Emburse Inc v. Gold Spring Group Holdings Ltd and Another

HCA 495/2026

[2026] HKCFI 2032

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 495 OF 2026

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BETWEEN

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D E C I S I O N

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Introduction

1.It is the Plaintiff’s case that it is a victim of an internet fraud, and it was deceived to pay away an aggregate sum exceeding US$38 million.

2.On 25 March 2026, upon the Plaintiff’s ex parte application, DHCJ Gary CC Lam (the “Learned Judge”)  granted a proprietary and Mareva injunction against the 1^st and 2^nd Defendants.

3.Insofar as the 2^nd Defendant is concerned, it is restrained from disposing of:

(1)  an aggregate of US$35,362,030 that was paid into its bank account maintained with HSBC; and

(2)  the shortfall in respect of the aforesaid sum to the extent that any part thereof is no longer maintained in its bank account maintained with HSBC.

4.Whilst the order in respect of (1)  above is a proprietary injunction, the order in respect of (2)  above is a Mareva injunction.

5.This is the first return day hearing.

6.Despite limited time, the 2^nd Defendant has adduced evidence showing that:-

(1)  It is a registered or licensed trust company under the Trustee Ordinance, and a member of the Hong Kong Trustees’ Association.  Under its custodianship, it has been managing clients’ assets exceeding HK$2 billion.

(2)  One of the 2^nd Defendant’s clients is Feichen Trading Co Ltd (“Feichen”).  In accepting Feichen as a client, the 2^nd Defendant went through the usual “know your client” procedures, and no red flags were identified.

(3)  Pursuant to Feichen’s instructions:-

(a)  The 2^nd Defendant received the aforesaid aggregate sum of US$35,362,030 on Feichen’s behalf.

(b)  The aggregate sum of US$35,362,030 had been converted to USDT and transferred to the cryptocurrency wallets designated by Feichen.  In this connection, the 2^nd Defendant was provided with the supporting contracts regarding Feichen’s transactions with its clients.

7.In the premises, the 2^nd Defendant contended that:-

(1)  It no longer maintains the sum of US$35,362,030.

(2)  It was not involved in any wrongdoing at all.

(3)  The injunction order granted in favour of the Plaintiff has seriously disrupted its normal business operation.

Proprietary Injunction

8.In Orion Engineered Carbons Gmbh v Gan Yuqi & Ors [2025] HKCFI 2992 at paras 6 and 7.2-7.3, Cheng J pointed out that:-

“…[a proprietary injunction] must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff”;

“…the plaintiff should…adduce some reasonable evidence of the existence of the specific asset…and that the same is being held by or under the control of the defendant.”

“…the mere fact that a defendant has received property from a plaintiff, and has not adduced evidence as to whether he retains the property or its traceable proceeds, does not necessarily support an inference that the defendant does retain such property.”

9.As pointed out, the 2^nd Defendant has adduced evidence showing that the sum of US$35,362,030 has been converted to USDT and transferred to the cryptocurrency wallets designated by Feichen.

10.There is not a shred of evidence, not to mention reasonable evidence, suggesting that the aforesaid sum of US$35,362,030 is still under the custody or control of the 2^nd Defendant.

11.I am not satisfied that the Plaintiff has raised a serious issue to be tried in regard to its proprietary claim against the 2^nd Defendant.

12.For this reason alone, the proprietary injunction under paragraph 2 of the order granted by the Learned Judge on 25 March 2026 should be discharged.

Mareva Injunction

13.In considering whether the Mareva injunction against the 2^nd Defendant under paragraph 5 of the order dated 25 March 2026 should be continued, the court must consider, inter alios, whether it can be shown that there is a real risk of dissipation.

14.The question of whether there is a real risk of dissipation involves evaluative and predictive judgment.  It is trite that the risk can be inferred from the defendant’s low commercial morality or dishonesty. However, the court will have to be satisfied that the risk is established by solid evidence, and mere inference or generalized assertion is not sufficient: see Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81 at paras 35, 40 and 53 (per Lam VP, as Lam PJ then was).

15.The evidence before the court shows that:-

(1)  The 2^nd Defendant has been carrying on a legitimate business of providing custodianship services for its clients as a professional trustee.

(2)  The 2^nd Defendant acted in accordance with the instructions of its client, namely Feichen, and there were supporting contractual documents in relation to the transactions in question.

16.It is true that the 2^nd Defendant received the sum of US$35,362,030, which emanated from the Plaintiff.

17.However, this fact alone does not show that the 2^nd Defendant is a co-conspirator of the alleged fraud or that the 2^nd Defendant wrongfully colluded with the wrongdoers who perpetrated the alleged fraud against the Plaintiff.

18.At the hearing, Ms Jacqueline Poon (solicitor for the Plaintiff)  relied on the following suggestions:-

(1)  a sizeable sum of US$35,362,030 was transferred away within a short period of time; and

(2)  one of the instructions provided by Feichen came after the corresponding sum was transferred away.

19.I am not of the view that these suggestions would avail the Plaintiff:-

(1)  Insofar as (1)  is concerned, the fact that the 2^nd Defendant handled a sizeable sum of US$35,362,030 does not show that it was a fraudster or co-conspirator.  Indeed, the 2^nd Defendant was (and still is)  a professional trustee, and its instructions came from Feichen.  Thus, putting the Plaintiff’s case to the highest, only Feichen could possibly participate in the alleged fraud.  There is simply no evidence showing that the 2^nd Defendant knowingly and/or willingly participated in and/or facilitated the alleged fraud.

(2)  Insofar as (2)  is concerned:-

(a)  As demonstrated by Patrick Chong (counsel for the 2^nd Defendant)  at the hearing, the documentary evidence shows that what happened were as follows:- (i)  the sum in question arrived at 14:30 on 10 March 2026[1]; (ii) Feichen issued an email at 15:59 on 10 March 2026 requesting that the cryptocurrency wallet be changed[2]; and (iii)  at 16:34 on 10 March 2026, the 2^nd Defendant, having converted the sum in question into USDT, made a transfer to the cryptocurrency wallet designated by Feichen[3].  Put simply, the truth is that the instructions from Feichen came before the corresponding sum was transferred away.  There was no impropriety; nor were there any suspicious circumstances.

(b)  In any event, even if one of the instructions from Feichen came after the corresponding sum was transferred away as alleged, this does not ipso facto support an inference that the 2^nd Defendant was a fraudster or co-conspirator.  In light of the speed with which commercial activities take place in reality, it is not uncommon for businessmen to perfect documentation after an arrangement was in place, and it cannot be said that some fraud is necessarily involved in this kind of scenario. This depends on the circumstances.  In the present case, it appears that the transaction in question was supported by some underlying contractual documents.  Meanwhile, the Plaintiff is not in a position to take issue with regard to those transactions where the instructions came before the corresponding sum was transferred away.  In this connection, I cannot accept Ms Poon’s suggestion that the 2^nd Defendant might have been involved in manufacturing bogus documentation upon discovering the risk that its alleged fraudulent conduct would be exposed in the future.  This bare assertion is wholly speculative.

20.All in all, on the available evidence, I am unable to form a view that the 2^nd Defendant has been dishonest or of low commercial morality, such that it may unjustifiably dissipate its assets with a view to evading the court’s judgment.

21.I am not satisfied that there is a real risk of dissipation on the part of the 2^nd Defendant.

22.Furthermore, there is every reason to believe that the Mareva injunction, which carries draconian effect, will have an adverse impact on the 2^nd Defendant’s legitimate business operation.  For instance, the Mareva injunction prohibits the 2^nd Defendant from effecting payment of a sum of HK$32 million for a client, who will soon complete a property purchase.

23.The disruption is an important consideration that the court must take into account in the course of considering the question of balance of convenience: see Zhang Yan v ASA Bullion Ltd [2019] HKCFI 179 at para 31(2)  (per Recorder Eugene Fung SC, as Eugene Fung J then was).

24.I accept the submissions of Mr Patrick Chong (for the 2^nd Defendant)  that there is a very real risk that the Mareva injunction may cause loss and damage to the 2^nd Defendant as it would not be in a position to execute the instructions from its clients.  In this connection:-

(1)  I am of the view that there was material non-disclosure on the part of the Plaintiff when it made the ex parte application before the Learned Judge.  This is an additional reason why the ex parte Mareva injunction ought to be discharged.

(2)  The Plaintiff is a foreign company with no business activities in Hong Kong.  It is true that the Plaintiff claimed to be a victim of a fraud and that the Plaintiff had mounted a proprietary claim.  However, in the circumstances of the present case, these were not ipso facto convincing reasons for not fortifying the undertaking as to damages.  There was no reason why the 2^nd Defendant should be left unprotected.

(3)  At the hearing, the Plaintiff’s solicitors were unable to take instructions from the Plaintiff as to whether it was willing and able to fortify its undertaking as to damages by paying a reasonable sum of HK$5 million into court.  This is not satisfactory.  In my view, the matter should have been sorted out before the Plaintiff pursued the ex parte application before the Learned Judge.

25.For all the above reasons, I discharge the Mareva injunction against the 2^nd Defendant under paragraph 5 of the order dated 25 March 2026.

Conclusion

26.To conclude, I discharge the proprietary injunction and Mareva injunction against the 2^nd Defendant under the order dated 25 March 2026.

27.However, I will continue the order dated 25 March 2026 until trial or further order insofar as the 1^st Defendant is concerned, and there will be liberty to apply.

28.I order the Plaintiff to pay the costs of the 2^nd Defendant in respect of its summons dated 30 March 2026 seeking to continue the Learned Judge’s order dated 25 March 2026, to be summarily assessed by this court.  The 2^nd Defendant should file its statement of costs within 7 days, and the Plaintiff should file its statement in opposition within 7 days thereafter.

29.I also order that the costs between the Plaintiff and the 1^st Defendant be reserved.

30.I thank Ms Jacqueline Poon (solicitor for the Plaintiff)  as well as Mr Patrick Chong and Mr Kevin Lau (counsel for the 2^nd Defendant)  for their very helpful assistance.

Ms Jacquline Poon, of M/s Tanner De Witt, for the Plaintiff

Gold Spring Group Holdings Limited, the 1^st Defendant, in person, absent

Mr Patrick Chong and Mr Kevin Lau, instructed by / of M/s Howse Williams, for the the 2^nd Defendant