GREEN ELITE LTD (in liquidation in the British Virgin Islands) v. FANG ANKONG AND ANOTHER

HCA 1779/2022

[2023] HKCFI 1505

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1779 OF 2022

________________________

________________________

________________________

________________________

DECISION

________________________

1.  This is a common law action for the enforcement of a judgment (“BVI Judgment”)  given by the Eastern Caribbean Supreme Court, British Virgin Islands (“BVI Court”)  on 17 January 2022[1] (and recorded in an order dated 20 January 2022 and entered on 26 January 2022)  in favour of the plaintiff (“Green Elite”)  against, inter alios, the 1^st defendant and the 2^nd defendant (“Fang” and “HWH” respectively and “defendants” collectively).

2.  Fang is the sole shareholder and director of HWH, a BVI company.  Fang’s 50,000 shares in HWH has since become the subject-matter of a charging order which is currently subject to a limited stay pending the defendants’ appeal to the Privy Council (“BVI Charging Order”).

3.  The BVI Judgment has since been wholly upheld on appeal.  The defendants’ application for leave to appeal to the Privy Council was, as at the hearing before me on 28 April 2023, listed to be heard sometime in May 2023.

4.  In the meantime, by an order dated 23 February 2022 and entered on 17 March 2022)  (“BVI Injunction Order”), Green Elite further obtained in the BVI a worldwide freezing injunction against Fang[2], restraining him from (1)  dealing with or diminishing the value of any of his assets in the PRC up to the value of HK$195,000,000 and (2)  dealing with or diminishing the value of any of his assets up to the value of US$24,975,717[3] whether they are in or outside BVI (which does not apply to Fang’s assets in the PRC)  until further order of the court. 

5.  To facilitate the enforcement of the BVI Injunction Order, the BVI Court has ordered Fang to disclose in writing to Green Elite’s BVI legal representatives details of (1)  all his assets outside the PRC having a value over US$50,000, regardless of how they are held; and (2)  the actual amounts and sources of his living expenses and legal costs.  See §§14 and 17 of the BVI Injunction Order.

6.  By an inter partes summons issued herein on 24 April 2023 (“Summons”), Green Elite seeks domestic Mareva injunctions against each of (1)  Fang up to HK$180,890,529.70 and (2)  HWH (invoking the Chabra jurisdiction[4] on the ground of Fang’s sole ownership and control)  up to the same ceiling or alternatively, HK$4,040,186.30.

7.  At the call-over hearing on 28 April 2023, with the parties’ agreement, I ordered the substantive argument of the Summons to be adjourned to a date to be fixed before Mr Justice Coleman[5] and gave directions for the filing and service of affidavit evidence for use at the adjourned hearing.

8.  The only point of contention between the parties is whether Green Elite is entitled to interim interim protection during the period of adjournment.

9.  It has become fashionable nowadays for a party seeking interlocutory injunctive relief under an inter partes summons which has to be adjourned for substantive argument to invariably ask for interim interim remedy before the disposal of the summons.

10.  However, as explained by the Court of Appeal in China Shanshui Cement Group Limited v Zhang Caikui, CAMP 58/2018, unreported, 19 July 2018; [2018] HKCA 409 at [13] per Lam VP (as he then was), the grant of 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.

11.  Notwithstanding Miss Esther Mak’s able submission, I am not persuaded that Green Elite has met the threshold for the grant of an interim interim Mareva injunction against either of the defendants on the facts of this case, particularly those pertinent to the existence or otherwise of a real risk of dissipation, which is of course an essential element that an applicant for Mareva relief must establish by cogent evidence.

12.  Green Elite has not identified, and is not relying on, any act of actual dissipation by either of the defendants. 

13.  Rather, it invites the court to infer the existence of a real risk of dissipation from Fang’s “evasive” conduct in, inter alia:

(1)  not satisfying the judgment debt under the BVI Judgment (“BVI Judgment Debt”)  which remains wholly outstanding;

(2)  failing to disclose a number of assets in breach of the asset disclosure requirements imposed by the BVI Injunction Order;

(3)  failing to disclose his living expenses and legal costs in breach of the expenses disclosure requirements imposed by the BVI Injunction Order;  

(4)  initially evading Green Elite’s attempts to serve him personally while at the same time refusing to instruct solicitors to accept service on his behalf in this action;

(5)  refusing to undertake not to use the sums of (a)  HK$41,900,000 paid into court by HWH under the Related Hong Kong Proceedings and (b)  HK$64,067,118 held in escrow by the defendants’ former solicitors in their client account (“HK Funds” collectively)  pending satisfaction of the BVI Judgment Debt; and

(6)  declining to give an undertaking in terms similar to the BVI Injunction Order.

14.  For the reasons following, it is unnecessary, and I do not propose, to pass judgment on whether the aforesaid acts and/or omissions by Fang, whether on their own or together with the circumstances giving rise to Green Elite’s causes of action litigated in the BVI, would support an inference of a real risk of dissipation by the defendants.

15.  First:

(1)  The action in which the BVI Judgment was given was commenced on 14 December 2018.  The trial took place in October and November 2021, with judgment being rendered at first instance on 17 January 2022. 

(2)  There is no evidence before me that Green Elite had seen any need to apply to the BVI Court for any pre-trial Mareva relief or to invoke the Hong Kong courts’ jurisdiction under s 21M of the High Court Ordinance (Cap 4)  in aid of the proceedings in the BVI.

(3)  Indeed, Green Elite was contented to wait for 11 months after the BVI Judgment until 16 December 2022 to issue the writ of summons herein. 

(4)  Green Elite then waited 4 more months until 12 April 2023 to apply for leave to issue a concurrent writ and serve the same on HWH out of the jurisdiction in the BVI.  There is no suggestion of any difficulty in locating HWH’s address for service.  Leave was granted on 20 April 2023.

(5)  Green Elite finally took out the Summons on 24 April 2023.

16.  Such procedural chronology, which I would describe as complacent and laid back, hardly conveys the necessary urgency required for the grant of interim interim relief.

17.  It is no answer for Green Elite to reiterate the undisputed principle that the most appropriate place to make orders affecting assets is the place where the assets are located.  The matter under scrutiny is whether the applicant for interim interim relief (i.e. Green Elite)  has satisfied the requirements laid down and followed by the courts of the place where the assets to be frozen are located (i.e. the Hong Kong courts)  in exercising their power to grant such relief.

18.  Second, unlike the usual case where an application for a Mareva injunction is made ex parte without notice to the opposite party, the Summons (rightly in the particular circumstances of this case)  takes the inter partes form.  The undeniable harsh reality is that had the defendants been minded to do so, they would have had ample opportunities to unjustifiably dissipate their assets since December 2018 (when litigation began in the BVI)  and before the BVI Injunction Order.

19.  Third, Green Elite is presently protected by:

(1)  the BVI Injunction Order which is worldwide in terms indisputably covering any assets that Fang has in Hong Kong;

(2)  the BVI Charging Order (although the value of Fang’s shares in HWH is at this moment unknown); and

(3)  the HK Funds which will remain secure before judgment is handed down in the Related HK Proceedings.  I do not accept Green Elite’s suggestion that it would be difficult for it to obtain timely information as to when Coleman J would hand down judgment.  With respect, those acting for Green Elite can have the daily cause of the High Court checked everyday.  Alternatively, out of abundance of caution, they may write to Coleman J’s clerk to alert his lordship of Green Elite’s application by the Summons and interest in the HK Funds and to invite the learned judge not to make any immediate order affecting the HK Funds without first hearing Green Elite.

20.  For these reasons, I decline to grant Green Elite any interim interim Mareva relief.

21.  But for the disagreement on interim interim relief, the parties would have eventually agreed on the adjournment of the substantive hearing of the Summons and the timetable for the filing and service of affidavit evidence.  I therefore award, on a nisi basis, the costs of the hearing on 28 April 2023 to the defendants, to be assessed summarily on paper by me.  The defendants are to file and serve a statement of their costs of such hearing within 7 days from the date of this decision.  Green Elite shall have 7 days thereafter to file and serve a list of its objections, if any.