Skyhigh Investment Ltd v. Yu Jun and Others

HCCT 29/2019
HCA 1434/2019
(heard together)

[2020] HKCFI 913

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 29 OF 2019

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AND

HCA 1434/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1434 of 2019

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(Heard Together)

Before: Hon Mimmie Chan J in Chambers (open to public)

Date of Hearing:  22 May 2020

Date of Decision: 1 June 2020

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D E C I S I O N

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Background

1.On 4 June 2019, Skyhigh Investment Limited (“Skyhigh”) applied ex parte for worldwide injunction orders and disclosure orders against 3 defendants, Mr Yu Jun (“Yu”), Ms Yu Mengying (“Daughter”) and Yujime Investment Management Limited (“YJM”).  HCCT 29/2019 was issued by Skyhigh (“HCCT 29”), whereby the injunction and disclosure orders were sought against the defendants in aid of an arbitration to be commenced by Skyhigh against the 3 defendants (“Arbitration”), for breach of their respective obligations owed to Skyhigh under an Amended and Restated Shareholders Agreement dated 13 October 2014 and pursuant to the arbitration agreement contained therein.  The Mareva injunction and disclosure orders were granted against Yu and YJM, but not the Daughter.  An inter partes summons was issued by Skyhigh on 5 June 2019 (“HCCT Summons”), to seek the orders against the Daughter on inter partes basis, and for the orders made against Yu and YJM to be continued. 

2.The Arbitration against Yu, the Daughter and YJM was commenced by Skyhigh on 14 June 2019. 

3.On 19 June 2019, the Daughter gave an undertaking, expressed to be pending the determination of the HCCT Summons, not to dispose of or deal with a property in Shatin in the New Territories which is registered in her sole name (“Property”), without giving Skyhigh at least 14 days’ advance notice in writing (“Undertaking”). 

4.The hearing of the HCCT Summons was adjourned on 20 June 2019 for substantive argument of Skyhigh’s application against the Daughter.  The injunction orders against Yu and YJM have since been continued.

5.On 8 August 2019, the Daughter commenced HCA 1434/2019 against Skyhigh (“HCA 1434”), to seek a declaration and a final injunction to restrain Skyhigh from continuing the Arbitration or commencing any arbitration against her.  The claim made by the Daughter in HCA 1434, and her defence to the claims made against her in the Arbitration, is that she did not sign and was not a party to any of the agreements relied upon by Skyhigh in the Arbitration (“Contractual Documents”), in respect of which Skyhigh claimed that she was in breach of contract, and pursuant to which the Arbitration was brought.  She claims that the signatures on the relevant Contractual Documents were not hers, and had been forged. 

6.On 15 January 2020, Skyhigh issued a summons in HCA 1434 (“HCA Summons”), seeking essentially the same relief as that sought in the HCCT Summons, as an alternative to the orders sought by the HCCT Summons.  In the HCA Summons, Skyhigh seeks an additional injunction to restrain the Daughter from disposing of or dealing with the Property specifically. 

7.The HCCT Summons and the HCA Summons were opposed by the Daughter, and were heard together on 22 May 2020.  On behalf of Skyhigh, Leading Counsel explained that the orders sought against the Daughter under the Summonses are for Mareva injunctive relief and alternatively, pursuant to the Court’s Chabra jurisdiction.

8.On behalf of the Daughter, it was confirmed that her Undertaking would be extended until the final determination of HCA 1434.  The Daughter maintains however that the HCA Summons and the HCCT Summons should be withdrawn, with costs in the cause or reserved to the trial judge, as Skyhigh has no case under the Summonses. On its part, Skyhigh maintains that it is wrong for the Summonses to be withdrawn, and since Skyhigh had offered in October 2019 that the matter should be resolved by the Undertaking being continued until the determination of HCA 1434 and HCCT 29, which offer was not then accepted by the Daughter, she should bear the costs incurred.

9.The dispute before the Court is whether the HCA Summons and the HCCT Summons should be dismissed for failure to show a case for the injunction, and where the costs should fall. 

10.The Daughter’s case is that Skyhigh’s application for the injunctions should be dismissed, as it has failed to show a good arguable case against the Daughter in respect of any liability under the Contractual Documents, and also failed to establish any risk of dissipation of assets on the Daughter’s part.

11.Specifically in relation to HCCT 29, Leading Counsel for the Daughter highlighted the fact that Skylight is no longer pursuing the Arbitration against the Daughter.  As such, there is no need to have the injunctive and disclosure orders in aid of the Arbitration, as originally sought under the Arbitration Ordinance. 

12.On behalf of Skyhigh, Leading Counsel pointed out that Skyhigh has throughout made it clear that, in view of the allegations and claims made by the Daughter in relation to the Contractual Documents, Skylight agreed not to proceed with the Arbitration against the Daughter for the time being, and only pending the Court’s determination of HCA 1434.  Skyhigh has counterclaimed in HCA 1434 in respect of the same breach of contract as it alleged in the Arbitration, and if the Daughter’s claims of forgery and of her not being a party to the contracts relied upon by Skyhigh are dismissed by the Court in HCA 1434, Skyhigh’s counterclaim will be resolved in the same action, or alternatively in the Arbitration.  The application made by the HCA Summons is under the High Court Ordinance and the inherent jurisdiction of the Court.  The injunctive relief sought should be granted under section 21L of the High Court Ordinance, and under the Chabra jurisdiction of the Court.

13.The claims made by Skyhigh against the Daughter are on the basis of her being a signatory and party to a Share Subscription Agreement dated 17 July 2013 (“SS Agreement”), and an Amended and Restated Shareholders Agreement (“SA”) made between her, Yu, YJM and Skyhigh.  Skyhigh claims that pursuant to the SA, it is entitled to exercise its right to issue a Repurchase Notice upon the occurrence of a trigger event as defined in the SA, requiring the Daughter, Yu and YJM to repurchase its shares in Guocui Flowers Holdings Limited (“Company”).  As evidence, Skyhigh has produced these subject agreements, which bear the signatures of the parties, and are part of a series of contracts entered into between Skyhigh as investor on the one part, and Yu, the Daughter and YJM described in the SS Agreement as the “Founder Parties” of the Company on the other part. 

14.YJM at all material times held a 50% interest in Guangzhou Guocui Flowers Trading Co Ltd (“G Flowers”), which is a company incorporated on the Mainland engaged in the business of flowers and potted plants. Yu was at the material time the chairman, director and legal representative of G Flowers, and the registered shareholder of 90% of the shares in YJM.  The Daughter was at the material time the registered holder of the remaining 10% of the shares of YJM.  Yu and the Daughter together own YJM, and in turn, YJM owns 100% of the share capital of the Company.

15.The SS Agreement and the subsequent Contractual Documents were all for Skyhigh’s subscription of over 26 million shares in the Company for US$65 million, with the rights and obligations of the shareholders of the Company being governed by a Shareholders Agreement, as later amended by the SA.  The Company was to be listed on the Hong Kong Stock Exchange, and a trigger event occurred under the SA, when the IPO of the Company did not materialize by 26 September 2017.  Skyhigh claims that the Daughter was in breach of the SA, by failing to purchase from Skyhigh the shares which were the subject matter of the Repurchase Notice it issued on 4 January 2019.

16.The Daughter’s defence is that she was not aware of the fact that she was the holder of 10% of the shares in YJM, that she had no involvement in YJM, had never received or signed any documents relating to YJM to subscribe for shares or otherwise, and that she had not authorized anyone to sign any such documents.  In HCA 1434, she seeks a declaration that she was not a party to the Contractual Documents relied upon by Skyhigh, and that the said documents were null and void, invalid and unenforceable as against her. 

17.In opposition to Skyhigh’s application for the injunction orders, the Daughter claims in her evidence that the signatures purported to be hers on the Contractual Documents were all forgeries.  She stated in her affirmation that her belief was that “somebody else” signed in her name without her knowledge or consent, but she had no knowledge as to who might have done so.  The Daughter produced various banking and other documents signed by her, to show that her true signatures were “radically different” to those which appear in the Contractual Documents.  According to her, she has 3 different signatures, for use in relation to, respectively, “Mainland China documents”, “Hong Kong documents”, and “more official documents” since 2016 - when she would sign in English.

18.On behalf of the Daughter, Mr Pang SC highlighted the fact that even on Skyhigh’s evidence, as submitted to the ex parte judge on 4 June 2019, Skyhigh had acknowledged that Yu had admitted, on 28 August 2018 when a Share Repurchase Agreement was being negotiated between Skyhigh and Yu, that he (Yu) had forged the Daughter’s signature, and that the Daughter was never a party to the relevant Contractual Documents.

19.It was argued that in the light of the Daughter’s evidence, and in the absence of any other evidence from Skyhigh to show that the Daughter had involvement in and had in fact signed the disputed Contractual Documents - such as evidence of the independent attestation of her signature, Skyhigh has failed to produce any strong and cogent evidence to support a good arguable case against the Daughter, and that Skyhigh’s claim for the injunction is purely based on surmise, bare allegations and inferences which cannot be substantiated.

20.As highlighted by Mr Lam SC on behalf of Skyhigh, a good arguable case that needs to be established is “in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success” (The Niedersachen [1984] 1 All ER 398 at 404d; Grupo Pacifica Incorporada v Worldwide Marine Product Ltd & Ors, unreported, CACV 217/2015, 28 January 2016).  The existence of a good arguable defence does not necessarily negate a good arguable case, and it is entirely possible to have, at the interlocutory stage, both the claim and the defence being more than barely capable of serious argument and not necessarily having a better than 50% chance of success.  There is no requirement that the plaintiff must show that he has a much better case or argument than the defence: Kazakhstan Kagazy plc & Ors v Arip [2014] 1 CLC 451; Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd, unreported, HCA 3023/2016, 2 May 2017.

21.At the foremost, it is trite, that the Court will not and is not able to decide disputed facts at the interlocutory stage.  It is not for the Court to decide at the hearing of the HCCT Summons and the HCA Summons whether the signatures of the Daughter as appearing in the Contractual Documents are forgeries, or her genuine signatures.  Contrary to the assertions made by and on behalf of the Daughter, I do not agree that the Daughter’s signatures on the Contractual Documents can be seen to be radically different to those which appear in the documents on which she relies, or that it is “obvious” even without expert evidence that the signatures in the Contractual Documents were not hers, and are forgeries.  Signatures inevitably change over the years, and even on the Daughter’s own case, she has at least 3 different signatures.  This is not surprising. Expert evidence may, or may not, be adduced at trial, when the Court will decide on the issue.

22.The Daughter claims that Skyhigh’s case against her in reliance on the Contractual Documents which she allegedly signed is based on circumstantial evidence and inferences which cannot be substantiated by proved facts.  I have borne in mind, as Leading Counsel submits I should, the reminders from the Court of Final Appeal not to draw an inference unless there is primary evidence which logically and reasonably justifies such inference, and not to choose between guesses on the ground that one seems more likely than another (Ming Shiu Chung v Ming Shiu Shum (2006) 9 HKCFAR 334).  However, it has also to be borne in mind that what the Court is deciding at this stage is whether there is a good arguable case, that the primary facts proved logically and reasonably justify the inference, in this case, that the Daughter had signed the Contractual Documents.

23.I first deal with Counsel’s reliance on the “admission”, or assertion made by Yu to Skyhigh in August 2018, after a trigger event had occurred under the SA and when the parties were negotiating on the repurchase of Skyhigh’s shares, that the Daughter was never a party to the Contractual Documents and that had Yu forged her signature.  The truth of Yu’s assertion is a dispute on the facts which remains to be resolved at trial.  As highlighted by Skyhigh, Yu’s claim might well have been an attempt by him at the time to insulate the Daughter from the claims which may be and were being made against her.  It was also in Yu’s interest if the Daughter and any assets held in her name on his behalf were to be protected from and not affected by Skyhigh’s claims under the Contractual Documents.  Whether the Daughter’s signatures were in fact forgeries, and were in fact forged by Yu, are not admitted by Skyhigh.  On Skyhigh’s evidence, Yu’s claim that the Daughter had not signed the Contractual Documents and that he had forged her signature had only been asserted after other excuses had been offered by Yu, as to why the Daughter should not be made a party to the Share Repurchase Agreement, for Skyhigh to exit from its investment in the Company and for Yu’s purchase of Skyhigh’s shares.

24.In my assessment of whether there exists, on the facts in this case, firstly, a good arguable case against the Daughter on the basis of her being a party to the Contractual Documents, and secondly, a real risk of the Daughter’s dissipation of assets, I have considered the evidence in the round, and as a whole.

25.I cannot ignore the effect of the evidence adduced in this case, not only by Skyhigh, but also by the Daughter, that under and as evidenced by the SS Agreement, the SA and the other Contractual Documents, substantial transactions were entered into and dealings were made in relation to shares in the Company held through YJM which were registered and held in the name of the Daughter.  In addition to her being the registered holder of shares in YJM, from 2012 onwards, the Daughter’s name was also used and appeared as the registered holder of shares in companies associated with YJM, Yu and G Flowers, such as Guangzhou Yujime E-Commerce Company Limited (“YJM-E”) and Shenzhen Ruiying Value Venture Capital Partnership Limited (“Ruiying”). On the Daughter’s case, she had no knowledge of any of this, but that does not alter the fact that shares and assets were put in her name, with no payment from her as can be shown.  The evidence is that Yu himself claimed to Skyhigh (after the event) that he had used the Daughter’s name and signatures for the Contractual Documents.

26.The Daughter’s Mainland identity card had been supplied and used on various occasions, in the incorporation of the companies related to G Flowers, and for the due diligence in 2013 leading to Skyhigh’s investment in the Company. 

27.The Daughter was one of the registered owners of the Property, which was acquired in 2016 and registered in her name and Yu’s name, as tenants in common in the shares of 90% and 10% respectively.  On 28 January 2019, Yu and the Daughter entered into an agreement for the alleged purchase by the Daughter and the assignment from Yu of his 10% interest in the Property to the Daughter (“Property Transfer”), rendering her the sole registered owner of the Property.  The Daughter herself admits that she had not paid any consideration for the Property Transfer of Yu’s 10% interest.  Skyhigh relies on this Property Transfer as evidence of the risk of dissipation, together with the evidence of a transfer in late 2017 of the Daughter’s 10% interest in YJM to Yu’s sister (“Share Transfer”).  The Share Transfer took place at a time when a trigger event had already occurred under the SA, and Skyhigh had made threats (on 1 November 2017) to exercise its rights to demand the repurchase of its shares in the Company by Yu, YJM and the Daughter.

28.It was contended on behalf of the Daughter that there is no solid evidence of any risk of dissipation of assets on her part.  Leading Counsel emphasized that there is nothing in Skyhigh’s evidence which can show any improper or unjustifiable conduct on the Daughter’s part (as is required even if Skyhigh seeks to rely on the Chabra jurisdiction of the Court as against the Daughter and her assets, citing China Medical Technologies, Inc & Ors v Wu Xiaodong [2019] HKCFI 1488).  It was argued that Skyhigh has put wrong focus on the conduct of Yu but any alleged dishonesty, lack of commercial morality or commercial sharp practice on the part of the father cannot be used against or be equated with the Daughter.

29.On behalf of Skyhigh, it was argued that the Share Transfer and the Property Transfer, made at a time when Yu and the Daughter had notice of Skyhigh’s claims under the SA, evidence the Daughter’s active assistance to Yu, to transfer away his assets and to put such assets out of reach of Yu’s creditors such as Skyhigh.  The acts of Yu and the Daughter to put the Property in the Daughter’s sole name in January 2019 were made in the belief that the Daughter would be insulated from Skyhigh’s claims, as Yu was persuading Skyhigh at that time that the Daughter was never a party to the SA and the other Contractual Documents.

30.The Daughter maintains that Yu never had any interest in the Property, such that the Property Transfer at no consideration was innocuous.  On her case, the Property was purchased by her mother (“Mother”) as a gift to her in 2016, so that she could have a home in Hong Kong and be close to the family home where the Mother resided.  She claims that her Mother worked as the Deputy General Manager and Head of the Administration Department of a subsidiary of an established (but unnamed) listed company in Hong Kong.  The Daughter stated that it was her “impression” that her Mother earned a “sizable independent income”, such that on her understanding, the Property was financed by the Mother’s personal funds, with a mortgage loan from the bank which was guaranteed by the Mother.

31.As to why Yu was named as the registered co-owner of the 10% interest in the Property, the Daughter explained that as she had just graduated from University without any substantial or stable income in 2016, a co-owner was necessary to support her application for a mortgage loan.  The Mother was already the owner of their family home and residence, and for stamp duty reasons only, Yu was named as the 10% co-owner of the Property, which was on the advice of the Mother’s solicitors.  She also explained that the Mother was advised to include a “nominee co-owner” “so as to better keep an eye” on the Daughter and her assets.  According to the Daughter, it was at the Mother’s request that Yu held the share in the Property on trust for the Daughter, but he had not contributed financially to the purchase of the Property at all.

32.The Daughter’s explanation as to why Yu’s share in the Property was transferred to her in 2019, was that the Mother and Yu had a divorce around the end of 2018, and to have a clean break, the Mother had asked Yu to transfer his share in the Property back to the Daughter.

33.Again, these disputed facts have to be tested and determined at trial, but it is upon all such evidence that this Court has to assess whether Skyhigh has a good arguable case against the Daughter under the Contractual Documents, and whether there is a real risk of dissipation to make it just and convenient to grant the injunction sought.

34.As contended for Skyhigh, I have to agree that the Daughter has not been forthcoming in her evidence as to the alleged source of funds for the acquisition of the Property.  The Daughter’s case is that the Mother had the financial means to acquire the Property, and that Yu had not paid anything for the Property to have any interest therein.  However, apart from the Daughter’s own bare allegation, no documentary evidence has been produced to support her assertions in these respects, not even in the form of an affirmation from the Mother, to confirm the Daughter’s claims and to assert her interests in the Property.  Moreover, as highlighted by Mr Lam for Skyhigh, the Daughter’s claims are self-contradictory and inherently improbable.  According to the Daughter, the Property was purchased by the Mother in 2016 as a gift to her, so that she would have a home in Hong Kong.  However, on the Daughter’s own case, she had decided in 2016 to move to Shenzhen to take up a full-time job there. Her claim that the Mother had the necessary means to purchase the Property out of her own income was vague, unparticularised as to details and lacking in documentary and supporting evidence. She accepted, in her second affirmation, that the Mother had received money from Yu (as head of the family) from time to time prior to their divorce.

35.The assertion that the Mother would go to the lengths of purchasing the Property for the Daughter, immediately upon her graduation, and yet insisted on Yu being registered as a co-owner purely in order to keep an eye on her, appears to be self-contradictory.  If the Mother had sufficient trust in the Daughter to decide that she was mature enough to own and hold a property in Hong Kong of substantial value, it seemed superfluous to have her husband’s name included as nominee owner. It is more consistent with Yu having paid for the purchase of the Property, in whole or in part.

36.The claim that upon their divorce in 2018, it was at the Mother’s request for a clean break of her assets with Yu, that the Property was transferred back to the Daughter, is also unconvincing and inconsistent.  The Property was held in the names of the Daughter and Yu, and not Yu and the Mother.  A clean break and division of the assets of the Mother and Yu would not have to involve the Property, even if it was the case that the Property was held by Yu on trust for the Daughter. Again, the need to involve the Property in the clean break suggests that Yu did have an interest in the Property.

37.Taken together, I do not consider the Daughter’s evidence on her sole beneficial ownership of the Property to be credible.

38.Yet, it is clear from the evidence in this case that Yu was accustomed to putting assets in his Daughter’s name, or using the Daughter’s name to hold shares and assets he acquired - irrespective of whether he had obtained the prior consent of the Daughter for so doing. 

39.It is also pertinent that the Daughter has never in her evidence claimed that she had made inquiries with either Yu, or her Mother, at any time, as to any of the matters relating to Skyhigh’s claims against her on the basis of the Contractual Documents on which her signature appears.  This is so, notwithstanding firstly, her claim that someone had signed in her name without her knowing, but she had no knowledge as to who might have done so.  If she had no knowledge, she would naturally have asked Yu, but she never said in her affirmation that she had done so. Secondly, the assertion in her affirmation is that she was a victim of forgery or fraud. If she was indeed the innocent victim as claimed, or if Yu’s claim that he had forged the Daughter’s signatures was true, the Daughter has not been forthcoming enough to state this fact: that it was her father who was the forger.  I accept the submissions made on behalf of Skyhigh, that on the entirety of the evidence, the Daughter has not been candid and it seems reasonably clear that she had been compliant with, if not deliberately blind (as is more probable than not on the state of the current evidence) as to how her name and signatures were used by Yu as his nominee throughout the years, such that her consent to her father’s use of her name and signature may be reasonably and logically inferred. The lack of evidence on the Daughter’s confrontation with Yu as to the truth of the events allegedly withheld from her suggests that she continued to be under Yu’s control and will continue to be compliant with any further demand that may be made by Yu for assistance in the dealings with property in her name.

40.On the question of whether Skyhigh has a good arguable case against the Daughter under the Contractual Documents bearing her signature, I have borne in mind the observations made by the Court in the context of the standard of proof in cases of forgery.  In Re H & Others (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at 856, and cited in Nina Kung v Wong Din Shin (2005) 8 HKCFAR 387, at 560 the Court stated:

“The balance of probabilities standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in that particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence.”

41.At this interlocutory stage, the Court is not required to make a conclusive finding on the probabilities of the occurrence of the factual matters.  However, even in considering whether a good arguable case is established, it remains relevant that in assessing the evidence and the strength or weaknesses and credibility of Skyhigh’s and the Daughter’s case, forgery by Yu is less likely than his signing the Contractual Documents with the Daughter’s prior consent or subsequent ratification.   

42.Looking at the evidence as a whole, therefore, I am satisfied in this case that Skyhigh has a good arguable case against the Daughter on the basis of her being a party and signatory to the Contractual Documents. It is not necessary to show that she was a person holding assets on trust or as nominee for Yu, in the sense that she is an “innocent third party” who is not a substantive defendant, within the Chabra sense as the alternative basis of Skyhigh’s application.

43.Whether the injunction sought by Skyhigh is to be granted as the usual Mareva relief, or under the Chabra jurisdiction of the Court, Skyhigh has to show that there is a real risk of dissipation to justify the order sought.  The legal principles relating to the assessment of a risk of dissipation are clear (as summarized in Re Chau Cham Patrick (a bankrupt) [2016] 2 HKLRD 278, and Great Wall Pan Asia International Investment Company Limited v Cervera Holdings Limited and Anor, unreported, HCCT 13 of 2016, 1 June 2016 referred to by Counsel), and are not seriously disputed.  Counsel for the Daughter has also referred to the parts of the judgments of Godfrey J in Honsaico Trading Ltd v Hong Yian Seng Co Ltd [1990] 1 HKLRD 35 and of Anthony Chan J in Crete Maritime Corp v Emirates Shipping Line DMCEST [2017] 5 HKLRD 345.  In Honsaico, Godfrey J referred to the “devious conduct of the defendant in its dealings with the plaintiff” and observed in that context:

“I have, however, come to the conclusion that the defendant exhibited an unacceptably low standard of commercial morality in its dealings with the plaintiff; and this drives me to conclude that there is a danger that if the defendant thought it was in its best interests to do it, it would not shrink from attempting to defeat the interests of the plaintiff under any judgment the plaintiff might obtain here.”

44.In Crete as well as other decisions, the courts have warned against drawing inferences of dissipation too easily from a defendant’s conduct, and such reminder has not been overlooked.  In Eastman Chemical Ltd v Heyro Chemical Co Ltd (No 2) [2012] 3 HKLRD 307, the Court highlighted the high standard of proof of risk of dissipation, stating that there must be “solid evidence” of the risk of dissipation of assets.  At the end of the day, the conduct should be “unjustifiable” or otherwise “improper”, although it is not necessary to show a “nefarious intent” on the part of the defendant.

45.For the purpose of the Chabra order, the fact that Skyhigh has a good arguable case against Yu for breach of the SA is not disputed.  From the evidence of Yu’s dealings in this case, it is clear that he had substantial control and power of disposition over assets which are in the Daughter’s name – as he was obviously able to sign documents in her name to transfer or deal with assets in her name.  On his case, he entered into the SS Agreement and the SA and dealt with the Daughter’s shares in the Company, without her involvement, and had signed her name.  He was also able to procure the Share Transfer of the Daughter’s shares in YJM to his sister, in late 2017. From these, it can be reasonably and logically inferred that the assets in the Daughter’s name are actually held by her as nominee or trustee for Yu, as the ultimate beneficial owner. 

46.The fact that Yu is able to exercise substantial control and power of disposition over assets in the Daughter’s name also shows that there is a real risk that such assets may be dissipated and disposed of by Yu or by the Daughter on his instructions, in the absence of a freezing order. On the entirety of the evidence in this case, the Daughter had obviously and for some years been following her father’s instructions in the dealings made in the assets held in her name, or otherwise leaving them to her father, without questions being raised.  There is good reason to suppose that the Daughter well knew and was content to be used by her father to hold his assets as his nominee, and on his behalf. I repeat the observations made in paragraph 39 above.

47.Again, looking at the evidence as a whole at this stage, which includes (but is not confined to) the conduct of Yu, I am driven to the conclusion that in the absence of an injunction, there is a real risk that Yu would take steps to dispose of property which is not only in his direct name and control, but also property in his control and power through the Daughter, and that the Daughter would follow his instructions and co-operate with him in the disposal, as she had done in late 2017 and in January 2019. 

48.For all the above reasons, I grant orders in terms of paragraphs 1 to 3 of the HCA Summons.  The basis for the conditions sought to be imposed by the Daughter on 24 April 2020 for the withdrawal of the Summonses has not been established.  If the Daughter had accepted the offer made in the letter dated 8 October 2019 from Skyhigh’s solicitors, the costs incurred thereafter up to the hearing on 22 May 2020 could have been avoided. Accordingly, the order nisi on costs that I make on the Summonses is that the Daughter should pay to Skyhigh the costs incurred after 8 October 2019 up to and including the hearing on 22 May 2020, with certificate for 2 counsel, with the remainder of the costs in the cause.

Mr Douglas Lam SC and Mr Roger Phang, instructed by Reed Smith Richards Butler, for the plaintiff in HCCT 29/2019 & the defendant in HCA 1434/2019

Mr Robert Pang SC and Ms Lydia Leung, instructed by Siao, Wen and Leung, for the 2^nd defendant in HCCT 29/2019 & the plaintiff in HCA 1434/2019