New Shipping Ltd v. Lau Wing Yan
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HCA 1280/2018 [2026] HKCFI 4724 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1280 OF 2018 ________________________ BETWEEN
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________________________ JUDGMENT ________________________ 1.Words accusing a commercial operator and manager of the subject vessels of dishonestly assisting in a fraudulent scheme of asset-stripping and of knowingly receiving its fruits strike at the core of maritime commerce. This is the Plaintiff’s action for defamation arising from multiple targeted communications by or on behalf of the Defendant in 2017 and 2018 (the “Words Complained Of”). 2.The Defendant accepts that the Words Complained Of were made by him or on his behalf and are generally defamatory[1]. He defends on two grounds: first, justification – that the stings of the Words Complained Of are substantially true and therefore justified; and second, qualified privilege, on the basis that he had a duty or interest in publishing the statements to their recipients and the recipients had a corresponding interest in receiving them. For the purposes of these two defences and the assessment of damages, the Defendant takes issue with the precise meaning of the Words Complained Of. 3.The principal individuals in these proceedings are Mr Shum Chun Lawrence (“Mr Shum”), the Defendant Mr Lau Wing Yan (“Mr Lau”, or the “Defendant”, or “D”) and Mr Chu Kong (“Mr Chu”). 4.Mr Shum is the sole director and chairman of the Plaintiff. 5.There is no dispute that Mr Lau is:-
6.Mr Chu is, according to Mr Lau, the wrongdoer behind an alleged fraudulent scheme, which Mr Lau calls the “Asset Stripping Arrangement”, and Mr Shum is said to be his associate in the alleged wrongdoing. On that basis, in Mr Lau’s case, it is said to be justified for him to publish the Words Complained Of. 7.Both Mr Shum and Mr Lau gave evidence at trial. Mr Chu did not. B. The Vessels and Related Companies 8.Mr Lau made serious accusations against Mr Chu. As part of his justification defence, he pleaded that Mr Chu and Mr Chu’s associates had committed the criminal offences of theft and conspiracy to defraud[2], as part of allegedly unlawfully dissipating assets in which he claims to have an interest, i.e. the Asset Stripping Arrangement. Nonetheless, the Defendant’s counsel[3] did not pursue or develop these assertions of criminal offences at the trial. I note that in paragraph 132 of the Defendant’s Closing Submissions, the Defendant’s counsel have toned down the suggestion and submitted only that the conduct of Mr Chu and his associates (including the Plaintiff) “warrant criminal investigation”. 9.The assets are two vessels – MV New Prestige (formerly known as “BBG Hope”) and MV New Honor (formerly known as “BBG Glory”). They are sister ships built by the same shipyard. They operate as dry bulk carriers, classified in the shipping industry as Kamsarmax vessels. These are large cargo vessels designed to meet the maximum size and length limits allowed at the cargo port of Kamsar. I shall refer to these two vessels collectively as the “Vessels”. 10.The Plaintiff, New Shipping Limited (“New Shipping”, or the “Plaintiff”, or “P”) is the commercial operator and manager of the Vessels. It bareboat-chartered the Vessels through its trading arms, New Prestige Company Limited and New Glory Group Limited. 11.The current registered owner of MV New Prestige is Victory Sail Investment Ltd (“Victory Sail”), and the current registered owner of MV New Honour is Plain Sail Holdings Ltd (“Plain Sail”). 12.Victory Sail purchased MV New Prestige from its former registered owner, Hope BBG Shipping Ltd (“Hope BBG”), and Plain Sail purchased MV New Honour from Glory BBG Shipping Ltd (“Glory BBG”) in August 2017. 13.Hope BBG was formerly wholly owned by TPL, and Glory BBG was formerly wholly owned by SCL. TPL and SCL are both wholly owned by BBG Group. 14.BBG Group had two shareholders: PBM, with 49% shareholding, and Beibu Gulf Holding (Hong Kong) Co. Ltd. (“BBG Holding”), with 51% shareholding. 15.PBM was wholly owned by Ocean Sino, and BBG Holding was wholly owned by Guangxi Beibu Gulf International Port Group Limited (廣西北部灣國際港務集團有限公司) (“Guangxi Beibu Gulf”). 16.Mr Lau was a 50% shareholder and director of Ocean Sino. Mr Chu was the other 50% shareholder and director of Ocean Sino. Ocean Sino was put into compulsory liquidation by the BVI Commercial Court on 29 June 2017 upon the Defendant’s petition. 17.Guangxi Beibu Gulf was wholly owned by the State-Owned Assets Supervision and Administration Commission of Guangxi Zhuang Autonomous Region (廣西壯族自治區國有資產監督管理委員會). 18.In summary, Mr Lau has a 50% shareholding in Ocean Sino, which wholly owned PBM, which in turn owned 49% of BBG Group. BBG Group wholly owned TPL and SCL, which in turn wholly owned Hope BBG and Glory BBG, the companies that constructed and owned the Vessels, then known as BBG Hope and BBG Glory. 19.The Vessels were subsequently purchased by Victory Sail and Plain Sail respectively. After the acquisition, their names were changed to MV New Prestige and MV New Honor respectively. 20.The Words Complained Of are contained in 5 sets of documents, namely:-
Each set of the Words Complained Of is reproduced in the Annexure to this Judgment, with paragraph numbering added ([1.1], [1.2] and so forth) for ease of reference. Words to Oldendorff[8] 21.According to the parties’ pleadings, it is common ground that the following meanings are attributed to the Words to Oldendorff:-
Words to Marubeni[9] 22.The parties agreed that the Words to Marubeni carry the same agreed meanings as the Words to Oldendorff set out in paragraph 21 above. Words to Skuld[10] 23.The parties agreed through the pleadings the following meanings are attributed to the Words to Skuld:-
Words to ADM[11] 24.There is no dispute that the same meanings attribute to both the Words to ADM and the Words to Skuld. Words to Skuld HK 25.There are no agreed meanings in relation to the Words to Skuld HK. D(2) The Plaintiff’s Additional Pleaded Meanings Words to Oldendorff 26.The Plaintiff pleaded that in their natural and ordinary meanings, the Words to Oldendorff also meant and were understood to mean[12], that:-
Words to Marubeni 27.The Plaintiff’s additional pleaded meanings[13] attributed to the Words to Marubeni are the same as those attributed to the Words to Oldendorff. Words to Skuld 28.The Plaintiff pleaded the following additional meanings[14] are natural and ordinary meanings also attributed to the Words to Skuld:-
Words to ADM 29.The Words to ADM are pleaded to carry the same additional meanings[15] as those attributed to the Words to Skuld. Words to Skuld HK 30.The Plaintiff pleaded that in their natural and ordinary meaning, the Words to Skuld meant and were understood to also mean that:-
D(3) The Defendant’s Additional Pleaded Meanings Words to Oldendorff 31.The Defendant pleaded the following meanings are natural and ordinary meanings also attributed to the Words to Oldendorff, with which the Plaintiff does not agree:-
Words to Marubeni 32.The same additional meanings said to be attributed to the Words to Marubeni as those attributed to the Words to Oldendorff were pleaded[19]. Words to Skuld 33.The following additional meanings were pleaded by the Defendant to be attributed to the Words to Skuld:-
Words to ADM 34.The Defendant pleaded[22] the same additional meanings attributed to the Words to ADM as those attributed to the Words to Skuld. Words to Skuld HK 35.The Defendant pleaded[23] that the Words to Skuld, in their natural and ordinary meaning, also meant and were understood to mean as follows:-
36.Paragraph 33(7) of the Re-Amended Defence reads as follows:-
E. Findings on Meanings of the Words Complained Of E(1) The Relevant Principles in Determining the Meanings 37.The first principle is reasonableness: Koutsogiannis v Random House Group Ltd [2019] EWHC 48 (QB); [2020] 4 W.L.R. 25 at [12]; Gatley on Libel and Slander, 13th ed., §3-013; Independent Commentators Association Limited v Joint Publishing (HK) Co. Ltd. & or [2021] HKCFI 743, §21(3)(a). Pertinently, in determining the meanings of the Words Complained Of:-
38.Mr Lau raised the defence of justification. To demonstrate how the justification can be satisfied, the sting of a libel is divided into three categories or levels of meanings, or three “different shades of meaning” as described by Lord Devlin in Chase (see below), which the Court may ascribe to – “proof of the fact of an inquiry”, “proof of reasonable grounds for it”, and “proof of guilt”: Lewis v Daily Telegraph Ltd [1964] AC 234 at p.282 per Lord Devlin. 39.In the English Court of Appeal’s judgment in Chase v News Group Newspapers [2003] EMLR 11, §45, Brooke L.J. elaborated the three levels further into what are known nowadays as:-
40.Nonetheless, this is not a straitjacket categorization. The Court should bear in mind that there could be subtle differences in meaning. Sometimes the line between Chase Level 2 and Chase Level 3 can be blurred. The Court should examine the context and discern the meaning encompassed in the Words Complained Of: Mark Anthony Allen v Times Newspapers Ltd [2019] EWHC 1235 (QB) (15th May 2019), §§17-18. Whist the Chase categorization is a practically helpful tool, it is not a must for the Court to put each set of the Words Complained Of or their imputations exactly into one of the three “pigeon-holes”. The Court is not bound to choose between the contested meanings advanced by the parties and may make its own decision. See: Gatley, §3-028 and particularly the reference in footnote 306 to the comment of Tugendhat J in White v Express Newspaper [2004] EWHC 2928 (QB) at [9]. 41.The Defendant’s counsel submits that whether an allegation that someone has acted “dishonestly” or “criminally” is an allegation of fact or expression of opinion will very much depend upon context, and that there is no fixed rule that a statement that someone has been dishonest must be treated as an allegation of fact: as commented by Nicklin J in Koutsogiannis at §16(v). As pointed out by the Plaintiff’s counsel[24], Nicklin J in Koutsogiannis at §16(iv) has cautioned that when a statement, which appears to be an opinion, mentions expressly or impliedly that the plaintiff has done something but does not mention what that something is, that statement is a “bare comment’, and it will be treated as a statement of fact. Accordingly, an assertion that he has committed a fraud, but without identifying what he has done specifically, or providing any particulars or underpinning facts of the fraud, that assertion shall be regarded as a statement of fact – an unexplained and unreasoned factual allegation, which will only be defensible by justification or privilege, and not fair comment[25]. See: Gatley, §3-028; Centa-City Index Co Ltd & Ors v Hong Kong Economic Journal Co (CACV 232/2014, 24 November 2015), §§36-37 per Kwan JA (as Kwan VP then was). 42.The Defendant’s additional pleaded meanings set out in Section D(3) above are the defamatory meaning which the Defendant seeks to prove in establishing his defence of justification. They may be referred to as the Lucas-Box meaning, following the leading judgment of Lucas-Box v News Group Ltd [1986] 1 W.L.R. 147. The Lucas-Box meaning must be pleaded clearly so that the Plaintiff and the Court will know unequivocally what the Defendant is seeking to justify. Clarity requires that proper particulars of the facts on which the Defendant relies to justify the Lucas-Box meaning must be given: Chase, §37. 43.The first threshold which the Defendant has to pass in proving justification is whether the Words Complained Of, in their natural and ordinary sense, bears the Lucas-Box meanings as contended for by the Defendant, bearing in mind that out of the different meanings advanced by the Plaintiff and the Defendant, the Court can only decide one single meaning as what a reasonable reader would read or infer from the communications sent to him/her: Hong Kong Far Infrared Rays Association Ltd v Lam Hong Nam & ors [2021] HKCFI 3884 §130, per Madam Justice B Chu, referring to Bawang International (Group) Holding Limited v Next Magazine Publishing Limited, unreported, HCA 1109/2010, 23 May 2016; Gatley, §12-013. E(2) Determination - Meaning of the Words Complained Of 44.There is no dispute that the Words Complained Of are defamatory. 45.The agreed meanings attributed to the Words Complained Of have been set out in Section D(1) above. It should be noted that the parties do not agree on any meaning for the Words to Skuld HK. 46.As between the contested meanings, I shall set out my findings on the meaning of each set of the Words Complained Of, i.e. what those words would convey to the mind of the ordinary, reasonable, fair-minded reader, below. Among the Words Complained Of, Words to Oldendorff, Words to Marubeni, Words to Skuld, and Words to ADM concern the Asset Stripping Arrangement, whereas Words to Skuld HK relate only to what I shall call the Office Harassment and the Telephone Harassment as I shall define them below (paragraph 101(3) below). I shall deal with those Words Complained Of concerning the Asset Stripping Arrangement first, then the Words to Skuld HK in respect of the harassments. Asset Stripping Arrangement Words to Oldendorff 47.The first set of contested meanings between the parties are:-
48.The Defendant’s meaning refers to “unqualified legal right”. The Plaintiff’s counsel submit that Words to Oldendorff only suggested that P is liable to account its profits on the ground of dishonest assistance and/or knowing receipt – this is the only qualification which limited P's right to charter the Vessels, and not that P had no right at all to charter the Vessels. 49.I do not agree with the Defendant’s suggestion. In my view, the sting of these words goes beyond that. 50.Apart from the assertion that P is liable to account its profits on the ground of dishonest assistance and/or knowing receipt (Annexure, §[1.10]), D asserted in the same paragraph that in his view, P, as “commercial manager of purported head owner [i.e. Victory Sail and Plain Sail] of the Vessels”, in causing the transfer of ownership of the Vessels from Hope BBG and Glory BBG to Victory Sail and Plain Sail, P had acted dishonestly in assisting Mr Chu and his associates in relation to their breaches of fiduciary duties owed to PBM, BBG Group, TPL, SCL, Hope BBG and Glory BBG. 51.Further, in Annexure, §[1.10], D states that he believes that both the transfer of ownership of the Vessels to Victory Sail and Plain Sail and the change of commercial management of the Vessels to P is unlawful. 52.As mentioned above, in its capacity as the commercial manager of the Vessels, New Shipping bareboat-chartered the Vessels from Victory Sail and Plain Sail respectively, who are the registered owners of the Vessels. If it is asserted that Victory Sail and Plain Sail’s acquisition of the Vessels and New Shipping’s appointment as the Vessels’s commercial manager are unlawful, it would be plain and natural for the reader to understand the assertion to mean (a) that Victory Sail and Plain Sail are not the lawful or rightful owner of the Vessels, and (b) that since, when chartering, New Shipping derives its right to charter from Victory Sail and Plain Sail, whose ownership is in fact unlawful or wrongful, it follows that it also in fact has no right to charter the Vessels. 53.I agree with the Plaintiff’s counsel’s submission that such meaning is supported by the Defendant’s various descriptions in the Email to Oldendorff of the transfer of the ownership and P’s capacity as the commercial manager of the Vessels:-
54.The Defendant’s counsel rely on a submission[26] by the Plaintiff’s counsel to say that, on the Plaintiff’s own logic, statements regarding problems with the Vessels’ title are the problems of Victory Sail and Plain Sail and cannot affect the Plaintiff’s right to charter the Vessels or defamatory of the Plaintiff[27]. In that submission, the Plaintiff was attacking the Defendant’s position that Victory Sail and Plain Sail are not bona fide purchasers of the Vessels without notice, suggesting that this position is, at best, irrelevant to the Plaintiff’s position and appears to confuse and conflate the distinct roles of purchaser/owner and charterer. I do not agree with these submissions: While the roles of the purchaser/owner and charterer are distinct; as explained above, since New Shipping derives its right or authority to charter from Victory Sail and Plain Sail as the registered owners of the Vessels, if it transpires that their titles are defective or liable to be set aside (as what Mr Lau in his evidence suggested that Ocean Sino’s liquidators would commence legal actions to seek so), or they in fact had no interest in them, subject to certain situations (e.g. where the nemo dat rule might come into place, on which I need not delve into here), New Shipping faces severe liabilities such as breach of warranty of authority towards the third-party charterer and claims of conversion from the true owner (which details again I need not delve into), and the Vessels may be liable to be arrested or seized. The authenticity of the ownership clearly affects the Plaintiff’s right to operate or charter the Vessels at the material time when the Words to Oldendorff were published. 55.Therefore I find that the meaning of the Words to Oldendorff carries the sting that P has no legal right to, though it wrongfully purports to, charter the Vessels. 56.The second set of contested meanings are:-
57.In the Email to Oldendorff, the section “Ownership of the Vessels by the BGA Group” already expressly asserted that BBG Group, through its subsidiaries, “owns” the Vessels. The Defendant’s point really is, according to his counsel’s submissions, that D’s assertions on the ownership of the Vessels does not concern P at all; and that if D now argues that these assertions relate to P’s right to charter the Vessels, that would be diametrically opposite to P’s own case. 58.I reject the Defendant’s arguments for the same reasons set out in paragraphs 50, 52 and 54 above. 59.In addition, the Email to Oldendorff must be read as a whole. While the sting of the libel may have may have many facets, they should also be considered as a whole. The assertion that BBG Group, through its subsidiaries, is still the current owner of the Vessels essentially mean that Victory Sail and Plain Sail are not. For the reasons explained above, it necessarily follows, among other things (such as the allegations of unlawfulness, fraud, dishonest assistance, knowing receipt, not to mention the subsequent assertion in the same email that legal actions will soon be commenced by the liquidators to recover the assets owned by BBG Group, “which include the Vessels” (Annexure, [1.14 ])), that New Shipping has no right to charter the Vessels. 60.I therefore adopt the formulation propounded by the Plaintiff, namely: The Vessels belong to BBG Group through its subsidiaries, TPL, Hope BBG, SCL and Glory BBG, notwithstanding that ownership of the Vessels has been purportedly transferred by Hope BBG to Victory Sail and Glory BBG to Plain Sail. 61.The third contested meaning is propounded by the Plaintiff, which the Defendant disagrees:-
62.The Defendant advances the same submission as the second set of contested meanings – that the transfer of ownership of the Vessels do not concern P at all and to argue otherwise now is diametrically opposite to P’s own case. 63.I see no reason why I should not reject the Defendant’s submission on this contested meaning, for the same reasons applied to the second set of contested meanings. 64.Nonetheless, it is necessary for me to add the following. The third contest meaning is taken from Annexure [1.6] in the Email to Oldendorff, which reads:-
“This” in the above sentence, in context, refers to the process leading to the “purported” transfer of the Vessels in Annexure [1.5] and [1.6], namely:-
65.Therefore, it is not only “the purported transfers” that are alleged to be defying all common sense and commercial sense and appearing to be part of a fraudulent scheme. The scope of reference in the Words to Oldendorff is wider, namely the transactions leading to the transfers of ownership of the Vessels to Victory Sail and Plain Sail. 66.On the other hand, although Annexure [1.6] made no mention of “a fraudulent scheme” but only “fraudulent conduct on the part of the management of BBG Group, Hope BBG/ Glory BBG, and Mr Chu”, since a series of transactions and actions were involved – loans, convertible bonds, mortgage/ charge, repayment, wilful default, enforcement actions, taking them together, the ordinary reader would reasonably form the understanding that a scheme was involved. 67.I therefore find apposite to adjust the formulation of the sting to:-
68.The fourth set of contested meanings under the Words to Oldendorff are:-
69.This statement of meaning is derived from Annexure [1.14], which reads:-
70.The Plaintiff’s counsel emphasize the words “I have no doubt”, showing that the Email to Oldendorff, when read naturally, unambiguously states that the newly appointed liquidators intend to take imminent legal steps to recover BBG Group’s (abbreviated as “BGA” in the email) assets including the Vessels. 71.The Defendant’s counsel submit however that this sentence is preceded with other passages in the email beginning with “In my view” (Annexure [1.10]), “ I believe” (Annexure [1.11]), “I strongly believe” (Annexure [1.13]), indicating that it is simply D’s opinion, and the reasonable reader would consider the entire statement as one and understand that D is asserting that there are reasonable grounds to believe the Vessels were subject to fraudulent misappropriation, and that Ocean Sino’s liquidators would soon commence litigation to trace and recover the assets. 72.In my view, I should first consider the ordinary and natural meaning of the words themselves. When one says “I have no doubt that …”, naturally it means what he says is certain, for sure. And what he said to be certain is a future event – that legal actions will soon be commenced. The Defendant is clearly conveying a message to the reader that for sure, legal actions will be commenced soon. The force of the assertion appears to be much stronger than just saying “there are reasonable grounds to believe” that legal actions will be commenced soon. 73.Moreover, the assertion is not a bare opinion. It is immediately preceded with the factual statement that liquidators have been appointed by the BVI Court to Ocean Sino on 23 August 2017 and they are now in the course of investigating into the affairs of Ocean Sino, PBM and BBG Group. Coupled with the earlier statements in the email asserting breach of trust, breach of fiduciary duties, dishonest assistance, knowing receipt, unlawful transfer of ownership and commercial management of the Vessels etc., in my view, the no-doubt assertion is much more affirmative than Chase Level 2 meaning that there are reasonable grounds to suspect, or believe as in this sentence. 74.Therefore I find for the Plaintiff’s version of the sting that:-
Words to Marubeni 75.The parties agreed that the contested pleaded meanings are the same as those of the Words to Oldendorff and repeated the same respective submissions. As such, my analyses would be the same as those in respect of the Words to Oldendorff. 76.In addition, I note that the Fax and Email to Marubeni contain the following passage which does not appear in the Email to Oldendorff:-
77.Annexure [2.14] is a point-blank assertion that, among other things, the Vessels are assets of BBG Group (defined as BGA in the Fax and Email to Marubeni), and that New Shipping has no legal right or entitlement to trade the Vessels or to retain any income earned from the Vessels. This fortifies my corresponding analysis in paragraphs 47-54 and 56-59 above and my findings in paragraphs 55 and 60 above, insofar as the Words to Marubeni are concerned. 78.I therefore make the same findings as set out in paragraphs 55, 60, 67 and 74 in respect of the stings of the meanings of the Words to Marubeni. Words to Skuld 79.The first set of the contested pleaded meanings is as follows:-
80.As to the Plaintiff’s pleaded meaning that the Vessels “have been fraudulently misappropriated by Mr Chu with the assistance of his associates”. The Defendant’s argues that reading the statements as a whole, it would be apparent to the reader that the misappropriation concerns the transfer of ownership pf the Vessels from BBG Group’s subsidiaries to Victory Sail and Plain Sail. It seems that the Defendant’s counsel are attempting to advance something similar to the argument noted in paragraph 57 above – that the ownership of the Vessels does not concern P at all. I have rejected the argument in paragraph 58 above. The transfer of ownership to Victory Sail and Glory Sail, labelled as “fraudulent” by the Defendant, certainly affect New Shipping’s legitimate right to charter the Vessels in the eyes of the reasonable reader. 81.In my view, the meaning of the Words to Skuld is abundantly clear. 82.Firstly, Annexure [3.11] reads:-
The specific reference to fraudulent appropriation by Mr Chu with the assistance of his associates speaks volume. 83.Secondly, the title of the Letter to Skuld is “FRUADULENT CONDUCT” in bold. 84.Thirdly, it is said to be “Mr Lau’s firm belief” that the Vessels have been fraudulently misappropriated by Mr Chu with the assistance of his associates. In the immediately following sentence New Shipping was stated to be one of Mr Chu’s associates. The use of the strong words “firm belief”, in my view, presents the reasonable reader with the impression that the statement is a fact. 85.Therefore, I find one of the stings of the Words to Skuld to be:-
86.The Plaintiff’s next contention is that the Words to Skuld carry the sting that:-
The Defendant did not propound an alternative meaning. 87.The Plaintiff relies on the specific reference to New Shipping as one of Mr Chu’s associates in Annexure [3.11] as set out in paragraph 82 above. 88.The Defendant describes the reference to P as Mr Chu’s associate as loose and submits that “it was not directly referred to as part of the fraudulent or illegal misappropriation of the Vessels”. 89.I do not understand the Defendant’s submission. The reference to P in Annexure [3.11] is indeed direct: “Mr Chu and his associates such as [Victory Sail], [Plain Sail], and New Shipping”. Moreover, although the sentence containing the reference to the Plaintiff as one of Mr Chu’s associates is asserting that, New Shipping, among others, has no right to enter into any agreement for the Vessels, etc., it comes immediately after the sentence asserting Mr Chu’s fraudulent misappropriation “with the assistance of his associates”. In my view, the reasonable reader must have understood that the “associates” in the two sentences belong to the same group, hence including New Shipping. It would be quite impossible for the reasonable reader to have regarded the “associates” appearing in two consecutive sentences are in fact referring to two different categories of persons or entities. 90.Therefore, my finding is that “P is one of Mr Chu's associates.” is one of the stings of the Words to Skuld. 91.The third and final set of contested pleaded meanings for the Words to Skuld are:-
92.The first part of the Plaintiff’s contested version, namely, “The Vessels are part of the assets illegally misappropriated from the BBG Group …”, obviously overlaps with the latter part of the first set of the contested meaning as found and set out in paragraph 85 above, namely, “The Vessels … have been fraudulently misappropriated by Mr Chu with the assistance of his associates.”. 93.The Plaintiff’s formulation[28] is taken from the Words to Skuld, Annexure [3.16]:-
94.The Defendant’s counsel suggest a meaning akin to a Chase Level 2 meaning. They highlight the word “possible” in “possible laundering of money and assets (i.e. the Vessels)” derived from criminal offences” and submit that the Defendant was really suggesting a possibility that the Vessels are the subjects of money laundering and/or proceeds of crime. I agree that the use of the word “possible” simply denotes a possibility, not certainty. I see no reason to depart from the literal meaning apparent from the word used. 95.The question is then whether that possibility is based on some reasonable grounds which leads to the belief of such possibility. In other words, whether the ordinary and reasonable reader would understand from the Words to Skuld to be asserting that there are reasonable grounds to believe that the Vessels are the subject of possible money laundering and/or proceeds of crime. 96.Annexure [3.16] appears at the near end of the Letter to Skuld. From the beginning words – “It is clear from the above that”, it is apparent that the paragraph serves as a conclusion to the matters set out earlier in the letter concerning the alleged Asset Stripping Arrangement said by the Defendant to have been carried out by Mr Chu and his associates, including New Shipping. DLA Pipper Norway, acting on behalf of the Defendant, did provide certain particulars of those allegations. In light of those particulars, in considering whether the Vessels was the subject of possible money laundering and/or proceeds of crime, the reasonable reader would understand that the Defendant’s assertion was advanced by reference to the factual allegations in the earlier part of the letter. As such, the reasonable reader would consider that there were reasonable grounds for believing in such a possibility. 97.Therefore I consider it necessary to add the word “possible” in the Plaintiff’s formulation of the sting, so as not to convey a definite assertion. I accordingly make the finding that the ordinary and reasonable reader would understand the following from the Words to Skuld, that:-
Words to ADM 98.Words to ADM[29] bear the same contents as Words to Skuld and both parties agree[30] that they carry the same defamatory stings as the Words to Skuld. Therefore, I make the same findings as set out in paragraphs 85, 90 and 97 above. The Harassments Words to Skuld HK 99.The first contested pleaded meaning is described to be a contest between Chase Level 1 meaning and Chase Level 2 meaning:-
100.The Email to Skuld HK is bilingual – in both Chinese and English. The contents are similar but not the same. Having read the email as a whole, I set out he more pertinent parts of the Words to Skuld (with the additional numbering set out in the Annexure) as follows:-
101.In my view, the Words to Skuld HK carries the Chase Leve 1 meaning, for the following reasons:-
102.The second set of the contested pleaded meanings under the Words to Skuld HK concerning the Telephone Harassment:-
103.More pertinent parts in the Email to Skuld HK read as follows (with the additional numbering in the Annexure):-
104.I agree with the Plaintiff’s submissions that the certainty with which the incident is described leaves no room for ambiguity, and the statement would be understood by the ordinary and reasonable reader that on 1 October 2017, New Shipping’s representative telephoned Mr Lau and threatened Mr Lau’s personal safety, saying that he knew Mr Lau’s home address (the “Telephone Harassment”). 105.The harasser of the Telephone Harassment is described as “an unknown person”. Therefore, his/her identity cannot be ascertained. On the other hand, in the Chinese version, the person who made the Telephone Harassment is described as “这些人” (“these people”). Since this description comes immediately after the description of the Office Harassment, namely “三名人员声称受贵会会员 NEW SHIPPING LIMITED 负责人 SHUM CHUN, LAWRENCE的指派, … ” (referred to in paragraph 101(1) above with English translation), “这些人” naturally refer to the harassers, or one of the harassers, perpetrating the Office Harassment. 106.The Defendant’s submission in relation to the Telephone Harassment, as mentioned in paragraph 101 above, is the same as that on the Office Harassment. For the same reasons as explained in paragraph 101 above, I disagree. 107.Therefore, I accept the Plaintiff’s counsel’s proposition that the ordinary and reasonable reader would understand the Words to Skuld HK to mean:-
108.The Plaintiff’s last two pleaded meanings derived from the Words to Skuld HK may be dealt with together, with the Defendant laying out his contested meanings:-
109.The more pertinent passages of the Words to Skuld HK read as follows (with the additional paragraph numbering set out in the Annexure):-
110.In supporting its formulation (that if P were an innocent third party with respect to the Vessels, P would not have resorted to harassing or threatening the safety of Pacific Bulk personnel, which is illogical, underhand and illegal conduct; under the circumstances, P cannot be an innocent third party), the Plaintiff’s counsel rely on Annexure [5.10] quoted above. And they rely on what they describe as disparaging expressions in the highly critical tone, such as “this kind of ‘shipping company'”, “this ‘New Shipping Limited'”, and that P should be reminded of “the basic standard of commercial ethics of operating a shipping company in the international marine transportation market” – to suggest that the reasonable and ordinary reader would understand from these descriptions that New Shipping does not qualify as a legitimate shipping company and is unworthy of recognition within the industry. 111.The Defendant submits that the Plaintiff’s above submission is strained and incorrect. According to him, the Words to Skuld HK, read as a whole, never suggests that P does not deserve to be acknowledged as a shipping company; at most, they imply P would not be an innocent party if it had participated in the harassment. He goes further to say that in fact, by asking Skuld to remind P of the “basic standard of commercial ethics of operating a shipping company”, D was implicitly affirming P's status as a shipping company, which is the antithesis of the meaning P alleges. 112.I agree with the Plaintiff that the ordinary and reasonable reader would understand those words to mean that P was not an innocent party with respect to the Vessels; and that in light of its underhand and illegal conduct, P cannot truly be a shipping company, or does not deserve to be acknowledged as a shipping company, for the following reasons:-
113.Therefore, I find that the Words to Skuld HK are also understood to mean ordinarily and naturally, the following:-
E(3) Summary of the Findings on Defamatory Meanings 114.In addition to the agreed imputations set out in Section D(1), paragraphs 21 – 24 above, the Words Complained Of carry the imputations below. 115.For the Words to Oldendorff and the Words to Marubeni:-
116.For the Words to Skuld and the Words to ADM:-
117.For the Words to Skuld HK:-
118.The Words Complained Of published by the Defendant are defamatory of the Plaintiff. They impute to the Plaintiff dishonesty, underhandedness, base and contemptible commercial conduct, lack of basic commercial ethics, unlawfulness, the connotation of “not deserving to be acknowledged as a shipping company”. The Plaintiff in the estimation of right-thinking members of society is lowered. Nonetheless, publication of the Words Complained Of was limited to the addressees of the respective emails, fax and letters. F(1) Guiding Principles for Proof 119.The defamatory imputations are presumed to be false. Therefore, the burden falls on the Defendant to prove that those imputations set out in paragraphs 21-24 and 115-117 are substantially true. See Gatley, §12-003. The essential or substantial truth of every sting of the libel must be proved. It will be taken as proved if the main charge, or gist, of the sting has been shown to be true. There is no need to prove peripheral facts which do not add to the sting or introduce a matter separably actionable, as Gatley supplements at §12-007:-
120.When a Chase Level 1 meaning is published, the imputation of guilt must be substantiated: Gatley, §12-013. Footnote 121 of §12-013 contains a helpful summary of the extent of the requirement:-
In substantiating the defamatory imputations, apart from identifying the acts of the Plaintiff which are said to be justify the imputations, it is of fundamental importance that the casual link between the Plaintiff’s acts and the imputations must be shown. 121.To justify a Chase Level 2 “reasonable ground to suspect or believe” defamatory imputation, it is not sufficient to prove merely the existence of such suspicion or belief. It is a prerequisite that all the primary facts and matters which give rise to reasonable grounds of suspicion or belief must be proved. What amount to reasonable grounds of suspicion must be assessed objectively. While the Court should assess the overall factual position as it stood at the time of publication of the Words Complained Of, including any true explanation which the Plaintiff may have given for the apparently suspicious circumstances, the Court cannot rely on post-publication events. Primarily, reasonable grounds of suspicion should be assessed by reference to the Plaintiff’s conduct or conduct on its behalf prior to the publication of the Words Complained Of, and the Court is to determine whether such conduct of the Plaintiff brought suspicion upon itself. This is what is called the “conduct rule”. See Gatley, §12-013. Circumstantial evidence can contribute to, or carry some weight in assessing, reasonable grounds of suspicion, but only when such evidence implicated the Plaintiff by means of an available inference as to the Plaintiff’s conduct. In other words, it can only assist as an adjunct but not as an alternative to the need to adduce evidence which tend to show that it was the Plaintiff’s conduct which give rise to the grounds of suspicion. But in any event, the Court should bear in mind that it is always the Defendant who carries the burden of proof. The Defendant cannot plead or present factual allegations in such a way to effectively transfer the burden to the Plaintiff to disprove such allegations. F(2) The Asset Stripping Arrangement by Mr Chu with P’s assistance 122.The Defendant place heavy emphasis on the Asset Stripping Arrangement perpetrated by Mr Chu with the Plaintiff’s assistance. I would however caution that this alleged scheme would only be relevant to the present proceedings if and only if it is related to the imputations which are defamatory of the Plaintiff. The emphasis of requisite proof is on the Plaintiff’s dishonest assistance of Mr Chu’s fraudulent scheme and the Plaintiff’s knowingly receipt of its fruits. Those stings as found above relevant to the Asset Stripping Arrangement are (with the meaning of some of them overlapping):-
To succeed in this defence, the Defendant must justify every sting. 123.For ease of reference, I shall group related stings into topics for discussion and determination. F(2)(a) Transfer of Ownership of the Vessels to Victory Sail and Plain Sail 124.The Defendant splits the Asset Stripping Arrangement into 5 steps, leading to the transfer of the ownership of the Vessels to Victory Sail and Plain Sail, which he now describes as “defying all common sense and commercial sense”, appearing to be “part of a fraudulent scheme”, “fraudulent” / “illegal” misappropriation, “possible money laundering and/or proceeds of crime”. 125.The 5 steps are detailed by the Defendant’s counsel as follows[32]:-
126.The Defendant submitted that the detailed actions above said to culminate in the Asset Stripping Arrangement are “corroborated” by (1) various primary documents such as mortgages, loan agreement, nomination agreement, (2) the BBG Group’s liquidators’ statement of claims in HCA 631/2022, and Ocean Sino’s liquidators’ PBM’s Petition in HCCW 251/ 2019, (3) the BVI judgment and the Privy Council judgment in respect of the Ocean Sino winding-up proceedings, (4) the parties’ Dramatis Personae, and (5) Mr Lau’s witness statements. After outlining the said 5 steps and these documents, the Defendant concluded[33] that viewing all of these documents together, there is an overwhelming amount of evidence that the Asset Stripping Arrangement did exist. 127.With all due respect, I disagree. 128.First, the documents relied upon are largely primary corporate documents – mortgages, loan agreements, share transfers, resolutions, and the like. These documents record transactions, but they do not, without more, demonstrate that those transactions were fraudulent, orchestrated, or part of any “scheme”. The Defendant’s case requires proof of a fraudulent arrangement involving multiple entities and individuals acting in concert. The documents he relies on do not themselves speak to fraud; they merely show that certain transactions occurred. The Defendant’s submission that these documents “corroborate” his narrative is therefore overstated. 129.Second, the Defendant relies heavily on the pleadings filed by liquidators in other proceedings, such as the liquidators’ pleadings filed in HCA 631/2022 and PBM’s Amended Petition in HCCW 251/2019. In my view, such reliance is misconceived. 130.In this connection, I first briefly describe what these two proceedings are and the issues involved:-
131.Reliance on pleadings in other proceedings for the purposes of the present defamatory proceedings is inherently problematic. Pleadings are not evidence. They are assertions advanced by parties, often vigorously contested by the others. The Plaintiff in this action is not a party to those proceedings, and this Court has not been provided with the full evidence adduced or filed or discovered in those cases, including all witness statements / affirmations of both parties, a full set of documents adduced or the documentary exhibits, nor has the Court had the benefit of observing the cross‑examination of witnesses (save for Mr Lau and Mr Shum who gave oral evidence at trial). The Court cannot treat the contents of those pleadings as proof of the matters asserted therein. To do so would be to adopt, with no proper evidential foundation, a one‑sided narrative advanced by the Defendant. 132.Third, as Mr Chain, leading counsel for the Defendant, properly accepted[34] at the trial, the question of to what extent Victory Sail and Plain Sail, as the recipients of the Vessels, were involved – that is a matter which has not been the subject of precise commentary or determination. 133.In any event, as submitted by the Plaintiff’s counsel, even for judgments and factual findings of another court in other proceedings, they are inadmissible in subsequent proceedings under the Hollington rule[35]. The Court of Appeal in Bank of Huludao Co Ltd v Zhongying Int'l Holding Group Ltd [2025] HKCA 978, §§25-26 explained the rule as follows:-
134.By the same token, the Defendant’s reliance on the BVI judgment and the Privy Council judgment is misplaced under the Hollington rule. Moreover, those judgments were concerned with the winding‑up of Ocean Sino and the conduct of Mr Chu in that context. They were not findings made after a trial of the alleged Asset Stripping Arrangement now asserted by the Defendant. The foreign courts did not determine whether the Vessels were stripped from BBG Group pursuant to a fraudulent scheme, nor did they make findings about the Plaintiff’s involvement. The Defendant’s attempt to elevate certain observations in those judgments into findings of fraud cannot be sustained. 135.Fourth, although the Dramatis Personae is a document filed by both parties, it is not an agreed statement of facts. It is merely a list of persons and entities involved in the background narrative. The matters the Defendant seeks to rely on from it are expressly not agreed by the Plaintiff. The Defendant cannot convert disputed background descriptions into evidence of wrongdoing. 136.Fifth, the Defendant’s own witness statements cannot corroborate his case. They are his assertions, and should be tested against competing evidence from opposing parties such as Mr Chu and Plain Sail and Victory Sail. The Defendant’s account remains untested by cross‑examination of the individuals he accuses of orchestrating the alleged scheme. The Court cannot accept his narrative as fact merely because it is lengthy or confidently presented. 137.In truth, the Defendant’s 5‑step Asset Stripping Arrangement is a complex, multi‑jurisdictional narrative involving a number of entities, alleged nominees, allegedly purported convertible bonds, share transfers, and enforcement actions. To determine whether such an arrangement existed would require a full trial of those issues, with discovery from all relevant parties, witness statements from directors and officers of the companies involved, and cross‑examination of those witnesses. None of these has gone through this Court at the trial of this action. 138.Accordingly, the Defendant’s submission that the materials he identifies “corroborate” the existence of the Asset Stripping Arrangement is rejected. The documents he relies on do not discharge the burden of proving fraud; the pleadings he relies on are not evidence; the foreign judgments do not make the findings he suggests and are in any event inadmissible; the part of Dramatis Personae he relies on is not agreed; and his own witness statements cannot corroborate themselves. Therefore, even if the Defendant’s suspicion is genuinely held, on the evidence currently adduced before this Court, his case on the Asset Stripping Arrangement cannot be made out on a balance of probabilities. 139.For these reasons, I find that the Defendant has not proved the existence of the alleged Asset Stripping Arrangement. This conclusion is sufficient to dispose of the defence of justification. But for completion, and in the event that I am held to be wrong in this conclusion, I shall deal with the remaining issues of this defence. F(2)(b) P’s Dishonest Assistance of Breach of Fiduciary Duties and P’s Knowing Receipt 140.To establish dishonest assistance the Defendant must prove, on the balance of probabilities, (1) a breach of fiduciary duty by the primary wrongdoers – Mr Chu and/or his associates; (2) assistance by the Plaintiff in that breach; and (3) that the assistance was dishonest by the standards of ordinary honest people (or that the Plaintiff had the requisite state of mind): Sunni International Ltd (in liquidation) v Kao Wai Ho Francis [2025] HKCFI 3398 at §275 per Mr Justice Ng, following Cockerill J in FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm). 141.To establish knowing receipt the Defendant must prove (1) receipt by the Plaintiff of trust property; (2) that the property was traceable to a breach of fiduciary duty; and (3) that the Plaintiff had knowledge (actual or constructive) such as to make retention unconscionable: Sunni, §275, following BCCI v Akindele [2001] Ch 437 at 448C. Suspicion or commercial improbability, without a sufficient transactional or documentary nexus to the primary wrongdoing (i.e. the alleged Asset Stripping Arrangement), is insufficient to discharge the Defendant’s burden. 142.In assessing the Defendant’s plea of justification the Court will examine two complementary perspectives. First, the Court will apply the tests for dishonest assistance and knowing receipt and determine whether the proved facts satisfy those tests. Second, for the purpose of the justification defence, the Court will ask whether the pleaded meanings – as the Court has found them to be understood by the relevant recipients – are shown to be substantially true on the balance of probabilities. That second inquiry is conducted from the standpoint of the reasonable reader in the particular audience to whom each set of the Words Complained Of was published (for example, commercial charterers, P&I underwriters, or brokers). The two perspectives are complementary: legal proof of the elements of a cause of action is necessary to establish the truth of a legal imputation, but the Court should not conflate legal labels with the ordinary meaning of the Words Complained Of as read by their recipients. 143.The Defendant relies on the exposition of Mr Recorder Maurellet SC in Real Estate and Finance Fund (In Liquidation) v Sun Cheuk Pak Alan [2025] HKCFI 2478 at §§122-126, 129, 131, 435 to the effect that there is a single civil standard of proof, that context governs the drawing of inferences, and that the Court should not decline to infer dishonesty where the totality of the evidence makes that the only plausible explanation. I respectfully accept these propositions as a correct statement of the general principle for drawing inference. They do not, however, in the circumstances of the present case, relieve the Defendant of the ordinary task of adducing sufficient evidence to establish the necessary transactional or documentary nexus between the Plaintiff’s conduct and the primary wrongdoing – the alleged Asset Stripping Arrangement by Mr Chu and/or his associates. Whether Real Estate and Finance Fund (In Liquidation) assists the Defendant in this case therefore depends on the facts: the Court must ask whether, on the evidence as a whole and viewed in context, the only plausible explanation of the proved facts is that the Plaintiff knowingly assisted or received proceeds of a breach. For the reasons set out below, the Court finds that the evidence in this case does not reach that threshold. 144.As explained above, the focus of the requisite evidence is on the Plaintiff’s dishonest assistance and knowing receipt and not on Mr Chu. The principal difficulty for the Defendant is the absence of evidence identifying any specific act by the Plaintiff that assisted Mr Chu and/or his associates to remove the Vessels from BBG Group through its subsidiaries. The Defendant’s justification defence must show, on the balance of probabilities, that the factual imputations pleaded in the libel (that the Plaintiff assisted in or knowingly received the fruits of an Asset Stripping Arrangement) are substantially true as those imputations would be understood by the reasonable recipients. That requires proof of the underlying facts relied on by the Defendant (the manner and terms of the sale of the Vessels, the role of the Plaintiff and related companies, and any contemporaneous communications or documents evidencing knowledge or intent). 145.The Defendant invites[36] the Court to draw adverse inferences from what it describes as the “nature of the sale” and a catalogue of alleged “red flags” (short bid window; undervalue; back‑to‑back bareboat chartering; use of intermediary companies; concealment of ties). Commercial improbabilities may be relevant to an inference of knowledge, but such features are capable of supporting an inference of dishonest assistance or knowing receipt only if there is evidence connecting those features to the Plaintiff’s conduct or state of mind – for example, contemporaneous communications showing awareness, documents evidencing an intention to conceal, or payment traces linking the Plaintiff to proceeds. Absent such connecting evidence, the inference is speculative. 146.The Defendant has not identified evidence that the Plaintiff used the back‑to‑back bareboat charter to conceal its involvement in any fraudulent scheme. There is no contemporaneous statement by any witness that the charter was entered into for the purpose of concealment, no internal note recording such an intention, and no payment trail showing that the Plaintiff received or passed on proceeds in a manner consistent with the asserted scheme. 147.Accordingly, and having regard to the tests explained above, the Defendant has not discharged the burden of proving dishonest assistance or knowing receipt against the Plaintiff on the balance of probabilities. The Defendant’s case rests principally on inferences from commercial oddities; those inferences are not supported by the necessary transactional or documentary nexus to the alleged primary wrongdoing. The Court therefore rejects the pleaded stings of the libel that impute to the Plaintiff dishonest assistance and knowing receipt, insofar as those stings depend on the evidential case described above. 148.The Court will, for completeness, address below the specific “red flags” alleged and relied on by the Defendant. Red Flag 1 – “at best” advertisement and two‑day bid window 149.I summarize the relevant evidence as follows:-
150.The Defendant submits that the combination of the “at best” formulation and the two‑day deadline demonstrates that the sellers were intent on disposing of the Vessels quickly and at any price; that this feature is highly unusual for two modern Kamsarmaxes; and that a reasonable recipient would understand the advertisement as indicating desperation on the part of the sellers and therefore as a contextual indicator of impropriety. 151.The Plaintiff accepts the facts but offers a different commercial reading. Mr Birley explained that “to be sold at best” can be used where an owner wishes to sell quickly and to invite offers without a reserve; it does not necessarily connote impropriety and may be a legitimate commercial choice. The Plaintiff further points to the market conduct after the advertisement – inspections and offers, and the fact that the accepted offers were not themselves shown to be tainted – as evidence that the short window did not prevent a proper market response. 152.The “at best” wording and the two‑day window are, individually and together, relevant contextual features. They are capable of lowering the market’s expectation of price and of signalling urgency. Mr Marsh’s evidence that the timeline was “highly unusual” and that such haste would impede market reaction is reasonable. Mr Birley’s evidence that two weeks is a common period for offers is also accepted. 153.Relevance, nonetheless, is not sufficiency. To infer that the advertisement and compressed timetable demonstrate that the Plaintiff knew of, assisted in, or knowingly benefited from an Asset Stripping Arrangement would require connecting evidence: for instance, contemporaneous communications showing the Plaintiff’s awareness of an intention to dispose irrespective of price; documents evidencing use of haste to defeat creditors; or operational/financial records linking the Plaintiff to proceeds or to conduct inconsistent with an innocent management role. No connecting evidence is available before this Court. 154.In my view, the Plaintiff’s evidence that the market did in fact respond (inspections and offers, including Wilmar/Raffles’ inspection within the two‑day window) and that sales were concluded over a longer period in practice diminishes the force of the Defendant’s submission that the two‑day window rendered the sale inherently suspect in the sense alleged. The experts’ acceptance that the expressions used can, in some circumstances, be legitimate commercial devices (and that a buyer may negotiate for more time) further supports the view that the advertisement is equivocal rather than determinative of impropriety. 155.An ordinary and reasonable reader in the relevant commercial audience would, on these facts, understand the advertisement as signalling urgency and a willingness to consider offers, but not as a clear implication that the Plaintiff participated in or facilitated an Asset Stripping Arrangement. 156.Therefore, in my view, Red Flag 1 (the “at best” advertisement and two‑day bid window) does not establish the substantial truth of the Defendant’s imputations as they would be understood by the reasonable reader. One cannot exclude the possibility on balance that the advertisement and timetable may be consistent with a seller seeking a quick sale and with commercial urgency; they are not shown to be part of a scheme to strip assets or to be indicative of the Plaintiff’s knowing participation in such a scheme. Red Flag 1 is probative but is also equivocal. It, standing alone or with the proved facts, does not make the Defendant’s imputations the only plausible explanation on balance of probability. Red Flag 2 – Sale of the Vessels at Substantial Undervalue 157.The relevant facts on this topic are summarized as follows:-
158.The Defendant contends that the US$11 million price is a substantial undervalue for which no adequate commercial explanation has been shown; that the scale of the discount is inherently suspicious. The Defendant relies on the joint expert evidence, contemporaneous valuations, press commentary and the experts’ view that an Admiralty Marshal auction sale would have been the normal enforcement route. 159.The Plaintiff accepts the disparity but offers possible commercial explanations: a distressed sale dynamic following the aborted Wilmar/Raffles transaction and adverse rumours; a thin pool of willing buyers, the value to a buyer of prompt cash; the walking away of Raffles/Wilmar, certainty and contractual protections (Clause 9 of the MoAs); waiver of inspection in some transactions; and the experts’ concessions that a ready cash buyer can rationally obtain a discount. 160.I must say in the beginning of my analysis that a disparity in the region of 35% ((US$17m-11m) / US$17m) is eye-catching. The joint expert valuations make clear that US$11 million was well below the market range prevailing in mid‑2017. That fact, together with the experts’ evidence about the Admiralty Marshal route, indicate that the sale price is indeed commercially unusual. 161.Next in my analysis I must bear in mind that even if there is a finding of undervalue, the undervalue does not itself establish the Defendant’s imputations. To translate undervalue into proof of the Plaintiff’s dishonest assistance in the alleged Asset‑Stripping Arrangement requires connecting evidence demonstrating how the undervalue was brought about and how the Plaintiff was implicated in that process. The types of material the Court would ordinarily expect include, for example, contemporaneous broker files or emails evidencing a limited market canvass or exclusion of bidders; transactional records or payment routing showing diversion or misapplication of sale proceeds; or internal communications revealing an intention to dispose of the Vessels irrespective of price. None of that connecting evidence is before the Court. In its absence, and given the seriousness of the imputations, it would not be proper for the Court to bridge the evidential gap by characterizing inference as proof. 162.I do not consider the sale can be classified as undervalue given the then particular circumstances. As submitted by the Plaintiff’s counsel, the experts’ evidence in this respect, particularly Mr Marsh’s concessions, are material. Mr Marsh accepted that his valuation assumptions presupposed competing bidders and that, in the absence of competition, a seller’s bargaining position is weakened and price can fall. He also accepted that waiver of inspection is not necessarily determinative of price. Mr Birley explained that a ready cash buyer prepared to take prompt delivery and accept short‑term risk can rationally secure a substantial discount and described the circumstances here as akin to a “flash crash” where a forced seller and limited competition can produce a low price. This evidence show that the lower price can, in principle, be explained by distressed‑sale dynamics and buyer readiness to pay promptly. As such, there can be no “undervalue” which implicates impropriety or even fraud as argued by the Defendant’s counsel. 163.The absence of SSY’s files and of the responsible broker’s testimony is significant. The broker’s contemporaneous records would likely illuminate whether the market was properly canvassed and whether other offers existed. I note that Mr David Li of SSY was not called. The Defendant invites the Court to draw an adverse inference, namely that any evidential lacuna should be construed against the Plaintiff. I do not agree. Firstly, there is no clear evidence showing Mr Li’s availability to attend the trial. Secondly, the Plaintiff is accused of dishonest assistance and/or knowing receipt. The evidence presently before the Court does not make it reasonably probable for me to say that the missing evidence would have been adverse to the Plaintiff. The lacuna here concerns what steps were taken to market the Vessels and canvass potential buyers, and whether there were other offers received around that time. The missing evidence is open-ended and could support either party’s account. The broker’s records could, for example, show a limited market canvass or, alternatively, approaches and offers that support the Plaintiff’s account. Their absence is not necessarily adverse to the Plaintiff’s case, and is therefore, in my view, neutral in itself. Therefore, while I accept that the lacuna reduces the Court’s ability to test competing explanations, I do not consider it fair or safe to draw adverse inference against the Plaintiff. 164.I shall discuss Clause 9 of the MoAs and the contemporaneous market conduct (inspections, negotiations, the aborted Wilmar/Raffles purchase) below. They are relevant explanatory features. Where such features are supported by evidence, they diminish the force of undervalue as proof of impropriety. 165.For the above reasons, I take the view that a reasonable commercial recipient, informed by the proved facts, would understand the sale as indicating urgency and a bargain; that understanding is capable of attracting suspicion. It would not, however, in the absence of connecting evidence, amount to a proof on balance of probability that the Plaintiff participated in or facilitated an Asset‑Stripping Arrangement. 166.Further, while the sale price of US$11 million per Vessel is a striking feature that warrants careful scrutiny of the transactions, in the absence of contemporaneous documentary or transactional evidence linking that lower price (but not undervalue in my finding) to conduct by the Plaintiff that facilitated a breach, such as manipulation of the sale process or diversion of the sale proceeds, the lower price (not undervalue as I would like to emphasize) is insufficient on its own, or taken together with other available evidence, to establish the substantial truth of the Defendant’s imputations. For these reasons, on the current evidence, the Plaintiff cannot be said to have been implicated. Red Flag 3 – Mr Shum’s knowledge and acquisition of the Vessels 167.The facts pertinent to this topic are summarized as follows:-
168.The Defendant contends that Mr Shum plainly had knowledge of the underlying shareholders’ dispute and the consequent risk of arrest of the Vessels, but strangely did nothing to protect against those risks. He relies on (a) the evolution of the Plaintiff’s case through three versions (initial denial; admission of broker warnings and public reporting; later reliance on Clause 9 of the MoAs), (b) admissions that Mr Li (the broker) warned of arrest risk and TradeWinds’s reporting, (c) Mr Shum’s failure to make enquiries or obtain due diligence, (d) waiver of inspection, and (e) the limited role of CNC. The Defendant submits that these matters, taken together, show that Mr Shum either knew of the risks and turned a blind eye or was complicit in the Asset Stripping Arrangement. 169.The Plaintiff responds that while in his evidence Mr Shum accepts he was told by the broker of market rumours and adverse reporting, he took commercially plausible steps thereafter by asking SSY to identify solicitors experienced in such matters, relying on broker representations about prior inspections and contractual protections in Clause 9 of the MoAs. 170.On a closer examination of what the Defendant calls the “repeated evolution of P’s case”, Version 1 is a pleaded denial of knowledge of the loan agreement, its Addendum and the Lohas transaction. Version 2 is Mr Shum’s answers during cross-examination that Mr Li of SSY warned him of the existence of shareholders’ disputes, the high risk of arrest of the Vessels and the negative news concerning the Vessels in the market. Version 3 is a later contention that the greater protection afforded by Clause 9 of the MoAs explains why Victory Sail and Plain Sail proceeded despite any awareness. In my view, the three versions represent three formulations which address different factual and legal layers – knowledge of the detailed finance documents (Version 1), awareness of general market rumours and arrest risk (Version 2), and a commercial motive or justification for proceeding despite any such awareness (Version 3). Absent direct, time‑aligned contradictions or contemporaneous documents showing otherwise, these three versions are not necessarily irreconcilable. From their nature and descriptions, I do not consider the facts in each version to be mutually exclusive. In my view, they do not establishes mendacity. Accordingly, I do not treat the existence of the three formulations alone as proof of dishonest participation in the alleged Asset Stripping Arrangement. 171.On his own account, Mr Shum told the Court that Mr Li of SSY informed him of market rumours, the existence of shareholder disputes and the high risk that the Vessels might be arrested, and he accepted that such negative news was public knowledge in the market. He had at least some awareness of negative market information and of the risk of arrest at the time of the transactions. That, however, was limited to awareness. It does not demonstrate that he had detailed knowledge of the Loan Agreement, its Addendum or the Lohas transaction, nor does it of itself establish that he knowingly participated in or facilitated the alleged Asset Stripping Arrangement. 172.CNC’s role, so far as the documents adduced show, was limited to acting as escrow agent. The absence of any contemporaneous solicitor’s advice, engagement letter or drafting trace showing substantive involvement does weakens Mr Shum’s assertion that independent legal safeguards were obtained prior to completion, and reduces the force of his assertion that he requested SSY to instruct an experienced solicitors’ firm to handle the transaction and ensure that he would obtain a clean title. Nevertheless, in the absence of contemporaneous evidence showing that CNC’s nomination was a sham or that escrow arrangements were used to conceal improper routing of funds, the role of CNC remains a non-conclusive feature. It does not, taken singly or cumulatively with other available evidence, establish dishonest participation of the Plaintiff in the alleged Asset Stripping Arrangement. Red Flag 4 – Waiver of inspection 173.The relevant facts on this topic are summarized as follows:-
174.The Defendant’s submission is that Mr Shum’s waiver of inspection is for no good reason. The Defendant relies on Mr Birley’s evidence that it is not common to waive inspection without an inspection report, on the apparent inconsistency between Mr Shum’s stated reservation of brokers’ representation and his reliance on Mr Li’s oral assurance, and on Mr Shum’s apparent focus on only the most basic seaworthiness concern (whether the vessel would sink) rather than a proper technical inspection. The Defendant submits that the waiver of inspection, in the context of known shareholder disputes and arrest risk, points away from an arms‑length commercial purchase and supports the inference of impropriety. 175.The Plaintiff submits is that waiver of inspection is commercially explicable in the circumstances. The Plaintiff relies on:-
176.The Plaintiff’s points about commercial pressure, reliance on a reputable prior buyer’s inspection, and the market practice of making quick offers are not fanciful: the experts accepted that waiver of inspection does occur and that a ready cash buyer prepared to take prompt delivery can rationally secure a discount. 177.I have taken into account the following contextual factors. The waiver of inspection occurred against a background of adverse market commentary and known risk of arrest. There is no contemporaneous inspection report from Raffles/Wilmar on the record. The broker’s files and Raffles/Wilmar’s inspection materials were not produced. These lacunae reduce the Court’s ability to test the Plaintiff’s explanation that reliance on a prior inspection was reasonable. Conversely, the evidence that waiver of inspection can be commercially rational in a time‑pressured market and Mr Marsh’s acceptance that waiver can explain a lower price mean that waiver alone does not prove impropriety. 178.In my view, the waiver of inspection is explicable by potentially innocent commercial considerations and by the evidence that buyers sometimes waive inspection to secure a deal. In the absence of contemporaneous inspection documentation or broker records confirming that no independent inspection occurred or that the prior inspection was misrepresented, the waiver of inspection is not by itself, or taken cumulatively with other available evidence, sufficient to establish that Mr Shum knowingly participated in an Asset Stripping Arrangement. Red Flag 5 – Use of Admiralty Marshal for Auction Sale rather than Private Sale 179.The Vessels were sold by private sale under the MoAs dated 11 August 2017 rather than by an Admiralty Marshal’s auction. The interval between SSY’s soliciting email of 27 June 2017 to the market and the signed MoAs was approximately six weeks. Both parties’ sale experts agreed that an Admiralty Marshal’s auction is a recognised enforcement mechanism capable of producing a clean title and, in many cases, a price closer to market. Both experts also accepted that the choice between a private sale and an Admiralty Marshal auction sale is fact‑sensitive and depends on the seller’s objectives, timing pressures, the costs and delay of arrest and advertisement, and jurisdictional practicalities. 180.The Defendant contends that a financier or seller seeking to maximise recovery would ordinarily have utilised the Admiralty Marshal’s auction process rather than a private sale. The Defendant relies on expert evidence that Admiralty Marshal sales commonly attract competitive bidding, pass clean title and are therefore the sensible enforcement route. The Defendant submits that the private sale at a substantial discount is therefore unusual and supports the inference that the sale was not a bona fide enforcement sale but part of an Asset Stripping Arrangement. 181.The Plaintiff contends that a private sale was commercially explicable. The Plaintiff points out that both experts accepted some proportion of enforcement sales occur outside the Admiralty Marshal system and that a prompt private sale can be completed within weeks. The Plaintiff emphasises that Admiralty Marshal proceedings can be lengthy, costly and disruptive to trading, so a financier seeking immediate realisation may rationally prefer a private sale; that the discount attributable to an Admiralty Marshal sale is not a fixed industry constant and the Defendant’s 7.5% allowance is not an industrial benchmark; and that the intended Wilmar/Raffles sale had itself been pursued as a private sale, showing private sale routes were being actively considered by market participants. 182.The general proposition advanced by the Defendant, that an Admiralty Marshal’s auction is a recognised and often preferable enforcement route for a financier intent on maximising recovery, is generally sound. However, that proposition has to be qualified by both experts’ evidence and by the fact‑sensitive nature of the choice between different enforcement routes. Timing, the costs and delay of arrest and advertisement, jurisdictional practicalities and the seller’s objectives all bear on whether an Admiralty Marshal sale is appropriate. These qualifications were accepted by both experts. 183.In the present context, the interval between market solicitation and contract was relatively short – seemingly a prompt private sale. There is no contemporaneous material on the record showing that Admiralty Marshal enforcement was available and was deliberately rejected for reasons which are improper. The Defendant’s expert accepted limits to his personal experience and that his discount allowance is not an industry constant. Market participants had been pursuing private sale routes (the Wilmar/Raffles approach). Those features, in my view, reduce the force of a categorical inference that the private sale must have been improper. 184.In the absence of contemporaneous transactional evidence showing Admiralty Marshal enforcement was practicable in the then circumstances but was deliberately eschewed to secure an undervalue private sale (for example, internal lender deliberations, solicitor advice rejecting Admiralty Marshal proceedings for non‑commercial reasons, or communications instructing a limited market canvass), the fact that the sale was effected privately cannot be conclusive for showing the Asset Stripping Arrangement, still less the dishonest assistance by or knowing receipt of the Plaintiff. Red Flag 6 – The Broker’s Valuation 185.The SSY Valuation dated 11 August 2017 records a value of US$11 million per vessel and bears the same date as the MoAs by which the Vessels were sold. SSY was the exclusive shipbroker marketing the Vessels. Mr Li of SSY acted as the principal broker in the marketing and sale process. He communicated with Mr Shum about the Vessels’ condition and market rumours and is the author or source of the SSY valuation. There are references to earlier oral communications in which Mr Li and Mr Shum spoke of market values in the region of US$17 million per vessel. No contemporaneous SSY working files, valuation instructions, draft notes or emails explaining the purpose or commissioning of the valuation have been produced to the Court, and Mr Li did not give oral evidence at trial. The Plaintiff have sought but did not subpoena him. 186.The Defendant submits that the SSY Valuation is an unorthodox, self‑serving document produced to legitimise a pre‑agreed undervalue sale. The Defendant relies on three features: (a) the valuation is dated the same day as the MoAs and therefore appears to be post hoc; (b) the valuation was prepared by the broker who was marketing the Vessels, creating an obvious conflict of interest; and (c) the written valuation diverges materially from earlier oral references to a US$17 million value. Taken together, the Defendant says, these features justify treating the valuation as of limited independent probative value and as part of the cumulative case of impropriety. 187.The Plaintiff contends that the SSY Valuation is commercially explicable. The Plaintiff relies on the following points: (a) brokers commonly prepare market valuations and a valuation date will often coincide with the sale date because valuations are expressed as at a particular market snapshot; (b) SSY is a reputable international broker and an exclusive appointment is not exceptional; (c) a valuation is often prepared for legitimate purposes (financing, internal approvals or buyer/seller decision‑making); and (d) the absence of SSY working files is explained by practical difficulties in obtaining older electronic records and by unsuccessful attempts to call Mr Li as a witness. 188.I accept that brokers sometimes prepare valuations for legitimate commercial reasons and that a valuation date may properly coincide with a sale date. However, the combination of (a) a valuation dated on the same day as the concluded sale, (b) the fact that the valuer was the broker who were supposedly actively marketing the Vessels, (c) the divergence between the written figure and earlier oral references to a materially higher value, and (d) the absence of contemporaneous working papers or instructions, reduces the valuation’s independence. 189.Given the features identified above, it would have been sensible for the Plaintiff to provide a credible contemporaneous explanation and, where available, supporting documents showing who requested the valuation, why it was prepared and what methodology was used. Absent such corroboration, the valuation is properly regarded as a self‑serving contemporaneous document of limited weight. It may nonetheless be used, in combination with other matters on the record, as part of the overall evidential picture. 190.In these circumstances, the SSY Valuation cannot by itself establish that the sale reflected true market value. However, it does not by itself prove that the sale formed part of an orchestrated undervalue scheme with the dishonest assistance of the Plaintiff. Clause 9 of the MoAs 191.Clause 9 of the MoAs is not a red flag raised by the Defendant. This issue arose from Mr Shum’s oral evidence at trial, which the Defendant took exception. 192.Clause 9 contains an indemnity and hold‑harmless undertaking which expressly survives completion and identifies particular underlying documents and enforcement scenarios. Mr Shum gave evidence that he instructed the broker that he required an indemnity “against all losses”. In his evidence, he said his principal concern was to secure clean title on delivery. He also said he left detailed drafting to the broker. The broker had informed Mr Shum of a financier’s involvement and of negative rumours, though during cross-examination he said he was not told about any shareholder disputes. Nonetheless, there is no documentary evidence such as contemporaneous solicitor advice or internal purchaser documents showing the background of the indemnity in the clause. 193.The Plaintiff relies on Clause 9 to explain why Mr Shum caused Victory Sail and Plain Sail to proceed with the purchases despite having heard rumours and being aware of a heightened arrest risk. The Plaintiff submits that a survival indemnity of the kind in Clause 9 is a commercially rational device that allocates post‑completion risk, gives contractual comfort about title and therefore provides a plausible commercial reason for Mr Shum to proceed without exhaustive legal inquiry. 194.The Defendant accepts that purchasers seek contractual protection but contends that Clause 9 does not demonstrate that Mr Shum lacked knowledge of the seller’s internal arrangements or that it neutralizes other adverse features of the transaction. The Defendant further submits that a later, more assertive version of the Plaintiff’s case, that Clause 9 was the reason for purchase because it revealed knowledge of the disputes, was advanced without evidential foundation and should not be accepted. 195.In my view, it makes commercial sense for purchasers confronted with rumours of enforcement risk to seek indemnities and hold‑harmless undertakings. A clause that expressly survives completion and identifies particular documents or enforcement events is, other things equal, more protective than a generic indemnity and therefore more likely to give contractual comfort to a purchaser who wishes to proceed quickly. 196.I would accept that Clause 9 is a commercially intelligible protective measure and that a purchaser in Mr Shum’s position could reasonably regard such a clause as providing contractual comfort about title. Mr Shum’s evidence that he requested an indemnity, focused on clean title and left drafting to the broker is consistent with that commercial explanation. 197.The protective effect of an indemnity, however, is limited in important respects. An indemnity provides a remedy against the seller for losses but does not prevent third‑party arrests, liens or other enforcement steps from occurring in the interim. It does not itself clear title at the moment of delivery. 198.The weight to be given to Clause 9 as an explanation for Mr Shum’s decision therefore turns on (a) whether he appreciated the clause’s protective reach and limits at the time, and (b) whether contemporaneous evidence shows the indemnity was a genuine and enforceable protection rather than an illusory comfort. No such contemporaneous evidence is available to corroborate Mr Shum’s account, which emerged only during cross‑examination. In its absence, Clause 9 cannot be treated as establishing any exculpatory safeguard, nor conversely any inculpatory implication, beyond its contractual wording. 199.Absent such corroboration, Clause 9 does not resolve the other matters raised by the Defendant or explain the features of the transaction relied upon in his case. On the other hand, while it forms part of the overall evidential matrix, it cannot advance the Defendant’s case beyond raising questions and cannot establish the Plaintiff’s dishonest assistance or knowing receipt. Red Flag 7 – Purpose of Acquiring the Vessels through Mr Wong Ben Koon 200.Mr Shum was cross-examined on the commercial decision‑making that led him to acquire the Vessels. He revealed that a Mr Wong Ben Koon (“Mr Wong”) played a pivotal role in the acquisition of the Vessels by Victory Sail and Plain Sail. 201.Mr Shum explains the purchases were driven by his family loan‑recovery considerations and commercial opportunity. Mr Shum’s evidence, in summary, is that:-
The Plaintiff also points out that the Loan Agreement between Mr Shum Siu Hung, Mr Shum’s father and Mr Wong dated 17 February 2012 (“WBK Loan Agreement”) has now been placed before the Court and that Mr Shum made efforts to retrieve it after Day 1 of the trial. 202.In brief, the Defendant challenges the genuineness of the stated commercial reasons and invites the Court to infer that the purchases were pretexts for the Asset Stripping Arrangement. The Defendant relies other suspicious features identified and submits that, in the absence of contemporaneous corroboration, the Plaintiff’s post‑hoc explanations are insufficient to rebut an adverse inference of impropriety. 203.From the alleged omission to disclose the WBK Loan Agreement, the Defendant invited the Court to draw an adverse inference. The Plaintiff’s response is that the WBK Loan Agreement is not in issue in this action. It relates to HCA 631/2022, to which the Plaintiff is not a party. Mr Shum subsequently retrieved and produced the WBK Loan Agreement after Day 1, and it is now in evidence (see my order in relation to the Plaintiff’s Summons dated 6 November 2026 below). In these circumstances, the earlier omission does not justify an adverse inference. The evidential position must be assessed on the material now before the Court, and there is no basis for concluding that the document was deliberately withheld or that its prior absence was adverse to the Plaintiff. 204.Where a party advances an inference of impropriety from circumstantial features, the Court must weigh the cumulative force of those features and decide whether innocent explanations are less likely than the impugned hypothesis on the balance of probabilities. I agree with the Plaintiff’s counsel that the party asserting the affirmative (here, the Defendant, who asserts that the purchases were part of an orchestrated undervalue scheme) bears the evidential burden of adducing sufficient material to make that inference more probable than not[38]. Absent direct contemporaneous evidence, the Court may draw adverse inferences from a tightly woven circumstantial matrix (if and only if it is indeed tightly woven), but such inferences require that innocent explanations be shown to be improbable rather than merely possible. 205.The WBK Loan Agreement and the family loan‑recovery context are relevant background facts. Mr Shum’s evidence that his family lent money to Mr Wong, that repayment became difficult, and that a commercial arrangement involving the Vessels was proposed as an alternative means of recovery, is supported by the WBK Loan Agreement now in evidence and by Mr Shum’s contemporaneous conduct as described in his evidence. 206.The explanation that the family preferred a negotiated, relationship‑based approach to recovery (including the possibility of taking the Vessels as part‑repayment) is commercially plausible. The cultural considerations Mr Shum described (preference for personal negotiation with an elderly debtor, reluctance to press formal legal demands) are not fanciful and accord with the account he gave. The Court therefore treats the family‑loan explanation as a credible alternative to the Defendant’s hypothesis that the purchases were motivated by an intent to dissipate value. 207.Nonetheless, the WBK Loan Agreement and Mr Shum’s oral evidence explain why his family might have been willing to accept the Vessels as part‑repayment, but they do not explain the particular mechanics of the 2017 private sale, the pricing decisions, the role of the broker valuation dated the same day as the MoAs, or the absence of contemporaneous purchaser working papers. 208.The family‑loan explanation provides a commercial motive for the family’s acquisition of the Vessels and for accepting contractual protections (such as Clause 9) in lieu of protracted enforcement. The Defendant’s circumstantial case identifies matters that require examination, but it does not displace the Plaintiff’s loan‑recovery explanation. The WBK Loan Agreement and Mr Shum’s account of family considerations and the agreed contingency that the Vessels could be taken as part‑repayment, provide a contemporaneous, non‑culpable explanation that the Court cannot reject on the balance of probabilities. 209.In conclusion, the Plaintiff’s reasons for causing Victory Sail and Plain Sail to purchase the Vessels, namely the family loan‑recovery context, the commercial attractiveness of the proposed arrangement and the agreed contingency that the Vessels could be taken as part‑repayment, are plausible. These reasons materially reduce the force of the Defendant’s invitation to infer that the purchases were a pretext for asset dissipation. Any such inference must be compelling, as succinctly put by Madam Justice Linda Chan in China Stem Cells Holdings Limited v Zhen Ting and ors [2024] HKCFI 481, §60:-
210.While the Plaintiff’s reasons do not resolve every matter raised by the Defendant, in the absence of direct evidence such as contemporaneous purchaser deliberations, broker working files or other material showing the commercial negotiations and valuation methodology, there will be no compelling evidence for the Court to find, on the balance of probabilities, that the Plaintiff assisted in effecting the purchases as part of an orchestrated asset‑stripping scheme. Red Flag 8 – Alleged Concealment of Mr Shum’s connections with Mr Chu or his Associates 211.The Defendant alleges that Mr Shum concealed material connections with Mr Chu or his associates and that unexplained ties exist through (a) the family loan arrangement with Mr Wong, (b) commercial dealings with the Singapore joint venture (the Singapore JV) linked to Ausca/Chu interests, and (c) the Shum family’s participation in industry associations. 212.The Defendant advances three principal propositions:-
213.The Plaintiff responds that the Defendant has not proven any meaningful or culpable connection between Mr Shum and Mr Chu. The Plaintiff emphasizes that:-
214.As explained above, the party asserting a positive case bears the burden of proving the truth of that factual assertion on the balance of probabilities. 215.A court may draw an adverse inference from a party’s failure to call a witness or produce evidence, but such inferences must be drawn cautiously and only where the absence of the evidence is likely to be probative and where the missing evidence would reasonably be expected to exist and to be available to the party. This depends of course on the circumstances, as expounded by Lord Sumption in Prest v Petrodel Resources Ltd [2013] UKSC 34, §44:-
216.Mere coincidence of industry association membership, indirect commercial contact, or the presence of third‑party links does not, in my view, establish the degree of connection or knowledge required for findings of dishonest assistance or knowing receipt. 217.I note that in the earlier proceedings, there was some documentary material indicating that Mr Wong and Mr Chu were acquainted or had business dealings. That limited finding, however, does not by itself establish that Mr Shum was party to or aware of any improper scheme involving Mr Chu. The acquaintance or business dealings between Mr Wong and Mr Chu cannot, without further substantiating evidence, support any inference that Mr Chu had a corresponding acquaintance or business relationship with Mr Shum or the Plaintiff. 218.Mr Shum’s family’s loan arrangement with Mr Wong is now in evidence and provides a direct explanation for the family’s commercial dealings with Mr Wong and for the proposal that the Vessels be acquired as part‑repayment. The existence of a relationship between Mr Wong and Mr Chu, if proved, is a separate factual strand. The Plaintiff’s evidence does not admit or prove that Mr Wong’s acquaintanceship with Mr Chu translated into any channel through which Mr Chu controlled, influenced or directed the Vessels’ sale to Mr Shum or the Shum family. 219.Therefore, on the evidence now available before the Court, the link between Mr Wong and Mr Chu is indirect and limited. The Defendant has not produced communications or documents showing that Mr Wong acted as an agent of Mr Chu in relation to the Vessels, or that Mr Wong’s directorships were used to conceal any connection between Mr Chu and the purchasers. In the absence of such connecting evidence, the Wong-Chu association does not advance the Defendant’s case beyond identifying an indirect commercial contact. 220.Regarding the Singapore JV, I accept that some companies beneficially owned by Mr Shum chartered vessels to the Singapore JV and that Mr Shum negotiated certain charters. Those facts establish commercial contact between entities connected to Mr Shum and the Singapore JV. They do not, however, establish that Mr Shum personally participated in or controlled the Ausca–NewOcean JV network, nor do they prove that the Singapore JV was a conduit for any fraudulent scheme involving Mr Chu. 221.Mr Shum’s initial descriptions in his written statement were imprecise and were corrected in cross‑examination. The corrections show that the commercial picture is more complex than the first statement suggested, but they do not demonstrate concealment of a culpable relationship. The evidence indicates operational overlap (staff assistance, vessel operation) that is commercially explicable in a shipping group where related companies provide services to one another. 222.Regarding the Shum family, associations and the decision not to call the father, documentary evidence shows that members of the Shum family and Mr Chu participated in overlapping industry associations and that the father had business dealings in the same commercial sphere as Mr Chu. Overlap in association membership and industry contacts is unsurprising in the shipping and energy sectors and is not sufficient to prove, in my view, a close personal or business partnership. 223.The Defendant invites an adverse inference from the decision not to call Mr Shum’s father. I agree that calling the father might have assisted in testing the extent of any relationship with Mr Chu. But the absence of the father’s evidence must be weighed against the explanation given by Mr Shum (a desire not to trouble elderly parents with litigation) and against the fact that the Defendant has not shown that the father’s evidence was uniquely available and likely to be adverse. On the evidence before me an adverse inference is not compelled. The omission reduces the completeness of the evidential picture but does not, by itself, prove concealment or dishonest collusion. 224.The Defendant’s material establishes a network of indirect connections: acquaintanceship or business contact between Mr Wong and Mr Chu; commercial dealings between some Shum‑owned companies and the Singapore JV; and overlapping association membership. They do not, however, amount to direct evidence that Mr Shum concealed a material connection to Mr Chu or that he knowingly participated in any scheme orchestrated by Mr Chu. The Defendant’s case requires proof that the purchasers were knowingly linked to Mr Chu in a way that would support findings of dishonest assistance or knowing receipt. That proof is not supplied by the indirect network evidence. 225.The corrections in Mr Shum’s evidence (admissions about charters and operational assistance) show that his written account was incomplete, but they do not, on balance, justify a finding that he deliberately concealed a culpable relationship with Mr Chu. The corrections does not, in my view, reflect evidence of concealment. 226.To conclude, for the reasons detailed above, whilst the Defendant has established indirect and circumstantial connections between persons and entities in the wider commercial network (Mr Wong, the Singapore JV, association membership), I do not consider that the Defendant has established, on the balance of probabilities, that Mr Shum concealed a material connection with Mr Chu or his associates, or that he was knowingly complicit in the Asset Stripping Arrangement allegedly orchestrated by Mr Chu. The decision not to call Mr Shum’s father reduces the available evidence but does not justify an adverse inference sufficient to displace the Plaintiff’s explanations in the absence of stronger corroborative material. 227.Victory Sail and Plain Sail were the corporate vehicles used for the acquisition of the Vessels. The corporate and operational picture at the time of purchase included: (a) the incorporation dates of the Plaintiff and its immediate shareholder within 6 days and 7 days respectively prior to the sale of the Vessels; (b) evidence that Mr Shum had owned and operated other vessels but he admitted limited prior experience in dry‑bulk chartering; (c) contemporaneous and later company records showing that P’s principal activity was the bareboat chartering and commercial management of the two Vessels; and (d) the use of internal back‑to‑back bareboat charters and related group operational arrangements. 228.The Defendant submits that the timing and structure of the incorporations, the absence of prior dry‑bulk chartering experience by Mr Shum or by P, and the fact that P’s only apparent business was to charter the two Vessels, together point to a company created solely to take over the Vessels. The Defendant says that this is a striking feature that supports the inference that the purchasers were special‑purpose vehicles formed to receive assets at an undervalue and to facilitate dissipation. 229.The Plaintiff responds that (a) Mr Shum had relevant shipping experience and owned other vessels; (b) bareboat chartering is commercially similar to ownership and does not require a specialist prior track record in the particular vessel type; (c) the use of newly incorporated special‑purpose companies and back‑to‑back bareboat charters is common in shipping for operational, financial, tax and litigation‑containment reasons; and (d) expert evidence supports that internal back‑to‑back charters and in‑house arrangements are not exceptional and can explain the corporate form and timing. 230.In assessing whether a corporate vehicle was incorporated for a legitimate commercial purpose or as a device to conceal impropriety, in my view, I should take into account: (a) the ordinary commercial reasons for using special‑purpose companies in shipping (risk containment, tax, financing, group structuring); (b) whether the corporate form and timing are explicable by those reasons; and (c) whether the corporate structure, when viewed with other transactional features, makes an innocent explanation improbable on the balance of probabilities. 231.Regarding the question of experience, I accept that Mr Shum had limited prior experience specifically in dry‑bulk chartering but had broader shipping experience and owned other vessels. The absence of a long track record in the precise charter type is not, by itself, unusual. Shipping investors commonly move between vessel types and may deploy newly formed entities to hold particular assets. Mr Shum’s ability to identify and operate other vessels, and his evidence about operational arrangements, cannot, in my finding, support the inference that he had no practical competence to manage the Vessels through group structures. 232.Regarding the timing of incorporation, as explained by Mr Colm Nolan, P’s charter expert and Mr Michael Robson, D’s charter expert, it is a common commercial practice to incorporate special‑purpose vehicle companies shortly before an acquisition so as to ring‑fence assets, facilitate financing or implement group operational arrangements. The mere fact of recent incorporation therefore does not establish an improper purpose. 233.Regarding P’s business profile, the contemporaneous and later company records showing that P’s principal activity was to charter and manage the Vessels are consistent with the stated commercial plan. The fact that P’s fleet initially comprised only the two Vessels is unsurprising for a newly formed special‑purpose owner. The Infospectrum reports and other records indicating limited staffing and a narrow fleet do not, in themselves, prove that P was a sham. They are consistent with a small owner whose commercial role was to hold and bareboat the Vessels. 234.Regarding back‑to‑back charters and internal arrangements, both parties’ charter experts gave evidence that back‑to‑back bareboat charters and internal group operational arrangements are commercially orthodox in shipping. They can be used for legitimate reasons including, for example, separation of ownership and operation, containment of litigation risk, tax planning and internal management. The particular allocation of operating expenses in this case departs in some respects from typical examples, but I accept Mr Nolan’s evidence that in‑house variations are commercially plausible. Such variations do not indicate impropriety or advance the Defendant’s case beyond identifying commercially explicable features. 235.In the circumstances, I accept that the corporate form and timing are consistent with legitimate shipping practice and with Mr Shum’s evidence that the companies were intended to function as owner/charterer vehicles within his broader shipping activities. The expert evidence corroborates that such structures and back‑to‑back charters are commonly used for legitimate commercial reasons. On the other hand, the Defendant has not produced contemporaneous internal purchaser documents, financing memoranda, or other direct evidence showing that the incorporations were contrived for an improper purpose. Absent such material, the corporate timing and limited prior chartering experience remain neutral features and do not make the Defendant’s hypothesis more probable than the Plaintiff’s explanation. They do not, without connecting evidence, support any inference of dishonest assistance or knowing receipt. 236.The Defendant submits that the Plaintiff’s back‑to‑back bareboat chartering structure is commercially irrational and therefore indicative of a contrived scheme: the charters were not genuine bareboat arrangements because operational costs were split between layers rather than borne by a single charterer; the two‑year term is unusually short and lacks a market benchmark; and the exclusion of Gulf of Aden transit is commercially inexplicable given the route’s importance and prevailing market responses to piracy risk. Taken together, the Defendant says, these atypical features are not innocent commercial variations but deliberate drafting choices designed to conceal P’s and Mr Shum’s involvement and to facilitate the alleged Asset Stripping Arrangement. 237.In my view, the Defendant’s attack is circumstantial. The evidence shows departures from textbook practice but does not include contemporaneous communications or internal instructions tying those departures to a deliberate concealment or asset‑stripping purpose. The Plaintiff’s legitimate commercial reasons remain plausible. The features under attack do not, by themselves, decisively undermine the Plaintiff’s commercial explanations. Again, crucially, the Defendant has produced no contemporaneous documentary evidence showing that these drafting choices were selected to conceal a pre‑agreement or to facilitate asset dissipation. In the absence of such corroboration, the atypical charter terms remain neutral features and do not make the Defendant’s hypothesis more probable than the Plaintiff’s explanations. They do not advance the Defendant’s case beyond identifying commercially explicable variations. 238.The Court’s task is to determine whether, on the balance of probabilities, the purchasers (Victory Sail and Plain Sail) and Mr Shum, and hence the Plaintiff, knowingly and dishonestly participated in the Asset Stripping Scheme alleged by the Defendant. 239.In summary, the Defendant has assembled a circumstantial case composed of a number of unusual features. Those features require examination. On the evidence as a whole, however, the Defendant has not proved that the purchasers or Mr Shum knowingly and dishonestly engaged in an asset‑stripping scheme or that the purchases were a sham. The contemporaneous WBK Loan Agreement and Mr Shum’s account of a family loan‑recovery motive provide a plausible, non‑culpable explanation for the transactions. 240.As to the nature of the circumstantial case, the Defendant’s case is presented as cumulative. No single feature is decisive. The Defendant relies on the aggregation of several unusual matters: the private sale route, the timing and content of the SSY Valuation, the discount to other indicia of value, the waiver of inspection, the proximate incorporation of purchaser entities, the back‑to‑back chartering structure and its atypical terms, and indirect network links involving Mr Wong and the Singapore JV, to support an inference of impropriety. 241.On Red Flag 8 (alleged concealment of connections with Mr Chu), the evidence establishes indirect connections within a shared commercial network: some material suggests acquaintance or business contact between Mr Wong and Mr Chu; certain Shum‑owned companies had commercial dealings with the Singapore JV; and there was overlapping association membership. Those facts are relevant contextual indicators. They do not, however, establish a direct channel of control or agency from Mr Chu to the purchasers, nor do they show that Mr Shum concealed a material connection. Crucially, the Defendant has not produced contemporaneous communications or documents demonstrating that Mr Wong acted as Mr Chu’s agent in relation to the Vessels or that the purchasers were directed by Mr Chu. 242.On the decision not to call Mr Shum’s father, the absence of the father’s evidence reduces the completeness of the evidential picture. Having considered the explanation given for that omission and the absence of proof that the father’s testimony would have been uniquely adverse, I consider myself not able to draw an adverse inference sufficient to alter the balance of probabilities. 243.On Red Flag 9 (lack of chartering experience and corporate purpose), the purchaser entities and related companies were incorporated shortly before the sale and that P’s initial business profile was narrow. Mr Shum had limited prior experience in dry‑bulk chartering, although he owned and operated other vessels. These matters are, however, explicable by ordinary shipping practice: the use of special‑purpose vehicles, ring‑fencing of assets, internal back‑to‑back charters and short transitional charters are commercially orthodox. Expert evidence accepted by the Court confirms that such structures are commonly used for legitimate operational, financing, tax and litigation‑containment reasons. In the absence of contemporaneous purchaser deliberations, financing memoranda or internal documents showing an improper purpose, the timing and corporate form do not, standing alone, prove contrivance. 244.On the charter terms, the back‑to‑back bareboat charters contain three notable unusual features: the allocation of operational costs across charter layers, the relatively short two‑year term, and the exclusion of Gulf of Aden transit. They can be explained by explicable bespoke in‑house arrangements, transitional commercial planning or conservative risk management. The Defendant has not produced contemporaneous documentary evidence linking these drafting choices to concealment or pre‑agreement. 245.As an overall evaluative conclusion, taking all the evidence and the parties’ submissions together, the Court finds that the Defendant has not discharged his burden of proof that the Plaintiff has dishonestly assisted Mr Chu or his associates in the alleged Asset Stripping Arrangement or knowingly received the Vessels or profits derived from the fraudulent scheme allegedly perpetrated by Mr Chu. As found in section F(2)(b), fundamentally, the Defendant has not discharged his burden to show the existence of the Asset Stripping Arrangement by Mr Chu. The Defendant’s circumstantial factors, while coherent, cannot, in the absence of connecting evidence as elaborated above, weigh so heavily as to make the Defendant’s imputations more likely than not on the balance of probabilities. 246.I should add that, in considering plausibility of each party’s case, I have taken into account the credibility of each party’s factual witnesses, particularly Mr Shum and Mr Lau. Having considered the parties’ submissions and the parties’ documentary and oral evidence, I consider that Mr Shum’s evidence is not without blemish. The Defendant has identified a number of inconsistencies between earlier statements and his oral testimony, instances of evasive or argumentative answering, and examples where his account diverged from documentary records. Those matters engage many of the classic indicia of unreliability relied on by the Defendant and are material to the assessment of credibility. They require the Court to approach aspects of Mr Shum’s testimony with care, particularly on peripheral points of detail where the evidence is conflicted. 247.That said, I have weighed those shortcomings against the totality of the evidence. Mr Shum gave a coherent account of the central commercial motive – the family loan‑recovery objective – which is supported by the contemporaneous WBK Loan Agreement and by particulars about his wider shipping activities and the operational arrangements for the Vessels. By contrast, much of Mr Lau’s oral evidence depended on inference from omissions and on generalized assertions about industry connections rather than on contemporaneous documents that directly contradict Mr Shum’s core account. I also note the Plaintiff’s submission that the Defendant adopted an opportunistic and at times evasive stance on key matters. On balance, and for the purposes of the justification defence, the Court accepts Mr Shum’s evidence on the matters that are decisive: his motive for the purchases, the broad commercial purpose of the transactions, and the principal operational arrangements. The limited inconsistencies identified diminish the weight the Court can place on his evidence in finely balanced disputes of detail, but they do not, in my view, undermine the Plaintiff’s explanation as a whole. 248.The next issue is whether, at the time the Words Complained Of were published, the then circumstances gave reasonable grounds to believe that the Ocean Sino liquidators would imminently commence legal proceedings to trace and recover the Vessels which allegedly were owned by BBG Group. 249.The BVI judgment placing Ocean Sino into liquidation was handed down on 29 June 2017 and liquidators were appointed on 28 July 2017. The Defendant communicated information about the Asset Stripping Arrangement to the liquidators shortly after their appointment. In subsequent years the liquidators took a number of recovery‑oriented steps: they caused themselves to be appointed directors of PBM; PBM later presented winding‑up petitions and other proceedings; and the Official Receiver/OSL liquidators commenced HCA 631/2022 on 27 May 2022. There appears to be a sequence of contested interlocutory applications, appeals and other litigation activity in the BVI and Hong Kong. 250.Whether a reasonable person would have believed that litigation was imminent depends on the objective indicators of immediacy available at the time of the publication of the Words Complained Of. Evidence that proceedings were commenced at a later date is relevant to whether recovery was pursued, but it does not establish that the commencement of proceedings was reasonably to be expected in the immediate future when the Words Complained Of were published. 251.The Defendant’s case has force on one level: (a) the BVI judgment and the appointment of liquidators plainly made investigation and potential recovery a natural consequence; (b) the Defendant’s prompt disclosure to the liquidators was a reasonable basis for expecting the liquidators to consider recovery; and (c) the liquidators did, in due course, take recovery steps. Those facts support the proposition that recovery was likely to be pursued at some stage. The real question, therefore, focuses on “imminence”. 252.The contemporaneous record, however, contained clear indicia that the timing of any recovery litigation was uncertain. Immediately after appointment the liquidators were engaged in complex, contested proceedings and procedural skirmishes across jurisdictions. There were appeals and interlocutory applications that consumed time. There was evidence of active resistance and delaying tactics by Mr Chu and others. Those features made the prospect of immediate commencement of tracing or arrest proceedings far from certain. The mere fact that the liquidators later instituted proceedings years after the Words Complained Of were published does not convert that later reality into an objectively reasonable expectation of imminent action at the earlier date when the Words Complained Of were published. 253.The Plaintiff’s submission, that there was no reasonable basis to assert imminent legal action and that the Defendant’s claim of imminence rested on assertion rather than contemporaneous indicia, is supported by the delay between appointment and the commencement of HCA 631/2022. The Defendant’s reliance on its own expectation and on later events does not supply contemporaneous objective evidence of imminence. The Defendant’s witness evidence that he “expected” action is subjective and, in the absence of contemporaneous documentary steps by the liquidators indicating imminent litigation, cannot establish an objective reasonable belief in imminence. 254.The Defendant’s submission on imminence is therefore rejected. The subsequent institution of proceedings by the liquidators is relevant to the history of the dispute but does not alter the conclusion about what a reasonable reader could have inferred at the time the Words were published. 255.It is necessary to add an observation on ownership: Even if the Court were to accept arguendo that the alleged Asset‑Stripping Arrangement had been put in place, that conclusion would not by itself resolve the separate and complex questions whether BBG Group (or Ocean Sino) still retained proprietary title to the Vessels or whether any traceable proceeds remain recoverable. Those issues raise difficult questions of law and fact – including the operation of constructive trust principles, the availability of proprietary remedies against subsequent purchasers, the effect of any bona fide purchaser for value without notice, the impact of intervening transfers and third‑party rights, limitation and laches defences, and the practical difficulties of tracing in a multi‑jurisdictional context. They also require detailed, contemporaneous evidence about the chain of title, the consideration actually paid, the knowledge and conduct of third parties, and the precise timing of transfers and registrations. Neither party has delved into these questions in any detail, and they do not form part of the issues joined in these proceedings. 256.In the present proceedings, the Defendant’s circumstantial case does not supply the factual particularity required to prove that BBG Group retains proprietary rights in the Vessels or that any tracing claim would succeed against Victor Sail, Plain Sail or other third parties. In short, even accepting arguendo the Asset Stripping Arrangement, the Defendant has not shown that the legal and factual hurdles to recovery have been overcome. Those unresolved complexities further undermine the Defendant’s contention that immediate or straightforward recovery of the Vessels was to be expected at the time the Words Complained Of were published. The evidential gaps make it impossible to conclude that recovery was imminent or reasonably anticipated. F(5) Lack of Denial by the Plaintiff 257.The narrow issue is whether the Plaintiff’s failure to reply to the Defendant’s 29 August 2017 letter permits a reasonable inference that the Plaintiff was not an innocent third party. In other words, whether silence in the face of the Defendant’s complaint can be treated as an admission of culpability. 258.It is common ground that the Defendant sent the 29 August 2017 letter to Mr Shum and that no substantive reply was sent by him on behalf of the Plaintiff. The letter referred to transfers of ownership and changes of technical and commercial management of the Vessels and asserted that those steps were unlawful and part of the Asset Stripping Arrangement. Mr Shum’s evidence was that he considered the Defendant to have no standing, that he sought legal advice and was told the Defendant lacked a right to arrest the Vessels, and that he made informal enquiries of Mr Wong. 259.The Defendant submits that the letter made specific allegations against the Plaintiff and that silence in the face of such particularized allegations permits an adverse inference. That submission has force where a clear, direct accusation is made to a person who has both the opportunity and an obvious motive to deny it. The Defendant also points to the change in Mr Shum’s account about what, if anything, he did after receiving the letter; those inconsistencies are relevant to credibility and to the weight to be given to his explanation for non‑reply. 260.The Plaintiff’s position is that the letter was not addressed in terms that required an immediate denial by the Plaintiff, that the Defendant lacked contractual standing in Mr Shum’s view, and that legal advice indicated no immediate obligation to respond. Those matters are supported by the contextual circumstances: multi‑jurisdictional litigation, contested interlocutory skirmishes and uncertainty about rights of arrest and standing. In that factual matrix, silence carries limited probative value and is materially less significant than it might be in a straightforward, single‑jurisdiction commercial dispute. 261.I do not consider the Plaintiff’s failure to reply a proper basis for drawing the strong adverse inference the Defendant seeks. The 29 August 2017 letter was not so plainly particularized, nor were the surrounding circumstances such, that silence alone reliably indicates culpability. The Defendant’s submission on this point is therefore rejected. 262.The stings of libel in respect of harassment are all (and only) contained in the Words to Skuld HK. The incidents themselves are not seriously disputed. The real issue is whether they were authorised or directed by the Plaintiff or Mr Shum. As set out in paragraph 115 above, they are found to be:-
263.The sting formulated in paragraph 262(1) above is what I have called the Office Harassment. The sting formulated in paragraph 262(4) above is what I have called the Telephone Harassment. The Plaintiff did not seriously challenge that the two incidents occurred. 264.Therefore, the real issue is whether the Plaintiff or Mr Shum authorised, directed or caused the Office Harassment on 29 September 2017 and the Telephone Harassment on 1 October 2017. 265.The Defendant submits that the two harassment incidents were orchestrated by or on behalf of the Plaintiff and Mr Shum. The Defendant relies on the following points:-
266.The Plaintiff denies any knowledge of or instruction to Mr Yiu and denies authorising the two harassment incidents. Mr Shum denies when cross-examined at trial. He relied on employer return documents and solicitor correspondence to show that Sound Industrial Limited (“Sound Industrial”) was nominal or inactive and that he took steps to follow up when he learned of the conduct of Messrs Paul Kwong & Co, solicitors which acted for Sound Industrial in DCCJ 3222/2008 (“Tenancy Litigation”). The Plaintiff submits that the employer returns and the solicitor letters reduce the force of drawing any adverse inference from silence and that the Defendant’s case depends on inference rather than contemporaneous proof of instruction, payment or authorisation. 267.The visual footage of the Office Harassment and the news photographs (the authenticity of which is not challenged) are consistent and persuasive on identity. The contemporaneous reports that the harassers named “岑濬” and referred to “their company” are direct contemporaneous evidence. The temporal sequence of letter, visit and call forms a coherent narrative that supports the Defendant’s circumstantial case. Presence at the scene plus the harassers’ own words materially heightens the plausibility of a link to Mr Shum. 268.The employer-return documents produced by the Plaintiff cover 2005, 2006 and to 31 March 2010 only. Those returns do not cover the critical periods relied on by the Defendant, in particular August to December 2007 and the events of 2017. For that reason the returns cannot be treated as proof that Mr Yiu had no connection with the Shum family companies at the relevant times. The solicitor correspondence shows some follow‑up but is limited in scope and does not amount to contemporaneous disavowal or a documented internal investigation that would conclusively rebut the harassers’ contemporaneous oral statement that Mr Shum was their boss. 269.Mr Shum’s denials were clear and repeated. He accepted the limited temporal scope of the employer returns and acknowledged that family companies sometimes used staff interchangeably. Those concessions are important because they both explain gaps in formal records and leave open the possibility of informal links between Mr Yiu and Mr Shum and/or his family businesses. The solicitor letters are relevant but do not, on their face, provide contemporaneous proof that would displace the primary contemporaneous evidence. 270.No direct evidence such as contemporaneous communications, payment records, authorisation letters or admissions linking Mr Shum to the harassers was available before this Court. Innocent explanations, such as the harassers misrepresenting their authority, acting for an unrelated third party, or acting opportunistically without instruction, are theoretically possible, but they lack evidential support and do not coherently account for the harassers’ contemporaneous statements, their possession of the 29 August letter, and the temporal proximity of the threatening call. When weighed against the combined effect of the reliable identification evidence, the harassers’ own words and the subsequent call, those alternatives are unlikely. 271.I have paid regard to the Tenancy Litigation and its judgment insofar as they establish historical and commercial links between Mr Yiu and companies associated with the Shum family. These materials are admissible as background and as evidence of historical association and business relationships. In the Tenancy Litigation, Sound Industrial was the plaintiff, Mr Yiu was the main witness for Sound Industrial, and at that time, both Mr Shum and his father were Sound Industrial’s directors. For the avoidance of doubt, I did not treat any findings in the tenancy judgment as proof of any facts now in issue, as per the Hollington rule referred to in paragraph 133 above. 272.For the present purpose, the Court is to apply the civil standard and decide whether the inference of authorisation is more likely than any innocent explanation. The visual identification and the harassers’ contemporaneous statements are powerful primary evidence. The documentary gap reduces the exculpatory effect of Mr Shum’s denials but does not by itself prove authorisation. The solicitor correspondence mitigates an adverse inference from silence but does not displace the contemporaneous material. 273.I find that the person who attended D’s office on 29 September 2017 is the same individual shown in the news footage and photographs identified at trial as Mr Yiu. The Court accepts the contemporaneous reports that the harassers referred to “岑濬” and to “their company” while holding and referring to the 29 August 2017 letter. 274.The employer return documents relied on by the Plaintiff do not cover the critical periods of 2007 and 2017. The returns therefore cannot be treated as proof that Mr Yiu had no connection with the Shum family companies at the relevant times. 275.Taking into account all of the above, I find that the combination of reliable visual identification of a participant with historical links to the Shum family, the harassers’contemporaneous statements invoking “岑濬” and referring to “their company”, the harassers’ possession and reference to the 29 August 2017 letter, and the subsequent threatening telephone call together render innocent explanations less likely than the inference that the visit and the subsequent call were authorised or directed by persons acting for or on behalf of the Plaintiff and/or Mr Shum, who is the Plaintiff’s director and chairman. 276.In conclusion, I find that the Office Harassment on 29 September 2017 and the Telephone Harassment on 1 October 2017 were authorised or directed by persons acting for or on behalf of the Plaintiff. F(7) Conclusion on the Defence of Justification 277.For the above reasons, in my judgment, the Defendant has failed to prove that those defamatory imputations in respect of the alleged Asset Stripping Arrangement set out in paragraph 122 above are substantially true. His defence of justification in this respect is rejected. 278.For the above reasons, in my judgment, the Defendant has established that those defamatory imputations in respect of the Office Harassment and the Telephone Harassment set out in paragraph 262 above are substantially true. His defence of justification in this respect succeeds. G. Defence of Qualified Privilege 279.In the present proceedings, the legal principles governing qualified privilege focus on the two issues: corresponding interest (the scope of the privileged occasion) and malice (how privilege may be defeated). 280.Privileged occasions fall into two broad classes: (a) occasions where the maker has a duty, social or moral, to communicate and the recipient has a corresponding interest to receive the information; and (b) occasions where the maker acts in pursuit of his own legitimate interest and the recipient has a corresponding interest or duty, or where maker and recipient share a common interest in the subject matter: Multi‑Winner Investment Ltd v Lau Ming Yee [2017] 1 HKLRD 328 at 347, §68, per Mr Justice Lok. 281.Whether an occasion of privilege exists is a question of law to be determined objectively by reference to the circumstances known to the maker at the time of publication. A defendant’s honest but mistaken belief that a duty or corresponding interest exists does not, by itself, create privilege: Gatley, §§15‑008, 15‑014, 15‑015. 282.Quality of information and reasonableness of conduct are important. Where there is no pre‑existing relationship between the maker of the statement and the recipient, the Court evaluates whether the publication was “fairly warranted by the occasion” and all surrounding circumstances. This includes consideration of the quality of the information available at the time, the steps taken to verify it, and the reasonableness of the maker’s conduct in making the communication to the particular recipient(s): Gatley §15‑044. In Downtex v Flatley [2003] EWCA Civ 1282 §§47–48, the English Court of Appeal illustrated that mere subjective concern is insufficient where objective evidence does not support the asserted risk. 283.Malice defeats qualified privilege. Proof of malice removes the protection of qualified privilege and renders the communication actionable. 284.In the context of qualified privilege, malice is to be equated with use of a privileged occasion for some purpose other than that for which the privilege is accorded by the law. In simple terms, if the maker of the defamatory statements has (a) some public or private duty, whether legal or moral, which justifies him to communicate them, or (b) some interest which he is entitled to protect by making those statements, the law of qualified privilege will protect him from defamation action. However, if he makes the defamatory statements for some reasons other than performing that public or private duty or protecting that interest, then he loses the protection of the defence of qualified privilege: Jonathan Lu v Paul Chan Mo Po & Another [2018] HKCFA 11, §§15-16 per Lord Reed NPJ. 285.Therefore, in deciding whether a defence of qualified privilege is available but defeated by malice, the Court must firstly consider whether the occasion was privileged, i.e. whether the defamatory communication was made in compliance of a legal or moral duty or in protection of a legitimate interest, such that the law affords the Defendant the protection of the privilege; and if so, what is the purpose of performing that duty or protecting that interest. After ascertaining the privileged occasion and the privileged purpose, the second thing that the Court must do is to investigate and find out what is the Defendant’s purpose for communicating the defamatory statement. If the Defendant's purpose for making the communication is not the privileged purpose as found by the Court, then the Defendant will lose the protection of the defence. See Jonathan Lu, §17 per Lord Reed NPJ. 286.The Defendant’s motive is crucial for the Court to ascertain. Some hunch, or an idea at the back of his mind is not enough to destroy the privilege. It is the dominant motive that matters. If his dominant motive for making the defamatory communication is not the privileged purpose, but, for example, out of a desire to injure the Plaintiff, the privilege us destroyed. On how to ascertain the motive, Lord Diplock’s guidance in Horrocks v Lowe (H.L.(E.)) [1975] A.C. 135 at 149H-150B is instructive:-
287.The task is always to find out the motive which played the central role in actuating the Defendant to publish the Words Complained Of. Human motives are often mixed. Personal spite and an honest belief in the truth of the statement may coexist. It is for the Court, with caution, to determine whether, for example, the giving vent to personal spite was so dominant that the Defendant simply did not care whether the communication he was about to send out was true, or whether the discharge of the relevant duty or the protection of the relevant interest played no significant part in his desire when publishing it, as Lord Diplock, in His Lordship’s customary eloquence, explained in Horrocks v Lowe at 150E-151B:-
See also Jonathan Lu, §§18, 26, 28 per Lord Reed NPJ; Leung Chi Ching Candy v Yeung Hon Sing [2021] 5 HKLRD 684 at 704, §75 per Madam Justice Kwan VP. Privileged Occasions - The Defendant’s Case 288.The Defendant submits that the Words Complained Of were made to recipients who each had a legitimate economic interest in receiving them and that the Defendant himself had a legitimate economic interest or duty in informing those recipients. He contends that given the recipients were economically exposed by the circumstances surrounding the Vessels, and that he was motivated by a duty or interest to protect his and his companies’ economic position, the communications were made on occasions of privilege. 289.The Defendant identifies five publication recipients, grouped into two categories. The first comprises the sub‑charterers and the voyage charterer:-
290.The Defendant submits that each of those recipients had an economic interest in information about whether the Vessels could lawfully be sub‑chartered and whether they were subject to outstanding or potential actions and litigation which might lead to the vessel being arrested, voyage disrupted, or otherwise affect their economic interests. 291.The Defendant emphasises that Oldendorff, Marubeni and ADM transported very valuable dry bulk cargo on the Vessels and that, as he put it at trial, the value of the dry bulk cargo “far exceeds the value of the Vessels”. If the Vessels were arrested with perishable dry bulk on board there would be significant losses to the voyage charterers, a risk the Defendant described as “very high”. The Defendant relies on contemporaneous documentary and factual material, for example, Oldendorff’s letter to the Plaintiff of 21 September 2017 and Skuld’s request for further information, as evidence that the recipients had a legitimate interest in receiving the information he provided. 292.The Defendant further contends that he had a legitimate interest or duty to publish the statements to those recipients. The factual matrix relied on by the Defendant is that he is a 24.5% indirect beneficial owner of BBG Group (and its subsidiaries) and a director of Ocean Sino and PBM, companies which owned the Vessels prior to the Asset Stripping Arrangement. He says he believed, on the materials available at the time, that the Vessels had been wrongfully transferred pursuant to an Asset Stripping Arrangement, that the sale would be subject to investigation, and that the Vessels might be subject to recovery and disputes against the wrongdoers. Against that background the Defendant asserts that he passed information to the liquidators, funded the liquidators in HCA 631/2022 to allow them to carry out the necessary investigations, and sought and obtained an injunction in Panama in October 2017 based on substantially the same facts underpinning the Asset Stripping Arrangement. He also relies on his membership of the Hong Kong Shipowners Association and the responsibilities he submits that membership entails to ensure the healthy development of the industry and to facilitate risk control and safety supervision. He further submits that, if there were issues concerning the Vessels, he was duty‑bound to inform third parties. 293.The Defendant further submits that the publications were limited in scope and made in good faith. He points out that the Words Complained Of were only published to five entities – the insurers and charterers directly involved with the Vessels – and were not disseminated widely or indiscriminately. He also asserts that the Plaintiff’s complaints as to his reference to the allegedly struck‑out in rem writs are unfounded because those writs were never struck out and “remained live” when the Words Complained Of were published. The context in which they were referred to must therefore be considered. On this basis, the Defendant submits that the communications were neither excessive nor unnecessary and that they were confined to recipients who had a corresponding interest. 294.The Defendant relies on his asserted indirect economic interest, the contemporaneous evidence of association, and the recipients’ enquiries to support his submission that the recipients had a legitimate interest in receiving the information and that the communications were made on privileged occasions, relying on Gatley, §15‑043. 295.Finally, the Defendant contends that Oldendorff, ADM and Marubeni as sub‑charterers and voyage charterer would be directly affected economically by the risk of arrest, that Skuld and Skuld Hong Kong faced realistic and material exposure as insurers, and that publication to five entities should not be characterised as excessive. He submits that if the Court accepts that the recipients had economic interests, that the Defendant had a legitimate interest or duty, and that the publications were limited and made in good faith, then the communications were made on privileged occasions and are therefore protected unless malice is established. Privileged Occasions - The Plaintiff’s Case 296.The Plaintiff accepts, for present purposes, that the recipients, which include the charterers and sub‑charterers (Oldendorff, Marubeni and ADM) and the insurers (Skuld and Skuld Hong Kong), may in some circumstances have a commercial interest in information about the legal status of the Vessels. The Plaintiff’s primary submission, however, is that the mere existence of a commercial interest on the part of a recipient does not establish an occasion of qualified privilege. The test is objective and must be applied by reference to the facts and materials known to the Defendant at the time of publication. An honest but mistaken belief by the Defendant that a duty or corresponding interest existed cannot, of itself, create privilege. The Court must therefore ask whether, on the contemporaneous materials and the Defendant’s state of knowledge at the time, it was reasonable to communicate the particular allegations to the particular recipients. 297.The Plaintiff contends that, on the facts, the Defendant’s publications exceeded what any legitimate duty or corresponding interest could reasonably justify. The Defendant communicated serious allegations of orchestration and asset‑stripping to third parties without the objective evidential foundation required to justify circulating such allegations. The Plaintiff emphasises the quality, provenance and timing of the information available to the Defendant and submits that the Court must scrutinise the reasonableness of the steps (if any) the Defendant took to verify the allegations before publication. Where there was no pre‑existing relationship with a recipient that would make the Defendant’s disclosure plainly appropriate, the Plaintiff says the Court should be particularly cautious before treating disclosure as privileged. 298.The Plaintiff challenges each strand of the Defendant’s asserted basis for a duty or interest:-
299.Applying the objective test to the contemporaneous materials and the Defendant’s state of knowledge at the time of publication, the Plaintiff submits that the Words Complained Of were not justified by any legally recognised duty or corresponding interest and therefore did not attract qualified privilege. The Plaintiff further submits that even if the Court were to find that some communications were made on occasions that might attract privilege, the defence should be defeated if the Defendant misused any such occasion for an improper dominant purpose. Discussion and Determination 300.Having reviewed the parties’ submissions, I am not satisfied, in my judgment, that the Defendant has established that the publications were made on occasions of qualified privilege. 301.I accept in principle the Defendant’s submission that the charterers and insurers had a commercial interest in the legal status of the Vessels. Charterers and insurers are plainly persons who may be affected by arrests, ownership disputes and litigation in respect of ships which have been chartered with insurance in place, and therefore have a legitimate commercial interest in relevant information. The Plaintiff accepts that proposition but emphasises that a recipient’s general commercial interest is not sufficient to create a privileged occasion. On the evidence, while the recipients of the Words Complained Of had a general commercial interest, the Defendant did not establish that any recipient had made a narrowly defined, contemporaneous request for verified information or otherwise demonstrated an immediate need to receive the specific allegations in the form and detail published. I therefore find that the recipients’ general commercial interests, standing alone, did not convert the communications into privileged occasions. 302.The Defendant relies heavily on his asserted 24.5% indirect beneficial interest in BBG Group and on his directorships in related companies as creating a duty or at least a sufficiently concrete interest to justify the communications. The Plaintiff accepts that a proprietary interest can, in appropriate circumstances, ground a legitimate interest in protecting assets but contends that an indirect, minority stake does not of itself create a duty to circulate serious allegations to unrelated commercial counterparties. I agree with that submission. The Defendant’s asserted indirect minority interest lacked the immediacy and connection required to establish a duty to inform the charterers and insurers (with which the Defendant has no prior business relationship in relation to the Vessels) of unproven allegations. The Defendant’s alleged proprietary connection therefore does not, on the evidence, establish a privileged occasion. 303.Regarding the Defendant’s submission that his membership of industry bodies and general responsibilities in the shipping community imposed an industry duty to communicate risks to counterparties, I accept that industry norms and roles may, in certain particular or specified circumstances, give rise to obligations to communicate safety or risk information. However, the Defendant did not identify any discrete, cognizable obligation arising from his industry membership that would have objectively necessitated the communications in question. General industry membership alone, as in this case, is insufficient to establish a privileged occasion. 304.The Defendant points to his investigatory and litigation activity, such as funding and passing information to liquidators, supporting HCA 631/2022, and obtaining injunctive relief in Panama, as evidence of a legitimate interest and as steps that made the publication of the Words Complained Of appropriate. I do not accept that submission. While those activities demonstrate the Defendant had an interest in investigating and protecting assets, they do not demonstrate that publishing the Words Complained Of to the charterers and insurers was objectively necessary at the time the communications were made. The Defendant did not show that disclosure of the Words Complained Of to those particular recipients was the necessary means of protecting his asserted interest. 305.The Defendant relies on contemporaneous writs, letters and third‑party enquiries (including the Oldendorff letter of 21 September 2017 and enquiries by Skuld) as both a factual foundation for the allegations and evidence of recipients’ interest. The Plaintiff accepts that such documents and enquiries are relevant but submits they must be assessed for quality, immediacy and causal connection to the Defendant’s asserted interest. Having considered the documents relied upon by the Defendant, together with other contemporaneous materials, I find that they did not provide a sufficiently reliable or immediate foundation for the serious allegations communicated, nor did they show that the recipients’ enquiries were of the kind that objectively required the Defendant to circulate the allegations in the form used. 306.The Defendant emphasises the high commercial value of the cargoes and the risk of loss from arrest as factors making the publication of the Words Complained Of appropriate. The Plaintiff accepts that cargo value and risk are relevant to proportionality but contends they do not obviate the need for objective justification and verification. I agree with that submission. Whilst commercial risk is a relevant consideration in assessing whether disclosure was necessary and proportionate, the mere existence of high cargo value does not convert speculative or insufficiently verified allegations (i.e. all the Words Complained Of, except the Office Harassment and the Telephone Harassment, see the analysis and findings in the previous section on the defence of justification) into privileged communications. The Defendant did not demonstrate that the gravity of the commercial risk made the particular disclosures necessary in the absence of adequate verification. 307.The Defendant relies on limited circulation – publication to five entities – and on the targeted manner of publication as supporting proportionality and privilege. I agree that limited circulation is a relevant factor in the proportionality assessment, but it is insufficient to establish privilege where the underlying occasion element (a maker’s legitimate interest/duty and a corresponding recipient interest) is not satisfied on the present facts. 308.The Plaintiff contends that the Defendant failed to take reasonable steps to verify the allegations before publication and that the content and tone of the communications were disproportionate to any arguable interest. I agree, and add that where allegations are serious and potentially reputationally damaging, the maker’s duty to take reasonable steps to verify is correspondingly high. The Defendant did not discharge that duty. The record does not show adequate verification of the most serious allegations before they were communicated as assertions to third parties, and the manner in which the allegations were presented increased the risk of harm. 309.The parties dispute the burden and sequence of proof. In my view, the initial burden is on the Defendant to show that the publication occurred on an occasion of qualified privilege by reference to the facts known to him at the time. On the facts now before the Court, the Defendant has not discharged that burden. 310.For the above reasons, I conclude that the Defendant has not established that the Words Complained of were made on occasions of qualified privilege. The Defendant did not demonstrate that he had a legally recognizable duty to perform or an interest sufficiently concrete and immediate to justify publishing the allegations to the charterers and insurers in the form and manner used. The recipients’ general commercial interests, limited circulation, investigatory steps, and contemporaneous documents relied upon by the Defendant do not, either singly or cumulatively, establish the necessary occasion of privilege. 311.For completeness, I shall deal with the issue whether the Defendant publishes the Words Complaint Of maliciously, hence destroying the defence offered by any privilege (assuming my conclusion in the preceding paragraph is wrong, that a privileged occasion has been established). 312.On malice, the Plaintiff submits that the Defendant published the Words Complained Of with an improper dominant purpose or, at the very least, with reckless disregard for the truth. The Plaintiff says motive and purpose are central. The Defendant’s pattern of conduct, such as funding liquidators, supporting HCA 631/2022, pursuing litigation and obtaining injunctive relief in Panama while simultaneously circulating serious allegations to selected commercial counterparties, demonstrates an overriding aim to damage the Plaintiff’s reputation and to exert tactical pressure rather than a bona fide desire to protect a legitimate interest. The Plaintiff emphasises the Defendant’s failure to verify the most serious allegations before publication, the presentation of those allegations as established fact rather than as matters under investigation, and the absence of reasonable steps to test provenance and reliability. The Plaintiff points to the timing, targeted recipients and accusatory tone of the communications as evidence showing that the dominant purpose was not to inform but to injure or to gain leverage in related disputes. The Plaintiff also relies on contemporaneous documentary and witness evidence to show that the Defendant knew, or must have known, that the evidential foundation for the allegations was weak, and that publishing them in the form used therefore amounted to recklessness or an improper purpose. 313.The Defendant’s submissions on malice are that he acted in good faith and with an honest belief that he had a duty or a legitimate interest to protect which justified disclosure. The Defendant says his motive was protective – to warn charterers and insurers of a real risk to cargo and to protect his commercial and proprietary interests. He denies any improper dominant purpose. He relies on contemporaneous writs, third‑party enquiries, letters, his funding of liquidators and litigation, and the Panama injunction as objective indicia that he had reasonable grounds for concern and that his communications were made in pursuit of a legitimate interest. The Defendant contends that he took steps that were reasonable in the circumstances. Such steps included passing information to liquidators, pursuing injunctive relief, and responding to enquiries. Moreover, as he submitted, limited circulation and targeted recipients demonstrate a proportionate approach rather than malice. The Defendant accepts that some factual uncertainties existed but says any errors of judgment were honest mistakes made in a complex factual matrix and do not amount to malice. He denies dishonesty, deliberate falsehood or an improper dominant purpose. 314.Regarding the Defendant’s funding of liquidators, support for HCA 631/2022 and the Panama injunction, as the Plaintiff submits, these activities, taken together with selective disclosure, show an ulterior motive. The Defendant says they show legitimate investigatory and protective steps. In my view, such litigation and investigatory activity are neutral in themselves: they can be consistent with both legitimate protection and tactical pressure. The proper inquiry is how those activities were actually used. Where, as here, the Defendant combined litigation funding with proactive, assertive and seriously accusatory communications to commercially sensitive recipients without adequate verification, those activities cannot be treated as exculpatory. They are the factual matrix which compels the drawing of an inference. 315.I next consider the quality and sufficiency of verification steps. The Plaintiff contends that the Defendant failed to take reasonable steps to verify the most serious allegations and that the materials he relied on were of mixed provenance and quality. The Defendant contends that contemporaneous documents and recipient enquiries provided reasonable grounds. In my view, the standard of reasonable verification is heightened where allegations are grave and reputationally damaging. As analysed above, the contemporaneous record displays material gaps in provenance and corroboration, and the evidence does not establish that the Defendant took adequate steps to resolve those uncertainties before presenting the allegations as established fact to third parties. That failure supports an inference of reckless disregard for the truth rather than mere inadvertence. 316.The Court should also consider the manner, tone and form of the communications. The Plaintiff points to assertive language, presentation of allegations as fact, and targeted dissemination to a small group of commercial recipients as indicia of improper purpose. The Defendant says the communications were proportionate, targeted to those with a legitimate interest, and limited in circulation. In my view, presenting serious allegations as established fact, rather than as unverified concerns or matters under investigation, materially increases the risk of harm and is inconsistent with a protective purpose unless accompanied by reasonable verification. Limited circulation does not neutralise that risk. Indeed, selective circulation of unverified allegations to commercially sensitive recipients can concentrate harm and facilitate tactical misuse. On the evidence, the form and tone of the key communications are therefore probative of an improper dominant purpose or, at minimum, of reckless indifference to the truth. 317.The next matter requiring examination is the timing of the publications and the contemporaneous enquiries by recipients. The Defendant relies on recipient enquiries and prior writs to justify the timing of the publication of the Words Complained Of. The Plaintiff says those enquiries were not of the kind that objectively required the Defendant to circulate the allegations. Recipient enquiries are relevant but must be assessed in terms of the necessity of immediate reply and the specificity of what needs to be replied. It appears to me that the Defendant’s defamatory communications were not made in response to narrowly defined, contemporaneous requests for verified information. Rather, several communications of the Words Complained Of were proactive. Where a publisher acts proactively, the absence of a clear recipient‑initiated need to know strengthens the inference that the dominant purpose may have been tactical rather than protective. 318.On the Defendant’s asserted honest belief and his contention that any error was an honest mistake, I note that whilst the Defendant’s subjective belief is relevant, an honest belief which is not the product of reasonable inquiry may still be consistent with malice in the form of reckless disregard. I can find no evidence of deliberate dishonesty. There is no outright proof that the Defendant knowingly published falsehoods. However, the evidence does support a finding that, if the Defendant honestly believed the allegations, that belief was not the product of reasonable verification and inquiry. Publishing serious allegations in assertive terms in those circumstances amounts to reckless indifference to their truth and therefore satisfies the malice standard necessary to defeat qualified privilege. 319.The court next addresses the Defendant’s reliance on the commercial value of cargo and the risk of arrest as justifications for his conduct. The Defendant says the high commercial stakes made the publications necessary. The Plaintiff says risk does not excuse recklessness. I accept that commercial risk is a relevant factor in assessing proportionality, but it does not absolve a publisher from his obligation to verify serious accusations before presenting them as fact. High cargo value may increase the urgency of inquiry, but it does not justify publishing unverified, damaging allegations to third parties. I therefore reject the Defendant’s submission that the commercial risk made the particular disclosures necessary, even in the absence of adequate verification. 320.Lastly, I have considered whether malice is established in respect of all communications or only some. The Defendant contends that certain communications were responsive to recipient enquiries and therefore non‑malicious. The Plaintiff contends otherwise – that malice extends across the board. Having examined the circumstances of each communication of each set of the Words Complained Of (i.e. the Email to Oldendorff, the Fax and Email to Marubeni, the Letter to Skuld, and the Letter to ADM, except the Email to Skuld HK which relate only to the harassment incidents which I have found in the preceding paragraph to be substantially true), I find that, insofar as those Words Complained Of in relation to the Asset Stripping Arrangement, dishonest assistance and/or knowing receipt are concerned, malice – in the form of reckless disregard for the truth and an improper dominant purpose – is established in respect of those communications in which the Defendant presented serious allegations as established fact without adequate verification and where there was no clear recipient‑initiated need for such assertions. The overall finding is that malice is established in respect of the principal publications (i.e. the Words Complained Of, except the Email to Skuld HK) that gave rise to the Plaintiff’s complaint. 321.In conclusion, the Court finds that malice is established in respect of the Words Complained Of, save the Words to Skuld HK. The Defendant did not act with deliberate dishonesty, but he published serious allegations in assertive form with reckless disregard for their truth and with an improper dominant purpose in at least some of the communications. That state of mind is sufficient to defeat any qualified privilege that might otherwise have attached to those communications. The Plaintiff’s submissions on malice are therefore accepted in substance and the Defendant’s submissions on good faith and honest belief are rejected to the extent they seek to excuse the reckless and improperly motivated publications. 322.I find that:-
323.Finally, I shall deal with the reliefs sought by the Plaintiff. 324.The Plaintiff submits that the Court should award general damages of around HK$800,000. The Plaintiff contends that the Words Complained Of contained “very grave allegations” of dishonesty and improper conduct in relation to the Vessels, made to important commercial counterparties whose confidence is essential to P’s business. 325.The Plaintiff submits that publication to a small number of persons in a business relationship may be “as serious or worse” than wider publication, because the recipients were charterers, brokers, and insurers whose views directly affect P’s ability to trade. 326.The Plaintiff relies on authorities emphasizing the reparative and vindicatory functions of general damages, and the need to avoid setting damages at a level publishers might regard as an acceptable risk. The Plaintiff submits that general damages may absorb loss of business profits, and that strict causation requirements are relaxed where precise proof is difficult. 327.The Plaintiff further submits that, although P is a corporate plaintiff, substantial general damages may be awarded notwithstanding a failure to prove specific financial loss. The Plaintiff contends that alleged losses relating to Glencore, Olam, Arrow, Oldendorff, and Skuld may be taken into account when arriving at a global figure. 328.The Plaintiff relies on “comparable awards” in other defamation cases, contending that those awards support the figure proposed. 329.The Defendant submits that P is not entitled to substantial general damages. The Defendant contends that P “has suffered no loss”, whether specific or general, and that P had “no established reputation” at the time of publication which could be vindicated by an award of damages. 330.The Defendant submits that the extent of publication was “extremely limited”, confined to five recipients, and that there is no evidence of wider dissemination. The Defendant argues that, in the absence of proof of a general loss of business or other tangible impact on P’s trading, a corporate plaintiff is “unlikely to be entitled to a really substantial award of damages”. 331.The Defendant submits that each of P’s “comparable cases” is distinguishable, either because the plaintiff there had a well‑established reputation, the publication was much wider, or the facts involved more serious or different kinds of allegations. 332.The Defendant contends that P’s attempt to fold alleged business losses into general damages is impermissible, because causation is not proved and the alleged losses are speculative. He submits that, even if liability is established, P should receive only nominal damages. 333.In my view, the allegations were serious. The Words Complained Of accused P of dishonesty and improper conduct in relation to vessel ownership and management. Such allegations are inherently grave. 334.The extent of publication was limited. The Words Complained Of were sent to five recipients, all of whom were commercial counterparties. While publication to such persons is serious, the limited number of recipients constrains the scale of reputational harm. 335.P’s reputation at the time of publication was limited. P was newly incorporated and had only begun to establish relationships with charterers and brokers. The evidence does not establish that P enjoyed a substantial or widely recognised reputation in the market. 336.I accept that substantial general damages may be awarded to a corporate plaintiff notwithstanding a failure to prove specific financial loss. However, in practice, in the absence of at least a general loss of business, a limited company is unlikely to be entitled to a really substantial award. 337.P has not proved any general downturn in business attributable to the defamatory statements. The alleged losses in relation to specific fixtures and relationships are addressed below. 338.This Court does not accept the Defendant’s submission that only nominal damages should be awarded. The allegations were serious, and the recipients were important commercial counterparties. Even in the absence of proved financial loss, the Court must ensure that the award is sufficient to vindicate P’s reputation. 339.On the other hand, this Court does not accept the Plaintiff’s submission that general damages “of around HK$800,000” are appropriate. That figure is not supported by the evidence of P’s reputation, the limited extent of publication, or any proved general loss of business. The “comparable cases” cited by P are distinguishable by the particular facts of this case. 340.The exclusion of the Words to Skuld HK reduces the total number of defamatory publications from five to four. Although the Words to Skuld HK was only one of several, its removal further limits the extent of publication and therefore warrants a modest downward adjustment of the general damages award. 341.Taking all factors into account: the gravity of the allegations, the limited publication, P’s limited reputation, the absence of proved general loss of business, the need for vindication, and that D has succeeded in his defence of justification in respect of the Words to Skuld HK (which must therefore be excluded entirely from the damages assessment), this Court awards general damages in the sum of HK$180,000. 342.The Plaintiff advances claims for special damages and/or business‑related losses arising from (i) Glencore and Olam fixtures, (ii) Arrow, (iii) Oldendorff, and (iv) Skuld. The Plaintiff submits that these matters demonstrate actual financial loss caused by the defamatory statements. 343.The Plaintiff relies on Mr Nolan’s evidence to contend that P lost profitable fixtures or opportunities as a result of the defamatory statements. The Plaintiff submits that the defamatory statements destabilized P’s relationship with Arrow. The Plaintiff contends that it incurred legal costs in dealing with Oldendorff. The Plaintiff submits that it expended time and resources in addressing concerns raised by Skuld. 344.The Defendant submits that P “plainly cannot prove the alleged loss resulting from the Glencore and Olam Fixtures”. The Defendant argues that the evidence does not establish that any fixture was lost, or that any loss was caused by the defamatory statements. 345.As to Arrow, D submits that the evidence “falls far short” of demonstrating any loss of business attributable to the defamatory statements. 346.In relation to Oldendorff, the Defendant submits that P has not proved that any legal costs were incurred as a result of the defamatory statements. 347.As to Skuld, the Defendant submits that P’s claim for time and costs is unsupported by evidence. 348.My view is as follows:-
349.For the above reasons, no special damages are awarded. 350.The Plaintiff seeks exemplary damages, contending that D acted with malice and sought to damage P’s business and reputation. 351.The Defendant submits that P “evidently fails to prove its case on exemplary damages”, and that the requirements for exemplary damages are not satisfied. 352.My view is:-
353.The claim for exemplary damages is dismissed. 354.The Plaintiff seeks an injunction restraining D from further publishing the Words Complained Of. 355.The Defendant submits that no injunction is necessary or appropriate. 356.I do not find evidence of any continuing or threatened further publication of the defamatory statements. They were made in 2017–2018. I cannot find a real risk of repetition. 357.The claim for injunctive relief is dismissed. 358.Under section 48 of the High Court Ordinance, I see fit to award interest on damages at the judgment rate. 359.Interest shall run on the general damages awarded, namely HK$180,000, from the date of service of the Writ until judgment. 360.Costs follow the event. The Plaintiff has succeeded on liability in respect of four of the five publications and has obtained an award of general damages. The Defendant has succeeded on the discrete issue of justification in respect of the Words to Skuld HK. Although the Plaintiff has failed on special damages, exemplary damages, and injunctive relief, those matters did not materially increase the length or complexity of the trial. 361.Accordingly, I make an order nisi that the Plaintiff is entitled to its costs of the action, save that the Defendant shall have the costs of the discrete issue of justification relating to the publication to Skuld HK. All such costs shall be taxed if not agreed. 362.For the above reasons, I make the following orders:-
363.I also make an order nisi that (1) the Defendant shall pay the Plaintiff costs of this action (inclusive of all costs reserved), save that the Plaintiff shall pay the Defendant his costs of the action in relation to the Words to Skuld HK; and (2) the amounts of all such costs shall be taxed if not agreed. The order nisi shall become absolute unless an application for variation is made within 14 days from the date of this Judgment. K. Disposal of Miscellaneous Summons 364.Lastly, there remain 4 summonses which I need to deal with. 365.First, paragraph 19 of the Pre-Trial Review Order dated 9th September 2025 ordered that costs of and occasioned by the following 2 Summonses be dealt with at the conclusion of the trial:-
366.There is no dispute that apart from the costs of and occasioned by D’s amendments to his Amended Defence, costs should be in the cause. Given that D succeeds in the justification defence in respect of the Words to Skuld HK only, and the 2 summonses concern issues relating to both the harassment incidents and the alleged Asset Stripping Arrangement, the costs of these 2 summonses should follow the costs order for the Action that I made above. 367.In respect of the costs of and occasioned by D’s amendments to his Amended Defence, I see no reason to depart from the usual practice that the party seeking to amend his defence should bear the costs of and occasioned by the amendment. 368.I therefore make an order that:-
369.Second, I shall deal with the Plaintiff’s Summons dated 6 November 2025, which sought to produce the WBK Loan Agreement (see paragraph 201 above) on Day 2 of the trial. The Defendant has now indicated no objection to the application[39]. As to costs, I agree with the Defendant’s counsel’s submissions that the Plaintiff should pay all costs of and occasioned by the Summons on an indemnity basis, to mark its disapproval of the Plaintiff’s last minute discovery. I therefore make:-
370.Third, during the cause of Mr Shum’s cross-examination, again on day 2 of the trial, the Plaintiff sought to produce two solicitors’ letters in relation to the Tenancy Litigation. At this Court’s request, on day 3 of the trial, its solicitors issued another Summons dated 7 November 2025, for leave to produce the two letters. The Defendant has also now indicated no objection[40] to this much belated disclosure and application, and for the same reason as the Summons dated 6 November 2025, he asks for costs on an indemnity basis, which in my view is obviously justified in the circumstances of what happened on day 2 and day 3 of the trial. While the affirmation reveals that the eleventh-hour disclosure was due to the Plaintiff’s solicitors’ omission, the Defendant has indicated that he has no views as to whether the costs should be borne by the Plaintiff or its solicitors[41]. I do not see the necessity to consider the question whether the Plaintiff’s solicitors should bear the responsibility. I therefore make:-
371.I express my gratitude towards Ms Lau SC and Ms Lam for the Plaintiff, and Mr Chain SC, Ms Tiffany Chan and Ms Regina Yip for the Defendant for their able and helpful assistance.
Ms Queenie Lau SC leading Ms Rachelle Lam, instructed by Holman Fenwick Willan, for the Plaintiff Mr Christopher Chain SC leading Ms Tiffany Chan and Ms Regina Yip, instructed by Adrian Elms & Co, for the Defendant 1. Words to Oldendorff: “[1.1] I am a 50% owner of Ocean Sino Limited (“OSL”) which in turn owns 100% of the issued shares in PBM Asset Management Limited (“PBM”). [1.2] I understand that Oldendorff Carriers Middle East Ltd and/or its associated companies may have recently time-chartered MV New Prestige (ex MV BBG Hope) through Arrow Shipbroking, with a company named “New Shipping Limited” purportedly as head owner of the vessel. [1.3] I would like to put you on notice of the following matters concerning the true ownership of MV New Prestige. Ownership of the Vessels by the BGA Group ... [1.4] It has very recently come to my attention that ownership of the Vessels has been purportedly transferred by Hope BBG to Victory Sail Investments Limited (“VSIL”) and Glory BBG to Plain Sail Holdings Limited (“PSHL”) in August 2017. Both VSIL and PSHL are companies incorporated in the British Virgin Island (“BVI”) and are represented by a Mr Wong Ben Koon as director. I have also been given to understand that the technical management of the Vessels has been changed to Seacon Ships Management Company Ltd and commercial management of the Vessels has been changed to New Shipping Limited. The names of the Vessels have also been changed to “New Prestige” and “New Honor”. All of these changes took place surreptitiously and without any notice given to PBM / me. [1.5] I understand that the purported transfer of ownership of the Vessels may have been by way of purported enforcement action taken by a company named “Premier Bright Holdings Limited” (“PBHL”) and/or its nominee, Lohas Finance Limited (“Lohas”) which, according to Mr Chu, provided certain alleged loans to BGA, Hope BBG and Glory BBG. [1.6] In fact, I was informed by Mr Chu and by his associates who control BGA that Lohas / PBHL acquired security over the Vessels by way of, inter alia, the mortgaging / charging of purported “convertible bonds” issued to PBM, in purported settlement of the PBM Loans. I have also been told by BGA in no uncertain terms that BGA / Hope BBG / Glory BBG intentionally defaulted on the purported loan from PBHL / Lohas, so as to enable PBHL / Lohas to take enforcement action against the Vessels. This, as you will appreciate, is against all common sense and commercial sense, and is suggestive of fraudulent conduct on the part of the management of BGA, Hope BBG / Glory BBG, and Mr Chu. To date, despite my position as one of the two directors of PBM, I have not even seen any documentation in respect of the “convertible bonds” purportedly issued to PBM. [1.7] Please find attached a copy of the Judgment of the BVI Commercial Court in respect of the disputes between Mr Chu and me in relation to OSL, PBM and BGA (then known as Beibu Gulf Ocean Shipping (Group) Limited) in Claim No. BVIHC (COM) 0065 of 2015 for your reference. Please also find attached an article dated 2 August 2017 published by TradeWinds concerning the Vessels. [1.8] Even after the handing down of the BVI Judgment, Mr Chu repeatedly represented and asserted to me and PBM that Lohas / PBHK were “independent 3rd party financiers”. In fact, through my investigation, I have recently discovered that PBHL (also a BVI company) is in fact owned and controlled by Mr Chu and his family, through his nominee Mr Cheung Kai Fung. PBHL is a 5% shareholder of Lohas. I have written to Mr Chu, Mr Cheung Kai Fung, Mr Wong Ben Koon, as well as a number of other associates of Mr Chu (for example, Mr Chu's nominee directors on the board of BGA) regarding the above matters. None of them has sent me any reply to deny the matters I mentioned above. [1.9] Please note that I have issued In Rem Writs against the Vessels in Hong Kong and in Singapore in order to preserve my, OSL, PBM, and BGA's rights and interests. Copies of the In Rem Writs are attached. [1.10] In my view, in causing the transfer of ownership of the Vessels from Hope BBG and Glory BBG to VSIL and PSHL (which I have no doubt are companies owned and controlled by Mr Chu and his associates), Mr Chu and his associates have acted in breach of trust and of their fiduciary duties owed to PBM, BGA, TPL, SCL, Hope BBG and Glory BBG. VSIL, PSHL (as purported registered owners of the Vessels), New Shipping Ltd (as commercial manager of purported head owner of the Vessels), as well as their directors and officers, are also acting dishonestly in assisting Mr Chu and his associates in relation to their breaches of fiduciary duties as directors of PBM, BGA, TPL, SCL, Hope BBG and Glory BBG. I have no doubt that they are liable to account for all income earned in respect of the Vessels as trustees of BGA, TPL, SCL, Hope BBG and/or Glory BBG on the ground of dishonest assistance and/or knowing receipt. ... Unlawful misappropriation of the Business and Assets oof BGA by Mr Chu [1.11] I believe that the transfer of ownership of the Vessels (whether by TPL, SCL, Hope BBG, Glory BBG, Lohas, PBHL and/or by Mr Chu) to VSIL and PSHL and also the change of technical management and commercial management of the Vessels without PBM’s consent is unlawful and amount to fraudulent conduct on the part of Mr Chu and his associates. [1.12] Further, the transfer of BBG Shipping and BBG Resources and with them, BGA's shipping and logistics businesses, procured by Mr Chu to his company for no or insufficient consideration paid to BGA is also unlawful. [1.13] I strongly believe that the conduct described above of Mr Chu and his associates including Ausca Shipping Limited, amounts to a fraud upon BGA and PBM. I hereby urgently put you on notice of the above issues concerning the vessels (including MV New Prestige). [1.14] For your information, Liquidators have been appointed by the BVI Court to OSL on 23 August 2017 and they are now in the course of investigating into the affairs of OSL, PBM and BGA. I have no doubt that legal actions will soon be commenced by them to trace and recover the assets owned by BGA which include the Vessels and also BBG Shipping and BBG Resources (and with them, the shipping and logistics businesses rightfully belonging to BGA).” 2. Words to Marubeni: “[2.1] I am a 50% owner of Ocean Sino Limited (“OSL”) which in turn owns 100% of the issued shares in PBM Asset Management Limited (“PBM”). [2.2] I understand that Marubeni Corp. may have recently, through Oldendorff Carriers Middle East Ltd, fixed MV New Prestige (Ex MV BBG Hope) for a shipment of maize bound for Vietnam. [2.3] I would like to put you on notice of the following matters concerning the true ownership of MV New Prestige. Ownership of the Vessels by the BGA Group … [2.4] It has very recently come to my attention that ownership of the Vessels has been purportedly transferred by Hope BBG to Victory Sail Investments Limited (“VSIL”) and by Glory BBG to Plain Sail Holdings Limited (“PSHL”) in August 2017. Both VSIL and PSHL are companies incorporated in the British Virgin Islands (“BVI”) and are represented by a Mr Wong Ben Koon as director. I have also been given to understand that the technical management of the Vessels has been changed to Seacon Ships Management Company Ltd and commercial management of the Vessels has been changed to New Shipping Limited. The names of the Vessels have also been changed to “New Prestige” and “New Honor”. All of these changes took place surreptitiously and without any notice given to PBM / me. [2.5] I understand that the purported transfer of ownership of the Vessels may have been by way of purported enforcement action taken by a company named "Premier Bright Holdings Limited" (“PBHL”) and/or its nominee, Lohas Finance Limited (“Lohas”) which, according to Mr Chu, provided certain alleged loans to BGA, Hope BBG and Glory BBG. [2.6] In fact, I was informed by Mr Chu and by his associates who control BGA that Lohas / PBHL acquired security over the Vessels by way of, inter alia, the mortgaging / charging of purported "convertible bonds" issued to PBM, in purported settlement of the PBM Loans. I have also been told by BGA in no uncertain terms that BGA / Hope BBG/Glory BBG intentionally defaulted on the purported loan from PBHL / Lohas, so as to enable PBHL / Lohas to take enforcement action against the Vessels. This, as you will appreciate, is against all common sense and commercial sense, and is suggestive of fraudulent conduct on the part of the management of BGA, Hope BBG/ Glory BBG, and Mr Chu. To date, despite my position as one of the two directors of PBM, I have not even seen any documentation in respect of the "convertible bonds" purportedly issued to PBM. [2.7] Please find attached a copy of the Judgment of the BVI Commercial Court in respect of the disputes between Mr Chu and me in relation to OSL, PBM and BGA (then known as Beibu Gulf Ocean Shipping (Group) Limited) in Claim No. BVIHC (COM) 0065 of 2015 for your reference. Please also find attached an article dated 2 August 2017 published by TradeWinds concerning the Vessels. [2.8] Even after the handing down of the BVI Judgment, Mr Chu repeatedly represented and asserted to me and PBM that Lohas/PBHK were "independent 3rd party financiers". In fact, through my investigation, I have recently discovered that PBHL (also a BVI company) is in fact owned and controlled by Mr Chu and his family, through his nominee Mr Cheung Kai Fung. PBHL is a 5% shareholder of Lohas. I have written to Mr Chu, Mr Cheung Kai Fung, Mr Wong Ben Koon, as well as a number of other associates of Mr Chu (for example, Mr Chu's nominee directors on the board of BGA) regarding the above matters. None of them has sent me any reply to deny the matters I mentioned above. [2.9] Please note that I have issued In Rem Writs against the Vessels in Hong Kong and in Singapore in order to preserve my, OSL, PBM, and BGA's rights and interests. Copies of the In Rem Writs are attached. [2.10] In my view, in causing the transfer of ownership of the Vessels from Hope BBG and Glory BBG to VSIL and PSHL (which I have no doubt are companies owned and controlled by Mr Chu and his associates), Mr Chu and his associates have acted in breach of trust and of their fiduciary duties owed to PBM, BGA, TPL, SCL, Hope BBG and Glory BBG. VSIL, PSHL (as purported registered owners of the Vessels), New Shipping Ltd (as commercial manager of purported head owner of the Vessels), as well as their directors and officers, are also acting dishonestly in assisting Mr Chu and his associates in relation to their breaches of fiduciary duties as directors of PBM, BGA, TPL, SCL, Hope BBG and Glory BBG. I have no doubt that they are liable to account for all income earned in respect of the Vessels as trustees of BGA, TPL, SCL, Hope BBG and/or Glory BBG on the ground of dishonest assistance and/or knowing receipt. … Unlawful misappropriation of the Businesses and Assets of BGA by Mr Chu [2.11] I believe that the transfer of ownership of the Vessels (whether by TPL, SCL, Hope BBG, Glory BBG, Lohas, PBHL and/or by Mr Chu) to VSIL and PSHL and also the change of technical management and commercial management of the Vessels without PBM's consent is unlawful and amount to fraudulent conduct on the part of Mr Chu and his associates. [2.12] Further, the transfer of BBG Shipping and BBG Resources and with them, BGA's shipping and logistics businesses, procured by Mr Chu to his company for no or insufficient consideration paid to BGA is also unlawful. [2.13] I strongly believe that the conduct described above of Mr Chu and his associates, including Ausca Shipping Limited, amounts to a fraud upon BGA and PBM. I hereby urgently put you on notice of the above issues concerning the Vessels (including MV New Prestige). [2.14] The Vessels (i.e. MV New Prestige and MV New Honor) are assets of BGA and its group of companies (TPL, SCL, Hope BBG and Glory BBG) but they have been fraudulently misappropriated by Mr Chu with the assistance of his associates. In the circumstances, Mr Chu and his associates such as VSIL, PSHL, New Shipping Limited and Seacon have no legal right or entitlement to trade the Vessels or to retain any income earned from the Vessels. [2.15] For your information, Liquidators have been appointed by the BVI Court to OSL on 23 August 2017 and they are now in the course of investigating into the affairs of OSL, PBM and BGA. I have no doubt that legal actions will soon be commenced by them to trace and recover the assets owned by BGA which include the Vessels and also BBG Shipping and BBG Resources (and with them, the shipping and logistics businesses rightfully belonging to BGA).” 3. Words to Skuld: “ ... [3.1] (1) Mr. Lau is a 50% owner of Ocean Sino Limited (“OSL”), which in turn owns 100% of the issued shares in PBM Asset Management Limited (“PBM”). PBM is a 49% owner of BGA Holdings Limited (“BGA”) which wholly-owned The Palace Limited (“TPL”) and Shining Centre Limited (“SCL”). TPL and SCL in turn wholly owned Hope BBG Shipping Limited (“Hope BBG”) and Glory BBG Shipping Limited ("Glory BBG"). The registered owners of MV New Prestige (ex MV BBG Hope) and MV New Honor (ex MV BBG Glory) used to be Hope BBG and Glory BBG. The corporate chart showing the above is enclosed as Appendix A. The other 50% owner of OSL is Mr Chu Kong (“Mr Chu”). ... [3.2] (3) Due to irreconcilable differences between Mr Chu and Mr Lau and the fact that Mr Lau had completely lost trust and confidence in the integrity of Mr Chu as a business partner, Mr Lau applied to the BVI Commercial Court in 2015 to liquidate OSL. Mr Chu opposed Mr Lau's application, but after undergoing a full trial in May 2017, the BVI Commercial Court ruled in Mr Lau's favour and ordered OSL to be wound-up [sic] (see enclosed approved judgment dated 29 June 2017 - Appendix B) ... [3.3] (6) With only himself and his nominees on the board of BGA, Mr Chu began to take unlawful steps to strip BGA of all of its valuable assets, including by way of the purported “sale” of its operating subsidiaries, namely, Beibu Gulf Shipping Limited ("BBG Shipping") and Beibu Gulf Resources Limited to Ausca Group / Ausca Shipping Ltd in mid-2016 at artificially deflated prices (at par value of their issued capital only, even though BBG Shipping was running an extremely profitable chartering and logistics business in 2015) and without seeking the consent of or even notifying PBM (see paragraph 79 of the BVI Judgment). Mr Chu's dishonest conduct is consistent with the findings of the BVI Commercial Court (see paragraph 81C of the BVI Judgment). [3.4] (7) Ausca Group and Ausca Shipping were set up by Mr Chu and his associates for the purpose of taking over completely all the shipping and logistics businesses (as well as employees) of BGA originally carried out through BBG Shipping. Worse still, there is no evidence of any consideration having been paid by Ausca Group and Ausca Shipping for their “acquisition” of BBG Shipping and BBG Resources (and their businesses) from BGA (see paragraph 79 of the BVI Judgment). This caused significant losses and damage to BGA (and PBM as its 49% shareholder). [3.5] (8) It has recently been discovered that registered ownership of the Vessels has been purportedly transferred by Hope BBG to Victory Sail Investments Limited ("VSL") and by Glory BBG to Plain Sail Holdings Limited ("PSHL") in August 2017. Both VSIL and PSHL were represented by Mr Wong Ben Koon, who is a known close acquaintance of Mr Chu. The transfers were at an extremely low price of USD11 million per vessel when the market value at the time of transfer was about USD18-20 million. The names of the Vessels have also been changed to “New Prestige” and “New Honor”, and after their transfers to VSIL and PSHL, they began to be managed / traded by a newly Hong Kong incorporated company (with no track record in the shipping industry whatsoever) named New Shipping Limited. All of these changes took place surreptitiously and without any notice given to PBM / Mr Lau. The corporate charts showing the changes of the registered ownerships of the companies and the Vessels and enclosed as Appendix C. [3.6] (9) According to Mr Chu, the purported transfer of ownership of the Vessels was by way of purported enforcement action taken by a company named "Premier Bright Holdings Limited (“PBHL”) which allegedly provided loans to BGA, Hope BBG and Glory BBG. [3.7] (10) In fact, PBHL purportedly acquired security over the Vessels by way of, inter alia, the mortgaging / charging of purported “convertible bonds” issued to PBM, in purported settlement of the PBM Loans. Mr Lau has also been told by BGA in no uncertain terms that BGA / Hope BBG / Glory BBG intentionally defaulted on the purported loan from PBHL, so as to enable PBHL / Lohas to take enforcement action against the Vessels. This, as you will appreciate, is against all common sense and commercial sense and it is apparent that fraudulent conduct was involved. To date, despite Mr Lau's position as one of the two directors of PBM, Mr Lau has not even seen any documentation in respect of the “convertible bonds” purportedly issued to PBM. [3.8] (11) It is obvious that the above purported change/transfer of the registered ownerships of the Vessels was engineered by Mr Chu and was resulting from the delivery of the Judgment of the BVI Commercial Court in late June 2017 in respect of the disputes between Mr Chu and Mr Lau in relation to OSL, PBM and BGA (previously known as Beibu Gulf Ocean Shipping (Group) Limited). [3.9] (12) Even after the handing down of the BVI Judgment, Mr Chu repeatedly represented and asserted to Mr Lau and PBM that PBHL was “independent 3rd party financiers”. In fact, through investigations, it has been discovered that PBHL (also a BVI company) is in fact owned and controlled by Mr Chu and his family, through his wife and a Mr Cheung Kai Fung, who acted as sole director of a number of Mr Chu's private companies. Mr Cheung Kai Fung in fact is a relative of Chu's wife and also used to be an employee of a furniture store invested by Mr Chu's family. [3.10] (13) Mr Lau has written repeatedly to Mr Chu, Mr Cheung Kai Fung, Mr Wong Ben Koon, New Shipping, as well as a number of other associates of Mr Chu (for example, Mr Chu's nominee directors on the board of BGA) regarding the above matters. None of them sent any reply to deny the matters mentioned above. [3.11] (14) The Vessels are assets of BGA and its group of companies (TPL, SCL, Hope BBG and Glory BBG) in which Mr Lau (through OSL and PBM) has a beneficial interest. It is Mr Lau's firm belief that these assets have been fraudulently misappropriated by Mr Chu with the assistance of his associates. In the circumstances, Mr Chu and his associates such as VSIL, PSHL, and New Shipping have no legal right or entitlement to enter into any agreement for the Vessels, to trade the Vessels, or to retain any benefit or income earned from the Vessels. Mr Lau's rights in this regard are expressly reserved and you are put on notice of the same. Mr Lau has reported the conduct of Mr Chu and his associates to the relevant Hong Kong Government authorities for further criminal investigations. [3.12] (14) Further investigations have also revealed that New Shipping was only incorporated in August 2017 and this company had no experience in the dry bulk market: it never owned, chartered, operated or managed any vessels. However, despite the lack of shipping experience and background or any claim record, New Shipping managed to arrange P&I coverage with your Hong Kong office via Marsh Hong Kong as brokers for these two Vessels. You would agree that these arrangements are most unusual and suspicious. [3.13] (15) Mr Lau has informed Skuld Hong Kong of the above suspicious circumstances but they did not appear to be concerned about dealing with suspicious vessels and managers/owners. Copies of previous correspondence (without attachments) between Ms Sun Min (sent on behalf of Mr Lau) and your Hong Kong office are enclosed as Appendix D. As an attempt to preserve his beneficial rights and interests in the Vessels, Mr Lau has arranged to issue In Rem Writs against the Vessels in Hong Kong and in Singapore. Copies of the In Rem Writs are enclosed - Appendix E. [3.14] (16) Further, an Injunction Order in relation to the current purported ship registrations in Panama have also been obtained and a copy of these Injunction Order with English translation is enclosed as Appendix F. [3.15] (17) We also enclose an article dated 29 September 2017 published by TradeWinds concerning the disputes between Mr Chu and Mr Lau and also the purported "sale" of the Vessels - Appendix G. [3.16] It is clear from the above that a fraud has been perpetrated on BGA, PBM and OSL and that the purported transfers of the Vessels to VSIL and PSHL amounted to an illegal misappropriation of the assets of the BGA group and possible laundering of money and assets (i.e. the Vessels) derived from criminal offences. Mr Lau, as one of the ultimate beneficiaries and hence a victim of these activities, finds it extremely unusual for an International P&I Club to agree to underwrite the Vessels despite having full knowledge of the above circumstances. By providing P&I coverage to the Vessels, Skuld P&I is effectively assisting Mr Chu and his associates in their misappropriation of assets belonging to the BGA Group. [3.17] It is our understanding that Ausca Shipping (see point 7 above) also managed to enter liability coverage with Skuld Hong Kong through Marsh Hong Kong in mid-2017. We query whether Skuld Hong Kong deliberately turned a blind eye to the clear issues concerning the Vessels, Mr Chu and his companies because of their connections with Mr Chu or the premiums generated from Ausca Shipping. [3.18] We urge that you look into this matter with your Hong Kong office seriously and reconsider your coverage or renewal of the Vessels and New Shipping. We hereby reserve our client's right to take actions against parties who have participated or assisted in any fraudulent conducts/schemes causing loss to our client including any insurer in full knowledge of the circumstances continuing to provide insurance coverage to enable Mr Chu to unlawfully profit from the trading of these vessels." 4. Words to ADM: “... [4.1] (1) I am a 50% owner of Ocean Sino Limited (“OSL”), which in turn owns 100% of the issued shares in PBM Asset Management Limited (“PBM”). PBM is a 49% owner of BGA Holdings Limited (“BGA”) which wholly-owned The Palace Limited (“TPL”) and Shining Centre Limited (“SCL”). TPL and SCL in turn wholly owned Hope BBG Shipping Limited (“Hope BBG”) and Glory BBG Shipping Limited (“Glory BBG”). The registered owners of MV New Prestige (ex MV BBG Hope) and MV New Honor (ex MV BBG Glory) used to be Hope BBG and Glory BBG. The corporate chart showing the above is enclosed as Appendix A. The other 50% owner of OSL is Mr Chu Kong (“Mr Chu”). ... [4.2] (3) Due to irreconcilable differences between Mr Chu and I, I had completely lost trust and confidence in the integrity of Mr Chu as a business partner, and I applied to the BVI Commercial Court in 2015 to liquidate OSL. Mr Chu opposed my application, but after undergoing a full trial in May 2017, the BVI Commercial Court ruled in my favour and ordered OSL to be wound-up [sic] (see enclosed approved judgment dated 29 June 2017- Appendix B) ... [4.3] (6) With only himself and his nominees on the board of BGA, Mr Chu began to take unlawful steps to strip BGA of all of its valuable assets, including by way of the purported “sale” of its operating subsidiaries, namely, Beibu Gulf Shipping Limited (“BBG Shipping”) and Beibu Gulf Resources Limited to Ausca Group / Ausca Shipping Ltd in mid-2016 at artificially deflated prices (at par value of their issued capital only, even though BBG Shipping was running an extremely profitable chartering and logistics business in 2015) and without seeking the consent of or even notifying PBM (see paragraph 79 of the BVI Judgment). Mr Chu's dishonest conduct is consistent with the findings of the BVI Commercial Court (see paragraph 81C of the BVI Judgment). [4.4] (7) Ausca Group and Ausca Shipping were set up by Mr Chu and his associates for the purpose of taking over completely all the shipping and logistics businesses (as well as employees) of BGA originally carried out through BBG Shipping. Worse still, there is no evidence of any consideration having been paid by Ausca Group and Ausca Shipping for their “acquisition” of BBG Shipping and BBG Resources (and their businesses) from BGA (see paragraph 79 of the BVI Judgment). This caused significant losses and damage to BGA (and PBM as its 49% shareholder). [4.5] (8) It has recently been discovered that registered ownership of the Vessels has been purportedly transferred by Hope BBG to Victory Sail Investments Limited (“VSIL”) and by Glory BBG to Plain Sail Holdings Limited (“PSHL”) in August 2017. Both VSIL and PSHL were represented by Mr Wong Ben Koon, who is a known close acquaintance of Mr Chu. The transfers were at an extremely low price of USD11 million per vessel when the market value at the time of transfer was about USD18-20 million. The names of the Vessels have also been changed to “New Prestige” and “New Honor”, and after their transfers to VSIL and PSHL, they began to be managed / traded by a newly Hong Kong incorporated company (with no track record in the shipping industry whatsoever) named New Shipping Limited. All of these changes took place surreptitiously and without any notice given to PBM/ me. The corporate charts showing the changes of the registered ownerships of the companies and the Vessels and enclosed as Appendix C. [4.6] (9) According to Mr Chu, the purported transfer of ownership of the Vessels was by way of purported enforcement action taken by a company named “Premier Bright Holdings Limited” (“PBHL”) which allegedly provided loans to BGA, Hope BBG and Glory BBG. [4.7] (10) In fact, PBHL purportedly acquired security over the Vessels by way of, inter alia, the mortgaging / charging of purported “convertible bonds” issued to PBM, in purported settlement of the PBM Loans. I have also been told by BGA in no uncertain terms that BGA / Hope BBG / Glory BBG intentionally defaulted on the purported loan from PBHL, so as to enable PBHL / Lohas to take enforcement action against the Vessels. This, as you will appreciate, is against all common sense and commercial sense and it is apparent that fraudulent conduct was involved. To date, despite my position as one of the two directors of PBM, I have not even seen any documentation in respect of the “convertible bonds” purportedly issued to PBM. [4.8] (11) It is obvious that the above purported change/transfer of the registered ownerships of the Vessels was engineered by Mr Chu and was resulting from the delivery of the Judgment of the BVI Commercial Court in late June 2017 in respect of the disputes between Mr Chu and I in relation to OSL, PBM and BGA (previously known as Beibu Gulf Ocean Shipping (Group) Limited). [4.9] (12) Even after the handing down of the BVI Judgment, Mr Chu repeatedly represented and asserted to Mr Lau and PBM that PBHL was “independent 3rd party financiers”. In fact, through investigations, it has been discovered that PBHL (also a BVI company) is in fact owned and controlled by Mr Chu and his family, through his wife and a Mr Cheung Kai Fung, who acted as sole director of a number of Mr Chu’s private companies. Mr Cheung Kai Fung in fact is a relative of Chu's wife and also used to be an employee of a furniture store invested by Mr Chu's family. [4.10] (13) I have written repeatedly to Mr Chu, Mr Cheung Kai Fung, Mr Wong Ben Koon, New Shipping, as well as a number of other associates of Mr Chu (for example, Mr Chu's nominee directors on the board of BGA) regarding the above matters. None of them sent any reply to deny the matters mentioned above. [4.11] (14) The Vessels are assets of BGA and its group of companies (TPL, SCL, Hope BBG and Glory BBG) in which OSL and PBM have a beneficial interest. It is my firm belief that these assets have been fraudulently misappropriated by Mr Chu with the assistance of his associates. In the circumstances, Mr Chu and his associates such as VSIL, PSHL, and New Shipping have no legal right or entitlement to enter into any agreement for the Vessels, to trade the Vessels, or to retain any benefit or income earned from the Vessels. The rights of PBM, OSL and me in this regard are expressly reserved and you are put on notice of the same. [4.12] (15) As an attempt to preserve beneficial rights and interests in the Vessels, I have arranged to issue In Rem Writs against the Vessels in Hong Kong and in Singapore. Copies of the In Rem Writs are enclosed - Appendix D. [4.13] (16) Further, an Injunction Order in relation to the current purported ship registrations in Panama have also been obtained and a copy of these Injunction Order with English translation is enclosed as Appendix E. [4.14] (17) We also enclose an article dated 29 September 2017 published by TradeWinds concerning the disputes between Mr Chu and me and also the purported “sale” of the Vessels - Appendix F. [4.15] It is clear from the above that a fraud has been perpetrated on BGA, PBM and OSL and that the purported transfers of the Vessels to VSIL and PSHL amounted to an illegal misappropriation of the assets of the BGA group and possible laundering of money and assets (i.e. the Vessels) derived from criminal offences. [4.16] I urge that you look into this matter seriously. I hereby reserve all the rights of OSL, PBM and myself to take actions against parties who have participated or assisted in any fraudulent conducts/schemes causing loss to us.” 5. Words to Skuld HK [5.1] “就早前亚太海运刘先生与贵会沟通贵会会员 New Shipping Limited 两艘干散货船一事。 [5.2] 1. 在上周五早上有三名人员声称受贵会会员 NEW SHIPPING LIMITED 负责人 SHUM CHUN, LAWRENCE的指派,来到亚太海运的办公室对我司人员进行滋扰。想必贵会应已经知晓此事。 更加让亚太海运震惊的是, 这些人在2017年10月1日晚八点左右打恐吓电话到亚太主席刘永人先生手机,声称知道刘先生住址, 威吓刘先生人身安全。 亚太海运已经就被滋扰一事报警,刘先生也会采取相应法律行动保护其自身合法权益和利益。 [5.3] 2. 刘先生和亚太在航运界活跃经营了十多年, 第一次遭受这种肆无忌惮的骚扰和威胁恐吓。 刘先生和亚太海运不会接受这种公司在航运界扰乱秩序,甚至做出非法行为。 一定会竭尽所能为航运界除害。 [5.4] 3. 根据我们所知, SKULD作为有悠久历史国际知名的保陪协会, 对客户审核有着颇为严谨的流程。 我们相信SKULD的在接受会员前会对会员的情况及背景进行详细的了解和调查。 因此,我司希望贵会可以同贵会会员及其背后的实际控制方加强沟通, 核实了解事件的经过, 并提醒他们作为一个航运企业和国际航运从人员应有的行事标准, 道德底线和守法意识。 [5.5] 4. 如果 NEW SHIPPING LIMITED是无辜第三方, 受人误导卷入有关船舶的经营管理, 其理应如同刘永人先生一样同为商业欺诈的受害人。 但其背后的实际控制人为了达到其不可告人的目的而滋扰亚太海运普通员工并恐吓威胁亚太海运某些股东个身安全, 这等行为不但不合逻辑, 下三滥, 而且也触犯了香港的法律。 香港是法治社会, 亚太海运将采取一切法律手段保护员工安全和权益。 亚太海运也将追究一些相关公司和人员法律责任, 决不寬贷姑息。 在此保留一切权利。 … [5.6] Further to the previous communications between Mr Lau Wing Yan and yourselves about your member New Shipping Limited and the two drybulk vessels entered with your club, we would like to bring your attention to the following matters: [5.7] 1. In the morning of 29th September 2017, three unidentified men alleging as representatives of Mr Shun Chun Lawrence, sole director of “New Shipping Limited” attended the offices of Pacific Bulk and harassed the staff then working in the offices. They spoke in a loud and threatening tone and disrupted the normal operations of Pacific Bulk's business. We trust your good club should have heard of this incident by now. What is more shocking is that at about 2000 Hrs on 1st October 2017, Mr Lau received a telephone call from an unknown person who said that he knew Mr Lau’s home address and threatened that Mr Lau would be in danger. Pacific Bulk had reported these incidents to the Police. Mr Lau will take further legal actions to safeguard his rights and legitimate interests. [5.8] 2. Pacific Bulk have been active in the drybulk transportation business for almost 20 years. This was the first time we received such outrageous harassments and threats. Pacific Bulk will not put up with this kind of "shipping company" from disturbing the normal commercial operations of the drybulk shipping circle in such a low-handed manner and we will do whatever necessary and appropriate to stop such kind of unlawful behavior. [5.9] 3. We believe that Skuld, being one of the IGA P&I Clubs and with good reputation and long history in the market, would have conducted thorough due diligence before offering P&I cover for this “New Shipping Limited”. We urge that Skuld communicate with your member and the true beneficial owners of the vessels so as to remind this company and their employees of the basic standard of commercial ethics of operating a shipping company in the international marine transportation market. A decent company in international marine transportation should conduct their business in a more responsible way and practice fairness, honesty and integrity in every aspect. [5.10] 4. We would also comment that if, for argument sake, New Shipping Ltd is indeed an innocent third party but somehow is unfortunately involved in operating the two vessels, they would be victims of a commercial fraud. They should have been in the similar position as Mr Lau is in. If that is the case, they would not have resort to harass or threatened safety of Pacific Bulk personnel. These conducts are not only illogical but also low-handed and illegal. Pacific Bulk will certainly not tolerate such kind of behavior and will not keep silent about it. Please rest assured that Pacific Bulk will take all legal means to protect the peace of mind, wellbeing and safety of our employees and will take all and any legal actions against all the responsible individuals and companies. All Pacific Bulk's rights are fully reserved.” [1] D’s Opening Submissions, §3(a) & (b); D’s Closing Submissions, §2(b) [2] D’s Re-Amended Defence, §35(3) reads,
[3] Mr Christopher Chain SC, leading Ms Tiffany Chan and Ms Regina Yip [4] According to New Shipping, Oldendorff is its sub-charterer, as evidenced by a time charter party dated 29 August 2017 entered between them with respect to the MV New Prestige. (A time charter is a maritime lease agreement where a shipowner rents out a vessel to a charterer for a specific period of time (e.g., 6 months, 5 years, etc.). The shipowner provides the physical ship along with a fully operational crew, but the charterer assumes operational control over where the vessel sails and what cargo it carries. A time charter party is the actual written legal contract that binds a shipowner and a charterer to a time charter agreement.) [5] According to New Shipping, Marubeni or its associated company is the voyage charterer of Oldendorff. (A voyage charter is a maritime contract where a shipowner rents out a vessel – or its total cargo space – for a single specific journey or a series of connected journeys. Unlike a time charter, the shipowner retains full operational, technical, and commercial control of the ship. The owner is paid to move a specific cargo from Point A to Point B. The voyage charterer is often a cargo owner or trader who hires the ship for that single voyage.) [6] Skuld is the International P&I (Protection and Indemnity) Club, i.e. insurer, for the Vessels. [7] ADMIntermare, a division of ADM International Sarl, is a sub-charterer of New Shipping. ADMIntermare and New Shipping entered into a Time Charter Trip dated 22 February 2018 with respect to the MV New Honour, as evidenced by an email of the same date. (A time charter trip is a hybrid shipping arrangement that combines the commercial structure of a time charter with the specific route of a voyage charter. In a time charter trip, a charterer rents a vessel on a time basis, paying a daily hire rate and buying the fuel, but only for the duration of a single, specific voyage.) [8] See §17 of P’s Opening Submissions, §132 of D’s Closing Submissions [9] See §25, P’s Opening Submissions, §132 of D’s Closing Submissions [10] See §26, P’s Opening Submissions, §132 of D’s Closing Submissions [11] See §38, P’s Opening Submissions, §132 of D’s Closing Submissions [12] As set out in §9.1, P’s Amended Statement of Claim [13] As set out in §15.1, P’s Amended Statement of Claim [14] As set out in §21.2, P’s Amended Statement of Claim [15] As set out in §31.2, P’s Amended Statement of Claim [16] As set out in §46(1)(i), D’s Re-Amended Defence [17] As set out in §46(1)(i), D’s Re-Amended Defence [18] As set out in §46(1)(ii), D’s Re-Amended Defence [19] As set out in §53(1)(i) & (ii), D’s Re-Amended Defence [20] As set out in §60(1)(i), D’s Re-Amended Defence [21] As set out in §60(1)(ii), D’s Re-Amended Defence [22] As set out in §72(1)(i) & (ii), D’s Re-Amended Defence [23] As set out in §65, D’s Re-Amended Defence [24] Ms Queenie Lau SC, leading Ms Rachelle Lam [25] Mr Chain for the Defendant have made clear in his oral opening that the Defendant is not running fair comment. [26] P’s Opening Submissions, §53.1 [27] D’s Closing Submissions, §134(b) [28] P’s Opening Submissions, §31. [29] Annexure, Section 5 [30] P’s Opening Submissions, §§38 & 39; D’s Closing Submissions, §132 [31] There is no information on the shareholders and directors of Pacific Bulk Enterprises Co. Ltd. – unlike Pacific Bulk Shipping (Cayman) Limited and Pacific Bulk Shipping Limited of which the Defendant says it was owned by Mr Chu and himself as equal shareholders (Defence §31). But there is no dispute that the offices of Pacific Bulk referred to in [5.2] and [5.7] are D’s offices. [32] D’s Closing Submissions, §§50-54 [33] D’s Closing Submissions, §55 [34] Transcript, Day 1, page 85, 14-18 [35] following Hollington v F. Hewthorn & Co. Ltd [1943] KB 587 [36] D’s Closing Submissions, §§56-57 [37] Joint Expert Report of Sale Experts by Mr Birley and Mr Marsh, §(II)(A)(3), the third bullet point [38] See: Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd, HCA 1957/2005, 714/2007, 886/2007, 1364/2008, 28 July 2011, §16 per Poon J (as the Chief Judge of the High Court then was). [39] D’s Closing Submissions, §26 [40] ditto [41] D’s Closing Submissions, Footnote 19 | |||||||||||||||||||||||
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Cheung Wai Yee v. Poon Pik Yuk
Tam Heung Man v. The Incorporated Owners of Lung Poon Court (Blocks A-f)
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Chen Yue Jia James, Executor of the Estate of Wong Shou Chen Alias Wong Sau Chun v. Chen Maria (also known as Maria Chen Fang and Maria Fang)
Breton Jean v. HK Bellawings.Jet Ltd and Others
Yip Wai Tak Vivian v. Lee Ka Wo Esmond and Another
Yu Sau Ning Homer v. Wong Wan Keung and Others
Chan Ching Wah v. Chan Yeung Sun
Ng Yui Tong v. Chan Chi Keung
Ng Woon King v. Cheng Kam Wah and Another
Bank of Huludao Co Ltd v. Zhongying Int’l Holding Group Ltd
港基物業管理有限公司 對 杜焯耀及另十四人
Bank of Huludao Co., Ltd v. Zhongying Int'L Holding Group Ltd
Independent Commentators Association Ltd v. Joint Publishing (HK) Co Ltd and Another
Leung Chi Ching Candy v. Yeung Hon Sing
The Incorporated Owners of on Ning Garden v. Wong Mo Chi
Further hearings and rulings under HCA 1280/2018