FUNG SHING CHUNG v. CHOI KING HUNG

HCMP 2129/2024

[2025] HKCFI 5685

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2129 OF 2024

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J U D G M E N T

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INTRODUCTION

1.  This is the plaintiff’s application to enforce a charging order over the securities owned by the defendant and held in the securities account(s)  maintained by the defendant with Henik Securities Limited (“Henik”), namely:

(1)  12,524,000 shares in Hans Energy Company Limited (“Hans Limited”);

(2)  16,125 shares in Wai Chun Group Holdings Limited;

(3)  34,400 shares in Green Economy Development Limited; and

(4)  5,000 shares in North Asia Strategic Holdings Limited.

(collectively, “the Shares”)

BACKGROUND

2.  The following background is partly adopted from the plaintiff’s skeleton submissions.

3.  On 5 December 2018, the plaintiff commenced an action HCA 2860/2018 (“the HC Action”)  against the defendant for repayment of a loan in the sum of US$1,028,053.00 together with interest and costs.

4.  On 8 April 2024, the plaintiff obtained Judgment against the defendant in the HC Action (“the HC Action Judgment”), pursuant to which the defendant was obliged to pay the plaintiff, inter alia, the sum of US$1,028,053.00 (or its Hong Kong dollar equivalent at the time of payment) together with interests on the said sum at the rate of 5% per annum from the date of the writ (i.e. 5 December 2018)  up to the date of the HC Action Judgment (i.e. 8 April 2024)  and thereafter at judgment rate until the date of payment.

5.  To enforce the HC Action Judgment against the defendant, the plaintiff obtained:

(1)  a Garnishee Order Absolute dated 4 June 2024 whereby Henik has been ordered to pay forthwith to the plaintiff the debt due from Henik to the defendant;

(2)  a Charging Order Absolute dated 12 September 2024 imposing a charge on the legal and beneficial interest of the defendant in the Shares (“the Charging Order Absolute”).

6.  By a letter dated 17 September 2024, Lennon and Lawyers, (i.e. the plaintiff’s solicitors)  (“Lennon”)  served the Charging Order Absolute on Henik, and demanded the latter to “pay the sale proceeds of the 4 shares as stipulated in the Order without delay”.

7.  On around 20 September 2024, Lennon received a call from a Mr William Wong of Henik, who stated that since the shares in Hans Limited had a very low daily transaction volume in the stock market, and the defendant was holding quite a large amount of such shares, it would take a long time for Henik to sell such shares.  In reply, the Lennon by letter dated 20 September 2024 reminded Henik to keep and provide Lennon with the record of every sale of the Shares, as well as to pay over the sale proceeds to them.

8.  On around 25 September 2024, Lennon received another telephone call from a staff of Henik who mentioned about the difficulties in setting a selling price for the shares in Hans Limited.  On the same day, Lennon replied by letter which stated that:

“We write further to our letter dated 20 September 2024 and understand that you are selling the Stocks held by you which are subject to the Garnishee and Charing (sic)  Orders (as defined in our letter dated 20 September 2024).

As to the [shares in Hans Energy Company Limited], we understand from your Mr. William Wong that the liquidity of the stocks are rather restricted in that the daily sales volume are not high […].  In view of such circumstances, please kindly proceed to sell the [said] stocks at such price for such possible lots in the market everyday with a view to sell all the stocks the soonest possible before accounting and paying the sale proceeds to us.”

(emphasis added)

9.  Henik had subsequently sold most of the Shares.  By 30 September 2024, out of the shares in the 4 companies mentioned in [1] above, there were only 11,360,000 shares in Hans Limited which remained unsold.

10.  By this action which was commenced by Originating Summons filed on 23 October 2024, the plaintiff seeks an Order for Sale of the Shares[1].

11.  On the following day, the plaintiff filed a Notice of Appointment to Hear Originating Summons.  The matter was fixed to be heard on 17 January 2025 before Master Dick Ho.

12.  On 17 January 2025, the learned Master gave certain usual directions for the filing of evidence, and adjourned the matter for a second call-over hearing to be held on 2 May 2025.

13.  On 4 June 2025, this action came before Ng J for a directions hearing.  Upon the defendant’s request, his Lordship adjourned the matter for substantive argument.  His Lordship further directed that the defendant shall lodge and serve written submissions in opposition to the action by 18 June 2025.

14.  The matter was subsequently fixed to be heard by this Court on 8 October 2025. 

THE DEFENDANT’S APPLICATION FOR ADJOURNMENT

15.  The defendant had all along been acting in person in this action, until 6 October 2025 when his solicitors, Messrs. Choy Yung & Co, filed a Notice to Act.

16.  The defendant also instructed counsel, Ms Cheryl Lam, at last minute to appear at the substantive hearing on 8 October 2025 on his behalf. 

17.  At the beginning of the substantive hearing, Ms Lam applied to have the hearing adjourned for 8 – 12 weeks.  In support of this application, it was submitted that:

(1)  Having lost the HC Action trial, the defendant had lost faith in lawyers;

(2)  The defendant had only sought legal advice from lawyers again within 3 months before the substantive hearing on 8 October 2025;

(3)  The defendant was minded to appeal against the HC Action Judgment.

18.  The application for adjournment had been dismissed right away at the hearing for the following reasons:

(1)  The present action was commenced in October 2024, and the last call-over hearing was held on 4 June 2025.  As the procedural history shows, there had been ample time for the defendant to seek legal advice;

(2)  It is not open to the defendant to complain that it was unfair to him that the adjournment was not granted, for he only had himself to blame not to engage solicitors earlier.  Indeed, he had been directed by Ng J to lodge and serve submissions by 18 June 2025 but he simply ignored such a direction.

THE DEFENDANT’S ARGUMENTS

19.  It was argued on behalf of the defendant[2] that the plaintiff’s application for an order for sale should be dismissed because:

(1)  Lennon had asked Henik to sell the Shares even before an order for sale had been granted by the Court;

(2)  The affirmations filed in support of the action herein were all made by a solicitor of Lennon, rather than by the plaintiff himself.  As the contents of such affirmations are disputed, they should not be permitted to be relied on.

DISCUSSION

20.  Pursuant to Order 50 rule 9A of the Rules of the High Court (“RHC”), an application for an order for sale to enforce a charging order should be brought by originating summons pursuant to Order 88 of the RHC.

21.  This procedure has been followed herein, and I am satisfied that the other requirements imposed by virtue of Order 88 rule 5A(2)  have been complied with.  It is not contended otherwise anyway by the defendant.

22.  Since the defendant has failed to satisfy the HC Action Judgment, I consider that prima facie it is just to grant the order for sale sought by the plaintiff, save that the order should only cover the shares which are yet to be sold.

23.  In relation to the defendant’s arguments, with respect, they are totally without merits for the purpose of resisting this application:

(1)  While I am of the view that it was pre-mature on 25 September 2024 for Lennon to request Henik to sell the Shares “everyday with a view to sell all the stocks the soonest possible” when the plaintiff was yet to obtain an order for sale, I do not think this would amount to a valid ground to resist the present application as far as the unsold shares are concerned;

(2)  Although the supporting affirmations herein were indeed made by the plaintiff’s solicitor rather than the plaintiff himself, it should be noted that the matters contained were all within the knowledge of the solicitor.  They were largely about the procedural history of the case which had all along been handled by the same solicitor and are indisputable.  Insofar as it is alleged that there are factual matters under dispute, they relate to the question of whether Lennon had instructed Henik to sell the Shares by its letter dated 25 September 2024.  That is not a matter which is within the personal knowledge of the plaintiff, and is, as discussed above, irrelevant anyway. 

ORDER

24.  I therefore order that the 11,360,000 shares in Hans Energy Company Limited (or any part thereof which remains unsold)  shall be sold, and the net sale proceeds thereof shall be applied in discharge of what shall be due to the plaintiff by the defendant pursuant to the HC Action Judgment (including costs)[3]. Any surplus thereof shall be paid to the defendant.  Liberty to apply.

COSTS

25.  There is no reason why costs should not follow the event.

26.  The plaintiff asked for indemnity costs against the defendant.  On my part, on a preliminary basis, I take the view that there is no special or unusual feature in the present case which would justify such an order.  Even if it may be said that the defendant’s litigation conduct in resisting the present application is something which the Court should take into account, this factor would be counter-balanced by Lennon’s conduct in prematurely demanding Henik to sell the Shares. 

27.  I therefore make a costs order nisi that the plaintiff’s costs shall be borne by the defendant and that such costs shall be assessed on party and party basis.

28.  The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper)  within 14 days hereof.

29.  The plaintiff’s costs shall be summarily assessed in lieu of taxation.  The plaintiff has lodged his statement of costs dated 6 October 2025.  Unless any application for variation of the aforesaid costs order nisi is made within time, the defendant shall lodge and serve his statement of objection within 7 days after the expiry of the said 14-day period.  Summary assessment of the costs of the action will be conducted on paper (no matter whether any statement of objection is lodged by the defendant within time)  thereafter.  The costs assessed shall be paid by the defendant within 14 days after assessment.