CHEN HONGQING v. LIU YIU KEUNG STEPHEN AND OTHERS

HCA 1699/2019

[2019] HKCFI 2720

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1699 OF 2019

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BETWEEN

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D E C I S I O N

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1.  Given the highly convoluted background of the matter, filing a summons for an interim injunction with estimated hearing time of 30 minutes is entirely unrealistic. There will not be sufficient time even to consider the appropriateness of any interim interim relief. Leading counsel for P pushes for a ruling. The Court does the best it can. I emphasize however that whatever views expressed below will necessarily be provisional. I also would not able to deal with all the submissions that have been made before me.

2.  The test to be applied when deciding whether to grant any interim interim relief is balance of fairness — see China Shanshui Cement Group Limited v Zhang Caihui [2018] HKCA 409, per Lam VP at §13.  Ms Eu submits that as the application will be set down for hearing, and that directions save interim interim relief have been agreed upon, that means that the application is not doomed to fail.  I hasten to add that whether an application is “doomed to fail” is not the test for interim interim relief.

3.  I form the provisional view that the stance of Chen HQ is extraordinary, verging on being an abuse.

4.  In HCA 2648/2017 (“HCA 2648”):

(a) as submitted and framed by counsel then acting on his behalf, “Chen HQ “brings the present proceedings to enforce his proprietary right over the SHDs’ shares that he acquired either through SALA with the ASI Defendants, or directly from the some other SHDs” ^[1];

(b) Chen HQ maintained that Hong Kong was clearly and distinctly the appropriate forum for that action against the 2265 Ds named therein (I exclude Jinan for this purpose), so much so that he sought and obtained the ASI against the ASI Defendants;

(c) He sought amongst others a Declaration that the 2265 Ds be obliged to procure and to take all necessary steps and actions to ensure that the CSI Shares be transferred to him;

(d) The EY Receivers were however not sued as defendants, but only became involved subsequently as interested parties. They could have been joined based on Chen HQ’s own case, so that, should Chen HQ become successful in his claim, an appropriate order could be made against them for transfer of the relevant shares to him;

(e) In the meantime, he started various proceedings in the Mainland, which led to inter alia the Mainland Judgments which he is now seeking to enforce by this action (ie HCA 1669/2019).

5.  Upon my handing down of the Jurisdiction Decision:

(a) Chen HQ then started the present action;

(b) Instead of seeking to have the matter tried in Hong Kong to “enforce his proprietary right over the SHDs Shares”, this time he seeks to rely on the Mainland Judgments he obtained while the ASI was in force;

(c) Whilst in HCA 2648, he sued the 2265 Ds but not the EY Receivers, this time, he sues the EY Receivers but not the 2265 Ds.

6.  Chen HQ pursues the present action whilst HCA 2648 is still on foot, and whilst he is actively pursuing an appeal against the Jurisdiction Decision. And to make the point more apparent, whilst I do not venture any view as to what Chen HQ could do if his appeal against the Jurisdiction Decision become successful, I can see in that eventuality that there would be two parallel proceedings in Hong Kong with basically the same cause of action, but against different defendants. I accept Mr Westbrook’s submissions in this regard.

7.  The situation in my provisional view fall foul of the principle explained in Buckland v Palmer [1984] 1 WLR 1109 and applied in Choy Gain Chee v Kowloon Development Co Limited (CACV 371/2005, 13 June 2006) at §65 per Yeung JA (as the learned VP then was). The facts and decision in Buckland are in my view enlightening. In that case, P and D were involved in a traffic accident. On the strength on the arrangement between P’s insurer and D’s insurer, and upon the belief that D had been properly insured, P’s insurer accepted liability to paid P for the repair costs less the uninsured excess. P then sued D for the uninsured excess. D made a payment into court, which P accepted, leading to the action being stayed. Subsequently, it became apparent that D in fact had not been insured. P’s insurer started a new action in the name of P against D to claim back the full repair costs less the excess. The Court of Appeal held that since both actions were in the name of the plaintiff and were based upon the same cause of action, application could have been made to lift the stay of the first action and for amendments. The second action was hence struck out.

8.  I bear in mind also that those available Mainland Judgments had mostly been available to Chen HQ by December 2018. Throughout, and until recently, Chen HQ maintained that Hong Kong was clearly and distinctly the appropriate forum for the trial, that the legal proceedings he initiated in the Mainland were only defensive measures, and that he chose to contest the Jurisdiction Challenges in Hong Kong. Now, he takes a different turn. He initiated the present action on 13 September 2019. He now further seeks an urgent interim interim relief.

9.  Mr Westbrook has also raised an additional and genuine concern. As mentioned above, Chen HQ only named the EY Receivers as the defendants in the present action. Order 15 rule 14 is sought to be relied upon. It is submitted that the present action is therefore properly constituted. But Chen HQ’s alleged interests derived from the Employee-litigants ^[2]. He said that much in his latest affirmation ^[3]. There is this concern as to whether a receiver is a trustee for the litigants whose assets he receives — see Company Law in Hong Kong (Insolvency) (Looseleaf Edn) at §11.023. Ms Eu’s reply is that the EY Receivers are now bare trustees. That might be so, but there is also and in any event the concern that Chen HQ is not suing as a stranger to the trust, but as an “insider”, in which case “it may be found expedient and even necessary to join beneficiaries” — see Hong Kong Civil Procedure 2019 at §15/14/2.

10.  Further, as Mr Westbrook has pointed out, I have not issued directions under HCA 2648, and that until I do so, the CSI Shares are safe in court. I bear in mind that we are not dealing with interim relief, but interim interim relief.

11.  Having considered and balanced the above, I form the view that the balance of fairness is against the grant of any interim interim relief. I refuse to make any.

12.  I will hear submissions on costs and further directions on the hearing of the summons.