CHINA CITY CONSTRUCTION HOLDING GROUP CO., LTD v. PATRICK COWLEY AND LUI YEE MAN, JOINT AND SEVERAL LIQUIDATORS OF CHINA CITY CONSTRUCTION (INTERNATIONAL) CO., LTD

HCMP 738/2023

[2024] HKCFI 219

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 738 OF 2023

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J U D G M E N T

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1.  There is before the Court an Originating Summons filed by the Plaintiff (“CCCH”)  on 12 May 2023 (“OS”)  pursuant to s.255 of the Companies (Winding Up and Miscellaneous Provisions)  Ordinance, Cap 32 (“Ordinance”), by which it seeks disclosure of two categories of information from the Liquidators (“Liquidators”)  of the Company (“CCCI”), namely :

(1)  the Liquidators’ plans, strategy, and views on merits as regards HCCW 30/2022 and related legal proceedings in relation to the potential recovery of loss and damage suffered by CCCI and/or reliefs (“Litigation Information”); and

(2)  the actual and estimated future legal costs and the funding arrangements and terms in connection with HCCW 30/2022 and related legal proceedings (“Fees Information”).

2.  The issues before the Court are neither extensive nor complicated.  However, in order to understand the Liquidators’ primary ground for resisting the disclosure, which is based on the connection between CCCH and the defendants (or at least some of them)  in the litigations involving CCCI, it is necessary for the Court to go into complex corporate structures and the disposal of a valuable piece of land which used to, partly and indirectly, belong to CCCI back in October 2019. 

3.  Much of the material background facts can be found in a Decision of this Court dated 29 July 2022 ([2022] HKCFI 2314)  (“Decision”), [4]-[34], which concerned various applications made in two actions, HCCW 30/2022 (“HCCW”)  and HCA 309/2022 (“HCA”).  These facts had been summarized in the skeleton arguments of Mr Man, who appeared for the Liquidators. With gratitude, they are adopted with modifications below. 

Background

4.  I start with the property holding vehicle, a BVI company called Dingway Investment Ltd (“Dingway”).  It is the plaintiff in HCA and (until 15 October 2019)  the holding company, through 3 Delaware subsidiaries (“Company A to C”), of a piece of land in Miami (“Land”).  Company C was the titleholder of the Land.  On 15 October 2019, Dingway was owned by CCCI, the petitioner in HCCW (55%), and Champ Prestige International Ltd (“Champ Prestige”), the 1^st respondent in HCCW (45%).  Dingway was the 2^nd respondent in HCCW.

5.  The Land was acquired in December 2014 at US$86.7 million.  The purchase price was accounted for as a shareholder’s loan from CCCI to Dingway.  CCCI was at the time the sole owner of Dingway.

6.  In about February 2016, CCCI sold 45% of the shareholding in Dingway as well as 45% of its shareholder’s loan to Champ Prestige for US$40.5 million.

7.  Up until 22 April 2016, CCCI and China City Construction & Development Co, (Hong Kong)  Ltd (“CCCD”)  were both indirectly wholly-owned subsidiaries of China City Development Academy Co Ltd (a PRC company)  (“CCDA”).  CCCH was (and is)  the immediate sole shareholder of CCCI.  On CCCH’s evidence, CCCH and other corporate entities were part of the China City Group.  The existence of China City Group is not in dispute, but the entities which belonged or belong to the Group is not uncontroversial. 

8.  In April 2016, according to CCCH’s case, China City Group was reorganised.  CCCH says that since the reorganisation there has been no connection between CCCH (and CCCI before it was placed into liquidation)  on one hand and CCCD on the other.  The Liquidators’ position is that there were and continue to be overlap in the management personnel of both CCCH/CCCI and CCCD.  After the purported reorganisation, CCCI and CCCD continued to have a common director and CCCD’s sole director was a bank signatory of CCCI.

9.  Beginning from around 2016, CCCI was in financial difficulties.  The Liquidators say that it was partly due to the reorganisation engineered by those in control of it.  CCCI defaulted on bonds issued by it with a face value of RMB 2.5 billion.  In June 2018, a creditor’s winding up petition was presented against it.

10.  On 5 October 2018, CCCD commenced HCA 2343/2018 against CCCI, asserting that CCCI had been holding the shares in Dingway on trust for it since the incorporation of Dingway (“Trust Arrangement”).  Accordingly, CCCD claimed that CCCI’s 55% shareholding in Dingway and the consideration received by it from Champ Prestige for 45% of Dingway were held by CCCI for its benefit.  CCCI’s directors took no step to defend CCCI’s position in HCA 2343/2018.  Instead, they passed a board resolution on 18 October 2018 by which they purported to confirm the Trust Arrangement. 

11.  In January 2019, CCCI went into creditors’ voluntary liquidation, and the Liquidators were appointed.

12.  Both Champ Prestige and CCCI (through the Liquidators)  filed Defence in HCA 2343/2018 on 30 May 2019 and 11 July 2019 respectively, denying the Trust Arrangement.

13.  On 18 June 2019, Champ Prestige started an action in Miami (“Miami Action”), seeking an order that Company C be dissolved and the Land be sold.

14.  On 15 October 2019, Zeng Yuqi (“Zeng”), the 2^nd defendant in HCA, then a director of CCCI and a former director of CCCD, acted on behalf of Dingway and transferred its entire shareholding in Company A (“Shares”)  to CCCD for no consideration (“Transfer (1)”).  The transfer agreement was signed by Zeng on behalf of Dingway and Sze Wai Suen (“Sze”), the 3^rd defendant in HCA who was at that time a director of CCCH’s indirect parent company, on behalf of CCCD.

15.  Within weeks, in November 2019, CCCD transferred the Shares to a Californian company, Rega Center LLC (“Rega Center”), for a stated consideration of US$70 million (“Transfer (2)”).  The transfer documents were signed by Sze on behalf of CCCD.  It is the Liquidators’ case that Rega Center was a nominee of CCCD and those controlling it.

16.  On 17 December 2019, upon learning that Companies A to C had changed their name to include the word “Rega”, the Liquidators took steps to remove the 3 (out of a total 5)  directors of Dingway originally nominated by CCCI, namely, Zeng, Yuan Qing (“Yuan”)  and Yu Lin, and appointed themselves and their colleague in their place.

17.  HCA 2343/2018 was unilaterally discontinued by CCCD on 17 December 2019.  At that time, the Shares had been transferred from Dingway.

18.  On 19 December 2019, Champ Prestige filed an Emergency Motion in the Miami Action, which led to temporary injunctive relief against Rega Center granted on 26 December 2019.

19.  In February 2020, further details regarding Transfers (1)  and (2)  were revealed in documents disclosed by Rega Center in the Miami Action.  Champ Prestige immediately took action in Hong Kong (based on a claim of conspiracy to defraud)  against CCCD, Zeng and Sze in February 2020.  On 13 February 2020, it obtained an ex parte Mareva injunction from DHCJ Liu against CCCD, Zeng and Sze.

20.  On 5 March 2020, one day before the return day of the Mareva injunction, Asia Allied Infrastructure Holdings Ltd announced that it had sold its entire interest in Champ Prestige to CCCD for US$44 million.  Thereafter, Champ Prestige ceased all its legal actions in Hong Kong and the US.

21.  On 2 April 2020, Champ Prestige (under CCCD’s control)  appointed 2 new individuals to be its nominated directors of Dingway, namely, Zhao Lang (“Zhao”)  and Cui Hongxing (“Cui”).  As will be seen below, the evidence shows that these two individuals are connected with CCCH.

22.  In March 2021, Company C (the titleholder of the Land)  sold the Land to Mast Capital (a US real estate developer)  for US$103 million.  The sale was completed on or around 22 December 2021 (“Sale”).

23.  The Liquidators found out about the Sale on 30 December 2021 from news reports.  A financing arrangement which enabled them to take legal action was put in place in December 2021 after prolonged negotiations.

24.  HCCW was brought by CCCI (acting by the Liquidators)  on 24 January 2022 to wind up Dingway.

25.  On 25 January 2022, upon the ex parte application of CCCI in HCCW, Peter Ng J granted (i)  a worldwide proprietary injunction against CCCD in respect of the sum of US$70 million (being the proceeds of Transfer (2)), topped up by a worldwide Mareva injunction up to US$103 million; (ii)  a worldwide Mareva injunction against both Zeng and Sze up to US$103 million; and (iii)  the appointment of provisional liquidators to Dingway.

26.  The application for appointment of provisional liquidators was made with the intention that the injunction granted would enable such provisional liquidators to conduct the necessary investigation for commencement of appropriate legal proceedings in the name of Dingway.  HCA (commenced on 1 April 2022)  was the result of such investigation.  In gist, Dingway says that the transfer of Company A (and by extension, the Land)  to CCCD was wrongful and it seeks to recover the sale proceeds (“Proceeds”)  from CCCD as well as its fellow conspirators and the recipients of the Proceeds.  CCCD relies on the Trust Arrangement as its defence.  

27.  After their appointment, the provisional liquidators of Dingway (Mr Fergal Power and Mr Russell Crumpler)  issued subpoenas in the US for information and documents.  These steps led them to discover that a substantial portion of the Proceeds was transferred from Company C to various entities which Dingway had reasons to believe were conduits or nominees of CCCD (or those controlling CCCD).

28.  Upon discovery of the transfers of the Proceeds, Dingway made ex parte applications against some of the recipients of the Proceeds in Hong Kong, and injunctive reliefs were granted.

29.  On 15-16 June 2022, this Court heard various summonses concerning the interim injunctive reliefs granted in favour of CCCI and Dingway.  By the Decision, this Court continued the proprietary injunction against CCCD and the Mareva injunctions, but discharged the proprietary injunctions against the recipients of the Sale Proceeds.  It was held that there was “ample contemporaneous evidence which undermines the existence of a Trust Arrangement” (Decision, [48]).  It is relevant to note that for the purpose of that hearing evidence was given by Yuan on behalf of CCCD and Sze.

30.  Prior to the June 2022 hearing, CCCD had commenced HCA 356/2022 against CCCI on 12 April 2022 asserting beneficial ownership of, inter alia, the 55% Dingway shares based on the Trust Arrangement.  It was a revival of HCA 2343/2018 which CCCD had unilaterally discontinued in December 2019 after Transfers (1)  and (2).  HCA 356/2022 had been stayed by the Court pending the resolution of HCA.

31.  On 15 August 2022, a winding up order was made against Dingway in HCCW.  On 14 December 2022, Mr Power and Mr Crumpler were appointed as Dingway’s liquidators.

32.  It is not in dispute that CCCH is the sole shareholder, the largest creditor and a member of the committee of inspection (“COI”)  of CCCI.  According to the Liquidators :

(1)  CCCI is indebted to various creditors claiming in aggregate HK$7,397,271,199.75 but has negligible liquid or immediately realisable assets;

(2)  CCCH has filed a proof of debt in the amount of HK$3,810,444,564.33 which represents approximately 51.5% of the value of claims filed;

(3)  No adjudication has been made with the proofs of debt.

Issues

33.  CCCH accepts that there is no absolute right to the information in question.  It relies upon s.255 of the Ordinance which applies to voluntary winding up according to s.249. 

34.  S.255(1)  provides that: “The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls, or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court.”

35.  S.255(2)  provides that: “The court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or may make such other order on the application as it thinks just.”  [emphasis added]

36.  It is uncontroversial that the issue here is whether the Court should exercise its discretion to order discovery if it is just and beneficial to do so.  This requires the Court to examine the bases on which the Liquidators had declined CCCH’s request, namely :

Litigation Information

(1)  the connection between CCCH and the defendants in HCA, including CCCD and Sze, giving rise to risk that the information sought may be used against the interest of CCCI;

(2)  lack of adequate explanation on CCCH’s need for the Information;

(3)  CCCH had been provided with sufficient information by the Liquidators.

Fees Information

(1)  The terms of the funding arrangement are confidential as required by the funder;

(2)  CCCH had not provided adequate justification for the Information which outweighs the Liquidators’ obligation of confidentiality;

(3)  CCCH had been provided with sufficient information by the Liquidators.

Applicable principles

37.  I agree with Mr Man that there are established principles of companies law which may guide the Court in the exercise of its discretion :

(1)  The Court will not interfere with a liquidator’s decision unless it can be demonstrated that the liquidator has not acted in good faith, made an error of law or principle, has not acted impartially and even-handedly, or the decision is perverse in the sense of falling outside the range of decisions a liquidator having proper regard to the relevant principles might make: Re A Company (Liquidators: Cowley and Lui) [2020] 3 HKLRD 96, per Harris J at [21]; Re Performance Investment Products Corp Ltd, unrep, HCCW 348/2007, 17 March 2014, per Harris J at [67(a)];

(2)  The Court proceeds on the rebuttable assumption that the liquidator will normally be in the best position to take an informed and objective view as to what is in the best interests of the liquidation: Re Performance Investment, supra, at [67(b)];

(3)  The commercial decisions of liquidators are accorded great weight.  The Court in considering a challenge on commercial grounds to a liquidator’s decision must approach the matter on the basis that the liquidator is recognised as having both the qualifications and the access to the multiplicity of information which may be necessary in order to make commercial decisions: Northbourne Developments Pty Ltd v Reiby Chambers Pty Ltd (1989)  19 NSWLR 434, per McLelland J at 440A-G;

(4)  In Re Hong Kong Universal Jewellery Ltd (In Liq) [2022] 2 HKLRD 779, which concerned an application by the liquidators to seek directions under s.255 of the Ordinance, Harris J observed at [12] that the principles governing s.200(5)[1] are of general application to any consideration of a liquidator’s decision or conduct.  The fact that the contributory thinks there is a better decision that might be made is not a ground for challenging a liquidator’s decision.

38.  In respect of  funding arrangement, it was held in Re A Company (Liquidators: Cowley and Lui), supra, at [7]-[10] and [13] :

(1)  S.251(1)(b)  of the Ordinance provides that a liquidator of a company in voluntary liquidation may without sanction exercise any of the powers in Parts 2 and 3 of Schedule 25 of the Ordinance;

(2)  Pursuing litigation to recover monies or other property owed to a company is covered by para.1 of Pt.2 of Sch.25 and the taking of steps necessary to facilitate the litigation comes within para.9 of Pt.3 of Sch.25.  Funding litigation is also covered by para.9 of Pt.3;

(3)  Accordingly, a liquidator does not require the Court’s or the COI’s sanction to cause the company to pursue litigation to recover assets and for that purpose enter into a funding agreement.

39.  It was held in Osman Mohammed Arab v Chu Chi Ho Ian, unrep, HCB 4344/2012, 21 January 2016, per Peter Ng J at [50] that there is no legal justification, practical need or policy reason for a rigid rule that a liquidator must, notwithstanding the confidentiality clause in a funding agreement, disclose its terms to other creditors in order to be seen to be impartial.

Need or justification for the Information

40.  This point applies to both sets of Information (see para 36 above).  In respect of both the Litigation Information and Fees Information, it is not at all clear why CCCH would require such information. On a macro view, CCCI is badly insolvent and its main asset, or at least one of them, is represented by Dingway’s claim to recover the value of the Land (HCA).  The fact that CCCH does not have to fund the litigation and can take advantage of the work of Liquidators as well as the liquidators of Dingway in the conduct of the litigation is to most people in CCCH’s position an attractive proposition. 

41.  It is therefore perplexing why CCCH is investing the resources to press for the information in question, and to have the resources of the Liquidators expended for the purpose.  Indeed, there is no satisfactory explanation by CCCH on the need for the information.  This point has to be considered in conjunction with the Liquidators’ concerns over the connection between CCCH and the defendants in HCA, as well as the evidence on the information which had already been provided to CCCH by the Liquidators. 

Information provided by the Liquidators

42.  On 2 June 2023, the Liquidators wrote to the COI (“Letter”)  disclosing some of the information sought by CCCH together with an attached schedule setting out the actual legal costs incurred.

43.  As regards Litigation Information, the Letter stated as follows :

“The COI will appreciate that the legal advice obtained by Dingway, the Company and/or the Liquidators as to the merits of the claims Dingway has against [CCCD] and its co-conspirators is subject to legal privilege. To the extent that we refer to that advice here, no privilege is waived. As such, and as explained in our COI / creditors’ meetings, we are not in a position to share the legal advice with the COI. However, the Liquidators can confirm that the analysis has so far been vindicated, most particularly by the [Decision], in which the Judge provided a detailed analysis of the case as he saw it. More specifically, the Liquidators’ position in relation to the [Trust Arrangement] was also validated by the comments of the Judge in that decision, in which he noted ‘I am far from convinced on the evidence before the court that the Trust Arrangement is one which the court can rely on.’ Likewise, in dismissing [CCCD]’s application for ‘security for costs’ against Dingway in [HCA], the Master took note of the A Chan J’s findings in relation to the [Trust Arrangement], and noted that these could not be ignored.

In terms of CCCI’s strategy for HCA 356, and Dingway’s for [HCA], we can confirm that the Liquidators consider that the [Trust Aarrangement] in favour of [CCCD] to be a sham, and we are confident that the Hong Kong Court will agree with that position. As such, we believe that that [CCCD]’s claims in HCA 356 will fail, and its defences in [HCA] will likewise fail. A number of [CCCD]’s co-conspirators have likewise placed this [Trust Arrangement] at the heart of their defences in [HCA], which will likewise fail. On that basis, we would expect the Court to hand down orders in favour of Dingway and CCCI, which we will then prosecute against the various defendants in order to generate realisations for the benefit of Dingway’s and CCCI’s creditors. As matters stand, the other defendants who Dingway sues as [CCCD]’s co-conspirators and against whom Dingway has sought and obtained injunctions, have provided no reasonable explanation for why they received significant portions to (sic)  the [Proceeds]. In respect of two of the recipients of those proceeds (the relevant receipts being, in aggregate, more than US$40 million)  no attempt at all has been made to explain why they received the money. Further, in respect of the defendants where explanations have been offered, there are serious questions that have yet to be answered. It is notable that the Court itself raised some of these queries last June and July (being far from convinced of the genuineness of the explanation given)  but they remain unaddressed.

…

Lastly, in terms of the strategy, the Liquidators acknowledge that in circumstances where a sufficiently attractive settlement offer was made, it would be brought before the independent members of the COI for their consideration and discussion.”

44.  In relation to Fees Information, the Letter stated :

“The fact that a litigation funder is advancing funds to meet litigation costs does not of course mean that those costs will not ultimately be subject to the scrutiny and approval of the COI. They will. However, from a practical perspective, as we have sought to explain to CCCH, until such time as there is actually an ‘estate’ (i.e. realised assets)  from which the funder will be reimbursed the amounts advanced (and paid its return), there is little purpose to the Liquidators and/or the COI spending time (and thus costs)  on preparing the detailed fee packs that will be required to secure the COI’s approval of the various costs. As things currently stand, the litigation is costing the creditors nothing, as it is the funder that is taking the commercial risk associated with the costs being incurred by Dingway and the Company in the various jurisdictions where we are litigating. This approach is comparable to the practical reality that liquidators often do not spend time adjudicating creditors’ proofs of debt until there are actually assets to fund a distribution to those creditors, and is not in any way inconsistent with our duties.

However, that being said, CCCH has requested details of the costs incurred in the litigation to date, in response to which request we have provided a summary of in the attached schedule. The litigation costs represent US$4.1 million of the US$4.7 million total liquidation costs set out in the schedule. In considering the reasonableness of the litigation costs incurred to date, I remind you again that Dingway’s claim is for US$103 million, that we are conducting this litigation in three jurisdictions, with multiple separate pieces of litigation running in parallel, and against defendants who are unwilling to offer explanations for their actions and actively oppose any kind of disclosure, including that which is common in cases of this kind. In short, the defendants are ‘stonewalling’ Dingway.

CCCH’s summons also seeks disclosure of details of the ‘... estimated future legal costs and the funding arrangements and terms ...’.

The Liquidators consider that these details are both commercially sensitive, and the details that CCCH are most concerned to obtain. If the Liquidators’ concerns about CCCH’s connections with [CCCD] are correct, which we continue to believe them to be, it would seem to be extremely imprudent from a litigation strategy perspective for the Liquidators to disclose the extent of the funding available to the Company and Dingway, the funder’s identity, or the terms upon which it is being provided. I trust that the COI will see the force of this concern.

…

Again, that is not to say that this important information will not be disclosed to the COI in the future. It will be, as follows:

1. If and when the litigation is successfully completed, or a settlement offer is tabled, the question of the costs incurred in securing that outcome would become immediately relevant;

2. At that time, the independent members of the COI will be provided with full transparency into the commercial terms of the funding arrangement, the costs incurred and funded, and the overall effect of the funding arrangement on the distributable estate, once the funder’s return on investment is considered;

3. The COI will be invited to consider the relative expense of this funding facility against the commercial risks taken by the funder, and the alternatives that were available to the Company and/or Dingway at the time;

4.   The Liquidators will also disclose the process undertaken in selecting the funder, and respond to COI members’ questions in this regard, before asking the COI members to pass resolutions to approve the litigation costs, which will include the indirect costs, that is to say, the costs incurred by Dingway in its prosecution of [HCA], which, in the event of a successful claim and substantial realisation, will have generated a recovery which otherwise would not have been available to the Company’s creditors.”

45.  On 6 June 2023, the Liquidators’ solicitors wrote to those of CCCH (“Gall”), enclosing a copy of the Letter and invited CCCH to withdraw this application.  On 14 June 2023, Gall replied, asserting that the information disclosed by the Liquidators was not sufficient or satisfactory, and declined to withdraw this application.

46.  In my view, the information supplied by the Liquidators to the COI, including CCCH, was reasonable in the circumstances and it reflected a reasonable stance taken by the Liquidators.  In particular, relevant financial information, normally the primary concern of creditors, will be disclosed when there is a settlement offer on the table.  Coupled with the lack of adequate explanation by CCCH for the need of the information in question, these matters call into question the real motive of this application.  This brings me to the next issue.

Connection between CCCH and the defendants in HCA

47.  If the connection is established, there is plainly sensitivity in revealing the Litigation Information and Fees Information to CCCH, which can be used to the detriment to CCCI and Dingway in their pursuit against the conspirators who had deprived them of the interest in the Land.  CCCH did not seek to dispute the proposition.  However, its case is that whatever connections it had with the defendants in HCA, in particular CCCD, they had been severed since the corporate re-organization (possibly in April 2016 (see para 8 above)). 

48.  The evidence in this regard is fairly extensive.  The issue was mainly addressed in the 1^st affirmation of Ms Lu filed on 30 May 2023 in support of OS, paras 15 to 49.  I note that in para 46, Ms Lu quite fairly acknowledged that the Liquidators “should look at all the circumstances as a whole …”.  In opposition to this application, the Liquidators rely on the affidavit of Mr Cowley filed on 28 June 2023, paras 43 to 44.  The overall picture is that CCCH and CCCD are within two corporate structures each involving a number of Mainland companies with opacity over their shareholding and management.

49.  Mr Man had provided two colour coded Annexes to illustrate the shareholding structure of CCCH/CCCI (Annex I)  and the shareholding structure of CCCD (Annex II).  To put the matter most favourably for CCCH, the evidence demonstrates that the Liquidators’ concern about the connection between CCCH and some of the defendants in HCA is reasonable and it would not be prudent for them to disclose the information sought by the former.

50.  I need only refer to the evidence concerning two persons as examples to demonstrate the connection.  Firstly, Sze is the sole director of CCCD.  She was also a director of China City Development Academy International Ltd (“CCDAHK”), a HK company which indirectly owns 100% of CCCH, until 20 January 2022.  Sze was centrally involved with both Transfers and (1)  and (2)  (she signed the transfer documents for CCCD).

51.  Secondly, CCCH is 49% indirectly owned by Beijing Tian Di Qun Ying Investment Co (“BTDQY”).  Zhao is the legal representative, manager and executive director of BTDQY, and has an indirect shareholding in it.  He is also a director of CCDAHK, the indirect parent of CCCH, having been appointed on the day when Sze resigned.  Zhao, together with Cui, were nominated by CCCD (through Champ Prestige)  to become directors of Dingway on 2 April 2020 (see para 21 above).  Cui is also a shareholder of BTDQI.  

52.  Further, Zhao was the proxy holder/representative of CCCD in a creditors’ meeting of CCCI held on 25 January 2019.  He was identified by the Liquidators to be the representative of CCCD on the COI.

53.  The intricate and opaque connections between the various companies in the two corporate structures (within which CCCH and CCCD stand)  cannot, in my view, be satisfactorily explained by CCCH’s suggestion that these were past connections. 

54.  Once the Liquidators’ concern over the relationship between CCCH and the defendants in HCA is recognised as reasonable, CCCH’s criticisms over the Liquidators’ alleged lack of impartiality have little to stand on.

Funding arrangement and future legal costs

55.  I have already touched on the desirability and indeed need for the Funding Arrangement without which CCCI would not have been able to bring legal action for remedy against the wrongdoers for deprivation of its interest in the Land. 

56.  There is no dispute that the terms of the Funding Arrangement are confidential as required by the funder.  I see no reason, certainly none has been demonstrated by CCCH, that the Liquidators should not respect their obligation of confidentiality.

57.  The Liquidators had already provided information about the actual legal costs incurred to the COI (including CCCH).  What remain are the estimated legal costs in future.  There is no adequate explanation why such information, which may be quite useful to the adversaries of CCCI, is of immediate interest or even relevance to CCCH.  Insisting on such information only serves to heighten the Liquidators’ concern over the connection between CCCH and the defendants in HCA.

58.  For these reasons, there is no sufficient reason for the Court to exercise its discretion in granting this application. 

Disposition

59.  Accordingly, the OS is dismissed with an order nisi that the costs of and occasioned by the OS be paid by CCCH to be summarily assessed. 

60.  For the purpose of summary assessment, the Liquidators are to lodge and serve their statement of costs within 5 days from today.  CCCH is to lodge and serve its objections thereto within 3 days thereafter, limited to 3 pages printed in A4 paper with font size 13, 1.5 line spacing and margins not less than 1 inch.  The Liquidators are to reply to the objections within 2 days thereafter, limited to 2 pages with the same format. 

61.  Lastly, I am grateful to counsel for their assistance.