Heitkamp & Thumann Kg v. Living Profit Trading Develop Ltd and Others

HCA 151/2017

[2018] HKCFI 2475

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 151 OF 2017

________________________

________________________

Before: Deputy High Court Judge Marlene Ng in Chambers

Date of Hearing: 3 September 2018

Date of Handing Down Decision: 9 November 2018

_______________

DECISION

_______________

I. INTRODUCTION

1.The plaintiff company (“P”) claimed it was deceived by email fraud into transferring monies into a bank account in Hong Kong, and such monies were disbursed from such bank account to the bank accounts of various tiers of recipients of which the 2^nd defendant (“D2”) was one.

2.On 19 January 2017, P commenced the present action against the 1^st defendant (“D1”) and D2 (collectively, “Ds”), and applied for an ex parte injunction order. Yau J granted an ex parte injunction order whereby inter alia D2 was restrained from dealing with or disposing of her assets representing any part of US$520,000 or its HK$ equivalent transferred to her bank account (“D2 Account”), or removing from Hong Kong or disposing of, dealing with or diminishing the value of any of her assets up to US$520,000 or HK$ equivalent (“Ex Parte Order”).

3.On 27 January 2017, L Chan J amended the Ex Parte Order (“Amended Ex Parte Order”), and continued the same until judgment or further order with liberty for Ds to apply to discharge or vary the injunction order upon notice to P’s solicitors (“Inter Partes Order”).

4.On 31 August 2017, D2 applied to discharge the Ex Parte Order, Amended Ex Parte Order, and Inter Partes Order (collectively, “Injunction Order”) (“D2 1^st Summons”).

5.On 19 September 2017, D2 filed a summons for deletion of or alternatively stay of the disclosure order against Ds granted by Yau J on 19 January 2017 (“Disclosure Order”) continued by the Inter Partes Order (“D2 2^nd Summons”).

6.On 13 November 2017, P filed a summons for inter alia continuation of the Injunction Order save to allow US$500,000 to be paid into court in the manner specified therein whereupon the D1 1^st / 2^nd Summonses would be dismissed (“P Summons”).

7.On 14 November 2017, D2 filed a summons inter alia for P to forthwith pay D2’s costs occasioned by the Injunction Order to be taxed if not agreed, and for directions to be given in relation to D2’s claim for loss and damages pursuant to P’s undertaking as to damages upon discharge of the Injunction Order with costs (“D2 3^rd Summons”).

8.On 23 January 2018, I granted inter alia the following order:

(a)	the Disclosure Order (ie paragraphs (8)-(9) of the Amended Ex Parte Order) be set aside, which disposed of the D2 2nd Summons save for the question of costs;
(b)	without prejudice to the D2 1st / 3rd Summonses, the Injunction Order be varied to the extent that the amount of D2’s assets frozen by such injunction order be reduced from US$520,000 to US$500,000.

9.At the hearing on 23 January 2018, P abandoned the relief sought in the P Summons to allow US$500,000 to be paid into court in the manner specified therein.

10.On 8 May 2018, I handed down written decision (“Decision”) as follows:

(a)	the D2 1st and 3rd Summonses be dismissed with costs order nisi that D2 shall pay P costs of and occasioned by such summonses, including all costs reserved, if any, to be taxed forthwith if not agreed;
(b)	there be costs order nisi that P shall pay D2’s costs of and occasioned by the D2 2nd Summons, including all costs reserved if any, to be taxed forthwith if not agreed;
(c)	there be costs order nisi that there be no order as to costs of the P Summons.

11.For convenience, unless otherwise stated, I adopt the abbreviations in the Decision herein.

12.D2 did not submit the draft order in respect of the order in paragraph 10(a)-(b) above (“D2 Draft Order”) to the court for approval, and P did not submit draft order in respect of the order in paragraph 10(c) above (“P Draft Order”) to the court for approval.

13.On 23 May 2018, D2 filed a summons for leave to appeal against the Decision (“Leave Summons”) as per the proposed grounds in the draft Notice of Appeal annexed thereto (“Draft Notice”) that was settled by D2’s counsel Mr Lai.

14.On the same day, D2 filed a Statement for Leave to Appeal (“D2 Statement”) also settled by Mr Lai. Order 59 rules 2A, 2B(3)-(5) and 2C of the Rules of the High Court (“RHC”) and Practice Direction 4.1 do not apply to the Leave Summons, and Order 59 rule 2B(1), (2) and (5) of the RHC do not require the D2 Statement to be filed.[1] But since D2 had unnecessarily filed the D2 Statement, to save costs and effort, on 5 June 2018 this court directed that the D2 Statement shall stand as D2’s written skeleton submissions for the Leave Summons, and that P was to lodge and serve written skeleton submissions for the Leave Summons within 21 days.

15.By the Draft Notice, D2 asked for the Decision to be varied on the intended appeal in the following manner:

(a)

the order in paragraph 10(a) above be set aside and replaced by an order that (i) the Injunction Order be discharged or alternatively “the amount in restraint under [the Injunction Order] be forthwith reduced from US$520,000 to US$43,348 or any other figure that the Court of Appeal may find just”, (ii) P do forthwith pay D2’s costs of and occasioned by the D2 1st Summons to be taxed if not agreed, and (iii) the D2 3rd Summons be adjourned to the trial judge with liberty to restore before trial;

(b)

the order in paragraph 10(c) above be set aside and replaced by an order that P shall forthwith pay D2’s costs of and occasioned in resisting the P Summons to be taxed if not agreed.

16.The Leave Summons came before this court for hearing on 3 September 2018 (“Leave Hearing”). After such hearing, it transpired D2 and P still had not submitted D2 and P Draft Orders to the court for approval. Since “[appeal] lies against the order made by the judge, not against the reasons he gave for his decision”,[2] it is inappropriate for the Draft Notice to seek to appeal against certain paragraphs of the reasoned Decision instead of the relevant orders. So on 29 October 2018 I directed P and D2 to submit the P and D2 Draft Orders for approval, and such orders were perfected and sealed on 7 November 2018 and 5 November 2018 respectively.

II.  LEGAL PRINCIPLES

17.Under section 14AA(4) of the High Court Ordinance Cap 4, leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard. In SMSE v KL,[3] Le Pichon JA pointed out such leave to appeal is not lightly granted. Reasonable prospect of success involves the notion that the prospect of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable” (p 129). Chu J (as she then was) explained in Wynn Resorts (Macau) SA v Mong Henry[4] that to meet the “reasonable prospect of success” test, an applicant is required to show more than just an arguable case, ie an appeal that has merits and ought to be heard although he does not have to demonstrate that the appeal will probably succeed.

18.Further, it is pertinent to bear in mind that even if there is a reasonable prospect of success on appeal, the court still retains a discretion whether to grant leave to appeal, although the fact that there is, ex hypothesi, a reasonable prospect of success would heavily influence the court’s exercise of discretion.[5]

19.In Rhonda Jeanine Pohn v Mac Richard Pohn & ors,[6] the Court of Appeal gave guidance on applications for leave to appeal against first instance refusal to discharge or vary injunction orders (in that case in respect of a proprietary claim):

“8. The refusal to vary or discharge the injunction was an exercise of discretion. This court will only interfere with an exercise of discretion in the limited circumstances set out by Lord Diplock in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at p.220B-F, see also the recent judgment of the Court of Final Appeal in SPH v SA [2014] 3 HKLRD 497 at paragraph 65.”

20.In Hadmor Productions Ltd & ors v Hamilton & anor,[7] Lord Diplock explained as follows:

“…… Upon an appeal from the judge’s grant or refusal of an interlocutory injunction the function of the appellate court …… is not to exercise an independent discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercise the discretion differently. The function of the appellate court is initially one of review only. It may set aside the judge’s exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him or upon an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn upon the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal; or upon the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it. Since reasons given by judges for granting or refusing interlocutory injunctions may sometimes be sketchy, there may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge's decision to grant or refuse the injunction is so aberrant that it must be set aside upon the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge’s exercise of his discretion must be set aside for one or other of those reasons, that it becomes entitled to exercise an original discretion of its own.”

21.It is also well established that the appellate court will not interfere with the exercise of a judge’s discretion in the award of costs unless it is shown he has failed to exercise the discretion, or has exercised it upon a false principle, or has not exercised it judicially, or the exercise of discretion is demonstrably flawed.[8]

III.  DISCUSSION

22.The Draft Notice ran to 12 pages which sought to re-argue almost all points made at the hearing on 23 January 2018 and also to answer the Decision paragraph by paragraph. The reasoned Decision is there for all to see, and I do not propose to engage in detailed debate on the proposed grounds.

23.On the question of “backward tracing”, the Draft Notice complained that P “got the law completely wrong” in suggesting backward tracing could be used to conclude there was coordination between D2 and other fraudulent defendants, and this court erred in accepting such proposition and in finding the temporal proximity of the figures in the bank statements could be evidence of an evidential “black hole”. It was said although P carried the burden of establishing the evidential basis for invoking the doctrine of backward tracing, but there was no evidence of any agreement, scheme or anticipation for such doctrine to be “utilized to manufacture a conclusion of coordination”.

24.I refer to (but do not propose to repeat here) the discussion, which is there for all to see, on “backward tracing” in paragraphs 70-79 of the Decision. Such principle concerned tracing trust monies by enabling inference to be drawn from a network of payments without exact proof of each transactional link. But “coordination” as understood in the concept of backward tracing is not about coordination between the recipient of monies and the fraudsters, and instead it is concerned with tracing of trust monies, ie depletion of trust fund and acquisition of asset subject to the tracing claim, as explained in paragraph 40 in Federal Republic of Brazil & anor v Durant International Corpn & anor[9] (see paragraph 74 of the Decision). The authorities recognised that the court is entitled to draw inference, especially when, as such authorities reminded (see paragraph 70, 72 and 74-75 of the Decision), useful evidence from the defendant will be hard to come by. In paragraphs 76-79 of the Decision, I have explained why inference of an evidential “black hole” could be drawn, and why the chronological entries in the transaction summaries and bank account statements (in tandem with concerns discussed in paragraphs 80-83 of the Decision and paragraphs 26-28 below over the alleged defence of bona fide purchaser for value without notice) were not necessarily conclusive. I am not convinced this intended ground of appeal has reasonable prospect of success.

25.On the defence of bona fide purchaser for value without notice, the Draft Notice claimed this court erred as follows:

(a)	this court was mistaken in thinking Wang’s affirmation evidence asserted he lost his telephone number when in fact he lost his telephone, and hence this court should not have criticised Wang’s credibility;
(b)	in accepting the time sequence of transfers in the bank account statements put forward by P’s counsel to conclude Wang remitted RMB to the Hua 2nd Account before Hua began remitting US$ to the D2 Account and thereby to question the veracity of such defence, this court erred in failing to note there were other earlier inward US$ remittances to the D2 Account, and the Haiyan Sum (US$270,000) was transferred to the D2 Account at 16:20:51 on 13 July 2016 followed by Wang’s transfer of RMB833,300 to the Hua 2nd Account afterwards at 16:30:52, so D2’s affirmation evidence was true, accurate and correct;
(c)	this court wrongly thought Mr Lai made admission that inability to explain the time marks meant P had a good arguable case, and this court misunderstood Mr Lai’s criticism about P’s pleadings was in relation to this defence when it was directed at P’s dishonest assistance claim;
(d)	but even if there was mistake in the time sequence of the US$/RMB transfers, it would not have undermined the existence of Hua and the foreign exchange transactions with Hua since Hua’s full name and the US$/RMB transfers were recorded in the bank account statements;
(e)	this court’s view of such defence as applied to this case was contrary to this court’s own decision in A Company v W Company & ors[10] in which this court accepted the practice WeChat communications for arranging receipt of funds in tranches via third parties and discharged the injunction order;
(f)	it was wrong for this court to draw adverse inference against numerous RMB remittances by D2 in exchange for US$ funds without hearing evidence, and there could be divers perfectly legitimate explanations for splitting up the RMB remittances.

26.As pointed out in paragraph 81 of the Decision, the burden was on D2 to establish bona fide purchase, and to show she lacked constructive notice of any impropriety.[11] Thus, in my view, assertions that this court has failed to take judicial notice of permanent loss of WeChat communications upon loss of Wang’s telephone, and failed to consider possible “divers perfectly legitimate explanations” for numerous split RMB remittances to Hua (when D2 did not particularise such explanations), would not give rise to reasonable prospect of success on appeal, especially when the threshold for setting side a proprietary injunction on the basis of no serious question to be tried is a high one of demonstrating the claim is liable to be struck out (see paragraph 56 of the Decision). Anyway, despite the complaint in paragraph 25(a) above, when paragraph 83(b) of the Decision was read as a whole, there was no answer to the query raised therein as to (a) why Hua was not contactable via Zhou when D2 still used her services up to 18 January 2017, and (b) when/how the telephone (if not the telephone number) was lost.

27.In relation to time sequence of transfers of the Haiyun Sum (US$270,000) to the D2 Account and the alleged corresponding RMB remittances from Wang’s bank account with ICBC to the Hua 2^nd Account, it was true the relevant bank statement of the D2 Account showed that on 13 July 2016 there were 10 inward remittances of US$ funds into the D2 Account of which the Welly Smart Sum (US$230,000) and Haiyun Sum (US$270,000) were the 6^th and 9^th inward remittance items listed therein. Such bank statement did not give the precise time and/or time sequence of such 10 US$ inward remittances into the D2 Account, but HSBC’s transaction documents showed the Welly Smart Sum and Haiyun Sum were remitted to the D2 Account at 15:04 and 16:28 respectively (see paragraph 83(c) of the Decision). The transaction summaries for Wang’s account with ICBC showed RMB1,000,000 and RMB833,300 were remitted from Wang’s account with ICBC to the Hua 2^nd Account at 15:59:46 and 16:30:52 respectively. Since RMB833,300 was worth far less than US$270,000, so even on D2’s best case put by Mr Lai, at least part if not all of the Haiyun Sum (US$270,000) was allegedly “reimbursed” by the earlier RMB1,000,000 remittance at 15:59:46 (ie about half hour before the Haiyun Sum was remitted into the D2 Account) and/or by the 5 RMB remittances to the Hua 2^nd Account from the ICBC account of Wang’s cousin between 13:58:28 and 15:10:32 (ie well before the Haiyun Sum was remitted into the D2 Account), which did not sit well with D2’s case as explained in paragraph 83(c) of the Decision.[12]

28.That being the case, there would be no need for me to labour too much on the other arguments in paragraph 25 above. The fact that various RMB sums as shown on the bank statements appeared to have been remitted to the Hua 2^nd Account and that the matter ought to go for trial would not diminish P’s good arguable case when D2’s own evidential foundation was called into question as explained in paragraph 83(c) of the Decision and paragraph 27 above. I am not persuaded D2 could draw much assistance from A Company when apart from the WeChat messages, the 19^th defendant in that case were able to produce sales confirmation, sales invoices, receipts for part payments and cargo handling invoices that could be cross-matched to the sales invoices to prove genuine sale and purchase of products. No contemporaneous documents were available in the present case. I am not persuaded D2’s challenge against the Decision in relation to the defence of bona fide purchaser for value without notice satisfied the requisite threshold test for leave to appeal.

29.In relation to both proprietary and Mareva injunctions, the Draft Appeal contended this court failed to consider the first and fundamental question of adequacy of damages and injustice to D2 in continuing with the Injunction Order:

(a)	it was said P was “merely pursuing a money claim for defrauded sums for which damages and interest will be adequate compensation”, so the Injunction Order should be forthwith discharged;
(b)	continuing the Injunction Order against D2 “may convey a negative message to HSBC which may ripple out through the international network of bank credit bureaus to trigger off detrimental action of other banks on other accounts of [D2] and her families; accounts may be forced closed, standing loans may be recalled by banks for immediate repayment and applications for new bank accounts or new credit lines may be refused. These events will inflict on [D2] devastating, irreparable and unquantifiable loss and damage for which no damages on any undertaking of [P] can ever compensate”;
(c)	“the original funds capable of being traced to [P’s] cause” had been spent by D2 when she was unaware of P’s action in that the money trapped by the Injunction Order belonged to a trust fund for the education of her innocent family member, which loss could not be compensated by damages and it was doubtful whether such loss fell within the scope of P’s undertaking.

30.Mr Lai did not dispute the principles for proprietary and Mareva injunctions set out in paragraphs 55-58 and 59-60 of the Decision. Plainly, a proprietary injunction is issued to preserve assets which a claimant has a proprietary claim so they can be turned over to the claimant if he is successful in the action. In the absence of any suggestion D2 had assets in Hong Kong other than the frozen funds that P could seize if it were successful in the action, I do not even begin to see how damages could be an adequate remedy and/or why P should forgo preservation of assets over which it had a good arguable case of a proprietary claim. If D2 is right in her contention in paragraph 29(a) above, then almost invariably interlocutory injunction cannot be granted for email/internet fraud claims as they essentially involve money claims for defrauded sums, but authorities abound with interlocutory injunctions granted for such claims.

31.Further, the Injunction Order was granted in January 2017, but the D2 1^st/2^nd Affs and Wang Aff filed in August 2017 and January 2018 made no mention of the deleterious effect set out in paragraph 29(b) above even though by the time the D2 2^nd Aff was filed in January 2018 the Injunction Order had been in place for a year. As for the matter in paragraph 29(c) above, they were only pleaded in D2’s Defence and not verified in the D2 1^st/2^nd Affs and/or Wang Aff as factual matters that D2 relied on for the purpose the D2 1^st, 2^nd and 3^rd Summonses. In any event, given my conclusion there were good arguable contention of “backward tracing” and inherent concerns over the defence of bona fide purchaser for value without notice that lent weight to a good arguable case for P’s proprietary claim, the matters raised by D2 in paragraph 29 above had no reasonable prospect of upsetting this court’s exercise of discretion in refusing to vary/ discharge the Injunction Order.

32.On the balance of convenience, it was said it was never D2’s suggestion that P’s proprietary claim was liable to be struck out, which “strike-out” argument only related to the in personam dishonest assistance claim. Also, it was said this court erred in observing the balance of convenience necessarily fell in P’s favour as (a) there was a serious issue to be tried and (b) risk of dissipation be dispensed with. D2 complained that this court had abandoned its duty of judicial discretion in failing to evaluate relevant factors so as to take a course that would lower the risk of injustice.

33.I have set out the principles of proprietary injunction in paragraphs 55-58 of the Decision. Yifung Properties Limited & ors v Manchester Securities Corp & ors[13] and Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd & ors[14] made clear that in an application to discharge an injunction order, if the opposing party seeks to show there is no serious question to be tried, it would be necessary to demonstrate the claim was liable to be struck out. This is the threshold to discharge the Injunction Order on the basis of no serious question to be tried. Since D2 insisted it was never her contention that P’s proprietary claim was liable to be struck out, it necessarily followed the view that there was a serious question to be tried in respect of such claim (notwithstanding D2’s complaints about the Decision in relation to the issue of backward tracing and defence of bona fide purchaser for value without notice) did not justify leave to appeal.

34.The authorities also reminded that in relation to interlocutory proprietary injunctions, “irremediable damage need not necessarily be shown and the court will readily find that the balance of convenience favours the preservation of the fund pending trial” (see paragraph 55 and 58(c) of the Decision). I am not persuaded there was reasonable prospect of success in relation to the intended grounds of appeal in paragraph 32 above when P was the victim of the Email Fraud and given the analysis in paragraph 33 above.

35.In relation to the claim based on dishonest assistance, D2 in the Draft Notice claimed this court erred in using backward tracing to implicate her with knowledge of a money laundering process, and in using the inherent weakness of the bona fide purchaser defence to contend she played an active role in dissipating the defrauded sum together with apparent coordination among Hen Yue, Pengshunyi and Haiyun / Welly Smart to conclude there was enough, at this interlocutory stage, to demonstrate a good arguable case of drawing inference that D2 might have been dishonest and might have had knowledge of the fraud. It was said there was no evidential basis for such inference as the HSBC bank statements showed that at the time of remittance of the Haiyun and Welly Smart Sums D2 did not know the existence of Hen Yue, Penghunyi, Haiyun and Welly Smart.

36.This was nothing more than reiteration of D2’s arguments for the purpose of the hearing on 23 January 2018, which I have dealt with in paragraphs 93-96 of the Decision after taking note of high burden on P and also P’s fair acknowledgment that the position was not entirely clear-cut at the interlocutory stage. As DHCJ Douglas Lam SC reminded in Pacific Rainbow International Inc, the approach in the interlocutory context should be as follows:[15]

“74. The principles above on assessing probabilities and the drawing of inferences in cases where serious misconduct is alleged (as in the present case) are of course well established. However, these principles must be viewed in the context of deciding whether there is a good arguable case at the interlocutory stage. The court is not making any findings of fact, but merely taking a view as to whether, on the materials now before the court, a case has been shown that is ‘…barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success’. That said, in taking such a view, the court will take into account all of the circumstances, including the inherent improbabilities of serious misconduct.

75. I accept for present purposes that the 2^nd defendant has presented an arguable defence to the plaintiff’s claims. However, for the reasons I have set out above, the 2^nd defendant’s evidence is far from conclusive, and indeed raises a number of questions that will have to be investigated at the trial. I am of the firm view that the plaintiff has maintained a good arguable case for its claims of knowing receipt, dishonest assistance and conspiracy using unlawful mean against the 2^nd defendant, including the inferences to be drawn as to the requisite knowledge and state of mind of the 2^nd defendant. It follows that the plaintiff has also demonstrated a good arguable case on its claim of unjust enrichment.” (my emphasis)

I have followed the above approach in coming to my views in paragraphs 94-96 of the Decision, and have also borne in mind a good arguable defence may co-exist with a good arguable claim. I am not persuaded there was reasonable prospect of success for this intended ground of appeal.

37.D2 next complained that as regards the Mareva injunction, I have erred in failing to require positive evidence (instead of mere suspicion) of risk of dissipation,[16] and failing to recognise that whether P knew or did not know monies were idling in the D2 Account were irrelevant. But it was Mr Lai who for the purpose of the hearing on 23 January 2018 raised the complaint that the Ex Parte Order would not have been granted but for P’s failure to draw to the attention of the ex parte judge that (to P’s knowledge) US$500,000 was idling in the D2 Account for half a year since 17 July 2016, so this court dealt with such complaint in paragraphs 98-100 of the Decision.

38.D2 further complained this court erred in relying on the grounds in paragraphs 101-102 of the Decision in finding there was risk of dissipation. But given my conclusions about the inherent concerns over the defence of bona fide purchaser for value without notice which I have explained in the Decision and hereinabove, the good arguability of the dishonest assistance claim, and D2’s intended grounds of appeal in relation thereto for which I am unable to find reasonable prospect of success (see paragraphs 35-36 above), risk of dissipation and balance of convenience in P’s favour could be inferred.

39.Mr Szeto, counsel for P, drew my attention to CAC Brake Co Limited Zhuhai v Bene Manufacturing Company Limited & ors[17] which supported the view that if there were good grounds for alleging the defendant has been dishonest or implicated in a scheme for misappropriation of funds “then it is unnecessary for there to be any further specific evidence on risk of dissipation for the court to be entitled to take the view that there is a sufficient risk to justify granting Mareva relief”. The Court of Appeal in CAC Brake Co Limited Zhuhai cited Norwich Union Fire Insurance Society Ltd v Eden[18] in which Lord Philipps said inter alia that:

“It seems to me that when the court considers whether there is a good arguable case it is at that stage that it considers whether the likelihood of a judgment in favour of the plaintiff is sufficient to justify the grant of Mareva relief. If it is so satisfied, the question then arises:- if such a judgment is given, what is the risk that there will be no assets there to satisfy it? If the judgment in question being considered is a judgment in which allegations of fraud are made, then it seems to me that it is open to the court to conclude from that fact alone that there is sufficient risk of dissipation of assets to justify the grant of relief. For myself it does not seem to me that there would be any prospect of persuading this court that the learned Judge had erred in principle in so concluding.” (my emphasis)

I am not persuaded there was reasonable prospect of success on this intended ground of appeal.

40.As regards the intended appeal against the costs order nisi (now made absolute) in respect of the P Summons, D2 in the Draft Notice complained this court erred as follows:

“The learned judge erred in failing to exercise true judicial discretion on costs in a non-partisan manner. US$20,000 [ie the injunction cap should be US$500,000 rather than US$520,000] is not de minimis and is a substantial sum; it is a whole year’s wages for the average university graduate trainee in general employment. The patent mistake of excessive injunction amount has been persisted in by [P] without explanation or retraction all the way from first grant of the ex parte injunction to the hearing of the discharge summons. It was therefore necessary for [D2] to incur costs to come to court to seek to rectify the mistake, amongst other reliefs. Under neutral, fair and judicious discretion [D2] should have been awarded part of the costs of her summons necessarily incurred to deal with [P’s] mistake even if she fails in her application to discharge the ex parte injunction.”

On such basis, it was said that since the P Summons was misconceived and D2 was brought to court to deal with such misconceived application, there was no good reason for D2 to be denied costs of resisting P’s failed summons, and in so denying D2 her costs this court had acted in a “non-partisan manner” and failed to exercise “neutral, fair and judicious discretion”.

41.This court was not in a position to take judicial notice of yearly wages of “the average university graduate trainee”. As explained in paragraph 106 of the Decision, whilst I accepted the various reliefs sought in the P Summons were unnecessary and/or eventually abandoned, I found D2’s stance in response to the P Summons was also inappropriate. Under Order 62 rule 5(1)(aa) and (e) of the RHC, “the Court in exercising its discretion on costs shall, to such extent, if any, as may be appropriate in the circumstances take into account” inter alia the underlying objectives set out in Order 1A rule 1 of the RHC[19] and the conduct of all the parties. Order 62 rule 5(2) of the RHC explained that for the purpose of considering the conduct of all the parties, such conduct includes inter alia (a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue, and (b) the manner in which a party has pursued or defended his case or a particular allegation or issue. Upon considering the nature of the application by way of the P Summons and taking into account both parties’ conduct in coming to an appropriate costs order, I am unable to see failure to act judicially or failure to act in a non-partisan manner. I am not persuaded there was reasonable prospect of success on the intended appeal against the cost order nisi (now absolute) for the P Summons.

IV.  OTHER COMPLAINTS

42.My attention was also drawn to the D2 Statement which set out D2’s reasons/stance for the Leave Summons. In the D2 Statement, Mr Lai submitted:

(a)	This court failed to consider that in locking up US$500,000 of D2’s money for another year or two pending trial, “it is inevitable that extremely negative images and misunderstanding as to [D2’s] integrity and business practices will ripple off from the Decision to the general public, in particular banking circles in Hong Kong, China and then worldwide. There is an international network of credit bureaus monitoring bank and finance company customers and banks and financial institutions worldwide are in close and continual contact. News of black list customers travel fast and wide”.
(b)	Whilst P as a fraud victim deserved sympathy, “this does not mean that the court’s sympathy can extend to condoning [P’s] sins in taking it out on innocent people unfortunate enough to cross his path”.
(c)	“The learned justice failed to appreciate …… justice requires fairness to both sides. The learned judge made the mistake of giving the benefit of doubt to [P] …… Hence every rule in the rule book was bent in favour of [P] and every possible adverse inference was drawn against [D2]. If facts and evidence do not exist, legal principles can be prayed in aid to make up the lacunae. ……”.

43.In respect of the contention in paragraph 42(a) above, I reiterate paragraphs 29(b) and 31 above. As for Mr Lai’s submissions in paragraph 42(b)-(c) above, they echoed the criticisms in the Draft Notice set out in paragraph 40 above that this court had acted in a “non-partisan manner” and failed to exercise “neutral, fair and judicious discretion”. But in the absence of allegation of actual bias on the part of this court, the manner of formulation of such grounds/submissions was not easy to understand. It is inappropriate for this court to make an unseemly spectacle of entering into debate over such allegations (despite the seriousness of the criticism of breach of judicial conduct) save to adopt the observations by the Court of Appeal in Win Glories Limited v Majorluck Limited[20] and Yap Sui Kong v Yip Fong Tim (sued as personal representative of the Estate of Ip Tseung Hong alias Chiu Loi, deceased)[21] on the court’s expectation of a professional approach worthy of counsel in drafting court documents and submissions.

V.  CONCLUSION

44.In the circumstances, the Leave Summons is dismissed. There is no reason why costs should not follow event. I grant a costs order nisi that D2 shall pay P’s costs of and occasioned by the Leave Summons (including all costs reserved, if any) to be taxed forthwith if not agreed.

Mr Frank Szeto, instructed by Robertsons, for the plaintiff

Mr Thomas Lai, instructed by Hui & Lam LLP, for the 2^nd defendant