China Evergrande Group (中國恒大集團) (In Liquidation) v Hui Ka Yan (許家印) & Ors (No 4) [2025] HKCFI 4327; [2025] 6 HKC 623 (Vincent Chen)
Vincent Chen represented the 1st defendant in China Evergrande Group (中國恒大集團) (In Liquidation) v Hui Ka Yan (許家印) & Ors (No 4) [2025] 6 HKC 623; [2025] HKCFI 4327.
China Evergrande Group (CEG) was ordered to be wound up, with joint and several liquidators appointed. CEG subsequently commenced an action against the 1st defendant and others, and obtained a Mareva injunction against the 1st defendant prohibiting him from disposing of his assets worldwide up to the sum of US$7,7 billion (Injunction Order), with an order for him to disclose to CEG all of his assets of an individual value of HK$50,000 or more, whether in or outside Hong Kong (Disclosure Order). There was a total failure on the part of the 1st defendant to comply with the Disclosure Order. CEG applied for an order that the joint and several liquidators be appointed as the joint and several receivers and managers over the entire assets and undertaking of the 1st defendant, contending that the appointment of receivers was the only way CEG could obtain information that the 1st defendant should otherwise had been disclosed under the Disclosure Order.
Held, granting the order sought, that:
(1) The court may appoint a receiver pursuant to s 21L(1) of the High Court Ordinance (Cap 4) if it was just or convent to do so. Such power was discretionary to be exercised flexibly on similar principles to grant and interlocutory injunction and the American Cyanamid principles were applicable: (i) whether there was a serious question to be tried; (ii) whether there was a real risk of dissipation of assets; (iii) whether there was no or no current effective protective regime and some form of interim protection should be given to preserve the status quo (which covered the consideration that the appointment of receivers was a drastic measure and should be made if it was necessary); (iv) the risk of damage to the respondent if the appointment was made, and whether it could be adequately compensated by a cross-undertaking in damages. Akai Holdings Ltd & Ors v Ho Wing On, Christopher & Ors [2009] HKCU 1308, (HCCL 37 & 40/2005, Stone J, 1 September 2009, unreported); and China Metal Recycling (Holdings) Ltd (in compulsory liquidation) & Anor v Chun Chi Wai & Ors [2016] HKCU 371, (HCA 1412/2013, Deputy High Court Judge Keith, 5 February 2016, unreported) followed. Wallace Kevin James v Merrill Lynch International Bank Ltd [1998] 1 SLR 785; National Australia Bank Ltd & Others v Bond Brewing Holdings Ltd & Ors [1991] 1 VR 386; Macau First Universal International Ltd v Ding Xiaohong & Ors [2012] HKCU 1575, (CACV 193/2011, Yeung VP and Yuen JA, 31 July 2012, unreported); and Wong Luen Hang & Anor v Chan Yuk Lung & Ors [2017] HKCU 97; (HCMP 2906/2016, Lam VP and Kwan JA, 12 January 2017, unreported) considered (paras 6-8, 13-15, 17-18, 21-22, 25-27).
(2) In the present case, where the 1st defendant had totally failed to disclose his assets, it was necessary to appoint receivers as a last resort, which was the only way CEG could obtain the information that should had been disclosed, otherwise the Injunction Order could not be effective enough for preserving the status quo (paras 29-31, 35, 37, 39, 41-44, 50, 52, 54).
(3) In a proper case, it was open to the court to appoint as receiver a person interested in the subject matter of the claim if it was satisfied that the appointment would be attended with benefit to the estate. A common-sense approach could be adopted. Where there were obvious advantages for the liquidators to be appointed as receivers, the questions were whether any conflict of interest would likely arise and whether such conflict was manageable. In the present case, conflict of interest was unlikely since the receivers would not be in a position to interfere with the 1st defendant’s defence. Any conflict could also be managed by the appointment of a supervising solicitor who the receivers would report to on a regular basis and answer all questions reasonably raised. Re Orient Power Holdings Ltd [2008] 2 HKLRD 494, [2008] HKCU 200 followed (paras 68-72).
[The above is excerpted from the headnote to the report in HKC.]
