LIM YEW CHENG AND ANOTHER v. GUANGHUA SS HOLDINGS LTD

HCA 1571/2025

[2026] HKCFI 5123

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1517 OF 2025

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D E C I S I O N

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Introduction and Undisputed Background

1.  This is an application by the Defendant (“D”) by Summons dated 27 February 2026 (“the Summons”) seeking to strike out the Writ of Summons dated 22 August 2025 and the Statement of Claim dated 9 October 2025, on the grounds that they: (a) disclose no reasonable cause of action; (b) are scandalous, frivolous and vexatious; or (c) are otherwise an abuse of process of the Court.  Subsequent to the issuance of the Summons, the Statement of Claim was amended (“ASOC”) pursuant to O.20, r.3 of the Rules of the High Court, Cap. 4A (“RHC”).  It was not disputed that the Summons should be dealt with on the basis of the claims as pleaded in the ASOC.

2.  In this action, the 1^st and 2^nd Plaintiffs (collectively, “Ps”) seek inter alia to set aside the Judgment of Ng J (“the Judge”) in HCA 1972/2020 (“the 2020 Action”) dated 20 April 2022 that granted summary judgment in favour of D (“the Judgment”) on the ground that it was obtained by fraud relying on Takhar v Gracefield Developments Ltd and others [2020] AC 450 (“Takhar claim”).

3.  For present purposes, the following brief background suffices:

(1)  D is beneficially owned by MBK Partners (“MBK”), a private equity firm in Asia;

(2)  The 1^st Plaintiff (“P1”) is the beneficial owner of Xeno Origin Limited (“Xeno”) and Kenora Corporation Limited (“Kenora”) through which held 49% shares in Aether Ltd (“Aether”);

(3)  The 2^nd Plaintiff (“P2”) is P1’s son;

(4)  Aether through its PRC subsidiary (“BJ Aether”) is the developer for a construction project in Beijing;

(5)  By a facility agreement dated 21 December 2017, SCH I Limited (“SCH I”) as lender, Xeno as borrower and Ps inter alios as guarantors entered into a facility agreement for two years (“Xeno Facility Agreement”) for the sum of US$80M.  By a Share Charge dated 21 December 2017, inter alia, the 49% shareholding in Aether held by Xeno and Kenora were charged in favour of SCH I as security;

(6)  On 21 May 2018: (a) the Xeno Facility Agreement was assigned to D as lender; (b) a facility agreement between D as lender, Xeno as borrower and Ps inter alios as guarantors for a further two-year facility in the amount of US$80M (“Aether Facility Agreement”) was executed (which later was novated to Aether as borrower on 26 October 2018); (c) Xeno and P1 also executed a Fee Letter whereby P1 agreed to pay stipulated fees jointly and severally with Xeno for the Aether Facility Agreement (“Fee Letter”);

(7)  After the original due date for repayment of the Xeno Facility Agreement and Aether Facility Agreement (collectively, “Loan Agreements”) on 28 December 2019, there were further extensions and amendments to the Loan Agreements and Fee Letter;

(8)  In October 2020, D issued demand letters to Xeno, Aether and Ps for repayment under the Loan Agreements and the Fee Letter;

(9)  On 23 November 2020, D commenced the 2020 Action against Ps;

(10)  On 15 June 2021, D took out the summary judgment application;

(11)  By the Judgment, P1 was ordered to pay over US$7M in facilities and interest under the Fee Letter and Ps were ordered to pay over US$220M as guarantors for the loans advanced under the Loan Agreements.  In the 2020 Action, Ps did not dispute execution of the documents, the quantum of the claim or that the loans and fees were outstanding but put forward only the defence of misrepresentation as summarized by Ps’ then Senior Counsel as: (1) the misrepresentation by D’s representative Mr Stephen Le (“Le”) prior to Ps’ execution of the Xeno Facility Agreement that the construction loan made to BJ Aether may be used to repay related party loans incurred by it; and (2) the misrepresentation by Le prior to Ps’ execution of the Aether Facility Agreement and the Fee Letter that the interest rate under the Aether Facility Agreement would be a flat rate of 12% p.a.  Essentially, the Judge rejected the misrepresentation defence given that Ps had known about the ability to use the construction loan to repay related party loans before the Aether Facility Agreement and amendment deed to the Xeno Facility Agreement were entered into, and were aware of the interest rate by the date of the amendment deed to extend the Aether loan, and thus had affirmed the Loan Agreements.  Furthermore, the assertion that Ps had relied on the misrepresentations was held to be unbelievable.  (See [2022] HKCFI 1052.)

4.  In the ASOC, essentially, it is pleaded that D concealed from the Judge that: (1) D knew the Loan Agreements should have been void/voidable for: (a) misrepresentation; (b) undue influence; (c) mistake; (d) fraud; and/or (e) breach of fiduciary duties; and (2) D participated in a conspiracy between D, MBK, Cinda Group and the Receivers of Xeno and Kenora (“the Receivers”) to sell assets pledged under the Loan Agreements at an undervalue when those pledged assets would have been sufficient to discharge the debts owed under the Loan Agreements and yet continued to pursue the recovery of the outstanding loan against Ps in the 2020 Action (“the Conspiracy”).

5.  From the Skeleton Submissions for Ps dated 12 June 2026 and the oral submissions, for the purposes of the present application, Ps only rely on the Conspiracy.  In particular, in P’s Aide Memoire dated 15 June 2026 at §4(1), the Conspiracy (which D is said to be a party to) is stated as follows:

“While [D] were suing Ps’ as guarantors for ~ US$227 million, it was secretly conspiring to acquire the very security assets (the ‘49% Shareholding’ in HK Aether) for a price ‘as low as possible and less than the total outstanding amount’ owed.  If the assets had been properly sold, the guarantors’ liability under Standard Chartered v Walker/Silven Properties would have been reduced or eliminated.  By engineering a gross undervalue, [D] sought to obtain double recovery: full judgment (US$220 million + US$7 million +24% p.a. default interest) and the security at a knock-down price.”

6.  On 6 December 2023, Ps commenced another High Court action (HCA 1976/2023) against inter alios D, contending that D, MBK as well as the Receivers participated in the Conspiracy (“the Derivative Action”).  Ps’ case as set out in the Amended Statement of Claim therein at §77 is as follows:

“Pursuant to and in furtherance of the Conspiracy, the Receivers, [D], Cinda HK and the 7^th and 8^th Defendants [Chang An Limited and Guanghua SS Finance Limited] (or any two of them) carried out the following unlawful acts and means by which the Guarantors and Chargors [i.e. Ps] were injured (the ‘Unlawful Means’):

77.1 The Receivers wrongfully breaching the Director’s Duties as pleaded in Section H;

77.2 The Receivers wrongfully breaching the Receivers’ Duties at Equity as pleaded in Section G;

77.3 [D] wrongfully breaching the Chargee’s Duties as pleaded in Section I; and

77.4 Cinda HK dishonestly assisting or facilitating the Receivers in breaching their Director’s Duties as pleaded in paragraph 50.”

7.  Specifically, as regards D’s wrongful breach of duties, it is pleaded at §69 that D: (1) failed to obtain the best price reasonably obtainable for the Sale Assets; and (2) instructed the Receivers (directly or through MBK and/or Cinda HK) to carry out the acts in breach of their Receivers’ Duties at Equity and the Director’s Duties pleaded in Sections G and H.

8.  A 24-day trial of the Derivative Action has been fixed before Eugene Fung J commencing on 16 May 2028.

9.  At the hearing of the Summons, Mr Johnny Mok SC leading Mr Thomas Wong, Mr John CK Chan and Miss Fan Tsz Hing Kitty, counsel, appeared for Ps and Mr Bernard Man SC leading Mr Danny Tang, counsel, appeared for D.

Applicable Principles

10.  The applicable principles for a strike-out application under O.18, r.19 of RHC are trite and were not disputed.  These include the following:

(1)  It is only in plain and obvious cases that the court should exercise its summary powers to strike out the indorsement on any writ or any pleading under this rule; 

(2)  There should not be any trial upon affidavit.  Disputed facts are to be taken in favour of the party sought to be struck out;

(3)  Nor should the court decide difficult points of law in striking out proceedings.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out.  If the court does not think the matter to be clear beyond doubt or if it fails to be satisfied that there is no reasonable cause of action or that the proceedings are frivolous or vexatious, then, there should be no striking out;

(4)  However, plain is not the same as simple, and obvious is not the same as short.  If, on a careful reading of the statement of claim, however complicated, it can be seen that there is no cause of action or the claim will obviously not succeed, then it will be struck out despite the apparent complexity;

(5)  Where the legal viability of the cause of action is sensitive to the facts, an order to strike out should not be made;

(6)  The mere fact that the case is weak and not likely to succeed is no ground for striking it out;

(7)  It is for the party seeking to strike out an indorsement on a writ or pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail;

(8)  The rule also empowers the court to amend the indorsement on any writ or any pleading.  If a statement of claim does not disclose the cause of action relied on, an opportunity to amend may be given, even though the formulation of the amendment is not before the court.  However, unless there is reason to believe that the case can be improved by amendment, leave will not be given.

See Hong Kong Civil Procedure 2026, Vol.1, §18/19/4.

11.  As for setting aside a judgment on the basis that it was obtained by fraud, the legal principles as set out by Aikens LJ in Royal Bank of Scotland plc v Highland Financial Partners LP & Ors [2013] 1 CLC 596, as approved by the Supreme Court in Takhar, were summarised by the Court of Appeal in Mayer Corporation Development International Limited v Alliance Financial Intelligence Limited & Others [2019] HKCA 777 (“Mayer”) at §72 as follows:

(1)  There must be “conscious and deliberate dishonesty” in relation to the relevant evidence given;

(2)  The fresh evidence must be “material”, in that it demonstrates that the evidence or act under complaint must be an operative cause of the court’s decision to give judgment in the way it did, or that it would have entirely changed the way in which the first court approached and came to its decision; and thus the conscious and deliberate dishonesty must be causative of the impugned judgment being obtained in the terms it was; and

(3)  The question of “materiality” of the fresh evidence is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.

12.  However, as held by the Privy Council in Finzi v Jamaican Redevelopment Foundation Inc and others [2024] 1 WLR 541 and endorsed by Mimmie Chan J recently in G & Anor v CNG & Anor [2026] HKCFI 902 at §§119-122, a Takhar claim is still subject to the doctrine of abuse of process by referring to §76 where Lord Legatt held: “allegations of fraud are not to be regarded as some kind of open sesame which have only to be uttered to enable a party to engage in a new round of litigation of disputes that have been compromised or decided”.  The learned judge cited with approval the observations made by Lord Leggatt as to the risks of allowing vexatious fraud claims to be launched (see §§67-69):

“67 When once it has been established, or if it is incontrovertible, that a judgment or settlement agreement was obtained by fraud, it cannot—as Lord Sumption pointed out—be a reason to allow the judgment or settlement to stand that the victim of the deceit was negligent in failing to recognise or allege fraud in the earlier proceedings.  Clearly fraud is not excused by negligent failure to expose it.  Or, as it was put in a pithy statement quoted by Lord Kerr JSC in Takhar, at para 50, ‘a knave does not escape liability because he is dealing with a fool’ (Gould v Vaggelas (1985) 157 CLR 215, 252, per Brennan J).  Yet what this reasoning leaves out of account is the burden and expense involved in litigating allegations of fraud.  If a new action in which fraud is alleged proceeds to trial and the allegation is not made out, the mischief which the power to prevent abuse of the court’s process is designed to prevent will have been incurred. As Lord Briggs JSC pointed out in his separate judgment in Takhar, at para 75:

‘In particular cases the fraud allegation may be a weak one, just passing the summary judgment test, whereas the invasion of the finality principle in such a case will not merely be a risk but an expensive and time—consuming actuality.’

68 The risk of a party being vexed by allegations of fraud which amount to ‘wasteful and potentially oppressive duplicative litigation’ is as at least as great as the risk as regards other types of new claim.  In fact, it may be considered greater, as the jurisdiction to set aside a judgment or settlement agreement for fraud creates the potential for using allegations of fraud as a pretext for relitigating the dispute supposed to have been finally determined. The Board would endorse in this context the observation of Coulson J in Seele Austria GmbH & Co KG v Tokio Marine Europe Insurance Ltd [2009] BLR 261, para 107, that:

‘the court should be astute to prevent a claiming party from putting its case one way, thereby causing the other side to incur considerable expense, only for the claiming party to lose and then come up with a different way of putting the same case, so as to begin the process all over again.’

The same applies with equal, if not greater force, in the familiar situation where a party who has entered into a compromise agreement afterwards regrets having done so and attempts to re‑open the litigation.

69 It is by no means unknown for disappointed litigants, looking back at proceedings which resulted in an adverse judgment or a settlement that with hindsight seems to them disadvantageous, to come to believe that, to achieve such an outcome, their opponent must have engaged in deceit.  Conduct and intentions not originally seen as fraudulent may now be perceived in a malign light.  Such a change of perception cannot, in the Board’s opinion, provide an adequate basis for allowing a party to bring fresh proceedings relying on material it already had when the earlier proceedings were taking place but which is now rebranded as evidence of fraud.”

[My emphasis in bold.]

Discussion

13.  As Mr Mok correctly points out, because this is a strike-out application, all disputed facts (particularly, those relating to the alleged conspiracy and sale at undervalue) are assumed in favour of Ps.  Mr Man in his oral submissions seems to have accepted that and was willing to proceed on the basis that at the time of the Judgment, Ps had the alleged plan to sell the pledged securities at an undervalue.

14.  The question before me is whether D has demonstrated that it is plain and obvious that Ps’ Takhar claim is unsustainable, the pleadings are unarguably bad and that it must be impossible, not just improbable, for that claim to succeed.  There is also the question whether to bring the Takhar claim is an abuse of process.

15.  Essentially, Ps’ pleaded case is that no later than July 2021, before the O.14 application, MBK and Cinda began discussions on the possibility of MBK procuring and transferring the 49% shareholding into a joint venture vehicle owned by MBK and Cinda (see ASOC, §115).  Mr Mok submitted that it was consciously and deliberately dishonest for D to swear in its affirmation in support of the O.14 application (Affirmation of Liu Kao dated 24 June 2021) that: (a) it was entitled to the relief claimed; and (b) Ps had no defence to D’s claim.  He submitted that if, as claimed by Ps, D was engaged in the Conspiracy, D should have given credit for the amount for which the sale should have been realized if reasonable care should have been used relying on Standard Chartered Bank Ltd v Walker and Another [1982] 1 WLR 1410 at 1416B and Silven Properties Ltd and another v Royal Bank of Scotland plc and others [2004] 1 WLR 997 at §19.  Mr Mok submitted that Ps owed D nothing or close to nothing when D swore that Ps had no defence which means that the Judgment cannot possibly be correct.

16.  In respect of the first requirement in Mayer, Mr Man made comprehensive submissions that mere silence or the non-disclosure of the Conspiracy does not give rise to conscious and deliberate dishonesty.

17.  On the other hand, Mr Mok relied heavily on the case of Royal Bank of Scotland plc v Highland Financial Partners [2013] 1 CLC 596 that suppression of true facts could amount to conscious and deliberate misstatements and concealment of suppressed facts (see §§120-122).

18.  However, it is plain to me whether non-disclosure can amount to positive suggestion of the false, and whether given the Conspiracy, Liu Kao did not genuinely believe that Ps had no defence when he deposed to the same, must give rise to triable issues which should not be resolved in a strike-out application.

19.  In Royal Bank of Scotland plc, RBS was engaged to finance the purchase of “acquired loans” which would provide securities for the notes to be issued pursuant to Highland’s collateralized debt obligation.  These notes would be marketed by RBS, the sale of which would reimburse RBS for its purchase of the “acquired loans”.  One of the clauses of the interim servicing deed (clause 4.2) which governed the transaction provided that if by the time of the “termination date”, the notes had not been issued, the “acquired loans” were to be sold per the terms of the clause.  The notes were never issued so RBS went about recovering the sums which it had advanced.  As part of that process, RBS organized an auction of the “acquired loans” and ended up purchasing all of the loans and claimed that there was a shortfall and brought proceedings against Highland to recover it pursuant to which Burton J granted summary judgment.  The English Court of Appeal held that RBS had positively misled Highland and the Court at the time of the liability hearing and judgment, and did so consciously and deliberately when 36 of the loans had been transferred to RBS’s banking book and were never available for sale in the auction.

20.  Mr Man submitted that the finding in Royal Bank of Scotland plc was justified on its own facts and was not a case of mere non-disclosure but an egregious case where RBS had made multiple positive misstatement on what had occurred.  Furthermore, he pointed out that at §132, Aikens LJ held that the breach of the English equivalent of the O.14, r.2 to swear to the belief that no viable defence adds nothing to the analysis.  Either there was dishonest misstatement or concealment or there was not.  It seems to me that Mr Man therefore must accept that whether there was positive misstatement to the Judge is facts sensitive and not a matter for strike-out.

21.  Mr Man also relied on the cases of Ampthill Peerage [1977] AC 547 and G & Anor which he submitted were cases that affirmed the lack of frankness is not fraud.  However, it is clear that the House of Lords in Ampthill Peerage recognized that to impeach a judgment on the ground of fraud, it must be proved that the court was deceived into giving the impugned judgment by means of a false case known to be false or not believed to be true or made reckless without any knowledge on the subject. Furthermore, it was not doubted that suppression or non-disclosure of the truth may sometimes amount to suggestion of the false.  See at 591B-C (per Lord Simon) and 595F-H (per Lord Kilbrandon).  These cases clearly demonstrate whether there was positive misstatement (as opposed to mere non-disclosure) and what was known or believed by the deponent must necessarily be facts sensitive and raise triable issues.

22.  As for Mr Man’s reliance on Jane Rebecca Ong & Ors v Ong Siauw Ping [2015] EWHC 1742 (Ch) at §289, Justice Morgan held that a lack of candour in litigation even in relation to an O.14 application, does not necessarily amount to fraud.  In finding that in that case Madam Lim’s and her lawyers’ conduct in the litigation does not amount to conscious and deliberate dishonesty, I do not read that case as laying down any proposition of law that lack of candour can never amount to conscious and deliberate dishonesty.

23.  I therefore agree with Mr Mok that it is not plain and obvious that it is impossible for Ps to establish the dishonesty requirement to raise the Takhar claim.

24.  However, Mr Man was on stronger grounds in his other submissions relating to the relevance and hence the materiality requirement in Mayer.  Mr Man submitted that there could be no conscious and deliberate dishonesty in saying to the Judge that Ps had no defence because even if the intended plan to sell the securities at an undervalue was disclosed, it would have been irrelevant to Ps’ liability to D and not material having no bearing to the outcome of the Judgment.

25.  Firstly, as submitted by Mr Man, it is well-established that a secured creditor is not under a duty to exercise his power of sale over the mortgage securities at any particular time or at all: see Southwest Securities (HK) Brokerage Limited v Nieumarkt Investments Ltd & Anor [2021] HKCA 740 at §§5.10-5.12.  In that case, the Court of Appeal held that the first instance judge was wrong to enter summary judgment for damages to be assessed because of the possible realisation of the value of the security.  The Court of Appeal entered judgment for the plaintiff in the sum as claimed.  Mr Mok submitted that the case does not help D because it is not Ps’ case that D had to sell the security but as D was actively engineering an undervalue sale whilst simultaneously pursuing Ps for the full debt which “corrupt the sale process while obtaining judgment for the full amount”.  I respectfully do not agree that changes the analysis.

26.  As for the cases of Standard Chartered Bank and Silven Properties Ltd relied upon by Mr Mok, as submitted by Mr Man, those cases were cases where the pledged assets were monetized and it was claimed that there was a shortfall to which the bank then looked to the guarantors or the mortgagors.  Silven Properties Ltd at §19 makes clear that the duty in equity to the mortgagor to take reasonable precautions to obtain the fair or true market value or proper price for the mortgaged property at the date of the sale is “when and if the mortgagee does exercise the power of sale”.  As at the time of the O.14 application and the Judgment, there had yet to be any sale whether at an undervalue or not.  It was not disputed that the sale of the 49% shareholding in Aether took place on 1 August 2023.  I do not think that the fact there was already a plan to sell the securities changes the analysis because there was yet to be any sale of the pledged assets.

27.  Furthermore, in Southwest Securities (HK) Brokerage Limited, the Court of Appeal held that because of the immediate recourse clause (whereby the borrower waived any right it may have to require the lender to proceed against or enforce any or rights or security before claiming repayment from the borrower), there was basis for entering judgment in the sum claimed (see §5.11).  In the present case, there were similar clauses in the Xeno Facility Agreement (see clause 16.5) and the Aether Facility Agreement (see clause 15.5).

28.  In addition, as Mr Man submitted, the Conspiracy is also irrelevant as it would not afford any defence to Ps as a matter of contract given the waiver of defences clause to the effect that the obligations of Ps shall not be affected by any acts or omissions which would reduce, release or prejudice its obligations by the refusal or neglect to enforce against any security over assets (see clause 16.4(c) of the Xeno Facility Agreement and clause 15.4(c) of the Aether Facility Agreement).

29.  Secondly, even if I were wrong on the foregoing, the question of materiality is to be assessed by reference to its impact on the evidence supporting the original decision, not by reference to its impact on what decision might be made if the claim were to be retried on honest evidence.  As Mr Man submitted, the plan to sell the securities cheap would not have impacted on any of the issues or evidence before the Judge and thus the Judgment.  He cited the following decisions to illustrate how the third condition of Mayer should be applied: 

(1)  Lu Yongliang v Bank of China Limited, Dongguan Branch & Anor [2020] HKCA 1089 where it held by Lam VP (giving the judgment of the Court of Appeal) that there has to be some causative link or causal nexus between the new evidence and the grounds previously canvassed before the judge (see §§22 and 40).  In the court below, the Applicant chose not to address the court by reference to the underlying merits concerning the liability of the guarantee in the Hong Kong proceedings by alleging fraud, but was content to have the disputes determined in the Mainland proceedings (a retrial application) and in the Hong Kong proceedings, simply relied on expert opinion predicting the chance of success by reference to some purported statistics on retrials and hence the new evidence was not regarded as material (see §§16, 29-40).  See also Lu Yongliang v Bank of China Limited, Donguan Branch & Anor [2021] HKCA 1047 at §24; and

(2)  G & Anor where the alleged bribery of A and evidence given by A could not have influenced or affected the essential issue in the Original Arbitration which was whether CNG was in breach of contract, by reason of its performance or non‑performance during the course of the Sale Purchase Agreement or the Shareholders Agreement such that the Awards could not have been materially different (see §§140-141).

30.  However, Mr Mok submitted that if the Judge knew that the Conspiracy was in progress, he could not have concluded that D was entitled to USD227M as final judgment or that D had no defence.  He submitted that “the chargee’s own conduct would have required the Court to refuse judgment until the conspiracy issue was determined at trial, or an interlocutory judgment with damages to be assessed”.  For the reasons already explained, I respectfully disagree that the Conspiracy or plan for undervalue sale would have afforded Ps any defence as a matter of common law or contractually.  It was also never raised as a defence and hence could not have affected the Judgment.  To enter interlocutory judgment with damages to be assessed would be contrary to the Court of Appeal’s decision in Southwest Securities (HK) Brokerage Limited.

31.  Mr Mok also submitted that D would not have applied for final judgment relying on Royal Bank of Scotland plc at §139.  However, in that case, RBS had misled its own legal representatives as to what in fact occurred (see §§110, 113-14 and 116) but had they known the full story, Aikens LJ was of the view that they would not have advised making the summary judgment application or if the application was made, would have fully disclosed what happened (see §131).  In the present case, given that the Conspiracy affords Ps no defence, it is difficult to see how D would not have applied for summary judgment.

32.  Accordingly, I am of the view that contrary to Mr Mok’s submissions, it is plain and obvious that Ps cannot satisfy the materiality requirement and that any dishonesty was causative of the Judgment.

33.  Since I am of the view that it is plain and obvious that Ps’ Takhar claim cannot succeed, I do not need to further consider whether it ought also be struck out on the ground that it is vexatious or otherwise amounts to an abuse of process.  Only for completeness, I deal with this other ground briefly.

34.  Mr Man submitted that there was an abuse of process when the Takhar claim is only founded on the Conspiracy (having now abandoned the other pleas in the ASOC) which should and have been advanced in the Derivative Action.  He submitted that it is an abuse for Ps to pursue both the present action and the Derivative Action where Ps are seeking recourse for the Conspiracy.  In the Derivative Action, D has already pleaded reliance on the Judgment in contending that the Derivative Action should be barred by issue estoppel or collateral attack abuse: see D’s Amended Defence in the Derivative Action, §92.3.  He relied on the case of DP World Djibouti FZCO v China Merchants Port Holdings Company Limited [2025] HKCFI 3861 at §§35-41 per DHCJ MK Liu that Henderson v Henderson abuse applies even when the first action is proceeding and has not come to a close.

35.  On the other hand, Mr Mok submitted that there was no duplication because a Takhar claim is an independent cause of action to the earlier proceedings and is also independent cause of action from the Derivative Action (see Takhar, §§60-61) although he accepted that there were overlapping factual matrix.  In the latter action, if Ps succeed, they would get damages or equitable compensation but would not be able to set aside the Judgment which requires payment of US$220M plus interest which D can seek to enforce.  He also submitted that it was only through the discovery in the Derivative Action and ongoing discovery the full extent of the fraud can be discovered and pleaded.

36.  Whilst there is no doubt some overlap between the present action and the Derivative Action such that there is some force in the submissions that the Takhar claim could have been raised in the Derivative Action, given the submissions of Mr Mok on the circumstances of this case, I am of the view that it is not plainly abusive to take out the present action and not raising it in the Derivative Action.  Given that the court takes a broad, merits-based judgment which takes account of the public and private interests involved and all the facts of the case focusing attention on the crucial question whether in all the circumstances a party is misusing or abusing the process of the court by seeking to raise before it an issue which could have been raised before (see e.g. Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 per Lord Bingham cited in Aldi Stores Ltd v WSP Group plc and others [2008] 1 WLR 748 at §5 by Thomas LJ), this multi-factorial assessment is not a straightforward one suitable for striking out.

Disposition and Orders

37.  Accordingly, I would strike out Ps’ Writ of Summons and the ASOC on the grounds that it discloses no reasonable cause of action.  I make a costs order nisi that the costs of this action, including the Summons, be to D, with certificate for two counsel, to be taxed if not agreed.  Any application to vary the costs order nisi should be made within 14 days from the handing down of this Decision.