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

HCA 57/2018

[2025] HKCFI 6195

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 in my Decision handed down on 17 September 2025 [2025] HKCFI 4299 (“the Decision”).

2.  By the Decision, I dismissed Chuang’s summons dated 17 August 2023 in its entirety with an order nisi on costs that Chuang should pay P’s costs, including all costs reserved, with certificate for 2 counsel, and also dismissed the rest of Lo’s summons dated 11 September 2023 but acceded to part by ordering the striking out of such part of the ASoC pleading, and all claims therein against Lo based on the allegation, that Lo was a de facto director of the Company. On the basis that Lo was partly successful and P’s claims against Lo based on shadow directorship were salvaged only by the very recent Proposed Green Amendments and the Yellow Green Version[1], I ordered on nisi basis that Lo should only pay 40% of P’s costs, also including all costs reserved, with certificate for 2 counsel.

3.  By summons dated 2 October 2025, Chuang, with written submissions annexed thereto, seeks to vary the costs order nisi to that he should also only pay 40% of P’s costs or such reduced sum as the Court finds just and reasonable.

4.  The sole contention there advanced in support of the variation was summarized in §8 of the submissions :

“As a matter of consistency, insofar as the Deputy Judge sustained the shadow directorship claims against the 1^st and 20^th Defendants for the same reasons (cf J#106 & J#169), clearly his exercise of discretion as to costs should have also been decided in the same way.”

5.  As acknowledged in §8 and also §9 of Chuang’s submissions, Chuang’s basis for seeking such variation is premised on the contention that P’s claims against Chuang based on shadow directorship were also only salvaged by the belated changes in or additions of averments introduced by the Proposed Green Amendments and the Yellow Green Version.

6.  That premise, however, is not correct.

7.  In §§101-113 of the Decision, I dealt with whether there is a reasonable cause of action disclosed against Chuang that he was a shadow director of the Company at the material time. I began by setting out in §101 Chuang’s specific contention against P’s plea of shadow directorship, which was that §108.1 to §108.16.6 of P’s ASoC contain no averment of primary facts capable of supporting any plea of shadow directorship. While Chuang made a myriad of criticisms over many aspects of P’s ASoC, that was the bone of contention and thrust of Chuang’s case that there was no reasonable cause of action concerning P’s claims against Chuang based on shadow directorship.

8.  It is therefore most pertinent to note that P made but only one change in the Proposed Green Amendments and the Yellow Green Version so far as §108.1 to §108.16.6 of P’s ASoC are concerned, which was the addition of the new sub-paragraph §108.6A, which only pleaded that Chuang since 20 January 2012 in fact held some indirect interest in the Company via holding some 6.39%, later increased to 12.91%, interest in Freeman.

9.  In the ensuing discussions in §§102-112 of the Decision, leading to my conclusion at §113 that P’s claims against Chuang based on shadow directorship are sustainable and would not be struck out, I have not referred to the said newly added §108.6A or any averments concerning P’s claims against Chuang based on shadow directorship introduced in the other parts of the Proposed Green Amendments and the Yellow Green Version. Though the newly added §115A in the Proposed Green Amendments and the Yellow Green Version to an extent pleaded clearer and improved P’s pleaded case of shadow directorship against Chuang, in successfully resisting Chuang’s contentions, it was not pivotal and I would not regard, for costs purposes, that P’s such claims were salvaged by any averments pleaded in the new §115A.

10.  Moreover, I also accept, as has been pointed out in P’s written submissions :

a.  That Chuang’s summons dated 17 August 2023 included therein (i) an application to set aside the ex parte order of Master Phoebe Man dated 13 January 2022 renewing the validity of the writ for another year, (ii) an application to strike out the Statement of Claim on the ground that it constituted an abuse of process for a number of reasons, for which substantial affirmation evidence was filed by Chuang and P, and (c) an application to strike out numerous individual paragraphs of the Statement of Claim based on different reasons as set out under 10 different categories in the Annex to Chuang’s said summons.

b.  Chuang was unsuccessfully in all of the above-mentioned applications, over which substantial time and costs were incurred, and which were not at all affected by the late introduction of the changes or averments in the Proposed Green Amendments and the Yellow Green Version.

c.  In refusing to strike out P’s claims against Chuang based on de facto directorship, I have expressly stated in §100 of the Decision that I found that the ASoC already disclosed a reasonable cause of action. I have also rejected all the other grounds / contentions raised by Chuang for striking out P’s ASoC without the need to resort to the averments newly introduced by the Proposed Green Amendments and the Yellow Green Version.

11.  In other words, and in my view, the time and costs spent on Chuang’s application to strike out P’s claims against Chuang based on no reasonable cause of action on the shadow directorship claim, when compared with the time and costs spent on all the other aspects of Chuang’s summons together, were in any case but a relatively minor component.

12.  This is unlike Lo’s situation in that her summons only applied for striking out and only based on no reasonable cause of action, and that the de facto directorship aspect was a substantial part, over which Lo was successful; while P’s shadow directorship plea and claims against Lo, as I noted in the Decision, were salvaged by the averments newly introduced by the Proposed Green Amendments and the Yellow Green Version. Hence, my said costs order against Lo.

13.  For all these reasons, and as a matter of discretion, I refuse Chuang’s application to vary and make the costs order nisi against him absolute, and order on nisi basis that Chuang pays P its costs of this application.