ALLIED WELI DEVELOPMENT LTD (In Liquidation) v. CHUANG YUE-CHIEN EUGENE AND OTHERS

HCA 57/2018

[2026] HKCFI 1251

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 57 OF 2018

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D E C I S I O N

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1.  I will continue to adopt the defined terms and expressions in my Decision herein handed down on 17 September 2025 [2025] HKCFI 4299 (“the Decision”). In the Decision, I referred to the Yellow Green Version of P’s proposed amendments to the ASoC. The proposed amendments have since been formally made in the Re-Amended Statement of Claim (“RASoC”). Hereinbelow, I will refer to P’s averments by reference to the RASoC.

2.  By the Decision, I

(a)  dismissed with costs Chuang’s summons dated 17 August 2023 in its entirety, which included an application to strike out the ASoC for disclosing no reasonable cause of action, being an abuse of process and/or embarrassing and to consequentially dismiss the action as against him, or alternatively, to strike out such parts of the ASoC as set out in the Annex to the summons on the same grounds;

(b)  acceded to part of Lo’s summons dated 11 September 2023 in that I ordered the striking out of such part of the ASoC pleading, and all claims therein against Lo based on, the allegations that Lo was a de facto director of the Company, but dismissed the remainder and ordered Lo to pay P 40% of P’s costs; and

(c)  gave leave to P to amend the ASoC per the Proposed Green Amendments as revised by the Yellow Green Version save the proposed amendments on the parts of the ASoC ordered to be struck out.

3.  By their respective summonses both dated 2 October 2025, Chuang and Lo seek leave to appeal against the Decision; and on Chuang’s part, only for leave to appeal against my refusal to strike out and consequentially dismiss the action against him.  They both also therein apply for a stay pending appeal of the direction requiring them to file their respective Defence within 28 days after the Order was sealed, or alternatively, for an extension of time until 28 days after the determination of their leave applications or of their substantive appeals if leave be granted.

4.  By consent, the summonses are to be disposed of on papers without an oral hearing.  Having considered the parties’ written submissions, this is my decision.

CHUANG’S APPLICATION FOR LEAVE TO APPEAL

The Proposed Grounds of Appeal

5.  Chuang attached a draft Notice of Appeal (“Chuang’s DNOA”)  to his summons.  The proposed grounds of appeal are stated therein by way of 16 paragraphs in 11 pages.  However, each paragraph of itself does not seem to form a distinct ground of appeal, and the 16 paragraphs seem to read like submissions in skeletal form.  I agree with the comments of Mr Bartlett (leading Ms Law)  that it is difficult to distil Chuang’s precise grounds as Chuang’s DNOA and skeleton submissions (“Chuang’s Skeleton”)  essentially comprise 22 pages of densely packed criticisms. 

6.  In Chuang’s Skeleton, submissions (essentially in the form of densely packed criticisms)  are not organized or developed under any particular proposed ground of appeal, but they are organized under the following 6 headings (and therein merely occasionally referencing some of the paragraphs in Chuang’s DNOA)  :

(1)  “No viable RASOC Fraud Claim against D1”;

(2)  “No viable RASOC de facto directorship claim”;

(3)  “No viable RASOC shadow directorship claim”;

(4)  “No viable RASOC fraudulent conspiracy claim”;

(5)  “No viable dishonest knowing assistance claim”; and

(6)  “No viable ‘negligent breach’ claim”;

7.  Thus, in assessing below whether the threshold of showing that the proposed appeal has a reasonable prospect of success has been met, I can but endeavour to try to understand and identify Chuang’s complaints under each of these headings regarding errors that he thinks this court has made in the Decision.

“No viable RASOC Fraud Claim against D1”

8.  One of the complaints now raised, as I understand it, is that “the demurrability of the RASOC’s purported fraud claims against D1 is clear from its structure and core pleas”[1] in that Section D of the RASoC pleading “the Fraud” “[contains] no plea against (or even mention of)  [Chuang]”[2] and that P pleaded the “Ungrounded Causation Inference Plea” which is “obviously incorrect, irrational and impermissible in law”[3], and that the lack of pleaded particulars of the “Fraud Actus Reus”[4] makes the fraud plea not viable.

9.  This complaint boils down to being yet another iteration and in substance a rehash of Chuang’s central complaint that P was unable to plead particulars as to “who did what, when and how” in relation to the transactions forming the Re-organization and the Asset Strip. The argument, put forth in many forms at the hearing, has been considered by this court and dealt with in the Decision.  Chuang’s present related complaint (§4 of Chuang’s DNOA)  that Chuang’s point at the hearing that P failed to give any, or any satisfactory, “core particulars” requested in Chuang’s 45-page Requests for Particulars of the Plaintiff’s Statement of Claim was “barely mentioned” in §119 of the Decision and not being treated as “important consideration” has no substance, as I have considered it as part of Chuang’s such central complaint and P’s alleged failure to so give the “core particulars” did not add anything further.

10.  Next is a complaint that I erred in law in disregarding or disapplying the principles which were quoted in §2 of Chuang’s DNOA and which were referred to there as the “Fraud Pleading Principles”.

11.  However, not included as part of the “Fraud Pleading Principles” in Chuang’s DNOA or Chuang’s Skeleton were the principles and observations made by learned judges in other cases cited by Mr Bartlett at the hearing (which were not disputed by Mr Barlow), which I summarized in the 4 sub-paragraphs of §69 of the Decision.  They concern the court’s recognition that direct evidence of fraud is relatively rare, that fraudsters not only would hide their tracks but would do so with skill, that fraud cases are often proved based on inference from circumstantial evidence, and that the relevant concept is “sufficiency”, which comes into play when one considers whether sufficient particulars have been pleaded so that the opposite party has sufficient notice of the case he has to meet.  This court also there said that it found instructive K Yeung J’s observation (made after surveying the relevant cases)  that underpinning the reasons for the rules that allegations of fraud must be pleaded distinctly and with the utmost particularity are the notion of fairness and justice which is relevant in considering the sufficiency of the particulars that have been pleaded.

12.  Those principles and observations are as much part of the relevant principles as the selective and so-called “Fraud Pleading Principles” now emphasized by Mr Barlow.

13.  I thus understand Chuang’s present complaint of error is that this court should only apply the so-called “Fraud Pleading Principles” and not these other principles and observations; and apply the so-called “Fraud Pleading Principles” mechanically and rigidly in the manner Chuang has been advocating.

14.  In the present case, the factual circumstances are, and the RASoC pleaded P’s claim in such a sequence and manner by first alleging, that the Asset Strip (together with the Reorganization as allegedly a pretence for the Asset Strip and allegedly to achieve other connected purposes)  was shown to be a set of fraudulent and dishonest transactions under the pleaded factual setting.

15.  I held in §85 of the Decision that the pleaded factual allegations are already sufficient to sustain a case that (a)  at or around the time of the Re-organization and the Asset Strip, the shareholders and directors of the Company ought to have regard to the overriding creditor’s interest of Penta, (b) the Asset Strip when implemented would plunge the Company into insolvency by depleting completely its assets for no good consideration, to the great prejudice of its creditors, particularly Penta, (c)  there was thus a breach of fiduciary duties on the part of the directors; and (d)  the shareholders of the Company could not effectively authorize the Asset Strip (or later on ratify them if they had not been authorized).  Thus, I concluded in Section F.2. of the Decision that the pleaded averments in the RASoC were already sufficient to show that under such factual setting the Asset Strip by its nature was dishonest.  The requirement that the element of fraud or dishonesty has to be distinctly and sufficiently pleaded to that extent has been fulfilled.

16.  P then essentially pleaded that Chuang “caused” the Re-organization and the Asset Strip as he was a de facto and/or shadow director of the Company at the time, who (together with Lo)  exercised control over the affairs of the Company.  I then set out in Section F.3. of the Decision Chuang’s contentions that there is no reasonable cause of action pleaded against him and considered under Section F.4. of the Decision as to whether reasonable cause of action has been disclosed that Chuang was a de facto and/or shadow director of the Company at the material times.

17.  Having considered all the relevant authorities, including those emphasized by Mr Barlow, but no less those cited to me by Mr Bartlett, and applying those principles to the very unique circumstances of this case as I have explained in the Decision, I came to the conclusion that P’s fraud case against Chuang has been sufficiently pleaded, and in any case as a matter of discretion it ought not be struck out.

18.  Thus, it is an empty and unsubstantiated complaint that I “disapplied” or “disregard” the relevant principles concerning the pleading of fraud.

19.  Next, under §10 of Chuang’s DNOA, based on the contended premise that I have adopted “a wrong approach”, it is complained essentially that the reasons for me adopting such “a wrong approach” “appear to be” my taking into consideration of circumstances set out in §§108 to 111 of the Decision, which were then quoted out of context and labelled as “belief” and “suspicion” in §10 of Chuang’s DNOA, and described as “speculative conjecturing” in §9(3)  of Chuang’s Skeleton.

20.  The matters alluded to in §§108 to 111 of the Decision were :

(a)  In §108, I accepted P’s submission that the inability to plead the “who did what, when and how” was not the fault of the Liquidators or P;

(b)  In §109, I said “On the contrary, for such complex transactions involving such substantial value as those comprised in the Asset Strip, the complete unavailability of relating documentation from the Company and the inability to produce any such documentation by the persons examined in the 286B Examinations, and their claimed complete lack of knowledge and recollection, including the claimed lack of knowledge of the Receivables Assignment by the 12 related companies involved are staggering, to say it mildly.  As observed by DHCJ Jin Pao SC in Leung Chin Sing, Rabo v Ko Chun Hay, Kelvin in [2021] HKCFI 2242 at [42] : “The prevalence of e-mails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic imprint: Blue v Ashley [2017] EWHC 1928 (Comm)  at [65] per Leggatt J (as he then was); Music Holdings Property HK Ltd v Ooi Lean Choo [2020] HKCFI 1312 at [58] per Ng J”.  On my part, I find it most difficult to postulate that such state of affairs was the result of otherwise than some careful, thorough and elaborate engineering by those who wanted to have the tracks covered.”;

(c)  In §110, I said I was persuaded by Mr Bartlett that the approach adopted by Sales J in Nokia Corp v AU Optronics was relevant and apt here and that I would also allow P, as the claimant on such an unlevel playing field, “a measure of generosity”; and

(d)  In §111, I accepted Mr Bartlett’s submission that in the circumstances of this case, it was reasonable for P to pursue the 2 pleas of de facto directorship and shadow directorship against Chuang as broad alternatives.

21.  To dispel any misunderstanding, this court did not consider as a reason not to strike out any “hope that “later on” the absent “evidence in support of shadow directorship might come up” and enable a complaint fraud plea to be made” as suggested or complained in §10(3)  of Chuang’s DNOA, which contains a misquote out of context of what I said in §111 of the Decision.  In §111 of the Decision, I dealt with Chuang’s complaint against P pleading de facto and shadow directorship on the part of Chuang as alternatives.  For ease of reference, I quote §111 in full and let the contents speak for themselves :

“111. Third, I accept Mr Bartlett’s submission that in the circumstances of this case, it is reasonable for P to pursue these 2 pleas as broad alternatives. It seems to me that the particular circumstances of this case make it fall within a classic case where the Court would allow alternative pleas lest there would be a risk of unfairness and injustice against P in that later on evidence in support of shadow directorship might come up (or even later on one or some of the 286B Examinees somehow resile from what they said in the 286B Examinations and say something very different), P might then have difficulty proving de facto directorship while its claim based on shadow directorship, though supported by such evidence surfaced later, was already struck out.”

22.  In §§108 to 111 of the Decision, I have given my reasons as to why I came to those views.  In Chuang’s DNOA and Skeleton, there are mere criticisms without any discussions as to the correctness of my reasons. It is evident from reading the Decision that I did not use those circumstances as reasons to “disapply” or “disregard” established principles concerning pleading fraud, as Chuang now complains.  Rather and as said, I have considered the matters in the round and regard those as circumstances I could and should take into account in exercising my discretion as to whether to strike out.

23.  In all, there is no reasonable prospect of success regarding these complaints as grounds of appeal.

“No viable RASOC de facto directorship claim”

24.  Chuang’s Skeleton only contains 2 paragraphs under this heading - §§11 and 12.  Paragraph 11 contains 5 sub-paragraphs in which Chuang purportedly summarized §§94 – 98 of the Decision.  In the Decision, I dealt specifically with P’s plea of de facto directorship under §§92 – 100.

25.  It is then complained in §12 of Chuang’s Skeleton :

“12 Thus, having cited (in J#72 [3/69])  our law’s requirements for any viable claim of de facto directorship, in the manner cited in para. 11 above, the Deputy Judge illogically and impermissibly disapplied or disregarded those requirements (c/f DNOA#6(1)  and 12 [1/6-7 and 10-11])  and allowed the RASOC’s hopelessly non-compliant and demurrable plea of de facto directorship against D1 to remain (while simultaneously striking out the same plea against D20).

This paragraph merely states a conclusion or assertion of error without laying out any detail reasoning.

26.  In §§94 to 98 of the Decision, I identified the averments in the RASoC concerning various conducts, matters and circumstances which singly or together can be regarded either as holding out by the Company and/or as conducts on Chuang’s part assuming the status and functions of a director (and not the conducts of a manager below the board level)  or receipts of substantial benefits by Chuang from the Company qua its director or Chuang assuming de facto control of the Company.

27.  I particularly noted in §95 of the Decision P’s averments that Chuang, despite his claim that he has retired from managing the affairs of the Company and the Group, essentially was representing the Company or the Group in, and has placed himself at the centre of, the key negotiation discussions with Zwaanstra on behalf of Penta between December 2010 and July 2012 concerning Penta’s investments in Freeman, and then Penta’s investments in Mascotte, and then Penta’s claim against the Company.

28.  I do not think it has been shown that I erred in holding that the RASoC disclosed a reasonable cause of action that Chuang was a de facto director of the Company at the material times.  There is no reasonable prospect of success regarding Chuang’s proposed appeal under this heading.

“No viable RASOC shadow directorship claim”

29.  In §§101 to 113 of the Decision, I dealt specifically with Chuang’s striking out concerning P’s shadow directorship plea against him.

30.  In §101, I quoted in full Chuang’s contentions, as set out in §43(2)  of Chuang’s written submissions for the hearing, and summarized them in §102 - “In short, Chuang complained that in respect of each of the de jure directors, there was no particular instance(s)  pleaded with details showing Chuang “directed” that particular de jure director so to act in relation to the affairs or business of the Company, and that the particular de jure director acted accordingly, and such as to show that the particular de jure director was accustomed so to act”.

31.  As I understand it, Chuang’s present complaint of error is premised upon the insistence that the averments required to support the allegation that a particular de jure director was accustomed to act according to Chuang’s directions or wishes must only be pleaded in the form of specific instances or occasions with particulars as to time, place, who and what; and cannot be proved by inference and / or supported by averments on circumstantial settings or factual matters supporting the drawing of such inference.

32.  As I noted in different places in the Decision, including §103, that P’s case is a broad one that Chuang was in control of the Company’s affairs, with some pleaded facts tend to show such control by way of de facto control while some others tend to show such control through puppets; and P has, pleading its case the best it can, averred to one specific instance that Chuang had instructed another de jure director so to act (see §104 of the Decision)  and then averred to all the circumstantial matters in support of their case that there were such de facto control or control in the shadow by Chuang.

33.  In §§103 to 112 of the Decision, this court has considered (a)  the viability of P’s case, which by and large is a circumstantial one, (b)  the practical difficulty, and therefore practical injustice, that P might face if they are required conventionally to plead in a clear-cut and mutually exclusive manner which acts / transactions fall within the allegation of de facto directorship and which fall within shadow directorship, (c)  the prejudice that Chuang may suffer if he is to plead to and meet a case as presently pleaded, (d)  the inability to plead “who did what, when and how” is not the fault of the Liquidators or P, but very much likely the result of the deliberate and elaborate efforts of those who wanted to have the tracks covered, (e)  evaluating the matter under the notion of fairness and justice.  In the result, I came to the conclusion that the shadow directorship case that Chuang is to meet is reasonably set out and defined and that in the proper exercise of my discretion I should refuse to strike out the shadow directorship claim against Chuang.

34.  In the rather unique circumstances of this case and bearing in mind it is a matter of discretion as to whether such claim should be struck out, I am not convinced that it has been demonstrated that the intended appeal against my refusal to strike out the shadow directorship claim against Chuang has a reasonable prospect of success.

“No viable RASOC fraudulent conspiracy claim”; “No viable dishonest knowing assistance claim”; and “No viable ‘negligent breach’ claim”

35.  These 3 headings are addressed under §§15 to 21 of Chuang’s Skeleton.

36.  They can be convenient dealt with together. Indeed, while they are now separated out and addressed each under a separate heading according to the respective causes of action, Chuang did not present his striking out case at the hearing by reference to each of these specific causes of action or by reference to these headings. 

37.  Regarding the conspiracy claim, as noted in §135 of the Decision, Chuang’s challenge against the “demurrability” of P’s pleaded case of conspiracy consisted of the challenge that the plea that Chuang “caused the Plaintiff to … undergo the Asset Strip” was demurrable (§B31(3)  of Annex B to Chuang’s written submissions).  I have addressed that one challenge in §§132-136 of the Decision by first setting out the pleaded averments in the RASoC and then expressed my view and reasoning (in §136)  that because I have found sustainable P’s broad case that the Asset Strip was “caused” by Chuang as he was in control of the Company at the material times as a de facto and/or shadow director and when all other de jure directors were mere “puppets”, I reject that challenge.

38.  It is now asserted in §§15 and 16 of Chuang’s Skeleton that P’s pleaded case of conspiracy was “[an] open defiance of the Fraud Pleading Principles” and my reasoning was “inapplicable to demurrable purported pleas of fraudulent conspiracy”.  It seems that in this complaint Chuang is again relying on the application of his selective “Fraud Pleading Principles” in the manner he has been advocating, which I have addressed above.  I find no reasonable prospect of success of the proposed appeal regarding this complaint. 

39.  The sole complaint under the headings of “No viable dishonest knowing assistance claim” and “No viable “negligent breach” claim” is that I dismissed this part of Chuang’s striking out application without specifically addressing or deciding its ground.  That is so because at the hearing, there was really no “this part of Chuang’s striking out application” as is suggesting now.  As said, Chuang’s case for striking out was not presented by reference to, nor was this court addressed regarding the striking out of each specific cause of action, but Chuang’s then presentation consisted of attacks on various flaws of P’s pleaded case under certain topics, themes or points, which were identified and alluded to in §§78, 87, 91-92, 101-102, 114, 117-120, 125, 128-129, 132, 135, 138, 142, 145 and 146 of the Decision and which I have endeavoured to address there.

40.  There are no merits nor reasonable prospect of success in Chuang’s present complaint in this regard.

41.  In the premises, I refuse to grant leave to appeal to Chuang.

LO’S APPLICATION FOR LEAVE TO APPEAL

42.  Lo seeks to appeal against the Decision regarding my refusal to strike out as against Lo the pleas of (a)  shadow directorship, (b)  conspiracy to injure by unlawful means, and (c)  dishonest assistance; and to consequentially dismiss the action as against Lo.

43.  A draft Notice of Appeal was annexed to Lo’s summons.  In it was raised proposed Grounds 1 to 6 concerning shadow directorship, Grounds 7 – 9 concerning conspiracy and Grounds 10 and 11 concerning dishonest assistance.

Grounds 1 to 6 – shadow directorship

44.  I dealt with Lo’s challenges to the plea of shadow directorship in §§166 to 170 of the Decision.  However, as I stated in §162 there, I was persuaded by Mr Bartlett that I might look at the pleaded matters cumulatively, which were extensively set out in §160.  I should therefore state clearly here that in coming to my decision refusing to strike out the shadow directorship plea as against Lo, I had borne in mind and taken into consideration all the matters set out in §160.

45.  Ground 2 essentially is a rehash of Lo’s main argument at the hearing that P has not pleaded in the RASoC “any specific allegation concerning [Lo] capable of supporting an allegation that all or a majority of the directors of the Plaintiff were accustomed to act in accordance with [Lo’s] instructions at the material times”.  For now, I will leave aside the “majority of the directors” part to be dealt with under the discussion relating to Ground 3.

46.  The linchpin of Lo’s such contention is that each pleaded allegation is to be examined individually to see if it supports the “accustomed to act in accordance with Lo’s instructions” element.  As have mentioned, I accepted P’s submission that the pleaded matters can be looked at cumulatively (§162).  I have summarized P’s pleaded case in §166 of the Decision, which as have mentioned, should also include the matters P relied on as have been extensively set out in §160 of the Decision.  P’s case that the 6 de jure director nominees were accustomed to act in accordance with Lo’s instructions, as I noted in §166(g), would largely be proved by inference.

47.  It is complained in this Ground that I should apply the same reasoning in §§156, 157 and 159 of the Decision.  In §§156 and 157, I dealt with one of Mr Yu’s submissions concerning the plea of de facto directorship.  There, I expressed the view that the averments that Lo received quite a number of substantial benefits from P and other companies within the Group over certain periods of time cannot support any directorial act concerning those receipts on the part of Lo (who was then not a de jure director of any of the giving companies).  However, P’s reliance on those receipts in the context of the shadow directorship plea is very different.  P’s pleaded case in that regard, in a nutshell, is that the de jure director(s)  of those giving companies at the time was/were one or some of the 6 named nominees of Lo, it is therefore to be inferred that such substantial outlays were authorized by the respective directors of the giving companies (thus, directorial acts), and taking into account the repetition over periods of time and the fact that the amounts were substantial, it is to be inferred that these nominees were accustomed to act in accordance with Lo’s instructions to confer such substantial benefits to herself.  Thus, I think there is no merits to the complaint that the same reasoning expressed in §§156 and 157 should have been applied to P’s plea of shadow directorship.

48.  In §159 of the Decision, in gist I accepted Mr Yu’s submission that the matters pleaded in §§110.9 and 111 of the RASoC did not show any directorial act on the part of Lo.  Contrary to what are now complained in Ground 2.3 and 2.4 and as can be gauged from the Decision, I did not regard the matters pleaded in those 2 paragraphs as supportive of P’s shadow directorship claim against Lo.

49.  Ground 3 complains that I should have analysed the plea by considering whether it has been averred that a majority of the de jure and de facto directors were acting in accordance with Lo’s instructions.  Lo’s submission is that this “majority” is an essential legal requirement to establish shadow directorship.

50.  P’s pleaded case is that the Company’s corporate governance under its Articles included the role of “Permanent Managing Director” who had the authority to exercise all the powers, authority and discretion vested in the directors generally; and that the Permanent Managing Directors for the period from 12 November 2009 onwards were exclusively Lo’s nominees.  As I noted in §72 of the Decision, there quoting the summary of principles by Coleman J in Cyberworks Audio Video Technology Ltd - “Each case gives rise to a question of fact and degree, where all relevant factors must be taken into account and looked at in their context. It is the cumulative effect of all relevant factors that guides the Court” (Cyberworks Audio Video Technology Ltd §56(2)).  The English Court of Appeal case of Re Mumtaz Properties Ltd [2011] EWCA 610, cited by P, is an example of how the court would take into account the specific situation concerning corporate governance of the company in question.  In the unique facts of this case, I accept P’s submission that shadow directorship may be established by reference to control over those with majority control, and not necessarily be established by reference to control over the majority number of de jure and de facto directors.  I also accept P’s submission that to the extent that such is a novel proposition of law, it is not one which ought to be resolved in a striking out application.

51.  Grounds 4 and 5 complain that I erred in concluding that the 8 transactions pleaded in RASoC §110 showed a pattern of behaviour, but that the 8 transactions are at best isolated incidents, and they in any case are not capable of supporting “a definite inference” that Lo “routinely” issued directions to the nominees who routinely followed them, that they did not show that Lo alone and not Chuang was the person directing the alleged fraud.   However, in pleading a case based on inference, it is not required that the inference to be drawn from the primary facts must reach the threshold of a “definite” inference.  Nor in establishing shadow directorship, it needs to be pleaded and then proved that the shadow director must routinely issue directions to the puppet directors or he must be the only person in control of the affairs of the company.  Lo is here effectively trying to raise the hurdles much higher than they should be and then says P tumbled.  In a striking out application on the ground that no reasonable cause of action has been disclosed, the court is concerned only with the sufficiency of the pleading, and Lo’s such contentions do not show that this court erred in my assessment in that regard.

52.  Ground 6, I understand, complains that I “excused” P from the otherwise consequence of striking out because I gave P “a measure of generosity” (§§108-111 and 169 of the Decision). Evidently, by striking out the de facto directorship claim against Lo, it can be seen that I have not thereby excused P from having to plead a reasonable cause of action.  Rather, I have considered all the relevant matters in the round (as set out in the Decision, which I will not repeat here), including the matters alluded to §§108-111, and came to the decision refusing the striking out of the plea of shadow directorship.  There is now no complaint raised that the matters alluded to §§108-111 were irrelevant matters that I should never have taken into account.

53.  I conclude that there is no reasonable prospect of success in the proposed appeal against my refusal to strike out the shadow directorship plea.

Grounds 7 to 9 - Conspiracy

54.  These 3 Grounds can be addressed together.

55.  P’s case of conspiracy was pleaded in Section G.2 of the RASoC, with the conspiratorial agreements pleaded in §145 there and the overt acts pleaded in §144.

56.  These 3 Grounds are essentially rehashes of Lo’s Contentions 1 to 3 at the hearing.  By these 3 Grounds, Lo complains that I erred in rejecting those 3 Contentions.  The 3 Contentions (together with Contention 4, which is not relevant here)  were summarized in §171 of the Decision:

“a.  First, there is no pleading of the conspiratorial agreement between each of the Defendants as to when the agreement was reached, or between whom or how it was reached, and there is no indication of the nature of the agreement other than the mere assertion that they combined together to carry out the alleged fraud of stripping P of its assets (“Contention 1”);

b.  Second, the overt acts relied on against Lo are clearly deficient (“Contention 2”);

c.  Third, there is no viable allegation that Lo was aware of the alleged Asset Strip, or had intention to procure the same (“Contention 3”); and”

57.  Ground 7 complains that I erred in rejecting Contention 1, in that I wrongly distinguished Pido v Compass Technology Ltd [2010] 2 HKLRD 537, a case Lo relied on heavily to contend that particulars of  “when the agreement was reached, or between whom or how it was reached, and an indication of the nature of the agreement other than that they were to carry out the alleged fraud of stripping the Plaintiff of its assets” (my added emphasis)  must be pleaded.

58.  I have set out my full reasons in rejecting Contention 1 in §§172-180 of the Decision.  In this Ground, Lo does not engage in a discussion as to how I erred in those reasoning but just complains that I erred.  There is no reasonable prospect of success on this Ground.

59.  Ground 8 centres on my holding in §185 of the Decision essentially that, for the purpose of striking out, the capacity in which Lo approved of and participated in the Re-organization is neither here nor there.

60.  As I understand it, Lo’s contention is that she approved the Re-organization merely as a shareholder of Ristora and hence it was the act of Ristora and not Lo that approved the Re-organization.  It was contended that somehow such a contention would necessarily and completely absolve Lo from the claim of conspiracy - whether by disentitling P to claim that Lo (instead of Ristora)  was the conspirator, or that her approval of or participation in the Re-organization could never amount to an overt act on her part.  In my view, such a contention could, and should be properly, raised and formulated by Lo as a defence and then properly and fully ventilated at trial; it hardly shows that it is plain and obvious that P’s claim against Lo for conspiracy should be struck out. This Ground has no reasonable prospect of success.

61.  Ground 9 challenges the correctness of my views and reasoning in §§187 and 188 of the Decision wherein I concluded that the matters pleaded in the RASoC were already sufficient to support an allegation that Lo was at the time aware of the Asset Strip, and that it could then be inferred that she would have constructive knowledge that the Asset Strip would involve a breach of duties by the Company’s directors and would be to the prejudice of the Company’s creditors (including Penta)  and was therefore dishonest.  In this Ground, there is again no discussion as to how my reasoning in §§187 and 188 was said to be incorrect.  This Ground has no reasonable prospect of success.

Grounds 10 and 11 – Dishonest assistance

62.  Ground 11 complains that I erred in finding that there was a sufficient plea of dishonesty.  It essentially is the same complaint raised in Ground 9, which I have dealt with above.

63.  Ground 10 complains that I ought to have struck out the dishonest assistance claim as there is no particulars pleaded as to the details of acts constituting the assistance, but only broad descriptions of such acts are pleaded in §151 of RASoC.  For the reasons I expressed in §§192-200 of the Decision, despite such lack of particularity I refused to strike out this claim as a matter of exercising my discretion.  I adhere to the view that such was a proper exercise of my discretion in the unique facts of this case and for those reasons.  I do not think there is a reasonable prospect of success in appealing against my such exercise of discretion.

64.  In the premises, I would not grant leave to appeal to Lo.

STAYING THE DIRECTION TO FILE AND SERVE THEIR RESPECTIVE DEFENCE; EXTENSION OF TIME ?

65.  Chuang seeks the interim stay / time extension arguing that his appeal has very strong grounds, that the appeal would be rendered nugatory, that he would be “forced to file a non-compliant Defence containing multiple “bare denials”” if no stay or time extension is granted, and that it would save judicial resources in that Chuang does not need to make a similar application before the Court of Appeal.

66.  Lo seeks the interim stay / time extension if leave to appeal is granted so as to avoid a wastage of costs in preparing the Defence in case Lo successfully strike out the action against her.

67.  I accept P’s submissions that the chance of success, especially in striking out the entire action, of Chuang’s and Lo’s appeal is not strong and that this action has been delayed for too long.  Moreover, the potential waste of costs, when compared to the amount claim in this action and the costs that Chuang and Lo have already spent to resist the Liquidators’ investigations and P’s claim, is not at all a significant factor.

68.  I would refuse the applications of Chuang and Lo to stay the direction or to extend time.

DISPOSAL

69.  I dismiss the respective summons of Chuang and Lo in their entirety with the order, on nisi basis, that they pay P’s costs with certificate for 2 counsel.

70.  I thank Mr Bartlett SC, Mr Barlow SC, Mr Yu SC, Ms Law, Mr Chan and Mr Lam for their assistance.