China Citic Bank International Ltd v. Goldin Investment Intermediary Ltd and Others

HCA 107/2022

[2022] HKCFI 882

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 107 OF 2022

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BETWEEN

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Before: Hon B Chu J in Chambers (Open to Public)

Dates of Hearing: 15 March 2022

Date of Judgment: 31 March 2022

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JUDGMENT

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INTRODUCTION

1.There were altogether 3 summonses before this Court, namely:

(1) a summons issued on 26 January 2022 on behalf of the plaintiff (“Bank”) for an order to continue the worldwide Mareva injunction against the 1^st defendant (“GIIL/D1”) for a sum of around HKD 1,085,631,075,47 (“Continuation Summons”). The worldwide Mareva injunction was first granted ex parte by Lok J on 24 January 2022 and continued by Cheng J on 4 February 2022 (“Injunction”)

(2) a summons issued on 8 March 2022 on behalf of the Bank for leave to file and serve the 2^nd affirmation of its officer Mr Wong Man Kin (“Mr Wong”) to update the Court of the development of the BVI Proceedings (as defined later) (“Leave Summons”)

(3) a summons issued on 10 March 2022 by GIIL/D1 for extension of time to comply with its disclosure obligations under the Injunction (“Time Summons”)

LEAVE SUMMONS

2.There was no objection to the Leave Summons and I have made an order in terms of the Leave Summons at the hearing before this Court.

BRIEF BACKGROUND

3.GIIL is a company incorporated in the British Virgin Islands (BVI) and according to a Certificate of Incumbency dated 22 May 2019, as at that date GIIL had two shareholders which are also BVI companies, namely Infinite Blossom Limited (“Infinite Blossom”) holding 40% shares in GIIL and Central Source Limited (“Central Source”) holding 60% of GIIL, and Mr Pan Sutong (“Mr Pan”) was the sole director of GIIL.

4.The sole shareholder of Infinite Blossom is Mr Ma Zhao (“Mr Ma”). Central Source is wholly owned by another BVI company Superior Mansion Limited which is in turn wholly owned Mr Pan.

5.Mr. Pan is the Chairman, an Executive Director and a substantial shareholder of Goldin Financial Holdings Limited, a Bermudian company listed on the Main Board of Hong Kong Stock Exchange under the Stock Code 530 (“Listco”). According to Mr Pan, he also personally holds, directly or indirectly, a large number of private companies (collectively “Goldin Group”) which holds his personal investments in Hong Kong, Mainland China and elsewhere, mainly in real estate and other consumer products[1].

6.On 4 December 2017, the Bank (as lender) entered into a facilities agreement with Infinite Blossom (as borrower) and Mr Ma (as guarantor) (“Facilities Agreement”)[2]. Pursuant to the Facilities Agreement, the Bank provided loan facilities up to HKD 1,490,000,000 to Infinite Blossom, and the purpose of the loan was to finance the acquisition by Infinite Blossom of all the issued share capital in the “Target Company” namely GIIL, under the share sale and purchase agreement entered into on 1 December 2017 (“01.12.17 SPA”)[3] between Infinite Blossom (as purchaser), Central Source (as vendor) and Mr Pan (as the vendor guarantor)[4].

7.As stated out in the recital of the 01.12.17 SPA, GIIL was the beneficial owner of the entire issued share capital of Goldin Financial Global Square Limited, the 3^rd defendant herein (“GFGS/D3”) and GFGS was the registered and beneficial owner of New Kowloon Inland Lot No 5948 with the building thereon known as Global Financial Global Square in Kowloon Bay (“Property”). By acquiring all the issued share capital of GIIL, Infinite Blossom would end up being the beneficial owner of the Property. The consideration was HKD 9,000,000,000 of which a “Deposit” in the sum of HKD 3,600,000,000 was to be paid by: (i) a sum of HKD 900,000,000 already paid prior to the signing of the 01.12.17 SPA; (ii) a sum of HKD 1,490,000,000 to be paid within 2 working days of the signing of the 01.12.17 SPA; (iii) a sum of HKD 1,210,000,000 to be paid within 3 months of the agreement. The balance of the consideration to be paid upon completion. Thus, the Deposit represented 40% of the total consideration, and that it was provided in the agreement that upon payment of the sum of HKD 1,490,000,000 in (ii), the vendor/Capital Source was to transfer the legal title to and beneficial ownership of 40% of the sale shares in GIIL to Infinite Blossom.

8.GFGS is defined in the Facilities Agreement as the “Project Company” and the “Project” is defined to be the redevelopment of the Property. Under the “Conditions Subsequent” set out in Schedule 2 of the Facilities Agreement, Infinite Blossom was to provide to the Bank various documents (“Condition Subsequent Documents”), amongst which was an “all-monies” mortgage over the Property (“Mortgage”) duly executed by GFGS in favour of the Bank together with other specified documents were to be delivered to the Bank within stipulated deadlines.

9.As the Property is in Kowloon Bay, the Project has also been referred to as the “Kowloon Bay Project” in other documents referred to later in this judgment.

10.On 4 December 2017, the same day as the Facilities Agreement, a debenture was entered into between Infinite Blossom (as chargor) and the Bank (as chargee) (“Debenture”)[5], Infinite Blossom assigned, amongst other things, the benefits of the 01.12.17 SPA to the Bank as security, including a put option which Infinite Blossom had under the 01.12.17 SPA of requiring Central Source to buy back the 40% shareholding in GIIL at the option price of HKD 1,490,000,000. Mr Pan had signed a consent to the assignment on behalf of Central Source and notice of assignment was issued by the Bank, the acknowledgment of which was signed by Mr Pan on 4 December 2017.

11.In other words, the Bank could exercise the put option to ask Central Source to buy back Infinite Blossom’s 40% shareholding in GIIL at HKD 1,490,000,000 and use such proceeds to settle the amounts owing by Infinite Blossom to the Bank under the Facilities Agreement. Further, under clause 12 of the 01.12.17 SPA, Mr Pan (as vendor guarantor) had irrevocably and conditionally guaranteed to Infinite Blossom punctual performance by Central Source of its obligations thereunder. Hence, Mr Pan would be personally liable if the Bank (being assignee of the benefits of the 01.12.17 SPA) was to exercise the put option as a means to recoup the Debt. It is thus the Bank’s case that Mr Pan was at all material times fully aware of such right exercisable by the Bank and his liabilities, and that Mr Pan had signed an undertaking dated 25 February 2019 in Chinese[6] (“Chinese Undertaking”) and acknowledged that Infinite Blossom had the right to exercise the put option and undertook to the Bank that Central Source would buy back Infinite Blossom’s 40% shareholding in GIIL on or before 8 March 2019.

12.The Bank duly advanced the sum of HKD 1,490,000,000 to Infinite Blossom to facilitate its acquisition under the 01.12.17 SPA. Infinite Blossom made two repayments on 15 March 2019 and 25 March 2019 in the sum of HKD 100m and HKD 400m respectively, with the balance of the principal under the Facilities Agreement of HKD 990,000,000 outstanding with interest accrued continually thereon (“Debt”). Suffice to say, Infinite Blossom had since failed to make any further payment towards the principal and further since December 2019 had failed to make any interest payments.

13.Infinite Blossom had also failed to provide to the Bank the various “Conditions Subsequent Documents” within the deadlines stipulated in the Facilities Agreement, which constituted an event of default under the Facilities Agreement.

14.In light of the event of default, on 1 August 2019, the Bank’s solicitors Wilkinson & Grist (“W&G”) issued a demand letter to Infinite Blossom demanding the payment of the Debt within 2 days. By 31 July 2019, the interests had grown to HKD3,562,372,60, and accruing at a daily rate of HKD 161,926.03 from 1 August 2019.

15.Thereafter, a meeting was held on 11 September 2019 between representatives of the Bank (including Mr Wong who is the Executive Deputy General Manager and Head of Credit Portfolio Management of the Bank) on one side and Mr Pan and representatives of the Goldin Group on the other. As seen in the minutes of that meeting which was signed by Mr Pan (“11.09.19 Minutes”)[7], the meeting was called to specifically discuss the Debt of HKD 990,000,000 in relation to the Kowloon Bay Project. As set out in further detail later in this judgment, Mr Pan agreed to provide a personal guarantee for the Debt to be repaid not later than 20 December 2019, and further Mr Pan undertake to apply 40% of the sale proceeds of any mortgage or sale of the Property towards the repayment of the Debt.

16.Following the above meeting on 11 September 2019, Mr Pan executed a deed of guarantee in favour of the Bank on 18 September 2019 (“Personal Guarantee”)[8].

17.On 26 September 2019, the Listco issued an announcement (“29.09.19 Announcement”) that a conditional sale and purchase agreement was entered into between a wholly owned subsidiary of the Listco Silver Shine Global Limited (“Silver Shine”) and GIIL, whereby Silver Shine would subject to the fulfilment of condition precedents set out therein, purchase from GIIL the entire issued share capital of Solar Time Developments Limited (“Solar Time/D2”) at a consideration of HKD 4,598,000,000 (“Solar Time SPA”).

18.It is the Bank’s case that prior to the 29.09.19 Announcement, the Bank was not aware of the existence of Solar Time, or that Solar Time was interposed as a wholly-owned subsidiary of GIIL to hold GIIL’s 100% interest in GFGS and the Property[9].

19.There were follow up circular/announcements of the Listco on the proposed purchase of the entire issued share capital of Solar Time from GIIL as set out later.

20.In the meantime, pursuant to the 11.09.19 Minutes, the Bank had started to engage in discussions with Mr Pan’s representatives on the terms of an assignment of the sale proceeds, and a draft was sent to Mr Pan/GIIL on 4 October 2019.

21.While the discussions on the draft assignment were going on, despite Mr Pan’s guarantee to pay the Debt in full before 20 December 2019, he failed to do so. Another meeting was then held on 27 December 2019 between the Bank’s representatives (including Mr Wong) and Mr Pan to discuss the repayment progress and again minutes of the meeting were prepared and signed by Mr Pan (“27.12.19 Minutes”)[10]. During that meeting, the parties had agreed to the key points contained in the 11.09.19 Minutes were to continue to be effective.

22.The assignment of the sale proceeds was eventually executed as a deed by Mr Pan on behalf of GIIL on 3 January 2020 and GIIL (“Assignment”)[11]. The “Assigned Property” therein is the full benefit and right to receive and recover the “Sale Proceeds”, which means 40% of all sale proceeds received or receivable by GIIL pursuant to the Solar Time SPA. In particular, Clause 2 of the Assignment states: “The Assignor [GIIL] shall pay or discharge the Secured Liabilities in the manner provided for in the Financial Documents”. The “Secured Liabilities” is defined to in effect mean the Debt. Although “Finance Documents” have not been defined in the Assignment, it has been defined in the Facilities Agreement. As seen in Mr Wong’s 1^st affirmation, there was an attempt on the part of GIIL’s representative to remove Clause 2 in the draft, but this clause was re-inserted at the Bank’s insistence[12].

23.As the Debt remained unpaid, pursuant to the terms of the Assignment, in particular Clause 2 thereof, the Bank served on GIIL a statutory demand dated 12 November 2021 in respect of the Debt in BVI[13]. On 26 November 2021, GIIL applied to set aside the statutory demand under Case Number BVIHC(COM) 2021/0208 which application was supported by an affirmation of Mr Pan of the same date (“1^st BVI Affirmation”), on the grounds that (a) the Debt was owed by Infinite Blossom and/or Mr Ma and not GIIL; (b) the Assignment could not be construed in the way that GIIL was under a liability to repay the Debt on behalf of Infinite Blossom/Mr Ma; and (c) the Bank knew all along that the Debt was owed by Infinite Blossom only and GIIL never owed any obligation to repay the Debt and had no commercial reason to assume such substantial liabilities on behalf of Mr Ma and/or Infinite Blossom[14] (“BVI Proceedings”). Mr Pan subsequently filed a 2^nd affirmation in the BVI Proceedings on 10 January 2022 (“2^nd BVI Affirmation”).

24.Thereafter, shortly before it commenced the present proceedings, the Bank became aware of there being an allotment of shares of GFGS, and that on 29 October 2021, GFGS had allotted 9,998 shares to the 4^th defendant herein Kensington Phoenix Limited (“Kensington/D4”) at HKD 1 per share (“Allotment”), which meant that Kensington had obtained 99.8 % in the Property which was of an estimated value in the region of billions of Hong Kong dollars by injecting only HKD 9,998 into GFGS. The Bank thus believed that GIIL under the control of Mr Pan had been dissipating very valuable assets at an undervalue, and this led to the Bank commencing the present proceedings and applying for the Injunction against all the defendants on 26 January 2022.

25.GIIL’s application in the BV Proceedings was later dismissed on 1 February 2022 by Justice Wallbank of the BVI Court[15]. On 9 February 2022, the Bank presented a petition for the winding up of GIIL in BVI under BVIHC(COM) 2022/0026. On 16 February 2022, GIIL filed a notice of application for leave to appeal and a stay of the execution of Justice Wallbank’s order[16].

26.In the meantime, after the Injunction, a director of GFGS Ms Lai Wan Han (“Ms Lai”) had filed two affirmations on behalf of D2 to D4, and further Mr Lu Wing Chi (“Mr Lu”) and Mr Yap Shee Liam (“Mr Yap”) had each filed an affirmation/affidavit on behalf of D2 to D4, with supporting documentary evidence.

27.What has transpired from the above affirmation/affidavit evidence is that Solar Time has never been owned by GIIL/Mr Pan.

28.Solar Time is a shelf company incorporated on 3 January 2019 in BVI and is a wholly-owned subsidiary of Lavender Plume Limited (“Lavender Plume”) of which the ultimate beneficial owners are Mr Lu of 40% and Mr Ting Lee Yuen Michael (“Mr Ying”) of 60% (and/or their respective family or family trust). Lavender Plume is a joint venture vehicle between Mr Lu and Mr Ying and Solar Time is incorporated for the purpose of being the purchaser in the transaction under a sale and purchase agreement dated 11 March 2019 (“GFGS SPA”)[17].

29.In short, by the GFGS SPA made between GIIL as seller, Mr Pan as the seller’s guarantor and Solar Time as purchaser, GIIL essentially agreed to sell all of the issued share capital of GFGS to Solar Time. The GFGS SPA was coupled with an option agreement, which was executed by Lavender Plume, GIIL and Mr Pan (as GIIL’s guarantor) immediately after the GFGS SPA agreement (“Option Agreement”)[18]. The Option Agreement provided a call option to enable GIIL to purchase Solar Time and a put option for Lavender Plume, in the event that the call option is not exercised by GIIL, to require GIIL to buy Solar Time. In other words, as explained by Mr Yap who is a director of GFGS and an executive director and Chief Financial Officer of S E A Holdings Limited, if GIIL did not exercise the call option, Lavender Plume could either exercise the put option or complete the development of the Property themselves, or sell the entire issued share capital in Solar Time without further developing the Property.

30.The completion of the GFGS SPA took place on 11 March 2019, the date of the GFGS SPA, since when Solar Time has become the sole legal and beneficial owner of GFGS to the exclusion of GIIL/Mr Pan. The call option date in the Option Agreement was 10 June 2019 and the put option date was 10 September 2019. Thereafter, Lavender Plume, GIIL and Mr Pan (as GIIL’s guarantor) had agreed to various extensions of the date of the call option and the date of the put option and there had been a number of supplemental option agreements signed, culminating in the 9^th supplemental option agreement dated 30 June 2020, which was subject to Lavender Plume’s overriding right of termination[19] (“9^th Supplemental Option Agreement”). Suffice to say, eventually, on 21 July 2020, Lavender Plume served a notice of termination by letter to GIIL/Mr Pan and terminated the Option Agreement[20]. Hence, the Option Agreement and/or any supplemental option agreements including the 9^th Supplemental Option Agreement ceased to have effect as from 21 July 2020 onwards.

31.As for Kensington/D4, this turns out to be a company wholly owned by Solar Time. According to the evidence filed on behalf of D2 to D4, the purpose of interposing Kensington between Solar Time and GFGS in the ownership structure was/is to facilitate a possible sale by tender of the Property by means of a company sale. As a result of the Allotment, Solar Time has only retained 0.02% of the shares of GFGS.

32.Thus, although GIIL was once given an option to buy back Solar Time, such option ceased to have effect as from 21 July 2020, and it is the Bank’s case that it was to the knowledge of GIIL, Mr Pan and the Listco, that the Solar Time SPA had ceased to be viable latest from that date onward.

33.Although extensive evidence was filed on behalf of D2 to D4, GIIL and Mr Pan have not filed any evidence to dispute the evidence filed on behalf of D2 to D4, citing the pandemic in Hong Kong and the need for employees of its group to work from home as the reason in a letter from D1’s solicitors to the Bank’s solicitors on 18 February 2022[21]. This was despite affirmation evidence was filed in support of GIIL’s Time Summons.

34.Anyway, based on the evidence filed on behalf of D2 to D4, the Bank agreed to the discharge of the Injunction against them and to the dismissal of its claims against D2 to D4 in this action and a consent order was made on 7 March 2022 with the Bank agreeing to pay their costs of HKD 2 million.

35.It is the Bank’s case that that the documentary evidence filed by D2 to D4 shows that GIIL and Mr Pan (by themselves and/or through the Listco) have been knowingly and repeatedly deceiving the Bank, as well as the general public and the BVI Court, on matters concerning the Solar Time SPA and had dissipated assets belonging to GIIL. Thus, the Injunction should be continued.

36.On the other hand, it is submitted on behalf of GIIL that the Injunction should be discharged forthwith on the grounds that (1) GIIL did not carry out any act of dissipation and (2) P’s initial claim against GIIL was premised upon the assumption that D2, D3 and D4 were under the common control and/or ownership of GIIL and that the Bank had sought the Injunction on the basis of conspiracy with GIIL and/or a Chabra basis. It is submitted that these planks underlying the Bank’s original case are false, and that now the Bank’s case is a radically changed one, to a simple debt claim against GIIL alone.

37.Mr William Wong SC leading the team for GIIL has submitted that the Continuation Summons is defective for the following reasons:

(1) There is no substantive case of dishonesty or collusion made against GIIL, unlike the case before the ex parte judge;

(2) There is no act of dissipation relied upon by P, unlike the case of actual wrongful dilution put before the ex parte judge;

(3) As for the various alleged false and misleading statements made by GIIL, all these matters can be properly accounted for, even without GIIL filing any evidence;

(4) Even if any of the statements made by GIIL had been misleading, there is no solid analysis as to how the misleading statements were indicative of a risk on the part of GIIL to conceal or dissipate its assets;

(5) Mr Pan has been pursued by P for another claim upwards of HKD 12 billion more than a year ago, and yet no act of dissipation had been carried out by Mr Pan.

THE APPROACH OF THE COURT AT AN INTER-PARTES HEARING

38.In relation to the approach of the Court at an inter-partes hearing to consider whether or not to continue a Mareva injunction granted on ex parte basis, it was held by the English Court of Appeal in Ninemia Maritime Corp v Trave Schiffahrtgesellschaft [1983] 1 WLR 1412 per Kerr LJ at 1426A-B that the Court should consider the whole of the evidence at the inter partes hearing in deciding whether to maintain the order previously made ex parte.

39.The above approach was followed by Hunter J (as he then was) in Builders Federal (HK) Ltd v Elemeta Holdings Ltd HCA 709/1986, 04.08.86 (unrep), who held in paragraphs 2 and 3 as follows:

“2. A word first about the proper approach. I do not think for a moment that this put me in the bizarre position of appealing from myself. I think the correct approach is that any exparte order which a judge makes should be regarded as provisional in the sense that when full or further facts are placed before him, he should have no hesitation in reconsidering the matter as a whole in the light of all the evidence that is put before him. I have in mind, but cannot identify, some observations of Sir John Donaldson in a very recent case to that effect. It also emerges from a decision of the Court of Appeal in England, in Ninemia Maritime Corp. v. Trave Schiffahrtgesellschaft⁽¹⁾. In that case the trial judge said:

“The judge who hears the proceedings inter-partes must decide on all the evidence laid before him.”

He was referring there to himself as the judge who heard the proceedings inter-partes as well as having granted the ex-parte injunction. That this was the right approach, and was so regarded by the Court of Appeal, is to be seen from the observations of Kerr, L.J. at the foot of p. 1425 and the top of p. 1426.

3. So I should now be looking at the whole of the evidence, not for the purposes of deciding whether I was right or wrong in granting the ex-parte order, but whether in the light of the whole of that evidence, an injunction should now continue in favour of this plaintiff in the terms that I originally ordered or in any terms.”

40.There is no dispute over the above general principles. I now turn to the present case.

WHETHER A GOOD ARGUABLE CASE ON MERITS

41.The Bank’s claim against GIIL is based on Clause 2 of the Assignment, and in view of the definitions of the term “Secured Liabilities” in Clause 1.1 and also “Finance Document” in Clause 1.2(a)(iii), GIIL has assumed liability to pay the Debt.

42.In the BVI Proceedings, GIIL had argued that it was not liable for the Debt on the grounds that:

(1) On a proper interpretation of Clause 2, GIIL could not be said to have assumed liability to pay the Debt;

(2) Alternatively, GIIL was entitled to rectify the Assignment and/or the Assignment was liable to be set aside or declared void for unilateral mistake.

43.As seen in the transcript of the BVI Proceedings[22] (“Transcript”) it was Mr Pan’s case notwithstanding Clause 2 of the Assignment, there was to be no direct liability from GIIL to the Bank and that GIIL’s liability was to be in respect of the proceeds of sale as and when received, and in this respect, it was attempted to argue on behalf of GIIL/Mr Pan that the 11.09.19 Minutes and the 27.12.19 Minutes supported Mr Pan’s case. As seen in the orally delivered decision of Justice Wallbank, this was rejected by him.

44.It was also Mr Pan’s case and evidence in his 2^nd BVI Affirmation that notwithstanding Clause 2 of the Assignment, that was not actually what was agreed and that in the negotiations for the Assignment, Mr Pan’s assistant or the person primarily charged with the details of the documentation mistakenly did not send through a version which excluded or otherwise modified Clause 2 as it eventually appeared, and it was also said by Mr Pan that there was a side agreement[23]. Such arguments were also rejected by Justice Wallbank who had pointed out that in putting forward those arguments Mr Pan had overlooked that he had already signed the Personal Guarantee on 18 September 2019 to the Bank to make payment of the Debt upon first written demand by the Bank pursuant to the terms in the Personal Guarantee. Justice Wallbank also pointed out it was the Bank’s evidence that it had made a demand on 23 December 2019 and that Mr Pan requested further time until the 24 January 2020 to pay the Debt, and that it was in return for giving the extra time that the Bank demanded the Assignment be executed by 31 December 2019 which was later extended.

45.Justice Wallbank in fact found Mr Pan’s arguments were “all very implausible attempts at getting out of the fact that there is in black and white, crystal clear, an assumed obligation by GIIL to pay or discharge the HKD 990 million”[24].

46.Justice Wallbank is clearly of the view that there is no bona fide dispute on substantial grounds in relation to GIL’s liabilities for the Debt under Clause 2 of the Assignment. I agree.

47.As pointed out on behalf of the Bank, the decision of Justice Wallbank should give rise to issue estoppel.

48.In any event, in the present hearing, as seen in D1’s skeleton submissions, there was no real challenge to the Bank having a good arguable case on merits against GIIL and the main issue in respect of the Continuation Summons is whether the Bank has satisfied this Court in there being a risk of dissipation on the part of GIIL.

THE DOCUMENTARY EVIDENCE RELIED ON BY THE BANK IN SUPPORT OF RISK OF DISSIPATION

49.The evidence which the Bank relies on to demonstrate that there is a risk of dissipation on the part of GIIL/D1 includes the following:

(1) the two minutes of the meetings signed by Mr Pan;

(2) public announcements of Listco

(3) the Assignment

(4) the letters between the Bank and GIIL;

(5) Mr Pan’s evidence in his affirmation filed in the BVI Proceedings

The 11.09.19 Minutes

50.Under paragraph 1 of the 11.09.19 Minutes[25], Mr Pan promised to assist Mr Ma in repaying to the Bank before 20 December 2019 the Debt. Under paragraph 3, Mr Pan agreed to provide a full personal guarantee to the Bank for the Debt of Infinite Blossom no later than 20 September 2019. Then under paragraph 4, according to Mr Pan, the sale of his 40% share in another project “Kai Tak Project” to the Listco was still in progress and that according to the then estimates, the syndicated swap involved in the transaction would be completed as early as 20 October 2019 but not later than 20 November 2019, and Mr Pan promised to assist Mr Ma to repay to the Bank no less than HKD 300,000,000 towards the Debt no later than 20 November 2019.

51.In particular, it was recorded under paragraph 7 of the 11.09.19 Minutes that Infinite Blossom and Central Source and the Bank entered into a tripartite agreement, and the parties agreed that (i) the Listco to simultaneously acquire from Infinite Blossom and Central Source the indirect holdings of their equity in GFGS; (ii) Infinite Blossom was to first use the sale proceeds received from the sale of its 40% equity interest to repay the Bank the Debt, and that the amount would not be less than HKD 990,000,000 and the completion date not to be later than 20 December 2019; (iii) the tripartite agreement was to be completed not later than 26 September 2019, and (iv) in respect of the Listco’s acquisition of the Kowloon Bay Project, GIIL was to provide a detailed timetable before 26 September 2019 (including due diligence, contract signing, seeking approval from the Stock Exchange, shareholder meeting approval and completion) to follow up the progress and ensure that the completion would be before 20 December 2019; (v) all transaction schedules and arrangement details must comply with the listing requirements and that GIIL was to notify the Bank of the progress at each stage.

52.Thus, by agreeing to the above, Mr Pan was representing to the Bank that as at the date of the meeting, namely 11 September 2019, GIIL (ie Infinite Blossom and Central Source) still indirectly held shares/equity in GFGS. As Mr Anson Wong SC pointed out on behalf of the Bank, this was wrong as under the GFGS SPA, GFGS was already sold to Solar Time and the transaction was completed on 11 March 2019 with the payment of the balance of HKD 1,159,130,317.87 to GIIL by Solar Time/Lavender Plume.

53.In his 1^st BVI Affirmation, it was Mr Pan’s evidence that in light of the non-completion of the 01.12.17 SPA, he began to look for other opportunities to realise the commercial and monetary potential of GIIL and as a result of a corporate restructuring that he undertook (the details of which he said were immaterial to the dispute), (1) Solar Time became and remained the 100% owner of GFGS and in turn the Property; and (2) GIIL has the right to require Solar Time and in turn the Property to be transferred back to GIIL. Thus, according to Mr Pan, GIIL remained effectively the 100% beneficial owner of Solar Time, GFGS and the Property[26].

54.Mr Pan referred to a “corporate restructuring” and yet never gave details, and never made clear in his above statement that in fact Solar Time has always been a wholly owned subsidiary of Lavender Plume which has nothing to do with Mr Pan or the Goldin Group and that under the GFGS SPA, GIIL had already sold its issued share capital in GFGS to Solar Time and he did not disclose the GFGS SPA or the Option Agreement.

55.Mr William Wong SC attempted to argue on behalf of GIIL that GIIL had a call option under the Option Agreement to buy back the shares of GFGS. However, this does not mean that GIIL (including Infinity Blossom and Central Source) has continued to hold any interest or equity directly or indirectly in GFGS after 11 March 2019. In fact, Ms Lai has in her 1^st affirmation made it quite clear that since 11 March 2019, GIIL has not owned any interest, whether directly or indirectly, in GFGS or in the Property[27]. This was again reiterated in Mr Yap’s affidavit that on 11 March 2019, Solar Time has become the sole legal and beneficial owner of GFGS to the exclusion of GIIL/Mr Pan[28].

56.As mentioned earlier, Mr Pan has filed no affirmation in these proceedings to contradict the evidence given by Ms Lai and Mr Yap. In fact in the Option Agreement between Lavender Plume and GIIL, with Mr Pan as GIIL’s guarantor, it is stated clearly in (A) of the “Background”, completion of the [GFGS SPA] took place immediately prior to the execution of the Option Agreement whereupon Solar Time has become the sole legal and beneficial owner of the GFGS shares and loans; and in (B), it is further clearly stated that Lavender Plume is the sole shareholder of Solar Time[29]. Both GIIL and Mr Pan executed the Option Agreement and they ought to be fully aware of the statements and contents therein.

The 26.09.19 Announcement

57.The above announcement[30] was the first announcement made by the Listco in relation to the Solar Time SPA. It was an announcement of a disclosable and connected transaction in relation to the acquisition of the entire equity interest pursuant to the Solar Time SPA, and it was announced that the vendor/GIIL conditionally agreed to sell the issued share capital of Solar Time to the Listco’s wholly owned subsidiary Silver Shine which conditionally agreed to purchase at a consideration of HKD 4,598m. As stated therein, the completion was conditional upon the fulfilment of all the conditions precedent (or waiver by the vendor/GIIL, if applicable).

58.Mr William Wong has argued on behalf of GIIL that on the face of the announcement, there was no warranty that the vendor/GIIL was the beneficial owner of the target share of the target company.

59.It was stated in the announcement amongst other things that (i) the target company is Solar Time and that GFGS is a wholly owned subsidiary of Solar Time and that GFGS currently owns the legal and beneficial title to the Property as its principal/sole asset;(ii) the vendor/GIIL is an associate of Mr Pan and thus a connected person of the Listco, and therefore the acquisition constitutes a connected transaction of the Listco under the Listing Rules; (iii) Mr Pan has a material interest in the Solar Time SPA and that an independent board committee (“IBC”) had been established to advise the independent shareholders (all shareholders other than Mr Pan and his associates) on the terms of the Solar Time SPA.

60.As seen earlier, at the time of the announcement, GIIL had no legal or beneficial interest in GFGS or Solar Time to sell to the Listco. The most that can be said is that GIIL had a call option under the Option Agreement. The announcement was in my view clearly misleading in that there was no disclosure of the GFGS SPA or the Option Agreement and it was not made clear in the announcement that the vendor/GIIL had no legal or beneficial interest and only had a call option at the time. As pointed out by Mr Anson Wong for the Bank, either Listco was itself not aware of this or the Listco was in collusion with GIIL/Mr Pan in misleading the public.

The Solar Time SPA

61.As mentioned earlier, until the 29.09.19 Announcement, the Bank was not aware of the existence of Solar Time. The Bank first had sight of the Solar Time SPA when it was produced by Mr Pan in his 1^st BVI Affirmation, which was filed on 26 November 2021.

62.It was set out in section (B) of the Recitals of the Solar Time SPA that Solar Time through GFGS holds the legal and beneficial title to the Property and the purchaser/Silver Shine wishes to acquire the “Sale Shares” (100% of the issued shares in Solar Time) in order to acquire the legal and beneficial interests in the Property[31].

63.However, as seen earlier, on 26 September 2019, it was Lavender Plume who was the beneficial owner of Solar Time and thus GFGS and the Property, and not GIIL.

Circular and Notice of SGM dated 30 October 2019

64.This circular consisted of a letter from the Board, a letter from the IBC, a letter from the independent financial adviser Gram Capital, a valuation report on the property, general information and a notice of the SGM[32]. It was announced that completion of the Solar Time SPA would take place on the later of (i) 20 December 2019); and (ii) the day which is five business days after fulfilment (or waiver, where applicable) of all the conditions precedent, or such later date as the vendor and the purchase may agree in writing[33]. In the letter from Gram Capital, they clearly stated that in formulating their opinion to the IBC and the independent shareholders, that they had relied on the statements, information, opinions and representations contained or referred to in the announcement and the information and representations as provided to them by the directors. Further the information on the purchaser, the vendor and also the target group and the target company was according to what was provided to Gram Capital in the “Board Letter”.

65.Suffice to say, and repeating, there was no mention in any of the above documents of the GFGS SPA or the Option Agreement, or that GIIL only had a call option under the Option Agreement, and had no legal or beneficial interest in Solar Time and/or GFGS to sell.

66.At the subsequent SGM on 18 December 2019, the resolution for the approval, confirmation and ratification of the transactions contemplated under the Solar Time SPA was duly passed[34].

The 27.12.19 Minutes

67.It was recorded in the minutes which was signed by Mr Pan[35] that the purpose of the meeting was to discuss issues arising from the loan for the Kowloon Bay Project (borrowing company: Infinite Blossom) and to discuss the implementation of the repayment plan and credit enhancement measures and to reach an agreement on 3 matters including all principal and interest of the Kowloon Bay Loan was to be repaid on or before 24 January 2020 and GIIL was to assign the proceeds from the sale of the Kowloon Bay Project to the Bank and to sign the assignment of the sale proceeds on 31 December 2019. It was further recorded that no consensus was reached on 3 matters. The matter in relation to the Kowloon Bay Project that no consensus was reached was that Mr Pan believed that the “Kowloon Bay Project Company” could not sign guarantees and mortgages as the completion would take place on 15 January 2020 and that signing those documents at that time would affect the completion. However, the Goldin Group agreed to the 11.09.19 Minutes to continue to be effective. In any event, GIIL and Mr Pan ought to know that GIIL would not be receiving any sale proceeds.

The Assignment

68.The Assignment was subsequently executed as a deed by GIIL on 3 January 2020[36]. In Schedule 1 of the Assignment, there was a form of notice of assignment and acknowledgment by Silver Shine acknowledging receipt of the notice of assignment by GIIL as beneficial owner of 40% of the sale proceeds under the Solar Time SPA[37] (“Acknowledgment”). On the same day, 3 January 2020, there was a consent signed by the Bank to Infinite Blossom copied to GIIL to the transaction under the Solar Time SPA upon the conditions stated therein (“Consent”)[38].

69.Mr Anson Wong pointed on behalf of the Bank, the “Subject Property” in the Assignment means all issued shares held by the Assignor (GIIL) in the Company (Solar Time), and this was false. Clause 2 has been set out earlier and GIIL has covenanted to pay or discharge the Debt thereunder. Clause 4 sets out the representations made by GIIL. In particular, it was pointed out that GIIL had represented that there was no security or quasi-security existed (at date of the Assignment) on the “Subject Property” of the GIIL.

70.Clause 5 sets out the ‘Positive Undertakings” on the part of GIIL. Under Clause 5.1, GIIL undertook to the Bank that it was and would continue to be the sole legal and beneficial owner of the “Assigned Property” (the full benefit and right to receive and recover the “Sale Proceeds” (ie 40% of the of all sale proceeds received or receivable by the GIIL under the Solar Time SPA) free from any security, except the security created under or permitted by the Assignment. Further, under Clause 5.2(f), GIIL has undertaken it will promptly notify the Bank of any material breach or material default by it or any purchaser under any sale contract.

71.As pointed out by Mr Anson Wong, and as set out earlier, by 21 July 2020, any call option that GIIL had under the Option Agreement had been terminated and yet there was no disclosure by GIIL to the Bank notwithstanding the undertaking of GIIL.

Further circulars of Listco

72.In a circular of the Listco of 29 January 2021, amongst other things, the Listco had referred to the Solar Time SPA and stated that at the “Latest Practicable Date”, all of the conditions precedent to completion of the acquisition had been fulfilled and the directors expected that the acquisition would be completed on or before 20 June 2021[39].

73.There was another circular from the Listco dated 4 February 2021 in which the Listco had reported that on 28 October 2020, a confirmatory deed (“Confirmatory Deed”) was entered with GIIL pursuant to which amongst other things, GIIL irrevocably agreed that completion of the acquisition be extended to the third business day after a write notice served on GIIL by the Listco of its intention and readiness to complete the acquisition[40].

74.On 27 February 2021, there was a further announcement by the Listco and amongst other things, the Listco stated that the completion of the Solar Time SPA had been extended in view of the worsened economic conditions and the substantial amounts of cash required for settlement of the consideration but stated that it expected to complete before 30 June 2021[41].

Letters between the Bank and GIIL

75.On 20 April 2021, the Bank’s solicitors W&G sent a letter to Infinite Blossom, GIIL and also to GFGS as the process agent of Infinite Blossom and GIIL[42]. In this letter, W&G pointed out that in breach of the conditions in the Assignment, GIIL had failed to deliver to the Bank the Acknowledgment by Silver Shine and further referring to the Listco announcement on 4 February 2021 and pointing out that the Bank had not given its consent to the Confirmatory Deed. In the letter, amongst other things, W&G demanded on behalf of the Bank that 3 documents be sent to the Bank within 7 days of the letter. The 3 documents were (i) the Acknowledgment by Silver Shine of the Notice of Assignment; (ii) a certified true copy of the Confirmatory Deed; and (iii) an updated timeline in form and substance agreed by GIIL and Silver Shine on the progress of the carrying out of the transaction in the Solar Time SPA.

76.On 22 April 2021, GFGS’s and Solar Time’s solicitors Mayer Brown replied to inform W&G/the Bank that GFGS is not the process agent of Infinite Blossom and GIIL as stated in W&G’s letter and that neither GFGS nor Solar Time is related to Infinite Blossom nor GIIL referring the Bank to the annual return of GFGS as at 9 September 2019 which indicated that the shareholding of GFGS was transferred from GIIL to Solar Time which has remained the sole shareholder of GFGS since (“MB Letter”).

77.There was no reply from Infinite Blossom and GIIL.

78.On 30 April 2021, W&G wrote again to Infinite Blossom and GIIL copied by hand to Mr Pan and amongst other things reiterated that the 3 documents mentioned in their earlier letter be provided to the Bank within 7 days[43].

79.On 7 May 2021, W&G received a short letter from Zhong Lung Law Firm LLP acting on behalf of Mr Pan, stating only that their client, namely Mr Pan, would keep the Bank posted of further developments once the completion took place[44]. There was no update or details provided.

Further Listco announcements

80.On 30 August 2021, there was a further announcement from Listcoand amongst other things repeating that the completion of the acquisition of Solar Time under the Solar Time SPA had been extended in view of the worsened economic conditions and the substantial amounts of cash required for settlement of the consideration and stating that the acquisition was expected to be completed before 31 December 2021[45].

81.On 30 September 2021, there was another announcement by Listco and amongst other things, again repeating the above[46].

Mr Pan’s 1^st BVI Affirmation

82.As pointed out by Mr Anson Wong on behalf of the Bank, when Mr Pan made the above affirmation on 26 November 2021, he should clearly know by then that GIIL ceased to have any right to repurchase Solar Time from Lavender Plume or otherwise to require Solar Time/GFGS to transfer the Property back to it. Yet, as pointed out by Mr Anson Wong, the evidence and the documents emanated from GIIL and Mr Pan (whether by themselves and/or through the Listco) portrayed a clear picture that GIIL was still at all material times the sole owner of Solar Time and that the Solar Time SPA remained afoot and pending completion. I accept the picture portrayed was not correct and misleading.

WHETHER RISK OF DISSIPATION

83.On the approach on assessment of risk of dissipation in the context of an application for freezing order Lam VP, as he then was, has in paragraph 35 of his judgment in Convoy Collateral Limited v Cho Kwai Chee and others, CACV 197/2020 and CAMP 38/2020 (heard together) [2020] HKCA 537, referred to the principles set out by Haddon-Cave LJ in Lakatamia Shipping Co Ltd v Toshiko Morimoto [2019] EWCA Civ 2203 at [34][47]:

“(1) The claimant must show a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets. In this context dissipation means putting the assets out of reach of a judgment whether by concealment or transfer.

(2) The risk of dissipation must be established by solid evidence; mere inference or generalised assertion is not sufficient.

(3) The risk of dissipation must be established separately against each respondent.

(4) It is not enough to establish a sufficient risk of dissipation merely to establish a good arguable case that the defendant has been guilty of dishonesty; it is necessary to scrutinise the evidence to see whether the dishonesty in question points to the conclusion that assets may be dissipated. It is also necessary to take account of whether there appear at the interlocutory stage to be properly arguable answers to the allegations of dishonesty.

(5) The respondent's former use of offshore structures is relevant but does not itself equate to a risk of dissipation. Businesses and individuals often use offshore structures as part of the normal and legitimate way in which they deal with their assets. Such legitimate reasons may properly include tax planning, privacy and the use of limited liability structures.

(6) What must be threatened is unjustified dissipation. The purpose of a [World Freezing Order] is not to provide the claimant with security; it is to restrain a defendant from evading justice by disposing of, or concealing, assets otherwise than in the normal course of business in a way which will have the effect of making it judgment proof. A WFO is not intended to stop a corporate defendant from dealing with its assets in the normal course of its business. Similarly, it is not intended to constrain an individual defendant from conducting his personal affairs in the way he has always conducted them, providing of course that such conduct is legitimate. If the defendant is not threatening to change the existing way of handling their assets, it will not be sufficient to show that such continued conduct would prejudice the claimant's ability to enforce a judgment. That would be contrary to the purpose of the WFO jurisdiction because it would require defendants to change their legitimate behaviour in order to provide preferential security for the claim which the claimant would not otherwise enjoy.

(7) Each case is fact specific and relevant factors must be looked at cumulatively.”

(emphasis added)

84.Lam VP went on to say that, subject to certain elaborations, the aforesaid principles are applicable in Hong Kong. Lam VP further went to state as follows:

“[37] On the onus borne by a party seeking such draconian relief, whilst there are no doubt respectable authorities referring to the need for a solid evidential basis to establish a real risk of dissipation …, we prefer to describe the burden as solid basis for concluding that there is such a real risk.”

(emphasis added)

[38] It is perhaps useful to remind ourselves what Mustill J (as he then was) had in mind when he referred to “solid evidence” in Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft, supra, at p.606-607:

“It is not enough for CCL to assert a risk that the assets will be dissipated. He must demonstrate this by solid evidence. The evidence may take a number of different forms. It may consist of direct evidence that the defendant has previously acted in a way which shows that his probity is not to be relied upon. Or CCL may show what type of company the defendant is (where it is incorporated, what are its corporate structure and assets, and so on) so as to raise an inference that the company is not to be relied upon. Or, again, CCL may be able to found his case on the fact that enquiries about the characteristics of the defendant have led to a blank wall. Precisely what form the evidence may take will depend upon the particular circumstances of the case. But the evidence must always be there. Mere proof that the company’s incorporated abroad, accompanied by the allegation that there are no reachable assets in the United Kingdom apart from those which it is sought to enjoin, will not be enough.”

[39] Gee on Commercial Injunction, 6^th Edn at para 12-033 discussed the ‘solid evidence’ of risk of dissipation and at footnote 155 cited this part of the judgment of Mustill J as the authority on this requirement. The learned author also observed that each case depends on its own facts and it is impossible to lay down any general guidelines on satisfying the evidential burden. Instead, he discussed various factors that could be relevant. For present purposes, it is pertinent to note that most factors are not direct evidence on dissipation as such. Matters like the nature of assets held by the defendant, nature and financial standing of the defendant, past or existing credit history, defendant’s behaviour in respect of the claim can be indicative of the risk of dissipation.

(emphasis added)

[40] Since the assessment is in respect of the risk of dissipation as opposed to the fact of actual dissipation, the exercise necessarily involves an evaluative and predictive judgment. Thus, the evidential burden can be satisfied by drawing proper inferences from a holistic consideration of all the circumstantial materials that are indicative of risk, including matters which point against such risk…

[41] …….

[42] There are cases where a good arguable case on the underlying substantive claims could also be regarded as supporting a case of real risk of dissipation. As highlighted in proposition (4) in Popplewell J’s summary, the court needs to scrutinise with care whether the allegations in respect of the claims justify the inference of likelihood of dissipation.

[43] Notwithstanding the broad statement of Godfrey J in Honsaico Trading Ltd v Hong Yiah Seng Co Ltd [1990] 1 HKLRD 235, Hong Kong judges have been vigilant in scrutinizing the allegations in a claim with care before drawing the inference of risk of dissipation…

[46] In Lakatamia Shipping Co Ltd v Toshiko Morimoto, supra, the wrongdoing was the dishonest assistance provided by a mother to the son’s breach of a world-wide freezing order in the dissipation of certain proceeds subject to the order. Haddon-Cave LJ held at [51] that:

‘(1) Where the court accepts that there is a good arguable case that a respondent engaged in wrongdoing against the applicant relevant to the issue of dissipation, that holding will point powerfully in favour of a risk of dissipation.

(2) In such circumstances, it may not be necessary to adduce any significant further evidence in support of a real risk of dissipation; but each case will depend upon its own particular facts and evidence.’

[47] Wrongdoing relevant to the issue of dissipation can be some dishonest or wrongful acts which were not themselves acts of dissipation. In VTB Capital v Nutritek International [2012] 2 CLC 431, the alleged wrong committed by the defendant was the procurement of a loan from CCL by fraudulent misrepresentation as to the value of the assets of the borrower and the disappearance of the proceeds in a complex web of corporate entities. Lloyd LJ said at [177]:

‘… However, where (as here) the dishonesty alleged is at the heart of the claim against the relevant defendant, the court may well find itself able to draw the inference that the making out, to the necessary standard, of that case against the defendant also establishes sufficiently the risk of dissipation of assets.’

[48] ………

[49] Another illustration is the judgment of Saville LJ in Grupo Torras SA v Al-Sabah (21 March 1997) which was cited in the judgment of Flaux J in Madoff Securities International Ltd v Raven [2011] EWHC 3102 (Comm). The defendant in that case was an investment adviser in Switzerland. The judge found there was a good arguable case that he was implicated in a scheme of fraud and the nature of the allegation was such that there was a strong fear of dissipation…”

85.Lam VP then summed up the position in paragraph 53 of his judgment as follows:

“To sum up, the approach set out by Haddon-Cave LJ in Lakatamia Shipping Co Ltd v Toshiko Morimoto, supra at [51] provides good guidance. The ultimate question is whether CCL succeeds in showing objectively there is a solid basis for concluding that there is a real risk of unjustified dissipation of assets by a defendant. That question is to be answered by examining the evidence holistically. Evidence of dishonest and fraudulent conducts or other serious wrongdoings which form the basis of the claims, and which reflect adversely on the integrity of the defendant could point powerfully towards an inference of such risk.”

86.Lam VP also pointed out in paragraph 54 of his judgment that evidence of delay is relevant in the assessment of risk of dissipation, namely delay after a defendant gained knowledge of a plaintiff’s claim can militate against the risk of dissipation as such defendant would already have the opportunity to dispose of assets should he be inclined to do so.

87.Mr William Wong had referred this Court to Re China Medial Technologies Inc (In liquidation), CACV 510/2019, 19.01.22 in which Chow JA also cited those principles set out by Lam VP in the Convoy case.

88.It was submitted on behalf of GIIL that the Court has repeatedly disapproved of the approach whereby an applicant repeats the incantation of “low standard of commercial morality” and invites the Court to infer a risk of dissipation, and that mere propensity of wrongdoing is not sufficient to justify a finding of low commercial morality without conduct relevant to dissipation[48].

89.Mr William Wong pointed out on behalf of GIIL that the Bank’s cause of action is a simple debt claim, and there are no pleadings of any misrepresentation on the part of GIIL to delay the Bank’s enforcement of the Debt, no pleadings on any reliance of GIIL’s representations or any detriment suffered by the Bank. There are no allegations of fraud by the Bank and having now dropped its action against D2 to D4, there is no more conspiracy upon which the application for the Injunction was based.

90.Mr William Wong further pointed out that by the MB Letter to W&G, the Bank has been informed as early as 22 April 2021 that GFGS is no longer related to GIIL or Infinite Blossom and yet the Bank waited until January 2022 to apply for the Injunction relying on the misconceived Allotment.

91.The Bank does not shy away from the fact that their original ex parte application for the Injunction was based on their belief that there was dissipation by reason of the Allotment. However, it is the Bank’s case that they have been misled by GIIL and Mr Pan (and/or announcements of Listco) and lulled into a false sense of security that GIIL had remained the legal and beneficial owner of the Property through GFGS, and it was only after the Injunction that the Bank realised what had happened, namely that GIIL had sold all its equity in GFGS ( and thus the Property) to Solar Time on 11 March 2019.

92.At this inter partes stage, the Court is entitled to consider all the evidence now available. As said earlier, GIIL and Mr Pan ought to know that GIIL was never a registered or beneficial owner of the shares in Solar Time, and further as stated clearly in the Option Agreement, since the completion of GFGS SPA on 11 March 2019, Solar Time has become the sole legal and beneficial owner of GFGS.

93.Having considered all the evidence, in particular the documentary evidence set out earlier, I accept the Bank’s submission that (i) false/misleading documentation has been knowingly generated and signed by GIIL and Mr Pan; (ii) false/misleading information has been knowingly disseminated by GIIL and Mr Pan in relation to Solar Time and Solar Time SPA; and (iii) false/misleading sworn evidence has been knowingly presented by GIIL and Mr Pan in the BVI Proceedings in relation to Solar Time and Solar Time SPA.

94.The above also has to be seen in light of the fact that GIIL and Mr Pan were fully aware that the loan from the Bank to Infinite Blossom was for the purpose of the 01.12.17 SPA and that the Mortgage over the Property was one of the Condition Subsequent Documents which had to be delivered to the Bank within the specified deadline, failing which there would be an event of default which would entitle the Bank to call for immediate repayment of the Debt and that the Bank could exercise the put option. Yet, behind the Bank’s back, GIIL had disposed of GFGS and thus the Property, pursuant to the GFGS SPA on 11 March 2019.

95.The above should further be seen in the light of the evidence of Mr Yap who indicated that the total amount paid by Solar Time on completion of the GFGS SPA on 11 March 2019 was HKD 2,380,082,536.68 out of which a sum of HKD 1,220,952,218.81 was transferred ICBC to discharge the term loan to Central Source (borrower), and HKD 133,760.884 was the option fee paid by Solar Time to Lavender Plume at the direction of GIIL, and the balance of HKD 1,159,130,317.87 was paid to GIIL directly by 3 cashier orders[49].

96.This payment to GIIL was 3 days after the deadline of 8 March 2019 in the Chinese Undertaking in which Mr Pan as vendor guarantor for Central Source had undertaken to the Bank that not later than 8 March 2019, that Central Source would re-purchase Infinite Blossom’s 40% shareholding in GIIL, which would enable the Bank to recover the Debt or part thereof from Infinite Blossom. Yet, Mr Pan and Central Source failed to effect the re-purchase, and the whereabouts of the balance of the consideration paid by Solar Time to GIIL have remained unknown.

97.Although there is no direct evidence of any specific act of dissipation, having considered the totality of the evidence before this Court, in particular all the false/misleading documentation, information and evidence emanated from GIIL and Mr Pan which have lulled the Bank into a false sense of security, that GIIL through GFGS was still the legal and beneficial owner of the Property and delayed its enforcement of the Debt, I am satisfied that such conduct of GIIL and Mr Pan points to a conclusion that assets may be unjustifiably dissipated by GIIL and Mr Pan.

98.As for the delay issue, as set out in the Convoy Collateral case[50], it is clear from the authorities that delay per se would not necessarily bar relief and that the significance of delay in each case must be considered on its own circumstances.

99.In the present case, it was pointed out on behalf of GIIL that Mr Pan has been sued by the Bank in separate proceedings more than a year ago for a sum of more than 10 times the amount of the Debt herein and that a statutory demand was presented by the Bank against another of Mr Pan’s companies as early as December 2020[51] and another statutory demand against Mr Pan personally on 16 February 2021. It was submitted on behalf of GIIL that no act of dissipation was alleged to have been carried out against Mr Pan. However, the Bank would not know and it was not until after the Injunction herein that the evidence on behalf of D2-D4 was filed which revealed the documentation, information and evidence emanated from GIIL and Mr Pan (and/or the Listco) to the Bank was false/misleading.

100.As said by Lam VP, as he then was, the ultimate question is still whether the plaintiff could show a real risk of dissipation despite delay[52].

101.Having considered the evidence, I am satisfied that notwithstanding the delay, an inference of real risk of dissipation can be drawn from the conduct on the part of GIIL and Mr Pan, and that there is a real risk that a future judgment would not be met. The Bank has shown a real risk of dissipation.

BALANCE OF CONVENIENCE

102.The Bank is plainly able and willing to give the usual undertaking as to damages in the event that the Injunction is later found to be wrongly granted.

103.Having considered the circumstances of this case, I am satisfied that the balance of convenience is in favour of continuing the Injunction as against GIIL.

THE HADKINSON APPLICATION

104.The deadline for GIIL’s disclosure obligations in the Injunction was 14 March 2022.

105.In a letter dated 10 March 2022 sent by W&G to GIIL’s solicitors that it was stated that the Bank reserved its right to argue that GIIL should not be heard at the hearing before this Court in the event of its failure to comply with the disclosure obligations[53].

106.On 10 March 2022, GIIL then attempted to issue a summons for extension of time to 14 days after the resolution of the Bank’s Continuation Summons.

107.The Bank’s supplemental skeleton submissions were then lodged on 14 March 2022, just a day before the hearing before this Court, in which it was submitted that GIIL’s breach of its disclosure obligations in the Injunction meant it was possible for the Court not to hear GIIL on the Continuations Summons until GIIL’s contempt has been purged.

108.The Bank has relied on Hwang Joon Sang v Golden Electronics Inc [2021] HKCFI 1973 and CWG v MH [2014] 4 HKLRD 141.

109.Suffice to say, in the Hwang Joon Sang case, there was a Hadkinson summons issued which was heard prior to the substantive summons. In CWG v MH, a Hadkinson summons was taken out in respect of one appeal but not in the other appeals in which the contemnor was the respondent. The applicant had produced authorities that the Hadkinson point had been taken without a summons having been taken out. The Court of Appeal granted a Hadkinson order and held that as there was no suggestion that the contemnor’s legal team had been misled or taken by surprise by the application being extended to the other appeals in which the contemnor was a respondent.

110.However, Yuen JA stated that for her part given the principles of Civil Justice Reform, an application of such significance as a Hadkinson application should not be made without the other party being duly forewarned by way of summons, with time for affidavit evidence for and against an order to be adduced[54]. I agree.

111.In the present case, in the W&G’s letter, all that was stated was that the Bank reserved its right to argue on a Hadkinson order. Thereafter, no proper summons was issued and no notice to GIIL that the Bank decided to proceed with a Hadkinson application until the Bank’s submissions were made the day prior to the hearing. Notwithstanding those late submissions, at the hearing, it was not the Bank’s position that this Court should hear and determine the Hadkinson issue first before hearing the parties on the Continuation Summons.

112.As pointed out on behalf of GIIL, in any event, the Bank has the burden of satisfying this Court that the Injunction should be continued.

113.Having considered the above, I would decline to make a Hadkinson order.

THE TIME SUMMONS

114.At the inter partes hearing before Cheng J, the time for GIIL to comply with its disclosure obligations in the Injunction had been extended to 18 February 2022. Then on 15 February 2022, Mr Pan filed an affirmation seeking further extension of time to comply with the disclosure obligations in the Injunction, alleging amongst other things the pandemic, the resignation of the Corporate Development and Assistant Vice President Mr Stanley Chum who was familiar with the operation of GIIL, and that a Ms Hou Qin, who was managing the financial matters of GIIL, had gone to Xian to visit her parents and she had not been able to return to Hong Kong due to the pandemic. D1’s solicitor then filed an affirmation on 18 February 2022 exhibiting an affirmation in Chinese filed by a Ms Hou Qin (“Ms Hou”) in support of the extension of time [55]. Ms Hou claimed to be the sole director of GIIL and her evidence was that as GIIL did not need to file any annual financial statements/reports under the BVI law, there had never been any financial statements/reports prepared, and that GIIL needed time to verify its financial situation and was thus not able to comply with the disclosure obligations in the Injunction.

115.Eventually, on 23 February 2022, Master Lai granted an extension of time to 14 March 2022[56].

116.D1’s solicitor filed an affirmation in support of the Time Summons exhibiting a 2^nd affirmation from Ms Hou. This time she disclosed apart from Mr Stanley Chum’s resignation, many other staff had also recently left GIIL. She then said as she had returned to Xian to visit her family at end of 2021 and was not able to return to Hong Kong and could thus only work remotely and due to the workload and lack of support, she needed more time to comply with the disclosure obligations. There was no address given by Ms Hou and her exact whereabouts were unknown.

117.The time sought in the Time Summons was another 14 days after the resolution of the Continuation Summons.

118.The Injunction was granted on 24 January 2022. There was no evidence as to when Ms Hou became the sole director of GIIL in place of Mr Pan. However, there is no sufficient evidence that Mr Pan is no longer the person in control of the Goldin Group or GIIL. Since the balance of the consideration of the GFGS SPA was paid to GIIL on 11 March 2019, GIIL must have held bank accounts, and information of any bank accounts and/or the balances therein can be obtained whether Ms Hou is physically in Hong Kong or not. Even though audited financial statements need not be filed under BVI law, this does not mean there are no management accounts or any accounts or accounting records kept by GIIL. Further, Mr Pan resides in Hong Kong.

119.I do not find the reasons given by Ms Hou are valid reasons.

120.In any event, in light of my conclusion that the Injunction should be continued, GIIL should comply with its disclosure obligations. I am prepared to grant a further 7 days from today for GIIL to comply with its disclosure obligations in paragraph 3(1) of the Injunction and a further 7 days for GIIL to company with paragraph 3(3) of the Injunction.

121.The Bank has sought an Unless order. No details were given as to the terms of such an Unless order. I am decline to grant an Unless order at this stage.

ORDER

122.The effect of my order is that:

(1) The Injunction shall be continued until trial or further order;

(2) Time for D1 to comply with paragraph 3(1) of the Injunction be extended to 7 days from the date hereof and time for D1 to comply with paragraph 3(3) of the Injunction to be extended to 7 days thereafter.

123.As for costs, having taken into account that the Bank has not succeeded on seeking the Hadkinson order, I will make an order that D1 to pay 95% of the Bank’s costs of and incidental to the Continuation Summons. As for the Time Summons, it is D1 who is seeking the indulgence of the Court, I see no reason as to why it should not pay the Bank’s costs. This is an order nisi which shall be made final after 21 days.

124.I understand that the Bank intends to seek costs on indemnity basis. I direct that this matter and any variation of the costs order nisi upon an application being made to be dealt with on paper and the parties to lodge agreed directions and timetable for lodging written submissions.

Mr Anson Wong SC, Ms Ellen Pang and Mr Tom Ng, instructed by Wilkinson & Grist, for the Plaintiff

Mr William Wong SC, Mr Lai Chun Ho and Mr Kevin Lau instructed by Messrs Charles Chu & Kenneth Sit, for the 1^st Defendant

Mayer Brown for the 2^nd, 3^rd and 4^th Defendants (excused from attendance at the hearing)