SUN LI v. YU ZHIFENG AND ANOTHER

HCA 1845/2023

[2025] HKCFI 4679

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1845 OF 2023

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DECISION

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Introduction and Factual Background

1.  By Summons dated 19 August 2025 (“Summons”), the Plaintiff (“P”) applies for:

(1)  A stay of execution of the Order of Master Michael Lok (“Master”) made on 30 July 2025 (“Master’s Order”) pending appeal; or

(2)  A proprietary injunction over the sum of US$525,000 (“the Sum”) to be paid by P into the account of 2^nd Defendant (“D2”) pursuant to the Master’s Order; and/or

(3)  A Mareva injunction restraining D2 from disposing of, dealing with and/or diminishing the value of her assets up to the value of US$525,000. 

2.  According to the 6^th Affirmation of P (“P 6^th”) filed in support of the Summons:

(1)  P is a businessman residing in Hong Kong running the business of operating two malls in Shenzhen;

(2)  P’s daughter (“Nicole”) runs a blockchain business in Singapore but travels often;

(3)  Nicole had previously asked for financial injection from P and to transfer funds to her;

(4)  Between 11 and 16 September 2023, P fell victim of a sophisticated fraud by unknown fraudsters who impersonated Nicole using a fake Telegram account as a result of which he transferred from his bank account and e-wallet: (a) US$1M; (b) HK$2.6M; and (c) 2.08366 Bitcoins (collectively, “the Funds”) to various accounts/bitcoin wallet designated by the fraudsters;

(5)  It was only when Nicole returned home past midnight on 17 September 2023, P asked her about the transfer requests did P realize that he had been scammed;

(6)  P and Nicole immediately reported the matter to the Hong Kong Police (“the Police”) by calling 999;

(7)  The Police were able to trace and freeze some of the Funds including the Sum which was paid into D2’s bank account (“D2’s Bank Account”) received from the first tier recipient;

(8)  The Police also were able to trace and freeze the bank account of the 1^st Defendant (“D1”);

(9)  The present action was commenced against D1 and D2 in November 2023;

(10)  P obtained default judgment against D2 on 6 March 2024, a garnishee order nisi was granted on 11 April 2024 which was made absolute on 9 August 2024, as a result of which US$524,999.53 was released from D2’s Bank Account to P;

(11)  However, later it was discovered that these proceedings were served on D2 at an incorrect address due to a clerical mistake by P’s previous solicitors.  P conceded to D2’s application to set aside the default judgment and the garnishee order absolute but urged the Master to impose a condition requiring payment of the Sum into court but the Master refused and instead ordered the unconditional setting aside of the default judgment and the return of the Sum to D2’s account held with Shanghai Pudong Development Bank (“D2’s New Account”); and

(12)  By a Notice of Appeal dated 13 August 2025 (“the Notice of Appeal”) P has taken out an appeal against the Master’s Order to a judge. 

3.  At today’s hearing, being the first hearing of the Summons, Ms Barbara Wong together with Ms Cherry Xu, counsel, appeared for P and Mr Ernest Ng together with Mr Calvin Ng, counsel, appeared for D2. 

4.  Strictly speaking, D2 had not been served with the Summons and P 6^th two clear days prior to today’s hearing.  P should be treated as proceeding ex parte on notice.  See Ming Yang Capital Limited v China Vered Asset Management (Hong Kong) Limited & Anor [2024] HKCFI 1444 at §§36, 74-76. 

5.  Counsel are agreed that directions should be given for the filing of evidence by D2 and any evidence in reply by P, and the application for proprietary injunction and/or Mareva injunction should be adjourned for substantive argument.  Clearly, D2 should be given a fair opportunity to marshal her evidence and arguments to answer this application and it is not possible in the limited time prior to this hearing and time allocated for this hearing (15 minutes) for this court to resolve the arguments raised in this hearing nor to reject either parties’ case off hand. 

6.  However, Ms Wong sought a stay of execution of the Master’s Order pending the determination of the Notice of Appeal (“the Stay Application”) or alternatively, an interim-interim proprietary injunction over the Sum to be transferred to D2’s New Account and/or Mareva injunction over the Hong Kong assets of D2 up US$525,000 pending the determination of the Summons (“Interim-interim Relief Application”) to be granted today. 

7.  Mr Ng invited me to dismiss the Stay Application and refuse the Interim-interim Relief Application. 

Discussion

Re: Stay Application

8.  Ms Wong is aware of and drew the court’s attention to Source View Development Ltd v Tang Kam Cheung (鄧錦祥) [2022] 2 HKLRD 1, where it was held by DHCJ Winnie Tsui (as she then was) that where a master makes a substantive order, an appeal against that order lies to a judge. If the aggrieved party wishes to stay the execution of the substantive order pending the appeal, generally speaking, the proper course for him to take would be to make the stay application before the master who made the substantive order.  In that case, the learned judge held that the defendant’s application for stay pending appeal brought before a judge was procedurally flawed, amounted to an abuse of process and was dismissed.  See §§24-39, 48-49. 

9.  As explained by the learned judge, the master who made the substantive order is best placed to hear the application.  When seeking a stay, the applicant will need to demonstrate that he has an arguable appeal.  Given that the master had heard the arguments and is familiar with them, he is able to evaluate the prospects of the appeal on the merits quickly and effectively.  The master may also appreciate how a decision may affect the further conduct and progress of the proceedings from a case management perspective.  See ibid at §§26-27. 

10.  Whilst Ms Wong submitted that the judge of the Court of First Instance has power to grant a stay under O.58, r.1(4) of RHC and relied on Re The Grande Holdings Limited (unrep) HCCW 177/2011, 20 July 2017 per Anthony Chan J at §§9-12, as rightly pointed out by Mr Ng, in that case,  the learned judge expressly endorsed the correct procedure was that the stay application should have been brought before the Master who was familiar with the matter.  The learned judge in that case was only prepared to entertain the application given the erroneous misunderstanding of the jurisdiction of a master by the provisional liquidators. The provisional liquidators had taken out an application before the master in seeking a time extension for compliance of the master’s order until 14 days after the determination of the stay application but the master was informed that the provisional liquidators’ view was that he had no jurisdiction to grant a stay. 

11.  In the present case, there is no suggestion that there was any misunderstanding of the Master’s jurisdiction and that was the basis for not applying to the Master for a stay of execution pending appeal. 

12.  Furthermore, it is not apparent to me that there are any special circumstances why the application for stay of execution should not have been made to the Master. 

13.  Whilst counsel for parties had made submissions on the merits of the intended appeal, it would bypass the procedural framework for me to substantively consider the Stay Application. There is simply no good reason for me to do so.  On the contrary, if I were to come to a ruling on the Stay Application, I would inevitably have to express a provisional view on the merits (without a fair opportunity for D2 to respond with full evidence and/or considered submissions).  Furthermore, when the appeal proper comes before another judge (the hearing of the Notice of Appeal has yet to be fixed and it may well not be myself), he/she might reach a different and contradictory view (at that time, a definitive one) on the merits and there would be a duplication and unnecessary waste of judicial time and resources. 

14.  With greatest respect, I disagree with Ms Wong’s submissions that the hearing of the Stay Application together with the injunction application is consistent with the objectives of the CJR. Although only a judge has jurisdiction to grant injunctive relief, if P is successful in obtaining the injunctive relief, plainly the Stay Application, which is pursued in the alternative, would be unnecessary.  Alternatively, had the Stay Application been taken out before the Master, and if granted, the present application (said to be taken alternatively to the stay of execution) would be unnecessary. 

15.  For the above reasons, I take the view that the Stay Application is misconceived and should be dismissed. 

Re: Interim-interim Relief Application

16.  There is no dispute that interim-interim relief is meant to be an “urgent temporary stop-gap measure and the circumstances were such that the court has to do practical justice on the balance of fairness even though it may not have sufficient time to consider the matter fully”: see China Shanshui Cement Group Limited & Others v Zhang Caikui & Others [2018] HKCA 409 at §13. 

17.  Moreover, recent authorities affirm that the grant of an interim-interim injunction requires extreme urgency and there is a high burden to be satisfied for the grant of inter-interim relief: see per Anthony Chan J in Tai Sang Feeds Company Limited & Ors v Sharply Development Limited [2020] HKCFI 2105 at §3 and Smart Edge Limited v Lun Hau Mun & Ors [2020] HKCFI 1900 at §§11-12. 

18.  I accept the submissions of Mr Ng that the delay in making the present application only on 19 August 2025 viewed against the following demonstrates a lack of any extreme urgency:

(1)  The alleged fraud was discovered on 17 September 2023;

(2)  The present action was commenced on 14 November 2023; and

(3)  The Master’s Order was made on 30 July 2025 and in the reasons given by the Master, he referred to the submissions of Mr Ng that it was and is always open to P to apply for a Mareva and/or proprietary injunction. 

19.  Ms Wong submitted that there was no delay because the Police had “frozen” the Sum and that remained in place until the Police consented to the release of the Sum pursuant to the garnishee order absolute.  However, as pointed out by Mr Ng, the issuance of Letters of No Consent to banks by the Police is temporary, reviewed each month and of finite duration (usually 6 months): see Tam Sze Leung & Ors v Commissioner of Police (2024) 27 HKCFAR 288 at §45(f) and Stephen Anthony Soyka v Hang Xu Trading Co Limited [2023] HKDC 957 per Deputy District Judge David Chan at §16.  There is no good explanation for the delay in making this application. 

20.  Given that the Master’s Order was made on 30 July 2025, by then P knew or ought to have known interlocutory relief would be required, and by the latest should have made the application (for stay or injunctions) then. 

21.  Ms Wong submitted that they had 14 days to consider whether to appeal and wrote to D2’s solicitors seeking their consent to a stay and within a week took out the present application.  However, the filing of the Notice of Appeal does not operate as a stay and there was delay in not making the application on 30 July 2025 (at the latest). 

22.  Delay is of course also relevant to the risk of serious prejudice or irreparable harm: see King Fung Vacuum Ltd & Others v Toto Toys Ltd & Others [2006] 2 HKLRD 785 at §20 per Rogers VP and Wong Chung Ming Development Fund Co Ltd v Profit Surplus Ltd [2009] 3 HKLRD 514 at §§30-31 per Le Pichon JA. 

23.  I also bear in mind in the present case, leaving aside whether the claim against D2 is personal only or also proprietary, P is claiming the return of the Sum said to belong to him.  Where a claim is purely monetary unless there is evidence to show that D2 is not good for her money, a proprietary injunction is neither necessary nor justified: see Wason Holdings Limited & Others v BHP International Markets Limited [2018] HKCA 113 at §§36-38 per Barma JA.  At this stage, D2 has not had the opportunity to file evidence so in so far as P alleges D2 received the Sum fraudulently or there is a risk of dissipation, it would be for P to adduce cogent evidence.  Save to point to D2’s failure to justify reason for her to receive the Sum and she is not resident in Hong Kong, I am not satisfied on the evidence before me there is a serious risk of dissipation on these two factors alone.  

24.  Ms Wong referred to the failure of D2 to explain her receipt of the Sum in the affirmations filed in the application to set aside default but that is not evidence filed in these proceedings.  Furthermore, Mr Ng explained that D2 took the view (as stated in her affirmation), merits is not relevant where the default judgment was irregular.  Although the court has a discretion upon setting aside a default judgment to impose conditions, the court will consider the conduct of the party. Ms Wong submitted that the merits of D2’s defence was also relevant but the cases cited by her do not support that proposition. 

25.  Although counsel for both P and D2 had made other submissions on whether the requirements of proprietary injunction and Mareva injunction have been made out, at this moment, without the benefit of D2’s evidence and considered submissions[1], in view of lack of extreme urgency in making this application, when P could and should have sought to obtain a stay from the Master, and given P’s claim is a monetary one only, I am of the view that it is not necessary for any interim-interim relief be granted to do justice, on the balance of fairness, balancing the risk of injustice to P if the injunction is refused against the risk of injustice to D2 if the injunction proves to be wrongly granted. 

[Discussion on directions and orders]

Disposition and Orders

26.  I would dismiss paragraphs 1 and 3 of the Summons.  Paragraph 2 of the Summons is to be adjourned to a hearing to be fixed (with 3 hours reserved) in consultation with counsel’s diary. 

27.  Save for the costs of today, which shall be paid by P to D2 to be summarily assessed, the costs of the Summons are reserved.  P is to lodge any objection to D2’s Statement of Costs handed up on or before 29 August 2025 for summary assessment on paper. 

[1] D2 was served the Summons, P’s 6^th and P’s Skeleton Submissions less than 2 clear days prior to today’s hearing.