DELCO PARTICIPATION B.V. v. CHIHO ENVIRONMENTAL GROUP LTD (formerly known as CHIHO-TIANDE GROUP LTD) AND ANOTHER

HCA 3040/2015

[2026] HKCFI 202

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3040 OF 2015

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AND 

HCA 2939/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2939 OF 2016

________________________

________________________

(Heard together)

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D E C I S I O N

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A. Introduction

1.  This case raises the question as to what a plaintiff is to do if the plaintiff seeks a Mareva or freezing injunction but does not trust the defendant in relation to assets which the defendant may claim he does not actually own because he holds them legally, but only on trust or as nominee for a third party.  That question arises in the following circumstances.

2.  After trial in these two captioned actions (“A3040” and “A2939” respectively)  – heard together, along with another action HCA 2943/2015, which is not relevant for present purposes – I delivered a Judgment dated 15 October 2025.  For present purposes, I adopt the abbreviations and definitions used by me in that Judgment.

3.  I held in that Judgment, amongst other things, that:

(1)  in A3040, Delco was successful on its Uncapitalised Portion Claim against Fang, such that Fang should pay HK$55,501,079 to Delco, with pre-judgment interest at prime +1% from 4 March 2011;

(2)  in A2939, Delco was successful on its Breach of Fiduciary Duty Claim against Fang and HWH, such that Fang/HWH should pay equitable compensation to Delco in the sum of HK$332,922,194, with pre-judgment interest at prime +1% from 23 January 2015; and

(3)  in A2939, Delco was also successful on its CB Interest Claim against Fang, such that Fang should pay HK$6,252,000 to Delco, with pre-judgment interest at prime +1% from 20 September 2013.

4.  Therefore, as a result of the Judgment, Fang is liable to pay Delco a total of HK$670,403,670 (inclusive of pre-judgment interest), with post-judgment interest still accruing.  None of that sum has been paid to date.

5.  On 25 November 2025, Mr James Man and Mr Jonathan Ng as Counsel for Delco made an ex parte application for a post-judgment Mareva injunction in each of A3040 and A2939.  I was satisfied that such an injunction was appropriate to the circumstances, and granted an order in each action broadly in the terms as sought (albeit slightly amended by me).

6.  The ex parte orders were served on Fang’s solicitors on record on 26 and 27 November 2025 respectively.

7.  On 27 November 2025, Delco issued inter partes Summonses, seeking (1) the continuation of the ex parte orders for a further 12 months, and (2) ancillary asset disclosure orders.  The return date of the summonses was 5 December 2025.

8.  At the hearing on 5 December 2025, and as a result of a point arising (see below), I adjourned the matter for further argument on 9 December 2025.  Following that further argument, I reserved my decision to be handed down later – albeit that I continued the ex parte orders on an ‘interim interim’ basis until my decision.

9.  At both the hearing on 5 December 2025 and its continuation on 9 December 2025, Delco was represented by Mr Jonathan Ng of Counsel, and Fang was represented by Mr Roger Phang of Counsel.

10.  This is my Decision.

B.  Terms of the Orders and Applications in Issue

11.  Each of the ex parte orders provided for the restriction on disposal of assets in the following terms (emphasis added):

[Fang] must not:

(a)  remove from Hong Kong any of his assets which are within Hong Kong, whether in his own name or not, whether legally or beneficially owned, and whether solely or jointly owned, up to the value of [relevant amount], [that amount] being separate from and in addition to the amount frozen in the Order of 25 November 2025 made in [the other action];

(b)  in any way dispose of or transfer away or deal with or diminish the value of any of his assets, whether within or outside Hong Kong, whether in his own name or not, whether legally or beneficially owned, and whether solely or jointly owned, up to the same value.

12.  It can be noted that the emphasised words in italics and underlined are not found in, and so were added to, the standard form wording for an injunction prohibiting disposal of assets worldwide as set out in Practice Direction PD 11.2.

13.  However, neither this deviation from the standard form nor any suggested justification for the deviation were drawn to my attention or explained in the ex parte skeleton argument or at the oral ex parte hearing.  This was a clear breach of §3 of PD 11.2/1.

14.  Each of the inter partes summonses sought an ancillary disclosure order in the following terms (emphasis added):

[Fang] must inform Delco in writing at once of all his assets of an individual value of HK$100,000 or more, whether in or outside Hong Kong, whether in his own name or not, whether solely or jointly owned, and whether he is interested in them legally, beneficially or otherwise, giving (i)  the value, location and details of all such assets, (ii)  whether the assets are in Fang’s own name, (iii)  whether they are solely or jointly owned, and (iv)  whether the interest is legal, beneficial or otherwise, or if they are controlled by Fang directly or indirectly. Fang may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate him.

15.  Again, the emphasised words in italics and underlined are not found in the standard form wording for the ancillary disclosure order contained within the standard form wording in PD 11.2.

16.  Following receipt of the inter partes summonses, Fang’s solicitors wrote to Delco’s solicitors by letter dated 3 December 2025 (“3 December Letter”), which included the following (italics in original):

We are instructed that our client is prepared to consent to an order in terms of the Summonses, save that paragraph 2 thereof should be amended by removing the words “and whether he is interested in them legally, beneficially or otherwise” and “(iv)  whether the interest is legal, beneficial or otherwise, or if they are controlled by Fang directly or indirectly”.  These words are addition to and depart from the standard wording in Practice Direction 11.2.  It is not clear to us what proper purpose these additional words serve.  It seems to us that the standard wording already covers all assets which belong beneficially to our client.  If our client only has a legal interest in an asset which is held beneficially for a third party, such assets do not belong to our client and are not liable to enforcement.  We are also unable to advise our client as to what other interest apart from a legal or beneficial interest would have to be disclosed under the terms of paragraph 2 of the Summonses.

17.  Mr Ng described the terms of the 3 December Letter as “concerning” – at one point described as a “smoking gun” – the concern being that Fang was in essence “conspicuously hinting” that Fang might be holding assets supposedly held on trust beneficially for third parties, but that he would not give disclosure of them.  It was submitted that Delco is in a game of cat and mouse and, prior to that letter, Delco had not conceived of the possibility that Fang might be concealing his assets via this means.

18.  Nevertheless, as I shall repeat below, it seems to me that the 3 December Letter was merely identifying the departure from the standard form, and questioning the purpose of that departure, against hitherto settled principles that Mareva freezing orders would bite only upon assets beneficially belonging to the defendant (and not to assets held by defendant beneficially for a third party), and irrespective of what “or otherwise” might mean.

19.  At the hearing on 5 December 2025, Mr Ng offered a draft Order continuing the Injunction Order, and a suggested wording of the ancillary disclosure order slightly varied from that put forward by the summonses, such that the words “whether he is interested in them legally, beneficially or otherwise” should be replaced by the words “whether legally or beneficially owned”.  But Mr Ng also suggested a further paragraph in the draft order reading:

The Injunction Order and the Disclosure Order shall cover assets held by Fang on trust for a third party.

20.  The first alteration seemed to be intended to address the concern expressed on behalf of Fang about the words “or otherwise”.  The proposed additional paragraph made clear that Delco was seeking disclosure by Fang of assets held by him on trust (i.e. assets said to be held by him as to legal title only, but not beneficially his).

21.  Hence, the issue to be determined is not whether there should be a general continuation of the ex parte orders, nor whether there should be ancillary asset disclosure orders, but whether those various orders should have the wording additional to that set out in the standard form. This is an issue of scope.

22.  The argument on that issue turns substantially on how far the Court should go in any given case to give effect to the purpose of a Mareva injunction, namely seeking to prevent the dissipation of assets which would otherwise be available to meet a judgment.

C.  Solodchenko

23.  In the argument, Mr Ng placed significant weight on the English Court of Appeal decision in JSC BTA Bank v Solodchenko [2011] 1 WLR 888 (“Solodchenko”).

24.  The issue arising on that appeal was described in the decision at §1 as the short but important point of construction about the meaning of the words “his assets” as they appeared in the standard form a freezing order in the then current edition of the Commercial Court Guide (April 2009).  In short, the issue was whether those words include assets which the respondent to the order holds as a trustee or nominee for a third party.

25.  Reference was made to an earlier English Court of Appeal decision in Federal Bank of the Middle East Ltd v Hadkinson [2000] 1 WLR 1695, where the court had to decide whether the standard form a freezing order without additional words was effective to cover assets held in the defendant’s name, but which belonged beneficially to third parties.  It held that it was not.

26.  In Solodchenko at §36, it was recognised by Pattern LJ that part of the argument in the Hadkinson case in favour of construing the order so as to include assets of which the defendant was a trustee centred on the need to deal with the dishonest defendant who would be inclined to conceal his own assets by pretending that they were held by him only as a trustee or nominee for another person.  But once served with an order which included trust assets, a defendant who was genuinely only a trustee could apply to vary the injunction so as to exclude the asset on proof that his interest was not a beneficial one.  The Court has power to decide issues of that kind as part of its jurisdiction to grant freezing order relief.

27.  However at §37, it was recognised that the argument failed to carry the day for the claimant, not because it was regarded as unrealistic, but simply because the language of the order under consideration made it impossible to accept that it should be given the wide effect contended for.  Further at §§38-39, Patten LJ was not persuaded by the argument advanced for the defendant in that case that: (1) the dishonest defendant was likely to seek to avoid the consequences of the freezing order by masquerading his own assets under the guise of assets held for a third party, so that the wider form of order was justified in such cases; (2) the dishonest defendant was unlikely to comply with any order of this kind; (3) the claimant was therefore no better off with a more detailed order freezing both assets held in trust for third parties and the defendant’s own assets than he would be if the order only applied in terms to the latter; so that (4) usual order would suffice to catch all assets of the defendant which in truth were his.  Instead, it seemed to Patten LJ that a defendant who has gone to the trouble of disguising his own assets as those held under a trust for a named third party would have done so with a view to resisting applications of the kind.  He is therefore likely to utilise the disguise he has invented, rather merely to abandon it and ignore the order. The wide form of order would therefore likely in many cases provide an opportunity of investigating the truth of the claim that the assets are held on trust, before they are released from the injunction and its accompanying disclosure obligations.

28.  At §46, Patten LJ said:

46.  I was, for all these reasons, doubtful whether what was introduced as an almost routine updating of the Commercial Court form of freezing order was intended to effect such a radical change in what is presented as a standard form of order. But, in the end, I have been persuaded that the words used did have that effect.  A description of assets held “legally, beneficially or otherwise” does draw a distinction between assets held legally and those held beneficially.  As the judge put it, the words are disjunctive.  That is only a meaningful distinction if legal ownership means something different from beneficial ownership.  By the same token, there is a meaningful distinction of the same kind between assets held beneficially and those held otherwise than beneficially which are all within the new words.  I do not accept Mr Stanley’s submission that one can read all three categories as forms of beneficial ownership even though I accept that the inclusion of the words where they are is a potential source of confusion.  If the new words were intended only to confirm that the order includes assets held by the defendant legally (and beneficially)  as well as only beneficially then they were unnecessary because the opening words of para 6 (“whether or not they are in its own name”)  have precisely that effect.  Any assets owned both legally and beneficially will be held by the defendant in his own name.  Therefore, assuming as I do that the new words were added for a purpose, I can only conclude that para 6 effects an expansion of the type of asset which para 5 of the order would otherwise include.  Assets held by the defendant as a trustee or nominee for a third party are included by an order which contains the new words.

29.  At §48, Patten LJ expressed the view that it would be unwise to attempt to lay down some kind of definitive guidance as to when, if at all, it is appropriate to make an order which does include trust assets, as opposed to one which does not.  He thought it a developing area of the law, and the form of order would inevitably be dictated by the facts and circumstances of the particular case.

30.  Nevertheless, at §49, he thought it would be helpful to summarize a number of uncontroversial points and the principles as follows:

49.  They are these.

(1)  Nothing in this judgment is intended to case any doubt upon the established principles which underlie that grant of all freezing orders.  I refer in particular to the fact that the only purpose of such an injunction is to prevent the dissipation of assets which would otherwise be available to meet a judgment.  The inclusion of trust assets is therefore only justifiable if there are proper grounds for believing that assets ostensibly held by the defendant on trust or as a nominee for a third party in fact belong to him (or to another person whose assets are also frozen).  Absent such circumstances, I can see no possible justification for including in the order assets which belong beneficially to a third party and are not therefore the property of the defendant.

(2)  A judge who is asked to grant an injunction in this form should be concerned to minimise the impact of the order on third party beneficiaries under genuine trusts.  This will require expedition in resolving any issues of title on an application by a defendant or beneficiary to vary the order and active consideration being given to the form of the cross-undertaking.  It will usually be appropriate for the cross-undertaking to be extended in terms to cover the purported beneficiary for any loss which is caused by an injunction which is subsequently varied or discharged in respect of the trust assets.

(3)  The authors of the Commercial Court Guide should make it clear in the guide that the effect of the current form of order is to include trust assets.  There should also be active consideration as to whether it is appropriate for the specimen CPR freezing order and the Commercial Court Guide form of order to remain materially different.

(4)  I also venture to suggest that if the standard form of Commercial Court order is to continue to include trust assets it should be redrafted so as to make it absolutely clear to any reader that it does extend to assets held by the defendant as a trustee or nominee for a third party.

31.  Longmore LJ made similar points, and at §56, by reference to the prior Hadkinson decision, he said:

56.  The majority of the court (Mummery and Pill LJJ), at p 1709E, did not find that an easy decision to reach because they recognised the possible repercussions of their construction on the effectiveness of the standard form of freezing order.  It had been submitted by Mr Lawrence Cohen QC for the bank in that case, at p 1707D-E, that, if the order did not apply to assets held in trust by the defendant:

“an unscrupulous defendant of the kind against whom freezing orders are usually directed could undermine and nullify the object of the order by simply saying that he did not believe that he was the beneficial owner of the fund or assets in question. He could then withhold its existence from his disclosure affidavit and secretly deal with it. The defendant would in effect be given licence to decide for himself whether or not an asset or fund belonged to himself or to a third party. This was unrealistic, impractical and contrary to the rationale of the jurisdiction to make freezing orders.”

In spite of this powerful submission this Court nevertheless concluded that, on the true construction of the order, assets held by Mr Hadkinson in trust for others were not caught by the order, did not have to be disclosed to the claimant and could be dealt with and disposed of.

32.  Mr Phang acknowledged those passages.  But he pointed out that what was said in the case was said against the particular circumstances of that case.  For example, and of real importance, before the application for a freezing order was made in that case, the plaintiff bank had obtained a Norwich Pharmacal order.  Amongst the documentation obtained pursuant to that order were certain declarations of trust executed by one defendant in respect of some shares in other corporate defendants relevant to the subject of the underlying claim in the proceedings. However, the named beneficiary, when contacted, had told the bank’s solicitors that he had no beneficial interest in or association with the particular corporate defendants, and that he had not given instructions in respect of the declarations of trust.  Hence, the argument about the scope of the injunction in that case arose where the plaintiff bank already had knowledge of the existence of claimed trusts, and where the genuineness of those trusts was significantly in doubt.

33.  I take these various passages and points into consideration in my following analysis.

D.  Analysis of Legal Approach

34.  The relevant analysis can usefully start with a repetition of what are nevertheless trite principles relating to the context and purpose of making Mareva/freezing orders:

(1)  The design of a Mareva/freezing order is to prevent injustice to a successful claimant, by preserving assets and funds and guarding so far as possible against the risk that they will be disposed of or dissipated before a judgment is satisfied, in a way which might otherwise render ineffective the claimant’s attempts to recover what is due to him.

(2)  The order therefore seeks to freeze the defendant’s assets (usually up to the limit of the claim, with perhaps some element of possible interest and costs).

(3)  It is the defendant’s assets which are frozen, because it is those assets (and no others)  against which a judgment might be enforced.

(4)  Hence, the language of the standard form order (“his assets”)  naturally refers to assets and funds belonging to the defendant – or, in legal parlance, assets and funds to which the defendant is legally entitled – and which are and should remain available to satisfy the claim against him.

(5)  Assets and funds which belong beneficially to another person would not be available for that purpose.

(6)  Therefore, assets and funds which the defendant holds for the benefit of another – for example, as trustee or nominee – are not assets to which resort can be had for the purpose of enforcement against the defendant, and they do not ordinarily come within the scope of a freezing injunction.

(7)  Properly construed, the language of the standard form order does not extend to assets and funds which the defendant holds for the benefit of another as trustee or nominee.

(8)  On the other hand, the language of the standard form order order (“whether in his own name or not”)  recognises that assets and funds may belong to the defendant if they are held by another person for the defendant’s benefit.

(9)  The language of the standard form order (“whether solely or jointly owned”)  also recognises that the defendant may have partial or joint ownership of assets and funds.

(10)  A freezing order is available only in cases where the claimant can show that there is a real risk that the defendant will dissipate his assets.

(11)  Nevertheless, the application and the order are frequently made on incomplete information about the nature, extent, location and value of the assets and funds which the defendant may hold, or to which he may be beneficially entitled.

(12)  Hence, there is usually an ancillary order made in reinforcement of the freezing order, by requiring full disclosure of the nature, location and value of assets and funds and the dealings with them.

(13)  The disclosure required is of the nature, location and value of assets and funds belonging to the defendant, or to which he may be beneficially entitled.

35.  I also think that the following points are materially relevant to the purpose of the disclosure obligation:

(1)  Asset disclosure ancillary to a Mareva/freezing order is properly recognised as the normal provision, so that the freezing order can be properly policed and effective.

(2)  Indeed, the disclosure requirement is intimately involved in the effectiveness of the Mareva/freezing order, and gives it teeth.

(3)  Hence, even if there is a pending challenge to the Mareva/freezing order, that is not of itself a ground for suspending the operation of the disclosure of assets order in the interim.

(4)  Though an asset disclosure order is, as a matter of legal principle, ancillary to the Mareva/freezing order, there can be a different link in practice.

(5)  In many cases – in particular in international cases leading to a worldwide Mareva/freezing order – it is not unlikely to be the disclosure order which will be the most useful in practical terms.

(6)  In such cases, it may be that the disclosure order made in Hong Kong will be the main remedy in Hong Kong, and the Mareva/freezing order can be seen as a ‘holding’ injunction, to give the plaintiff time to apply to the relevant foreign court for appropriate orders relating to the foreign assets disclosed.

(7)  The standard of compliance required in respect of the disclosure obligation ancillary to a Mareva/freezing order is much higher than that in the ordinary discovery context.

(8)  As already stated, the whole purpose of Mareva/freezing injunctions and consequent disclosure orders is to protect and secure assets in order to ensure that a judgment obtained in litigation will not go unsatisfied.

(9)  So, compliance with the disclosure provision must effect virtually complete compliance, made in good faith, comprising disclosure of an extent that can fairly be judged to be full disclosure.  It must not be illusory.

36.  The above principles inform the proper approach to the current question.

37.  In the present context, I think it is also helpful to refer to the well settled principles applicable on what is normally referred to as the Chabra jurisdiction – derived from a number of cases including TSB Private Bank International SA v Chabra [1992] 1 WLR 231.  The circumstances when the Chabra jurisdiction might be exercised can be summarised as follows:

(1)  The plaintiff must identify that there is good reason to suppose that assets held in the name of a defendant against whom the plaintiff has no cause of action (“NCAD”)  holds, is using, or has exercised, or is exercising a power of disposition over, or is otherwise in possession of, assets of the defendant whom the plaintiff asserts to be liable on his substantive cause of action claim (“CAD”)  – the 1^st Limb.

(2)  The plaintiff must also identify that there is good reason to suppose that the assets held in the name of the NCAD would be amenable to execution of some process, ultimately enforceable by the courts, by which the assets would be available to satisfy a judgment against the CAD – the 2^nd Limb.

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

(4)  The plaintiff must also demonstrate that there is a real risk of dissipation of the assets (where the conduct of both the NCAD and CAD may be relevant).

(5)  It must be just and convenient to grant the injunction – keeping well in mind that the jurisdiction is exceptional and should be exercised with caution, taking care that it should not operate oppressively to innocent third parties who are not substantive defendants and have not acted to frustrate the administration of justice.

38.  Hence, the rationale is that – in the appropriate, exceptional case – an order may be made in respect of assets not held in the name of the defendant, so long as there is good reason to suppose that (1) those assets are held by a person who is using them for, or has exercised, or is exercising a power of disposition over, or is otherwise in possession of, assets of the defendant whom the plaintiff asserts to be liable on his substantive claim, and (2) those assets would be amenable to execution of some process, enforceable by the courts, by which the assets would be available to satisfy a judgment against the defendant.

39.  The wider form of order which is sought by the plaintiff in this case is perhaps the ‘flipside’ of that situation, because it is said that although the defendant might maintain that assets legally held in his name are actually beneficially owned by a third party, those assets in fact are or may be beneficially owned by the defendant, such that they would be available for enforcement to satisfy a judgment against him.  Hence, it seems to me that a similar evidential burden as permits triggering the Chabra jurisdiction would be applicable.

40.  The relevant options or permutations for making such an order can also be considered:

(1)  to require disclosure of assets held by the defendant as trustee or nominee, but not in the first instance to freeze any such assets until their true nature can be established;

(2)  to freeze assets held by the defendant as trustee or nominee, but not in the first instance to order disclosure of such assets;

(3)  both to freeze assets held by the defendant as trustee or nominee, and at the same time to require ancillary disclosure of such assets.

41.  A reason to take the first option would be as a result of caution about freezing assets which are actually beneficially owned by third party, but to require disclosure of assets held on that basis to permit investigation.  However, if it should later turn out that assets said to be held on trust are in fact beneficially owned or retained by the defendant, those assets would not have been subject to the freezing order, and they might therefore have been dealt with or disposed of without that being a breach of the order.  Any subsequent attempt to extend injunction to cover those assets might mean that the stable door is closed only after the horse has bolted.  As to the second option, there seems to me to be little reason – and it would be contrary to the underlying policy requiring ancillary asset disclosure – to order trust assets to be frozen without requiring the proper identification of them.

42.  Logically, therefore, only the third option is likely realistic.  That option provides for the disclosure of the relevant assets, permits the defendant or third party to argue that the relevant assets should not be frozen, but would freeze those assets until any dispute as the beneficial ownership can be resolved.  It would also be the best option to ensure that an unscrupulous defendant is not in effect given licence to decide for himself whether or not an asset or funds belong to himself or to a third party, and to give or not give disclosure accordingly.

43.  I have also considered whether the applicable principles should differ depending on whether the order sought is a pre-judgment Mareva/freezing order or a post-judgment Mareva/freezing order. In my view, the principles do not differ.  However, in practical terms, it may be that it is easier to obtain a post-judgment Mareva/freezing order extended to trust assets, because of the potential fuller investigation of surrounding circumstances made possible by the full interlocutory and trial process.

44.  Lastly, from the circumstances of the Solodchenko case, it can be seen that it would normally require evidence identifying a claimed trust, with proper basis to doubt its veracity, before the wider form of Mareva/freezing order extending to trust assets might be granted.  Indeed, as pointed out by Mr Phang in his submissions, in FM Capital Partners Ltd v Marino [2019] 1 WLR 1760 at §§56 and 58, the English court varied a worldwide freezing injunction order made against a defendant by deleting the words “and whether the respondent is interested in them legally, beneficially or otherwise” because there was no evidence that the defendant owned any assets as a trustee or nominee or indeed on any basis other than as the owner of the legal and beneficial interest.

45.  In my view, therefore, the following general principles should be applicable:

(1)  The ordinary or usual Mareva/freezing order will not extend to assets held (or claimed to be held)  by the defendant only on trust or as nominee, where he has no beneficial interest in those assets.

(2)  Similarly, the ancillary disclosure obligation would not extend to assets held by the defendant on trust or as nominee, where he has no beneficial interest in those assets.

(3)  The current standard form wording provided for in Practice Direction 11.2 makes that clear.

(4)  However, the inclusion within a freezing order of trust assets is justifiable if there are proper grounds for believing – or, to put it another way, there is good reason to suppose – that assets ostensibly held by the defendant on trust or as a nominee for a third party in fact belong beneficially to him.

(5)  If the freezing order is extended to include trust assets, ancillary disclosure of such assets may be, and usually will be, justified.

(6)  The wider form of order would provide the plaintiff with an opportunity of investigating the truth of the claim that the assets are held by the defendant on trust, before they are released from the injunction and its accompanying obligations.

(7)  This would prevent an unscrupulous defendant from undermining and nullifying the object of the injunction order by masquerading his own assets under the guise of assets held for a third party.

(8)  If the wider form of order is sought, the plaintiff must draw that fact to the attention of the Judge, and must identify what is said to justify the wider form of order in the particular circumstances of the case.

(9)  Absent proper grounds for believing or good reason to suppose the matters as do justify the wider form of order, there is no justification for including in the order assets which belong beneficially to a third party, nor to require disclosure of such assets.

(10)  Therefore, the wider form of order must be thought of as one to be sought only exceptionally, and to be granted only exceptionally.

(11)  It is, therefore, logical that such orders will ordinarily only be sought and granted where there is some proper evidential basis identifying that the defendant holds specific assets as apparent trustee or nominee, but where there is good reason to suppose that those identified assets are in fact retained beneficially by the defendant.

(12)  To put it another way, it will ordinarily be necessary for there to be evidence adduced that there are assets claim to be held on trust for a third party, where the genuineness of the trust is doubtful.

(13)  A general assertion that a defendant might hold (as yet unidentified)  assets, claimed to be held on trust but in fact beneficially retained by him, will unlikely be sufficient evidential basis for the wider form of order.

(14)  But it can also be recognized that – as with proving risk of dissipation – the relevant evidential burden may sometimes be discharged from inferences drawn from a holistic view of the evidence as a whole.

(15)  The wider form of order if granted should be drafted in a way to make it absolutely clear to any reader that it does extend to assets held by the defendant as a trustee or nominee for a third party.

(16)  A Judge who is asked to grant an injunction in the wider form should be concerned to minimise the impact of the order on third party beneficiaries under genuine trusts.

(17)  Therefore, expedition would be required to resolve any issues of title on an application by a defendant or third party beneficiary to vary the order so as to exclude them from the scope of the freezing order.

(18)  Active consideration should be given to the form of the cross-undertaking as to damages, which ordinarily would appropriately be extended expressly to cover the purported beneficiary for any loss which is caused by an injunction which is subsequently varied or discharged in respect of the trust assets.

(19)  Active consideration should, therefore, also be given to requiring service of the order on identified beneficiaries of such assets.

46.  I apply those principles to the particular circumstances of this case.

E.  Application of Principles to this Case

47.  As I have already pointed out, there was a complete failure at the ex parte hearing to raise with the Court Delco’s inclusion of the additional words – in breach of the mandatory requirement of the practice direction.  That failure is to be deprecated in strong terms.

48.  Had I nevertheless noted the additional wording at the time of the ex parte hearing – and without any further elucidation being offered – I would likely have thought that the additional words “whether legally or beneficially owned” were intended only to emphasise that the assets to be frozen would include both those legally and beneficially owned and those not legally but beneficially owned by the defendant.

49.  In any event, I confess that I remain unsure as to what those additional words were intended to achieve at the time of the ex parte application.  In light of Mr Ng’s submission that the relevant concern about concealing of assets under the guise of trust assets was triggered by the letter from Fang’s solicitors only after service of the ex parte order, I do not accept that the additional words were specifically included for the purposes of extending the standard form of order to include trust assets.

50.  Indeed, there is nothing in the 11^th Affidavit of Mr Hammerstein (which led the ex parte application)  really seeking to justify the wider form of order.  There, the ancillary disclosure order sought was justified specifically on the basis that “it might yield additional and materially new information about assets owned by Fang (whether held in his own name or through companies, nominees or other structures)  which is not presently available to Delco”.  That seems to me to be reference to the standard position of seeking information about assets beneficially owned by Fang, whether he is or is not the legal owner of them.  I accept that there was some reference in the affidavit to the use by Fang of a discretionary trust and nominee arrangements which might render public verification of his present beneficial interest difficult.  But that does not seem to have been advanced as a basis for any wider form of order than the standard form.  Similarly, nothing advanced in the ex parte skeleton addressed or sought to justify a wider form of order.

51.  Therefore, it seems to me to be appropriate to treat the inter partes application as not just seeking to maintain the ex parte order to its standard extent, but specifically to extend it to assets apparently held by Fang on trust or as nominee.

52.  In those circumstances, the additional words “whether held legally or beneficially” would be seeking to draw a distinction between (1) assets held legally but not beneficially, and (2) assets not held legally, but owned beneficially.  On the authorities, it seems that the use of that phrase or the phrase “whether held legally or beneficially or otherwise” would also be construed as seeking to identify disjunctive and separate bases of ownership.  In any event, the precise form of any wider order can be addressed if any such order is appropriate at all.

53.  Mr Ng relied on the following matters as justifying the wider form of order in this case:

(1)  Fang is accustomed to the use of trust structures.  For example, a property in Stanley – valued at approximately HK$270 million as at 19 December 2018, and his last known residential address in Hong Kong – is held through a company, which is in turn held through a discretionary trust purportedly for the benefit of Fang’s children (and perhaps himself).  This shows a tendency to deploy trust structures to arrange his affairs, which will have the effect of obscuring his true asset position.

(2)  Fang has persistently failed to provide information as to the whereabouts or ultimate destination of the sale proceeds of approximately HK$1.36 billion from the sale of the CT shareholding. Given that the substantial proceeds of sale have not been accounted for, it is entirely possible that they might be concealed through some alleged trust structures unknown to Delco absent any forced disclosure.

(3)  Fang’s argument that he is under no obligation to explain what has become of those funds overlooks the fact that he has failed to attend no fewer than five court-ordered judgment debtor examinations in the BVI Court, which would likely require him to account for the whereabouts of the sale proceeds.

(4)  Despite Fang’s previous disclosure given, Fang’s assets known to Delco comprise minimal liquid assets.  This is highly suspicious given (a) Fang is clearly a wealthy businessman with substantial assets, and (b) he is able continuously to fund substantial legal costs in support of his proceedings and appeal, and in opposition to the enforcement actions taken against him on multiple fronts.  This fortifies Delco’s suspicion that there might be assets concealed by Fang, possibly under the guise of trusts held on behalf of third parties.

(5)  Fang is not merely a person of low commercial morality, he has a distinct track record of giving false evidence and suppressing disclosure of documents, and has taken every possible step to frustrate the enforcement of judgment against him.  It is not beyond Fang to circumvent the injunction and disclosure order by relying on some alleged dubious trust structures imposed on assets held under his own name.

(6)  The balance of convenience lies in favour of the grant of the injunction extended to cover assets held by Fang on behalf of third parties, because (a) there are solid grounds to support a compelling inference that Fang might be holding assets on trust for third parties, (b) if he is not, they would be no resulting prejudice or oppression to him, (c) if there are assets genuinely held on trust for other parties, they can have these specifically excluded upon proper investigation, and (d) Delco offers an undertaking wide enough to cover any loss caused to any beneficiaries of assets genuinely held on trust by Fang.

54.  Mr Phang opposed the wider form of order on the following basis:

(1)  Because the additional words were not brought to the Court’s attention and expressly justified, they had no basis for being in the ex parte orders which should not be continued in that form.

(2)  It was only on the return date that Delco attempted retroactively to justify the use of the words, by relying on the Solodchenko case.

(3)  Nevertheless, no exceptional circumstances have been demonstrated on the evidence to justify the wider form of order.

(4)  Delco has not adduced any evidence that Fang holds any assets on trust for a third party, despite having had the benefit of previous asset disclosures made by Fang.  This is not a case where the applicant is completely in the dark as to what assets the defendant might have.

(5)  The high point of Delco’s evidence is the reference to the ownership of the Stanley property, held by a company which is owned by discretionary trust.  But that provides no justification for an injunction extending to assets held by Fang on trust for a third party.

(6)  The letter said to comprise the “smoking gun” was simply making the point that assets not beneficially owned by Fang are not available to satisfy the judgment.  Delco is grasping at straws, because it does not have any evidence that Fang holds any assets on trust for a third party.

(7)  The mere fact that HWH had in December 2015 realised proceeds of approximately HK$1.36 billion is neither here nor there, and Delco has failed to explain on what grounds Fang was required to explain what became of those funds when there is no proprietary injunction of related asset disclosure made in respect of them.

(8)  Delco’s speculation does not constitute proper grounds for believing that assets ostensibly held by Fang on trust or as a nominee for a third party in fact belonged to him.

(9)  No such assets have been identified, and there is no evidence that there are such assets to begin with.

(10)  The allegation of low commercial morality is in any event not exceptional to justify departure from the standard form of freezing order.

55.  There is real force in some of Mr Phang’s submissions.  First, I agree that describing the 3 December Letter as a “smoking gun” or as triggering the concern now put forward is inapt.  The letter merely pointed out the departure from the standard form wording and queried what that was intended to achieve against settled principles.  The reaction to the letter can be regarded as perhaps somewhat speculative.  Indeed, certainly Delco has not been able to point to specific assets supposedly held by Fang on trust or as nominee, but where there is good reason to suppose that they are actually beneficially owned by Fang himself.

56.  Of course, that is not to say that Delco does not have a proper basis to have deep suspicion about the disclosure so far provided elsewhere by Fang, or as might be provided in future.  The disclosure so far provided appears seriously at odds with the assets and funds previously available to and deployed by Fang, and even apparently fails to explain how the various litigation costs and Fang’s own living costs are funded.  More importantly, the previous disclosure is massively out of line with the receipt of about HK$1.36 billion – a sum which must be extremely difficult to spend without purchase of (or translation into)  significant capital assets.  I also note that the BVI Court has thought it appropriate to order examination of Fang as judgment debtor, and that Fang appears to have taken all possible steps to avoid being examined.  I accept that, if he were examined, he would almost certainly be asked to explain the whereabouts of and what has happened to such a huge sum.

57.  I also take into account the views expressed by me in my Judgment after trial, as to the dishonesty of Fang both generally and specifically as to the circumstances in which that huge sum was generated and received by Fang/HWH.  That seems to me to take this case beyond a mere assertion of low commercial morality of the sort typical to an application for Mareva/freezing injunction.

58.  Ultimately, on balance, and in the very exceptional circumstances of this case, I think the evidence viewed holistically does identify reasonable grounds to believe, or good reason to suppose, that Fang is hiding assets, including through use of the kind of trust structures with which he is plainly familiar.  It seems to me that Fang has proven himself to be both evasive and unscrupulous, and in the particular exceptional circumstances of the case it would – bearing in mind the context, purpose and rationale of the granting of the Mareva/freezing order – be inappropriate to give licence to Fang to decide for himself whether or not an asset or fund belongs to himself or to a third party.

59.  I keep in mind the point, made in submission in the Solodchenko case, that a plaintiff might be no better off with a more detailed order freezing both assets held in trust for third parties and the defendant’s own assets, because a dishonest defendant is perhaps simply unlikely to comply with an order.  But I agree with the answer to that submission offered by Patten LJ, namely that a defendant who has gone to the trouble of disguising his own assets as those held under a trust for a named third party is likely to utilise the disguise he has invented rather than merely to abandon it and ignore the order.  Hence, the wider form of order is likely to provide the plaintiff with an opportunity of investigating the truth of any such claim that the assets are held on trust, before they are released from the injunction and its accompanying disclosure obligations.

60.  Therefore, I make an order in a form wider than the standard form, specifically to include in the first instance assets held by Fang on trust or as nominee for third parties, and to require the appropriate matching ancillary disclosure.  It is to me that the best way to deal with that is to add a separate paragraph along the lines proposed by Mr Ng – rather than adding words to the operative paragraphs as set out above, which are to remain in the standard form provided for in PD 11.2, namely that:

[Fang] must not:

(a)  remove from Hong Kong any of his assets which are within Hong Kong, whether in his own name or not, and whether solely or jointly owned, up to the value of [relevant amount], [that amount] being separate from and in addition to the amount frozen in the Order of 25 November 2025 made in [the other action];

(b)  in any way dispose of or transfer away or deal with or diminish the value of any of his assets, whether within or outside Hong Kong, whether in his own name or not, and whether solely or jointly owned, up to the same value.

[Fang] must inform Delco in writing at once of all his assets of an individual value of HK$100,000 or more, whether in or outside Hong Kong, whether in his own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets. Fang may be entitled to refuse to provide some or all of this information on the grounds that it may incriminate him.

61.  The additional paragraph will therefore be in the following terms:

The above injunction order and disclosure order shall cover assets held by Fang on trust or as nominee for a third party or third parties, and the disclosure to be provided must expressly include and identify such assets.

62.  I also direct that the cross-undertaking should be varied from the standard form so as to read:

If the Court later finds that this Order has caused loss to Fang, any beneficiary of assets held by Fang on trust or as nominee (“Beneficiary”), or any other party, and decides that Fang, the Beneficiary, or that other party should be compensated for that loss, the Plaintiff will comply with any order the Court may make.

63.  I also require a further undertaking in the following terms:

If Fang discloses assets which he asserts he holds on trust or as nominee for any other third party (“Beneficiary”), the Plaintiff will notify the Beneficiary of this Order and the Beneficiary will be given a copy of it by the Plaintiff’s solicitors.

64.  The standard form of order already includes a provision permitting anyone notified of the order to apply to the court at any time to vary or discharge the order, or so much of it as affects that person.

65.  I also give the parties liberty to apply, including as to any further aspects of the terms of the orders made.

F.  Costs

66.  As to costs, Mr Ng submitted that costs should follow the event so that the costs of Delco’s ex parte application and its inter partes summons be payable by Fang, with certificate for two Counsel at the ex parte hearing, and for such costs to be summarily assessed.

67.  Mr Phang argued that Delco should not be entitled to its costs.  In respect of the ex parte application, he submitted that (1) no prior agreement of Fang had been sought to an injunction order, where it is not unreasonable to believe that Fang would have agreed to such an order, (2) there was no need for secrecy, nor need for urgency, (3) there was a breach of PD 11.2, which justifies the Court marking its disapproval by depriving Delco of its costs.  In respect of the return date and adjourned hearing, Mr Phang submitted that (1) the application was really one to extend the scope of the orders previously made, (2) even if the Court were to agree that there is a proper basis for believing that Fang holds any assets on trust for third parties, the words “and whether legally or beneficially owned” would still be removed, and (3) it was not unreasonable for Fang to have raised limited opposition based on the lack of justification on the face of Delco’s evidence and skeleton arguments.

68.  Whilst I do not think the point about offering Fang the opportunity to have consented to a proposed injunction is a very strong one, I agree that the clear breach of PD 11.2 – and, indeed, the degree of confusion as to what was being sought at the ex parte stage and why – justifies depriving Delco of its costs of the ex parte application.  There will, therefore, be no order as to those costs.

69.  As to the inter partes costs, I can see the usual argument that costs should follow the event where Delco has now obtained the wider form of order.  However, I do not think that success has been achieved in the way which Delco intended, nor in the manner of an ordinarily successful applicant.  The opposition to a continued order was limited, and was in circumstances where there was apparently no earlier Hong Kong case canvassing the possibility of extending a freezing order and ancillary disclosure to assets said to be held on trust by a defendant for a third party.  I have also already specifically noted the force in many of the arguments advanced on behalf of Fang as to the particular circumstances as might or might not justify the wider form of order. Therefore, in the overall exercise of my broad discretion as to costs, it seems to me that the appropriate order to make in these circumstances is that there be no order as to costs.