周惠明 v. 挪信新能源科技 (南通) 有限公司 and Another

HCCT 96/2024 & HCCT 97/2024 &

HCCT 98/2024 & HCCT 99/2024

Heard Together

[2025] HKCFI 1503

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 96 OF 2024

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AND

HCCT 97/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 97 OF 2024

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AND

HCCT 98/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 98 OF 2024

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AND

HCCT 99/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 99 OF 2024

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______________________

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(Heard together)

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J U D G M E N T

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INTRODUCTION

1.By an inter partes Summons dated 12^th December 2024, Mr Zhou Hui Ming (“Zhou”) applies for an immediate appointment of interim receivers (the “Receivership Application”) over the assets of Sun Kwok Ping (孙国平) (“Sun”); 挪信新能源科技 (南通) 有限公司 (“Noxin”) and Zhang Jun (张骏) (“Zhang”) (collectively, the “Sun Parties”).

2.This matter first came before this Court on 20^th December 2024. As the Sun Parties resisted an immediate appointment and applied for evidence to be filed in opposition to the Receivership Application, I was of the view that it is only fair that the Sun Parties be given an opportunity to present their cases before this Court. Accordingly, I adjourned the Receivership Application to be heard on 31^st December 2024.

3.At the hearing on 31^st December 2024, I was inclined to grant an order in favour of the Receivership Application. However, Mr Chong for Sun and Noxin forcefully submitted that Sun is a person of substantial means and an immediate appointment of receivers would jeopardize refinancing exercises which Sun was undertaking. Further, this Court was informed that a substantial fundraising exercise was about to be closed by the end of January 2025 which if, materialised, could satisfy the four arbitration awards granted in favour of Zhou (the “Awards”). On the other hand, Mr Chain SC for Zhou is correct that there is no transparency of Sun’s assets. Accordingly, I exercised my discretion to appoint Special Managers to provide Sun and Noxin the opportunity to proactively and conclusively demonstrate or identify their assets available for enforcement.

4.I had in mind that if sufficient assets and securities could be identified to satisfy the Awards, then there would not be any need for the continuation of the Mareva Injunction and the appointment of receivers. Further, Special Managers as professional and independent parties will be able to provide the Court with adequate and impartial information to assess whether receivers should be appointed.

5.Directions were also given for the Receivership Application to be heard together with (1) a summons taken out by Sun and Noxin on 18^th November 2024 to set aside the Order of Mimmie Chan J dated 24^th October 2024 granting leave to enforce the Awards and (2) Zhou’s summons dated 4^th October 2024 to continue the worldwide Mareva injunction (“Mareva Injunctions”) granted (1) against Sun and Noxin for the enforcement of the Awards, and (2) against Zhang on the Chabra basis.

Setting Aside Summons

6.As the Respondents are no longer pursuing their summons to set aside the enforcement of the Awards, I am of the view that the said summons should be dismissed with costs.

7.Mr Chain SC asked for costs to be awarded on an indemnity basis. I do not seek to repeat the detailed submissions advanced by Mr Chain SC save to say that I agree that the summons to set aside the Order of Mimmie Chan J dated 24^th October 2024 was taken out tactically to delay the enforcement of the Awards. I see no merits in such an application. Sun and Noxin are entitled to take out whatever applications they like but there are always costs consequences for unmeritorious applications. This is particularly so when on 29^th November 2024, the Mainland court swiftly dismissed parallel applications in the Mainland to set aside the Awards based on the same evidence, on the grounds that Sun’s assertion were “obviously baseless and not to be believed” (“显然缺乏依据，不予采信”).

8.Further, I note that as a result of the Mainland Court’s decision, by letter dated 5^th December 2024, Zhou invited Sun and Noxin to withdraw the Setting Aside Summons. It was only after two hearings of the Receivership Summons in December 2024, and the fixing of the substantive hearing of the Setting Aside Summons on 7^th February 2025, that Sun and Noxin confirmed on 14^th January 2025 that they “do not oppose, and do unconditionally withdraw” the Setting Aside Summons.

9.Zhou has, then, reasonably proposed a consent summons to dismiss the Setting Aside Summons. However, more than 21 days after Sun and Noxin’s decision to withdraw the Setting Aside Summons, no consent summons has been signed. Mr Chain SC submitted that Sun and Noxin have disingenuously held this up (thereby holding up any enforcement measures) by deploying the excuse of resisting indemnity costs, even though (1) it is the standard order (See: A v R (Enforcement) [2009] 3 HKLRD 389, 400-401 at §§67-72 per Reyes J and (2) it is particularly justified given the total lack of merits in the case.

10.Additionally, Zhou’s counterproposal for costs reserved to be dealt with at the present hearing was met with complete silence. Yet, there is no apparent reason why this was not agreed to right away, if not to delay the matters further. I agree.

11.I therefore accept that Sun and Noxin’s unreasonable maintenance of the Setting Aside Summons is an attempt to frustrate enforcement.

12.For all the reasons stated above, I agree with Mr Chain SC that on the facts of the present case, a costs order on indemnity basis is justified and I so order. The costs are to be summarily assessed by this Court.

13.Shortly prior to the substantive hearing on 7^th February 2025, the Special Managers filed their first Report (the “Report”). Sun and Noxin sought leave to file evidence to respond to the same. Again, I am of the view that Sun and Noxin should be given an opportunity to do so. Accordingly, I gave a set of directions for the filing of evidence and supplemental written submissions in relation to the Report.

MAREVA INJUNCTION

14.The requirements for granting worldwide Mareva relief are well established. The applicant should show (1) a good arguable case on the merits, (2) the respondents have insufficient assets within the jurisdiction to satisfy the claim and there are assets without the jurisdiction, and (3) there is a real risk of dissipation of the respondents’ assets to render judgment nugatory: White Book 2025 at §29/1/83.

15.As to risk of dissipation specifically:-

(a)  There must be a solid basis for concluding there is a real risk of unjustified asset dissipation by the respondents, examining the evidence holistically: Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81 (“Convoy”) at 89I-94H, §§35-54 per Lam VP (as Lam PJ then was).

(b)  Risk of dissipation is very often shown by “inferential evidence”: Pacific Concepts (HK) Ltd v Michel Brennion (unrep., HCA 2672/2008, 13^th March 2009) at §24 per A Cheung J (as the Chief Justice then was).

(c)  Indicia which strongly support an inference of risk of dissipation include (1) evidence of actual dissipation of assets, (2) failure to comply with disclosure requirements, and (3) more generally, evidence of dishonest or fraudulent conduct. See:-

(i)  Aleksandr Narimanovich Kushaev v Greenly Holdings Ltd (in liq) [2019] HKCFI 2745 (6^th November 2019) at §§59-60 per Recorder Manzoni SC;

(ii)  Beijing Renji Real Estate Development Group Co Ltd v Zhu Min [2022] 4 HKC 116 at 143B-I, §§70-72 per G Lam JA (sitting as a first instance judge); and

(iii)  Convoy at 94F, §53 per Lam VP (as he then was).

(d)  Risk of dissipation is more easily found in a post-judgment context: see China Citic Bank, supra at §31 per DHCJ K Yeung SC (as he then was).

16.I agree that with the dismissal of the Setting Aside Summons, the present Actions are within the post-judgment territory. For the continuation of the Mareva Injunction, it is no longer necessary for this Court to consider the underlying merits of the Awards and the application for leave to enforce the Awards (Great Station Properties SA v UMS Holding Ltd [2017] EWHC 3330 (Comm) (20^th December 2017) at §56 per Teare J), and (2) risk of dissipation will be more easily inferred.

17.On the facts, Zhou relies on the following five classes of conduct to evidence risk of dissipation and attempts to frustrate enforcement.

18.First, Mr Chain SC relies on the underlying dishonesty on the part of Sun and Noxin. It is submitted that the arbitral tribunal found that Sun and Noxin were “at fault” for not registering Zhou’s security interest in Noxin’s land in the Mainland (the “Mainland Land”), in breach of Sun and Noxin’s own warranty under contract. In Sun 7^th at §27, Sun and Noxin responded for the first time, alleging that Zhou’s security interest was in fact unregistrable by reference to a pamphlet. It is submitted that this explanation can be dismissed out of hand as (1) it was not accepted by the tribunal, and (2) Zhou has obtained an independent formal Mainland legal opinion confirming registrability of his interest.

19.I am of the view that, at an interlocutory stage, this Court is prepared to give benefit of the doubt to Sun and Noxin in the sense that they might have been wrong in relation to the legal position in the Mainland.

20.However, I am of the view that they consciously failed to tell Zhou about the Wenzhou Bank's priority security interest over Zhou’s promised security interest. This is a factual issue, and they should have altered and/or informed Zhou about Wenzhou Bank's priority security interest. It is no good answer to say that if Zhou was diligent enough, he could have found that out from the public domain. There is no legitimate reason as to why Sun and Noxin chose not to inform Zhou of the same. I am of the view that this is a conduct falls below the acceptable standard of commercial morality.

21.Even if this Court were to accept Mr Chong’s submission that it could be a mistake on the part of Sun and Noxin as there was no point in hiding something from Zhou when the same could be easily found out by conducting a search in the public domain, I am of the view that this, at least, demonstrates Sun and Noxin’s cavalier attitude in dealing with their assets. It could also be that Sun and Noxin were simply playing a hide and seek game. In any event, this is a factor to be taken into consideration when assessing whether there is a risk of dissipation pending the final enforcement of the Awards.

22.Secondly, Zhou relies on Sun’s sale of a landed property, namely, Flat G on 31^st Floor of Lime Stardom, No. 1 Larch Street, Tai Kok Tsui, Kowloon (“Flat 31G”). On 13^th September 2024, a sale and purchase agreement for Sun to sell Flat 31G was purportedly signed (“Flat 31G Sale”). Sun says that Flat 31G was sold due to water seepage albeit that he adduces no evidence to support the same.

23.I am of the view that sale of a landed property in open market, per se, is not an act of dissipation of assets. The reason for the sale, whether water seepage or not, is irrelevant. What is relevant, however, is that Sun consistently refused to disclose the amount of the net sale proceeds and its whereabouts in answer to Zhou’s repeated queries. In view of the Mareva injunction, Zhou is entitled to know the amount of net sale proceeds and its whereabouts.

24.It is fair to say that Zhou has a justified concern that Sun was trying to avoid making the net proceeds of the sale available to satisfy the Awards. First, despite repeated requests, Sun refused to disclose the amount of net proceeds of the sale until in answer to the purchaser’s letter, he first asserted that the balance of the purchase price was sufficient to discharge the existing mortgage and stated that the deposits in the sum of HK$680,000 were released to him. Secondly, when Zhou first requested the net sale proceeds to be paid to Zhou, Sun only agreed to pay the same into court, which by itself is not problematic. However, when the purchaser backed out from the transaction, Sun informed the Special Managers his intention to transfer the net sale proceeds to Zhou. I agree with Mr Chain SC that Sun’s intent is disingenuous – given that no sale proceeds would be available from the Flat 31G Sale.

25.Further, there is no explanation as to the whereabouts of the sum of HK$680,000, being the deposits released to Sun. This is notwithstanding that (i) Sun is still restrained by the Mareva Injunction not to dispose of or deal with his assets and (ii) Sun is under a positive obligation to disclose his assets pursuant to the Disclosure Orders.

26.More importantly, I am of the view that there is evidence of actual dissipation of assets when on 12^th September 2024, shares in two of Sun’s corporate vehicles, i.e. Bright Praise and Right Victory, were gratuitously transferred to Zhang’s nominee, Zhengwei International Investment and Management Ltd (“Zhengwei”) for nominal or no consideration. Such disposals raise many questions and are evidence of actual dissipation.

27.Sun and Zhang explained that the transfer of Bright Praise was an “reassurance” to Zhang who borrowed US$5.6 million from a financier for Sun’s personal use. Mr Chain SC is correct that there is very scant evidence of such a loan. In any event, on Zhang’s own case, Bright Praise was just a “shell company”, it is difficult to fathom how the receipt of a shell company can provide any reassurance. Further, the arrangement between Sun and Zhang was not reflected in any contemporaneous evidence, written or otherwise.

28.As to Right Victory, Sun and Zhang asserted that 85% of the shares in Right Victory were transferred to Zhengwei to incentivize Zhang to sell the Mainland Land, to (1) repay loans due to a bank, (2) repay sums due to Zhou, and (3) repay sums owed by Sun to Zhang. Putting aside the fact that there is no contemporaneous evidence in support of such an arrangement, there is also the critical absence of any evidence that Zhang had ever tried to sell the Mainland Land and to apply the sums in the stated order of priority. There is also no explanation as to what would happen if Zhang failed to sell the Mainland Land as agreed.

29.Mr Chain SC also reminded this Court that:

(1)  First, in terms of timing – the transfers of shares in Bright Praise and Right Victory occurred on 12^th September 2024, i.e. (1) after the Awards made on 25^th July 2024, (2) after the letter dated 12^th August 2024 to the companies requesting copies of registers of members, (3) immediately after the letter dated 10^th September 2024 requesting Sun and Noxin to provide an undertaking not to dissipate their assets, and (4) contemporaneously with the Flat 31G Sale on 13^th September 2024. This strongly suggests a coordinated scheme to dissipate assets.

(2)  Secondly, there was no suggestion at all that any consideration was actually paid by Zhang or Zhengwei for the shares transferred. Whilst bought and sold notes were provided by Sun to the Special Managers, the consideration paid was only nominal at HK$1 per share, and there is no proof of actual payment of such consideration. This falls far short of establishing such transfers as genuine business transactions.

30.Mr Chain SC also pointed out that similar to his disposal of Bright Praise and Right Victory, Sun resigned from key offices in Mainland subsidiaries of Nobao Energy (China) Holding Limited (“Nobao Energy”), holding company of Sun’s thermal energy business) and appointed one许灵武 in his place, which is again suggestive of a disposal of interest. Given Sun’s persistent refusal to provide the register of shareholders for these subsidiaries, it is unknown whether the shares have been dissipated.

31.Thirdly, Mr Chain SC submitted that despite having been legally represented herein since as early as 31^st October 2024, Sun and Noxin only provided their first round of disclosure (2 one-page lists) by Sun 5^th on 30^th December 2024. Yet, the disclosure was incomplete. For instance, Sun failed to disclose his interest in Sunshine Oilsands Ltd (“Sunshine Oilsands”), a Hong Kong-listed company in which Sun directly holds shares worth around HK$11,318,963.50 as of 30^th September 2024. It was only after being caught red-handed lying to this Court that Sun made Sun 6^th to provide additional disclosures, which were still incomplete. For instance, Sun still has not disclosed (1) his securities account held at Guotai Junan Securities Ltd (“GJSL Account”), and (2) a Sunshine Oilsands senior note of USD297,753,306 (as of 31^st March 2024) (the “Senior Note”). There is also no explanation for the obvious lie in Sun 5^th.

32.Mr Chain submitted that such incomplete disclosure, despite that the existence of such assets ought to be known to Sun and Noxin, plainly suggests dishonesty and lack of transparency.

33.Mr Chong for Sun and Noxin submitted that the above assets could be easily identified from basic research in the public domain. Hence, there could be no dishonesty on the part of Sun and Noxin. At best, it shows that they were then busily engaged in refinancing as their first priority and thus caused the above obvious omissions. That might well be the case. However, orders of courts of this jurisdiction are to be treated seriously and must be compiled with. I am of the view that Zhou has a very legitimate concern that assets of Sun and Noxin are not properly scrutinized and managed. This could lead to dissipation of assets.

34.Fourthly, I agree that Sun and Noxin have failed to cooperate and deal with the Special Managers’ requests for information. Mr Chain SC submitted that even where the Sun and Noxin purported to comply, material inaccuracies exist. For instance, Sun stated that his 17,413,790 Sunshine Oilsands shares are held at a Partners Capital Securities Limited (“PCSL”) securities account. Yet, PCSL statements show that only 2,020,770 Sunshine Oilsands shares are in Sun’s account. Sun’s subsequent explanation to the Special Managers that the remaining 15,393,020 Sunshine Oilsands Shares were held by physical share certificates is a bare assertion and inherent unbelievable. It is thus likely that Sun maintains other undisclosed securities accounts with other securities firms which have not been disclosed to the Special Managers or this Court.

35.Fifthly, Mr Chain SC submitted that at the 31 December Hearing, Sun insisted that funding would be available in January 2025 from 苏州资管 to repay the Awards sum, which would be secured by, inter alia, some of Sun’s account receivables. No further corroborative evidence has been produced since the 31 December Hearing, besides some broadbrush generic assertions as to “ongoing negotiations”. Such assertions are demonstrably false because the WeChat conversations produced by Sun to show the availability of such funds were suspiciously cut off part way through a message, and Sun appeared to be pledging the same receivables to multiple parties (including Zhou) which suggests that the funds from 苏州资管 were not actually forthcoming.

36.On this point, I agree with Mr Chong that it might well be Sun’s subjective wish that funds would be forthcoming but there is no certainty in such kind of negotiations. Further, it is usual to approach different financiers using the same set of securities or assets as collaterals. Hence, I agree that on this ground alone it is not sufficient to establish a risk of dissipation.

37.Finally, Mr Chain SC submitted that Sun’s corporate vehicles were required to comply with their statutory obligations to disclose basic corporate documents (such as the register of members), but they failed to do so. On 10^th September 2024, Sun was requested to provide a list of his assets and an undertaking not to dispose of the same to evade enforcement of the Awards.

38.Sun admitted he received the aforesaid letters but chose not to respond, as there is “no obligation” for him to reply to “self-engineered evidence”. This is clearly contrary to the statutory obligations. In fact, a failure to reply to request by solicitors’ correspondence for disclosure would constitute an indicium of risk of dissipation: see e.g. ArcelorMittal USA LLC v Essar Steel Ltd [2019] 2 All ER (Comm) 414 at 434f, §58 per Jacobs J.

39.Mr Chain SC submitted that Sun has committed a series of contumelious and deliberate failures in complying with statutory and court-ordered disclosure requirements. Without the Mareva Injunction in place, he would use every effort to dissipate his assets beyond Zhou’s reach.

40.I am of the view that taking all the facts and factors as stated above into consideration, on balance, there is a genuine risk of dissipation. Hence, the balance of convenience is in favour of granting injunctive relief: Seridom Servicios Integrados Idom SAU v Heng Wen Trade Co Ltd [2019] HKCFI 85 (21^st January 2019) at §129 per Marlene Ng J.

41.Accordingly, I make an order to continue the Mareva Injunction until further order of the Court.

CHABRA INJUNCTION AGAINST ZHANG

42.The principles for granting Chabra relief are well-established: see XY LLC v Jesse Zhu [2017] 5 HKC 479 at 490C-491A, §24 per Kwan JA (as she then was).

(a)  The Chabra jurisdiction will be exercised if there is “good reason” to suppose assets in the name of a third party could be used to satisfy a judgment. “Good reason” means more than barely capable of serious argument, but not necessarily better than 50% chance of success.

(b)  A common example is where there is good reason to suppose assets in the name of third parties are in truth the assets of the respondents, such as assets held by the third parties as the respondents’ nominee.

43.I am of the view that on the facts of the present case, on balance, there is a case to suggest that Zhang is a nominee holding his interest in the Bright Praise and Right Victory shares on behalf of Sun. I note that Zhang acquired the shares without consideration. In the case of Right Victory, given that Zhang had failed to secure a sale of the Mainland Land, there is a prima facie case that the said shares should be transferred back to Sun.

44.Mr Chain SC also points to Sun’s disclosures to the Special Managers, Sun had managed to disclose Bright Praise’s management accounts for the year ended 31^st December 2024, i.e. covering the period after Bright Praise’s shares were transferred to Zhengwei on 12^th September 2024. It is submitted that there is a case that Sun has remained involved in the affairs of Bright Praise, and Zhang is simply holding Bright Praise’s interest as Sun’s nominee. I agree.

45.I also consider that there will not be any prejudice to be suffered by Zhang as on his case Bright Praise is a shell company and Right Victory was transferred to him for a specific purpose which so far has not been fulfilled.

46.Hence, I am of the view that judicial discretion should be exercised in favour of granting a Chabra injunction over Zhang’s interest in Bright Praise and Right Victory.

APPOINTMENT OF RECEIVERS

47.The principles for appointing interim receivers in support of a Mareva injunction are also well-established:-

(a)  The Court may appoint receivers when it is “just and convenient to do so” under s. 21L of the High Court Ordinance (Cap. 4).

(b)  It would usually be “just and convenient” to appoint receivers where (1) assets are liable to be dissipated or are otherwise in jeopardy; and (2) they cannot satisfactorily be preserved by the injunction. This will “normally” be the case where the respondent has provided inadequate disclosure, such that there is a “measurable risk” that he may deal with assets in breach of the Mareva Injunction.

(c)  The evidential test is the American Cyanamid test. The Court will thus consider (1) whether there is a serious issue to be tried; (2) whether there is a risk of dissipation of assets; (3) the efficacy of the current arrangements to protect the interest of the claimant; and (4) the risk of damage to any party if a receiver is appointed.

(d)  Specifically, where a respondent’s asset-holding structure renders the protection offered by a Mareva injunction inadequate, a receivership order may be made. This is especially so where the asset-holding structure is abused to facilitate the breach of the injunction. As held in JSC BTA Bank v A [2010] EWCA Civ 1141 (19^th October 2010) (“JSC”) at §17 per Maurice Kay LJ:-

“…if [a Mareva Injunction] does not, of itself, provide adequate protection to a claimant because there is a measurable risk that a defendant may use the structure which he holds his assets to deal with those assets in breach of the Freezing Order, then a receivership order will normally be justified.”

In other words, at the end of the day it is the practical adequacy of the Mareva injunction which determines whether a receivership order should be granted, rather than subjective descriptions of its “complexity”.

See: China Metal Recycling (Holdings) Ltd (in liq) v Chun Chi Wai (unrep., HCA 1412/2013, 5^th February 2016) (“China Metal”) at §§16-17 per DHCJ Keith; Akai Holdings Ltd (in liq) v Ho Wing On Christopher (unrep., HCCL 37/2005 and 40/2005, 1^st September 2009) (“Akai”) at §§41-54 per Stone J; JSC (supra) at §§11-18.

ANALYSIS AND DETERMINATION

48.First, Zhou is a judgment creditor of Sun and Noxin. In July 2024, four Shanghai Arbitration Commission arbitral awards were made against Sun and Noxin. On 24^th October 2024, by order of Mimmie Chan J, leave was granted by this Court to enforce the 4 Arbitral Awards as judgments of this Court (“Leave to Enforce”).

49.Secondly, worldwide Mareva injunctions have been granted against Sun and Noxin (and Zhang under the Chabra jurisdiction). On 3^rd October 2024, Recorder Jenkin Suen SC granted worldwide Mareva injunctions in the Actions against the Sun Parties (“Mareva Injunctions”). In doing so, the learned Recorder was satisfied that (1) there was a risk of dissipation of the Sun Parties’ assets; and (2) there is good reason to suppose that Zhang holds two private companies belonging to Sun and/or Noxin.

50.Sun’s Parties have been given ample opportunities to avoid the making of an order to appoint receivers. The starting point is that the Awards need to be enforced. Sun Parties might have liked to buy time to solve this issue, but this Court has given them sufficient time to provide a suitable solution. Regrettably, no acceptable proposals were offered to alleviate the need for an immediate appointment of receivers.

51.I accept that Zhou has satisfied the 1^st and 2^nd requirements of merits and risk of dissipation. As to the 4^th requirement of risk of damage, where receivers are appointed in aid of a Mareva injunction, receivership merely “achieves the same result as full compliance by the defendant with the [Mareva] Order”, and hence will not result in greater damage that the Mareva Injunction itself: see Akai (supra) at §72 per Stone J. Here, since the Mareva Injunctions are granted and continued, damage is not relevant.

52.The key issue is that the existing Mareva Injunctions are sufficient to preserve the Sun’s Parties’ assets for enforcement. I am of the view that on the existing evidence, it is insufficient, and the appointment of receivers is warranted to give sufficient protection to Zhou.

53.First, for the reasons stated above, I am of the view that the Sun Parties’ disclosure of their assets is inadequate and at times inaccurate. The Report of the Special Managers supports this conclusion. It is hoped that the Sun Parties will at least fully cooperate with the Special Managers, but it turns out that the legitimate requests of the Special Managers are not met. Zhou is entitled to the view that without full knowledge and transparency as to Sun and Noxin’s assets, the utility of the Mareva Injunction is limited. It is correct that there is a sure sign of inadequacy of the Mareva Injunctions, whose efficacy relies on adequate disclosure being given: see Yau Chiu Wah v Gold Chief Investment Ltd [2002] 2 HKLRD 832 at 840D-E, §16 per Ma J (as he then was).

54.Secondly, in relation to Sun’s main asset, namely, his holding of listed securities, Mr Chain SC is correct in submitting that there is insufficient transparency as to the value of such listed securities. Sun had persistently refused to cause his corporate vehicles to comply with statutory obligations to provide members’ registers, as well as Sun’s patent failure to disclose audited accounts of each Nobao Energy subsidiary to the Special Managers notwithstanding requests to do so.

55.Further, the audited financial statements of Nobao Energy for the year ended 31^st December 2022 disclosed by Sun on 27^th January 2025 to the Special Managers are heavily qualified. Nobao Energy’s own auditors remarked that they “have not been provided with the complete set of books and record of the [subsidiaries] for inspection” and were “unable to satisfy [themselves]” as to the valuation of the subsidiaries, and hence they were unable to “obtain sufficient appropriate audit evidence to provide a basis for an audit opinion”. Significantly, Nobao Energy’s auditors also noted that they were “unable to satisfy [themselves] that the valuation of the investments in subsidiaries and other investments of RMB32,613,318 and RMB494,325,000 respectively in the statement of financial position are recoverable”. Accordingly, in the auditors’ report, the auditors only provided a disclaimed opinion.

56.Thirdly, while Zhou’s application for receivership is premised on the jurisdiction to grant interim receivership in aid of the Mareva Injunction, the Court is entitled to take into consideration the fact that receivers by way of equitable execution are likely to be eventually appointed as part of the execution of the Awards.

57.For Zhou to properly enforce the Awards in due course, e.g. through a charging order, there is ample justification for appointment of receivers for equitable execution: Leader Screws Manufacturing Co Ltd v Huang Shunkui [2021] HKCFI 2828 (24^th September 2021) at §11 per Au-Yeung J. The Sun Parties thus cannot seriously complain of any prejudice or inconvenience arising from the appointment of interim receivers when it would soon be the inevitable outcome.

58.As stated in Cruz City 1 Mauritius Holdings v Unitech Ltd [2014] EWHC 3131 (Comm) (2^nd October 2014) at §47 per Males J (as he then was), receivers by way of equitable execution may be appointed where there is some legal or practical hindrance or difficulty in using the normal processes of execution, after considering all the circumstances of the case.

59.In the present case, first, the Sun’s Parties had resorted to the Setting Aside Summons to prevent and/or delay the normal processes of execution.

60.Secondly, after the Setting Aside Summons is dismissed, the main issue is that the true state of affairs and finances of Sun’s companies were opaque even according to their own auditors, the usual execution methods (e.g. sale pursuant to charging orders over the shares in those companies) would very likely be fruitless; no sensible commercial party would acquire such shares without the intervention of management of court-appointed receivers. I am of the view that one must assess this situation with common sense and a touch of reality. As a matter of common sense, given little is known about Nobao Energy’s subsidiaries, receivers will be required to obtain the books of Nobao Energy’s subsidiaries to provide an accurate valuation, before any sale of Sun’s interest to third parties to satisfy Sun’s liabilities under the Awards.

61.Hence, it is just and convenient that, in order to assess and preserve the value of Sun’s assets, receivers be appointed in the interim given that receivers by way of equitable execution will be appointed soon in any event.

62.I am also of the view that the receivership order against Zhang in respect of his interest in Bright Praise and Right Victory should also be made. As a matter of law, receivers can be appointed over assets in the name of third parties if there is “good reason to suppose” that the asset the third party holds would be susceptible to a procedure leading to satisfaction of a judgment: JSC BTA Bank v Mukhtar Kabulovich Ablyazov (unrep., HCMP 341/2014, 17^th February 2014) at §§39-40 per Zervos J (as he then was.)

63.As to the risk of dissipation vis-à-vis Zhang, as there is a prima facie case that he holds the subject assets as nominee or on trust for Sun, I am of the view that there is a real risk that Sun could direct Zhang to transfer or to put the same beyond the reach of Zhou.

64.I agree with Mr Chain SC that it took months for Zhou to discover the true shareholding status of Bright Praise and Right Victory. There is thus a strong risk of assets being transferred away by Zhang (through Zhengwei) without detection by Zhou, which therefore justify the Mareva Injunction and receivership orders against Zhang.

65.Overall, I am of the view that given that this Court is going to make the receivership orders against Sun and Noxin, and, on balance, Zhang is holding his interest in Bright Praise and Right Victory as nominees for Sun, receivership orders should be made to preserve Zhang’s interests in Bright Praise and Right Victory for enforcement of the Awards.

The Special Managers’ Report

66.Sun and Noxin were given leave to file supplemental submissions to deal with the issues raised in the Special Managers’ Report. The gist of Sun and Noxin’s submission is that they have already tried their best to disclose the information available. I agree that if, despite their best efforts, they still could not satisfy the Special Managers as to the state of their assets and hence it is unknown whether assets can be sufficiently preserved by the Mareva Injunctions, then clearly the Mareva Injunctions are inadequate and the test for receivership is met.

67.The test for ordering receivership in aid of a Mareva injunction is whether assets can be satisfactorily preserved by the Mareva injunction: China Metal at §16 per DHCJ Keith (as he then was.) This demonstrates the necessity for appointing receivers to manage the assets.

68.I agree that it is no good to say that they are unable to respond to the Special Managers’ requests because Sun is “not an accountant or a person in the finance industry”. Sun had the assistance of individuals within his organization e.g. Sean Lau and Vicky Choy of the Nobao Group, and professional legal advisors in Hong Kong.

69.The consistent picture presents to this Court is that Sun and Noxin are not able to identify their own assets. It is no good and rather irresponsible to suggest that the materials they failed to provide could have been obtained by the Special Managers either from the public domain (e.g. information about Sunshine Oilsands shares, information about Nobao Energy’s subsidiaries can be found in annual returns or other public documents) or from other institutions (e.g. different valuation of the Mainland Land could have been clarified with the valuers directly, financial information about Flats 31G and 39G could have been obtained from BOCHK, corporate documents of Prime Union can be obtained from the “BVI Agent”).

70.In fact, this shows that Sun and Noxin were not even able to assemble the requisite materials from the public domain. This leaves little confidence that they can and will do so in relation to assets which are not discoverable from the public domain. This reinforces the need to appoint receivers.

71.Again, it is also no good to suggest that the assets Sun and Noxin failed to disclose were “de minimis” or errors and omissions are discoverable and could not indicate a risk of dissipation (e.g. failure to disclose other securities in the Partners Capital Account and the GJSL Account). Whether “de minimis” or not, the Court has to be satisfied that without the intervention of professional receivers, Zhou will get an accurate account of Sun and Noxin’s assets. This simply cannot be done with a cavalier attitude towards compliance with court orders and cooperation with court-appointed officers.

72.Further, I fully understand Mr Chong’s submissions that the appointment of receivers will result in a “lose-lose situation”. First, it may well be a lose situation for Sun and Noxin. However, this Court has given them ample time and opportunities to make funds available to satisfy the Awards or to provide reliable and accurate disclosure of their assets. Regrettably, these opportunities have not been seized upon and fully embraced. They have only themselves to be blamed. As for Zhou, it is up to him to decide whether it is a lose situation for him. This Court could well understand that in view of the long period of time which had lapsed for Sun and Noxin to satisfy the Awards and the lack of transparency in Sun and Noxin’s assets position, he prefers an appointment of receivers.

73.In the premises, the continuation of the Mareva Injunctions and the receivership orders sought are eminently justified.

Terms of Appointment of Receivers

74.As to the terms of the appointment of receivers, it is well established that receivers can be appointed over assets abroad, so long as the respondent is personally within the jurisdiction of the Court: see e.g. Derby v Weldon (Nos 3 and 4) [1990] Ch 65 at 86F per Lord Donaldson MR. This is because a receivership order is not proprietary but operates personally by (1) negatively restraining the respondent from dealing with the subject asset; and (2) positively authorising the receiver to deal with the same: see also Kerr & Hunter on Receivership and Administration (22^nd ed., 2024) at §§2-52 to 2-53.

75.Where a respondent is guilty of non-disclosure of his asset position, appointing receivers for part of the respondent’s assets will not suffice – without proper disclosure, the Court cannot assess whether a partial appointment can protect the plaintiff: see China Metal (supra) at §17 per DHCJ Keith.

76.Where receivers are appointed over the holding company of a business and not its operating arms, the appointment would have no inherent adverse effect on the business: see Guo Jing Jing v Art Master Investment Ltd (unrep., HCA 1008/2009, 11^th December 2009) at §74 per Au J (as he then was).

77.As for the powers to be given to the interim receivers, such powers necessarily have to be drafted in broadly as a Court-appointed receiver derives all of his powers from the appointment order and does not have any inherent powers. The powers contained in the Draft Order are standard, based upon the order made in Guo Jing Jing (supra).

78.Sun and Noxin submit that the receivership should only last for 6 months, and no powers of management should be granted to the receivers. However, I agree that, as to time, there is no reason why Zhou should bear the burden of seeking renewal every 6 months. In any event, I will give liberty to Sun and Noxin to apply to discharge the same if good grounds are made out, for example, if the Awards are fully satisfied.

79.As to the powers of management, I am of the view that it is difficult at this stage to curtail the receivers’ powers in such a way because it may transpire that they will need such power to preserve the relevant assets. I trust the receivers will deploy their powers proportionally. If there are any real concerns in due course, they can seek directions from the Court. Similarly, Sun and Noxin can also seek directions if required.

80.I am also informed that Zhou remains willing to provide an undertaking as to damages. Zhou is a substantial shareholder in a Mainland property company named Shanghai Hengda Group Co Ltd. He has around HK$4,200,000 in cash held in Hong Kong bank accounts.

DISPOSITION

81.For all the reasons stated above, I make an order in terms of:

(1)  the Mareva Continuation Summons;

(2)  the Receivership Summons in the terms of the Draft Order as submitted to this Court.

82.As far as costs are concerned for both summonses, I make a costs order nisi that Zhou is entitled to the costs of and occasioned by such applications against the Sun Parties, to be taxed on a party to party basis if the parties cannot reach an agreement. This costs order nisi will be made absolute within 14 days herein unless an application is taken out to vary the same within the 14-day period.

83.I also dismiss the Setting Aside Summons with indemnity costs to Zhou.

84.Finally, it remains for me to thank Mr Chain SC and Mr Chong for their very sensible and able assistance rendered to this Court.

Mr Christopher Chain SC leading Mr Vincent Chiu and Mr Alex Yeung, instructed by Grandall Zimmern Law Firm, for the applicant 

Mr Patrick Chong and Mr Joseph Wong, instructed by Han Kun Law Offices LLP, for the 1^st and 2^nd respondents

Mr Timothy Lam, instructed by JC Legal, for the interested party