Chu Kong (Suing on behalf of Himself and All Other Shareholders in (I) Ocean Sino Ltd (Except Lau Wing Yan) and (Ii) Pbm Asset Management Ltd) v. Lau Wing Yan and Others

CACV 373 /2023, [2026] HKCA 1522

On appeal from [2023] HKCFI 2703

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 373 OF 2023

(ON APPEAL FROM HCA NO 1885 OF 2021)

________________________

BETWEEN

________________________

_____________________

J U D G M E N T

_____________________

Hon Kwan VP (giving the Judgment of the Court):

1.On 29 May 2026, we handed down our judgment (“CA Judgment”)[1] dismissing the appeal of Mr Chu Kong (“Chu”) with indemnity costs against the decision of Au-Yeung J dated 20 October 2023[2] striking out this double derivative action in HCA 1885/2021 which Chu purported to bring.  We also dismissed his application to adduce new evidence on appeal.  In this judgment, we adopt the terms and expressions in the CA Judgment.

2.The judge struck out this action because Chu has no locus standi to bring a derivative action, which is not available where a company is in liquidation.  He failed to establish that OSL and PBM are under the control of wrongdoers.  The judge also struck out the action for issue estoppel and abuse of process.

3.This is Chu’s application for leave to appeal against the CA Judgment to the Court of Final Appeal.  He has again unilaterally included in the application bundle documents which have not been placed before Au-Yeung J.  These documents will not be considered by us. 

4.Five questions are formulated in the notice of motion issued on 26 June 2026 as questions of great general or public importance under section 22(1)(b) of the Court of Final Appeal Ordinance, Cap 484.  He also relies on the “or otherwise” limb.

5.The application is opposed by Lau, Yen and Greenwood.

6.It is trite that an applicant applying for leave to appeal to the Court of Final Appeal must demonstrate that the intended appeal is not academic and the questions said to arise are reasonably arguable.

Question 1

7.This question reads as follows in translation:

“Under Hong Kong’s substantive and procedural law, when a Hong Kong company involved in the case is controlled by the liquidators of its foreign parent company at a non-material time of the case, does an individual who is a stakeholder at the material time therefore lose his locus standi to seek relief (by way of derivative action)?”[3]

8.The distinction Chu purported to draw between material (or critical) time and non-material time is misconceived, as is his contention that his locus to claim against the wrongdoers which arose from matters that happened at the “material time” cannot be lost by the subsequent control gained by the liquidators over OSL and PBM at the “non-material time”.  Sections 465, 723 and Part 14 of the Companies Ordinance, Cap 622 cited by him in support of his contention are not concerned with the issue of locus and are wholly irrelevant.  The pertinent or critical time is when the derivative action was commenced by him, ie 15 December 2021.  On that day, OSL was under the control of its liquidators and PBM was controlled by the OSL liquidators via their nominated director Greenwood.  The established principles and rationale set out in §§62 to 65 and 67 of the CA Judgment will not be repeated.

9.The renewed attacks against Lau, Yen and Greenwood in §§6.4 to 6.6 of Chu’s submissions are irrelevant.  In any event, Chu is not permitted to rely on allegations based on the “two important core facts” which are premised on the new evidence and have been ruled by this court may not be adduced on appeal[4].

10.Question 1 is not reasonably arguable.  We refuse to grant leave to appeal for this question.

Question 2

11.This question reads as follows in translation:

“The limits of jurisdiction of the Hong Kong courts in cross-border insolvency cases, especially the highest exclusive jurisdiction in cases involving questions of GPI as to the handling of equity and debt interests of Hong Kong permanent residents in Hong Kong Special Purpose Vehicles (“SPVs”)[5]: Where a liquidator of a foreign parent company (SPV1) is appointed as director of its wholly-owned Hong Kong subsidiary (SPV2), should the Hong Kong courts relinquish jurisdiction over the conduct of the said liquidator who acts as a director of the Hong Kong SPV and leave it entirely to foreign courts?”[6]

12.This would appear to be directed at §65 of the CA Judgment in which it was held that it would be anomalous for the Hong Kong court to recognise the OSL liquidators appointed by the BVI court and at the same time permit Chu to interfere with the integrity of the liquidation process by bringing proceedings in the Hong Kong court without first seeking directions from the BVI court.  We did not hold that the Hong Kong courts are to relinquish jurisdiction over the conduct of the OSL liquidators in their capacity as director of PBM.  Nor did we hold that the conduct of foreign-appointed liquidators acting as directors of a Hong Kong company is beyond the reach of the Hong Kong courts or is exempt from any duties imposed by Hong Kong law.  Question 2 does not arise from any ruling in the CA Judgment.

13.Insofar as the question is premised on “the equity and debt interests of Hong Kong permanent residents in Hong Kong Special Purpose Vehicles”, it does not arise on the facts.  PBM is wholly owned by OSL, Chu does not hold any direct equity interest in PBM.  This action is not concerned with any alleged debt interests of Chu.

14.It is inappropriate to grant leave on an academic and hypothetical question, nor do we think any challenge to the holding in §65 of the CA Judgment reasonably arguable.  We refuse to grant leave for Question 2.

Question 3

15.This question reads as follows in translation:

“The standard of fiduciary duties owed by a liquidator of a foreign parent company acting as a director of its Hong Kong subsidiary, and the right to bring derivative actions: Should a liquidator appointed by a foreign court assume the same fiduciary duties as those of an ordinary director of the Hong Kong subsidiary while serving as its director? If the liquidator breaches those duties, do minority shareholders of the Hong Kong subsidiary have the right to bring derivative actions to hold him responsible for the breach?”[7]

16.This does not arise from any ruling in the CA Judgment.  Neither the CA Judgment nor the court below held that foreign-appointed liquidators serving as directors of a Hong Kong company owe different or lesser duties to it.  The first question in Question 3 is academic.  Insofar as the second question in Question 3 concerns the right of minority shareholders of a Hong Kong subsidiary, this does not arise on the facts.  Chu is not a direct shareholder of PBM.  He holds 50% shares in OSL which wholly owns PBM.  Insofar as he suggests he has locus to bring the derivative action, this is untenable for the reasons given in the CA Judgment at §§62 to 65.

17.We refuse to grant leave for Question 3.

Question 4

18.This question reads as follows in translation:

“The court’s duty to prevent false representation and preserve judicial integrity: Where a party (seeks to) adduce new evidence which cogently shows that the opposite party fabricated a false case and/or concealed certain facts from and/or presented false statements to the court, thereby obtaining an improper order of the court in previous judicial proceedings, should the court reject (the application for adducing) that evidence on the mere ground of ‘procedural delay’?”[8]

19.This is directed at our decision refusing to admit new evidence on appeal, which is interlocutory in nature.  Leave will generally be refused in respect of interlocutory appeals unless it can clearly be seen that: (1) the proposed appeal genuinely raises a question of law of great general or public importance; (2) the result of the appeal would indeed turn on how that question is answered; and (3) such result is likely to make a significant contribution to the just disposition of the litigation[9].

20.We refuse to grant leave for Question 4.  Leaving aside the underlying premise (that the new evidence cogently shows the opposite party fabricated a false case etc, which is without evidential foundation), our decision is a case management decision and does not raise a question of law of great general or public importance, not to mention it is not reasonably arguable.  Although we dismissed the New Evidence Summons on the basis of significant delay without an acceptable explanation, we went on to consider other grounds and held that the three items of new evidence could not have any or any important impact on the outcome of the case or in the appeal.  Thus, the result of the intended appeal would not turn on how Question 4 is answered.

Question 5

21.This question reads as follows in translation:

“Whether BVI’s OSL WU new case law comes into conflict with the exclusive jurisdiction of the Hong Kong (courts): The BVI OSL new case law involves performing certain factual findings on post-commencement affairs after 27 May 2015[10] concerning the board of directors and shareholders of the corporate entity BBGOS (for the period before it changed its name to BGAH) or BGAH (for the period after the renaming), which was in a non-BVI jurisdiction and a non-party to these winding-up proceedings.  Can such ‘factual finding’ which is in conflict with the jurisdiction of the Hong Kong (courts), inconsistent with Hong Kong’s substantive and procedural law or statutory safeguards and completely contradictory to the objective facts occurred in Hong Kong (the court is invited to pay special attention to the fact that BBGOS was a subsidiary under the control of a PRC state-owned enterprise, and under Hong Kong’s Companies Ordinance and financial accounting standards, the assets under BBGOS’s control are state-owned assets), be relied upon as the basis for issue estoppel in the present case?  For instance, it was wrongly concluded that BBGOS or BGAH was a subsidiary of OSL (see para 18 of the judgment of the Court of Appeal).  This is clearly inconsistent with section 13 and section 15 of Hong Kong’s Companies Ordinance (Cap. 622).”[11]

22.This question is convoluted and poorly formulated.

23.The expression “BVI’s OSL WU new case law” is not defined but would appear from Chu’s submissions to refer to the BVI winding-up judgment against OSL.  It may also refer to the BVI Removal Judgment and the BVI CA Removal Judgment.

24.The question seems to ask whether factual findings made in “BVI’s OSL WU new case law” could found issue estoppel, when the factual findings (1) conflict with the “exclusive jurisdiction” of the Hong Kong courts; (2) are inconsistent with Hong Kong substantive and procedural law; (3) are inconsistent with the “objective facts” that occurred in Hong Kong; and (4) relate to the affairs of non-parties to the winding-up proceedings in the BVI, ie BBGOS and BGAH.

25.In gist, Chu’s contention is that the courts in the present proceedings erred in applying issue estoppel as the issues, legal elements, standards of proof and remedies in the two sets of proceedings in the BVI and Hong Kong were entirely different. 

26.We do not think any intended appeal based on Question 5 is reasonably arguable.

27.Insofar as Chu relies on the BVI winding-up Judgment and the Privy Council Judgment to argue the alleged inconsistency, it was pointed out at §89 of the CA Judgment that these judgments “hardly featured in the judge’s reasoning for striking out the derivative action or are of limited relevance”, and the judge’s reasoning touching upon the Privy Council Judgment “is a relatively unimportant reason for striking out the derivative action and is of little moment in this appeal.”

28.If Chu is to rely on the BVI Removal Judgment and the BVI CA Removal Judgment to argue the alleged conflict, this is not reasonably arguable, for the reasons given in the CA Judgment at §§72 to 77.  Chu has not shown how this court has erred in its analysis.

29.We refuse to give leave to appeal on Question 5.

“Or otherwise” limb

30.In §§11.1 and 11.2 of Chu’s submissions, he argues that leave to appeal should be granted on the “or otherwise” limb.  We do not agree.  In any event, it is the settled practice of the Court of Appeal to leave this limb to be decided by the Appeal Committee of the Court of Final Appeal.

Disposition

31.We refuse to grant leave to appeal to the Court of Final Appeal in respect of Questions 1 to 5.

32.Lau, Yen and Greenwood all seek costs on an indemnity basis on the grounds that this leave application is wholly devoid of merits and an abuse of process.  We are inclined to agree.

33.We make an order nisi that Chu is to pay the costs of Lau, Yen and Greenwood on an indemnity basis.  We make a gross sum assessment in these amounts: for Lau $363,030, for Yen $227,805.50, for Greenwood $261,670.

34.If there is no application to vary the costs order nisi and gross sum assessment within 14 days of this judgment, they will be made absolute.

The Plaintiff (Appellant), acting in person

Mr Anson Wong SC and Mr Lai Chun Ho, instructed by Adrian Elms & Co, for the 1^st Defendant (1^st Respondent)

Mr Tommy Cheung, instructed by Reynolds Porter Chamberlain, for the 2^nd Defendant (2^nd Respondent)

Mr Victor Joffe SC, Mr Justin Ho and Mr Jonathan Ng, instructed by Dentons Hong Kong LLP, for the 4^th Defendant (3^rd Respondent)

[1]  [2026] HKCA 1004

[2]  [2023] HKCFI 2703

[3]  In Chinese: 依據香港實體法、程序法，對於案件涉及的香港公司在案件的非關鍵時刻被外國母公司清盤人控制時，案件的關鍵時刻的持份者是否因此而喪失法律救濟的地位(locus standi)?

[4]  CA Judgment, §96

[5]  This corresponds to the first part of the question printed in bold in Chinese.  For subsequent questions, the parts printed in bold are shown likewise in the translation.

[6]  In Chinese: 跨境清盤案中香港法院的管轄權邊界，特別是對於涉及處理香港永久居民在香港SPV的股權和債權權益的這個GPI問題的最高專屬管轄權： 當外國母公司(SPV1)的清盤人 被任命為香港全資子公司(SPV2)的董事時，香港法院是否應當放棄對該清盤人作為香港SPV董事行為的管轄權，完全交由外國法院處理?

[7]  In Chinese: 外國母公司清盤人作為下屬香港公司董事的授信責任標準及衍生訴訟權利：外國法院任命的清盤人在擔任香港公司董事期間，是否應當承擔與普通香港公司董事相同的授信責任?如果清盤人違反了這些責任，香港公司的少數股東是否有權提起衍生訴訟追究其責任?

[8]  In Chinese: 法院對防止虛假陳述和維護司法誠信的職責: 當一方當事人提交新證據，強有力地證明對方當事人在先前的司法程序中向法院揑造了false case、和或有concealment以及和/或作出了虛假陳述，從而獲得了不正當的法院命令時，法院是否應當解釋僅以「程序延誤」爲由拒絕接納該證據?

[9]  Re Lau Kam Sing Dickie [2022] HKCA 980 at §6

[10]  The date of the presentation of the winding-up petition of Lau against OSL in the BVI.

[11]  In Chinese: BVI的OSL WU New Case Law是否與香港專屬管轄權發生衝突: BVI OSL New Case Law涉及對非BVI司法管轄權、非此清盤訴訟對象(Non parties)的實體公司BBGOS(時期)或BGAH(時期)的董事會、股東會在2015年5月27日之後的Post-commencement事務進行Factual Finding。這些與香港司法管轄權相抵觸、與香港實體法、程序法或法定法保障相抵觸、以及與發生在香港的客觀事實完全相矛盾的「Factual Finding」(請法庭特別留意，BBGOS是中國國有企業控制下的附屬公司，依據香港《公司條例》和財務會計準則，BBGOS屬下資產是國有資產)，能否作為本案禁反言的依據?例如，錯誤地認定BBGOS或BGAH為OSL的附屬公司(見上訴判決書第18段)，顯然與香港《公司條例》(Cap 622) Section 13和Section 15相抵觸。