JIANG XI AN FA DA WINE CO. LTD v. ZHAN KING

HCMP 1574/2017

[2019] HKCFI 2411

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1574 OF 2017

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J U D G M E N T

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BACKGROUND

1.  According to Jiang Xi An Fa Da Wine Co Ltd (江西安發達酒業有限公司), the abovenamed plaintiff, the matters that gave rise to its claims against Zhan King (also known as Zhan Shao Min (詹少敏)), the abovenamed defendant, in Mainland China and Hong Kong are as follows.

The parties and other relevant individuals and entities

2.  The plaintiff is a PRC company carrying on business in the food and beverages, land development and investment sectors in Mainland China. The office of legal representative of the plaintiff was at the material times successively held by Ye Neng Xiang (葉能湘) (“Ye”) until about the end of January 2016, Chan Wai from late January 2016 to 1 March 2017 and Chai A Mei from 2 March 2017.

3.  At the material times, the plaintiff had 2 associated companies called Fujian Lude Biological Co Ltd (福建綠得生物股份有限公司) and Shanghai Shenlong Investment Management Co Ltd (上海勝龍投資管理有限公司)[1] (“Fujian Lude” and “Shanghai Shenlong” respectively and “Associated Companies” collectively). 

4.  The Associated Companies owned certain lands in Fuzhou City, Jiangxi Province (江西省撫州市) (“Lands”), including what was referred to by the parties, as a matter of shorthand, as the “Old Brewery Lot” (老酒廠地塊) at Industrial Road, Liming Village, Hongshan Town, Gulou District, Fuzhou City. Shanghai Shenlong owned the Old Brewery Lot itself while Fujian Lude owned the buildings on it (included in “Old Brewery Lot”).

5.  The defendant is a PRC citizen and businessman ordinarily resident in Xiamen City, Fujian Province (福建省廈門市). He holds and at all material times held shares in Natural Dairy (NZ Holdings) Limited (“Natural Dairy”), a registered non-Hong Kong company listed on the Stock Exchange of Hong Kong Limited (“Stock Exchange”) with stock code number 00462. Natural Dairy’s shares have since September 2010 been suspended from trading. The shares in Natural Dairy controlled by the defendant are held partly in his own name and partly through Sky Upright Enterprises Limited, a corporate entity of which the defendant is a director and the controlling shareholder. The subject matter of these proceedings is 68,000,000 shares of the defendant’s shares in Natural Dairy.

6.  Insofar as it is material, another substantial shareholder in Natural Dairy is a PRC businessman called Ke Xi Ping (柯希平) (“Ke”).  Like the defendant, Ke owns and controls shares in Natural Dairy partly in his own name and partly through a corporate entity namely, Xiamen Heng Xing Group Co Ltd (廈門恆興集團有限公司) (“Heng Xing”), a PRC corporation of which Ke was the legal representative and controlling shareholder.

The transactions

7.  On 14 April 2010, the defendant borrowed RMB 152 million from Ke with monthly interest at 2.5%. By late 2012, the defendant’s liability to Ke for principal and interest rose to RMB 267 million (“Debt”).

8.  The defendant was unable to repay any part of the Debt when it fell due. He sought assistance from the plaintiff. The plaintiff, represented by Ye, commenced discussion with both the defendant and Ke with a view to finding a solution that would settle the account between the defendant and Ke while benefiting the plaintiff. In this regard, the plaintiff knew about the defendant and Ke’s shareholdings in Natural Dairy. Notwithstanding the suspension of trading and in anticipation of the resumption of trading, the plaintiff was interested in acquiring Natural Dairy shares.

9.  The result of such discussion was the conclusion of

(1)  firstly, an oral agreement between the plaintiff and the defendant that in return for the plaintiff settling the Debt for the defendant, the defendant shall transfer part of his shareholding in Natural Dairy to the plaintiff (“Oral Share Transfer Agreement”); and

(2)  secondly, a《合作合同書》dated 15 November 2012 (“Written Co-operation Agreement”) signed by/on behalf of Heng Xing, the plaintiff, Ke and the defendant (“4 Parties” collectively).

10.  The recitals of the Written Co-operation Agreement recorded, inter alia, that (1) the defendant owed Ke the Debt which the defendant had so far failed to repay; (2) the 4 Parties agreed to jointly develop the Lands via a specially formed project company (“Project Company”), through which developments the dispute between the defendant and Ke over the Debt could be settled and all the 4 Parties could jointly derive financial benefits; and (3) Heng Xing and Ke shall acquire a 53% share in the Project Company by injecting into it the right over the Debt and cash while the plaintiff shall take over a 47% interest in the Project Company by injecting into it the Lands and cash.

11.  Broadly speaking, it was agreed under the Written Co-operation Agreement, inter alia, that:

(1)  Heng Xing shall as the holding company incorporate a company (i.e. the Project Company) with a registered capital of RMB 10 million.

(2)  Heng Xing shall, at a price of RMB 4.7 million, transfer 47% of the shares in the Project Company to the plaintiff or its nominee(s).

(3)  The plaintiff shall cause the Lands (including the Old Brewery Lot) to be transferred by the Associated Companies into the plaintiff’s ownership.

(4)  The plaintiff shall then transfer the Lands into the name of the Project Company as full and final settlement of the Debt on behalf the defendant.

(5)  The Lands shall then be developed by the Project Company, with the proceeds of sale of the development(s) to be shared between Heng Xing and the plaintiff in accordance with the ratio of their respective shareholdings in the Project Company.

12.  However, before the plaintiff could acquire the Old Brewery Lot from the Associated Companies, it had come to the attention of the 4 Parties that the Fuzhou City Government intended to resume such land.

13.  In consequence of such change of circumstance, on 3 July 2013, Heng Xing and the plaintiff signed a《合作合同書》之補充協議 (一) (“1^st Supplemental Agreement”), under which it was agreed, inter alia, that

(1)  The plaintiff shall remain obligated to acquire the ownership of the Old Brewery Lot, as agreed under the Written Co-operation Agreement.

(2)  Upon the plaintiff’s acquisition of the ownership of the Old Brewery Lot, Heng Xing shall transfer to the plaintiff or its nominee(s) 47% of the shares in the Project Company (which had by then been formed by Heng Xing in the name of 福州恆興濱海置業有限責任公司 with all the registered capital already paid up by Heng Xing) and the plaintiff shall at the same time pay Heng Xing RMB 4.7 million being equivalent to 47% of the registered capital of the Project Company.

(3)  Within 3 days of being transferred 47% of the shares in the Project Company, the plaintiff shall enter into a written agreement with the Project Company to transfer to it the Old Brewery Lot so that such land would be resumed from the Project Company which would then become entitled to receive the compensation therefor from the Fuzhou City Government.

14.  The plaintiff acquired the ownership of the Old Brewery Lot on 6 August 2013. It did so by virtue of certain mediated settlement agreements (“Settlement Agreements”) with the Associated Companies, which were reached after litigations between the plaintiff and the Associated Companies before the Intermediate People’s Court of Fuzhou City, Jiangxi Province (江西省撫州市中級人民法院) (“Fuzhou Intermediate Court”) and which were concluded with the sanction of such court.

15.  Pursuant to the 1^st Supplemental Agreement, Heng Xing became obliged to transfer 47% of the shares in the Project Company to the plaintiff or its nominee(s) upon the plaintiff’s payment of RMB 4.7 million.

16.  On 24 October 2013, Ke (being the person behind Heng Xing) signed a《合作合同書》之承諾函 (“Ke’s Undertaking”), whereby he promised to cause Heng Xing to transfer to the plaintiff 32.9% of the shares in the Project Company at the price of RMB 3.29 million and to the plaintiff’s nominee named 福州恆興財富投資發展有限公司 14.1% of the shares in the Project Company at the price of RMB 1.41 million within 30 days, i.e. before 24 November 2013.

17.  On the same date, the 4 Parties also entered into a《合作合同書》之補充協議(二)(“2^nd Supplemental Agreement”), under which it was agreed, inter alia, that

(1)  The plaintiff shall enter into a written agreement with the Project Company to transfer the interest of the Old Brewery Lot to the Project Company.

(2)  Within 30 days of the signing of such agreement, the defendant shall transfer 68,000,000 shares in Natural Dairy under his name (“Subject Shares”) to the plaintiff or its nominee(s), failing which the defendant shall remain liable to Ke for the Debt.

18.  It can be seen that, as between the plaintiff and the defendant, the 2^nd Supplemental Agreement reduced the Oral Share Transfer Agreement into writing and further spelt out the exact number of Natural Dairy shares that were to be transferred from the defendant to the plaintiff.

19.  However, the defendant was not himself a shareholder or officer of the Project Company. He would not know if the written agreement for the transfer of the Old Brewery Lot had been signed between the plaintiff and the Project Company or not. Hence, it was further handwritten on the 2^nd Supplemental Agreement that the defendant shall transfer the Subject Shares to the plaintiff only upon Ke’s written instruction to do so.

20.  Instead of signing a written agreement with the Project Company for the transfer of the Old Brewery Lot as envisaged under the 1^st and 2^nd Supplemental Agreements, the plaintiff actually directly transferred the Old Brewery Lot to the Project Company without any such written agreement.

21.  The Project Company then surrendered the Old Brewery Lot to the Fuzhou City Government in exchange for compensation whereupon, the plaintiff says, the defendant became obliged to transfer the Subject Shares to it.

22.  In January 2014, all the 4 Parties signed a《合作合同書》之補充協議(三) (“3^rd Supplemental Agreement”), the details of which are immaterial for present purposes save that clause 2 of the recitals recorded the facts of the resumption of the Old Brewery Lot by the Fuzhou City Government from the Project Company and the payment of compensation therefor by the Fuzhou City Government into the bank account of the Project Company.

Evidence of Plaintiff’s performance

23.  More particularly, in addition to recital clause 2 of the 3^rd Supplemental Agreement, in proof of the performance of its obligation under the Oral Share Transfer Agreement and the 2^nd Supplemental Agreement, the plaintiff has, by the affirmation dated 11 August 2017 of its director Lin Huaqing (“Lin’s Affirmation”), exhibited copies of, inter alia:

(1)  a Chinese document entitled《土地房屋交接單》dated 20 August 2013 signed between the plaintiff and the Project Company, confirming that the plaintiff had since 6 August 2013 ceased to have any interest in the Old Brewery Lot and that the Project Company had since that date acquired the entire right to dispose of such land;

(2)  a Chinese document entitled《關於同意以“福州恆興濱海置業有限責任公司”的名義實施福州老酒廠地塊徵收的承諾書》dated 24 October 2013, whereby the plaintiff confirmed to the Housing Security and Real Estate Administration Bureau and the Construction Investment Management Centre for Gulou District, Fuzhou City (福州市鼓樓區住房保障和房地產管理局and鼓樓區建設投資管理中心) and the Fuzhou Phoenix Housing Resumption Project Department (福州鳳凰房屋徵收工程處) (“Relevant Fuzhou City Authorities” collectively) that all its interest in the Old Brewery Lot belonged to the Project Company and that the plaintiff agreed to the Project Company directly dealing with the Relevant Fuzhou City Authorities; signing the《房屋徵收補償安置協議書》in respect of the Old Brewery Lot and receiving the resumption compensation for such land;

(3)  the said《房屋徵收補償安置協議書》also dated 24 October 2013 (“Resumption Agreement”) signed by the Relevant Fuzhou City Authorities and the Project Company, setting out the compensations payable by the former to the latter for the Old Brewery Lot (“Compensations”); and

(4)  a Chinese document entitled《補充協議(一)》dated 18 March 2014 signed by the Relevant Fuzhou City Authorities and the Project Company, varying the schedule of payment of the Compensations and confirming that RMB 100 million thereof (“Paid Compensations”) had already been paid to the Project Company.

24.  According to paragraph 25 of Lin’s Affirmation, to the best of the plaintiff’s knowledge, the Fuzhou City Government had since sold the Old Brewery Lot to China Resources (Holdings) Co Ltd or one of its related companies, which had in turn redeveloped the Old Brewery Lot.

Defendant’s defaults

25.  It is the plaintiff’s case that its aforesaid successive legal representatives had from December 2013 until March 2017 repeatedly called upon the defendant to transfer the Subject Shares to the plaintiff and that the defendant, while acknowledging his legal obligation to do so, gave various excuses for delaying the transfer.

26.  In particular, when Chan Wai chased the defendant again in the last quarter of 2016, the defendant disclosed that Ke, through Heng Xing, was either prepared to present, or had already presented, a petition to wind up Natural Dairy.  As the defendant intended to exercise his voting right to support the petition, he could not yet transfer the Subject Shares to the plaintiff. 

27.  Then, on 29 December 2016, Natural Dairy announced that the Grand Court of the Cayman Islands had appointed joint provisional liquidators of Natural Dairy (“Provisional Liquidators”) upon Heng Xing’s petition to wind up the company.   Upon receiving such news and fearing that the appointment of the Provisional Liquidators would further delay the transfer of the Subject Shares and materially affect their value, Chan Wai immediately contacted the defendant again.  The defendant replied that Ke was conducting the liquidation and assured Chan Wai that the Subject Shares would not be affected.

28.  Chai A Mei had, after taking over as the legal representative of the plaintiff, also telephoned the defendant who, however, refused to discuss the matter any further, saying only that Ke was in charge of the winding up of Natural Dairy.

29.  On 20 June 2017, Natural Dairy announced that the Provisional Liquidators had conducted a thorough review of Natural Dairy’s financial situation and operations and did not consider that it would be possible for Natural Diary to satisfy the Stock Exchange’s requirement of sufficiency of operations without significant new investment; that they had therefore undertaken a process of soliciting investment into Natural Dairy by way of a reverse takeover; and that they were in negotiations with 2 potential investors and hoped to sign a framework agreement with one of them in the coming weeks.

30.  Fearing that the defendant might dispose of the Subject Shares under the anticipated reverse takeover, on 26 June 2017, the plaintiff sent a letter to the defendant at his last known residence in Xiamen City[2], demanding him to take steps within 3 days to effect the transfer of the Subject Shares to the plaintiff and reserving all the plaintiff’s rights.  The defendant had, however, not responded.

LEGAL PROCEEDINGS BY PLAINTIFF AGAINST DEFENDANT IN PRC

31.  On 7 August 2017, the plaintiff commenced proceedings in the Higher People’s Court of Fujian Province (福建省高級人民法院) against the defendant and Ke (“PRC Proceedings”).  Insofar the defendant is concerned, the plaintiff’s claim in the PRC Proceedings was primarily for an order that the defendant should transfer the Subject Shares into the plaintiff’s name, failing which the defendant shall compensate the plaintiff for the value of the Subject Shares which, according to the plaintiff, was RMB 128,581,200 as at 7 August 2017.

Subsequent legal proceedings against plaintiff over Old Brewery Lot

32.  As stated in [14] above, the plaintiff obtained ownership of the Old Brewery Lot through settlement of litigations with the Associated Companies.

33.  For the sake of discharging its continuing duty of full and frank disclosure, the plaintiff has disclosed the fact that the People’s Procuratorate of Fuzhou City, Jiangxi Province (江西省撫州市人民檢察院) (“Fuzhou Procuratorate”) subsequently took actions against the plaintiff and each of the Associated Companies in the Fuzhou Intermediate Court on the basis that the previous litigations between the plaintiff and each of the Associated Companies were launched and pursued for the false/improper purpose of enabling the plaintiff to acquire the Old Brewery Lot to the detriment of the Associated Companies’ creditors.

34.  By 2 civil judgments (民事判決書) dated 25 August 2016 (“2016 Fuzhou Intermediate Court Judgments”), the Fuzhou Intermediate Court upheld the Fuzhou Procuratorate’s contention against the plaintiff and the Associated Companies and set aside the Settlement Agreements.

35.  Then, by 2 enforcement decisions (執行裁定書) dated 28 April 2017 (“2017 Fuzhou Intermediate Court Enforcement Decisions”), the Fuzhou Intermediate Court ordered the plaintiff to return the Old Brewery Lot to the Associated Companies, failing which the plaintiff shall pay damages to the Associated Companies.

Subsequent legal proceedings against Project Company etc over Compensations

36.  Further, on 27 April 2017, in reliance on the 2016 Fuzhou Intermediate Court Judgments, the first and second of the Relevant Fuzhou City Authorities commenced proceedings in the Fuzhou Intermediate Court against the Project Company, the plaintiff and the Associated Companies to rescind the Resumption Agreement and to recover the Paid Compensations with interest. According to paragraph 17 of Lin’s Affirmation, the Fuzhou Intermediate Court did not decide to entertain such proceedings until 3 July 2017 and it was not until 10 July 2017 that the plaintiff was served with the relevant statement of claim, list of evidence of the claimants and notice to adduce evidence.

37.  In the meantime, on 10 June 2015, the third of the Relevant Fuzhou City Authorities was directed by the Fuzhou Intermediate Court to withhold payment of the balance of the Compensations to the Project Company until 10 June 2016.

PROCEEDINGS AND APPLICATIONS BY PLAINTIFF AGAINST DEFENDANT IN HK

38.  This is the convenient point to introduce the proceedings before me. By the originating summons issued herein on 10 July 2017 (“OS”) pursuant to s 21M of the High Court Ordinance (Cap 4) (“HCO”), the plaintiff claimed against the defendant an order restraining him from, in any way whether directly or indirectly through his servants or agents or companies he beneficially owns or controls, disposing of or dealing with the Subject Shares or his interest (direct or indirect, legal or equitable) therein, pending the determination of the PRC Proceedings, then yet to be taken by the plaintiff.

39.  On the same day, the plaintiff applied ex parte to, and obtained from, Madam Justice B Chu an interlocutory proprietary injunction order, restraining the defendant from, in any way whether directly or indirectly through his servants or agents or companies he beneficially owns or controls, disposing of or dealing with the Shares (“Interlocutory Injunction Order”) until 14 July 2017 which was the return date of the inter partes summons that the plaintiff undertook to take out before the summons judge.

40.  On 10 July 2017, the plaintiff duly issued such inter partes summons (“Summons”) against the defendant for the continuation of the Interlocutory Injunction Order until further order.

41.  Both the OS and the Summons first came before me on 14 July 2017. Subject to certain minor amendments, I continued the Interlocutory Injunction Order until the determination of the Summons.

42.  This is the substantive hearing of the OS and the Summons after 2 further adjournments ordered by this court on 18 October 2017 and 30 January 2018 to enable formal service to be effected on the defendant in accordance with Order 11 rule 5A of the Rules of the High Court (Cap 4A) (“RHC”) which was accomplished by the People’s Court for the Si Ming District of Xiamen City (廈門市思明區人民法院) on 3 November 2017[3].  

43.  In the end, I proceeded in the absence of the defendant, after having been satisfied that the defendant had been duly served and did receive notice of this hearing from both the court and the plaintiff’s solicitors but chose not to appear or adduce any evidence in opposition[4].

OS

44.  I shall first deal with the OS.

Relevant statutory provisions

45.  The OS was issued under s 21M of the HCO which, insofar as it is material, provides:

“Interim relief in the absence of substantive proceedings

“(1)  Without prejudice to section 21L(1), the Court of First Instance may by order appoint a receiver or grant other interim relief in relation to the proceedings which –

(a)  have been or are to be commenced in a place outside Hong Kong; and

(b)  are capable of giving rise to a judgment which may be enforced in Hong Kong under any Ordinance or at common law.

 ...

(3)  Subsection (1) applies notwithstanding that –

(a)  the subject matter of those proceedings would not, apart from this section, give rise to a cause of action over which the Court of First Instance would have jurisdiction; or

(b)  the appointment of the receiver or the interim relief sought is not ancillary or incidental to any proceedings in Hong Kong.

(4)  The Court of First Instance may refuse an application for appointment of a receiver or interim relief under subsection (1) if, in the opinion of the Court, the fact that the Court has no jurisdiction apart from this section in relation to the subject matter of the proceedings concerned makes it unjust or inconvenient for the Court to grant the application.

...

(7)  In this section, “interim relief” (臨時濟助) includes an interlocutory injunction referred to in section 21L(3).” (emphasis added)

46.  Supplemental provisions for exercise of the power to grant interim relief in the absence of substantive proceedings under s 21M(1) can be found in s 21N, as follows:

“Supplementary provisions as to interim relief in the absence of substantive proceedings

(1)  In exercising the power under section 21M(1), the Court of First Instance shall have regard to the fact that the power is —

(a)  ancillary to proceedings that have been or are to be commenced in a place outside Hong Kong; and

(b)  for the purpose of facilitating the process of a court outside Hong Kong that has primary jurisdiction over such proceedings.

(2)  The Court of First Instance has the same power to make any incidental order or direction for the purpose of ensuring the effectiveness of an order granted under section 21M as if the order were granted under section 21L in relation to proceedings commenced in Hong Kong.”

47.  Prior to the enactment of s 21M in 2008, the only source of the jurisdiction and power of the Court of First Instance (“CFI”) to appoint a receiver and/or grant other interim relief is s 21L which, insofar as it is material, reads:

“Injunction and receiver

(1) The Court of First Instance may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the Court of First Instance to be just or convenient to do so.

...

(3)  The Power of the Court of First Instance under subsection (1) or section 21M to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the Court of First Instance, or otherwise dealing with, assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled or resident or present within that jurisdiction.”

Approach for exercise of jurisdiction and power under s 21M

48.  The legal principles applicable on a s 21M application were considered and illuminated by the Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd (2016) HKCFAR 586.  Such an application is to be considered in 2 stages:

(1)  In the first stage, the court firstly asks whether, if the proceedings that have been or are to be commenced in the foreign court result in a judgment, that judgment is one that the Hong Kong court may enforce. If the judgment resulting from the foreign proceedings may be enforced by the Hong Kong court, then the court asks the same questions as it would if the interim relief were sought in support of a Hong Kong action, save that the strength of the plaintiff’s substantive claim against the defendant (if material) should be considered from the standpoint of the foreign court, and not under the law of Hong Kong.

(2)  In the second stage, as required by s 21M(4), the court should consider whether the fact that the court has no jurisdiction apart from s 21M in relation to the subject matter of the proceedings concerned makes it unjust or inconvenient for the court to grant the application.

See [47]-[54] per Lord Phillips of Worth Matravers NPJ.

Whether judgment under the PRC Proceedings is one that may be enforced by HK court

49.  This is the intriguing question in this case.

50.  The plaintiff does not suggest that the Hong Kong court may enforce any judgment that may be obtained by it against the defendant in the PRC Proceedings (“Prospective PRC Judgment”) by registration under the Mainland Judgment (Reciprocal Enforcement) Ordinance (Cap 597) which, based on the material placed before me, is plainly inapplicable.

51.  The plaintiff proceeds on the basis that it would have to attempt enforcement of the Prospective PRC Judgment in Hong Kong by a common law action.

52.  It is further acknowledged that the traditional criteria for the enforcement of a foreign judgment by action under the common law are that the judgment is:

(1)  for a debt or definite sum of money[5];

(2)  made by a court of competent jurisdiction over the parties and the subject-matter;

(3)  between the same parties or their privies on an identical issue;

(4)  final and conclusive on the merits;

(5)  not impeachable according to the rules on conflict of laws of Hong Kong.

See, for instance, Dicey, Morris & Collins, The Conflict of Laws, 15^th Edition (2012), Volume 1, Rule 42; JSC BTA Bank v Nukhtar Kabulovich, HCMP 341/2014, unreported, 27 February 2014, [27], per Zervos J (as he then was).

53.  The plaintiff will potentially encounter difficulty in satisfying the first and fourth-mentioned criteria.

54.  First, as stated in [31] above, if the plaintiff succeeds in the PRC Proceedings, the primary remedy that it will seek is an order for the defendant to transfer the Subject Shares to the plaintiff. The very aim of the present s 21M application is the preservation of the Subject Shares for the satisfaction of such an order.

55.  Second, a judgment is final and conclusive if it is not amenable to challenge except by way of appeal. Put in another way, for a judgment to be final, it must be final and unalterable in the court that pronounced it and cannot thereafter be modified by such court. See Nouvion v Freeman (1890) LR 15 App Cas 1 applied in, for example, Lee Yau Wing v Lee Shui Kwan[2007] 2 HKLRD 750 (CA) at [10]-[12], per Cheung JA.

56.  In this connection, Chapter XVI of the PRC Civil Procedure Law (Articles 177 to 188) provides for a “trial supervision” system under which a party to a case, the president of the people’s court at which a trial took place (“trial court”), a people’s court at a level higher than the trial court, the Supreme People’s Court, a people’s procuratorate at a level corresponding to or above the trial court or the Supreme People’s Procuratorate can, under specified circumstances, apply to / direct / lodge a protest with (as the case may be) the trial court or a people’s court at the next higher level for a re-trial of the case. Essentially, those circumstances are where the judgment is erroneous; where there is sufficient new evidence to set aside the judgment; where the judgment was based on insufficient evidence; where there was definite error in the application of the law in the judgment; where there was violation by the trial court of the legal procedure which may have affected the correctness of the judgment; and where the judicial officers conducting the original trial were guilty of embezzlement, corruption or other malpractices for personal benefits and perversion of the law in the adjudication of the case.

57.  The issue of whether the “trial supervision” system per se would render a PRC judgment inconclusive and not final has been raised in the Hong Kong courts on a number of occasions as a ground of defence to actions for the enforcement of PRC judgments. The first such case was Chiyu Banking Corporation Limited v Chan Tin Kwan [1996] 2 HKLR 395, in which the “trial supervision” procedure had actually been invoked. Cheung J (as he then was) stayed the proceedings before him pending the outcome of the decision of the Supreme People’s Procuratorate with leave to the plaintiff to remove the stay if Supreme People’s Procuratorate rejected the request to lodge a protest with the people’s court that pronounced the judgment. His Lordship so decided on the ground that the PRC judgment was not final and conclusive for the purpose of recognition and enforcement in Hong Kong as the court that pronounced it retained the power to alter or modify its own decision under the “trial supervision” system.  See 399G-I.

58.  To deal with these potential difficulties in enforcing the Prospective PRC Judgment in Hong Kong, the plaintiff contends for the purpose of the first part of the first stage of the consideration of a s 21M application that:

(1)  As s 21M proceedings is “interlocutory in nature”, the plaintiff is only required to show a “good arguable case” that the foreign judgment to be obtained “is enforceable” in the Hong Kong court.

(2)  There is “a good arguable case that the PRC [Proceedings] is “capable of giving rise to a judgment which may be enforced in Hong Kong ... at common law””.

59.  In support, Mr Alan C Y Yung, counsel for the plaintiff, refers to what Mr Justice Anthony To said in Bank of China Ltd v Yang Fan [2016] 3 HKLRD 7 at [20] as follows:

“Second, such proceedings are capable of giving rise to a judgment which can be enforced in Hong Kong: Pacific King Shipping Holdings Pte Ltd (In Compulsory Liquidation) v Huang Ziqiang and Beyonics Technology Ltd v Goh Chan Peng. As the proceeding is interlocutory in nature, the applicant seeking this relief is only required to show a good arguable case that the foreign judgment to be obtained will be final and conclusive without having to actually prove that such judgment will be final and conclusive: see the fourth principle set out below. That more onerous burden is to be discharged when actually seeking to enforce the foreign judgment in Hong Kong: see Chiyu Banking Corp Ltd v Chan Tin Kwun and Lee Yau Wing and Lee Shui Kwan.”

60.  See also JSC BTA Bank v Nukhtar Kabulovich, supra, at [27] which likewise adopted a “good arguable case” threshold in relation to the question whether the English judgments that had been obtained by the plaintiff against the defendant in that case were capable of being enforced in Hong Kong.

61.  With respect, I disagree as a matter of proper analysis although, I suspect, it would not affect the outcome in this and many other cases.

62.  The court’s jurisdiction to grant interim relief in the absence of substantive proceedings in Hong Kong in aid of foreign proceedings is derived entirely from statute under ss 21M and 21N of the HCO. As stated by Lord Phillips in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd, supra, at [47], that the judgment resulting from the proceedings that have been or are to be commenced in the foreign court is one that the Hong Kong court may enforce is a precondition under sub-s (1)(b) to the exercise of the s 21M jurisdiction.  Such precondition is either satisfied or not satisfied.  There does not appear to me to be any scope for a “good arguable case” standard of proof.  In this regard, while the relief granted under s 21M may be interim in nature, the proceedings itself is final in that it is commenced and pursued by an originating, as opposed to an interlocutory, process and the order made on the originating summons will finally dispose of the cause or matter.  There will not be a trial or any further hearing under the same proceedings.

63.  I observe that in setting out the second principle applicable to an application for interim relief in aid of foreign proceedings in [20] in Bank of China Ltd v Yang Fan, cited in [59] above, To J referred to the fourth principle set out in [22] of the same judgment, which read as follows:

“Fourth, the court has to be satisfied that the basic requirements for granting the relief were met, if the substantive proceedings were brought in Hong Kong: see Pacific King Shipping Holdings Pte Ltd (In Compulsory Liquidation) v Huang Ziqiang and Beyonics Technology Ltd v Goh Chan Peng. In the case of a Mareva injunction application, these requirements involve demonstrating a good arguable case, that the Defendant has assets within the jurisdiction, a real risk of dissipation of assets which would render any judgment obtained nugatory, and balance in favour of granting the relief in that it is just and convenient to do so. The strict duty of full and frank disclosure also applies.” (emphasis added)

64.  It can be seen that the fourth principle stated by To J was concerned with the second question to be asked under the first stage of the consideration of a s 21M application after the plaintiff has satisfied the precondition that the judgment resulting from the foreign proceedings may be enforced by the Hong Kong court, i.e. whether the requirements for interim relief of the type sought were met if the substantive proceedings were brought in Hong Kong.  In Yang Fan, the interim relief applied for was a Mareva injunction for which the “merit” threshold is a “good arguable case”.  With respect, it appears to me that his Lordship might have mixed up the first and second questions to be asked at the first stage of the enquiry in a s 21M application.

65.  As I see it, the matter at hand is simply one of construction of s 21M(1)(b) under which an applicant is to show that the proceedings that have been or are to be commenced by him outside Hong Kong are capable of giving rise to “a judgment which may be enforced in Hong Kong” (emphasis added).  It is, to my mind, neither appropriate nor necessary to put any judicial gloss or spin on the words that the legislature has chosen to formulate this precondition to the exercise of the s 21M jurisdiction.  These words, with the emphasis being on “may”, should just be given their ordinary and natural meaning as expressing possibility. See, for example, The Shorter Oxford English Dictionary, 6^th Edition, Volume 1, page 1731.

66.  On this note, I turn to the potential obstacle to enforcement of the Prospective PRC Judgment posed by the common law limitation to recognise and enforce only a monetary foreign judgment.

67.  As noted by the learned authors of Dicey, Morris & Collins, The Conflict of Laws, supra, Volume 1, page 673, footnote 74, this limitation can be traced back to Sadler v Robins (1808) 1 Camp 253 and the historical explanation for such restriction is that the form of action appropriate for the enforcement of a foreign judgment was originally debt.

68.  The plaintiff’s answer to this likely hurdle is the repudiation of the restriction in recent years by certain jurisdictions when the opportunities arose.

69.  Dealing with the relevant development chronologically, first, in Pro Swing Inc v Elta Golf Inc [2006] 2 SCR 612; [2007] 3 LRC 338, the plaintiff owned a US registration for the mark “TRIDENT” for golf clubs and related accessories. It sued the defendant, a Canadian company, in Ohio, USA for trademark infringement in connection with the sale of “RIDENT” brand golf clubs on its website. The US action was resolved by means of a settlement agreement and a consent decree. Subsequently, the plaintiff brought contempt proceedings in the same US court on the basis that the defendant had violated the consent decree. The defendant was held by the Ohio court to be in contempt. Both the consent decree and the contempt order granted injunctive relief against the defendant, and ordered the recall and delivery up of all infringing goods, as well as the production of all accounting records. When the defendant failed to comply with the contempt order, the plaintiff successfully applied in the first instance to the Ontario Superior Court of Justice to have the consent decree and the contempt order recognised and enforced against the defendant in Canada.  On appeal by the defendant, the Ontario Court of Appeal reversed the decision on the basis that the US orders were not sufficiently precise to be enforced in Canada.

70.  On appeal by the plaintiff, the Supreme Court of Canada unanimously held that, in principle, non-monetary foreign judgments can be enforced in Canada in appropriate circumstances though such change should be approached “cautiously”, “incrementally” and in a “principled” manner, accompanied by a judicial discretion enabling the domestic court to take into account all factors relevant to the recognition and enforcement by it of the foreign non-monetary judgment.  

71.  It was common ground between the majority and the minority that the need for change was “compelling”.  At [1], Deschamps J (LeBel, Fish and Abella JJ concurring) opened the majority judgment with the following statements: 

“Modern-day commercial transactions require prompt reactions and effective remedies. The advent of the Internet has heightened the need for appropriate tools. On the one hand, frontiers remain relevant to national identity and jurisdiction, but on the other hand, the globalization of commerce and mobility of both people and assets make them less so. The law and the justice system are servants of society, not the reverse. The Court has been asked to change the common law. The case for adapting the common law rule that prevents the enforcement of foreign non-money judgments is compelling. But such changes must be made cautiously. ...”

See further [10]-[20].

72.  McLachlin CJ, delivering the disssenting judgment also for Bastarache and Charron JJ, said at [77]-[79]:

“77. The traditional common law position is that foreign judgments are recognizable and enforceable only if they meet two conditions. First, they must be for a definite sum of money. Second, they must be final and conclusive. These requirements ensure that in ordinary cases the merits of foreign judgments are not considered by an enforcing court. Barring exceptional concerns, a court’s focus when enforcing a foreign judgment is not on the substantive and procedural law on which the judgment is based, but instead on the obligation created by the judgment itself.

78. In Morguard[6], La Forest J.discussed the need to ensure that the evolution of the common law keeps pace with the acceleration, intensification, and nature of cross-border social and economic activity. He noted:

The world has changed since the above rules were developed in 19^th century England.  Modern means of travel and communications have made many of these 19th century concerns appear parochial.  The business community operates in a world economy and we correctly speak of a world community even in the face of decentralized political and legal power.  Accommodating the flow of wealth, skills and people across state lines has now become imperative. Under these circumstances, our approach to the recognition and enforcement of foreign judgments would appear ripe for reappraisal. [p. 1098]

In Hunt v. T&N plc, [1993] 4 S.C.R. 289, La Forest J. further described rigidity in this area of the law as resting on an “outmoded conception of the world that emphasized sovereignty and independence, often at the cost of unfairness” (pp. 321-22). The common law must evolve in a way that takes into account the important social and economic forces that shape commercial and other kinds of relationships.

79. That evolution must take place both incrementally and in a principled way. Although the enforcement of money judgments across provincial boundaries raises unique considerations and constitutional dimensions, the underlying principles of comity, order and fairness must apply both interprovincially and internationally. As Major J. noted in Beals v. Saldanha, [2003] 3 S.C.R. 416, 2003 SCC 72, “[t]he principles of order and fairness ensure security of transactions, which necessarily underlie the modern concept of private international law” (para. 27). These principles do not exclude the enforcement of non-monetary judgments from another country. At the same time, comity, which requires respect for the legitimate sovereignty of others and for the needs created by relationships that “involve a constant flow of products, wealth and people across the globe”, may favour it: Hunt, at p. 322.” (footnote added)

See further [80]-[101].

73.  What divided the Supreme Court of Canada in Pro Swing was whether the US consent decree and contempt order should be enforced against the defendant in Canada, with the majority declining to do so because, inter alia, the intended territorial scope of the injunctive relief granted by the Ohio court was uncertain and contempt orders issued by a non-Canadian Court should not be enforced due to their criminal or quasi-criminal nature.

74.  In Pattni v Ali 2005-06 MLR 586; [2007] 2 AC 85, the appellant claimed against the respondents in the High Court of Kenya for breach of a contract governed by Kenyan law under which the respondents had agreed to sell to the appellant their respective shareholdings in a Manx company.  The Kenyan court gave judgment for the appellant and ordered the respondents to transfer all the 100% shares in the Manx company to the appellant as per the sale and purchase agreement. The appellant subsequently applied to enforce in the Isle of Man such order by seeking rectification of the Manx company’s register of members. The deemster determined as preliminary issues that the Kenyan judgment was a judgment in rem and that the Kenyan court did not have jurisdiction to make such a judgment. Such determination was upheld on appeal by the Staff of Government Division. 

75.  The appellant appealed, successfully, to the Privy Council.  Although their Lordships were concerned with the question whether the judgment of the Kenyan court was a judgment in rem which the Kenyan court had no jurisdiction to make, it expressed the following opinion at [27] which is pertinent for our present purpose:

“Their Lordships are not however concerned with immovables. Which represent as stated an exceptional case in private international law. For presennt purposes, it is the converse of the above propositions relating to movables orintangibles that is important. As presently advised, though the arguments did not address the point (or, it may be, need to under the terms of the two preliminary issues presently in issue), their Lordships would think it clear that, where a court in state A makes, as against persons who have submitted to its jurisdiction, an in personam judgment regarding contractual rights to either movables or intangible property (whether in the form of a simple chose in action or shares) situate in state B, the courts of state B can and should recognise the foreign court’s in personam determination of such rights as binding and should itself be prepared to give such relief as may be appropriate to enforce such rights in state B. The extent to which this was possible might be limited by the law of state B as the situs or, in the case of shares, as the place of incorporation of the relevant company (in this case, as both). ...” (emphasis added)

76.  In Miller v Gianne [2007] CILR 18, the Grand Court of the Cayman Islands had to decide, inter alia, whether leave should be given to amend a pleading to provide that if the order of the California court required the husband to transfer to the wife varrious properties in Cayman, the Cayman Islands would recognise and enforce such order. The argument was essentially whether it was arguable that the common law refusal to enforce a foreign non-mentary judgment had been or should be abolished in the Cayman Island.

77.  Following Pro Swing and Pattni v Ali, it was held that the ability to enforce directly foreign judgments and orders made in personam is no longer confined in the Cayman Islands to judgments for debt or a definite sum of money.  Smellie CJ commented that the jurisdiction to provide relief by way of recognition of foreign non-monetary judgments may well have existed in equity even before the emergence of the rule which was derived from Sadler v Robins, supra.  He said at [67]:

“The inclination in modern jurisprudence to grant recognition and enforcement by way of equitable remedies such as specific performance, injunctive or declaratory relief and pleas of res judicata, may well be regarded as a re-emergence of that jurisdiction which has always existed in equity, even if rendered dormant over the years in deference to the limitations of the traditional common law rule. ...”

78.  Smellie CJ, in particular, referred to the opinion in Pattni v Ali at [27] (quoted in [75] above) and found that it was not obiter dicta and was central to the decision. He further held that this was no basis for doubting that the Privy Council had (implicitly) disapproved Sadler v Robins.

79.  The Royal Court of Jersey, in Brunei Investment Agency and Bandone Sdn Bhd v Fidelis Nominees Limited [2008] JLR 337, also read the Privy Council’s judgment in Pattni v Ali as clearly implying the removal of the bars that had been raised by way of preliminary points against the recognition and enforcement of the Kenyan order in the Isle of Man so that it was now enforceable in the Isle of Man. Even if the opinion of the Privy Council given in this context was strictly obiter, it should carry very substantial weight as giving a clear indication as to the direction in which the Jersey court should be proceeding.  See [33].

80.  In Brunei Investment Agency and Bandone Sdn Bhd v Fidelis Nominees Limited, the Brunei Investment Authority (“BIA”) originally commenced proceedings against Prince Jefri Bolkiah (“Prince Jefri”), the youngest brother of the Sultan of Brunei, in the courts of Brunei, alleging misappropriation and misapplication of state funds by Prince Jefri whilst he occupied governmental office. The BIA and Prince Jefri later reached a settlement, which Prince Jefri subsequently refused to honour. The BIA applied to the Bruneian courts to enforce the settlement agreement, as a result of which Prince Jefri was ordered by the High Court of Brunei to perform his obligations under the settlement agreement (“Bruneian Judgment”). Prince Jefri’s appeal against the Bruneian Judgment was ultimately dismissed by the Privy Council sitting as the final appellate court of Brunei. It then became necessary for the BIA to engage in enforcement litigations in different jurisdictions against assets that Prince Jefri had acquired across the world. As the settlement agreement included obligations to transfer shares in certain Jersey companies to the BIA, the BIA applied to the Royal Court of Jersey for orders for the transfer of the shares in the Jersey companies to the BIA’s nominee. Prince Jefri opposed the application on, inter alia, the ground that the Jersey court did not have power under its inherent jurisdiction to enforce foreign non-monetary judgments.

81.  The Royal Court of Jersey identified the real issue to be whether it should make the orders for transfer sought with or without reconsidering the merits (see [12]).  After a review of the abovementioned and other authorities, the court concluded at [35]:

“The reasons which have compelled the courts in Canada and the Cayman Islands to change the common law rule are equally compelling here. In our view, the restriction in relation to non-money judgments under English common law ... should, in its application to this jurisdiction, be amended so as to give the court a discretion ... to enforce non-monetary judgments but, for the reasons set out in Pro Swing, it is a discretion that is to be exercised cautiously. That discretion is not confined, and we can see no good reason to confine it, to the court‘s supervisory jurisdiction under art. 51 of the Trusts (Jersey) Law 1984.”

82.  The common law prohibition on the recognition and enforcement of foreign non-monetary judgment has apparently never been contested or put in issue in the courts of Hong Kong. My attention has certainly not been drawn to any such argument. 

83.  As said earlier, the rule has its origin in an English case from Georgian times.  The developments and changes in societies all over the world in the last 200 years, in particular, the increasing globalisation of business and commerce, the mobility of both individuals and assets and the ease with which people and properties can relocate and be relocated, are far-reaching and most probably beyond the imagination of those living in the early 19^th century.

84.  In view of the said recent developments in case law in other jurisdictions, given the opportunity, a general or cases by case (depending on the nature of the foreign judgment sought be enforced) re-assessment of the continuing applicability in Hong Kong of the 200 years old common law prohibition on the recognition and enforcement of foreign non-monetary judgment should be due. In this regard, I note that a foreign order for the transfer of company shares were successfully enforced in Pattni v Ali and Brunei Investment Agency and Bandone Sdn Bhd v Fidelis Nominees Limited.  It is for present purpose not necessary to put the matter any higher than this.

85.  As to the finality and conclusiveness of the Prospective PRC Judgment, as said in [50] above, the “trial supervision” system has been deployed in the Hong Kong courts on a number of occasions to resist enforcement of PRC judgments. 

86.  The picture as to whether such procedure would per se render a PRC judgment not final and/or inconclusive has become less definite and more unclear after Chiyu Banking Corporation Limited v Chan Tin Kwan, supra. 

87.  In Lee Yau Wing v Lee Shui Kwan [2007] 2 HKLRD 749, the majority of the Court of Appeal, in setting aside a summary judgment enforcing a PRC judgment, observed that the issue with which we are presently concerned is one of public importance and involved complicated legal questions that could not be determined in the absence of trial.  See Cheung JA at [15]-[29] and Yuen JA at [34]-38].

88.  In Wu Wei v Liu Yi Ping, CACV 32/2009, unreported, 27 March 2007, Tang VP (as he then was) agreed at [7] that the question as to whether the PRC judgment in the case before him should be recognised as “final and conclusive” “必須在正審以後才可以作出裁定”.

89.  In short, there is no definite authority that the existence of the “trial supervision” procedure would deprive a PRC judgment of its otherwise final and conclusive character. Rather, the matter has to be proved at trial at which evidence of material PRC law would have to be adduced by the parties and assessed by the court in the actual enforcement proceedings.

90.  I am satisfied that the Prospective PRC Judgment may be enforced in Hong Kong within the meaning of s 21M(1)(b) of the HCO notwithstanding (1) the common law prohibition on the recognition and enforcement of foreign non-monetary judgment; or (2) the existence of the “trial supervision” system under the Civil Procedure Law of the PRC.

Whether injunction sought would be granted if substantive proceedings were in HK court

91.  Moving then to the second question in the first stage of the consideration of a s 21M application, I am persuaded, on the material before me, that the interim relief sought would have been granted in support of a Hong Kong action (but with the strength of the plaintiff’s substantive claim against the defendant considered from the standpoint of the PRC court).

92.  The plaintiff asks for a proprietary injunction or preservation order, the criteria for the grant of which are well established:

(1)  there is a serious issue to be tried;

(2)  the balance of convenience favours granting an injunction; and

(3)  it is just and convenient to grant the injunction.

See, for example, Zimmer Sweden AB v KPN Hong Kong Limited, HCA 2264/2013, unreported, 2 May 2014, [76]-[77], per Deputy High Court Judge Kent Yee; Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd, HCA 3023/2016, unreported, 2 May 2017, [36]-[42], per Deputy High Court Judge Douglas Lam SC.

93.  I have already summarised in [23] above the plaintiff’s evidence of its performance of its obligations under the Oral Share Transfer Agreement and the 2^nd Supplemental Agreement.

94.  According to legal opinions dated 5 July 2017 by one Zhang Yalin of R&P China Lawyers exhibited to Ye’s affirmation herein dated 7 July 2017 (“Ye’s Affirmation”), the defendant may be ordered under PRC laws namely, Article 107 of the Contract Law of the PRC (“PRC Contract Law”), to transfer the Subject Shares to the plaintiff if the plaintiff does, within the statutory limitation period[7], claim specific performance of the 2^nd Supplemental Agreement unless the transfer of the shares has become legally or practically impossible when judgment is entered[8].

95.  The defendant has not come forward to dispute the plaintiff’s factual or PRC law evidence.

96.  On this state of evidence, I do not see how it can be said that the plaintiff has not shown even a serious issue to be tried as to its entitlement to be transferred the Subject Shares under the PRC Proceedings.

97.  I so conclude notwithstanding the 2016 Fuzhou Intermediate Court Judgments and the 2017 Fuzhou Intermediate Court Enforcement Decisions as well as the pending proceedings by the first and second of the Relevant Fuzhou City Authorities in the Fuzhou Intermediate Court against, inter alia, the plaintiff.

98.  In respect of the 2016 Fuzhou Intermediate Court Judgments and their aftermaths, the plaintiff has asserted through paragraphs 25 to 27 of Lin’s Affirmation that:

(1)  It has been advised by its in-house counsel that given that it has become impossible for the plaintiff to return the Old Brewery Lot to the Associated Companies[9], the plaintiff’s only obligation under the 2016 Fuzhou Intermediate Court Judgments and the 2017 Fuzhou Intermediate Court Enforcement Decisions is to pay damages to the Associated Companies, which is a matter strictly between the 3 companies.

(2)  The Project Company itself has not contested the validity of the transfer of Old Brewery Lot by the plaintiff to it.

99.  The plaintiff has further obtained a legal opinion dated 10 August 2017 by one Zhang Chen of Beijing Yingke Law Firm, Shanghai office (北京盈科 (上海) 律師事務所), confirming that:

(1)  The 2016 Fuzhou Intermediate Court Judgments and the 2017 Fuzhou Intermediate Court Enforcement Decisions do not invalidate the transfer of the Old Brewery Lot from either the plaintiff to the Project Company or from the Project Company to the Fuzhou City Government which, one assumes, is a bona fide transferee within the meaning of article 106(1) of the Property Rights Law of the PRC and has therefore, as such, obtained ownership of the Old Brewery Lot.

(2)  There is thus no legal basis for the Fuzhou City Government to rescind the Resumption Agreement with, or recover the Paid Compensations from, the Project Company.

(3)  On the premise that the Fuzhou City Government has, as a bona fide party, so obtained ownership of the Old Brewery Lot, it is no longer legally possible for such land to be returned to its original owner (i.e. the Associated Companies) who shall, instead, have the right to be paid damages by the plaintiff.

100.  I have examined such opinion evidence with care.  I accept the same.  It is, in my view, a reasonable position to be taken.  Given the subsequent purchase and redevelopment of the Old Brewery Lot by a third party from Fuzhou City Government, I am at a loss as to how the Fuzhou City Government may rescind the Resumption Agreement or for the plaintiff to return the Old Brewery Lot to the Associated Companies.  Indeed, the 2017 Fuzhou Intermediate Court Enforcement Decisions themselves expressly stated that the plaintiff shall pay damages to the Associated Companies if it cannot return the Old Brewery Lot to them.

101.  Given the plaintiff’s performance of its obligations under the Oral Share Transfer and the 2^nd Supplemental Agreement whereupon it has become entitled to be transferred the Subject Shares and in the absence of evidence from the defendant of any irreparable prejudice or damage that he might suffer should the injunction sought in the OS be granted, the balance of convenience must favour the preservation of the Subject Shares pending the conclusion of the PRC Proceedings by such an injunction. 

102.  In particular, I read from the PRC legal opinion mentioned in [94] above that the defendant will not be ordered to transfer the Subject Shares to the plaintiff if a transfer has become legally or practically impossible when judgment is entered, such as where the Subject Shares have in the meantime been sold or otherwise disposed of by the defendant.

103.  For the same reasons, I consider it just and convenient to grant the injunction.

Second stage consideration

104.  I cannot see how the fact that the court only has jurisdiction by virtue of s 21M of the HCO makes it in any way unjust or inconvenient to grant the injunction on the facts and circumstances of this case.

Conclusion on OS

105.  The injunction prayed for should be granted.

SUMMONS

106.  In view of my favourable disposition of the OS, it is unnecessary for me to deal with the Summons.

DISPOSITION

107.  I hereby grant an order on the OS that, pending the determination of the PRC Proceedings or until the further order of this court, the defendant must not, in any way whether directly or indirectly through his servants or agents or companies he beneficially owns or controls, dispose of or deal with the Subject Shares or his interest (direct or indirect, legal or equitable) therein.  For the avoidance of doubt, the injunction is granted upon the usual cross-undertaking as to damages by the plaintiff.

108.  I make no order on the Summons.

109.  I also make an order nisi that the defendant should pay the plaintiff’s costs of these proceedings, including the costs of the ex parte application for the Interlocutory Injunction Order and the inter partes application for the continuation thereof, to be taxed on a party and party basis if not agreed, with certificates for counsel for the hearings on 10 July 2017, 14 July 2017 and 13 March 2018.