鑫都集團有限公司 v. WONG YIU KWAN (also known as WANG GUOJU) AND ANOTHER

HCMP 1107/2024

[2026] HKCFI 4566

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1107 OF 2024

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BETWEEN

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DECISION

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1.   Introduction

1.1  Before me is an application by the 1^st Defendant (“D1”) by his summons dated 19 December 2025 (“Summons”) seeking payment out of court the sum of RMB233,001,440 (“Subject Sum”). The Subject Sum forms part of the RMB288,059,440 paid into court on 7 November 2024 (“Payment In Sum”) by the 2^nd Defendant (“D2”) pursuant to undertakings given by each of D1 and D2 (“Undertakings”) as recorded in the order of Mr Recorder Jenkin Suen SC dated 27 September 2024 (“27/9/24 Order”).

1.2  The Undertakings are in the following terms:

(1) D1 do cause or procure D2 to pay the Payment In Sum representing 20% of the Consideration (as defined below) under the Totalbuild SPA (as defined below) into court within 28 days from the date of the 27/9/24 Order;

(2) D2 do pay the Payment In Sum into court with 28 days from the date of the 27/9/24 Order and (2) it do not sell, dispose of, transfer, assign, encumber or diminish the value of, or otherwise in any way deal with the issued share capital of Totalbuild (as defined below) or any part thereof and/or its traceable assets.

1.3  The real protagonists in the Summons are P and D1. Although the Payment In Sum was paid into court by D2, D2 does not object that any sum paid out of court (if allowed) be paid directly to D1. At the hearing, D1 was represented by Mr David Leung SC (leading Ms Cyndi Ho) and the Plaintiff (“P”) by Mr David Chen (with Ms Clara Wong).

2.   Background

2.1  On 16 January 2015, a memorandum was entered into by, inter alios, P, D1, UK Prolific Petroleum Group Company Ltd (“UKPPGC”) and 王 漢 寧 先生 (“WHN”)[1] to settle various disputes between them (“2015 Memorandum”). UKPPCG was at all material times (1) a company beneficially owned by D1 and (2) a shareholder of China Energy Development Holdings Ltd (“China Energy”), a listed company in Hong Kong.

2.2  Relevant for present purpose are the following provisions in the 2015 Memorandum:

(1) Under clause 四(二)(2) (“Clause 4(2)(2)”), P was entitled to (among other things) 20% interest in UKPPCG and the proportionate benefits in shares and convertible bonds issued by China Energy[2] (“UKPPGC Securities”);

(2) Under clause 四(四) (“Clause 4(4)”), D1 undertook to P that, in the event that D1 continued to receive investment rights (投資權益) in a project in Kashgar North (喀什北) (“Project”) through Totalbuild Investments Holdings Group Ltd (“Totalbuild”): (1) P was entitled to 20% of the investment (投資份額) and (2) a pre-emption right to acquire the investment rights in the event that D1 was to transfer the investment rights to a third party (“Pre-emption Right”)[3].

2.3  The 2015 Memorandum has generated various sets of proceedings.

2.4  In November 2023, P issued a stop notice over the UKPPGC Securities (“Stop Notice”). Thereafter:

(1) On 2 April 2024, UKPPGC commenced HCMP 546/2024 to discharge the Stop Notice;

(2) On 16 April 2024, P commenced HCMP 630/2024 pursuant to RHC Order 50, rule 15 against China Energy, Tricor Tengis Limited and UKPPGC to seek a stop order to restrain the registration of the transfers of the UKPPGC Securities in breach of Clause 4(2)(2) and applied for urgent interim-interim relief;

(3) On 19 April 2024, upon P’s undertaking to commence arbitration proceedings to enforce its rights under the 2015 Memorandum, DHCJ KC Chan granted interim-interim relief pending the substantive determination of HCMP 630/2024;

(4) On 13 May 2024, an order was made for HCMP 546/2024 and HCMP 630/2024 to be heard together on 23 September 2024.

2.5  In May 2024, P commenced arbitral proceedings in the Shenzhen Court of International Arbitration against, inter alios, UKPPGC, WHN and D1 (“Arbitration”) to enforce its rights under Clause 4(2)(2) and Clause 4(4). In the Notice of Arbitration dated 22 May 2024 (“NOA”), the relief sought by P included (1) a declaration that the 2015 Memorandum was valid, (2) a request to confirm P’s ownership in the UKPPGC Securities and an order for the transfer of the same to P[4], (3) damages quantified at HK$313,170,000 and (4) a request to confirm P’s 20% interest in the Project and the Pre-emption Right[5]. P complained that the rights conferred by Clause 4(2)(2) and Clause 4(4) had not been transferred to P and the convertible bonds issued by China Energy had been cancelled (注銷).

2.6  On 24 June 2024, P discovered that D1 and D2 had entered into an agreement (“Totalbuild STA”) by which D1 agreed to sell and D2 agreed to purchase Totalbuild for RMB1,440,297,200 (“Consideration”) in alleged breach of Clause 4(4) of the 2015 Memorandum. The foregoing prompted P to commence these proceedings by an originating summons dated 27 June 2024, initially only against D1. On the same day, P obtained an ex parte injunction to restrain D1 from (1) dealing with 20% of the issued share capital of Totalbuild and its traceable assets and (2) taking any further steps to complete the Totalbuild STA (“1^st Injunction Order”). The 1^st Injunction Order was thereafter continued pending the substantive hearing of P’s application for its continuance until further order of the court or the arbitral tribunal (“1^st Continuation Summons”).

2.7  Thereafter, on 16 July 2024, D1’s solicitors informed P that the transfer of Totalbuild’s shares to D2 had been completed in April 2024 and provided Totalbuild’s certificate of incumbency signed on 24 April 2024 showing D2 as the sole shareholder of Totalbuild. P was at the same time informed that the Consideration had yet to be paid by D2.

2.8  The above prompted a second ex parte application for injunctive relief to restrain (1) D1 from receiving any funds for his sale of Totalbuild and (2) D2 from taking further steps to complete the sale and purchase of Totalbuild and dealing with Totalbuild and/or its traceable assets. I granted the application on 29 July 2024 (“2^nd Injunction Order”) and also granted leave to P to join D2 in these proceedings and to amend the originating summons, which P duly did on 2 August 2024 (“AOS”).

2.9  On 2 August 2024, P issued a summons for the continuation of the 2^nd Injunction Order (2^nd Continuation Summons”) until the determination of the AOS.

2.10  On 20 August 2024, D1 issued a summons to discharge the 2^nd Injunction Order by providing undertakings in lieu, alternatively for fortification (“Fortification Summons”).

2.11  As stated above, HCMP 546/2024 and HCMP 630/2024 were listed to be heard on 23 September 2024. Following hearings on 23 September 2024, 2 October 2024 and 29 May 2025, Mr Recorder Jenkin Suen SC handed down his decision on 9 October 2025 (“9/10/25 Decision”), by which the learned Recorder dismissed the application to discharge the Stop Notice and granted a stop order in favour of P in respect of the UKPPGC Securities identified therein. As will be seen below, some of the observations set out in the 9/10/25 Decision are relevant to the issues debated between the parties in these proceedings.

2.12  On 27 September 2024, Mr Recorder Jenkin Suen SC heard the 2^nd Continuation Summons and the Fortification Summons. Upon the Undertakings given by D1 and D2, the learned Recorder (1) made no order under the 2^nd Continuation Summons and (2) adjourned the AOS, the 1^st Continuation Summons, the 2^nd Continuation Summons and the Fortification Summons for substantive argument with 1 day reserved.

2.13  As regards the Arbitration:

(1) On 12 October 2024, P amended its NOA (“ANOA”), in which the monetary claim was increased to RMB958,877,780 (“Claimed Sum”);

(2) On 13 November 2024, the Intermediate People’s Court of Dongying City, Shandong (“IPC”), granted a property preservation order against D1 and WHN (“Asset Preservation Order”) up to the value of RMB679,887,780 (“Asset Preservation Sum”);

(3) The Asset Preservation Order was granted by the IPC at the request of the arbitral tribunal, which request was made by the arbitral tribunal to the IPC upon P’s application in the course of the Arbitration;

(4) The total of the Payment In Sum (in Hong Kong) and the Asset Preservation Sum (in the Mainland) equals the Claimed Sum.

2.14  The trial of the AOS and the substantive hearing of the 1^st Continuation Summons, the 2^nd Continuation Summons and the Fortification Summons took place before me on 11 December 2025 (“December Hearing”). By consent, it was ordered, inter alia, that (“11/12/25 Order”):

(1) No order be made on the AOS, the 1^st Continuation Summons, the 2^nd Continuation Summons and the Fortification Summons, save and except that the Payment In Sum is to remain in court pending the substantive determination of the Arbitration;

(2) There be liberty to D1 and/or D2 to apply for payment out of court the Payment In Sum.

3.   D1’s grounds

3.1  The scope of D1’s grounds has curtailed and changed in the course of the hearing, Mr Leung having abandoned some of them and changed the basis of others. In summary, the grounds as pursued by Mr Leung at the hearing are as follows.

3.2  First, D1 points out that in the ANOA, the monetary relief sought against him in respect of the claim premised on 20% of China Energy has been inflated to RMB521,060,840 (“Increased Sum”). As D2 only agreed to pay the Consideration, the proper quantification of P’s claim ought to be the Payment In Sum. There is therefore an “over-securitization” of [RMB 521,060,840 – RMB 288,059,440 =] RMB 233,001,400 (ie the Subject Sum). As P had obtained the Asset Preservation Order, the Subject Sum should be released to D1 (“Ground 1”).

3.3  Secondly, even were I to reject Ground 1, the monetary claim against D1 himself set out in the ANOA is only the Increased Sum. The only asset identified in the Asset Preservation Order is D1’s entitlement to receive certain payments from 新疆鑫泰天然氣股份有限公司 (“Xinjian Xintai”), D2’s parent company. The asset preserved by the Asset Preservation Sum exceeds the monetary claim made in the ANOA against D1 personally (“Ground 2”).

3.4  Thirdly, on 2 April 2026, the arbitral tribunal informed D1 of a new development which is said to have an impact on the validity of the 2015 Memorandum. As set out at 9/10/25 Decision §80, it has always been D1’s evidence that his signature on the 2015 Memorandum was procured by duress whilst he was incarcerated in the Mainland. The new development is that, on D1’s application, the arbitral tribunal requested the Shenzhen police to provide certain information. On 21 January 2026, the Shenzhen police confirmed that D1 did not leave the prison nor meet any notary public on 14 January 2015 (“Shenzhen Police Reply”). On the face of the 2015 Memorandum, D1 signed the 2015 Memorandum on 14 January 2015 and there is a certificate from a notary (“Notary”) stating that D1 signed the 2015 Memorandum in his presence. It is said that the Shenzhen Police Reply constitutes cogent and independent evidence which casts serious doubts on the authenticity of the 2015 Memorandum. Mr Leung submits that the Shenzhen Police Reply has the effect of damaging the merits of P’s underlying claim to the extent that they fail to meet the “serious issue to be tried” threshold (“Ground 3”).

3.5  Fourthly, the arbitral tribunal has postponed the rendering of the award for the second time for another three months to 17 July 2026. D1 says that with the Shenzhen Police Reply, the rendering of the award may be further delayed (“Ground 4”).

3.6  Fifthly and finally, it is said that the Payment In Sum has remained in court for about 18 months and has the effect of restricting D1’s cash flow and preventing him from deploying capital for petroleum exploration (“Ground 5”).

4.   The applicable principles

4.1  The Summons relies on RHC Order 22A, rule 1. Counsel, through their industry, have referred me to quite a number of authorities, but it seems to me that the applicable principles may be shortly stated as follows.

4.2  As stated at Hong Kong Civil Procedure 2026 Note 22A/1/2:

(1) The Court has wide powers and an unfettered discretion over money paid into court to achieve justice between the parties on the facts and in the circumstances of the case;

(2) It is always necessary to consider the purpose of the initial payment into court, and where the applicant for release is in principle entitled to the money, then the respondent must demonstrate good reasons to justify why the court should retain the money instead of releasing it.

4.3  In the present case, pursuant to the 11/12/25 Order, the Payment In Sum initially paid into court pursuant to the Undertakings is retained in court pending the resolution of the Arbitration. It bears emphasis that the 11/12/25 Order was a “final” order made in these proceedings, as the December Hearing was the substantive hearing of, inter alia, the AOS. Where, as here, the 11/12/25 Order was made by consent, the principles adumbrated at Chanel v Woolworth & Co Ltd [2013] 1 WLR 485 at 492D-E and 492H to 493A are pertinent:

“In my judgement, an order or an undertaking to the court expressed to be until further order by implication gives a right to the party bound by the order or the undertaking to apply to the court to have the order or undertaking discharged or modified if good grounds for doing so are shown. Such an application is not an application to set aside or modify any contract implicit in the order or undertaking. It is an application in accordance with such contract, being an exercise of a right reserved by the contract to the party bound by the terms of the order or undertaking…

… Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party has become aware of facts which he could not reasonably have known, or found out, in time for the first encounter. The fact that he capitulated at the first encounter cannot improve a party's position…” (emphasis added)

4.4  In the present case, Mr Leung has very fairly (and correctly in my view) accepted that, in order for D1 to succeed in the Summons (1) a good cause has to be shown and (2) it is incumbent upon D1 to demonstrate that there has been a material change in circumstances justifying the release of the Subject Sum.

5.   Overarching observations

5.1  In my view, Grounds 1, 2, and Ground 5 are plainly not material changes in circumstances and D1 should not be permitted to raise them in support of the Summons. The factual matters underlying Grounds 1, 2 and 5 were known to D1 prior to him consenting to the 11/12/25 Order for the following reasons:

(1) In relation to Grounds 1 and 2, as noted at §2.13 above, the amendment leading to the ANOA took place in October 2024 and the Asset Preservation Order was granted by the IPC in November 2024;

(2) In relation to Ground 5, the Payment In Sum was paid into court in November 2024. The cashflow problem identified at §§15 and 16 of D1’s 6^th Affirmation was already known to D2 at the latest by June 2025.

5.2  It is true that at the December Hearing, oral submissions were made on behalf of that the Payment In Sum ought to be reduced. As there was no summons or evidence for that purpose, a provision was therefore inserted into the 11/12/25 Order granting D1 the liberty to apply for payment out. It bears emphasis that that provision (1) procedurally does not add anything to the terms of Order 22A, rule 1A, since an order for payment out may be made at any time before, at or after the trial or hearing of the actions and (2) substantively does not have the effect of allowing D1 to raise grounds which D1 could or should have raised at the Hearing. As observed at Chanel, the fact that D1 had capitulated at the hearing cannot improve his position.

5.3  Even were the foregoing view incorrect, as will be seen below, Grounds 1, 2 and 5 are in any event unmeritorious.

6.   Grounds 1

6.1  Ground 1 in effect challenges the merits of the quantum of P’s claims in the Arbitration, in particular the Increased Sum.

6.2  The Increased Sum is based on a valuation of the Project as set out in a valuation report dated 10 May 2024 commissioned by Xinjian Xintai which provided a valuation of RMB2,605,304,200 (“Valuation”)[6].

6.3  D1’s case is that on a proper interpretation of Clause 4(4), the clause limits P’s monetary claim to 20% of the Consideration which is precisely the basis on which the Undertakings were given, namely the Payment In Sum represents 20% of the Consideration.

6.4  Insofar as it is suggested that the claim premised on the Increased Sum is unmeritorious, as noted at §2.13 above, the chronology shows that the Asset Preservation Order was obtained as a security of the entirety of P’s claims in the Arbitration, giving credit to the Payment In Sum. As such, the Asset Preservation Sum is a “top up” amount, and together with the Payment In Sum, secures the entirety of P’s claims in the Arbitration.

6.5  The following points merit emphasis.

6.6  First, the Asset Preservation Order was granted by the IPC at the request of the arbitral tribunal upon P’s application. The Asset Preservation Order expressly provided that D1 and WHN could apply for a review (復議) of the Asset Preservation Order within a stipulated period. If D1 took the view that the merits of any parts of P’s claims in the Arbitration lacked merits, one would have thought that D1 could or should have applied for a review. No such application was made.

6.7  Secondly, it is pertinent to note that the Asset Preservation Order only seeks assistance from Xinjiang Xintai to freeze the Consideration which remained unpaid to D1 up to the Asset Preservation Sum. Given that the Xinjiang Xintai is not a party to the Arbitration and the Asset Preservation Order only names D1 and WHN as the “preserving parties” (被保全人) it is entirely unclear whether the Asset Preservation Sum is in fact secured. As pointed out by Mr Chen, D1 has failed to adduce any expert evidence on what are the legal nature of the assistance requested of Xinjiang Xintai and the consequence of non-compliance.

6.8  Thirdly and relatedly, D1 now seeks to release “hard cash” paid into court in Hong Kong which (1) requires an examination of the merits of P’s claims in the Arbitration which one would have thought would have been examined by the arbitral tribunal in agreeing to make the request to the IPC for the Asset Preservation Order and (2) is applied for after consenting to the 11/12/25 Order against the background that no challenge to the Asset Preservation Order was made in the Mainland. When queried by the court at the hearing, Mr Leung was unable to provide a satisfactory explanation as to why no application for review was made in the Mainland, save to submit that the IPC might similarly ask why an application was not made in Hong Kong to release the Payment In Sum. I am unable to accept Mr Leung’s submissions. The arbitral tribunal, in making the request to the IPC, was obviously aware that the Asset Preservation Sum was a “top up” measure after taking into account the Payment In Sum. It seems to me that the arbitral tribunal, being the tribunal seized to adjudicate the merits, and the Mainland court, being the supervisory court of the Arbitration, are clearly in a better position to form a view on the merits of P’s claims. It bears emphasis that the substantive hearing in the Arbitration has already taken place. As the court has not been provided with the parties’ submissions on the Increased Sum advanced in the Arbitration, it seems to me entirely inappropriate for the court to release the Subject Sum on the basis that P’s claim premised on the Increased Sum lacks merits.

6.9  But even were I to carry out a provision assessment of the merits, it seems to me that P’s claim against D1 for the value of the Project which is over and above the Consideration cannot be dismissed summarily. It appears tolerably arguable that the real subject matter of Clause 4(4) is not Totalbuild, the corporate vehicle but the Project itself. Whilst I have not lost sight of Mr Leung’s argument that the Valuation predated the Totalbuild STA and his related submission that the Consideration was therefore the best reflection of the valuation of the Project agreed between D1 and D2. However, if it is established that by reason of D1’s breach P had lost its interest in the Project, it seems to me to be at least arguable that P may contend that the Consideration did not fully reflect the true value of the Project and hence its true loss.

6.10  For the above reasons, I reject Ground 1.

7.   Ground 2

7.1  I do not accept Ground 2 for the following reasons.

7.2  Whilst it is true that the Asset Preservation Sum is to be preserved by D1’s entitlement to receive the Consideration up to that amount, the fact remains that the Asset Preservation Order was made to secure P’s claims in the Arbitration in their entirety. Whilst the monetary claim against D1 personally is the Increased Sum, P seeks to hold D1 jointly and severally liable for the entirety of the Claimed Sum. In any event, the Asset Preservation Order was directed not only at D1, but at D1 and WHN to preserve assets under their names up to the Asset Preservation Sum (凍結被申請人 [WHN]、[D1] 人民幣 [Asset Preservation Sum] 銀行存款或查封同等價值的其他財產).

7.3  There is therefore no merit in the suggestion that the Asset Preservation Order should be construed severally, namely to secure only D1’s assets in respect of claim made against D1 personally.

8.   Ground 3

8.1  Ground 3 is equally unmeritorious. The gist of D1’s submissions is that the discovery of the Shenzhen Police Reply would single-handedly destroy the validity of the 2015 Memorandum. I am unable to accept this contention for the following reasons:

(1) The evidence of D1 is that he signed the 2015 Memorandum as a result of duress. This is diametrically inconsistent with the new allegation that he never signed the 2015 Memorandum;

(2) In any event, as noted at 9/10/25 Decision Section C5, there were a host of other documents signed by D1 and/or UKPPGC which acknowledged and confirmed the validity of the 2015 Memorandum (§§83-85 thereof). The Shenzhen Police Report does not have the effect of saying that D1 did not sign those other documents and there is no suggestion that those other documents were procured by duress;

(3) No or no real attempt was made by Mr Leung to deal with the above.

8.2  In my view, Mr Chen is right in his submission that the Shenzhen Police Reply at its highest represents an additional piece of evidence which has to be weighed in the arbitral tribual’s fact-finding exercise. As ventilated with Mr Leung at the hearing, the Shenzhen Police Report only has the effect of showing that D1 did not leave the prison nor meet any notary public on 14 January 2015. One has to bear in mind that the Shenzhen Police Report may be inaccurate as it seeks to confirm matters which took place around 10 years ago and there is also the prima facie inherent unlikelihood of the Notary lying by signing the notary certificate. I am unable to accept Mr Leung’s invitation that I should arrive at the conclusion that the Shenzhen Police Report has the effect of damaging P’s case on the validity of the 2015 Memorandum to one that does not even meet the “serious issue to be tried” threshold, which is the relevant merit threshold given that the Payment in Sum is premised on a proprietary injunction. In any event, for the purpose of the Summons, D1 has not filed any evidence to state categorically that he did not sign the 2015 Memorandum or to explain the change of case (from duress to non-execution).

9.   Ground 4

9.1  In my view, the delay in the rendering of the Award is substantially self-induced by D1’s own inaction. The Shenzhen Police Report was obtained by the arbitral tribunal on the application by D1. If and insofar as the award is delayed by the Shenzhen Police Report, there is no explanation as to why an application by D1 could not have been made earlier, since the Arbitration had commenced in May 2024.

10.   Ground 5

10.1  As already noted above, D1’s purported cashflow problem is not new.

10.2  Where D1 is claiming financial difficulties, he has been less than candid in disclosing the relevant information. As submitted by Mr Chen, according to Xinjiang Xintai’s 2025 Annual Report, out of the Consideration, D2 had paid in total RMB543,190,823.50 to “the former shareholder, the Court and a former supplier”. Subtracting the Payment In Sum, D2 had paid RMB255 million to D1 and the former supplier. In the circumstances, D1 has already received substantial sums from D2, and yet D1 has not explained how he has applied these funds, or why they are insufficient.

10.3  In any event, as pointed out by Mr Chen, the 9/10/25 Decision at §56 has already observed that, in an application for proprietary injunctive relief, “the Court will readily find that the balance of convenience favours the preservation of the property pending trial”.

10.4  For the above reasons, I reject Ground 5.

11.   Conclusion

11.1  Where, as here, the 11/12/25 Order expressly provides that the Payment In Sum is to remain in court pending the substantive determination of the Arbitration, D1 at present is not entitled to the Payment In Sum. For the reasons stated above, none of the grounds relied on D1 (even if allowed to be raised) amounts to a good cause.

11.2  In the exercise of my discretion, I dismiss the Summons. It seems to me that, to achieve justice between the parties, the Payment In Sum should remain in court.

11.3  I also make a costs order nisi that D1 is to pay to P the costs of an occasioned by the Summons. P is to lodge and serve its statement of costs (limited to 3 pages) within 7 days hereof and D1 its statement of objections (limited to 3 pages) within 7 days thereafter, I will then carry out summary assessment on the papers.