Americhip Inc v. Zhu Hongling and Others

HCA 1644/2016

[2021] HKCFI 2073

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1644 OF 2016

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Before: Mr Recorder Manzoni SC in Chambers

Date of Hearing:  9 July 2021

Date of Decision:  20 July 2021

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D E C I S I O N

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1.This is an application made by plaintiff for further injunctive relief against the 1^st defendant in order to guard against the risk that the 1^st defendant will remove assets under her control from the jurisdiction, or will otherwise dissipate those assets. The plaintiff seeks an injunction over an amount equal to the interest and costs that it expects to recover by way of a judgment to be handed down by Madam Justice Mimmie Chan in due course. The trial of the action took place between 23 February 2021 and 4 March 2021, with oral closing submissions taking place on 9 April 2021.

2.On 20 June 2016, the day before the writ in the action was issued, the plaintiff obtained an injunction from DHCJ Marlene Ng against the 1^st defendant in which a sum of HK$12,476,607 was frozen.  That injunction remained in place until the 1^st defendant paid that amount into court on 20 July 2016, thereby permitting its discharge in accordance with its terms.  The plaintiff contends that the original injunction, and the payment into court reflected only the principal amount of the plaintiff’s claim, and it is now entitled to further injunctions in respect of interest and costs.

3.The plaintiff has made it clear that:

(1)  it seeks a proprietary injunction in respect of its claim for interest;

(2)  it seeks a mareva injunction in respect of costs.  However, in oral submissions the plaintiff expanded its claim for a mareva injunction to include an amount for interest, just in case the court was not with the plaintiff in respect of its proprietary claim.

4.As a result, I must assess each of interest and costs separately by reference to the different principles that apply to proprietary injunctions and to mareva injunctions.

The Principles

5.The principles upon which a proprietary injunction may be granted are relatively well settled and have been restated by Mr Recorder Eugene Fung SC in Zhang Yan and Others v Asa Bullion Ltd [2019] HKCFI 179 at [11] as follows (with citations omitted):

“(1) Where a plaintiff asserts title to property or seeks to trace property which belongs to him, the court has jurisdiction to grant a proprietary injunction restraining the disposal of that property.

(2) for the grant of a proprietary injunction, there are three elements which the plaintiff has to demonstrate, following the American Cyanamid approach: (a) that there is a serious issue to be tried on the merits; (b) that the balance of convenience is in favour of granting an injunction and (c) that it is just and convenient to grant the injunction. It is not necessary to show any risk of dissipation of assets.

(3) a proprietary injunction must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff.

(4) in order to justify the grant of a proprietary injunction, the plaintiff should ordinarily adduce some reasonable evidence of the existence of the specific asset (or its traceable proceeds) and that the same is being held by or under the control of the defendant.  Where the asset forming the subject matter of the proprietary claim has been dissipated and can no longer be traced, a proprietary injunction cannot ordinarily be granted.”

6.The principles relating to the grant of a mareva injunction are also well established.  The applicant must show that: (1) he has a good arguable case on the substantive claim over which the court has jurisdiction; (2) there are assets within the jurisdiction; (3) the balance of convenience lies in favour of the grant; (4) there is a real risk of dissipation of the assets which would render the plaintiff’s judgement of no effect.

7.The principles relating to the assessment of a risk of dissipation have been set out recently by Coleman J in Predicine Holdings Ltd v Bianchi (Hong Kong) Ltd [2021] HKCFI 123 at [76] as follows:

“(1) The applicant must show a real risk, judged objectively, that a future judgement would not be met because of an unjustified dissipation of assets.

(2) In this context, dissipation means putting the assets out of reach of a the judgement whether by concealment or transfer. Whilst it may not always be necessary to demonstrate a nefarious intent, there must be something more than merely ordinary or usual dealing with assets.

(3) What must be threatened is unjustified dissipation. It is not the purpose of a freezing order to provide security for the claim. Rather, the purpose is to restrain a defendant from evading justice by disposing of, or concealing, assets otherwise than in the normal course of business, in a way which will have the effect of making the defendant judgement proof.

(4) The purpose of a freezing order is not to prevent a corporate defendant from dealing with its assets in the normal course of business, or to restrict an individual defendant from conducting his personal affairs in the way he has always conducted them, provided that such dealing and conduct are legitimate.

(5) Where there is more than one respondent to the application, the risk of dissipation must be established separately against each respondent.

(6) The burden is on the applicant to show a real risk of dissipation, which must be established by solid evidence. Mere inference or generalised assertion is not sufficient. Neither are unsupported or bare statements of fear, which will carry little weight. Resort to mantras such as “low commercial reality” are of little value unless supported by solid evidence.

(7) It is not good enough to establish a sufficient risk of dissipation merely to establish a good arguable case that the defendant has been guilty of dishonesty. It is necessary to scrutinise the evidence to see whether the dishonesty in question points to the conclusion that assets may be dissipated.

(8) It is also necessary to take into account whether there appears at the interlocutory stage to be properly arguable answers to the allegations of dishonesty.

(9) An assessment of the risk of dissipation necessarily involves an evaluative and predictive judgement. The evidential burden can be satisfied by drawing proper inferences from a holistic consideration of all the circumstantial materials that are indicative of risk, including matters which point against such risk.

(10) Where the court accepts that there is a good arguable case that a respondent has engaged in wrongdoing against the applicant relevant to the issue of dissipation, that holding will, or may, point powerfully in favour of a risk of dissipation.

(11) Hence, where the dishonesty alleged is at the heart of the claim against the defendant (being either the substantive claim or the claim for an injunction), the court may find it able to draw the inference that the making out of that case to the necessary standard also establishes sufficiently the risk of dissipation of assets. But the evidence of dishonesty must be relevant to the risk of dissipation and not simply to the underlying claim.

(12) Evidence of delay in making the application may be relevant in the assessment of risk of dissipation. Delay after a defendant gained knowledge of the plaintiff’s claim can militate against the risk of dissipation because that defendant has already had the opportunity to dispose of assets, should he be inclined to do so. But delay of itself does not necessarily bar relief. The ultimate question remains whether the plaintiff can show a real risk of dissipation despite delay.

(13) Each case is fact specific, and the relevant factors must be looked at cumulatively.”

Good Arguable Case

8.Given that there has already been a trial in this matter, and that judgment has been reserved following oral closing submissions on 9 April 2021, it would be inappropriate for me to say anything about the merits of the underlying dispute.  However, in order to justify an injunction, it is necessary for the court to be satisfied that there is at least a good arguable case.  Therefore, it is necessary for me at the very least to identify that case.

9.The plaintiff was in the business of designing, engineering, developing and selling an array of multi-sensory marketing and advertising materials and promotional products manufactured for it by contract manufacturers that are mostly located in Shenzhen.  For this purpose, it employed a Mr Dean and a Ms Chen.  The plaintiff contends that Mr Dean and Ms Chen defrauded the plaintiff out of approximately US$10 million by way of overpayments and “kickbacks”. 

10.Its claim against the 1^st defendant is that she received the sum of HK$12,476,607 of the money which Mr Dean and Ms Chen had defrauded from the plaintiff in circumstances which render her liable to return that monies to the plaintiff. The plaintiff brings a proprietary claim against her in that sum, citing causes of action for dishonest assistance, knowing receipt, unjust enrichment or restitution.  It seeks a declaration that the plaintiff is entitled to trace into the money held by the 1^st defendant, that she holds that money on constructive trust for the plaintiff and that the 1^st defendant is liable to account to the plaintiff.  It also seeks further, or alternatively, damages, equitable compensation and/or restitution in a sum to be assessed, as well as interest, consequential directions and costs.

11.The court reached the conclusion in 2016 that the plaintiff had a good arguable case in relation to one or more of those causes of action because it granted an injunction. Further the case has not been struck out, and has proceeded to a full trial. On this basis I am prepared to accept that the plaintiff is able to demonstrate, to the relevant standard for the purposes of granting an injunction, that it has a good arguable case on the basis pleaded.  However, I decline to identify any detail as to that conclusion because I do not think it appropriate for me to do so whilst judgment is reserved from the trial.

12.In relation to the proprietary claim for interest, it seems to me that the plaintiff has more difficulty.  I accept that, on the basis on which I approach the question of a good arguable case, there is a good arguable case that a proprietary claim will attach to the plaintiff’s money in the hands of the 1^st defendant, and to the traceable proceeds thereof.  The traceable proceeds would include any money which the 1^st defendant has earned with the plaintiff’s money.  But there is no proprietary claim beyond that. 

13.Thus if the 1^st defendant had decided to take the HK$12,476,607 and place it in dollar notes under her mattress (to use a facile example for the purposes of illustration) there would be nothing earned with that money and hence there could be no proprietary interest in anything other than the HK$12,476,607.

14.However, if the 1^st defendant had chosen to take the HK$12,476,607 and purchase high yielding equities with it, then a proprietary interest would extend to those equities and any yield that they had provided to the 1^st defendant.

15.In this case there is little evidence as to exactly what the 1^st defendant did with the HK$12,476,607.  It was paid into the 1^st defendant’s Wing Lung bank account numbered 602-21015-434 on 6 or 7 May 2015 (there is contradictory evidence as to the date).  But there is no positive evidence as to the movement of funds into or out of that account since then.  Although her witness statement attaches a passbook for that account between December 2014 and March 2016, as appendix 4, that is not in the evidence before me.  Her witness statement, at paragraph 43, says that she has not moved or used the HK$12,476,607 that was paid into that account.  She told the court that as at 10 June 2016 she had assets in her account numbered 602-21015-434 of just over HK$21 million.

16.Her statement also says that she has a number of accounts at the Wing Lung Bank, including an Investment account numbered 02060118803242 and a securities account numbered 688-3-11048-5.  She gives some detail of payments into and out of those accounts.    

17.The only other relevant evidence to which I have been directed is her evidence that when she paid HK$12,476,607 into court in 2017 it was made up of monies from her Wing Lung bank account numbered 602-21015-434 and a loan of HK$1.2 million from her brother. 

18.Further, there is no evidence of which I am aware of the interest, if any, that Wing Lung paid on the account numbered 602-21015-434 into which the HK$12,476.607 was paid.

19.The plaintiff appears to contend that the 1^st defendant mixed the HK$12,476,607 with her own assets and therefore must be deemed, according to the rule in Hallet’s Estate (1880) 13 Ch D 696, to have withdrawn her own funds first when making the payment into court.  That may be correct as a matter of principle, but given the lack of any evidence as to the movement of funds or the balance of the Wing Lung account numbered 602-21015-434 other than on a few selected days, I am unable to make any assessment of that proposition on the facts.  In any event it does not assist me to establish any returns that the 1^st defendant may have made with the money which she is alleged to have knowingly received.

20.Accordingly, on the basis of the evidence currently before me I am unable to make any assessment as to whether there is a good arguable case for a proprietary claim in respect of interest. 

21.The way in which the plaintiff has calculated the quantum of interest over which it seeks to make a proprietary claim also makes it is clear that in fact what the plaintiff is seeking is simply an injunction over what it says will be the discretionary interest it will ultimately recover.

22.The quantum of interest is calculated, according to paragraph 108 of the plaintiff’s skeleton argument, as “D1’s anticipated liability in respect of interest at 1% over the HSBC best lending rate”.

23.Paragraph 72 of the plaintiff’s skeleton argument states :

“As P has at least a good arguable case on the merits of the substantive claim, it also has a good arguable case in relation to interest and costs. Once liability is established, the practice of the court is well settled in relation to the award of interest and costs. In order to compensate the plaintiff for being kept out of its money by the defendant, the general practice of the court is to award interest at a commercial rate plus 1%; Polyset Ltd v Pandandat Ltd, FACV 28/2000 per Ribeiro PJ at [13].”

24.It is, of course, obvious that there can be no proprietary claim in respect of any statutory interest which the court may, in its discretion, decide to award the plaintiff.

25.In all the circumstances the claim for a proprietary injunction in respect of interest must be dismissed on the basis that there is no good arguable case demonstrated in respect of a proprietary claim for interest.

26.The position in respect of costs, and in respect of the mareva claimed over the interest entitlement, needs a separate analysis. 

27.The 1^st defendant contends that the plaintiff cannot have a good arguable case in relation to costs.  She cites Gee on Commercial Injunctions, seventh Edition at [3-301], where the author has stated “Mareva relief is not available in aid of a costs order which has not yet been made i.e. as a form of security for costs.”.

28.She also cites Cooke v Venulum Property Investments Limited [2013] EWHC 4288 Ch, in which Mr Justice Morgan refused to grant a mareva injunction against a third defendant that had been brought into the action because the property in question had been transferred to it.  He confirmed that a mareva injunction would not be ordered in favour of a party if no costs order had been made against it.  But on a detailed reading of the case it is clear that there was no underlying cause of action against the third defendant in that case.  The third defendant had been brought in simply in an attempt by the plaintiff to secure the property.  The mareva was sought on that basis, and was refused because there was no underlying cause of action against the third defendant.

29.The position is different in this case.  The plaintiff does have an underlying cause of action against the 1^st defendant.  Gee on Commercial Injunctions identifies at [21-032] that:

“In practice the courts have granted injunctions in forms limited to a single maximum sum (which makes an allowance for interest and costs), leaving it to banks and third parties to apply to the court for a variation if there is a difficulty in any particular case.”

30.That passage supports the proposition that where there is an underlying cause of action, it is open to the court to grant a mareva injunction in an amount to include for interest that will be recoverable as well as costs that may be ordered to be paid by the defendant.

31.The question came before Anthony Chan J in Crete Maritime Corp v Emirates Shipping Line [2017] 5 HKLRD 345, in the context of an application for a mareva Injunction in aid of intended arbitration in London.  The Judge said this:

“37. In my view, a claim for costs should not be included in a Mareva injunction without sufficient justification both as to entitlement and quantum. The entitlement as to the costs of the arbitration will only arise if it is won by Crete. I have a good deal of reservation whether it was appropriate to cover the Arbitration costs in the Injunction when the dispute turns upon, inter alia, expert evidence to be ventilated in the Arbitration. However, I do not believe that the arguments were fully explored at the hearing, and it is unnecessary for this Court to come to a conclusion on this issue in the light of the decision to discharge the Injunction. On the other hand I would respectfully make a few observations on such a claim.

38. Firstly, it must be remembered that the threshold for triggering the Mareva jurisdiction in respect of the merits of Crete’s case is not very high, namely, a good arguable case. It is highly questionable whether it should follow or assume that Crete’s good arguable case will prevail in the Arbitration. In hearing and ex parte application, the judge would not be able to examine the merits of the defendant’s case in any real depth due to primarily, the absence of the defendant and time constraint. That being the case, it would be wrong to ask the court to grant a relief which depends upon an adequate evaluation of the merits of the opposing cases. Further, such an exercise is not for the ex parte Judge.

39. Secondly, there are many uncertainties on costs entitlement. For example, the case may settle; a strong case may collapse due to, e.g., the absence of a key witness; and a winning party may be penalised on costs due to unreasonableness in its conduct.

40. Thirdly, to include a costs element in an injunction has the effect of piling on the unfairness and prejudice for the recipient. He is likely to feel the pressure to settle the action quickly.

41. Fourthly, more often than not costs are reduced after taxation, and therefore it would not be right to simply include all the claimed costs in an injunction.”

32.I agree with those comments.  It seems to me that whilst there is a jurisdiction available to the court to include an allowance for interest and costs within an amount frozen by way of mareva injunction, that jurisdiction ought to be exercised carefully.

33.Factors which may be relevant to the exercise of the discretion include the time at which the application is made and the ability of the court to make an assessment of the likely recovery of interest and costs.  Thus, in the circumstances in which Anthony Chan J found himself in that case, it was likely to be very difficult to make an accurate assessment because the proceedings appear not to have been commenced.  There was a whole range of matters which were unknown and which might have affected both the liability for and quantum of interest and costs. 

34.At that early stage, it may be impossible to ascertain the real strength of the plaintiff’s case on the underlying cause of action.  As the judge said, the threshold for the grant of a mareva injunction is relatively low in relation to the underlying cause of action.  It does not follow that simply because there is a good arguable case on the underlying cause of action, there is also a good arguable case for costs and/or interest.  Costs and interest are matters to be addressed in the discretion of the court, and they do not follow automatically from the good arguable case in relation to the underlying cause of action.  If the plaintiff is able to demonstrate a strong underlying case, then it may be that there is an increasing likelihood that it will demonstrate a good arguable case for both interest and costs.  But if the court is unable to make any real assessment of the merits of the underlying case, the court is in even more difficulty making an assessment of whether there is a good arguable case for costs and interest.

35.The same goes for the quantum of interest and costs.  The later that an application is made within a process, the more accurate an assessment of interest and costs incurred is likely to be, because a more accurate picture of the time when the Judgment might be made, and therefore the costs likely to be incurred will be available.  Equally, in the later stages of a process a court may find itself with greater and more accurate information as to the good arguable case for recovery of interest and costs.

36.In this case the trial has concluded.  I accept that it is therefore possible, with some level of accuracy, to predict the quantum of interest and costs incurred.  However, I have not heard the trial, and I consider it would be inappropriate for me to investigate the merits of the case (over and beyond a good arguable case), or the conduct of the parties throughout the process leading up to the trial. Those are matters which the trial judge will have to consider when rendering her judgment after the trial, and when making an assessment of liability for costs.  It is not appropriate for me at this point in time to engage upon an exercise which would require me to make findings and reach conclusions, albeit on a provisional basis, as to the likely amount of interest that the judge might award, or the way in which she may wish to exercise her discretion on costs.

37.In those circumstances I do not think that I am in a position to say that there is a good arguable case for either interest or costs.  Had I been the trial judge, the position may have been different.  Equally had the application been made before me prior to trial the position may have been different because it could not be said that I was trespassing upon territory which, at this stage of the process, seems to me to be exclusively within the jurisdiction of the trial judge who has reserved judgment and is therefore carefully considering all of these questions.

38.Consequently, I decline to reach a conclusion that the plaintiff has demonstrated before me a good arguable case for interest and costs.

Balance of Convenience

39.In case I am wrong about the good arguable case, and in case it might be held elsewhere that I should indeed have engaged with the merits of the underlying cause of action, and also engaged in the merits of the way in which the trial judge might exercise her discretion on interest and costs I go on to consider the balance of convenience.

40.The same arguments would indicate that, on the balance of convenience, I should not make any attempt to second guess what the judge might conclude in her judgment.

41.To put that in a slightly different way, the correct thing for the plaintiff to have done was to ensure that this application, if it was to be made, was placed before the trial judge, who was best placed to make an assessment of the matters which are relevant. 

42.I understand that the plaintiff made an oral application before the trial judge towards the conclusion of the trial, but she refused to hear it because she required a summons to be issued.  Subsequently a summons was issued, but the trial judge did not have sufficient time available in her diary to hear it, so the matter was listed on an ex parte basis before Mr Recorder Eugene Fung SC, and subsequently on an inter partes basis before me. 

43.In such circumstances the plaintiff may say that it has tried to put the matter before the trial judge.  But I would not agree with that.  There has been plenty of time for a properly constituted application to be made by the plaintiff to the trial judge.  It could have been made at any stage since the 1^st defendant’s witness statement was served on 21 June 2017, for reasons which I shall explain below.  To the extent that further time was needed more fully to evaluate the quantum and likely recovery of interest and costs, an application certainly could have been made in the few months before trial, or even at the start of the trial.

44.That the plaintiff chose to leave such an application to the last minute, and then to make it without a summons does not constitute a good enough reason for me to engage with matters which are properly left to the trial judge now considering her decision.

45.Further, the delay in bringing the application is an additional reason why the balance of convenience is against the granting of an injunction.  The essence of the plaintiff’s case is that the 1^st defendant has brought assets into the jurisdiction so as to satisfy the requirements for obtaining a permanent residency in Hong Kong under the Capital Investment Entrant Scheme.  Her witness statement dated 21 June 2017, at [9] stated the following in this respect:

“On 2 December 2013, I had successfully passed the Capital Investment Entrant Scheme and obtained approval in principle by the Immigration Department of Hong Kong. A copy of the approval in principle letter granted by the HKSAR Immigration Department is now attached as “Appendix 2”. We were also required to invest a sum of HK$10 million on Permissible Investment Assets class as specified by the HKSAR government (“the PIA”). Equities as shares of companies that listed on the Hong Kong Stock Exchange and traded in Hong Kong dollars belongs to specified financial assets that could also be qualified as PIA. Then we chose to invest at the equity that listed on the Hong Kong Stock Exchange as there was restriction to invest on the property market in Hong Kong by that time. Thus I also opened another security account no. 688-3-11048-5 at Wing Lung Bank as designated account for my investment commitment under the Capital Investment Entrant Scheme.” [sic]

46.At paragraph 19 of her witness statement she confirmed that she obtained approval of her participation in the Capital Investment Entrant Scheme and obtained her Hong Kong Identity card on 6 August 2014.

47.The third affidavit of Timothy Clegg filed in support of this application contends, at paragraph 9, that the plaintiff was unaware, before the course of her oral evidence during trial, that the defendant held shares in Hong Kong.  In the light of paragraph 9 of her witness statement, that is patently wrong.  He also says, at paragraph 13, that if the 1^st defendant’s evidence concerning her assets and status under the Capital Investment Entrant Scheme is accurate she will need to maintain those assets, to a value of HK$10 million in Hong Kong until 6 August 2021 (ie 7 years from the date of her approval under the scheme).  All of the information necessary to form that conclusion, and to understand that the 1^st defendant’s assets deposited into Hong Kong for the purposes of the scheme could be removed after 6 August 2021 without prejudice to her application under the scheme, were fully available to the plaintiff from the moment the 1^st defendant served her witness statement on 21 June 2017.

48.Consequently, the plaintiff had all the necessary information available to it, apart from possibly an accurate quantification of its costs and interest, from the moment on which the 1^st defendant served her witness statement.  I accept that there was no urgency to make an application for a mareva injunction at that time, but there is no reason at all for the plaintiff to have waited until the conclusion of the trial to make an oral application before the trial judge.  Any difficulty which the plaintiff now finds itself in is brought about entirely by its own delay in making the application.

49.For this reason alone, I also reject the grant of an injunction.

Risk of Dissipation

50.Finally, I am not satisfy that there is sufficient evidence to conclude that there is a risk of dissipation.  The principles against which the risk must be assessed have been set out above.  The plaintiff urges me to take a holistic view of the position.  In summary it relies upon four things:

(1)  That the court has already made an assessment of the risk of dissipation in 2016 when it first granted an injunction.  This court, the plaintiff says, should accept that assessment, and the 1^st defendant is not entitled to re-argue that point, having previously lost it and having decided not to set aside the original injunction.

(2)  The 1^st defendant is resident outside Hong Kong, despite her application for permanent residency. She has not been in Hong Kong “for the last one or two years”. 

(3)  Based upon her own evidence, she has been guilty of offences under the Organised and Serious Crimes Ordinance because she had reasonable grounds to suspect that the money she was receiving was the proceeds of an indictable offence.  It is said that because she is prepared to engage in criminal activity she is also likely to deal with her assets so as to avoid enforcement of a judgment against her.

(4)  The time during which she is required to maintain significant assets in Hong Kong is about to expire on 6 August 2021, and given the high probability of a judgment against her in this case, which may not come out before 6 August 2021, and which will almost certainly not be capable of being enforced before 6 August 2021, there is an obvious and real risk that she will move her assets out of the jurisdiction.

51.I do not think that the court’s previous assessment (if there was one) is in any sense binding upon me.  First, it is not at all clear that the assessment was made, because the amount of the injunction granted reflected the principal amount over which a proprietary claim was made.  A proprietary injunction does not require an assessment of a risk of dissipation.  Paragraph 2 of the plaintiff’s skeleton argument before me suggests (but does not expressly say) that the original injunction was indeed a proprietary injunction.  As a result, it is not at all clear that there was any assessment of a risk of dissipation, and I cannot therefore be bound by it.

52.Secondly, as the 1^st defendant points out, that injunction was discharged when she paid the money into court, and cannot bind me now, certainly in respect of a risk of dissipation.  A different sum was sought, at a different time.  A risk of dissipation is something that must be individually assessed having regard to the circumstances that exist at the time that the application is made.  An assessment made by the court back in 2016 cannot be relevant to an assessment of the risk of dissipation in 2021.  Some of the factors which the court may have taken into account in 2016 might also be relevant in 2021, but that is a very different thing to suggesting that the court’s original assessment is binding.  A risk of dissipation is a very different thing to the assessment of a good arguable case, which does not have the same sensitivity to the time the application is made.

53.As to the 1^st defendant’s residency, I do not think that this is a factor which can have any more than a peripheral relevance.  The mere fact that the 1^st defendant lives outside of Hong Kong does not demonstrate a risk of dissipation.  At its highest it may simply show that the 1^st defendant has easy access to other jurisdictions in which she may place her assets.  But that does not begin to demonstrate a risk of dissipation.  Therefore, whilst I accept that it is something which the court should recognise and place into the balance, I do not think that it can bear any significant weight in the overall assessment.

54.As to the suggestion that the 1^st defendant is guilty of offences under the Organised and Serious Crimes Ordinance, the essence of the plaintiffs’s case is that she entered into a foreign exchange transaction with a stranger within a matter of hours of first being introduced to that stranger (See paragraph 87 and 88 of the plaintiff’s skeleton).  In those circumstances the plaintiffs says that the 1^st defendant must be taken to have had reasonable grounds to believe that, having regard to all the circumstances, she may well be dealing with the proceeds of an indictable offence, even if there were also reasonable grounds for believing in some alternative scenario.

55.In my view this does not amount to sufficiently solid evidence upon which a real risk of desk dissipation can be demonstrated.  It is, in reality no more than an allegation of inference and a generalised assertion unsupported by solid evidence.  It may well be that the trial judge will have to make an assessment of this proposition based on the evidence that she has heard, and in no sense do I seek to undermine any view that she may take having regard to the evidence she has heard, but based on what has been put before me, the proposition is mere assertion, and is insufficient on its own to justify a finding of a risk of unjustified dissipation.

56.As to the forthcoming deadline of 6 August 2021, I am not satisfied that this demonstrates a real risk of dissipation.  At best for the plaintiff it demonstrates that on 6 August 2021 the incentive for the 1^st defendant to maintain assets in Hong Kong because of the Capital Entrant Investment Scheme will come to an end.  But the mere ending of an incentive to maintain assets in Hong Kong does not give rise to an inference that there will, thereafter, be an unjustified disposition of assets.  Even if the 1^st defendant does regret having taken part in the scheme, which was the thrust of her oral evidence before the judge during trial, that in itself also does not demonstrate a risk of unjustified disposition.  The proposition is no more than assertion, but not backed by solid evidence.

57.In fact, in my view there is evidence to suggest that the 1^st defendant will not seek to unjustifiably dissipate her assets.  She has paid the sum of HK$12,476,607 into court in circumstances where she did not have to do so.  It would have been perfectly open to her not to pay the money into court but to leave it in her accounts and remain the subject of the original mareva injunction.  That she chose not to do so could be seen as indicative of an overall desire to respect the judgement of this court rather than seek to evade it.

58.Taking all of these matters into account, and taking a holistic view of the entirety of the evidence that is before me, I am not satisfied that there has been demonstrated a risk of dissipation.  For these reasons also I decline to grant an injunction.

Disposition

59.The plaintiff’s application is dismissed.

60.There shall be a costs order Nisi that the plaintiff shall pay the 1^st defendant’s costs of this application to be taxed if not agreed. 

61.The parties have liberty to apply to vary this costs order Nisi.  Any such application is to be made in writing within 5 days of handing down this judgement, limited to 5 pages.  The opposing party shall have the right of a reply in writing, also limited to 5 pages, within 5 days thereafter.  The applying party shall have a right of reply, limited to 3 pages, to be served 3 days after the opposing party’s response. 

Mr Colin Wright, instructed by M B Kemp LLP, for the plaintiff

Mr Man Hon Chiu, instructed by Peter Cheung & Co, for the 1^st defendant