CHINA EVERGRANDE GROUP (IN LIQUIDATION) v. HUI KA YAN AND OTHERS

HCMP 1080/2024

[2025] HKCFI 2465

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1080 OF 2024

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AND

HCA 551/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 551 OF 2024

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(Consolidated pursuant to the Order of Honourable Mr Justice Coleman
dated 12^nd February 2025)

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D E C I S I O N

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A.  Introduction

1.  This is the hearing of the summons dated 30 May 2025 (“Summons”) issued by the plaintiff (“CEG”), by which CEG seeks relief relating to the ancillary asset disclosure orders made against the 2^nd defendant (“Xia”), and with which Xia claims to have complied but CEG says he has not.

2.  The dispute between the parties centres on the date by reference to which asset disclosure should have been given.

3.  The Summons is supported by the 10^th affidavit of Edward Simon Middleton, one of the Liquidators of CEG. The Summons is opposed by the 8^th affirmation of Sherman Yan, solicitor for Xia. I have taken both items of evidence into account, and there is no need to descend into any argument as to whether one or the other should be ignored.

4.  I also note that Mr Yan’s affirmation again makes serious allegations against CEG and the Liquidators, which CEG and the Liquidators say are untrue, and for which they have sought to file the 4^th affirmation of Wing Sze Tiffany Wong to address those allegations. I have read that affirmation, and I allow it to stand on the file.

5.  Nevertheless, I do not think it necessary in order appropriately to determine the Summons for me to entertain or seek to decide on the allegations and responses to them.

6.  In any event, the key matters which fall for consideration on the Summons are narrow and relate to (1) the requirements of the asset disclosure order contained within the Injunction Order, as compared with (2) the content of the affirmation filed which is said to have given that disclosure.

7.  At the end of the hearing, I reserved my decision to be handed down the following morning. This is that Decision.

B.  Context

8.  The matter arises against the following history.

9.  On 24 June 2024, I granted to CEG an ex parte order for a Mareva/freezing injunction and ancillary asset disclosure orders against defendants, including Xia (“Injunction Order”). The Injunction Order has been subsequently amended on various dates since, though the form of the asset disclosure orders made has not been materially varied.

10.  The ancillary asset disclosure order (“ADO”) as originally made is to be found in §§7 and 8 of the Injunction Order. In light of some aspects of the argument advanced on this Summons, it is helpful to set out the terms of those paragraphs, as follows:

7.  Each of the 1^st and 2^nd Defendants must inform the Plaintiff in writing at once of all their assets of an individual value of HK$50,000 or more, whether in or outside Hong Kong, whether in their own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets including, but not limited to:

(a)  the current whereabouts of the assets identified in Annexure B hearing, or the whereabouts of the sale proceeds thereof if any of them have been sold; and

(b)  the assets of the companies listed in Annexure C hearing, or the current whereabouts of the sale proceeds thereof if any of them have been sold.

Those Defendants may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate them.

8.  This information must be confirmed in an affidavit which must be served on the Plaintiff’s solicitors within seven days after this Order has been served on the relevant Defendant.

11.  The Injunction Order was made in the HCMP proceedings, which have subsequently been consolidated on 12 February 2025 with the HCA proceedings also identified in the title to this Decision.

12.  On 12 July 2024, I dealt with the first return date of CEG’s inter partes application for continuation of the orders made ex parte. Prior to that, on 5 July 2024 – the last day of the deadline set by the ex parte order for Xia to provide asset disclosure – Xia issued an application (“Discharge Application”) seeking the discharge of the orders made against him, as well as interim variations of the orders pending the substantive hearing of the discharge application.

13.  The interim variations sought included the stay of, or an extension of time for compliance with, the obligations under the ADO until 21 days after the determination of the Discharge Application.

14.  Amongst the orders I made at the hearing were an order to extend the time for compliance by Xia with the obligations already ordered under the ADO, until a new compliance date would be set on 2 October 2024, or until further order. My Reasons for Decision dated 18 July 2024 [2024] HKCFI 1854, set out the reasons why I thought it appropriate in the then prevailing circumstances to extend the time for the required asset disclosure.

15.  It is important to note that, though I extended the time for providing the disclosure, I did not make any change to the disclosure which would have to be provided upon any newly set date.

16.  I heard the Discharge Application on 2 October 2024. For the reasons explained in my decision dated 12 February 2025 [2025] HKCFI 689 (“Discharge Decision”), I dismissed the Discharge Application and required Xia’s disclosure obligations under the ADO to be made on or before the extended deadline of 21 February 2025.

17.  In that regard, a further §8A was later added to the Injunction Order, which after amendment reads as follows:

8A.  The 2^nd Defendant must comply with his obligation under paragraphs 7 and 8 above by no later than 21 February 2025.

18.  I said that date against the chronology of the proceedings, and as I stated, I worked on the basis that Xia and those acting for him must have contemplated the potential need to provide this disclosure, and so should have been gathering the necessary materials.

19.  Obviously, I remained of the view that ancillary asset disclosure was appropriate to the circumstances, albeit by reference to an extended deadline, and I saw no reason to grant any longer period of time.

20.  It is also obvious from my reference to the fact that Xia and those acting for him must have contemplated the potential need to provide disclosure, and ought to have been gathering the necessary materials to do so, that the disclosure I had in mind was that which I had already ordered, namely disclosure as at 24 June 2024.

21.  On the extended last day for compliance, 21 February 2025, Xia instead issued an application for leave to appeal from the Discharge Decision, by summons which also sought an order that, pending the determination of the application for leave to appeal and/or the appeal, the asset disclosure order should be stayed. That summons did not act as a stay, and as a result Xia was in deliberate breach of my disclosure order.

22.  CEG issued a summons dated 7 March 2025 (“Unless Order Application”) seeking an unless order, namely that unless by 4pm on the day five days from the date of the order to be made, Xia were to comply with the disclosure obligations to be performed under the terms of the Injunction Order, Xia be debarred from filing a Defence in the action.

23.  I heard the Unless Order Application on 14 March 2025. By my Ruling dated 19 March 2025 [2025] HKCFI 898, I granted the unless order, but set a deadline for compliance of 4pm on 28 March 2025. In the course of my reasons, I pointed out that Xia’s stance had in effect been to oppose the making of any asset disclosure at all, but that he had simply not addressed any potential practical difficulty in complying with, or having already complied with, the asset disclosure order.

24.  It can be seen from my reference to the possibility of having already complied with the asset disclosure order that I did not have in mind that Xia should or would give disclosure only by reference to the date of his giving that disclosure.

25.  Further, during the 14 March 2025 hearing, I expressly indicated that compliant disclosure might have to identify what has changed, if the position had changed from the original date of the disclosure requirement. I said in terms that the disclosure to be given must relate to the assets as were frozen by and as at the date of the Injunction Order. Both the solicitors and Senior Counsel for Xia were present at the hearing and heard my comments.

26.  There was a further delay in disclosure in circumstances which need not be canvassed for present purposes. Ultimately, Xia made asset disclosure in his 3^rd affirmation dated 24 April 2025.

27.  It is clear from the content of that affirmation, and it is indeed common ground, that the asset disclosure given has been disclosure as at roughly the date of the affirmation – not as at the date of 24 June 2024, when the Injunction Order and ADO were made.

28.  By its solicitors’ correspondence, CEG requested Xia voluntarily to give disclosure of assets as at 24 June 2024. Despite an initial indication that that might occur, it has subsequently been refused.

C.  The Summons

29.  In those circumstances, by the Summons CEG seeks:

(1)  a direction and/or declaration that the Disclosure Obligations under paragraphs 7 and 8 of the Injunction Order require Xia to inform CEG by affidavit of all of his assets as at the date of the Injunction Order, namely 24 June 2024 (so that if assets have been disposed of since that date, the whereabouts of the sales proceeds should also be identified);

(2)  an order that Xia should within 7 days file a further affirmation confirming the position as at 24 June 2024, and if any asset then held has been disposed of encumbered or otherwise dealt with between 24 June 2024 and the ordered affirmation, full particulars should be given as the circumstances of those dealings;

(3)  an order that unless Xia comply with the disclosure obligations within 7 days of the order to be made, Xia be debarred from defending the action.

30.  Though the second paragraph is phrased in the Summons as being sought “further and/or in the alternative”, it does not seem to me to be necessarily an alternative to the first paragraph. Rather, it is the means by which compliance is sought to be obtained from Xia in light of the proper meaning of the Injunction Order/ADO if as declared under the first paragraph. I reject the suggestion that this is a “new” application.

31.  Therefore, I also reject the suggestion that the third paragraph seeking the unless order is also somehow a “new” application. It is not. It is simply a way of reiterating the consequences of the failure to comply with my order, if my order has not in fact already been complied with.

32.  For the reasons that I shall explain below, it has not already been complied with.

D.  Analysis

33.  When the Injunction Order/ADO was made, it plainly required asset disclosure as at the date it was made, namely 24 June 2024.

34.  When there was an extension of time granted to provide that asset disclosure, that did not change the reference date for the required disclosure. It is obvious that the asset disclosure obligations were imposed for the purpose of ensuring that the Mareva/freezing order could be properly policed and be effective. What was to be disclosed under the ADO were (or at least included) the assets as had been frozen by the Injunction Order. Hence, I agree with the submission advanced for CEG that it would be absurd to suppose that the Injunction Order and extension of time for complying with the ADO aspect of it was somehow intended to create what became a 10-month vacuum of information between the time of the freezing and the timing of the disclosure given.

35.  It is also obvious that there may be the disposal of assets in the period between the date when disclosure ought first to be given, and the date when it is ultimately provided. If the position is not properly identified, one of the primary purposes for ordering the ancillary asset disclosure will be defeated.

36.  These obvious points are also, if necessary, broadly supported by authority, such as in ‘Gee on Commercial Injunctions’ (7^th Ed) at §23-024, and a number of cases, including Elektromotive Group v Pan [2012] EWHC 2742 (QB), PSJC Tafneft v Bogoluobov [2018] EWHC 20 TO 2 (Comm) and Armeniakou v Thomson [2025] EWHC 149 (KB). I accept those cases primarily turn on their own facts, and the key question in each case is likely to be what the substance of the particular disclosure order required. For example, the last-mentioned case involved an argument not just about the timing for the giving of asset disclosure, but its scope, so that the obligation of disclosure only arose once the proper scope of disclosure required had been set. That is not the same as in this case, where the scope of disclosure has always been the same.

37.  It is of course correct that the time of the giving of the information is the relevant time to assert the accuracy of that information. But I do not think that, of itself, says much about the date reference point. Further, it is trite that if there has been a material change in the position after initial disclosure prior to the service of the affidavit, that should be disclosed in the confirming affidavit. Also, if an affidavit is served late, then it should set out the assets both at the date it is served and at the earlier date when it should have been served pursuant to the order. The fact that an affidavit is late provides no justification for not providing what had to be provided if the affidavit had been served on time, notwithstanding that a late affidavit should also contain any up-to-date information. For myself, I do not think those matters are simply matters of best practice; rather, they are inherent in the nature and purpose of asset disclosure orders such as I made by the ADO in this case.

38.  The analysis seems to me to apply equally to an affidavit which is served at the end of the period of an extension of time for doing so. Put simply, the extension of time for providing the information does not change the original obligation, but changes the time for compliance with that obligation.

39.  As to the suggestion that the phrase “current whereabouts” means that the disclosure of assets is only of assets current at the time of the disclosure, that is not correct. The “current whereabouts” of the assets are the whereabouts of those assets current to date of the Injunction Order. That was also the time when Xia became liable to give that asset disclosure (even if there was a subsequent extension of time which permitted him to do so later).

40.  In other words, on 24 June 2024, I ordered that Xia should disclose his then current assets. Originally, he was to do so in writing at once, confirmed in an affidavit within 7 days. Subsequently I extended the time for doing so. I made no other change to the terms of the obligation relating to the need to disclose the then current assets. I do not think there is any ambiguity. There is none which need be resolved in favour of Xia.

41.  Nor is it relevant that there would be drastic consequences if there was a failure to disclose on the basis argued for CEG (with which I agree). It was the precise intention of my previous unless orders that there should be consequences if there was a failure in compliance with my previous ADO. Hence, whilst I accept that making the declaration sought by paragraph 1 of the Summons would have the effect of confirming the self-executing debarring order, I agree that the appropriate way to deal with that would be on any application for relief from sanction (even if that has to occur outside the time when such an application for relief ought to have been made).

42.  I reject the submission that paragraph 2 of the Summons makes a new disclosure application, and I also reject the submission that paragraph 3 of the Summons makes a new debarring application in the sense submitted on behalf of Xia. Rather, the position is as follows.

43.  If there has been a failure to meet the obligation of providing asset disclosure by reference to the original reference date for that disclosure, logically a new affidavit should be served so as to complete the disclosure and to state the position as at the date when (in this case, but for the extension of time) it ought to have been made. Granting time for that, if compliance is then effected within that extended time, also prevents the consequence which might otherwise flow from non-compliance. In other words, if I make an order in terms of paragraphs 2 and 3 of the Summons, Xia can avoid the adverse consequences of non-compliance which would flow from paragraph 3 if he makes proper compliance in accordance with paragraph 2.

44.  This does not strip Xia of any rights (which is the suggestion advanced for Xia). The making of orders in accordance with those paragraphs would in fact grant Xia yet a further extension of time within which finally to effect compliance with the ADO. If he does so, the consequence for not doing so will not arise (and that may be relevant on any application for relief from sanction arising from the earlier failure).

45.  Lastly, I would make clear that even had I accepted the submission that the proper terms of the ADO required Xia only to give asset disclosure by reference to whatever assets were held by him on the date that that asset disclosure was finally made by affidavit, I would exercise my discretion in the circumstances of this case – canvassed at length in my previous decisions – to require Xia to fill in the gap of missing information between 24 June 2024 and 25 April 2025 in the way sought by paragraph 2 of the Summons.

E.  Result

46.  In the premises, save that I delete the words “Further and/or in the alternative” from the beginning of paragraph 2, I make an order in terms of paragraphs 1, 2 and 3 of the Summons.

47.  As to costs, I see no reason why the costs of the application should not follow the event. In the particular circumstances, I am also persuaded that costs should be payable on the indemnity basis, and forthwith.

48.  I will proceed to a summary assessment of those costs on the papers, in accordance with a timetable which I shall leave to the parties’ solicitors to agree.