HONG KONG TOPKEY LTD v. WINTAC (HONG KONG) LTD AND ANOTHER

HCA 667/2022

[2023] HKCFI 1912

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 667 OF 2022

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BETWEEN

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D E C I S I O N

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Background

1.  On 4 January 2023, Master Alexander Tang granted summary judgment to the Plaintiff against the Defendants (“O14 Judgment”) for the judgment sum of US$9,279,400, costs of HK$390,000 plus interests (“Judgment Sum”).

2.  On 4 July 2023, the O14 Judgment was affirmed on appeal before DHCJ MK Liu (“Appeal Judgment”).

3.  This is the first hearing of the plaintiff’s summons filed on 18 July 2023 for a post-judgment worldwide Mareva injunction against the defendants (“Injunction Summons”). The plaintiff asks for an interim-interim injunction, pending adjournment of the summons for argument. The defendant opposes the application.

4.  The subject matter of this Injunction Summons are shares in a BVI company called Window of Trade International Ltd (“WOTI Shares”). By an arbitral award (“Award”) made by SCIA in the PRC on 11 April 2022, the SCIA ordered, amongst others, the transfer of the entire shareholding of WOTI from Wu Wei to D2.

5.  Wu Wei failed to effect the transfer. The substantive hearing for enforcement of the Award will be held in a BVI Court on 26 July 2023.

6.  It is the Plaintiff’s case that:

(1) D2 has already dissipated all other assets under his name, currently held by his sister.

(2) The Defendants have failed to comply with any court order or to satisfy any part of the Judgment Sum.

(3) D2 (acting as borrower or guarantor of the companies then under his control) is heavily in debt with a large number of unsatisfied judgment debts in the PRC.

(4) D2 has not set foot in the PRC since at least early 2020 to avoid enforcement/execution efforts by his judgment creditors in the PRC.

7.  If the WOTI Shares are to be transferred from Wu Wei to D2, this would be the only window of opportunity for any chance of recovery of the Judgment Sum.

8.  Given D2’s previous conduct of dissipating assets and avoiding judgment creditors, the Plaintiff says that there is a real and appreciable risk that the WOTI Shares will be dissipated immediately once they reach D2’s hands.

9.  The Plaintiff claims that it was not a party to the BVI proceedings. The Plaintiff only first knew about the BVI enforcement proceedings from the affidavit filed by D2 on 11 April 2023 in the bankruptcy proceedings in HCB 1051/2023 against D2.

10.  After DHCJ MK Liu handed down the Appeal Judgment on 4 July 2023, the Plaintiff issued the present summons for injunction.

Disposition

11.  I decline to grant the interim-interim injunction as no urgency has been shown.

12.  The Award was granted on 11 April 2022. It already came to the plaintiff’s notice, at the latest, by December 2022. The Plaintiff has not not sought an injunction.

13.  After the O14 Judgment on 4 January 2023, Master Tang had, on 10 March 2023 given an interim stay of the O14 Judgment pending hearing of the substantive stay application, on condition that the Defendants paid HK$24,000,000 into Court. The Defendants never paid. On 30 May 2023, Master Keith Lam granted a stay pending appeal. Between January and May, the Plaintiff did nothing to seek an injunction despite there being, in fact, no stay of execution.

14.  The Plaintiff explained that it had been waiting for the appeal, but that is not, in my view, a good reason. Further, the Plaintiff had instituted bankruptcy proceedings in HCB 1051/2023 against D2 based on the O14 Judgment. If a bankruptcy order was granted, there would be no need for an injunction. Through the affirmation of D2 filed in respect of the bankruptcy proceedings, the Plaintiff came to know about the BVI enforcement proceedings and thus the Plaintiff issued this summons.

15.  However, the bankruptcy petition was first heard on 15 May 2023. It was adjourned for substantive hearing on 4 September 2023. The Plaintiff waited for the Appeal Judgment whilst a stay of execution was in force. There was still delay between 4 July and 18 July 2023.

16.  The Court accepts that the Plaintiff had adopted a pragmatic and costs-saving approach. However, overall delays since January 2023 were not warranted. The urgency is self-induced by the Plaintiff. On this basis, I decline to grant an interim-interim injunction.

17.  I adjourn the Injunction Summons for argument before a judge with 3 hours reserved with the following directions:

(1) Leave to the Defendants to file and serve affirmations in opposition within 28 days from today;

(2) Leave to the Plaintiff to file and serve affirmations in reply within 21 days thereafter;

(3) No further affirmation is to be filed without leave; and

(4) On a nisi basis, costs of today’s hearing be to the Defendant to be summarily assessed by Au-Yeung J on 28 July 2023. Costs statement to be lodged and served by noon of 25 July and grounds of objection be lodged and served by 4 pm on 27 July.