YINGJIA INTERNATIONAL PROPERTIES LTD v. STATE HERO HOLDINGS LTD

HCMP 334/2026

[2026] HKCFI 4452

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 334 OF 2026

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J U D G M E N T

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1.  By originating summons issued on 3 March 2026 (“OS”) the plaintiff, Yingjia International Properties Limited (盈佳國際置業有限公司) (“Plaintiff”), seeks an injunction restraining the defendant, State Hero Holdings Limited (國雄控股有限公司) (“Defendant”), from presenting a winding-up petition against the Plaintiff pursuant to a statutory demand served on 13 February 2026 (“SD”) requiring the Plaintiff to pay HK$5,971,517,808.22 (“Debt”).

2.  In support of its case, the Plaintiff filed 5 substantive affirmations[1] made by 3 individuals (who have never been a director of the Plaintiff) said to have been involved in the negotiation process leading to the Loan Agreement (as defined in §11 below) and the “Funding Arrangement Scheme” (as defined in §3(1) below):

(1)  Affirmation of Zhao Fei (趙飛) (“Zhao”)[2] dated 3 March 2026 (“Zhao 1^st”) and2^nd affirmation of Zhao dated 23 June 2026 (“Zhao 2^nd”);

(2)  Affirmation of Liu Chunying (劉春英) (“Liu”)[3] dated 4 March 2026 (“Liu 1^st”) and 2^nd affirmation of Liu dated 24 June 2026 (“Liu 2^nd”); and

(3)  Affirmation of Huang Zaizai (黃再再) (“Huang ZZ”)[4] dated 26 June 2026 (“Huang 1^st”). 

3.  As will be seen further below, the Plaintiff’s case keeps shifting:

(1)  In Liu 1^st , it is said that the parties reached a Funding Arrangement Scheme in March 2021 whereby none of the parties to the Loan Agreement (and the PRC Loan Agreement, defined in §14 below) “had any intention to make or receive any further payments” and “neither agreement was ever intended to be legally enforceable” (“Funding Arrangement Scheme”).  The Funding Arrangement Scheme was subsequently confirmed in a declaration letter issued in or around October 2021 (“Declaration Letter”)[5].

(2)  In his Skeleton, Mr Bernard Man SC[6], counsel for the Plaintiff, argues that the Debt is subject to a bona fide dispute on substantial grounds in that there was “a collateral agreement” that the Loan Agreement and the PRC Loan Agreement (together “Loan Agreements”) “were not to be enforceable”[7].  On that basis, the threatened use of winding-up procedure by the Defendant is “a plain abuse of process”[8]. 

(3)  Upon this Court’s enquiry as to when and who on behalf of the parties entered into the collateral agreement, Mr Man contends that there were 2 collateral agreements.  The first collateral agreement was reached in March 2021 at around the time when the parties entered into the Loan Agreements.  The second collateral agreement was reached when the Declaration Letter was executed in October 2021.  Under these 2 collateral agreements, the Plaintiff and the Defendant agreed that the Loan Agreements were not to be enforceable. 

4.  Mr John Scott SC[9], counsel for the Defendant, submits that the Plaintiff comes nowhere close to showing a bona fide dispute on the Debt because (1) the alleged collateral agreement is not supported by any contemporaneous document, which is most improbable given the amount at stake; (2) the Plaintiff’s case has changed from a sham to a scheme and now to a collateral agreement; (3) the collateral agreement is wholly unparticularised as to when, where and who allegedly entered into such agreement; and (4) the Defendant was not a party to, and did not sign or execute, the Declaration Letter and the same is not binding upon the Defendant. 

A.  BACKGROUND FACTS

5.  The following facts are not in dispute or are indisputable. 

6.  The various entities featured in the evidence fall into 2 camps.

7.  In the Plaintiff’s camp:

(1)  The Plaintiff is a Hong Kong company.  Its sole shareholder and director is Ms Wang Lihua (王麗華)  (“Ms Wang”)[10].

(2)  Heyirong International Trade Co., Ltd (和益榮國際貿易有限公司) (“Heyirong”) is a company established in the Mainland with registered and paid-up capital of RMB 50 million.  It engages in import, export, trading and investment business. The sole equityholder is Mr Wang Kaiguo (王開國) (“Mr Wang”), who acquired all the equity on 9 March 2021 and became its legal representative, executive director and manager on the same day.[11]

(3)  Honour Best International Trade Ltd (鴻昌國際貿易有限公司) (“Honour Best”) is a Hong Kong company.  According to Honour Best’s annual return dated 22 December 2021, Mr Wang was the sole director and he acquired all the issued shares from another shareholder on 23 March 2021.

(4)  According to Liu, Mr Wang is the shareholder of Honour Best, and a friend and business partner of Ms Wang[12].

8.  In the Defendant’s camp:

(1)  China Evergrande Group (中國恒大集團) (in liquidation)[13] (“CEG”), a company incorporated in Cayman Islands whose shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (“HKEx”) (stock code 3333), was wound up by the court on 29 January 2024.  On the same date, this Court appointed Mr Edward Simon Middleton and Ms Wong Wing Sze Tiffany as CEG’s joint and several liquidators (together “Liquidators”).  Mr Hui Kayan (許家印) (“Mr Hui”) was the founder and controlling shareholder of CEG before its demise[14].

(2)  China Evergrande New Energy Vehicle Group Ltd (中國恆大新能源汽車集團有限公司) (“NEV”) is a company incorporated in Hong Kong and its shares are listed on the Main Board of HKEx (stock code 0708). NEV has 2 main business segments, new energy vehicle and health management.  As at 30 June 2022, CEG held, directly or indirectly, more than 50% shareholding in NEV which were unencumbered[15]. The General Manager of NEV was Mr Huang Xiangui (黃賢貴) (“Mr Huang”)[16].

(3)  Kailong Real Estate Co., Ltd (廣州市凱隆置業有限公司) (“Kailong”), a company established in the Mainland, is the sole equityholder of Evergrande Group Company Limited (恒大集團有限公司) (“Evergrande PRC”)[17]. 

(4)  Evergrande PRC is a company established in the Mainland and a wholly owned subsidiary of Kailong and an indirect wholly owned subsidiary of CEG. 

(5)  The Defendant is a company incorporated in the BVI.  Its  sole shareholder and director is Smart Joy Investments Ltd which, in turn, is an indirect wholly owned subsidiary of CEG, and is now under the control of the Liquidators.[18]

A1.  Subscription Agreement

9.  On 24 January 2021, NEV and Heyirong entered into a subscription agreement (認購協議) (written in Chinese) (“Subscription Agreement”) whereby Heyirong agreed to subscribe for 183,150,500 new shares to be issued by NEV at HK$27.3 per share, representing a discount of 8% of NEV’s closing price in the last 5 trading days, at total price of HK$5,000,008,650.  The subscription was to be completed within 3 months. 

10.  On 24 January 2021, NEV made an announcement that it had entered into subscription agreements with 6 placees whereupon it would allot and issue a total of 952,383,000 new shares at HK$27.3 per share representing 9.75% of its enlarged issued shares and raise HK$26 billion.  Each investor agreed to a 12-month lock-up period in respect of the shares subscribed.  Heyirong was listed as one of the investors in the announcement and was described as “wholly and beneficially owned by Mr Wang Kaiguo”.

A2.  Loan Agreement & PRC Loan Agreement

11.  By a loan agreement (借款協議) (written in Chinese) dated March 2021 made between the Plaintiff and the Defendant (“Loan Agreement”), the parties agreed that:

(1)  the Defendant will advance a loan in the amount of HK$5,000,000,000 to the Plaintiff (cl.1.1);

(2)  the loan shall be repaid by the Plaintiff in one tranche within 2 years whereupon no interest is payable (cl.1.1);

(3)  if the Plaintiff is not able to repay the entire loan by one tranche before the end of the term, interest will be payable from the date the loan was drawn down up to the date of repayment at 4% p.a. (cl.1.1);

(4)  the Plaintiff will withdraw the loan in March 2021 in tranches and the Defendant warrants that the source of the fund for the loan is legitimate (cl. 1.2);

(5)  the parties shall keep the contents of the Loan Agreement confidential (cl. 2.1);

(6)  if any party acts in breach of the Loan Agreement and causes the other party to incur any costs, liabilities or losses, the party in breach shall indemnify the other party for such losses (cl. 2.2);

(7)  the Loan Agreement shall be governed by and construed in accordance with Hong Kong law (cl. 3.1); and

(8)  Both parties irrevocably agreed that any legal action or proceedings arising out of or relating to the Loan Agreement may be brought in the courts of Hong Kong, and they agreed to submit to the non-exclusive jurisdiction of such courts (cl.3.2).  

12.  The Loan Agreement was signed by a director of the Plaintiff (Ms Wang) and a director of the Defendant (whose identity is unknown). 

13.  Pursuant to the Loan Agreement, the Defendant transferred  HK$5 billion to the Plaintiff in 3 tranches, on 7 April 2021 (HK$1.7 billion); 8 April 2021 (HK$1.7 billion) and 9 April 2021 (HK$1.6 billion)[19].

14.  By an undated loan contract (借款合同) (written in Chinese) made between Heyirong and Evergrande PRC (“PRC Loan Agreement”), the parties agreed that:

(1)  Evergrande PRC will borrow RMB equivalent of HK$5 billion from Heyirong for a term of 2 years which may be repaid earlier (cl. 1.1-1.2); 

(2)  If Evergrande PRC repays the entire loan in one lump sum during the 2-year term, no interest is payable.  If Evergrande PRC is unable to repay the loan in one lump sum before the end of the term, it agrees to pay interest at 4% p.a. from the date the loan was drawn down up to the date of repayment (cl. 1.3);

(3)  Evergrande PRC shall use the loan for ordinary business operations and not any unlawful purposes (cl. 2);

(4)  Upon expiry of the term, Evergrande PRC shall transfer the principal of the loan in one lump sum to the bank account designated by Heyirong (cl. 3);

(5)  Both parties warrant that the contents of the PRC Loan Agreement are confidential and will not be disclosed to any third party without prior written consent of the other (cl. 4.3);

(6)  If any party acts in breach of the PRC Loan Agreement or that the representations made thereunder are untrue and causes the other party to incur any costs, liabilities or losses, the party who breach shall indemnify the other party for such losses (cl. 5); and

(7)  Any unspecified matters of the PRC Loan Agreement shall be submitted to the courts where the Agreement is executed, in accordance with applicable PRC laws and regulations (cl. 6). 

15.  The PRC Loan Agreement was stated to have been executed in Dalian by (1) Evergrande PRC with its seal and the personal chop of its legal representative (韓雪), and (2) by Heyirong with its seal and personal chop of its legal representative (Mr Wang). 

16.  Pursuant to the PRC Loan Agreement, Heyirong transferred RMB 4,204,375,000 to Kailong (“RMB Loan”) in 3 tranches, on 7 April 2021 (RMB 1,429,309,000); on 8 April 2021 (RMB 1,429,530,000); and on 9 April 2021 (RMB 1,345,536,000)[20].  As will be seen further below, the Plaintiff contends that applying the HKD to RMB exchange rate on the dates of transfers[21], the total amount transferred from Heyirong to Kailong was HK$4,999,863,243.60[22]. 

17.  On 9 April 2021, the Plaintiff transferred HK$5 billion to Honour Best (“Loan”)[23].  On the same day, a share certificate was issued to Honour Best certifying that it held 183,150,500 shares in NEV.

A3.  CEG liquidity crisis & Declaration Letter

18.  In September 2021, the liquidity crisis of CEG became apparent.[24]

19.  On the Plaintiff’s case (which is disputed by the Defendant):

(1)  It became concerned that creditors of CEG might treat the Loan Agreements as “genuine transactions” and on that basis sought to require the Plaintiff to repay the Loan.[25]

(2)  To protect its rights and interests, the Plaintiff requested a written document confirming that no party was entitled to make any repayment demand under the Loan Agreements[26].

(3)  Liu/Zhao/Mr Wang were authorized by Heyirong/the Plaintiff/Honour Best to liaise with Mr Huang and Mr Lin Haoteng (林浩騰) (“Mr Lin”), and the relevant communications were conducted mainly through WeChat. 

(4)  In the discussions from the Funding Arrangement Scheme through to the Declaration Letter, Mr Huang and Mr Lin “at all material times acted on behalf of the relevant Evergrande-related entities (including Evergrande PRC, the Defendant, NEV and CEG).”  The Plaintiff’s camp with the assistance of external legal advisers prepared a draft Declaration Letter and circulated the same to Mr Huang and Mr Lin for their comments.  After internal discussions and settlement of the draft Declaration Letter amongst the parties, Mr Huang informed the Plaintiff’s camp that the Declaration Letter would be executed under the seal of Evergrande PRC and would be delivered to the Plaintiff’s camp in Beijing.[27]

20.  Thereafter, the Declaration Letter (声明涵) (written in Chinese and undated) which bore the seal of Evergrande PRC came into existence.  The Plaintiff claims that the Declaration Letter was executed by Evergrande PRC in October 2021[28].

21.  The Declaration Letter was addressed to Heyirong, the Plaintiff and Honour Best and contained the following statements:

(1)  §1(3) stated that the Loan Agreements did not create any real creditor/debtor relationship, and the borrowers under both agreements did not have to repay the principal and interest on the same.

(2)  §5 provided that any disputes relating to the Declaration Letter and the Loan Agreements should be submitted to the court of the place of signature of the Declaration Letter, that is Dalian.[29]

A4.  Demand for payment & Plaintiff’s responses

22.  By letter dated 15 May 2025, the Defendant (under the control of the Liquidators) demanded the Plaintiff to repay the principal and interest payable under the Loan Agreement. 

23.  On 5 June 2025, the Plaintiff replied saying that it needed “more time to investigate into the captioned matter and consult legal advice”.

24.  On 3 July 2025, the Plaintiff through its solicitors asserted, without any particulars, that “in gist”the Loan Agreement “is a sham”and did not create any legal relationships.

25.  On 2 October 2025, the Defendant’s solicitors noted that the Plaintiff’s response was a bare denial.

26.  On 13 February 2026, the SD was served on the Plaintiff[30].

27.  On 27 February 2026, the Plaintiff’s solicitors asserted that:

(1)  the Loan Agreement was “a sham”, it was the common intention of the Plaintiff and the Defendant at the time the Loan Agreement was signed that it would not create a legal relationship as creditor and debtor, and there would be no obligation for the Plaintiff to repay the Loan (§3);

(2)  the Loan was not a genuine loan as it was part of “an arrangement (the “Arrangement”) consisting of a number of transactions entered into and/or implemented in around January to April 2021 to achieve multiple business objectives and purposes, one of the key purposes is to enable [Honour Best] to invest in the shares in [NEV]” (§4(1));

(3)  the PRC Loan Agreement signed in tandem with the Loan Agreement was a sham and would not create any legal relationship between Heyirong and Evergrande PRC (§4(2)-(3));

(4)  the Arrangement is evidenced by inter alia:

(a)  the Subscription Agreement;

(b)  the Tripartite Agreement entered into between Heyirong, NEV and Honour Best in March 2021[31];

(c)  a personal undertaking signed by Mr Hui on 19 March 2021 in favour of Honour Best/Mr Wang that Honour Best would make a profit of no less than HK$5 billion from its investment in NEV on or before 31 December 2022 (“Hui’s Undertaking”);

(d)  the Loan Agreement and the PRC Loan Agreement both signed in March 2021;

(e)  the Loan remitted to the Plaintiff “mirrored” the sums remitted by Heyirong in RMB to Kailong as designated by Evergrande PRC to receive the funds on its behalf.  The overriding purpose of the remittance was to enable Honour Best to invest in the shares in NEV, there has never been any genuine loan arrangement between the Defendant’s camp and the Plaintiff’s camp of companies; and

(f)  the Declaration Letter (§5(1)-(5)).

28.  By letter dated 2 March 2026, the Defendant’s solicitors pointed out that the Plaintiff did not satisfy the legal elements of a sham, and no sham was necessary to accomplish the alleged objective of enabling Honour Best to invest in NEV; and the Defendant was not a party to the Declaration Letter.

29.  On 3 March 2026, the Plaintiff issued the OS and a summons seeking an interim injunction against the Defendant.  In the Plaintiff’s skeleton dated 3 March 2026, reliance was placed on “an Arrangement to facilitate the transfer of funds”. 

B.  DISCUSSION

30.  The principles governing an application to restrain presentation of a winding-up petition have been stated by Chow J (as he then was) in Re The Grande Holdings Limited, HCMP 2369/2017, 22 December 2017 at §14:

(1)  The court will grant an injunction to restrain the presentation of a winding-up petition which it considers would be an abuse of the court’s process.

(2)  It is an abuse of process to present a winding-up petition based on a claim of which there is a bona fide dispute on substantial grounds.

(3)  The threshold for resisting a petition (requiring proof of a bona fide defence) is higher than that for resisting an application for summary judgment (requiring proof of a fair probability of establishing a bona fide defence), but the difference between the two tests is, in most cases, likely to be more a matter of semantics than substance.

(4)  Petitions are not meant for the purpose of debt collection and the winding-up jurisdiction of the court would be exercised only in clear cases.  Where oral evidence is required to decide a real and substantial dispute of fact, the court will generally dismiss the petition.

(5)  The onus is on the company to put forward credible evidence that demonstrates sound reasons to think that the asserted facts may be proved at the trial.

31.  I shall deal with 2 legal issues relevant to the application:

(1)  Whether for the purpose of demonstrating abuse of process, it is necessary for the debtor company to show that the creditor knows or should know that the debt is subject to a bona fide dispute on substantial grounds (Knowledge Issue). 

(2)  Whether after determination by the court at the application for injunction on the issue whether the debt is subject to a bona fide dispute on substantial grounds, it is open to the company to dispute the debt at the hearing of the petition in the absence of exceptional circumstances (Finality Issue). 

B1.  Knowledge Issue

32.  Mr Man refers to Alco Holdings Ltd v World Crown Investments Ltd [2023] 1 HKLRD 335 where Harris J (at §4) held that to seek an injunction to restrain presentation of a winding-up petition, a debtor is required to show that presentation of a winding-up petition would be an abuse of process.  For this purpose, it is necessary to demonstrate that the creditor knows or should know that there is a genuine defence to the claim at the time the application is issued.  Mr Man contends that the requirement of showing the creditor’s knowledge that there is a genuine defence should not be necessary.  If the existence of a bona fide dispute itself suffices for a petition to be dismissed, that should be sufficient for a quia timet injunction.  The court should not allow a petition to be presented only for it to be inevitably dismissed when a bona fide dispute is shown. 

33.  In my view, the requirement of showing knowledge stems from the principle that a debtor seeking a quia timet injunction is required to satisfy the court that the presentation of the petition would be abuse of process. 

34.  The principles have been sufficiently stated by Godfrey Lam JA in Silver Starlight Ltd v China Citic Bank Corporation Ltd, Tianjin Branch  [2021] HKCA 1248, §14, in this way:

“There is no dispute between the parties on the applicable principles for the grant of an injunction to prevent the presentation of a winding‑up petition. They do not align with the American Cyanmid principles governing the grant of an ordinary interlocutory injunction,[32] but are based instead on the court’s inherent jurisdiction to prevent abuse of its process: see Re Sinom (Hong Kong) Ltd [2009] 5 HKLRD 487. A company has to show that the presentation of a winding‑up petition against it would be an abuse of process, in order to obtain an injunction in advance to prevent it. Great circumspection must be exercised in respect of the grant of such injunction, for the right to petition for winding‑up in appropriate circumstances is a right conferred by statute, and a would‑be petitioner should not be restrained from exercising it except on clear and persuasive grounds: Sinom, §10. As Harris J observed in Hung Yip (HK) Engineering Co Ltd v Kinli Civil Engineering Ltd [2021] 1 HKLRD 860 at §14, the ability to present a petition promptly in the case of a company believed to be insolvent is important to creditors since by virtue of section 184(2) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32) (‘Ordinance’), it is relevant to the date of commencement of the liquidation …” (underlined added)

35.  A plaintiff seeking an injunction to restrain a would-be petitioner from presenting a winding-up petition is required to establish, on clear and persuasive ground, that the commencement of the winding-up proceedings would constitute an abuse of process. The principle has been explained by Buckley LJ in Bryanston Finance Ltd. v De Vries (No. 2) (CA) [1976] 1 Ch 63, 78C-H:

“It has long been recognised that the jurisdiction of the court to stay an action in limine as an abuse of process is a jurisdiction to be exercised with great circumspection and exactly the same considerations must apply to a quia timet injunction to restrain commencement of proceedings. These principles are, in my opinion, just as applicable to winding up petition to an action. The right to petition the court for a winding up order in appropriate circumstances is a right conferred by statute. A would-be petitioner should not be restrained from exercising it except on clear and persuasive grounds….. If the presentation of the petition is prevented the commencement of the winding up will be postponed until such time as a petition is presented or a winding up resolution is passed. This is capable of far-reaching effects.” (underlined added)

36.  As regards the need for great circumspection, this was explained in Bryanston Finance at 80F-H, per Stephenson LJ:

“The issue between the intending petitioner and the company which would arise upon presentation of the petition is whether or not the company shall be compulsorily wound up. The motion seeks a summary order restraining the defendant from starting the process which would raise this issue for litigation in the Companies Court. The order sought upon the motion, if made, will from its very nature conclude once and for all, so far of course as concerns the ground upon which the petition is based, the summary issue raised by the motion: that is to say, the defendant is either free to present his petition or he is prohibited from doing so… whether the application succeeds or fails, the order upon it is the end of the action. The only issue in the action has been determined once and for all upon the motion and there can be no question of the action itself being brought on for a hearing at some later date on the same issue.” (underlined added)

37.  If a creditor knows or should know that a debtor has a bona fide dispute on substantial ground in respect of the debt, the presentation of the petition would be an abuse of process.  This is because the creditor knows that it does not have locus to present a winding-up petition against the debtor.  Conversely, if the creditor does not know that the debtor has a bona fide dispute on the debt, there would be no basis for the debtor to restrain the creditor from presenting a petition which would have the effect of delaying the commencement date of the winding up proceedings.

38.  However, this is not to say that abuse of process can only be established by showing that the creditor knows that the debt is subject to a bona fide dispute on substantial grounds.  It is as much an abuse of process for a creditor to threaten to present a petition if he holds valuable security which equals to or exceeds the debt (such that the creditor has no real interest in the liquidation of the debtor) or he knows that the debtor will be able to provide security to secure or compound for the debt if requested by the creditor.  

B2.  Finality Issue

39.  This issue is raised by this Court at the hearing.  It seems to me that where, as here, a company chooses to apply for an injunction to prevent a creditor from presenting a winding-up petition against it on the ground that the debt is subject to a bona fide dispute on substantial grounds (or that the company has a serious cross-claim against the creditor) and asks the court to determine the dispute, if the court determines the dispute and holds that there is no bona fide dispute on substantial grounds (or no serious cross-claim against the company), as a matter of public policy, the company should not be allowed to dispute the debt (or raise the same or any other cross-claim) at the hearing of the petition, whether or not the ground has been raised at the hearing of the injunction. 

40.  Both counsel submit that as a matter of principle, a debtor cannot re-argue grounds which it unsuccessfully raised at the injunction stage.  The principle derived from bankruptcy cases and has been described as Turner principle.

41.  In Pan Sutong v China Citic Bank Corporation Ltd, Tianjin Branch [2024] HKCA 580, Godfrey Lam JA held that:

(1)  In winding-up context, a debtor company is precluded from raising the same issues in its application for an injunction that no bona fide dispute of debt has been shown at the determination of the petition in the absence of a change of circumstances (§§111-125).

(2)  It would be “preferable” not to use the terminology of res judicata and issue estoppel in this context.  The principle relates to the prevention of duplicated and wasteful arguments in bankruptcy and insolvency proceedings (§§117-119).

42.  Similarly, in Hong Kong Aviation Support and Development Association Ltd v Beacon International Ground Solutions Ltd (Formerly known as Bigman HK Ltd) [2025] HKCA 1010 §6, Kwan VP came to the same conclusion:

“A decision on the application for an injunction that no bona fide dispute of the debt has been shown is capable of precluding any further contest on the same issue in the petition…  The debtor cannot re-argue grounds on which he unsuccessfully sought to restrain the presentation of a winding-up petition…”.  However, “change of circumstance” is a situation where a re-argument is possible.

43.  As to what constitutes change of circumstances which may permit a debtor to re-argue or re-open a point decided against him in the setting aside/injunction stage, in Pan Sutong, the Court of Appeal held that:

(1)  The “new material” in Hayes v Hayes [2014] Bus LR 1238 §53 was the debtor’s assertion that his financial loss (in addition to anxiety, which was raised at the setting aside stage) and the advice he had received that the claim was good in law and worth a great deal more.  Nugee J accepted the debtor’s explanation as to why the additional claim had not been raised earlier (§§122-123).

(2)  More detailed or more sophisticated submissions or argument on what is in essence the same point will not justify a second bite of the cherry.  In Atherton v Ogunlende [2003] BPIR 21, at 27, Neuberger J said Turner principle should not be abrogated where the debtor has found a better way of putting the same point or wants to put in more evidence to support the same point.  If there were evidence from the debtor “as to specific facts which really would make a difference, and which he was unable to put forward through no fault of his own” then different considerations might apply (§124).

(3)  New evidence that “was merely more evidence of the type before the court on the first hearing and added nothing material” would not suffice to allow the point to be re-litigated, citing Harvey v Dunbar Assets plc (§125). 

(4)  Further affirmation not adduced at the injunction stage but was in essence the same evidence, or slightly more of the same kind, was not a change of circumstances sufficient to warrant re-opening the argument (§128).

44.  In Pan Sutong, the Court of Appeal left open the “extended aspect” of the Turner principle, that is, whether the principle operates to bar a debtor from raising points and arguments that had not but could and should have been run in the injunction stage (§120). 

45.  In Re Yip Kim Po [2022] 3 HKLRD 356 at §21, I summarise the Turner principle as follows:

“(1) Where a debtor brought an application to set aside a statutory demand, that application being part of the bankruptcy process, is the proper forum for the parties to raise all their arguments against the petition debt (Turner v Royal Bank of Scotland [2000] BPIR 683, [47], [49], per Chadwick LJ; Atherton v Ogunlende [2003] BPIR 21, at 27, per Neuberger LJ).

(2) It would be an abuse of the bankruptcy court’s practice if the debtor is allowed to run an argument which could and should have been run at the application to set aside a statutory demand (Harvey v Dunbar Assets plc [2017] EWCA Civ 60 [51], [58], per Henderson LJ). It would be a waste of court’s time and parties’ money and would defeat the obvious purpose of the statutory scheme if a debtor can at the hearing of the petition ask the court to go into the question which has already been determined in the application to set aside the statutory demand (Turner [49]).

(3) If the debtor wishes to run new arguments at the hearing of the petition which were not run at the application to set aside the statutory demand, the court would inquire why those arguments were not run at the time when they could, and should have been raised (Coulter v Chief Constable of Dorset Police (No 2) [2006] BPIR 10, [20]-[22], per Chadwick LJ; Harvey [§48]).

(4)  The court requires exceptional circumstances before it would allow the debtor to raise the same arguments at the petition stage (Atherton v Ogunlende, at p.27).”

46.  It can be seen from the above summary that the Turner principle is grounded on public policy and abuse of process considerations.  In my judgment, the same considerations apply equally to winding-up proceedings where the debtor company elects to commence separate proceedings and asks the court to determine whether there is a bona fide dispute on substantial grounds in respect of the debt (or for that matter, whether the company has a serious cross-claim which exceeds the petition debt) in those proceedings. 

47.  Although the procedure governing an application to challenge the debt (the subject matter of a statutory demand) is different in bankruptcy and winding-up context, in practice, once a debtor exercises the right to challenge the debt, it would have the effect of suspending the creditor’s statutory right to present a petition. 

48.  In bankruptcy, the debtor has a statutory right to apply to set aside a statutory demand which, if exercised, will suspend the creditor’s right to present a bankruptcy petition based on the debt until determination of the set aside application:

(1)  Rule 47(1)-(2) of the Bankruptcy Rules (Cap. 6A) provides that the debtor may, within 18 days from the date of the service of the statutory demand,[33] apply to the court for an order setting the statutory demand aside.

(2)  Under rule 48(1) the court may, if satisfied that no sufficient cause is shown for it, dismiss the set-aside application without giving notice to the creditor. Rule 48(2) provides that on the date the application is dismissed, the time limited for compliance with the statutory demand runs again. 

(3)  Rule 48(3) provides that if the application is not dismissed summarily, the court shall fix the date for the set-aside application to be heard.  Rule 48(7) further provides that if the court dismisses the application, it shall make an order authorizing the creditor to present a bankruptcy petition either forthwith, or on or after a date specified in the order.

(4)  Section 6(2)(d) of the Bankruptcy Ordinance (Cap. 6) provides that a creditor’s petition may only be presented to the court if, at the time the petition is presented, “there is no outstanding application to set aside a statutory demand served under section 6A in respect of the debt or any of the debts”.

(5)  The combined effect of rules 47-48 and s.6(2)(d) is that once the debtor elects to set-aside the statutory demand, the creditor’s statutory right to present a petition is suspended until the application is determined.  Where the set-aside application is one which requires the court to determine at a hearing, the suspension will last until determination of the application. 

49.  While in winding-up context there is no equivalent provision for setting aside a statutory demand, the debtor company may challenge the creditor’s right to present a winding-up petition by commencing separate proceedings to seek an injunction against the creditor.  Once the application is made, unless it is so lacking in merit that the court declines to grant an interim injunction or summarily dismiss the application, the company is able to delay the creditor’s right to present a petition until determination of the application. 

50.  The public policy considerations underpinning the Turner principle in bankruptcy proceedings apply equally to winding-up proceedings.  These include:

(1)  The need to avoid a party being vexed twice on the same matter.  Once the debtor elects to invoke the process to challenge the statutory demand, unless summarily dismissed, the creditor will be required to deal with the application by filing evidence in opposition.  Fairness requires the debtor to raise all arguments (and adduce all evidence) in support of his application so that the creditor can respond to the arguments (and evidence) once and for all. 

(2)  The need to prevent abuse of process.  It would be unfair to allow a debtor to benefit from the suspension of the creditor’s statutory right to present a petition by advancing some (but not all) arguments, and when the application fails, be able to have the second bite of the cherry and asks the creditor and the court to deal with the remaining arguments at the petition stage.

(3)  The need for finality. If the debtor is allowed to re-open the issue as to whether the debt is bona fide disputed on substantial grounds in the absence of exceptional circumstances, this would undermine the determination by the court at the set-aside/injunction stage.  In effect, it would be tantamount to allowing the debtor to mount a collateral attack on the determination.  

(4)  The need to preserve court process and avoid wasting judicial resources.  If a debtor is allowed to re-open the issue and ask the court to consider new arguments or new materials not placed before the court at the set-aside/injunction stage in the absence of exceptional circumstances, it would result in duplication and waste of the court’s time in having to re-consider issue which has already been determined.

(5)  Neither counsel has identified any reasons which would justify the court relaxing or disapplying the public policy considerations underpinning the Turner principle in winding-up context. 

51.  If and insofar as it is suggested that winding-up proceeding is not ordinary litigation in that it is a class remedy and concerns the status of a company, I do not think that such features provide a justification to relax or disapply the public policy considerations discussed above.  If the debt is not bona fide disputed, the creditor is entitled to invoke its statutory right to present a winding-up petition so as to bring about the class remedy through a winding-up order.  The company may avoid a winding-up order by paying the debt, and if it is unable to do so, it should be wound up on the basis that it is unable to pay its debts. 

52.  For the above reasons, I remain of the view that the Turner principle including the “extended aspect” of the principle (which the Court of Appeal did not decide in Pan Sutong) should apply to winding-up proceedings where the company elected to challenge the debt through an injunction application and the court has made a determination on the issue whether the debt is bona fide disputed on substantial grounds (or for that matter, whether the company has a serious cross-claim which exceeds the petition debt).

B3.  Grounds relied upon by Plaintiff

53.  There is no dispute that the Loan Agreement was signed by the Plaintiff and the Defendant, and HK$5 billion was transferred to the Plaintiff on 7-9 April 2021.  The Loan Agreement provides that the Plaintiff shall repay the Debt (being the Loan and interest accrued thereon) by April 2023 but the Plaintiff has not done so.  

54.  The burden is on the Plaintiff to adduce sufficiently precise factual evidence to show that there is a bona fide dispute on substantial grounds that despite its terms, the Loan Agreement was not legally enforceable, and the Defendant knew that the Loan Agreement was not to be enforced.  

55.  Mr Man advances 3 broad grounds in support of his submissions that the court should grant an injunction to restrain the Defendant from presenting a winding-up petition:

(1)  There is a bona fide dispute on substantial grounds that the “Collateral Agreement” existed.  The Collateral Agreement is that both the Loan Agreement and the PRC Loan Agreement were not to be enforceable[34] (Collateral Agreement Ground).

(2)  There is a good arguable case or bona fide dispute on substantial grounds that the Declaration Letter is a promise by the Defendant not to enforce the Loan Agreement and the Defendant is bound by the Declaration Letter[35] (Declaration Letter Ground).  

(3)  The Plaintiff is entitled to invoke the jurisdiction clause under the Declaration Letter, and the Defendant is debarred from enforcing the Loan Agreement against the Plaintiff[36] (Jurisdiction Clause Ground).

56.  I shall consider each ground in turn. 

B4.  Collateral Agreement Ground

57.  The parties disagree on the approach of the court in considering whether a collateral agreement existed.

58.  Mr Man contends that whether a collateral contract exists is ultimately a matter of fact in each case.  In Bank of China v Fung Chin Kan (2002) 5 HKCFAR 515 at §§55-57, Litton NPJ observed:

“It is undoubtedly true that the courts are nowadays much more willing to accept that a pre-contractual assurance gives rise to a collateral contract, so that such collateral contracts are no longer rare …

  A collateral agreement, like any other contract, must be objectively viewed, so the test must be this: On the totality of the evidence, must the parties be taken to have intended that the representation made by one of them should form part of the basis of the legal relationship between them?”

59.  On the other hand, Mr Scott contends that the court should view collateral agreement, which varies or adds to the terms of other written documents, with caution.  In China Jianxin Credit Services Ltd v IR Resources Ltd [2021] HKCFI 575 at §23, DHCJ MK Liu observed that:

“The courts will always view such kind of collateral contracts with some suspicion, as any laxity would enable parties to escape from the full performance of the obligations of contracts unquestionably entered into by them.

If the defence in a summary judgment application rests upon a collateral oral agreement, the sole effect of which is to vary the terms of a written existing document, the threshold onus on the defendant is compounded by the onus to strictly prove such an agreement…”[37]

60.  In my view, the passages cited by counsel go to show that where a party alleges that there is a collateral agreement the effect of which is to vary the terms of a written agreement, it bears a heavy burden to show that such collateral agreement existed.  The reason is obvious.  The parties decided to enter into a written agreement to spell out the terms of what they agreed, it makes no sense for the same parties to enter into an oral collateral agreement only to vary that written agreement.  The court will consider the totality of the evidence to see if the parties did enter into the collateral agreement as alleged. 

61.  Mr Man contends that the circumstances “overwhelmingly point to the existence of the Collateral Agreement” for the following reasons.

62.  First, the Collateral Agreement has been documented in the Declaration Letter.  In this regard, the Declaration Letter:

(1)  is clear contemporaneous documentary evidence proving the  existence of the Collateral Agreement;

(2)  was known to have been executed, according to Huang ZZ, who advised the Plaintiff at the time;[38]

(3)  was preceded by a number of drafts found in Huang ZZ’s computer.  This shows that parties gave serious thought to the document and confirmed that it represented the true state of affairs.  There is no reason to suppose that the Declaration Letter did not spell out the truth; and

(4)  contained the seal of Evergrande PRC, which is itself strong evidence that the recital of the facts then existing was true.

63.  Second, the Arrangement only makes commercial sense if both the Loan Agreement and the PRC Loan Agreement were not enforceable:

(1)  From the Plaintiff’s perspective, it never intended to apply the funds received from the Loan Agreement for its own purposes.  If the Loan Agreement were enforceable, it would mean that the Plaintiff exposed itself to a HK$5 billion liability for no commercial reason.  The fact that it may be able to sue Honour Best for the monies downstream is neither here nor there, when there is no guarantee that Honour Best is good for the money.

(2)  The same goes for “Evergrande Group”.  If the Loan Agreements were enforceable, they would be exposing Evergrande PRC to a liability of RMB equivalent of HK$5 billion to Heyirong; while having no guarantee that “Evergrande Group” can recover anything from the Plaintiff.

(3)  It therefore only made commercial sense for all parties to have proceeded on the assumption that the Loan Agreements were not enforceable.  “Evergrande Group” received RMB Loan in the Mainland and gave out the equivalent amount in Hong Kong.  There are no commercial downsides to any party to the Collateral Agreement.

64.  Third, although both the Loan Agreement and PRC Loan Agreement were due in April 2023, no parties have sought to enforce the same until the Liquidators took action on behalf of the Defendant.  It is inconceivable that both the Defendant and Heyirong would have taken no action to seek repayment of the sizeable sum of HK$5 billion if the Loan Agreements were truly enforceable.

65.  Fourth, it is not possible for the court to dismiss the Plaintiff’s case on Collateral Agreement summarily given that the Liquidators have no personal knowledge of the Arrangement or the Collateral Agreement, and they did not adduce any evidence from the Defendant’s then management.

66.  The Liquidators’ reliance on the Defendant’s internal documents to suggest that the Loan Agreement was enforceable[39] suffers from a number of difficulties:

(1)  The internal documents at best represent the Defendant’s subjective belief as to the enforceability of the Loan Agreement, which is irrelevant (Arnold v Britton [2015] AC 1619 at 1627).  Indeed, expression of subjective belief is post-contractual conduct that was not communicated to the other party, which is irrelevant (Marble Holdings Ltd v Yatin Development Ltd (2008) 11 HKCFAR 222, §22).

(2)  The internal documents are ambivalent.  Although the Loan Agreement was described as a loan in some of the internal documents, a memorandum prepared by “Evergrande Group” explained the rationale of the Loan Agreements as follows:

“To mitigate the risks associated with the [Loan Agreement], Evergrande Group in mainland China entered into a RMB loan agreement with Heyirong International for an equivalent amount in HKD, and Heyirong provided the aforementioned loan to Evergrande Group in mainland China.”

(3)  This stated purpose cannot be achieved if both of the Loan Agreements are enforceable.  The “Evergrande Group” would be exposed to Heyirong suing under the PRC Loan Agreement; while there would be no guarantee that the Plaintiff would be good for the money under the Loan Agreement.  This is particularly the case when “Evergrande Group” knew for certain that the Plaintiff would transfer away the HK$5 billion it received to Honour Best to complete the subscription[40]. 

(4)  There can only be mitigation of risks if the loans under the  Loan Agreements can set-off against each other.  That is precisely the effect of the Collateral Agreement.

(5)  The internal description of the sums due under the Loan Agreement is inconsistent over time. In the Defendant’s 2021 management accounts, it was described as “合作單位往來合作款，與股東之間 (主要為原股東之間的往來款)”; while the 2022 and 2023 accounts described the sum as “外單位借款”.  The change is unexplained.

67.  In my judgment, the Plaintiff has failed to discharge the burden of showing that there is a bona fide dispute on substantial grounds that the Collateral Agreement existed. Taking into account the evidence adduced by the parties, it is clear that the Collateral Agreement is nothing more than a recent fabrication.  

68.  First, despite having filed 3 affirmations, the Plaintiff has not been able to articulate, let alone with any particularity, as to when, who on behalf of the Plaintiff and the Defendant respectively, and where the Collateral Agreement was entered into, and what were the precise terms of such agreement.  This is compounded by the fact that none of the directors of the Plaintiff (or the Defendant) has come forth to make any affirmation to say when, who and where was the Collateral Agreement entered into, and no explanation has been provided as to why they did not do so.  Indeed, even in Liu 1^st, all that she says is that there was the “Funding Arrangement Scheme” and the Loan Agreements were executed pursuant to such Funding Arrangement Agreement.  There was no mention of the alleged or any collateral agreement.

69.  Second, the response of the Plaintiff after having received the demand letter from the Defendant reinforces the fact that the Collateral Agreement did not exist.  Had the parties entered into the Collateral Agreement, the first response would have been to say that the parties had entered into the Collateral Agreement such that the Loan Agreement was not to be enforced.  This was not done. 

70.  Instead, the response from the Plaintiff (in correspondence), with the benefit of legal advice, was to assert that the Loan Agreement was a sham, which was later changed to an assertion that that there was a “Funding Arrangement Scheme” (in Liu 1^st §§20-21) between the so-called “Evergrande Group” and the “Heyirong Group”, when neither of them was a legal entity or a party to the Loan Agreement.  No explanation has been provided by the Plaintiff as to why it did not mention the Collateral Agreement in its reply to the Defendant’s demand. 

71.  Mr Man rightly does not dispute that the Plaintiff has put forward different assertions in correspondence and affirmations but submits that it does not matter as the difference only goes to the legal label  of what the parties agreed, and the fact remains the same.  I am unable to agree.  At the time 3 July 2025 the Plaintiff replied to the Defendant’s demand letter, it was already under legal advice.  There is no reason to think that the Plaintiff’s solicitors would not have taken thorough instructions from the Plaintiff before they provided their substantive replies on 3 July 2025 and 27 February 2026, which were 49  days and 288 days respectively after the Plaintiff had received the first demand letter from the Defendant.  Nor is there any reason to think that the Plaintiff’s solicitors would have failed to mention the Collateral Agreement had the Plaintiff told them that such agreement existed.  Again, no explanation has been provided by the Plaintiff or its solicitors for not mentioning the Collateral Agreement in correspondence. 

72.  Third, the Plaintiff has not been able to adduce a single contemporaneous document (such as WeChat which, according to the Plaintiff, was one of the means used by Mr Lin to communicate with the Plaintiff’s camp) to show that the Collateral Agreement was made between the Plaintiff and the Defendant (or indeed, any entities) in March 2021.  Given the importance of the Collateral Agreement, a point which the Plaintiff is at pain to emphasise, it is inconceivable that the parties would not have recorded the fact that they had entered into the Collateral Agreement as soon as it came into existence in March 2021.  Again, no explanation has been provided by the Plaintiff as to why it is unable to adduce any contemporaneous document in support of the Collateral Agreement. 

73.  I do not accept Mr Man’s submissions that the Collateral Agreement is evidenced by the Declaration Letter.  On the Plaintiff’s own case, the Declaration Letter was only prepared after CEG had liquidity issue.  At its highest, the Declaration Letter is no more than a document prepared by Evergrande PRC’s advisers at the behest of the Plaintiff’s camp.  It is not a contemporaneous document.  Nor does it bind the Defendant, as further discussed in Section B5 below.

74.  Fourth, I do not think that the commercial rationale behind the Loan Agreements is a relevant consideration.  It is not for one party to the agreement or the court to judge whether the terms of the agreements signed by them make any commercial sense or that such agreement would be in the interests of the parties concerned.

75.  Even if, contrary to my view, it is necessary to consider the whether the suite of the agreements (including the Loan Agreements) made between various parties make commercial sense, I do not think that the agreements make no commercial sense in the absence of the Collateral Agreement.  From the perspective of the Plaintiff’s camp, the written agreements make commercial sense and protect its interests:

(1)  Heyirong advanced the RMB Loan to Evergrande PRC, which was (and still is) a separate legal entity and appears to have substantial assets in the Mainland at the time the PRC Loan Agreement was made. If Evergrande PRC failed to repay the RMB Loan, direct enforcement action could be taken by Heyirong in the Mainland. 

(2)  Honour Best/Mr Wang had negotiated and obtained the additional security from Mr Hui (who was at the time a person appears to have substantial wealth) in the form of Hui’s Undertaking to protect against the risk of default. 

(3)  Heyirong (through Honest Best) obtained the NEV Shares at the exact price they were allotted and placed by NEV.  There is no suggestion that the allotment was done at an artificial or inflated price or that the NEV Shares did not worth what Honest Best had paid to NEV. 

(4)  The only “loss” which Heyirong (through Honest Best) suffered was the “profit guarantee” allegedly given by Mr Hui to Mr Wang.  In respect of that guarantee, the security which Mr Wang had specifically negotiated and obtained from Mr Hui was Hui’s Undertaking. 

76.  Seen in the above light, the Loan Agreements and Hui’s Undertaking are perfectly workable without the Collateral Agreement.

77.  I do not agree with Mr Man’s submissions that there was no commercial downsides to any party to the Collateral Agreement.  On the Plaintiff’s case:

(1)  The Collateral Agreement would only benefit the Plaintiff’s camp, as the Plaintiff would not have to repay the Loan but (a) Honour Best would be able to retain the NEV Shares, and (b) Honour Best/Mr Wang would be able to retain the benefit of Hui’s Undertaking; and

(2)  The Collateral Agreement would not be in the interests of the Defendant in that while the Defendant had advanced the Loan to the Plaintiff, it would not receive anything in return and would not even be able to enforce the Loan Agreement and obtain repayment of the Loan.  The RMB Loan had nothing to do with the Defendant as the same was advanced to Evergrande PRC, which was (and still is) a separate legal entity. 

78.  Fifth, the Collateral Agreement, even if existed (which I do not think it did), would not be binding upon the Defendant as the only purpose of the Collateral Agreement was for the Defendant to give up its right to enforce the Loan Agreement but without any benefit to the Defendant in return.  It is well-established that directors of a company have no actual authority, express or implied, to cause the company to enter into an agreement which is against its interests and such agreement, even if entered into, would be void and not binding upon the company (Hopkins v TL Dallas Group Ltd [2005] 1 BCLC 543, §88 per Lightman J; Wrexham Association Football Club Ltd (in admin) v Crucialmove Ltd [2006] EWCA Civ 237, §32).  

79.  Sixth, the fact that the directors of the Defendant could not have authorised the Defendant to enter into the Collateral Agreement, thereby giving up the right to obtain repayment of the Loan, is consistent with the Defendant’s contemporaneous accounting records as well as its financial statements including:

(1)  CEG’s Funds Application Approval Form dated 20 March 2021[41];

(2)  The Defendant’s accounting voucher dated 9 April 2021 recording the transfer of the Loan to the Plaintiff[42];

(3)  The Defendant’s management accounts since 2021[43];

(4)  The restructuring memorandum dated 7 December 2022 prepared for discussions with creditors of CEG, which was prepared with the assistance of Houlihan Lokey (financial adviser) and Sidley Austin (legal adviser)[44]; and

(5)  CEG Liquidation Analysis Report dated 17 July 2023 prepared by Deloitte and CEG’s auditors[45].

80.  Seventh, the fact that neither Heyirong nor the Defendant demand repayment of the RMB Loan and the Loan does not support the existence of the Collateral Agreement.  As can be seen from the restructuring memorandum dated 7 December 2022, even before the RMB Loan and the Loan fell due (in April 2023), CEG had already been unable to pay its debts, which necessitated discussions with creditors’ groups on possible restructuring of its debts.  

81.  Lastly, it is not clear if the Plaintiff is still relying on the so-called “Funding Arrangement Scheme” as a ground in support of its contention that the Debt is bona fide disputed on substantial grounds.  If and insofar as the Plaintiff still relies on the “Funding Arrangement Scheme,” I do not think that such Scheme would have the alleged effect of rendering the Loan Agreement to become unenforceable.  This is because even on the Plaintiff’s case, it was merely a scheme (not an agreement), and the scheme was made between “Evergrande Group” and “Heyirong Group” neither of which was a legal entity.  In any event, the so-called “Evergrande Group” was not and could not be equated with the Defendant. 

B5.  Declaration Letter Ground

82.  I am unable to see how the Declaration Letter would have the effect of rendering the Loan Agreement to become unenforceable as the Defendant was not a party to the Declaration Letter. Nor did the Defendant sign or execute the Declaration Letter.  Indeed, the Declaration Letter on its face does not bind Evergrande PRC as it was never signed by its legal representative.  Even if, contrary to my view, the Declaration Letter were binding upon Evergrande PRC, it would only render the PRC Loan Agreement to become unenforceable, and would not have any effect on the Loan Agreement.

B6.  Jurisdiction Clause Ground

83.  In light of my conclusion that the Declaration Letter is not binding upon the Defendant, there is no basis to suggest that the Defendant is bound by the jurisdiction clause in the Declaration Letter such that it can only bring legal proceedings against the Plaintiff in Dalian.

84.  As the Plaintiff has not discharged the burden of showing that there is a bona fide dispute on substantial grounds in respect of the Debt, it is not necessary to consider whether the Defendant had knowledge of the dispute raised by the Plaintiff in this application at the time it served the SD on the Plaintiff.  In any event, as the Collateral Agreement is a recent fabrication (as I so find) and the Plaintiff did not in correspondence allege that the Collateral Agreement existed, the Defendant would not possibly have knowledge of the grounds raised by the Plaintiff in the present application.  It follows that the Plaintiff would not be able to show that the service of the SD and the threatened use of winding-up proceedings constitute an abuse of process. 

C.  DISPOSITION AND COSTS

85.  For the reasons set out above, the OS is dismissed. 

86.  As for costs, I make a costs order nisi that the costs of and occasioned by the OS, including the costs of the hearing and all costs reserved, be paid by the Plaintiff to the Defendant on an indemnity basis, to be assessed by way of gross sum assessment, with certificate for 2 counsel.  

87.  I consider that it is appropriate to order costs against the Plaintiff on a higher scale to reflect the court’s disapproval on the Plaintiff’s conduct in fabricating the Collateral Agreement for the purpose of seeking an injunction against the Defendant. 

88.  The Defendant do submit a statement of costs for gross sum assessment by 12 August 2026, and the Plaintiff do provide its comments on the statement within 17 August 2026. 

89.  In his supplemental submissions, Mr Man submits that if this Court refuses to grant the injunction sought by the Plaintiff, it should grant an interim injunction for a short period of time (e.g. 28 days) so that the Plaintiff can consider whether to seek any further interim injunctions pending a possible appeal.  This was done by the first instance judge in X v A & Ors [2021] HKCFI 1595 §63.  Further, the Court of Appeal has explained in Hong Kong Aviation that if the company intends to appeal against a refusal of injunction, it should seek an interim injunction to continue the injunction pending appeal.  Absent such interim injunction, an appeal by the company may be rendered nugatory because the creditor may well have presented a winding-up petition before the appeal is heard.  The company  could then be debarred from re-arguing the payability of the underlying debt in the petition because of the Turner principle.  In effect, the company could well be deprived of the right to appeal against the finding that there is no bona fide dispute on substantial grounds as to the underlying debt. 

90.  I do not see any proper basis for this Court to grant an interim injunction to enjoin the Defendant from exercising its statutory right to present a winding-up petition when there is no bona fide dispute on substantial grounds in respect of the Debt, as I so find.