Case Document

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HCA 1845/2023

[2025] HKCFI 6369

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1845 OF 2023

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BETWEEN

	SUN LI	Plaintiff
	and
	YU ZHIFENG	1^st Defendant
	JIANG YUANCHUN	2^nd Defendant

____________________________

Before:

Deputy High Court Judge Grace Chow in Chambers (Open to Public)

Date of Hearing:	17 December 2025
Date of Decision:	17 December 2025

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DECISION

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Introduction and Factual Background

1.By Inter-Partes Summons dated 19 August 2025 (“Summons”), the Plaintiff (“P”) applied for:

(1) A stay of execution of the Order of Master Michael Lok made on 30 July 2025 (“Master’s Order”) pending the final determination of P’s appeal of Master’s Order by way of Notice of Appeal dated 13 August 2025;

(2) Further and/or alternatively, until judgment in this action or further order there be an injunction against the 2^nd Defendant (“D2”) in terms of the draft order as annexed therein Annex 1; and

(3) Alternative to (1), pending the hearing and determination of (2) above, D2 be restrained from withdrawing, disposing of, dealing with, etc. the value of the Sum to be transferred by P to D2’s account with Shanghai Pudong Development Bank Co Ltd, Hong Kong branch (“D2’s New Account”).

2.At the first hearing of the Summons on 22 August 2025 (“1^st Hearing”), I dismissed paragraphs (1) and (3) of the Summons.

3.A summary of P’s case and the procedural background was set out in my Decision at the 1^st Hearing (see [2025] HKCFI 4679 at §§1-2) which I shall not repeat and I shall continue to adopt the same abbreviations and definitions therein.

4.The main relevant events after the 1^st Hearing are as follows:

(1) On 2 September 2025, US$525,000 has been deposited by P to D2’s New Account pursuant to the Master’s Order;

(2) The Statement of Claim was amended and an Amended Statement of Claim (“ASOC”) was filed on 10 October 2025;

(3) A 3^rd Affirmation of D2 (“D2’s 3^rd”) in opposition to the Summons was filed on 20 October 2025 (no affirmation in reply has been filed by P notwithstanding leave having been granted to P at the 1^st Hearing);

(4) The Writ of Summons was amended and the Amended Writ of Summons filed on 4 November 2025;

(5) A Defence of D2 has been filed on 2 December 2025;

(6) By Summons filed on 11 December 2025, P seeks leave be granted to P for filing and serving a notice of intention under O.38, r.7 of the Rules of the High Court, Cap. 4A (“RHC”) out of time (“O.38 Summons”). An Affirmation of Chau Cham Kuen was filed in support of O. 38 Summons on the same day. In particular, it was said that whilst D2 has raised a defence of bona fide purchaser in these proceedings, based on earlier Hong Kong cases which discussed the relevant Mainland law provisions (“HK Cases on PRC Law”), the legality/illegality of the underground foreign exchange trading may affect whether D2 was in fact acting “bona fide”;

(7) On 12 December 2025, P’s Skeleton Submissions were lodged in support of “P’s application for a proprietary injunction against D2”. It was submitted inter alia that D2’s defence is not so strong to negate P’s good arguable case in particular, relying on HK Cases on PRC Law, which have held that individuals who entered into a currency exchange transaction with unlicensed agent in the Mainland contravened the law of the Mainland;

(8) On 15 December 2025, D2’s Skeleton Submissions were lodged inter alia objecting to the “ambush” of seeking to rely on the HK Cases on PRC Law as evidence of PRC law without having prior leave to do so and having only filed O. 38 Summons on 11 December 2025 as well as the lack of submissions in respect of that Summons or any submissions in support of the grant of a Mareva injunction; and

(9) On 16 December 2025, P’s Skeleton Submissions in Reply (“P’s Reply”) was lodged. In P’s Reply, it was confirmed that at today’s hearing P only seeks a proprietary injunction until judgment in this action or further order and it was intended to rely on the HK Cases on PRC Law at trial.

5.Today is the substantive hearing of paragraph (2) of the Summons. Before me also is the O.38 Summons.

6.Ms Barbara Wong together with Mr Martin Lau, counsel, appeared for P and Mr Ernest Ng together with Mr Calvin Ng, counsel, appeared for D2.

Discussion re: O. 38 Summons

7.Where a party intends to adduce in evidence a finding or decision on a question of foreign law by virtue of s.59 of the Evidence Ordinance, Cap. 8 (“EO”), s.59(3) provides that except with the leave of court, no party to any civil proceedings shall be permitted to adduce such finding or decision unless he has in accordance with the rules given every other party to the proceedings notice that he intends to do so.

8.O.38, r.7 of RHC makes provision for the time for serving of such notice: (a) in the case of an action of which O.25, r.1 of RHC applies, within 28 days after the pleadings in the action are deemed to be closed; and (b) in the case of any other cause or matter, within 21 days after the date on which an appointment for the first hearing of the cause or matter is obtained, or in either case, within such other period as the Court may specify.

9.In She Ching Yan v Cai Yunxiang & Ors [2023] HKCFI 592 at §54, DHCJ Winnie Tsui (as she then was) held that “cause or matter” generally refers to the entire action or proceedings as opposed to a discrete interlocutory application made in the course of the action or proceedings. She expressed reservation as to whether “other cause or matter” includes interlocutory matter but even if it did, it should be the date when the summons (in that case concerning summary judgment) for summary judgment was filed as opposed to the hearing of the summons itself.

10.In P’s Reply, as mentioned, it is stated that the Notice of Intention was to give advance notice of what P intends to rely on at trial. I clarified with Ms Wong, whether the HK Cases on PRC Law will not be referred to and relied on today (and submissions in various paragraphs in P’s Skeleton Submissions and P’s Reply are to be disregarded). After a short adjournment for Ms Wong to take instructions, she confirmed that she would not rely on the HK Cases on PRC Law today. In the circumstances, I saw no prejudice to D2 even if the Notice was filed late (P seems to accept the notice was out of time and requires the leave of court) as there is still plenty of time between now and the trial of this action for D2 to consider what steps she wishes to take in respect of the foreign law issue and prepare evidence to the contrary. See She Ching Yan, at §56 where the learned judge explained that the rationale for the notice requirement was to give ample notice of the party seeking to invoke s.59 of EO so that the other side can consider what step he needs to take in respect of the foreign law issue and prepare his own evidence where appropriate.

11.I therefore granted leave to P to file and serve the notice of intention under O.38 of RHC without prejudice to D2’s right to file further notice of intention under O.38 of RHC or seek leave to adduce expert evidence in respect of PRC Law. I ordered costs of O.38 Summons to be in the cause.

Discussion re: paragraph 2 of the Summons

12.The legal principles governing proprietary injunction are well-established. For the grant of a proprietary injunction, there are three requirements: (1) there is a serious issue to be tried on the merits; (2) that the balance of convenience lies in favour of the injunction; and (3) it is just and convenient to grant the injunction. The threshold of “serious issue to be tried” is not a very steep hurdle but if the opposing party seeks to show that there is no serious issue to be tried, the threshold is high as it would be necessary to demonstrate that the claim should be struck out. Furthermore, it is not necessary to show any risk of dissipation of assets although if such risk is demonstrated, it may be an additional factor in favour of the grant of injunction. Nor is it necessary to show that damages would not be an adequate remedy. However, it remains necessary to demonstrate that the balance of convenience favours the granting of the injunction, and that it would be just and convenient to do so. It would not be granted if a monetary award would be adequate remedy for the plaintiff. In particular, where the proprietary claim of the plaintiff is not to any specific real or personal property but to money, the plaintiff can be adequately compensated by a monetary award, unless there is evidence which calls into question the ability of the defendant to meet the monetary award, so that a proprietary injunction is not necessary or justified. See e.g. Predicine Holdings Ltd v Bianchi (Hong Kong) Limited & Ors [2021] HKCFI 123 per Coleman J at §§69-73; and DBS Bank (Hong Kong) Limited v Tian Wen Quan (unrep), HCA 3228/2016 12 October 2017 per Anthony Chan J (as he then was) at §§11-18.

13.In Welly Grace Limited & Ors v Keung Yee Man & Ors [2023] HKCFI 3082, Recorder Eugene Fung SC (as he then was) at §30 held:

“In the context of obtaining a proprietary injunction, the plaintiff needs to demonstrate a serious issue to be tried in relation to his proprietary claim, which would involve not only a consideration of the merits of the claim being brought by the plaintiff, but also an examination of the tracing exercise pursuant to which the asset in question has been identified. As far as the tracing exercise is concerned, the plaintiff should adduce reasonable evidence to show a serious issue to be tried that the asset or its traceable substitute is being held by or under the control of the defendant. As to what would constitute reasonable evidence to show ‘the existence of the specific asset or its traceable proceeds and that the same are still being held by or under the control of the defendant’, that must naturally depend on the facts and circumstances of each case, including but not limited to the stage of the proceedings, the information available to the plaintiff at the time when the proprietary injunction is sought, and any materials with sufficient cogency from the defendant.”

14.In the present case, what is sought to be injuncted by the Summons is the “value of the sum of US$525,000 to be transferred (as already mentioned now transferred) by P to D2’s New Account pursuant to Master’s Order (see Annex 1 of the Summons at paragraph 1).

15.Essentially, Mr Ng submitted that there was no serious issue to be tried in respect of P’s proprietary claim in the sum of US$525,000 in D2’s New Account. He submitted that the sum of US$525,000 was extracted from D2’s CMB Account (which had received the Sum) and paid to P pursuant to the garnishee order absolute (“GOA”) in around November 2024 and from that moment, it was “consumed and ceased to exist in D2’s hand”. He therefore submitted that there was nothing left to which any tracing exercise could be attached.

16.Furthermore, it was submitted that when P paid US$525,000 to D2’s New Account in September 2025, there was satisfaction of D2’s personal judgment debt under the Default Judgment and the effect is to convert the underlying debt or claim into a judgment debt. Even when the Default Judgment and GOA were set aside, there was no revival of the proprietary interest in favour of P.

17.Ms Wong on the other hand submitted that Mr Ng’s submissions cannot be right, defies logic and is against the notion of substantive justice. Looking at the matter in substance and not in form, she submitted that upon the setting aside of GOA, which was a nullity ab initio, there was a re-winding of the transactions.

18.Given the low threshold of serious issue to be tried and the court should not in interlocutory injunction application decide difficult questions of law which calls for detailed arguments and mature consideration (see DBS Bank (Hong Kong) Limited at §13), I am satisfied that there is a serious issue to be tried on P’s proprietary claim.

19.As for D2’s bona fide purchaser defence, I do not accept that there is no challenge by P as to whether D2 acted in good faith and bona fide. Ms Wong has pointed out the objective circumstances which does call into question D2’s involvement in the alleged fraud (including the fact that D2’s CMB bank account was opened only two days before the receipt of the Sum and the Sum had been deposited into the account immediately following the transfer of the Sum from the 1^st tier account and the belated raising of this defence). P also has raised the issue of the illegality of the foreign exchange transaction and it may well affect the merits of this defence. I do not think the raising of the bona fide purchaser defence negates a serious issue to be tried on P’s proprietary claim.

20.Thus I turn to the issue of whether damages will be an adequate remedy for P. In my Decision at the 1^st Hearing, I held by reference to the decision of Wason Holdings Limited & Others v BHP International Markets Limited [2018] HKCA 113 at §§36-38 per Barma JA, that where a claim is purely monetary unless there is evidence to show that D2 is not good for her money, a proprietary injunction is neither necessary nor justified.

21.Ms Wong relied on the fact that D2 has doubtful connections with Hong Kong, being a resident in PRC and a housewife (although Mr Ng has pointed out in D3’s affirmation she has stated that she was employed), it is unlikely that she would be good for her money. Even though P has to show that the balance of convenience lies in favor of the grant of the injunction, given that: (1) there is no evidence to show what assets D2 had whether in Hong Kong or elsewhere; (2) D2’s CMB Account has been closed so apart from US$525,500 in D2’s New Account there is no suggestion D2 has any other assets in Hong Kong; (3) D2 in D2’s 3^rd has not positively asserted she is able to satisfy judgment against her (but cast the burden on P to show that she is insolvent or unable to satisfy a judgment against her), I am satisfied that there are doubts over D2’s ability to meet a claim for damages such that damages would not be an adequate remedy. On the other hand, if there was any loss and damages suffered by D2 should it turns out the proprietary injunction is wrongly granted, D2 will be adequately covered by P’s cross-undertaking in damages.

22.I also accept that even though there is delay in the present application, an interlocutory proprietary injunction may nonetheless be granted: see Gentle Soar Limited v CMBC Capital Finance Limited & Ors [2021] HKCFI 3450 at §36 per Keith Yeung J. As held by Harris J in Re Wako Giken (HK) Co Ltd [2010] 4 HKLRD 121 at §§24-25, it is not sufficient for a defendant to show that the applicant has delayed unreasonably. It must be shown that because of that delay, it would be unreasonable or unjust to grant the remedy. Nothing in D2’s 3^rd or Mr Ng’s submissions has demonstrated why because of the delay it would be unreasonable and unjust to grant the injunction. I have not overlooked D2 has asserted in D2’s 3^rd that an injunction would impose a heavy financial burden on her and her family, she has pressing needs for the funds and it affects her financial planning etc., but none of that is because of the delay. Whilst Mr Ng submitted that he has no instructions on whether US$525,000 remains in D2’s New Account, but given that no submissions are made that the sum no longer remains, notwithstanding the delay, there will be utility to grant the proprietary injunction.

23.In all, I am satisfied that the balance of convenience lies in favour of the grant of proprietary injunction and it is just and convenient to do so.

[Discussion on costs]

24.P should be granted the costs the Summons in the cause save 80% of the costs of today’s hearing should be paid by D2 to P, with certificate for two counsel, to be summarily assessed. Directions have been given for the lodging and serving of P’s Statement of Costs and D2’s objections, following which there will be an assessment of costs on paper.