Securities and Futures Commission v. Lo Kai Bong and Others

HCMP 1811/2024

[2026] HKCFI 5211

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1811 OF 2024

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BETWEEN

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D E C I S I O N

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I. INTRODUCTION

1.Before me is the Summons filed by the Petitioner (“SFC”) on 15 June 2026 (the “Summons”) for (1) continuing the ex parte worldwide Mareva injunction (the “Ex Parte Mareva Injunction against Lo”) granted by me on 11 June 2026 against the 1^st Respondent (“Lo”); and (2) a worldwide Mareva injunction (the “Ex Parte Mareva Injunction against Major Success”) granted by me on 11 June 2026 against the 4^th Respondent (“Major Success”), whose sole director and sole shareholder has been Lo.  On 18 June 2026, during the return hearing of the Summons, on an interim-interim basis, I continued both Mareva Injunctions.  Now is the substantive disposal of the Summons.

2.Mr José-Antonio Maurellet SC, leading Mr Lau Ka Kin and Mr Isaac Wong, counsel for Lo and Major Success, with a sense of practicality and fairness (for which I am grateful), proceeds on the basis, for the present purposes, that SFC has a good arguable case on the Amended Petition.  The main disputes before me are:-

(1)  whether there existed and exists a real risk of dissipation;

(2)  whether Major Success is a Chabra defendant;

(3)  whether SFC should give a cross-undertaking in damages;

(4)  whether undertakings offered by Lo and Major Success on any net sales proceeds of the Japanese Lands should be sufficient; and

(5)  whether there should be variations to the Mareva Injunctions.

II.  SFC’S CASE

3.SFC’s case can be summarised in the following.

4.At all material times, Lo was and is a director and Chairman of the 2^nd Respondent (“LET”) and the 3^rd Respondent (“SA”).

5.LET is a Cayman Islands company whose shares were listed on the Main Board of the Stock Exchange of Hong Kong Limited (the “SEHK”) on 22 February 2007.  Major Success is the controlling shareholder of LET, holding approximately 72% of the issued shares of LET.

6.SA is a Bermuda company whose shares were listed on the Main Board of the SEHK on 10 January 1994.  As at 23 February 2026, LET was the controlling shareholder of SA holding an aggregate of approximately 69.66% of its issued shares.

7.I shall refer to LET and SA collectively as the “Companies”.

8.The Companies are holding companies.  The business and affairs of their subsidiaries (the “Group”) include running a resort in the Philippines, operating a hotel and gaming business in Russia, property development in Japan and running malls in the People’s Republic of China (the “PRC”).  Among the subsidiaries are:-

(1)  Oriental Regent Limited (“ORL”), indirectly held by SA, held through Summit Ascent Russia Limited (“SA Russia”) the entirety of issued shares of G1 Entertainment Limited Liability Company (“G1 Entertainment”), another subsidiary of the Group, which was engaged in hotel operations and gaming business in Russia;

(2)  Honour City (“Honour City”) was a Japanese company wholly-owned by LET indirectly, through a chain of wholly-owned subsidiaries led by Victory Lion Limited (“Victory Lion”).  Honour City held and holds lands in Niseko (the “Niseko Lands”); and

(3)  MSRD Corporation Limited (“MSRD Co Ltd”) was also a Japanese company.  It is wholly owned by SA indirectly, through a chain of wholly-owned subsidiaries led by Summit Ascent Japan Limited (“SAJL”).  MSRD Co Ltd held and holds lands in Okinawa (the “Okinawa Lands”).

9.Annex A is a corporate chart I take from the annex to SFC’s written submissions prepared by Mr Jin Pao SC[1], leading Mr Keith Chan (SFC’s counsel also for the present hearing) for the ex parte hearing on 11? June 2026 (the “Ex-Parte Hearing”) to show the corporate structure described in the preceding paragraph.

10.In early 2024, Lo caused the Companies to enter into various agreements for disposal of the entire issued share capital of G1 Entertainment for US$116 million (the “Intended Disposal”).  The Intended Disposal constituted a very substantial disposal for LET and SA under Chapter 14 of the Listing Rules and therefore, LET and SA had to comply with Rule 14.49, Rule 14.06E and Rule 13.24 of the Listing Rules and Note 7 to Rule 2 of the Takeovers Code.

11.These rules, however, were not complied with and breached.  On 10 January 2024, at the board meetings, their legal advisers Messrs Chiu & Partners (“Chiu & Partners”) advised the boards of the Companies of the non-compliance and breaches.  All attending directors of LET and SA, except Lo, disapproved of the Intended Disposal, and indicated that they would resign if the Intended Disposal would be proceeded with.

12.Despite that, Lo said that ORL should proceed because of the commercial benefits to the Group.

13.On 10 January 2024, a representative of ORL still signed a sale and purchase agreement (the “SPA”) for the Intended Disposal with the intended buyer (the “Intended Buyer”).

14.On 15 January 2024, ORL resolved to dispose of the entire issued share capital of G1 Entertainment at US$116 million, and Lo, representing SA Russia, voted in favour of the Intended Disposal at the Special General Meeting of ORL.  Consequently, all the directors of LET and SA, except Lo, resigned.

15.On 17 January 2024, Lo caused the Companies to announce that the Intended Disposal would proceed, but did not mention any non-compliance issues.

16.On 29 January 2024, the Companies submitted to SFC a draft joint announcement on the Intended Disposal.  Between 29 January 2024 and 6 February 2024, SFC informed the Companies that the Intended Disposal had to comply with the Listing Rules and Takeovers Code.

17.After the Companies failed to address those concerns, on 9 February 2024, SFC informed the Companies of its decision to direct SEHK to suspend dealing in the shares of the Companies.  As a result, on 14 February 2024, trading in the Companies shares were suspended.

18.On 22 February 2024, LET and SA jointly announced that the Intended Buyer had unilaterally terminated the SPA on 19 February 2024.

19.On 20 September 2024, SFC presented the Petition herein under section 214 of the Securities and Futures Ordinance (Cap. 517) (the “SFO”) against Lo.  SFC’s case is, in summary, that Lo knowingly or recklessly disregarded applicable rules and requirements and regulatory concerns in relation to the Intended Disposal and did not disclose the same to the shareholders of the Companies.

20.On 1 September 2025, SEHK cancelled the listing of shares of LET and SA.

III.  RELIEF IN THE PETITION AND THE AMENDED PETITION AND THE REMOVAL OF JAPANESE LANDS OUT OF THE COMPANIES IN THE MEANTIME

21.In the un-amended Petition, SFC sought a disqualification order against Lo and a share repurchase order (the “Share Repurchase Order”) requiring Lo, LET and SA to make an offer to purchase the shares in LET and SA from independent members of the Companies. 

22.On 25 November 2025, LET and SA filed respectively the Witness Statement of Chiu King Yan and the Witness Statement of Yip Ho Chi.  In §40 of the former and in §28 of the latter, they both say that LET and SA respectively do not have sufficient or necessary financial resources to finance the Share Repurchase Order.  Similarly, in §34 of his Witness Statement filed on 25 November 2025, Lo says that he does not have the liquidity to finance the Share Repurchase Order.  

23.At the 2^nd Case Management Conference held before Linda Chan J on 2 December 2025, her Ladyship expressed concern about the financial positions of Lo, LET and SA to finance the Share Repurchase Order. 

24.On 15 January 2026, SFC issued an inquiry notice pursuant to section 179 of the SFO to LET, requesting, among others, the following information relating to the Niseko Lands and the Okinawa Lands (collectively, the “Japanese Lands”):-

“1. All records and documents showing the latest financial positions of [LET], including but not limited to, a breakdown of its non-current assets, current assets and the following information in relation to the [Japanese Lands]…

2. All records and documents showing LET has attempted to divest the [Japanese Lands].”

25.In answer, on 20 January 2026, Chiu & Partners, on behalf of LET, stated that land parcels in Japan worth approximately HK$398 million.  In relation to SFC’s inquiry about any LET’s attempt to divest the Japanese Lands, LET’s response was:-

“Miyako Island, Okinawa

The latest attempt was the discussion with a company called Potato Head…in which there is no further feedback subsequent to the site visit carried out in May 2025.

Niseko, Hokkaido

The latest attempt was the discussion with a company called Potato Head…in which there is no further feedback subsequent to the site visit carried out in May 2025.”

26.According to Lo, on 4 February 2026, he caused the Companies to engage lawyers to prepare restructuring documents so that the Group could be restructured and his personal loans due and owing to First Asian Lenders (as defined in §34 below) could be extended.  On 20 February 2026, the shareholders of the Companies approved the amended articles and bye-laws for the restructuring (the “Restructuring”).

27.On or around 23 February 2026. the restructuring documents were executed.  The restructuring documents included, notably, a Deed of Set-Off dated 23 February 2026 (the “Deed of Set-Off”) between LET (whose signatories were Lo and another director) and Major Success (whose signatory was Lo himself).

28.Also on 23 February 2026, SFC sent the draft Amended Petition to the legal representatives of the 1^st to 3^rd Respondents for their consent.  The amendment included further and alternative relief, including prayer (2A):

“Further to [the Share Repurchase Order], insofar as necessary, an order under section 214(2)(c) and (e) of the [SFO] to appoint a receiver and/or manager of LET and SA, with all necessary powers to procure and conduct the sale of the Niseko [Lands] and Okinawa [Lands] and/or shares of the subsidiary companies holding these lands…and to apply the net sale proceeds for the purpose of fully complying [with the Share Repurchase Order]”.

29.This relief is not aimed at Lo but the Companies.

30.On 16 March 2026, they confirmed that they did not object to the amendment.  The parties then agreed on some procedural directions as well.  On 24 March 2026, the parties entered into a Consent Summons, and on 14 April 2026, Linda Chan J granted a consent order accordingly.

IV.  THE DEED OF SET-OFF AND THE DEED OF PERPETUAL SECURITIES

31.In other words, from 15 January 2026 the latest, Lo well knew, or must have well known, that SFC had the Japanese Lands on its radar for the purpose of implementing the Share Repurchase Order.  With Lo’s such knowledge, Lo caused LET to enter into the Deed of Set-Off to the following effect:-

(1)  The perpetual securities issued by LET in favour of Major Success back in 2020 (the “Perpetual Securities”) would be set-off; and

(2)  The set-off would be done by way of transferring various loan receivables and notably, the chain of wholly-owned subsidiaries led by Victory Lion (holding Niseko Lands) and that led by SAJL (holding Okinawa Lands) from LET to Major Success.  In other words, the Japanese Lands were no longer under LET and SA, and relief (2A) under the Amended Petition for appointing a receiver and/or manager of the Companies to conduct sale of the Japanese Lands could not be achieved and became academic.

32.The effect of the Deed of Set-Off (together with the other transaction documents executed on or around the same date) was the Restructuring.  Annex B to this Decision, which I take from the annex to SFC’s written submissions for the Ex-Parte Hearing, shows the corporate structure after the Restructuring and the transfers of other assets from LET to Major Success.

33.I make a few observations here:-

(1)  It so happened that about 2-3 weeks after SFC’s inquiry notice issued on 15 January 2026, and having answered SFC on 20 January 2026 on the basis that the Japanese Lands were owned by the Companies (indirectly), Lo caused the Companies to engage lawyers to prepare the Restructuring documents and to approve of such Restructuring which would remove the Japanese Lands out of the Companies.

(2)  While Lo did not have any legal obligation actively to inform SFC about the Deed of Set-Off or removal of the Japanese Lands out of the Companies, however, the fact that Lo caused LET to do so with his knowledge of SFC’s targeting the Japanese Lands would, in my view and as a matter of common sense, be frowned upon or raise one’s eyebrows that put mildly, this removal may be prompted by the SFC’s inquiry and targeting the Japanese Lands.

(3)  As mentioned above, on 23 February 2026, SFC sent the draft Amended Petition to the legal representatives of the Respondents for their consent.  The date of the Deed of Set-Off happened also to be 23 February 2026.  SFC’s targeting the Japanese Lands could not escape Lo’s attention.  Again, while Lo had no legal obligation actively to inform the SFC that he was removing, or even had removed, the Japanese Lands out of the Companies whereby rendering relief (2A) ineffective or academic, the fact that Lo did not inform SFC about the transaction to be, or already, entered into would, again, in my view and as a matter of common sense, be frowned upon or raise one’s eyebrows that put mildly, this removal may be prompted by the SFC’s inquiry and targeting the Japanese Lands.

(4)  Further, objectively viewed, agreeing to the amended relief (2A) in March 2026, despite knowing since at latest 23 February 2026 that this relief had become academic, would appear to be a tactic to lure SFC into thinking that the Japanese Lands indeed were still within the control of the Companies.

(5)  The above, in my view, reflects negatively on Lo’s commercial morality.

34.The background of the Deed of Set-Off and the Deed of Perpetual Securities, according to Lo, is:-

(1)  On 21 March 2023, Lo as borrower entered into a facility (the “Facility”) up to HK$400,000,000 (the “First Asian Loan”) with First Asian Holdings Limited and its associates (the “First Asian Lenders”).

(2)  For the facility, Lo’s shares in LET and his shares in Major Success were mortgaged.  I shall refer to the share mortgages as the “Share Mortgages”.

(3)  Then, according to §§22-30 of Lo’s 1^st Affirmation:-

“22. On or around 27 August 2025, the Stock Exchange of Hong Kong Limited made an announcement that the listing of LET and SA be cancelled with effect on 1 September 2025. The lenders were worried about the securities of the loans, including the Share Mortgages. In order to avoid the possibility of the lenders’ enforcement action, I have started to negotiate with the lenders since around August 2025.

23. On 1 September 2025, LET and SA [were] delisted.

24. Throughout the discussions with the lenders, I understood that they would require certain repayments to be made coupled with more securities in order for them to consider extending the repayment date again. This could only be done by a restructuring exercise of the Group.

25. However, given that LET and SA were ex-listed companies, there was a lot of restrictions in their respective articles of association which would prolong the decision making process of the Group. As such, I instructed overseas lawyers to amend LET’s and SA’s articles of association.

26. Further, on or around 4 February 2026, I caused LET and SA to engage lawyers to prepare the necessary restructuring documents.

27. On 20 February 2026 (Friday), LET passed an extraordinary general meeting to approve the new amended and restated articles of association. There is now produced and shown to me marked as exhibit ‘LKB-10’ a copy of the poll results of the EGM.

28. On the same day, SA passed a special general meeting to adopt the new bye-laws. There is now produced and shown to me marked as exhibit ‘LKB-11’ a copy of the poll results of the SGM.

29. Still on the same day, I received a letter from…the solicitors for the First Asian Lenders, in which they demanded me to make payment in the amount of HK$150,000,000 together with interest accrued thereon and other sums payable…

30. On 23 February 2026 (Monday), all the restructuring documents were executed. These restructuring documents have been properly discovered in the 3^rd Supplemental List of Documents filed on 14 May 2026. These restructuring documents were also provided to the lenders to show that I was sincere in procuring a settlement with them.”

35.The poll results of LET’s EGM and the poll results of SA’s SGM mentioned nothing about Lo’s interest in the Restructuring, namely, for his personal lenders to obtain securities for his personal loans.  Nor have there been any documents ever produced to the effect that Lo somehow informed the shareholders of his personal interest.

36.Further, despite Lo’s allegation that there were discussions with the First Asian Lenders, not even a message or email related to such allegation has been produced.  §24 of Lo’s 1^st Affirmation is also carefully drafted.  While Lo alleges that he understood that some repayment coupled with security would be required, he never said that it was the First Asian Lenders who required the Restructuring or the removal of the Japanese Lands.  Instead, he just alleges that this could only be done by restructuring, but he did not explain why this was the only possible way for him to make some repayment and give security for his personal loans.  At most, the First Asian Lenders did request some repayment and securities, but there is no evidence that they did request the Restructuring or the removal of the Japanese Lands.  It appears to me that it was Lo’s own idea to use the Companies’ assets as security for his personal First Asian Loan.

37.Further, the relevant terms of the Deed of Set-Off ask for more explanation rather than explain the matter.

38.Clause 7 of the Deed of Set-Off provided:-

“7.1 The Parties acknowledge and agree that the Set-off Amount represents a single packaged consideration amount, being the aggregate value of the consideration for all assets and rights the subject of the transactions contemplated under this Deed, as commercially agreed between the Parties.

7.2 The Parties further acknowledge and agree that the Set-off Amount reflects the agreed reduction of the Outstanding Amount and that it is not necessary for the consideration allocated to each individual asset or right comprised in such transactions to be separately stated or apportioned.

…

7.4 Following the set-off, the outstanding principal amount under the Perpetual Securities shall be HK$1,996,000,000, being the Outstanding Amount less the Set-Off Amount.”

39.The “assets and rights” to set off included the underlying assets, namely, Japanese Lands held by the subsidiaries.  The Outstanding Amount was, according to recital (C), HK$5,396,000,000 owed by LET to Major Success under the Perpetual Securities, while the Set-Off Amount was defined by Clause 1 of the Deed of Set-Off to mean “the aggregate of HK$3,400,000,000 (HK$3.4 billion), which shall be set off against and reduce the Outstanding Amount” to “HK$1,996,000,000”.  As pointed out by Mr Pao, on the face of it, suddenly to use HK$3.4 billion to reduce the outstanding amount under the Perpetual Securities when there was no demand made by LET does not make much sense.

40.Mr Maurellet explains, in essence, that the Perpetual Securities was worth than the mere number of HK$5,396,000,000, because by virtue of Clause 7.4 of the Perpetual Securities, until repayment was made under the Perpetual Securities, LET was not allowed to declare dividends and make distributions on the shares, and also not allowed to buy back or acquire its own shares, and therefore, there was a premium over this HK$5,396,000,000.  Forceful Mr Maurellet’s submissions may appear, however, in my view, (1) Lo’s evidence has never explained the matter in this way (as one can see from the quote of Lo’s 1^st Affirmation above); and (2) even if this was really a consideration Lo had, on the evidence, the reason why Lo would like to have LET released from such restrictive obligations under Clause 7.4 of the Perpetual Securities was, in all likelihood, for the Restructuring so that he could provide securities to the First Asian Lenders in respect of his First Asian Loan.  Lo never explained the transactions in terms of the Companies’ interests.

41.Another feature worthy of note is the difference between pre-Restructuring and post-Restructuring:-

(1)  Before the Restructuring, neither Victory Lion holding the Niseko Lands via its subsidiaries nor SAJL holding the Okinawa Lands via its subsidiaries were within 100% (indirect) ownership of Lo, since Major Success only held 72.07% of LET which in turn held 100% of Victory Lion, and LET only owned 69.66% of SA which in turn held 100% of SAJL.  That was why shareholders resolutions were passed for the Restructuring.

(2)  After the Restructuring, Lo holds 100% of the Japanese Lands through his 100% ownership of Major Success which in turn wholly owned Victory Lion and SAJL. 

42.While I do not go so far as to say that after the Restructuring, Lo has absolute control over the Japanese Lands, given that the shares mortgages created on 11 June 2026 (the “Post-Restructuring Shares Mortgages”) by Major Success over its shares in Victory Lion and SAJL did not allow Major Success to do anything to prejudice the security (clause 5.2.3), it is fair to say that the Japanese Lands now is one step further away from SFC – the prayer (2A), not against Lo, is not sufficient; perhaps further amendment would be needed; and security interest has prima facie been created over Major Success’ shares in Victory Lion and SAJL and therefore, the First Asian Lenders may have priority over the shares.  Objectively viewed, the Restructuring has dissipated the main assets originally available for prayer (2A) for collecting sufficient funds for the Share Repurchase Order.

43.Having considered the above, I come to the view that:-

(1)  In the light of the de-listing of the Companies, the First Asian Lenders did request Lo to make some repayment and provide securities;

(2)  The First Asian Lenders never asked Lo to do any Restructuring or provision of the Japanese Lands and/or the shares in the companies holding the Japanese Lands for securities;

(3)  It was Lo himself, for his own benefit to extend time for his personal First Asian Loan, who came up with the idea of the Restructuring whereby the Japanese Lands would be removed out of the Companies into his own sphere of control for providing the securities needed by First Asian Lenders;

(4)  Lo put his idea into practice despite (a) his knowledge by January 2026, SFC started targeting the Japanese Lands; (b) his knowledge by 23 February 2026 that SFC would target the Japanese Lands by appointing a receiver and/or manager to receive the Companies;

(5)  Lo agreed to the amendment in March 2026 despite his knowledge that relief (2A) added by the amendment would be academic, without informing SFC of anything about that the Japanese Lands were no longer within the Companies’ reach; and

(6)  Objectively viewed, the Restructuring has dissipated the main assets originally available for prayer (2A).

V.  DISCOVERY/DISCLOSURE OF THE DEED OF SET-OFF AND THE RELATED TRANSACTIONS

44.On 14 May 2026, by his 3^rd Supplemental List of Documents (the “Lo’s 3^rd Supplemental LOD”) and by the Companies’ 2^nd Supplemental List of Documents, the Deed of Set-Off and the other related documents were disclosed.  Also, on the same day, the Companies filed their amended Defence, where they aver that the Companies no longer held any interest in the Japanese Lands.

45.“Alarmed” by the disclosure, about three to four weeks later, SFC applied, ex parte without notice, for the Ex-Parte Mareva Injunction against Lo.

VI.  NO CULPABLE DELAY

46.The delay was about three to four weeks.  I accepted at the Ex-Parte Hearing and still accept SFC’s explanation that SFC “required a reasonable period to review and analyse the newly disclosed documents, obtain instructions, seek legal advice, consider the appropriate relief and prepare the necessary materials to make” the ex parte application.  There is nothing to suggest that SFC laid back doing nothing.

47.Thus, subject to the analysis of real risk of dissipation below, I do not think that there is any culpable delay that would have any impact on whether to continue the Ex Parte Mareva Injunction against Lo and also the Ex Parte Mareva Injunction against Major Success.

VII.  REAL RISK OF DISSIPATION

48.The legal principles in relation to determining whether there exists a real risk of dissipation are well established.  Mr Maurellet draws my attention to Convoy Collateral Ltd v Cho Kwai Chee and Others [2020] 6 HKC 81 at §§35-41 per Lam VP (as he then was) and specifically highlights the following principles in Annex B to his Skeleton Submissions:-

(1)  The risk must be established by solid evidence;

(2)  Mere inference or generalised assertion is not sufficient;

(3)  Dishonesty alone is not sufficient, though it may be an indicia of a real risk of dissipation;

(4)  The threat must be unjustified dissipation, and for this purpose, “conducting his personal affairs in the way he has always conducted them” is not unjustified;

(5)  The risk must be established against each respondent separately; and

(6)  The assessment is made on the material as a whole, including matters which point against such risk, on objective facts rather than expressions of fear.

49.In the present case:-

(1)  The good arguable case against Lo (that despite repeated advice or warnings to Lo that the Intended Disposal would breach rules and regulations, Lo still caused the Companies to proceed with the Intended Disposal) reflects negatively on Lo’s attitude towards rules and regulations.

(2)  My views in §§43(3) and 43(4) above (that it was Lo himself, for his own benefit to extend time for his personal First Asian Loan, who came up with the idea of the Restructuring whereby the Japanese Lands would be removed out of the Companies into his own sphere of control for providing the securities needed by First Asian Lenders, and that he put his idea into practice despite his knowledge of SFC’s targeting the Japanese Lands) mean that he would like to and did dissipate the Japanese Lands out of the Companies against which prayer (2A) aims.

(3)  My views in §§43(3) and 43(4) that the Deed of Set-Off was for Lo’s personal benefit also show that Lo used the Companies’ assets for his own benefit, and this strongly arguably constitutes breach of fiduciary duties on Lo as a director of the respective Companies, and that the breach was intentional because strongly arguably, he, as director, knew that Companies’ assets should be used for the Companies’ interests rather than his personal interests.

(4)  That no evidence suggesting that Lo informed the shareholders of his personal interests in the Restructuring shows that he did not pay regard to the shareholders’ interests, and consistently with the good arguable case that Lo did not pay regard to the rules and regulations, he did not pay attention to the rules requiring disclosure of conflict of interests. 

(5)  §(3) and (4) above tend to show that Lo would take lengths for his personal interests at the expense of the Companies’ and the shareholders’ interests despite breaches of fiduciary duties and rules.

(6)  As found in §43(5) above, Lo agreed to the amendment in March 2026 despite his knowledge that relief (2A) added by the amendment would be academic, without informing SFC of anything about that the Japanese Lands were no longer within the Companies’ reach.  This tends to show that Lo would like to keep silent about the matter, and that he would like to keep silent about the matter tends to show that he did not want SFC to know the dissipation.

(7)  The shares in Victory Lion and SAJL, and thus the Japanese Lands, are now wholly owned by Lo through his wholly-owned Major Success.  This means that the assets were not dissipated in the sense that the assets are now under Lo.  However:-

(a)  the assets were, upon Lo’s procurement, dissipated out of the Companies, when prayer (2A) specifically targets at the Companies’ assets;

(b)  before the Restructuring and the Post-Restructuring Shares Mortgages, the First Asian Lenders had the security interest in Lo’s shares in Major Success and Major Success’ shares in LET, and the value of these security interests was that the shares in LET were listed together with the underlying assets such as the Japanese Lands, but at the same time, the First Asian Lenders would not be able easily to enforce the security interests against the underlying assets given that they were company’s assets and thus certain corporate governance thresholds (like members’ resolutions) would have to be passed if major assets would be sold; and

(c)  now after LET lost its listing status and the Restructuring, under the Post-Restructuring Shares Mortgages, the First Asian Lenders have security interests in the shares in Victory Lion and SAJL themselves, which are private companies wholly owning the Japanese Lands, and if Lo defaults, the First Asian Lenders may have priority over the shares and indirectly the Japanese Lands, and viewed this way, the assets have dissipated even out of Lo.  Put another way, Lo used this Restructuring effectively to convert the assets of the Companies into repayment of his personal First Asian Loan.

(8)  Following from §(7) above, therefore, Mr Maurellet submits that there was no dissipation at all because the assets already been secured in favour of First Asian Lenders pre-Deed of Set-Off remain secured in favour of First Asian Lenders post-Deed of Set-Off cannot be maintained.  While the underlying assets may be the same, now the underlying assets have become owned by Major Success and Lo, rather than the Companies.  The enforcement against the underlying assets now, under the full control of Major Success and Lo, are easier than before the Restructuring.  This, in my view, was dissipation of assets out of the Companies.  In this regard, Mr Maurellet reminds me that SFC’s application before me is against Lo and Major Success, but not the Companies, and therefore, any dissipation of the Companies’ assets out of the Companies should have little bearing on Lo and Major Success.  With respect, as found in §49(5) above, Lo took all the way to procure the Restructuring for his own person benefits without proper disclosure in breach of his fiduciary duties owed to the Companies.  He was the mastermind of the Restructuring.  It is his way of dealing with the assets of the Companies under his control that sheds light on his way of dealing with the assets of his own, which is relevant to the evaluative assessment of a real risk of his dissipation of his assets.

(9)  Mr Maurellet also submits that the Deed of Set-Off, the Restructuring and the Post-Restructuring Shares Mortgages were all for the purpose of ensuring that Lo would not default on his personal First Asian Loan, and therefore, it would be facilitative, or at least not detrimental, to any Share Repurchase Order against Lo.  However, with respect, such submissions miss the point that Lo now used directly the Companies’ assets to ensure that he would not default on the loan at the expense of the Companies and prayer (2A) which has been rendered academic as a result of the Deed of Set-Off.  Although the First Asian Lenders cannot enforce the security for the First Asian Loan until the extended deadline by the end of 2026 and therefore, and the security right now is to buy time for Lo, there is no evidence showing that Lo would be able to secure sufficient financial resources to make the repayment.  On the contrary, in his Amended Points of Defence, he avers that he does not have financial means to implement the Share Repurchase Order, and in §37 of his Witness Statement, he alleges that he only has bank deposits of around HK$13 million and shares in listed companies of then market value of around HK$3 million (while the First Asian Loan was HK$400 million.)  There is every risk that by the end of 2026, the First Asian Lenders may enforce the security.  This would, as explained in §(7)(d) above, effectively convert the assets of the Companies into repayment of his personal First Asian Loan.

(10)  Insofar as there are any submissions that SFC should have been alerted by Lo’s Witness Statement filed on 25 November 2025 where he mentioned in §§35.7-35.8 that he had defaulted on the First Asian Loan and enforcement action may be taken anytime, it must be remembered that before the Restructuring and the Post-Restructuring Shares Mortgages, the security was created over Lo’s shares in Major Success and Major Success’ shares in LET, rather than any property owned by LET and/or SA.  Therefore, even though SFC knew that there would be enforcement action, SFC would not be able to know that Lo would take all the way to procure the Restructuring and create security interests in favour of his personal lenders over LET’s shares in Victory Lion and LET’s shares indirectly in SAJL.

(11)  Lo himself disclosed the Deed of Set-Off and the related restructuring documents by Lo’s 3^rd Supplemental LOD.  This tends to show that he does not think there is anything to hide and thus that he has never intended to dissipate the assets secretly, and therefore tends to show that there is no real risk of dissipation.  However, the disclosure came rather late, almost three months after the execution of the Deed of Set-Off.  By the time of the disclosure, the dissipation of the assets out of the Companies, or the conversion of the assets into repayment of his personal First Asian Loan, became a fait accompli.  This disclosure by Lo himself at most shows that after the actual dissipation, two to three months later, Lo would inform SFC about the dissipation done in the past, but this may be too late for SFC to know.  

(12)  There is no evidence to suggest that removing assets out of the Companies for his personal interests had been Lo “conducting his personal affairs in the way he has always conducted them” (see §48(4) above).  If this had been how Lo had conducted his affairs, this would be rather alarming and would reflect, again, negatively on his commercial morality.  I also disagree with any suggestion that securing means to repay lenders is justified in the present circumstances – in the present circumstances, it is use of a third party’s (the Companies’) assets to secure Lo’s personal First Asian Loans.  As I said above, it is strongly arguably breach of fiduciary duties.  Such conduct can in no way be regarded as “justified”.

(13)  The three to four weeks’ delay in making the ex parte application, though no culpable as I have found above, militates against any real risk of dissipation.  However, the fact is that the assets have been, upon his procurement, dissipated out of the Companies and thus out of the reach of prayer (2A).  It was not a risk, but an actual dissipation.  During this three to four weeks’ time, and given Lo’s attitude towards rules and regulations and his keeping silent about the Restructuring while at the same time engaging in and agreeing to the amendment to the Petition, this shows that there is a real risk that Lo may have entered into other transactions of the effect of dissipation without informing SFC at all, and at most he would inform SFC only until it would be too late.

50.Having considered the above, I find that there was and still is a real risk of dissipation.  Therefore, there should remain the Ex Parte Mareva Injunction against Lo subject to any cross-undertaking and variation to be canvassed below.

VIII.  IS MAJOR SUCCESS A CHABRA DEFENDANT?

51.SFC’s position was and is that the Companies assets were transferred to Major Success in breach of Lo’s fiduciary duties owed to LET, and therefore the assets are held by Major Success on constructive trust for LET, available for execution of a monetary judgment against LET.  In making good of this position at the Ex Parte Hearing, Mr Pao cited FHR European Ventures LLP and Others v Cedar Capital Partners LLC [2015] AC 250 at §§7 and 33.  On this, Mr Maurellet’s submissions are that that case was a case on an agent holding a bribe or secret commission on constructive trust for his own principal, but not a case like the present one where the transferee, not the agent, holds the property of the principal.  In my view, Mr Pao referred to this case for the legal principle at §33 that the agent’s duty is to deliver up to his principal the benefit which he has obtained that is more relevant.  It is a well-established legal principle applicable to a director as agent of the company as principal.  Mr Maurellet, fairly, does not dispute the proposition that on the assumption that the Companies’ assets were transferred to Major Success in breach of Lo’s fiduciary duties, a constructive trust would be imposed on the assets held by Major Success for the Companies.

52.Mr Maurellet then refers to 蘇州太合匯投資管理有限公司 v 霍爾果斯市摩伽互聯娱樂有限公司 [2023] 1 HKLRD 342 for the proposition set out by Recorder William Wong SC at §22 that “the existence of a wholly-owned subsidiary per se, without more, does not justify the grant of a Chabra injunction” and that “the correct legal position is that the establishment of substantial control over the assets [by] the [cause-of-action defendant] will not necessarily be sufficient”.  At §23, the learned Recorder also gave an example that “if the wholly-owned subsidiary is insolvent or its assets are subject to encumbrances, it is not clear that Chabra injunction will be readily available to a claimant without analysing the facts of the particular case.”  All these, as general propositions, must be correct, and I do not see any mis-description of the law to me at the Ex Parte Hearing.  Mr Pao never submitted that simply because Major Success is a company wholly owned by Lo, it should therefore be a Chabra defendant.  What he submits, and what the evidence in support at §87 of the supporting affirmation (the 2^nd Affirmation of Li Yuen Pik) is that because Major Success holds the Companies’ assets on trust for the Companies as a result of Lo’s breach of fiduciary duties, and that Lo is the sole owner and director of Major Success, its assets would be amenable to execution of a judgment against Lo.  Having considered that Lo used Major Success to facilitate his breach of fiduciary duties and Lo has had full ownership and control of Major Success, I accepted and still maintain the view that these two factors, playing together, are sufficient for joining Major Success as a Chabra defendant.

53.Mr Maurellet submits that if, as SFC contends, Major Success holds the Companies’ assets on trust for LET, they are LET’s and are not available to Lo or his bankruptcy-in-trustee.  There is some force in these submissions.  However, SFC has not joined Major Success as a cause-of-action defendant here.  Therefore, SFC has no cause of action against Major Success.  The question would then be back to whether the assets of Major Success would be amenable to execution of a judgment against Lo.  The answer to this question, as I have explained, is in the affirmative.

54.For the sake of completeness, there is a real risk of dissipation of Major Success’s assets, given that it has been under the full control of Lo, who I have found above has conducted his affairs to demonstrate a real risk of dissipation.

55.In the circumstances, I do not accept any submissions made by Mr Maurellet that at the Ex Parte Hearing, SFC did not present the full picture about its Chabra application against Major Success.

56.Therefore, there should remain the Ex Parte Mareva Injunction against Major Success as a Chabra defendant subject to any cross-undertaking and variation to be canvassed below.  

IX.  CROSS-UNDERTAKING IN DAMAGES

57.At the Ex Parte Hearing, I acceded to Mr Pao’s submissions, made in reliance on Securities and Futures Commission v Leung Anita Fung Yee Maria and Others [2024] HKCFI 1210 at §5.34, Securities and Futures Commission v Lui Man Wah [2026] 2 HKLRD 1160 at §75 and Gee on Commercial Injunctions (7^th edition, 2022) §§11-022 and 11-023, that the usual cross-undertaking in damages should be dispensed with.  The reasons for dispensing with the usual cross-undertaking in damages were set out at §63 of the SFC’s submissions for the Ex Parte Hearing that:-

“to require the SFC to provide a cross-undertaking would risk inhibiting its enforcement of the SFO by the fear of cross-claims and exposing financially the resources allocated by the Government for its functions”.

58.Mr Maurellet submits that SFC should be required to give a cross-undertaking.  The reasons for his submissions can be summarised as follows:-

(1)  An undertaking in damages is the price of an injunction: see Re Lau Yu also known as Jaffe Lau [2018] HKCFI 1802 at §§127-128.

(2)  There is no rule of law that SFC never has to give a cross-undertaking.  It is within the Court’s discretion to determine whether a cross-undertaking is required: see Securities and Futures Commission v A [2008] 1 HKC 89 at §56 per Kwan J (as she then was).

(3)  Even an officer holder, like a court-appointed liquidator, should be held to the price. Dispensation from the cross-undertaking should only be confined to “the most extraordinary circumstances”: see Natural Dairy (NZ) Holdings Limited (in provisional liquidation) v Chen Keen (alias Jack Chen) and Others [2020] HKCFI 2678 at §123 per DHCJ Eva Sit SC.

(4)  SFC is not funded by “the resources allocated by the Government” as alleged in §63 of the written submissions for the Ex Parte Hearing (quoted at §57 above).  Instead, its funds come mainly from transaction levies and fees from market participants.  Mr Maurellet seems faintly to suggest that there was a material non-disclosure when SFC submitted at the Ex Parte Hearing that SFC’s resources were allocated by the Government.  

(5)  As shown by its Annual Report 2025-26, SFC has ample financial resources: levies of HK$3,310,849,000 and fees and charges of HK$282,687,000, with a total income of HK$4,051,909,000.  Its accounts record a surplus of HK$1,781,531,000 and net assets of HK$9,638,626,000.  With such ample financial resources, the degree of risk of inhibition, if any, does not warrant dispensing with the usual requirement of a cross-undertaking.

(6)  Lo has come forward to explain the loss caused by the Mareva Injunction against him.

(7)  The authorities relied upon by SFC are distinguishable.

(8)  In any event, Customs and Excise Commissioners v Anchor Foods Ltd. (No 2) [1999] 1 W.L.R. 1139 and the more recent English authorities (The Commissioners for His Majesty’s Revenue and Customs v Payroll & Pension Services (PPS Umbrella Company) Limited [2024] EWCA Civ 995, The Commissioners for His Majesty’s Revenue and Customs v Parul Keshavlal Malde [2023] EWHC 1188 (Ch) and Financial Services Authority v Sinaloa Gold plc and Others [2013] 2 AC 28) show a “seriously different flavour” to the practice of dispensing with a cross-undertaking for public authorities.  Mr Maurellet also relies on the textbook Zuckerman on Civil Procedure: Principles of Practice (5^th edition, 2025) §§10.166-10.167, cited in The Commissioners for His Majesty’s Revenue and Customs v Payroll & Pension Services (PPS Umbrella Company) Limited, supra at §54 and Financial Services Authority v Sinaloa Gold plc and Others, supra at §§28-29.

59.As general propositions, §58(1) – (3) above must be correct. 

60.For §58(4) above, it is pursuant to section 394 of the SFO that the funds come from the levies and fees and charges, at rates “specified by the Chief Executive in Council by order published in the Gazette”.  These funds, levies and fees and charges on the transactions, are, in my view, in the nature of tax.  Further and in any event, irrespective of whether they are tax or not, these levies and fees and charges are authorised by the legislature at rates specified by the Chief Executive in Council, and thus are in my view authorised by the Government.  Viewed this way, the funds are allocated by the Government; just that the funds go direct to SFC rather than through the Government.  Therefore, I do not think there is any inaccuracy in SFC’s submissions at the Ex Parte Hearing that its resources are allocated by the Government, and I do not think there is any material non-disclosure or misleading to the Court at the Ex Parte Hearing, if it were so suggested.

61.For §58(5) above, it is true that on the face of it, SFC has ample resources.  However, this has to be viewed in proper perspective and with the risk of inhibition.  SFC is a law enforcement agent charged with the duties to enforce, mainly, the SFO in the public interest.  The amounts at stake involved in wrongs done to or in public companies are usually substantial, and thus the possible losses caused by injunctions would also be significant.  Given the number of public companies in Hong Kong, SFC, unlike a private entity or a court-appointed liquidator, is faced with quite a significant number of cases for enforcement.  If SFC would be treated as a private entity and required to give a cross-undertaking in one case, there would be no reason not to require it to do so in other cases, and the magnitude of the potential compensation under such a cross-undertaking would be multiplied.  In using its resources, SFC should also bear in mind that the resources are public resources and the resources are not unlimited.  Therefore, the degree of inhibition arising from requiring SFC to give a cross-undertaking is plain and obvious.

62.This takes me to §58(6) above.  In essence, Mr Maurellet submits that Lo has come forward to explain the potential losses, and so, the losses have become known and limited, and therefore, SFC should not be concerned about exposure to unknown substantial compensation.  However, in my view, mere explanation, however detailed and particularised, of the potential losses, is not sufficient.  As Mr Pao submits, merely on such a mere explanation, to require a cross-undertaking, even a limited cross-undertaking, would lead to a slippery slope, and it would also be difficult to set a limit to impose on the cross-undertaking to minimise any degree of inhibition.

63.It comes to §58(7).  I do not think that the cases relied upon by SFC are distinguishable.  Mr Maurellet submits that the operative basis for Securities and Futures Commission v A, supra and Securities and Futures Commission v Lui Man Wah, supra was section 213 of the SFO for statutory injunction.  However, with respect, I fail to see why this justifies any distinction.  In those two cases, SFC was applying for interlocutory injunctions.  Although the underlying cause of action was section 213 for statutory injunction, losses might also be caused by the interlocutory injunction if eventually, no statutory injunction would be granted at the final stage, and therefore, the issue whether there should be a cross-undertaking was still a live issue same for section 213.

64.For Securities and Futures Commission v Leung Anita Fung Yee Maria and Others, supra and Securities and Futures Commission v Tam Chung Wai and Others [2026] HKCFI 1610 (an additional case submitted at the inter partes hearing), Mr Maurellet submits that although these cases were on section 214 of the SFO, the requirement to give a cross-undertaking was dispensed with without argument.  Such submissions at most mean that in considering whether I should depart from the rulings made by the Court at the same level, less weight should be given to such decisions. However, it is well established that unless there are good reasons such as that the previous decisions are plainly wrong, the Court should follow the rulings made by Courts of the same level.

65.The criticism against dispensation of requirement for a cross-undertaking for public authorities echoed or made in The Commissioners for His Majesty’s Revenue and Customs v Payroll & Pension Services (PPS Umbrella Company) Limited, supra, Financial Services Authority v Sinaloa Gold plc and Others, supra and Zuckerman on Civil Procedure: Principles of Practice can broadly be summarised as follows:-

(1)  There is no reason of favourable treatment to law enforcement agents even though discharging its duties of law enforcement.

(2)  Inhibition cannot be a concern.  The rule that costs follow the event has consistently applied to public authorities.

(3)  With the requirement for cross-undertaking, public authorities would be more careful before making any application for interlocutory injunction.

66.There is force in such criticism.  It is, in my view, a public policy consideration where one should strike the balance.  One public interest is that law enforcement agents like SFC should not be unduly concerned with exposure to potentially significant amounts of compensation.  Another public interest is that innocent parties should be protected from mis-prosecution by the law enforcement agents.  The application of the rule of costs following the event to law enforcement agents, in my view, strikes the balance: it exerts a degree of pressure on the law enforcement agents to be careful before it commences any litigation, but at the same time, it does not expose the law enforcement agents to potentially significant amounts of compensation.  Therefore, the dispensation of the requirement of a cross-undertaking, though appearing at a first glance favourable to public authorities, is justified.  Further and in any event, the criticism may just represent a healthy disagreement among judges and academics, and in my view does not constitute any good reason for me to depart from the previous cases.

67.It remains for me to deal with Customs and Excise Commissioners v Anchor Foods Ltd. (No 2), supra and The Commissioners for His Majesty’s Revenue and Customs v Parul Keshavlal Malde, supra.

(1)  In Customs and Excise Commissioners v Anchor Foods Ltd. (No 2), supra, the Customs and Excise Commissioners commenced proceedings against the defendant for alleged arrears of custom duties totaling GBP 264 million.  The defendant had lodged appeals.  Pending the appeals, the defendant proposed transferring the whole of its business to a new company for GBP 9 million, which would leave the defendant GBP 9 million upon the transfer.  The Customs and Excise Commissioners applied for a Mareva injunction.  For reasons I do not have to go into detail, Neuberger J granted the injunction but at the same time, finding at 1154C-D that the proposed transfer was a bona fide transaction in the ordinary course of business, the proposed sale was in accordance with the independent valuation by a leading firm of accountants and the injunctive relief was ancillary to Customs primary function, required a cross-undertaking in damages.  In my view, the present case is materially different, in the light of my findings of (a) the real risk of dissipation, (b) the personal purpose of the dissipation of the Companies’ assets; and (c) Lo’s attitude towards rules and regulations.

(2)  In The Commissioners for His Majesty’s Revenue and Customs v Parul Keshavlal Malde, supra, Deputy Judge Nicholas Thompsell requested a cross-undertaking in damages from HMRC (that is, the Commissioners for His Majesty’s Revenue and Customs) as a condition for continuing the freezing order.  In that case, the freezing order had been imposed on the respondent for more than nine years (§32), and the HMRC’s officers’ conduct had been heavily criticised in their investigation and their evidence as not applying the “best judgment” (§76).  It was on these two features of the case that the learned Deputy Judge found it just and convenient to require a cross-undertaking in damages from HMRC.  None of these features appears in the present case.

68.Therefore, I still do not see the need to require SFC to give any cross-undertaking for the Ex Parte Mareva Injunction against Lo.  I do not see why different treatment should be accorded to the Ex Parte Mareva Injunction against Major Success, given that Major Success is under the sole ownership and full control of Lo. Major Success is, for this purpose, regarded as his alter ego.

69.In conclusion, I maintain my view that no cross-undertaking from SFC is required for the Ex Parte Mareva Injunctions against Lo and Major Success.

X.  UNDERTAKING OFFERED BY LO AND MAJOR SUCCESS ARE SUFFICIENT?

70.Lo and Major Success have offered an undertaking to the effect that the net sale proceeds of the Japanese Lands, if there would be a sale, would be paid into court and no encumbrances would be created over the Japanese Lands or the shares in the chain of companies holding the Japanese Lands.  For the following reasons, this is insufficient and therefore I refuse to accept the undertaking:-

(1)  The proceeds are net sales proceeds only, and may well not be sufficient to cover the amounts covered under the MarevaInjunctions; and

(2)  Given Lo’s attitude towards rules and regulations, I am not satisfied that reliance on an undertaking given by Lo and a company under his control would be reliable.

XI.  VARIATIONS

71.If the Mareva Injunctions are continued, Lo seeks the following variations:-

(1)  HK$800,000 per month for Lo’s ordinary living and business expenses;

(2)  HK$500,000 per month for Lo’s legal advice and representation, and HK$300,000 per month for Major Success’;

(3)  Payment of the sums due to the First Asian Lenders under the Facility and its supplemental agreements;

(4)  US$42,410 per month for the mortgage on Lo’s Manila apartment;

(5)  Payment of the sums demanded by the Inland Revenue Department of the HKSAR Government by its notice of 13 July 2026 (the “IRD’s Demand Notice”); and

(6)  The above payments allowed be permitted to be made out of the accounts restrained by the Mareva Injunctions.

A.  Legal principles

72.The legal principles for variation of a Mareva injunction have been summarised by Ng J in Re Lau Yu also known as Jaffe Lau, supra at §§7 and 23:-

(1)  “Assets are only to be released or excepted from a Mareva injunction for a proper purpose”.

(2)  “Where the defendant seeks the release of funds subject to a Mareva injunction to meet certain expenses, the Court should consider whether the defendant has shown by sufficient evidence that (a) he does not have other assets available to meet those expenses; and (b) the purpose of the application is not an attempt to dissipate the assets to frustrate the plaintiff’s enforcement of a judgment”.

(3)  “The defendant must make full and frank disclosure to the court”.

(4)  “The court is, in an appropriate case, entitled to have a ‘very healthy skepticism’ in respect of assertions made by the defendant.  Where the defendant has previously put forward evidence of questionable credibility, the court should take a ‘very cautious view’ of the defendant’s evidence in support of varying the order”.

(5)  “Where the defendant wishes to pay a debt falling due, he bears the burden of proving its validity”.

73.Further, Mr Maurellet submits:-

(1)  A defendant “cannot be required to reduce his ordinary standard of living with a view to putting by sums to satisfy a judgment which may or may not be given in the future”: see Polly Peck International Plc v Asil Nadir and Others [1992] 2 Lloyd’s Rep 238 at 249.

(2)  No defendant may be enjoined “in terms which will prevent him from carrying on his business in the ordinary way or from meeting his debts or other obligations as they come due prior to judgment”: see Polly Peck International Plc v Asil Nadir and Others, supra.

(3)  A Mareva injunction “does not operate to give the claimant a prior right in the form of security over the assets”, and thus, “the injunction does not destroy or affect the rights of a chargee or mortgagee”.  It follows that “the secured debt already exists and the secured property is already encumbered with it”: see China Merchants Bank Co., Ltd (Taiyuan Branch) v Cai Sui Xin [2018] HKCFI 2358 at §39 per Lok J.

B.  General observations

74.Before I deal with each variation sought to be made, I make the following general observations:-

(1)  Lo has not even affirmed on oath that he has no funds.  Mr Maurellet submits that given the Mareva Injunctions are worldwide, there is no point for Lo to say the obvious – he himself has no funds available.  However, such submissions do not deal with the point that third parties may provide funds to Lo. 

(2)  That there may be third parties providing funds to Lo is not a mere speculation.  While Lo alleged in §17 of his 4^th Affirmation filed on 28 July 2026 that the immediate deadline to pay interest of HK$6,791,615 to the First Asian Lenders would fall on 24 August 2026, something he should have known by the return hearing on 18 June 2026, he did not make any application for variation to provide for this payment at that hearing, despite that at the return hearing, the Court fixed the date of the substantive hearing to be 26 August 2026.  Nor did he apply for any such variation thereafter.  Despite the deadline having been missed for such a substantial amount of payment, there is no evidence that the First Asian Lenders have made any demands. 

(3)  Given Lo’s attitude towards rules and regulations and his low commercial morality (a record of breaching rules and regulations despite warnings, of keeping silent about his removal of the Companies’ assets and at the same time agreeing to SFC’s amendment targeting the Companies’ assets to be removed) as well as the matter in §(2) above, I take “a healthy skepticism” and “a very cautious view” against Lo’s evidence on the payments under the Facility.

(4)  True that the Mareva Injunctions are supposed to cover each and every asset he has in the world, and presumably, there is no point to say something that is the obvious – he has no other means.  However, the present case is different – Lo’s attitude towards rules and regulations and his low commercial morality – and therefore, taking “a healthy skepticism” and “a very cautious view”, I find that Lo’s glaring absence of such an affirmation is due to his inability to make such an affirmation, rather than because of the apparent obvious position that would usually apply in normal cases.

C.  Variation for Lo’s living expenses

75.For Lo’s living expenses, Lo tabularises his expenses in §25 of his 4^th Affirmation, showing that his monthly expenses come to HK$1.5 million.  Extravagant it may seem, I bear in mind that a Mareva injunction is not to reduce his ordinary standard of living.  If his ordinary standard of living is really so extravagant, the starting point is still to allow the variation.

76.However, in the present case, payments for online poker, purchases at luxury boutiques such as Hermes, Gucci, Louis Vuitton and other brand names, over HK$9 million on watches from Louis Vuitton in October 2025 and HK$2.5 million on watches in March 2026, in my view, cannot be said to be ordinary, regularly spent and/or recurring.  Having considered the matter, I am not satisfied that Lo’s extraordinary expenses are HK$800,000 per month, and I refuse to make the variation as he seeks.

77.SFC is prepared to increase the amount to HK$300,000 per month.  At the end of the hearing before me, on an interim basis, I made an order of variation to that effect.  I now make it a variation as part of the disposal of the Summons.

D.  Variation for legal expenses

78.Lo and Major Success have not produced any skeleton bill of costs or any other kind of evidence showing the estimate of the costs to be incurred, and any bills or any kind of evidence showing the costs already incurred.  On such state of evidence, I am not satisfied that there should be any variation for legal fees and expenses. 

79.That said, fairly, SFC is prepared to increase the legal expense for Major Success to HK$200,000 per month, plus a one-time withdrawal of HK$1,000,000 for the fees for this hearing before me.  At the end of the hearing, on an interim basis, I made an order of variation to that effect save and except that the one-time withdrawal be HK$1,200,000.

80.Further, Lo and Major Success, of course, are not prevented from making fresh applications for variation for legal fees and expenses when there are bills and feenotes issued for the legal costs already incurred and properly prepared estimates of legal costs for legal costs to be incurred.

E.  Payment of sums due to First Asian Lenders under the Facility and its supplemental agreements

81.Viewing the matter with “a healthy skepticism” and taking “a very cautious view”, and bearing in mind that he did not apply for any variation before the deadline of 26 August 2026 to make payment of HK$6,791,615 to the First Asian Lenders under the Facility and its supplemental agreement without explaining how he made good that payment and without any evidence of demand from First Asian Lenders, I am not satisfied that variations are needed for paying under the Facility and its supplemental agreements.

82.Therefore, I refuse the variation for such payment.

F.  Mortgage payment for Lo’s Manila apartment

83.The evidence in support of the variation for the alleged mortgage payment for Lo’s Manila apartment is (1) a term sheet dated 16 July 2024 under the letterhead Asia United Bank; (2) an undated, updated amortization schedule with no letterhead; and (3) his mere assertation that a variation would be needed to ensure that there would not be default.  However, according to the amortization schedule, after the Ex Parte Mareva Injunction against Lo was granted on 11 June 2026, payments of approximately US$42,000 were due on 18 June 2026, 18 July 2026 and 18 August 2026.  Similar to the Facility, no explanation has been provided as to whether these payments were made and if so how.  Nor was there any application at any stage for variation for these payments. 

84.In the circumstances, with “a healthy skepticism” and taking “a very cautious view”, I am not satisfied that the variation for paying the mortgage for the Manila apartment is necessary.

G.  Payment under the IRD’s Demand Note

85.SFC does not oppose the payment under the IRD’s Demand Note.  Therefore, I shall make an order of variation for that purpose.

H.  Payments allowed to be permitted to be made out of the accounts restrained by the Mareva Injunctions

86.The variation to allow the allowed payments above, namely, the legal costs and payments under the IRD’s Demand Note, is consequential to ensure that funds would be released for those allowed payments.  I allow such variation.  As to which specific account or accounts, I leave this for the parties to agree to the term of the order of variation.

XII.  CONCLUSION

87.For the above reasons, I make an order that the Ex Parte Mareva Injunction against Lo and the Ex Parte Mareva Injunction against Major Success shall be continued until the disposal of the Amended Petition herein or further order of the Court, subject to the following variations:-

(1)  The legal expense shall be increases for Major Success to HK$200,000 per month;

(2)  There shall be a one-off payment of HK$1,200,000 for the present hearing.  For the avoidance of doubt, if this amount is more than spent, Lo and Major Success shall inform SFC by way of affirmation within 3 days from the date when the relevant bills and fee notes are issued, and shall return the surplus in a way agreed by the parties.

(3)  There shall be a one-off payment of HK$507,320 under the IRD’s Demand Note; and

(4)  There shall be variation in terms to be agreed by the parties within 14 days from today as to which account or accounts the payments under the above variation should be paid from.

88.I also make an order that Lo and Major Success shall pay the costs of the Summons to SFC, with certificate for counsel, summarily assessed at HK$2,600,000.

89.Lastly, I thank Mr Pao and Mr Chan, for SFC, and Mr Maurellet, Mr Lau and Mr Wong, for Lo and Major Success, for their able and thorough assistance.

Mr Jin Pao SC and Mr Keith Chan, instructed by Securities and Futures Commission, for the Petitioner  

Mr José-Antonio Maurellet SC, Mr Lau Ka Kin and Mr Isaac Wong, instructed by Chiu & Partners, for the 1^st and 4^th Respondents

Annex A

Annex B