苏州太合汇投資管理有限公司 v. 霍尔果斯市摩伽互联娱乐有限公司

HCMP 1663/2022

[2022] HKCFI 3657

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1663 OF 2022

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J U D G M E N T

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INTRODUCTION

1.  This application raises an interesting and important point of law concerning the applicable test and ambit of the Court’s Chabra jurisdiction to grant injunction against non-cause of action defendant (“NCAD”).

2.  By a summons dated 9 November 2022, the Plaintiff seeks to, inter alia, continue the ex parte post-judgment Mareva injunction (“Chabra Injunction”) against MMOGA, a wholly-owned subsidiary of the Defendant, which was granted by Mr Justice K Yeung on 8 November 2022 (the “Summons”), pursuant to the Court’s Chabra jurisdiction and s.21M of the High Court Ordinance (Cap 4) (“HCO”).

3.  The Chabra Injunction restrains MMOGA from disposing of or otherwise dealing with its assets in Hong Kong up to the value of HK$222,799,944.24.

MATERIAL FACTS

4.  The following salient facts are largely undisputed:

(1)  The Defendant is a judgment debtor of the Plaintiff for the sum of HK$222,799,944.24 (the “Judgment Sum”) pursuant to a conciliatory statement granted by consent by the Shanghai Financial Court of the PRC dated 16 December 2021 (“PRC Judgment”).

(2)  On 27 July 2022, the PRC Judgment has been registered in HCMP 633/2022 (“Registration Action”) by an Order of Master Hui pursuant to the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap 597) (“MJREO”). There is no dispute that the Plaintiff, after registration of the PRC Judgment, is entitled to enforce the same as a Hong Kong Judgment including applying for charging order over the Defendant’s shareholding in MMOGA.

(3)  On 20 October 2022, in aid of the enforcement of the PRC Judgment, Mr Justice S T Poon granted an ex parte post-judgment Mareva injunction against the Defendant (“Post-Judgment Injunction”), restraining the Defendant from disposing of or otherwise dealing with its assets in Hong Kong up to the value of HK$222,799,944.24. No application has been made to set aside the Post-Judgment Injunction although it is fair to infer that the Defendant does have knowledge of the same, at the very least, through MMOGA.

(4)  On 8 November 2022, Mr Justice K Yeung further granted the Chabra Injunction against MMOGA, a wholly-owned subsidiary of the Defendant, on the bases that (a) MMOGA’s assets are liable to enforcement of the PRC Judgment by the Plaintiff against the Defendant, and (b) there was a real risk of dissipation of assets on MMOGA’s part.

(5)  On 11 November 2022, this Court continued the Post-Judgment Injunction without any opposition from the Defendant and adjourned the hearing of the continuation of the Chabra Injunction for further argument. This is the substantive hearing of the same.

5.  It is pertinent to note that on 16 December 2021, the PRC Judgment was granted against the Defendant by consent. The Defendant’s parent company, Whole Easy Internet Technology Co Ltd (“Whole Easy”), was also a party liable for the Judgment Sum under the PRC Judgment.

6.  Pursuant to the PRC Judgment, the Defendant acknowledged its liability to the Plaintiff and agreed to repay the Plaintiff the sum of RMB194,444,667.77 within 2 weeks of the date of the judgment (i.e. by 1 January 2022).

7.  Nonetheless, the Defendant failed to satisfy any part of the PRC Judgment by 1 January 2022. Thereafter, the Plaintiff applied to commence the enforcement process in the PRC.

8.  On 27 January 2022, the Shanghai Financial Court issued an enforcement notice (“Notice of Enforcement”) and a disclosure order (“PRC Disclosure Order”) against the Defendant for it to comply with the PRC Judgment and to make disclosure regarding its assets.

9.  Notwithstanding the Notice of Enforcement and the PRC Disclosure Order, the Defendant refused and failed to comply with the PRC Judgment. This was despite the Defendant’s apparent ability to repay at least part of the PRC Judgment:

(1)  As stated in the 2021 Annual Report dated 29 April 2022 (“2021 Annual Report”) and the 2022 Interim Report dated 26 August 2022 (“2022 Interim Report”) of Whole Easy, the Defendant had net assets of RMB1,065,806,357.25 on 31 December 2021 and RMB1,137,003,823.31 on 30 June 2022 respectively.

(2)  Further, the 2021 Annual Report and the 2022 Interim Report recorded that Whole Easy and/or subsidiaries of Whole Easy (collectively, “Whole Easy Group”) had available bank deposits (可随时用于支付的银行存款) of RMB139,988,583.56 on 31 December 2021 and RMB201,918,777.14 on 30 June 2022 respectively.

(3)  Moreover, from the 2021 Annual Report and the 2022 Interim Report, the Whole Easy Group had deposit overseas (存放在境外的款项总额) amounting to RMB158,696,136.95 (as at 31 December 2021) and RMB199,073,534.65 (as at 30 June 2022) respectively (although it was not clear with which subsidiary the cash was placed).

(4)  There is also no dispute that the Defendant and MMOGA continue to market themselves proactively. For instance, in the 2021 Annual Report, MMOGA was described as having ‘海量忠实客户群体’ and ‘领军优势’. It was stated that MMOGA was prepared to find overseas opportunities (准备在海外游戏运营方面寻找突破口). Of course, this Court bears in mind that the Defendant and MMOGA are separate legal entities. MMOGA is perfectly entitled to carry on its legitimate business in due course.

10.  Further, the Defendant also breached the PRC Disclosure Order by failing to make any disclosure regarding its assets.

11.  On 27 May 2022, the Plaintiff commenced the Registration Action in Hong Kong. Notice of the Registration Action has not been given to the Defendant then. The Plaintiff’s explanation is that it was minded to exhaust the avenues of enforcement in the Mainland before formally commencing acts of enforcement in Hong Kong.

12.  On 26 August 2022, in view of the Defendant’s refusal to satisfy the PRC Judgment, the Plaintiff applied before the Shanghai Financial Court for:

(1)  An order (“Restriction Order”) of restriction on high-level consumption (限制高消费) against the Defendant;

(2)  An order (“Listing Order”) to add the Defendant to the list of dishonest persons (失信被执行人).

13.  On 21 and 27 September 2022 respectively, the Shanghai Financial Court granted the Restriction Order and Listing Order. The Listing Order against the Defendant was made on the basis that it has refused to fulfil its legal obligation despite having the financial ability to do so (有能力但不履行生效法律文书确定业务).

14.  Notwithstanding the grant of the Restriction Order and Listing Order, the Defendant still refuses to satisfy the PRC Judgment.

15.  On 12 October 2022, the Shanghai Financial Court issued an enforcement decision (“Enforcement Decision”) at the completion of the enforcement process, with minimal recovery being achieved.

16.  On 20 October 2022, the Plaintiff applied for the Post-Judgment Injunction on the basis that there is an objective risk of dissipation on the part of the Defendant.

17.  On 3 November 2022, the Defendant and MMOGA wrote to the Plaintiff complaining that MMOGA’s account maintained with the Standard Chartered Bank (Hong Kong) Limited (“SCBHK”) has now been wrongfully frozen as a result of P’s communications with SCBHK, alleging that the same has caused disruption to the operation of MMOGA.

18.  In view of the parties’ disagreement on the effect of the Post-Judgment Injunction on MMOGA, on 8 November 2022, the Plaintiff applied and obtained the Chabra injunction against MMOGA.

19.  From the above undisputed narrative of facts, it appears that the Defendant, albeit with the financial ability to satisfy the PRC Judgment, is determined not to fulfil its civil obligations and does not care whether it breaches any order of the Mainland Courts. Nonetheless, the Defendant, via MMOGA, is still operating an active business with assets in Hong Kong and overseas.

JURIPRUDENCE ON CHABRA INJUNCTION

20.  The starting point of analysis is the leading judgment of Popplewell J in PJSC Vseukrainskyi Aktsionernyl Bank v Maksimov [2013] EWHC 422 (Comm) at §7 as approved by Tomlinson LJ in Lakatamia Shipping Co Ltd v Su [2015] 1 WLR 291 at §32 where the learned judge said:

“(1) The Chabra jurisdiction may be exercised where there is good reason to suppose that assets in the name of a defendant against whom the claimant asserts no cause of action (the NCAD) would be amendable to some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment against a defendant whom the claimant asserts to be liable on his substantive claim (the CAD).

(2) The test of ‘good reason to suppose’ is to be equated with a good arguable case, that is to say one which is more than barely capable of serious argument, but yet not necessarily one which the judge believes to have a better than 50% chance of success.

(3) In such cases the jurisdiction will be exercised where it is just and convenient to do so. The jurisdiction is exceptional and should be exercised with caution, taking care that it should not operate oppressively to innocent third parties who are not substantive defendants and have not acted to frustrate the administration of justice.

(4) A common example of assets falling within the Chabra jurisdiction is where there is good reason to suppose that the assets in the name of the NCAD are in truth the assets of the CAD. Such assets will be treated as in truth the assets of the CAD if they are held as nominee or trustee for the CAD as the ultimate beneficial owner.

(5) Substantial control by the CAD over the assets in the name of the NCAD is often a relevant consideration, but substantial control is not the test for the existence and exercise of the Chabra jurisdiction. Establishing such substantial control will not necessarily justify the freezing of the assets in the hands of the NCAD. Substantial control may be relevant in two ways. First, evidence that the CAD exercises substantial control over the assets may be evidence from which the court will infer that the assets are held as nominee or trustee for the NCAD as the ultimate beneficial owner. Secondly, such evidence may establish that there is a real risk of dissipation of the assets in the absence of a freezing order, which the claimant will have to establish in order for it to be just and convenient to make the order. But the establishment of substantial control over the assets by the CAD will not necessarily be sufficient: a parent company may exercise substantial control over a wholly owned subsidiary, but the principles of separate corporate personality require the assets to be treated as those of the subsidiary not the parent. The ultimate test is always whether there is a good reason to suppose that the assets would be amendable to execution of a judgment obtained against the CAD.” (Emphasis added.)

21.  The above legal principles are approved and applied by our Court of Appeal in XY, LLC v Jesse Zhu & Anor [2017] 5 HKC 479 at §24 per Kwan JA (as she then was).

22.  Mr Sussex SC for MMOGA submitted that the existence of a wholly-owned subsidiary per se, without more, does not justify the grant of a Chabra injunction. I agree. It is quite clear that the correct legal position is that the establishment of substantial control over the assets of the CAD will not necessarily be sufficient. Insofar as it is suggested that the existence of a wholly-owned subsidiary is a sufficient condition for the granting of a Chabra injunction, such suggestion must be incorrect.

23.  As Popplewell J rightly pointed out the ultimate test is always whether there is a good reason to suppose that the assets would be amendable to execution of a judgment obtained against the CAD. For instance, 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.

24.  Further, Chabra-type jurisdiction is not limited to cases where the NCAD holds, or has received, assets beneficially belonging to the CAD or assets in which the CAD has some sort of proprietary entitlement. That would be easy as the NCAD would then be a mere conduit or vehicle which holds assets for and on behalf of the CAD.

25.  In Jesse Zhu (supra), Kwan JA (as she then was) specifically approved and applied Paul Cardile v LED Building Proprietary Ltd (1999) 198 CLR 380. At §§25-26, the learned judge said:

“25…In this respect, the English court decisions followed the important decision of the High Court of Australia in Paul Cardile v LED Building Proprietary Ltd (1999) 198 CLR 380. At §§57 and 58 of the joint judgment of Gaudron, McHugh, Gummow and Callinan JJA, the High Court of Australia stated:

‘What then is the principle to guide the courts in determining whether to grant Mareva relief in a case such as the present where the activities of third parties are the object sough to be restrained? In our opinion such an order may, and we emphasise the word ‘may’, be appropriate, assuming the existence of other relevant criteria and discretionary factors, in circumstances in which:

(i) the third party holds, is using, or has exercised or is exercising a power of disposition over, or is otherwise in possession of, assets, including ‘claims and expectancies’, of the judgment debtor or potential judgment debtor; or

(ii) some process, ultimately enforceable by the courts, is or may be available to the judgment creditor as a consequence of a judgment against the actual or potential judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor.

It is that principle which we would apply to this case. Its application is a matter of law, although discretionary elements are involved.’

26. It is recognised that the second limb of the principle set out in §57(ii) is ‘potentially of extremely wide application.’ As stated by Briggs J in Revenue & Customs Commissioners v Eagleton [2007] 1 All ER 606 at §29, ‘it appears to contemplate that jurisdiction exists to make a freezing order against any potential debtor of an individual or company against whom the claimant has a cause of action, upon the footing that since enforcement of a judgment against the defendant may lead to its liquidation or (if any individual) bankruptcy, and since a liquidator or trustee in bankruptcy may then be able to pursue claims against third parties, then jurisdiction exists to enable the plaintiff to seek a freezing order against any such third parties, always assuming that the other discretionary considerations, such as a risk of dissipation of assets, are satisfied.’” (Emphasis added.)

26.  Mr Sussex SC’s main submission is that there is a limit to the second limb of the principle, namely, there must be some process under which the third party may be obliged to disgorge property or otherwise contribute to the funds or property of the judgment debtor to help satisfy the judgment against the judgment debtor. In other words, there must be some claims, causes of action or obligations on the part of the third party to disgorge its assets or otherwise contribute to the funds or property of the judgment debtor. The liquidation, bankruptcy, receivership or otherwise, are only mechanisms through which such claims, causes of action or obligations can be enforced. It is not permissible that such claims, causes of action or obligations only arise as a result of liquidation, receivership or bankruptcy. Though Mr Sussex SC also agrees that such claims, causes of action or obligations includes prospective claims, causes of action or obligations.

27.  Mr Sussex SC cautions this Court from expanding the Chabra jurisdiction to an impermissible boundary because the Court should always be vigilant in protecting the assets of innocent third parties. As a matter of general principle, Mr Sussex SC must be right. However, despite the most able submissions on the part of Mr Sussex SC, I am of the view that the Court looks at fundamental underlying rationale of the Chabra jurisdiction and guards against itself from construing the formulation of a legal test as if it is a statutory provision. Chabra jurisdiction develops as a matter of common law. The Court should restrain from construing judicial statements of principles of law as if they were statutory provisions.

28.  The ultimate and underlying objective is to analyse and determine whether there is good reason to suppose that the assets would be amenable to execution of a judgment against the CAD. In the present case, the PRC Judgment. I see no intellectual difficulties in appreciating that the enforcement of the PRC Judgment could well lead to the liquidation of the Defendant herein, and a liquidator may then be able to pursue claims against third parties, including procuring MMOGA to declare dividends or simply passing a resolution to wind up MMOGA and make distribution to its contributory, namely, the Defendant herein. These are all prospective claims, causes of action or obligations which liquidation or receivership, as proper legal process, could lead to assets amenable to an execution of the PRC Judgment. In my view, this is not an impermissible expansion of the second limb of the principle but rather a legitimate application of the same.

29.  If I am wrong on the above analysis and there is a need on the Court to extend the second limb of the principle further, I am happy to do it. Common law develops in order to achieve substantive justice. As a matter of principle, there is no reason why liquidation or receivership through which the assets of a wholly-owned subsidiary of a defendant could be taken control by a receiver or liquidator appointed against the defendant cannot be regarded as some “process” under the second limb of the principle.

30.  I agree with Deputy High Court Judge Saunders in Re Lau Yu [2018] HKCFI 1802 at §§107-111 when he said:

“107. Third, there is simply no suggestion, at this stage, that the corporate veil is being pierced. All that is being done at this stage is that the assets of APHL and APIL are sought to be protected in favour of creditors, who may ultimately be able to access those assets to satisfy Mr Lau’s debts. Even then, it will not be necessary to pierce the corporate veil.

108. If the share transfer is reversed, the liquidator becomes the sole shareholder in APIL. Clearly, the liquidator cannot then simply sell APIL’s assets to satisfy Mr Lau’s debts. But the liquidator can take steps, lawfully, to wind up APIL, and distribute the assets to those lawfully entitled to those assets or the funds arising from realisation.

109. This is noted in Gee, Commercial Injunctions, 6^th Edn, 2016, where it is said:

“Even if the company is not a nominee, the defendant has access to the company’s assets through distributions made to him as a shareholder or through placing the company in liquidation. The same might be done after judgment by a receiver appointed over the shares in aid of enforcement of the injunction and this route can be protected by a Mareva injunction.”

110. Of course, there may be others entitled to share in the distribution ahead of the liquidator, who is simply the shareholder. There may be creditors who have security over the assets. There may be creditors who have preference as a matter of law, such as the Inland Revenue Department or employees entitled to preference for wages. It will only be after a winding up, in accordance with law, and the lawful distribution of the proceeds of the liquidator’s realisation of APIL’s assets, that any surplus may be distributed to the shareholder, the Trustees, who may apply those funds in the satisfaction of Mr Lau’s creditors.

111. There being a lawful process, which does not involve the piercing of the corporate veil, by which the liquidator may ultimately access the assets of APIL and APHL for the benefit of Mr Lau’s creditors, I have no doubt at all that those assets should be secured to be available for the benefit of Mr Lau’s creditors.” (Emphasis added.)

31.  Further, it is well established that a receiver, as an officer of the Court, may be given wide powers to facilitate the enforcement of judgment by way of equitable execution. I agree that, in a loose sense, though receivers are part of the enforcement machinery as they aid execution, they, however, do not enforce the judgment for the judgment creditor. Receivers are not engaged in the enforcement of a judgment per se. (See: Sebastian Holdings v Sarek Holdings [2020] 97 WIR at §§127-132, 138 and 139 per Agyemang CJ).

32.  However, the exercise this Court is mandated to conduct is not an interpretation as to what amounts to execution and enforcement. The Court applies the ultimate test as state out above. In TMSF v. Merrill Lynch Bank & Trust Co (Cayman) Ltd [2012] 1 WLR 1721, the Privy Council held (at 1721F-G) that receivers may be appointed to exercise such powers or rights exercisable by the defendant for the purpose of recouping of assets which could be used to satisfy judgment against the defendant.

33.  In Joint Stock Co VTB Bank v. Skurikhin [2013] 2 All ER 418, Burton J held that Chabra jurisdiction may be invoked against certain non-cause of action subsidiaries on the basis that a receiver may take control over the defendant’s right to transfer assets under a trust to himself and thereby become the sole owner of such subsidiaries. At §41, Burton J said:-

“It is quite plain that, on the provisional findings of fact that I have been able to make on the evidence before me, if those facts remained the same when it came to enforcement, then the appointment of an equitable receiver would indeed fill the bill in that regard. Standing in the shoes of the defendant as being entitled to the assets of the Trusts, it could enforce those rights in respect of the shareholding of the Trusts and, hence, of D1 in the shareholding of D2 and D3. In this way the shareholding could be realised, whether by its voluntary winding up or otherwise, and, in addition, the debt owed by Miccros (also owned by the Trusts) can be repaid and appropriately applied to the assets of D1 and, hence, made available for satisfaction of any judgment” (emphasis added)

34.  Burton J expressly noted that the Chabra jurisdiction may be invoked where the receivers appointed over the shares held by the parent defendant could put the wholly-owned subsidiary into voluntary winding up.

35.  I agree with Mr Wong SC that in a case, such as the present one, one can readily imagine that a receiver may, when exercising its own professional judgment, decide to take over and/or vote the shares of the wholly-owned subsidiary in certain ways so as to achieve enforcement of the judgment against the parent defendant. For example, the receivers may appoint directors to cause the subsidiary to declare dividends to the parent defendant, or may put the subsidiary into voluntary liquidation such that surplus assets would go back to the parent defendant, qua contributory. I agree that there is no reason why the Chabra jurisdiction may not be invoked in such circumstances.

36.  Mr Wong SC also submitted that to confine the Chabra jurisdiction in such way as suggested by MMOGA is to defying the analysis endorsed by the English Court of Appeal in Lakatamia (supra.) In Lakatamia, Burton J in the court below at §19 held that:

“…in the event that a claimant, who has the benefit of a freezing order, becomes a judgment creditor, then in execution of the judgment he will be able to appoint a receiver, legal or equitable, of the interests of the judgment debtor in the companies which the judgment debtor controls, as here F3, F5 and IM3, and thus be able to execute against the assets of those three companies, being the shares in question in Vantage and Starbulk and the vessel, a right which should be protected by the freezing order.” (emphasis added)

37.  In other words, Lakatamia (supra.) is itself an authority demonstrating that a judgment against a CAD can be effectively executed against the assets of a NCAD by the appointment of receiver or liquidator.

38.  In PT Bayan Resource TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1, French CJ, Kiefel, Bell, Gageler and Gordon JJ at §§47 said:

“47. The actual holding in Cardile v LED Builders Pty Ltd illustrates that the prospective enforcement process that a court might protect by making a freezing order can be a process contingent on factors in addition to the outcome of a substantive proceeding in that court. The holding was that a freezing order can be made against a third party against whom no present cause of action exists and against whom no present proceeding has commenced. It is enough that some future legal process (which might be contingent, for example, on the appointment by another court of a liquidator or a trustee in bankruptcy) may be available pursuant to which the third party may be obliged to contribute to the funds of the judgment debtor to help satisfy the judgment against the judgment debtor.” (Emphasis added.)

39.  Further, at §§71-74, the same court said:

“71. Three aspects of this statement of principle may be noted here. First, their Honours expressed the principle as pertaining to the “general power of superior courts which is comprehended by the express grant in s23 of the Federal Court Act”, a power which their Honours described as “a broad one”.

72. Secondly, the statement in Cardile contemplates the making of a freezing order against a person against whom proceedings in the court are not pending. The principle is said to be protective of “some process, ultimately enforceable by the courts, [which] is or may be available to the judgment creditor as a consequence of a judgment” (Emphasis added.)

73. Thirdly, their Honours expressly recognised that, although “general power” was a broad own”

“orders made pursuant to [s 23 of the Federal Court Act] (and under the general power) must be capable of properly being seen as appropriate to the case in hand.”

74. The limit on the general power acknowledged in this passage is stated in terms which contemplate a judgment by a court as to what is “appropriate to the case in hand” rather than the mechanical application of a hard and fast rule.”

40.  Insofar as reliance is placed on the case of Ahmad Hamad Algosaibi and Brothers Company v Saad Investments Company Limited and Forty Three Others [2011] (1) CILR 178, I am of the view that Chadwick P’s reasoning at §43 sits well with the above analysis. At §43, Chadwick P. said:

“…It is not enough that the CAD could, if it chose, cause the assets held by the NCAD to be used to satisfy the judgment. It is necessary that the court be satisfied that there is a good reason to suppose either (a) that the CAD can be compelled (through some process of enforcement) to cause the assets held by the NCAD to be used for that purpose; or (b) that there is some other process of enforcement by which the claimant can obtain recourse to the assets held by the NCAD.” (Emphasis added.)

41.  In the present case, through a legal process, whether by way of liquidation, receivership, or as Mr Sussex SC suggested, the application of a charging order and an order for sale, the Plaintiff here can obtain recourse to the assets held by the NCAD, namely, MOOGA.

42.  It is not disputed that MMOGA has undistributed profits of EUR177.89 million (i.e. RMB 1.25 billion) which far exceeds the Judgment Sum (i.e. about HK$222.8 million). There are certainly legal processes through which the Plaintiff, as judgment creditor, can have resource to such assets in order to satisfy the Judgment Sum.

43.  Fundamentally, I am of the view that the underlying objective of the Chabra jurisdiction which developed as a matter of common law is to protect the administration of justice. Such protection necessarily involves, in a proper case, preservation of assets belonging to third parties to the principal litigation.

44.  In Convoy Collateral Ltd v Broad Idea International Ltd [2022] 2 WLR 703, Lord Leggatt JSC at §59 rightly observed that:

“59. The developments in the practice of granting injunctions described above – including the expansion of freezing injunctions far beyond their original confines and the creation of other new types of injunction – illustrate the ability of courts with equitable powers to modify existing practice where to do so accords with principle and is necessary to provide an effective remedy. Such flexibility is essential if the law and its procedures are to keep abreast of changes in society. Recent decades have seen fundamental changes in commercial and financial practices, driven in large part by the revolution in information technology. The legal development described above have been forged, often explicitly, in response to such changing circumstances.”

45.  This is what gives life to our common law. In §§84-85, Lord Leggatt JSC, in relation to the nature of Mareva injunction, said:

“84…It has been clear, at least since Mercedes Benz, that a freezing injunction is different in character. As Lord Mustill observed in the judgment of the Board in Mercedes Benz, at p 299B, “the Mareva injunction does not enforce anything, but merely prepares the ground for a possible execution by different means in the future”. Furthermore, the applicant “does not claim any interest in the assets and seeks an inhibition of dealings with them simply in order to keep them available for a possible future execution to satisfy an unconnected claim” (p 300F).

85. Lord Mustill elaborated on these points later in the judgment when he said, at p 203, that, if an application for a Mareva injunction succeeds:

“the relief granted bears no resemblance to an orthodox interlocutory injunction, which in a provisional and temporary way does seek to enforce rights, or to the kind of interim procedural measure which aims to make more effective the conduct of the action or matter in which the substantive rights of the plaintiff are ascertained. Nor does the Mareva injunction enforce the plaintiff’s rights even when a judgment has ascertained that they exist, for it merely ensures that once the mechanisms of enforcement are set in motion, there is something physically available upon which they can work.” (Emphasis added.)”

46.  I am of the view that one must not lose sight of what a Mareva injunction seeks to achieve. The same applies to the Court’s Chabra jurisdiction. At §§110 and 111, Lord Leggatt JSC further said:

“110. This reasoning involves an extended application of the enforcement principle. As discussed above, the enforcement principle justifies the grant of a freezing injunction when it is needed to ensure that assets against which a judgment could be enforced remain available to satisfy the judgment. It has been pointed out that this principle can in an expanded form apply to any conduct which would diminish the value of assets against which a judgment could potentially be enforced, even if that conduct does not involve dealing with those assets directly: see FM Capital Partners Ltd v Marino [2019] 1 WLR 1760, para.39. The prohibition in the standard form of freezing injunction against “diminishing the value of” the respondent’s assets has been interpreted in this way. Thus, in Lakatamia Shipping Co Ltd v Su [2015] 1 WLR 291 the English Court of Appeal held that, although assets of a company wholly owned and controlled by the defendant were not his assets for the purpose of such an injunction, the injunction restrained the defendant from procuring the company to dispose of its assets as this would diminish the value of his shareholding (which was an asset covered by the injunction).

111. There seems no reason in principle why the expanded form of the enforcement principle should not be applied in an appropriate case to assets held by a “non-cause of action defendant”, as it was in Gilfanov v Polyakov. The practical purpose of granting a freezing injunction against the company in that case was to restrain the third party to whom its shares had been transferred from procuring the disposal of the company’s assets and thereby diminishing the value of its shares (against which a future judgment could potentially be executed). There would not have been a need to grant an injunction against the company of the shares had remained in the possession of the defendants, as in that event the freezing injunction granted against them would have restrained them from procuring the company to dispose of its assets (thereby diminishing the value of the shares) and no purpose would have been served by granting in addition a freezing injunction against the company itself.”

47.  It is clear that in the present case, in any event, MMOGA could not have acted in such a way so as to diminish the value of the Defendant’s shares. In that sense, MMOGA is affected by the Post-Judgment Injunction as as it cannot diminish the value of the Defendant’s shares. I agree with Mr Wong SC for the Plaintiff that there is a present need for a Chabra injunction because the stance taken by MMOGA is that it is not in any way affected by the Post-Judgment Injunction and it is free to deal with its assets including the credit standing in its bank accounts in Hong Kong without reference to whether it would or would not have the effect of diminishing the value of the Defendant’s shares. The Court adopts a pragmatic and practical approach in these matters.

48.  In Motorola Solutions Inc v Hytera Communications Corp Ltd [2020] EWHC 980, Jacobs J. at §§97 and 98 rightly said:

“97. It is obviously the case that Motorola cannot simple execute its current judgment against the assets of Shortway, against whom there is no judgment or cause of action. However, there is clearly a route, as Mr. Sprange submitted, whereby such assets (or at least any surplus assets on a winding up) could in due course become available. As described in Gee paragraph 13-010:

“If the defendant is a shareholder in a private company and were left to deal with assets of the company this could affect the value of his shareholding and could diminish the value of his assets. This may justify an order requiring prior notice of dealing with the company’s assets or an injunction restraining dealings with the company’s assets, albeit that the company is a third party. Where the defendant owns 100 per cent of a company beneficially it might be that those assets are held by the company as a nominee for him because they have been acquired using the defendant’s money and there is a resulting trust. Each case is fact sensitive and may involve the drawing of negative inferences against the defendant and the third party. Even if the company is not a nominee, the defendant has access to the company’s assets through distributions made to him as a shareholder or through placing the company in liquidation. The same might be done after judgment by a receiver appointed over the shares in aid of enforcement of the judgment, and this route can be protected by a Mareva injunction.” (Emphasis supplied)

98. The potential availability of this route is also apparent from the judgment of the Court of Appeal in Lakatamia: see paragraph [37] of the judgment of Tomlinson LJ, (referring to the “shorthand” language of Burton J. quoted in paragraph [19]), and [52] (Rimer LJ). It is true that the appointment of receivers in the present case might be more complicated than in some cases, because there are two intermediary companies between Hytera China and Shortway. However, given that there is no dispute as to Hytera China’s ultimate ownership (via a chain of shareholdings) of Shortway, there is no difficulty in principle in envisaging the possibility of a number of recievers being appointed along the chain in aid of enforcement of Motorola’s judgment, with the consequence that ultimately Motorola would have access to Shortway’s surplus assets.” (Emphasis added.)

49.  It is true that the first instance decision in Motorola (supra) was overturned on appeal on the basis that there was insufficient evidence to justify an inference of risks of dissipation. However, I agree that the Court of Appeal decision in Motorola [2021] QB 744, did not touch upon the issue of whether the Chabra jurisdiction was improperly invoked against the non-cause-of-action defendants (which are indirect wholly owned subsidiaries of the cause-of-action defendants). All that Males LJ said at §80 was that he would reserve his opinion on the matter.

50.  In Cruz City 1 Mauritius Holdings v Unitech Ltd and others [2015] 1 All ER (Comm) 305, Males J (as he then was) at §9 envisaged the Chabra jurisdiction may be invoked to preserve assets which may be available to the judgment creditor “if necessary by the appointment of liquidator or receiver, by exercising the rights of the judgment debtor to compel the third party to disgorge property or otherwise contribute to the funds or property of the judgment creditor”.

51.  Mr Wong SC also referred this Court to a line of case in this jurisdiction in support of the proposition that in the case of a solvent 100% owned subsidiary, the appointment of liquidators or receivers are legitimate legal process which satisfy the second limb of Cardile. (See: Paloma Co Ltd v Capxon Electronic [2020] HKCFI 3050, Linda Chan J at §42; Pinpoint Multi-Strategy Master Fund v. Gangtai Group Co Ltd & Ors [2021] HKCFI 1011, Anthony Chan J at §47 and G v. X [2022] 3 HKC 625, Mimmie Chan J at §69.)

52.  Finally, although I agree that it is important that the case against the defendant is clearly formulated, and more so must the possible claim against a third party be clearly formulated. (See Barsa v Poole [2007] EWHC 3528 at §10), I am of the view that the Plaintiff has sufficiently identified the claims against the Defendant and the legal process, whether by liquidation or receivership, through which the assets of MMOGA could be made available for contribution to the satisfaction of the Judgment Sum.

53.  For all the reasons stated above, I am of the view that this Court does have jurisdiction and is permissible under the second limb of Cardile to grant and continue the Chabra injunction against MMOGA.

REAL RISK OF DISSIPATION

54.  There is no dispute there is a need for the Plaintiff to establish there is a real risk of dissipation on the part of MMOGA. The focus of inquiry should be on MMOGA’s conduct and its assets.

55.  In cases where there is substantial control by CAD over the assets in the name of the NCAD, it may be relevant to examine the conduct of the CAD to determine whether there is a risk of dissipation of NCAD’s assets. This is just plain common sense.

56.  More generally, it has been considered legitimate to look at the actions of the ultimate beneficial owners of a group of companies, or conduct in relation to holding company and subsidiary, notwithstanding the existence of separate legal personality. In ArcelorMittal USA LLC v Essar Steel Ltd [2019] EWHC 724 (Comm) Jacobs J. at §68 said:

“…When considering risk of dissipation, it is in my view legitimate to look at the actions of the ultimate beneficial owners of a group of companies, or conduct in relation to holding company and subsidiary, notwithstanding the existence of separate legal personality. The straightforward reason for this is that if there is solid evidence that the owners or controllers of company A have dissipated its assets, that is highly material to the question of whether there is a risk of dissipation of the assets of company B which is within the same ownership or control. Other evidence in the case reinforces the conclusion that, at least in the present context of considering the risk of dissipation, the existence of separate legal personality does not matter…”

57.  The ultimate question is whether there is a solid evidential basis for concluding that there is a real risk of unjustified dissipation of assets by a defendant (as opposed to the actual acts of dissipation). That question is to be answered by examining the evidence holistically and involves a predictive and evaluative judgment: see Convoy Collateral Limited v. Cho Kwai Chee [2020] 6 HKC 81 at §§37, 40 and 53 per Lam VP.

58.  As regards the failure to give disclosure of assets:-

(1)  In appropriate circumstances, failure to give proper disclosure of assets under a Court order is indicative of risk of dissipation: see Gee on Commercial Injunctions 7^th Edition at §12-041; China Citic Bank Corporation Limited (Quanzhou Branch) [2022] HKCFI 882 at §37.

(2)  In Beijing Renji Real Estate Development Group Co Ltd v Zhu Min [2022] 4 HKC 116 at §§70-71, the Court had regard to the defendant’s failure to comply with the asset disclosure requirement in the Mainland pursuant to the judgment in the PRC.

59.  However, I am of the view that the mere fact that a judgment debtor has the ability to repay but chooses not to satisfy a judgment debt is per se not sufficient to give rise to an inference that there is a real risk of dissipation. In Les Ambassadeurs Club Ltd v Yu [2022] 4 WLR 1, Andrews LJ at §§14-19 and 43 said:

“14. The purpose of a freezing injunction is to ensure that a judgment in the applicant’s favour will not go unsatisfied by reason of assets that would otherwise be available to satisfy its being dealt with in a manner that will make them unavailable by the time the judgment comes to be enforced. It is designed to protect against the frustration of the process of the court by depriving the claimant of the fruits of any judgment obtained in his favour. It is not intended as a safeguard against insolvency, nor as a means of providing security for a claim, however strong that claim may be and however large a sum of money may be involved. Nor is it just another standard means of securing enforcement of a judgment in favour of the applicant, like a charging order or third party debt order. It is a potent weapon in the armoury available for dealing with those individuals and companies who may seek to make themselves judgment-proof.

15. All these points emerge clearly from the seminal judgment of the Court of Appeal, delivered by Kerr LJ, in Ninemia Maritime Corpn v Trave Schiffahrstgesekkschaft mbH & Co KG (“The Niedersachsen”) [1983] 1 WLR 1412. At p 1422, addressing the requirement to show a real risk of dissipation, Kerr LJ rejected the suggestion that the claimant needed to show “nefarious intent”, in the sense that the defendant would deal with his assets with the object, and not just the effect, of putting them out of the claimant’s reach. He said”

“In our view the test is whether…the court concludes, on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiff would remain unsatisfied.”

16. In view of the drastic interference with a person’s right to do as they please with their own property that a freezing injunction entails, (quite apart from the reputational damage that it may cause), the courts must remain vigilant to ensure that such orders will only be granted in cases in which the evidence suffices to establish that there is a real risk of the judgment going unsatisfied by reason of what Gloster LJ in Holyoake v Candy [2017] EWCA Civ 92; [2018] Ch 297 (“Holyoake”) elegantly termed “unjustified dissipation”, and where it is just and convenient to make the order.

17. It makes no difference in terms of the risk that must be established whether the freezing injunction is sought before or after judgment, though post-judgment injunctions may be easier in practice to obtain. The policy of the law is to enforce judgments, and for that reason it may be right that when a judgment creditor has satisfied the court there is a real risk of dissipation, it would require particularly strong grounds for refusing to grant him a freezing order on the basis of justice and convenience, as Teare J suggested in Great Station Properties SA v UMS Holding Ltd [2017] EWHC 3330 (Comm) at [63].

18. However, I respectfully disagree with the suggestion made by Leggatt J in Distributori Automatici Italia SpA v Holford General Trading Co Ltd [1985] 1 WLR 1066, 1073, and cited with apparent approval by Teare J in that same paragraph, that it may be easier to infer a risk of dissipation in a post-judgment case. An adverse judgment may provide more of an incentive to the defendant to put his assets beyond the reach of the claimant than a mere claim, but that tells one nothing about whether the evidence establishes a real risk that he may do it.

19. In this context, there is an important distinction to be drawn between a defendant who can pay but refuses to pay his debts until he is forced to do so, and a defendant who is so determined not to pay that he would take active steps to frustrate the recovery of sums due to his creditors by transferring or concealing assets or by some other form of unjustified dissipation. In order to avoid the undesirable situation in which, as Gloster LJ put it in Holyoake at para 58 “the nuclear remedy of a freezing order would…become a commonplace threat”, there must be cogent evidence from which it can at least be inferred that the defendant falls into the latter category. The distinction is one which the Judge had at the forefront of his mind when he refused to make the freezing order in the present case.

43. Several of the factors identified under this heading, the lack of engagement with the proceedings, the lengthy period of lack of contact with the claimant, and the repeated and continuing acts of non-payment were, as the Judge accepted, examples of behaviour indicative of a risk of dissipation, but could also be the behaviour of someone who does not want to pay until he is made to pay (by the process of enforcement.” (Emphasis added.)

60.  I am of the view that the above reasoning of Andrews LJ must be correct. First, an applicant for a Mareva injunction must demonstrate, with cogent evidence, the existence of a real risk of dissipation. The fact that the applicant has obtained a judgment or an order does not lower the requisite threshold or it is somehow easier to infer a real risk of dissipation in a post-judgment scenario. Secondly, it is not right to infer a real risk of dissipation simply because a defendant is able to pay but chooses not to pay a judgment debt. Such conduct, per se, cannot amount to a real risk of dissipation to justify a post-judgment injunction for otherwise courts in this jurisdiction are likely to face with a long queue of post-judgment Mareva injunction applications.

61.  Mr Wong SC for the Plaintiff relied on the case of Beijing Renji Real Estate Development Group Co Ltd v Zhu Min (supra) where G Lam JA at §69 said:

“69. At the hearing before me, 4 of the 5 matters are relied upon by the plaintiff. First, the defendant has refused to satisfy the BHPC Judgment when he has the apparent ability to do so. This is in my view a significant factor. The defendant had fully taken part in the proceedings in both levels of the Beijing courts and had then applied unsuccessfully to the Supreme People’s Court for a retrial. There is now a judgment of a court of competent jurisdiction against him, which has been outstanding for a long time. Even assuming the defendant is still taking steps to seek a retrial, that does not operate to suspend the judgment. There is no evidence of any concern that the plaintiff would not be good for the money if the defendant pays the judgment debt and later succeeds in overturning the judgment. By refusing to satisfy the judgment or at least to offer means of securing the plaintiff’s rights under the judgment, he has demonstrated a complete disregard of his legal obligations in the Mainland. The defendant’s explanation that because he considers the judgment ‘wrong and unfair’, he has decided he will not voluntarily comply with it, it is not only not an excuse, but heightens the concern that he will do whatever he can to thwart its enforcement. The courts, for good reasons, are more ready to grant post-judgment Mareva injunctions than before judgment (see e.g. China Citic Bank Corporation Ltd (Quanzhou Branch) v Li Kwan Chun [2018] HKCFI 1800, [2018] HKCU 2562, §§26-32). The fact that the judgment here is not that of a Hong Kong court does not make this approach entirely irrelevant.” (Emphasis added.)

62.  First, G Lam JA was not there saying that the fact that a judgment debtor can pay but chooses not to pay a judgment debt per se is sufficient to satisfy the legal test of a real risk of dissipation. Secondly, in that case, the defendant considered the Mainland judgment wrong and unfair. In the present case, the Defendant herein consented to the judgment in the Mainland. Thirdly, Andrew LJ’s reasoning in Les Ambassadeurs Club Ltd v Yu was not cited for the consideration of G Lam JA.

63.  Further, in Masri v Consolidated Contractors International (UK) Ltd and others (No.2) [2009] QB 450, Lawrence Collins LJ at §131 said:

“131. The judge relied on the fact that the judgment debt had not been paid. But it is a necessary condition of a post-judgment freezing order being sought that the judgment will not have been paid. It does not follow from non-payment that a defendant intends to dissipate its assets.”

64.  However, Mr Wong SC is right that in relation to the approach of the Court at an inter-partes hearing to consider whether or not to continue a Mareva injunction granted on ex parte basis, the Court should consider the whole of the evidence at the inter-partes hearing in deciding whether to maintain the order previously made on ex parte basis. (See: China CITIC Bank International Limited v Goldin Investment Intermediary Limited and Others [2022] HKCFI 882, at §38 per B Chu J.)

65.  In view of the all the evidence before this Court, I am of the view that there is a real risk of dissipation on the part of MMOGA.

66.  First, I agree that a risk of dissipation can be inferred from the unaudited accounting evidence filed by MMOGA concerning its operations.

67.  The accounting figures disclosed by MMOGA are inconsistent with the accounting figures of the entire Whole Easy Group and there is not satisfactory explanation offered. MMOGA has disclosed a one-page cash flow statement (“MMOGA Cash Flow Statement”) concerning the period from January to September 2022. It is shown that:-

(1)  MMOGA has a “total cash inflow” (现金流入小计) of about RMB 214,317,518.86.

(2)  MMOGA has a “total cash outflow” (现金流出小计) of about RMB 213,599,580.20.

68.  However, MMOGA’s total cash inflow and outflow turn out to be significantly higher than those of the entire Whole Easy Group. According to the accounts of the entire Whole Easy Group published on 28 October 2022 (“Whole Easy Accounts”), from January to September 2022:-

(1)  The entire Whole Easy Group only has a “total cash inflow” (经营活动现金流入小计) of RMB 176,195,482.78 .

(2)  The entire Whole Easy Group only has a “total cash outflow” (经营活动现金流出小计) of about RMB 165,561,371.10.

69.  The same applies to the asset position of MMOGA as of 30 September 2022:-

(1)  According to unaudited balance sheet of MMOGA September 2022, MMOGA has “total liquid assets” (流动资产合计) of around RMB 1,242,321,461.62 .

(2)  According to the Whole Easy Accounts, the “total liquid assets” (流动资产合计) of the Whole Easy Group was RMB 329,617,412.24.

70.  Mr Wong SC submitted that as a member of the Whole Easy Group, MMOGA’s cashflow activities and assets’ position must be subsumed under that of the Group. There is no conceivable reason why MMOGA’s cashflow activities and assets’ position could be larger than that of the Whole Easy Group as a whole.

71.  While there could be legitimate explanations, for instance, set off by losing operations of other subsidiaries. However, no proper explanation was proffered.

72.  Significantly, I agree that what Mr Wang, the sole director of MMOGA and supervisor of the Defendant, has said on oath is inconsistent with the documentary evidence:

(1)  At §10 of Wang 2^nd Affirmation, Mr Wang reiterated his earlier position that MMOGA would need at least EUR 11,382,000 per month (i.e. about RMB79.8 million) to operate. The figure was supported by a one-page cash-flow analysis exhibited to the 1^st Affirmation of Wang Tao.

(2)  However, this figure is inconsistent with the Whole Easy Account which shows that the Whole Easy Group only has a total cash outflow of RMB 165,561,371.10 for 9 months from January to September 2022.

(3)  Further, what Mr Wang said to be the sum needed for the operation of MMOGA (i.e. about RMB79.8 million per month) far exceeds the figures in MMOGA Cash Flow Statement, which shows that MMOGA’s “total cash outflow” (现金流出小计) for 9 months between January and September 2022 was about RMB 213,599,580.20 (i.e. about RMB 23.7 million per month).

(4)  As to the above inconsistency, Mr Wang’s only “explanation” is that he has been advised by MMOGA’s accountants that as a matter of accounting principle, MMOGA does not book any prepayments to its suppliers as cash outflows; and when sales are received from customers, MMOGA would book the sale proceeds as cash inflows, after the sale proceeds are netted off against such prepayments: see Wang 2^nd §10. I agree with Mr Wong SC that there is no evidence to substantiate the alleged accounting principle.

73.  It is also important to note that this Court did direct MMOGA to produce evidence in relation to its up-to-date assets and liabilities position together with documentary evidence in relation to its monthly operation and expenses requirement. MMOGA has not done so despite its application for variation of the terms of the Chabra injunction.

74.  Thirdly, it is equally important that:-

(1)  Following the grant of the PRC Judgment in December 2021, MMOGA has caused a staggering sum of almost RMB 200 million to be incurred as “other cash outflow relating to operating activities” (经营活动现金流出小计) from January to September 2022.

(2)  However, such payment cannot be explained by any increase in MMOGA’s operating activities and is reflective of actual dissipations on MMOGA’s part. In particular:-

(1)  As the Whole Easy Accounts reveals, from January to September 2021, (a) the “cash inflow relating to sales” (销售商品、提供劳务收到的现金) of the Whole Easy Group was about RMB 178,422,746.51, and (b) the “other cash outflow relating to operating activities” (经营活动现金流出小计) of the Whole Easy Group was about RMB 52,168,114.85.

(2)  As the MMOGA Cash Flow Statement shows, from January to September 2022, (a) the “cash inflow relating to sales” (销售商品、提供劳务收到的现金) only slightly increased to RMB 173,654,935.56, but (b) the “other cash outflow relating to operating activities” (经营活动现金流出小计) increased close to 4-fold to RMB 190,194,377.53.

(3)  There is no explanation for the sudden and drastic increase of cash outflow in 2022, which coincidentally took place after the grant of the PRC Judgment in December 2021.

(4)  In the absence of any proper explanation from MMOGA of such sudden and drastic increase of cash outflow, I agree that the reasonable inference is that MMOGA has been taking steps to dissipating its assets.

75.  Fourthly, it is also inexplicable as to why MMOGA has chosen not to disclose essential documents showing that it has no other assets available (e.g. bank balances in jurisdiction outside Hong Kong) to support its business operation. Mr Wong SC submitted that a reasonable inference is that MMOGA opportunistically seeks to try its luck to vary the Chabra Injunction to allow it to spend up to EUR 11,382,000 per month, such that it can completely defeat the purpose and efficacy of the Chabra Injunction.

76.  Fifthly, this Court can legitimately take into account the conduct of the sole director of MMOGA, Mr Wang who is also a supervisor of the Defendant. He is the supervisor (监事) of the Defendant. Pursuant to Article 53 of the PRC Company law as well as Article 33 of the Defendant’s Articles of Association, as supervisor, Mr Wang was under the duty and power to supervise the Defendant’s management personnel to ensure that they comply with the law and to remove them when they fail to do so (对执行董事、高级管理人员执行公司职务的行为进行监督，对违反法律、行政法规、公司章程或者股东决定的执行董事、高级管理人员提出罢免的建议). The conduct of Mr Wang is relevant to the Court’s assessment on the risk of dissipation on the part of MMOGA.

77.  I agree that Mr Wang must be privy to and responsible for the affairs of the Defendant. However, he has not explained in evidence why, in breach of his duty as supervisor of the Defednant, he has hitherto permitted the Defendant or its management personnel to conduct itself in a way that demonstrates a complete disregard of Mainland law.

78.  Mr Wong SC is right that a reasonable inference is that Mr Wang himself approved of the Defendant’s conduct which reveals an unanswerable case of risk of dissipation. Leaving MMOGA to the control of Wang would give rise to a risk of dissipation on its part.

79.  It is also clear from the evidence that Mr Wang acts in accordance with the instructions of Whole Easy, which is also judgment debtor under the PRC Judgment):-

(1)  According to the “关于汪涛先生工作职务调整的公告” published by Whole Easy on 22 February 2019, Mr Wang resigned as a director and deputy general manager of Whole Easy in order to better accommodate the business needs and development of Whole Easy by focusing on his duties with MMOGA.

(2)  Subsequently, on 28 April 2019, Mr Wang was appointed as a director for MMOGA.

80.  Given that Mr Wang acts according to the instructions of Whole Easy, and Whole Easy has similarly refused to satisfy the PRC Judgment and disregarded its legal obligations in the PRC in the same way as the Defendant, I agree that there is a real risk of dissipation on MMOGA’s part to dissipate its assets to put the assets out of the reach of the Plaintiff.

81.  Indeed, Mr Wang, as the sole director of MMOGA, has not offered any explanation as to why with such a high level of undistributed profits, about 5 times of the Judgment Sum, no resolution was passed by the board of MMOGA to distribute the same to the Defendant so that it can satisfy the PRC Judgment.

82.  Finally, this Court also takes into account Mr Wong SC’s submissions in relation to the Defendant’s deliberate refusal and failure to satisfy any part of the PRC Judgment, despite its apparent ability to do so and its breach of disclosure orders of the Mainland courts. In view of the fact that the Defendant is the 100% shareholder of MMOGA and as such exercises substantial control over its assets, the said conduct on the part of the Defendant to which Mr Wang is the supervisor, in my view, gives rise to a real risk of dissipation on the part of MMOGA.

83.  Taking into account all of the above matters into consideration, I am of the view that the Plaintiff has established a real risk of dissipation vis-à-vis MMOGA.

DISPOSITION

84.  For all the reasons stated above, I make an order in terms of paragraphs 1-7 of the Plaintiff’s Summons dated 9 November 2022 save that I revise the amount of individual value in paragraph 4 to HK$100,000 and the number of days in paragraph 5 to 14 days. I am of the view that ancillary disclosure order should be granted to give effect to the Chabra injunction against MMOGA.

85.  As to MMOGA’s application for variation, it is up to MMOGA to properly put forward an application with supporting evidence. The Court will deal with it as and when such application is made.

86.  As far as costs is concerned, I make a costs order nisi that the Plaintiff is entitled to the costs of and occasioned by its application for a Chabra injunction against MMOGA, to be taxed if not agreed, on a party to party basis, with a certificate for two counsel. The costs order nisi will be made absolute in 14 days from the date of this judgment unless an application is taken out to vary the same within the 14-days period.

87.  Finally, it remains for me to thank Mr Wong SC, Mr Lai and Mr Liu for the Plaintiff and Mr Sussex SC and Mr Chan for MMOGA for their most helpful assistance.