Yu Quan Li and Another v. Suen Kin Wing

HCA 1671/2018

[2022] HKCFI 2358

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1671 OF 2018

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BETWEEN

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REASONS FOR DECISION

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1.The defendant has been subject to a worldwide mareva injunction obtained by the plaintiff since July 2018. At the end of the hearing of his application to discharge the injunction, this court dismissed the application with costs summarily assessed against him. Below are my reasons.

Background

2.The claim in this action is for fraud of the defendant against the plaintiff.  Briefly, the defendant is a former associate director of UBS AG (“UBS”).  In October 2014, the plaintiffs opened an account at UBS for the purposes of investment (the “UBS Account”).  The defendant was the client advisor of the UBS Account.  Acting on the defendant’s advice, the plaintiffs regularly remitted amounts in RMB into the UBS Account for investment purposes (the “Investment Funds”)

3.According to the plaintiff, the defendant represented to the plaintiffs that since investments through the UBS Account must be made in Hong Kong or US dollars, the RMB would first be subject to a foreign currency exchange process running through UBS, but he could arrange to effectively short-circuit the process by first transferring the funds to another account.  That, the plaintiffs say, provided the window for the defendant to intercept the Investment Funds and channel the same for his own use.  Upon discovery of that, report was filed and the defendant was arrested by the police on 12 June 2018.  That eventually led to the criminal charges which he now faces.

4.On 18 July 2018, the plaintiffs applied for and obtained a worldwide mareva injunction freezing the defendant’s assets up to the value of HK$130,000,000, which was varied and continued by this court on 27 July 2018 (“the Injunction”).  Ancillary to the Injunction was the usual disclosure order in respect of the defendant’s assets.

5.By summons filed on 8 July 2022, the defendant applied to “解除”, ie to discharge the Injunction.  In support, he filed his affirmation of the same date whereby he stated his request for discharge of the Injunction to enable him to pay the contribution towards the costs of his criminal proceedings pursuant to the offer of legal aid.  A copy of the relevant certificate of offer of legal aid was exhibited. These were all that the defendant put forward for the purpose of his application.

6.Within a week, the plaintiffs’ solicitors came up with their affirmation in opposition filed on the day before the hearing in response to the scanty content of the defendant’s affirmation in support. Notwithstanding this court’s explanation, the defendant confirmed that he would not seek leave to file an affirmation in reply, and that he would proceed on the basis of the materials before the court.  So he did.

Discussion

7.The defendant’s application is devoid of merits.

8.As an application to discharge the Injunction, which has been in place since July 2018, the defendant in support stated no more than his reason for the application.  Reason for the application is not justification for the requested discharge.  No ground whatsoever was put forward.  Nothing was said either by way of affirmation evidence or submission in respect of any of the factors that the plaintiffs succeeded in establishing back in 2018 to entitle them to the Injunction in the first place.

9.The defendant did not say that the Injunction was impeachable from the outset.  The fact was that no application for discharge has been taken out by now, notwithstanding that the defendant has engaged full legal team including Senior Counsel in other applications such as his application for stay of proceedings in 2019[1].  Nor did the defendant suggest that the Injunction ought to be discharged because of change of circumstances since 2018.

10.According to the plaintiffs, the circumstances since grant of the Injunction until now could only demonstrate that the Injunction should hardly be relaxed, let alone discharged.  Essentially, the plaintiffs tendered evidence of alleged repeated breach of the Injunction and non-compliance with the ancillary disclosure order on the part of the defendant.  With previous leave of this court, the plaintiffs have actually commenced committal proceedings against the defendant (HCMP 633/2019)  which are still ongoing.

11.Opting not to file any affirmation in reply, the defendant was taken not to contradict the above affirmation evidence of the plaintiffs at least in respect of the sequence of events since the Injunction until the present.

12.The defendant failed to put forward, and to discharge his burden of substantiating, any justification for the requested discharge of the Injunction.

13.Insofar as the defendant was seeking to vary instead of discharging the Injunction, his reference to the financial need arising out of the payment of contribution towards legal aid for defending his criminal proceedings remains merely his reason.

14.The defendant’s right to defend against the criminal charges against him is noted.  Yet even so, it is trite that the defendant has the burden to show by sufficient evidence that he does not have other asset to meet the payment and the purpose of the requested relaxation of the injunction is not an attempt to dissipate the assets to frustrate the enforcement of any judgment that the plaintiff may obtain against him eventually: see XY, LLC v Jesse Zhu [2018] HKCFI 1485 (at §§20-22).

15.In the present case, the defendant did not even begin to discharge his burden.  As mentioned, the defendant has been legally represented by full legal team at one stage.  He provided no explanation and evidence in respect of his financial situation since then.  Coupled with the un-contradicted affirmation evidence from the plaintiffs, an account of the entire assets of the defendant and its development since the grant of the Injunction was not before this court.  There was no way this court could gauge any assertion by the defendant of lack of asset now to meet his ends, however desperate he might project his situation to be.

16.The circumstances pointed out above by the plaintiffs in relation to the quality of the defendant’s compliance with the Injunction and the ancillary disclosure order discussed above also added a real concern, if not skepticism, about the risk of dissipation of the assets of the defendant.  That simply worked against the defendant in the consideration for the present purpose.

Conclusion

17.Hence the dismissal of the defendant’s application with costs, which this court summarily assessed at HK$98,000 and ordered the same to be paid within 14 days.

18.The background of the defendant does not convince this court that he is unable to adequately understand English. Nevertheless, the hearing was conducted in Punti for his benefit.  If requested, interpreter assistance will be arranged for him for the handing down of these reasons.

Mr Tommy Cheung, instructed by Addleshaw Goddard (Hong Kong)  LLP, for the 1^st and 2^nd plaintiffs

The defendant appeared in person