BEIJING RENJI REAL ESTATE DEVELOPMENT GROUP CO., LTD v. ZHU MIN

HCA 189/2025

[2025] HKCFI 1295

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 189 OF 2025

_________________

BETWEEN

_________________

_________________________________

REASONS FOR DECISION

_________________________________

Introduction

1.  By Summons dated 4 February 2025 (“Summons”) and served on the same day, the Plaintiff applied for (i) in para 1, by reference to the draft Order in Annex 1 of the Summons, the appointment of receivers over the Defendant’s 10,000 shares in Cybernaut International Ltd (“Cybernaut HK”) with extensive powers given to the receivers set out in Schedule 3 of Annex 1 and (ii) in para 2, “interim-interim” relief pending the determination of para 1. The Summons was only set down as a 30-minute hearing.

2.  In support of the Summons, the Plaintiff’s solicitors have submitted over 70 pages of Court Documents, over 90 pages of affirmations and draft affirmations and over 700 pages of exhibits. Mr Lai himself has submitted 40 pages of skeleton submissions plus 23 items of authorities.

3.  At para 2 of Mr Lai’s skeleton, as confirmed by him at the beginning of the hearing on 7 February 2025, he indicated he only sought “interim-interim” relief at that hearing but in the same terms as the draft Order in Annex 1 of the Summons.

4.  After hearing the parties for an hour, this court dismissed the application for “interim-interim” relief. Here are the reasons for the dismissal.

Background

5.  On 16 January 2020, the Plaintiff obtained an ex parte post-judgment Mareva injunction (“Injunction”) against the Defendant in aid of the enforcement of a judgment (“Mainland Judgment”) dated 13 August 2019 granted by the Higher People’s Court of Beijing Municipality ordering the Defendant to pay the sum of RMB 201,769,932 to the Plaintiff.

6.  The Injunction was granted by DHCJ Dawes SC on 16 January 2020. It prohibited the disposal of the Defendant’s assets, whether in his own name or not, which are in Hong Kong up to the value of RMB 201,769,932 including inter alia his direct and/or indirect shareholding in Cybernaut HK[1] and Cybernaut International Holdings Company Ltd (“ListCo”).[2]

7.  The Injunction was subsequently continued on 24 January 2020 by Marlene Ng J in HCMP 83 of 2020, an action commenced by the Plaintiff seeking to continue the Injunction. The Injuction was then further continued by G Lam JA on 7 April 2022. It remains in force up to the hearing.

8.  The event which prompted the Plaintiff’s Summons was that, on 13 September 2024, the Defendant transferred 356 million shares in the ListCo (“ListCo Shares”) from his own name to Cybernaut HK, a private company wholly owned by the Defendant (“Sept 2024 Transfer”). The Plaintiff claimed this transfer was in clear breach of the Injunction. Its concern appeared to be that the Cybernaut HK Shares could be transferred away at the Defendant’s direction without any effective third party scrutiny.

9.  But the Sept 2024 Transfer merely turned the Defendant’s direct interest in the ListCo Shares into his indirect interest held through Cybernaut HK, both of which were and still are caught by the Injunction and the Defendant was and still is bound by the Injunction. Moreover, the Sept 2024 Transfer was publicly reported and announced by way of Disclosure of Interest Forms dated 13 September 2024 (“Disclosure Forms”) for all to see, including the Plaintiff and/or its solicitors.

10.  On 5 December 2024, the Plaintiff’s solicitors first made enquiries with the Defendant’s solicitors about the Sept 2024 Transfer. In that letter, the Plaintiff’s solicitors referred the Injunction and to 2 DI Forms, one filed by the Defendant and the other filed by Cybernaut HK regarding the Sept 2024 Transfer. The Plaintiff’s solicitors requested the Defendant to refrain from disposing of the ListCo shares or if that had already been transferred to Cybernaut HK, procure the return of the same to the Defendant. Importantly, the Plaintiff’s solicitors even threatened to cite the Defendant for contempt of Court for the Sept 2024 Transfer should their requests not be met.

11.  There was then subsequent correspondence between the parties’ solicitors dated 12 December 2024, 20 December 2024, 24 December 2024, 14 January 2025 and 22 January 2025. By the time of these inter solicitors correspondence, the Defendant must have been well aware, or fully advised by his solicitors, that he was being closely watched as to his dealings with the ListCo Shares in light of the Injunction and the threat of contempt of Court. In fact, as early as the 12 December 2024 letter, his solicitors confirmed on the Defendant’s behalf that he would continue to abide by the Injunction and would not dispose of his assets including the ListCo Shares.

12.  In light of the above, it seems to this court an overreaction on the part of the Plaintiff to apply for the appointment of receivers over the Cybernaut HK Shares, at least not on such an urgent basis – there being only 2 working days between 4 and 7 February 2025. It is also a gross exaggeration for Mr Lai to submit in his skeleton that “there is a pressing need for robust action to be taken by the Court” by reason of the “heightened” risk of dissipation as a result of the Sept 2024 Transfer. The rush of the Plaintiff to go to Court with such a large volume of materials appears more like an ambush on the Defendant than anything else, always frowned upon by the Courts.

Deliberation

13.  The law on whether to grant interim interim relief is not complicated at all.

14.  In China Shanshui Cement Group v Zhang Caikui [2018] HKCA 409 at [13], Lam VP (as he then was) noted that:

“…It has to be reiterated that interim interim relief is meant to be an urgent temporary stop-gap measure and the circumstances were such that the court has to do practical justice on the balance of fairness even though it may not have sufficient time to consider the matter fully.” (emphasis added)

15.  Even at the early stage of the hearing, all Mr Lai submitted to this court on the law was the following:

“MR LAI: Now, my Lord, today is my application for interim interim relief, and the test for the grant of an interim interim relief is really the balance of fairness, what the court can do to do practical justice on the balance of fairness when the court does not have a sufficient opportunity to consider the matter. So it’s a question of balance.”

16.  On the question of balance, one of the matters Mr Lai highlighted to this court was the so-called “known and decided risk of dissipation”, and there has been a “knowing and continuous breach of the injunction”. In the end, Mr Lai concluded the balance was in favour of grant.

17.  After those brief submissions, this court and Mr Lai went through the terms of the Draft Order in Annex 1, in particular the powers set out in Schedule 3 that he wished this court to confer on the Receivers even on an interim and interim basis. That took a long time. In the end, out of the 12 paras in Schedule 3, Mr Lai abandoned 8 of them. When that exercise finished, and when Mr Lok began his brief submissions, the hearing had already overrun substantially.

18.  Mr Lok basically had 3 points.

19.  First, the Sept 2024 Transfer was entirely transparent. This militated strongly against the Sept 2024 Transfer being a tool to dissipate the Defendant’s assets or indicated any material future risk of dissipation. That was the public reporting and announcement point about the Sept 2024 Transfer. It was always known to the parties that Cybernaut HK is a Hong Kong company wholly owned by the Defendant. In fact, the Plaintiff had adduced its latest Annual Return dated 27 Mar 2024 which showed the Defendant was its sole director and 100% shareholder.

20.  Mr Lok therefore submitted there was no heightened risk of dissipation so there was no pressing need for making any Order at the hearing.

21.  Second, there was an injunction in place which was continued even up to the hearing. This was not disputed by Mr Lai. Mr Lok submitted that:

“MR LOK: ...The point is if we want to frustrate this injunction order, my client would not transfer to the Hong Kong private company, number one. Number two, he would not report it to the whole world immediately in September 2024. So on what basis does my learned friend come to court today and ask my Lord to make an urgent appointment of receivers based on that September transfer? That’s my submission.

COURT: So you are saying that the injunction is good enough?

MR LOK: Correct, yes.”

22.  Third, Mr Lok submitted that:

“MR LOK: Simple. My Lord, that’s the first point. Second point, my Lord asked Mr Lai many times, “What are you asking from this court?” Right? My Lord, let me have a go to answer that. They bring this receivership application, so they put in the standard forms of power, which my Lord tried to go through in Schedule 3. But what are they really looking for?

COURT: Yes.

MR LOK: Right? It’s to ensure that the Hong Kong private company does not further transfer the listco shares away.

COURT: There is an injunction.

MR LOK: Exactly. That’s the whole point.

COURT: Yes, carry on, please.

MR LOK: Now, we say that if they want supervision, right, assuming my Lord is not with me that “You need additional relief today urgently and the court will find” -- you know, if they need additional relief, why do they need to appoint receivers? Just appoint a director in the Hong Kong company, for example. So my learned friend cannot answer my Lord why they need the full-blown powers of receivers. So draconian and drastic.”

23.  Having read the parties’ skeleton and heard their submissions, it seemed to this court the Plaintiff could not establish any serious risk of dissipation of the ListCo Shares or any urgent need for the appointment of receivers on an interim interim basis. Further, the Plaintiff could have resorted to the remedy of contempt of court if it seriously thought that the Sept 2024 Transfer was in breach of the Injunction. The remedy was first suggested by the Plaintiff’s solicitors in their letter of 5 December 2024 but did not resort to. Lastly, there was a less draconian way to address the Plaintiff’s concern, apparent or real, than to appoint receivers over the Cybernaut HK Shares.

24.  In other words, this court accepted the submissions of Mr Lok and did not consider the balance should lie in the Plaintiff’s favour at the hearing on 7 February 2025. That was enough to dispose of the Plaintiff’s application for interim interim relief. For these reasons, the Plaintiff’s application was dismissed.

Postscript

25.  Towards the end of the overran hearing when the dust was settled, Mr Lai still wished to show this court an authority to argue a point which would not have made a difference to the result of his interim interim relief application, as though the court’s time was unlimited and freely at the Plaintiff’s disposal. The sooner practitioners in general realise that this is just not on and enough is enough, the better for the administration of justice.