RE RZ3262019 LTD

HCCW 244/2023

[2025] HKCFI 3321

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 244 OF 2023

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REASONS FOR DECISION

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1.  Zhou Ying Investments Group Limited (“Zhou Ying”) issued on 20 January of this year an application for the removal of the Liquidators (Frank Yuen Tsz Chun and Chan Hoi Yan) of RZ3262019 Limited (“Company”), which is in liquidation in Hong Kong, and their replacement with the next eligible liquidators on the Administrative Panel of the Insolvency Practitioners for Court Winding-Up (Panel A) roster list. This case came on before me on 25 July 2025 along with an application by Zhou Ying to cross-examine Ms Chan. I granted the application to cross-examine and adjourn the substantive application for the following reasons.

2.  The Company was incorporated in the British Virgin Islands (“BVI”) on 17 April 2019 for the purpose of acquiring Shun Hong Real Estate (Chengdu) Limited (“PRC Project Company”) from the subsidiaries of CK Asset Holdings Limited.  The PRC Project Company operated several residential and commercial property developments in Chengdu.

(1)  The PRC Project Company was 50% owned by each of Shun Hong Limited (“Shun Hong”, previously named Bruckner Limited) and Carton International Limited (“Carton”).

(2)  Shun Hong was wholly owned by Happy Magic Enterprises Inc. (“Happy Magic”), which in turn was 100% owned by Happy Lion Ventures Limited (“Happy Lion”), which in turn was 100% indirectly owned by CK Holdings.

(3)  Carton was wholly owned by Chinex Limited (“Chinex”), which was 100% indirectly owned by CK Holdings.

3.  Zhou Ying claims to be a creditor of the Company.  It says that it is owed US$828 million.  As summarised by Mr Anson Wong SC[1], who appeared for Zhou Ying, in [6] of his skeleton submissions the basis for the removal application is that the Liquidators had (1) obtained a Norwich Pharmacal order on a false basis; (2) disclosed confidential documents in breach of their implied undertaking to the court; and (3) for the purposes of covering up their wrongdoings, proffered multiple false and/or misleading explanations to the court.  What is not apparent from this summary is that the proceedings in respect of which the relevant order was made were in connection with proceedings brought against Zhou Ying by the Liquidators.  In other words Zhou Ying is trying to remove the individuals conducting litigation against them for cause directly connected with the conduct of that litigation.

4.  On 8 July 2022 a petition was presented by the Happy Lion and Chinex (“CK Creditors” or “Vendors”) in the BVI to wind up the Company.  On 13 July 2022 the BVI court appointed provisional liquidators.  The Company was put into liquidation in the BVI on 31 May 2023.  On 8 June 2023 the CK Creditors commenced HCCW 244/2023 in Hong Kong seeking to wind up the Company in Hong Kong. On 29 June 2023 Mr Justice Peter Ng appointed the Liquidators as provisional liquidators.  On 11 July 2023 the Liquidators sent a letter to Ng J seeking the court’s approval of the appointment of solicitors.  Unfortunately, this was not obtained until 7 August 2023.

5.  In the meantime Linda Chan J granted on 13 July 2023 sanction for the commencement of a Norwich Pharmacal application against Bank of China (Hong Kong) Limited (“BOC”). On 14 July 2023, the Liquidators issued an originating summons (HCMP 1113/2023) seeking a Norwich Pharmacal order against BOC.  The application was listed for 30 minutes on 26 July 2023.  As the application was commenced by the Company (Provisional Liquidators appointed) as Plaintiff.  In my view arguably at least Order 5 rule 6(2) of the Rules of the High Court(“RHC”) required the Company to instruct solicitors before issuing the proceedings and the Liquidators did not have the authority to represent the Company at the hearing on 26 July 2023. It appears that neither the Liquidators nor the Deputy Judge were aware of this procedural complication.  As this was an intrusive ex parte application it was undesirable that the Liquidators made the application without legal advice.  As it transpires BOC did not attend the hearing.  The transcript of the application reveals that other than answering a question about the communications between BOC and the Liquidators, the Liquidators made no oral submissions and the Deputy Judge said he had read the papers and was satisfied that this was a suitable case for granting the order sought, which he did (“Order”).

6.  The purpose of the Order was to facilitate the Liquidators’ intervention in proceedings in the Mainland in which Zhou Ying obtained a judgment against a subsidiary of the Company and, which the Petitioner in these proceedings suspected was part of a conspiracy to misappropriate assets of the Company.  BOC was required to disclose banking records of Zhou Ying and in particular records relating to a remittance from the BOC account to an account with China Construction Bank (Asia) Corporation Limited on 20 July 2021.  Paragraph 8 of the Order contained a restriction on the use by the Liquidators of the documents disclosed to them.  Paragraph 8 is in the following terms.  “The Plaintiff do have leave to use the information and documents obtained as a result of this Order for the purpose of issuing letters and/or statutory demands to, and commencing and pursuing proceedings (whether in Hong Kong or elsewhere) against, Zhou Ying, and/ or Everlast Bloosom Investments Limited, and/or Yuzhou Group Holdings Company Limited, implicated in any wrongdoing by such information and documents”.  Leave was not granted to the Liquidators to share the documents or the information in them with third parties.  As is common the Order contained a gagging order, which expired on 4 September 2023.Ms Chan explains in her 8^th affirmation that the Liquidators received the first batch of documents from BOC on 1 August 2023 and a second batch on 11 August 2023.

7.  On 8 March 2022 Vendors which had made a vendor loan of US$348 million to fund the acquisition of the PRC Project Company had appointed Receivers over the Company’s shares in Happy Magic and Carton (“Receivers”) with a view to obtaining control of the PRC Project Company and intervening in proceedings brought by Zhou Ying in the Mainland.  According to Ms Chan’s evidence in her 8^th affirmation upon the Liquidators obtaining on 1 August 2023 the first batch of documents, the Receivers requested the Liquidators for copies of some of them[2], which the Receivers apparently anticipated might be used by them in certain legal proceedings presumably in the Mainland for the purposes of securing the assets of the PRC Project Company.  The Liquidators provided such documents to the Receivers on the basis that they were only to be used for an agreed list of proceedings that the Liquidators considered were necessary to secure the assets of the PRC Project Company.  The Liquidators also requested the Receivers undertaking that the documents provided to them should be kept in strict confidence and would not be used for purposes other than those stated in an agreed list of proceedings and that they would not be disclosed to any third parties without the consent of the Liquidators.

8.  Ms Chan says in [97] of her 8^th affirmation that upon receiving the “Critical Evidence and based on our interpretation ….. the PLs verily believed that paragraph 8 ….. did not specifically limit usage of the Critical Evidence to proceedings commenced by the Company ….. and it was permissible for the PLs to provide the same to third parties to seek recourse against, inter alios, Zhou Ying’s wrongdoing …… For the same reason, the disclosure of the Critical Evidence to the Receivers would not amount to a breach of the implied undertaking in relation to First Disclosure order….”.

9.  Zhou Ying point out that there are inconsistencies between this evidence and the evidence that was filed for a second application issued on 22 December 2023 for a further Norwich Pharmacal order along with an application for retrospective approval of the passing of documents to the Receivers.  In her 2^nd affirmation in support of that application Ms Chan appears to explain the decision to provide the documents to the Receivers on the basis that there was an urgent need for them to take action to protect the PRC Project Company’s assets rather than a belief that [8] did not restrict the Liquidators from doing so.

10.  In addition Zhou Ying pointed to what it says is a number of other unsatisfactory features of the way in which the Norwich Pharmacal proceedings progressed including the failure to bring to the court’s attention that the statutory deadline by which any intervention in the Mainland proceedings had to be instigated had passed and the references to the Liquidators’ legal advisers in the first application for a Norwich Pharmacal order, suggesting that Ms Chan’s evidence that the Liquidators did not have legal advice is misleading.

11.  What is also unclear is, and this is not an exhaustive list, who drafted the Order and on the basis of what instructions, why [8] was drafted in the language I have quoted, how and when the Receivers came to know about the Order and how the Liquidators came to interpret [8] in the way described by Ms Chan in [97] of her 8^th affirmation.

12.  The Court has the power to order cross-examination of a deponent when satisfied that there is good and sufficient reason to do so[3]. A challenge to the bona fides of part of a deponent’s affirmation evidence does not automatically justify allowing cross-examination[4].  The court needs to be satisfied that it will serve some relevant purpose.  This is consistent with the underlying objectives of Order 1A r1 of the RHC.

13.  I accept that Zhou Ying has identified sufficiently relevant but unanswered questions arising from Ms Chan’s evidence that cross-examination is justified and arguably necessary in order for Zhou Ying to advance a case, which as currently formulated involves asserting that Ms Chan’s evidence is at the very least misleading and this is a matter to be taken into account in determining the substantive application.

14.  Since the filing of the summons for leave to cross-examine Ms Chan on her 8^th affirmation, she had filed a 9^th affirmation.  I will grant leave for cross-examination of both affirmations on the terms proposed by Mr Wong to which Mr Lam had no objection.  This includes adjourning the matter to 12 January 2026.