Tsai Lee Ting and Another v. Best Leader Precious Metals Ltd and Others

HCA 102/2023

[2023] HKCFI 2871

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 102 OF 2023

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D E C I S I O N

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A. INTRODUCTION

1.By summons dated 4^th September 2023 (“the Summons”), the Plaintiffs seek leave to appeal against my decision of 31^st August 2023 (“the Decision”) declining to continue the Mareva injunctions against D8 (Chan)[1] and D10 (Hung) and discharging the Mareva injunction against D9 (Tsang); and a stay of execution of the orders made accordingly pending determination of the appeal.

2.This decision should be read in conjunction with the Decision, which sets out the relevant facts.

B.  THE APPLICATION FOR LEAVE TO APPEAL

3.The principles applicable to an application for leave to appeal against an interlocutory judgment or order of the Court of First Instance are not in dispute.

3.1  Under s.14AA of the High Court Ordinance (Cap.4), leave to appeal is not to be granted unless the court hearing the application for leave is satisfied that (a) the appeal has a reasonable prospect of success or (b) there is some other reason in the interests of justice why the appeal should be heard.

3.2  For this purpose, a reasonable prospect of success means a prospect that is more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 127 at [17] (Le Pichon JA).

4.As to the principles applicable to an appeal against the refusal to grant an injunction, since the refusal involves the exercise of discretion, the appellate court will not interfere unless an appellant can show that the judge erred in law, or misapplied the law by failing to take account of relevant considerations or taking account of irrelevant considerations, or that the decision is plainly wrong, in other words, that the exercise of the discretion is outside the generous ambit within which reasonable disagreement is possible: Convoy Collateral v Cho Kwai Chee & ors [2020] HKCA 537 at [33] (Lam VP, as he then was).

5.The Plaintiffs’ first proposed ground of appeal, as set out in their draft notice of appeal attached to the Summons, is that the approach taken to the requirement of demonstrating an arguable case on quantum was wrong. It is said that since all the necessary conditions for the grant of a Mareva injunction were met, it was wrong to hold that the Plaintiffs failed to establish a good arguable case in respect of quantum, Universal Entertainment Corporation v Kazuo Okada [2020] HKCA 995 being an extreme and distinguishable case in which the lack of evidence in relation to quantum cast doubt on whether the plaintiffs had even established a good arguable case on liability. It is said that in contrast, in the present case the ceiling of US$212,780,996.75 for the Mareva was based on the best available evidence at the ex parte stage, being the total remittances of the Defrauded Investors, and not “arbitrary” as in the case of Universal Entertainment Corporation. It is further said that the court’s attention was not drawn to a number of applicable principles, including that (a) it is not a precondition to the grant of Mareva relief that the plaintiff has to show a good arguable case in support of a claim for a certain or approximate sum (Gee, Commercial Injunctions, 7^th ed., paragraph 4-009), and that (b) whether a plaintiff has established a good arguable case as to quantum is to be determined qualitatively and not quantitatively, so that if the quantum claimed is shown to be excessive at the inter partes stage, it may be reduced: Agritrade Resources Limited v Ashok Kumar Sahoo [2021] HKCFI 1605 at [11] to [12] (DHCJ To), approved on appeal at [2022] HKCA 280 at [37].

6.Under the first and third proposed grounds of appeal, the Plaintiffs say that the Mareva injunctions should not have been discharged entirely, but should have been continued or re-granted with a lower monetary ceiling. It is said that a discharge was tantamount to holding that the Plaintiffs had failed to make out any case of loss and damage against D8 (Chan), D9 (Tsang) and D10 (Hung), which was inconsistent with the finding that a good arguable case on liability had been made out against them, and that there was a solid basis for concluding that there was a real risk of dissipation of assets.

7.The Plaintiffs’ second proposed ground of appeal is that the double actionability rule does not apply to the present case, so that there could not have been any non-disclosure. The Plaintiffs say that applying the “substance” test (Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc & anor [1990] 1 QB 391 at 440F-G, 443E-F, 446D-E (Slade J)), the substance of (at least) the unlawful means conspiracy alleged arose in Hong Kong as the Purported Group was headquartered in Hong Kong; the Purported Group was represented and managed by D8 (Chan), D9 (Tsang) and D10 (Hung) who were resident in Hong Kong; and the contracts signed by the Defrauded Investors in Taiwan were sent to Hong Kong and signed by D9 (Tsang) in Hong Kong; it therefore does not matter that some acts, such as the offering of the fake investment products, took place in Taiwan.

8.I am satisfied that these grounds of appeal are reasonably arguable.

C.  THE APPLICATION FOR A STAY OF EXECUTION PENDING APPEAL

9.The principles applicable to an application for a stay of execution pending appeal are likewise not in dispute. They were set out in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at [6] to [10] (Ma J, as he then was).

9.1  An appeal does not operate as a stay of execution of proceedings.

9.2  In order to justify a stay of execution, the appellant must show that good reasons exist. Relevant factors include whether the absence or existence of a stay would render an appeal nugatory, and the merits of the appeal.

9.3  The existence of an arguable appeal is the minimum requirement before the court will even consider granting a stay. The existence of a strong appeal would usually by itself enable a stay to be granted, because this would constitute a good reason for a stay. But where there only exists an arguable appeal, the appellant would need to provide the court with additional reasons as to why a stay is justified, for example, that the appeal would be rendered nugatory. It is impractical and even undesirable to go deeply into the merits and strengths of the appeal, but the court must form a preliminary view of these aspects.

9.4  As to whether an appeal would be rendered nugatory, the court must first have regard to the nature of the order which is the subject matter of the appeal. Evidence will be required as to why the appeal would be rendered nugatory.

9.5  The position of the respondent should not be forgotten. It is always relevant to consider the prejudice that would be caused to the respondent in the event that a stay is granted, and if necessary, to impose conditions so as to minimise the prejudice caused to him.

9.6  Ultimately, the court embarks on a balancing exercise, with the starting point that the successful party is not to be deprived of the fruits of his success.

10.I consider that the Plaintiffs have an arguable appeal. If no stay of execution is granted, there is a real risk that D8 (Chan), D9 (Tsang) and D10 (Hung) would dissipate their assets, rendering the appeal nugatory. In the circumstances, the Plaintiffs show a good reason why a stay should be granted.

D.  DISPOSTION

11.I therefore make an order in terms of paragraphs 1 and 2 of the Summons.

12.I continue the Mareva orders against D8 (Chan), D9 (Tsang) and D10 (Hung) until the determination of the Plaintiffs’ appeal or further order.

13.I further make an order nisi that the costs of the Summons should be in the cause of the appeal, with certificate for two counsel.

Mr Norman Nip SC leading Mr Roger Phang and Mr Johnathan Tsang, instructed by Withers, for the 1^st and 2^nd Plaintiffs

Mr Johnny Ma SC leading Mr Look-Chan Ho and Mr Joshua Yeung, instructed by DLA Piper Hong Kong, for the 8^th Defendants

Mr James Man, instructed by So, Lung & Associates, for the 9^th Defendants

Mr Alan Kwong, instructed by Stevenson, Wong & Co., for the 10^th Defendant