Lead Good Group Ltd v. Creditland Group Ltd and Others
Read the full judgment text of HCCT 2/2024 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 11 December 2024 before Hon Anthony Chan J.
Construction and Arbitration — Enforcement of Arbitral Award — Mareva Injunction — Asset Disclosure — Compliance with Court Orders — Procedural Sanctions — Utility of Further Disclosure Relief. The Applicant sought further disclosure of assets from the 2nd and 3rd Respondents in aid of enforcing an arbitral award and a worldwide Mareva Injunction. A previous order required the Respondents to disclose assets of HK$1,000,000 or more by affidavit from authorized directors, but the 2nd and 3rd Respondents failed to comply by the deadline, submitting only unsigned statements and unsworn affirmations. The court found that their alleged reasons for non-compliance—cooperation with PRC authorities and ill health—were bare assertions unsupported by evidence and rejected them. The court held that given the incomplete and unverifiable nature of the asset disclosures, further disclosure orders were necessary to police the Injunction and enforcement of the Award. The court granted the relief sought and ordered costs against the Respondents, summarily assessing the Applicant’s costs at HK$200,000 with counsel’s fees at HK$90,000. The court also held that the appointment of provisional liquidators of the 2nd Respondent did not affect the application due to lack of recognition or power to control Hong Kong assets. The Applicant’s Summons was accordingly granted with minor drafting modifications and costs ordered to the Applicant.
Legal issues: Compliance with the 1st Disclosure Order · Utility of granting further disclosure relief
Outcome: The order sought in the Summons for further disclosure was granted subject to minor drafting amendments; costs were ordered to be paid by the 2nd and 3rd Respondents to the Applicant.
Cites 1 case
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HCCT 2/2024 [2024] HKCFI 3591 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 2 OF 2024 ______________________
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________________ DECISION ________________ 1.This is the Applicant’s Summons filed on 3 September 2024 (“Summons”) seeking further disclosure from the 2nd and 3rd Respondents of their assets in aid of (a) a worldwide Mareva Injunction granted against the Respondents on 27 May 2024 (“Injunction”) in favour of the Applicant; and (b) the Applicant’s enforcement of an arbitral award dated 8 December 2023 (“Award”) which was obtained by it against the Respondents. Issues 2.The issues in this application are quite simple, namely, (1) whether the 2nd and 3rd Respondents had complied with the existing order for asset disclosure made against them by Yeung J on 6 June 2024 (“1st Disclosure Order”); and (2) whether there is any utility in granting the relief sought by the Applicant. Background 3.The relevant background facts are as follows. Leave to enforce the Award was granted ex parte by M Chan J on 11 January 2024. The Respondents’ application to set aside the order of M Chan J was dismissed consequential upon their failure to make payment of security by 24 May 2024. 4.After obtaining the Injunction on 27 May 2024, the Applicant applied on 28 May 2024 for continuation of the Injunction as well as disclosure by the Respondents of their assets. On 6 June 2024, Yeung J adjourned the continuation summons for argument with directions for filing of evidence, and continued the Injunction until determination of the summons. In respect of disclosure, the learned Judge ordered :
5.On 26 July 2024, M Chan J ordered that unless the Respondents file evidence in compliance with the evidential directions and the 1st Disclosure Order by 8 August 2024 (“Deadline”), they be debarred from filing any evidence in opposition to the continuation summons. 6.On 6 August 2024, the 1st Respondent filed an affidavit in opposition to the continuation Summons. It also filed an affidavit alleging that it had no assets of value of HK$1,000,000 or more. 7.The 2nd and 3rd Respondents did not file any affidavit to comply with the 1st Disclosure Order by the Deadline. Instead :
8.On 3 September 2024, PMT filed an affirmation by one of its solicitors (“Li”) with the authorisation of the 2nd Respondent purporting to, inter alia, comply with the 1st Disclosure Order. Li exhibited a notarized affirmation of Sun Jiateng (“Sun”) dated 30 August 2024. 9.Sun’s affirmation in turn exhibited two signed but unaffirmed “affirmations” of Ou Zongrong (“Ou”), the sole director of the 2nd Respondent, dated 28 August 2024 (“Ou 1st” and “Ou 2nd”). Although Ou 2nd was made for the purpose of resisting the continuation summons, some of its contents are relevant for the present purpose. 10.According to Sun’s affirmation, he acted as Ou’s PRC lawyer. He confirmed that Ou 1st and Ou 2nd were signed by Ou. 11.According to Ou 1st, it was made pursuant to the 1st Disclosure Order. Paragraph 3 of Ou 1st went on to set out the 2nd Respondent’s assets of an individual value not less than HK$1 million. In short, they were (a) shares in Zhenro Properties Group Ltd; (b) shares in 祥生控股(集團)有限公司 and (c) account receivables (“Receivables”) from a number of companies (“Debtors”). 12.According to Ou 2nd :
13.In relation to the 3rd Respondent’s disclosure of assets, it is confined to PMT’s letter dated 8 August 2024 (see para 7 above). The 2nd Attachment indicated that :
Compliance with the 1st Disclosure Order 14.Plainly, the 2nd and 3rd Respondents had failed to fulfil their obligations under the 1st Disclosure Order by the Deadline. In particular, the Affidavit Requirement was not met. 15.In respect of the alleged reason for failure to comply, it was stated in the 1st Attachment that Ou, the sole director of the 2nd Respondent, was under cooperation with PRC Government agency (the details of which could not be disclosed) and he was unable to make an affirmation or sign any document. Nor was he able to authorise any person to make an affirmation. The allegation is nothing but a bare assertion. It was not stated whether Ou was cooperating on a matter concerning himself or the 2nd Respondent. It is difficult to understand why cooperation with Government agency would hinder the 2nd Respondent’s compliance with a court order. Such allegation cannot be accepted at face value. The allegation was largely repeated in Ou 2nd without any evidential support. 16.The 2nd Attachment was drafted in the same style as the 1st Attachment. It alleged that the sole executive director and legal representative of the 3rd Respondent, Mr Li, was unable to comply with the 1st Disclosure Order due to his health condition. He was in the course of recovery from a stroke. He was also unable to authorise anyone to make the requisite affirmation. The allegation was not supported by any documentary evidence of Mr Li’s health issue. There was no explanation whether there was other non-executive director(s) or why Mr Li was unable to authorise another person, such as a senior staff, to make the affirmation. Again, the bare assertion cannot be accepted at face value. Utility 17.Given the non-compliance of the 1st Disclosure Order, the Applicant is entitled to apply for another disclosure order for the purpose of policing the Injunction and to aid the enforcement of the Award. 18.The materials produced by the 2nd Respondent so far (R2’s List of Assets, the attached supporting documents, Ou 1st and Ou 2nd) do not provide sufficient information to allow the policing of the Injunction. Further, without a verifying affidavit, there is no assurance that the information provided is accurate or complete. 19.I accept the submission of Mr Chui, who appeared for the Applicant, that the Applicant is in the dark as to the registered office address and location of the Debtors; the nature and particulars of the Receivables; and whether the Receivables are subject to any set-off. Pursuant to the 1st Disclosure Order, the Respondents are obligated to provide “details” of their assets. 20.As regards the asset information provided by the 3rd Respondent, I agree with Mr Chiu that basic information such as registered office address, location of share register and whether the shares in the 7 PRC companies are held through third parties should be supplied. 21.It should be said that the details required for the disclosed assets should be made clear. A further disclosure order can serve this purpose. 22.Finally, I do not believe that the appointment of JPL for the 2nd Respondent affects this application. First, as pointed out by Mr Chiu, the JPL have not sought recognition in Hong Kong. Absent an order of recognition and assistance to them, the JPL do not presently have leave or power to take possession or control of assets within Hong Kong where some of the 2nd Respondent’s assets are situated. 23.Second, the JPL were only appointed after the Injunction was granted. I see no good reason why the Applicant should not take step to obtain relief for the non-compliance of the 1st Disclosure Order or to leave the matter of policing the Injunction entirely in the hands of the JPL. Disposition 24.For these reasons, I grant the order sought in the Summons, save for the minor drafting issues in respect of paras 2(b), (d) and (f), which were discussed at the hearing. 25.The parties are in agreement that costs should follow the event. I order that the costs of and occasioned by the Summons be to the Applicant. 26.As per its statement of costs, the amount sought by the Applicant is over HK$460,000. I agree with Mr Ko, who appeared for the 2nd and 3rd Respondents, that it is very high for a simple application. The time charges of the Applicant’s solicitors are very high, bearing in mind especially the involvement of counsel. The hearing was much shorter than expected. On a broad brush view, I assess the Applicant’s costs summarily at HK$200,000 (with counsel’s fee allowed at HK$90,000). 27.I am grateful to counsel for their assistance.
Mr Bryon Chiu, instructed by Jingtian & Gongcheng LLP, for the Applicant Mr Tony Ko, instructed by Patrick Mak & Tse, for the 2nd to 3rd Respondent | ||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCCT 2/2024