CHIEF HOLDINGS (H.K.) LTD AND ANOTHER v. HE CHENGUANG AND OTHERS

HCA 2415/2014

[2026] HKCFI 1502

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2415 OF 2014

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BETWEEN

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DECISION

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1.   Introduction

1.1  On 10 October 2025, I handed down my decision (“Decision”)[1] on appeals mounted by different parties against the orders made by Master Frances Lok SC on 7 November 2024. By the Decision[2], I dismissed the He Camp’s appeal against the learned Master’s orders dismissing the He-Bao 2415 SO Summons and the BSTCC 2415 SO Summons, save to the limited extent that I provisionally struck out the conspiracy claim against the He Camp but the dismissal of that claim was made subject to the Chau Camp taking out an application for further amendment its pleading.

1.2  By a summons dated 24 October 2025, the He Camp seeks leave to against the Decision in so far as it relates to the He-Bao 2415 SO Summons and the BSTCC 2415 SO Summons. At the hearing, the parties were represented by the same counsel teams, namely Mr Ernest Ng (with Mr Raphael Leung) for the He Camp and Mr Simon Lam for the Chau Camp.

2.   The proposed appeal grounds

2.1  In the draft Notice of Appeal (“DNOA”), five proposed appeal grounds are advanced. At the hearing, Mr Ng confirmed that the He Camp no longer relies on Grounds 3, 4 and 5.1. The grounds which are pursued may be summarized as follows:

(1) Ground 1: I erred in declining to strike out any parts of the 2415 ASOC on the ground of issue estoppel, in that my conclusions on the “same parties” requirement and/or the “same issue” requirement were erroneous;

(2) Ground 2: I erred in declining to strike out any parts of the 2415 ASOC on the ground of the wider doctrine of abuse;

(3) Ground 5: This ground is directed at how I dealt with the Chau Camp’s claim premised on breach of warranty[3]. As pursued, the remainder of Ground 5 consists of 2 parts. The first is tied to the merits of Grounds 1 and 2. The second is based on the contention that I had ignored the He Camp’s complaint that the pleaded claim was “woefully devoid of particulars”.

2.2  There is no dispute on the applicable principles. Mr Ng relies only on the limb that the proposed appeal grounds have a reasonable prospect of success. The general principles applicable to a decision involving, as here, an evaluative judgment or exercise of discretion are set out in Xu Hong Biao v Oasis Investment Group Ltd [2024] HKCA 854:

“[40] Under section 14AA(4) of the High Court Ordinance, Cap 4, leave shall not be granted unless the intended appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

[41] To meet the threshold of 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). In other words, the applicant is required to show more than just an arguable case, although he does not have to demonstrate that the appeal will probably succeed (Wynn Resorts (Macau) SA v Mong Henry [2009] 5 HKC 515 at §19).

[42] As stated by the judge in the Leave Decision at §13, the Decision "involved an evaluative exercise balancing a large amount of countervailing facts and factors". The Leave Decision set out at §§8 and 9 the legal principles governing the court's exercise of power under Order 11 of the RHC in deciding whether to grant leave for service out of jurisdiction and we are satisfied that they are correct. A decision of this kind involves not the exercise of a discretion, but an "evaluative, or a balancing, exercise", albeit that the evaluative exercise is closely analogous to the exercise of a discretion (Bright Shipping Ltd v Changhong Group (HK) Ltd (No.2) [2019] 5 HKLRD 30 at §§9 to 11). We would add that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors (Ko Hon Yue v Chiu Pik Yuk & Ors (2012) 15 HKCFAR 72 at §83(5)(b)).

[43] Insofar as challenge is made to a judge's exercise of discretion, the principles for granting leave to appeal are well established. The appellate court is not to exercise an independent discretion of its own. Its initial function is one of review only. The appellate court will not lightly interfere unless it can be shown that the judge had erred in principle of law, or had misapprehended material facts, or had taken into account irrelevant matters, or had failed to take relevant matters into account, or where the judge's conclusion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible. It is only if the appellate court has reached the conclusion that the judge's exercise of discretion must be set aside for one or more of these reasons that it becomes entitled to exercise a discretion of its own (Harbour Front Ltd v Money Facts Ltd and Others [2019] HKCA 916 at §6)." (emphasis added)

3.   Ground 1: Issue Estoppel

(i) Overview

3.1  The issues and findings in the Mainland Proceedings are summarized at Decision §§3.6-3.17. Essentially, Ground 1 first refers to (1) the finding made by the HPC recited at Decision §3.11[4] (“Party Finding”); (2) the finding made by the HPC recited at Decision §3.11[5] (“Locus Finding”) and (3) the undisputed fact set out at Decision §2.8(4)[6] which then led to the finding made by the HPC recited at Decision §3.15[7] (“Payment Finding”).

3.2  DNOA §§1.5 and 1.6 assert that, by reason of issue estoppel:

(1) The Party Finding precludes the Chau Camp from raising any contention that BSTCC entered into the Share Pledge Agreement as Mr He’s nominee or alter ego;

(2) The Locus Finding precludes the Chau Camp from raising any claims premised upon Chief Holdings being a party to the Share Pledge Agreement;

(3) The Payment Finding precludes the Chau Camp from raising any claims premised upon Chief Holdings having paid and is therefore entitled to recover the Sum.

3.3  DNOA §§1.7 then asserts that had I applied the correct legal principle, I should have held that issue estoppel operates against the Chau Camp from claiming that (1) BSTCC entered into the Share Pledge Agreement as Mr He’s nominee or alter ego, (2) Chief Holdings was a party to the Share Pledge Agreement, and (3) Chief Holdings paid the Sum.

3.4  DNOA §1.8 then draws the conclusion that I should have struck out any claims mounted (1) against Mr He insofar as they contradict the Party Finding and (2) by Chief Holdings against Mr He insofar as they contradict the Locus Finding and/or the Payment Finding.

3.5  For ease of understanding, I will endeavour to summarize the relevant parts of the Decision which dealt with the He Camp’s case on issue estoppel:

(1) At Decision §1.3, I set out that the disputes between the parties on the Oral Investment Agreement (respectively the Miyun Agreement (the Chau Camp’s version) and the Purchase Agreement (the He Camp’s version)). As set out at Decision §1.4, it is the He Camp’s case that the Purchase Agreement was a tripartite agreement entered into by BSTCC on one part and Mr Chau and Mr Lam on the other part. Conversely, it is the Chau’s Camp primary case that the Miyun Agreement was a bipartite agreement reached between Chief Holdings and Mr He. By amendment, the Chau Camp added an alternative case based on the identities of the parties as asserted by the He Camp;

(2) The Actions (in Hong Kong) were stayed pending the conclusion of the Mainland Proceedings commenced by the Chau Camp against BSTCC only (Decision §1.5);

(3) At Decision §§3.2 to 3.5, I set out the pleaded issues in the Actions, which include the disputed issues of (1) whether, as the Chau Camp contends, BSTCC entered into the Share Pledge Agreement as Mr He’s agent and/or nominee and as Mr He’s alter ego, (2) what were the terms of the Oral Investment Agreement and (3) how the Oral Investment Agreement and/or the Share Pledge Agreement came to be terminated (including the Chau Camp’s allegations of sham, misrepresentations and breach);

(4) As noted above, at Decision §§3.6 to 3.17, I set out the issues in the Mainland Proceedings and the findings of the HPC which were all upheld by the SPC. Decision §§3.6-3.7 note that the issues in the Mainland Proceedings were limited to the rights and obligations under the Share Pledge Agreement, not the Oral Investment Agreement;

(5) At section 4 of the Decision, I set out the applicable principles;

(6) Importantly, at Decision §4.3, I found that the scope of the Mainland Proceedings was narrower than that in the Actions in Hong Kong as the Oral Investment Agreement was not the subject matter in the Mainland Proceedings.

3.6  As I understand Mr Ng, it has not been suggested that I had erred in my understanding of the matters set out in the preceding paragraph. Particularly in relation to the applicable principles, despite his initial suggestion to the contrary in his written materials, Mr Ng has confirmed at the hearing that, despite not making reference in the Decision to some of the cases referred to by him, the relevant principles have all been considered by reference to other cases.

3.7  I dealt with the He Camp’s arguments on issue estoppel at Decision §§9.3 to 9.9. Pausing here, it is pertinent to note that I had confined the scope of the He-Bao 2415 SO Summons at Decision §§7.2 to 7.7 and 9.1 to a narrower basis, namely that the strike-out ground is limited to striking out any claims made against Mr He, and does not include any claims made by Chief Holdings. There is no appeal against those paragraphs.

(ii) Decision §§9.3-9.9

3.8  In the relevant paragraphs of the Decision, I rejected the He Camp’s case on issue estoppel as it was not plain and obvious that the PRC Judgments created an issue estoppel that Mr He was not a party to the Oral Investment Agreement. As the scope of the Mainland Proceedings was narrower than the issues raised in the Actions, I relied on the principle that issue estoppel only applied to fundamental issues determined in an earlier proceeding which formed the basis of the judgment and only determinations which were necessary for the decision, and fundamental to it, would create an issue estoppel (Decision §9.4). I specifically found that the Party Finding did not determine who were the parties to the Oral Investment Agreement or its terms, and in particular the issue whether Mr He was a party to the Oral Investment Agreement or the Share Pledge Agreement (Decision §9.5).

3.9  As a matter of evidence, I found that the Oral Investment Agreement was entered into shortly after Mr Chau met Me He and that, given the dynamics, the Chau Camp’s case that the intention was to contract with Mr He personally instead of a project company in the form of BSTCC was not obviously unsustainable (Decision §9.6).

3.10  At Decision §§9.7-9.8, I further held that it is the Chau Camp’s case that BSTCC entered into the Share Pledge Agreement as Mr He’s nominee or alter ego, and by reference to China Forestry Holding Co Ltd (in Official Liquidation) v Top Wisdom Overseas Holdings Limited & Anor [2025] HKCFI 2893, whether that assertion can be made out is a matter for trial.

3.11  As I had confined the scope of the He-Bao 2415 SO Summons to a narrower basis (against which there is no appeal), the above matters were in my view sufficient to dispose of the He Camp’s argument on issue estoppel.

(iii) The He Camp’s submissions

3.12  In respect of the “same parties” requirement, Mr Ng says that I was wrong in not concluding that Mr He was plainly a privy of BSTCC, and hence, (Mr Ng reasons) the PRC Judgments binds not only BSTCC, Mr Chau and Mr Lam but also Mr He.

3.13  I do not believe it is necessary to deal with this part of Mr Ng’s submissions in any great detail. As is plain from the Decision, I did not reject the He Camp’s case on the basis of the “same parties” requirement. Instead, my rejection of the argument is based only on the “same issue” requirement.

3.14  I now deal with Mr Ng’s submission on the “same issues” requirement.

3.15  Mr Ng says that the Chau Camp’s case that BSTCC entered into the Share Pledge Agreement as Mr He’s nominee or alter ego is precluded by the Party Finding, in that the HPC found that BSTCC, Mr Lam and Mr Chau were the only parties to the Share Pledge Agreement.

3.16  I am unable to accept that the foregoing submission is reasonably arguable. The starting point is that the Chau Camp did not make a claim against Mr He in the Mainland Proceedings and Mr He was not a party thereto. The only claim was made against BSTCC and, were liability established, the issue then to be considered was whether BSTCC’s obligation to repay the Sum was owed to Chief Holdings or Mr Chau. Given the scope of the Mainland Proceedings (as set out at Decision §3.6), whether Mr He was a party to the Share Pledge Agreement was not a fundamental issue which formed the basis of the PRC Judgment and neither was it a determination which was necessary for the decision and fundamental to it. In any event, as set out at Decision §9.5, as I read the HPC Judgment, there was no finding that Mr He was not a party to the Share Pledge Agreement, and in particular, there was no finding that BSTCC did not enter into the Share Pledge Agreement as Mr He’s nominee or alter ego.

3.17  The other arguments made by Mr Ng are beyond the scope of the He-Bao 2415 SO Summons as determined in the Decision. However, as no objection has been raised by Mr Lam for the purpose of this application, I also deal with those arguments.

3.18  Mr Ng says that, given that Chief Holdings was found not to be a party to the Share Pledge Agreement by reason of the Locus Finding, any contention that Chief Holdings still has the necessary standing to sue thereon against Mr He necessarily contradict the Locus Finding.

3.19  The foregoing argument made by Mr Ng is not reasonably arguable. As pointed out by Mr Lam, the Chau Camp’s case is premised inter alia on the Oral Investment Agreement. In fact, at the He Camp’s Skeleton Submissions §16, Mr Ng accepts that the Oral Investment Agreement was the overarching agreement pursuant to which the Share Pledge Agreement was executed. It is plain from the Revised 2415 Draft RASOC (annexed to the Decision) that the Chau Camp’s case is premised on the averments that (1) Chief Holdings was induced by and acted in reliance on the pleaded misrepresentations in entering into the Oral Investment Agreement with Mr He on the pleaded term (ie the Miyun Agreement), (2) the Sum was transferred pursuant to the Miyun Agreement, (3) the Share Pledge Agreement formed part and parcel of the Miyun Agreement and (4) the breach of the Share Pledge Agreement rendered the performance of the Miyun Agreement impossible and (5) the Miyun Agreement was rescinded by reason of the misrepresentation and/or terminated by breach. At Revised 2415 Draft RASOC §24, the Chau Camp pleads that it has suffered loss and damage and the relief claimed include the return of the Sum and damages.

3.20  At Decision §7.5, I had referred to the He Camp’s written submissions §8 (lodged for the substantive hearing). It bears emphasis that the argument then advanced was that, were issue estoppel successful, it would lead to a complete striking out of the contractual claim advanced in HCA 2415/2014 against Mr He (except for fraudulent misrepresentation, breach of warranty and conspiracy). Insofar it is now suggested that there should be a partial striking out of Chau Camp’s contractual claim against Mr He on the basis of the Share Pledge Agreement (by reason of the Locus Finding), there is in any event no attempt made by Mr Ng to identify which parts of the pleaded claim are demurrable given the interlinkages of the Oral Investment Agreement and the Share Pledge Agreement pleaded by the Chau Camp.

3.21  Mr Ng next says that I had failed to take into account the Payment Finding, and had I done so, I should have found that even if not all the terms of the Oral Investment Agreement were in issue before the HPC and the SPC, it is plain and obvious that the Chau Camp is precluded from advancing a case on the Oral Agreement which contradict the findings that the obligation to pay and repay the Sum arose from the Share Pledge Agreement, not the Oral Investment Agreement. It follows therefore that Mr He cannot be held liable to repay the Sum by reason of the Payment Finding and the Party Finding.

3.22  In my view, the foregoing argument is not reasonably arguable, as it is not plain and obvious that the HPC did make the Payment Finding as contended by Mr Ng.

3.23  The gloss which Mr Ng puts on the Payment Finding is that the HPC has specifically found that the Sum was paid pursuant to the Share Pledge Agreement, not the Oral Investment Agreement. The passage relied on by Mr Ng is the underlined words below:

“[The Chau Camp] 主張 [the Share Pledge Agreement] 的簽約主體是 [Chief Holdings] 和 [BSTCC],… [BSTCC] 對此不予認可，認為合同相對方為 [Mr Chau and Mr Lam]，與 [Chief Holdings] 無關。… 本院認為，從合同文本看，[Share Pledge Agreement] 在名的合同主題為 [Mr Chau, Mr Lam and BSTCC]，[Mr Chau and Mr Lam] 以自己名義簽訂協議，並約定二人均等持有案涉股權，協議中並未有提及 [Chief Holdings]，未涉及 [Chief Holdings] 的合同權利和義務。亦無其他證據證明協議簽訂時，[Mr Chau and Mr Lam] 有代表 [Chief Holdings] 簽訂合同，或者 [Chief Holdings] 公司系履約主題的意思表示。從合同履行過程來看，以支付給[BSTCC] and 2.7億港元[ie the Sum] 付款方為至益公司，好運公司出具的收據再名的付款方為[Mr Chau and Mr Lam]。案涉股權投資款項的支付系在[Share Pledge Agreement]簽訂前，而 [Share Pledge Agreement] 沒有約定實際付款方是 [Chief Holdings]，亦無其他證據證明至益公司系根據 [Chief Holdings] 的指示代為付款。[Mr Chau] 名下有多家企業，在無明確約定以及充分證據證明的情況下，其簽約行為和付款行為不能當然代表 [Chief Holdings]。因此根據現有證據，即使[Chief Holdings]公司委託[Mr Chau and Mr Lam]簽訂[Share Pledge Agreement]，但在沒有向[BSTCC]明確披露委托人的情況下，[Share Pledge Agreement] 只約束[Mr Chau, Mr Lam and BSTCC]…”

3.24  I am unable to see how it can be said that it is plain and obvious that the underlined words should be construed as a finding by the HPC that the Sum was paid pursuant to the Share Pledge Agreement. In my view, the contention advanced by Mr Ng is blinkered. Contrary to Mr Ng’s contention, the bolded words which follow those which Mr Ng relies upon plainly show that the detailed evidence on the Oral Investment Agreement was not before the HPC (as the Chau Camp’s claim in the Mainland was not based on the Oral Investment Agreement) and no finding was made on the existence of the Oral Investment Agreement or its terms, and how those terms would have impact its findings.

3.25  For the above reasons, I do not regard Ground 1 to be reasonably arguable.

4.   Ground 2: Wider Doctrine of Abuse

4.1  At the hearing, Mr Ng accepted the legal principles set out at Decision §§4.4 and 9.12, namely it is only rare cases where litigation of an issue which has not previously been decided between the same parties or their privies will amount to abuse of process.

4.2  For the reasons set out in the Decision and section 3 above, I have decided against the He Camp’s case on issue estoppel and, as a corollary, set out my view that there was no collateral attack on the PRC Judgments. I have also set out why I was of the view that the He Camp’s case on Henderson abuse was not made out.

4.3  Mr Ng says that whilst I had cited the proposition that relitigation based on substantially the same evidence would bring the administration into disrepute and the jurisdiction can be invoked on that ground, it “did not appear to have featured in [my] reasoning”. He says that I should have concluded that it is plain and obvious that the Chau Camp relies on the same factual matrix, similar pleaded and substantially overlapping documents the Mainland Proceedings and in HCA 2415 of 2014.

4.4  As pointed out by Mr Lam. it is entirely unclear on what basis Mr Ng can advance the foregoing submission. Even from the passage in the HPC Judgment cited at §3.23, it is plain that the evidence on the Oral Investment Agreement was not before the HPC.

4.5  On the issue of Henderson abuse, Mr Ng says that I failed to take into account relevant matters and took into account irrelevant matters.

4.6  As regards the matters referred to at Decision §§9.11 and 9.12, Mr Ng says that the Chau Camp’s evidence assertion that the limited scope in the PRC Proceedings was upon legal advice was not supported by any Mainland law evidence. As pointed out by Mr Lam, the foregoing evidence was not disputed by the He Camp and this is a rehash of the arguments already made at the substantive hearing.

4.7  Mr Ng then contends that I failed to take into account of the fact that the commencement of the Mainland Proceedings was on Mr Chau’s own admission of “a classic stunt of forum shopping” on the Chau Camp’s part. The evidence relied on by Mr Ng set out in Chau 3^rd reads as follows:

“[19] Some time after the commencement of the action herein, we (the 1^st Plaintiff and myself) were introduced to a firm of lawyers in mainland China to discuss the possibility of suing upon the Miyun Agreement, and seeking the return of the Start-up Fund, in mainland China. We were advised that it would be difficult to commence proceedings in the mainland on the basis of the Miyun Agreement. This was because, firstly, mainland courts seldom recognise or enforce oral agreements; and secondly, the Miyun Agreement concerns oral representations, negotiations and agreements conducted or entered into mainly in Hong Kong. If we attempted to start proceedings in the mainland based upon the oral Miyun Agreement, the mainland court may not accept the case (in Chinese “立案”) in the first place, and our claim might not even be able to get off the ground.

[23] The mainland court's rejection of my application to withdraw, and the eventual award in my favour personally (instead of to the 1 st Plaintiff) illustrates the immense weight that courts in the mainland attach to written documents, and their reluctance to depart from what has been written in those documents. It also explains the manner in which the Mainland Action was conducted on our behalf by our mainland lawyers. I have been advised, and I verily believe, that the approach of Hong Kong courts is more flexible, and that the courts in Hong Kong are more willing to take the entire circumstances into account in determining the scope of contracts, and the real parties thereto.

[24] I would also like to emphasize that, while the mainland courts determined that the 6th Defendant was liable under the Shareholding Agreement, it never determined that Mr. He was not so liable. As there was good reason why Mr. He was not joined as a defendant in the Mainland Action, the Plaintiffs are not barred from continuing with the present proceedings against Mr. He. The scope of the present proceedings is in any event much wider than the Shareholding Agreement. The Shareholding Agreement was no more than a step taken in furtherance of the Miyun Agreement.

[25] The enforcement and execution of the Judgment has not been fruitful. We have been told by our mainland lawyers that the chance of recovering substantial assets from the 6th Defendant is slim. There is now produced and shown to me and exhibited herewith marked "CCKP-20" true copy of a letter dated 12th June 2024 from our mainland lawyer explaining the progress of enforcement. Be that as it may, the Plaintiffs will inform the Comi and give credit to whatever amount they may be able to get from the enforcement of the Judgment.”

4.8  I am unable to see why the foregoing evidence amounts of an admission on the Chau Camp’s part of a “classic stunt of forum shopping”. To the contrary, as set out at Decision §§1.6 and 9.12, I had already found that the resurrection of the Actions was due to difficulties of enforcing the fruits of the PRC Judgments against BSTCC and it was not plain and obvious that the Chau Camp was not justified in refraining from litigating the wider issues premised on the Oral Investment Agreement.

4.9  For the above reasons, I do not regard Ground 2 to be reasonably arguable.

5.   Remainder of Ground 5

5.1  The short point is that, at Decision §7.8, I have already observed that the Chau Camp’s pleadings were “lazy” pleadings, but where a pleading is said to be defective in not containing particulars to which the other side is entitled, application should be made for further and better particulars and not for an order to strike out the pleading.

5.2  In my view, the complaint that the Chau Camp’s case on breach of warranty is “woefully lacking in particulars” at best falls within the foregoing rubric. In any event, as pointed out by Mr Lam, Revised 2415 Draft RASOC §15D in fact refers to §§12-15C which form the alleged basis upon which the implied term arose.

5.3  In my review, Ground 5, as pursued, is not reasonably arguable.

6.   Conclusion

6.1  For the above reasons, I dismiss the present application for leave to appeal.

6.2  I have heard submissions on costs and counsel agreed, in essence, that costs should follow the event. The 1^st, 3^rd and 6^th Defendants are to pay to the Plaintiffs the costs of the present application to be summarily assessed. The Plaintiffs are to lodge and serve their statement of costs (limited to 2 pages) within 3 days hereof and the relevant Defendants their statement of objection (limited to 2 pages) within 3 days thereafter. Summary assessment will then be conducted on the papers.