LU YONGDE v. ALLAN YAP AND OTHERS

HCA 1501/2017

[2025] HKCFI 1023

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1501 OF 2017

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D E C I S I O N

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INTRODUCTION

1.  By a summons dated 30 July 2024 (“the Summons”), the 4^th defendant (“D4”), the 5^th defendant (“D5”), the 6^th defendant (“D6”)  and the 8^th defendant (“D8”)  (“the Applying Defendants”)  apply for an order, inter alia, to:

(a)  restrain the plaintiff (“P”)  from repeating, procuring the repetition, or authorizing the publication to any person of, any allegations or claims made by him in this Action or otherwise in any way related to this Action; and

(b)  restrain P from providing information to, in any way assisting, any third part in making any claim, or in pursing any proceedings, including but not limited to HKIAC A20214 and HCA 212 of 2021, involving D2, D3 and D5 in respect of any matter arising from this Action;

in breach of Clauses 14 and 15 of the Settlement Agreement annexed to the Consent Order dated 12 October 2017 (“the Consent Order”).

BACKGROUND

2.  Mr John Yan SC (“Mr Yan SC”), who appeared with Ms Shannon Leung (together with Mr Yan SC as “the Applying Defendants’ Counsel”), for the Applying Defendants, have summarised the factual as well as procedural background to this application in their skeleton submissions lodged with the court on 4 November 2024 (“the Applying Defendants’ Submissions”).  Mr Lawrence Ng (“Mr Ng”), who appeared with Mr Victor Lui for P (together with Mr Ng as “P’s Counsel”), have also summarised the background of the case in their skeleton submissions lodged with the court on 5 November 2024 (“P’s Submissions”).  I shall adopt the relevant parts of their submissions in order to set out the background of this case below but with modifications of my own where I consider appropriate.

Factual Background

3.  Alpha & Leader Law Firm (“A&L Law Firm”)  is a mainland Chinese law firm which had been established in Guangzhou in 2004 by 4 founding partners (“the Founding Partners”), including Pan Weisi (潘衛思)  (“Pan”). At about the same time that A&L Law Firm was established, the Founding Partners also caused a company named Alpha & Leader Associates Limited (“A&L Hong Kong”)  to be incorporated in Hong Kong. The Founding Partners were the subscriber shareholders in and the first directors of A&L Hong Kong. A&L Law Firm and A&L Hong Kong were both part of a group named the Alpha & Leader Group (“A&L Group”). A&L Hong Kong was used to enter into contracts with clients of the A&L Group to which services other than purely legal consultancy service relating to mainland Chinese law were provided[1].

4.  Ma Zhangkai (“Ma”)  is a mainland Chinese lawyer who had been employed by A&L Law Firm from the time it was set up and until January 2012.  Ma had worked under Pan in a different law firm before the Founding Partners set up A&L Law Firm. Although Ma had been given the title of partner in 2008, he was not an equity partner and had remained an employee of A&L Law Firm[2].

The 1^st Framework Agreement

5.  In 2011, Ma introduced to Allan Yap (葉家海), the 1^st defendant (“D1”)  herein and Hong Shunyao (洪舜堯)  who is D5 in this case, through a person called Chung Kwok Cheung (“Chung”), an opportunity to invest in the Spinnaker Rights. D5 decided not to invest but D1 decided to do so and to use a corporate vehicle, Nation Field Limited (“Nation Field”), for this purpose[3].

6.  It is the position of the defendants herein and Nation Field that Ma was acting in the course of his employment by A&L Law Firm at the time he introduced the opportunity to invest in the Spinnaker Rights to Chung and D1 and helped Nation Field to enter into the 1^st Framework Agreement with the Spinnaker Companies.

7.  Although the 1^st Framework Agreement was dated 8 December 2011, it was not in fact signed until in or after mid-December 2011, as confirmed by a contemporaneous email dated 9 December 2011 (a Friday)  from Ma which specifically stated that it was estimated that Spinnakers’ “老板” would sign it the following Wednesday or Thursday (ie 14 or 15 December 2011)  after which Ma would come to Hong Kong to arrange for D1 to sign it[4].

Cooperation Agreement

8.  Chung has explained that since Ma and A&L Law Firm had assisted D1 (through Nation Field)  to enter in the 1^st Framework Agreement, it was agreed that A&L Law Firm would continue to provide services to Nation Field in relation to the matters arising from the 1^st Framework Agreement. Ma then suggested, and Chung agreed, that a formal agreement be executed between A&L Law Firm and Nation Field to confirm this arrangement and Chung agreed. A 合作協議 (“the Cooperation Agreement”)  dated 26 December 2011[5] was accordingly executed[6].

9.  Chung has also explained that when Ma showed him the draft of the Cooperation Agreement, he had noticed that the parties thereto were Nation Field and a company named “Alpha & Leader Associates Limited”, ie A&L Hong Kong, which was expressly described as a Hong Kong company.  As Chung noticed that this company bore a name similar to the English name of A&L Law Firm, he had asked why it was not A&L Law Firm which was the party to the Cooperation Agreement to which Ma had explained that it was for tax reasons and that A&L Hong Kong was a company which had been incorporated in Hong Kong by Pan and the partners of A&L Law Firm[7]. 

Termination of the 1^st Framework Agreement on 21 February 2012

10.  By a letter dated 21 February 2012, the Spinnaker Companies terminated the 1^st Framework Agreement by reason of Nation Field’s failure to pay the deposit thereunder by 20 February 2012 as had been requested by the Spinnaker Companies[8].

The 2^nd Framework Agreement

11.  In about April 2012, Chung having found another investor, P, willing to cooperate with D1 to invest in the Spinnaker Rights, he approached Ma to request Ma to contact the Spinnaker Companies[9].

12.  P having agreed to cooperate with D1 to invest in the Spinnaker Rights, with P taking a 55% interest in the proposed investment and D1 taking 45% therein, Ma drafted an agreement entitled “关于合作投资 “Spinnaker” 債权项目之协议书” (“the Investment Agreement”)  between D1, P and Chung which was executed by them.  D1 has explained in a witness statement filed in the Arbitration Proceedings that he had noticed that the Cooperation Agreement had been referred to and annexed to the Investment Agreement but that as he did not know at the time that Ma had left A&L Law Firm, he did not take issue with this.  Chung has also explained that he had not paid attention to when Ma had left A&L Law Firm[10].

13.  P and D1 also executed a 股東協議 (“the Shareholders Agreement”)[11].

14.  P having persuaded D5 to share in his share of the proposed investment in the Spinnaker Rights by taking up 20% out of P’s 55% interest, P and D5 entered into a separate agreement entitled “合作投资 “Spinnaker” 債权协议书”[12]. Like Chung and D1, D5 allegedly did not know at the time that Ma had left A&L Law Firm and thought and believed that he was continuing to assist with the investment in the Spinnaker Rights as a lawyer of A&L Law Firm[13].

15.  Nation Field and the Spinnaker Companies subsequently entered into a new Framework Agreement dated 14 May 2012 pertaining to the acquisition of the Spinnaker Rights by Nation Field (“the 2^nd Framework Agreement”)[14].

16.  Thereafter, Szeto Wai Ling, Virginia (司徒惠玲)  (“Szeto”), D3 in this Action, who was at the time a solicitor practising in Hong Kong as sole proprietor of Szeto Virginia & Co., D2 in this Action, started to proceed to arrange for the Spinnaker Rights to be transferred to Nation Field.  Most of such work was done by D3 pursuant to instructions given to her by D1.  D5 also sometimes gave D3 instructions, especially because when payment of expenses and fees was required, D5 usually ended up paying them.  P, however, did not become involved in the work relating to the transfer of the Spinnaker Rights, nor did he pay any of the expenses or fees[15].

Use by D1 of his share in the Spinnaker Rights as security for loan in May 2014

17.  In May 2014, D1 used his 45% interest in the Spinnaker Rights as security for a loan of $300m (“the Loan”)  from 深圳市泰銀投資發展有限公司 (“Tai Ngan”).  Arrangements were made and documentation prepared and executed to, inter alia, separate the Spinnaker Rights representing D1’s 45% interest from those representing the 55% interest which was shared between P and D5.  In particular, the documentation provided for part of the Spinnaker Rights representing P’s and D5’s 55% interest to be transferred to D7 herein, ie Million Victory Corporation Limited, to be held on trust for P and D5[16].

Default by D1 in repaying the Loan and enforcement of the security in 2016

18.  From October 2016, due to D1’s default in repayment of the Loan and outstanding interest, Tai Ngan took steps to enforce the security[17].

PROCEDURAL BACKGROUND

This Action

19.  This Action was commenced on 23 June 2017 with P applying ex parte for an order restraining D7 and D8 from dealing with certain assets. The application for the ex parte order was supported by an affirmation by P (“the 2017 Lu Affirmation”)[18]. Thereafter, P filed the Statement of Claim herein dated 20 September 2017[19] (“the SOC”).

20.  P’s complaints centred on the arrangements which had been made when D1 made use of his share in the Spinnaker Rights as security for the Loan and when Tai Ngan enforced such security on D1’s default in repaying the Loan and interest thereon : see §§72-80 of the SOC[20]. P’s complaints were premised on the Investment Agreement and the Shareholders Agreement.  The Cooperation Agreement appears not directly relevant to P’s claims and was not mentioned in the SOC.

21.  Just 7 days after the SOC was filed, P and D2, D3, D4, D5, D6, D7 and D8 (“the Settling Defendants”)  entered into the Settlement Agreement dated 27 September 2017[21].

22.  Whilst the Settling Defendants now allege that they disputed the claims made by P in the 2017 Lu Affirmation and the SOC, no affidavit evidence was filed in response to the 2017 Lu Affirmation and no defence was filed in response to the SOC.

23.  However, the Settling Defendants now claim that they were concerned enough to make it clear on the record that they disputed P’s allegations against them and wished to ensure that such serious allegations would not be repeated by P:

(a)  It was expressly provided in §1 of the Consent Order[22] and Clause 13 of the Settlement Agreement[23] that P’s claims were being settled on a without admission of liability basis.

(b)  §§14 and 15 of the Settlement Agreement[24] provided as follows:

“14. The Plaintiff undertakes not to repeat, procure the repetition, or authorise the publication to any person of, any allegations or claims made by him in this Action or otherwise in any way related to this Action.

15. The Plaintiff undertakes not to provide information to, in any way assist, any third party in making any claim, or in pursuing any proceedings involving the 2^nd, 3^rd and/or 5^th Defendants in respect of any matter arising from this Action.” [25]

Arbitration Proceedings HKIAC A20214

24.  On 15 September 2020, a company registered in Samoa, Alpha & Leader Associates (“A&L Samoa”)  issued a Notice of Arbitration in Arbitration Proceedings HKIAC A20214 against Nation Field (“the Arbitration Proceedings”).  A&L Samoa is a company with a name identical to the name of A&L Hong Kong which was caused to be incorporated by Ma in Samoa.  It has nothing to do with A&L Law Firm or the A&L Group.  The claims by A&L Samoa against Nation Field are based on the Cooperation Agreement and are premised on A&L Samoa being the counter-party to Nation Field under the Cooperation Agreement.

25.  A&L Samoa’s case is that after the 1^st Framework Agreement had been entered into on 8 December 2011, it “was not proceeded with due to a lack of funds by Nation Field at that stage”.  Thus, “in around mid-December 2011 [Ma] had further discussions with Yap and Chung in which it was agreed between [Ma, Yap and Chung] that [A&L Samoa] would be involved in setting up a new deal with Spinnaker to purchase the Spinnaker Rights.  [Ma, Yap and Chung] further discussed that a Cooperation Agreement would be entered into between Nation Field and [A&L Samoa] whereby [A&L Samoa] would receive a percentage of profits upon the successful purchase of the Spinnaker Rights.”  The Cooperation Agreement was then entered into on 26 December 2011.[26] 

26.  As Nation Field disputes this and Nation Field and A&L Hong Kong (which has joined in the Arbitration Proceedings)  contend that it was in fact A&L Hong Kong which was the party to the Cooperation Agreement, the Arbitral Tribunal has ordered that the issue of whether it was A&L Samoa or A&L Hong Kong which was the counter-party to Nation Field under the Cooperation Agreement to be tried as a preliminary issue on 17 to 28 March 2025 and 22 to 24 April 2025.[27]

27.  On 20 February 2024, the parties to the Arbitration Proceedings exchanged witness statements for the trial of the preliminary issue.  A&L Samoa has adduced 2 witness statements:

(a)  《盧永德的證人陳述書》 dated 20 February 2024[28] (“Lu’s Arbitration WS”)  ; and

(b)  《馬章凱的證人陳述書》 dated 20 February 2024[29] (“Ma’s Arbitration WS”).

28.  In Lu’s Arbitration WS, P has referred to and relied on the 2017 Lu Affirmation in §6 and also extensively repeated allegations which he had made in this Action in §§14(1), 15(1)-(3), 16-17, 35-42, 44, 51-54, 57, 62-64, 65(1), 65(3)  and 65(4)[30].

29.  In Ma’s Arbitration WS, Ma made allegations in §§14(1), 15-17, 101-102, 127, 130 and 135(1)[31] which repeated or were based on allegations made by P in this Action.

HCA 212/2021

30.  The plaintiff in this case was A&L Samoa and the defendant was Victory Mega, D8 in our Action.  The claims by A&L Samoa are similarly based on the Cooperation Agreement and premised on A&L Samoa being the counter-party to Nation Field under the Cooperation Agreement.

31.  P made an affirmation in Chinese 《盧永德的非宗教式誓詞》on 29 November 2023[32] which was filed by A&L Samoa in HCA 212/2021 against Victory Mega (“Lu’s 212 Affirmation”).

32.  In §§5, 11(3)-(6), 15 and 17 to 29 of Lu’s 212 Affirmation,  P made extensive references to the 2017 Lu Affirmation and has repeated the allegations he had made in this Action against the Settling Defendants and in particular D5.  Those allegations were also made to assist A&L Samoa in making claims and pursuing proceedings involving D2, D3 and D5.

33.  In that case, P took out an inter parte summons for an interlocutory injunction against D8 which was the only defendant in that case. On 11 February 2021, DHCJ Winnie Tsui (as she then was)  granted an interim mareva injunction up to the amount of RMB¥320,396,231.35 and adjourned the summons for substantive argument before her. She gave a written decision on the same day for granting the interim injunction (“the 2021 CFI Decision”).  In a lengthy decision dated 15 September 2023 given after a 4-day hearing where the defendant applied to discharge the interlocutory injunction, DHCJ Winnie Tsui, inter alia, dismissed the defendant’s application and allowed the interim mareva injunction (as amended)  to continue until trial or further order of the court (“the 2023 CFI Decision”).

34.  The defendant’s application for leave to appeal to the Court of Appeal (“CA”)  was also dismissed by DHCJ Winnie Tsui in a decision handed down on 13 March 2024 (“the 2024 CFI Decision”).

35.  The defendant’s applied to the CA by way of summons filed on 27 March 2024 seeking leave to appeal against the CFI Decision.  In a decision handed down by the CA on 25 July 2024, the defendant’s application was dismissed (“the CA Decision”).

36.  The CA acknowledged that the factual background to the case is “rather complicated” and referred the parties to the summary set out by DHCJ Winnie Tsui in the 2023 CFI Decision at §§20-109.

Background as highlighted by P

37.  Mr Ng in P’s Submissions also referred to the factual background set out in §§20-109 by DHCJ Winnie Tsui in the 2023 CFI Decision. 

38.  I agree with the CA’s comment that the factual background to this case is rather complicated.  I would also like to refer to the very comprehensive summary set out by the learned judge in the 2023 CFI Decision.   

39.  In addition to the above summary of facts made by Mr Yan SC in the Applying Defendants’ Submissions, Mr Ng highlighted the following facts in P’s Submissions. It can be seen that the emphasis made by P on the factual background is quite different from that of the Applying Defendants. It is worth setting them out here to see the difference.

40.  On 23 June 2017, Au J (as he then was)  granted an interlocutory injunction was in favour of P against Million Victory (D7)  and Victory Mega (D8), which inter alia restrained D8 from dealing with or disposing of 35 sets of Direct Creditor’s Rights (直接債權)  with a face value of RMB¥ 2,455,273,911.30 in Guangdong International Trust and Investment Corporation (廣東國際信託投資公司)  (“GITIC”), which was adjudged bankrupt in Mainland China in 2003 (the “35 Direct Creditor’s Rights”)  (which are set out in Schedule 4 therein)  (the “Injunction Order”).

41.  P’s application for the interlocutory injunction was supported by his 1^st Affirmation dated 23 June 2017 (“Lu’s 1^st Aff”), which sets out the relevant background of this Action. In particular:-

(a)  P’s complaint against D7 and D8 was that his share of the rights/assets in GITIC was wrongfully divested by Nation Field (the 1^st respondent in the Arbitration), which held his share of such rights/assets as trustee for and on his behalf, to D7 and D8 with a view to defrauding P as a beneficial owner of such rights/assets; and

(b)  P’s complaint against D5 was that D5 was the mastermind of the conspiracy to injure P through his nominees D4 Ng Chok Lung, the sole shareholder and director of Nation Field since 9 November 2016, D6 Luo Yibing, the sole shareholder and director of D8.

42.  On 26 June 2017, P commenced the present Action. On 20 September 2017, P filed the SOC in this Action.

43.  After the making of the Injunction Order and the filing of the SOC, none of the defendants chose to defend the Action or adduced any evidence to rebut the serious allegations made by P against them in Lu’s 1^st Aff and the SOC. On the contrary, the defendants chose to enter settlement negotiations with P.

44.  In this connection, as DHCJ Winnie Tsui has observed at §17 of the 2021 CFI Decision, which the learned judge reiterated at §192 of the 2023 CFI Decision: -

“Sixth, [Victory Mega] adduced no evidence to rebut the above suggestions. In the end, settlement was reached in that action and the settlement terms would appear to be to the effect that the assets alleged to be owned by Mr Lu were to be returned to him. They were in fact subsequently returned to him. This seems to reinforce the conclusion that there was a wrongful and fraudulent appropriation of assets from the rightful owner by Nation Field and [Victory Mega].” (emphasis added)

45.  On 27 September 2017, the Settlement Agreement was made between P, D2, D3, D4, D5, D6, D7 and D8. Despite the fact that the sole basis of Applying Defendants’ application is their allegation that P had purportedly breached §§14 and 15 of the Settlement Agreement, P says it is inexplicable that D5 intentionally refrained from exhibiting the Settlement Agreement in Hong’s 1^st Aff [33] but merely recited certain paragraphs thereof in §6 of Hong’s 1^st Aff, thus precluding the court from construing §§14-15 in the context of the Settlement Agreement as a whole.

P’s additional comments on HCA 212/2021

46.  On 4 February 2021, A&L Samoa commenced the HCA 212/2021 Action against Victory Mega by issuing a writ of summons and applied for interlocutory injunction by way of an inter-partes summons against Victory Mega (“the 212 Injunction Summons”). On the same day, A&L Samoa filed the 1^st affirmation of Ma Zhangkai (“Ma’s 212 1^st Aff”)  in support of the application.

47.  On 11 February 2021, having heard submissions from counsel, the Court granted an interim mareva injunction in favour of A&L Samoa against Victory Mega, retraining it from dealing with or disposing of its assets up to the sum of RMB¥320,396,231.35 (“the 212 Injunction”)  and adjourned the 212 Injunction Summons for substantive argument. On 11 February 2021, the court handed down the 2021 CFI Decision giving the reasons for granting the 212 Injunction.

48.  On 28 April 2021, A&L Samoa filed the statement of claim in the 212 Action (the “212 SOC”). The gist of A&L Samoa’s claims against Victory Mega is as follows:

(a)  A&L Samoa’s claims arise from a Cooperation Agreement (《合作協議》)  entered into between A&L Samoa and Nation Field)  on 26 December 2011 (the “Cooperation Agreement”). A&L Samoa claims against Victory Mega for, among other things, (1)  conspiracy with Nation Field to injure A&L Samoa by unlawful means, and (2)  procuring or inducing Nation Field’s breach of the Cooperation Agreement.

(b)  A&L Samoa’s case is that there was an asset stripping exercise (the “Asset Stripping Exercise”)  which took place in about January 2017, in which Nation Field and Victory Mega conspired together to unlawfully dispose of the 35 direct creditor’s right held by Nation Field as trustee to Victory Mega without A&L Samoa’s knowledge or consent. The purpose was to denude Nation Field of the ability to honour its obligations under the Cooperation Agreement and to prevent A&L Samoa from recovering the “Recovery Returns Share”, which is a percentage of profits to be received by A&L Samoa after amounts were distributed by the liquidation unit of GITIC to the rights holder.

(c)  A&L Samoa’s case is that Hong (ie D5 herein)  was the mastermind behind the Asset Stripping Exercise and that Luo (ie D4 herein)  and Ng (ie D6 herein)  were merely acting as his nominees.

(d)  Victory Mega’s purported defence is that the transfer of the direct creditor’s rights in about January 2017 was genuine commercial transaction. In particular, it was alleged that on 30 December 2016, Nation Field and Victory Mega entered into a purported agreement titled 「債權轉讓協議」 for the　purchase of the said direct creditor’s rights for the consideration was about RMB 118 million (the “Alleged Assignment Agreement”).

(e)  A&L Samoa’s case is that the Alleged Assignment Agreement is a sham, and that there is evidence that shows that the alleged payments made by Luo (on behalf of Victory Mega)  to Ng (on behalf of Nation Field)  in fact formed part of a series of circular fund transaction, the net effect of which was that no consideration was in effect paid by Victory Mega to Nation Field at all.

49.  The substantive argument of the 212 Injunction Summons took place before DHCJ Winnie Tsui on 11 August 2011, 20 September 2011, 21 September 2021 and 6 December 2022. On 15 September 2023,  the learned judge handed down the 2023 CFI Decision whereby she (1)  ordered the 212 Injunction to be continued until trial or further order; (2)  dismissed Victory Mega’s application to discharge the 212 Injunction; and (3)  dismissed Victory Mega’s application to adduce new evidence after the hearings.

50.  P says that the following observations of the learned judge in the 2023 CFI Decision are particularly pertinent:

(1)  At §107:

“The [bank] statements appear to show a pattern whereby during the period from 3 to 9 January 2017, funds would first be transferred from individuals whom the plaintiff says are associated with Hong (eg his wife and relatives)  to Luo’s account. Luo would then pay the funds to Ng. But within the same day or shortly afterwards, Ng would transfer the funds back to individuals associated with Hong: Furthermore, those funds would go through the same cycle again, ie from Hong’s associates to Luo, then from Luo to Ng, and then from Ng to Hong’s associates. The purpose of these transactions would appear to be to create the façade that there were real payments made by Luo to Ng when in fact there were not and no real money changed hands between the two of them.” (emphasis added)

(2)  At §201:

“What is striking here is that the defendant did not even try to put forward any evidence to rebut the allegation concerning the circular fund transactions…” (emphasis added)

(3)  At §202:

“…I can safely conclude that [Alpha & Leader] has made out—a good arguable case on the Asset Stripping Exercise” (emphasis added)

51.  On 13 March 2024, the learned judge handed down the 2024 CFI Decision in which she dismissed Victory Mega’s application for leave to appeal against the 2023 CFI Decision, on the basis that none of the proposed grounds of appeal raised by Victory Mega had any real prospects of success.

52.  On 25 July 2024, the CA handed down the CA Decision in which the CA also dismissed Victory Mega’s application for leave to appeal against the 2023 CFI Decision. In particular, the CA observed that Victory Mega’s application was “wholly without merit”: (See §34, CA Decision).

DISCUSSION

The Summons

53.  The Summons issued by the Applying Defendants herein is rather unusual.  In my experience, it is not common for a party to seek a permanent injunction order by way of an interlocutory application.  Whether a permanent injunction will be granted in a case usually will be dealt with at the trial and decide by the court at the end of the trial, after hearing oral evidence from witnesses and submissions from parties, with the opportunity for the parties to cross-examine the other side’s witnesses and test their evidence.

54.  Further, it has not been stated under which particular provision of the Rules of the High Court (“RHC”)  the Summons was based on as in the margin of the Summons it merely cited “Inherent Jurisdiction” but none of the rules of the RHC.  It is clear that it is not an application for an interlocutory injunction as Order 29 of the RHC was not mentioned nor was the order sought on an interim basis up to a certain time only, like the return day or further order of the court. On the other hand, it has not been mentioned in the Summons that the Applying Defendants are seeking for an injunction, let alone a permanent injunction as the word “injunction” was never mentioned or used.

55.  It was only at the hearing before me that Mr Yan SC confirmed that he is seeking a permanent injunction against P under the Summons, based on the breach of Clauses 14 & 15 of the Settlement Agreement.

Applicable legal principles  

56.  It is well established that the terms of settlement embodied in the schedule to a Tomlin Order may be enforced by making an application to the court by way of summons, no fresh separate action is required to be taken out: Luk Por v Chau Kim Hung HCA 10369/1997, unreported, (8.10.2003: Reyes J)  at §§7-11 and The Incorporated Owners of Hoi To Court v Chinluck Properties Limited [2006] HKCFI 1003, per Chu J at §15.

57.  In Luk Por, Reyes J in rejecting an argument of the defendant that the plaintiff in that case ought to have started a fresh action for breach of contract evidenced by the schedule to the consent order, the learned judge had this to say §§8-10:

“8. Agreed terms scheduled to a Tomlin order do not form part of the order. One consequence of this is that the failure to observe a scheduled term does not constitute a contempt of court. But this does not mean that it is necessary to start a new action to enforce a scheduled term.

9. In E F Phillips & Sons Ltd v. Clarke [1970] Ch 322 Goff J stated:-

There is no express authority that a Tomlin order can be enforced by an application in the same action. It is clearly settled by Dashwood v. Dashwood [1927] WN 276, that it cannot be enforced directly by committal proceedings; it is first necessary to obtain an order requiring the party in breach to perform his obligation under the compromise. But the question is, can such an order be obtained in the original action?

In the absence of authority I would have thought it clearly could have been even where, as in the present case, a compromise goes outside the ambit of the original action, which compromises often do, because it is part of the form of order that the proceedings are not absolutely stayed but are stayed except for the purpose of carrying the terms in effect, and liberty to apply as to carrying the terms into effect is expressly reserved.

...

That being so, in my judgment it is not an authority for the bald proposition stated in Daniell’s Chancery Practice which I have read.  In my judgment provided an order is in the normally appropriate form with a qualified stay and a liberty to apply, and provided the application is strictly to enforce the terms embodied in the order and the schedule, and does not depart from the agreed terms, an order giving effect to the terms may be obtained under the liberty to apply in the original action, notwithstanding the compromise itself goes beyond the ambit of the original dispute and the provision sought to be enforced is something which could not have been enforced in the original action and which, indeed, is an obligation which did not then exist but arose for the first time under the compromise.”

10. Goff J’s criteria enabling enforcement of scheduled terms in an original (as opposed to fresh)  action are all met in this case.  There is here a qualified stay with liberty to apply and the Plaintiff simply wishes to enforce the scheduled terms.”

58.  In The Incorporated Owner of Hoi To Court, Chu J (as she then was)  succinctly summarized the relevant principles regarding the application to enforce the terms of a Tomlin Order attached to a consent order at §§15-16 as follows:

“As note above, the plaintiff’s summons is to enforce the terms embodied in the Schedule to a Tomlin Order pursuant to the “liberty to apply” provision in the Order.  There is no need for the plaintiff to commence a new action to make the application: see Reyes J’s decision on the point in Luk Por v. Chau Kim Hung (unreported)  HCA 10369/1997, 8 October 2003, at paras.9-11.

Where, as in this case, a ground of opposition is raised, the court should decide whether the ground is arguable but the burden is no higher than that in a summary judgment application: Chan Yiu Sing Peter v. Lam Yat Wah [1990] 2 HKLR 92, 95I-96B.”

59.  Based on the above authorities, there is in my view no question that the Applying Defendants can apply to enforce the terms of the Schedule attached to the Consent Order by the Summons.  There is no need for them to start a new separate action to do so.

60.  Having said that, as it is an application for an injunction, which is on equitable relief, I consider that all the rules regarding granting such an equitable relief must be satisfied, particularly when it is being sought on a permanent basis.   

The Applying Defendants’ grounds of application

61.  As noted above, P has referred to and relied on the 2017 Lu Affirmation and has also extensively repeated allegations which he had made in this Action in Lu’s Witness Statement.  In so doing, the Applying Defendants say that he has clearly acted in breach of §14 of the Settlement Agreement.

62.  Further, as noted above, Ma made allegations in the Ma’s Witness Statement which repeated or were based on allegations made by P in this Action.  Ma’s source of information for making these allegations was clearly P.  Further, as is clear, for example, from §§123, 129-131 and 135(1)  of the Ma’s Witness Statement, which make accusations against D5 in the Arbitration Proceedings.  According to the Applying Defendants, P is accordingly providing information to or assisting A&L Samoa in making claims and pursuing proceedings involving D5 in respect of matters arising from this Action in breach of §15 of the Settlement Agreement.

63.  Further, as noted above, in Lu’s 212 Affirmation, P has made extensive references to the 2017 Lu Affirmation and has repeated the allegations he had made in this Action against the Settling Defendants and in particular D5.  The Applying Defendants say that those allegations were also made to assist A&L Samoa in making claims and pursuing proceedings involving D2, D3 and D5 in respect of matters arising from this Action.  P has accordingly acted in breach of §§14 & 15 of Settlement Agreement.

64.  In this Decision, I shall first deal with the issue of (A)  whether there was any breaches of the Settlement Agreement on the part of P; and then (B)  whether any of the objections raised by P listed out above by Mr Ng in P’s Submissions and in Lu’s 2^nd Aff is valid and have the effect of frustrating what the Applying Defendants are seeking under the Summons.

(A)  Whether there was any breaches of the Settlement Agreement by P

65.  In my judgment, there is no doubt that P was in breach of Clauses 14 and 15 of the Settlement Agreement.

66.  No matter what was the true reason or reasons behind the defendants in settling the Action with P, the fact is that P and the defendants had settled the matter just 7 days after the filing of the SOC. 

67.  The Settlement Agreement appears to be a legal document which has been carefully drafted by lawyers.  It consisted of 5 pages and 21 paragraphs, setting out fully the terms and conditions of the settlement between P and D2 to D8.  They were signed and executed on the same day before their own respective solicitor.  

68.  Clause 13 makes it clear that the settlement was made on a “without admission of any liability in respect any cause of action, claim, issue or matter raised in this Action” between P and the defendants. 

69.  Under Clause 14, P undertakes not to repeat, procure the repetitions, or authorize the publication to any person of, any allegation or claims made by him on this Action “or otherwise in any way” related to this Action. In my view, in return to the considerations provided by the Settling Defendants under the Settlement Agreement, P must be fully aware what this undertaking means.  It is not only confined to the acts of himself in repeating or publishing the allegations made by him against the Settling Defendants in this Action, it goes further in prohibiting P from procuring or authorizing other people in repeating or publishing the same allegations,  In other words, what he cannot do himself, he promised that he would not get someone else to do it on his behalf.

70.  The effects of Clause 15 is similar in that P undertakes not to provide information to, or in any way assist, any third party in making any claim, or in pursuing any proceedings, involving D2, D3 and/or D5 “in respect of any matter arising from this Action.”

71.  On balance, I am satisfied that in Lu’s Arbitration WS exchanged in the Arbitration Proceedings, by referring to and relied on the 2017 Lu Affirmation and by extensively repeated the allegations which he had made in this Action in the paragraphs identified by Mr Yan SC in D’s Skeleton (as listed out in §28 hereinabove), P was in breach of Clause 14 of the Settlement Agreement.  

72.  Further, I am satisfied that by allowing Ma to make the allegations in Ma’s Witness Statement as identified by Mr Yan SC in the Applying Defendants’ Submissions (as listed out in §29 hereinabove), P was in breach of Clauses 14 and 15 of the Settlement Agreement.

73.  Similarly, by making extensive references to the 2017 Lu Affirmation and repeated the allegations made in this Action in his Chinese affirmation filed in HCA 212/2021 on 29 November 2023, ie Lu’s 212 Affirmation, against the Settling Defendants and in particular D5, P was in breach of Clauses 14 & 15 of the Settlement Agreement.

74.  In the aforesaid premises, I am satisfied that P was in breach of Clauses 14 & 15 of the Settlement Agreement.  

75.  However, just because there are breaches to the terms of a Tomlin Order does not mean that a claimant is automatically entitled to equitable relief like that of an injunction or specific performance, particularly when damages will be an adequate remedy in the case.  Hence, it is important to examine the grounds of objections raised by P in this application.  

(B)  P’s Grounds of Opposition

76.  P opposes the present application principally on the following grounds:

(a)  The Applying Defendants’ alleged unexplained delay in making the present application / no irremediable prejudice/damages: Lu’s 2^nd Aff §§34-37[34].

(b)  The Applying Defendants’ application is allegedly futile: Lu’s 2^ndAff §§38-44[35].

(c)  The injunction sought would allegedly have the effect of debarring the Court and Arbitral Tribunal from ascertaining the truth and prohibiting A&L Samoa from calling P to give evidence as a witness, which is a serious matter and is detrimental to the administration of justice: Lu’s 2^ndAff§45[36].

(d)  No breach of Settlement Agreement: Lu’s 2^ndAff §§46-49[37].

(e)  No damages alleged or proved / damages are an adequate remedy: Lu’s 2^ndAff §§50[38].

77.  I shall examine each of the above grounds that can be found in Lu 2^nd Aff and P’s Submissions.  They were supplemented by the oral submissions made by Mr Ng on behalf of P during the hearing before me. 

(a)  Inordinate delay / No irremediable prejudice/damage

(i)  Inordinate delay

78.  In P’s Submissions, there was “unexplained delay” on the part of the Applying Defendants in making the application.  Mr Ng cited passages from King Fung Vacuum Ltd & Ors v Toto Toys Ltd & Ors [2006] 2 HKLRD 785 and Wong Chung Ming Development Fund Co Ltd v Profit Surplus Ltd [2009] 3 HKLRD 514 to make the proposition that a party seeking an injunction must show that it acted promptly and without delay.  Similarly, in Lu’s 2^nd Aff §§34-37, P also referred to the alleged inordinate delay and irremediable prejudice.  

79.  While both of the passages relied on by Mr Ng dealt with interlocutory injunction and not permanent injunction, I consider the principle mentioned therein also apply to our present Action.

80.  In King Fung Vacuum Ltd, Rogers VP made the following observations at §20:

“20. There has traditionally been a strong requirement when interlocutory injunctions have been sought, that the plaintiff must show that it has acted promptly and without delay. Promptly in the circumstances of interlocutory injunctions has been commonly understood to be a period of six weeks or so of unexplained delay and three months with an explanation given for the delay in making application for an injunction. Since the American Cyanamid decision the importance of irreparable damage in an application for an interlocutory injunction is paramount. If there is no irreparable damage demonstrated then the need for an interlocutory injunction has not been shown. This is important because of the approach that the courts take to interlocutory injunctions. They are not the trial of the action and the court is concerned with whether irreparable damage will occur before a trial can take place. It stands to reason that if a party is prepared to allow matters to proceed and takes no action with respect to matters which have been extant for lengthy periods, it lies ill in their mouth to say that there is likely to be irreparable damage and that is the case here.” (emphasis added)

81.  In Wong Chung Ming Development Fund Co Ltd, Le Pichon JA applied King Fung Vacuum and stated at §§30-31:

“30. That statement is a rule of thumb that has been used as a guide for many years. As Oliver J, as he then was, said in Radley Gowns Ltd v Costas Spyrou [1975] FSR 455 at p.469, the court does not countenance a ‘leisurely stroll to the court door’ if a party seeks an interlocutory injunction. The question of delay is relevant when considering the question of irreparable damage because a party seeking an injunction is unlikely to stand by for any period of time if the party against whom the injunction is sought is truly causing serious and irreparable damage. Delay in seeking relief may also cause prejudice to a party against whom the injunction is sought because that party may have altered its position in the intervening period and be prejudiced by reason of the delay.

31. The date from which the period runs is the date on which the person seeking an interlocutory injunction knew or ought to have been aware that interlocutory relief would be required in order to prevent what is said to be irreparable damage.” (emphasis added)

82.  While the Applying Defendants are not applying for an interlocutory injunction, in my view, what they are seeking is of a more draconian nature than that.  The reason being that, if granted, they will have the effect of forever gagging P from saying those things that they are now trying to restrain him or Ma to say without having to go to trial to argue over those matters anymore.  Also, they would have prevented P from raising those matters at the Arbitration Proceedings.  Hence, all the more, the court should be slow in granting the injunction unless there are good explanations for any inordinate delays.

83.  Under such circumstances, I consider that it is important to look at whether there was any inordinate or unexplained delay on the part of the Applying Defendants in taking out the application.

84.  It is not in dispute that Lu’s 212 Affirmation although made on 29 November 2023, in fact was signed by him and relied upon by A&L Samoa in HCA 212/2021 action as early as on 29 July 2021, which was more than 3 years before the Summons was taken out on 30 July 2024.  As Lu explained in his 2^nd Affirmation filed in opposing the Summons, at the time of signing the Lu’s 212 Affirmation in July 2021, he was unable to formally make the affirmation due to the strict travel restrictions in the Mainland imposed during Covid-19.  It is not disputed that the same practice was adopted by affirmants of both parties in HCA 212/2021.

85.  I agree with Mr Ng that if the Applying Defendants had any complaints about the contents of Lu’s 212 Affirmation, they could have raised them at the time.  They have not explained why it had taken them 3 years to do so.

86.  More significantly is the fact that the application for a permanent injunction under the Summons in this case was only made after DHCJ Winnie Tsui had made the very significant and damaging factual findings in the 2023 CFI Decision against the Applying Defendants.  They included the very damning finding that D8 (as the sole defendant in HCA 212/2021), together with the other Applying Defendants, ie D4, D5 & D6, are all individuals linked to and involved in the “Asset Stripping Exercise” complained by A&L Samoa in that action: See §§107, 201 and 202 of the 2023 CFI Decision.

87.  Again, the Applying Defendants have not explained why they had not applied for the permanent injunction before DHCJ Winnie Tsui in HCA 212/2021.  Nor had they explained why they did not do so before July 2024 in the present application.

88.  As for Lu’s Arbitration WS, in my view, it will be artificial for the court to grant an injunction to prohibit him from repeating or mentioning those things that the Applying Defendants are trying to restrain him to do.  The reason being that, firstly, A&L Samoa had already informed the Arbitral Tribunal on 18 January 2023 (which is more than 2 years ago), that it will call Lu as a witness at the trial of the proposed preliminary issue; and secondly, Lu’s Arbitration WS was filed on 20 February 2024 which was almost 6 months before the Summons was taken out. There is no doubt that the members of the Arbitral Tribunal have already read Lu’s Arbitration WS and are familiar with the contents.  In my judgment, to grant a permanent injunction now will achieve little other than to give the Applying Defendants a significant tactical advantage in the Arbitration Proceedings.

89.  Further, I agree with Mr Ng that the Applying Defendants have completely failed to explain the delay in D5’s 1^st Aff filed in support of the Summons and Hong’s 2^nd Aff in reply to Lu’s 2^nd Aff specific mention of D5’s failure to give any explanation for the significant delay in taking out the Summons.  The court can only infer that the complete lack of explanation of the substantial and inordinate delay is because there was simply no justifiable explanation.  As the Applying Defendants are asking the court to grant them an equitable remedy and exercise a discretion in their favour, I consider that it is incumbent for them to come up with some good explanations as to why the injunction should be granted at this stage despite the significant and inordinate delay.  In my view, the golden rule that those who come to equity must come with clean hands must apply in our case.

90.  Mr Yan SC submits that P has mistakenly understood that P’s application is one for an interlocutory injunction when P’s application is one to enforce the terms of a Tomlin Order.

91.  Mr Yan SC submits that as held by Chu J (as the VP then was)  in The Incorporated Owners of Hoi To Court at §22, inordinate delay does not give rise to a defence in an application to enforce the terms of an agreement, therefore the point raised by Mr Ng in relation to delay would not apply in the Applying Defendants’ application.  In his submission, what the defendant needs to demonstrate is that the applicant to enforce the terms had by conduct or representation unequivocally abandoned its rights so as to amount to a waiver.  Similarly, he submits that the CA has, in Large Land Investment Limited v Cheung Siu Kwai [2003] 1 HKLRD 313 at §15(4)  (which was cited and followed by the court in The Incorporated Owners of Hoi To Court), held that a party will only be held to have elected to abandon his rights “if he has so communicated his election to the other party in clear and unequivocal terms”. As there was no such communication on the part of the Applying Defendants to P of their election to waive their rights under the Settlement Agreement, therefore they cannot be said to have abandoned their rights.

92.  In my view, the dicta relied on by Mr Yan SC in The Incorporated Owners of Hoi To Court case does not apply in this case as Chu J (as she then was)  referred to whether “delay simpliciter” could give rise to an arguable defence to the action before her, it was not stated in the context of an application for injunction, whether an interlocutory or permanent one.  

(ii)  Irreparable damage   

93.  In Wong Hing Cheong v Wan E Investment Ltd [2002] 2 HKLRD 175, Rogers VP at §28 stated the following:

“… As already indicated, in view of the lengthy period which had occurred from the commencement of the acts complained of up until the application for the interlocutory injunction, any averment as to irreparable damage is doomed to failure. Indeed, no attempt was made in the evidence to show any irreparable damage…” (emphasis added)

94.  While I appreciate the fact that the learned judge stated the above in the context of an application for interlocutory injunction, I am of the view that it will equally apply in the situation of an application for a permanent injunction.

95.  Despite this issue has been specifically raised by P in Lu’s 2^nd  Aff, D5 in his affirmation in opposition has completely failed to deal with why in his or other Applying Defendants’ view that they will suffer any irreparable damages if the injunction is refused.  In my view, it is difficult to see how they would suffer any such irreparable damage given the significant lapse of time between the filing of Lu’s 212 Affirmation and Lu’s Arbitration WS.

96.  For the above reasons, I find that there was an unexplained and inordinate delay on the part of the Applying Defendants in applying for the injunction. They have also failed to establish they would suffer irreparable damage if the injunction sought is not granted.

97.  On this ground alone, I do not think the court should exercise its discretion and grant the permanent injunction that the Applying Defendants are now seeking for.  

(b) Futility of the Applying Defendants’ application

98.  P contends that the Applying Defendants’ application is futile because :-

(a)  the judge who granted the interlocutory injunction in HCA 212/2021 and the CA which considered the application for leave to appeal against such grant had already considered Lu’s 212 Affirmation; and

(b)  the members of the Arbitral Tribunal had already considered Lu’s Arbitration WS and Ma’s Arbitration WS.

99.  Mr Ng’s futility arguments as stated in his written submissions can be briefly summarised as follows.

100.  He submits that equity does not act in vain and will not grant an injunction which is futile: See Chan Shu Chun v Right Margin Ltd [2015] 3 HKLRD 409 per Recorder Linda Chan SC (as she then was)  at §23; Re Chan Cham Wong Patrick (a bankrupt) [2016] 2 HKLRD 278 per Ng J at §24; and Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81 per Lam VP (as he then was)  at §78.

101.  Insofar as HCA 212/2021 is concerned, Mr Ng submits that DHCJ Winnie Tsui had already considered Lu’s 212 Affirmation when reaching her decision to continue the injunction granted in favour of A&L Samoa against Victory Mega (D8 herein)  back in 2021.  She made extensive reference to that affirmation both in the 2023 CFI Decision and the 2024 CFI Decision.  Further, the CA also observed that Lu had made that affirmation which the CA had considered and relied upon in the CA Decision.

102.  In addition, Mr Ng submits it is important to note that throughout the HCA 212/2021 action, D8 had never once objected to the filling of that particular affirmation or the contents thereof.  It had also never alleged that in filing Lu’s affirmation, he had purportedly breached §§14-15 of the Settlement Agreement. 

103.  Since the affirmation had already been duly considered and relied upon by DHCJ Winnie Tsui in reaching the 2023 CFI Decision and the 2024 CFI Decision and by the CA in the 2024 CA Decision, Mr Ng submits that any attempts on the part of the Applying Defendants to prohibit P from giving evidence in HCA 212/2021 along the lines of his affirmation would be futile and the injunction sought should not be granted.

104.  Similarly, Mr Ng submits that after Lu’s Arbitration WS was made, all members of the Arbitral Tribunal had duly considered the same.  As can be seen from their fee notes, they had “reviewed the papers filed by the parties” and “perused witness statements filed by the parties”.  Mr Ng submits that this must include Lu’s Arbitration WS and Ma’s Arbitration WS.  

105.  Mr Yan SC submits that P’s contention is wholly misconceived due to the following reasons:-

(a)  The injunction granted in HCA 212/2021 was granted on an interlocutory basis.  The action will still need to proceed to a trial.  The relief sought by the Applying Defendants will prevent P from repeating at the trial the allegations and claims he had made in the present Action and from assisting A&L Samoa in making the claims involving D2, D3 and D5 at the trial in respect of any matter arising from this Action.

(b)  Similarly, the relief sought by the Applying Defendants will prevent P from repeating at the forthcoming trial of the preliminary issue the allegations and claims he had made in the 1501 Action when he testifies.  These will therefore not be testimony before the Arbitral Tribunal. P will also be restrained from continuing to assist A&L Samoa in making the claims involving D2, D3 and D5 in the Arbitration Proceedings.

(c)  It is therefore clear that the Applying Defendants’ application is not futile.

106.  On this issue, I prefer the submissions made by Mr Ng. 

107.  First, in my judgment, whether the present injunction is an interlocutory or permanent one, it is still an equity relief the Applying Defendants are seeking and the rules of equity should apply, including the rule that equity does not act in vain.  

108.  Second, insofar as HCA 212/2021 is concerned, I think it is an undeniable fact that DHCJ Winnie Tsui not only had made extensive reference to Lu’s 212 Affirmation, she had actually relied on a lot of the contents from that document in reaching her findings: see for example §§25-28, 67, 104-105 & 193 of the 2023 CFI Decision.  The learned judge repeated this in the 2024 CFI Decision when she refused leave to D8 (as the only defendant in that case): see §§29-33 of the 2024 CFI Decision.  It is important to note that while the learned judge made no factual finding on why the present Action was settled, she treated “what had happened” as a relevant piece of evidence in evaluating A&L Samoa’s case.  Similarly, the CA in §§23 & 24 of the CA Decision also referred to Lu’s 212 Affirmation.  The CA specifically found in §24 that the learned judge did not err in taking into account of Lu’s 212 Affirmation when considering A&L Samoa’s case on the “asset stripping exercise, and in particular, on the circumstances of the Transfer, which is the central plank of the plaintiff’s case”.  

109.  In my view, there are 2 comments made by the CA which is of particular relevance in deciding whether an injunction should be granted in this case.  First, as the CA has noted in §2 of the 2024 CA Decision:

“As observed by the Judge, the substantial factual disputes in this matter can only be resolved at trial when oral evidence is to be adduced and cross-examined and the parties’ cases tested. (Decision [12])”.

110.  Second, in §8 of the same Decision, the CA state the following:

“It is of note that regarding the Transfer, in the separate action of HCA 1501/2017, Mr Lu claims against, inter alia, Mr Hong and the defendant for conspiracy to defraud him of his beneficial interests in the creditors’ rights in GITIC held by Nation Field. (Decision [33])  Mr Lu and the defendant (among others)  reached a settlement, whereby it seems the assets were returned to Mr Lu. Neither Mr Hong nor the defendant came up with any evidence to refute the fraud allegations in that action. (Decision [66])” (emphasis added)

111.  In my judgment, it is not only futile (and artificial)  at this stage to bar P, who will no doubt be a main witness to the trial in HCA 212/2021 one day, to refer to those evidence when the contents of Lu’s 212 Affirmation had already been considered and relied on by both the CFI and CA in HCA 212/2021, it will be most unfair to A&L Samoa as plaintiff in HCA 212/2021 not to be allowed to rely on it when the case goes to trial.  D8 as well as the remaining Applying Defendants could have filed evidence and disputed the serious allegations of fraud made against them in this Action.  Instead, they choose to settle with P in the present Action within a short time and returned the assets to P.  The reasonable inference must be that they realized that they did not have an arguable defence in the case.  However, as the CA has observed, ultimately the substantial factual disputes in HCA 212/2021 can only be resolved at trail when oral evidence is to be adduced and witnesses to be cross-examined.  However, to impose a permanent injunction to effectively deprive the witness to say what he had already stated on oath by way of an affirmation (the contents of which had been relied on by DHCJ Winnie Tsui as the basis of granting an interlocutory injunction), in my judgment, will be wrong.

112.  To borrow the words of Ng J in Re Chan Cham Wong Patrick (a bankrupt) at §24 above, granting “an injunction would in effect be locking the stable door after the horse has bolted.”  In our case, figuratively speaking, the horse has bolted 3 years ago.  

113.  Similarly, for the Arbitration Proceedings, since Lu’s Arbitration WS and Ma’s Arbitration WS have already been provided to and considered by members of the Arbitral Tribunal, it is in my view futile (and artificial)  to grant an injunction under the Summons to prevent the relevant parts of those witness statements to be placed before the Arbitral Tribunal.

114.  Last but not least on this issue, I note that D8, as well as the other Applying Defendants, has never raised any objections to the filing of Lu’s 212 Affirmation in HCA 212/2021 at both CFI and CA levels.  They only raised this issue after DHCJ Winnie Tsui had ruled against it in the CFI 2023 and 2024 CFI Decisions and only after the CA had refused leave. In other words, the Applying Defendants had only raised this after D8 had exhausted all the potential appeal options before they raised this issue.

115.  It seems to me that this is a last-ditch and desperate attempt for the Applying Defendants to try to stop P from relying on the evidence he had set out in Lu’s 212 Affirmation as well as Lu’s Arbitration WS and Ma’s Arbitration WS.  What they had failed to do by filing evidence to dispute P’s claim in this Action, they now want to do so by way of a permanent injunction.  I do not think it is right for the court to allow them to do so.

116.  In my judgment, this is perhaps the strongest ground why the Applying Defendants’ application for a permanent injunction should be rejected.   

(c)  Detriment to the administration of justice

117.  Mr Ng at the beginning of P’s Submissions started with the serious allegation that “to seek to restrain a party from calling its witness and/or from giving relevant evidence to a court and an arbitration tribunal and to debar the Court and the arbitration tribunal from performing their primary duty of ascertaining the truth is a very serious matter and would be detrimental to the administrative of justice.”: See §2 of P’s Submissions.

118.  Mr Ng went on to develop this argument in the main body of P’s Submissions by referring to the below authorities.

119.  Mr Ng submits that it is well established that the primary duty of the court to ascertain the truth, and in this connection the court has a right to every man’s evidence. As Lord Denning MR held in Harmony Shipping Co. v Saudi Europe Line Ltd. [1979] 1 WLR 1380 at 1384 G-H:

“So far as witnesses of fact are concerned, the law is as plain as can be. There is no property in a witness. The reason is because the court has a right to every man's evidence. Its primary duty is to ascertain the truth. Neither one side nor the other can debar the court from ascertaining the truth either by seeing a witness beforehand or by purchasing his evidence or by making communication to him. In no way can one side prohibit the other side from seeing a witness of fact, from getting the facts from him and from calling him to give evidence or from issuing him with a subpoena.” (emphasis added)

At 1385B, Lord Denning MR further observed: -  

“That principle is established in the case of a witness of fact: for the plain, simple reason that the primary duty of the court is to ascertain the truth by the best evidence available. Any witness who has seen the facts or who knows the facts can be compelled to assist the court and should assist the court by giving that evidence.” (emphasis added)

120.  Mr Ng further submits that Harmony Shipping has been consistently applied by the courts in Hong Kong: -

(1)  In HKSAR v Egan (2010)  13 HKCFAR 314:-

(a)  Chan PJ(at §24)  stated: -

“As Lord Denning MR. said in Harmony Shipping Co SA v Saudi Europe Line Ltd [1979] 1 WLR 1380, 1384, ‘There is no property in a witness. The reason is because the court has a right to every man’s evidence. Its primary duty is to ascertain the truth.’ There is no general prohibition against approaching a witness or potential witness ‘from getting the facts from him and from calling him to give evidence (Lord Denning, 1384)  …”

(b)  Ribeiro PJ stated (at §132): -

“This is reflected in the principle that there is no property in a witness so that, as Lord Denning pointed out, neither party can ‘prohibit the other side from seeing a witness, from getting the facts from him and from calling him to give evidence or from issuing him with a subpoena”.

(2)  See also: Kwan Fung Kam v A-G [1990] 1 HKLR 760 at 762I-763E per Cons VP.   

121.  Therefore, Mr Ng submits, given that the injunction sought would adversely affect the administration of justice, it must be dismissed.  

122.  Furthermore, at §133 of Egan, Ribeiro PJ cited Connolly v Dale [1996] QB 120 (at footnote 77)  for the proposition that: -

“Indeed, the right to approach a witness for such proper purposes is protected by the courts treating as a contempt of court, any attempt to prevent a party or his lawyers from engaging in that process”. (emphasis added)

A fortiori, wh

A fortiori, Mr Ng submits, when a party has exercised their right to see a witness of fact, get the facts from him and call him to give evidence, any attempt by the opposing party or their lawyers to obstruct this right could constitute contempt of court. This power is crucial to uphold the integrity of the judicial process and ensure proper administration of justice. The Applying Defendants’ application places the court in an impossible position and must also be dismissed on this additional ground.

123.  I am not sure if I can follow Mr Ng’s argument on this.  I do not think the Applying Defendants are trying to prohibit A&L Samoa from calling P as a witness in HCA 212/2021 or P and Ma as witnesses in the Arbitration Proceedings by the present application.  My understanding is that they are seeking to debar P from repeating the allegations and claims made by him in this Action or otherwise in any way related to this Action from providing information to or in any way related to this Action and assisting A&L Samoa in making any claims.  

124.  In any event, in my view, the relief sought by the Applying Defendants would not debar the court or the Arbitral Tribunal from ascertaining the truth or prohibit A&L Samoa from calling P as a witness in HCA 212/2021 or P and Ma as witnesses at the Arbitration Proceedings.  If successful, it would only debar P from repeating the allegations and claims made by him in this Action or otherwise in any way related to this Action and from providing information to or in any way assisting A&L Samoa in making any claim involving the D2, D3 and/or D5 in respect of any matter arising from this Action. 

125.  Hence, I do not find it has anything to do with the primary duty of the court to ascertain the truth as put forward so forcefully by Mr Ng at all.  Of course, it is the primary duty of the court to ascertain the truth by the best evidence available, but the Applying Defendants are not trying to debar P and/or Ma to act as witnesses in the trial of HCA 212/2021 (should it happens one day)  or the Arbitration Proceedings.  They just want to restrain them to give evidence on those matters that P had agreed under the Settlement Agreement not to repeat.

126.  I do not think the proposed injunction, if granted, would have the effect of baring the court or the Arbitral Tribunal from ascertaining the truth or that it would be detrimental to the administration of justice.

127.  Thus, I do not think this ground of objection relied on by P is valid.  

(d)  No breach of the Settlement Agreement

128.  I have already dealt with this ground at §§65-75 above. I will not repeat them here. 

(e)  No damages alleged or proved / damages are an adequate remedy

129.  The last major ground of objection which P is relying on is the trite principle that if damages would be adequate, then no injunction should be granted: See Wong Chung Ming Development Fund Co Ltd v Profit Surplus Ltd [2009] 3 HKLRD 514 at §17 per Le Pichon JA, applying American Cyanamid Co v Ethicon Ltd [1975] AC 396 at p 408B-C per Lord Diplock.

130.  Mr Ng submits that even if P had breached Clauses 14 & 15 of the Settlement Agreement (which P denies), the injunctive relief should not be granted in any event because (1)  the Applying Defendants did not suffer any damage; and (2)  even if they do, damages would be an adequate remedy and therefore an injunction should be refused.  

131.  Despite P has raised this matter in Lu’s 2^nd Aff at §50, D5, the alleged mastermind behind the “Asset Stripping Exercise”, did not respond to this issue in his 2 affirmations filed in support of the Summons at all.  D5 was completely silent on what alleged damage the Applying Defendants would suffer if there was indeed a breach of the terms of the Settlement Agreement.  More importantly, he did not explain why damages would not be adequate as a remedy in this case, particularly having taking into consideration the fact that what the Applying Defendants are trying to restrain P to do is something that had already been done and dealt with by the CFI and CA in their decisions.

132.  Mr Yan SC’s reply to this is P and his legal advisors have misunderstood the nature of the Applying Defendants’ application in that it is not an application for an interlocutory injunction but rather an application to enforce the terms of the Settlement Agreement as annexed to a Tomlin Order: (see §48 of D’s Submissions).  He submits therefore it is no answer to the Applying Defendants’ application that they have not alleged that they have suffered any damage or that damages would not be an adequate remedy.

133.  I am afraid I do not agree with Mr Yan SC’s submissions on this. 

134.  In my view, the Settlement Agreement, whether it is contained in a Tomlin Order or not, is still a contract between the parties who entered into it.  Damages are usually considered as adequate remedy for breach of the terms of a contract: See One Step (Support)  Ltd v Morris-Garner [2019] AC 649 at §§33-35 per Lord Reed; China Tender Ltd & Another v Lam Chun Mui & Ors, HCA 151/2008, unreported (17.3.2008; Reyes J at §§3-31.

135.  Mr Yan SC submits that China Tender Ltd can be distinguished from our present case because it involved the plaintiffs seeking for interim orders, pending trial, restraining the defendants from doing certain acts, ie an interlocutory injunction rather than a permanent one. 

136.  With respect, I do not see why there should be any difference.  If there was any breach of Clause 14 & 15 of the Settlement Agreement  (which as I found above there was), then the remedy must lie in damages unless the claimant can demonstrate to the court why damages would not be adequate and other remedies like specific performance or injunction are necessary in its place.  In this case, I did not hear from the Applying Defendants in saying why in their view damages will not be adequate and an injunction must be granted in its place.  

137.  I therefore would reject the Applying Defendants’ application for a permanent injunction on this ground also.  

CONCLUSION

Disposal of the Summons

138.  In the aforestated premises and for the reasons stated above, I would dismiss the Summons with costs in favour of P (save for the costs mentioned below), with certificate for two counsel. 

139.  The costs will be summarily assessed by the court with the direction that P would lodge its statement of costs within 7 days after the handing down of this decision with copy served on the Applying Defendants and the Applying Defendants would lodge their list of objections, if any, within 7 days thereof with copy served on P.  The court will make the summary assessment by way of paper disposal.

Other Issues

140.  There are other issues raised by Mr Ng under P’s Submissions, including the allegation that as the present application taken out so late in the day, particularly after the 2023 & 2024 CFI Decision and the CA Decision, it would amount to a “collateral attack” by the Applying Defendants and “constituted an impermissible attempt to overturn those Decisions and an abuse of process of the Court.”: See §70 of P’s Submissions. 

141.  With respect, I do not agree and find nothing of the sort.  However, given my conclusion on the main grounds of objection above, I do not need to make any specific findings on this. 

142.  There are also other minor issues raised and a lot of authorities have been referred to in making different propositions by Mr Ng.  However, I do not think they are helpful to assist me in disposing of the real issues in the application.  I do not intend to deal with them here.  I consider the above discussion on the main grounds of objection and my conclusion on them would be sufficient to dispose of the matter.

P’s Further Evidence Summons and the hearing on 7 November 2024

143.  The original date fixed for the substantive hearing of the Summons was on 7 November 2024 with one day reserved. That was pursuant to the Order made by DHCJ Phoebe Man on 9 August 2024.  Directions have been given under the Order for P to file and serve his further affirmation in opposition to the Summons first, then for the Applying Defendants to file and serve their affirmation in rely, if so advised.  There was a specific direction that no further affirmation evidence to be filed without leave of the court under the Order.

144.  D5 filed his affirmation in reply to Lu’s 2^nd Aff on 27 September 2025.  That normally should be the end of the round of evidence in such application. 

145.  However, quite out of the blue and without any prior notice to the Applying Defendants, P suddenly took out a summons on 25 October 2024 returnable on the same day of the scheduled hearing of the Summons on 7 November 2024 before me to apply to adduce the 3^rd affirmation of P (which is 22 pages long), together with exhibits (which consisted of more than 300 pages of documents)  (“the New Evidence Summons”).  That was almost a month after D5 had filed his affirmation in reply.

146.  Not only there was no application to the court for leave to file and serve the 3^rd affirmation of P (and the voluminous new evidence attended to it)  prior to the hearing scheduled for the substantive argument of the Summons on 7 November 2024, P tried to put the blame on the Applying Defendants for not opposing to the New Evidence Summons earlier. [39]

147.  What made things worse was P’s Counsel had faxed in a 10- page written submissions to the clerk of this court at 8:44 am in the morning of the scheduled hearing on 7 November 2024, with the heading of “P’s Skeleton Submissions in Reply to D4/5/6/8’s Skeleton Submissions in opposition to P’ Summons dated 25.10.2024 (P’s Further Evidence Summons”).  That was of course about 1¼ hour before the commencement of the hearing only.  They fully expected the court to read it and digest the contents prior to the hearing. 

148.  Further, as the applicant for the New Evidence Summons, P should have lodged and served his skeleton submissions at least 72 hours prior to the hearing.  Instead, it “slipped” it under a small paragraph in P’s Submissions stating that as the Applying Defendants “did not raise any objection or make any submissions in respect of P’s Further Evidence Summons and must be taken to accept the filing of Lu’s 3^rd Aff and the exhibits therein.”[40]

149.  I find the above conduct on the part of P’s Counsel totally unacceptable and appalling.  In my view, not only they have displayed a high degree of arrogance and disrespect to the court (by not observing the practice directions to lodge and serve its skeleton submissions for the New Evidence Summons in time and by faxing a rather substantial skeleton submissions shortly before the hearing), it amounted to no less than an ambush to their opponents.

150.  I refused to hear the New Evidence Summons on the day and ordered to adjourn the case to 9 December 2024 in order to allow the Applying Defendants, as well as the court, to have sufficient time to fully consider the contents of the New Evidence Summons and the new written submissions and, if advised, for the Applying Defendants to file and serve a further affirmation in reply to P’s 3^rd affirmation, as they have the last word in the present application.  I reserved the costs occasioned and caused by the adjournment on that day.

151.  In my judgment, not only the proposed adducing of the 3^rd affirmation of P and the voluminous exhibits were unnecessary, it was done in a way which was wholly unsatisfactory with very little regard to the practice directions or respect to the court and the Applying Defendants’ counsel.  At the end, hardly anything was refereed to or turned on any of the contents of the 3^rd Affirmation of P or the 300 pages of exhibits during the adjourned substantive argument.  The whole exercise was a waste of time and costs with little impact save from disrupting the proceedings and distracting the parties and the court from focusing on the real issues in dispute under the Summons.  I would have refused to allow the admission of the new evidence if I were to hear it on the day anyway, if I had been allowed sufficient time to properly digest the contents of Lu’s 3^rd Aff and the new evidence on that day.  

152.  I therefore consider that P should be ordered to bear the costs of the New Evidence Summons as well as the costs wasted as a result of the adjournment for the first day of the hearing.  I would also order the costs of the adjournment should be paid by P on an indemnity basis.

153.  Like the costs for the Summons, I would like to summarily assess such costs. I would direct the Applying Defendants to lodge with the court and serve on P a statement of costs for the costs occasioned and caused by the New Evidence Summons and the adjournment on the first day of the hearing, within 7 days from today.  P to lodge with the court and serve on the Applying Defendants a list of objections, if any, within 7 days thereto.  The court will deal with the above costs on paper also.