北京誠義豪泰投資管理有限公司 v. ZHANG YUPING (also known as CHEUNG YU PING)

HCCT 1/2025

[2025] HKCFI 3002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 1 OF 2025

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D E C I S I O N

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INTRODUCTION

1.  By a summons dated 9 June 2025, P seeks (i) an urgent interim stay of the order made by this Court dated 29 May 2025 (“the Decision”) pending the determination of P’s application for leave to appeal against the Decision (“Leave Application”) and (ii) an order that the Injunction Order be continued until the determination of the Leave Application (“Interim Stay Application”).

2.  In the Decision, I have dismissed P’s application for continuation of the Injunction Order on the basis that: (i) there is no solid basis to conclude that there was a real risk of unjustified dissipation (Decision §67); (ii) the delay in P in applying for the Mareva injunction is also fatal to P’s application (Decision §71); and (iii) there is material non-disclosure (“MND”) on the part of P (Decision §83).

P’s Grounds of Interim Stay Application

3.  P says that there are two main reasons why an interim stay should be granted:-

(a)  The Leave Application would be rendered nugatory if no interim stay were granted pending the determination of the issue (“the Nugatory Argument”); and

(b)  The grounds of appeal advanced in the draft notice of appeal (“Draft NOA”) are plainly arguable in the sense of having reasonable prospects of success due to various grounds stated in their submissions (“the Reasonable Prospects of Success Argument”).

4.  I shall briefly discuss those 2 matters in turn below.

The Nugatory Argument

5.  P submits that in the context of a stay pending appeal, it is well established that the nature of the order that is the subject matter of the appeal will sometimes by itself almost be determinative of the question whether or not the appeal would be rendered nugatory.  Where the relevant order is an injunction, it may well be that without a stay, an appeal would be rendered nugatory in the event of a successful appeal: Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at §9(1) per Ma J (as he then was).

6.  In the present case, as the subject matter concerns the continuation of a Mareva injunction, P says that the Leave Application would very likely be rendered nugatory in the event that P obtains leave to appeal.

7.  In support of its application, P has filed the affirmation of Wong Ming Wai Matthew, a trainee solicitor at P’s solicitors, dated 9 June 2025 (“Wong’s Aff”) where P’s solicitors were informed by a staff member of Standard Chartered Bank (“SCB”) that D has already requested to deal with his assets: (See §5 of Wong’s Aff). P therefore says that without an interim stay pending the Stay Application, there is a real risk that D would further dissipate his assets, thereby rendering the Leave Application (and, if leave to appeal is granted, the appeal proper) nugatory.

8.  D in his submissions (“D’s Submissions”) stated that the Leave Application would not be rendered nugatory even of the Interim Stay Application was not acceded to due to the fact that D did not request SCB to allow D top deal with his assets.  Instead, he says that it was two companies associated with D that requested SCB to “take immediate steps to lift/remove all of the restriction imposed on accounts of [those companies] and allow [those companies] to restore full access to the funds therein.”, of which he claims was well within the right of those companies in light of the Decision.  It is submitted that nothing suggests that there is any further risk of unjustified dissipation of assets.  Further, D submits that the Court should also consider the prejudice which would be caused to D if interim stay were granted but P’s appeal is ultimately dismissed.           

9.  D further expanded the above submission in the following manner:-

(a)  D did not request SCB to allow D to deal with his assets.  Instead, it was Best Growth (a company wholly owned by D) and Xinyu Shengshi Investment Co Ltd (“Xinyu Shengshi”) (a company of which D is one of several indirect shareholders) that requested SCB to do the above;

(b)  There is no basis to infer from such request a real risk of unjustified dissipation (emphasis supplied).  All it shows is that D requested access to his account, which cannot be criticized at all in light of the Decision; and

(c)   P’s suggestion amounts to giving effect to a Mareva injunction that is not granted, even with the dismissal of P’s application.

10.  D also asks the Court to take into account of the fact that even after the sale of D’s shares in the ListCo to his children (which P complained to be an event of dissipation in the application for the continuation of the injunction), D still owns around 17% of the ListCo (which is valued at around HK$100 million).  As they are shares held by D in a public listed company, it can be shown that it was untouched in a transparent manner for an extended period.  Therefore it is submitted on behalf of D that any suggestion of the appeal being rendered nugatory is unreal.

11.  Finally, D asks the Court to consider the prejudice to D if interim stay were granted but P’s appeal is ultimately dismissed.  In particular, D says that D’s ability to meet his ongoing business needs and outgoings, including regular repayments of principal and interest by Best Corporate to Swatch would be adversely affected if the Injunction Order were to subsist by reason of a stay, when the Court has actually dismissed P’s application in the Decision.

The Court’s findings on the Nugatory Argument

12.  I agree with P that the Leave Application will be likely rendered nugatory if no interim stay is granted pending the Leave Application for the following reasons.

13.  First, I think there is some force in P’s argument that the distinction between D and his wholly owned company (Best Growth) and partially owned company (Xinyu Shengshi) is a little bit artificial as the terms of the Injunction Order not only restrict D from dealing with his assets under his own name but also extend to any assets “whether in his own name or not, and whether solely or jointly owned.”: See §1 of the Injunction Order.

14.  Second, it is clear that D would like to gain access to the funds in Best Growth and Xinyu Shengshi immediately, which he is of course entitled to do as a result of the order I made in the Decision.  However, this must now be seen in the light of P’s Leave Application.  If P is able to convince the Court that one or more of the grounds of the proposed appeal enjoys some real prospects of success, then by allowing D to remove some funds or assets in companies he either wholly owned or partially owned, it will defeat the purpose and make the Leave Application nugatory.

15.  Third, in regard to the issue of prejudice to D, I agree that this is ultimately a balancing exercise in light of the Leave Application.  As this is an application for an “interim” stay pending the determination of the Leave Application, pending the full consideration of the arguments of the parties on the Leave Application itself by the Court, any prejudice to D will be short-lived.

16.  Fourth, more recently by a letter dated 4 July 2025 to the Court, P has adduced a further affirmation from Yuen Ho Lung deposing to the fact that it has come to P’s attention that D has disposed of his remaining shares in the ListCo to his wife.  P submits that this new development is highly relevant to whether P’s pending application for leave to appeal against the Decision would be rendered nugatory without any order in terms of the Interim Stay Application. While D’s solicitors by a reply letter dated 8 July 2025 say that this is not relevant and that D is not under any restriction to transfer his assets, I would agree with P that this would make an interim stay more pertinent.

17.  In the aforestated premises, I agree with P that the Leave Application would likely be rendered nugatory if no interim stay is granted at this stage.  I therefore would make an order in terms of the Summons for the Interim Stay Application.                 

The Reasonable Prospect of Success Argument 

18.  P submits that the grounds of appeal advanced in the Draft NOA are plainly arguable in the sense of having reasonable prospects of success.

19.  P relied on 3 different grounds.  They are:-

(a)  Ground 1 – that the Court erred in finding that the Injunction Order ought to be discharged on the ground of material non-disclosure (“MND”);

(b)  Ground 2 – that the Court erred in finding that there was no solid evidence of unjustified dissipation on the part of D;

(c)  Ground 3 – that the Court erred in holding that there was delay on the part of P in applying for the Injunction Order and that the delay was fatal to P’s application.

20.  I agree with D that P’s appeal essentially is one against my exercise of discretion in refusing to continue with the Mareva injunction.  I believe the law is that the appeal court must defer to the judge’s exercise of discretion and not interfere with it save on the well-established grounds:  China Art Bank Co Ltd v Xu Zhiqiang [2018] HKCA 63 at §8 (Kwan JA).

21.  In an appeal against the exercise of discretion, the appeal court may set aside the judge’s exercise of discretion if it can be shown that the judge did so under a mistake of law or in disregard of principle, or under a misunderstanding of the evidence, or had taken into account irrelevant matters, or failed to take into account relevant ones, or that the conclusion reached in the exercise of discretion is outside the generous ambit within which reasonable disagreement is possible: Trenus Oceanway Ltd v Richland International Ltd and Another[2022] HKCA 200 at §6 (Kwan VP).

22.  More importantly, the Court of Appeal will not entertain an appeal simply because an applicant wishes to regurgitate arguments already considered in the Court below with the hope that the Court of Appeal may come to a different assessment of the situation: Symphony Partners Ltd v Fullerton Bay Investment Ltd [2018] 4 HKLRD 264 at §33 (Lam VP).

23.  A quick glance of the grounds of appeal appears to me that at least one of them may be arguable and perhaps even enjoy reasonable prospects of success.  However, I would like to study the parties’ full arguments and the authorities in detail first before coming to a definite view on the merits of P’s Leave Application.

24.  Given the fact that the parties are already in the process of lodging their written submissions with the Court on the Leave Application and all the written submissions will be lodged within the next couple of weeks, I would prefer to consider the arguments fully on whether there are any reasonable prospects of success under the Leave Application in one go.  It is expected that my decision on the Leave Application will be ready within a few weeks after all the submissions are lodged with the Court as it will be dealt with by way of paper disposal. 

25.  For now, given the urgent nature of the application and the latest developments, I would grant an interim stay in terms of the Interim Stay Application.