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

HCMP 1080/2024

[2024] HKCFI 3523

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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R U L I N G

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A.  Introduction

1.  On 29 July 2024, I granted a proprietary and worldwide Mareva injunction order (“Injunction Order”) in favour of the Plaintiff (“CEG”) against the 3^rd Defendant (“Ding”). By summons dated 19 August 2024 (“Discharge Summons”), Ding applied for a discharge of the Injunction Order.

2.  On 27 August 2024, and pursuant to a consent summons filed on the same day, I gave an order (1) making agreed variations to the Injunction Order, and (2) giving agreed directions in respect of the Discharge Summons.

3.  One part of those directions related to the filing and service of expert evidence on Cayman Islands law. It was agreed, and I directed, that Ding should file that evidence within 14 days, and CEG should file evidence in response within 21 days thereafter.

4.  In accordance with those directions, Ding filed an affirmation of David Lee dated 6 September 2024 (“Lee 1”), and CEG filed an affidavit of Thomas Lowe KC dated 2 October 2024 (“Lowe Affidavit”).

5.  Notwithstanding the agreed directions, and compliance with them, the solicitors for Ding wrote to the solicitors for CEG on 23 October 2024, suggesting that as Ding was the applicant in the Discharge Summons, then “in the usual course [Ding] would be entitled to file evidence in reply” to the Lowe Affidavit. The letter noted that, given there is currently no order of the Court permitting such evidence, it is necessary to seek leave from the Court to file the 2^nd affirmation of David Lee dated 17 October 2024 (“Lee 2”), which was enclosed. That affirmation was described as one “which responds briefly to several points made” in the Lowe Affidavit.

6.  By letter dated 25 October 2024, the solicitors for CEG declined to adopt that course by consent.

7.  Hence, by summons dated 1 November 2024 (“Expert Evidence Summons”), Ding seeks leave to file and serve Lee 2.

8.  I heard argument on the Expert Evidence Summons at a hearing on 4 December 2024. CEG and Ding were represented by Ms Cherry Xu and Mr Ian Yu of Counsel respectively.

9.  However, as a result of the inability of the parties to provide me with potential dates to fix for argument of the Discharge Summons, I was forced to reserve my decision on the Expert Evidence Summons to be handed down later. This was against my original intention, which was of course to deal with a relatively straightforward case management summons at the first hearing.

10.  This is my Ruling.

B.  Date for Hearing of Discharge Summons

11.  It is convenient to deal with this point first, because the date of the hearing may be a relevant factor to take into account in deciding how best to exercise the case management discretion so as to dispose of the present summons.

12.  One of the directions which I made on 27 August 2024, by consent, was for the substantive argument on the Discharge Summons to be fixed for a hearing date in consultation with Counsel’s diaries, with 1 day reserved.

13.  Despite the parties’ agreement and my direction, no date was in fact fixed – at any time even prior to the hearing on 4 December 2024. This is surprising for various reasons: (1) there was obviously no need to wait for the other steps in the timetable to be completed before fixing the date for substantive argument; (2) the later a date is sought to be fixed, the later the likely hearing date fixed will be; (3) when a plaintiff obtains a proprietary and Mareva injunction order, it is incumbent on that plaintiff to progress the claim and any argument about that injunction with some expedition; and (4) where a defendant seeks to discharge an injunction order made against him, it would be expected that the defendant pursues the discharge application with some expedition.

14.  Had a date for hearing been fixed shortly after the direction was given in late August 2024, I think the hearing would likely have been fixed on a date, such that the argument would already have taken place.

15.  Having expressed some dissatisfaction that no date for substantive argument on the Discharge Summons had yet been fixed, I attempted at the hearing to fix that date. It proved impossible for that to happen, as the parties were unable to provide immediately the available dates of their respective Counsel, in consultation with whose diaries the hearing date might be fixed.

16.  I indicated the Court’s availability for the next three months or so, and post-hearing solicitors’ correspondence has provided the parties’ Counsel’s availability. Though CEG’s Counsel has availability in January, and Ding’s Counsel has availability in February, there is only mutual availability in late March 2025.

17.  As Ding is apparently content to wait until late March 2025 for the hearing of her own Discharge Application, I am prepared – though not without some hesitation – to fix the hearing date of 21 March 2025 (the first mutually available date).

18.  I take that matter into account, in weighing the factors relevant to the case management decision which falls to be determined on the Expert Evidence Summons.

C.  Analysis

19.  I might first note the circumstances in which Lee 2 apparently came into being. Attached to that affirmation is the letter of instructions from Ding’s solicitors dated 15 October 2024. On its face, it merely states that the solicitors would like to instruct Mr Lee to prepare an affirmation setting out his opinions in response to the Lowe Affidavit, including six issues as then listed. Neither the letter, nor the affirmation, suggest that the desire to put in any reply evidence from Mr Lee was generated from or by Mr Lee.

20.  In short, Ding’s solicitors seem simply to have changed their mind about the agreed approach to the filing of expert evidence.

21.  The body of Lee 2 itself, including its pro forma elements, is some 18 pages long, but there are 235 pages of exhibits, mainly copies of reported cases. Obviously, the body of the affirmation contains Mr Lee’s opinion as to the Cayman law principles to be derived from those case authorities.

22.  Mr Yu submitted that the affirmation addresses crucial points of Cayman law, pertinent to CEG’s claims and the discharge application, and gives a response to the Lowe Affidavit where Mr Lee so far has had no opportunity to do so. Mr Yu submitted that, given the centrality of Cayman law evidence, and the confined scope of Lee 2, and the absence of any prejudice to CEG, leave should be granted for Lee 2 to be adduced.

23.  Mr Yu also submitted, in summary, that:

(1)  This is not a last-minute application, where the hearing date has not yet been fixed, so that there is no question of any hearing being derailed.

(2)  Lee 2 is relatively short, with 13 pages of substantive opinion, albeit by reference to the copied case authorities attached as exhibits, and it does not seek to introduce new issues.

(3)  The relevant question is one of necessity, and this is a substantial claim when the contest between the experts on the evidence already filed relates to whether knowledge of illegality is required for a claim for the return of unlawful dividends, where the legal principles may also go to matters of disclosure, where this is not an exercise in contractual interpretation, and where gaps in the existing evidence might be closed or clarified by way of a proper response in Lee 2.

(4)  Indeed, the points addressed in Lee 2 specifically arise from the Lowe Affidavit, and are put forward in response to that.

24.  In response, Ms Xu submitted, in summary, that:

(1)  The application may not be made at the 11^th hour, but it is still likely to cause delay, because if Lee 2 were permitted, then Mr Lowe should be entitled to respond to that on the approach previously agreed between the parties.

(2)  There is no necessity for Lee 2, where Mr Lee could and should have raised in Lee 1 all the points he wished to canvass, the present state of the evidence is more than sufficient to decide whether CEG has established the necessary merits threshold for the grant of the Injunction Order, Lee 2 is irrelevant to the question of material non-disclosure, and the Court will have to read the relevant cases anyway (they being cases decided in common law jurisdictions).

(3)  If there is any dispute about the proper interpretation of what was said in Lee 1, that is a matter for the Court aided by submissions from Counsel, and it is unnecessary to file a further affirmation for this purpose.

(4)  There is further prejudice to CEG, where the parties have previously agreed one round of expert evidence in a specific order, as well as giving Ding the last word on factual affirmation evidence, and where it was also agreed that no further affirmation will be filed without leave.

25.  As to the right approach on an application such as the present, there has been some dispute between Ms Xu and Mr Yu.

26.  Ms Xu submitted that the starting point – where the Court ordered only one round of expert evidence by the consent of the parties, and that no further evidence shall be filed without leave – is that leave would not be granted absent genuine extenuating circumstances, namely those that would normally fall within the rule in Ladd v Marshall. She submitted that it does not matter whether the analysis is approached through RHC Order 32 rule 11A or Order 1A rule 1 – as the conclusion reached would be the same. There is no right to the grant of leave to file extra evidence, and justification should be made out.

27.  Mr Yu submitted that there is no general requirement that any application for evidence to be filed after the Court has given an order that there be no further evidence without leave, in all cases whether interlocutory or otherwise, and whether or not there is prejudice, must meet a requirement of demonstrating exceptional circumstances.

28.  To an extent, the contest on this point seems to me to be of no great moment. I do not think it is particularly helpful to consider whether circumstances need to be “exceptional” or not, or whether Ladd v Marshall applies. Though the process is of course not free-wheeling and it must have some judicial structure, I think it more straightforward simply to focus on ordinary case management principles. Material for present purposes, those principles include that: (1) the deployment of expert evidence should be controlled by the Court and kept within proper bounds; (2) where parties have agreed a procedural timetable, which has been accepted and directed by the Court, departure from that timetable needs to be appropriately justified; (3) the parties who have agreed a timetable must be taken to have considered the appropriateness of that timetable, and the directions jointly sought from the Court; (4) applications for additional, and particularly late additional evidence, should in general be discouraged; and (5) the Court is concerned to achieve appropriate justice on any given issue, so as to ensure fairness between the parties, but in the context of reasonable proportionality and procedural economy, and the preference to deal with cases expeditiously.

29.  I take these various submissions and principles into account.

30.  Had the hearing date been fixed when it should have been, I am certain that the parties and the Court would have ‘managed’ to deal with the Cayman Law questions on the materials filed in accordance with the agreed and directed timetable. Indeed, had the substantive argument on the Discharge Summons been fixed for any date in or before November/December 2024, I think the Expert Evidence Summons (if issued) would almost certainly have been dismissed.

31.  This would have been for reasons of timing, as well as the doubtful additional value from this evidence in the context of the merits threshold to be satisfied in the context of an application for, or the application for the discharge of, an interlocutory injunction.

32.  However, in the circumstances that: (1) it is suggested that the Lowe Affidavit has misunderstood what was being said in Lee 1, (2) Lee 2 provides clarification, but apparently does not seek to widen the issues addressed in the expert evidence, and (3) as a result of the failure to fix an earlier date, the hearing will now take place on 21 March 2025, then it seems to me the case management discretion should be exercised in favour of permitting Lee 2 to be filed, but with the caveat that CEG be granted consequential leave to file a further affidavit from Mr Lowe (so as to preserve the integrity of the originally agreed structure for expert evidence).

D.  Result

33.  In the circumstances, I grant leave for Lee 2 to be filed and served within 3 days, namely by 12 December 2024.

34.  I also grant leave to CEG, if it wishes, to file and serve a responsive affidavit from Mr Lowe on or before 10 January 2025 (a generous time so as to take account of the intervening holiday period).

35.  As to costs, against the matters I have set out above, it seems to me that I have in effect granted an indulgence to Ding. Therefore, whilst I have allowed the application to file and serve Lee 2, the costs of the application (including the costs of argument on 4 December 2024) will be paid by Ding to CEG, to be summarily assessed by me. I have already received from CEG a statement of costs for summary assessment, and permit Ding until 10 January 2025 to make any list of objections to that statement, after which I shall perform the summary assessment.

36.  I also expressly reserve to the substantive hearing of the Discharge Summons how to deal with the costs of the further round of expert evidence now ordered/permitted. There is at least a real possibility that – irrespective of the outcome of the Discharge Summons

– I will take the view that the second round of evidence was unnecessary in the circumstances of the argument on that summons, and I may deal with the costs accordingly.