Liquidity Technologies Ltd and Another v. Mark David Lamb and Others

HCA 1646/2023

[2025] HKCFI 5658

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1646 OF 2023

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D E C I S I O N

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Introduction

1.I have before me an application by Summons dated 3 September 2025 (“the Amendment Summons”) for leave to be granted to the 1^st and 2^nd Plaintiff (collectively, “Ps”) to amend their Summons dated 12 June 2025 for summary judgment and/or judgment on admission (“the SJ Summons”) to include an additional relief, and for leave to the parties to file further evidence in relation to the additional relief. The Amendment Summons is supported by the 5^th Affirmation of Douglas Stephen Clark (“Clark 5^th”).

2.Ps and the 1^st Defendant (“D1”)[1] have already filed evidence in respect of the SJ Summons: 6^th Affidavit of Kirill Gourov filed on 12 June 2025 in support; Affirmation of Ewelina Anna Mielecka and Affirmation of Mark David Lamb both filed on 9 July 2025 in opposition; and 7^th Affidavit of Kirill Gourov filed on 7 August 2025 in reply. The substantive hearing of the SJ Summons has been fixed for hearing before me on 9 December 2025.

3.I considered it appropriate to accede to Ps’ request that the Amendment Summons be disposed of by way of paper disposal and directions were given on 11 September 2025 for the lodging and serving of written submissions by the parties (“the Directions”).

4.On 15 September 2025, Skeleton Submissions were filed on behalf of Ps.

5.On 15 September 2025 and 16 September 2025, an “Affidavit in Opposition to Amendment Application” of 9 pages and 5 pages respectively were faxed to my clerk by D1 (collectively, “D1’s Affs”). The two affidavits appear to be the same document save that some of the printed words in the first affidavit were not completely clear and the second affidavit was not completely faxed (stopping half way through the fifth page).

6.On 25 September 2025, an “Affidavit – Enhanced Version 2.0 (Final)” was lodged by the D1 (“the Enhanced Aff”).

7.On 26 September 2025, P’s Reply Submissions were lodged. It did not refer to the Enhanced Aff. Apparently, the Enhanced Aff was never served on Ps and only came to their attention when I wrote to the parties on 2 October 2025, in relation to D1’s application by letter to attend the hearings scheduled before me by video conference facility (“VCF”), and I took the opportunity to seek confirmation from Ps whether they wished to lodge any reply submissions to the Enhanced Aff which was received by this Court on 25 September 2025 (and if so, to file and lodge the same by 16 October 2025).

8.Accordingly, Ps’ Reply Submissions dated 16 October 2025 was further lodged. It was stated inter alia therein that ultimately they only obtained the Enhanced Aff from the Court after receipt of the Court’s letter of 2 October 2025.

9.A 5^th Affirmation of Hoi Kin Long (“Ho 5^th”) was also filed on behalf of Ps on 16 October 2025 in response to the allegation in the Enhanced Aff to the effect that D1 had not been served with the relevant court documents, was not represented by counsel and was not given the opportunity to defend the proceedings before the Seychelles Court.

10.Notwithstanding that strictly speaking there were non‑compliance with the Directions in terms of the time limits and manner to lodge and serve parties’ submissions in respect of the Amendment Summons by both Ps and D1, insofar as it is necessary and for the avoidance of doubt, retrospective leave is granted for the lodging of the various submissions, affidavits and affirmations lodged/filed by the parties and they have all been considered by me for the purposes of disposal of the Amendment Summons.

Background Facts

11.Bearing in mind that this is not the substantive hearing of the SJ Summons, a brief summary of the background facts suffices to dispose of the Amendment Summons.

12.The 1^st Plaintiff (“P1”) is a company incorporated under the laws of the Republic of Seychelles (“Seychelles”).

13.The 2^nd Plaintiff (“P2”) is the wholly owned subsidiary of P1 and is a company incorporated in Hong Kong.

14.P1 operated a cryptocurrency exchange (“CoinFLEX”) which was co-founded by D1 and Mr Arumugam. CoinFLEX issued a cryptocurrency named FLEX token which can be purchased or exchanged for cash according to its market exchange rate.

15.P2 was established to employ CoinFLEX’s Hong Kong team and operational staff running CoinFLEX.

16.D1 was the CEO of CoinFlex until his removal on 8 October 2023 and a director of P1 and P2 until his removal on 22 October 2023 and 7 November 2023 respectively.

17.D2, a well-known cryptocurrency investor, entered into a manual margin agreement dated 14 May 2021 with P1 (“the Margin Agreement”).

18.D3 and D4 are companies incorporated in Seychelles for which D1 had been their sole director since their inception in 2023. D4 is the wholly owned subsidiary of D3.

19.On 9 July 2022, Mr Arumugam and D1 issued a statement on behalf of CoinFLEX stating that a large individual customer had a written manual margin arrangement with CoinFLEX but had dishonoured his obligations leaving a significant deficit of US$84M. The statement further stated that they were looking for ways to re-finance CoinFLEX.

20.On 28 July 2022, P1 applied to the Supreme Court of Seychelles (“Seychelles Court”) for the approval of a Scheme of Arrangement based on the deficit of US$84M caused by the default of D2. The application was granted and the Scheme of Arrangement was approved by the Seychelles Court on 6 March 2023.

21.Ps allege that D1, D3 and D4 have since early 2023 operated an online cryptocurrency exchange named OPNX Exchange (“OPNX”) which issues a cryptocurrency named OX Token. OPNX(HK) Limited (“OPNX(HK)”), is a Hong Kong incorporated company wholly owned by D3. It is alleged that D1, without P’s authorization, established D3 and D4 or OPNX(HK) as a competing business, to transfer or licence the assets of Ps to D3, D4 or any other OPNX entity. It is also alleged that D1 represented to customers of Ps and the public at large that CoinFLEX will be re-branded or “transitioned” to OPNX and passed off OPNX as that of CoinFLEX or as a business in some way connected with CoinFLEX.

22.In the Amended Statement of Claim (“ASOC”), Ps claim that there were various misappropriation of Ps’ assets by D1 and claimed inter alia that:

(a)  a Technology License Agreement entered into on behalf of P1 and D3 on 31 March 2023 (“License Agreement”) which allowed D3 to use all CoinFLEX’s technologies for no consideration is null and void, and therefore D1, D3 and D4 have infringed the software and other intellectual property licensed under the License Agreement for which they are liable to pay damages, give an account of profits and should be subject to injunctive relief;

(b)  D1, as one of the administrators of CoinFlex’s account with Fireblocks (an online infrastructure used to move and store digital assets), signed on behalf of P1, and D4 an Assignment, Assumption and Consent Agreement on 25 and 26 September 2023 (“Fireblocks Assignment Agreement”) that assigned to D4 all of P1’s rights, title and interest in the License Agreement between Fireblocks and P1 dated 16 April 2020, for no consideration and which was unauthorized by P1, which resulted in Ps not having access to the Fireblocks account of CoinFLEX;

(c)  There were various alleged wrongful use or misappropriation of assets and human resources of Ps for the operation of OPNX totalling US$10,631,392.90 (“Unauthorized Payments”) for which D1, D3 and/or D4 is liable to repay;

(d)  There were also various misappropriations of FLEX tokens from P1 by D1 to himself, D3 and/or D4 or their affiliates for which D1, D3 and/or D4 is liable to compensate, account to P1 and/or make restitution;

(e)  D1 has divulged confidential information, records and/or trade secrets to third parties including but not limited to D3 and D4 for the benefit of OPNX; and

(f)  D1 as registered owner of the domain name (coinflex.com) (“the Domain Name”) had failed to disclose information necessary to login into and act as administrator to the Domain Name and to access other infrastructure platforms subscribed to and/or utilised by CoinFLEX.

23.During the first half of 2023, D1 froze customer’s assets on CoinFLEX, and clients and creditors were prevented from withdrawing their assets. The services of CoinFLEX Exchange have since late October 2023 been suspended.

24.In July 2023, P1 commenced HKIAC arbitration proceedings against D2 for approximately US$84M based on the Margin Agreement (“the Arbitration”). The Arbitration was settled based on a settlement agreement purportedly entered into between P1 (through D1) and D2 on 12 August 2023 (“the Settlement Agreement”). However, Ps claim that the Settlement Agreement was entered into in breach of duty owed by D1 to P1 by: (a) entering into the Settlement Agreement without authorisation; (b) giving instructions to counsel to terminate the Arbitration; and (c) putting himself in a position of conflict of interest where the terms of the Settlement Agreement is solely to the benefit of himself and D2, and to the detriment of P1. Ps have commenced separate proceedings against D2 to set aside the Settlement Agreement in HCCT 87/2023 but in the event the Settlement Agreement is not set aside, P1 claims against D1 the sum of US$84M and interests, or in the event it is set aside, all costs incurred in the setting aside.

25.Ps has further claimed inter alia the following relief:

(1)  Damages against D1, D3 and D4 for unlawful means conspiracy;

(2)  Declaration that the License Agreement is null and void and restitution of any benefits received by D3;

(3)  Declaration that various amounts of FLEX tokens of P1 misappropriated by D1 are held on trust for P1 or damages to compensate and/or account for their value and any profits made therefrom;

(4)  Damages for improperly settling the Arbitration against D2 , forging documents in the Arbitration and improperly giving instructions to terminate the Arbitration, to be assessed;

(5)  Various injunctive relief against D1;

(6)  Order that D1 do delivery up to Ps’ solicitors any and all confidential information which are in his possession, custody or control and to remove, delete, destroy all such information;

(7)  Declaration that all of Ps’ assets transferred to D1, D3 and D4 and/or their traceable proceeds are held on trust for Ps;

(8)  Orders that D1 do deliver up to Ps’ solicitors specified information necessary for access and login to the specified accounts and to transfer ownership of the specified accounts to P1;

(9)  A declaration that the Fireblocks Assignment Agreement is null and void;

(10)  Repayment of or an account for the Unauthorized Payments;

(11)  Equitable compensation;

(12)  Order that each of the Defendants do provide a full and proper account of the profits they each made and payment of all sums found due to P upon such taking of account;

(13)  Interest;

(14)  Costs; and

(15)  Further and/or other relief.

Applicable Principles

26.O.20, r.8(1) of the Rules of the High Court, Cap.4A (“RHC”), provides:

“For the purpose of determining the real question in controversy in any proceedings, the Court may at any stage of the proceedings and either of its own motion or on the application of any party to the proceedings order a pleading or any other document in the proceedings to be amended on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.”

27.As for the general principles for grant of leave to amend under O.20, r.8 of RHC see Hong Kong Civil Procedure 2025, Vol.1, §20/8/6, in particular:

“It is a guiding principle of cardinal importance on the question of amendment that, generally speaking, all such amendments ought to be made ‘for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings’…

In Tildesley v Harper (1878) 10 Ch D 393, 396, 397, Bramwell L.J. said: ‘My practice has always been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by his blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise.’ ‘However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs.’ An amendment ought to be allowed if thereby ‘the real substantial question can be raised between the parties’, and multiplicity of legal proceedings avoided…

The court is entitled to have regard to the merits of the case in any application to amend if the merits are readily apparent although a prolonged investigation into the merits of the case is inappropriate.”

28.See also the helpful summary of the applicable principles by Ng J in Hsu Ming Chi v Lam Shu Chit & Ors (Unrep) HCCL 8/2013, 22 October 2014, at §§13-18:

“13. It is a guiding principle of cardinal importance on the question of amendment that generally speaking, all such amendments ought to be made ‘for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings’: Re Playmates Investments Ltd [1996] 4 HKC 577 at 582E-H (per Le Pichon J as she then was); Natamon Protpakorn v Citibank NA [2009] 1 HKLRD 455 at para. 25 (per Cheung JA); Hong Kong Civil Procedure 2014 Vol. 1 para. 20/8/6.

14. Leave is readily granted to amend before trial unless it can be shown that the new claim based on the proposed amendment is bound to fail. While the court is entitled to have regard to the merits of the case, it should only do so when the merits are readily apparent, and are so apparent as not to require prolonged investigation: Natamon Protpakorn v Citibank NA supra at para. 25 (per Cheung JA).

15. If the proposed amendments are bound to fail, no leave to amend should be granted. In this regard, the court will take the applicant’s proposed pleaded case to the highest: Bank of China v Leigh Hardwick unrep., HCA 1110 of 2006, 28 August 2013, per Anthony Chan J at para. 2.

16. Absent any real prejudice, an application for amendment, albeit late, must be decided upon the general principle that a court of law seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims or defences before the court for adjudication: VSC Building Products Co Ltd v Kono Insurance Ltd., unrep. HCA 947/2005, 9 September 2009, per A Cheung J (as he then was) at [22].

17. Where prejudice is claimed, the burden is on the party opposing the amendment to show prejudice. There is no injustice to the opposing party if he can be compensated by appropriate orders as to costs: Re Playmates Investments Ltd supra at 582H, 584C (Le Pichon J as she then was).

18. Lastly, in giving effect to the underlying objectives of the Rules of the High Court, including those concerning amendments, the court shall always recognize that the primary aim in exercising the powers of the court is to ‘secure the just resolution of disputes in accordance with the substantive rights of the parties’: RHC O 1A r 2(2).”

Discussion and Disposition

29.By the Amendment Summons, Ps seek to include the following additional relief:

“The 1^st Defendant do pay damages to the 1^st Plaintiff to be assessed for improperly settling the Arbitration Proceedings (as defined in §10(c) of the ASOC) and giving instructions to terminate the Arbitration Proceedings” (“the Additional Relief”).

30.The alleged unauthorized and improper settlement of the Arbitration and claim for damages to be assessed have been pleaded in the ASOC. Plainly, there can be no prejudice to D1 to include in the SJ Summons relief for a claim that D1 has always been aware of. The Amendment Summons also affords D1 the opportunity to file evidence to address this additional relief.

31.As to why it was not included in the relief to the SJ Summons, it was explained in Clark 5^th that on 31 July 2025, after the filing of the SJ Summons, Mr Justice Vidot of the Seychelles Court handed down a judgment in an action between P1 and D1 that declared inter alia D1 had no authority to enter into the Settlement Agreement. As the authorities cited above held, absent any real prejudice, an application for amendment, albeit late, must be decided upon the general principle that a court of law seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims before the court for adjudication.

32.In D1’s Affs and Enhanced Aff, a number of grounds of opposition to the Amendment Summons are raised by D1. I shall deal with the main grounds that are relevant to the Amendment Summons, leaving others which plainly do not concern the Amendment Summons and goes to the merits of the SJ Summons or question of costs to be considered at the hearing of the SJ Summons.

33.Firstly, it was submitted in D1’s Affs (“the Primary Ground”) that the Seychelles Court’s findings are “res judicata between P1 and D1” and that P1 is precluded from seeking “additional relief” in the Hong Kong court against D1. In the Enhanced Aff, D1 also states “the Seychelles Supreme Court judgment of 31 July 2025 conclusively determined all issues relating to the Roger Ver Settlement. Under established res judicata principles, no further proceedings are permitted.” Whether or not the Seychelles Court’s judgment of 31 July 2025 (“the Judgment”) is res judicata between P1 and D1 and by seeking summary judgment against D1 the effect is to seek additional relief which is not permissible under the doctrine of res judicata involves questions of law which D1 has not clearly demonstrated by authorities that Ps’ case is bound to fail.

34.Secondly, in the Enhanced Aff (“Alternative Defence”), it was further submitted that as there was violation of due process in Seychelles when: (a) D1 was not present at the hearing, (b) he was not validly served with those proceedings, (c) he was not represented by counsel; and (d) he was not given the opportunity to defend the contempt allegations, this prevents the giving of summary judgment. Factually, in so far as it is asserted that D1 was not properly served and afforded a fair opportunity to defend the proceeds etc, this is a bare assertion by D1. It is contradicted by Ho 5^th that by way of substituted service granted by the Seychelles Court, the relevant court documents were served on D1 at D3 and D4’s registered office in Seychelles and D1 confirmed receipt of the court documents. Legally, no relevant authorities were cited to support the proposition that the alleged procedural defects in Seychelles, even if factually true, prevents the entering of summary judgment based on the Judgment in Hong Kong and that Ps’ relief is bound to fail.

35.Thirdly, in the Enhanced Aff it was submitted that there were “Devastating Contradictions” in the evidence of Kirill Gourov, in particular, the 2^nd Affidavit on 17 October 2023 and 8^th Affidavit on 15 August 2025. It is said that his evidence in the 2^nd Affidavit that D1 also attended board of directors meeting on 13 October 2023 contradicts the allegation that D1 entered into the Settlement Agreement without authority. I am afraid that D1 has misunderstood Ps’ case. It is not disputed that D1 was a director of P1 at the time of the Settlement Agreement but Ps’ case is that D1 had no authority to sign the Settlement Agreement under the Articles of Associations of P1. I therefore do not agree that there is contradiction and this somehow undermines Ps’ case to such extent P’s relief is bound to fail.

36.Fourthly, it was submitted in D1’s Affs and Enhanced Aff that that there was a tactical two-year delay for which Ps had not provided adequate explanations. I do not accept there has been a deliberate delay for 2 years. As mentioned, the claim for damages to be assessed for the alleged unauthorized settlement of the Arbitration was pleaded from the start. As for not seeking the relief in the SJ Summons, Ps have explained the reason for amendment was because the Judgment of the Seychelles Court was only handed down after the SJ Summons was taken out. In any event, as mentioned above, lateness or delay in the absence of real prejudice should not get in the way of allowing the parties to raise all their real claims in one go and multiplicity of proceedings should be avoided. Whilst D1 also referred to criticisms by previous courts of Ps’ litigation conduct and alleged forum shopping by Ps in D1’s Affs, I do not accept in so far as concern this application to amend, it was not bona fide or amounts to an abuse of process. The threshold for so alleging necessarily is a high one and even taking into account the previous criticisms, I am not satisfied that in all the circumstances Ps acted mala fide to amend the SJ Summons.

37.Fifthly, it was submitted in D1’s Affs and Enhanced Aff that there was a “fundamental case transformation” and the amendments would transfer a summary judgment application into a complex commercial trial which would be prejudicial to an unrepresented litigant and be a disproportionate burden on D1. I am afraid that D1 is mistaken as the inclusion of the Additional Relief does not alter the fundamental nature of the application for summary judgment and the relief remains for damages to be assessed (which is not to be embarked by the court at the substantive hearing even if after the hearing of the SJ Summons partial judgment is entered in favour of Ps.)

38.Lastly, a number of other grounds are raised but they relate to whether triable issues are raised to make summary judgment inappropriate which is plainly a matter to be argued at the substantive hearing of the SJ Summons. There are other criticisms of the lack of evidence to show that the Settlement Agreement has been abandoned or was not for rational business reasons but with respect, again D1 seems to have misunderstood Ps’ case which is that D1 had entered into the Settlement Agreement without authority and in breach of duty as director or contrary to the best interest of P1. In any event, these are matters going to the merits which can be fully argued at the hearing of the SJ Summons and is not demonstrated as being bound to fail.

39.Accordingly, bearing in mind the underlying objectives and applying the applicable principles to the circumstances of this case, I will exercise my discretion to allow amendments to the SJ Summons to include the Additional Relief.

40.I see no reason why I should not make the usual costs orders: see Hong Kong Civil Procedure 2025, Vol. 1, §20/8/51. I therefore order that Ps shall pay to D1 the costs of and occasioned by the amendments in any event, but having failed to oppose the Amendment Summons, D1 shall pay to Ps the costs incurred in the filing of the submissions for the paper disposal of the Amendment Summons, such costs are to be taxed if not agreed.

41.I will further grant leave to D1 to file and serve any further affirmation(s) limited to the Additional Relief within 14 days of the handing down of this Decision and 14 days thereafter for Ps to file any reply evidence. No further evidence shall be filed without leave of court.

42.This necessarily means that the hearing of the SJ Summons (together with the Inter-Partes Summons dated 9 July 2025 for security for costs) scheduled for 9 December 2025 would have to be adjourned to a date to be re‑fixed. Given that D1 has previously applied to attend the hearing on 9 December 2025 by VCF for the various reasons stated in his application and Ps’ solicitors did not object, parties are directed to liaise with each other to agree a date for the adjourned hearing of the Summonses. Furthermore, if there is agreement for D1 to attend the adjourned hearing by VCF to write to this Court to check the availability of the Technology Court and for further directions in that regard.

Mr Douglas Clark (Solicitor Advocate) of Messrs Tanner De Witt, for the 1^st and 2^nd Plaintiffs

The 1^st, 3^rd and 4^th Defendants were not represented