TIANCHENG BIOPHARMACEUTICAL HOLDINGS LTD v. DILLIGENT INVESTMENT DEVELOPMENT LTD AND ANOTHER

HCA 1101/2025

[2025] HKCFI 2654

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1101 OF 2025

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D E C I S I O N

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1.  On 6 June 2025, following an ex parte hearing, Kwok J granted to the Plaintiff (“P”) a Mareva and proprietary injunction against the 1^st Defendant (“D1”) and the 2^nd Defendant (“D2”) (“the Injunction Order”).

2.  P claims that there was a suspected fraud or misappropriation carried out by P’s former director in breach of fiduciary duties. According to P, on 30 December 2024, a sum of US$60M was withdrawn from P’s bank account and a sum of US$59.9M odd was received by D1, a Hong Kong company incorporated only on 21 November 2024. There were subsequent transfers from D1’s account including the sums of US$15M and US$3.9M transferred from D1’s account to D2’s account on 10 January 2025 and 16 January 2025 respectively. D2 is a company incorporated in the BVI on 31 May 2024.

3.  P’s parent, a company established in Shanghai (“the Shanghai Company”), was put into liquidation by a judgment of the Shanghai court dated 30 September 2024 and an administrator (“the Administrator”) was appointed by the court. On 7 February 2025, the Shanghai court issued a Letter of Request to the Hong Kong court to recognize and assist the Administrator in performing their duties in investing the affairs of the Shanghai Company. The recognition order was granted by Linda Chan J on 24 April 2025: see Re 上海昇奕科城实业有限公司 (in Liquidation in the Mainland of the People’s Republic China) [2025] HKCFI 1744. The factual background is set out in paragraphs 4 to 9 of the Reasons for Judgment. The fact that the Administrator became aware of a transfer of US$60M out of P’s account which was not on the instructions from the Administrator and the subsequent steps taken to stop the withdrawal and difficulties encountered to take control over inter alia P’s account are set out in paragraphs 10 to 20.

4.  Today is the return date of the Injunction Order. I have before me the following applications by P by Summons dated 6 June 2025 (“the Summons”):

(1)  To continue the Injunction Order until the conclusion of the trial or further order of the court;

(2)  Ancillary disclosure order against D1 and D2; and

(3)  Disclosure order against the Respondent (“R”), a bank, under s.21 of the Evidence Ordinance, Cap. 8 (“EO”) in respect of accounts of D2 maintained with R.

5.  Mr Lok and Mr Liu, counsel, appears on behalf of P. R, D1 and D2 were all served with the Summons. D1 has not appeared but Mr Wong, counsel, appears on behalf of D2 and Mr Woo, solicitors appears on behalf of R.

6.  In respect of the application against R, P and R have by way of a Consent Summons agreed to the terms of the order to be made. The requirements for an order under s.21 of EO are well-established and were set out in CTO (HK) Ltd v Li Man Chiu & Ors [2002] 2 HKLRD 875 at §§12-13. I am satisfied that the requirements are made out and it is appropriate for an order to be made in terms of the Consent Order.

7.  Mr Wong submitted that the disclosure order should not be made without the benefit of evidence of D2 and the requirement for cogent evidence that a serious tortious or wrongful act committed by D2 was not satisfied. I do not agree with his submissions.

8.  Orders under s.21 of EO can be made without summoning the bank or any other party: see s.21(2) of EO. I am of the view that it is not necessary to receive any evidence or submissions of D2. In any event, I do not accept the submissions of Mr Wong that the requirements have not been made out. Disclosure orders are often made even before there is sufficient evidence to found an action against the alleged wrongdoer. See A Co v B Co [2002] 3 HKLRD 111 at §12(1). The jurisdiction to make Norwich Pharmacal orders are wide and not limited to disclosure of wrongdoing but may be made where a plaintiff wishes to investigate the passage of monies in and out of bank accounts in aid of a tracing claim. It may be obtained not on the basis of actual tort but to find out if a wrong has been committed against the applicant and if so the precise nature of the wrong. See ibid, §11 and Evergreen International Storage & Transportation Corp v Hong Kong and Shanghai Banking Corp Ltd & Anor [2008] 5 HKLRD 49 at §60.

9.  In the present case, P has made a proprietary claim to the sum of US$59.9M odd which it seeks to trace the whereabouts of that sum or its traceable proceeds. I am satisfied that there is a real prospect the information sought will lead to the location or preservation of assets to which P has made a proprietary claim and the information and documents will assist P to ascertain the whereabouts of the US$18.9M that was transferred to D2’s accounts and to take steps to preserve P’s monies.

10.  In respect of the continuation of the Injunction Order, Mr Wong has opposed the continuation or alternatively, seeks to adjourn the Summons for substantive argument after D2 is given leave to file evidence in opposition. Mr Wong has submitted that P has failed to establish a serious issue to be tried, let alone a good arguable case, in its causes of action against D2, there is no risk of dissipation and there were delays in making this application 6 months after the transfer of the monies to D2.

11.  Given that that D2 has only yesterday engaged lawyers, including Mr Wong, to represent it and wish to seek to file evidence, and the skeleton submissions made by Mr Wong have only been received by the court and P this morning (around 9:15am), it is only appropriate for the application for continuation of the Injunction Order and ancillary disclosure be adjourned for substantive arguments.

12.  Notwithstanding the abled submissions of Mr Wong, I am not convinced that the Injunction Order should not be continued until the adjourned hearing. I have considered the evidence and submissions filed in support of the ex parte application by P. I take the view the relatively low threshold of serious issue to be tried and good arguable case even in respect of a Mareva injunction are satisfied. Of course, these are only my preliminary views on the merits in light of only P’s evidence and without the benefit of any evidence filed by D2.

13.  However, as indicated to Mr Lok, although the Injunction Order should be continued until the adjourned hearing of the Summons[1], I am not satisfied the proprietary injunction as currently worded should be continued.

14.  In Zhang Yan & Ors v ASA Bullion Limited [2019] HKCFI 179, Recorder Eugene Fung SC set out the relevant legal principles regarding a proprietary injunction. Of relevance is that a proprietary injunction must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff. In order to justify the grant of a proprietary injunction, the plaintiff should ordinarily adduce some reasonable evidence of existence of the specific asset (or its traceable proceeds) and that the same is being held by or under the control of the defendant. Where the asset forming the subject matter of the proprietary claim has been dissipated and can no longer be traced, a proprietary injunction cannot ordinarily be granted. See §11(3) and (4). These propositions were taken from 任俊國 v Chin Choi Ming (unrep) HCA 2017/2017, 6 November 2017 at §§20-22 per Chow J as he then was.

15.  The Recorder in Welly Grace Limited & Ors v Keung Yee Man & Ors [2023] HKCFI 3082 revisited and confirmed those principles: see §§22-30. In particular, at §30 he held:

“In the context of obtaining a proprietary injunction, the plaintiff needs to demonstrate a serious issue to be tried in relation to his proprietary claim, which would involve not only a consideration of the merits of the claim being brought by the plaintiff, but also an examination of the tracing exercise pursuant to which the asset in question has been identified. As far as the tracing exercise is concerned, the plaintiff should adduce reasonable evidence to show a serious issue to be tried that the asset or its traceable substitute is being held by or under the control of the defendant. As to what would constitute reasonable evidence to show ‘the existence of the specific asset or its traceable proceeds and that the same are still being held by or under the control of the defendant’, that must naturally depend on the facts and circumstances of each case, including but not limited to the stage of the proceedings, the information available to the plaintiff at the time when the proprietary injunction is sought, and any materials with sufficient cogency from the defendant.”

16.  In the present case, I am not satisfied that there is a serious issue to be tried in relation to a proprietary claim against D1 for “…the sum of US$59,999,997.42 (or its equivalent in Hong Kong Dollar) paid by [P] into D1 Accounts on 30 December 2024…” (see paragraph 2(1)(a) of the Injunction Order) and against D2 for “… the sum of US$18,900,000 (or its equivalent in Hong Kong Dollars)…” (see paragraph 2(2)(a)).

17.  According to the Affirmation of Leung Ho Sun Wilson at §43(1), from the information provided by R on 27 May 2025, as of 23 May 2025, there was only US$99,983.53 in the account maintained by D1. Furthermore at §49(5), it was stated that he was informed by the Police that only around HK$3M remain in D2’s Account.

18.  Accordingly, P plainly has not shown by reasonable evidence a serious issue to be tried that US$59,999,997.42 and US$18,900,000 is still being held by D1 and D2 respectively.

19.  The proprietary injunction should be varied for the amount held by D1 (i.e. US$99,983.53) and D2 (i.e. HK$3M) respectively.

20.  I would also adjourn the application for ancillary disclosure against D1 and D2. Plainly, that should go hand in hand with the injunction. I agree with Mr Wong that given D2 seriously contest the merits of P’s case and the continuation of the Injunction Order, and the ancillary disclosure order is sought in order to police and give teeth to the Injunction Order which should not be made if the Injunction Order is not continued, and there should not be great prejudice to P to maintain the status quo up to the adjourned substantive hearing of the Summons and given the disclosure order obtained against R, on balance, I would not make any ancillary disclosure order today.

21.  I will now hear the parties on directions for the further conduct of the Summons.