PACIFIC KING SHIPPING HOLDINGS PTE LTD (IN COMPULSORY LIQUIDATION) v. HUANG ZIQIANG

HCMP 2464/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2464 OF 2012

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BETWEEN

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1.  This is an application pursuant to s 14AA (1) of the High Court Ordinance, Cap 4, for leave to appeal my orders for disclosure and costs.[1] It is provided that in the case of an interlocutory appeal, leave shall not be granted, unless the court is satisfied that (1) the appeal has a reasonable prospect of success; or (2) there is some reason in the interest of justice why the appeal should be heard.[2] The court will only refuse leave if satisfied that the applicant has no reasonable prospect of succeeding on the appeal. This requires the applicant to show that the prospect of succeeding must be reasonable in that the appeal is arguable and not fanciful, but without having to be probable.

2.  The grounds of appeal briefly summarised are as follows:

(1) The plaintiff’s claim was not a proprietary claim and the further disclosure order was wrongly granted.

(2) The further disclosure order was not properly in aid of a freezing injunction.

(3) The further disclosure order was oppressive, unnecessary and unjustifiably wide.

(4) The further disclosure order was not appropriate both in law and in fact.

3.  As to ground 1, it was submitted that the plaintiff’s claim against the defendant in the Singapore proceedings concerned breaches of his fiduciary duties owed to the plaintiff as its director and officer, and the misappropriation of funds belonging to the plaintiff during the period from 1 January 2008 to 1 December 2009.[3]  There was reference in the originating summons [4] and the statement of claim [5] to the misapplication of moneys and assets of the plaintiff as a result of misfeasance and breach of duty.  In response to the complaint that the claim was not proprietary in nature, I stated that it was in that it involved a claim against the defendant and another for a breach of their fiduciary duties and the misappropriation of funds and property belonging to the plaintiff.  It was in this context that I made this statement.  There is an argument that the claim is not a proprietary claim but a monetary one instead.  The nature of the claim no matter how it is described was a matter that was taken into account.  In paragraph 54, I concluded “I am satisfied that the information sought to be disclosed would provide relevant information as to the status of bank accounts and the funds held in them in order to have a complete picture of the assets under the defendant’s control for the purpose of the claim and in aid of the freezing injunctive order.” It is to be recognised that the disclosure order was made both for the purpose of the claim and in aid of the freezing injunctive order. Mr Randall Arthur, for the plaintiff, argues that this does not affect the order made, and as to whether or not the claim was a proprietary claim is a red herring.  He points out that the order was made in aid of the freezing injunction. As there is a reasonable argument on appeal on the issue of a proprietary claim, I grant the leave sought by the defendant on this ground. 

4.  As to ground 2, it is argued that the further disclosure order which was applied for under s 21 of the Evidence Ordinance, Cap 8, was not, and could not, be in aid of the freezing injunction order.  At one point in submissions before me, Ms Elaine Liu, for the defendant, argued that the further disclosure order was made as a variation to the freezing injunction order and not under s 21. I should point out that the summons indicated that the application was made under s 21 and the submissions before me both from the plaintiff and the defendant was on the basis that it was an application under s 21 in aid of the freezing injunction order. It is argued that the injunction does not give the plaintiff any proprietary interests in the defendant’s frozen assets and also in reliance of RACP Pharmaceutical Holdings Ltd v Li Xiaobo (CA) CACV 139/2007, 19 September 2007, it is argued that discovery directed at finding out whether the defendant has “dissipated” or “concealed” assets was not a legitimate purpose for making a disclosure order in aid of the freezinginjunction. I do not find that there is a reasonable argument on this ground.

5.  As to ground 3, it is complained that the further disclosure order was oppressive, unnecessary and unjustifiably wide.  I acknowledged in my judgment that the order was wide for the reasons given in refusing to discharge the injunction and the findings that I made.  This is typified by my statement in paragraph 53: “In my view, the defendant has quite deliberately realised his assets quickly in both these jurisdictions in order to put his funds and himself beyond the reach of the judicial processes of these jurisdictions.”   There is a reasonable argument as to the width of the disclosure order and I grant leave on this ground.

6.  As to ground 4, this is a compendium of complaints as to the application of legal principles and findings in granting the further disclosure order.  I do not find that there is a reasonable argument on this ground.

7.  I am satisfied that grounds 1 and 3 are arguable in that there is a reasonable prospect of success on appeal and accordingly leave is granted on this basis. In addition to rendering the appeal nugatory if a stay is not granted, it has been rightly acknowledged by Mr Arthur that this application has been outstanding for some time and no prejudice would result in any event by staying the order pending appeal upon leave being granted. Accordingly, I order a stay of execution of the order pending appeal. Costs will be in the cause.