CHINA STEM CELLS HOLDINGS LTD v. ZHENG TING AND OTHERS

CACV 81, 85 & 90/2024,
CACV 82, 86 & 91/2024,
CACV 83, 87 & 92/2024 &
CACV 84, 88 & 93/2024

[2025] HKCA 326

On Appeal From [2024] HKCFI 481

CACV 81, 85 & 90/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 81, 85 AND 90 OF 2024

(ON APPEAL FROM HCA NO 1407 OF 2022)

________________________

________________________

AND

CACV 82, 86 & 91/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 82, 86 AND 91 OF 2024

(ON APPEAL FROM HCA NO 1408 OF 2022)

________________________

________________________

AND

CACV 83, 87 & 92/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 83, 87 AND 92 OF 2024

(ON APPEAL FROM HCA NO 1409 OF 2022)

________________________

________________________

AND

CACV 84, 88 & 93/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS 84, 88 AND 93 OF 2024

(ON APPEAL FROM HCA NO 1410 OF 2022)

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________________________

(Heard together)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.  These are appeals brought by Zheng Ting (“Tina”), Chen Bing Chuen Albert (“Albert”) and Prime Intelligent Management Limited (“PIML”) against the determinations made by Madam Justice Linda Chan in her judgment dated 8 February 2024 (“the Judgment”) after a trial of preliminary issues in 4 actions (“the HK Actions”) heard together.

2.  The HK Actions are brought by the joint provisional liquidators of Global Cord Blood Corporation (“GCBC”), a Cayman Islands company, in the names of 3 indirect wholly owned subsidiaries of GCBC (collectively “the Plaintiffs”) to take control of 4 direct wholly owned subsidiaries of the Plaintiffs in Hong Kong (“the HK Subsidiaries”).

3.  The Plaintiffs in the HK Actions are:

(1)  China Stem Cells Holdings Limited (“CSC Holdings”), a Cayman Islands company;

(2)  China Stem Cells (South) Company Limited (“South BVI”), a BVI company; and

(3)  China Stem Cells (East) Company Limited (“East HK”), a Hong Kong company.

4.  The HK Subsidiaries are:

(1)  East HK;

(2)  China Stem Cells (North) Company Limited (“North HK”);

(3)  China Stem Cells (South) Company Limited (“South HK”); and

(4)  Favorable Fort Limited (“FFL”).

5.  In each of the HK Actions, the relevant HK Subsidiary has been made the 4^th Defendant in that action:

Action	Plaintiff	HK Subsidiary
HCA 1407/2022	CSC Holdings	North HK
HCA 1408/2022	South BVI	South HK
HCA 1409/2022	East HK	FFL
HCA 1410/2022	CSC Holdings	East HK

BACKGROUND FACTS

6.  The disputes in the HK Actions concern the validity of various allotments/transfers of shares, and appointments of directors/secretaries, of the HK Subsidiaries, and are part of a wider dispute over the ownership and control of GCBC and its subsidiaries (“the Group”) between 2 camps of shareholders/former shareholders of GCBC, with those associated or affiliated with Kam Yuen (“Kam”) on one side and Yuan Ya Fei (“Yuan”) on the other. The Group is engaged in apparently highly profitable business relating to cord blood banking services, with most of its operations and assets located in the Mainland.

7.  The underlying facts of this case are of considerable complexity, and involved numerous transactions amongst many different parties. However, for the purpose of disposing of the present appeals, the following brief summary of the background facts should suffice.

(i)  The parties involved

8.  GCBC is a Cayman Islands company incorporated in 2003. Its shares were listed on the New York Stock Exchange in November 2009[1]. On 22 September 2022, GCBC was put into provisional liquidation by the Cayman Court. GCBC is an investment holding company, and holds, indirectly through China Cord Blood Services Corporation (another Cayman Islands company), 100% of the issued share capital of CSC Holdings.

9.  CSC Holdings holds, directly and indirectly, a number of companies incorporated in Hong Kong (including the HK Subsidiaries), Mainland China, and other jurisdictions (including South BVI). A corporate chart of the Group can be found at §7 of the Judgment.

10.  Up until 30 December 2016, Golden Meditech Holdings Limited (“GMHL”), a medical device company whose shares were formerly listed on The Stock Exchange of Hong Kong until its privatisation in 2020, indirectly owned or controlled, through a BVI company called Golden Meditech Stem Cells (BVI) Company Limited (“GMSC”), 78,874,106 shares (amounting to 65.4% of the issued capital) of GCBC (“the GCBC Shares”).

11.  The founder of GMHL is Kam, who was the majority shareholder, chairman and an executive director of GMHL.

12.  Tina is a qualified accountant and has substantial experience in managing business. She was appointed as an executive director of GMHL in September 2001 until she became a non-executive director in August 2012, a position she held until May 2019. She was also appointed as executive director and chairman of the board of GCBC in June 2009 and 2018 respectively, and as GCBC’s chief executive officer before 2016. She remained a director and the chairman of the board of GCBC after the 2016 SPA referred to in §16 below. Tina apparently has an intimate personal relationship with Kam, and has 2 children with him.

13.  Albert joined GMHL as its corporate finance vice president in 2005. He was appointed as a director and chief financial officer of GCBC in 2009, and remained a director of GCBC after the 2016 SPA.

14.  Up until 24 September 2022, Tina and/or Albert were in control of, inter alia, CSC Holdings, South BVI and the HK Subsidiaries, being their only directors or secretaries:

Company	Party	Directors	Secretary
CSC Holdings	Plaintiff in HCA 1407 & 1410/2022	Tina & Albert
South BVI	Plaintiff in HCA 1408/2022	Tina & Albert
North HK	4th Defendant in HCA 1407/2022	Tina & Albert
East HK	Plaintiff in HCA 1409/2022, and 4th Defendant in HCA1410/2022	Tina	Albert
South HK	4th Defendant in HCA 1408/2022	Tina	Albert
FFL	4th Defendant in HCA 1409/2022	Albert

15.  Nanjing Ying Peng Hui Kang Medical Industry Investment Partnership (“Ying Peng Partnership”) is a limited partnership established in the Mainland and operates as a private equity fund. The executive general partner of Ying Peng Partnership is a company called Nanjing Ying Peng Asset Management Co Ltd (“Ying Peng AMC”), which is vested with all the powers to act for Ying Peng Partnership in dealing with third parties. Ying Peng AMC is ultimately controlled by Yuan of Sanpower Group Co Ltd (“Sanpower”), a Mainland company.

(ii)  The sale of the GCBC Shares

16.  By an agreement dated 30 December 2016 (“the 2016 SPA”) entered into between GMSC (as seller) and Ying Peng Partnership (as purchaser), GMSC agreed to sell the GCBC Shares to Ying Peng Partnership at the price of RMB 5,764 million. Both Yuan and Sanpower acted as guarantors to guarantee Ying Peng Partnership’s obligations under the 2016 SPA.

17.  The 2016 SPA was completed on 31 January 2018. Ying Peng Partnership used a BVI company called Blue Ocean Structure Investment Company Limited (“Blue Ocean BVI”) to hold the GCBC Shares. Notwithstanding the completion of the 2016 SPA, 5 directors of GCBC, including Tina (the chairperson) and Albert (the chief financial officer), previously nominated by Kam remained on the board of GCBC, while Blue Ocean BVI appointed one non-executive director, Xu Ping (“Xu”), to the board of GCBC. Two independent non-executive directors were later appointed to the board of GCBC.

(iii)  The appointment of joint provisional liquidators over GCBC

18.  On 29 April 2022, GCBC announced that it had entered into what is referred to in the Judgment as the “Cellenkos Transaction”, under which GCBC agreed to acquire a 100% interest in Cellenkos Inc. (“Cellenkos”), a Delaware biotechnology company, together with certain rights under a licence agreement to market a Cellenkos product in Asia (“the Licence Rights”), for substantial considerations:

(1)  for the acquisition of Cellenkos, GCBC agreed to issue 112,613,633 GCBC shares (at the conversion rate of approximately 8 GCBC shares for 1 Cellenkos share) to the existing shareholders, warrant holders and options holders of Cellenkos; and

(2)  for the acquisition of the Licence Rights, GCBC agreed to issue 12.4 million GCBC shares and pay US$664 million in cash to a subsidiary of GMHL.

19.  Blue Ocean BVI, who would stand to lose its majority shareholding of GCBC after completion of the Cellenkos Transaction, objected to the transaction on the grounds that:

(1)  the cash consideration represented 63% of the Group’s cash and cash equivalent as at 31 March 2022;

(2)  Cellenkos was apparently related to GMHL, in that (a) GMHL had a 30.5% stake in Cellenkos, and (b) Cellenkos and GMHL had a common director who held a 6.5% stake in Cellenkos;

(3)  Blue Ocean BVI’s nominated director (Xu) on the board of GCBC was not aware of and did not approve the Cellenkos Transaction; and

(4)  the shareholders of GCBC were not given prior notice of the Cellenkos Transaction.

20.  On 12 May 2022, Blue Ocean BVI obtained an interlocutory injunction (“the Cellenkos Injunction”) from the Cayman Court to restrain GCBC from proceeding with the Cellenkos Transaction. At a subsequent hearing before Kawaley J in July 2022, GCBC (then under the control of its board of directors, including Tina and Albert) contended that the injunction ought to be set aside because the balance of convenience clearly favoured permitting the company to complete the part-performed Cellenkos Transaction. In support of this contention, GCBC relied on an affirmation of Albert sworn on 7 June 2022, in which he stated that Stage 1 of the Cellenkos Transaction had already been completed in that, inter alia, US$664 million had been paid by GCBC on 29 April 2022. In a further undated affirmation made by Albert in reply to Blue Ocean BVI’s evidence, he produced a bank statement (“the Guangfa Bank Statement”) purportedly issued by China Guangfa Bank as evidence of the said payment. On the basis of such evidence, Kawaley J was satisfied that the Cellenkos Injunction should be discharged on balance of convenience ground. However, no order was drawn up by either party to give effect to this part of the judgment of Kawaley J, and thus the Cellenkos Injunction appeared to be still in place by the time that Blue Ocean BVI applied for the appointment of provisional liquidators of GCBC on 22 August 2022[2].

21.  Disputes also arose between GMHL/GMSC on one side and Ying Peng Partnership/Blue Ocean BVI on the other side over the ownership of GCBC. In particular, GMSC alleged that it held a share charge executed by Blue Ocean BVI dated 30 March 2018 over the GCBC Shares to secure Ying Peng Partnership’s obligations under 2 loan agreements dated 29 and 30 March 2018.

22.  On 9 August 2022, Blue Ocean BVI obtained evidence which indicated that the Guangfa Bank Statement relied upon by GCBC to support the application for the discharge of the Cellenkos Injunction was a forgery. On 22 August 2022, Blue Ocean BVI made an application to the Cayman Court for the appointment of provisional liquidators over GCBC. On 22 September 2022, Kawaley J made an order appointing Chow Tsz Nga Georgia (“Chow”), Margot McInnis and John Royle as joint provisional liquidators (“the PLs”) over GCBC. In his judgment delivered on 28 September 2022, Kawaley J stated that:

(1)  “… it is very difficult to avoid the conclusion that this document [ie the Guangfa Bank Statement] which was placed before me in the course of the hearing which resulted in my 29 July 2022 Judgment was in fact a forged document … it is, on the face of it, difficult to see how that document can possibly be anything other than a forgery, particularly because Mr Albert himself has, despite having an opportunity to explain the various discrepancies, merely denied the forgery allegation and said nothing more than that about it”; and

(2)  “… the best available evidence strongly suggests that the Chief Financial Officer of the Company [ie Albert] has misled the Court and put before the Court a false bank statement pivotal to the matters that the Court was adjudicating at the 13-15 July 2022 hearing”.

(iv)  The Impugned Documents

23.  As earlier mentioned, up until 24 September 2022, Tina and/or Albert were in control of CSC Holdings, South BVI and the HK Subsidiaries, being their only directors or secretaries.

24.  After their appointment on 22 September 2022, the PLs took steps to secure and take control of the subsidiaries of GCBC. In particular:

(1)  On 24 September 2022, Albert and Tina were removed as directors of CSC Holdings and South BVI and replaced by the PLs.

(2)  On 28 September 2022, Tina and Albert were removed as the chairperson and chief financial officer respectively of GCBC.

(3)  On 28 September 2022, resolutions were passed to appoint 6 new directors to each of East HK, South HK and North HK.

(4)  On 5 October 2022, resolutions were passed to appoint 6 new directors to FFL.

(5)  On 10 October 2022, 4 additional directors were appointed to each of the HK Subsidiaries.

(6)  On 12 October 2022, special notices were given to remove Albert and Tina as directors of the HK Subsidiaries. They were removed on 14 November 2022.

(7)  On 14 October 2022, Mauve Limited was appointed as the new company secretary of the HK Subsidiaries.

25.  While the PLs were in the course of taking the above steps, they discovered 30 filings made at the Companies Registry (“CR”) concerning the HK Subsidiaries since 27 September 2022. Those filings purported to notify the public on changes of director and company secretary (ND2A), allotment of shares (NSC1), change of registered address (NR1), change of company name (NNC2), and amendment of articles (NAA1) in respect of the HK Subsidiaries. All these CR filings (except the last NAA1 filed on 21 October 2022) were presented by PIML. When the PLs made inquiries with PIML about those filings, PIML’s response was that the PLs were not shareholders of the HK Subsidiaries.

26.  The PLs say that the aforesaid filings were unauthorized, and challenge the validity of the transactions as evidenced by the following documents (“the Impugned Documents”):

(1)  The “1^st Transfers” by the Plaintiffs of all shares in the HK Subsidiaries to China In Shine Investment Limited (“CISIL”), in each case for US$1.00, by (a) instruments of transfer (“I/T”), (b) bought and sold notes (“B/S”) and (c) written resolutions of all directors, all bearing the date of 12 September 2022 (collectively “1^st Transfers Documents”).

(2)  The “2^nd Transfers” by CISIL of all the shares in HK Subsidiaries to Sonoe Muramatsu (“MS”) again for US$1.00 in each case, by (a) I/T, (b) B/S and (c) written resolutions of directors, all bearing the date of 13 September 2022 (collectively “2^nd Transfers Documents”).

(3)  The written resolutions of sole shareholder bearing the date of 13 September 2022 (collectively “Allotment Resolutions”) approving the allotments of new shares in the HK Subsidiaries to Notake Minori (“Notake”) (collectively “Allotments”).

(4)  Written board resolutions of the HK Subsidiaries, all bearing the date of 13 September 2022 which were (a) signed by Tina and/or Albert (as the case may be) appointing MS as a director of the HK Subsidiaries (collectively “1^st Appointment Resolutions”); and (b) signed by MS appointing Notake as a director of the HK Subsidiaries and PIML as their company secretary (collectively “2^nd Appointment Resolutions”).

Particulars of the Impugned Documents are set out by the Judge in Schedule A to the Judgment.

27.  The Impugned Documents, if valid, would have the effect of vesting the ownership and control of the HK Subsidiaries in MS and Notake away from GCBC, because:

(1)  MS and Notake would become the only directors of the HK Subsidiaries; and

(2)  MS and Notake would between them hold all the issued shares of the HK Subsidiaries.

(v)  The HK Actions

28.  On 25 October 2022, the PLs commenced the HK Actions in the name of the Plaintiffs.

29.  It is the PLs’ case that since their appointment on 22 September 2022, they have become the only persons with proper authority to take control and manage all the direct and indirect subsidiaries of GCBC, including the HK Subsidiaries. They contend, inter alia, that:

(1)  The Impugned Documents were created no earlier than 29 September 2022, but back-dated to 12 or 13 September 2022.

(2)  The Impugned Documents were invalid, void, unlawful, or liable to be set aside for a variety of reasons, including want of authority and breach of fiduciary duties on the part of those who purported to execute the Impugned Documents as directors of the Plaintiffs/HK Subsidiaries.

30.  On the other hand, Tina and Albert both said that the Impugned Documents were executed in connection with the enforcement of what is referred to in the judgment as the “2019 Security Arrangement”, of which a “Four-Party Agreement” and a “2019 Guarantee” formed part (hereinafter collectively referred to as the “2019 Security Arrangement”), entered into between Yuan (and his companies) on one side and Kam (and his companies) on the other. The Judge summarized Albert’s case at §53 of the Judgment, as follows:

“(1) Both Yuan and Sanpower acted as guarantors to guarantee Ying Peng Partnership’s obligations under the 2016 SPA.

(2) By September and October 2019, Ying Peng Partnership was still unable to settle the outstanding purchase price due to GMHL. At that time, Ying Peng Partnership / Yuan / Sanpower remained substantially liable for: (a) the outstanding consideration of RMB 2.3 billion, along with accrued interests and penalties, and (b) other liabilities owed by Yuan / Sanpower directly to GMHL and Kam (collectively, the ‘Outstanding Debts’).

(3) In October to November 2019, Kam and Yuan came to an agreement that, inter alia, the Outstanding Debts would be further secured by the shareholding of a number of companies within the Group (including CSC Holdings, South BVI, and the HK Subsidiaries), which would be held by Golden Meditech Technology (Shanghai) Co. Ltd (‘GM Shanghai’) as security agent and trustee on behalf of GMHL (‘2019 Security Arrangement’).

(4) The 2019 Security Arrangement was documented in: (a) the Four-Party Agreement dated 20 November 2019 entered into between Kam, [GM Shanghai], Yuan and Blue Ocean BVI (‘Four-Party Agreement’); and (b) the 2019 Guarantee dated 22 November 2019 executed by inter alios CSC Holdings, South BVI, and the HK Subsidiaries as guarantors (‘2019 Guarantee’). In particular:

(a) The issued shares in the guarantors were part of the secured assets under the security agreements. The security agreements also provided for broad rights in favour of the secured parties (i.e. including GMHL, Kam, and GM Shanghai as security agent) - including rights of sale, disposal, management, and/or the right to act as absolute beneficial owner, etc.

(b) The Preambles to the Four-Party Agreement and the 2019 Guarantee also confirm the Outstanding Debts at the time, including the outstanding consideration under the 2016 SPA.

(c) Both the Four-Party Agreement and the 2019 Guarantee are governed by PRC law and subject to arbitration clauses in favour of arbitration under the SIAC rules.

(5) In late August to early September 2022, Kam informed Albert that GMHL had decided to enforce the security (via GM Shanghai as security agent) under the 2019 Security Arrangement. In the week of 5 September 2022, Albert was provided with the relevant ‘enforcement documents’ for his signature at GCBC’s Hong Kong office, which included his resignation letters and the 1^st Appointment Resolutions in respect of North HK and FFL dated 12 and 13 September 2022. By signing these documents, Albert effectively resigned as director of North HK and FFL.

(6) After Albert had signed the documents, they were returned to Ms. Kathy Chan, an administrative staff of GMHL. To Albert’s understanding, the documents were subsequently provided to PIML on 13 September 2022.”

31.  As for Tina’s case, the Judge summarized it at §54 of the Judgment, as follows:

“… Tina, contends that the 2016 SPA is a ‘conditional agreement’ between GMSC (as vendor) and Ying Peng Partnership (as purchaser), and the failure by Ying Peng Partnership to ‘make good’ the consideration for the sale of the [GCBC Shares] is what gave rise to the 2019 Security Arrangement. The critical issue insofar as it relates to Tina concerns the 1^st Transfers Documents and the 1^st Appointment Resolutions bearing her signature, all of which were signed by Tina in late August 2022 and are referred to as ‘Completion Documents’ in [the 1^st Affirmation of Tina filed on 29 May 2023].”

32.  Insofar as PIML’s position was concerned, although it claimed to adopt a neutral position, its counsel submitted to the Judge that the court could only presently proceed on the footing that Tina and Albert’s case that they signed the 1^st Transfer Documents and the 1^st Appointment Resolutions before 12 September 2022 was correct.

33.  CISIL, MS and Notake, who apparently had some real interests in the HK Actions, did not enter any appearance to defend the Plaintiffs’ claims.

(vi)  Trial of preliminary issues

34.  The Judge took the view that the issue as to who had proper authority to act for the HK Subsidiaries depended entirely on whether the Impugned Documents were back-dated and therefore void, and whether they were made by the directors in breach of fiduciary duties and therefore voidable. Upon the Plaintiffs’ application by summons dated 17 February 2023, the Judge made an order on 2 March 2023 for the trial of 7 preliminary issues. At §56 of the Judgment, the Judge set out the 7 issues (“the Preliminary Issues”) appearing in an “Agreed List of Issues” of the parties:

(1)  Whether the 1^st and 2^nd Transfers Documents were created on a date or dates on or after 29 September 2022 and were backdated and, therefore, invalid for want of authority (Issue 1);

(2)  If the 1^st and 2^nd Transfers Documents were created on 12 and 13 September 2022, were the 1^st Transfers procured by Tina and/or Albert (as the case may be) as directors of the relevant Plaintiffs in breach of fiduciary duties[3] (Issue 2);

(3)  If the above issues are answered in the affirmative in respect of the HK Subsidiaries (Issue 3):

(a)  What knowledge, if any, did CISIL have with respect to (i) the backdating and want of authority in Issue 1 above, or (ii) the breach of fiduciary duties in Issue 2 above (Issue 3(a)); and

(b)  What knowledge, if any, did MS have with respect to (i) the backdating and want of authority in Issue 1, or (ii) the breach of fiduciary duties in Issue 2 (as the case may be) (Issue 3(b));

(4)  Whether the Allotments took place on a date on or after 29 September 2022 and were backdated to 13 September 2022 (Issue 4);

(5)  If the Allotments did take place on 13 September 2022, were the Allotments procured by Tina, Albert, Notake and/or MS (as the case may be) for the improper purpose of diluting the Plaintiffs’ shareholdings in the HK Subsidiaries (Issue 5);

(6)  Whether the 1^st and 2^nd Appointment Resolutions were created on a date or dates on or after 29 September 2022 and were backdated (Issue 6); and

(7)  If the 1^st and 2^nd Appointment Resolutions were made on 13 September 2022, were they procured by Tina, Albert, Notake and/or MS (as the case may be) for the proper purpose of the relevant HK Subsidiaries (Issue 7).

THE JUDGMENT

35.  The trial of preliminary issues took place before the Judge in September 2023. At the trial, the Judge received oral evidence from the following witnesses:

(1)  Chow, the Plaintiffs’ only witness;

(2)  Lo Shing Choi Venus (“Lo”) and Chen Tsz Suen (“Chen”), respectively the sole shareholder/director and a consultant of PIML;

(3)  Tina; and

(4)  Albert.

36.  The Judge considered that Chow gave evidence in a straight forward and candid manner, and answered all the questions put to her directly. She readily made concessions where appropriate, and remained unshaken throughout cross-examination. The Judge accepted Chow’s evidence in full, and where her evidence on a matter differed from that of Tina, Albert, Lo or Chen, the Judge preferred her evidence to that of the other witnesses.

37.  The Judge considered neither Chen nor Lo to be a truthful witness.

(1)  As regards Chen, the Judge found that her evidence was full of inconsistencies, and was consistent with a person who had no personal knowledge of the matters asked of her, and made up answers during cross-examination. The Judge considered Chen’s evidence to be wholly unreliable, and was put forward by PIML in a desperate attempt to change the evidence previously given by Lo in her first affirmation filed on 6 January 2023 (in particular, whether Chen had any involvement in handling the receipt of the 1^st Transfers Documents and the 1^st Appointment Resolutions from one “Mr Lam”, and handled matters relating to the Impugned Documents). The Judge rejected Chen’s evidence in its entirety.

(2)  As regards Lo, the Judge found that she changed her evidence in the course of cross-examination, and made up answers when it suited her. The Judge found that what Lo said in her first affirmation at §§7-11 largely represented the true position, except as to when the relevant events actually took place. Of particular relevance for the present purpose are the Judge’s findings that –

(a)  Lo dealt with “Mr Lam”, who retained PIML to assist with the filing and stamping of the 1^st Transfers Documents and the 1^st Appointment Resolutions on or after 27 September 2022; and

(b)  the 1^st Transfers Documents and the 1^st Appointment Resolutions had already been prepared and were provided to Lo on the same day, which the Judge found to be a date on or after 29 September 2022[4].

38.  As for Tina, the Judge noted that her counsel was unable to refute any of the criticisms made by Ms Eva Sit, SC (the Plaintiffs’ trial counsel) concerning her evidence (including obvious falsity, incredibility, evasiveness, and change of evidence), and considered her evidence on the 1^st Transfers Documents and the 1^st Appointment Resolutions to be “plagued with inconsistencies and … unreliable”. The Judge specifically rejected her evidence that the 1^st Transfers Documents and the 1^st Appointment Resolutions were signed by her in late August 2022, which the Judge considered to be untrue.

39.  Finally, as for Albert, the Judge found that he was not a truthful witness and his evidence regarding the date on which he signed the resolutions approving the 1^st Transfers and the 1^st Appointment Resolutions in relation to North HK[5] and FFL was unreliable. The Judge rejected his evidence that the resolutions approving the 1^st Transfers and the 1^st Appointment Resolutions in respect of North HK and FFL were signed by him in the week of 5 September 2022.

40.  In respect of the Preliminary Issues, the Judge made the following determinations:

(1)  Issue 1: The 1^st and 2^nd Transfers Documents were created on or after 29 September 2022 and were backdated to 12 or 13 September 2022 and, therefore, were void for want of authority (§§87-112 and 143(1) of the Judgment).

(2)  Issue 2: Even if (contrary to the Judge’s view) the 1^st and 2^nd Transfers Documents were created before 13 September 2022, the 1^st Transfers were procured by Tina and Albert in breach of fiduciary duties and, therefore, were voidable (§§113-129 and 143(2) of the Judgment).

(3)  Issue 3: CISIL and MS knew that (a) the 1^st and 2^nd Transfers Documents were backdated and void for want of authority, and (b) the 1^st Transfers were made by Tina and Albert in breach of fiduciary duties and were voidable (§§130-135 and 143(3) of the Judgment).

(4)  Issue 4: The Allotments Resolutions were created on or after 29 September 2022 and were backdated to 13 September 2022 and, therefore, were void for want of authority (§§87-112 and 143(4) of the Judgment).

(5)  Issue 5: Even if (contrary to the Judge’s view) the Allotments Resolutions were created on 13 September 2022, the Allotments were procured by MS for the improper purpose of diluting the Plaintiffs’ shareholdings in the HK Subsidiaries and, therefore, were voidable (§§136-138 and 143(5) of the Judgment).

(6)  Issue 6: The 1^st and 2^nd Appointment Resolutions were created on or after 29 September 2022 and were backdated to 13 September 2022 and, therefore, were void for want of authority (§§87-112 and 143(6) of the Judgment).

(7)  Issue 7: Even if (contrary to the Judge’s view) the 1^st and 2^nd Appointment Resolutions were made on 13 September 2022, they were procured by Tina, Albert and MS for improper purpose and, therefore, were voidable (§§139-142 and 143(7) of the Judgment).

THE APPEALS

41.  Tina, Albert and PIML have each lodged an appeal against the Judge’s determinations of the Preliminary Issues.

42.  In Tina’s Supplemental Notice of Appeal dated 17 June 2024, Tina raises 5 grounds of appeal:

(1)  The Judge’s assessment of her credibility and consequently the Judge’s findings as to the dates on which Tina signed the 1^st Transfer Documents and 1^st Appointment Resolutions are plainly wrong (“Tina Ground 1”).

(2)  The Judge erred in failing to confine her factual findings to the Preliminary Issues, and wrongly made, or purported to make, findings on the veracity or validity of the 2019 Security Arrangement (“Other Findings”) outside the ambit of the Preliminary Issues (“Tina Ground 2”).

(3)  The Other Findings related to matters there were not properly before the court, and thus were irrational and/or perverse findings of fact (“Tina Ground 3”).

(4)  The Judge erred in proceeding on the basis that it was “not the Plaintiffs’ pleaded case that the 2019 Security Arrangement did not exist or that it was invalid”, so as to find it was open to the court to make the Other Findings (“Tina Ground 4”).

(5)  Insofar as the Judge made adverse findings as to Tina’s credibility and/or took into account issues outside the ambit of the Preliminary issues (which resulted in the Other Findings or otherwise), such findings are procedurally unfair, unsound and unsafe as a matter of law (“Tina Ground 5”).

43.  Albert’s Supplemental Notice of Appeal dated 18 March 2024 raises 7 substantive grounds of appeal:

(1)  The Judge erred in law and/or committed serious procedural irregularity in considering and making findings in relation to the 2019 Security Arrangement in the Judgment, which were outside the scope of the Preliminary Issues (“Albert Ground 1”).

(2)  The Judge’s aforesaid error is compounded by the fact that the parties were all along ad idem that the disputes relating to the 2019 Security Arrangement were not to be resolved by way of Preliminary Issues (“Albert Ground 2”).

(3)  The Judge further fell into error in holding that it was not the Plaintiffs’ pleaded case that “the 2019 Security Arrangement did not exist or that it was invalid”, which was contrary to the Plaintiffs’ pleaded case in its Reply to Defence of the 5^th Defendant dated 3 May 2023 (in HCA 1407/2022) (“Albert Ground 3”).

(4)  Furthermore, in the determination of the Preliminary Issues, the Judge ought to have properly assumed that the 2019 Security Arrangement and the 2019 Guarantee were valid and in existence (“Albert Ground 4”).

(5)  If the Judge was not minded to assume the validity and existence of the 2019 Security Arrangement, the Judge ought at least to have directed that the Preliminary Issues be resolved at the substantive trial of the HK Actions (“Albert Ground 5”).

(6)  The Judge erred in law in reversing and/or misapplying the burden of proof on Issues 1 and 6 (“Albert Ground 6”).

(7)  The Judge erred in finding that Albert had committed the serious misconduct of backdating the relevant documents based solely on inferences, which was reached on conjecture and without any proper foundation (“Albert Ground 7”).

44.  PIML’s Notice of Appeal dated 7 March 2024 raises 2 substantive grounds of appeal:

(1)  The Judge ought to have decided the Preliminary Issues pertaining to PIML against the Plaintiffs because their pleadings were seriously defective in that, amongst other things, the Plaintiffs’ plea on backdating, which involved a serious allegation of fraud or dishonesty, was devoid of particulars. The Judge also erred in holding that, after the Plaintiffs had proved that the Impugned Documents were backdated, the evidential burden shifted to Tina, Albert and PIML to prove their assertions (“PIML Ground 1”).

(2)  The Judge committed a serious procedural irregularity in deciding the issue of the veracity and validity of the 2019 Security Arrangement, which did not form part of the Preliminary Issues to be determined by her (“PIML Ground 2”).

45.  In what follows, we shall first deal with some common grounds of appeal raised by Tina, Albert and/or PIML, in particular, the complaint that the Judge dealt with issues outside the scope of the Preliminary Issues and erred in reversing the burden of proof, before we turn to PIML’s pleading objections and finally the litany of complaints raised by Tina and Albert concerning the Judge’s findings of fact.

THE COMPLAINT THAT THE JUDGE MADE FINDINGS ON MATTERS OUTSIDE THE SCOPE OF THE PRELIMINARY ISSUES

46.  Tina, Albert and PIML all complain that the Judge erred in making findings in relation to the validity or veracity of the 2019 Security Arrangement which were outside the scope of the Preliminary Issues. This complaint encapsulates:

(1)  Tina Grounds 1 to 4;

(2)  Albert Grounds 1 to 5; and

(3)  PIML Ground 2.

47.  It is not in dispute that the Preliminary Issues did not include the question of the validity or veracity of the 2019 Security Arrangement. That arrangement was in fact raised by Albert and Tina to explain or justify their conduct in signing the 1^st Transfers Documents and the 1^st Appointment Resolutions[6], in answer to the allegations of breach of fiduciary duties on the part of Tina/Albert under Issues 2 and 7.

48.  In response to Tina, Albert and PIML’s complaint, Mr Rimsky Yuen, SC (for the Plaintiffs) argues that the Judge did not go beyond the scope of the Preliminary Issues in the Judgment. Mr Yuen argues, alternatively, that even if the Judge did go beyond the scope of the Preliminary Issues, those parts of the Judgment which travelled outside the Preliminary Issues concerned only the question of whether Tina and Albert acted in breach of fiduciary duties, but not the question of backdating, which was a standalone issue. Hence, the Judge’s determination of Issues 1, 4 and 6 should stand in any event. Mr Yuen argues in the further alternative that even if the Judge did go beyond the scope of the Preliminary Issues when considering both the question of backdating and the question of breach of fiduciary duties, those affected parts in the Judgment may be ignored, but her conclusions on the Preliminary Issues would be the same in light of her findings on other matters.

49.  We do not accept the complaint that the Judge erred in making findings on matters outside the scope of the Preliminary Issues. The Judge was well aware that “…the veracity or validity of the 2019 Guarantee and the 2019 Security Agreement do not fall within the preliminary issues…”[7]. In the Judgment, she referred to the 2019 Security Arrangement in two contexts.

50.  First, the Judge referred to the 2019 Security Arrangement at §§81(1), 83(1), (2) & (3), 84(3), and 85 of the Judgment in the context of her assessment of the credibility or reliability of Tina and Albert’s evidence. In those parts of the Judgment, the Judge did not make any positive finding on the veracity or validity of the 2019 Security Arrangement. What the Judge did was to consider the credibility of Tina and Albert’s evidence, in particular their evidence that they executed the 1^st Transfers Documents and the 1^st Appointment Resolutions in late August 2022 (Tina) or in the week of 5 September 2022 (Albert), in light of their assertions that they signed those documents in furtherance of Kam/GMHL’s decision to enforce the 2019 Security Arrangement.

51.  Second, the Judge discussed the 2019 Security Arrangement at §§119-127 and 140 of the Judgment in the context of her consideration of the allegation of breach of fiduciary duties on the part of Tina/Albert under Issues 2 and 7. In those parts of the Judgment, the Judge considered Tina and Albert’s reliance on the 2019 Security Arrangement, in the course of which she did make some adverse comments on the veracity or validity of the 2019 Security Arrangement.

52.  At the trial, Tina, Albert and PIML’s counsel all objected to the Judge making any findings on the validity or veracity of the 2019 Security Agreement on the ground that it was outside the scope of the Preliminary Issues. Those objections were rejected by the Judge. She saw no reason why the court could not make any findings on the validity or veracity of the 2019 Security Agreement insofar as they were relevant to (i) the credibility of Albert and Tina’s evidence and the issue as to when they actually signed the 1^st Transfer Documents and the 1^st Appointment Resolutions, and (ii) the question of whether Tina and Albert acted in breach of fiduciary duties[8].

53.  We agree with the Judge on this matter. The Preliminary Issues were issues which the parties had agreed were to be determined at the trial. If, in the course of determining the Preliminary Issues, some other issues arose and the resolution of those other issues would have a bearing or impact on the answers to the Preliminary Issues, it seems to us that, as a matter of principle, the court ought to have regard to those issues and make such findings on them as may be necessary in order to reach the correct answers to the Preliminary Issues. To hold otherwise would mean that the Judge might be required to reach a conclusion contrary to the true state of the evidence.

54.  We shall now deal with the specific points raised by Tina, Albert and/or PIML in support of the complaint that the Judge made findings on matters outside the scope for the Preliminary Issues.

55.  On behalf of Tina, Mr Ronny Tong, SC submitted that the Other Findings “either involved individuals and businesses which are not parties to this action, such as Yuan, Kam, Sanpower, Ying Peng Partnership, GCBC, GMSC and GMHL, who could testify on the existence and validity of the 2019 Security Arrangement and 2019 Guarantee, the parties’ respective concerns, justification, purposes and other connected considerations or were not based on any evidence before the court”[9]. In our view, the fact that the Other Findings involved individuals or businesses which were not parties before the court did not make it improper or inappropriate for the Judge to make those findings. As correctly submitted by Mr Yuen, the Judgment is not binding on non-parties including those mentioned above, there being no suggestion that Tina, Albert or PIML could or should be regarded as their “privies” for the purpose of the application of the doctrines of res judicata or issue estoppel. It is also incorrect to suggest that the Judge made the Other Findings not based on evidence before the court. The Judge’s findings were based on such evidence as was properly adduced by the parties before her (ie the Plaintiffs, Tina, Albert and PIML).

56.  The same comment applies to the next point raised by Mr Tong, namely, that the Judge had “overlooked the undisputed fact that Kam and Yuan are the individuals who, at the material times, had control respectively of the two camps. The Court should be presented with full evidence regarding the running of the companies controlled and dominated by these two individuals”[10].

57.  In Tina Ground 4, she complains that the Judge erred in proceeding on the basis that it was “not the Plaintiffs’ pleaded case that the 2019 Security Arrangement did not exist or that it was invalid”, so as to find it was open to the court to make the Other Findings. This complaint is also made by Albert in his Supplemental Notice of Appeal, at §3.

58.  At §127 of the Judgment, the Judge stated as follows:

“(1) It is the pleaded defence as well as the evidence of Tina and Albert that they signed the 1^st Transfers Documents and the 1^st Appointment Resolutions to give effect to the 2019 Security Arrangement which arose because of the Outstanding Debts.

(2) The issue as to whether in executing the 1^st Transfers Documents and the 1^st Appointment Resolutions, Tina and Albert acted in breach of their fiduciary duties fall within the scope of Issue 2.

(3) There is no inconsistency between the above and the PLs not inviting this Court to resolve the competing factual allegations between Blue Ocean BVI and Tina/Albert. It is not the Plaintiffs’ pleaded case that the 2019 Security Arrangement did not exist or that it was invalid. Rather, it is Tina and Albert’s pleaded case that they signed the 1^st Transfers Documents and the 1^st Appointment Resolutions to complete or enforce the 2019 Security Arrangement. Having pleaded and relied on the 2019 Security Arrangement in their defence and evidence, Tina and Albert bear the evidential burden to prove their assertions. The Plaintiffs are entitled to challenge the case and evidence advanced by Tina and Albert.” [underlining added]

59.  The above underlined statement of the Judge would seem, on the face of it, to be inconsistent with §8.4(f)(v) of the Plaintiffs’ Reply to Defence of the 1^st Defendant (ie Tina), and §8.7(f)(v) of the Plaintiffs’ Reply to Defence of the 5^th Defendant (ie Albert) in HCA 1407/2022, where it was expressly pleaded that “… the alleged 2019 Security Arrangement(s) was/were invalid, unlawful, void and/liable to be set aside”.

60.  As we see it, at §127(3) of the Judgment, the Judge was explaining why she considered that there was no inconsistency between the Plaintiffs’ complaint that Tina and Albert acted in breach of their fiduciary duties in executing the 1^st Transfers Documents and the 1^st Appointment Resolutions, and the Plaintiffs’ stated position that they would not be inviting the court to resolve the competing factual allegations between Blue Ocean BVI and Tina/Albert in respect of the 2019 Security Arrangement. It was in that context that the Judge said it was “not the Plaintiffs’ pleaded case that the 2019 Security Arrangement did not exist or that it was invalid”. On one reading of the Judgment, when the Judge said that it was not “the Plaintiffs’ pleaded case …”, she was focusing on the Plaintiffs’ case as pleaded in the Statement of Claim, which did not involve any allegation concerning the veracity or validity of the 2019 Security Arrangement. The 2019 Security Arrangement came into the picture only because it was raised by Tina and Albert to counter the allegation of breach of fiduciary duties on their part.

61.  This having been said, on a literal reading of §127(3) of the Judgment, the Judge was incorrect to say that it was “not the Plaintiffs’ pleaded case that the 2019 Security Arrangement did not exist or that it was invalid”. For the purpose of the present appeals, we are prepared to read §127(3) of the Judgment in favour of Tina and Albert, and proceed on the basis that the Judge had overlooked the aforesaid pleas in the Plaintiffs’ Replies and was mistaken in her statement that it was not the Plaintiffs’ pleaded case that the 2019 Security Arrangement did not exist or that it was invalid. However, notwithstanding such mistake, we consider that the Judge was correct to adopt the approach that the veracity and validity of the 2019 Security Arrangement was a matter which she was entitled to take into account when assessing the credibility of Tina and Albert, and when considering whether Albert and Tina acted in breach of fiduciary duties in executing the 1^st Transfers Documents and the 1^st Appointment Resolutions. In other words, the mistake made by the Judge is not material.

62.  On behalf of Albert, Mr Anson Wong, SC argues that the Judge erred in making findings on the veracity and validity of the 2019 Security Arrangement because the Plaintiffs had confirmed, at §21 of Chow’s 6^th Affidavit, that they “do not intend to invite this Honourable Court to resolve those factual disputes or call Xu in these proceedings”, and Chow had also confirmed that it was for this reason that the Plaintiffs would not call Xu to testify at the trial. Mr Wong further contends that the Plaintiffs’ unequivocal confirmation of their position gave rise to an election or estoppel, and the Plaintiffs should not be permitted to approbate and reprobate and ask the Judge to resolve the disputes on the 2019 Security Arrangement[11]. A similar complaint is made by Ms Lilian Ip on behalf of PIML[12].

63.  At §21 of Chow’s 6^th Affidavit, she stated the following:

“Further, after Tina, Albert and Kam disclosed the alleged ‘2019 Security arrangement’ and the Four-Party Agreement and the 2019 Guarantee, the JPLs asked Blue Ocean to comment. The JPLs were provided with the First Affirmation of Xu Ping filed before the Cayman Court denying the existence of the alleged ‘2019 Security Arrangement’ or that he had signed the Four-Party Arrangement… I should make clear that (like the affidavit in paragraph 20 above) I am referring to this to show what the JPLs understand to be Blue Ocean’s position, and the JPLs do not intend to invite this Honourable Court to resolve those factual issues or call Xu in these proceedings.”

64.  In her cross-examination by Mr Wong, Chow confirmed that the PLs did not intend to invite the court to resolve factual issues concerning the 2019 Security Arrangement, and therefore would not call Xu to give evidence at the trial.

65.  Issues 2 and 7 of the Preliminary Issues expressly raised the question of whether Tina and Albert had acted in breach of fiduciary duties in executing the 1^st Transfers Documents and the 1^st Appointment Resolutions. Tina and Albert sought to justify their conduct by relying upon the 2019 Security Arrangement. In our view, it was incumbent on the Judge to examine whether the justification put forward by Tina and Albert had substance. The Judge could not be bound by the stance taken by the Plaintiffs to adopt a blinkered approach.

66.  Mr Wong’s suggestion that Albert did not have a full and fair opportunity to (i) adduce full evidence and call witnesses in relation to the 2019 Security Arrangement (for example, calling one Mr Huen Ho Yin, who witnessed the signing of the 2019 Guarantee as a solicitor), and/or (ii) properly challenge or cross-examine Chow on the issues pertaining to the 2019 Security Arrangement, is unfounded. It was up to Tina and Albert to adduce such evidence as they could muster to make good their case. What Chow said cannot sensibly be taken to mean that the Plaintiffs accepted the veracity or validity of the 2019 Security Arrangement such that it was not necessary for Tina or Albert to adduce evidence to prove the same. Neither would it be reasonable for Tina or Albert to think that was the position. It was for Albert and Tina (with advice from their respective legal teams), not the Plaintiffs, still less the court, to decide how best to run their cases. The fact that the PLs decided not to call Xu to give evidence at the trial meant that Albert and Tina did not have to deal with direct evidence coming from Xu, who denied the existence of the 2019 Security Arrangement. To the extent that PIML wished to rely on the 2019 Security Arrangement in any way in support of its case at the trial of preliminary issues, it was likewise for PIML to arrange for relevant evidence to be adduced at the trial. The complaint of estoppel or election against the Plaintiffs has no validity, since it was for the Judge, not the Plaintiffs, to decide what findings to make on the evidence before her and how those findings would impact on her determination of the Preliminary Issues.

67.  Mr Wong argues that the Judge ought to have at least assumed that the 2019 Security Arrangement was valid and in existence, or alternatively if she could not isolate the issues relating to the 2019 Security Arrangement from the Preliminary Issues, the Judge should have directed all the issues to be resolved together at the substantive trial of the HK Actions, pursuant to the court’s case management powers under Order 1B, rule 1 of the Rules of the High Court, Cap 4A. We see no reason or basis for the suggestion that the Judge ought to have assumed that the 2019 Security Arrangement was valid and in existence. As for the suggestion that the Judge should have directed all the issues to be resolved together at the substantive trial of the actions, while we accept the Judge would have power to do so notwithstanding the previous order for the trial of preliminary issues, plainly that was something which should be considered only as a matter of last resort bearing in mind the time and costs already spent or incurred. It was, in our view, well within the Judge’s discretion to continue with the trial in the circumstances of this case.

THE COMPLAINT ABOUT REVERSAL OF BURDEN OF PROOF

68.  In Albert Ground 6, he complains that the Judge erred in law in reversing or misapplying the burden of proof on Issues 1 and 6. A similar complaint is raised in Ground 1(5) in PIML’s Notice of Appeal. Although not raised in Tina’s Supplemental Notice of Appeal, the issue of burden of proof is also mentioned in Mr Tong’s Skeleton Submissions for Tina dated 30 October 2024, at §25.

69.  The part of the Judgment in which it is said that the Judge erred in reversing or misapplying the burden of proof is to be found at §§108 and 109 thereof:

“[108] It seems to me that the arguments advanced by Mr Chan, Mr Sarony and Mr Wong in their Closing are premised on assumption that the Plaintiffs bear the burden of proving that the Impugned Documents were backdated and disproving the assertions advanced by Tina, Albert and PIML. This cannot be right.

[109] While the Plaintiffs bear the burden of proving that the Impugned Documents were created on or after 29 September 2022 and backdated to 12-13 September 2022, which I consider has been discharged for the reasons stated in Section D1.1 above, Tina, Albert and PIML bear the evidential burden of proving their assertions that (1) the 1^st Transfers Documents and 1^st Appointment Resolutions were signed and delivered to PIML by 13 September 2022; and (2) the Allotment Resolutions, the 2^nd Transfers Documents and the 2^nd Appointment Resolutions were created by PIML, signed by MS and CISIL and took effect on 13 September 2022 (see the authorities cited in §59 above).”

70.  By way of preliminary observation, it may be noted that the Judge’s discussion on the issue of burden of proof was in the context of dealing with the pleading objection raised on behalf of PIML referred to at §§106-107 of the Judgment. This is a matter which we will deal with below.

71.  Apparently, the Judge took the view that while the Plaintiffs bore the burden of proof that the Impugned Documents were backdated, upon her satisfaction that the Plaintiffs had discharged that burden, the evidential burden then shifted to Tina, Albert and PIML to prove their assertions as to when the Impugned Documents were signed and delivered to PIML.

72.  Mr Wong argues that the Judge wrongly rejected the submissions that “Ps bore the burden of proving that the Impugned Documents were backdated and disproving the assertions advanced by Tina, Albert and PMIL” at §108 of the Judgment. Mr Wong submits that the burden of proof “remain[ed] unchanged throughout the trial exactly where the pleadings place it, and never shifting”. The Plaintiffs bore the burden of proving the “backdating” allegations against Albert, including disproving the evidence adduced by Albert on when the relevant documents were signed by him. It was for the Plaintiffs to demonstrate that Albert had not already signed and delivered the documents to Kathy Chan by 13 September 2022 (on which Albert gave evidence and put the matter in issue). Such burden never shifted to Albert.

73.  PIML argues that the Judge erred in holding that after the Plaintiffs had proved that the Impugned Documents were backdated, the evidential burden shifted to Tina, Albert and PIML to prove their assertions. PIML contends that in respect of the issue of backdating, the burden of proof was fixed by the state of the pleadings, and it remained unchanged throughout the trial and never shifted.

74.  Both Albert and PIML rely on Phipson on Evidence, 20^th Ed, at §6-06. That passage concerns the “persuasive” (or “legal”), not “evidential”, burden of proof:

“So far as the persuasive burden is concerned, the burden of proof lies upon the party who substantially asserts the affirmative of the issue. Where a given allegation, whether affirmative or negative, forms an essential part of a party’s case, the proof of such allegations rests on that party. If, when all the evidence is adduced by all parties, the party who has this burden has not discharged it, the decision must be against him…

… The burden of proof is fixed at the beginning of the trial by the state of the pleadings, and it is settled as a question of law, remaining unchanged throughout the trial exactly where the pleadings place it, and never shifting.”

75.  Insofar as Albert is complaining that the Judge erred in reversing the persuasive burden of proof, such complaint is obviously unsustainable. The Judge never held that Tina, Albert and PIML bore the persuasive burden to prove that the Impugned Documents were signed and delivered to PIML on or before 13 September 2022 as asserted by them.

76.  Insofar as evidential burden of proof is concerned, we consider that the Judge’s discussion at §109 of the Judgment over-complicated the matter. The question of whether the Impugned Documents were signed on or before 13 September 2022 (as alleged by Tina, Albert and PIML), or on or after 29 September 2022 but backdated to 12-13 September 2022 (as alleged by the Plaintiffs) was a simple question of fact. There was no dispute, and the Judge plainly accepted, that the Plaintiffs bore the persuasive burden to prove that the Impugned Documents were created on or after 29 September 2022 and backdated to 12-13 September 2022[13]. The Judge was satisfied that the Plaintiffs had discharged such burden for the detailed reasons given at Section D1 of the Judgment. Although the Judge considered, mistakenly in our view, that there was an evidential burden on Tina, Albert and PIML to prove their assertions as to when the Impugned Documents were signed and delivered, this mistake has no material impact on the outcome of the case, because the Judge rejected the evidence given by or on behalf of Tina, Albert and PIML as untruthful, inconsistent, unreliable or incredible. In other words, the Judge found that the Impugned Documents were backdated not because she considered that Tina, Albert and PIML had failed to discharge any burden of proof. Instead, she found positively, on the evidence before her, that the Impugned Documents were backdated as alleged by the Plaintiffs. Albert and Tina’s complaint about reversal of burden of proof is a red-herring.

PIML’S PLEADING OBJECTION

77.  Under PIML Ground 1, PIML argues that the Judge erred in law in rejecting the objection that the Plaintiffs’ pleadings on backdating were devoid of particulars. In her skeleton submissions, Ms Ip argues, in support of this ground of appeal, that the Judge’s finding that PIML dishonestly backdated the Impugned Documents was unfair to PIML, for the following reasons:

(1)  There was no plea in the Defence of PIML to respond to the Plaintiffs’ serious allegations of fraud or dishonesty, stemming from the fact that there was no plea of fraud or dishonesty in the Plaintiffs’ Amended Statement of Claim. The Judge, however, incorrectly reasoned that this was due to PIML’s acceptance that backdating per se was not objectionable and the backdating in this case involved no allegation of fraud or dishonesty.

(2)  It was unfair for the Judge to heavily criticise the evidence of Chen and Lo when PIML was afforded no opportunity to state clearly its case in the Defence in relation to the Plaintiffs’ fraud case. In the Amended Statement of Claim, the Plaintiffs only pleaded the conclusion of backdating and gave no particulars in support of that conclusion.

(3)  The Judge’s justification that no unfairness was caused to PIML “does not hold any water”, for the reasons mentioned at §12 of Ms Ip’s Skeleton Submissions dated 31 October 2024.

(4)  The Judge wrongly shifted the evidential burden of proof to PIML, Tina and Albert on the issue of backdating of the Impugned Documents.

(5)  The order for the trial of preliminary issues was against well-established principles, taking into account the Plaintiffs’ allegations of fraud/dishonesty against PIML, Tina and Albert.

For the above reasons, PIML invites the Court to set aside the Judge’s determinations of Issues 1, 4 and 6.

78.  Central to PIML Ground 1 is the complaint that the Plaintiffs’ plea on backdating is devoid of particulars. It is argued that the Plaintiffs’ failure to properly particularise the plea is contrary to the principle that where a party alleges fraud or makes serious allegations against other parties, the allegations must be pleaded with sufficient particularity, and it is not open to the court to infer fraud or dishonesty from facts which have not been pleaded[14].

79.  This argument has no merit. It can be seen from the Amended Statement of Claim that the Plaintiffs have advanced different causes of actions against the Defendants, including invalidity of the Impugned Documents on the grounds of want of authority, conspiracy to injure, breach of fiduciary duties, knowing receipt and knowing assistance. Many of these causes of action are not directed against PIML. Out of the allegations raised by the Plaintiffs in the Amended Statement of Claim, the Judge identified 7 distinct issues which she ordered were to be tried as preliminary issues. Of those 7 issues, the ones which are relevant for the purpose of the present discussion are Issues 1, 4 and 6, ie the backdating issue. Each of them raises a simple question of fact, namely, whether the 1^st and 2^nd Transfers Documents/Allotments/1^st and 2^nd Appointment Resolutions were created on a date or dates on or after 29 September 2022 and were backdated.

80.  The backdating of a document may (but does not necessarily) give rise to a cause or causes of action. As pointed out by the Judge at §106(2) of the Judgment, the backdating of the Impugned Documents in this case gave rise to or supported the Plaintiffs’ claim that the relevant documents were invalid for want of authority as well as the claim of conspiracy against Tina, Albert, CISIL and MS[15]. However, the issues which were tried as preliminary issues were whether the relevant documents were backdated, not whether the causes of action which might be supported by the backdating were made out. The issues as framed did not involve any allegation of fraud or dishonesty. The principle that fraud must be clearly and distinctly pleaded has simply no application in the present case. In passing, it may be noted that in Issue 1, but not Issues 4 and 6, the additional words “… and, therefore, invalid for want of authority” appear at the end. However, the Judge’s finding on the invalidity of the Impugned Documents for want of authority was a conclusion which followed directly from her finding that those documents were created on or after 29 September 2022 and were backdated. No further finding was required to be made by the Judge to reach the finding that the Impugned Documents were void for want of authority[16].

81.  At §1(2)(i) of its Notice of Appeal, PIML complains that the Judge erred in finding that the cause of action of want of authority was not the subject of the preliminary issues when it was precisely the subject of Issue 1[17].

82.  At §106(2) of the Judgment, where the Judge dealt with PIML’s pleading objection, the Judge stated the following:

“The backdating plea is a material fact, which gives rise to different causes of action, namely want of authority (ASOC §§17C, 17E, 17F) and conspiracy (ASOC §§17G). These causes of action are not the subject of the preliminary issues.”

83.  The Judge was well aware that the question of “want of authority” was within the scope of Issue 1[18], and made specific findings that the Impugned Documents were void for want of authority[19]. We accept Mr Yuen’s submission that this slip in the Judgment is not material because, in the context of the discussion concerning PIML’s pleading objection, what was material was whether Issues 1, 4 and 6 involved any allegation of fraud or dishonesty against Tina, Albert and/or PIML. As earlier mentioned, we are of the view that the issues as framed did not involve any such allegation.

84.  We shall now briefly deal with the points raised by PIML mentioned at §77 above:

(1)  In respect of §77(1), the trial before the Judge was a trial of 7 discrete preliminary issues, and not all the issues on the pleadings. The 7 issues were clearly defined. PIML was directly involved in Issues 1, 4 and 6. The Plaintiffs’ supporting evidence was disclosed in the Affirmations of Chow filed and served before the trial, and PIML well knew the case that it faced. PIML had full opportunity to meet the Plaintiffs’ case, and was at liberty to adduce such evidence as was available to it to answer the Plaintiffs’ allegations. The state of PIML’s own pleading did not cause any prejudice to PIML in its defence of the Plaintiffs’ case on Issues 1, 4 and 6.

(2)  In respect of §77(2), the Judge took an adverse view of the evidence of Chen because, amongst other things, her evidence was full of inconsistencies and she was unable to provide any coherent or credible answers on critical aspects of her own testimony[20], while Lo was considered by the Judge to have changed her evidence in the course of cross-examination, given inconsistent answers, and made up answer when it suited her[21]. The Judge’s criticisms of the evidence of Lo and Chen were fully explained and well justified. PIML’s complaint that Lo and Chen were unfairly criticized because PIML was afforded no or no fair opportunity to state its case in the Defence is wholly untenable.

(3)  The argument at §77(3) does not add anything of substance to PIML’s ground of appeal. The matters relied upon by Ms Ip at §12 of her Skeleton Submissions are repetitions of the complaints about lack of particulars of the Plaintiffs’ fraud case, and the inability of PIML to adduce evidence to defend the Plaintiffs’ case, which we have already dealt with above.

(4)  The complaint of shifting of evidential burden at §77(4) has already been dealt with above.

(5)  In respect of §77(5), PIML’s complaint that the order for the trial of preliminary issues, taking into account the Plaintiffs’ complaint of fraud/dishonesty against Tina, Albert and PIML, should not have been made in the first place, cannot get off the ground. If PIML was not satisfied with the Judge’s order for a trial of preliminary issues, it should have sought to appeal that order instead of raising it only after the Judge had made her determinations of the Preliminary Issues. In any event, the issues as framed did not involve any allegation of fraud or dishonesty.

APPEALS AGAINST FINDINGS OF FACT

85.  The proper approach for considering appeals against findings of fact made by a trial judge is well settled, and will not be repeated here.

(i)  Tina Ground 1

86.  Under this ground of appeal, Tina argues that the Judge’s assessment of her credibility and consequently the Judge’s finding as to the dates on which she signed the 1^st Transfers Documents and the 1^st Appointment Resolutions[22] (which Tina referred to in her Affirmation filed on 29 May 2023 as 完成文件 (“Completion Documents”)) is plainly wrong, in that:

(1)  the Judge failed to take into account the history of the relationship and dispute between the 2 camps (ie Kam and Yuan) including the 2019 Security Arrangement and the numerous contemporaneous documents in relation thereto;

(2)  the Judge failed to consider the fact that Tina, Albert and Xu were the only 3 directors (except INEDs) of GCBC at the relevant time, and at least, Xu acting for the controlling shareholder of GCBC at the material time was aware of and approved the 2019 Security Arrangement, and Tina was aware of and approved the 2019 Guarantee;

(3)  the Judge failed to take into account and/or have regard to a material fact, namely, the very existence of the 2019 Security Arrangement (as distinct from the enforceability and/or validity of the same) and connected documents notwithstanding that the prima facie existence of the same explained and/or was consistent with Tina’s testimony as to her reasons for executing the Completion Documents in late August 2022;

(4)  had the Judge done so, she would have come to the conclusion that at least an important part of Tina’s evidence was true and inherently there was no palpable reason for her as a seasoned director to embark on a course of obviously futile events in signing or executing the Completion Documents as if by way of afterthought after she had been removed or displaced as director of the HK Subsidiaries; and

(5)  the Judge erred in failing to have regard to a material fact, viz that there was no evidence or allegation as to Tina’s motive(s) or reason(s) for committing “serious” conduct such as backdating the Completion Documents, and in particular no suggestion that such act benefited her, contrary to the principles set out in Hui Cheung Fai v Daiwa Development Ltd & Ors (HCA 1734/2009, unreported, 8 April 2014, §§77-83).

87.  In his opening speech on behalf of Tina, Mr Tong said that there was essentially only one point in Tina’s appeal, namely, whether the Judge properly used her advantage as the judge presiding over the trial to assess the evidence before her. Mr Tong submitted that the Plaintiffs made a very serious allegation against Tina, and the Judge, in her assessment of Tina’s evidence, overlooked an important consideration, namely, the lack of motive on the part of Tina to backdate the Completion Documents. Mr Tong referred to and relied upon the following passage in the judgment of Robert Goff LJ in The Ocean Frost [1985] 1 Lloyd’s Rep 1 at 57 (quoted by DHCJ Eugene Fung, SC in Hui Cheung Fai, at §81):

“Speaking from my experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.”

88.  In his Skeleton Submissions for Tina, Mr Tong further submits that there was plainly no motive for Tina, a well-educated, qualified accountant and sophisticated businesswoman to risk committing forgery when:

(1)  It is not suggested that Tina would derive any benefit by reason of the documents signed by her when the Impugned Documents were not suggested to have been prepared or dated by her.

(2)  The Judge categorized the Impugned Documents as having the effect of giving away assets of the Plaintiffs for free. If so, it matters not when the documents signed by Tina were dated.

(3)  In assessing Tina’s evidence, the Judge failed to consider the 2019 Security Agreement and in particular, the 2019 Guarantee, to which the Plaintiffs and the HK Subsidiaries were all parties and signatories, at all or test it against the evidence of Tina.

89.  In response to the argument that the Judge failed to consider the issue of motive when assessing Tina’s credibility, Mr Yuen submits that this point was not made at the trial below, whether via affirmation evidence or by way of opening/closing submissions; nor was the alleged lack of motive put to the Plaintiffs’ witness (Chow) during cross-examination, and thus, Tina should not be allowed to raise it on appeal. In any event, the motive point is hopeless because:

(1)  Whilst the presence of motive would support a finding of a wrongful act, etc, the absence thereof does not necessarily assist Tina.

(2)  The Judge must have been aware of the relevance (or otherwise) of motive when assessing credibility. At §63 of the Judgment, the Judge outlined the court’s approach for fact finding and assessment of the credibility of a witness that was discussed at §§77-83 of Hui Cheung Fai, which included the very passage in Hui Cheung Fai (§81) now relied on by Tina.

(3)  The fact that the Judge did not explicitly discuss motive in the Judgment does not vitiate her analysis. A judgment does not need to identify and explain every factor considered by the judge.

(4)  Tina was previously a director of GMHL and has 2 children with Kam. Her motive was crystal clear: by executing the Impugned Documents, the HK Subsidiaries (and thus the profitable subsidiaries in the Mainland) would remain under the control of Kam/GMHL (through nominees such as Notake and MS). In other words, Tina and Albert wanted to avoid the impact of the order made by the Cayman Court appointing the PLs over GCBC.

(5)  In any event, motive is only one of the factors to be considered together with other objective facts, documents and the overall probabilities. In view of the overwhelming evidence in this case, the Judge’s findings/conclusion would remain the same irrespective of whether motive was taken into account.

90.  Mr Yuen further submits that the 2019 Security Arrangement does not assist Tina’s case, because Tina and Albert had been removed as directors of CSC Holdings and South BVI on 24 September 2022 after the appointment of PLs on 22 September 2022, and thus it would be necessary to backdate the Impugned Documents so as to make it looked like that they were created before the PLs were appointed.

91.  Although we do not consider that Tina should necessarily be debarred from raising the motive point on appeal because it was not taken below, we agree with Mr Yuen that the point has no merit. On the evidence before the court, Tina plainly had a very close personal and business relationship with Kam (see §12 above). Kam and Yuan (and their respective companies) were involved in a dispute over the ownership and/or control of the Group, and the HK Subsidiaries were integral parts of the Group. The suggestion that Tina had no motive to assist Kam to take control of the HK Subsidiaries is unrealistic.

92.  In any event, the absence of positive evidence on Tina’s motive is not a matter of great significance in the present case. There were ample materials which justified the Judge’s view that Tina was not a credible witness, as well as the conclusion that the Impugned Documents were executed on or after 29 September 2022 and backdated to 12 or 13 September 2022. At §§78-82 of the Judgment, the Judge explained why she considered Tina’s evidence was unreliable, and at §§87-105, she set out the matters which she relied upon as well as her reasoning for the conclusion that the Impugned Documents had been backdated, including (i) Section D1.1 – “Objective facts”, (ii) Section D1.2 – “No contemporaneous documents in support of defendants’ case”, (iii) Section D1.3 – “MS, CISIL and Notake did not contest Plaintiffs’ claims”, and (iv) Section D1.4 – “Internal inconsistencies in Tina, Albert’s and Lo/Chen’s evidence”. While it is true that the Judge did not expressly refer to the issue of motive in the Judgment, it is by no means clear that she had overlooked the point, having expressly referred to the proper approach for fact finding and assessment of the credibility of a witness that was discussed at §§77-83 of Hui Cheung Fai (which included the very passage about the relevance of motive in the judgment of Robert Goff LJ in The Ocean Frost now relied upon by Tina). The Judge cannot be criticized for not having expressly dealt with the issue of Tina’s motive in the Judgment, since this was not a point taken on behalf of Tina at the trial below, probably because of the obvious unattractiveness of the point. In any event, even if one assumes that the Judge had overlooked the point, we are satisfied that, had she expressly considered it in the Judgment, she would have reached the same conclusion having regard to the evidence and materials before her referred to at §§78-82 and §§87-105 of the Judgment.

93.  We also accept Mr Yuen’s submission that the 2019 Security Arrangement does not assist Tina’s case. The simple fact of the matter is that it must have been obvious to Tina, being a qualified accountant with substantial business experience, that consequent upon the appointment of the PLs over GCBC by the Cayman Court on 22 September 2022, all the assets and affairs of GCBC, including all its direct and indirect subsidiaries, would come be the control of the PLs. Even if the 2019 Security Arrangement existed and was valid (disputed by Yuan), the HK Subsidiaries would still come under the control of the PLs unless and until their appointment was discharged. Such difficulty could, however, be bypassed if it could be shown that prior to the appointment of the PLs, the HK Subsidiaries had already ceased to be part of the Group. Thus, the existence and validity of the alleged 2019 Security Arrangement would not mean that Tina (or Kam’s camp) had no motive to backdate the Impugned Documents.

94.  At §20 of the Skeleton Submissions for Tina, Mr Tong complains that the Judge made a point of there being no “contemporaneous documents in support of the defendants’ case” at §99 of the Judgment, but ignored the contemporaneous documents relating to the existence of the 2019 Security Arrangement itemized at §20(1) to (10) of the Skeleton Submissions. This complaint is off focus because the Judge’s comment at §99 of the Judgment was directed at the absence of contemporaneous documents which supported Tina and Albert’s assertions they signed the 1^st Transfers Documents and the 1^st Appointment Resolutions in late August 2022 (Tina) or the week of 5 September 2022 (Albert), and PIML’s allegations that those documents were provided to it on 13 September 2022 and the Allotment Resolutions, the 2^nd Transfers Documents and the 2^nd Appointment Resolutions were created and signed on 13 September 2022.

95.  Mr Tong’s further complaint at §21 of the Skeleton Submissions for Tina that the failure of PIML to produce documents relating to the preparation of the Impugned Documents is not evidence of dishonestly on the part of Tina is beside the point. The Judge did not find that Tina was dishonest because of PIML’s failure to produce relevant documents relating to the preparation of the Impugned Documents.

96.  At §22 of the Skeleton Submissions for Tina, Mr Tong submits that when the Completion Documents were passed to PIML for handling, they must have already been signed by Tina. The change or alteration of the date chopped on the I/T for the 1^st Transfer in respect of East HK from “29 SEP 2022” to “12-9-2022” contained no initials of Tina, showing that she was not aware of, or could not have been privy to, the dating or any alteration of the date thereon. Mr Tong argues that the Judge failed to see the vital distinction between when the Completion Documents were signed and when they were dated and how. As the preparation of the Completion Documents and their filing were handled by PIML, Tina should not be blamed for any mistake or alleged anomalies associated with the handling of the documents. We do not accept this argument of Mr Tong. It is premised on the assumption that at the time when Tina signed the I/T for the 1^st Transfer in respect of East HK, it was undated. However, this assumption is not supported by Tina’s evidence. On the contrary, Tina said, at §36 of her Affirmation filed on 29 May 2023, that some of the “Completion Documents” (ie the 1^st Transfers Documents and the 1^st Appointment Resolutions), without specifying which of them, “were already post-dated as 12 or 13 September 2022 when they were delivered to me, notwithstanding that such documents came to me for execution, whilst still in August 2022…”. The crossing out of the date chop of “29 SEP 2022” on the I/T for the 1^st Transfer in respect of East HK and the replacement thereof by the handwritten words “12-9-2022” was one of the “objective facts” which the Judge took into account in coming to the view that “all the steps taken by PIML to implement the Impugned Documents only took place on or after 29 September 2022”[23]. We consider that it was open to the Judge, on the evidence before her, to come to this view.

97.  At §25 of the Skeleton Submissions for Tina, Mr Tong argues, in the context of his submission about “burden of proof”, that the Plaintiffs produced no evidence as to when the Impugned Documents were signed, and that disbelieving all of the Defendants’ witnesses would not establish the Plaintiffs’ case. As pointed out by Mr Yuen, this argument is outside the scope of Tina’s Supplemental Notice of Appeal. In any event, it has no merit. The Judge took into account all the evidence and materials before her to come to the conclusion that the Impugned Documents were backdated (see Section D of the Judgment). It matters little that the materials which the Judge relied upon to come to that conclusion were originally produced or created by the Plaintiffs or the Defendants.

98.  In his Skeleton Submissions for Tina, Mr Tong has raised a few other complaints concerning the Judge’s findings of fact in the Judgment, including the Judge’s seriously flawed criticisms of Tina’s evidence in various specific aspects[24], and the Judge’s improper or incorrect drawing of adverse inference from the absence of other parties[25]. We do not consider that Tina is entitled to rely on these complaints because, as pointed out by Mr Yuen, they are outside the scope of Tina’s Notice of Appeal[26]. In any event, they have been adequately answered by Mr Yuen[27].

(ii)  Albert Ground 7

99.  Under this ground of appeal, Albert argues that the Judge erred in finding that he had committed the serious misconduct of backdating the relevant documents (which Albert referred to in his 2^nd Affirmation of 19 May 2023 as the “Enforcement Documents”) based solely on inferences, which were reached on conjecture and without any proper foundation. In particular, Albert argues that:

(1)  The Judge ought to have accepted his evidence that he signed the Enforcement Documents before 13 September 2022, which is entirely consistent with PIML’s evidence that it had received the documents signed by him on 13 September 2022. Notably, as against Albert’s evidence, the PLs have no personal or direct knowledge as to the timing or circumstances of Albert’s signing of the Enforcement Documents.

(2)  The Judge ought to have found that the Plaintiffs had failed to put forward any proper basis for the serious allegations of backdating against him. The matters relied upon by the Judge in Sections C4 and Dl of the Judgment are plainly inadequate and insufficient for drawing any inferences (much less “compelling” inferences) of serious misconduct against him.

(3)  The Judge’s reasoning is based heavily on the matters set out under the heading “Objective facts” in Section Dl.1 of the Judgment. However, the matters under Section Dl.1 could at most give rise to a cloud of suspicion - which arise from certain corporate documents which do not involve Albert at all, and the vast majority of which are wholly irrelevant to the issue of whether the subject documents were backdated.

(4)  The Judge erred in seeking to rely on an alleged inconsistency between Albert’s evidence and his position in his sixth affirmation of 9 September 2022[28] filed in opposition to the Cayman Petition (“Albert Sixth”) to draw an inference of backdating against him.

(5)  It is plainly wrong for the Judge to reject Albert’s oral evidence that “he was told by Xu that he (Xu) would inform other GCBC directors and obtain their approval” of the 2019 Security Arrangement as unreliable merely because, in his 2^nd Affirmation, Albert only mentioned that Xu represented to him on the disclosure requirement[29].

(6)  It is also plainly wrong for the Judge to refer to GCBC’s defence of the application for appointment of the PLs up to 22 September 2022, in finding that “the need for more aggressive measures on Tina/Albert’s part only materialized after the PLs had been appointed”[30].

100.  In respect of §§99(1) to (3) above, Mr Wong submits that while Albert gave direct evidence that he signed the Enforcement Documents in the week of 5 September 2022, the Plaintiffs adduced no direct evidence to disprove his evidence. The Judge’s observations and findings on the evidence given by PIML on the handling of the Impugned Documents (at §§89-98 and 104 of the Judgment) are incapable of “disproving” Albert’s evidence as to when he signed the relevant documents, because Albert was not involved in the passing of those documents to PIML or the subsequent handling of those documents; and the Plaintiffs adduced no evidence and put forward no case of any conspiracy or collusion between Albert and PIML. As for the Judge’s observation that there was no contemporaneous document in support of the defence case, the Judge erred in reversing the burden of proof. She also erred in failing to take into account contemporaneous documents relating to the 2019 Security Arrangement, which were not disputed for the purposes of the trial of preliminary issues and which should be assumed in favour of the defence. Such contemporaneous documents supported Albert’s evidence that he simply gave effect to what he believed to be the prior legal commitments of the relevant companies when he signed on the Enforcement Documents, and they also militate against any “backdating” allegation. As for the Judge’s reliance on the fact that MS, CISIL and Notake did not contest these proceedings, this simply does not support any inference that Albert did not sign on the Enforcement Documents in the week of 5 September 2022. Not only did the Judge err in surmising the reasons for these parties not appearing in these proceedings, she further erred in drawing inferences against Albert on the basis of such surmise.

101.  None of these arguments has merit. They are merely attempts to re-argue Albert’s factual case, but do not show that the Judge made any palpable errors in her findings of fact, or that those findings are plainly wrong:

(1)  The fact that the Plaintiffs have not been able to adduce direct evidence to disprove Albert’s assertion that he signed the Enforcement Documents in the week of 5 September 2022 does not mean that the court must accept his assertion as to when he signed those documents. The Judge took the view that Albert was not a truthful witness and his evidence regarding the date on which he signed the documents was unreliable because, amongst other things, various aspects of his evidence were clearly incredible and inconsistent, and he was highly evasive and deflective in his answers. The Judge was entitled to come to her adverse view about the credibility of Albert.

(2)  On the other hand, there were objective facts which supported the Judge’s view that all the steps taken by PIML to implement the Impugned Documents only took place on or after 29 September 2022. The Judge considered that those objective facts were consistent with and supported the Plaintiffs’ prima facie case that the Impugned Documents were only created on or after 29 September 2022 but not before[31]. We consider that it was open to the Judge to come to that view, notwithstanding the fact that Albert was not involved in the passing of those documents to PIML or the subsequent handling of those documents. The fact that the Plaintiffs adduced no evidence and put forward no case of any conspiracy or collusion between Albert and PIML is neither here nor there.

(3)  We have already dealt with the Judge’s observation at §99 of the Judgment about the lack of contemporaneous documents, the issue of burden of proof, and the relevance of the alleged contemporaneous documents relating to the 2019 Security Arrangement above, and shall not repeat our views here. We have also explained why we do not accept the contention that for the purposes of the trial of preliminary issues, the Judge was required to assume in favour of the defence the veracity and validity of the 2019 Security Arrangement.

(4)  As for the contention that the alleged contemporaneous documents relating to the 2019 Security Arrangement supported Albert’s evidence that he simply gave effect to what he believed to be the prior legal commitments of the relevant companies when he signed on the Enforcement Documents, such contention does not assist Albert in view of the Judge’s clear and well-supported finding that he was not a truthful witness.

(5)  Lastly, as for the Judge’s reliance on the fact that MS, CISIL and Notake did not contest these proceedings, while this fact by itself would not prove that Albert signed the relevant documents on or after 29 September 2022, the Judge was entitled to take this factor into account in her overall assessment of how Issues 1, 4 and 6 ought to be determined. On any view of the matter, the fact that MS, CISIL and Notake, who apparently had interests to contest these proceedings, did not do so cannot be said to be irrelevant to the Judge’s consideration of Issues 1, 4 and 6.

102.  In respect of §99(4) above, Mr Wong argues that:

(1)  The Judge erred in holding that there was inconsistency between Albert’s evidence and his position in Albert Sixth made on 9 September 2022 and filed in opposition to the Caymen Petition. The Judge took the view that Albert should have stated, but failed to state, in Albert Sixth that “at the time the Cellenkos Transaction was entered into[32], the Group no longer held South HK/Nuoya and hence the indirect equity in Shanghai GM Life Bank Co., Ltd and Shanghai GM Diagnosis Co., Ltd, which would have been the position had the 1^st Transfers Documents been signed in the week of 5 September 2022”[33].

(2)  This view is plainly wrong for 2 reasons. First, “the week of 5 September 2022” in fact extended up to 11 September 2022 (Sunday). Hence, Albert Sixth could be affirmed before Albert signed on the documents relating to the 1^st Transfers. Second, in any case, Albert did not in fact give any precise date for the signing of the Enforcement Documents in his evidence[34]. Accordingly, there was no basis for the Judge to conclude that there was inconsistency in Albert’s evidence and, based on such alleged inconsistency, draw any inference against Albert’s case.

(3)  Additionally, it was unfair for the Judge to seek to draw any inference against Albert on this basis, in circumstances where the Plaintiffs did not even seek to include Albert Sixth in the hearing bundles, nor to present the same to Albert to refresh his memory in pursuing the Plaintiffs’ line of cross-examination. In this regard, Albert said in his oral evidence that according to his understanding at the time, the transfer of the HK Subsidiaries was not even relevant to the contents of Albert Sixth in the Cayman Proceedings.

103.  In answer to these arguments, Mr Yuen submits as follows:

(1)  That Albert Sixth could be affirmed before Albert allegedly signed on the Enforcement Documents in the week of 5 September 2022 is neither here nor there. As accepted by Albert in his evidence in cross-examination, he ought to have filed a supplemental affirmation to update the court of the latest position[35].

(2)  As the Judge rightly held, there was no unfairness for the Plaintiffs to test the credibility of Albert’s evidence by putting to him previous statements made by him on oath[36]. During cross-examination, Albert had no difficulties in recollecting the contents of Albert Sixth filed in opposition to the Cayman Petition[37].

(3)  It is equally wrong for Albert to contend that the transfer of the HK Subsidiaries was irrelevant to Albert Sixth. It was a hotly disputed issue in the Cayman Petition as to whether Stage 1 of the Cellenkos Transaction had been completed. However, Stage 1’s completion could not have happened if the Group no longer held South HK/Nuoya and hence the indirect equity in Shanghai GM Life Bank Co Ltd and Shanghai GM Diagnosis Co Ltd. Hence, had the shares in the HK Subsidiaries been transferred away in the week of 5 September 2022 (on Albert’s case), it would have been relevant for him to address the same in Albert Sixth made on 9 September 2022.

104.  We do not accept Mr Wong’s submissions. At §83 of the Judgment, the Judge set out the criticisms made by Ms Sit of various aspects of Albert’s evidence which she submitted were clearly incredible. One of the criticisms made by Ms Sit related to the apparent inconsistency between Albert’s evidence that he signed the Enforcement Documents in the week of 5 September 2022 and the position that he adopted in Albert Sixth. The Judge said this at §83(3) of the Judgment:

“Third, in Albert Sixth (made on 9 September 2022) filed in opposition to the Cayman Petition, Albert never stated that at the time the Cellenkos Transaction was entered into, the Group no longer held South HK/Nuoya and hence the indirect equity in Shanghai GM Life Bank Co., Ltd and Shanghai GM Diagnosis Co., Ltd,; which would have been the position had the 1^st Transfers Documents been signed in the week of 5 September 2022. Albert is unable to provide credible answer to this other than asserting that the transfers of the HK Subsidiaries was not relevant to the contents of Albert Sixth. Mr Wong contends that it is ‘unfair’ for the Plaintiffs to seek to draw any inferences of backdating against Albert on this basis particularly when Albert Sixth was not shown to him to refresh his memory. I disagree. It is Albert’s evidence that he signed the resolutions approving the transfers of North HK and FFL in the week of 5 September 2022 by way of enforcement of the 2019 Security Arrangement. The Plaintiffs are entitled to test the credibility of his evidence including putting to him previous statements contained in Albert Sixth to see if he has any explanation for the inconsistencies.”

105.  In respect of the first reason given by Mr Wong for contending that the Judge’s view that there was inconsistency between Albert’s evidence and his position in Albert Sixth is plainly wrong, it would appear that at the trial, Mr Wong never took the point that Albert Sixth could be affirmed before Albert signed the Enforcement Documents because “the week of 5 September 2022” in fact extended up to 11 September 2022 (Sunday)[38]. The Judge cannot be criticised for not dealing with this point in the Judgment when it was not raised by Mr Wong at the trial. In any event, as submitted by Mr Yuen, Albert ought to have filed a supplemental affirmation to update the Cayman Court of the position if there was indeed a material change of circumstances (ie the transfer of the HK Subsidiaries, which took place subsequent to the making of Albert Sixth). When this point was put to Albert in cross-examination, he did not disagree with it. Neither did Mr Wong in his written closing submissions to the Judge. As for the second reason relied upon by Mr Wong, while Albert did not give a precise date for the signing of the Enforcement Documents in his 2^nd Affirmation, he was clear in his oral evidence that he signed those documents in the week of 5 September 2022[39]. In his closing, Mr Wong submitted to the Judge that “Albert’s clear evidence is that he had signed the Enforcement Documents during the week of 5.9.2022”[40]. In our view, Mr Wong’s second reason adds nothing of substance to his first reason.

106.  We agree with the Judge that there was no unfairness to Albert merely because Albert Sixth was not shown to him to refresh his memory. We have read the transcript of Albert’s cross-examination. There was no indication that he needed to refresh his memory of what he had said in Albert Sixth in order to answer questions put to him by Ms Sit. Mr Wong also did not suggest to the Judge that Albert ought to be given a copy of Albert Sixth to refresh his memory.

107.  As for the relevance of the transfer of the HK Subsidiaries to the contents of Albert Sixth in the Cayman Proceeding, Mr Wong has no effective answer to Mr Yuen’s submission referred to at §103(3) above. The Judge was aware of Albert’s assertion that he considered the transfer of the HK Subsidiaries to be not relevant to the contents of Albert Sixth[41], but plainly did not accept such assertion.

108.  Finally, the apparent inconsistency between Albert’s evidence and Albert Sixth referred in §83(3) of the Judgment was just one of the matters which the Judge took into account in her assessment of Albert’s credibility. Even if one disregards that inconsistency, there were other mattes which amply justified the Judge’s view that Albert was not a truthful witness.

109.  In respect of §99(5) above, Mr Wong argues that it is plainly wrong for the Judge to reject Albert’s explanation given in his cross-examination as to why the 2019 Guarantee was not approved by GCBC’s board (namely, he had been told by Xu that he (Xu) would inform other GCBC directors and obtain their approval of the same) because at §35 of Albert’s 2^nd Affirmation, he merely said that “Xu had assured me that he had already consulted legal advisors, who confirmed that there was no requirement to make any disclosures with respect of the 2019 Security Arrangement”[42], for 3 reasons. First, the Plaintiffs had confirmed that they did not intend to ask the Court to resolve disputes concerning the 2019 Security Arrangement, and for this reason chose not to call Xu as a witness. It was thus wrong for the Judge to rely on such matters to discredit Albert’s evidence. Second, contrary to the Judge’s view, Albert’s oral evidence that “he was told by Xu that [Xu] would inform other GCBC directors and obtain their approval ”is not inconsistent with what he said at §35 of his 2^nd Affirmation. In this regard, one must bear in mind that the 2^nd Affirmation of Albert was not meant to be full narratives of the 2019 Security Arrangement, but was made for the purposes of the trial of preliminary issues only. Third, the alleged inconsistency is in any event incapable of supporting any inference that Albert was guilty of “backdating” the documents in question.

110.  Mr Yuen submits that this criticism of the Judge’s assessment of Albert’s credibility is unjustified, because the Judge was entitled to reject Albert’s explanation as to why the 2019 Guarantee was not approved by board of GCBC on the basis that this explanation was only given by him for the first time in cross-examination.

111.  We do not consider Mr Wong’s argument to have merit. At §83(1) of the Judgment, the Judge set out another aspect of Albert’s evidence which Ms Sit submitted was clearly incredible:

“First, when being asked why the 2019 Guarantee said to have been executed in furtherance of the 2019 Security Arrangement was not approved by GCBC’s board, Albert says, for the first time under cross-examination, that he was told by Xu that he (Xu) would inform other GCBC directors and obtain their approval, whereas in Albert 2, he stated that Xu only represented to him on the disclosure requirement.”

112.  At §85 of the Judgment, the Judge pointed out that Mr Wong did not advance any submissions to contradict the criticisms made by Ms Sit. Instead, the main plank of Mr Wong’s argument was that the court should not make any findings on the veracity or validity of the 2019 Security Arrangement. We have already rejected this argument above. Further, regardless of whether Albert’s aforesaid explanation was strictly inconsistent with what he said at §35 of his 2^nd Affirmation, it is a fact that the explanation came out for the first time in his cross-examination. The Judge was entitled to take the view that since Albert was seeking, at §35 of his 2^nd Affirmation, to justify the non-disclosure of the 2019 Security Arrangement by reference to some advice or confirmation allegedly given by Xu, there was no reason why Albert would omit to mention Xu’s assurance that he would obtain GCBC’s board approval of the 2019 Guarantee (if Albert’s evidence was true). In our view, the Judge was entitled to take this matter into account, not necessarily as supporting an inference that Albert was guilty of “backdating” the documents in question, but certainly for the purpose of assessing his credibility (which was what the Judge did at §§83-86 of the Judgment).

113.  In respect of §99(6) above, Mr Wong refers to §103(3) of the Judgment –

“There is no substance in Tina’s reliance on the removal of GCBC’s name plaque from the BOC Address to support her allegation of no backdating. As Albert accepts, GCBC was defending the application for appointment of the PLs all the way up to 22 September 2022. Thus, the need for more aggressive measures on Tina/Albert’s part only materialized after the PLs had been appointed”,

and argues that it is plainly wrong for the Judge to refer to GCBC’s defence of the application for appointment of provisional liquidators up to 22 September 2022, in finding that “the need for more aggressive measures on Tina/Albert’s part only materialized after the PLs had been appointed”. Not only did Albert disagree with this suggestion during cross-examination, it was not supported even by the Plaintiffs’ own evidence. It was Chow’s evidence that after the Cayman Court on 15 September 2022 had directed, inter alia, that it was willing to hear the application for the appointment of provisional liquidators on an ex parte basis on 22 September 2022, Carey Olsen (GCBC’s then lawyers) on 16 September 2022 by letter informed Bedell Cristin (Blue Ocean BVI’s then lawyers), and by email informed the Cayman Court, that (i) they were instructed by GCBC not to attend the hearing on 22 September 2022 “in order to save costs”, and (ii) Carey Olsen merely requested Bedell Cristin to present their submissions made in the letter to the Cayman Court[43]. Thus, even on the Plaintiffs’ own evidence, GCBC had on no later than 16 September 2022 ceased instructing Carey Olsen to attend the hearing for the appointment of provisional liquidators in order to save costs.

114.  Mr Yuen submits that this argument of Albert is unsustainable. It is Albert’s own evidence during cross-examination that GCBC defended the application for the appointment of provisional liquidators up to 22 September 2022[44]. In any event, the thrust of the point – which remains valid regardless of whether GCBC ceased defending the application on 16 or 22 September 2022 – is that there was a need for more aggressive measures by Albert and Tina after the appointment of the PLs on 22 September 2022 (viz creating the Impugned Documents and backdating them to 12 or 13 September 2022), therefore it is unmeritorious for Tina to rely on the removal of GCBC’s name plaque from the BOC Address (ie GCBC’s principal place of business at 48/F, Bank of China Tower) on 13 September 2022 to support her case of no backdating[45]. We consider Mr Yuen’s submissions to be well-founded.

115.  In all, Tina and Albert’s challenges to the findings of fact made by the Judge are all rejected.

CONCLUSION AND DISPOSITION

116.  For the above reasons, none of the grounds of appeal raised by Tina, Albert and PIML has merit. Their appeals are dismissed. We also make an order nisi that the Plaintiffs shall have the costs of the appeals, to be taxed if not agreed. The above costs order shall become absolute unless an application is made to vary the same within 14 days from the date of handing down of this judgment.