Barco Investments Ltd v. Wong Yan Ho

HCMP 24/2023

[2025] HKCFI 2416

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 24 OF 2023

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JUDGMENT FOR SENTENCE

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1.On 21 February 2023 (“Committal Hearing”), this Court found the Defendant guilty of contempt of Court.  This is the judgment for sentence.

Background

2.On 14 September 2022, the Plaintiff commenced proceedings and obtained from this Court an ex parte proprietary and Mareva injunction against, inter alia, the Defendant. (“1st Injunction Order”)

3.The subject matter of the proceedings was an alleged fraud perpetrated by the Defendant and others against the Plaintiff in respect of a purported acquisition of the shares of a company named StockX LLC (“StockX”). (“Underlying Proceedings”)

4.In 2021, the Plaintiff was introduced to an opportunity to subscribe for shares in an exempted Cayman limited partnership (“Fund”) on the basis that the Fund would then acquire shares in StockX, a company operating an online marketplace for the sale of sneakers, apparel and collectibles.  On 9 June 2021, the Plaintiff entered into a Subscription Agreement with Burnaby Critica Capital Partners Ltd, the General Partner of the Fund, which provided, inter alia, that the subscription monies would be used to acquire shares in StockX or if the acquisition was unsuccessful, returned to the Plaintiff. 

5.Pursuant to the Subscription Agreement the Plaintiff transferred US$6,300,073.82 (“Investment Sum”) to the bank account (“Critica DBS Account”) of Critica Capital Management (Cayman) Ltd, a company controlled by the Defendant.  In order to make the Plaintiff to believe that the Investment Sum has been used to acquire shares in SportX, the Defendant provided to the Plaintiff various documents which later found out to be false or forged.  In fact, the Investment Sum had been dissipated to the accounts of various individuals, including the Defendant, by way of bank transfers from the Critica DBS Account. 

The 1^st Injunction Order

6.The 1^st Injunction Order provided, inter alia, that:

Paragraph 4: “[The Defendant] must inform [the Plaintiff] within 3 days after this order has been served on [the Plaintiff] (1) the location of the [Investment Sum], (2) if the [Investment Sum] (or any part thereof) has been disposed of or transferred to third party/ies, what it has become of it and the location of such substitute / traceable proceeds, and to whom, to where, and under what circumstances the [Investment Sum] (or any part thereof) was disposed or transferred to such third party/ies”

Paragraph 5: “[The Defendant] must inform [the Plaintiff] within 3 days after this order has been served on [the Plaintiff] of all [the Plaintiff’s] assets of an individual value of HK$50,000 or more in Hong Kong, whether in his own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets. [The Defendant] may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate [the Defendant].”

Paragraph 6: “The above information must be confirmed in affidavit(s) with supporting documents which must be served on the [the Plaintiff]’s solicitors within 7 days after this Order has been served on [the Defendant].”

7.At the return date hearing of the 1st Injunction Order[1], the Defendant was represented by Messrs Georgiou Payne Stewein (“GPS LLP”).  At the hearing, this Court ordered that personal service of the 1st Injunction Order be dispensed with and the 1st Injunction Order be deemed to have been served on the Defendant on 17 September 2022.  Furthermore, the Defendant was granted extensions of time for compliance with paragraphs 4, 5 and 6 of the 1st Injunction Order to (i) 28 September 2022, (ii) 5 October 2022,and (iii) 7 days from the date of compliance with paragraphs 4 and 5 of the 1st Injunction Order respectively. 

8.By an email dated 28 September 2022 (“28 Sep Email”), in purported compliance with paragraph 4 of the 1st Injunction Order, Mr Phillip Georgiou of GPS LLP, on the Defendant’s instructions, stated that:

“(1) As to paragraph 4(a), as of today’s date, [the Defendant] has no knowledge of the location of the Investment Sum;

(2)As to paragraph 4(b), to the best of [the Defendant’s] knowledge and recollection, the Investment Sum was transferred from [the Critica DBS Account] sometime towards the end of June 2021 to an entity by the name of Dimmak LLC (the entity that the [the Defendant] believed was selling and transferring its shares held in StockX to the [Fund]) upon the authorization of SS&C (the fund administrator appointed to manage the [Critica DBS Account]). [The Defendant] has since the date of the Order made inquiries with SS&C to confirm that the transfer was in fact made to Dimmak LLC. SS&C has not answered the inquiries. Consequently, [The Defendant] does not have actual knowledge if the transfer to Dimmak LLC occurred towards the end of June 2021 or at any other time. (emphasis added)

9.In fact, contrary to what was stated in the 28 Sep Email, a substantial part of the Investment Sum had been transferred into the Defendant’s own bank account with Standard Chartered Bank (Hong Kong) Ltd, by way of a transfer of US$4,158,100 on 10 June 2021 and a transfer of US$40,000 on 11 June 2021 (“D1 Sums”).  The Plaintiff only discovered the falsity when it received bank statements in respect of the Critica DBS Account from DBS by way of Bankers Trust disclosure by letter dated 29 September 2022 (“DBS Documents”). 

10.The Defendant did not comply with paragraph 5 of the 1^st Injunction Order despite the Plaintiff’s solicitors’ reminder by email.  By a letter dated 14 October 2022, GPS LLP informed the Plaintiff’s solicitors that it would be filing a Summons for extension of time to comply with paragraphs 5 and 6 of the 1^st Injunction Order and, in purported compliance with paragraph 5, provided information of various assets of the Defendant located in Hong Kong but did not state the location, value or details of each individual asset. 

11.At the hearing for the Time Summons on 18 October 2022, Mr Randall Arthur of GPS LLP admitted that (i) the Defendant was “considerably out of time” in respect of his disclosure obligations, and that (ii) the 14 Oct Letter did not meet the requirements of the 1st Injunction Order.  Yet, the Defendant was granted an extension of time to comply with paragraphs 5 and 6 of the 1^st Injunction Order until 12:00 of 19 October 2022. 

12.By a letter dated 19 October 2022, GPS LLP stated that:

“[on 18 October 2022], [the Defendant] was provided with a final draft of the affirmation, prepared on his instructions, the contents of which address the matters required by paragraphs 5 and 6 of the [1st Injunction Order].  As at the time of sending this letter, our client has not provided us with a signed copy of the affirmation.  We will file and serve the affirmation as soon as we receive a signed copy of the same.”

13.The affirmation was never filed. 

The 2^nd Injunction Order

14.On 6 October 2022, the Plaintiff was granted, inter alia, a further ex parte proprietary injunction against the Defendant by Hon A Chan J on the basis of the DBS Documents (“2nd Injunction Order”).  The 2nd Injunction Order provided, inter alia, that:

Paragraph 11: “[The Defendant] must inform [the Plaintiff] within 3 days after this order has been served on him:- (1) the location of [the D1 Sums] referred to in paragraph 1 above; (2) if such sums (or any part thereof) have been disposed of or transferred to third party/ies, what has become of them and the location of such substitute / traceable proceeds, and to whom, to where, and under what circumstances such sums (or any part thereof) were disposed or transferred to such third party/ies”. 

15.At the return date of the 2nd Injunction Order on 14 October 2022 (at which the Defendant was represented by counsel), Hon Cheng J ordered that personal service of the 2nd Injunction Order be dispensed with, and granted the Defendant a time extension of 7 days to comply with paragraph 11 of the 2nd Injunction Order. 

16.Nothing has been done by the Defendant to comply with the 2^nd Injunction Order. 

17.Considering what transpired in the course of the events I have no doubt that the Defendant was in flagrant breach of the 1^st and 2^nd Injunction Order and I was satisfied that the breaches were deliberate. 

18.At the Committal Hearing, I found the Defendant guilty of (i) criminal contempt in providing false information to the Plaintiff by way of the 28 Sep Email in purported compliance with paragraph 4 of the 1st Injunction Order, and (ii) civil contempt for non-compliance with paragraphs 4 to 6 of the 1st Injunction Order and paragraph 11 of the 2nd Injunction Order. 

19.I also ordered that (i) a warrant of arrest be issued against the Defendant, (ii) adjourned the Originating Summons to a date to be fixed for purposes of mitigation and sentence, (iii) leave be given for the Defendant to file evidence in respect of mitigation, and (iv) the Defendant to attend the sentencing hearing personally.

Sentence

20.The order of this court has been served to the Defendant’s solicitors and the Defendant personally.  The Defendant did not file any evidence for mitigation.  Notwithstanding that the Defendant has been actively taking steps in the Underlying Proceedings, the Defendant did not engage legal representation in these contempt proceedings nor did he attend to them personally. 

21.I agree with Mr Fung, counsel for the Plaintiff, that the Defendant has consciously chosen to evade these contempt proceedings and has decided to forego his right to make submissions on sentence. 

22.I have in mind the applicable principles for sentencing criminal contempts as explained by the Court of Appeal in Secretary for Justice v Wong Chi Fung [2019] 2 HKLRD 1236.  

23.I also made references to Arboit v Koo Siu Ying (No 2) [2016] 3 HKLRD 154 and La Dolce Vita Fine Dining Co Ltd v Zhang Lan [2019] 2 HKLRD 341 in considering the appropriate sentences for the Defendant’s civil contempts. 

24.In the present case, the Defendant deliberately defy court orders with an obvious intention to mislead the Court.  The Defendant had admitted in an affirmation filed on 17 March 2023 that the Investment Sum was transferred to himself and other defendants as opposed to the purported sellers of StockX shares.  The representations through his solicitors to the court in the 28 Sep Email were blatant lies. 

25.Mr Fung submitted that:

(a)  The Defendant’s non-compliance with the ancillary disclosure orders in the 1^st and 2^nd Injunctions was obviously deliberate and contumacious.  The Defendant has admitted on affidavit that he had instructed GPS LLP to accept service of and defend the 1^st Injunction Order on 17 September 2022, putting beyond doubt that he was aware the injunction orders made against him and their terms.  The Defendant has not suggested that his non-compliance was in any way accidental or unintentional. 

(b)  given the Defendant’s admission that the Investment Sum was transferred to himself as alleged reimbursement, there can be no doubt that the Defendant was aware of the falsity of the statements in the 28 Sep Email that he “had no knowledge of the location of the Investment Sum”, and that “the Investment Sum was transferred … sometime towards the end of June 2021 to an entity in the name of Dimmak LLC” when they were made. 

(c)  The 28 Sep Email was calculated to deceive the Plaintiff and the Court, and the falsity of the statements therein would not have been discovered but for the DBS Documents which the Plaintiff obtained pursuant to the Bankers Trust order made by the Court.  As for the Defendant’s non-compliance with the ancillary disclosure obligations, this has greatly obstructed the Plaintiff’s efforts to trace and preserve the Investment Sum and police the 1^st and 2^nd Injunction Orders. 

(d)  It is apparent from the Defendant’s stance in these proceedings that he remains unwilling to accept the authority of the Court and the importance of complying with court orders.  He continues to ignore these proceedings despite being aware of them, in contrast to his stance in the Underlying Proceedings.  He has not attempted any explanation for his breaches or apologized to the Court.  Furthermore, while this Court ordered the Defendant to personally attend the sentencing hearing in its order dated 21 February 2023, the Defendant has so far not indicated any intention to comply this Court’s order. 

26.I respectfully agree. 

27.In my judgment, the conduct of the Defendant is grave, contumelious and contumacious.  The Defendant has showed no remorse.  I considered a term of imprisonment is the only appropriate sentence. 

28.I am giving an overall sentence for the Defendant’s acts of contempt.  The Defendant is sentenced for a term of 3 months’ imprisonment. 

29.Costs of the sentencing hearing be paid by the Defendant to the Plaintiff on an indemnity basis, summarily assessed at $228,100. 

Mr Fung, Jonathan E.T.R. instructed by Anthony Siu & Co. for Plaintiff

Defendant acting in person being absent