Dingway Investment Ltd (Provisional Liquidators Appointed) v. China City Construction & Development Co., (Hong Kong) Ltd and Others

HCA 309/2022

[2022] HKCFI 3422

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 309 OF 2022

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HCCW 30/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 30 OF 2022

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(Heard Together)

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DECISION

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1.There are 2 applications for leave to appeal against the Decision of this court dated 29 July 2022 ([2022] HKCFI 2314)[1]. One by D6 and the other by D7 and D9. There is also an application by Dingway for an extension of time to apply for leave to cross-appeal against the Decision.

2.With respect, I am unable to agree that there is reasonable prospect of success in either of the proposed appeal of the Defendants. 

3.In respect of D6’s proposed appeal, it is based, firstly, on the same complaints over the defects of Dingway’s pleaded case, which had been dealt with in the Decision.  Secondly, it is contended that the Mareva injunction against D6 should have been discharged on the ground of MND.

4.The pleading complaints should be considered against the backdrop that this court had found that there was clearly a good arguable case that (a) Transfer (2) was not a genuine sale but a device to keep the Shares from the reach of Dingway; and (b) D1 to D3, D6, D7 and D9 were acting in concert to deprive Dingway of the Shares and its indirect interest in the Land[2]. 

5.Whilst there were defects in Dingway’s pleading, this court took into consideration that the trial of this action was not going to take place in the near future, and it was a case where particulars could be sought by D6 in respect of the deficiencies.  It was not a plain and obvious case of strike out[3].

6.Further, I believe that the following dicta of K Yeung J in Delco Participation BV v HWH Holdings Ltd [2019] HKCFI 2923, [41(f)], is particularly apposite in a case, like the present, based on circumstantial evidence and inferences[4] :

“Beyond the seriousness of the charge, there is in fact nothing magical in the word “fraud”. Every set of pleadings will have to be looked at on a case by case basis with the notions of fairness, justice and sufficiency in mind so as to decide whether F&BPs should be ordered, or whether the accuser has sufficiently pleaded a “general case of fraud” so as to be permitted to flesh out the details later on;”

7.As regards the alleged MND, I agree with Mr Man, who appears for Dingway, that it is artificial to the extreme.  It is apparent from the evidence referred to by Mr Lai, who appears for D6, that Dingway had laid out before the ex parte Judge the evidence available to it on the issue whether there was any legitimate reason for D6 to have received part of the Sale Proceeds.

8.Moreover, D6’s case on the Loan was rejected by this court[5].  It is very difficult to understand why the Mareva injunction against D6 should have been discharged based upon a rejected case.

9.Turning to the application of D7 and D9, it is also based on pleading deficiencies and the discharge of the Mareva injunction against them as a consequence of the unsustainable pleading. 

10.Firstly, there is an argument not raised at the previous hearing[6], namely, Dingway’s loss had materialized in October 2019 when Transfer (1) took place and the pleaded overt acts of D7 and D9, which related to the Sale which took place in 2021, did not cause that loss.  The argument is misconceived because it ignores the fact that the Sale was part of the Wrongful Scheme pleaded against, inter alia, D7 and D9, and it was through that Sale that the fruit of the wrong was obtained.

11.In respect of the pleading complaints raised at the last hearing (only by D7 and not D9), they were dealt with in the Decision, [106] to [110], and paras 4 to 6 above apply mutatis mutandis.

12.Given the lack of a reasonably arguable appeal in respect of the pleading issues, there is no basis to discharge the Mareva injunction against D7 and D9.

13.For these reasons, I dismiss both applications.

14.In respect of Dingway’s extension of time application, Mr Man informed the court that the intended cross-appeal concerns only the proprietary injunction.  In my view, the law is quite clear on that issue and I am unable to see any merit in the proposed cross-appeal, nor any basis to exercise the court’s discretion in favour of Dingway.

15.Further, there is clearly force in Ms Lok’s objection that Dingway should not be given an extension of time without identifying in its Summons the parameters of the cross-appeal, otherwise the extension of time will result in a general permission to Dingway to apply for leave to cross-appeal.

16.In the premises, I also dismiss the extension of time application.

17.I shall hear the parties on costs.

Mr James Man, instructed by Tanner De Witt, for the Plaintiff in HCA 309/2022 and Petitioner in HCCW 30/2022

Attendance of Jun He Law Offices, for the 1^st and 3^rd Defendants in HCA 309/2022 and for China City Construction & Development Co., (Hong Kong) Limited and Sze Wai Suen in HCCW 30/2022 was excused

Au-Yeung, Chan & Ho for the 2^nd Defendant in HCA 309/2022 and Zeng Yuqi in HCCW 30/2022, absent

Mr Lai Chun Ho, instructed by Tung, Ng, Tse & Lam, for the 6^th Defendant in HCA 309/2022

Ms Frances Lok, instructed by Adrian Yeung & Cheng, for the 7^th and 9^th Defendants in HCA 309/2022