)  KS never made its requests to Xia directly. But, this is irrelevant since any information given or requests made to C&L would automatically place Xia on notice.

(2)  The earlier date of actual completion was due to the purchaser asking for it. Mr Barlow suspects it was because the purchaser was “spooked” by KS’s requests. Regardless of the real reason behind the expedited completion date, I see no relevance behind this point beyond explaining the perceived need to make the application earlier than might otherwise have been planned.

(3)  CEG via KS should have given notice at least 24 hours before the ex parte hearing. But a 24-hour notice requirement is arbitrary, and the proper time or availability for giving notice may vary depending on the circumstances. Had I formed the view that notice should have been given in this case, the likely time would have been when CEG decided to apply ex parte and/or at least when it fixed the appointment on 24 June 2024.

67.  On balance, therefore, I reject the submission that the ex parte Injunction Order was obtained in a way which was procedurally so compromised that it should be set aside.

68.  I might add that, even had I thought that there was procedural error as should lead to the ex parte order being set aside, I would in the overall exercise of my discretion nevertheless have re-imposed a fresh injunction order, so as to achieve the right balance of fairness between the overall interests of the parties to this case, including light of the matters which I deal with below.

F.  Material Non-disclosure

69.  The legal principles relating to material non-disclosure in ex parte applications are straightforward. They can be summarised (without reference to authority) as follows:

(1)  An applicant is required to give full and frank disclosure in ex parte applications. The test as to materiality is an objective one. The question is whether the facts are relevant to the weighing operation which the Court has to make in deciding whether or not to grant the order.

(2)  However, this must not lead to an over-onerous burden being cast onto a plaintiff, or to allow a defendant to take advantage of minor or innocent non-disclosures that lack merit on substance.

(3)  In the context of urgent ex parte applications, the obligation of full and frank disclosure must be tempered by realism and commonsense, bearing in mind features such as:

(a)  the urgency of preparations;

(b)  the number of different issues which fall to be canvassed at the hearing (and disclosed to the Court);

(c)  the difficulty of anticipating the precise arguments which will be run by the opposing side, precisely how they will be run, and the emphasis which will be attached to each such argument; and

(d)  the danger of the principles becoming an instrument of injustice or an unattainable counsel of perfection, by reference to criticism levelled at the hands of a meticulous opposing legal team with the benefit of hindsight and time.

(4)  A failure to disclose material matters would only be sufficiently acute if they are of such weight that their omission may mislead the Court in the exercise of its discretion.

(5)  Even if a material non-disclosure arises, the Court still has a discretion not to discharge an ex parte order where: (a) the non-disclosure is innocent; or (b) an injunction would still have been granted even if disclosure was made.

70.  Mr Barlow makes several broad points. He argues that:

(1)  CEG’s ex parte application was founded upon material non-disclosures of information found in public records or matters contained within CEG’s own records.

(2)  CEG did not dispute that since the proposed spin-off of Hengda in late 2016, as per the HKEX’s requirements, Xia ceased to have any involvement in the affairs of Hengda. This meant that Xia was not involved in Hengda’s accounts.

(3)  Xia was not involved in the preparation of the CFSs (in contrast to the approval of them).

(4)  Despite being massively insolvent, CEG failed to disclose matters material to its undertaking in damages, rendering that undertaking a “worthless illusion”. Further, Xia asserts that CEG had not given any explanation suggesting its non-disclosure was inadvertent.

71.  As to non-disclosures of matters in public record:

(1)  In the affirmation of Mr Chung Wing Yan dated 5 July 2024, a solicitor of Xia’s previous solicitors, Mr Chung affirmed to matters of public record that he said CEG failed to disclose during the ex parte hearing.

(2)  I have vetted each of the matters and found all of them disclosed by CEG, either in Mr Middleton’s first affidavit (in support of the ex parte application) or by Counsel’s submission during the ex parte hearing.

(3)  For instance, CEG was alleged to have not disclosed the fact that CEG is Cayman Islands entity, that its shares was listed on the Main Board of HKEX, or that CEG had various subsidiaries in different jurisdictions and in different business. Mr Manzoni helpfully referred me to the specific paragraphs of Mr Middleton’s first affidavit in which CEG did in fact make such disclosures.

72.  The referenced matters of public record which I think are worthy of note include the following – which I have re-ordered from the way they were presented in argument.

73.  First, PricewaterhouseCoopers (“PWC”) audited CEG’s CFSs and issued a “clean” or “unqualified” audit report in respect of each consolidated financial statement. I see the argument that because PWC’s audit reports are relevant by tending to bestow the CFSs with an aura of accuracy, CEG ought to have disclosed this matter to the Court. I also accept that the answer to the criticism is not found in saying the CFSs were exhibited to the affidavit which led the application; it is trite that disclosure should be made in the affidavit (and/or the skeleton submissions) and not in the exhibits, so as to ensure the ex parte Judge will not overlook the matters which require disclosure, when ex parte applications are often dealt with when the Judge has limited reading time beforehand. Nor did the reference to the CSRC Decision assist in disclosure – for the reasons I expand upon below.

74.  However, I think most Judges would work on the starting basis that the published financial statements of a listed company would have a clean audit opinion (unless expressly identified to the Judge to be otherwise). In any event, regardless of the PWC’s unqualified opinions, (1) the Five Misstatements were not identified, and (2) Xia’s duties in respect of the CFSs remained regardless of the audited reports. Therefore, I am not convinced that this aspect of alleged non-disclosure would ever have been substantial enough to warrant a discharge.

75.  Second, it is a matter of public record that Xia resigned as a director of CEG in 2022. However, this seems to me to be irrelevant, simply because it post-dated the period covered by CEG’s claim (i.e. 2017-2021). What matters is whether Xia breached his duties as a director during his employment at CEG.

76.  Third and fourth, it was open to public knowledge that Xia was not a member of the Remuneration Committee of CEG’s board of directors, and he was never been a director or officer of Hengda, nor was he responsible for its management or the preparation of its financial accounts. However, the crux of CEG’s case is directed against Xia’s duties as a director, and not at his actual or physical involvement in drawing up the CFSs. Xia’s non-involvement in the Audit or Remuneration Committees are not materially to the point as his duties remain engaged. Similarly, Xia was the CEO of Hengda’s parent company CEG, and as such his duties extended to Hengda’s statements during CEG’s consolidation of its financial accounts and those of its subsidiaries, including Hengda.

77.  Fifth, it is pointed out that CSRC’s investigation of Hengda began only after Hengda issued bonds in Mainland China and that Xia was not involved with Hengda’s bond issuance. I think this is not material, because CEG’s claim is directed against Xia’s responsibilities as a director and not at his actual participation in the preparation of the CFSs.

78.  Sixth, the CSRC Decision did not impose a penalty directly on Xia, despite having done so on others, including for example Mr Hui. Further, that the CSRC did not give notice to Xia to defend himself. I do not think this was material. CEG could not have known whether Xia was or was not in fact given actual notice, or whether the CSRC was unable to reach Xia in order to effect notice. Regardless, I am satisfied that CEG during the ex parte hearing disclosed all that it knew in respect of the Decision, including that Xia was not penalised by that time (see especially CEG’s written submission for the ex parte hearing).

79.  Seventh, it is said that PWC was “exonerated” by the Accounting and Financial Reporting Council on 12 July 2024, but it is argued for Xia that CEG did not draw attention to this “exoneration”. But, as rightly pointed out by CEG, this was about two weeks after the ex parte hearing, and CEG could not have disclosed what had yet to occur. More fundamentally, the Council’s decision is also subject to my conclusions regarding the admissibility the CSRC’s Decision. In short, this point falls away.

80.  Regarding CEG’s undertaking as to damages, relevant guidance is found in Wah Nam Holdings Co Ltd v Excel Noble Development Ltd [2000] 3 HKC 118 at p 129C-G, where it was held that:

(1)  If a plaintiff’s financial position is such that it may be said to raise realistic doubts as to the plaintiff’s ability to honour the cross-undertaking, it becomes incumbent upon the plaintiff to make a full and frank disclosure of his financial position to the ex parte judge so as to permit the judge to determine for themselves the correct order to make in the light of such disclosures.

(2)  It does not avail the plaintiff to say that his non-disclosure was inadvertent.

(3)  Nonetheless, the Court retains a discretion to maintain the ex parte order provided it is satisfied that no injustice has been caused to the defendant.

81.  Although CEG did not disclose matters regarding its financial ability to meet the undertaking up to and during the ex parte hearing, I do not think any injustice was caused to Xia as a result. First, it does not follow that, even if CEG is massively insolvent, it necessarily has no remaining assets to meet the undertaking in damages. This is because, as is made clear in Mr Middleton’s third affirmation, CEG does have assets, including its subsidiaries, located onshore and offshore. The Liquidators estimate that the realisable value of assets directly owned by CEG may exceed HK$100 million. Further, CEG rightly points out that in Xia’s discharge application he did not seek orders requiring CEG to fortify its undertaking, nor did he demonstrate that there was such a need, either as pure submission or based upon the evidence available since the ex parte hearing.

82.  The Injunction Order therefore is unaffected by any material non-disclosure.

83.  In any event, had I found any material non-disclosure as advanced, I would have found them to have been insubstantial or de minimis, such as would not warrant a discharge of the Injunction Order on this ground. To punish CEG for any such non-disclosure would be disproportionate.

84.  I also note that the Injunction Order is of importance for CEG in respect of Xia, because he was in effect the second-in-command of CEG and its group. He was, after all, its highest paid executive officer and director.

G.  Whether Properly Formulated Claim

85.  Mr Barlow submits that CEG obtained the Injunction Order without properly formulating any claim. He cites Fourie v Le Roux [2007] 1 WLR 320 at §§35-36:

35. […] I find it very difficult to visualise a case where the grant of a freezing order, made without notice, could be said to be properly made in the absence of any formulation of the case for substantive relief that the applicant for the order intended to institute. It has to be inferred that, at the time of the application to Park J, Mr Fourie’s counsel were unclear whether the substantive proceedings would be proceedings in South Africa or in England and, in either case, unclear what the cause or causes of action would be. But at the least a draft claim form could have been prepared claiming an inquiry as to what Mr Le Roux and Fintrade had done with the assets they had seized under the Germiston order and for the return of those assets or damages for their conversion. It seems to me significant that, when the freezing order was discharged in the morning of 30 September 2004, an adequate claim form was produced by that afternoon.

36. In my opinion, in the circumstances as they stood before Park J, the protection for the defendant that ought to be associated with the grant of a without notice freezing order was absent. The protection ought to include directions about the institution of proceedings for substantive relief. Here there were none. […]

86.  But it is important to note that these observations were made against the following background:

(1)  The appellant brought an ex parte application against the two respondents in England for a Mareva injunction in aid of foreign proceedings, after being permitted by a South African court to do so.

(2)  At the ex parte hearing, Park J granted the injunction despite there being (1) an ambiguity as to where exactly substantive proceedings were to take place, namely England or South Africa, and more importantly, (2) what the nature of such proceedings would be (which Lord Scott described as “unformulated and inchoate”).

(3)  Judge Norris QC renewed the injunction, despite having been offered no further details or description regarding the eventual substantive proceedings proffered by the appellant.

(4)  The respondents successfully discharged the injunction after Deputy Judge Jarvis QC concluded that during the ex parte hearing (1) no substantive proceedings were commenced and (2) no proceedings were formulated at all.

(5)  Immediately after the injunction’s discharge, the appellant finally formulated a claim for substantive relief in support of a new Mareva order, as a result of which they succeeded in obtaining it.

(6)  It was only at this point that a claim form, which may or may not have been specifically indorsed with the appellant’s particulars of claim, came to exist for the first time. Prior to that there was no claim form at all. Further, it took a claim form made within the same day as the discharge before the new injunction was granted.

87.  Compared to the present case, Fourie is clearly distinguishable:

(1)  In this case, a Writ was filed by CEG as early as 22 March 2024. Although subject to a confidentiality order (granted by the High Court on 20 March 2024), the broad description of CEG’s claims in the Writ were made known to the judge who granted that order.

(2)  It is correct that this Writ was not served on Xia until 1 August 2024, with CEG’s SOC following suit on 8 August 2024. Yet, as Mr Manzoni explained during the ex parte hearing and the hearing for the present application, CEG was not intending to serve the Writ and its SOC before it completed drafting the latter document. It was not until how rapidly urgent the situation became for CEG during its communications with C&L regarding the Pavilia Hill Property that CEG decided to apply for an ex parte injunction. Given the complexity, CEG understandably required a substantial period of time to try to draft it properly. This is perhaps reflected in the five months it took after issuing the Writ in March 2024 before CEG served the Writ and the SOC.

(3)  My view is further fortified by the fact that during the ex parte hearing Mr Manzoni clearly pointed to CEG having already taken out a Writ, was in the process of drafting its SOC, and was intending to serve both on Xia in due course.

88.  Therefore, I do not see that CEG failed to properly formulate its claim in the same manner as it occurred in Fourie. On the contrary, CEG has set out its claim in broad form in the Writ as early as March 2024, and stated during the ex parte hearing that it was to serve it along with its SOC in the near future.

89.  At the ex parte hearing, it was explained on behalf of CEG that the Liquidators’ investigations, based on a variety of sources, had led them to conclude that the consolidated financial statements of the Group were significantly overstated, in at least each of the financial years 2017 to 2020, in particular by reference to the Five Misstatements. The Liquidators identified that, on the basis of the overstated financial statements, dividends had been approved for those financial years totalling almost US$6 billion, and that that occurred as a result of the specified breaches of duty in relation to the preparation and approval of CEG’s financial statements. Though perhaps of less significance, there was also clear reference to the receipt of remuneration totalling over RMB1.8 billion for Xia. That seems to me to be a clear – albeit high level – articulation of the case advanced against Xia.

90.  Instead, the real issue raised by Mr Barlow is as to the sufficiency or insufficiency of particulars in CEG’s claim. Specifically, he points to CEG’s “vague and unspecified” allegations of breach of Xia’s duties in respect of the CFSs and that CEG is simply lumping Xia with the other directors of CEG in a form of “guilt by association”. To some extent, I sympathise with these submissions, especially with the latter one. But on the other hand, there must be some acknowledgement of the broader picture that led to CEG’s problems.

91.  Between 2017 and 2021, Xia was a senior executive officer and director of CEG, who was in charge of the overall financing of CEG, and who was part of the board that approved the CFSs and the subsequent dividends in reliance on those same statements. Although I say this without making a definite finding, it is arguable from the evidence as it stands that Xia was part of the decision-making entity who caused the fiasco that was CEG’s dramatic collapse. Obviously, something went seriously wrong. I am of the view that CEG has formulated its case broadly to accommodate that broad picture without being unnecessarily vague or inchoate.

92.  I also take it to be sufficiently formulated for the purposes of the injunction application:

(1)  Right from Mr Middleton’s first affidavit dated 24 June 2024, CEG disclosed its case broadly framed against Xia.

(2)  As was later seen, that mirrored the Writ verbatim.

(3)  CEG pleaded further particulars in its SOC.

(4)  In section F, CEG pleaded thirteen duties which Xia owed to CEG.

(5)  CEG pleaded how Xia breached his duties at section G. This section included a particularised explanation of how Xia and the other defendants, stemming from their breached duties, caused the Five Misstatements, the misstatements of Hengda’s financial statements, and the inflated revenue of Hengda between 2017 and 2020. In respect of the latter, Xia is pleaded to have been in actual coordination and management of Hengda’s daily operations and organised and arranged the preparation of false financial reports and was directly responsible for the false records in 2019 and 2020 of Hengda.

(6)  At section H, CEG pleaded that as a result of their breaches Xia and the other defendants caused it:

(a)  to declare and pay unlawful dividends of up to RMB42,355 million (approximately US$5,993 million), which CEG could not and/or would not have paid out but for the breaches of duty by the defendants; and

(b)  to pay remuneration to each defendant between 2017 and 2020, which it would not have paid but for their breaches of duty, and in respect of Xia an amount of up to RMB899.1 million (approximately US$127.2 million).

(7)  It is pleaded that as a result of which CEG suffered loss.

(8)  CEG also pleaded conspiracy, accessorial liability (dishonest assistance) or recipient liability (knowing receipt), want of authority, money had and received, and restitution for unjust enrichment against Xia (amongst others) in sections I and J respectively.

(9)  As for relief (besides interest, costs and further relief), CEG claims a declaration that (1) Xia breached his duties, (2) the dividends declared by Xia were unlawful, and (3) Xia holds funds improperly paid by CEG and received by him as a constructive trustee. Further or in the alternative, CEG claims damages and/or equitable compensation and/or restitution against Xia for the dividends and remuneration he received. CEG lastly claims for an account of monies belonging to CEG and received by Xia, an account of what has happened to such monies, an account of profits made if any, payment of such sums upon taking of account, and inquiries, tracing and/or other directions this Court thinks fit.

93.  This account of CEG’s pleaded case adequately shows that it has provided sufficient particulars against Xia. It also aptly demonstrates the intricacy of the claim CEG is currently forced to plead in order to accommodate the number of defendants involved in addition to the broad background of CEG’s collapse. Although the Writ was broadly termed, CEG’s case has since been given more shape in its SOC. I therefore find that CEG’s case is sufficiently formulated for present purposes.

H.  Admissibility of the CSRC Decision

94.  Mr Barlow contends that the entirety of the CSRC Decision is inadmissible for any purposes.

95.  In support, he cites Savings and Investment Bank Ltd v Gasco Investments BV [1984] 1 WLR 271, where Peter Gibson J at p 280A-C accepted that Hollington v F Hewthorn & Co Ltd [1943] KB 587 operated to exclude reports of inspectors post-investigation as mere opinion in the context of an injunction application. It was held that, because of Hollington (amongst other authorities), the applicant was not permitted to exhibit a quasi-judicial report in its affidavit because the report’s findings were relied upon as evidence of their truth (p 283D-F).

96.  Mr Manzoni attacks Gasco by submitting that it was based substantially upon the rule against hearsay, which in Hong Kong has been abolished in the civil context under section 47 of the Evidence Ordinance Cap 8. Thus, he submits, Gasco’s relevance and applicability has greatly diminished.

97.  I agree in part. It is correct that Hong Kong (as well as England and Wales) has moved on since when Gasco was decided in 1984. The hearsay rule no longer applies to bar hearsay evidence in civil proceedings. Despite this, I do not read Gasco as a predominantly hearsay case. In any event, it was based fundamentally on Hollington, but that decision was not a hearsay case, nor was the principle articulated in it based on the rule against hearsay.

98.  One of the grounds mounted against the report’s admissibility in Gasco was that the inspectors’ statements were mere opinions and therefore inadmissible. If the rule against hearsay was discussed in any way it was merely to disagree with an argument from the Bar table that under Order 41 rule 5(2) an affidavit may refer to hearsay statements without providing the sources or grounds supporting them. The decision was less concerned with hearsay than with the broader principle of law that evidence may not include something that would otherwise be inadmissible, whether it be opinion, hearsay or other types of inadmissible evidence. In any event, the fundamental rationale of Hollington was based on the rule against opinion evidence.

99.  The essence is that it is duty of a Court to form its own opinion on the basis of the evidence placed before it. It would not be proper for the Court in forming that opinion to be influenced by the opinion of someone else, however reliable that person’s opinion is likely to be. Hence, findings of fact made by another decision maker are not to be admitted in a subsequent trial because the decision at that trial is to be made by the Judge appointed to hear it, and not another. The opinion of someone other than the Judge is irrelevant.

100.  However, there are logical exceptions to Hollington principle. Mr Manzoni refers to Lam VP (as Lam PJ then was) in Yifung Properties Ltd v James Nicholas Barrie Smith [2019] 1 HKLRD 36 at §14: -

We note the contention […] that it is not permissible for the court to refer to such judgments in this action. With respect, insofar as counsel contends that the courts cannot have regard to such judgments under any circumstances, we disagree with that submission. It depends on the purpose(s) for which such reference was made. Whilst we accept findings of fact made in earlier proceedings cannot be taken as evidence in the present action [Lam VP cites Hollington], the court must refer to the earlier judgments in conducting the broad merits-based assessment in the context of Henderson v Henderson issue estoppel.

101.  Of course, this passage betrays its distinguishability from our case; we are not concerned with res judicata, but with a good arguable case in support of a Mareva injunction. Nonetheless, Lam VP’s broad description of Hollington’s principle is relevant. It rightly acknowledges that previous findings made by other courts, tribunals or inquiries are admissible unless they are relied upon for their truth. In the latter situation, the principle applies to bar that purpose.

102.  Similarly, in Capital Century Textile Co Ltd v Li DianXiao[2018] HKCFI 729 at §§28-29, Lisa Wong J observed:

28. In short, the exclusion of the factual findings and conclusions of an earlier court or tribunal from subsequent proceedings serves to ensure a fair trial, not in any general sense as suggested by Mr Tsang, but in the specific sense that the judge appointed to hear and determine the subsequent case makes his own decision on the evidence and submissions presented to him, without being influenced by the opinion of an earlier adjudicator.

29. Such concern however does not exist in relation to the evidence referred to in an earlier judgment such as the contents of documents or the evidence of witnesses.

103.  She went on to hold, at §31, that a PRC judgment that contained statements or reported statements of factual evidence before the court which rendered the judgment are not excluded by the Hollington principle.

104.  Another instance of the exception is found in Zillion Global Limited v UBS AG[2020] HKCFI 953 at §15, where Godfrey Lam J (as Godfrey Lam JA then was) affirmed Capital Century:

It is also submitted on behalf of the plaintiff that the judgment in the Singapore action is inadmissible. With respect, this is nowhere to the point. We are not here concerned with the findings and conclusions in a foreign judgment. We are not even concerned with a summary or digest of evidence set out in a foreign judgment, which would be admissible: see Capital Century Textile Co Ltd v Li DianXiao[2018] HKCFI 729 at §29; Rogers v Hoyle [2015] QB 265. Instead we are dealing with verbatim transcript of the oral factual statements made by Mr Pan and Ms Zhang. The fact that they were made overseas and in the context of legal proceedings there does not alter their nature as primary factual statements made by the persons with direct personal knowledge of the matters referred to.

105.  There is a dividing line to be drawn between (1) a narrative of the evidence and (2) the findings and conclusions in the light of that evidence. Hence, the question in the present case is as to the purpose for which CEG is citing the CSRC Decision.

106.  In his written submissions, Mr Manzoni argues that CEG relies upon the CSRC Decision as evidence of the fact that the CSRC investigated Hengda and certain individuals, including Xia. I agree that is permissible, as it falls within the exception to the Hollington principle.

107.  However, Mr Manzoni also says that CEG relies on the CSRC Decision as evidence of the findings made by the CSRC in respect of Xia, which findings were “confirmatory” of the Liquidators’ own views or findings in respect of the CFSs and Xia’s responsibility for its misstatements. Hence, Mr Manzoni submits it is proper for CEG to rely on the CSRC Decision as part of the broad enquiry into whether there was a good arguable case against Xia. I disagree.

108.  The CSRC’s findings are simply not admissible. What CEG is seeking to do is to adduce these findings and bypass Hollington’s principle, by relying upon the Decision as confirming the Liquidators’ own findings. Regardless of how one labels it, this is no different from directly relying upon the CSRC’s findings.

109.  Furthermore, I do not accept that the authorities cited by Mr Manzoni support the broad proposition that when assessing a plaintiff’s case on good arguable case a court may have recourse to such findings.

(1)  Lam VP in Yifung allowed recourse to extraneous findings because that case was a Henderson abuse case, which allowed a broad approach to assessing alleged abuses in that context. That is distinguishable from the present case.

(2)  In Wei Xing v Willwin Development (Asia) Co Ltd (unreported, HCMP 1922/2016, 13 April 2017), Lam J (as Godfrey Lam JA then was) was dealing with an application under section 740 of the Companies Ordinance, and was concerned with the bona fides of an applicant, which is not the same as the present case.

110.  Mr Manzoni has not cited any direct authority that supports his proposition that, in the present context, the Court may have recourse to the otherwise inadmissible findings in extraneous reports or judgments when assessing a good arguable case for a Mareva injunction. This is not surprising, as it would make little sense for the assessment of a good arguable case to include reference to materials which could never be deployed at the trial of that case.

111.  CEG is seeking to rely upon the findings of fact made in the CSRC Decision, and not upon the evidence cited therein. Therefore, even if the CSRC is thought to be “confirmatory” of the Liquidators’ own findings, the findings made in the CSRC Decision are inadmissible in the present application. CEG cannot rely upon it as supporting its good arguable case.

I.  The Liquidators’ Findings

112.  In both his written and oral submissions, Mr Barlow repeatedly submitted that the parts of Mr Middleton’s affidavit evidence, where he made references to the Liquidators’ findings from their investigations, were merely “opinions” and should accordingly be treated as inadmissible, or at least given little weight.

113.  I disagree. Under RHC Order 41 rule 5(2), an affidavit sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof. Mr Middleton in his fourth affidavit in support of the present application sets out his sources and grounds for each of his statements of information or belief. I shall not review each one, save to mention that Xia has not drawn the Court’s attention to any particular statement lacking a source or grounds. I therefore find the Liquidators’ findings as described by Mr Middleton in his affidavit (including his first, second, and third affidavits) as admissible and relevant evidence, to be accorded appropriate weight depending upon the circumstances.

J.  Whether Good Arguable Case

114.  Mr Manzoni raises the following as grounds for CEG’s good arguable case:

(1)  First, CEG’s CFSs were significantly misstated because of the Five Misstatements.

(2)  Second, Xia was in breach of his duties in respect of (1) the preparation and approval of the CFSs and (2) the approval of the payment of dividends totalling US$6 billion for the period between 2017 and 2020.

(3)  Third, Xia derived substantial financial gains for himself in the form of salary and other emoluments from CEG between 2009 and 2022, totalling over RMB1.8 billion.

J.1  The Five Misstatements

115.  From the evidence, I accept that there is at least a good arguable case that the CFSs suffered from various misstatements.

116.  First, it is apparent from the financial statements for 2021 that revenue up to 31 December 2020 was recorded based upon an internal policy that required revenue recognition to occur at “the earlier of the acceptance of the property by the customer or according to the sales contract, the property was deemed to have been accepted”. A change of policy was implemented in 2021, when in addition to the conditions for recognition above, revenue would be recognised after (1) construction completion certificates are obtained or (2) the delivery of property inventory to property owners for use. The result of this change was immense. CEG reversed RMB664 billion of revenue thus far recognised up to 2021. This amounts to around 27% of the total cumulative revenue recorded by CEG’s group from 2009 to 2020 of RMB2.49 trillion. This of course raises questions regarding the propriety of CEG’s previous revenue recognition method and, if corrected for the previous years, how that would have an impact upon CEG’s true state of financial affairs.

117.  Second, a significant proportion of CEG and its group’s assets were made up of two types of properties. The first type was “properties under development”, and the second was “completed properties held for sale”, which are self-explanatory. Together they amounted to 61% of CEG and its group’s total assets. Between 2009 and 2020 the write-downs for both assets were trivial, with the highest write-down occurring at 0.1% of the total value of both assets. However, in the 2021 statements, the write-down was RMB373 billion, or around 27% of the total value of both assets reported in the 2020 statements. CEG has referred to analyst reports made by J Capital Research and GMT Research Limited between 2014 and 2016. Whilst the opinions in those reports are inadmissible, the fact that the opinions were publicly expressed and available for those managing CEG to consider is relevant and admissible, in the context of the later substantial write-down of values between 2020 and 2021.

118.  Third, CEG also had a third type of property classified as “investment properties”, which included amongst others car parks attached to its residential development projects, commercial buildings and retail stores. The reported value of the group’s investment properties in 2020 was RMB165.8 billion, or around 7% of total assets. For the period between 2009 and 2020, CEG recorded fair value gains on its investment properties totalling RMB58 billion. However, in 2021, the write-downs amounted to RMB31 billion, or more than half of the cumulative fair value gains. CEG also reclassified over RMB40 billion as properties under development of assets previously classified as investments.

119.  Fourth, CEG and its group capitalised a large amount of interest expenses it incurred in respect of its borrowings. Essentially, between 2009 and 2020, the group had an average capitalisation of 74% and 100%, and was consistently the highest rate amongst its competitors during this period. However, in 2021 and 2022, the group reduced its capitalisation rate to 44% and 52% respectively. This is sizeable, if not strictly a significant reduction since the rates in 2021 and 2022 were then comparable to the rates of its competitors (who hovered just shy of 40% in 2020).

120.  Fifth, between 2017 and 2020 CEG’s audited reports were given a favourable going concern treatment by PWC. Yet by 2021, PWC admitted that there were multiple uncertainties relating to going concern, which included significant net loss and net liabilities of the group, the inadequate cash flows to meet borrowings, amongst others. Further, CEG referred to the fact that the Accounting and Financial Reporting Council and analyst reports raised queries about the going concern assessment in the CFSs. In so far as CEG relies upon the fact of queries being made, I accept these are admissible, and I do find them relevant in impugning the propriety of the going concern assessment. I therefore am inclined to find that is a good arguable case that the going concern assessment was inappropriate for each year between 2017 and 2020.

J.2  Breach of fiduciary duties

121.  In gist, Mr Barlow argues that Xia was too high up the management chain to have been directly involved in the preparation of the CFSs, much less the financial statements of CEG’s subsidiaries, in particular Hengda. Mr Manzoni meanwhile submits that this is an incorrect description of the evidence, and that Xia was directly involved. In any event, he says, Xia still had duties as a director to ensure with reasonable skill, care and diligence that the CFSs were properly prepared and accurate.

122.  First, the contemporaneous records indicate that Xia was integrally involved in CEG’s financial affairs and had ultimate oversight of its daily operations.

(1)  CEG’s annual reports between 2017 and 2020 each state that Xia was in charge of CEG’s daily operations, which included its financial and capital operations.

(2)  CEG’s board meeting minutes indicate that Xia attended relevant meetings where CEG’s financial results were discussed and approved. The agenda for the meeting regarding CEG’s annual results for 2019 indicates that Xia was in attendance and was presented CEG’s annual operating results and financial condition.

(3)  In a letter dated 31 January 2023 from Xia’s lawyers to the Accounting and Financial Reporting Council, Xia confirmed that he was amongst those who had ultimate responsibility for preparing CEG’s financial statements for 2020.

(4)  In a letter dated 15 March 2023 from Xia’s lawyers to Reed Smith Richards Butler, Xia admitted that CEG’s Finance Centre was led by him as CEG’s chief financial officer.

(5)  Xia in his affidavit admits being responsible for overseeing CEG’s financial management and fund-raising activities.

123.  Therefore, he must or ought to have had a profound knowledge and appreciation of CEG’s financial position if he were to carry out his responsibilities. There is no need to refer to the findings of Reed Smith in its report, which are inadmissible.

124.  Second, even without the contemporaneous documentary materials, Xia as director bore a duty to exercise reasonable skill, care and diligence when preparing the CFSs of CEG. In Re Barings plc and others (No5) [1999] 1 BCLC 433 at p 489a-c, it was held that:

(1)  Directors have a continuing duty to acquire and maintain a sufficient knowledge and understanding of the company’s business in order to enable them to properly discharge their duties as directors.

(2)  Directors may delegate their functions to those below the management chain, but they are not allowed to delegate their responsibility in carrying them out with reasonable skill, care and diligence. Thus, directors retain the duty to supervise the discharge of their delegated functions.

(3)  The extent of the duty, and whether it has been discharged, depends on the facts of each case, including the director’s role in the company’s management.

125.  Further, in Cyberworks Audio Video Technology Ltd v Mei Ah (HK) Co Ltd[2020] HKCFI 398 at §§62-64, I recognised that a director’s duty to act with reasonable skill and care includes a minimum expectation that they should have basic concepts and financial literacy to be in the position to properly identify and question any apparent errors in the company’s financial statements:

62. It is trite that directors owe fiduciary duties to the company of which they are directors. The distinguishing obligation of any fiduciary is the obligation of loyalty, comprising at a minimum the duty to act in good faith, the duty not to place himself in a position where his duty and interest may conflict, and the duty not to act for his own benefit or the benefit of a third person without the informed consent of his principal.

63. It is also trite that directors are required to conduct themselves with standards of a reasonably diligent person having both (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and (b) the general knowledge, skill and experience that the particular director has. Directors are, therefore, required on a continuous basis to obtain and maintain sufficient knowledge and understanding of the company’s business so as to enable them to discharge their duties as directors.

64. In the case of Australian Securities and Investments Commission v Healey [2011] FCA 717, at §§20-22, commenting that the basic concepts and financial literacy required by directors to be in a position properly to question any apparent errors in the financial statements are not complicated, and in a way with which I respectfully agree, Middleton J put the matter as follows:

“Nothing I decide in this case should indicate that directors are required to have infinite knowledge or ability. Directors are entitled to delegate to others the preparation of books and accounts and the carrying on of the day-to-day affairs of the company. What each director is expected to do is to take a diligent and intelligent interest in the information available to him or her, to understand that information, and apply an enquiring mind to the responsibilities placed upon him or her. Such a responsibility arises in this proceeding in adopting and approving the financial statements. Because of their nature and importance, the directors must understand and focus upon the content of financial statements, and if necessary, make further enquiries if matters revealed in these financial statements call for such enquiries.

No less is required by the objective duty of skill, competence and diligence in the understanding of the financial statements that are to be disclosed to the public as adopted and approved by the directors.

No one suggests that a director should not personally read and consider the financial statements before that director approves or adopts such financial statements. A reading of the financial statements by the directors is not merely undertaken for the purposes of correcting typographical or grammatical errors or even immaterial errors of arithmetic. The reading of financial statements by a director is for a higher and more important purpose: to ensure, as far as possible and reasonable, that the information included therein is accurate. The scrutiny by the directors of the financial statements involves understanding their content. The director should then bring the information known or available to him or her in the normal discharge of the director’s responsibilities to the task of focusing upon the financial statements. These are the minimal steps a person in the position of any director would and should take before participating in the approval or adoption of the financial statements and their own directors’ reports.”

126.  CEG also makes reference to sections 379 and 380 of the Companies Ordinance Cap 622, which materially provide as follows:

379. Directors must prepare financial statements

(1) […] a company’s directors must prepare for each financial year statements that comply with sections 380 […]

380. General requirements for financial statements

(1) The annual financial statements for a financial year—

(a) must give a true and fair view of the financial position of the company as at the end of the financial year; and

(b) must give a true and fair view of the financial performance of the company for the financial year.

(2) The annual consolidated financial statements for a financial year—

(a) must give a true and fair view of the financial position of the company, and all the subsidiary undertakings, as a whole as at the end of the financial year; and

(b) must give a true and fair view of the financial performance of the company, and all the subsidiary undertakings, as a whole for the financial year.

127.  There is, therefore, a statutory duty imposed on directors like Xia to ensure that the CFSs were accurate. It can be noted that neither sections 379 and 380 require direct or physical involvement in doing so.

128.  Xia is thus incorrect to insist that he bore no duty or responsibility to ensure the accuracy of the CFSs, just because he was not directly involved in preparing them. That argument otherwise condones delegation of responsibility, which as a director Xia retained even if he delegated the performance of his functions.

129.  CEG also submits that Xia’s approval of the dividends constituted another instance of breaching his duties as a director of CEG. In particular, had the CFSs been properly prepared and presented, the Five Misstatements would have been discovered, and the dividends should not have been approved. Thus, the dividends paid out were unlawful.

130.  I note that this argument is an example of lumping Xia in with the other defendants in respect of their breaches of duties. It is unclear from CEG’s pleaded case which defendant was responsible for which years when dividends were paid. Indeed, CEG pleads at §53 of its SOC that Xia attended the board meeting for 2019 and 2020, but not 2017 and 2018. This suggests that at least for those two years Xia was not involved in the approving of dividends. Nevertheless, Xia was involved and present during meetings when dividends were approved. There is a good arguable case that they should not have been approved by the board in light of the substantial misstatements in the CFSs. Had the directors, including Xia, performed their duties, it is arguable that the misstatements would have been discovered by the directors, and as a result the dividends would not have been approved.

131.  In further support of these points, Mr Manzoni refers to Moulin Global Eyecare Holdings Ltd (In Liq) v Olivia Lee Sin Mei[2019] HKCFI 1715. In that case, the defendant was held to have breached her duty as a director of the plaintiff in failing to fully investigate matters that placed her on notice of the fraud perpetrated by senior management. If she had investigated she would have discovered that no dividends should have been paid and no share repurchases would have been made (§68). Peter Ng J found that the dividends were unlawfully paid (§72) and also found the defendant strictly liable for the unlawful dividends (§81). In support of that finding, he referred (§76) to Re Exchange Banking Company (1882) 21 Ch.D 519 and Bairstow v Queens Moat Houses plc [2001] 2 BCLC 531 for the proposition that since unlawful dividends are unauthorised returns of capital the directors who approved it are liable to replace the amounts so paid. He also referred (§79) to Re Paycheck Services 3 Ltd [2010] 1 WLR 2794 at §§45-47, and the finding, albeit obiter, that a director’s liability for approving unlawful dividends is strict. Thus, there is at least persuasive authority to the effect that breaching the director’s duty – in failing to ensure accurate financial statements and then paying out dividends on the profits stated in those accounts – is strict.

132.  Mr Barlow argues that CEG’s arguments is flawed because it imposes a strict liability upon directors who in reality had no direct involvement in the preparation of financial statements of a company. I disagree. There is a clear distinction between (1) a breach of duty committed by a director, which as I indicated above occurs regardless of that director’s direct involvement, and (2) a causative link between that breach and the losses suffered by the company. I have not overlooked any requirement of causation, but that seems to me to be a matter for trial.

133.  In any event, given Xia’s statutory duties and the strict nature of unlawful dividend liability, I am inclined to reject Mr Barlow’s insistence that CEG is advancing a “liquidators’ fantasy” of strict liability whenever a director fails to adhere to his duties despite having had no direct involvement in the physical carrying out of those duties.

134.  Mr Barlow also cited Galoo Ltd (In Liq) v Bright Grahame Murray (a firm) [1994] 1 WLR 1360 and JSI Shipping (S) Pte Ltd v Teofoongwongldoon (a firm) [2007] 4 SLR 460 in support. However, those cases are concerned with the duties of auditors, not directors, and I do not think they lend any assistance.

135.  Therefore, I consider that CEG has raised a good arguable case that Xia breached his duties as a director of CEG, in respect of the preparation and approval of the CFSs, and the approval and payment of dividends on the basis of the CFSs.

J.3  CEG’s knowing receipt claim

136.  Though there is also a pleaded claim in dishonest assistance, the focus of the argument has been on CEG’s claim in knowing receipt. In the SOC, the knowing receipt claim against Xia is pleaded on the basis that (1) as a consequence of his breaches of fiduciary duty, Xia beneficially received significant sums in remuneration, and (2) at the time of the receipt Xia was aware of facts such that it was unconscionable for him to retain the monies received by him, or to apply them to the use or benefit of any person other than CEG, making Xia liable to account to CEG as constructive trustee.

137.  Mr Barlow argues Xia earned his remuneration from 2009 to 2022 in consideration for services rendered under a valid employment contract with CEG. Though Mr Barlow did not cite any authority for his argument, Mr Manzoni submits that to the extent this was in reliance on the dictum of Lord Nicholls of Birkenhead in Criterion Properties v Stratford UK Properties [2004] 1 WLR 1846 at §4, it is a proposition based upon a misunderstanding of that case.

138.  In an obiter passage it was said:

If a company (A) enters into an agreement with B under which B acquires benefits from A, A’s ability to recover these benefits from B depends essentially on whether the agreement is binding on A. If the directors of A were acting for an improper purpose when they entered into the agreement, A’s ability to have the agreement set aside depends upon the application of familiar principles of agency and company law. If, applying these principles, the agreement is found to be valid and is therefore not set aside, questions of ‘knowing receipt’ by B do not arise. So far as B is concerned there can be no question of A’s assets having been misapplied. B acquired the assets from A, the legal and beneficial owner of the assets, under a valid agreement made between him and A. If, however, the agreement is set aside, B will be accountable for any benefits he may have received from A under the agreement.

139.  The proposition of law that this has been said to expound is that a claim for knowing receipt will not arise if the assets or monies received were transferred pursuant to a valid contract: see, for example, Galleria (Hong Kong) Ltd (In liq.) & Anor v Cosimo Borrelli & Ors[2019] HKCFI 1877 §196.

140.  However, despite the reference to knowing receipt, Criterion as a whole was not chiefly concerned with it. Rather, the case was primarily concerned with the question of authority, either actual or apparent. On its particular facts, the directors of A entered into a “poison pill” agreement with B, an arrangement designed to detract a hostile takeover of A by a predator third party. The takeover never took place. However, B held A to the contract, which conferred a put option on B that allowed its interests in a partnership with A to be bought out by A on favourable terms set by B as it thought fit. The put option was exercisable only in certain situations, and one such situation arose after one of A’s directors was dismissed by its board when the latter discovered the poison pill agreement. A sued its directors and B, arguing that the contract was entered into in excess of actual or apparent authority because its directors breached their duties to A after entering into a contract that was and could not be in the commercial interests of A.

141.  The courts below had held that the issues of (1) whether there was lack of authority (i.e. whether the contract was enforceable) was the flipside of (2) whether the assets were knowingly received in breach of fiduciary duty. The House of Lords disagreed with this approach, since it elided two separate issues. It was against that context that Lord Nicholls said what he did at §4. If the issue was whether the contract was entered into for want of authority, then the ultimate issue is about that contract’s validity. Lord Nicholls was saying that under this issue questions of knowing receipt do not even begin to arise.

142.  Lord Scott of Foscote at §27 obviously agreed:

This is neither a case of ‘knowing receipt’ nor one of ‘knowing assistance’. The word ‘receipt’ in the expression ‘knowing receipt’ refers to the receipt by one person from another of assets. A person who enters into a binding contract acquires contractual rights that are created by the contract. There may be a ‘receipt’ of assets when the contract is completed and the question whether there is ‘knowing receipt’ may become a relevant question at that stage. But until then there is simply an executory contract which may or may not be enforceable. The creation by the contract of contractual rights does not constitute a ‘receipt’ of assets in the sense that a ‘knowing receipt’ involves a receipt of assets. The question whether an executory contract is enforceable is quite different from the question whether assets from which there has been a ‘knowing receipt’ are recoverable from the recipient. To confuse the two questions is likely to lead, and in the present case has, in my opinion, led, to further confusion.

143.  Lord Scott held that the case turned on the authority issue. At §30, he said:

This case turns, in my opinion, on the ‘authority’ issue. If [the directors] either had actual authority to conclude the [agreement], given by a person or body with power to confer that authority […], or, if they did not have actual authority, had apparent authority to do so, then I can see no reason why the [agreement] should not be held enforceable against [A]. If, on the other hand, [the directors] had neither actual nor apparent authority to conclude the [agreement], then the [agreement] would not be [A’s] contract. The conscionability or unconscionability of [B’s] behaviour in seeking to hold [A] to the [agreement] would in either case be irrelevant.

144.  Further, in China Metal Recycling (Holdings) Ltd (In Liq) v UBS AG[2021] HKCA 1450, the Court of Appeal distinguished Criterion. Mr Manzoni relies on this, including where at §25 it was stated:

The question that arises is whether money obtained via a separate breach of fiduciary duty and subsequently paid to a creditor pursuant to an obligation under a valid contract may be recovered from that creditor based on knowing receipt. It may in our view be argued that in such a case, the unconscionability in retaining the money and the consequent obligation to repay it do not arise from any invalidity of the transaction under which the money was paid (as envisaged in Lord Nicholls’ passage in Criterion […]), but from the separate breach of fiduciary duty through which the money was obtained in the first place and the creditor’s relevant knowledge when it received the money. It seems to us at least arguable that the Criterion principle does not have the effect of precluding a claim against the creditor for knowing receipt even where the contract is not set aside.

145.  Mr Manzoni submits that China Metal is illustrative of the distinction that in the present case compared to Criterion. However, it can be noted that on the available evidence, there is no indication that Xia was connected with or had any involvement, influence or power over his remuneration. Further, the facts of that case differ from the facts of the present case. There a separate breach of duty occurred from the director’s fraudulent conduct, of which the creditor had knowledge. Here, CEG accuses Xia of being in knowing receipt of remuneration from the same company to whom he owed his breached duties. The difference is that Xia is not a recipient separate from the company, compared to China Metal where an external creditor, not a director, was accused of knowing receipt. Indeed, knowing receipt claims would normally arise in misapplication of corporate property cases when (1) the director effects (2) transfers of company assets to (3) a third party recipient.

146.  Further, I note that the law on knowing receipt has recently been considered by the UK Supreme Court in Byers v Saudi National Bank (SC(E)) [2024] 2 WLR 237 (though neither Mr Manzoni nor Mr Barlow made any reference to it).

147.  The Supreme Court was unanimous as to the conclusion on law and result, though there was divergence as to the categorisation or nature of knowing receipt. In the case, the Supreme Court was confronted with the “single issue” of whether a claim for knowing receipt required that a plaintiff has retained an equitable interest in the assets transferred to the defendant at the time when it reached the defendant’s hands before he either transferred, dissipated or destroyed the property.

148.  On its facts, the appellant company (C) was in the process of being wound-up. A trustee (T) held some securities on trust for C. T then transferred these securities to D, the purpose of such transfers being to discharge debts T owed to D. Thus, T was in breach of his duties as trustee. The law governing the transfers was that of Saudi Arabia, which does not recognise a distinction between legal and beneficial ownership as understood under English law. Hence, D received clean and unencumbered title to the securities, particularly after registering them in its own name, even though they were transferred in breach of trust.

149.  The ultimate conclusion was that C cannot claim against D for knowing receipt, even if on the facts D had the requisite knowledge, because C ceased to have an equitable proprietary interest in the securities when they were transferred to D. The conclusion is based on two broad grounds:

(1)  There is a deep-rooted contradiction between having clean title and being under an obligation to restore the property to someone else, to look after it in the meantime, and to account for any use of the property inconsistent with those duties. If the recipient is able to say “the property is mine”, how can he or she be subject to duties designed to protect the equitable beneficial interest of someone else?

(2)  Although inadequate in answering the issue directly, the authorities lead to the same conclusion. A trust, with a concomitant splitting of legal title from the company’s continuing beneficial interest in the misapplied property occurred at the moment of the transfer which constituted the misapplication. Legal title passed to the transferee, but the equitable beneficial interest remained with the company. Therefore the company retained the equitable interest sufficient to support a proprietary claim to the property or its traceable proceeds, and a knowing receipt personal claim against any recipient who had received the property with notice of the misapplication, subject to any overriding of its equitable interest in the meantime. A successful outcome to a knowing receipt claim depends upon a contest between equitable priorities, i.e. between a continuing equitable interest of the claimant and such interest as the recipient may have acquired.

150.  Indeed, if a knowing receipt claim would impose trust-like obligations on a recipient, it might be thought redundant to do so if that “recipient” already breached similar, if not identical, duties at the outset. There is a distinction between (1) a claim based upon a pre-existing relationship recognised by equity and (2) a claim between a stranger and a plaintiff who lack any relationship. In the former, claims for breaches of duty are appropriate, and in the latter, proprietary claims are the norm, and such claims are based upon a continuing equitable interest of the plaintiff in the property before the claim is properly constituted. The defendant to a knowing receipt claim is just as much a stranger to the claimant, with no prior relationship recognised by equity, as is a recipient against whom a purely proprietary claim is made.

151.  In this case, I am not sure that CEG has demonstrated how it retained an equitable proprietary interest over the remuneration paid to Xia – not least where it has conceded that Xia’s employment contract with CEG was valid. Further, CEG’s case is not that Xia misapplied CEG’s monies under his control by somehow procuring such monies as his remuneration. Rather, CEG argues that Xia knew or should have known that the remuneration he was receiving was as a result of misstatements in the CFSs caused by his own breaches of duty.

152.  On this analysis, I have serious doubt as to whether CEG has established a good arguable case in this respect against Xia. I think likely not. But, as Mr Manzoni says, this is a small part of the overall claim.

K.  Insufficient Assets Within the Jurisdiction

153.  Xia does not contest the fact that he (1) has the proceeds from the sale of Pavilia Hill Property and (2) has several bank accounts in his name located in Hong Kong. Together they amount to something in the region of HK$42 million.

154.  I agree with CEG that given the quantum of its claim, the amount of Xia’s assets within the jurisdiction establishes the necessary insufficiency.

155.  I also agree that given Xia’s Canadian citizenship and his apparently fleeing Mainland China, there is high possibility that Xia does have assets abroad – which the Liquidators will be able to identify in due course.

L.  Risk of Dissipation

156.  Mr Manzoni advances three broad points in support of the stated risk of dissipation:

(1)  First, Xia’s attempts at selling the Pavilia Hill Property, his insistence via C&L for a prior court order, and the expedited date of completion are all indications of Xia’s attempts at realising his real estate in Hong Kong, and attempting to dissipate the resulting proceeds.

(2)  Second, subsequent to the Injunction Order, Xia has shown a sensitivity to publicising information regarding his current location. CEG submits that Xia’s fear for his safety is exaggerated and disingenuous since there is no indication that after the confidentiality orders over these proceedings have been lifted that his safety was in any way affected. CEG also submits other matters, such as Xia’s requests for a top up on his legal fees allowance and inconsistencies regarding his description of his assets in Hong Kong.

(3)  Third, Xia’s past conduct during his tenure and up to his resignation demonstrates his low commercial morality. In support, CEG points to Xia’s involvement in a scheme where deposit pledges of CEG’s publicly listed subsidiary Evergrande Property Services Group Limited worth around RMB13.4 billion were used as collateral to secure loans which were then diverted back to the parent group of CEG. This was designed to circumvent disclosure obligations under the Listing Rules of HKEX. Further, Xia’s resignation was in fact as a result of CEG’s board’s request for him to do by virtue of his misconduct and involvement in the scheme.

157.  As to Xia’s attempts in selling the Pavilia Hill Property, I agree that Xia’s conduct was indicative of an attempt at liquidating his assets in order to make it easier for him to dissipate any proceeds abroad. I note that Xia repeatedly said that the expedited sale being on the request of the purchaser. But, even if true, (1) Xia’s solicitors never sought to inform CEG/KS of the new completion date, notwithstanding the ongoing correspondence on the point, and (2) this does not necessarily mean that Xia was not seeking to dissipate his assets quickly.

158.  As for Xia’s fears for his safety, they may be exaggerated, but they may not. However, I see this as only increasing the risk of dissipation. I view Xia’s stated fear as likely fuel for attempts at realising as much of his assets as possible in liquid form in order to make it easier for him to transfer them at his pleasure.

159.  Lastly, in respect of Xia’s conduct in the scheme, I agree that is some evidence of a low commercial morality. There is a good indication from CEG’s public pronouncement dated 22 July 2022 that it in effect fired Xia by asking him to resign because of his role in the scheme. Nothing said by or on behalf of Xia significantly detracts from the risk of dissipation viewed against the circumstances as a whole.

160.  Looked at in context and with the common sense approach necessary, the material evidence as a whole seems to me to identify a solid basis for concluding that there is a real risk of unjustified dissipation of assets.

161.  I find that there is a serious risk of dissipation and that risk was evident both at and since the ex parte hearing on 24 June 2024.

M.  P’s Alleged New Case

162.  In both his written and oral submissions, Mr Barlow stresses that CEG has changed its case from what it was originally, as advanced during the ex parte hearing. The new case alleged arises from the point that CEG has conceded that Xia was not involved in the preparation of CEG’s CFSs.

163.  I disagree. This is because the difference, if any, is without significance. CEG dropping its reference to “preparing” the CFSs is neither here nor there. As I have discussed above, CEG’s case has always been directed against Xia’s duties in respect of the CFSs and their accuracy and approval, as well as the approval of the dividends on the faith of the profits stated in them. It was never about Xia’s direct participation in drawing up the statements.

164.  Overall, therefore, I hold that the Continuation Summons should succeed. In consequence, Xia’s disclosure obligations must be met, and will be reinstated. I propose to allow Xia slightly more than the 7 days for disclosure, as was suggested by CEG. But, against the chronology of these proceedings, and working on the basis that Xia and those acting for him must have contemplated the need to provide this disclosure, and so should have been gathering the necessary materials, I see no reason to grant any longer period of time.

N.  The Variation Summons

165.  On the Variation Summons, there are limited areas of dispute. This is because CEG has agreed (1) to consent to the transfer of the balance of the Pavilia Hill sale proceeds to Xia’s current solicitors, (2) conditionally to consent to an increase in the exception for legal fees incurred before 2 October 2024 to HK$2.1 million, and (3) that provision should be made for a “reasonable sum” in respect of the period after 3 October 2024.

166.  I am content to make those orders, save that I consider the exercise my discretion should permit the exception for legal fees incurred before 2 October 2024 to be in the sum of HK$2.5 million – which seems to me to take appropriate account of the fact of the amount of legal fees said to have been already incurred, and any material change in circumstances giving rise to the incidence of such fees.

167.  The main area of dispute is because CEG objects to Xia’s application for the legal fees to come out of the Pavilia Hills sale balance. In that regard, Mr Barlow submits that: (1) any concern that the Pavilia Hill sale balance is the only visible asset will fall away if Xia is obliged to provide ancillary disclosure; (2) it is reasonable for Xia to use his own funds in Hong Kong, and already in his solicitors’ hands, to pay his legal fees in Hong Kong to those same solicitors – rather than being required to source funds internationally – and that would not amount to any attempt to dissipate, or frustrate the execution of judgment; any submission proposing a condition that Xia does not have other assets available to meet the legal fees or other expenses would not apply in the case where the entirety of Xia’s assets are injuncted.

168.  I see some force in those submissions. But, on balance, it seems to me that making an order as to whether Xia can have recourse to the funds in the hands of his Hong Kong solicitors to pay his Hong Kong legal fees should nevertheless await the asset disclosure which I have ordered as a consequence of continuing the Injunction Order.

169.  Once proper asset disclosure has occurred, this matter can be revisited. I therefore adjourn this aspect of the Variation Summons sine die, with liberty to restore.

O.  The Consolidation Summons

170.  The various applications in relation to the injunction orders have been made, not in HCA 551/2024, but in HCMP 1080/2024. That was simply because of the original need to maintain the confidentiality of the HCA Action. Now that the confidentiality in respect of that action has been lifted, Mr Manzoni argues that the rationale for two separate actions has simply fallen away, and procedural efficiency points to consolidation of the two actions.

171.  The application is opposed by Mr Vincent Chen for Ms Ding, and by Mr Barlow for Xia.

172.  There can be little dispute about the applicable principles relating to potential consolidation of two actions (or making an order that the actions be tried at the same time one immediately after another), and they do not need to be rehearsed at any great length. Consolidation may be appropriate where some common question of law or fact arises in both actions, all the rights to relief are in respect of or arise out of the same transaction or series of transactions, or for some other reason it is desirable to make an order for consolidation.

173.  The main purpose of consolidation is to save time and costs, and the decision whether to consolidate or not is an unfettered exercise of case management. That permits appropriate flexibility suitable to the particular circumstances, but the Court must nevertheless be satisfied it would be proper and expedient to make such an order in the circumstances.

174.  The contest between the parties is effectively only as to the timing of a potential consolidation order.

175.  Mr Chen submits that it is not expedient or proper to order consolidation now where: (1) each of the two sets of proceedings serve their respective purposes; (2) the HCMP Action was commenced by way of originating summons so that no pleadings would ordinarily be filed, unlike in the HCA action; (3) CEG fails to identify how ordering consolidation now can save any costs for any party; (4) the parties to the proceedings are overlapping but not identical, and consolidation may increase costs for the non-overlapping parties; and (5) any proposed consolidation should only be considered and determined after the discharge applications have been determined, when there remains the possibility that the HCMP action would serve no further purpose and become irrelevant.

176.  For his part, Mr Barlow submits that: (1) the consolidation application is made only for the convenience of CEG, and certainly not for the convenience of Xia; (2) the HCMP action is self-contained; (3) consideration of consolidation should at least await, or be deferred until after, the various discharge/variation applications have been dealt with; (4) the likely effect of consolidation would only cause delay.

177.  Mr Manzoni submits that: (1) the circumstances giving rise to the existence of two actions have now fallen away; (2) there are clearly common questions of law and fact arising under the two actions, with a substantial overlap of the parties involved; (3) more efficient case management would follow from a consolidation; (4) that discharge applications have been made in the HCMP Action is only the result of the seeking and grant of injunctions in those separate proceedings, brought so as to preserve the confidentiality of the HCA Action at the time; (5) if Ms Ding were ever to cease to be a party to the HCMP Action, there would be even less basis for her to oppose consolidation.

178.  In my view, where the original basis for commencing the HCMP action – the need at the time to keep confidentiality of the HCA action – has fallen away, that point strongly in favour of consolidation. Indeed, had there been no need for confidentiality, there is no question of there having been two sets of proceedings, and the HCA action would have comprised interlocutory injunctive steps as in any ordinary case. I see no reason now to continue the separate proceedings, and it seems to me to be just and expedient for the two actions to be consolidated. I so order. I also direct that any affidavit filed in either one action shall stand as evidence in the consolidated actions.

P.  Conclusion and Orders

179.  I make the following orders:

(1)  The Continuation Summons is granted, but subject to the variations made on the Variation Summons.

(2)  The Discharge Summons is dismissed.

(3)  D2’s disclosure obligations under the Injunction Order are reinstated, and such disclosure shall be made on or before 21 February 2025.

(4)  The Variation Summons is granted to the extent as indicated above, and the remainder is adjourned sine die with liberty to restore, with no order as to costs.

(5)  The Consolidation Summons is granted by an order in terms of the summons (including as to costs).

180.  I leave it to the parties to draw up draft Orders for approval of the Court.

181.  Both the Continuation Summons and the Discharge Summons sought orders that the costs should be reserved. Nevertheless, it seems to me that the costs consequences of these two summonses can perhaps be dealt with now. Therefore, I will deal with all questions of costs of the Continuation Summons and the Discharge Summons on paper, once the parties have had the opportunity to consider this Decision. CEG and Xia should seek to agree a timetable, and page limits, for the provision of written submissions as to costs for my consideration.

Mr Charles Manzoni SC, instructed by Karas So LLP, for the plaintiff

Mr Barrie Barlow SC and Ms Terri Ha, instructed by ONC Lawyers, for the 2^nd defendant in both cases

Mr Vincent Chen, instructed by Lam & Co, for the 3^rd defendant in HCMP 1080/2024 and the 5^th to 7^th defendants in HCA 551/2024

The 3^rd and 4^th defendants in HCA 551/2024 did not appear

HCMP 1080/2024

[2024] HKCFI 2040

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

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________________________

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AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

________________________

________________

(Heard together)

_____________

R U L I N G

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1.  The matters being dealt with by me this morning arise in the context of two connected actions, being HCMP 1080/2024 (“HCMP Action”) and HCA 551/2024 (“HCA Action”).

2.  Today mainly concerns the return date of two inter partes summonses issued in the HCMP Action, as regards only the 3^rd defendant to that action (“Madam Ding”) – though she is also the 5^th defendant to the HCA Action. The summonses respectively seek the continuation against Madam Ding of (1) the Chabra Mareva injunction granted by me on an ex parte basis on 12 July 2024, and (2) the proprietary and worldwide Mareva injunctions granted by me on an ex parte basis on 29 July 2024. The Plaintiff seeks the continuation of both orders until the final determination of these proceedings, or further order.

3.  It is relevant to note that orders in similar terms to the proprietary and worldwide Mareva injunctions were granted against Madam Ding by a Court in London on 30 July 2024 (“London Order”).

4.  On the materials provided to me, I am satisfied that Madam Ding has been served with the documents in the Hong Kong proceedings, and I think she has also been served with the documents leading to and including the London Order. But Madam Ding has yet to engage in the Hong Kong proceedings and is not represented.

5.  Mr Manzoni SC, who appears for the Plaintiff this morning as on the previous hearings, has informed me that solicitors in London who may potentially be instructed by Madam Ding in relation to the proceedings in London have contacted the solicitors acting for the Plaintiff in London. Amongst other things, those solicitors have requested a variation of the London Order to permit Madam Ding to spend a greater sum on legal fees than is currently permitted under the terms of that order, and to extend the date for the ancillary asset disclosure required by the London Order from its current date of within four days of service of the London Order on Madam Ding to a new date of 9 August 2024.

6.  I have seen correspondence between the sets of London solicitors, by which it appears that the Plaintiff is content to agree to a variation of the London order to permit Madam Ding to spend the sum of £150,000 up to 7 August 2024, and for the asset disclosure deadline to be extended to 4pm on 7 August 2024 – though I do not think that extension has yet been agreed, and there may yet be a variation application to be heard by the Court in London.

7.  I do not think I need to be concerned about the relevant figure permitted for expenditure on legal fees. But I am concerned about the potential or actual mismatch between the asset disclosure deadlines in the order made by me and the London Order. I think it would be unattractive for the Hong Kong order to continue to contain the deadline to provide essentially the same asset disclosure as is required under the London Order, on a date which is earlier than the Plaintiff is prepared to accept by way of a variation to the current terms of the London Order. In essence, I do not think that Madam Ding should be left in the position that she risks being held in contempt of court, or required to run that risk, notwithstanding that the Plaintiff has indicated that in practice it would unlikely complain if disclosure is not provided in Hong Kong by the deadline which the Plaintiff is content to agree in London.

8.  In those circumstances, whilst I am prepared – on the materials and in the exercise of my discretion – to continue the Chabra Mareva injunction and the proprietary and worldwide Mareva injunctions against Madam Ding until trial or further order, I will do so on the basis that I vary the deadline for the provision of asset disclosure under the Mareva injunction order to 7 August 2024.

9.  I am conscious that this may not be an entirely satisfactory way of bringing the appropriate deadlines in London and in Hong Kong into line, but it seems that matter can be revisited as appropriate depending on what occurs in London, and once Madam Ding has the opportunity properly to instruct solicitors in London and, it may be hoped, in Hong Kong.

10.  A further matter which arises this morning is in relation to the current confidentiality orders applicable to these proceedings. In the underlying winding up proceedings relating to the Plaintiff, HCCW 2020/2022 (“HCCW Action”), Linda Chan J has made orders on 20 March 2024 and 25 July 2024 cloaking the HCA Action and/or claims against the defendants to that action with confidentiality/anonymity. As I understand it, that was in the circumstances that the Plaintiff was continuing to make investigation into its claim which it had protected by issue of the writ in the HCA Action, and also against a concern as to risk of dissipation of assets (which risk I have found to exist in my making of the various injunction orders). I have also accordingly made confidentiality orders in the HCMP Action.

11.  Obviously, the confidentiality orders have been sought by the Plaintiff for the intended potential benefit ultimately of the creditors of the Plaintiff, but the Plaintiff has recognised that once the writ in the HCA Action has been served on the defendants, the need or justification for confidentiality no longer exists, and the confidentiality orders can be discontinued.

12.  Ordinarily, I would be minded to accede immediately to lifting the confidentiality orders as has been requested by the Plaintiff. But Mr Manzoni has properly reminded me that the 2^nd defendant in both the HCMP Action and HCA Action (“Mr Xia”) has previously expressed a concern about being identified, even in circumstances where an initial was used instead of his name in the heading or listing of proceedings. The concern was expressed in correspondence sent to me in response to my indication that I intended to publish (by uploading to the judiciary website) my recent decision made in the context of the worldwide Mareva injunction application proceedings involving Mr Xia – whose application to discharge the injunction against him will be heard by me on 2 October 2024. I did not think that the concerns expressed warranted not uploading the decision suitably anonymized, and it was indeed published.

13.  However, against that background, I have considered whether it would be appropriate now to lift the confidentiality order without first hearing from Mr Xia. Having adjourned the hearing briefly this morning so as to take the time to think about it, I do not think it is necessary to hear first from Mr Xia. The matter seems to me to be quite clear. Had there been no confidentiality order made in the first place, Mr Xia would almost certainly have had no proper basis to have requested the fact that he is made a defendant to the HCA Action (or the HCMP Action) to be cloaked by confidentiality or anonymity. Ordinarily business of the sort being litigated in these proceedings would be conducted in accordance with the usual principles of transparency and open justice. The HCCW Action is being conducted in the usual way. The confidentiality/anonymity orders were sought and obtained by the Plaintiff for reasons which the Plaintiff properly recognizes no longer pertain, following service of the writ in the HCA Action on the defendants to that action.

14.  The orders made in the HCCW Action were plainly intended to have limited duration, and were made expressly until further order of the Court. The Court not being only the Court as constituted by Linda Chan J, it is appropriate for me to make the orders I now think to be appropriate. I will therefore lift the confidentiality as regards the HCA Action (by making orders in and/or as regards to the HCA Action and HCCW Action) and in the HCMP Action.

15.  Lastly, on the materials now provided to me, I am satisfied that it is appropriate to grant leave to serve a concurrent writ in the HCA Action out of the jurisdiction on the 3^rd defendant to that action (“CFO Pan”), at the identified addressed in the People’s Republic of China or elsewhere in the People’s Republic of China.

16.  I make the appropriate orders in accordance with the above terms, which can be drawn up for my approval.

Mr Charles Manzoni SC, instructed by Karas So LLP, for the plaintiff

The 3^rd defendant in HCMP 1080/2024, acting in person, absent