Aim Global Holdings Ltd and Others v. Chien Kun Allen and Another

HCA 2217/2014 and

HCA 2495/2014 (Consolidated)

[2025] HKCFI 4981

HCA 2217/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2217 OF 2014

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(By Original Action)

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(By Counterclaim)

ACTION NO 2495 OF 2014

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(Consolidated pursuant to the Order of

Master Leong dated 3 February 2015)

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D E C I S I O N

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A.  Background

1.For background, I refer to the Judgment of this Court handed down on 28 April 2023[1] (the “Judgment”). Unless otherwise specified, I adopt the same terms and abbreviations as used in the Judgment.

2.On 26 March 2019, I ordered that there be a split trial in respect of Ds’ counterclaim based on the Share Award Agreement[2] (the “Split Trial Order”).

3.After trial, and for the reasons set out in the Judgment, I made, inter alia[3], the following Orders:

(a)  All of Ps’ claims be dismissed;

(b)  In respect of Ds’ Counterclaim:

(i)  Judgment to Rising Dragon against AIM, Liu and Shanghai Weicon on a joint and several basis for breach of the Services Agreement, in the sum of HK$1,260,000, with interest at prime plus 1% from 26 August 2014 till judgment, and at judgment rate from then till payment;

(ii)  Judgment to Chien:

(1)  against AIM for HK$146,666.66, HK$59,938.83 and HK$4,728.01 for breach of the Hong Kong Employment Agreement, with interest on those sums at prime plus 1% from 24 June 2014 till judgment, and at judgment rate from then till payment (together with the judgment in the sum of HK$1,260,000 referred to above, the “Liquidated Parts of the Judgment”); and

(2)  against AIM and Liu on a joint and several basis for damages for breach of the Share Award Agreement in the value of 6% of shares in AIM (the “Subject Shares”) as at 2 July 2014 to be assessed, with the applicable law for the assessment of the values of those shares being BVI law (“Judgment to be Assessed”);

(c)  Liberty to apply for the purpose of assessment of damages.

B.  The present application for interim payment

4.By summons of 1 April 2025 (the “Summons”), Mr Chien seeks payment of interim payment in the sum of US$1.7 million against AIM and Madam Liu.

5.By order of 24 April 2025, I directed that the Summons be disposed of on the papers, and gave directions for the further conduct of the same.

6.In support and reply, Mr Chien has filed his 5^th and 6^th affirmations (“Chien/Aff5” and “Chien/Aff6”). In opposition, Madam Liu has filed her 5^th affirmation (“Liu/Aff5”).

7.Mr Arthur Poon, counsel for Mr Chien, has filed his written submissions in support and in reply (“Chien/Sub#1” and “Chien/Sub#2”). Messrs Ronald Tong & Co (“RT&Co”), solicitors for AIM and Madam Liu, have filed their written submissions in opposition (“AIM-Liu/Sub”).

8.I have read the affirmations and the exhibits referred to therein. I have read all the written submissions. I have also read the authorities submitted to me.

C.  The applicable legal principles

9.The Summons is taken out under Order 29 rules 10, 11 and 12 of the Rules of the High Court (Cap. 4A).

10.Order 29 rule 11(1)(b) provides, relevantly, that:

(1) If, on the hearing of an application under rule 10 in an action for damages, the Court is satisfied—

…

(b) that the plaintiff has obtained judgment against the respondent for damages to be assessed; …

…

the Court may, if it thinks fit and subject to paragraph (2)[4], order the respondent to make an interim payment of such amount as it thinks just, not exceeding a reasonable proportion of the damages which in the opinion of the Court are likely to be recovered by the plaintiff after taking into account any relevant contributory negligence and any set-off, cross-claim or counterclaim on which the respondent may be entitled to rely.

11.On the approach to be adopted, both sides refer to Bharwaney J’s decision in Top One International (China) Property Group Company Limited v Top One Property Group Limited (CACV 269/2011, 20 July 2012). I have considered the same, and in particular §§15 to 18 thereof which parties have made reference to. I will not repeat them here.

D.  AIM and Madam Liu’s objections on the basis of alleged delay

12.Mr Chien has indeed obtained the Judgment to be Assessed. The threshold condition in Order 29 rule 11(1)(b) is satisfied. This Court’s discretion to order interim payment is engaged.

13.Whilst divers matters have been raised in Liu/Aff5, RT&Co in AIM-Liu/Sub have only raised 2 specific matters in objection – (1) delay, and (2) the question of interest.

14.It is convenient to deal with the objection on the basis of alleged delay first.

15.Section D of RT&Co’s submissions bears the heading “Mr Chien is not entitled to interim payment – undue delay in starting the quantum proceedings”. RT&Co submit thereunder that Mr Chien only proposed further directions for the conduct of the quantum stage on 8 December 2023, 7.5 months after the Judgment. They hence submit that the fact that the action is still pending is therefore self-induced on Mr Chien’s part.

16.On the facts, I am of the view that the time taken for Mr Chien to commence the quantum stage is reasonable. Very soon after the Judgment, Mr Chien started enforcement proceedings in relation to the Liquidated Parts of the Judgment. Garnishee Order to Show Cause was granted on 15 June 2023. It was made absolute on 15 August 2023. Between August and November 2023, parties continued to exchange correspondence on the amount of interest payable in relation to the Liquidated Parts of the Judgment. At §15 of Chien/Aff5, Mr Chien says that it was not until December 2023 could his legal representatives finally proceed to propose directions for the quantum stage.

17.Enforcement of the Liquidated Parts of the Judgment and preparation of the quantum stage could have proceeded in parallel. But whilst that is so, as submitted by Mr Poon, given the lapse of time between the initiation of the proceedings and the significant legal costs and expenditures incurred in the meantime, Mr Chien could not be faulted for enforcing the Liquidated Parts of the Judgment first before commencing the quantum stage. I accept those submissions.

18.RT&Co refer to Sun Jianqiang v Chan Tai Kau [2001] 2 HKLRD 435[5] and Coco Mealing v Chelsea & Westminster NHS Trust [2007] EWHC 3254 (QB). Neither case assists them. They turned on their individual facts. In fact, in both cases, the Courts did not accept there were any delay (444 E-F in Sun Jianqiang) or culpable delay (§54 in Coco Mealing).

19.The ordering of interim payment is discretionary. I have taken into account the fact that Mr Chien only proposed directions for the quantum stage 7.5 months after the Judgment. I accept his explanations in that regard. I do not find any unreasonable, still less culpable, delay, on his part. That short lapse of time is not a factor which weighs in any material degree against the exercise of my discretion in ordering interim payment.

20.I note that RT&Co’s submissions focus on the alleged delay on Mr Chien’s part in starting the quantum stage. I have dealt with those submissions above. In so far as AIM and Madam Liu seeking to rely on any alleged delay in the subsequent prosecution of the quantum stage, I do not accept that the evidence reveals any. The proceedings are not altogether straightforward. The filing of witness statements, discovery, and the preparation of expert reports are involved. AIM and Madam Liu themselves have on multiple occasions sought extensions of time for the taking of various steps.

E.  Mr Chien’s application

21.I come back to Mr Chien’s application.

22.As said above, Mr Chien has indeed obtained the Judgment to be Assessed. The threshold condition in Order 29 rule 11(1)(b) has been met.

23.As also have been said above, the quantum stage is not altogether straightforward. No trial date has been fixed. There is likely to be some delay until final disposal of the case – see Sun Jianqiang at 442 B-C, and Li Ying Yi v Lo Hau On (HCPI 809/2001, 14 November 2003) at §5.

24.Mr Chien seeks interim payment in the total sum of US$1.7 million.

25.That sum comprises:

(a)  US$1,317,775, being what Mr Poon describes as the conservative estimated value of the Subject Shares (the “Share Value Component”), and

(b)  US$382,225, being what Mr Poon describes as a fraction of the interest on the above sum of US$1,317,775 (the “Interest Component”).

26.In relation to the Share Value Component:

(a)  Before the Split Trial Order, AIM and Madam Liu had engaged Ms Yan Wang of Ernst & Young (China) Advisory Limited (“Ms Wang”) as their expert on valuation;

(b)  Ms Wang had prepared her report. She estimated the value of the Subject Shares as of 24 June 2014 as being US$1,317,775[6];

(c)  In the process of agreeing directions for the quantum stage, RT&Co in their letter of 24 December 2024 to Mr Chien’s legal advisers (the “24 Dec Letter”) stated as follows (emphasis added):

6. We are instructed that our clients also intend to replace our valuation expert, Ms. Wang, with Ms. Edwina Tam (“Ms. Tam”) …

…

8. We are of the view that the change of our expert witness can assist the Court in narrowing down the issues in dispute in the quantum stage:-

8.1. First, we understand that one of the major areas of disagreement between the parties’ experts in the 2018 Joint Report arise out of the set of internal financial forecasts of Shanghai Weicon Optical Co. Ltd (“New Weicon”) as annexed to the 2018 Joint Report as Annex 2 (defined as “Alleged Forecasts” in your letter dated 8 December 2023, which was relied on by Ms. Wang in her valuation under the DCF approach). We understand that unlike Ms. Wang who solely relied on the Alleged Forecasts under the DCF approach in her expert report, Ms Tam will conduct her valuation under the DCF approach on the basis of the various sets of financial forecasts (including the forecasts as currently disclosed by the parties’ [sic.] in their lists of documents) and independent industry research.

8.2. Second, we understand that unlike Ms Wang, Ms. Tam will not rely on the NAV approach (or the “costs approach”), as she is of the opinion that the NAV approach is not suitable for assessing the value of the Shares given New Weicon was a profitable, going concern business as at the valuation date, and instead will focus on the DCF approach and market approach, in line with Mr. Tupila’s views that these two approaches are more suitable for valuing the Shares.

8.3. Third, unlike Ms. Wang who disregarded the CDH / Grand Pharm transaction on the basis that it was not completed as of the valuation date, we understand that Ms. Tam will take into account various bids received in relation to Project Flying Horse, including the CDH / Grand Pharm transaction and the Share and Purchase Agreement dated 23 June 2014 that was signed but was not completed[7].

8.4. Fourth, as regards the market approach, Ms. Tam will take into account the performance of various companies which she considered comparable to New Weicon. This is to be contrasted with Ms. Wang’s approach that there was no companies which are truly comparable to New Weicon.

8.5. Overall, while Ms. Tam has yet to finalise her valuation, we understand that there wi11 be a significant upward adjustment in her valuation as compared to Ms. Wang’s valuation.

(d)  Mr Chien in Chien/Aff5, with reference to the SPA, says that the value of the Subject Shares could in fact be about US$7.5 million. In specific response to the SPA, Madam Liu in Liu/Aff5 suggests that the issue should be addressed by the experts. She nonetheless puts forward certain adjustments that she says should be made to the SPA. In Chien/Aff6, Mr Chien, supported by figures and calculations, states that even with those adjustments taken into account, the value of the Subject Shares would still be about US$4.3 million;

(e)  Mr Chien’s original expert valued the Subject Shares as of 24 June 2014 at, depending on the bases of valuation, somewhere between US$6,375,000 and US$11,304,635. If the market approach or the DCF Approach (which RT&Co said in the 24 Dec Letter that Ms Tam would focus on) is to be adopted, the valuation would respectively be US$11,304,635 and US$10,272,398;

(f)  At §31 of Liu/Aff5, Madam Liu suggests that “even if the Court were minded to order interim payment, I believe that the principal amount of the interim payment should not exceed Ms. Wang’s valuation results under the income approach, i.e. US$617,000”;

(g)  I do not accept that suggestion. As explained by Mr Chien at §7(a) of Chien/Aff6:

… In applying the DCF / market approach and coming to a valuation of US$617,000, Wang’s Report relied solely on a set of internal financial forecasts of Shanghai Weicon annexed to the 2018 Joint Report (Annex 2). The forecast took a very pessimistic view on the outlook of Shanghai Weicon. On the contrary, the 24 Dec Letter confirms that Ms Tam shall conduct her valuation under the DCF / market approach on the basis of “the various sets of financial forecasts (including the forecasts as currently disclosed by the parties’ in their lists of documents) and independent industry research”;

(h)  I note that RT&Co have in AIM-Liu/Sub made no submission in relation to the amount of the Share Value Component. I have nonetheless, as discussed above, considered Madam Liu’s evidence in Liu/Aff5;

(i)  I have judicially weighed the evidence before me. I am not here conducting an assessment of the damages to be awarded. I adopt a fairly broad approach. On the evidence before me, net of interest, I am of the view that it is most likely that Mr Chien would be awarded at least US$1,317,775, and likely to be much more.

27.In relation to the Interest Component:

(a)  This Court has the jurisdiction to order the Interest Component as part of the interim payment – see Hong Kong Civil Procedure 2025 at §29/11/11, and Kuwait Airways Corp v Kuwait Insurance Co SAK [2000] 1 All ER (Comm) 972 at 974h, and 986g-987e;

(b)  RT&Co do not dispute the Court’s jurisdiction and power in doing so. They rather submit that as pre-judgment interest is in the discretion of the Court, it should be left till the end of the quantum stage;

(c)  As observed by Langley J in Kuwait Airways:

The major outstanding question to which this judgment relates is what order should be made for interest on the interim payment. It is agreed that the court has power to order interest and that the discretion to do so is to be exercised in a manner akin to the discretion which arises when a court awards interest on a judgment sum. (974h)

In my judgment the authorities to which I have referred establish the following principles and factors as material to the exercise of discretion. (1) In principle interest is to be awarded to compensate the claimant for being kept out of the money from the date when it has been established that it was due to him; it is not based on fault or the wrongful withholding of payment by the defendant. (986g-h);

(d)  Mr Chien has in fact been kept out of the money due to be assessed. That includes the Interest Component. Whilst pre-judgment interest is indeed in the discretion of the Court, I do not see that as any good reason for excluding the Interest Component as part of the interim payment;

(e)  As to the quantum of the Interest Component:

(i)  I have considered “CKA-45”[8]. It sets out the accumulated simple interest based on HSBC USD best lending rate between 2 July 2014 and the date of the Judgment which Mr Chien had gathered. The resultant figure is 0.389232877;

(ii)  On that basis, the pre-judgment interest on the Share Value Component should be US$512,921[9];

(iii)  The amount of the Interest Component which Mr Chien is now seeking is actually much lower;

(iv)  RT&Co submit that if interest is to be awarded on the interim payment, “the Court is invited to adopt the computation of interest as exhibited in ‘LLD-2’ and ‘LLD-3’ to [Liu/Aff5]”;

(v)  Madam Liu in fact has not done any “computation of interest” in those 2 exhibits. Those exhibits only set out what Madam Liu says to be the accurate HSBC USD best lending rates which she has gathered;

(vi)  In Chien/Aff6 at §21, Mr Chien states that he has done the calculations with reference to “LLD-2”. He says that the amount of interest so calculated for the same period would be US$514,825, even higher than the figure calculated with reference to “CKA-45”, hence also higher than the Interest Component.

28.RT&Co have raised no other matter which they submit would weigh against the Court’s exercise of discretion in ordering interim payment. I have in any event considered the overall facts of the case. I myself see none other.

F.  Conclusion

29.For the reasons set out above, I allow the Summons. I order that AIM and Madam Liu do pay Mr Chien the sum of US$1.7 million by way of interim payment within 28 days from the date of this Order. To avoid unnecessary dispute, I direct that that sum may be paid in US Dollars. If it is to be paid in HK Dollars, the exchange rate as of the date of payment should be adopted.

30.On costs, I make a costs order nisi, absolute within 7 days, that:

(a)  AIM and Madam Liu do pay Mr Chien’s costs of and occasioned by the Summons, to be summarily assessed on the papers;

(b)  Any application to vary the above shall be made by letter to this Court within 7 days from the date hereof, upon any receipt of which this Court would hand down further directions;

(c)  In the absence of any application to vary:

(i)  Mr Chien do lodge and serve its Statement of Costs together with any relevant submissions within 14 days from the date hereof, and

(ii)  AIM and Madam Liu do lodge and serve their Statement of Objections with any relevant submissions within 7 days of receipt.

Submissions by Ronald Tong & Co,
    for the 1^st to 2^nd Plaintiffs (by original action) and
    the 1^st to 2^nd Defendants (by counterclaim) in HCA 2217/2014
    and the Defendant in HCA 2495/2014

Submissions and Reply Submissions by Mr Arthur Poon,
    instructed by Zhong Lun Law Firm LLP,
    for the 1^st Defendant (by original action) and
    the 1^st Plaintiff (by counterclaim) in HCA 2217/2014
    and the Plaintiff in HCA 2495/2014