SJ AND ANOTHER v. A LTD

HCCT 113/2025 and 114/2025

(Heard together)

[2026] HKCFI 3500

HCCT 113/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 113 OF 2025

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AND

HCCT 114/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 114 OF 2025

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DECISION

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A.  INTRODUCTION

1.  On 23 January 2026 I handed down a judgment (“Judgment”) allowing the application of SJ and EL to set aside the arbitral award rendered in HKIAC/A21129 on 20 June 2025 (“Award”) and dismissing A Limited’s application to enforce the Award. The nomenclature and abbreviations in the Judgment are adopted herein.  This decision should be read together with the Judgment, which sets out the background to the matter and my reasoning in relation to each of the holdings in the Judgment.

2.  By Summonses each dated 3 February 2026 in the respective matters, A Limited sought leave to appeal, as well as a stay of execution pending appeal.

3.  At the leave to appeal hearing, A Limited was represented by Counsel Ms Winnie Tam SC leading Mr Patrick Siu, and SJ and EL were represented by Counsel Mr Mike Lui SC leading Mr John Leung.

B.   RELEVANT LEGAL PRINCIPLES

4.  There is no quarrel between the parties as to the relevant principles to be applied in a leave to appeal application of this nature.

5.  Section 84(3) of the Arbitration Ordinance (Cap 609) stipulates that the leave of the Court is required for any appeal from a decision of the Court to grant or refuse leave to enforce an award.

6.  An appeal against the Court’s decision to set aside an award is an appeal against the Court’s exercise of discretion.  An appellate court will not generally interfere with a judge’s exercise of discretion, unless it can be established that the judge misunderstood the law or evidence, misdirected herself, or the judge’s exercise of discretion was plainly wrong: LY v HW [2022] HKCFI 3016 at §§2-4; Canudilo International Co Ltd v Wu [2023] HKCFI 1055 at §3; TGL v SDC [2024] HKCFI 2393.

C.   DISCUSSION

7.  A Limited has five proposed grounds of appeal. The first four center around the contention that I erred in failing to recognize that SJ and EL could not satisfy all the conditions for an infra petita challenge. The last one argues that I erred in failing to consider remitting the Award to the arbitral tribunal.

8.  This was a leave to appeal application, and not a rehearing of the matter.  Ms Tam SC (who had not appeared in the original hearing) had thoroughly argued each point in some detail.  Despite her notable efforts, I am not persuaded that this is an appropriate case in which to grant leave to appeal. In the reasons that follow, I set out a summary of the arguments placed before the Court and my brief views thereon. I do not intend to go in depth into each of the points that had already been decided in the original Judgment as this is not the occasion to do so.

Intended Ground 1: Suggestion that Point not Properly Brought before Tribunal

9.  A Limited’s first proposed ground was that the suspensory estoppel defence had not been properly brought before the arbitral tribunal as it was not SJ and EL’s pleaded case.

10.  I had already considered and rejected this point (see paragraphs 27 to 30, and 41 to 42 of the Judgment).

11.  At the leave to appeal hearing, A Limited emphasized the following:

(1)  SJ and EL had in fact themselves proposed and framed Issue No. 3 for the arbitral tribunal’s consideration, and that the issue was addressed as framed.

(2)  The pleadings up until the Amended Rejoinder had not made clear that the point was about suspensory estoppel, and it was thus an error to “allow” SJ and EL to “take advantage of their inconsistent pleadings” (citing inter alia Wing Hang Bank Ltd v Crystal Jet International Ltd [2005] 2 HKLRD 795 at §6(2); Choi Yuk Ying v Ng Ngok Chuen [2019] HKCA 171 at §62).

(3)  The positions in the Amended Rejoinder and the opening and closing submissions were “mutually inconsistent”.

12.  During the hearing of the leave to appeal application, Ms Tam SC took me through each of the pleadings as well as how the list of issues came to be, and re-emphasised each of the points above. Whilst I appreciate the meticulous efforts in doing so, my view remains that seen as a whole, SJ and EL’s point regarding the suspensory estoppel defence remains a good one (cf. RAV Bahamas Ltd v Therapy Beach Club Inc [2021] AC 907 at §42, which stands for the proposition that whether an issue has been put requires consideration of the proceedings as a whole; see also Z v R [2021] HKCFI 2312 at §16). If one had properly considered the totality of the relevant materials before the arbitral tribunal, there would have been no confusion about the suspensory estoppel defence being put forward.

13.  I thus do not think there is any merit in the intended ground of appeal.

Intended Ground 2: Suggestion that Point not Essential

14.  A Limited’s second proposed ground was essentially a repackaged version of the argument that the point was not essential, and/or the suggestion that essentially the greater (i.e. consideration of a permanent estoppel) encompasses the lesser (the suspensory effect estoppel). The argument runs that in paragraphs 161 to 163 of the Award, the tribunal had already made a finding that A Limited had not represented that it did not intend to exercise the repurchase right at the time of the written notice but preferred to pursue other exit options, and that this “must necessarily mean that A Limited had not made a representation that was even more temporally circumscribed or more suspensory in nature.”

15.  This argument had been considered and rejected in paragraphs 43 to 44 of the Judgment.  I will not repeat the reasoning therein. Again, despite Ms Tam SC’s best efforts, I am not persuaded that there is any merit in the proposed ground of appeal.

Intended Ground 3: Suggestion that Tribunal Already Considered the Point

16.  A Limited’s third proposed ground was that the arbitral tribunal had already considered the point (again, relying on paragraphs 161 to 163 of the Award). It is suggested that I had erred in not recognizing that it does not matter whether the Court might think the arbitral tribunal had dealt with it badly or indifferently, or whether the Court might think the arbitral tribunal failed to provide reasons or dealt with the issue in pectore (citing LY v HW at §27).

17.  Reference is then made to paragraphs 148 to 154 of the Award, where there was discussion about:

(1)  The arbitral tribunal’s holding that it was lawful for A Limited to seek alternative exit options without losing its right to commence arbitration proceedings, viz. they had put their mind as to whether A Limited had represented that it would not exercise the repurchase right until all exit options had been exhausted (paragraph 148);

(2)  The arbitral tribunal’s examination of evidence surrounding exit options and the repurchase right (paragraph 150); and

(3)  The arbitral tribunal’s consideration of EL’s case that it was reasonable for SJ and EL to rely on A Limited’s assurance, demonstrating that “the arbitral tribunal was dealing with the Alleged Suspensory Estoppel Defence.”

18.  In reciting the above, A Limited disagrees with the analysis in the Judgment at paragraphs 36 to 47, which I have already based the decision on regarding this point.  Again, I will not repeat the same.

19.  A Limited also places focus on my use of the word “seem” in paragraph 37, suggesting that is not sufficient to mount an infra petita challenge.  However, that is really a misfocus on a turn of phrase used in a certain passage of the Judgment, reading the word out of context.

20.  As set out in paragraph 36 to 37, and then 45 to 46 of the Judgment, my view was that the arbitral tribunal had not considered the point at all.  I would also note that this argument is somewhat contradictory to those made in Points 1 and 2 above.

21.  I do not consider this is a meritorious ground of appeal.

Intended Ground 4: Suggestion that there was no prejudice

22.  A Limited’s fourth proposed ground was that even if the arbitral tribunal had failed to consider the point, there was no real or actual prejudice occasioned (citing LY v HW at §32). The reasoning offered by A Limited is that even if the suspensory estoppel defence had succeeded, A Limited could exercise the repurchase right because on the facts as found, all exit options (such as the potential SGX listing etc) were eventually exhausted thereby curing any potential prejudice.  It is suggested that I erred in not addressing this condition in the judgment.

23.  Whilst it is true that this was not expressly discussed in the Judgment, I had already indicated in the summary of the law that only breaches which cause actual prejudice should be remedied (Judgment paragraph 22(2)(iv)).

24.  SJ and EL further rely on the principle that the mere fact that certain matters relied upon by counsel are not mentioned in the judgment does not mean that the judge had not taken them into consideration (Harbour Front Ltd v Money Facts Ltd [2019] HKCA 916 at §9).  

25.  The short point, which was obvious upon considering the matter, is that the focus on what happened after the SGX listing failed in 2022 is a red herring. Whether at that point the repurchase remedy could be exercised is neither here nor there, when the crux of the complaint by SJ and EL in the arbitration (commenced in July 2021) was that the suspensory effect estoppel barred A Limited from relying on the Written Notice and commencing arbitration to enforce the repurchase remedy, unless / until the prejudice to them was removed by restoring their original rights under clause 5.6 of the shareholder’s agreement. The timings simply don’t allow for this argument on prejudice at all.

26.  The I thus do not consider this a meritorious ground of appeal.

Intended Ground 5: Suggestion that the matter ought to have been remitted to the tribunal

27.  A Limited’s fifth and final proposed ground was that the fallback position – viz remitting the Award to the arbitral tribunal to take such action as appropriate in respect of the suspensory estoppel defence – was not considered and no reasons were given for its rejection.  It relies on the proposition that where the impugned point is a discrete issue, and no suggestion of misconduct or bias is made against the arbitral tribunal, then the appropriate course is to remit the same (citing A v B [2015] 3 HKLRD 586 at §§38-40).

28.  It is true that I had dismissed the enforcement application and set aside the Award. In making such decision it is correct that I did not consider remission an appropriate course:

(1)  I disagree with A Limited’s contention that remission is the presumed or necessarily preferred course.

(2)  A v B is quite different in circumstances – with the limitation defence being one which is easily circumscribed. In the present case, the point concerned evidential issues and factual findings on an erroneously framed permanent estoppel defence. To set aside that mindset and those findings and reconsider the matter is a rather more involved and difficult exercise than simply considering a question of law.

29.  In any event, this was an exercise of discretion. I am not persuaded that it was plainly wrong not to remit.

C.   CONCLUSION

30.  Whilst there were various other matters that were re-argued during the course of the leave to appeal hearing, these were essentially an attempt to revisit matters that had already been decided upon in the Judgment. The crux of the matter is that I do not agree that there are grounds upon which to grant leave to appeal, and accordingly, A Limited’s summonses are dismissed, with a costs order nisi that costs be to SJ and EL, to be taxed if not agreed, with certificate for two counsel.

31.  I thank both teams of counsel for their assistance.