RE BGA HOLDINGS LTD (FORMERLY KNOWN AS BEIBU GULF OCEAN SHIPPING (GROUP) LTD)

CAMP 44/2024, [2025] HKCA 752

On Appeal from [2024] HKCFI 51

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 44 OF 2024

(ON AN INTENDED APPEAL FROM HCCW NO. 251/2019)

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J U D G M E N T

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The Court:

A.  Introduction

1.  This is the renewed application for leave to appeal by Bright Good Asia Limited and Polyrise Team Limited (“Bright Good” and “Polyrise”; collectively “2 Contributories”)  against the Order of Anthony Chan J (“Judge”)  dated 3 January 2024 (“Order”).

2.  By the Order, the Judge dismissed their appeal against the  Order of Master Rita So (“Master”)  contained in her Ruling dated 13 January 2023 that: (1)  Mr John Nicholas Greenwood (“Greenwood”)  of BDO Limited, Mr Roy Bailey (“Bailey”)  and Mr Tsui Chi Chiu (“Tsui”)  of Ernst & Young Transactions Limited (collectively “Liquidators”)  be appointed joint and several liquidators of BGA Holdings Limited (“Company”), and (2)  there should not be a committee of inspection (“COI”)  in this winding-up and the Liquidators be at liberty to seek directions from the Court under section 200(3)  of the Companies (Winding Up and Miscellaneous Provisions)  Ordinance, Cap 32 (“Cap 32”).

3.  As noted by the Judge in his Decision dated 3 January 2024[1] (“Decision”)  at para 2, the central complaint of the 2 Contributories was that there was a real doubt as to the ability of Greenwood and Bailey to act impartially, independently and fairly.  Further, there were legitimate concerns as to their competence because they were BVI-based and without Hong Kong winding-up experience.

4.  The present application is opposed by PBM Asset Management Ltd, the Petitioner in these proceedings (“Petitioner” or “PBM”). The Petitioner was a 49% contributory of the Company and its sole creditor claiming over US$36 million from the Company.

5.  As acknowledged by Mr Chan for the 2 Contributories in para 3 of his Written Statement, the parties agreed that the only question for determination is who are best placed to carry on the liquidation of the Company. There are 2 options, either the Liquidators or the 2 Contributories’ candidates (“Candidates”).[2]

B.  Background

6.  The following is largely taken from the Amended Petition dated 30 October 2019, the Decision of the Judge, his earlier decision dated 26 November 2021 (“Strike Out Decision”)[3] and the CA Decision dated 9 April 2025 referred to below.

7.  The Company was incorporated on 16 December 2009 as a joint venture between the Petitioner holding 49% of its shares and Beibu Gulf Holding (Hong Kong)  Company Limited holding the other 51%.

8.  Since about February 2016, the Company has had 3 shareholders/contributories ie the Petitioner (49%), Bright Good (45%)  and Polyrise (6%)[4]. Mr Chu Kong (“Chu”)  and Mr Lau Wing Yan (“Lau”)  were directors of the Company nominated to its Board by the Petitioner. On 10 March 2016, soon after the 2 Contributories had become shareholders of the Company, Lau was removed as director of the Company.

9.  On 23 August 2019, the Petitioner applied to wind-up the Company. At the time of Petition, the Company was controlled by Chu and a Mr Kwok Kai (“Kwok”).

10.  On 6 December 2021, the Judge ordered the Company be wound up (“W-UP Order”)  on the ground of insolvency and the Official Receiver (“OR”)  became the provisional liquidator of the Company. The insolvency ground was based on the Company’s non-compliance with a statutory demand dated 12 December 2017 by which it was asked to repay the Petitioner shareholder’s loans in the sum of US$36,298,272 (“PBM Loan”).

11.  Prior to the making of the W-Up Order, the Company applied to strike out the Petition, challenging the validity of the PBM Loan. The Judge held the PBM Loan was repayable and dismissed the striking out application: see Strike Out Decision. As a result, shortly afterwards, on 6 December 2021, the Judge granted the W-UP Order.  Both the Strike Out Decision and the W-UP Order were being challenged on appeal by the Company in CACV 591/2021 and CACV 557/2021. Both appeals were dismissed by the Court of Appeal on 9 April 2025 [5] (“CA Decision”). Leave to appeal to the Court of Final Appeal was dismissed by the Court of Appeal on 5 September 2025.[6]

12.  What followed after the W-UP Order was a meeting of creditors held on 13 January 2022.  The Petitioner was the only creditor whose debt was admitted for voting purposes. It was resolved that: (1)  Greenwood and Bailey be appointed as joint and several liquidators of the Company; and (2)  there should not be a COI.

13.  The meeting of contributories was also held on 13 January 2022.  It was resolved that: (1)  Mr Osman Mohammed Arab and Mr Wong Kwok Keung be appointed as liquidators of the Company; and (2)  there should not be a COI.  Subsequently, Bright Good and Polyrise wrote to the OR informing her that they had changed their mind and considered that a COI should be appointed.

14.  On 24 January 2022, the OR took out an ex parte Summons seeking the Court’s directions on the resolutions and determinations of the creditors’ meeting and contributories’ meeting in relation to the appointment of liquidators and COI. The OR filed 4 reports respectively dated 24 January, 12 April, 1 June and 8 July 2022 to set out her views on the issues.  The appointment of the Liquidators was supported by the OR.  With the parties’ agreement to paper disposal, the Master handed down her Ruling.

15.  As noted by the Judge in the Decision, the present dispute may be seen as an offshoot of a long running dispute, involving a large number of litigations, between Chu and Lau. They had a very successful business, principally in shipping and logistics. What followed was a breakdown of relationship in about late 2013, an acrimonious business divorce and multiple litigations. 

16.  The dispute began with a BVI company Ocean Sino Ltd (“Ocean”)  which wholly owned the Petitioner.  Chu and Lau were each 50% shareholder as well as directors of Ocean. On 29 June 2017, Ocean was wound up by the BVI Court upon the petition of Lau on the just and equitable ground. Greenwood and Bailey, together with another two individuals, were appointed as liquidators of Ocean (“Ocean Ls”). Greenwood in fact was one of the appointees proposed by Chu.  The Ocean Ls then appointed Greenwood as a director of the Petitioner on 23 January 2018.

17.  On 17 January 2020, the Eastern Caribbean Court of Appeal set aside the BVI Winding up Order upon Mr Chu’s appeal, but it was restored on 12 October 2020 by the Privy Council (“PC Judgment”).

18.  As noted in para 12 of the Decision, before the Judge, it was submitted by Mr Joffe for the Petitioner that the Privy Council remarked upon the need to investigate into Chu’s misconduct, including: (1)  obtaining control of the Company through the 2 Contributories which were beneficially owned by him or his associates; and (2)  procuring the Company to enter into the “Ausca Transaction” and “Lohas Transaction” (“Questionable Transactions”), arguably in breach of his fiduciary duties which warranted investigation by a liquidator. The efforts by the Liquidators to investigate and pursue the Questionable Transactions featured prominently in the submissions before the Judge.

19.  Meanwhile, Chu had commenced a number of other proceedings the purpose of which, according to Mr Joffe, was to obstruct the investigation into the Questionable Transactions.  At [33] of the Master’s Ruling, she stated that she was “inclined to accept that these are all attempts from Chu’s camp to disrupt the [Ocean] liquidators’ investigations at all costs and I accept that there are no real risks of conflict of interest”.

20.  In the BVI, Chu applied to remove the Ocean Ls on the grounds of bias and misconduct (“Removal Proceedings”).  The application was dismissed at first instance by Wallbank J in his Decision dated 24 November 2021 (“Removal Judgment (1)”).  Much of the arguments raised in the Removal Proceedings were similar to those raised before the Judge to resist the appointment of Greenwood and Bailey as Liquidators.  Chu’s arguments were rejected by the learned Judge.

21.  Chu’s appeal against Removal Judgment (1)  was rejected by the BVI Court of Appeal on 3 July 2023 (“Removal Judgment (2)”).  The Court of Appeal also rejected Chu’s allegations against the Ocean Ls.  Mr Joffe submitted to the Judge in that appeal Chu sought to re-run many of the arguments already rejected in the Removal Proceedings.

22.  Chu had also commenced the following proceedings:

(1)  HCA 411/2020 (“HCA411”)  on 15 April 2020 in which the Company (then controlled by Chu)  alleged that Lau was guilty of conspiracy against the Company.

(2)  HCA 1891/2020 (“HCA1891”)  against the Petitioner on 6 November 2020 in which the Company (then controlled by Chu)  as Plaintiff sought a declaration that the PBM Loan had been discharged. As submitted by Mr Joffe which the Judge agreed, HCA1891 was inconsistent with the Strike Out Decision. According to the court file, nothing happened in that case after the filing of the Statement of truth relating to the Defence on 24 November 2021.

(3)  HCA 1885/2021 (“HCA1885”), a double derivative action commenced on 15 December 2021 alleging, inter alia, that Greenwood was in breach of his duties to the Petitioner. HCA1885 was issued less than 2 weeks after the W-Up Order. It was struck out by Madam Justice Au-Yeung on 20 October 2023.

23.  After their appointment, the Liquidators had commenced HCA 631/2022 (“HCA631”)  on 27 May 2022 against Chu and Kwok (and their associates)  in respect of the Questionable Transactions.

C.  The Decision and Leave Decision

24.  In the Decision, the Judge rejected the 2 Contributories’ appeal against the Master’s Ruling. With regard to the OR’s submissions, the Judge specifically commented at [32] that “Mr Wong SC, who appeared for the OR, had rendered his assistance to the Court whilst maintaining a neutral stance.  His submissions on the issues raised by the Contributories over the integrity of Greenwood and Bailey are very helpful.”

25.  For ease of reference, the relevant parts of the Decision in rejecting the 2 Contributories’ submissions are set out below.

“Integrity

33. The allegations of the Contributories over the suitability or integrity of Greenwood and Bailey, including the evidence of the Contributories before the Master, were considered and analysed by the OR in her Reports. In particular, the OR believed that the conflict which may arise out of HCA 1891/2020 could be mitigated by the assurance of Greenwood and Bailey that the Court’s directions would be sought before deciding whether to continue with that action on behalf of the Company.

34. In my view, there is little substance to the allegation of conflict of interest arising out of HCA 1891/2020 when the status of the PBM Loan had been adjudicated in the [Strike Out] Decision.

35. I have considered all the Reports of the OR (as did the Master). I take the view that they were informative, well-reasoned and should be given weight by the Court.

36. There is a highly pertinent consideration to be borne in mind for the liquidation of the Company. As pointed out in the OR’s 2^nd Report, para 4: ‘[t]he remaining assets of the Company appear to be potential legal claims and recovery actions against those who had allegedly misappropriated the assets of the Company…’. In other words, the remaining assets are represented by the recovery action against Chu and his associates (HCA 631/2022).

37. I agree with both Mr Joffe and Mr Wong that much of the Contributories’ complaints of bias against Greenwood and Bailey had been dealt with and rejected by the BVI Courts in the Removal Proceedings.

38. HCA 1855/2021 [sic][7] was disposed of firmly by the Court by striking it out.

39. Mr Chan complained that it was not sufficient for Mr Joffe to maintain that many of the Contributories’ complaints raised in these proceedings had already been dealt with by the Hong Kong and BVI Courts. With respect, I disagree. The burden is on the accusers to make out their case of lack of integrity supported by credible evidence. There is no burden on PBM to chase down every hare.

…

44. For these reasons I see no real substance in the Contributories’ complaints over the integrity of Greenwood or Bailey.

45. Further, I am in agreement with the risk management measure put in place by the Master with the appointment of Tsui. His appointment also addressed the lack of Hong Kong insolvency experience of Greenwood and Bailey. In any case, I believe that the point of lack of experience is overplayed because both Greenwood and Bailey were experienced international insolvency practitioners from two of the biggest international accounting practices. As pointed out in the 2^nd Report of the OR (§8), they would have access to advice from their colleagues who are familiar with Hong Kong insolvency.

46. Further, I agree with Mr Wong that since there is no COI, the exercise any of the powers by the Liquidators which fall within Part 1 or 2 of Schedule 25 to Companies (Winding Up and Miscellaneous Provisions)  Ordinance, Cap 32 (“Ordinance”), would have to be sanctioned by the Court according to s.199(2)  of that Ordinance. This also serves to manage any concern of alleged conflicts of interests.”

Costs

47. I agree with the OR’s analysis that the appointment of Greenwood and Bailey would be conducive to minimizing the costs the liquidation. Para 6 of the OR’s 2^nd Report stated:

‘6. Greenwood and Bailey, the joint liquidators of OSL have been involved in the liquidation of [Ocean] in BVI and the wider and more extensive underlying dispute between Lau and Chu since 2017. The dispute concerns not just [Ocean] but also the Company as well as the other companies within the BBG Group. The [Official Receiver] takes the view that although they are BVI insolvency practitioners, because of their prior involvement in the liquidation of [Ocean] and the wider and more extensive underlying dispute between Lau and Chu in the BBG Group, it is likely to be more costs and time effective for Greenwood and Bailey to also deal with the liquidation of the Company, to ensure that prompt actions can be taken and legal claims and recovery actions, which are subject to pending limitation issues, can be brought on behalf of the Company against those responsible without any unnecessary delay. In the circumstances, the [Official Receiver] submits that the appointment of Hong Kong based liquidators may not necessarily be more efficient in terms of time and costs as compared to the appointment of Greenwood and Bailey who are already familiar with the picture.’

48. Mr Chan made the point that Tsui is about to resign as one of the Liquidators due to his intention to emigrate and that a replacement will have to be appoint in his place. Thus, there will be little costs savings compared with instructing the Candidates. I believe that with the detailed knowledge possessed by Greenwood and Bailey, there is still much costs to be saved by retaining them, albeit with a new colleague.

…

Decision on liquidators

54. In addition to the above analysis, the Court should bear in mind that the Greenwood and Bailey were (and are)  the choice of PBM, whose view should normally prevail with an insolvent company. Such view was supported by the OR.

55. For these reasons, I agree with the Master on the choice of liquidators.

COI

56. Since the Company is insolvent, it is unnecessary for the COI to consist of any contributories: see Re Sunni International Ltd [2018] HKCFI 2371 [57]-[58]. PBM had of course expressed no wish to have a COI.

57. Further, given that the only asset of the Company is represented by the claims against Chu and his associates, it is very difficult to see how a COI, with the participation of the Contributories (acting under the control of Chu)  would achieve any useful purpose. Rather, there is a risk that the legal proceedings may be obstructed.” (emphasis added)

26.  The 2 Contributories then applied to the Judge for leave to appeal against the Decision.On 26 February 2024, the Judge heard the 2 Contributories and immediately dismissed their application (“Leave Decision”).

(1)  The Judge held that the Decision was an interlocutory decision. For an interlocutory decision in winding up matters, leave was required: paras 2-14 Leave Decision.

(2)  The Judge then proceeded to consider the five grounds of appeal raised by the 2 Contributories and dismissed them all: paras 15-23 Leave Decision.

27.  On 11 March 2024, the 2 Contributories made a renewed application to this Court for leave to appeal against the Decision.

D.  Deliberation

D1. Whether Leave to Appeal is required

28.  The 2 Contributories’ primary position is that no leave is required in the present case. Their reasons are as follows.

(1)  No leave to appeal is required in the case of an appeal from a judgment, order or decision (whether interlocutory or final)  given or made in the matter of the winding up of a company: RHC O 59 r 4(1)(b).

(2)  Alternatively, the Decision is final in nature and requires no leave to appeal in accordance with the test in Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003)  6 HKCFAR 222.

29.  RHC O 59 r 4(1)  provides for the time for filing a notice of appeal as follows:

“Time for appealing (O. 59, r. 4)

(1)  Except as otherwise provided by these rules, a notice of appeal must be served under rule 3(5)  within—

(a)  in the case where leave to appeal to the Court of Appeal is required under section 14AA (not being a case to which sub-paragraph (b)  applies)  or section 14(3)(e)  or (f)  of the Ordinance, 7 days after the date on which leave to appeal is granted;

(b)  in the case of an appeal from a judgment, order or decision given or made in the matter of the winding up of a company, or in the matter of any bankruptcy, 28 days from the date of the judgment, order or decision; and

(c)  in any other case, 28 days from the date of the judgment, order or decision concerned.”

30.  Mr Chan submits jurisdictionally this appeal is governed by sections 13(2)(a), 14(1)  and 14AA(1)  of the High Court Ordinance Cap 4 (“HCO”).

31.  Sections 13(2)(a),14(1)  and 14AA(1)  HCO provide:

“13. Jurisdiction of Court of Appeal

…

(2)  The civil jurisdiction of the Court of Appeal shall consist of—

(a)  appeals from any judgment or order of the Court of First Instance in any civil cause or matter.

14. Appeals in civil matters

(1)  Subject to subsection (3)  and section 14AA, an appeal shall lie as of right to the Court of Appeal from every judgment or order of the Court of First Instance in any civil cause or matter.

14AA. Leave to appeal required for interlocutory appeals

(1)  Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted by the Court of First Instance or the Court of Appeal.”

32.  Mr Chan then submits section14AA HCO provides a wide exception to the requirement that leave to appeal is required for interlocutory matters “[e]xcept as provided by rules of court”. He further submits that RHC O 59 r 4(1)  specifically carves out winding up and bankruptcy appeals from the section 14 AA HCO leave requirement.

33.  In our view, RHC O 59 r 4(1)  does nothing of the sort suggested by Mr Chan because that is not what it says. RHC O 59 r 4(1), which governs when notice of appeals should be served, is a purely procedural rule whereas what we are concerned with is the law governing the jurisdiction of the Court of Appeal to hear the intended appeal. Mr Chan’s submission that RHC O 59 r 4(1), a procedural rule, provides the exception from the leave requirement under section 14AA HCO, a jurisdictional rule, is rather far-fetched and unsupported by authorities.

34.  In Re Lee Siu Fung Siegfried (No 2) [2018] 3 HKLRD 765 at [13], G Lam J (as he then was)  accepted the Official Receiver’s submission that the appellate jurisdiction of the Court of Appeal in a bankruptcy matter stemmed from section 98(2)  of the Bankruptcy Ordinance, Cap 6 (“BO”)  and governed by section 13(2)(c)  HCO, rather than generally from section 13(2)(a)  of HCO as a civil cause or matter. Thus, no leave was required for the appeal in that case. However, at [21], the learned Judge observed that there was no equivalent legislative provision in relation to companies winding up “as a result of which O 59, r 4(1)(a)  and (b)  seems to be infelicitously worded as far as appeals in winding up matters are concerned”.

35.  Infelicitous or not, the express wording of RHC O 59 r 4(1)(a)  and (b)  does not admit the construction suggested by Mr Chan and cannot provide this Court with jurisdiction to hear an appeal which it does not otherwise have.

36.  As submitted by Mr Joffe in his Statement of Opposition, RHC O 59 r 4(1)(b)  does not expressly disapply section 14AA HCO. That rule does not directly address whether leave is required in winding-up and bankruptcy matters. Rather, it is a rule concerning the deadline for serving a notice of appeal. In other words, it is simply a procedural timetable. In effect, the 2 Contributories are asking this Court to infer, on the basis of the wording of this purely procedural rule, it is the legislative intent that winding-up appeals do not require leave. In our view, that inference is not justified as a matter of statutory interpretation.

37.  In principle, the court will not “write into a statute words which are not there” even if the legislature ought to have enacted such a provision but has not: R v Morgan [2008] 4 All ER 890 at [24]. The Court will also only imply words into a statute if the statutory intention is plain and the insertion is not too big: Western Bank Ltd v Schindler [1977] 1 Ch 1, 18G per Scarman LJ (as he then was).  The words of Scarman LJ at 18E to G on judicial legislation as opposed to judicial interpretation are instructive and worth reminding ourselves of:

“Judicial legislation is not an option open to an English judge. Our courts are not required, as are, for instance, the Swiss courts (see the Swiss Civil Code, articles 1 and 2), to declare and insert into legislation rules which the judge would have put there, had he been the legislator. But our courts do have the duty of giving effect to the intention of Parliament, if it be possible, even though the process requires a strained construction of the language used or the insertion of some words in order to do so: see Luke v. Inland Revenue Commissioners [1963] A.C. 557, per Lord Reid at p.577. The line between judicial legislation, which our law does not permit, and judicial interpretation in a way best designed to give effect to the intention of Parliament is not an easy one to draw. Suffice it to say that before our courts can imply words into a statute the statutory intention must be plain and the insertion not too big, or too much at variance with the language in fact used by the legislature.”

38.  Mr Joffe goes on to submit that the legislative intention is by no means clear in this case. In the bankruptcy context, section 98(2)  of BO specifically provides that there is an appeal as of right in bankruptcy matters. This forms the basis for saying that section 14AA HCO does not apply to bankruptcy matters, as recognised in Re Lee Siu Fung Siegfried (No 2).  By contrast, there is no equivalent provision in Cap 32. The specific provision in the bankruptcy context would suggest that its absence in the equivalent winding-up context was intentional.

39.  Mr Joffe then submits to imply words into the RHC to the Contributories’ desired effect would have drastic consequences. It would run contrary to the cases where the court has considered that leave is required for appeals in respect of interlocutory decisions in winding-up matters: Leave Decision at para 6. These authorities clearly contemplate that leave may be required in respect of winding-up appeals. The 2 Contributories’ construction would mean all these authorities are wrong.

40.  In contrast, the consequence of the Petitioner’s interpretation is simply that interlocutory decisions in winding-up matters are subject to the usual leave requirement. The only difference is that a notice of appeal against such a decision would have to be filed within 28 days of the original decision, instead of 7 days after leave is granted. While procedurally imperfect, that is not a reason to do away with the leave requirement for all decisions in winding-up matters.

41.  In our view, the relevant jurisdictional law for the purpose of the intended appeal is indeed section 14AA HCO: if leave is not required, the 2 Contributories can launch their intended appeal as of right and this Court has jurisdiction to hear it; if leave is required, this Court has no jurisdiction to hear the appeal unless leave is obtained. As such, the issue simply turns on whether the Decision was or was not an interlocutory judgment or order. At para 14 of the Leave Decision, the Judge held the Decision was an interlocutory one.

42.  It is not controversial that the applicable test in deciding whether a decision is final or interlocutory is the “application approach”: Shell Hong Kong Ltd at [26].

43.  This approach was understood to involve an examination of the nature of the application to see whether the order or judgment made upon such an application would, whether it fails or succeeds, determine the whole action: per Chan PJ at [26]. At [31], Chan PJ further elaborated that if an issue in the action dealt with and determined by the court is “a substantive part of the final trial”, “a crucial issue” in the case, a point “that goes to the root of the case” or “a dominant feature of the case”, then the order or judgment, even if it does not finally dispose of the whole action, should nevertheless be regarded as a final judgment.

44.  Mr Chan refers to the Judge’s reasons in the Leave Decision (with a view to challenging them)  as to why the Decision was an interlocutory decision. For ease of reference, the reasons are reproduced below.

“9. I am of the view that the Decision is an interlocutory decision. First, it was obvious that the appointment of Liquidators did not finally dispose of the winding up proceedings.

10. Second, I agree with Mr Ho, who appeared for PBM with Mr Sik, that the exercise of discretion by the Court in appointing liquidators concerned what was in the best interest of the liquidation. The Court did not determine the “rights” of the Contributories or PBM. They had no “right’ to have their preference adopted by the Court.

11. Third, despite the appointment of the Liquidators they may be removed in the future (on ground(s)). Further, their decisions may be subject to challenge. There is thus no real finality.

12. Fourth, I fail to see how the appointment of the Liquidators was a matter “going to the root” or a “dominate feature” of the liquidation (Shell, [31]). Rather, the Liquidators were appointed to serve an important role in the conduct of the liquidation subject to the supervision of the Court.

13.  Finally, I do not believe that the case of Re Legend International Resorts Ltd, unrep, HCCW 1139/2004, 8 February 2011, is of assistance to the Contributories.  In that case, DHCJ L Chan (as he then was)  held in the context of a security for costs application that an application to remove liquidators was a final decision.  However, there is a clear distinction between a removal application which will determine the serious misconduct alleged against the liquidators (see Re Legend, [13])  and an appointment application.”

45.  Mr Chan submits that albeit not finally disposing of the whole proceedings, (i)  the intended appeal will be a “final determination of the Liquidators’ rights (as parties to the winding up)  to continue with the liquidation” which, given the centrality of the liquidators’ role, is clearly a dominant feature and (ii)  that liquidators may be later removed or their decisions subsequently challenged by separate applications does not affect the finality of the appointment decision.

46.  Mr Joffe submits the Judge had correctly identified the 5 reasons supporting the conclusion that the Decision was interlocutory. We agree with those reasons and cannot see how the Judge can be said to have erred.

47.  We reject Mr Chan’s submissions substantially for the reasons advanced by Mr Joffe:

(1)  First, the appointment of liquidators is just the beginning of the process of liquidation. It hardly finally disposes of anything in the liquidation.

(2)  The 2 Contributories’ suggestion that the Decision finally determined the Liquidators’ right to conduct the liquidation is untenable in law and is never heard of. No authorities have been cited to support such a novel proposition. Liquidators have no substantive right as such to conduct a liquidation – their conduct of the liquidation lasts only as long as the term of their appointment.

(3)  The analogy with removal applications is inapposite. Appointments of liquidators can always be challenged subsequently and their decisions are always subject to the Court’s supervision. On the other hand, where a liquidator is removed pursuant to a removal application, that has a very final and determinative effect – in practice, one can hardly expect the same liquidator who has been removed for cause shown would be re-appointed in the future.

48.  For the above reasons, we are of the view that leave to appeal is required.

D2. Whether leave to appeal should be granted

49.  Under section 14AA(4)  of HCO, leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

50.  To meet the threshold of a “reasonable prospect of success”, it must be shown that the prospect of succeeding is more than fanciful, without having to be probable: SMSE v KL [2009] 4 HKLRD 125 at [17] per Le Pichon JA.

51.  The role of the court in exercising its discretion to appoint liquidators is well established.

52.  In Re Orient Power Holdings Ltd [2008] 2 HKLRD 494 at para 26[8], Kwan J (as she then was)  lay down the following principles.

“26. The general principles relating to the role of the court and its powers in appointing liquidators in a determination hearing are not controversial and may be stated as follows:

(1)  Under section 194(1)(c), the court is empowered to decide on the differences between the determinations of the meetings of the creditors and contributories for the appointment of liquidators and “make such order thereon as the court may think fit”. Under rule 45(2), in deciding the differences, the court is to make “such order as shall be necessary”.

(2)  The court has a wide and unfettered discretion in the exercise of this power. It is not bound by the determinations of the meeting of the creditors or of the meeting of the contributories, although the court would of course have due regard to those determinations (Re Akai Holdings Ltd. & Anr. [2001] 2 HKLRD 411 at 417J; section 287(1)).

(3)  In deciding whom to appoint as liquidator, the court considers what is in the best interests of all persons interested in the winding up (Re Akai Holdings, supra. at 418B). The court has undoubted power to decline to appoint any nominated liquidator if his appointment conflicted or was likely to conflict with the best interests of the winding up as a whole including the best interests of all parties concerned in the winding up (Re Obie Pty. Ltd. (1983)  1 ACLC 1353 at 1363).

(4)  As an officer of the court, a liquidator should maintain an even and impartial hand between all individuals whose interests are involved in the winding up (In re Contract Corporation (1872)  7 Ch. App 207). A guiding principle in appointing a liquidator is that he must be independent and seen to be independent, as it is of great importance there should be no possibility of criticism attaching to the liquidator as an officer of the court on the ground of a conflict of interest and duty (Re National Safety Council of Australia Victorian Division (1989)  15 ACLR 355 at 360 to 361; Re Biposo Pty. Ltd. (1995)  17 ACSR 730 at 737). It would be inappropriate to appoint someone as liquidator in circumstances where there was some real prospect, even if small, of a conflict of interest and duty when the liquidator was conducting his or her duties (McPherson’s Law of Company Liquidation by Andrew Keay, 1^st edition published in England and Wales, para. 8.09).” (emphasis added)

53.  Substantially similar principles were endorsed by Harris J in Re Grand China Shipping (Hong Kong)  Company Limited unrep., HCCW 485/2012, 6 November 2013, Harris J at [16(1)] –[16(3)]:

“16. The court is not bound to appoint the liquidator chosen by the majority of creditors and contributories, although it will do so unless some reason is advanced by an interested party for doing otherwise. The general principles which govern the approach of the court to the appointment of liquidators under section 194(1)  are as follows:

(1)  The court has a wide and unfettered discretion in the exercise of this power. It is not bound by the determinations of the meeting of the creditors or of the meeting of contributories, although the court will give due weight to their views.

(2)  In deciding whom to appoint as liquidators, the court will consider what is in the best interests of all persons interested in the winding up.

(3)  A liquidator is an officer of the court and should act impartially and in an even handed manner between all those interested in the winding up. They must be independent and be seen to be independent. It would be inappropriate to appoint someone as liquidator where there is some real prospect, even if small, of a conflict of interest in duty and the conduct of the liquidation. However, the conflict must be real not theoretical and must be shown to be so by the person asserting it.” (emphasis added)

54.  Since a decision to appoint liquidators involves the Court exercising its discretion after considering what is in the best interests of all the persons involved, the Court of Appeal will only overturn such a decision if there are errors in principle or the discretion was exercised in a manner that is plainly wrong: Baosteel Engineering & Technology Group Company Limited v China Zenith Chemical Group Limited [2019] HKCA 435 at [13] per Lam VP (as he then was).

55.  In their Draft Notice of Appeal, the 2 Contributories have put forward 5 grounds of appeal.

D2.1  Grounds 1 and 3

56.  In Mr Chan’s Statement, he has grouped Grounds 1 and 3 under the same head “Existing Conflict of Interest”. Accordingly, they will be dealt with together.

57.  Grounds 1 and 3 are drafted as follows.

  Ground 1

“The learned Judge erred in law, was plainly wrong, and/or took into account an irrelevant matter in holding (at Judgment at §34)  that there is ‘little substance to the allegation of conflict of interest arising out of HCA 1891/2020 when the status of the PBM Loan had been adjudicated in the [Strike Out] Decision’.

…

(2)  The indisputable existence of inter alia HCA 1891/2020 and the appeals against the SO Decision and the winding-up Order suffices to establish the real prospect of Greenwood and Bailey’s inevitable conflicts of interests given PBM’s vested commercial interests in the outcomes of such decisions.”

  Ground 3

“The learned Judge erred in law, applied the wrong test, disregarded principle and/or was plainly wrong in holding that ‘many of the Contributories’ complaints raised in these proceedings had already been dealt with by the Hong Kong and BVI Courts" and that ‘[t]he burden is on the accusers to make out their case of lack of integrity supported by credible evidence’ (c.f. Judgment at §§37, 39).

(3)  In this connection, the sheer existence of the aforesaid ongoing proceedings suffices for the Contributories to make out their case and satisfy this low threshold. §1 of the Notice of Appeal is repeated.”  

58.  The gist of the 2 Contributories’ submissions on the Liquidators’ existing conflict of interest is set out in their Statement in para 15 as follows:

(1)  The correct test in this regard is whether the 2 Contributories are able to prove a real prospect of conflict of interest and any possibility of criticism (as opposed to what the Judge decided in paras 34, 39 and 44 of the Decision).

(2)  HCA1891 and the appeals against the Strike Out Decision and W-UP Order remain firmly afoot. As such, the Company and the Petitioner remain engaged in extant litigation against one another. This was recognized by the OR as involving on the present facts a major conflict and recognized in law to be a sufficiently serious conflict so as to compel the appointment of different liquidators in relation to companies within the same group: Re Luen Cheong Tai unrep., HCCW 190/2002, 14 November 2002, Kwan J (as she then was)  at para 19.

(3)  Further, the BVI Court’s decisions in the Removal Proceedings are inadmissible findings providing no compelling – still less authoritative – basis to dismiss the 2 Contributories’ complaints.

59.  To start with, it should be noted that the Judge was clearly aware of the principles laid down in Re Orient Power Holdings Ltd and reiterated in Re Grand China Shipping (Hong Kong)  Company Limited – he has correctly set them out, among others, in paras 22 and 23 of the Decision.

60.  Applying those principles, the Judge had come to the  conclusion that the 2 Contributories had failed to make out their case of conflict of interest or their complaint over the integrity of Greenwood and Bailey: para 44 of the Decision. In coming to this conclusion, the Judge had no doubt taken into consideration the various reports by the OR: para 35 of the Decision, the contentions of the parties: paras 28 – 31 of the Decision as well as at least some of the over 3,000 pages of documents placed before the Judge: para 26 of the Decision.

61.  Mr Joffe submits that the 5 grounds of appeal advanced by the 2 Contributories are the same grounds that were run before the Judge in the Leave Decision in which they had all been addressed and dismissed: paras 16 – 22 of the Leave Decision.

62.  Specifically, as far as Ground 1 is concerned, it is about the challenge in HCA1891 to the Strike Out Decision which affirmed the status of the PBM Loan. Mr Joffe submits it is the Liquidators’ duty to abide by the Strike Out Decision. We agree.

63.  As far as Ground 3 is concerned, Mr Joffe submits that the court examines the risk of conflict, but also considers whether such conflicts can be effectively managed. It is wrong for the 2 Contributories to suggest the mere existence of on-going legal proceedings can give rise to a conflict of interest, no matter how abusive those proceedings are. It is for the 2 Contributories to show that there is a real prospect of conflict which they have failed before the Judge.

64.  As we noted earlier in this Judgment, HCA1891 had remained dormant after the filing of the Statement of truth relating to the Defence on 24 November 2021. While the Strike Out Decision had been challenged on appeal by the Company, the appeal itself was dismissed by the Court of Appeal on 9 April 2025.  In these circumstances, any alleged conflict of interest based on HCA1891 or the appeal against the Strike Out Decision is simply illusory in our view and cannot support the existence of any real prospect of conflict. If so, Grounds 1 and 3 are without merits.

65.  Lastly, the 2 Contributories raise the point that the findings in the BVI Removal Proceedings are inadmissible.

66.  It seems to us that even without the BVI Courts’ findings in the Removal Proceedings, the Judge was still entitled to rule that the 2 Contributories have failed to make out their case of lack of integrity with credible evidence and there was no burden on the Petitioner “to chase down every hare”. Hence, whether or not the findings in the BVI Removal Proceedings are inadmissible would not make any difference to the prospects of their intended appeal.

67.  For these reasons, both Grounds 1 and 3 do not have reasonable prospects of success and fail.

D2.2  Ground 2

68.  Ground 2 is drafted as follows.

“The learned Judge erred in law, was plainly wrong, and/or took into account irrelevant matters insofar as the Court held that it is ‘relevant to bear in mind’ that there was a ‘need to investigate into Chu’s misconducts’, that there were ‘attempts by Chu’s camp to disrupt the [Ocean] liquidators' investigations at all costs’ and that ‘the remaining assets of the Company are represented by the recovery action against Chu and his associates’ was ‘a highly pertinent consideration to be borne in mind for the liquidation of the Company’ (Judgment at§§ 12, 17, and 36).

(1)  It was and is undisputed and accepted by all parties and the Court that there is no issue over the competence or suitability of the Candidates…

(2)  There is zero basis to suggest that the Candidates will not equally investigate Chu’s potential misconduct in respect of the Questionable Transactions insofar as necessary.”

69.  In this regard, it is pertinent to note the Judge’s following observations in the Decision:

(1)  First, “there was a need to investigate into Chu’s misconducts including … the ‘Questionable Transactions’ was made in the context and in light of the remarks made in the PC Judgment: [12].

(2)  Second, the Master was inclined to accept that Chu’s various manoeuvres were “attempts by Chu’s camp to disrupt the [Ocean] Liquidators’ investigations at all costs”: [17].

(3)  Third, the relevance of the recovery action against Chu and his associates in HCA631 at [36], which has already been quoted earlier in this Judgment and need not be repeated here.

70.  Mr Chan has not explained, and it is unclear to us, why the matters mentioned by the Judge in the aforesaid paras of the Decision were irrelevant matters that the Judge was not entitled to take into account. In our view, they are clearly relevant matters and if so, the Liquidators’ existing knowledge of the underlying context of the remarks made in the PC Judgment, the rationale behind the Master’s Ruling and HCA631 generally would be a clear advantage in their favour in terms of cost-efficiency and is a factor that could and should be considered, as submitted by Mr Joffe.

71.  The 2 Contributories’ contentions in their Ground 2(1)  and (2)  are completely beside the point. The issue is not whether or not the Candidates are competent and suitable and will equally investigate into Chu’s potential misconducts in respect of the Questionable Transactions. The issue is whether the Liquidators, chosen by the sole creditor of the Company (whose view will in the normal course of event prevail when a company is insolvent), endorsed by the Official Receiver and approved by the Master and the Judge are not competent, suitable or qualified to do so.  Once the conflict of interest contention fails, there is nothing else to suggest the Liquidators are not.

72.  Ground 2 has no reasonable prospects of success and fails.

D2.3  Ground 4

73.  Ground 4 is drafted as follows.

“The learned Judge erred and was plainly wrong in holding that ‘the appointment of Greenwood and Bailey would be conducive to minimizing the costs [of] the liquidation’ and that ‘with the detailed knowledge possessed by Greenwood and Bailey, there is still much costs to be saved by retaining them, albeit with a new colleague’ (Judgment at §§47 to 49)”.

74.  It is the 2 Contributories’ position that there would be additional costs incurred in retaining Greenwood and Bailey to manage their “unique disadvantages” such as inter alia, (a)  the accumulation of long-running costs of having to bring in an additional third liquidator to manage the risk of conflict of interest of Greenwood and Bailey and (b)  the need to seek the Court’s directions on the Company’s ongoing legal proceedings.

75.  We note that the Master had considered and set out the relevant parts of the OR’s 4^th Report in para 27 of her Ruling.

“27. I have also considered especially the summary by [Official Receiver] in paragraphs 48 and 49 of the 4^th Report that:-

(a)  On the one hand, Greenwood and Bailey are very familiar with the Company and have been involved in the insolvency of the group for a considerable period of time. Yet, given the group insolvency nature, their engagements with OSL and the ongoing legal proceedings between the camps of Mr. Chu and Mr. Lau in multiple jurisdictions, it would unlikely be a zero conflict of interest situation for their appointment. But the main issue is whether the conflict of interests is capable of being effectively managed.

(b)  On the other hand, it may be possible to appoint a more neutral and less controversial party, such as the Panel A takers, Lai and Ho. However, the appointment of Lai and Ho would likely result in increase in liquidation expenses as well as the time to complete the liquidation (and reduce the return of creditors). Lai and Ho do not have any prior knowledge in relation to the business and operation of the Company at all. Given the group insolvency nature, Lai and Ho have to familiarize themselves with the business and structure of the group, in order to co-operate and co-ordinate with the other liquidators appointed for different entities of the group.”

76.  The Judge had also considered the relevant parts of the OR’s 2^nd Report in para 47 of the Decision about costs savings which has been quoted earlier in this Judgment and need not be repeated here.

77.  The 2 Contributories also raise the point in para 4(3)  of the Draft Notice of Appeal, repeated by Mr Chan, that as things stand Tsui and Bailey were due to resign as liquidators of the company so that the appointment of the Candidates is more cost-efficient. This was aptly dealt with by the Judge in the Decision.

“48. Mr Chan made the point that Tsui is about to resign as one of the Liquidators due to his intention to emigrate and that a replacement will have to be appoint in his place. Thus, there will be little costs savings compared with instructing the Candidates. I believe that with the detailed knowledge possessed by Greenwood and Bailey, there is still much costs to be saved by retaining them, albeit with a new colleague.

49.  I should also mention that Bailey is in the course of making an arrangement with his firm so that he can continue to discharge his duties as Liquidators despite the mandatory retirement policy of his firm.”

78.  As Mr Joffe submits, the Judge’s finding that it would be cost effective to appoint Greenwood and Bailey given their existing knowledge of the liquidation necessarily involves an evaluative judgment. The 2 Contributories have only been able to make general allegations that no costs would be saved. It is difficult to see how the Judge could be said to have erred in principle or was plainly wrong. We agree.

79.  Ground 4 has no reasonable prospects of success and fails.

D2.4  Ground 5

80.  Ground 5 is drafted as follows.

“The learned Judge erred and was plainly wrong in holding that ‘it is very difficult to see how a COI, with the participation of the Contributories (acting under the control of Chu)  would achieve any useful purpose. Rather, there is a risk that the legal proceedings may be obstructed’ (contrary to Judgment at §57).”

81.  It is the 2 Contributories’ contention in para 5(1)  of the Draft Grounds of Appeal that a COI is not to be dispensed with unless there is a good reason to do so, and possible inconvenience to the Liquidators and difficulties arising from conflicts of interest and partisan views are not of themselves a reason to dispense with a COI, citing Re Joy Rich Development Ltd [2016] 2 HKLRD 1058 per Harris J at paras 19 and 20.

82.  To start with, what Harris J actually suggested in paras 19 and 20 were not quite what the  2 Contributories have paraphrased above. For ease of reference, the relevant parts are reproduced here:

“19. It is desirable that liquidations are conducted with the assistance of a COI. As Au J observes in Re Planet Toys (HK)  Ltd [9], the COI can ‘assist the court in its supervisory role over the liquidators and to obviate the potential need for time-consuming and costly applications to be made to the Court’. It is undesirable for the Companies Court’s time to be taken up with decisions that can as well, if not better, be made by creditors. It should also not be forgotten that the liquidation process is primarily intended to protect and advance the interests of creditors and COIs exist to help ensure that this is what happens. Kwan J (as she then was)  makes this point in Re Wah Nam Group Ltd [10]:

‘I should mention that a committee is more than just a consultative body for the liquidators, as the liquidators would appear to suggest in their affidavit. Under section 200(1), it is provided that the liquidator of a company which is being wound up by the court shall, in the administration of the assets of the company and in the distribution thereof among its creditors:

‘have regard to any directions that may be given by resolution of the creditors or contributories at any general meeting, or by the committee of inspection, and any directions given by the creditors or contributories at any general meeting shall in case of conflict be deemed to override any directions given by the committee of inspection.’

The function of the committee is to assist the court in its supervisory role over the liquidators, and avoid the need for time-consuming and costly applications to the court.’

20. Similar views were expressed by Yuen J (as she then was)  in Re Goodway Ltd[11]…” (emphasis added)

83.  Given that the Petitioner as the sole creditor of the Company does not desire or require the appointment of a COI, which after all is there to protect its interests, the Petitioner’s view should be given considerable priority over the contrary view of the 2 Contributories.

84.  Further, since the Company is insolvent, it is unnecessary for the COI to consist of any contributories: Re Sunni International Ltd [2018] HKCFI 2371 at paras 57 and 58 per Ng J, adopting Re Hung Fung Holdings Limited [2001] 3 HKLRD 692 [12].

85.  In Re Hung Fung Holdings Limited, Chu J (as she then was)  explained at para 12:

“12. From the information provided to the Court by the Official Receiver at the hearing, it can be seen that the Company, as it now stands, is insolvent. It is therefore likely that the creditors will not recover their debts in full. Given that the rights of the contributories rank after that of the creditors, it is probable that the contributories will not receive any distribution or dividends. Considering that the main functions and powers of the CI are to act with the liquidators and to oversee the liquidators in the exercise of their powers: see sections 206(1)  and 200(1)  of Companies Ordinance, I am of the view that it is not necessary for the CI of the Company to consist of the contributories or their representatives when the contributories are unlikely to be paid out of the estate of the Company…”.

86.  This is consistent with what the Judge had considered and pointed out in the Decision at para 56.

87.  Mr Chan submits that the COI will serve the useful purpose of functioning as a check and balance to manage the existing conflict of interest of Greenwood and Bailey. We do not agree. As Mr Joffe rightly points out, Ground 5 challenges the decision not to appoint a COI on the basis that there are real concerns of conflict of interest. If we reject Grounds 1 and 3, Ground 5 necessarily falls away. Additionally, the Judge has already pointed out that the 2 Contributories would not be members of the COI since this is an insolvent liquidation. The 2 Contributories fail to point out why that is wrong in principle.

88.  Ground 5 has no reasonable prospect of success and fails.

E.  Disposition and costs order nisi

89.  For the foregoing reasons, we conclude that none of the proposed grounds of appeal have any reasonable prospect of success. Nor is there any other reason in the interests of justice why the appeal should be heard. Accordingly, the 2 Contributories’ application for leave to appeal is dismissed.

90.  As we find the application totally without merit, we order under Order 59, rule 2A(8)  that no party may request the matter be reconsidered at an oral hearing inter partes.

91.  As for costs, we do not see why costs should not follow the event. There shall be an Order nisi that costs be to the Petitioner to be summarily assessed if not agreed and paid forthwith by the 2 Contributories.

92.  The Petitioner has already filed its Statement of Costs for summary assessment. We hereby grant leave to the 2 Contributories to file their statement of opposition if they so wish. Costs will then be assessed on paper.