YUEN TSZ CHUN FRANK and CHAN HOI YAN, the Joint and Several Liquidators of RZ3262019 LTD (in Liquidation) v. ZHOU YING INVESTMENTS GROUP LTD AND OTHERS

HCMP 1589/2024

[2025] HKCFI 6364

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1589 OF 2024

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D E C I S I O N

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I.  INTRODUCTION

1.  On 19 September 2025, I handed down my decision (the “Decision”) ([2025] HKCFI 4350) of dismissal of the 1^st and 2^nd Defendants’ respective Summonses for striking out the Plaintiffs’ Originating Summons. This is the 1^st Defendant’s Summons filed on 2 October 2025 (the “Summons”) for leave to appeal against the Decision. The 1^st Defendant set out three grounds of appeal in the draft Notice of Appeal attached to the Summons.

II.  GROUND 1

2.  Ground 1 has two facets. The first is that given that the jurisdiction under section 266 of the Companies (Winding up and Miscellaneous Provisions) Ordinance (Cap. 32) is restorative only, I erred in law in holding at §79 of the Decision that in exceptional circumstances, the Court may order the preferred creditor to return the preference not to the person or corporate entity who paid the preference, but may restore the position “in a different way” by ordering the preferred creditor to pay to the persons other than the person or corporate entity who paid the preference. In the present case, the exceptional circumstances I identified were set out in §80 of the Decision, namely, the person or corporate entity who paid the preference (that is, the PRC Project Company) was not and is not controlled by the Company, but rather was and is controlled by the wrongdoer who, according to the Plaintiffs’ case, are the 1^st and/or 2^nd Defendants.

3.  This brings me to the second facet of Ground 1, namely, there was no evidential basis for me to conclude that there were such exceptional circumstances. Insofar as there is any complaints about the facts assumed in favour of the Plaintiffs set out in §80 of the Decision that the Company was unable to control the PRC Project Company to which normally restoration would be ordered, I see no merits in such complaint – as Mr Bernard Man SC (leading Mr Danny Tang), counsel for the Plaintiffs, such evidence (which had to be assumed in favour of the Plaintiffs) was already put in §26 of the 2^nd Affirmation of Chan Hoi Yan.

4.  In relation to submissions made by Mr Anson Wong SC (leading Mr Lai Chun Ho and Mr Charlie Liu), counsel for the 1^st Defendant, that the Plaintiffs did not file any evidence or make any suggestion as to how the restoration could be achieved on such facts “in a different way”, and so there was no way for the 1^st Defendant and the Court to assess the feasibility of the remedy which was not even formulated before the Court, in my view, (1) the scope of the jurisdiction under section 266, in particular, including whether exceptional circumstances would justify restoration “in a different way” and if so, what would constitute exceptional circumstances, and (2) if the jurisdiction would be broad enough, how the remedy could be formulated to achieve the purpose of section 266 are novel legal points on the facts assumed in favour of the Plaintiffs in the present striking out application, taking into account the doctrine of separate legal entity. On the one hand is how justice could be achieved, and on the other hand is how this would be done in a way permitted by section 266.   

5.  As I indicated at §81 of the Decision, how the remedy should be formulated would depend on the evidence and the fact-findings. For the present purpose, I have thought about whether one may argue that the existence of jurisdiction is an open-and-shut matter while it is only the question of remedy that can be said to be highly fact-sensitive such that leave should be granted at least in relation to the existence of jurisdiction. However, having considered the matter further, in my view, the existence of jurisdiction, in turn, significantly depends on what remedy would be sought and/or how the remedy would be fashioned. The two matters are highly intertwined. While it may well be said after trial that such matters would constitute questions of law of general public importance that would merit the Court of Appeal’s consideration, at this striking out stage, the Court of Appeal may find it undesirable to consider such questions.

6.  Given that the burden lies upon the 1^st Defendant to satisfy me that there is a reasonable prospect of success of Ground 1 or it is in the interests of justice to grant leave for Ground 1, in this borderline case, I conclude that I am not so satisfied: see Hamida Begum (on behalf of MD KHALIL MOLLAH) v Maran (UK) Limited [2021] EWCA Civ 326 at §§23-24 and 116 per Coulson LJ.

7.  Therefore, I refuse leave for Ground 1.

III.  GROUND 2

8.  Ground 2 arises from the application of Alexander Brothers Limited (Hong Kong S.A.R.) v Alstom Transport SA & Anor [2020] EWHC 1584 (Comm) mentioned at §§49-54 of the Decision. In essence, for the purpose of issue estoppel, if the standards of proof are different, even for the same questions of fact, the issue may be regarded as a different issue.

9.  The application of this case was the first of its kind in Hong Kong. Although I disagree with Mr Wong’s submissions that Alexander Brothers Limited (Hong Kong S.A.R.) v Alstom Transport SA & Anor, a case on standards of proof, appears inconsistent with Gol Linhas Aereas SA (formerly VRG Linhas Aereas SA) v. MatlinPatterson Global Opportunities Partners (Cayman) II LP and other [2023] Bus LR 1305, a case not on standards of proof but different procedural rules, I agree with Mr Wong that whether Alexander Brothers Limited (Hong Kong S.A.R.) v Alstom Transport SA & Anor should apply, and how it should be applied, are reasonably arguable questions of law. That said, expert evidence was filed on the standards of proof, and I did not make any definite findings on the matters given that the standard for the striking out application was only “plain and obvious”. Thus, it may be said that this matter at this stage is premature for the Court of Appeal to consider, without any findings of fact.

10.  In any event, in determining whether to grant leave or not, I should also consider whether there would be any impact on the outcome. At §63 of the Decision, in relation to the identity of issue, putting aside the different standards of proof, I also found that it was not plain and obvious that the Sichuan Higher People’s Court had considered the issues in question. At §63, I expressly said that “I am aware that in general, the Hong Kong Courts should not lightly find that a foreign court has omitted important points and I agree that the Defendants have reasonable ground to say that the Allegation of Control and the Allegation of Conspiracy were determined implicitly in the Retrial Judgment”. This obviously showed that I had in mind the principle set out in Spencer Bower and Handley: Res Judicata (6^th edition) at §8.08 (cited in §26(1) of Mr Wong’s Written Submissions for the present application), a point Mr Wong already impressed upon me during the hearing. In coming to this view that it was not plain and obvious that the Sichuan Higher People’s Court had considered the issues in question, I also looked at the “extensive evidence” and “detailed submissions” (§63 of the Decision) as suggested in Spencer Bower and Handley: Res Judicata, supra at §8.29 (cited also in §26(1) of Mr Wong’s Written Submissions for the present application). It was a view I arrived at having considered and assessed the evidence before me. I do not see that such view was plainly wrong that the Court of Appeal would interfere with.

11.  In other words, even disregarding the different standards of proof and Alexander Brothers Limited (Hong Kong S.A.R.) v Alstom Transport SA & Anor, supra, upon my view that it was not plain and obvious that the Sichuan Higher People’s Court had considered the issues in question, there would still be no issue estoppel.

12.  Therefore, I refuse leave for Ground 2.

IV.  GROUND 3

13.  Ground 3 complains that I erred in law in only considering the identity of issues when concluding that there was no collateral attack and/or Henderson v Henderson abuse of process at §73 of the Decision.

14.  Detailed submissions, both written and oral, were made by the parties at the hearing for the Decision on what factors I should consider in determining whether there was no collateral attack and/or Henderson v Henderson abuse of process. Therefore, the conclusion that there was no abuse was reached upon evaluative assessment of the various factors (including the fact that the Plaintiffs could not have joined the Retrial Application or made such an application for retrial: see §§29 and 70(5) of the Decision), while I only highlighted the identity of issues at §73 of the Decision, which I considered the most important factor in the present circumstances. I cannot see that the conclusion was wrong or plainly wrong so that the Court of Appeal would interfere with.

15.  Therefore, I refuse leave for Ground 3.

V.  CONCLUSION

16.  In conclusion, I dismiss the 1^st Defendant’s Summons.

17.  For costs, I order the 1^st Defendant to pay the Plaintiffs costs of the 1^st Defendant’s Summons forthwith, with certificate for two counsel, summarily assessed at HK$380,000.

18.  Lastly, I thank Mr Wong, Mr Lai and Mr Liu, counsel for the 1^st Defendant, and Mr Man and Mr Tang, counsel for the Plaintiffs, for their able assistance.