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

CAMP 260/2023, [2026] HKCA 496

On An Intended Appeal From [2023] HKCFI 1926

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 260 OF 2023

(ON AN INTENDED APPEAL FROM HCA NO 667 OF 2022)

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REASONS FOR JUDGMENT

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Hon Chow JA (giving the Reasons for Judgment of the Court):

INTRODUCTION

1.  This is the rolled-up hearing of (i) the Plaintiff’s application for leave to appeal against the order of Au-Yeung J dated 21 July 2023 (“the Order”) refusing to grant an “interim-interim post-judgment worldwide Mareva injunction” against the Defendants pending the substantive hearing of the Plaintiff’s summons dated 18 July 2023 (“the Injunction Summons”), and (ii) if leave to appeal is granted, the Plaintiff’s appeal against the Order.  At the conclusion of the hearing on 17 March 2026, the application for leave to appeal was dismissed, with reasons to be given later.  This we now do.

BACKGROUND FACTS

2.  The basic facts of this case relevant to the disposal of the Plaintiff’s application/appeal can shortly be stated as follows.

3.  In the action below (HCA 667/2022), the Plaintiff (as lender) claims against the Defendants (as borrowers) for the recovery of the total outstanding principal amount of US$4.3 million under two written loan agreements dated 13 August 2019 and 6 January 2020 respectively, and contractual interest thereon.

4.  On 4January 2023, Master Alexander Tang gave summary judgment (“the Summary Judgment”) in favour of the Plaintiff against the Defendants for the sum of US$9,279,400 (inclusive of accrued interest on the outstanding principal amount), further interest thereon at judgment rate from the date of judgment to the date of payment, and costs of the action.

5.  On 17 January 2023, the Defendants filed a notice of appeal against the Summary Judgment.  The appeal was fixed to be heard on 29 June 2023.

6.  On 3 February 2023, the Plaintiff served statutory demands on the Defendants for payment of the judgment sum.  The Defendants did not satisfy the statutory demands.  Accordingly, the Plaintiff filed a bankruptcy petition against the 2^nd Defendant on 27 February 2023 (HCB 1051/2023, “the Bankruptcy Proceedings”), and a winding up petition against the 1^st Defendant on 13 April 2023 (HCCW 164/2023).

7.  In the 2^nd Defendant’s affirmation filed on 11 April 2023 in the Bankruptcy Proceedings, he made reference to an arbitral award that he had obtained on 11 April 2022 (“the Arbitral Award”) in the PRC against a person called Wu Wei (“Wu”) for the return of the entire shareholding (“the Shares”) in a BVI company called Window of Trade International Ltd (“WOTI”), and stated that he had commenced legal proceedings in the BVI to enforce the Arbitral Award.  The 2^nd Defendant also said that the BVI court had previously adjourned the enforcement proceedings pending Wu’s application to suspend enforcement of the Arbitral Award.  However, by the time of his affirmation, Wu’s application had already been dismissed by the Shenzhen Intermediate People’s Court, and the 2^nd Defendant expected the BVI court would soon resume the enforcement proceedings.  According to the Plaintiff, it then caused an inquiry to be made, and came to be informed that there would be a substantive hearing on 26 July 2023 in the BVI court for the enforcement of the Arbitral Award[1].  It is not clear on the evidence as to when it was that the Plaintiff first came to be so informed.

8.  On 4 July 2023, Deputy High Court Judge MK Liu gave a written decision dismissing the Defendants’ appeal against the Summary Judgment.

9.  On 18 July 2023, the Plaintiff took out the Injunction Summons for a post-judgment worldwide Mareva injunction against the Defendants in aid of execution of the Summary Judgment.  As can be seen from the 4^th Affirmation of Wu Jixiu filed in support of the Injunction Summons, the target of the application was the Shares.  It was the Plaintiff’s case that the 2^nd Defendant had already dissipated all known assets held under his name, the Shares represented the only valuable assets that the Plaintiff could look to for satisfaction of the Summary Judgment against the 2^nd Defendant, and there was a real risk that, if the 2^nd Defendant was successful in the BVI proceedings and the Shares were transferred to him, he would immediately dissipate them given his record of evading enforcement attempts and breaching court orders.

10.  The Injunction Summons came before the Judge on 21 July 2023.  At that hearing, the Plaintiff sought an “interim-interim injunction” pending the substantive hearing of the Injunction Summons.  The Judge refused to grant the interim-interim relief sought by the Plaintiff, on the ground that no urgency had been shown, in view of (i) the fact that the Arbitral Award had come to the Plaintiff’s notice, at the latest, by December 2022[2], but the Plaintiff did not seek any injunction until July 2023, (ii) although Master Keith Lam had granted a stay of execution of the Summary Judgment on 30 May 2023, there was no stay between January and May 2023, (iii) the Plaintiff’s explanation that it had been waiting for the determination of the appeal against the Summary Judgment was not a good reason for the delay, and (iv) in any event, judgment on the appeal was given on 4 July 2023, but the Plaintiff delayed until 18 July 2023 to take out the Injunction Summons.  The Judge considered that the Plaintiff’s overall delays since January 2023 were not warranted, and the alleged urgency was self-induced.  The Judge adjourned the Injunction Summons for argument, and gave directions for the filing of evidence in relation to the Injunction Summons.

11.  On 24 July 2023, the Plaintiff took out a summons (“the Leave Summons”) in the Court of Appeal seeking leave to appeal against the Order on the grounds set out in a draft Notice of Appeal attached to the Leave Summons.  The draft Notice of Appeal contains 5 grounds of intended appeal, namely:

(1)     The Judge failed to direct herself on the correct test for a post-judgment Mareva injunction (that the only or primary issue should be the risk of dissipation).

(2)     The Judge failed to apply the correct test and failed to conclude that there was a real risk of dissipation.

(3)     The Judge failed to find that any delay was justified and did not negate the Plaintiff’s genuine concerns as to the risk of dissipation.

(4)     The Judge failed to analyse the relative prejudice to the parties and that the balance of convenience was firmly in favour of granting an interim-interim injunction.

(5)     The Judge failed to consider that any delay was in any event very short.

12.  In the Leave Summons, the Plaintiff also sought a rolled-up hearing of the application for leave to appeal and the appeal proper (should leave to appeal be granted) before the Court of Appeal due to the “EXTREME URGENCY” of the matter.  Together with the Leave Summons, the Plaintiff filed a Certificate of Urgency signed by the Plaintiff’s counsel dated 24 July 2023.  In the Certificate of Urgency, it was stated that the application had to be heard on or before 26 July 2023 at the latest, and given the “extreme lack of time”, it was impracticable for the Plaintiff to appear before the Judge to apply for leave to appeal under Order 59, rule 14(4) of the Rules of the High Court, Cap 4A.  Reference was made to the forthcoming hearing in the BVI court on 26 July 2023 where the 2^nd Defendant would be seeking enforcement of the Arbitral Award, and it was said that “the matter must be heard (and decided) on or before 26 July 2023 for otherwise there will be irreparable damage to P (and the matter would have become academic when it comes to the Court again a few months later)”.

13.  On 24 July 2023, the Defendants lodged an appeal against the judgment of Deputy High Court Judge MK Liu to the Court of Appeal (CACV 230/2023).

14.  On 25 July 2023, this Court, having considered the Plaintiff’s Certificate of Urgency and other materials placed before it, directed a rolled-up hearing of the Plaintiff’s application for leave to appeal and the appeal proper (should leave to appeal be granted), and granted an interim injunction to restrain the Defendants from in any way disposing of or dealing with or diminishing the value of any or all of the Shares which might be ordered to be transferred to the 2^nd Defendant by the BVI court (“the Interim Injunction”) pending the outcome of the rolled-up hearing.

15.  On 4 September 2023, Linda Chan J made an order for the winding up of the 1^st Defendant in HCCW 164/2023.  Joint and Several Liquidators of the 1^st Defendant were appointed on 10 January 2024.

16.  On 18 September 2023, Cheng J made a bankruptcy order against the 2^nd Defendant in the Bankruptcy Proceedings.  On 14 December 2023, Messrs Pan and Chow (“the Trustees”) of FTI Consulting (Hong Kong) Limited were appointed as trustees-in-bankruptcy of the properties of the 2^nd Defendant.

17.  The rolled-up hearing was originally scheduled to take place on 12 January 2024.  It was subsequently re-fixed to 9 August 2024, and later further re-fixed to 17 March 2026, for reasons which we shall explain below.

18.  In the meantime, on 5 June 2024, the Eastern Caribbean Supreme Court of the High Court of Justice in the British Virgin Islands made an order (“the BVI Recognition Order”) that:

(1)     the appointment of Messrs Pan and Chow as trustees in respect of the properties of the 2^nd Defendant be recognised under BVI laws in aid of the Bankruptcy Proceedings in Hong Kong; and

(2)     WOTI and its registered agent in the BVI shall take steps to update its register of members to reflect the vesting of the Shares in the Trustees’ names.

The Trustees have confirmed, in a letter to the Plaintiff’s solicitors dated 6 August 2024 (and copied to the court), that, following the granting of the BVI Recognition Order, the Shares are now registered in the names, and under the control, of the Trustees.

DISCUSSION

19.  Although 5 grounds of appeal have been raised in the Plaintiff’s draft Notice of Appeal against the Order, the Plaintiff’s argument is encapsulated in §10 of the Mr Wong’s Skeleton Submissions dated 16 February 2026:

“In terms of the merits of the injunction application itself, in short, the application for interim-interim injunction was dismissed by the Judge on the ground of delay alone, with no discussion of its implications on the merits of the injunction itself, and no analysis on the risk of dissipation or the balance of convenience at all, which should be the relatively much more important factors in a post-judgment injunction application. P submits that, properly analyzed, the interim-interim injunction should have been granted by the Judge on 21 July 2023.”

20.  For the purpose of disposing of the present application, it is not necessary for us to determine definitively whether the Judge was correct to focus on the Plaintiff’s delay without considering the issues of the risk of dissipation of assets or the balance of convenience. This is because even if we are of the view that the Judge, in the context of the application for interim-interim relief then before her, erred in the proper exercise of her discretion by failing to consider those issues, it does not automatically mean that the interim-interim relief sought by the Plaintiff should now be granted.  Where the Court of Appeal is satisfied that a judge at first instance has failed to properly exercise his/her discretion to grant/refuse to grant an interim (or interim-interim) injunction, the Court of Appeal is entitled to exercise the discretion afresh, but such discretion must be exercised in the light of the current circumstances before it, not the circumstances then prevailing before the judge.

21.  Mr Wong has confirmed that the Plaintiff is seeking an order for the continuation of the Interim Injunction only in respect of the Shares[3]. However, it is not in dispute that the Shares are currently registered in the names, and under the control, of the Trustees appointed by the court.  The Plaintiff is an unsecured creditor of the 2^nd Defendant, and has no proprietary right or interest in the Shares.  The 2^nd Defendant’s properties, including the Shares, ought to be distributed in accordance with the order of priority of the debts of the 2^nd Defendant under the bankruptcy regime, and the proper persons to undertake that exercise are the Trustees.  In our view, the Plaintiff has simply failed to show any real risk of improper dissipation of the Shares. 

22.  There is an additional reason why we would refuse to grant leave to appeal in the present case.  On behalf of the Plaintiff, Mr Wong seeks a continuation of the Interim Injunction “pending the outcome of the substantive appeal in CACV 230/2023” (which is currently fixed to be heard on 6 November 2026)[4]. The relief now sought is different from that in the draft Notice of Appeal, namely, an “interim-interim post-judgment worldwide Mareva injunction … until a specified return [date]” of the Injunction Summons.  There is, in our view, no basis for the Plaintiff to seek such relief.  At the hearing before the Judge on 21 July 2023, the Plaintiff sought an interim-interim injunction over the properties of the Defendants pending the substantive hearing of the Injunction Summons, but the Judge refused to grant the relief sought by the Plaintiff.  At that time, the Defendants had not yet lodged the appeal in CACV 230/2023.  The Order refusing to grant an interim-interim injunction pending the substantive hearing of the Injunction Summons is the subject matter of the Plaintiff’s intended appeal.  This Court is not seized of the Injunction Summons.  The only matter before it is an intended appeal against the Order, and the only relief that the Plaintiff may properly seek from this Court is an interim-interim injunction pending the substantive hearing of the Injunction Summons.  However, notwithstanding the directions given by the Judge on 21 July 2023, the Plaintiff has failed to take any step to restore the Injunction Summons for hearing.  We have been told by Mr Wong that the Plaintiff has in fact taken no further action whatsoever in relation to the Injunction Summons.  Had the Plaintiff prosecuted the Injunction Summons diligently, as it ought to have done, the intended appeal against the Order would have become academic, save possibly on the issue of costs.  On the other hand, having allowed the matter to drag on for nearly 2 years and 8 months, it must be questionable whether the Plaintiff will succeed in obtaining the relief sought under the Injunction Summons.  That being the position, we would not in any event be prepared to exercise our discretion to grant an interim-interim injunction over the Shares pending the substantive hearing of the Injunction Summons.

23.  Since we have come to a clear view that the intended appeal has no reasonable prospect of success, it would be futile to grant leave to appeal.  Accordingly, leave to appeal is refused.

24.  We cannot end this judgment without expressing our disapproval of the Plaintiff’s conduct in failing to prosecute either the Injunction Summons or the Leave Summons diligently.

25.  Insofar as the Injunction Summons is concerned, as earlier mentioned, on 21 July 2023, the Judge gave directions to the parties for the filing of evidence, and adjourned the Injunction Summons for argument before a judge.  We have been informed by Mr Wong that the Defendants did not file any evidence in opposition to the Injunction Summons.  The fact that the Defendants did not do so would not prevent the Plaintiff from proceeding to fix a date for the substantive hearing of the Injunction Summons.  However, the Plaintiff did nothing whatsoever in relation to the Injunction Summons.  It seems to us to be clear that the Plaintiff, having obtained the Interim Injunction from this Court, was content to sit on it and did not proceed with the Injunction Summons at all.

26.  Insofar as the Leave Summons is concerned, the relevant chronology is as follows:

(1)     The rolled-up hearing was originally fixed to take place on 12 January 2024.

(2)     Consequent upon the orders for the winding up and bankruptcy of the 1^st and 2^nd Defendants made on 4 and 18 September 2023 respectively, the Plaintiff required the court’s leave to proceed with the Leave Summons under s 186 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32, and s 12 of the Bankruptcy Ordinance, Cap 6.

(3)     By a letter from the Court to the Plaintiff’s solicitors dated 3 January 2024, the Plaintiff was asked whether it had obtained the court’s leave to proceed with the Leave Summons, and if not, whether it intended to proceed with the rolled-up hearing on 12 January 2024.

(4)     The Plaintiff’s solicitors replied by a letter dated 4 January 2024, informing the Court that it had not obtained the court’s leave to proceed with the Leave Summons, and stating that it “will endeavour to do so as soon as possible after Liquidators of the 1^st Defendant have been appointed [which was expected to be] on 10 January 2024 (and in good time before any adjourned hearing)”.  The Plaintiff sought a 3-month adjournment of the rolled-up hearing.

(5)     On 5 January 2024, the Court granted the adjournment sought by the Plaintiff.

(6)     On 24 January 2024, the rolled-up hearing was re-fixed to take place on 9 August 2024.

(7)     On 18 July 2024, the Plaintiff’s solicitors wrote to the Court stating that “[as] of the present, we are actively liaising with the trustees/liquidators to deal with the matter of obtaining leave from the Court”, and sought the Court’s directions regarding the conduct of the Leave Summons or, alternatively, “a direction that the rolled-up hearing fixed on 9 August 2024 at 10 am be vacated and further adjourned to a date to be fixed …”.

(8)     Bearing in mind the representation made by the Plaintiff’s solicitors on 4 January 2024 that the Plaintiff would endeavour to apply for leave to proceed as soon as possible after the appointment of the Liquidators of the 1^st Defendant[5] and in good time before the adjourned hearing, the Plaintiff’s failure to make the application by 18 July 2024 (which was less than one month before the date of the hearing) was wholly unacceptable.  It also became clear that the Plaintiff would not be in a position to comply with Practice Direction 4.1 and proceed with the hearing of the Leave Summons on 9 August 2024.  Thus, on 19 July 2024, the Court vacated the date of the rolled-up hearing on 9 August 2024, and further directed that unless the Plaintiff should obtain leave to proceed with the Leave Summons on or before 19 August 2024, the Interim Injunction would be discharged forthwith, and the rolled-up hearing might not be re-fixed without leave of the court.

(9)     On 8 August 2024, the Plaintiff obtained leave from Master J Wong to proceed with the Leave Summons against the 1^st and 2^nd Defendants.

(10)     On 20 August 2024, the Court granted leave to the Plaintiff to re-fix the rolled-up hearing.

(11)     Notwithstanding such leave granted by the Court, the Plaintiff still failed to re-fix the rolled-up hearing.  This led to the Court’s further letter dated 9 April 2025 directing that unless the Plaintiff applied to re-fix the date of the rolled-up hearing within 14 days, the Interim Injunction would be discharged forthwith without any further order of the Court.

(12)     It was only on 22 April 2025 that the Plaintiff finally applied to re-fix the date of the rolled-up hearing, leading to the present hearing on 17 March 2026.

27.  Where a party has obtained interim relief from the court pending the substantive argument on a matter, it behoves that party to proceed with the matter diligently.  This is particularly so where the interim relief is sought and obtained in reliance upon a certificate of urgency signed by counsel, which normally would be given weight by the court.  It is unacceptable for a party, after he has obtained interim relief from the court, to drag his feet.  In future similar cases, the court should consider discharging the interim relief granted forthwith, as well as making an adverse costs orders against the delinquent party and/or his legal representatives.

28.  In the present case, there has been a lapse of nearly 2 years and 8 months from the date of the Leave Summons/Certificate of Urgency (24 July 2023) to the eventual date of the rolled-up hearing (17 March 2026).  Much of the substantial delay is attributable to the failure of the Plaintiff to take steps to proceed with the Leave Summons diligently after having obtained the Interim Injunction on an urgent basis.  It is clear to us that the Plaintiff has taken the stance that it did not have to prosecute either the Injunction Summons or the Leave Summons diligently because it had obtained the Interim Injunction (on the strength of the Certificate of Urgency). The Plaintiff’s stance is unacceptable, and its dilatoriness is inexcusable.

DISPOSITION

29.  The Leave Summons is dismissed.  In relation to the costs of the Leave Summons, Mr Wong accepted that normally costs should follow the event.  However, he pointed out that the Defendants had not appeared at the hearing or taken any substantive steps in relation to the Leave Summons, and asked this Court to make no order as to costs.  We are satisfied that, in the circumstances, this is an appropriate order to make.  Accordingly, we had made no order as to costs of the Leave Summons.

[1] See §41 of the 4^th Affirmation of Wu Jixiu made on 17 July 2023.

[2] A copy of the Arbitral Award was exhibited to an un-notarised affirmation of the 2^nd Defendant which was filed as an exhibit to the affirmation of Chan Hoi Wuen Katherine on 23 November 2022.  The affirmation of the 2^nd Defendant was later filed on 28 December 2022.

[3] See §7 of the Skeleton Submissions of the Plaintiff.

[4] See §§7 and 35 of the Skeleton Submissions of the Plaintiff.

[5] The Liquidators were appointed on 10 January 2024.