Tang Qiong v. Zhang Tingtnig

HCA 452/2018

[2025] HKCFI 2714

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 452 OF 2018

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D E C I S I O N

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A.  Introduction

1.Upon the Plaintiff’s ex parte application, on 31 January 2022, Keith Yeung J granted a Mareva injunction restraining the Defendant from:-

(1)  removing assets up to the value of RMB14,320,000;

(2)  disposing of Unit A, 30/F, Diva, No. 135 Electric Road, Hong Kong (the “Diva Property”) or the net sale proceeds thereof; and

(3)  disposing of Flat G, 9^th Floor, Lime Habitat, No.38 Ming Yuen Western Street, Hong Kong (the “Lime Habitat Property”) or the net sale proceeds thereof.

2.This is the substantive hearing of the Plaintiff’s summons dated 7 February 2022 seeking to continue the said Mareva injunction.

B.  Material Background

B1.  The Underlying Dispute

The Plaintiff’s Case

3.Zheng Qing Yuan (“Mr Zheng”) is a mutual friend of the Plaintiff and the Defendant.

4.Through Mr Zheng, the Plaintiff became acquainted with the Defendant.

5.In May 2014, the Plaintiff orally agreed to provide a loan of RMB4,000,000 to the Defendant, and the interest thereon was 3% per month.

6.From June 2014 to November 2014, the Defendant, via Mr Zheng, made 6 payments of RMB120,000 (ie total RMB720,000) to pay off the monthly interest accrued on the principal indebtedness of RMB4,000,000.

7.However, the Defendant has not made any payment after November 2014.

8.In the premises, the Plaintiff commenced the present action on 26 February 2018. Pursuant to the said loan agreement, she sues the Defendant for RMB14,320,000 (being the outstanding principal indebtedness and the outstanding interest). In the alternative, she seeks restitution against the Defendant in the amount of RMB3,280,000 (ie RMB4,000,000 less RMB720,000).

The Defendant’s Case

9.The Defendant does not dispute the fact that she received an aggregate sum of RMB4,000,000; nor does she dispute the fact that Mr Zheng was her friend.

10.However, the Defendant denies that the loan came from the Plaintiff.

11.The Defendant alleges that:-

(1)  She and Mr Zheng “have been in a partnership that involves a series of borrowing and lending loans between them in the nature of revolving loan”[1].

(2)  Against this background, Mr Zheng was the one who lent her the sum of RMB4,000,000.

(3)  The Plaintiff was not privy to the loan arrangement between herself and Mr Zheng at all[2].

12.Put simply, it is the Defendant’s case that Mr Zheng (not the Plaintiff) is the person who is entitled to sue her for recovery of the loan of RMB4,000,000.

B2.  Events leading to the Application for Mareva Injunction

13.As a matter of public records:-

(1)  The Defendant was a 90% registered owner of the Diva Property[3].

(2)  The Defendant was the sole registered owner of the Lime Habitat Property.

The Plaintiff’s Case

14.On 28 January 2022, the Plaintiff’s solicitors, upon checking the records maintained with the Land Registry, discovered that:-

(1)  Pursuant to a purported sale and purchase agreement dated 5 July 2021, the entirety of the interest (including the Defendant’s 90% interest) in the Diva Property was purportedly sold to a Zhang Yamin for HK$17 million.

(2)  Pursuant to another purported sale and purchase agreement dated 9 December 2021, the Defendant’s interest in the Lime Habitat Property was sold to a Zhang Xusheng for HK$13 million.

15.Whilst the transaction in respect of the Diva Property had completed already, the transaction in respect of the Lime Habitat Property had not yet completed.

16.The Plaintiff says that:-

(1)  Zhang Yamin is the Defendant’s daughter. She is a student with no financial means.

(2)  Zhang Xusheng is the Defendant’s son. He is a young man with limited financial means and has been declared “a dishonest person subject to enforcement (失信被執行人)” in the Mainland.

17.In the premises, the Plaintiff contends that:-

(1)  Neither Zhang Yamin nor Zhang Xusheng was financially capable of purchasing the Defendant’s interest in the Diva Property and the Lime Habitat Property.

(2)  The purported transactions under the sale and purchase agreements dated 5 July 2021 and 9 December 2021 (collectively the “Purported Transactions”) were not genuine. The same were orchestrated for the purpose of dissipating the Defendant’s assets and evading the court’s judgment in the present action.

The Defendant’s Case

18.The Defendant admits that Zhang Yamin is her daughter (hereinafter the “Defendant’s Daughter”), whereas Zhang Xusheng is her son (hereinafter the “Defendant’s Son”).

19.However, the Defendant alleges that the Purported Transactions were genuine.

20.The Defendant says that in light of her financial difficulty, she decided to sell the interests in the said Properties to her Daughter and her Son, such that mortgagee banks and money lenders would not foreclose the Properties.

21.As to the financial means of her Daughter and her Son, the Defendant alleges that:-

(1)  Her Son obtained (i) some loans from friend(s); and (ii) a mortgage loan[4]. Thus, he repaid the indebtedness of HK$7,500,000 owed to JIT Finance Co Ltd under a legal charge over the Diva Property as well as a sum of HK$875,652 owed to United Asia Finance Ltd. These sums would be set off against the purchase price in respect of the Lime Habitat Property.

(2)  As regards the sale and purchase of the Diva Property, her Daughter obtained (i) some loans from friend(s); and (ii) a mortgage loan from CMB Wing Lung Bank Ltd[5]. The Defendant appeared to suggest that her Daughter managed to repay the pre-existing mortgage loans in the amounts of HK$7,634,948[6] owed to JIT Finance Co Ltd and HK$6,590,220.42[7] owed to CMB Wing Lung Bank.

C.  Legal Principles

22.The legal principles relating to Mareva injunctions are well-established. The applicant has to show: (i) he has a good arguable case; (ii) there are assets within the jurisdiction; (iii) the balance of convenience lies in favour of granting a Mareva injunction; and (iv) there is a real risk of dissipation.

23.As Lam VP (as Lam PJ then was) pointed out in Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81 at paras 39 to 40, the question of whether there is a real risk of dissipation involves predictive and evaluative judgment. The court will holistically consider all the circumstantial materials that are indicative of risk, including matters which point against such risk. Matters like the nature of the assets held by the defendant, the financial standing of the defendant, his/her past or existing credit history, and the defendant’s behavior in respect of the claim can be indicative of the risk of dissipation.

D.  Deliberation

D1.  Good Arguable Case

24.The Defendant seeks to discredit the Plaintiff’s case by pointing out that she has amended her statement of claim a few times.

25.For the following reasons, I am not of the view that there is substance in this line of attack:-

(1)  The amendments to the statement of claim mainly concern (i) the background relating to the loan agreement; (ii) how the loan proceeds were made available to the Defendant; and (iii) the persons through whom the loan proceeds were made available to the Defendant.

(2)  Bearing in mind the crux of the Defendant’s defence is that the loan agreement was between herself and Mr Zheng, it appears to me that the amendments to the statement of claim merely concern some peripheral matters.

(3)  All along, it has been the Plaintiff’s case that she was the one who was privy to the loan agreement and who made available the loan of RMB4,000,000 to the Defendant. In this regard, the Plaintiff’s has not undergone any changes at all.

26.Meanwhile, the Plaintiff’s case is corroborated by:-

(1)  a written acknowledgement signed by the Defendant on 15 July 2014, wherein the Defendant unequivocally acknowledged that (i) she borrowed RMB4,000,000 from the Plaintiff; and (ii) the loan proceeds had been received[8].

(2)  the evidence of Mr Zheng[9], who was adamant that (i) he was never involved in any business with the Defendant; (ii) he did not borrow any money from the Plaintiff; and (iii) he did not lend the sum of RMB4,000,000 to the Defendant.

27.It is not this court’s function to conduct a mini-trial on affidavit. As such, I do not propose to embark on a forensic analysis of the evidence.

28.For present purposes, it suffices to say that the Plaintiff’s case is supported by (i) a piece of contemporaneous document; and (ii) the testimony of a neutral witness, ie Mr Zheng who used to be a friend of the Defendant.

29.On the evidence, I am satisfied that the Plaintiff has made out a good arguable case against the Defendant.

D2.  Assets within the jurisdiction

30.The Defendant is a permanent resident in Hong Kong.

31.As mentioned, the Defendant was the owner of the Diva Property and the Lime Habitat Property, which were purportedly sold to her Daughter and her Son.

32.In the circumstances, I am satisfied that the Defendant must have assets within the jurisdiction.

D3.  Risk of Dissipation and Balance of Convenience

33.For the reasons elaborated in this sub-section, I am not of the view that the purported sale and purchase of the Diva Property and the Lime Habitat Property were genuine.

34.Insofar as the Purported Transaction in respect of the Lime Habitat Property is concerned[10]:-

(1)  The consideration was HK$13 million.

(2)  According to the Defendant, her Son’s purported purchase was financed by some mortgage loan(s) and some loan(s) from friend(s). This was why the Defendant’s Son was able to repay (i) HK$7,500,000 owed to JIT Finance Co Ltd; and (ii) HK$875,652 owed to United Asia Finance Ltd.

(3)  Despite the Plaintiff expressly takes issue as to the financial means and creditworthiness of the Defendant’s Son, the Defendant has chosen not to provide any information as to:-

(a)  the identity of the alleged “friend(s)” who was/were willing to provide loan(s) to the Defendant’s Son for purchasing the Lime Habitat Property;

(b)  the details of the loan arrangement between the Defendant’s Son and his “friend(s)”;

(c)  when and how the alleged loan(s) from the alleged friend(s) was/were made available to the Defendant’s Son; and

(d)  the occupation of the Defendant’s Son and his financial abilities in making repayment.

(4)  There is simply not a shred of evidence showing that the loan arrangement between the Defendant’s Son and his unidentified friend(s) existed at all; nor is there any evidence showing that the Defendant’s Son was a creditworthy person with adequate financial means.

(5)  On the evidence, it is doubtful as to whether the funds for repaying the indebtedness owed to JIT Finance Co Ltd and United Asia Finance Ltd came from the Defendant’s Son as alleged. There is not a shred of objective or documentary evidence showing that this was the case.

(6)  For reasons best known to the Defendant, she has chosen not to adduce any evidence from her Son. No explanation has been provided.

(7)  In the premises, the Defendant’s case is completely hollow. Her allegations raise more questions than answers. The huge evidential gap is plainly inexplicable.

(8)  I do not believe that the alleged “friend(s)” existed at all. I do not believe that the Defendant’s Son is a creditworthy person with adequate financial means. I also do not believe that the Defendant’s Son provided the funds for repaying the indebtedness owed to JIT Finance Co Ltd and United Asia Finance Ltd.

35.As regards the Purported Transaction in respect of the Diva Property:-

(1)  The purported consideration was HK$17 million.

(2)  According to the Defendant, her Daughter’s purported purchase was financed by (i) loan(s) from some friend(s); and (ii) a new mortgage loan provided by CMB Wing Lung Bank. The Defendant appears to suggest that the funds from her Daughter were used to discharge the pre-existing indebtedness of HK$7,634,948 under a mortgage created in favour of JIT Finance Co Ltd as well as the pre-existing indebtedness of HK$6,590,220.42 under a mortgage in favour of CMB Wing Lung Bank.

(3)  As pointed out by Ms Angel Wong (for the Plaintiff), assuming that the pre-existing indebtedness of HK$7,634,948 and HK$6,590,220.42 was indeed repaid, there should be a balance in favour of the Defendant in the amount of HK$2,497,348.42[11]. However, the Defendant has failed to adduce a shred of evidence showing that the balance of the sale proceeds had been paid to and/or received by herself.

(4)  Moreover, the Defendant is not in a position to dispute the fact her Daughter was a student at all material times. It is simply inconceivable as to why a student would wish to purchase a substantial property that was worth HK$17 million.

(5)  Unsurprisingly, the Defendant cannot provide any information as to:-

(a)  the identity of the alleged “friend(s)” who was/were willing to provide loan(s) to the Defendant’s Daughter;

(b)  the details of the loan arrangement between the Defendant’s Daughter and her “friend(s)”;

(c)  when and how the alleged loan(s) from the alleged friend(s) was/were made available to the Defendant’s Daughter; and

(d)  the financial position of the Defendant’s Daughter and her abilities in making repayment.

(6)  In short, there is simply not a shred of evidence showing that the loan arrangement between the Defendant’s Daughter and her unidentified friend(s) existed at all.

(7)  In this connection, Ms Rachel Chiu (for the Defendant) emphasized that Wing Lung Bank granted a mortgage in favour of the Defendant’s Daughter[12]. However, the court knows very little about the mortgage arrangement, and the Defendant has kept the matter opaque. For instance, the Defendant has been silent as to whether herself and/or some other person with adequate financial means acted as guarantor(s) in respect of the Daughter’s indebtedness under the mortgage arrangement. In the circumstances, I am unable to conclude that the Defendant’s Daughter is a person with financial means simply because Wing Lung Bank granted a mortgage in her favour.

(8)  Furthermore, for reasons best known to herself, the Defendant has chosen not to adduce any evidence from her Daughter. No explanation has been provided.

(9)  Again, the Defendant’s case is completely hollow. Her allegations raise more questions than answers. The huge evidential gap is plainly inexplicable.

(10)  I do not believe that the alleged “friend(s)” of the Defendant’s Daughter existed at all. I do not believe that the Defendant’s Daughter is a person with financial means. I also do not believe that the Defendant has received any consideration from her Daughter.

36.For the above reasons, I am of the view that the matters relating to the Purported Transactions were commercially inexplicable in multiple respects. On the available evidence, the most likely explanation was that these Purported Transactions were orchestrated for the purposes of evading the Plaintiff’s claims in this action. I am not of the view that the Purported Transactions were genuine and/or bona fide.

37.The aforesaid matters show that the Defendant was prepared to orchestrate sham transactions for the purposes of rendering herself “judgment-proof”.

38.I do not lose sight of the fact that on the Defendant’s admissions, she was in financial difficulty. This was why she did not propose to make any repayment to Mr Zheng (who was, on the Defendant’s case, the creditor in respect of the loan of RMB4,000,000).

39.Taking all the circumstances into account, I am satisfied the Plaintiff has discharged the evidential burden of showing that there is a real risk of unjustified dissipation of assets.

40.Thus, if no Mareva injunction were granted, there is a real risk that the Plaintiff may only obtain an empty judgment at the end of the day. This will be unfair to the Plaintiff.

41.Insofar as the balance of convenience is concerned, Ms Rachel Chiu (for the Defendant) submitted that the Plaintiff failed to prosecute the present proceedings diligently, which caused prejudice to the Defendant.

42.I do not accept Ms Chiu’s submissions:-

(1)  First of all, I am unable to conclude that the Plaintiff did not prosecute these proceedings with diligence after Keith Yeung J granted the Mareva injunction on 31 January 2022. As pointed out by Ms Angel Wong (for the Plaintiff), both parties have taken interlocutory applications for discovery and adducing supplemental witness statements (which took time to resolve).

(2)  Second, in any event, it was open to the Defendant to prosecute the present proceedings. I cannot see how the Defendant might shift the blame to the Plaintiff completely.

D4.  Alleged Material Non-Disclosure

43.In her affirmation in opposition[13], the Defendant suggests that the reason why the Plaintiff lent her RMB4,000,000 was that she owned properties in Hong Kong. However, when the Plaintiff made the ex parte application before Keith Yeung J, she failed to inform the court about this matter.

44.There is no substance in the Defendant’s complaint:-

(1)  I disagree that the Plaintiff’s commercial judgment would be relevant to the court’s exercise of discretion. This is nothing but a red herring.

(2)  In any event, it is not in dispute that the loan of RMB4,000,000 was unsecured. Whilst the same was not secured against the Diva Property and the Lime Habitat Property, the Plaintiff was content with the arrangement. This matter could not have escaped the attention of Keith Yeung J.

45.I reject the Defendant’s suggestion that the Plaintiff was guilty of material non-disclosure.

D5.  The Court’s Charba Jurisdiction

46.In Hui Chi Ming v Koon Wing Yee [2010] 4 HKC 86 at paras 26 to 33, Fok J (as Fok PJ then was) stated:-

“26. However, it is established that the Mareva jurisdiction may be exercised against non-parties.

27. In S.C.F. Finance Co v Masri [1985] 1 WLR 876 Lloyd LJ (as he then was) summarised the principles in relation to third party interests sought to be included within a Mareva injunction as follows (at 884B-E):-

‘(i) Where a plaintiff invites the court to include within the scope of a Mareva injunction assets which appear on their face to belong to a third party, e.g. a bank account in the name of a third party, the court should not accede to the invitation without good reason for supposing that the assets are in truth the assets of the defendant. (ii) Where the defendant asserts that the assets belong to a third party, the court is not obliged to accept that assertion without inquiry, but may do so depending on the circumstances. The same applies where it is the third party who makes the assertion, on an application to intervene. (iii) In deciding whether to accept the assertion of a defendant or a third party, without further inquiry, the court will be guided by what is just and convenient, not only between the plaintiff and the defendant, but also between the plaintiff, the defendant and the third party. (iv) Where the court decides not to accept the assertion without further inquiry, it may order an issue to be tried between the plaintiff and the third party in advance of the main action, or it may order that the issue await the outcome of the main action, again depending in each case on what is just and convenient.’

28. The test of “good reason” in principle (i) above is a higher standard of proof or threshold than the test of a serious issue to be tried as to the ownership of the assets. The purpose of requiring the higher standard of proof or threshold is to protect the rights of innocent third parties: Allied Arab Bank v. Taj El Arefin Hajjar and others, unrep., The Times, 11 January 1988.

29. The above principles were not controversial between the parties. Where there was some disagreement, however, was in respect of whether it was necessary for the party seeking injunctive relief to show that the assets held by the third party were the defendant’s assets and that they were assets available to satisfy a judgment by way of execution. This was the submission of Mr John Yan SC, leading counsel for the 1^st Defendant, which submission was adopted by Mr Horace Wong SC, leading counsel for Madam Lui.

30. However, I agree with the submission of Mr Johnny Mok SC, leading counsel for the plaintiff, that it is not necessary for the applicant to demonstrate, at the injunction stage, that the assets sought to be frozen belong to the defendant. In this regard, Mr Mok SC relied on Dadourian Group International Inc v. Azuri Ltd [2005] EWHC 1768 (Ch) (Westlaw Transcript 2005 WL 1686886), where Deputy Judge Edward Bartley Jones QC, held (at p.6 of the transcript):-

‘For my part, I do not believe it is necessary to establish beneficial ownership in a strict trust law sense. Clearly, if assets are held on a bare trust then the Chabra jurisdiction can be exercised. But, in my judgment, even if the relevant defendant to the substantive claim has no legal or equitable right to the assets in question (in the strict trust law sense) the Chabra jurisdiction can still be exercised if the defendant has some right in respect of, or control over, or other rights of access to, the assets. The important issue, to my mind, is substantive control. The view expressed in Gee on Commercial Injunctions 5^th Edition 2004 at 13.007 is that if a network of trusts and companies has been set up by a defendant to hold assets over which that defendant has control and that this has, apparently, been done to make himself judgment-proof, then such would be an appropriate case for the granting of freezing relief against a relevant non-party. I agree. What needs to be considered is the substantive reality of control, not a strict trust law analysis as to whether the third party is a bare trustee. Thus, in my judgment, placing assets in a discretionary trust would not prevent the Chabra jurisdiction being exercised against that discretionary trust if the substantive reality were that the relevant defendant controlled the exercise of the discretionary trust. Any other analysis would entirely defeat the ability of the English courts to take drastic action and would allow the court’s orders to be evaded by manipulations, entirely contrary to the court’s powers and duties as identified by Robert Walker J in International Credit and Investment Co (Overseas) Limited v Adham (above). Whether this be described as identifying the discretionary trust as a ‘sham’, as piercing the corporate veil, or as seeking to identify a controlled discretionary trust as a bare trust does not, to my mind, particularly matter. Certainly, at the interim stage, all that matters is to ascertain whether there is good reason to suppose that the relevant defendant controlled the assets in the discretionary trust.’ (Emphasis added)

31. So, a Mareva injunction may be granted over assets where it is shown that there is good reason to suppose as against a non-party that the assets of or held by the non-party would be susceptible to a procedure which would lead to satisfaction of a judgment. Whether that ultimately proves to be the case, for example on the basis that a trust is to be disregarded as a sham, or by reason of a lifting of the corporate veil, or as a bare trust for the benefit of the defendant, is a separate issue to be determined at a later stage, either on a preliminary issue or at trial or in the process of execution.

32. For present purposes, therefore, I approach the plaintiff’s application by asking whether he has shown that there is good reason to suppose the assets of the Trust are assets which would be susceptible to a procedure which would lead to satisfaction of a judgment in his favour.

33. In this regard, however, where the grant of a Mareva injunction is sought to restrain the disposal or removal of assets held by third parties it must be shown that the person against whom judgment may be obtained has some right in respect of, or control over, or other access, direct or indirect, to the relevant assets so that they or the proceeds of their sale or other disposition could be required to be applied in discharge of the judgment debt. It is not sufficient to show that the person sought to be enjoined might be persuaded to make the assets available: Winter v. Marac Australia Ltd (1986) 6 NSWLR 11 at 12G-13B.”

(emphasis added)

47.For the reasons set out in Section D3 above, I am satisfied the Plaintiff has a good arguable case that although the Diva Property has been registered under the name of the Defendant’s daughter, the transaction under the purported sale and purchase agreement dated 5 July 2021 and the assignment dated 17 August 2021 was merely a sham, and thus the beneficial ownership of the Diva Property is still vested in the Defendant.

48.Accordingly, the interest in the Diva Property should be subject to the Mareva injunction granted by the court.

E.  Conclusion and Disposition

49.For all the above reasons, I order that Mareva injunction granted by Keith Yeung J on 31 January 2022 be continued until trial or further order.

50.As regards costs, I order that:-

(1)  the costs in respect of the Plaintiff’s application for the Mareva injunction be to the Plaintiff in the cause; and

(2)  the costs arising from the Defendant’s opposition to the Plaintiff’s application for continuing the Mareva injunction (including the costs in respect of the present hearing, the Defendant’s affirmation in opposition and the Plaintiff’s affirmation in reply) be paid by the Defendant to the Plaintiff, to be summarily assessed by this court on paper.

51.The Plaintiff should file her statement of costs within 7 days, and the Defendant should file her statement in opposition within 7 days thereafter.

52.I thank Ms Angel Wong and Ms Rachel Chiu for their helpful assistance.

Dated 10 June 2025

Ms Angel H Y Wong, instructed by M/s Zhang Lawyers, for the Plaintiff

Ms Rachel Chiu, instructed by M/s Patrick Mak & Tse, for the 1^st and 2^nd Defendants