Yingjia International Properties Ltd v. State Hero Holdings Ltd

HCCW 627/2026, HCMP 334/2026

[2026] HKCFI 5970

HCCW 627/2026

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) PROCEEDINGS NO 627 OF 2026

___________________

___________________

AND

HCMP 334/2026

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 334 OF 2026

___________________

___________________

___________________

________________________________

REASONS FOR DECISION

________________________________

1.By Judgment handed down on 7 August 2026[1], this Court dismissed the OS issued by the Plaintiff in HCMP 334/2026 with costs on an indemnity basis.  As a winding-up petition has already been presented by the Defendant against the Plaintiff, in this Reasons for Decision, I shall refer the Plaintiff and the Defendant as “the Company” and “the Petitioner” respectively.

2.At the hearing, I dismissed the 3 summonses issued by the Company with costs reserved. I considered that this is a case where the costs of the summonses should not be borne by the Company, but should be borne by the director, funder or solicitors for the Company.  These are the reasons for my decision. 

3.The first 2 summonses were issued by the Company on 28 September 2026 seeking leave to appeal against the orders made by this Court on 15 September 2026 (1) dismissing the Company’s summons for “stay of execution” against the Judgment[2] in HCMP 334/2026 (“Stay Summons”); and (2) appointing provisional liquidators over the Company in HCCW 627/2026 (“PL Order”).  By a further summons issued on 6 October 2026, the Company seeks leave to amend the summons filed in HCCW 627/2026 to include an application for stay of execution alternatively, to vary the terms of the PL Order.  

Procedural Background

4.In the Judgment, this Court dismissed the OS and the application made by the Company[3] for an interim injunction for a short period pending its application for a further interim injunction.[4]  In the OS, the only substantive relief sought was an injunction to restrain the Petitioner from presenting a winding-up petition against the Company pursuant to the SD which required the Company to pay the Debt (HK$5,971,808.22). 

5.On 12 August 2026:

(1)  The Petitioner presented a winding-up petition against the Company in HCCW 627/2026 (“Petition”), which was scheduled to be heard before a Master on 28 October 2026.

(2)  The Company issued the Stay Summons seeking (a) “stay of execution” of the Judgment “including the dismissal of the [OS] and the costs order against the [Company] pending the hearing and final determination of the appeal”; and (b) an “interim injunction/stay be granted restraining the [Petitioner] … from presenting or filing a winding-up petition against the [Company] based on the [SD].  The Stay Summons was listed before this Court on 9 October 2026 with 15 minutes reserved.  At the time the Stay Summons was filed, the Company had already been represented by a new firm of solicitors, Messrs. Anjie Broad Law Firm LLP (“ABL”)[5].

6.Although the Stay Summons referred to an “appeal”, in fact, no appeal was brought until 4 September 2026 when the Company served a 19-page Notice of Appeal (“NOA”) on the Petitioner’s solicitors seeking to set aside the dismissal of the OS and challenge every holding in the Judgment.  The NOA was filed by ABL.

7.On 8 September 2026, the Petitioner issued a summons for appointment of provisional liquidators (“PLs”) over the Company which was returnable before this Court on 15 September 2026.

Hearing on 15 September 2026

8.The Company was represented by ABL and Ms Shannon Leung while the Petitioner was represented by Mr John Scott SC (leading Mr Kevin Lau).  The Official Receiver was represented by Ms Christy Yiu.  After considering the parties’ written and oral submissions, this Court made the PL Order and gave ex tempore reasons for my decision as follows:  

“Now, having considered the submissions made by counsel … for the Petitioner and counsel for the Company, I am satisfied that this is a case where the court should make an order appointing professional liquidators to take over the control and management of the company. I agree with the submission made by Mr Scott on behalf of the Petitioner that the present state of affairs is something which cries out … for immediate intervention with a view to preserve and recover the assets of the Company.

And the need for the appointment is heightened and reinforced by the fact that in the audited financial statement belatedly disclosed by the Company, it shows that the Company is grossly insolvent and that it has no operating business or revenue for -- at least two years from 2023 to 2024.

And the other worrying aspect, again disclosed by the audited financial statement of the Company, is that the director caused a substantial amount of receivable in the sum of over [US$]600 million to be written off from the books without any explanation, and worst of all, without disclosing this particular fact to the court when the court was asked to consider the Company’s application for an injunction to restrain the Petitioner from presenting a petition against the Company.

I also agree with Mr Scott that the management of the Company is in a complete chaos in that none of the director or past directors have come forth to give any evidence regarding the affairs of the Company. Instead, in opposing the application -- in trying to get an injunction against the Petitioner to present a petition and also in opposing the present application for appointment of provisional liquidators, all the affirmations are made by one Mr Zhao Fei who is said to be a consultant of the Company. He is neither a director nor someone who has any actual interest in the Company. There is no explanation whatsoever as to why none of the directors, shareholder or the beneficial owner of the Company has come forth to give any evidence on the matters concerning the Company.

I do not accept Mr Zhao’s bare assertion that the appointment of provisional liquidator would serve no legitimate purpose. One of the obvious purposes of the appointment is for the provisional liquidators to take control of the books and records of the Company, to investigate its affairs and, more importantly, to take whatever step that is necessary for the purpose of recovering the receivable which the director saw fit to write off from the books and records.

And I also do not accept Mr Zhao’s assertion that placing the Company under provisional liquidators’ control would cause irreparable damage to the Company or damage to the Company’s commercial relationship and ongoing business operation for the simple reason that the Company has not carried on any business, as confirmed by its own audited financial statements.

Further, despite being asked by the court as to what ground in opposition the Company is going to raise to the petition, counsel for the Company has not been able to articulate any ground in opposition other than saying that the judgment of this court is under appeal and there is also a further application taken out by the Company seeking a stay of execution of the judgment pending appeal.  As I observed during the course of the hearing, that summons is misconceived. As far as this court is concerned, I have already dealt with an application for stay of execution of the effect of the judgment, and I also gave reason for refusing to grant “a stay” in the judgment.

For those reasons, I make an order in terms of the draft order submitted by the Petitioner with the amendments made by the Official Receiver, and the amendments indicated in the course of the hearing.”

9.During the hearing, it came to this Court’s attention that the Company had issued the Stay Summons which was scheduled to be heard on 9 October 2026 at 9:30am.  This Court indicated to the parties that the Stay Summons was misconceived and should be dismissed for the following reasons:

(1)  The only substantive order made by this Court on 7 August 2026 was the dismissal of the OS.  The Company could not seek a “stay of execution” of the dismissal of the OS.  Nor could the Company seek a “stay of execution” of the Judgment.

(2)  The Company could not apply for “an interim injunction/stay” restraining the Petitioner from presenting a winding-up petition based on the SD as such application had already been considered and dismissed by this Court for the reasons stated in the Judgment.

(3)  In any event, the interim injunction to enjoin the Petitioner from presenting a winding-up petition in reliance on the SD had become academic as the Petition had already been presented on 12 August 2026. 

(4)  If and to the extent that the Company wished to seek a stay, it should make the application to the Court of Appeal following the dismissal of the Stay Summons.  It would be a waste of time and costs for the parties to have to deal with the Stay Summons at a further hearing on 9 October 2026.

10.When asked by this Court as to why the Stay Summons should not be dismissed, Ms Leung was unable to articulate any reason other than asking the court to “hold off” and not to vacate the hearing.  The response was unhelpful.  It was the duty of the parties and their legal representatives to assist the court to further the underlying objectives[6] of the Rules[7].  It would be a waste of costs and time to require the parties to attend a further hearing to argue on the Stay Summons which was wholly without merit.  For these reasons, I dismissed the Stay Summons with costs against the Company and vacated the hearing on 9 October 2026.  

11.I turn to the reasons for dismissing the 3 summonses.

Leave to appeal against the Stay Summons

12.Leave to appeal will only be granted if the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard (SMSE v KL [2009] 4 HKLRD 125 §17). 

13.In her skeleton, Ms Queenie Lau SC (leading Ms Shannon Leung and Mr Francis Lo) argues that the Company has “good, arguable and bona fide grounds of appeal” against the dismissal of the OS, “such that the threshold for the grant of leave to appeal the dismissal of the Stay Summons is met”.  The argument conflates an appeal against the dismissal of the OS (for which leave is not required) with an appeal against the dismissal of the Stay Summons.  Ms Lau has not advanced any argument to show that the intended appeal against the dismissal of the Stay Summons has any prospect of success.  Indeed, when asked by this Court as to what order the Company is seeking to stay, Ms Lau is unable to identify any.  For this reason alone, the summons must be dismissed. 

14.Ms Lau advances 2 further arguments.  Neither has any merit. 

15.First, she submits that the dismissal of the Stay Summons “does not conform with the settled principle of audi alteram partem” as the Company was not afforded an opportunity to be heard on the Stay Summons, citing B. Surinder Singh Kanda v Government of the Federation of Malaya [1962] AC 322, 337; Hysan Development Co Ltd v Town Planning Board CACV 232/2012, [2014] HKEC 1869 §174.  The argument is wholly without merit.  At the hearing, opportunity was given to Ms Leung to advance submission as to why the Stay Summons should not be dismissed.  None was advanced.  I am unable to see how inability of counsel to advance any argument in support of the Stay Summons can be turned into a contention that the Company was not afforded an opportunity to be heard. 

16.Second, Ms Lau argues that “the dismissal of the Stay Summons has led to the Company suffering prejudice in the form of immediate and irreversible operational prejudice”.  The argument is fallacious.  It was not open to the Company to seek a stay of the dismissal of the OS.  In any event, as pointed out by Mr Scott, according to the audited financial statement for the year ended 31 December 2024 (“2024 AFS”) adduced by the Company, since at least January 2023, the Company has not had any operating business or revenue[8].  There is simply no operation which would be prejudiced even if, contrary to my view, there is any basis for the Company to seek a stay of the dismissal of the OS. 

Leave to appeal against the PL Order

17.In the summons for leave to appeal against the PL Order, 5 grounds of appeal are identified:

(1)  The legal threshold for appointing PLs has not been met as there was “no affirmative evidence of actual dissipation, fraud, or imminent danger/jeopardy to the [Company’s] assets” (Ground 1). 

(2)  This Court erred in holding that the Company was in a state of “total chaos” and “lack of transparency” when Zhao had made affirmation on behalf of the Company (Ground 2). 

(3)  The holding that the Company was insolvent was “based upon an erroneous understanding” of the Company’s 2024 AFS (Ground 3).

(4)  The holding that “there are few and/or no assets of [the Company] which would be put in jeopardy” is wrong in law and/or in fact (Ground 4).

(5)  The PL Order erred in “failing to limit the Provisional Liquidators’ mandate strictly to identifying, locating, and preserving assets pending the winding-up petition hearing” (Ground 5). 

18.In her skeleton, Ms Lau contends that this Court made the PL Order “on the basis of the findings that the Company was in a state of ‘chaos’ or had been insufficiently transparent regarding its affairs, those errors that meet the threshold for the grant of leave to appeal”.  The contention is plainly wrong as those were not the only reasons given by this Court for granting the PL Order.  See §8 above. 

19.It is surprising to see that ABL and Ms Leung, who were present at the hearing on 15 September 2026, saw fit to assert that this Court granted the PL Order on the basis of the alleged “findings”.  It was the responsibility of ABL and Ms Leung to take notes of the hearing including the ex tempore reasons given by the court.  Even if ABL and Ms Leung did not take any notes (which I do not accept), they must had some recollection of the reasons given at the hearing as they came up with Grounds 1-5.  It is regrettable that ABL and Ms Leung chose to misrepresent the reasons given by this Court and failed to inform Ms Lau of the same before the Company’s skeleton was lodged on 6 October 2026.

20.It is even more regrettable that after reading the notes taken by the Petitioner’s solicitors on the ex tempore ruling given at the hearing,[9] neither ABL nor counsel took any step to correct their submissions, whether before or at the hearing.  Worse still, upon this Court’s enquiry, Ms Lau informs the court that ABL had in fact applied for transcripts of the hearing on 15 September 2026 and was informed by my clerk that the transcripts were available for collection on 5 October 2026.  For reason not explained, ABL did not collect the transcripts until 8 October 2026 and a copy was provided to Ms Lau on 8 October 2026.  Ms Lau says that she only read the transcripts in the evening on 8 October 2026.  Having read the transcripts, it would have been clear to Ms Lau that the actual reasons for granting the PL Order were not those alleged in her skeleton.  No attempt has been made to correct her submissions either. 

21.In case this matter goes further, I shall briefly explain why none of the Grounds raised by the Company has any merit, let alone any reasonable prospect of success.  

22.Ground 1: Contrary to the Company’s allegation, evidence on dissipation of, or jeopardy to, the Company’s assets had been shown.  According to the 2024 AFS belatedly produced by the Company in the affirmation filed in opposition to the summons for appointment of PLs, the entire receivable in the amount of US$639,737,963 had been written off as “bad debt” during the year ended 31 December 2024[10] without any reason.  This was one of the worrying aspects taken into account by the court in granting the PL Order. 

23.Ground 2: These were not the only reasons given by the court.  Instead, this Court agreed with Mr Scott’s submissions that the present state of affairs of the Company cries out for immediate intervention with a view to preserving and recovering assets of the Company.  The need for appointment was heightened and reinforced by the fact that in the 2024 AFS belatedly disclosed, the Company was grossly insolvent and had no operating business or revenue for at least 2 years from 2023 to 2024.  This Court also agreed with Mr Scott’s submission that the Company was in a state of chaos as none of the directors had come forward to give evidence regarding the affairs of the Company; the affirmation in opposition to the application continued to be made by Zhao, who is said to be a consultant to the Company.  Contrary to the Company’s assertion that the appointment served no legitimate purpose, one of the purposes of the appointment was for the PLs to take control over the books and records of the Company, to investigate its affairs, and to take whatever step necessary for the purpose of recovering the receivable which the director saw fit to write off. 

24.Ground 3: The Company was plainly insolvent.  According to the 2024 AFS, it had net deficit of US$642,996,212.  The so-called “erroneous misunderstanding” is nothing more than an assertion created by ABL for the purpose of the intended appeal. 

25.Ground 4: The Company’s assets were in jeopardy and required protection for the same reasons stated in §§22-23 above.

26.Ground 5: The terms of the PL Order are conventional terms granted by the court, taking into account the comments made by the Official Receiver.  No authority has been cited by counsel as to why the terms of the PL Order should be limited in the way they suggested, whether at the hearing on 15 September 2026 or at the hearing for leave to appeal. 

Leave to amend

27.The summons was filed on 6 October 2026 to amend the summons filed by the Company in HCCW 627/2026 by adding (1) an application for stay of “execution and operation” of the PL Order pending final determination of the Company’s intended appeal against the PL Order; and (2) alternatively, the powers of the PLs “shall not extend to commencing, taking over, controlling or otherwise conducting any legal proceedings” on behalf of the Company including the Company’s appeal in CACV 958/2026 and HCMP 334/2026.

28.As regards stay of the PL Order, it is most unusual for the court to grant a stay of an order appointing provisional liquidators over the company pending determination of the appeal, as the court must have been satisfied (as this Court did) that the Petitioner had made out a prima facie case for a winding-up order and in the circumstances of the case, it would be right to appoint provisional liquidators (Re Union Accident Insurance Co Ltd [1972] 1 All ER 1105 at 1110b-c).  No attempt has been made by Ms Lau to show that this is an exceptional case where the court should grant a stay of the PL Order. 

29.As for the application to limit the powers of the PLs, it is based on a misconception that the effect of the PL Order would take away the power of the board to cause the Company to pursue an appeal against the dismissal of the OS.  It is well settled that despite the appointment of the PLs, the board has residual powers and can instruct solicitors and counsel to oppose the winding-up petition and, if a winding-up order is made, to appeal against that order (Re Union Accident, 1113d-e).  Upon being told by this Court of the legal position, Ms Lau does not pursue this part of the application. 

Costs

30.Mr Scott submits that the costs of and occasioned by the 3 summonses should not be paid out of the assets of the Company but should be paid by the director and/or the funder, as the creditors should not be required to bear the costs of the summonses which are wholly devoid of merit.  Such order was granted by the Court of Appeal in Re Qin Jun, ex p Win Wind Resources Ltd (No. 2) [2018] 5 HKLRD 562 §11. 

31.As stated above, I consider that this is a case where it is appropriate to order the third parties who caused the summonses to be issued and pursued to pay the costs incurred by the Company as well as the adverse costs payable to the Petitioner, and I reserved the costs of and occasioned by the 3 summonses until after the third parties have been joined for the purpose of costs only. 

32.I made the following order:

(1)  Ms Wang Lihua and Mr Zhao Fei be joined for the purpose of costs only;

(2)  The Company and ABL do provide the name and address of the person or persons who funded the proceedings in HCMP 334/2026 and HCCW 627/2026 within 7 days hereof;

(3)  Upon such information being provided, the funder(s) will be joined, without further order, as a party to HCMP 334/2026 and HCCW 627/2026 for the purpose of costs only;

(4)  The solicitors for the Petitioner do lodge and serve a statement of costs in each of the proceedings within 7 days thereof;

(5)  ABL do provide its comments on the statement of costs in each of the proceedings within 7 days thereafter; and

(6)  Liberty to the parties to apply to the court on paper for the purpose of costs.

Mr John Scott SC leading Mr Kevin Lau, instructed by Tanner De Witt, for the Petitioner in HCCW 627/2026 and Defendant in HCMP 334/2026

Ms Queenie Lau SC leading Ms Shannon Leung and Mr Francis Lo, instructed by Anjie Broad Law Firm LLP, for the Company in HCCW 627/2026 and Plaintiff in HCMP 334/2026

The Official Receiver is absent