Shen Yang v. Hai Yue
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HCA 583/2026 [2026] HKCFI 4762 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 583 OF 2026 ______________ BETWEEN
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____________________________ REASONS FOR DECISION ____________________________ 1.This is the substantive hearing of the Plaintiff (“P”)’s inter partes summons dated 14 April 2026 (“the Injunction Summons”) applying by way of interlocutory relief for a proprietary injunction, a Mareva injunction and disclosures ancillary to each of them. 2.Also before me for determination are two time summonses both issued by P. 3.At the conclusion of the hearing, I
4.These are my reasons and decision on P’s said summons. The parties’ respective case 5.P is a director of Hong Kong Shang Yin Group Company Limited (“Shang Yin”). From October 2020 to February 2025, the Defendant (“D”) was engaged by Shang Yin essentially to act as P’s personal assistant. 6.P’s case is that in mid-November 2023, he requested D and D agreed to act as his nominee to apply for, with funds to be provided by P, placement of 104,210,000 new shares of Pak Tak International Limited (HK Sock Exchange Code: 2268)(respectively “the Subject Shares” and “the Listco”) under the Listco’s share placement exercise. It was agreed that upon successful placement, D would hold the same on trust for P in a securities account to be opened and maintained with the placing agent ChaoShang Securities Limited (“ChaoShang”) and would only be disposed of or dealt with according to P’s directions. 7.On 22 November 2023, two tranches of funds of HK$1 million each were arranged by P to be deposited into D’s bank account with CMB Wing Lung Bank by respectively Huatai Longsheng Investment Co Ltd and Hongcheng Investment Group Co Ltd, which companies were respectively owned by Mr Gu Qiansheng (“Gu Jr”), the son of Gu, and Mrs Gu Jia (“Mrs Gu”), the wife of Gu. 8.On 1 December 2023, the Subject Shares were placed with D at the price of HK$0.019 per share at the total consideration of HK$1,979,990. Per P’s instructions, D opened a securities account with ChaoShang and deposited the Subject Shares to be held therein. On the same day, D provided to P a screenshot of the email sent by ChaoShang to D confirming the opening of the securities account no. 9002935 in D’s name (“D’s CS Account”). 9.In anticipation of the termination D’s employment with Shang Yin, P started to discuss with D concerning the return of the Subject Shares (and other shares also held by D as P’s nominee) around February 2025, but D did not immediately respond. Since late August 2025, D said that matters concerning the Subject Shares and other shares held by D would be handled by her husband (“Zhong”). 10.In the meantime, the closing price of shares of the Listco has increased substantially. The parties have only provided the closing prices since January 2026, which show that its price has risen from HK$0.186 per share on 2 January 2026 to HK$0.550 on 19 January 2026, and to an average price slightly over HK$0.3 in February 2026. 11.In a meeting held around 2 February 2026 between P and Zhong (“the February Meeting”), Zhong demanded 10% of the market value of the Subject Shares as “remuneration”. 12.On around 31 March 2026, P discovered that D has transferred the Subject Shares from D’s CS Account[1] to an account held with Futu Securities International (“D’s Futu Account”). 13.On 14 April 2026, P issued the Writ herein and the Injunction Summons. 14.D’s case is that the Subject Shares were purchased by her as her own personal investment and they belong to her. 15.She does not dispute that the Subject Shares were paid by the two tranches of funds of HK$1 million each deposited into D’s bank account by Huatai Longsheng Investment Co Ltd and Hongcheng Investment Group Co Ltd on 22 November 2023, as P said. 16.She says the HK$2 million was a loan lent to her by Gu, a friend of P and a substantial shareholder of the Listco, whom she got acquainted at a dinner party held at P’s home, and with whom she became “close personal friends”. However, her case is that she herself did not ask Gu for the loan but she asked P to, and P did, convey to Gu her request for the loan. 17.D now relies heavily on 2 written loan agreements both back dated to 22 January 2023 signed by her respectively with Gu Jr and Mrs Gu. According to D, the 2 loan agreements were signed in early January 2024 when one Mr Lam of CMB Wing Lung Bank requested documentary evidence of the source of funds received into D’s bank account for the purchase of the Subject Shares. 18.In her affirmation filed on 22 June 2026, D
Granting the proprietary injunction 19.The principles guiding whether a proprietary injunction should be granted are well-settled and not seriously disputed. They have been succinctly summarized by DHCJ Grace Chow in Vasily Trubnikov v Evgeny Volosov and Others [2025] HKCFI 1576 §14:
20.Though it is not necessary to show any risk of dissipation of assets, the existence of such risk is clearly a factor that weighs heavily in favour of the plaintiff (Hengshi International Investments Ltd v Bayspring International Ltd and Another HCMP1916/2015, 18 December 2015, Q Au Yeung J at §88). 21.Mr Chain SC, leading Mr Yeung, counsel for D, emphasized the point it had been held that where the subject matter of the proprietary injunction sought is a fungible asset (as the Subject Shares are) and if there is nothing to suggest that it would be beyond the defendant’s means to meet a monetary judgment for the amount that would after trial be awarded, a proprietary injunction ought not be granted as damages would be adequate remedy. 22.Despite Mr Chain’s contentions to the contrary, in my view P has clearly shown a more than serious question to be tried on his claim, for the following reasons. 23.Firstly, the following contemporaneous documents and WeChat messages on their face support P’s claim:
24.Secondly, I find D’s purported explanations as to why the WeChat messages sent on 20 and 21 February 2025 was sent rather unconvincing. Her various assertions in her affirmation concerning how these WeChat messages should be read and understood, including that the remark “代持” was only meant to apply to the Feiyang shares are rather disingenuous, as by the way the information was set out in the table, the remark “代持” plainly applies to the Subject Shares. 25.Thirdly and importantly, if the Subject Shares were her own investment and property, there is no credible reason why she would give to Gu and Gu Jr the credentials and password for operating D’s CS Account, and then told P in the WeChat message dated 20 February 2025 that “代持: 賬户登陆手机及，密碼資料交顾总保管”. It would mean that P, Gu and Gu Jr were put in a position to operate D’s CS Account, including selling the securities held thereunder. In October 2024, D even complied to Gu Jr’s request to him fresh credentials when she had changed her mobile phone number. And the compliance, as shown by the WeChat messages, was without query or hesitation. There was also no complaint by D, or any surprise or other reaction on her part, in relation to the repeated access of D’s CS Account by Gu Jr. Her explanation in her affirmation that she “voluntarily” gave Gu and Gu Jr the credential and password is rather incredible. 26.Fourthly, the transcript of WhatsApp voice recordings between Gu and D on 5 January 2024[5], which is proffered by D, shows that there were discussions between them that the 2 companies should not be named as the lenders in the 2 loan agreements (even though the 2 tranches of HK$1 million were transferred respectively by them to D) but a shareholder thereof should be, as well as other discussions concerning how the 2 loan agreements should be signed so as to meet the requirements of the bank, but no discussion between them as to the terms of the loan agreements, like interest rate and such, on which one would expect a lender and borrower would discuss. The tenor of the conversation lends some support to the suggestion that the 2 loan agreements were made merely to satisfy the requirement of the bank. 27.Lastly and also importantly, according to the 2 loan agreements, the terms of the 2 loans were both 12 months, ie., repayable on 21 November 2024, and interest was to be calculated at 3% per annum to be paid together with the principal at the end of the term. However, and based on D’s own evidence, there was never any demand to date by Gu Jr or Mrs Gu for repayment of either the principals or interests under the 2 loans. D’s explanation was that HK$2,000,000 was to Gu family but a negligible sum compared to their wealth, and suggested that they did not care for repayment. I find that rather inherently improbable and incredible in that the lenders cared enough to have 2 loans agreements signed, but did not care at all, according to D, for their performance and enforcement. 28.Mr Chain contended strenuously that as the Subject Shares are shares of the Listco and therefore could be purchased from the Exchange, and therefore fungible and that D was good for the monetary judgment, the proprietary injunction application should be refused. 29.At a price per share of say HK$0.3, the market value of the Subject Shares would be HK$31,263,000. 30.The material placed before this Court shows that the only valuable asset D has is a flat she purchased in December 2021 at the price of HK$9,502,000. However, it is subjected to a mortgage securing a loan of “all moneys”, and the precise amount of the outstanding loan D has not disclosed by D at all. 31.Mr Chain submitted that the Subject Shares should be regarded as part of D’s assets for the purpose of assessing whether she would be good for the ultimate money judgment, should P later prevailed. 32.I am not convinced that I should so regard as I consider there is not insignificant risk that D may from now until trial dissipate the Subject Shares and its traceable proceeds if she is not enjoined.
33.As is shown and not disputed that P is holding in his own name a significantly larger number of shares in the Listco than the Subject Shares, this Court enquired with P at the hearing, and P was prepared to give an undertaking that he will retain until trial or further order the unencumbered beneficial ownership of at least an equal amount of shares in the Listco as the Subject Shares by way of fortification of his undertaking as to damages should a proprietary injunction be granted as sought. 34.Mr Chain has submitted that there was delay on the part of P, that P has failed to show urgency or there existed such a real risk of immediate dissipation. Those are operative considerations in relation to the Mareva injunction application. However, concerning the principles governing the grant of proprietary injunction, as was not seriously disputed, these matters weigh relatively little, especially in light of my view that from now until trial there exists a not insignificant risk of dissipation by D. 35.In the round, I think on balance of convenience the proprietary injunction as sought by P ought to be granted. I therefore so ordered at the conclusion of the hearing and also granted the ancillary disclosure order, the contentious parts of the terms of which were ruled on at the hearing and the remaining parts, as indicated, the parties were able to agree on within 2 days of the hearing. Refusing to grant the Mareva injunction 36.The pertinent procedural background is that:
37.Having heard the parties, I refused to grant the Mareva injunction on top of the proprietary junction and its ancillary disclosure, as asked for by P, for following reasons. 38.First, I think there is validity in Mr Chain’s contention that even though P knew that about 63,000,000 shares now remain in Futu and D was willing to give an undertaking concerning them, P continues to apply and press for, on top of the proprietary injunction and not in some form of alternative to, a Mareva injunction covering the estimated value of the entire lot of Subject Shares. There is thus an unfair over-reach seeking to enjoin against D much more than the value of P’s claim. 39.Second, I accept Mr Chain’s submissions that by issuing the Injunction Summons inter-partes but served it not in time for the 17 April hearing, not proceeding with it as an ex-parte application on 17 April 2026 even though been effectively invited by the Judge, not appealing against the refusal of interim interim injunction, and then engaging in discussions with D over correspondence regarding the injunction application – all these indicated that there was no such serious urgency or such a real and appreciable risk of dissipation that justify the issuance of a Mareva injunction. 40.Lastly and in the round, I am of the view that granting the proprietary injunction is already the appropriate course that balances the justice and fairness between the parties, and is one that might occasion the least irremediable prejudice to one party as measured against that of the other. On the other hand, imposing the Mareva injunction sought on top would produce an interlocutory state of affairs relatively unjust to D. Refusing P’s summons to file and serve his reply affirmations out of time 41.The matters deposed to in P’s 2 reply affirmations concern the merits of P’s claim, in that principally by Gu’s affirmation, Gu refuted D’s version that they were close personal friends and that the transaction was a personal loan he caused to be made to D as D claimed. 42.As expressed above, I was able to come to my said view on the merits of P’s claim without even considering any of the matters deposed to in the 2 reply affirmations sought to be filed by P. 43.In this case, as often happened in interlocutory injunctions applications, a tight time table for the filing of affirmation evidence leading to the substantive hearing was given. Here D has applied for and was granted by consent an extension of 28 days from 22 May 2026 to 19 June 2026 to file her affirmation in opposition. P’s affirmation in reply was therefore due to be filed 28 days after on 17 July 2026. 44.However, P only issued the time summons as late as on 6 August 2026, and by then only draft affirmations were provided. There was no explanation given by P for the delay. The affirmed versions of P’s and Gu’s affirmations were only served onto D on 10 August 2026, which was less than 2 clear days before this hearing. 45.In the premises, I dismiss P’s said time summons with the costs order, on nisi basis, that costs be to D, but to be taxed together with D’s costs of the Injunction Summons (if D wins this action) or taxed separately by D then if P wins this action. 46.I thank, Mr Chain SC, Mr Lau and Mr Yeung for their assistance.
Mr Acorn Lau and Ms Karen Lo, instructed by C. F. Lee & Co., for the Plaintiff Mr Christopher Chain SC and Mr Joshua Yeung, instructed by ONC Lawyers, for the Defendant |
Further hearings and rulings under HCA 583/2026