Yuen Tsz Chun Frank and Chan Hoi Yan, The Joint and Several Liquidators of Rz3262019 Ltd (in Liquidation) v. Zhou Ying Investments Group Ltd and Others

On 12 August 2026, the Court of Appeal (Au and Chow JJA) dismissed the 1st Defendant's renewed application for leave to appeal in CAMP 260/2025, refusing to disturb Deputy High Court Judge Gary CC Lam's decision declining to strike out the liquidators' unfair preference claim. Mr Bernard Man SC (leading Mr Danny Tang, instructed by DLA Piper Hong Kong) acted for the successful Plaintiffs.

The dispute arises from the liquidation of RZ3262019 Limited, a BVI company set up to acquire a Chengdu real estate project. The Plaintiffs, as liquidators, allege that the 1st Defendant (Zhou Ying Investments) and the 2nd Defendant (Yuzhou Group Holdings) orchestrated an unfair preference scheme involving a US$310 million loan and the assignment of existing loans, secured by two guarantees from the Project Company. After the 1st Defendant obtained PRC judgments and received proceeds from judicial auctions of the Project Company's assets, the Plaintiffs issued an originating summons seeking a declaration of unfair preference and an order that the 1st and 2nd Defendants pay the received sums to the liquidators.

The 1st Defendant applied to strike out, arguing (1) issue estoppel based on the Sichuan Higher People's Court's dismissal of retrial applications raising similar allegations of conspiracy and control, and (2) that the §2 Relief was not restorative because it sought payment to the Company rather than the Project Company that gave the guarantees. The Judge below dismissed both arguments.

The Court of Appeal held that: (1) On the §2 Relief, the Judge was correct to find the Plaintiffs' position not plainly and obviously bad. Section 266 of Cap 32 confers broad discretion to fashion restorative relief, and the precise form of any order should be determined at trial with full evidence (§§36, 39). (2) On issue estoppel, the Judge's reliance on Alexander Brothers was not plainly wrong. Differences in the standard of proof applied by foreign and domestic courts can be relevant to whether issues are identical, and the SHPC Judgments did not plainly and obviously determine the Allegations (§§45, 47). (3) No interests-of-justice basis for granting leave; the proper course is to proceed to trial (§§49-51).

The summons was dismissed with costs nisi to the Plaintiffs, certificate for two counsel.

Why it matters: Practitioners advising on cross-border unfair preference claims should expect courts to be cautious about striking out at the pleadings stage, particularly where the form of restorative relief turns on disputed facts about control of the relevant subsidiary. The decision also signals that Hong Kong courts may treat significant divergences in the standard of proof applied by foreign courts as a relevant factor when assessing issue estoppel based on Mainland judgments.