HCA 1657/2022
[2025] HKCFI 4941
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1657 OF 2022
____________
BETWEEN
WANG WEIQING
Plaintiff
and
ZHUO YIHAO (卓一灝)
1st Defendant
AN UNKNOWN PERSON OR PERSONS WHO HAS ACCESS TO OR OPERATES THE ADDRESSES AS PER PART 2 OF SCHEDULE 1 OF THE INDORSEMENT OF CLAIM
2nd Defendant
NEST SERVICES LIMITED
3rd Defendant
____________
Before:
Deputy High Court Judge MC Law, SC in Chambers (Open to Public)
Date of Hearing:
24 April 2024 and 19-20 September 2024
Date of Decision:
17 October 2025
____________
DECISION
____________
A. Introduction
1. This judgment relates to various summonses taken out by the Plaintiff for, inter alia , the continuation of the worldwide Mareva injunction and proprietary injunction that he obtained on an ex parte basis in respect of certain cryptocurrency and the joinder of certain parties in respect of the cryptocurrency exchange platform known as Binance (“Binance” ).
B. Factual background
B1. The Plaintiff and his Wallets
2. The Plaintiff is a Mainland Chinese holding a Vanuatu passport.[1] In the Writ of Summons, the Plaintiff provides a correspondence address in Portugal.
3. The Plaintiff is the owner of various cryptocurrencies, ranging from USDT, APECoin, ETH, DOT Polkadot and TRX. The Plaintiff, like other owners of cryptocurrencies, stores his cryptocurrencies in wallets. These wallets are essentially computer accounts. Each wallet would be identified with a “wallet address”. The Plaintiff’s wallets (“Wallets” ) involved in the theft and their corresponding addresses are as follows:-
(1) Ox2f525ac63d8ba 9d7b3ce4b 1 6b639b3d 1 2b7 c32el (the (“MetaMask Wallet” );
(2) 0xf75f024eba7a68fc2c1aab6967f0aa93e6a25a68 (the “Trust Wallet Address 2” );
(3) TFjG8QIDB2aWVtyLVsnTrJBK5cK4ddAYGi (the “Trust Wallet Address 3 Blockchain 1” ); and
(4) JJvBeaZLr93JaUAaVTjAt2A77kSVi8VoS33cnGeyKesgS (the “Trust Wallet Address 3 Blockchain 2” ).
B2. Discovery of the Theft
4. The Plaintiff claims that he was a victim of fraud when his wallets were hacked / that the key to the Wallets was stolen.
5. The Plaintiff engaged UDomain Web Holsing Company Ltd (“UDomain” ), a crypto-asset security company, to monitor the activities of his Wallets. In support of the Plaintiff’s ex parte application, the Plaintiff relied upon the Affirmation of Mr Leung Tsz King (“Leung” ) dated 25 November 2022 (“Leung’s Affirmation” ). Leung was at all material times a business analyst employed by UDomain and was responsible for monitoring the Wallets in question.
6. At around 8.40 am on 14 November 2022, UDomain’s monitoring system detected 7 transactions (“Transactions” ) from the Plaintiff’s Wallets whereby cryptocurrencies held therein were transferred to various third-party addresses (“Recipient Addresses” ). It is the Plaintiff’s case that cryptocurrencies that were transferred out of the Wallets were in the sum of around HK$112,879,805.4 in total.
7. Following the alert, Leung immediately contacted the Plaintiff, who confirmed that he did not execute or authorize any of the Transactions. The Plaintiff also told Leung that he did not recognise any of the Recipient Addresses to which the cryptocurrencies in his Wallets were sent.
8. The Plaintiff noted that the 1st Defendant, his assistant in Hong Kong, had access to the Wallets. After the discovery of the theft, the Plaintiff did try to contact the 1st Defendant but to no avail. The Plaintiff suspected the 1st Defendant as the perpetrator of the theft, although UDomain has not ruled out the possibility of hacking pending further investigation. In the circumstances, the Plaintiff commenced this Action against the 1st Defendant.
B3. Subsequent steps
9. On 22 November 2022, UDomain reported the theft to the Hong Kong Police.
10. After the discovery of the theft, UDomain took steps to trace the stolen cryptocurrencies. According to Leung, the tracing exercise is possible, as the blockchain is a ledger system, and every transaction of address will be recorded in the blockchain. The staff in UDomain entered the Recipient Addresses of the Transactions in the blockchain to trace the flow of the cryptocurrencies.
11. There are 7 Transactions in question. For present purposes, it is pertinent to note what is described as “Transaction 5”. It involved the transfer of 7,482,876,9814 USDT out from Trust Wallet Address 3 Blockchain 1. Then, there were 4 further layers of transfer. Eventually an aggregate of 5,918,806.41 USDT were transferred to the TV6 Address (as defined in §25 below).
12. According to the Plaintiff’s evidence, as of 25 November 2022, there was a total of 5,918,806,406 USDT in the TV6 Address, equivalent to about HK$46,166,689.97.
B4. Exchange between the Plaintiff’s legal representatives and Binance before the ex parte application
13. Following the tracing exercise, it is Leung’s evidence that UDomain communicated with various cryptocurrencies platforms, including Tether (the operator of USDT) and Binance, a cryptocurrency exchange platform. At this juncture, it is pertinent to note that, in Leung’s Affirmation, he did not set out any details or particulars of any such communication. Neither did he exhibit any exchange of correspondence between the Plaintiff’s camp on the one hand and Binance on the other.
14. As a matter of fact, from 20 November 2022 onwards, there have been exchange of emails between Jacque Law LLC (“Jacque Law” ), a law firm in Singapore acting for the Plaintiff and the legal department of Binance. The relevant emails may be summarized as follows.
15. On 20 November 2022 (12:00 pm), Jacque Law sent to Binance an email notifying that they acted for a client whose crypto wallet had been hacked. They stated that a significant amount of hacked DOT had been deposited into a Binance wallet. They also provided the TXID (i.e. the transaction ID) in respect of the deposit transactions. In the said email, Jacque Law requested Binance to take action immediately to freeze the movement of the funds in the relevant account.
16. On 21 November 2022 (11.25 am), Binance replied to Jacque Law by email, which reads, inter alia , as follows:-
“3. Nevertheless, as a matter of courtesy, we placed a temporary hold yesterday afternoon on the identified user account relating to the transactions IDs for a period of 7 days. This is solely to allow time for law enforcement agencies to make a direct official request for assistance or for your client to secure a court freezing order. After 7 days, Binance will only consider extending the freeze if law enforcement agencies have reached out to us, or if legal proceedings have been commenced and if Binance itself is not named as a defendant.
4. If the relevant user requests an explanation as to why their account is frozen, this can place Binance Operators in a very difficult position. For this reason, it is a condition of any voluntary freeze that Binance may inform the User of your allegations and (if felt appropriate) to supply them with a copy of your correspondence. Please let us know if this is acceptable to your client. …”
17. On 22 November 2022 (at 1.19 am), Jacque Law wrote back to Binance. In this email:-
(1) Jacque Law identified the Plaintiff (a Chinese individual holding a Cambodian passport) as the victim; and informed Binance that a police report has been made in Hong Kong on 21 November 2022 (sic).
(2) In this email, Jacque Law stated that the Plaintiff had identified certain amounts of USDT had been stolen and deposited into the TV6 Address, being a Binance TRC hot wallet. As such, Jacque Law requested Binance to freeze, inter alia , the TV6 Address.
18. On 22 November 2022 (12.24 pm), Binance reverted to Jacque Law, stating that the freezing of the TV6 Address was not possible, for it was Binance TRX pooled funds hot wallet address; and the address did not belong to and/or was not associated with any particular user. In the said email, Binance explained the operation of the hot wallet address and why it was not possible to freeze the hot wallet address as follows:-
“When a Binance user deposits cryptoassets into their Binance account, they are initially transferred to a deposit address that is linked / assigned to their Binance account. Once the assets are transferred to the user’s deposit address, Binance has control of these assets and an equivalent amount to the deposited assets is credited to the user’s Binance account via a ledger. A user’s entitlement to cryptoassets as well as transactions involving the user’s crypto assets are tracked by reference to the user’s account rather than the deposit wallets.
Cryptoassets are periodically swept from users’ deposit addresses into Binance’s pooled funds hot wallet address (such as the Address). These pooled funds hot wallets are used to store cryptoassets deposited by multiple Binance users – in other words, the pooled funds hot wallet does not belong to and/or is not associated with any single Binance user.”
19. After 22 November 2022, the Plaintiff did not reach out to Binance again until 25 November 2022.
20. In an email from Jacque Law dated 25 November 2022 (5.03 pm), Jacque Law informed Binance that the Plaintiff was applying to the Hong Kong court for injunction and his counsel in Hong Kong expected that the Hong Kong Courts would grant the injunction in favour of the Plaintiff. Leung’s Affirmation (together with its exhibits) was attached to this email. Yet no other application papers such as the draft order was attached. As such, prior to the ex parte application, Binance was never informed that the Plaintiff was in fact pursuing an injunction application to restrain the dealing of assets in the TV6 Address. Instead, Jacque Law asked Binance to “extend the freeze on the identified accounts for a further period of 3 weeks until 16 December 2022”.
21. On 25 November 2022, the Plaintiff made the ex parte application to Deputy High Court Judge MK Liu (the “Duty Judge” ). But in fact the correspondence still continued between Jacque Law and Binance.
22. On 25 November 2022 (5.37 pm), Binance wrote back to Jacque Law, asking for a copy of the Plaintiff’s summons for the application for injunction taken out in the Hong Kong courts – for the purpose of considering the Plaintiff’s request to extend the courtesy freezes until 16 December 2022.
C. Procedural background
C1. Ex parte hearing before DHCJ MK Liu on 25 November 2022
23. On 25 November 2022, the Plaintiff made an ex parte application to the Duty Judge for a proprietary injunction and a worldwide Mareva injunction against the 1st Defendant and the 2nd Defendants, to cover the original cryptocurrencies in the Plaintiff’s Wallets and those traced cryptocurrencies.
24. It is significant to note that, in the Writ of Summons, the 2nd Defendants were described as “an unknown person or person(s) who has access to or operates the addresses as per Part 2 of Schedule 1 of the Indorsement of Claim”. Part 2 of Schedule 1 of the Indorsement of Claim covers the traced cryptocurrencies and 15 addresses were listed out and the 12th address in question is the TV6 Address.
25. At the hearing, the Duty Judge made an Order (the “Ex Parte Order” ), granting in favour of the Plaintiff the worldwide Mareva injunction and the proprietary injunction sought against the 1st and 2nd Defendants. The traced cryptocurrencies are set out in Part 2 of Schedule 3 to the Ex Parte Order. They include, inter alia , the 5,918,806.41 of USDT in the “TV6 Address”. It reads, inter alia , as follows:-
“Part 2: Traced Cryptocurrencies
No.
Address
Cryptocurrencies
…
… …
… …
12.
TV6 … … (the “TV6 Address” )
5,918,806.41 USDT
26. At the hearing, the Duty Judge asked if the return date should be 2 December 2022, the Friday in the following week. Mr Laurence Li SC, Leading Counsel for the Plaintiff, submitted to the Duty Judge that, for email fraud cases, the experience was that the defendants may not turn up within the week; and that there was a practice to have the return date to be fixed on the Friday in the second week after the ex parte hearing. As such, the Duty Judge acceded to the suggestion and fixed the return date as 9 December 2022; and the ex parte Injunction was stated to remain in force up to and including 9 December 2022 (the “Return Date” ).
27. For present purposes, it is significant to note the following.
28. First, the Plaintiff did give the usual undertakings, including the undertaking to effect service of the court documents (including the Order) on the Defendants. In the Ex Parte Order, paragraph 3 of Schedule 2 reads this:-
“3. As soon as practicable , the Plaintiff will serve on the Defendant (a) the Writ of Summons; (b) a summons to be heard on the Return Date; together with (c) a copy of the affidavits / affirmations and copiable exhibits containing the evidence relied on by the Plaintiff; and (d) a copy of the skeleton argument used at the application for this Order. Unless impracticable photographs of non-copiable exhibits should also be served.” [Emphasis added]
29. Second, at the ex parte hearing, Leading Counsel for the Plaintiff also requested for leave to serve the Writ and the various court documents on the 1st and 2nd Defendants by way of substituted service. As such, the Duty Judge granted the Plaintiff leave to serve the court documents on the 1st Defendant by sending him an electronic copy by way of WeChat; and to serve the court documents on the 2nd Defendants by attaching a message to a cryptocurrency transfer to each of the respective addresses in respect of the traced cryptocurrencies, including a link to access an electronic copy of the Writ and the Ex Parte Order.
30. Third, insofar as Binance is concerned:-
(1) In Leung’s Affirmation filed in support of the ex parte application, he confirmed that the Plaintiff has been advised and the Plaintiff understands that he has an obligation to make full and frank disclosure of all relevant matters. Leung also explained that there was urgency in the matter, as Binance only agreed to freeze the account up to 28 November 2022.
(2) In the Plaintiff’s skeleton argument in support of the ex parte application, it was the Plaintiff’s case that Binance had agreed to temporarily restrict trading of the Recipient Addresses; and that the restriction would not continue in the absence of any legal binding order.
(3) Nonetheless, the Duty Judge was not referred to any of the correspondence exchanged between the Plaintiff and Binance, (i.e. those identified in Section B4 above) whether in the supporting affirmation, the Plaintiff’s skeleton argument or oral submissions. Further, the Plaintiff never mentioned to the Duty Judge about any objection that Binance had raised in the pre-application correspondence against any injunction against the TV6 Address.
C2. Exchange of correspondence after the Ex Parte Hearing
31. On 26 November 2022, Jacque Law send an email to Binance, attaching a copy of the Ex Parte Order granting the Mareva injunction. However, the said email made no mention of the proprietary injunction; and that the email never drew the attention of Binance of the fact that the Ex Parte Order consisted of a proprietary injunction over the TV6 Address.
32. On 27 November 2022, Henry Yu & Associates (“HYA” ), the Plaintiff’s solicitors in this Action, sent to Binance a letter (transmitted through online submission platform). In this letter, HYA informed Binance that the Ex Parte Order was granted by the Duty Judge and that a sealed copy of the Ex Parte Order would be sent on the next working day, i.e. 28 November 2022. In this letter, the Plaintiff demanded Binance to freeze all transactions relating to the TV6 Address of and up to 5,918,806.406 units of USDT.
33. On 28 November 2022, Binance wrote back to Jacque Law and HYA. In this letter, Binance complained, inter alia , that the Plaintiff omitted to place before the Duty Judge the material communications between the Plaintiff’s camp and Binance; and that the Plaintiff failed to make full and frank disclosure before the Duty Judge. Binance also invited the Plaintiff to confirm by 30 November 2022 that the Plaintiff will not require the assets in the TV6 Address to be frozen; and that the Plaintiff will take the necessary steps to vary and/or discharge the Order insofar as it relates to the TV6 Address, failing which Binance will take out any necessary application.
C3. Inter-partes Summons dated 6 December 2022
34. Whilst the Plaintiff had obtained the Ex Parte Order on 25 November 2022 (Friday) and he undertook to effect service of the court documents as soon as practicable, for reasons which still remain unknown, the Plaintiff only took out the inter-partes summons on 6 December 2022. The hearing was fixed to be heard before Madam Justice Cheng on 9 December 2022 (Friday).
35. In the Plaintiff’s Summons dated 6 December 2022, he applied for the continuation of the Ex Parte Injunction. In addition:-
(1) The Plaintiff also sought to join the “Binance Operators” as the 3rd Defendants. In the draft Amended Writ attached to this Summons, the 3rd Defendants were described as “Binance Operators (being all parties that run Binance, including but not limited to legal persons (including Binance UAB), Unincorporated Organisations and Teams that provide Biance Services and are responsible for such services)”. The addresses of the 3rd Defendants to be joined were stated in the draft Amended Writ as unknown.
(2) The Plaintiffs also applied against for certain discovery against the “Binance Operators”, relating to certain information about certain addresses, including the TV6 Address.
36. For the purpose of the hearing on the Return Date, the Plaintiff filed Leung’s 2nd Affirmation on 7 December 2022 (“Leung 2nd ” ). It is significant to note the following:-
(1) As of 7 December 2022, the Ex Parte Order had not yet been served on the 1st Defendant, as the Plaintiff feared that the 1st Defendant may further dissipate the stolen cryptocurrencies if he is notified of the Ex Parte Order.
(2) For the unknown 2nd Defendants in respect of the 15 addresses as identified in Part 2 of the Ex Parte Order, service was only effected on eight of those recipient addresses on 7 December 2022. UDomain was unable to effect service on the other unknown 2nd Defendants in respect of the other 7 recipient addresses.
37. On 7 December 2022, the Plaintiff also filed the Affirmation of Chong Man Yee (“Chong 1st ” ), the solicitor acting for the Plaintiff. Chong 1st was filed in support of the Plaintiff’s application for joinder of the “Binance Operators” and discovery against them. Amongst other things, it is pertinent to note that it was exhibited to Chong 1st as “CMY-4” certain correspondence between the Plaintiff’s solicitors and Binance from 27 November 2022 to 30 November 2022 in respect of the Plaintiff’s request made to Binance for discovery. I will come back to this exhibit, when, at the hearing on 9 December 2022, Cheng J raised her concern that the Plaintiff failed to make full and frank disclosure before the Duty Judge in respect of the pre-action correspondence between Jacque Law and Binance.
C4. Hearing before Cheng J on 9 December 2022
38. The Plaintiff’s Summons dated 6 December 2022 was heard before Cheng J on 9 December 2022. At this hearing, the Plaintiff was represented by Mr Laurence Li SC, leading Mr Sik Chee-ching. The 1st and 2nd Defendants were not represented and did not appear. Ms Sharon Yuen appeared for Binance Holdings Ltd (“BHL” ). BHL was at all material times and is still a company incorporated in the Cayman Islands. It is BHL’s case that it can procure the platform of Binance to comply with any order of the Court.
39. I was provided with a transcript of the said hearing. For present purposes, it is necessary to set out in some detail as to what had happened at this hearing, as Cheng J raised some serious concerns about the Plaintiff’s ex parte application before the Duty Judge.
40. First, Cheng J raised the concern about service.
(1) On the Plaintiff’s own evidence, the 1st Defendant was not served at all (even as at the date of this hearing).
(2) Insofar as the 2nd Defendants are concerned, whilst the Plaintiff undertook before the Duty Judge to effect the service as soon as practicable , the Plaintiff effected service on 8 out of the 15 controllers addresses only on 7 December 2022, less than 2 clear days before the hearing.
(3) As such, Cheng J queried how this hearing on the Return Date could be treated as inter partes, when the service of the Summons was less than 2 clear days before the Return Date.
(4) Cheng J specifically asked Mr Li SC to explain when it was decided that there would be service on those 8 recipient addresses only on 7 December 2022, when the Ex Parte Order was obtained on 25 November 2022.
41. Second, Cheng J was concerned about the question of whether there was material non-disclosure about service at the ex parte hearing. When the Duty Judge was asked to grant to the Plaintiff leave for substituted service on the basis that the 1st and the unknown 2nd Defendants could not be located, the Duty Judge was not told that there would not be service on some of the Defendants.
42. Third, insofar as the platform Binance is concerned, Her Ladyship raised the concern that there was material non-disclosure on the part of the Plaintiff.
(1) Her Ladyship referred to a letter dated 28 November 2022 issued by Binance to Jacque Law and the Plaintiff’s solicitors. It is exhibited amongst the correspondence exhibited as “CMY-4” to Chong 1st . In the said letter, Binance complained, inter alia , that the Plaintiff had obtained the Ex Parte Order without making full and frank disclosure of the objections raised by Binance in the pre-action exchange of correspondence. It was in such context that Her Ladyship found that the Plaintiff failed to refer the Duty Judge to the pre-action correspondence with Binance.
(2) The Plaintiff did not disclose to the Duty Judge the exchange of correspondence between Jacque Law and Binance (those exchanged from 20 November 2022 onwards), whether in the supporting affirmation, his skeleton argument or oral submissions.
(3) Specifically, the Duty Judge was never referred to the email from Binance dated 22 November 2022, in which it raised various concerns about the nature of the order being sought by the Plaintiff and the difficulties of complying with any injunction order in the light of the operation of the TV6 Address.
(4) Her Ladyship was concerned that, even in the Plaintiff’s skeleton argument filed for the purpose of the hearing on 9 December 2022, there was still no reference to the pre-action exchange between the Plaintiff’s camp and Binance.
43. In those circumstances, Her Ladyship made an order for the Plaintiff to file affirmation evidence to explain the matters as indicated in the hearing; and that the Plaintiff’s Summons dated 6 December 2022 was adjourned to 23 December 2022 before the Summons Judge. As BHL did not raise any objection, Cheng J also made an order that the ex parte worldwide Mareva and proprietary injunction be continued until 23 December 2022.
C5. The Plaintiff’s Summons dated 19 December 2022 to amend the 6 December 2022 Summons
44. Shortly before the hearing on 23 December 2022, the Plaintiff took out another summons on 19 December 2022 for leave to amend the 6 December 2022 Summons. In this summons, the Plaintiff sought leave to amend the scope of discovery sought against the 3rd Defendants (should leave be granted to join the “Binance Operators” as the 3rd Defendants).
45. On 19 December 2022, the Plaintiff filed the 3rd Affirmation of Chong Man Yee (“Chong 3rd ” ) in support of this summons for leave to amend and to address the matters as indicated at the Hearing before Cheng J.
46. On 21 December 2022, the Plaintiff filed his own Affirmation (“Wang 1st ” ) to address those matters raised at the hearing before Cheng J.
(1) The Plaintiff explained that, whilst he understood that the Injunction Order had to be served on the 1st Defendant, he was worried that the 1st Defendant would further dissipate the stolen cryptocurrencies. Therefore, after obtaining the Injunction Order, he asked his solicitors to withhold service on the 1st Defendant and to take steps to secure the stolen cryptocurrencies with other third parties such as the cryptocurrency platform.
(2) The Plaintiff’s evidence is that the court documents and the Ex Parte Order were served on the 1st Defendant via Wechat on 19 December 2022.
(3) The Plaintiff also sought to explain why no disclosure was made to the Duty Judge about the correspondence between Jacque Law and Binance. The Plaintiff’s explanation was that he was not aware that the said communication had to be disclosed to the Hong Kong Courts, when these emails were sent by Jacque Law in a different jurisdiction in Singapore; and that his impression was that such emails were immaterial to the Hong Kong Court as they were not formal court documents; and therefore he did not disclose those correspondence to his solicitors.
47. Later, on 22 December 2022, the Plaintiff also filed Chong’s 4th , stating that the 1st Defendant was served the Court Documents on 19 December 2022. Subsequently, Chong’s colleagues received a message from the 1st Defendant via wechat on 22 December 2022, indicating that he would not attend the hearing on 23 December 2022.
C6. Hearing before Au-Yeung J on 23 December 2022
48. On 23 December 2022, the Plaintiff and BHL attended before Madam Justice Au Yeung sitting as the Summons Judge. At this hearing, BHL was represented by Ms Elizabeth Cheung and Ms Sharon Yuen.
49. At this hearing, the Plaintiff applied for leave to amend the 6 December 2022 Summons; for leave to join the “Binance Operators” as the 3rd Defendants in this Action; and for the continuation of the Ex Parte Injunction until further order. The Plaintiff also applied for ancillary orders for disclosure against the 2nd and 3rd Defendants.
50. BHL sought to intervene and to oppose the continuation of the proprietary injunction and the mareva injunction, insofar as the same relates to the TV6 Address.
51. Having heard the submissions from Counsel for the Plaintiff and for Counsel for BHL:-
(1) Au-Yeung J granted leave to the Plaintiff to amend the 6 December 2022 Summons.[2]
(2) Her Ladyship adjourned the Plaintiff’s Amended Summons for substantive argument with 1 day reserved (to be fixed in consultation with the diaries of Mr Li SC and Ms Elizabeth Cheung). Her Ladyship also gave directions for the Plaintiff to file evidence for that purpose. It is pertinent to note that Au-Yeung J’s Order expressly provides, inter alia , that no further evidence shall be filed without leave of the Court.
(3) The worldwide Mareva injunction and the proprietary injunction (save and except the TV6 Address) were ordered to be continued.
(4) Insofar as the TV6 Address is concerned, the worldwide Mareva injunction and the proprietary injunction against TV6 Address was ordered to continue pending the determination of the Plaintiff’s Amended Summons.
52. Eventually, the hearing of the substantive arguments of the Plaintiff’s Amended Summons was adjourned to 24 April 2024 with 1 day reserved.
53. Pursuant to the Order of Au-Yeung J, the parties have filed affirmations.
C7. The Plaintiff’s Summons dated 8 April 2024
54. On 8 April 2024, the Plaintiff took out yet another summons for leave to file the 3rd Affirmation of Wong Man Yee (“Wong” ) dated 5 April 2024 (“Wong 3rd ” ). Wong was at the material times the chief executive officer of UDomain. In summary, the Plaintiff sought to adduce, inter alia , evidence relating to some proceedings in the United States brought by the US Securities and Exchange Commission against BHL and its chief executive officer Zhao Changpeng and some articles on some websites relating to Binance.
D. Hearing before this Court on 24 April 2024
55. At the hearing before this Court on 24 April 2024, the Plaintiff was represented by Mr. Laurence Li SC, leading Mr. Sik Chee Ching. BHL was represented by Ms. Elizabeth Cheung and Ms. Sharon Yuen.
56. After receiving the parties’ skeleton submissions, I drew the parties’ attention to a few cases in connection with the Plaintiff’s applications for leave to file Wong 3rd , the Plaintiff’s application for joinder of the “Binance Operators” and the Plaintiff’s application for continuation of the worldwide Mareva injunction application.
D1. The problem relating to the Plaintiff’s Summons for leave to adduce Wong 3rd
57. On the Plaintiff’s application for leave to file Wong 3rd , Mr Li SC argued that such evidence was uncontroversial and that BHL had no locus to make any opposition.
58. The Plaintiff’s application was opposed by BHL, contending that there was unexplained gross delay on the part of the Plaintiff in adducing such evidence; and that the evidence is irrelevant and immaterial. Ms Cheung cited Jose Miranda DA Costa Junior v Lorenzo Yih (unrep) HCA 156/2010, 28 April 2014, at §§8-13, per DHCJ Le Pichon and argued that, in the post-CJR era, it is inconceivable that leave would be granted in the absence of any genuine extenuating circumstances.
59. Irrespective of whether BHL had any locus to be heard, before the hearing, I had referred the parties to a recent decision of Deputy High Court Judge H. Au-Yeung (as he then was) in Tian Hongmei v. Zhang Wei [2023] HKCFI 2675 . In Tian Hongmei (above), it was held that, in cases where a party sought to admit further evidence when there was an order prohibiting the filing of further evidence without leave of the court, Order 32 rule 11A(4) applied and hence an applicant who sought to admit further evidence would have to satisfy the 3 requirements in Ladd v. Marshall [1954] 1 WLR 1489. I raised with Mr Li SC if Tian Hongmei applies to the present case in light of the Order made by Madam Justice Au-Yeung on 9 December 2022 (when Her Ladyship made an order that there be no further affirmation without leave of the court); and if so, whether the Plaintiff could satisfy the 3 requirements set out in Ladd v Marshall .
60. After taking instructions, Mr Li SC asked for leave to withdraw the Plaintiff’s Summons dated 8 April 2024 with costs reserved.
D2. The Plaintiff’s application for joinder of “Binance Operators”
61. On the Plaintiff’s application for joinder of the “Binance Operators”, Mr Li SC submitted that Binance[3] had been evasive about the legal entities operating the Binance platform and the whereabouts of those entities. Mr Li SC also complained that Binance had deliberately avoided defining the entity which was responsible for its operations.
62. Mr Li SC further argued that BHL should not be entitled to intervene in this Action, when BHL’s connection with Binance was unknown and BHL has not adduced any evidence to show why it has interest to intervene. Mr Li SC argued that it is not BHL’s position that it falls within the definition of the 2nd Defendants. Instead, BHL’s position is merely that it can procure the Binance platform to comply with the injunction order.
63. On the other hand, Ms Cheung argues that the Plaintiff’s application to join “Binance Operators” should be dismissed, for the description of “Binance Operators” was incapable of accurately referring to a specific entity or company; and that BHL has voluntarily come forward and identified itself as an entity which can procure Binance to comply with orders made by the Court.
64. Whilst I see the force in Mr Li SC’s submissions that BHL should not be entitled to intervene (when it has not adduced any evidence to show why it has the legal interest to justify intervention in this Action), I expressed my concern about the Plaintiff’s joinder application.
65. First, even if Mr Li SC was right that BHL has no interest to seek to be joined as the 2nd Defendants, that may not be end of the matter, for the Plaintiff would still want to proceed with his application for joinder of the “Binance Operators”. Assuming if I were to allow the Plaintiff’s application for joinder of the “Binance Operators” as the 3rd Defendants, BHL may subsequently come back and seek to intervene by demonstrating that it is one of the “Binance Operators” .
66. Second and more importantly, I expressed to Mr Li SC about the difficulties of the Plaintiff’s joinder application.
67. In the Plaintiff’s Amended Summons, the 3rd Defendants that the Plaintiff sought to join were described as “Binance Operators (being all parties that run Binance, including but not limited to legal persons (including Binance UAB), Unincorporated Organisations and Teams that provide Biance Services and are responsible for such services)”. The addresses of these Binance Operators were stated in the Draft Amended Writ as unknown. I believe that the Plaintiff’s description of the 3rd Defendants is based upon the terms of use (“Terms of Use” ) of Binance, which reads, inter alia , as follows:-
“Binance Operators” refer to all parties that run Binance, including but not limited to legal persons (including Binance UAB), unincorporated organisations and teams that provide Binance Services and are responsible for such services. For convenience, unless otherwise stated, reference to “Binance” and “we” in these terms specifically mean Binance Operators. …”
68. In light of that, before the hearing, I referred the parties to the Hong Kong Court of Appeal’s decision in Billion Star Development Ltd v Wong Tak Chuen [2013] 2 HKLRD 714, §§69-75, per Lam JA (as Lam PJ then was); and also the English Court of Appeal’s decision in Canada Goose UK Retail Ltd v Persons Unknown [2020] 1 WLR 2802. In particular, the English Court of Appeal (Sir Terence Ehterton MR, David Richards and Coulson LJJ) set out the procedural guidelines applicable to proceedings for interim relief against “persons unknown”. At paragraph 82[1], [2] and [4], the English Court of Appeal said this:-
“82. Building on Cameron [2019] 1 WLR 1471 and the Ineos requirements, it is now possible to set out the following procedural guidelines applicable to proceedings for interim relief against “persons unknown in protestor cases like the present one:
[1] The “persons unknown” defendants in the claim form are, by definition, people who have not been identified at the time of the commencement of the proceedings. If they are known and have been identified, they must be joined as individual defendants to the proceedings. The “persons unknown” defendants must be people who have not been identified but are capable of being identified and served with the proceedings, if necessary by alternative service such as can reasonably be expected to bring the proceedings to their attention. In principle, such persons include both anonymous defendants who are identifiable at the time the proceedings commence but whose names are unknown and also Newcomers, that is to say people who in the future will join the protest and fall within the description of the “persons unknown”.
[2] The “persons unknown” must be defined in the originating process by reference to their conduct which is alleged to be unlawful.
[4] As in the case of the originating process itself, the defendants subject to the interim injunction must be individually named if known and identified or, if not and described as “persons unknown”, must be capable of being identified and served with the order, if necessary by alternative service, the method of which must be set out in the order.”
69. At the hearing, I raised with Mr Li SC as to how the Plaintiff can join the “Binance Operators” as unknown defendants, when in fact at least the identity of “Binance UAB” was known and identified in Binance’s Terms of Use. Mr Li SC did not dispute that “UAB” was the abbreviation of the Lithuanian words for a private limited company; and “Binance UAB” in Binance’s Terms of Use was a limited company incorporated in Lithuania.
70. After taking instructions from the Plaintiff, Mr Li SC informed this Court that the Plaintiff would seek leave to withdraw his application for joinder of the “Binance Operators” and the consequential disclosure application against them. Instead, the Plaintiff asked the Court for a direction that the Plaintiff would within 14 days from the date of the order to be made to take out a new application for joinder and the disclosure application. I acceded to Mr Li SC’s request that the costs be reserved.
D3. Concerns about the worldwide mareva injunction relating to the TV6 Address
71. On the Plaintiff’s application for the continuation of the worldwide mareva injunction (relating to the TV6 Address), before this hearing, I had also drawn the parties’ attention to the judgment of HH Judge Pelling QC (sitting as a Judge of the Commercial List in the English High Court) in Fetch.AI Ltd & Anr v. Persons Unknown Category A & Ors [2021] EWHC 2254 (Comm).
72. Similar to the present case, in Fetch.AI Ltd (above), the claimants made an Ex Parte application against certain unknown persons and entities including Binance Holdings Ltd and Binance Markets Ltd for a proprietary injunction, a worldwide freezing injunction and ancillary information disclosure. The first respondents were described as the “unknown persons”. HH Judge Pelling QC said this at [5]-[6]:-
“[5] The first issue which arises, therefore, concerns the parties against whom the orders are to be sought. The original formulation of the first respondent was to identify the persons unknown as
‘being the individuals or companies who: (a) obtained access to the First Applicant’s accounts … on the Binance Exchange and carried out the transactions on 7 June 2021 as a result of which USDT, BNB, BTC and FET held in those accounts were transferred to other accounts; and (b) own or control the accounts into which USDT, BNB BTC, FET or the traceable proceeds thereof are to be found.’
[6] It occurred to me on the pre-reading of the papers ahead of this application that that definition was too wide ranging, having regard to the fact that relief was sought which not merely sought to freeze either the virtual currency that had been removed from the claimant’s accounts or its traceable proceeds, but sought worldwide freezing orders against those who, at least potentially, were innocent in the sense of not knowing or having reason to believe, or reasonable grounds to believe, that assets belonging to the claimant had been credited to their account. That was a factor that the claimant drew to my attention as part of its full and frank disclosure and fair presentation obligations and is something which, in my judgment, requires that the persons unknown be boiled down to the three categories discussed in the course of the argument, being: those who were involved in the fraud against whom it is appropriate to seek both heads of relief (subject to the points I am going to mention in a moment); secondly, a class designed to capture those who have received assets, I think, without having paid a full price for them, or something of that nature; and third, and most importantly, those who fall within the category of innocent receivers.”
73. In light of the aforesaid observations in Fetch.AI (above)[4] , I raised with Mr Li SC as to why a worldwide mareva injunction could be made against the unknown 2nd Defendants in the present case. As rightly submitted by Ms Elizabeth Cheung for BHL, in the skeleton argument dated 19 April 2024 filed for the Plaintiff, the Plaintiff has not even developed any arguments as to why the ex parte worldwide Mareva injunction should be continued against the TV6 Address. Further, insofar as the TV6 Address is concerned, it is not clear as to the evidence showing that there were risks of dissipation of assets.
74. After taking instructions from the Plaintiff, Mr Li SC informed this Court that the Plaintiff accepted that the worldwide Mareva injunction Order (as contained in paragraph 6 of the Duty Judge’s Order) should be set aside and discharged. I acceded to Mr Li SC’s request with costs reserved.
D4. Adjournment of the hearing to 19 September 2024
75. As the parties had taken time for taking instructions on various matters, there was not sufficient time for hearing the substantive arguments. As such, the parties agreed that the substantive arguments should be adjourned to a date to be fixed.
76. Eventually, as per the parties’ requests, I adjourned the hearing to 19 September 2024 and gave further directions for the further conduct of the matter, so as to allow the Plaintiff time to take out the new application for joinder and discovery and for the parties to file evidence in that connection.
E. Nest Services Ltd (“Nest”) sought to intervene and the Plaintiff’s application to join Nest
77. After the 24 April 2024 hearing, the Plaintiff applied for and obtained extension of time for taking out the joinder application. However, despite the grant of the time extension, for reasons unknown, the Plaintiff eventually did not take out any application for joinder of any additional defendant.
78. On 12 September 2024, Nest Services Ltd (“Nest” ) took out a Summons leave to be heard at the hearing on 19 September 2024. An Affirmation of Lee Yin Lok Enoch dated 12 September 2024 was filed in support of Nest’s Summons.
79. Nest is a company incorporated in the Republic of Seychelles on 31 May 2023. It is Nest’s case that it meets the definition of the 2nd Defendants, when, after certain corporate restructuring of the group of companies operating the Binance platform, it has become an operator of the Binance platform. Nest’s application for leave to intervene was not opposed by the Plaintiff.
80. On 16 September 2024, the Plaintiff took out a summons for leave to join Nest as the 3rd Defendant. Under the summons, the Plaintiff also sought against Nest disclosure of certain information, effectively the same as those that the Plaintiff previously sought against the “Binance Operators”.
F. Hearing before this Court on 19-20 September 2024
81. At this hearing, the Plaintiff was represented by a new team of counsel, with Mr. Wayne Walsh SC leading Mr Fergus Tam. Mr. Walsh SC adopted the skeleton submissions prepared by Mr. Laurence Li SC and Mr. Sik Chee Ching filed at the hearing on 24 April 2024. Ms. Elizabeth Cheung and Ms. Sharon Yuen appeared for Nest.
82. Nest did not oppose to the Plaintiff’s Summons for joinder. As such, I granted the Plaintiff leave to join Nest as the 3rd Defendant and to leave to amend the Writ accordingly.
83. Similar to the position of BHL, Nest opposed the continuation of the proprietary injunction insofar as the TV6 Address is concerned and it further contended that the said proprietary injunction should be discharged, when there was no justification for the Plaintiff to proceed on an ex parte basis and that the Plaintiff was guilty of serious material non-disclosure.
84. As such, the matters that require determination are:-
(1) whether the proprietary injunction relating to TV6 Address (insofar as Binance and Nest are concerned) should be continued; or whether it should be discharged and set aside; and
(2) whether disclosure should be ordered in favour of the Plaintiff against Nest.
G. Interlocutory proprietary injunctions
G1. Applicable principles
85. It is common ground between the parties that an applicant for a proprietary injunction has to show (1) that there is a serious issue to be tried in respect of his proprietary claim; (2) that the balance of convenience favours the grant of an injunction and (3) it is just and convenient to grant the injunction. It is not necessary to show that there is a risk of dissipation: Zhang Yan & Ors v ASA Bullion Ltd & Ors [2019] HKCFI 179 at §11, per Recorder Fung SC (as he then was).
86. The Plaintiff further argues that, in the context of a proprietary claims, the Court should readily find that the balance of convenience favours the preservation of property, including funds. The Plaintiff relies upon Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd (unrep) HCA 3023/2016, 2 May 2017, at §37, per Deputy High Court Judge Douglas Lam SC.
87. However, recently in 李明實, 方壘 and 史洪源 (suing on behalf of themselves and the other employees employed by or by the Group of Companies under和利時科技集團有限公司) v. Ace Lead Profits Ltd & Anr [2024] HKCA 523 , the Court of Appeal (Barma JA and Anthony Chan J, as he then was) held that Pacific Rainbow International Inc (above) did not establish any principle of general application that in an application for proprietary injunction the court should readily find the balance of convenience in favour of the applicant after a serious issue to be tried is made out. It depends on the facts of the case: §§15-16.
G2. Serious issues to be tried
88. For the Plaintiff, Mr Walsh SC submitted that there is at least a serious issue to be tried that the stolen cryptocurrencies in the TV6 Address was held on constructive trust for the Plaintiff. It is the Plaintiff’s case that he can either trace or follow the stolen cryptocurrencies in the TV6 Address.
89. On the other hand, Ms Cheung on behalf of Nest argued that following is not possible because of how the Binance platform operates. It is the case of Nest that it has the defence of bona fide purchaser for value without notice.
90. Both parties have advanced serious arguments. I agree with Mr Walsh SC that there are serious issues to be tried, such as whether the Plaintiff is entitled to follow or trace into the TV6 Address and also whether Binance is entitled to rely on the defence of bona fide purchaser for value without notice.
91. Nonetheless, that is not the end of the matter, for the real question in this case remains whether the proprietary injunction against the TV6 Address should be discharged and set aside on the basis that the Plaintiff should not proceed with the application on an ex parte basis without giving notice to Binance; and whether the proprietary injunction against the TV6 Address should be set aside (insofar as Binance is concerned) on the basis of material non-disclosure on the part of the Plaintiff.
92. I now come to address these important questions. I would also address the question of balance of convenience when it comes to the question of whether the proprietary injunction, if discharged, should be regranted.
H. Whether the proprietary injunction should be set aside
H1. Ex parte application: the applicable principles
93. The applicable principles on when an ex parte application can be made are well established. The relevant ones may be summarized as follows.
94. It is trite that ex parte without notice applications are only justified in the most exceptional circumstances, where extreme secrecy or extreme urgency (such that five minutes notice cannot be given) so requires. In Slik Hong Kong v. Gerald Evans (unrep) HCA 1424/2005, 25 July 2005, Mr Justice Lam (as Lam PJ then was) helpfully summarized the principles as follows:-
“2. Ex parte applications should be regarded as exceptional and the court should not entertain the same unless there are cogent justifications usually in terms of either extreme urgency or secrecy. See Bates v. Lord Hailsham of St. Marylebone & others [1972] 1 WLR 1373.
3. In Brand, Farrar Buxbaum v Samuel-Rozenbaum Diamond, HCA 5191 of 1998, 8 May 2002, Ma J (as he then was) said at Para. 24,
‘One of the facets of equality before the law (a fundamental right guaranteed under Article 25 of the Basic Law) is that no order ought to be made by a court against anyone without his first being given a reasonable opportunity of being heard. An exception to this fundamental rule is where ex parte orders are made by the court. At the risk of repeating the obvious, ex parte orders are only made “where the situation is of such extreme urgency that there is literally no time to warn the defendant of what is proposed or where the purpose of the injunction will or may be frustrated if the defendant is informed of what is proposed or where the defendant simply cannot be found”: see TRP Limited v. Thorley , unreported, 13 July 1993, English Court of Appeal, per Bingham LJ. I should perhaps out of completeness add that this salutary rule does not apply where express provisions are made in the Rules for the ex parte procedure to be used: see Hong Kong Civil Procedure at paragraph 32/6/5.’
4. It follows that the first thing the court should ask when it is faced with an ex parte application is whether the applicant can show such exceptional circumstances which justify him proceeding on ex parte basis. If he could not cross that hurdle, the court should not be concerned about the substantive merits of his application.
5. In the context of urgency, it has to be borne in mind that nowadays it does not need to wait very long to list a matter for an inter parte hearing. Hence, Ma J said in Para.28 of his judgment in Brand, Farrar Buxbaum v Samuel-Rozenbaum Diamond,
‘Even if there was genuine urgency (and I do not accept that there was), the proper course was for the claimant to take out an inter parte application, if necessary with time abridged, or if that was somehow not possible, to make an ex parte application on notice to the plaintiff.’
In Seapower Resources International Ltd v Lau Pak Shing HCA No. A10715 of 1993, 15 December 1993, Rogers J (as he then was) said the following with regard to the degree of urgency that could justify ex parte application,
For an ex parte application for an injunction to be [justified] on the grounds of urgency it must be so urgent [that] you cannot give even five minutes warning to the other side. Here, solicitors were instructed for the Defendants … the Plaintiffs’ solicitors well knew it. … There was no justification for not even making a telephone call or sending a fax …
6. The fact that if notice is given, the defendant might ask for time to response is not a justification for proceeding ex parte . The court can exercise its discretion in deciding whether any interim relief should be granted in the meantime after hearing submissions from the defendant. Thus, Rogers J said in Seapower Resources International ,
‘Lastly, it was suggested that if the Defendants were given notice they would have sought an adjournment which would have delayed matters and then the Plaintiffs might not have got their injunction. That is an argument which I find so reprehensible that will not dignify it by dealing with it.’”
95. When there is no justification to make the application ex parte , the Court may set aside the order obtained ex parte on this ground alone: Luck Continent Ltd v Leonora Yung (unrep) CACV 42/2010, 22 October 2010, at §19; Nico Constantin Antonius Samara v. Stive Jean-Paul Dan also known as Steve Jean-Paul Dan, Stive Jean Paul Dan and Steve Jean Paul Dan [2018] HKCFI 1022 , at §§22-26, per Recorder Yvonne Cheng SC (as Cheng J then was).
H2. The duty to make full and frank disclosure: applicable principles
96. It is trite law that, if one proceeds to make an ex parte application, the applicant has the duty to make full and frank disclosure. The duty of full and frank disclosure extends but only to factual but also to legal and procedural aspects of the case: Memory Corporation Plc v. Sidhu (No. 2) [2000] 1 WLR 1443 at 1454H-1455E, 1460A; East Asia Satellite Television (Holdings) Ltd v. New Cotai LLC [2011] 3 HKLRD 734 at §82, per Tang Acting CJHC.
97. In Aleksandr Narimanovich Kushaev v Greenly Holdings Ltd (in liq) [2019] HKCFI 2745 , Recorder Manzoni SC helpfully summarized the principles in §69 of his judgment:-
“(1) The duty of the applicant in an ex parte application is to make a full and frank disclosure of all the material facts: Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 at 1356F-G, per Ralph Gibson LJ.
(2) Material facts mean all facts that are relevant to the weighing operation which the Court has to make in deciding whether or not to grant the order. The correct test is not simply whether, if the non-disclosure had not occurred, the ex parte judge would nevertheless have made the order, but whether the facts not disclosed, being relevant, should have been in the scales: Citibank NA v Express Ship Management Services Ltd & Anor [1987] HKLR 1184 at 1190C-E, per Fuad JA (as he then was).
(3) The test as to materiality is an objective one; and it is not for the applicant or his advisers to decide the question; hence it is no excuse for the applicant subsequently to say that he was genuinely unaware, or did not believe, that the facts were relevant or important. All matters which are relevant to the “weighing operation” that the court has to make in deciding whether or not to grant the order must be disclosed: New Asia Energy Ltd v Concord Oil (Hong Kong) Ltd [2000] 2 HKC 681 at 685G-I, per Keith JA.
(4) In addition, the plaintiff must identify any defences, which, although not yet taken, would have been available to be taken by the defendant had he been present at the ex parte application, provided that: (1) the defence is one which can reasonably be expected to be raised in due course by the defendant and (2) the defence is not one which can be dismissed as without substance or importance: New Asia Energy Ltd at 685G-I.
(5) The duty of making full and frank disclosure is not discharged by making partial disclosure on oath or deposing to half-truths. The court is entitled to assume that the applicant acts with utmost good faith, failing which the position of the ex parte judge would be extremely difficult, if not impossible: Guangdong Yuehe Investment Holdings Co Ltd & Another v Hongfan International Ltd (unreported), HCA 391/2017, 3 March 2017) at §11 per Chow J.
(6) The disclosure should be made in the affidavit (and/or the skeleton submissions) and not in the exhibits. This is to ensure that the ex parte judge will not overlook the matters which require disclosure, ex parte applications being usually urgent so the judge usually has little reading time) and ex parte hearings are often short: Tiong King Sing v Sam Boon Peng Yee [2011] 5 HKLRD 651 at §13 per Chung J.
(7) An applicant has a duty to inform the court as soon as he becomes aware that the court has been misinformed or given incomplete information at the time of the ex parte application: Cargill International Trading Ptd Ltd v. Loyal Base Development Ltd (unrep., HCCL 12/2015, 24 November 2015 at §50 per Mimmie Chan J.”
98. Further, material non-disclosure is not about the subjective intent of the applicant but the objective fact of non-disclosure. In Yau Ka Po v Town Planning Board (unrep) HCAL 67/2015, 14 June 2016, Au-Yeung J said this at §§31-32:-
“31. The applicant claims that the non-disclosure was not deliberate and that he and his legal advisers had no intention to suppress or withhold documents from the court.
32. This is no answer. Material non-disclosure is not about the subject intent of the applicant but the objective fact of non-disclosure:-
“in seeking ex parte relief an applicant must disclose to the judge any fact known to him which might affect the judge’s decision whether to grant relief or what relief to grant. It is no answer for an applicant who falls down on his duty to show that his breach of duty was committed in good faith and inadvertently, or to show that the relief would have been granted even had he complied with his duty. The courts have traditionally insisted on strict compliance with this rule, as affording essential protection to an absent defendant, and as applications for ex parte relief have multiplied so the importance of complying with this duty has grown”: Fitzgerald & Ors v. Williams & Ors [1996] QB 657, pg. 667H-0668C.”
99. Having said that, the duty to disclose material facts and identify possible defences does not extend to a detailed analysis of every possible point which may arise. The defendant must identify with clarity, and if necessary restraint, the failures of which it complains, rather than adopting a scatter gun approach: Tsai Lee Ting & Anr v. Best Leader Precious Metals Ltd & Ors [2023] HKCFI 2124 , at §72, per Cheng J, quoting National Bank Trust v. Yurov & Ors [2016] EWHC 1913 (Comm) at [19].
100. Further, in A1 v R1 [2021] HKCFI 650 , Colman J emphasised that full and frank disclosure is not made simply by placing the document somewhere in a bundle of exhibits to an affidavit, even if there is some glancing reference to that document in the affidavit itself. The greater the amount of material placed before the court, the more likely the court will need – and is entitled to – clear sign-posting to the various aspects of that material (which has been organised in a logical way, making it easier to find, follow and understand). That is all the more important when an applicant is made ex parte . The duty means that the party should specifically draw the attention of the court those matters, and do so fully as well as frankly.
101. On the question of material non-disclosure, Leading Counsel for the Plaintiff argued that the Court should bear in mind that legal proceedings relating to cryptocurrency are still novel and there was urgency involved. Yet, these are no justification for any lesser standard to apply in the present case. This is illustrated in the recent decision in Jahangir Piroozzadeh v. Persons Unknown & Ors [2023] EWHC 1024 (Ch).
102. In Jahangir Piroozzadeh (above), a without notice application was made by the claimants restraining defendants from dealing with the claimant’s cryptocurrencies transferred into the eighth and ninth defendant exchanges’ hop wallets. Apart from certain unknown defendants, BHL was named as the 8th defendant; and an ex parte order was made requiring BHL to preserve the claimant’s cryptocurrencies or its traceable proceeds. In holding that the injunction should be discharged against BHL, Trower J said as follows:-
“10. … Hoffmann J in Re First Express Ltd [1992] BCLC 824 at 828E, where Hoffmann J said:
‘It is a basic principle of justice that an order should not be made against a party without giving him an opportunity to be heard. The only exception is when two conditions are satisfied. First, that giving him such an opportunity appears likely to cause injustice to the applicant, by reason either of the delay involved or the action which it appears likely that the respondent or others would take before the order can be made.’
11. Thirty years on from Hoffmann J’s well-established statement of principle, urgency is unlikely of itself to be sufficient in the absence of a well-founded fear that action to the detriment of the applicant might be taken by the respondent should notice be given. Ease of communications is now such that some sort of notice is nearly always possible.
19. … this failure to give notice to [Binance Holdings Ltd] cannot be considered in isolation. It was said to be more serious because the claimant failed in his duty to make a fair presentation of the case at the without notice hearing. The duty to do so when applying without notice is trite law in this area and is well recognised by numerous authorities. In Siporex Trade SA v Comdel Commodities Ltd [1986] 2 Lloyd’s Rep 428, Bingham J summarised the position as follows. He said that an applicant must show the utmost good faith and disclose his case fully and fairly. He must identify the crucial points for and against the application and not rely on general statements and the mere exhibiting of numerous documents. He must investigate the nature of the cause of action asserted and facts relied on before applying for relief and he must identify any likely defences.
20. In the Pugachev case [2014] EWHC 4336 (Ch) at 171, Mann J said in a passage with which I agree:
‘The obligation to anticipate defences in pursuit of the obligation to make full and frank disclosure is very important. An Applicant for without notice relief has actively to consider what points of defence might be taken by the defendant and put them before the court. That is a fundamental requirement, and safeguard.’
21. I also agree with the submission made by Mr Quest that it is not sufficient for the applicant in these circumstances to rely on the judge. One helpful illustration of the reason for this is given by Popplewell J in the case of Fundo Soberano De Angola v Jose Filomeno Dos Santos [2018] EWHC 2199 (Comm) at para 51 to 53 where he said the following, a statement of general principle which will chime with any judge faced with granting injunctive relief on without notice applications:
‘The task of the judge on a without notice application in complex cases such as the present is not an easy one. He or she is often under time constrains which render it impossible to read all the documentary evidence on which the application is based, or to absorb all the nuances of what is read in advance, without the signposting which is contained in the main affidavit and skeleton argument. It is essential to the efficient administration of justice that the judge can rely on having been given a full and fair summary of the available evidence and competing considerations which are relevant to the decision.’
39. … The duty [to make full disclosure to the judge on a without notice application] extends not just to a fair presentation of the underlying facts (to the extent they are known or might properly be anticipated), but also the way in which those facts might reasonably be expected to support a defence. All of this needs to be properly explained in order to ensure that the presentation is fair. …”
103. In any event, as I shall elaborate below, it is my ruling that any urgency in the present case is no justification for the Plaintiff to proceed on an ex parte basis without giving notice to Binance.
H3. No justification for the Plaintiff to proceed on ex parte basis vis-à-vis Binance
104. Bearing in mind the legal principles set out above, I shall first consider the question of whether the Plaintiff was justified in proceeding with the application to the Duty Judge on an ex parte basis.
105. In Leung’s Affirmation, the Plaintiff sought to justify that the application was made ex parte on the basis of secrecy and urgency.
106. First, the Plaintiff prayed in aid the fact that there was theft of the cryptocurrencies from the Plaintiff’s Wallets and that called for secrecy. I disagree. The fact that the Plaintiff may wish to proceed on an ex parte basis against the 1st Defendant itself is no justification for the Plaintiff not to give notice to Binance about its application for interlocutory injunction. Further, there was no evidence or argument before the Duty Judge to suggest that tipping off was a material risk. In Jahangir Piroozzadeh (above) at §§15-18, Trower J observed that one solution to any such problem was to proceed against the fraudsters and serve any order on the exchange as a non-respondent first; and if specific relief was later needed, it could have been sought later in response to any reaction from the exchange.
107. Second, the Plaintiff contended that there was urgency in the matter, when Binance’s temporary freezing measures would only expire on 28 November 2022. There is no substance in this argument. Whilst Binance stated in the email that any temporary measures would expire on 28 November 2022, the urgency was not such that the Plaintiff can choose to proceed without giving any advanced notice to Binance: cf Slik Hong Kong (above) at §§5-6.
108. Third, the Plaintiff also contended that it was impracticable to take out an inter partes summons when the identifies of the recipients were not known. I disagree. This is no justification for the Plaintiff to proceed with ex parte without notice to Binance, when the Plaintiff knew from the pre-action correspondence with Binance that the TV6 Address was a hot wallet, which consisted of pooled funds deposited by various users of the Binance platform.
109. At the hearing, Mr Walsh SC fairly accepted that the Plaintiff should not have proceeded with the application before the Duty Judge on an ex parte basis.
H4. Material non-disclosure
110. I now come to the question of material non-disclosure. In the present case, I accept the arguments of Ms Cheung that there was material non-disclosure on the part of the Plaintiff.
111. First, both Leading Counsel acting for the Plaintiff accepted that the pre-injunction correspondence between Jacque Law and Binance was material and the Plaintiff should have disclosed to the Duty Judge such correspondence.
112. Second, there was material non-disclosure about the fact that the nature of the TV6 Address. Whilst Mr Walsh SC argued that it was not material, I disagree. This is highly relevant and material to the Court in considering if any injunction should be granted against the TV6 Address, when that address consisted of pooled funds deposited by various users of the Binance platform.
113. Third, Ms Cheung submitted that there was material non-disclosure in respect of the possible defences of Binance. I agree. As a matter of fairness, it would have been incumbent upon the Plaintiff to make full and frank disclosure about the nature of the hot wallet; and the legal defence of bona fide purchaser for value without notice that Binance had advanced.
114. In Jahangir Piroozzadeh (above) at §§26-37, Trower J held that the failure to present this at the without notice hearing amounted to “very important non-disclosure”. Further, there was no sufficient distinction drawn between the defendants (who misappropriated the cryptos) on the one hand and the exchanges on the other, which would make it easy for a court on an application of this sort to allow all the defendants to be lumped into the same box. Trower J emphasized that it is of particular importance for the claimant to ensure that the court should be fully apprised of the clear distinction between the separate positions of the various defendants.
115. Fourth, there is force in Ms. Cheung’s submission that the material non-disclosure here was serious and extensive. There was material non-disclosure not only before the Duty Judge, but also at the hearing before Cheng J.
(1) As her Ladyship observed at the hearing on 9 December 2022, that hearing cannot be treated as ex parte when the 1st Defendant and 8 out of the 15 recipient addresses were not served at all. Even worse, the inter partes summons was only served on 7 December 2022 (a Wednesday), i.e. less than 2 clear days before the hearing, notwithstanding the fact that the Ex Parte Order was obtained on 25 November 2022.
(2) Her Ladyship specifically emphasised the point to Mr Li SC that merely exhibiting voluminous exhibits would not be sufficient for the purpose of discharging the duty to make full and frank disclosure. The pre-action exchange of correspondence was referred to in Binance’s letter of 28 November 2022; and yet this was never canvassed in the Plaintiff’s affirmations or skeleton argument filed for the purpose of the hearing before Her Ladyship.
(3) Eventually, it was Cheng J herself who raised the question of the pre-action correspondence between the Plaintiff’s camp and Binance, after Her Ladyship had trawled through the voluminous exhibits herself.
116. The abuse of process of the ex parte procedure and the material non-disclosure on the part of the Plaintiff demonstrates that the proprietary injunction should be set aside. The remaining question is whether an interlocutory proprietary injunction should be re-granted.
I. Whether the interlocutory proprietary injunction should be re-granted
I1. Applicable principles
117. On the discretion to regrant injunctions, the applicable principles are set out in Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642 (Lam VP and Kwan JA, as they were). At §§56-58, Kwan JA (as she then was) said this:-
“56. … … The principles are well established and well recognised. As with all discretionary considerations, each case turns very much on its facts. So we do not propose to quote extensively from these authorities except for one of them, which is an unreported decision of Deputy Judge Alan Boyle QC in Arena Corp Ltd v. Schroeder [2003] EWHC 1089 (Ch), in which he carried out a thorough review of the authorities in this area. This decision has since been cited in a number of cases. At [213] he made a useful summary of the main principles which should guide the court in the exercise of its discretion as follows:
(1) If the court finds that there have been breaches of the duty of full and frank disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial.
(2) Notwithstanding that general rule, the court has jurisdiction to continue or re-grant the order.
(3) That jurisdiction should be exercised sparingly, and should take account of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.
(4) The court should assess the degree and extent of the culpability with regard to non-disclosure. It is relevant that the breach was innocent, but there is no general rule that an innocent breach will not attract the sanction of discharge of the order. Equally there is no general rule that a deliberate breach will attract that sanction.
(5) The court should assess the importance and significance to the outcome of the application for an injunction of the matters which were not disclosed to the court. In making this assessment, the fact that the judge might have made the order anyway is of little if any importance.
(6) The court can weigh the merits of the plaintiff’s claim, but should not conduct a simple balancing exercise in which the strength of the plaintiff’s case is allowed to undermine the policy objective of the principle.
(7) The application of the principle should not be carried to extreme lengths or be allowed to become the instrument of injustice.
(8) The jurisdiction is penal in nature and the court should therefore have regard to the proportionality between the punishment and the offence.
(9) There are no hard and fast rules as to whether the discretion to continue or re-grant the order should be exercised, and the court should take into account all relevant circumstances.
57. There is a tension between two kinds of public interest in this situation (Sita UK Group Holdings Ltd v. Serruys [2010] EWHC 698 (QB) at [15]). The first is that the court should take account of the need to protect the administration of justice and uphold the requirement of full and fair disclosure in an ex parte application. So if material non-disclosure is established, the court will be astute to ensure that a plaintiff who obtains an ex parte injunction without full disclosure is deprived of any advantage he may have derived by that breach of duty, to bring home to litigants the serious consequences of non-disclosure. This is what was described as “the golden rule” in some cases. The other public interest is the general duty to do justice so that the application of the golden rule must not be allowed to become the instrument of injustice in a particular case. So the court would have regard to the principle of proportionality in the exercise of its penal jurisdiction to impose sanctions for non-disclosure.
58. As Christopher Clarke J said in Re OJHSC Ank Yugraneft [2009] 1 BCLC 298 at [103], in exercise this discretion, the court, like Janus, looks both backwards and forwards. The overriding question for the court is what is in the interests of justice in the particular circumstances of the case.”
118. In Fantastic State Ltd v. Tien’s Organic Farm [2019] 3 HKLRD 438 at §40, Lam VP held that it was relevant to consider if the non-disclosure was innocent or deliberate; and the excuse for such non-disclosure. Normally, a court would expect affidavit evidence to account for the non-disclosure.
119. Mr Walsh SC has no disputes on those principles. In fact, he cited Platinum Century Ltd & Ors v. Sunfund Asia Capital Holdings Co Ltd & Ors [2022] HKCFI 3334 at §30, when DHCJ Alexander Stock SC applied those principles summarized in Excel Courage (above).
I2. Discussion
120. In considering whether the injunction should be re-granted, I bear in mind that the general rule is the Court should discharge the order obtained in breach and refuse to renew the order until trial; and that the jurisdiction to continue or re-grant the order should be exercised sparingly.
121. On whether I should exercise the discretion to regrant the proprietary injunction, at the hearing, I asked Mr Walsh SC to specifically identify those matters that the Plaintiff relied upon to justify the re-grant. Mr Walsh SC contended that the injunction should be re-granted on the basis of 3 matters:-
(1) First, the non-disclosure was innocent.
(2) Second, any discharge would have serious consequences for the Plaintiff. He contended that, as a matter of interest of justice, the injunction should be regranted.
(3) Third, Mr Walsh SC also relied upon the fact that the underlying matter involves the theft.
122. This is opposed by Ms Cheung. She argued that no proprietary injunction should be re-granted, when the Plaintiff has no reasonable explanation that the non-disclosure was innocent; and that the Plaintiff has no means to make good his undertaking as to damages, when the Plaintiff (a foreign party) has only provided a correspondence address in Portugal and did not give any evidence on his financial means or assets in Hong Kong (so as to show that he would be good for his undertaking as to damages).
123. Dealing with Mr Walsh SC’s third point first, I do not think that the mere fact that the matter involves a theft by itself would justify the re-grant.
124. On Mr Walsh’s second point, whilst the discharge of the injunction would have serious consequences for the Plaintiff, this is not the end of the matter, for the Court has to balance it against the public interest in the administration of justice. As reminded in Excel Courage , the court should not allow the merits of the applicant’s case to undermine the policy objective of the principle in requiring full and frank disclosure. Further, as Ms Cheung submitted, there is no reason why a party abusing the process of the court is entitled to keep the fruits obtained as a result of the abuse.
125. That is the reason why it is important to consider the degree and extent of the culpability with regard to non-disclosure. Mr Walsh SC argued that the non-disclosure was innocent.
(1) The Plaintiff’s explanation is set out in para 22 of Wang 1st . According to the Plaintiff, he was not aware that the communications had to be disclosed in the ex parte application, as these emails were sent by Jacque Law in a different jurisdiction in Singapore; and it was also his impression that the negotiation emails were immaterial as they were not formal court documents.
(2) Mr Walsh SC argued that the non-disclosure was innocent, when there was already some disclosure of the contact between UDomain and Binance in Leung’s Affirmation. In Leung’s Affirmation, he made reference to the contact with Binance; and stated that Binance was willing to freeze the account until 28 November 2022. As such, Mr Walsh SC contended that the non-disclosure was innocent.
126. Ms Cheung argued that there was no satisfactory explanation as to why such correspondence was not drawn before the Duty Judge at the hearing on 25 November 2022 or Cheng J at the hearing on 9 December 2022.
127. With respect, I disagree with Mr Walsh SC. I am not satisfied that the Plaintiff has provided sufficient evidence or reasonable explanation to persuade me that the non-disclosure was innocent.
(1) First, I find the Plaintiff’s explanation contrived. In Leung’s Affirmation, he confirmed that the Plaintiff had already been advised of his duty to make full and frank disclosure. There is no suggestion that the Plaintiff was not properly advised by his legal representatives on matters that he needed to be disclosed. Many of the documents Leung exhibited are not formal court documents. The fact that the correspondence was exchanged between Jacque Law in Singapore and Binance is neither here nor there.
(2) Mr Walsh SC’s argument that there is already some disclosure of the contact between the Plaintiff’s camp and Binance does not assist the Plaintiff’s case at all. In my judgment, this is in fact against the Plaintiff. When the Plaintiff tried to explain the urgency to the Duty Judge in Leung’s Affirmation by referring to the fact that Binance was only willing to impose a temporary restriction for 7 days up to 28 November 2022, one would have expected the Plaintiff to identify the pertinent personnel of Binance (who offered such undertaking) or to disclose any exchange of correspondence with Binance (so as to make good his case that Binance did in fact offer such temporary freeze). Yet, there is simply nothing. Leung’s Affirmation is surprisingly coy and silent in these aspects. The Plaintiff’s case is nothing but half-truth: Aleksandr Narimanovich Kushaev (above) at §69(5).
(3) There is still no satisfactory explanation from the Plaintiff as to why in Leung’s Affirmation, he referred to the fact that Binance was willing to temporarily freeze the account for 7 days until 28 November 2022; and yet at the same time the Plaintiff chose not to disclose the pre-action correspondence or identify the personnel involved. I am not satisfied that there is adequate evidence / reasonable explanation from the Plaintiff to show that the non-disclosure is innocent.
128. In addition, in approaching the question of regrant, it is inevitable for the Court to consider the question of balance of convenience. In the present case, when the Plaintiff is a foreign plaintiff, one would expect that there should be evidence of his assets and means to demonstrate that he is good for his undertaking as to damages. In fact, one would expect normally that there should be such evidence before the Duty Judge. Yet, there was still no such evidence before this Court even at the hearing on 19 September 2024.[5]
129. Faced with this argument advanced by Ms Cheung, the Plaintiff belatedly took out yet another summons on 20 September 2024 for leave to file Chong 5th Affirmation (which exhibits a draft of the Plaintiff’s 4th Affirmation), purporting to give evidence on the financial means of the Plaintiff in making good the undertaking as to damages. This application was opposed by Nest. After hearing the parties’ submissions, I had no hesitation in dismissing this application:-
(1) As submitted by Ms Cheung which I agreed, this application was taken out at the eleventh hour. Yet the Plaintiff had not provided any explanation as to why it could not have been produced earlier. As a matter of fact, the point that the Plaintiff had failed to provide any evidence about his ability to honour the undertaking as to damages had already been raised in Ms Cheung’s skeleton argument filed for BHL back in April 2024.
(2) Mr Walsh SC accepted that those principles in Tian Hong Mei (above) applied. However, he could not explain why the Plaintiff could satisfy the 3 conditions in Ladd v Marshall (above).
(3) Third, the evidence that the Plaintiff sought to adduce was of low probative value. All that the Plaintiff could point to is that he kept a time deposit of about US$5 million with a bank in Florida in the United States. There is nothing to suggest that the Plaintiff has any means / assets in Hong Kong of a sufficiently permanent nature to show that he would be good for his undertaking as to damages.
(4) In the circumstances, this eleventh-hour application was dismissed with costs to Nest.
130. As such, there is nothing before the Court to demonstrate that the Plaintiff is good for his undertaking as to damages. Nor is there any offer from the Plaintiff to provide any fortification of any undertakings. This is yet another powerful factor that militates against the exercise of the discretion to re-grant the injunction sought by the Plaintiff.
I3. Conclusion
131. The general rule is that the injunction should be discharged for material non-disclosure. The discretion to re-grant is to be exercised sparingly. As explained above, despite the valiant attempt on the part of Mr Walsh SC, I am not prepared to exercise the discretion to re-grant the proprietary interlocutory injunction in favour of the Plaintiff.
132. At the hearing, Mr Walsh SC asked that the Plaintiff may pursue the matter further should I discharge the proprietary injunction; and he requested that some interim measures be imposed should I discharge the injunction.
133. With some reluctance, I would make an order that the discharge of the proprietary injunction would not come into effect until the expiry of 14 days from the date of this judgment or further order. This would give some time for the Plaintiff to pursue the matter further if so advised.
J. Disposition and Conclusion on the proprietary injunction
134. In conclusion, I make the following Order:-
(1) The Plaintiff’s Amended Summons for the continuation of the proprietary injunction against TV6 Address be dismissed; and the proprietary injunction against TV6 Address be discharged (insofar as Nest is concerned).
(2) The order in sub-para (1) shall not come into effect until the expiry of 14 days from the date of this judgment or further order.
(3) An order nisi that the costs of and occasioned by the Plaintiff’s Amended Summons for the continuation of the proprietary injunction be paid by the Plaintiff to the 3rd Defendant forthwith, together with a certificate for two counsel.
(4) On the Plaintiff’s Summons dated 8 April 2024 for leave to adduce Wong 3rd and the joinder of the “Binance Operators”, I make an order nisi that there be no order as to costs.
(5) On the Plaintiff’s Summons dated 20 September 2024 for leave to adduce Wong 2nd (in the form of the draft as attached to Chong 8th ), a costs order nisi that the Plaintiff shall pay the 3rd Defendant forthwith.
(6) If the Plaintiff or the 3rd Defendant does not take out any application to vary the aforesaid costs orders nisi within 14 days from the date of this Judgment, the aforesaid costs orders nisi shall become absolute.
K. Whether disclosure should be ordered in favour of the Plaintiff against Nest
135. The remaining question is whether discovery should be ordered in favour of the Plaintiff against the unknown 2nd Defendants and also Nest.
136. The jurisdiction that the Plaintiff invoked is the Bankers Trust jurisdiction. The Plaintiff’s submissions can be found in the skeleton argument dated 20 December 2022 for the hearing on 23 December 2022 before Au-Yeung J.
K1. Disclosure against the unknown 2nd Defendants
137. The Plaintiff’s application is made on the basis that the Court can grant ancillary disclosure order to enable the Plaintiff to administer and enforce the proprietary injunction; alternatively that the Plaintiff can invoke the Bankers Trust jurisdiction.
138. The principles for the grant of a Bankers Trust orders are set out in A Co v B Co [2002] 3 HKLRD 111 at 117F-118B:-
(1) There must be cogent and compelling evidence to demonstrate serious tortious or wrongful activities have taken place;
(2) It has to be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff;
(3) The discovery sought must not be unduly wide. In particular, the third party should be entitled to the same specificity in the documents he is asked to produce as he would be served with a subpoena. If the third party is asked for information, the questions should be directed with specificity to ascertain the whereabouts of the assets in question.
(4) The court needs to balance the potential disadvantage against the detriment to the person against whom the order is sought, not merely in terms of costs, but by way of invasion of privacy and requiring breach of obligations of confidence to others.
139. Insofar as the 2nd Defendants are concerned, I raised with Mr Walsh SC as to how the jurisdiction is to be exercised here against the 2nd Defendants when their identity remains unknown. It is also not clear if any of those unknown 2nd Defendants would comply with the order. In this connection, Mr Walsh SC referred me to the decision of DHCJ Richard Salter KC in Tippawan Boonyaem v Persons Unknown Category (A) and Ors [2023] EWHC 3180 (Comm). The learned judge initially shared the same scepticism about the usefulness of making such order. But eventually His Lordship made such disclosure order against those unknown defendants. With some reluctance, I am prepared to make an Order in terms of paragraph 4 of the Plaintiff’s Amended Summons dated 25 April 2024.
K2. Disclosure sought against Nest as the 3rd Defendant
140. Insofar as Nest is concerned, the Plaintiff seeks discovery against Nest in respect of the following addresses (“Binance Deposit Addresses” ) the following information:-
No.
Address
1
… …
2
… …
3
… …
4
… …
5
… …
6
T … … (the “Sixth Address” )
(1) The names and physical address(es) of the owner(s) of the trading account with Binance Operators (“Trading Account”) operating each of the Binance Deposit Addresses.
(2) The address(es) (“Counter-Party Address(es)”) to which the Trading Account directed cryptocurrency to be transferred since 14 November 2022 (“Dealings”).
(3) Insofar as a Counter-party Address(es) is itself also associated with a Trading Account(s) with Binance Operators, the name(s) and address(es) of the owner(s) of that Trading Account(s).
(4) The date, time, currency and amount of the Dealings.
141. It was argued for the Plaintiff that such orders would enable the Plaintiff to trace his assets: Bankers Trust v. Shapira (above) at 1282B-E. The Plaintiff also cited Ion Science Ltd v. Persons Unknown (unrep), 21 December 2020, in which a Bankers Trust Order was granted against Binance in the capacity of a cryptocurrency exchange.
142. At the hearing, Ms Cheung raised some objection – contending that the disclosure should not be ordered when the interlocutory proprietary injunction is to be discharged. However, with respect, even if the proprietary injunction is to be discharged and that the Plaintiff may not have any basis to seek any disclosure ancillary to the injunction, that is not the end of the matter, for the Plaintiff could still invoke the Bankers Trust jurisdiction. In fact, as transpired from the parties’ correspondence placed before the Court, the position hitherto adopted by BHL (represented by the same team of counsel and solicitors) has been that it has been amenable to provide the bulk of the disclosure sought by the Plaintiff, save and except the information in respect of the Sixth Address. The objection is that the Sixth Address concerns dealings of funds of another exchange. Ms Cheung argued that provision of advance notice to that other exchange is crucial, when bona fide parties such as banks are asked to give disclosure to assist victims of asset recovery, citing Asia Asset Management (Cayman) Ltd v. Dipper Trading Co Ltd [2019] 3 HKC 145 at §§11-26, per DHCJ Maurellet SC.
143. However, I agree with Mr Walsh SC’s submission that, insofar as the Sixth Address is concerned, its position here is effectively the same as the other 5 addresses against which disclosure is sought.
144. In the circumstances, I am minded to grant the disclosure sought by the Plaintiff. Previously, there were some disputes about the wordings of the order. But Mr Walsh SC confirmed in his supplemental skeleton that the Plaintiff is amenable to the changes previously proposed – that the relevant wordings be changed to “use the best endeavours and to the extent the information is available” . In the premises, on the basis of the undertaking of the Plaintiff to indemnify Nest in respect of its costs of complying with any disclosure order as per the usual practice, I direct that an order be made in terms of para 1.3 of the Plaintiff’s Summons dated 16 September 2024. I also give the parties liberty to apply.
145. Lastly, it remains for me to thank counsel for their assistance.
(M C Law, SC)
On 24 April 2024
Mr Laurence Li SC, leading Mr Sik Chee-Ching, instructed by Henry Yu & Associates, for the Plaintiff
The 1st Defendant: Zhuo Yihao (卓一灝), unrepresented and absent
The 2nd Defendant: An unknown person or persons who has access to or operates the addresses as per part 2 of schedule 1 of the indorsement of claim, Absent
Ms Elizabeth Cheung and Ms Sharon Yuen, instructed by Herbert Smith Freehills, for Binance Holdings Ltd
On 19-20 September 2024
Mr Wayne Walsh SC, leading Mr Fergus Tam, instructed by Henry Yu & Associates, for the Plaintiff
The 1st Defendant, unrepresented and absent
The 2nd Defendants, unrepresented and absent
Ms Elizabeth Cheung and Ms Sharon Yuen, instructed by Herbert Smith Freehills, for the 3rd Defendant
[1] According to the report made to the Hong Kong Police, the Plaintiff holds a Vanuatu passport. But in the email from Jacque Law (his Singapore lawyers, as defined below) dated 22 November 2022 (1.19 am), the Plaintiff was said to be a holder of a Cambodian passport.
[2] The Plaintiff’s 6 December 2022 Summons was only amended on 25 April 2024 (the “Amended Summons” ).
[3] At this hearing, without joining any particular parties, Mr Li SC simply used the abbreviation of “Binance” to refer to the Binance platform.
[4] For the sake of completeness, I should also add that, in Fetch.AI Ltd (above), in considering if a Bankers Trust order should be made against BHL, HH Judge Pelling QC observed at §26 that the material generated by the Binance Group concerning which entities conduct what business was remarkably opaque, and that it was outside the scope of any regulatory regime in England and Wales. However, it is not the Plaintiff’s case here that any such matters could justify any ex parte application against Binance. In fact, in Jahangir Piroozzadeh v Persons Unknown [2023] EWHC 1024 (Ch) at §§17-18, Trower J was of the view that this did not justify any without notice application against BHL on the facts of that case.
[5] I note that there is a line of cases that, if an applicant’s financial position is such that, viewed fairly, it may be said to raise realistic doubts as to his ability to honor the cross-undertaking, it is incumbent upon the applicant to make full and frank disclosure of his financial position to the ex parte judge. But as Nest’s discharge application did not cover this ground, I say no more about it. But this remains relevant to the Court’s consideration as to whether the injunction should be regranted.