深圳澳銀天使創業投資企業 (有限合伙) and Another v. Liu Xiaolong and Another

HCMP 1801/2023

[2025] HKCFI 959

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1801 OF 2023

_______________________

______________________

______________________

_______________

J U D G M E N T

_______________

1.By this Originating Summons (“OS”) taken out on 13 October 2023[1], the 1^st and 2^nd Plaintiffs (respectively “P1” and “P2”, together “Ps”) apply for a Mareva Injunction pursuant to section 21M of the High Court Ordinance to freeze the assets of the 1^st and 2^nd Defendants (respectively “Liu” and “Chui”, together “Ds”) within Hong Kong up to the amount of RMB 11,897,850.91 as an interim measure pending the determination of Ps’ two claims brought before the People’s Court of Qianhai Cooperation District, namely case numbers (2023) 粵 0391民初 1390号and (2023) 粵 0391民初 1395号 (respectively, “the Qianhai Court”, “1390 PRC Claim” and “1395 PRC Claim”; the 2 claims collectively “the PRC Claims”).

2.On 12 October 2023, upon an ex parte application, Cheng J granted a Mareva Injunction against Liu up to RMB 11,897,850.91 and an injunction against Chui enjoining her from disposing of or diminishing the value of the property known as Flat A, 3^rd Floor, Tower 3, Noble Hill, No. 38 Ma Sik Road, Fanling (“the Property”) or any of the proceeds of sale thereof.

3.On 20 October 2023, DHCJ Pheobe Man ordered Ps’ summons dated 13 October 2023 (“the Continuation Summons”) for the continuation of the 2 injunctions and the substantive hearing of this OS be heard together and that the interim Mareva Injunction against Liu be continued until the said hearing. The Deputy Judge did not continue the injunction against Chui upon Chui having given an undertaking essentially on the same terms as the injunction against her (“Chui’s Undertaking”).

4.Except having appeared in person at the hearing on 20 October 2023 and having filed an asset disclosure affirmation on 13 November 2023 in compliance with paragraph 2 of the said order of Cheng J, Liu has not taken any further part in these proceedings. Liu’s affirmation consisted of only one sentence : “本人截止 [sic] 今日在香港沒有伍万元現金或財產” .

5.Chui was formerly wife of Liu. Chiu commenced divorce proceedings FCMC 216/2023 (“the Divorce Proceedings”) shortly after Ps commenced the PRC Claims.

6.On 15 February 2024, Chui took out a summons herein (“Chui’s Summons”) applying for :

a.  Under paragraph 1 thereof, the dismissal of this OS and the Continuation Summons and for the discharge of Chui’s Undertaking;

b.  Under paragraph 2 thereof and as an alternatively to paragraph 1,

i.  the OS and the Continuation Summons be dismissed as against her and Chui’s Undertaking be discharged; and

ii.  leave to vary the Mareva Injunction as against Liu by adding an exception to the injunction thereby permitting Liu to pay maintenance to his 2 children twice a year, each time in the sum of HK$150,000 for each child (“the Daughters’ Maintenance”), pursuant to the Order of HHJ C K Chan dated 27 September 2023 in the Divorce Proceedings (“the Family Court Consent Order”).

7.On 23 February 2024, the substantive argument of Chui’s Summons was ordered to be heard together with the substantive hearing of the OS and the Continuation Summons.

8.This was the substantive hearing of the OS, the Continuation Summons and Chui’s Summons at which Liu was absent and Chui was represented by Ms Eva Leung of counsel. Judgment was reserved and which I now give.

The PRC Claims and their procedural history

9.The PRC Claims are straightforward contractual claims. Chui is not contesting any matters concerning the PRC Claims. She said she was a housewife since May 2012 and had no knowledge of Liu’s business. Thus, the following brief summary should suffice for the present purpose.

10.Liu was one of the shareholders and the legal representative of one 深圳加美生物有限公司 (“PRC D3”).

11.In May 2019 and in August 2020, Ps, Liu, and others entered into 2 share capital increase agreements and a supplemental agreement (respectively “the 1^st Agreement”, ”the 2^nd Agreement” and “the Supplemental Agreement”) pursuant to which P1 and P2 agreed to respectively pay a total of RMB 15,428,571 and a total of RMB 571,429 to subscribe for shares in PRC D3. Liu and others were joint and several guarantors by virtue of various guarantee agreements.

12.However, PRC D3 failed to reach 60% of the business income targets of RMB 27 million for 2020 and RMB 65 million for 2021, as provided in the relevant provisions in the 1^st Agreement and the Supplemental Agreement, thereby triggering Ps’ contractual right to require Liu and others to repurchase Ps’ shares in PRC D3 at the repurchase price as calculated according to the contractual formula. Pursuant to the same 2 agreements, repurchase notices were issued on 26 October 2022 to Liu and the others (“the Other PRC Ds”). They however failed to so repurchase.

13.On 22 December 2022, and claiming against Liu and the Other PRC Ds for outstanding repurchase price plus contractual interest up to the 31 December 2022, (a) P2 issued 1390 PRC Claim for RMB 770,278.32, and (b) P1 issued 1395 PRC Claim for RMB 20,940,267.32.

14.On 15 February 2023, the Qianhai Court issued the respective Notices of Acceptance of a Claim (受理案件通知书) in the PRC Claims.

15.In both PRC Claims, Liu together with PRC D3 jointly filed their respective No-Contest Defence (答辨意見(无异议)) both dated 23 March 2023 indicating that they had no objections to Ps’ claims therein.

16.On 2 March 2023 and 6 March 2023, the Qianhai Court granted asset preservation measures respectively in 1395 PRC Claim and 1390 PRC Claim.

17.On 21 March 2023, Ps, Liu and PRC D3 reached an agreement whereby Liu and PRC D3 agreed to pay Ps RMB 300,000 and then RMB 200,000 per month from April 2023 and no less than RMB 16,000,000 on or before 31 March 2025 in consideration of unfreezing certain bank accounts held by PRC D3. Ps accordingly applied to vary the asset preservation measures on 27 March 2023 which was granted by the Qianhai Court on 30 March 2023. However, after the first payment of RMB 300,000, Liu and PRC D3 failed to make further payments.

18.As at 1 April 2023, the asset preservation measures have frozen assets at the value of RMB 9,512,694.73.

19.After this OS was taken out on 13 October 2023 :

a.  The Qianhai Court handed down its judgment in 1390 PRC Claim dated 27 October 2023 (“the 1^st Instance 1390 Judgment”) awarding to P2 the balance of the repurchase price, interest and penalty thereon, legal and other fees totalling RMB 812,377.50.

b.  The Qianhai Court handed down its judgment in 1395 PRC Claim dated 31 November 2023 (“the 1^st Instance 1395 Judgment”) awarding to P1 the balance of the repurchase price, interest and penalty thereon, legal and other fees totalling RMB 22,260,006.34.

c.  By 2 Notices of Appeal respectively dated 5 November 2023 and 7 December 2023, Liu and other PRC defendants sought to appeal to Shenzhen Municipal Intermediate People's Court against the 1^st Instance 1390 Judgment and the 1^st Instance 1395 Judgment. These 2 appeals were apparently still pending at the time of the hearing.

The Property, the Divorce Proceedings and its transfer to Chui

20.By an assignment dated 23 September 2011, Liu and Chui became the registered joint owners of the Property at the consideration of HK$4,138,000.

21.According to Chui, she and Liu got married on 12 November 2011. At the time, she worked part-time at a beauty parlour and Liu was a qualified PRC lawyer. The Property was purchased shortly before their marriage to be their matrimonial home. In May 2012, she gave birth to their elder daughter and since then she has become a housewife. In February 2014, their second daughter was born. The family lived in the Property up to 2016 when they moved to enable their children to attend schools in the Kowloon District. Since then, the Property has been rented out to fetch rental income. Liu has been stationing in Shenzhen for work.

22.Chui further said that she was diagnosed with melanoma skin cancer in November 2018 and that her marriage with Liu began to deteriorate.

23.According to Chui, Liu left for Shenzhen and did not return to Hong Kong since around February 2020. Chui asked Liu numerous times to return to Hong Kong but Liu refused. In October 2022, Liu informed Chui that he would return to Hong Kong in December 2022 and then stay for a longer period. Chui then consulted her lawyers about divorce. She told Liu on around 4 December 2022 that she would petition for a divorce.

24.On 9 January 2023, she commenced the Divorce Proceedings to petition for a divorce based on 2 years’ separation. On the same date, a consent summons in the Divorce Proceedings was signed by Liu and her (“the 1^st Consent Summons”).

25.Pausing here, it will be recalled that it was on 22 December 2022 that Ps issued the PRC Claims against Liu in the Qianhai Court.

26.The 1^st Consent Summons apparently[2] dealt comprehensively with all the matters in the Divorce Proceedings. By it, Chui and Liu applied jointly for an order by consent, among others, that (a) Liu would transfer all his right and interest in the Property to Chui within 28 days after the Decree Absolute is granted while Chui would be responsible for paying the outstanding amount under the mortgage loan, and (b) Liu would pay certain maintenance to the 2 daughters twice each year.

27.By letter dated 31 March 2023, the Family Court raised certain queries, sought clarifications and requested certain consequential actions be taken. Pursuant thereto, the 1^st Consent Summons was withdrawn and a revised version was signed and re-filed on 13 April 2023 (“the 2^nd Consent Summons”). The 2^nd Consent Summons applied for the same order in respect of the Property, but it clarified the order relating to the daughters’ maintenance and crouched it in terms of the Daughters’ Maintenance.

28.Before the Decree Nisi was granted and the Family Court Consent Order was made on 27 September 2023, and according to the land searches :

a.  A Provisional Agreement for Sale and Purchase of the Property in the consideration of HK$7,500,000 in favour of Chui dated 10 July 2023 (“the Provisional Agreement”) was registered on 17 August 2023;

b.  A Receipt on Discharge of a Charge dated 18 September 2023 (“the Receipt”) was issued and an Assignment of the Property dated 18 September 2023 in favour of Chui (“the Assignment”) was executed; and

c.  Both the Receipt and the Assignment were registered with the Land Office on 11 October 2023.

29.The outstanding amount of mortgage loan plus interest was HK$1,691,263.29. Chui said that she repaid the said outstanding amount herself from (a) a loan of HK$800,000 made by Uncle Kit made in mid February 2023, (b) a loan of HK$500,000 made by Uncle Ming made in early September 2023, and (c) the benefit from a medical insurance of HK$503,162 she received in late March 2019. Her case is that the Property was transferred by Liu and Chui as joint owners to her as sole owner without paying any consideration to Liu (“the Transfer”) as part of the financial arrangement of the divorce and pursuant to the Family Court Consent Order.

30.On 27 September 2023, the Decree Nisi was granted and an order concerning the Property and the Daughters’ Maintenance in terms of the 2^nd Consent Summons (among other matters not disclosed in these proceedings), namely the Family Court Consent Order, was made.

31.On 27 November 2023, the Decree Absolute was granted.

32.According to Chui, she and her 2 daughters moved back to the Property in January 2024 and they have since been living there.

Chui’s grounds for dismissing the OS and the Continuation Summons, and discharging Chui’s Undertaking

33.Chui put forth a host of grounds in the 2 affirmations she filed.

34.Her grounds for dismissing the Mareva Injunction against Liu are :

(1)  No risk of dissipation;

(2)  No basis for ex parte application without notice;

(3)  Serious material non-disclosure at the ex parte stage; and

(4)  Undue delay.

35.Her grounds for dismissing the Chabra injunction against her, and therefore discharging Chui’s Undertaking, are :

(1)  No good reason to suppose that the Property would be amenable to any judgment Ps might obtain against Liu;

(2)  No risk of dissipation by her;

(3)  Not just and convenient to grant the Chabra injunction;

(4)  No basis to proceed with an ex parte application without notice, serious material non-disclosure and undue delay; and

(5)  In any case, the wording in the OS was wrong and not amended, Ps failed to disclose the relevant legal principles to the ex parte judge, leading to the granting of the ex parte injunctive relief against Chui on a wrong basis.

The relevant general principles

36.The below-mentioned principles concerning s.21M, the granting of Mareva Injunctions and the Chabra jurisdiction are well established and not disputed.

37.The approach for the exercise of jurisdiction and power under s. 21M have been summarized by Lisa Wong J in Jiang Xi An Fa Da Wine Co Ltd v Zhan King [2019] HKCFI 2411 at §48 :

“48. The legal principles applicable on a s 21M application were considered and illuminated by the Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd (2016) HKCFAR 586. Such an application is to be considered in 2 stages:

(1) In the first stage, the court firstly asks whether, if the proceedings that have been or are to be commenced in the foreign court result in a judgment, that judgment is one that the Hong Kong court may enforce. If the judgment resulting from the foreign proceedings may be enforced by the Hong Kong court, then the court asks the same questions as it would if the interim relief were sought in support of a Hong Kong action, save that the strength of the plaintiff’s substantive claim against the defendant (if material) should be considered from the standpoint of the foreign court, and not under the law of Hong Kong.

(2) In the second stage, as required by s 21M(4), the court should consider whether the fact that the court has no jurisdiction apart from s 21M in relation to the subject matter of the proceedings concerned makes it unjust or inconvenient for the court to grant the application.

See [47]-[54] per Lord Phillips of Worth Matravers NPJ.”

38.A plaintiff seeking a Mareva Injunction must satisfy the Court that (a) it has a good arguable case, (b) 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, and (c) the balance of convenience is in favour of grant.

39.Concerning the requirement of a real risk of dissipation of assets, the Court of Appeal held in Convoy Collateral Ltd v Cho Kwai Chee & Ors [2020] 6 HKC 81 :

“35. The approach on assessment of risk of dissipation in the context of an application for freezing order was considered in the recent judgment of Haddon-Cave LJ in Lakatamia Shipping Co Ltd v Toshiko Morimoto [2019] EWCA Civ 2203 at [34]. His Lordship adopted (with a slight modification) the principles set out by Popplewell J (as Popplewell LJ then was) earlier in Fundo Soberano de Angola v dos Santos [2018] EWHC 2199 (Comm):

‘(1) The claimant must show a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets. In this context dissipation means putting the assets out of reach of a judgment whether by concealment or transfer.

(2) The risk of dissipation must be established by solid evidence; mere inference or generalised assertion is not sufficient.

(3) The risk of dissipation must be established separately against each respondent.

(4) It is not 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. It is also necessary to take account of whether there appear at the interlocutory stage to be properly arguable answers to the allegations of dishonesty.

(5) The respondent's former use of offshore structures is relevant but does not itself equate to a risk of dissipation. Businesses and individuals often use offshore structures as part of the normal and legitimate way in which they deal with their assets. Such legitimate reasons may properly include tax planning, privacy and the use of limited liability structures.

(6) What must be threatened is unjustified dissipation. The purpose of a [World Freezing Order] is not to provide the claimant with security; it 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 it judgment proof. A WFO is not intended to stop a corporate defendant from dealing with its assets in the normal course of its business. Similarly, it is not intended to constrain an individual defendant from conducting his personal affairs in the way he has always conducted them, providing of course that such conduct is legitimate. If the defendant is not threatening to change the existing way of handling their assets, it will not be sufficient to show that such continued conduct would prejudice the claimant's ability to enforce a judgment. That would be contrary to the purpose of the WFO jurisdiction because it would require defendants to change their legitimate behaviour in order to provide preferential security for the claim which the claimant would not otherwise enjoy.

(7) Each case is fact specific and relevant factors must be looked at cumulatively.’

36. Subject to the following elaborations, we respectfully agree that these principles are applicable in Hong Kong.

…

53. To sum up, the approach set out by Haddon-Cave LJ in Lakatamia Shipping Co Ltd v Toshiko Morimoto, supra at [51] provides good guidance. The ultimate question is whether CCL succeeds in showing objectively there is a solid basis for concluding that there is a real risk of unjustified dissipation of assets by a defendant. That question is to be answered by examining the evidence holistically. Evidence of dishonest and fraudulent conducts or other serious wrongdoings which form the basis of the claims, and which reflect adversely on the integrity of the defendant could point powerfully towards an inference of such risk.”

40.The relevant principles in relation to the Chabra jurisdiction of the Court have been summarized by the Court of Appeal (Kwan JA and G Lam J (as they then were)) in XY, LLC v Jesse Zhu & Another [2017] 5 HKC 479 at 490C-492A and also by Recorder Eugene Fung SC in Company A & Ors v Company D & Ors [2019] HKCFI 367 in §§71, 83 and 86.

41.In XY, LLC, Kwan JA observed :

“ 24. A convenient starting point is a summary of the Chabra jurisdiction taken from the judgment of Popplewell J in PJSC Vseukrainskyi Aktsionernyl Bank v Maksimov [2013] EWHC 422 (Comm) at §7 as approved by Tomlinson LJ in Lakatamia Shipping at §32:

‘(1) The Chabra jurisdiction may be exercised where there is good reason to suppose that assets held in the name of a defendant against whom the claimant asserts no cause of action (the NCAD) would be amenable to some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment against a defendant whom the claimant asserts to be liable on his substantive claim (the CAD).

(2) The test of ‘good reason to suppose’ is to be equated with a good arguable case, that is to say one which is more than barely capable of serious argument, but yet not necessarily one which the judge believes to have a better than 50% chance of success.

(3) In such cases the jurisdiction will be exercised where it is just and convenient to do so. The jurisdiction is exceptional and should be exercised with caution, taking care that it should not operate oppressively to innocent third parties who are not substantive defendants and have not acted to frustrate the administration of justice.

(4) A common example of assets falling within the Chabra jurisdiction is where there is good reason to suppose that the assets in the name of the NCAD are in truth the assets of the CAD. Such assets will be treated as in truth the assets of the CAD if they are held as nominee or trustee for the CAD as the ultimate beneficial owner.

(5) Substantial control by the CAD over the assets in the name of the NCAD is often a relevant consideration, but substantial control is not the test for the existence and exercise of the Chabra jurisdiction. Establishing such substantial control will not necessarily justify the freezing of the assets in the hands of the NCAD. Substantial control may be relevant in two ways. First, evidence that the CAD exercises substantial control over the assets may be evidence from which the court will infer that the assets are held as nominee or trustee for the NCAD as the ultimate beneficial owner. Secondly, such evidence may establish that there is a real risk of dissipation of the assets in the absence of a freezing order, which the claimant will have to establish in order for it to be just and convenient to make the order. But the establishment of substantial control over the assets by the CAD will not necessarily be sufficient: a parent company may exercise substantial control over a wholly owned subsidiary, but the principles of separate corporate personality require the assets to be treated as those of the subsidiary not the parent. The ultimate test is always whether there is good reason to suppose that the assets would be amenable to execution of a judgment obtained against the CAD.’ ”

42.In Company A & Ors, the learned Recorder summarized the key requirements of the Chabra jurisdiction as follows:

“71. Therefore, where a plaintiff seeks a Mareva injunction in aid of arbitral proceedings under section 45 and against a third party invoking the Chabra jurisdiction, it seems to me that the following requirements must be satisfied:

(1) There is good reason to suppose that:

(a) a defendant against whom the plaintiff asserts no cause of action (the NCAD) holds, is using, or has exercised, or is exercising a power of disposition over, or is otherwise in possession of, assets of the defendant whom the plaintiff asserts to be liable on his substantive claim in arbitration (the CAD) (“the 1^st Limb”): XY, LLC (above) at §§25, 27 and 39; or alternatively

(b) the assets held in the name of the NCAD would be amenable to execution of some process, ultimately enforceable by the courts, by which the assets would be available to satisfy an award against the CAD (“the 2^nd Limb”): XY, LLC (above) at §24(1).

(2) There is a real risk of dissipation of the assets: XY, LLC (above) at §§24(5) and 26.

(3) It is just and convenient to grant the injunction: XY, LLC (above) at §24(3) and (5).

…

83. Where a plaintiff seeks a Mareva injunction on the Chabra basis, it seems to me that the risk of dissipation factor should principally focus on the NCAD’s conduct as regards the NCAD’s assets:

(1) The underlying premise of a Mareva injunction on the Chabra basis is that there is good reason to suppose that assets held in the NCAD’s name would be amenable to some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment or award against the CAD. The plaintiff’s ability to enforce the judgment or award against the CAD would necessarily be impaired if the effect of NCAD’s conduct would be to frustrate the enforcement of any judgment or award, or the NCAD’s assets are no longer available to be enforced against. In considering the risk of dissipation of assets, the principal focus should therefore be on NCAD’s conduct and his assets.

(2) In cases where there is substantial control by the CAD over the assets in the name of the NCAD, it may become relevant to examine the conduct of the CAD to determine whether there is a risk of dissipation of NCAD’s assets. “[Evidence that the CAD exercises substantial control over the assets] may establish that there is a real risk of dissipation of the assets in the absence of a freezing order, which the claimant will have to establish in order for it to be just and convenient to make the order”: XY, LLC (above) at §24(5).

…

86. The standard of proving a real risk of dissipation is relatively high, and the plaintiff must establish that risk by reference to solid or cogent evidence: Re Chau Cham Wong Patrick [2016] 2 HKLRD 278 at §32 (P Ng J).”

No basis for Ps to have applied ex parte without notice, material non-disclosure, delay ?

43.Chui’s complaints on these 3 matters can be disposed of briefly as they clearly do not have substance.

44.The matters and evidence in support are said[3] to be contained in §§25-46 of Chui’s 1^st affirmation (“Chui 1^st”) and §§6-17 of Chui’s 2^nd affirmation (“Chui 2^nd”).

45.The period of delay complained of was not specifically deposed to or argued by Chui. She referred to the time the asset preservation measures were obtained from the Qianhai Court on 3 and 6 March 2023, the registration of the Provisional Agreement with the Land Office on 17 August 2023, and the time Ps applied for the ex parte injunction on 12 October 2023.

46.Chui alleged[4] that Ps have before applying for the said asset preservation measures already obtained their PRC lawyer’s advice in a Memorandum[5] that the PRC Court could not and would not make an enforceable freezing order freezing assets outside PRC and yet Ps included the Property in their application lodged with the Qianhai Court, showing that Ps were already minded to freeze the Property then.

47.Chui’s allegation is completely misconceived. The Memorandum was in fact dated 11 October 2023, and it was therefore provided more than 7 months after the asset perseveration measures were applied for. The Property was included in the annexure to the application papers for the asset preservation measures listing all of the assets Liu had. But it hardly showed that Ps were specifically minded to freeze the Property as Chui now seems to claim. In any case, the Qianhai Court did not include the Property in the Notice freezing the assets.

48.Concerning the alleged delay between the time the Provisional Agreement was signed or registered and the date of the ex parte application, in the 1^st affirmation of Gu Yao supporting the ex parte application, he had already deposed under “E. Full and Frank Disclosure”[6] that Ps conducted a land search on the Property on 21 September 2023[7] (“the 20230921 Search”) and discovered for the first time that there was the Provisional Agreement. Ps then investigated and took legal advice leading to the issuance of this OS and the ex parte application on 12 October 2023.

49.In my view, there was no delay such as would disentitle Ps to the granting of the ex parte injunctions.

50.Chui claimed that there was no urgency justifying the ex parte application without notice as “The Property is and was well under my name and I have not even attempted to sell it”[8]. That is of course her own stance.

51.The 20230921 Search revealed the fact that the Provisional Agreement was registered a month and 7 days after it was signed, purportedly selling the Property by Liu and Chui as co-owners to Chui at the consideration of HK$7,500,000, which presumably meant that Lui might be receiving half of the consideration by way of proceeds and Chui would be free to dispose of the Property. It was not even suggested by Chui that Ps at the time would have known, or did know, anything other than those revealed by the 20230921 Search, including the divorce, that the Assignment had already been executed days earlier. Ps would not know from the 20230921 Search whether other documents disposing of or encumbering the Property had been signed, but not yet registered, or whether sale proceeds have been paid to Liu or not. In my view, such circumstances clearly justify Ps to proceed to apply for the Mareva Injunctions ex parte without notice.

52.Chui contended in Chui 1^st that Ps were guilty of serious material non-disclosure[9] :

a.  Ps failed to disclose to the Court that Liu and her had a defence of no real risk of dissipation as the transfer of the Property took place “more than 7 months after the PRC Claims were issued and 4 months after the granting of the asset preservation measures”;

b.  Ps failed to draw the Court’s attention that the requirements of proceeding on an ex parte without notice application have not been met;

c.  Ps failed to disclose to the Court that mortgage on the Property was recently discharged by her on 18 September 2023 and the Receipt was registered on 11 October 2023, one day before the ex parte hearing.

53.In Chui 2^nd, after having reviewed the transcript of the ex parte hearing, Chui acknowledged that Ps had at the ex parte hearing handed to the Court an updated land search conducted on the day of the ex parte hearing and had drawn the Court’s attention to the Receipt and the Assignment. Remarkably, Chui now turned around and in Ms Leung’s written submissions accused that this “further demonstrates how oppressive and improper Ps have been conducting these proceedings” by, inter alia, relying on “inadmissible evidence of the discharge of the Mortgage by giving evidence from the bar table”[10].

54.It is clear that Mr Tam, also appearing as counsel for Ps at the ex parte application, had set out clearly the chronology of relevant events in his written submissions placed before Cheng J, and had properly submitted an updated land search results of the Property to fully present the situation for the learned judge’s consideration. Moreover, it has never been even suggested by Chui that Ps knew at the time of the ex parte application that it was Chui who repaid the outstanding mortgage amount (even if true, which Ps do not accept). Further, it is in my view clear that it would not be a material non-disclosure if Ps then did not present to the learned judge the same arguments Chui is now contending regarding no risk of dissipation of assets.

55.It is also contended by Ms Leung that it was a material non-disclosure in that Ps did not draw the Court’s attention to the case of Dingway Investment Ltd v China City Construction & Development Co (Hong Kong) Ltd [2022] 4 HKLRD 67 at p.92 that the Chabra injunction is in personam in nature, thereby leading to a wrong form of Chabra injunction being granted by Cheng J against Chui. This contention would be more suitably addressed when I discuss the Chabra injunction.

56.In all, I am of the clear view that Ps have not been guilty of material non-disclosure in their ex parte application.

Continuing the Mareva Injunction against Liu and granting the same in the OS

57.Chui’s contention was that if Ps fail to obtain the Mareva Injunction as against Liu, then Ps’ application for the Chabra injunction as against Chui would fail in limine.

58.Having dealt with the other grounds put forth by Chui, the remaining ground she relied on for dismissing the Continuation Summons and the OS as against Liu was that a good arguable case of risk of dissipation has not been shown.

59.One of Ps’ contention in this regard was that by having secured the unfreezing of the bank accounts from the asset preservation measures through negotiating and reaching an agreement with Ps and then making the first payment of RMB 300,000 in March 2023, but defaulting all further payments, Liu has been shown to have low commercial morality.

60.However, Ps’ evidence merely stated that such an agreement was reached and Liu defaulted after the first payment. No details whatsoever were given regarding the negotiation, what Liu said or represented at the time, which bank accounts were so unfrozen, and how much money was in them and so on, or other matters showing the conduct of Liu was at, or very close to, the fraud or dishonesty end of the spectrum. On this, I accept Ms Leung’s submission that low commercial morality or dishonesty cannot be so lightly inferred and that mere non-payment by Liu of the promised sums fell short of such showing.

61.One of Chui’s contentions in this regard was that if Liu and Chui really wanted to dissipate the Property, they would have sold it to an unrelated party well before July 2023, obtained the sale proceeds and dissipated it; thus, it was not shown that there was a risk of dissipation. I do not accept this contention.

62.Firstly, in the context of Mareva injunction, dissipation means putting the asset out of reach of a judgment or making the asset judgment proof (see the quote in §39 above). The means of dissipation does not necessarily need to be confined to a sale or some means of liquidating it. The fact that a defendant chose to dissipate an asset by methods other than a sale clearly could not be said to be proof that there was no dissipation. Putting the Property into the sole name of Chui clearly has the effect of making the Property out of reach of the judgments.

63.Secondly, I do not think the timing of July 2023 is the correct time point to view the matter. If the Transfer were an unjustified disposition, then the first step in such an arrangement to so dispose of Liu’s interest in the Property was the signing of the 1^st Consent Summons on 9 January 2023, which was very shortly after the PRC Claims were issued and before the Qianhai Court indicated its acceptance of the PRC Claims.

64.Evidently, it is not desirable for the Court to conduct a trial on affidavit evidence to attempt to resolve any factual disputes in the case of a trial; and the Court should refrain from doing so when dealing with interlocutory applications, as in dealing with the Continuation Summons. However, such principles do not preclude a Court from evaluating the internal consistency, inherent credibility and probability, and implications of a party’s own evidence. So doing, I find the following matters rather relevant and weighty.

65.The main thrust and general tenor of Chui’s case is that the divorce and the financial arrangement reached between her and Liu were genuine. It is also Chui’s evidence that her 2 daughters, respectively now aged around 12 and 10, are in Hong Kong, such that the Daughters’ Maintenance was not to be paid overseas to the daughters.

66.According to Chui’s evidence, on 4 December 2022, she told Liu that she wanted a divorce, and on 9 January 2023, the 1^st Consent Summons was signed after negotiations “at arm’s length”. It seems that both Chui and Liu readily accept on their respective parts around late December 2022 and early January 2023 that a total of HK$600,000 would be paid by Liu for the 2 daughters’ maintenance each year. The arrangement and both parties’ readiness to accept the same was confirmed without difficulty by the signing of the 2^nd Consent Summons in April 2023. Yet, Liu filed his affirmation on 13 November 2023 stating on oath and categorically that he has no asset in Hong Kong in the sum of HK$50,000 or above. In Chui 1^st and Chui 2^nd, Chui expressed no surprise, disappointment or disturbance about Liu’s apparent complete lack of means to fulfil his obligation to pay the Daughters’ Maintenance. Instead, Chui took out Chui’s Summons in February 2024 for the variation of the Mareva Injunction against Liu in all seriousness. The sole ground was to enable Liu to pay the Daughters’ Maintenance. Chui affirmed on oath[11] that “As a result of the present ex parte Injunction Order, Liu has been prohibited from performing his duty under the Family Court’s order to provide maintenance to the daughters”. At this hearing, Chui continued to hotly pursue the variation.

67.Considering all these, the reasonable inference that I draw is that Chui must have understood that either Liu has substantial assets in Hong Kong under his control but concealed or Liu has assets elsewhere which he could and would transfer into Hong Kong to pay for the Daughters’ Maintenance, such that these overseas assets when transferred into Hong Kong might be caught by the Mareva Injunction if it is not discharged or varied. That being the inference I draw, it goes to show that there is a real risk that assets were kept out of reach of the judgments by concealment.

68.Moreover, I come to the conclusion, as will be explained in the section starting with §80 below, that there is a good arguable case that the Transfer was an unjustified dissipation such as to show an actual dissipation had been attempted by Liu, justifying the continuation and granting of the Mareva Injunction as against Liu.

69.I thus find that the requirement of showing there was a real risk of dissipation by Liu has been met. I therefore am prepared to accede to the Continuation Summons as against Liu and to grant the interim relief under s.21M against Liu in terms of paragraph 1 of the OS, subject only to Chui’s application for variation, to which I will turn.

Refusing to vary the Mareva Injunction against Liu

70.The principles for allowing a defendant’s legitimate expenses as exceptions have been considered and explained by Au J (as he then was) in Wharf Ltd and Others V. Lau Yuen How And Others [2010] 1 HKLRD 783 :

“14. In the case of an “ordinary” Mareva injunction, where there is no proprietary claim asserted against the enjoined assets, in the exercise of the Court’s discretion faced with an application to release the funds, the Court should consider whether the defendant has shown by sufficient evidence that (a) he does not have other assets available to meet the payment, and (b) the purpose of the application is not an attempt to dissipate the assets (which prima facie are the defendant’s) to frustrate the enforcement of judgment by the plaintiff.”

(my emphasis in bold)

71.The commentary in Hong Kong Civil Procedure 2025 at §29/1/79 states that :

“… Where the defendant has hidden away substantial assets overseas, it would be unjust to permit the defendant to use assets subject to the Mareva injunction to pay expenses (Assets Investments Pte Ltd v The United Islamic Investments Foundation [1951] [sic] 1 HKC 560; Anokh Singh Pannu v Alantic Ltd). The court must seek to balance the risk of deliberate dissipation of frozen assets by the defendant against the abuse of the freezing order to pressure the defendant illegitimately (Assets Investments Pte Ltd v The United Islamic Investments Foundation).”

72.In Anokh Singh Pannu v Alantic Ltd (HCA 1696/2010, unrep., 10 May 2012), DHJC Jason Pow SC refused the 4^th defendant’s application to provide for exception in the Mareva injunction to pay its legal fees on the basis that it has failed to provide the Court with credible evidence that it has no other sources of funds to support the legal expenses.

73.In the present case, the evidence before this Court is that, and as said, Liu affirmed categorically that he had no assets in the amount of HK$50,000 in Hong Kong, while Chui proffered no evidence whatsoever relating to the assets or finance of Liu.

74.Chui merely presented this Court with the Family Court Consent Order and sought the variation, according to Ms Leung, in case Liu might later has sufficient assets to pay the Daughters’ Maintenance or in case Liu might transfer the money from overseas to meet the payment and Chui (or Liu ?) was wary that such payments might be caught by the Mareva Injunction.

75.There clearly is no, not to say sufficient, evidence showing that Liu does not have other assets available to meet the payment, or that the purpose of the application is not an attempt to dissipate the assets. The suggestion made at the hearing that Liu might later transfer from outside the jurisdiction money to pay the maintenance called into query whether it would be unjust to grant the variation to permit Liu to use assets otherwise subject to the Mareva Injunction to pay the maintenance. There is simply no evidence before me now to answer that query in favour of Chui or Liu.

76.The application to vary the Mareva Injunction against Liu, therefore, must be dismissed. I do so without prejudice to Liu or Chui applying for the same later in case they are in a position to proffer the said sufficient evidence.

CHABRA INJUNCTION AGAINST CHUI; SETTING ASIDE CHUI’S UNDERTAKING ?

77.The issues between the parties are :

a.  whether the Transfer is an unjustified dissipation;

b.  whether there is a good arguable case that the Transfer will be amenable to being avoided as a disposition to defraud creditors under s.60 of the Conveyancing and Property Ordinance Cap.619 (“C&PO”), and the Property be thus made available to satisfy the judgments of the PRC Claims;

c.  whether it is shown that there is a real risk of dissipation on the part of Chui;

d.  the form of the Chabra injunction; and

e.  whether the balance of convenience favours granting the Chabra injunction, particularly, whether the same might be oppressive to Chui and her children.

Only half equal share in the Property liable to be used to satisfy the judgments of the PRC Claims

78.Prior to the Transfer and since its purchase by Liu and Chui in September 2011, the Property had all along been registered in their names as joint tenants. This is not disputed by Ps. It was never said in Ps’ evidence, not even suggested, that Liu was in fact the sole beneficial owner of the Property. Therefore, it follows that even if the Transfer were subsequently avoided pursuant to s.60 of C&PO, only Liu’s half equal share would and could be used to satisfy the judgments of the PRC Claims, and not the half equal share belonging to Chui.

79.Therefore and in my view, only a half share in the Property could and should be subject to the Chabra jurisdiction, if at all. I will therefore discuss the above issues on the footing that only Liu’s half share in the Property might be subject to the Chabra jurisdiction.

Was the Transfer an “unjustified dissipation” and amenable to being avoided under s.60 of C&PO ?

80.It is convenient to deal with these 2 issues together.

81.It is common ground that the threshold is whether Ps has successfully shown that there is “a good reason to suppose”, in other words, a good arguable case, that these 2 issues would be determined in their favour.

82.Chui’s submissions, in gist, were that :

a.  The Transfer was a justified disposition in that it was part of the ancillary relief arrangement approved by the Family Court and made part of the Family Court Consent Order pursuant to which the Transfer was made.

b.  Chui has provided “valuable consideration” within the meaning of s.60 of the C&PO by repaying the balance of the mortgage loan in the sum of HK$1.6 million odd, and therefore, under s.60 an actual intent to defraud creditors has to be shown by Ps, the threshold for such showing is high and Ps cannot show a good arguable case that they would be able to do so.

83.Ps’ submissions essentially consisted of various analyses and then criticisms over the credibility and consistency of Chui’s evidence such that, the existence of the Divorce Proceedings notwithstanding, there is a good arguable case that the Transfer was still a dissipation to keep the Property out of reach of the judgments and that the Transfer would be amenable to be avoided under s.60. In Annex A of Ms Leung’s written submissions, she responded to Ps’ arguments and criticism.

84.Having carefully considered Chui’s evidence and Mr Tam’s arguments and criticisms and Ms Leung responses, below are my evaluations and views:

a.  As I have mentioned, the timing of the divorce was suspiciously close to the time when Ps had just issued the PRC Claims against Liu, among others. According to Chui, she only first mentioned to Liu about divorce on around 4 December 2022, but she and Liu was able to completely agree on all the matters relating thereto, from whether they should divorce in the first place, to all the details of ancillary relief, to maintenance and custody of the 2 daughters, and settled the terms and signed the 1^st Consent Summons on 9 January 2023. This seems to me unusually speedy and without difficulty.

b.  Chui’s evidence was that the negotiations “were not particularly cordial in the beginning”[12] and consensus “was reached at an arm’s length”[13]. I do not accept such picture portraited by Chui. Chui was all along represented by Messrs Hugill & Ip (“H&IP”) in the Divorce Proceedings. As mentioned, Liu has signed the 1^st Consent Summons, the 2^nd Consent Summons, the Provisional Agreement and the Assignment. Yet, there was not one single correspondence written by H&IP to Liu in relation to the divorce, whether for negotiations or to make arrangements to sign whatever papers. Even the Provisional Agreement was a home-made one in Chinese. Considering all these in the round, I find that the whole process of divorce, ancillary relief and custody was speedy, smooth, consensual and highly cooperative between Liu and Chui.

c.  While reliance was placed by Chui that the Transfer was made pursuant to the Family Court Consent Order. As have set out in the narrative above, the Provisional Agreement was signed on 10 July 2023, which was 2 and a half months before the Family Consent Order was made on 27 September 2023. Moreover, under paragraph G of the Family Court Consent Order, the Transfer was ordered to take place within 28 days from the date of that order, ie. on or before 25 October 2023, but the Assignment was executed on 18 September 2023; and under paragraph H, a partner of H&IP was authorized to execute all instruments to carry into effect paragraph G should Liu refuse to execute them.

d.  I find Chui’s explanation for accelerating the Transfer incredible according to the evidence and materials proffered by her. She explained that the Provisional Agreement and the Assignment was signed and executed so early because she “was worried that Liu would go back on his word and refuse to transfer the Property”[14] and her “inability to ascertain his whereabouts and my difficulty in getting hold of him”[15]. However, before me there is not a shred of evidence showing that Liu would refuse or that Chui had any difficulty in contacting Liu. As I said above, in my assessment, everything pointed to the whole process being smooth, consensual and highly cooperative between Liu and Chui. Moreover, paragraph H of the Family Court Consent Order has already provided an easy and effective mechanism to carry into effect the Transfer should Liu refuse to cooperate. And I also bear in mind that Chui was legally represented and advised by H&IP. I find Chui’s suggestion that there would be title issue if the Assignment was executed pursuant to the said paragraph H of the Family Court Consent Order wholly fanciful and hollow. I also particularly note that it was not said by Chui that she would not be receiving the rental income of the Property before the Transfer, such that there was no other practical reason to accelerate the Transfer. In fact, the tenor of the evidence is that she had been receiving such rental income all along. Having rejected Chui’s such explanations, the only circumstances before me that could explain the haste was the possibility of Ps making an attempt to freeze or otherwise secure the Property for the future satisfaction of the judgments of PRC Claims. I thus find such to the case by way of reasonable inference.

e.  Mr Tam also criticized the quality and credibility of Chui’s evidence in support of the allegation that it was she alone who paid the balance of the mortgage loan of HK$1.6 million odd, in that, (a) the IOU notes in favour of “Uncle Kit” and “Uncle Ming” both were hand-made notes not signed by the 2 “uncles”, (b) both these notes were dated 21 January 2023 with the respective dates of the loans written in manuscript thereon: for the loan in the sum of HK$30,000 by “Uncle Kit” the date of 16 February 2023 and for the loan in the sum of HK$500,000 by “Uncle Ming” the date of 4 September 2023, and (c) the compensation from insurance claim was received by Liu in March 2019 which was 4 and a half years before the alleged repayment of the balance of the mortgage loan. The explanation given by Chui[16] concerning the discrepancies in the dates of the note and dates of the draw down of the loan was that she came to agreements with the 2 uncles on the 2 loans in around January 2023 when she had come to an agreement with Liu concerning the Property, but the loans were drawn down later. However, such hardly explains how the 2 notes came to record things the way they do. Moreover, Chui did not explain how she could point to the medical insurance payment 4 years ago as one of the sources of funds for the repayment of the mortgage sum.

f.  On this issue concerning who actually repaid the balance mortgage loan, I note the fact that the most probative, direct and contemporaneous document that would readily show that the money was from Chui would have been say, a deposit slip, a cheque, or a bank statement of Chui’s bank account and such. However, none was being proffered by Chui, and instead, reliance was placed on the matters and in the manner mentioned above.

85.Ms Leung placed heavy reliance on the Court of Appeal judgment in China Medical Technologies, Inc v Samson Tsang Tak Yung [2022] HKCA 41. She submitted that the factual background there and here are strikingly similar. She relied particularly on this part of paragraph 68 of the judgment :

“68. … It is neither possible, nor appropriate, to make any definitive finding in the present interlocutory appeal on the veracity of Ms Chui’s explanation regarding the circumstances of Mr Tsang’s transfers of the Tsang Properties to her. All that we would say is that we do not regard Ms Chui’s explanation to be incredible, or consider that no weight should be given to her explanation because of the submission and criticism made by Mr Manzoni. Bearing also in mind the exceptional nature of the Chabra jurisdiction and the need for caution in the exercise of this jurisdiction, we are not satisfied that the Plaintiffs have shown a good arguable case that the Tsang Properties are in truth the assets of Mr Tsang.” (per Chow JA, giving the judgment of the Court)(emphasis added by Ms Leung)

86.Her submission, as I understand it, was that as the factual backgrounds between this CA case and the present one are so similar, this Court should be guided, if not bound, by the approach in that case to find that it is neither possible nor appropriate to make any definite finding concerning the veracity of Chui’s present explanations; and that I should take particular heed to the exceptional nature of the Chabra jurisdiction and the need for caution in the exercise of that jurisdiction.

87.I do not accept that the facts of that case and the facts in this case are so strikingly similar, though there are some similarities.

88.In China Medical Technologies, Inc, the plaintiff claimed to have been defrauded some US$521.8 million in 2006 to 2008 by, inter alios, Mr Samson Tsang. The Chabra injunction issue before the CA concerned 3 properties held in the name of Ms SK Chui, the Interested Party, and the net proceeds of sale of any of them. The 3 properties were purchased respectively in 2006, 2007 and 2008 when Tsang and SK Chui were still married, with 2 of these properties purchased by Tsang and SK Chui as co-owners, and the 3^rd property purchased in SK Chui’s sole name but the adjacent unit was at the same time purchased in Tsang’s name such that the two together form a “twin unit”. Tsang and SK Chui were divorced in September 2011. The plaintiff’s case was that the 3 properties were purchased using the money Tsang defrauded from the plaintiff. The plaintiff sought to engage the Chabra jurisdiction on the basis that the 3 properties were in truth the assets of Tsang. The plaintiff also disputed the genuineness of the divorce. SK Chui’s case was that she had independent income, was an active investor in real properties and these former 2 properties were purchased with substantial financial contributions by her and the “twin unit” entirely with her money, that there was documentary evidence showing she paid half of the down-payments for the former 2 properties and all the down payment for the 3^rd property. Her case was that on their divorce in 2011, Tsang and her agreed, inter alia, that the legal title of one of the units in the “twin unit” held in Tsang’s name be transferred back to her, Tsang’s interest in the other 2 properties be acquired by SK Chui at respectively HK$3 million and HK$3.98 million, while the HK$3 million purchase price be set off against a lump sum maintenance of the same amount to be paid by Tsang.

89.At the ex parte stage in that case, it was mistakenly stated to the Judge that the 3 properties were purchased without the need of mortgages, when it was later accepted by the plaintiff before Ng J that they were in fact purchased with mortgages of substantial amounts. Ng J acceded to SK Chui’s application to discharge the Chabra injunction, and from which the plaintiff appealed to the CA.

90.The point in issue in that case, therefore, was not so much whether the divorce was genuine, or whether the transfer of Tsang’s interest in the 3 properties pursuant to the financial arrangement in the divorce was a “dissipation”. The sharp point in dispute was whether there was a good arguable case that the 3 properties were in truth assets of Tsang. On the evidence and in the circumstances of that case, and as stated in the last sentence of §68 of the judgment, the CA came to the conclusion that the plaintiff has not shown a good arguable case on that matter, and the CA came to that conclusion without having to resort to making any definitive finding regarding the veracity of SK Chui’s explanation regarding the circumstances of Tsang’s transfers of the 3 properties to her in September 2011 under the financial arrangement of the divorce.

91.Very different from China Medical Technologies, Inc, in this case there is no dispute that half equal share of the Property belonged to Liu, while one, if not the main, issue is the nature of, as well as the veracity of Chui’s case and evidence over, the Transfer.

92.So properly understood, while a divorce forms part of the common background in China Medical Technologies, Inc and the present case, the similarities between that case and this one end there. I therefore do not accept Ms Leung’s submission that this Court is bound by the CA’s approach in the assessment of the evidence before it[17], or that the approach, while obviously apposite in that case, is the appropriate one on the facts of this case[18]. On the contrary, in my view, the facts and circumstances of the present case do call upon this Court to have to evaluate Chui’s evidence and decide whether the Transfer, apparently within the context of a divorce, could still be shown, on the basis of a good arguable case, to be a dissipation and a disposition that may be liable to be avoided under s. 60 of the C&PO.

93.On that, Ms Leung effectively submitted that as the Family Court has approved the 2^nd Consent Summons and made it into the Family Court Consent Order, there was no room, even on the basis of a showing of a good arguable case, that the Transfer was otherwise than a “justified dissipation”. In other words, Chui was contending that once the Transfer was made pursuant to an ancillary relief arrangement or pursuant to a Family Court order, whether made by consent or otherwise, it would as a matter of course be shielded from being a “dissipation” in the context of Mareva Injunction and from the operation of s.60 of C&PO. Evidently, the Family Court approved the 2^nd Consent Summons only in the setting and context of a divorce and according to family law, and not having to consider whether the Transfer would be a “dissipation” to put the asset out of reach of the enforcement of a judgment by creditors or whether the disposition was in fact one made with intent to defraud creditors. Those issues are, however, fairly and squarely required to be determined by this Court (as to whether there is a good arguable case). Therefore, I am unable to accept that submission.

94.As I evaluated above, while eventually the financial arrangement was made into the Family Court Consent Order, it was in the circumstances so speedy, smooth, consensual and highly cooperative that it was very much in the nature of a voluntary disposition made at the will and wish of Liu and Chui, at the time when Ps had just formally issued the PRC Claims against Liu. I agree with Mr Tam’s approach that I am not here to make any assessment, nor to make any finding, on the genuineness of the divorce between Liu and Chui, which is not something I am strictly required to deal with. I agree that the issue is, as Mr Tam posed and I have mentioned, that whether, the divorce nonetheless, there is a good arguable case that the Transfer would amount to a dissipation and would be amenable to s.60.

95.Neither party has cited authorities one way or another regarding whether a property transfer under a financial arrangement in the setting of a divorce would necessarily be outside the operation of s.60 or whether the setting of a divorce is definitely irrelevant for the operation of that section.

96.Neither party has cited authorities on what “valuable consideration” means in the context of s.60. Ms Leung’s submissions essentially assumed that if it was proved that Chui paid on behalf of Liu his half share of the outstanding mortgage loan in the tune of HK$800,000, it would be “valuable consideration”.

97.Those said, I find that there is some validity in Mr Tam’s criticisms, as set out in §84(e) above, on the proof proffered by Chui in support of her claim that she alone repaid the balance of the mortgage loan. I also find Chui’s failure to proffer the contemporaneous documents, as I have mentioned at §84(f) above, telling. That being the state of evidence, I think there is a good arguable case for Ps to challenge Chui’s assertion that she alone repaid the balance of the mortgage loan.

98.The test for “intent to defraud creditors” under s.60 of C&PO was authoritatively examined and settled by the Court of Final Appeal in Tradepower (Holdings) Ltd v Tradepower (Hong Kong) Ltd (2009) 12 HKCFAR 417, namely :

“88. … Where it is objectively shown that a disposition of property unsupported by consideration is made by a disponor when insolvent (or who thereby renders himself insolvent) with the result that his creditors (including his future creditors) are clearly subjected at least to a significant risk of being unable to recover their debts in full, such facts ought in virtually every case to be sufficient to justify the inference of an intent to defraud creditors on the disponor’s part. In cases falling outside the rule, that is, in cases where the disposition is made for valuable consideration, or where the disponor is not insolvent or where the disposition does not deplete the fund potentially available to the creditors, an actual intent to defraud creditors must be shown as an inference properly to be drawn on the available evidence before section 60 is engaged.” (per Ribeiro PJ at p.457)

99.By this test, if Ps successfully dispute Chui’s allegation that it was she who alone repaid the outstanding mortgage loan, therefore that she has not provided “valuable consideration”, there would be a good likelihood that the Transfer be held to be one that was made with an intent to defraud creditors. Moreover, there being no authorities cited to me on what “valuable” consideration under s.60 means, I am not readily persuaded by Ms Leung that, her premise, namely that if it is proved that Chui paid for Liu’s half of the outstanding mortgage loan, namely HK$800,000 odd, it would necessarily be considered as “valuable” consideration within the meaning of s.60, would be correct, when the value of Liu’s half share in the Property might well be about HK$3.5 millions at the time of the Transfer.

100.Having endeavoured to evaluate holistically the evidence and submissions before me as above set out, I am satisfied that Ps have shown that they have a good arguable case that the Transfer might nevertheless be considered as an unjustified dissipation for the purpose of the exercise of the Chabra jurisdiction against Chui and they have a good arguable case that the Transfer might be amenable to being avoided under s.60 of C&PO.

101.For completeness, I would just mention that I do not find of any relevance Chui’s repeated reference to the Property not being made a part of the asset preservation measures ordered by the Qianhai Court as a basis or justification that the Transfer was not an “unjustified dissipation”. As have mentioned, and it was not disputed by Chui, that the PRC Court could not and would not make an enforceable freezing order freezing assets outside the PRC.

Is there a real risk of dissipation on the part of Chui ?

102.Ps’ case is that Chui has participated and assisted Liu in dissipating assets by involving in or making the arrangements leading to the Transfer. In light of my views expressed in the preceding section, I accept Ps’ case that thereby it has been shown that there is a real risk of dissipation on the part of Chui.

103.Chui relied on the various contentions and matters dealt with above to contend that there is no cogent evidence of risk of dissipation, including, that the Transfer was a “justified dissipation”, that the Property was not frozen by the asset perseveration measures ordered by the Qianhai Court, that there was no sale by Liu and Chui to a third party prior to the Transfer to liquidate the Property and to dissipate the proceeds. As I have reasoned above, I do not accept or place weight on these matters as being able to show that there is no risk of dissipation.

104.I find there is a real risk of dissipation on the part of Chui.

Form of the Chabra injunction and balance of convenience

105.I understand that Ms Leung’s submission against the form of the Chabra injunction was directed at the relief sought as set out in the OS. The relief sought in the OS was essentially a Mareva Injunction in the sum of RMB 11,897,850.91 as against both Liu and Chui. The main objections raised by Ms Leung was that Chui should not be enjoined up to the whole amount claimed in the PRC Claims, and that the injunction should be in personam and not a proprietary one enjoining Chui from dealing with the Property in whatsoever way. Ms Leung did not provide a formulation of the wording of the Chabra injunction against Chui which she said would be correct and appropriate.

106.As have mentioned, before DHJ Phoebe Man at the return date hearing on 20 October 2023, Chui and Ps were content respectively to give and to accept, at least in the interim, Chui’s Undertaking, as follows:

“Not to in any way sell or dispose of or deal with or diminish the value of the [Property]”

107.Mr Tam has made clear in his written submissions[19] for this hearing that Ps were not seeking an injunction as against Chui up to the value of the PRC Claims, though he did not state the amount or extent Ps were seeking to enjoin as against Chui.

108.As I have said in §§78 – 79 above, it is not Ps’ case that the entire Property was in truth Liu’s asset, therefore it follows that only Liu’s half share would be used to satisfied the judgment in the PRC Claims and there is no reason proffered that the other half share in the name of Chui would or should be so used. In my view therefore, the Chabra injunction should only bite Liu’s half share.

109.Concerning Chui’s complaint that there was material non-disclosure by Ps of the in personam nature of the Chabra relief to the Court at the ex parte hearing. I accept Mr Tam’s submissions that, as shown by the transcript of the ex parte hearing, Cheng J had queried Ps the appropriateness of enjoining Chui in the full amount of the PRC Claims and Ps accepted that the full amount was not appropriate. There were then further discussions between the learned judge with him on the form of the interim order to be made to take effect until the return date, resulting in the grant of an interim injunction enjoining Chui to dispose or otherwise deal with the Property or to remove from Hong Kong any of its sale proceeds. I find no substance in Chui’s such complaint of material non-disclosure.

110.Ms Leung also contended on behalf of Chui that the Chabra injunction is oppressive to Chui and her children, in that the financial relief under the Family Court Consent Order was meant to give Chui a clean break and start, which the Chabra injunction would hinder. She also contended that Chui was thereby unjustly deprived of the opportunity to rent out the Property to earn rental income. I think there is some validity concerning these 2 complaints. I think it is just that the Chabra injunction ought to be relaxed to the extent of allowing Chui to rent the Property out to earn rental income to be used by her in the interim until formal measures are taken by Ps to seek to use Liu’s half share in the Property to satisfy the judgments in the PRC Claims.

111.So limiting the Chabra injunction to only bite Liu’s half share in the Property and so relaxing it to allow Chui to earn and use rental income from it in the interim, I do not think the “clean-break” point is sufficient to sway the balance of convenience against granting the Chabra injunction in this newly revised form.

112.Though the Chabra injunction should only bite Liu’s half share, I think it necessary, and therefore in the circumstances just, to enjoin Chui from selling or otherwise encumbering or diminishing the value of the Property as there might be a risk of letting in a third party potentially qualifying as a bona fide purchaser for value without notice, who might resist and/or complicate Ps’ later application under s.60 of the C&PO, or their other efforts in enforcing the judgments on the half share of the Property.

Conclusion and Disposal

113.In the premises, and as against Liu,

a.  I accede to the Continuation Summons and make an order in terms of paragraph 1 thereof;

b.  I give judgment to Ps granting the relief as against Liu in terms of paragraph 1 of the Amended OS; and

c.  Costs should follow the event. I order on nisi basis that Liu pays Ps costs of these proceedings, including the costs of the Continuation Summons, to be taxed if not agreed. This order nisi will become absolute unless any party applies to vary within 14 days.

114.In the premises, and as against Chui,

a.  I dismiss Chui’s Summons;

b.  I give judgment to Ps and grant an injunction under the Chabra jurisdiction as against her in terms that would incorporate my views expressed in §§108, 110 and 112 above; and

c.  Ps are to provide Chui a proposal on the terms of the injunction within 7 days, and Ps and Chui do attempt to come to agreement within 7 days after, failing which parties are to submit a joint letter 14 days thereafter setting out their proposed versions with succinct explanations for this Court to approve the final wording. For the avoidance of doubt, Chui will be released from Chui’s Undertaking only upon the judgment containing the injunction has been sealed and served on her.

115.Chui has some success in cutting down the ambit of the Chabra injunction as against her. My provisional view is that Ps should be deprived 15% of their costs. I thus order on nisi basis that Chui do pay Ps 85% of their costs of these proceedings, including the costs of Chui’s Summons, to be taxed if not agreed. This will also become absolute after the lapse of 14 days unless any party applies to vary within that time.

116.Lastly, I thank Mr Tam and Ms Leung for their assistance.

Mr Fergus Tam, instructed by Tang & So, for the 1^st and 2^nd Plaintiffs

The 1^st Defendant, appearing in person, being absent

Ms Eva Leung, instructed by Hugill & Ip, for the 2^nd Defendant