Mason Group Holdings Ltd and Another v. Chiang Ming Chun and Others

HCA 529/2021

[2022] HKCFI 3372

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 529 OF 2021

________________

________________

_________________

D E C I S I O N

_________________

1.This is the substantive hearing of the application of Mason Group Holdings Limited (“P1”) and its indirectly wholly-owned subsidiary Prestige Scenery Limited (“P2”) (collectively, “the Plaintiffs”) to continue the Mareva injunction granted by Wilson Chan J on 26 November 2021 (“the Injunction Order”) prohibiting Chiang Ming Chun (“D1”) from disposing of his assets up to HK $40 million until the determination of the action, and for an ancillary disclosure order. At the conclusion of the hearing, the decision was reserved which I now give.

BACKGROUND FACTS

2.P1 is a company incorporated in Hong Kong listed on the Main Board of the Stock Exchange of Hong Kong. P2 is its indirectly wholly-owned subsidiary.

3.D1 is a businessman engaged in the business in, inter alia, providing health check services.

4.In December 2018, D1 and Terence Leung (“Mr Leung”) of P1 discussed a joint venture project (“JV”) in the healthcare checks industry. D1 was seeking an investor (whose primary role was to provide capital) to make a capital injection of $40 million[1] into the JV with a total capital of $70 million. D1 made a number of representations to P1, including an entitlement to profit guarantees for a number of years under the JV.

5.Induced by these representations, P1 (through P2) entered into the Subscription Agreement and invested $40 million into a BVI company, Hublot Healthcare Group Limited (“D4”), by subscribing for a 27.8% ultimate beneficial holding in D4 which, in turn, directly owns 100% of Mason Supreme Healthcare Group Ltd (“D3”), the operating company of the JV.

6.The other parties to the Subscription Agreement are D1 who is the ultimate shareholder, his nominee Andy Ho (“D2”), D3, D4 and 3 BVI companies, namely, Yuky Holdings Limited (“D5”), Trinity Enterprise Holdings Co Limited (“D6”) and Supreme Medical Holdings Company Limited (“D7”).

7.D1 is the ultimate owner of D5, D6 and D7 (“D1’s Companies”) which together hold 72.2% of D4.

8.Under clause 8 of the Subscription Agreement, D4 and D7 guaranteed to P2 that the net profit of D4 to be not less than $24 million for each of the 3 consecutive financial years ended 30 September 2020, 2021 and 2022 (“the Profit Guarantee”).

9.D1 and D2 gave P2 a guarantee under a deed of guarantee on 22 March 2019 (“the Deed of Guarantee”) that D7 would punctually perform its obligations under the Profit Guarantee.

10.After the Subscription Agreement, the cash investments provided by the Plaintiffs for the purposes of the JV were channelled out by D1 through a series of agreements to outside entities some of which have close connections to D1.

11.Those agreements included, inter alia, (a) a Referral Agreement dated 22 March 2019 entered into by D3 with Bright Leader Enterprises Ltd (“Bright Leader”) and its Covenantor being D2, and Alpha Joy Limited (“Alpha”) and its Covenantor being D1 (“the Referral Agreement”) under which a signing fee of $10 million was payable to each of Bright Leader and Alpha (“the Referrers”) for Referral Services to be provided to D3 for the period ending 31 December 2024 (“the minimum period”); and (b) various service agreements D3 subsequently entered into with agents.

12.It is the Plaintiffs’ case that prior to entering into the Subscription Agreement, they had no knowledge of those agreements, the effect of which was to siphon off the monies invested by the Plaintiffs.

13.The Plaintiffs commenced this action on 9 April 2021, inter alia, for fraudulent misrepresentation and passing off, seeking the return of the $40 million.

14.On 19 November 2021, upon conducting a land search against D1’s known residential property (“the property”), the Plaintiffs discovered that D1 had entered into a provisional agreement to sell the property for $42,080,000 with completion on or before 1 December 2021.

15.In the absence of any response to a pre-action letter sent on 19 November 2021, upon the Plaintiffs’ application on 26 November 2021, the Injunction Order was granted after an inter partes hearing. The present hearing is for the continuation of the Injunction Order pending trial.

LEGAL PRINCIPLES

16.It is well established that for a Mareva injunction to be granted, the plaintiff must demonstrate that (a) he has a good arguable case on a substantive claim over which the court has jurisdiction; (b) there are assets within the jurisdiction; (c) there is a real risk of dissipation of assets, or removal of assets from the jurisdiction, which would render the plaintiff’s judgment of no effect; (d) the balance of convenience lies in favour of grant; and (e) he must comply with the strict duty of full and frank disclosure: see Zhang Yan v ASA Bullion Limited [2019] HKCFI 179 at §17.

I.  GOOD ARGUABLE CASE

17.It is incumbent on the Plaintiffs to demonstrate that they have a good arguable case. It is common ground that the relevant test is that set out in Natural Dairy (NZ) Holdings Limited (in provisional liquidation) v Chen Keen [2020] HKCFI 2491 at §80:

“The threshold of ‘a good arguable case’ is much higher than ‘a serious issue to be tried’ under the American Cyanamid principles. While the plaintiff need not go so far as to persuade the court that it is likely to win, it needs to show a case which is more than barely capable of serious argument, albeit not necessarily one that the judge believes to have a better than 50% chance of success. The existence of a good arguable defence does not necessarily negate a good arguable case …”

(A)  The misrepresentation claim

18.The Plaintiffs must show that there had been (a) representations; (b) which are false; and (c) inducement/reliance by the Plaintiffs on such representations.

19.There is no dispute that the representations pleaded in §10 of the Amended Statement of Claim were made[2].

20.Whether or not those representations are true is a matter of trial. However, the Plaintiffs highlight the following matters:

(a)  the Referral Agreement involving a signing fee of $10 million to be paid to each of Bright Leader and Alpha was signed only 5 weeks after the Subscription Agreement;

(b)  the signing fees represented advance payments to Bright Leader and Alpha for the provision of referral services for the minimum period[3];

(c)  Bright Leader and Alpha are each owned by D1 and/or persons connected to D1;

(d)  D1 and D2 procured D3 to conduct sales of pre-sale services which allegedly brought in a total of deferred revenue of approximately $30.5 million and arranged for a total of over $20 million as prepayment to various parties connected to D1 and D2 for selling the pre-sale services;

(e)  D3 officially commenced business in mid-October 2019 and shortly thereafter D1 and D2 convened a board meeting of D4 to request for the payment of $10 million by P2 as further investment funding pursuant to §§6.9 and 6.10 of the Subscription Agreement when only a one-page ‘spreadsheet in relation to funding needs’ was provided and there was no proof of any genuine need for capital; and

(f)  D3 also had not been in a position to provide and has no genuine intention to provide medical services.

21.The Plaintiffs state that they were not privy to the negotiations of the Referral Agreement[4] and were not informed of nor approved its content[5]. They were only informed by D1 sometime in March 2019 that the Referral Agreement had been signed.

22.It is the Plaintiffs’ case that P2 had been induced by the representations into entering into the Subscription Agreement.

23.Relying on the foregoing matters, Mr Kwan Ping Kan, counsel for the Plaintiffs, submitted that they have shown a good arguable case for misrepresentation and that the statement of principle in Chitty on Contracts (34^th Ed.) at §9-055[6] applies.

24.At the hearing, Mr Jonathan Kwan, counsel for the D1 took issue with the Plaintiffs’ lack of knowledge and approval, in particular, of the Referral Agreement. He relied on an email chain exhibited to D1’s 2^nd affirmation dated 24 December 2021 (“D1 2^nd”) between inter alia D1 and the Plaintiffs’ former solicitors commencing with an email dated 25 February 2019.

25.Mr Leung was on the circulation list of emails dated 25 and 27 February 2019. It would appear from the contents of the 27 February email that one of the attachments to the 25 February was a draft Referral Agreement. On 7 March 2019, Mr Leung sent an email to the others on the circulation list with some comments regarding the draft Referral Agreement.

26.The email chain does not go further than to show Mr Leung (who resigned from P1 in November 2019) to be the recipient of a draft and made some comments on the draft on 7 March which D1 characterized as active participation. There is no evidence that all this was known to the Plaintiffs when P2 entered into the Subscription Agreement on 14 February 2019.

27.Moreover, in D1, D5 and D6’s Amended Defence dated 16 August 2022 which post-dates D1 2^nd, they admit (at §10 (1)) that the Plaintiffs were not privy to the negotiation of the Referral Agreement. It would appear that inter alia D1 is taking inconsistent positions.

28.In any event, what the Plaintiffs knew is a matter for determination at trial.

29.D1 further submitted that there is no basis for the allegation of a lack of intention to provide medical services. There is no challenge that medical professionals were employed, medical equipment was purchased and premises rented for the purpose of such medical services. It is not a case of the Plaintiffs going to the offices of D3 or D4 only to find an empty space with a single photocopying machine.

30.But the real question is whether the funds have been properly expended to build and carry out the business of D3.

31.Under §§4 and 5 of the Referral Agreement if the Referrers fail to achieve “Service Targets” as therein defined, during the minimum period, D3 is entitled to clawback a portion of the Signing Fee on a pro rata basis.

32.As will become apparent, D3 closed down less than 2 years of operations. It is telling that D1 who is in control of D3 appointed his nominee D2 to handle the affairs of D3 despite the Plaintiffs’ objection. D2 has not taken any steps to clawback any part of the Signing Fees when there is no evidence of work done pursuant to the Referral Agreement to justify those fees.

33.I do not consider that the submissions made by D1 undermine the Plaintiffs’ misrepresentation which is plainly arguable.

(B)  The Profit Guarantee claim

34.In the alternative, the Plaintiffs claim against D1 as one of the guarantors under the Deed of Guarantee[7] for the sum of approximately $20 million being the profit guaranteed under the Subscription Agreement.

35.As earlier noted, D4 and D7 guaranteed profits accruing to D4 to be not less than $24 million per financial year between 2020 and 2022. §8.3 of the Subscription Agreement also provides that if D4 fails to complete the preparation of the audited accounts of any financial year on or before the date the actual net profit for such financial year shall be deemed to be 0.

36.No such audited accounts were completed for each of the financial years. Then on 30 July 2021, it was resolved that the operation of D3 shall cease on 15 August 2021. As a result, D4 failed to achieve any profit for the financial years ended 2020 to 2022, leaving unfulfilled the Profit Guarantee under the Subscription Agreement and the Deed of Guarantee.

37.D1’s response to this claim is that by failing to make available the further facility of $10 million as requested by D4 on multiple occasions between 10 December 2019 and 14 January 2021, P2 had wrongfully repudiated its obligations under the Subscription Agreement to inject further capital up to $10 million into the JV. That breach caused HCA 208 to be instituted.

38.In so far as it was suggested that there may have been an improper motive in presenting the present action (commenced 2 months after HCA 208), it cannot be the case as a pre-action letter[8] had been sent to D1’s solicitors on 23 December 2020 well before the commencement of HCA 208.

39.The Plaintiffs dispute the need for the call to contribute further capital which only arises when D4 had performed its obligations under the Subscription Agreement and “has genuine needs for further capital”. Not only had D4 failed to provide P2 with audited accounts and any update on the management of D3, the Plaintiffs’ case is that the calls by D4 were part of an ongoing effort by D1 to “bait” P2 into injecting further capital into D4 with the eventual aim of siphoning them off to D1 and/or his corporate vehicles.

40.On the issue of genuine need, there is a spreadsheet[9] exhibited which the court had difficulty in comprehending. At the hearing, counsel for D1 could proffer no satisfactory explanation for the treatment of various entries and how they are to be understood.

41.The Plaintiffs submitted that the “financial difficulties” of D3/D4 were engineered by D1 (and his nominees) by making “advance payments” of $20 million upfront to Bright Leader and Alpha ostensibly for prospective referral services, i.e. to be provided during the ensuing period of almost 5 years. That amount represents almost 30% of the capital funding for the JV. To expend 30% of a company’s capital on future services that may never materialize is remarkable and cries out for justification.

42.But that was not all: a further $20 million odd was disbursed to 3^rd parties in Pre-Sale Agreements.

43.It cannot be gainsaid that those arrangements do not have any indicia of a “genuine commercial” transaction. Moreover, Alpha is owned by a person who has the same address as D1’s residential address and Bright Leader is owned by D2 who is D1’s nominee/associate. Those matters do little to allay concerns that the Referral Agreement and the Service Agreement are but sham transactions.

(C)  The trademark and passing off claims

44.P1 is the registered owner of the Mason marks, being distinctive trademarks using the word “Mason”. Since 2017, it has also been using the Mason logo (collectively “Mason IP”).

45.On or about 21 June 2019, D3 submitted an application with the Trade Mark Registry for a mark which P1 considered would cause confusion between the Mason marks and that under application. Although D3’s application was refused, D3 continued to exploit the Mason IP.

46.D1 exhibited certain WhatsApp conversations between Terrance So of D3 and Edwin Wan of P1 between March and April 2019 which are said to show that the parties agreed and finalised the design of business cards which contained the Mason trade names and logo. However, the exhibit is unsatisfactory as some of the pages are hardly legible and its legal effect depends on the entire context of the communications rather than isolated excerpts.

47.In any event, whether or not the defendants have exploited the Mason IP can only be determined at trial.

(D)  Conclusion

48.In summary, I consider that the Plaintiffs have established a good arguable case against D1 in respect of all 3 claims.

II.  RISKS OF DISSIPATION

(A)  Post-injunction dissipations

49.There is a loan agreement made between D1 and Celestial Finance Limited, a Hong Kong company (“Celestial”) which is dated 9 March 2021. The “maturity date” of the loan of $3.5 million is the 1^st anniversary of the drawdown date. While the actual drawdown date is not known, the earliest date the loan could have matured could not have been prior to 9 March 2022, the 1^st anniversary of the agreement.

50.The Injunction Order was granted at about noon on 26 November 2021 with the D1’s legal representatives in attendance. D1 does not dispute that he had notice of the Injunction Order although the sealed copy could only be served on him on Monday, 29 November 2021.

51.However, several hours after the Injunction Order was granted, D1 made a payment of $28,767.12 by cheque to Celestial when the loan had not yet matured which is inexplicable.

52.In his written submissions, D1 countered the suggestion of dissipation by stating that that amount was well within the sum of $150,000 per month of living expenses he was allowed.

53.Be that as it may, there is still no explanation of why, being constrained by the Injunction Order, he should choose to make a payment out of his living expenses when there was no obligation to do so under the Celestial loan agreement.

54.As earlier noted, it was the imminent completion of the sale of the property jointly owned by D1 and his wife that had prompted the Plaintiffs’ application for a Mareva injunction. D1 has admitted[10] to discharging his personal loan obligations amounting to just under $550,000 from the proceeds of sale after the date of the Injunction Order.

55.D1 sought to justify those payments on the basis that his wife as a joint tenant was entitled to half the net sale proceeds and that it was that half of the proceeds that was utilised.

56.However, as the Plaintiffs submitted, it is well established that a joint tenancy may carry on following a sale by all joint owners because joint ownership may continue in relation to the sale proceeds: see Lui Wai Yee Eunice [2022] HKCFI 2585 at §31 citing Re Allingham [1932] VLR 469 at 472 and Ng Hwee Phong v Thum Sow Chan [2022] SGHC 145 at §46 a recent Singaporean decision. Hence the Injunction Order attached to the sale proceeds except what may be used to discharge the 3 mortgages over the property.

57.D1 did not (and could not) challenge that statement as correctly stating the legal position. Instead, he sought to deflect attention from his failure to comply with the Injunction Order by offering an undertaking from himself and his wife until the determination of this action (without prejudice to his contention that the Injunction Order did not attach to his wife’s share) to keep the total balance of his wife’s account above her half share of $1,176,685.845.

58.Pausing there, the giving of this undertaking actually underlines the risk of dissipation: the corollary must be that there is a risk of dissipation absent the undertaking. It is a factor to be taken into account considering whether the injunction should continue.

59.D1 made a total of 12 payments out of the proceeds of sale post-injunction totalling almost $550,000 of which 7 were to Celestial which is held by Celestial Finance Services Ltd, a BVI company (“Celestial BVI”). The Plaintiffs noted that Celestial BVI is a 50% shareholder of CASH, a joint venture between D1 and his partner. In those circumstances, I agree with the Plaintiffs that the payments to Celestial may not be as innocent as they would be had they been made to a regular lender.

60.D1 2^nd at §31 set out a list of personal loan obligations in respect of which monthly payments are due. It was said that as they had been disclosed, it should be no surprise to the Plaintiffs that payments have been made to meet them. However, D1 2^nd was filed one month after the date of the Injunction Order. If those payments had to be made, D1 should have applied to vary the injunction. Subsequent disclosure of creditors cannot excuse post-injunction dissipations.

(B)  D1 commenced HCA 946 for the purpose of stealing a march over other shareholders of D3

61.On 21 June 2021, D1 issued a writ against D3 claiming the repayment of various loans totalling approximately $9.5 million advanced to D3 between 15 June 2020 and 8 March 2021 pursuant to an oral agreement, such loans to be repayable on demand with interest at the rate ranging from 0% to 1% per month.

62.9 such loans were made with particulars as set out in the table at §4 of the HCA 946 statement of claim. In D1 2^nd (affirmed 6 months later on 24 December 2021), D1 exhibited a number of written loan agreements. Remarkably, 6 of the exhibited agreements correspond to items 1 to 6 of the table particularising the 9 loans said to be made orally. This necessarily calls into question D1’s credibility.

63.D3 commenced its business operations in October 2019. By mid-2021, it had become financially unviable. HCA 946 was instituted on 21 June 2021. The Plaintiffs were informed by D3 and D4 of the writ on 29 June 2021. As the Plaintiffs’ investor directors had never heard of any loans being extended by D1 to D3 and under the Subscription Agreement, the written consent of at least one investor director was required if D3 were to obtain any form of financing, the Plaintiffs’ suspicions were aroused and immediately enquired if D3 was intending to defend the action.

64.Meanwhile, an EGM was convened for 30 July 2021 at which the majority shareholders resolved that D3 should cease business operations altogether and that its operations would close on 15 August 2021. This led to P2’s application for leave to intervene in HCA 946 which was obtained on 20 October 2021 after an inter partes hearing, D1 appearing in person.

65.At the hearing, D1 represented to the court that as plaintiff in HCA 946 he had not made an application for a default judgment against D3 and that he did not know or understand what a “default judgment” meant when in fact he had obtained a default judgment on 10 August 2021.

66.When confronted with the Plaintiffs’ complaint that he had deliberately misled the court and had abused the legal process in order to steal a march over other shareholders[11] of D3, D1 portrayed himself as a novice in litigation and that he had made a genuine mistake in claiming that he had not made an application for a default judgment. In D1’s letter dated 17 November 2021 to the Plaintiffs’ solicitors he explained that the supporting affirmation of service had been drafted by a friend with some legal knowledge and that D1 had taken it at face value without considering its contents.

67.But what is not explained is what prompted D1 to file the affirmation in the first place if his reason for issuing a writ was merely “to preserve the rights against D3 (茂宸晉康醫療集團有限公司) only[12]”. Moreover, that explanation does not gel with his further explanation that he could show it to friends from whom he had borrowed monies and who were pressing him for repayment to show them the writ when the affirmation and the writ are 2 different things.

68.Although upon the Plaintiffs’ request D1 agreed that the default judgment be set aside, D1’s explanations for his conduct in relation to HCA 946 do not ring true. I accept the Plaintiffs’ submissions that D1’s conduct shows a lack of morality and an inclination to lie. Those traits unquestionably heighten the risk of D1 dissipating assets.

(C)  D1’s sale of the property

69.3 days after obtaining the default judgment in HCA 946, D1 executed a mortgage (being the 3^rd mortgage affecting the property) in favour of Winner Trend Investment Limited (“Winner Trend”), a finance company. It then transpired that D1 and his wife had obtained a loan of $7.2 million from Winner Trend 5 months earlier (on 5 March 2021) at an annual rate of 12% repayable by 12 monthly instalments. The condition of loan was stated in Chinese as 樓宇按揭三按 which translated into English is “third mortgage on a property”: in other words, the loan was to be secured by a mortgage of the property to Winner Trend since as at the date of the loan agreement there were already 2 mortgages secured on property.

70.Surprisingly, the loan was allowed to be drawn down without the 3^rd mortgage being executed. That is a remarkable state of affairs given the nature of the business of the lender. Then, 5 months after the loan agreement, on 13 August 2021, the 3^rd mortgage came to be executed.

71.But nothing is known of the circumstances that caused it to happen, at whose instigation et cetera. Those events being contrary to normal commercial practice render the transaction dubious and require nothing short of a full explanation. None has been provided.

72.17 days later, on 30 August 2021 D1 and his wife entered into the provisional agreement for the sale of the property with completion scheduled for 1 December 2021.

73.That sequence of events had the consequence of enabling Winner Trend to be repaid in full out of the proceeds of sale. That loan plus interest account for a sizeable portion of the proceeds.

74.The Plaintiffs submitted that the 3^rd mortgage and the sale constitute acts of dissipation in that they liquidate the financial value of the property, transforming them into sale proceeds which are easier to be dissipated compared to an immovable asset.

75.I agree that the sequence of events fills one with considerable unease and has the hallmarks of ‘engineered’ occurrences absent sufficient justification.

76.D1 explained that the sale of the property was based on his personal assessment that the US stock market would plummet. He also deposed to the fact that he has a deep connection to Hong Kong where he has lived and worked and has no desire to live elsewhere.

77.In those circumstances, one would have thought that it would take more than just market sentiment for D1 to sell the property which is the only residential property that he owns in Hong Kong. It stretches one’s credulity that fluctuations in the stock market would cause him to resort to such a drastic measure.

(D)  D1’s stated intention of moving assets out of the jurisdiction

78.D1 met with the Plaintiffs’ employee Han Ruixia (“Ms Han”) at the Plaintiffs’ office on 21 May 2020. In her 2^nd affirmation dated 30 March 2022 (“Han 2^nd”) Ms Han recounted D1’s statement to her that he had moved his assets out of Hong Kong to Australia and Japan such that he has little or no assets left in Hong Kong and the Plaintiffs’ intended legal action against him would be futile.

79.D1 took issue with the fact that this allegation did not feature in Han 1^st. D1 called it an “obvious fabrication”. It was said that the fact that Ms Han could recall a crucial detail with such clarity 2 years after the event made her evidence “highly questionable”.

80.Han 1^st had to be prepared under severe time constraints[13]. Han 1^st was served on 24 November. Given the urgency of the application, the omission of that matter is understandable and, without more, I do not consider that it bears the connotation that D1 suggests.

81.In so far as D1’s complaint that he had been prejudiced because there had not been an opportunity to respond, Han 2^nd was filed in April 2022, some 6 months prior to this hearing. There was ample time for D1 to apply for leave to respond to that allegation if the response is of significance.

82.Even disregarding Han 2^nd’s account as to D1’s stated intention, there remains overwhelming evidence that the risks of dissipation are real and substantial.

(E)  International Capital Corporation Limited (“ICCL”)

83.In D1 2^nd at §§ 35-36, D1 states that ICCL is a company owned by himself and his wife in the ratio 40:60. His evidence is that ICCL’s bank accounts were in fact used solely by the sister of D1’s wife for her business (IFC Group Australia Pty Ltd).

84.In the event of the Injunction Order being continued, the court was invited to exclude ICCL’s bank accounts because it was said that the remaining monies in the bank accounts of approximately $430,000 should belong to D1’s sister-in-law.

85.The Plaintiffs invited attention to the fact that the assertions are entirely unsubstantiated and the documents produced do not shed light on the reason for resorting to “nominee” structures. They submitted that the allegation of “shadow holding” of accounts points to commercial aberrations when no commercial explanation is given to justify it.

III.  BALANCE OF CONVENIENCE

86.D1 submitted that the balance of convenience lies in favour of discontinuing the Injunction Order because of the irreparable damage it would cause to D1’s career and other business ventures.

87.It was said that it has already caused significant damage:

(a)  D1’s position as Chief Business Strategist of Celestial Asia Securities Holdings Limited a subsidiary of the CASH Financial Services Group was suspended on 2 December 2021;

(b)  his application for the position of President of CASH Family Office Company Limited (a joint venture in which he has a 49% interest) was likewise suspended;

(c)  he has received verbal warnings that he may have to give up his shareholdings in those companies if the injunction is not discharged;

(d)  his Jockey Club membership has also been suspended which has hampered his ability to organise networking events; and

(e)  his involvement in the Forbes Global Alliance project would be adversely affected and it may cause his business ventures (such as an online service platform for medical consultancy and medical insurance services) to collapse.

88.Mr J Kwan submitted that losses already suffered and that may be further suffered cannot be adequately compensated by the Plaintiffs’ undertaking as to damages. In my view, the only harm that costs may not compensate is damage to his reputation.

89.But if a defendant chooses to engage in transactions that are justifiably questionable and to conduct himself in a manner that legitimately causes the plaintiff to fear that any judgment obtained would be frustrated, the defendant must shoulder the consequences of his own acts.

IV. CONCLUSION

90.Having regard to all the circumstances set out above, and in particular those set out in §§ 58, 62, 68 and 82, I have no hesitation in continuing the Injunction Order until the determination of this action. I am also not satisfied that the ICCL accounts should be excluded from the Injunction Order.

91.There is to be an order nisi of costs in favour of the Plaintiffs with certificate for counsel, such costs to be summarily assessed and payable forthwith.

92.It is further directed that the Plaintiffs lodge their statement of costs within 7 days of this Decision, D1 his objections within 14 days thereafter and the Plaintiffs their reply (if any) within 7 days thereafter.

93.Summary assessment will take place in Chambers.

Mr Kwan Ping Kan, instructed by Li & Partners, for the 1^st – 2^nd plaintiffs

Mr Jonathan Kwan and Mr Melvin Ho, instructed by Leung & Lau, Solicitors LLP, for the 1^st defendant