DONG YOUQUN AND ANOTHER v. WANG PING AND OTHERS

HCA 814/2025

[2026] HKCFI 813

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 814 OF 2025

________________________

________________

_________________

D E C I S I O N

_________________

Introduction

1.  In this action, Ps claim to have been defrauded by Ds in a sham transaction involving an eye-drop product (“the Eyedrops”). This is the substantive hearing of Ps’ summons dated 25 April 2025 (“the Summons”) for an extended continuation of the ex parte Mareva injunction granted by Leung J (“the Ex Parte Judge”) dated 24 April 2025 as continued by the order of DHCJ Kenneth Wong dated 2 May 2025 (“the Injunction”).

2.  By the Injunction, each of D1 and D2 is now prohibited from dealing with the assets within Hong Kong whether in his own name or not and whether solely or jointly owned up to the value of HK$22,988,491.00 (“the Injuncted Amount”).

3.  For the purpose of this application, Ps have a whole new legal team. At the hearing, Mr Lau, together with Ms Lee, appears for Ps. Mr Maurellet SC, leading Mr Cheng, opposes the Summons on behalf of Ds.   

Background facts

4.  P1 is a businesswoman. She used to be a resident in the Mainland until she came to settle in Hong Kong in January 2025. She is the sole shareholder and director of P2 incorporated in the British Virgin Islands.

5.  P1 is heavily assisted by Mr Gu who is General Manager of Zhejiang Qianhong Industry Co. Limited (“Zhejiang Qianhong”). It is ultimately controlled by P1.

6.  D1 claims to be a PhD holder and a professional investor. He is a director of D2 to D5. D2, D3 and D4 are locally incorporated companies whereas D5 was incorporated in the British Virgin Islands.

7.  P1 came to know D1 at a business conference in Shanghai on or about 6 November 2023. She soon became interested in having business co-operation with D1, who appeared to be very successful to her.

8.  Mr Xing Kai (“Xing”) is the Chief Executive Officer of D2 and is the right-hand man of D1. D2 wholly owns a Macanese company known as 康智明視國際生物科技有限公司.

9.  D1 owns a company known as 深圳西科智慧医疗科技有限公司 (“Shenzhen Siko”). Shenzhen Siko is the administrative hub of the companies owned and/or controlled by D1. In September 2023, P1 through Zhejiang Qianhong acquired a 4% shareholding of Shenzhen Siko and became its minority shareholder. On 18 November 2023, P1 signed an agreement with Shenzhen Siko to further invest RMB20 million in Shenzhen Siko.

Ps’ case

10.  The respective cases of Ps and Ds are poles apart. In a nutshell, Ps make a serious allegation of fraud and say that they were induced by D1 to pay US$3 million as an investment in a business project involving the Eyedrops (“the Project”). The Project turned out to be a fraudulent scheme. On the other hand, Ds deny any fraud and contend that P1 merely took part in an employment-based sales incentive scheme in the course of her employment with D2 and she was refused a bonus of US$2 million by reason of her failure to meet to the agreed sales target.

11.  As summarised in their skeleton submissions placed before the Ex Parte Judge (“the Ex Parte Skeleton”), for the purpose of this application, Ps’ case can be outlined as follows.

12.  In or about February 2024, D1 disclosed to P1 the details of the Project, which would lead to the floatation of a company. The company was contemplated to be listed (“Pre-IPO Company”). The main asset of the Pre-IPO Company would be the Eyedrops which could ease presbyopia. The Eyedrops would be marketed by reference to the trade name of “Clear Vision” (本草名目).

13.  P1 was interested in the Project. By 31 May 2024, D1 had allegedly made the following representations to P1 (“the Representations”):

(1)  Professor Zhang Kang (“Professor Zhang”) was in charge of the Project and the Eyedrops would be the main asset of the Pre-IPO Company.  The Pre-IPO Company was to be listed in the United States;

(2)  The Macanese authorities would give authorisation of the sale of the Eyedrops in the form of certification for non-prescription drug (“the ISAF Certificate”) to be issued in about one month’s time for the production and sale of the Eyedrops; and

(3)  The production of the Eyedrops had commenced in the Mainland in time for sale by the end of June 2024.

14.  In reliance on the Representations, Ps entered into an agreement with D1 and D2 (“the Agreement”). The Agreement was partly oral and partly in writing.

15.  For the written part of the Agreement, Ps rely on two Chinese agreements. They are an agreement entitled 「咨詢服務協議」 dated 1 May 2025 (“the Consultancy Agreement”) and an agreement entitled 「承諾函」 dated 31 May 2024 (“the Promise Letter”).

16.  P2 and Sight Health Biotechnology Co., Limited (“Sight Health Cayman”) were parties to the former agreement and the latter was issued by D2 to P1.

17.  In the Consultancy Agreement, P2 expressly agreed to recommend an online shopping platform, TH Mall (subsequently renamed “LOEE”), as the shopping platform for the sale of the Eyedrops and achieve the sales target of US$3 million by 31 August 2024 and US$10 million between 1 September 2024 and 31 August 2025. In return, Sight Health Cayman agreed to pay P2 “fee” in the form of 625,000 Class A shares in Sight Health Cayman (20.83% of 2 million Class A shares and 5.2% of the total of 12 million shares) (“the Shares”) after achieving the agreed sales target.

18.  On the other hand, by the Promise Letter, D2 agreed to reward P1 with a bonus in the amount of US$2 million (“the Bonus”) being 66% of the sale proceeds of the Eyedrops to be paid within 2 months after the receipt of the acknowledgement of the receipt of the Eyedrops. The Bonus was promised in view of P1’s sale of 120,000 bottles of the Eyedrops within the Mainland partially through cross-border online shopping platform in the sum of US$3 million.

19.  Ps further allege that D1 orally assured many times to P1 that he would not use any part of the sum of US$3 million before she was satisfied with the quality of the delivery. In a WeChat call taking place on 31 May 2024, D1 assured P1 that her money would be in the accounts in his company’s name and he was the only signatory on the accounts. He further assured P1 that he would produce bank statements for the accounts on a daily basis. Ps say that D1 and D2 relied on all these assurances (“the Assurances”) in their decision to enter into the Agreement.  

20.  After the conclusion of the Agreement, from June to August 2024, through Mr Gu, P1 arranged 18 selling agents in the Mainland to place, through their 145 purchasers with monies provided by P1, 4,885 orders for altogether 120,000 bottles of the Eyedrops on the platform “LOEE” at the total purchase price of RMB21,392,287.28 (“the Paid Amount”) (equivalent to HK$22,988,491 or US$3,075,186). P1 claims to be the sole provider of the Paid Amount and the selling agents used her fund to place the orders for the Eyedrops. Whilst P1 remained to be the exclusive distributor of the Eyedrops, the selling agents were expected to work as sales agents. P1 was confident that under her arrangement with the agents, the agents would sell the 120,000 bottles of the Eyedrops across China.

21.  As a result, Ps say that the sales target was reached and P1 should be entitled to both the Shares and the Bonus under the Agreement.

22.  In September 2024, P2 received shares in New Horizon Longevity Technology Limited, which were agreed to be the Shares in place of the shares in Sight Health Cayman. However, P1 was refused the Bonus.

23.  Ps then say that all the Representations and the Assurances were known to Ds to be false or at least made by them recklessly not caring whether they were true or not.

24.  First, despite the production agreement dated 9 December 2024 signed by D2 and Mega Cosmetics Limited (“Mega Cosmetics”), no Eyedrops were ever produced and delivered to Ps.

25.  P1 alleges that between 2 October 2024 and 7 October 2024, some of her agents told her that they had received parcels only to find that they contained soda powder and advertisement paper disguised as the Eyedrops. D1 explained to Mr Gu that once the ISAF Certificate was available, her agents would receive the genuine Eyedrops products.

26.  The ISAF Certificate was eventually issued on 5 November 2024.

27.  Ps aver that Mr Gu and P1 paid a visit to the factory of Mega Cosmetics in San Po Kong in late December 2024. At the factory, there was no worker and there was only one semi-automatic machine purportedly for the purpose of injection of the Eyedrops into bottles. Ps had serious doubts as to whether mass production of the Eyedrops (150,000 bottles) was possible by the factory.

28.  Ps further found out that Mega Cosmetics was not licenced as of December 2024 to manufacture medicine in Hong Kong.

29.  Second, Madam Dong Xiayu (“Madam Dong”) who is the niece of D1 found out that the true effect of the ISAF Certificate is to classify the Eyedrops as natural medicine only. It does not authorise drug production and sale of Eyedrops products in the Macau Special Administrative Region, contrary to the Representations.

30.  Third, notwithstanding the non-delivery of the Eyedrops, contrary to the Assurances, Ds diverted part of the funds received from the agents paid through “LOEE” to their own use. In particular, Ps allege that HK$11,579,403.12 was paid to D2 and HK$4,545,336.74 to D3, out of which sums were further paid to D1, D4 and D5.

31.  Ps’ case is that because of the Representations made fraudulently or recklessly, Ps have suffered loss and damage including the loss of the Paid Amount. Further, because of the Assurances of D1, a Quistclose trust is formed in respect of the Paid Amount, which could only be released by D2 after D1 was satisfied with the delivery of the 120,000 bottles of the Eyedrops.

32.  On this basis, Ds applied to the Ex Parte Judge for a proprietary injunction and a Mareva injunction. They were granted the Injunction as a result.

Ds’ case

33.  The following summary of Ds’ case is provided by Mr Maurellet in his skeleton submissions.

34.  D1 started the Project to manufacture and commercialise the Eyedrops invented by Professor Zhang, a Harvard-educated ophthalmologist. Their collaboration was genuine and authentic although Professor Zhang’s engagement was later terminated due to his personal financial issues and his role was since taken over by Professor Zhou to the knowledge of P1.

35.  The Eyedrops to be sold under the Project were a health supplement which did not require a licence under the Hong Kong Pharmacy and Poison Ordinance to be sold on the market.

36.  For the purposes of launching and operating the Project, P1 entered into the Agreement consisting of the Consultancy Agreement and the Promise Letter. P1 was a senior employee and sales representative of D2 and not an external investor. P1 assumed responsibility, as part of her employment duties, for promoting and selling the Eyedrops in the Mainland.

37.  The Consultancy Agreement and the Promise Letter were thus merely part of an employee incentive scheme, providing the Bonus and the Shares if D1 was able to achieve a sales target of US$3 million by 31 August 2024.

38.  The funds to achieve the sales target came from individual agents and not D1 personally. All payments from LOEE were legitimate commercial transactions used for production expenses and staff salaries, while transfers to the other Ds were either loan repayments or inter-company reimbursements later returned to D2.

39.  Eventually, under Mr Gu’s supervision, the Eyedrops were manufactured in Hong Kong by Mega Cosmetics and completed by the end of January 2025 (150,000 bottles). They were later stored in a warehouse in Yuen Long. Ps were aware of and engaged in the production process and subsequently refused to collect the stock when their employment relationship deteriorated. There is no truth in Ps’ allegation that not a single bottle was produced.

40.  D1 eventually failed to meet the agreed sales target. A confirmation letter issued by LOEE on 31 December 2024 recorded total sales of HK$23,002,635 and it fell short of the conditional US$3 million threshold. As a result, the pre-condition for the Bonus was never satisfied.

41.  For unknown reasons, P1 only started demanding for payment of the Bonus after her request for a salary increment was rejected in January 2025.

Grounds of Discharge and refusal of a regrant

42.  Ds’ position is that there was no basis for Ps to make the application on an ex parte without notice basis. There was neither urgency nor secrecy.

43.  Further, Mr Maurellet has identified certain flagrant material non-disclosures by Ps. They could be categorised as follows:

(1)  Failure to disclose D1 and Mr Gu’s roles as shareholder and senior employee of Shenzhen Siko (“MND-1”);

(2)  Failure to disclose their knowledge about the roles of Professor Zhang (which has later ceased) in the Project (“MND-2”);

(3)  Failure to disclose the ultimate source of the US$3 million payment (“MND-3”);

(4)  Failure to disclose the fact that the Eyedrops had been manufactured and delivered by Ps even though Ps have refused and/or declined to accept the same (“MND-4”);

(5)  Failure to disclose the fact that D1 had in fact failed to fulfil the relevant sales target to be eligible for the Bonus (“MND-5”);

(6)  Failure to disclose the fact of full repayment of funds by D3 to D2 (“MND-6”); and

(7)  Material non-disclosure of lack of real risk of dissipation (“MND-7”).

44.  Ps argue that in any event the Injunction must go and there can be no continuation and/or re-grant for lack of a good arguable case.

Discussion

45.  First and foremost, I opine that Ps had no reason to make the application for the Injunction on an ex parte without notice basis.

46.  Mr Maurellet pertinently refers to Slik Hong Kong Company Limited v Gerald Merlyn Rhoslyn Evans and Ors. (unreported, HCA1424/2005, 25.7.2005) in which Lam J (as Lam PJ then was) elaborated the principles relating to ex parte applications. At §2, the learned judge pointed out that ex parte applications should be regarded as exceptional and the court should not entertain the same unless there are cogent justifications usually in terms of either extreme urgency or secrecy.

47.  At §5, the learned judge went on to observe that in the context of urgency, it has to be borne in mind that nowadays it does not need to wait very long to list a matter for an inter parte hearing. He then cited with approval the following observations of Rogers J (as he then was) in Seapower Resources International Ltd v Lau Pak Shing (unreported, HCA No.A10715 of 1993, 15 December 1993) with regard to the degree of urgency that could justify ex parte application,

“For an ex parte application for an injunction to be [justified] on the grounds of urgency it must be so urgent [that] you cannot give even five minutes warning to the other side. Here, solicitors were instructed for the Defendants … the Plaintiffs’ solicitors well knew it. … There was no justification for not even making a telephone call or sending a fax…”

48.  In the present case, P1 had paid all the Paid Amount by the end of August 2024. According to her evidence and pleaded case regarding the falsity of the Representations and Assurances, she should have realized the fraudulent scheme now alleged by her by the end of 2024. It must be clear to P1 that no Eyedrops would be delivered to her agents. There is no reason why Ps only made the application in late April 2025. Ps did not explain the delay in her affirmations. The dilatory approach adopted by Ps suggests that there was no urgency at all.

49.  Curiously enough, by a letter dated 19 February 2025 (“the Demand Letter”), P1 wrote to D2 and demanded payment of the Bonus within 3 days from the date of the letter. She threatened that she would take legal action in Hong Kong,

50.  By a letter dated 28 February 2025 (“the Reply Letter”) issued to Ps, D2 claimed that the sales target was not met and the Bonus was not due to P1 under the Agreement. D2 further reminded P1 that the sales target of US$13 million was yet to be achieved and D2 might demand Ps to return the Shares.

51.  In her supporting affirmation, P1 said that she reported the case to the police on or about 26 March 2025. She did not disclose any details of her report. Nor did she exhibit any witness statement given to the police. It was only until P1 filed her 2^nd Affirmation dated 28 October 2025 in reply to the affirmations filed on behalf of Ds that she exhibited her witness statement given to the police (“the Police Statement”). As shown in the Police Statement, the police interview took place on 25 June 2025, long after the ex parte hearing. In the Police Statement, D1 stated that she made a report on 26 March 2025 and she went to Central Police Station to make a witness statement on 17 April 2025, less than a week before the ex parte hearing. Her second visit to the police station was not included in her supporting affirmation and the witness statement she made on 17 April 2025 was not exhibited. These matters were not mentioned in the Ex Parte Skeleton at all.

52.  Mr Maurellet draws to my attention P1’s own evidence that around the same time when she issued the Demand Letter, she discovered that the Project was a fraud. Thus, in or about mid-March 2025, she caused Zhejiang Qianhong to commence a case in Shenzhen against, among others, Shenzhen Siko and two other companies which she believed were controlled by D1.

53.  Then P1 went on to say that she was told by Madam Dong that on 2 April 2025, she had been informed by the staff of People’s Court of Futian District, Shenzhen that a preservation of assets order was granted against the defendants in that case on 1 April 2025.  

54.  Against this background, there is no genuine urgency and secrecy on 24 April 2025 that could justify the ex parte application of Ps. Given the Demand Letter, P1’s report to the police and the legal action against Shenzhen Siko and other companies in Shenzhen, Ds must have been forewarned and secrecy could not be a valid consideration. In fact, Ps even did not allege secrecy in the Ex Parte Skeleton. Ps could have taken out an inter partes summons on 22 April 2025 (Tuesday) returnable on 25 April 2025 (Friday) to give Ds proper notice of their application. There is no justification for their ex parte without notice application on 24 April 2025 in my view.

55.  I note that little submission on the important issue of delay, urgency and secrecy was made to the Ex Parte Judge. This is unsatisfactory to say the least.

56.  I come to the conclusion that Ps’ ex parte application was an abuse of process and the Injunction should be discharged on this ground alone.    

57.  I now turn to the alleged material non-disclosures.      

58.  Mr Maurellet refers to the following summary of the relevant principles provided by Mr Recorder Manzoni SC in Aleksandr Narimanovich Kushaev v Greenly Holdings Limited (in liquidation) and Ors. [2019] HKCFI 2745 at §69 (adopting the skeleton submission of the plaintiff’s counsel):

(1)  The duty of the applicant in an ex parte application is to make a full and frank disclosure of all the material facts: Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350 at 1356F–G per Ralph Gibson LJ.

(2)  Material facts mean all facts that are relevant to the weighing operation which the Court has to make in deciding whether or not to grant the order. The correct test is not simply whether, if the non-disclosure had not occurred, the ex parte judge would nevertheless have made the order, but whether the facts not disclosed, being relevant, should have been in the scales: Citibank NA v Express Ship Management Services Ltd & anor [1987] HKLR 1184 at 1190C–E per Fuad JA (as he then was).

(3)  The test as to materiality is an objective one, and it is not for the applicant or his advisers to decide the question; hence it is no excuse for the applicant subsequently to say that he was genuinely unaware, or did not believe, that the facts were relevant or important. All matters which are relevant to the “weighing operation” that the court has to make in deciding whether or not to grant the order must be disclosed: New Asia Energy Ltd v Concord Oil (Hong Kong) Ltd [2000] 2 HKC 681 at 685G–I per Keith JA.

(4)  In addition, the plaintiff must identify any defences, which, although not yet taken, would have been available to be taken by the defendant had he been present at the ex parte application, provided that: (1) the defence is one which can reasonably be expected to be raised in due course by the defendant; and (2) the defence is not one which can be dismissed as without substance or importance: New Asia Energy Ltd at 685G–I.

(5)  The duty of making full and frank disclosure is not discharged by making partial disclosure on oath or deposing to half-truths. The Court is entitled to assume that the applicant acts with utmost good faith, failing which the position of the ex parte judge would be extremely difficult, if not impossible: Guangdong Yuehe Investment Holdings Co Ltd & Another v Hongfan International Ltd (unreported, HCA 391/2017, 3 March 2017) at §11 per Chow J (as he then was).

(6)  The disclosure should be made in the affidavit (and/or the skeleton submissions) and not in the exhibits. This is to ensure that the ex parte judge will not overlook the matters which require disclosure, ex parte applications being usually urgent (so the judge usually has little reading time) and ex parte hearings are often short: Tiong King Sing v Sam Boon Peng Yee [2011] 5 HKLRD 651 at §13 per Chung J.

(7)  An applicant has a duty to inform the court as soon as he becomes aware that the court has been misinformed or given incomplete information at the time of the ex parte application: Cargill International Trading Pty Ltd v Loyal Base Development Ltd (unreported, HCCL 12/2015, 24 November 2015) at §50 per Mimmie Chan J.

59.  On the other hand, Mr Lau submits that it does not amount to material non-disclosure where an applicant fails to posit and canvas every conceivable argument which a creative respondent might conjure up in the face of a claim: Sky Motion Holdings Ltd v China Create Capital Ltd [2019] HKCFI 2408 at §88 per Coleman J.

60.  Mr Lau further submits that hotly disputed allegations of material non-disclosure should not and could not entail a mini-trial on which party’s story is inherently more credible. Whether or not an applicant has made full and frank disclosure in obtaining an ex parte Mareva injunction is a matter to be investigated at trial: Cheer Signal Development Ltd v Wong Siu Fan (unreported, HCA 780/2015, 26 October 2015) at §47 & §48 per Au-Yeung J and Sky Motion (supra) at §34;

61.  Lastly, Mr Lau reminds this court that at the end of the day, common sense must prevail and the heavy burden cast on an applicant must not be allowed to become so onerous as to be intolerable: Xie Li Xin v. Law Ka Yan, Thompson [2018] HKCFI 1096 at §60 per DHCJ Roxanne Ismail SC.

62.  With these principles in mind, I now assess the merit of MNDs1-7.

MND-1

63.  Ds complain that Ps failed to disclose the actual role of P1 and Mr Gu in Shenzhen Siko and the Project.

64.  Upon acquiring shares in Shenzhen Siko, P1 executed an employment contract appointing herself as Co-CEO with a monthly salary of RMB15,000 while Mr Gu was engaged as Assistant to the CEO with a monthly salary of RMB12,000. P1 is also a board member and she signed on the minutes of the meetings of Shenzhen Siko.

65.  On the other hand, both P1 and Mr Gu were also the sales representatives of D2 as confirmed at a staff meeting of Shenzhen Siko in late April 2024.

66.  P1 did briefly mention in her supporting affirmation that she had acquired 1% shareholding in Shenzhen Siko and she had made further investment in Shenzhen Siko. This is hardly sufficient to discharge the duty of full and frank disclose in my view.

67.  With the non-disclosure of the actual roles played by P1 and Mr Gu in Shenzhen Siko, the overall picture painted by the evidence in support of Ps’ ex parte application and the Ex Parte Skeleton is that P1 was only an outsider investor interested in the Project. Ps’ case of fraud was thereby strengthened in that P1 and Mr Gu were not actually involved in the administration of the Project except P2’s contractual obligation to achieve the sales target of the Eyedrops.

68.  I should add that Madam Dong on her own evidence worked for Shenzhen Siko from 1 October 2024 to 28 February 2025. This was not mentioned in the Ex Parte Skeleton.

69.  If the Project had been a mere scam, Ds had no reason to allow the participation of P1, Mr Gu and Madam Dong in the daily business of Shenzhen Siko and/or D2. Ds should not have allowed them any chance to discover the fraud.

70.  The flipside of the coin is that the case of Ds that P1 and Mr Gu were employees of Shenzhen Siko and the Agreement was a genuine employee incentive scheme for them was unduly weakened by MND-1.

71.  I, therefore, conclude that MND-1 is a valid compliant.

MND-2

72.  Ps allege that D1 and Mr Xing made a fraudulent or reckless misrepresentation to P1 that Professor Zhang would be in charge of the Project throughout. They wish to paint the picture that D1 and Mr Xing deliberately misled them and induced P1 to invest in the Project by the alleged participation of Professor Zhang.  

73.  It is not dispute that the replacement of Professor Zhang with Professor Zhou in September 2024 was mentioned in the slide deck prepared for an IPO pre-roadshow. The slide deck was circulated in a WeChat working group consisting of P1 and Mr Gu. It should have been disclosed by Ps and it is material to Ps’ allegation of the misrepresentation regarding the involvement of Professor Zhang.

74.  I find that the complaint about MND-2 is valid.

MND-3

75.  P1 did not disclose in her supporting affirmation how she raised the Paid Amount. This is clearly relevant to her allegation that she was victimised by the alleged fraud and suffered monetary loss.

76.  P1 found it necessary to give an explanation for her sources of fund to make the payment of the Paid Amount through the 145 purchasers allegedly in both her reply affirmation and the Police Statement. The materiality of this evidence cannot be disputed.

77.  In the premises, I find that MND-3 is made out.

MND-4

78.  Ps went to great lengths to give an impression that not a single bottle of Eyedrops was manufactured and hence the Project must be a scam.   

79.  To rebut this allegation, Dr Kwong made an affirmation for Ds. Dr Kwong is an independent consultant providing consultancy services to D2. He was in a WeChat group of which both P1 and Mr Gu were members and they discussed all the matters relating to the manufacture of the Eyedrops. Dr Kwong gave an account of how P1 and Mr Gu were involved in the process.

80.  Of course, the evidence of Dr Kwong is subject to challenge. However, those WeChat records which show that Mr Gu commented on the quality of different batches of the Eyedrops should have been disclosed by Ps at the ex parte stage.

81.  For completeness, Ds produced a letter issued by Mega Cosmetics dated 16 April 2025 to a company known as 千熙集團有限公司. Ds allege that this company is wholly owned by P1. By the letter, Mega Cosmetics requested them to take delivery of 30 pallets of the Eyedrops products as soon as possible. Such products were said to have been stored in a warehouse in Yuen Long since 17 February 2025.

82.  P1 says in her reply affirmation that this letter is suspicious. She points out that 千熙集團有限公司 is not related to P2 and Mega Cosmetics had no right and obligation to deliver the Eyedrops to P2. Next, P1 observes that the letter was issued after her report to the police on 26 March 2025. Lastly, P1 points out that the address of the recipient of the letter was an office located in Science Park to which she has no access. Ds and Mega Cosmetics have her contact information but they never give notice of delivery through the normal channels such as WeChat and by phone.

83.  It is noteworthy that P1, however, does not directly and unequivocally deny receipt of the letter. There is no reason why she does not do.

84.  In any event, for the purpose of this application, I disregard this letter, which flatly contradicts Ps’ core allegation of non-production and non-delivery of the Eyedrops.

85.  Considering all the relevant evidence, I have no hesitation in concluding that MND-4 is amply made out.

MND-5

86.  Whilst P1 referred to the Demand Letter in her supporting affirmation, inexplicably, she said nothing about the Reply Letter, which provided an answer to her allegation that she should be entitled to the Bonus by achieving the sales target.

87.  The Reply Letter was not available to the Ex Parte Judge. The contention of Ds was not brought to the attention of the court.  

88.  Ds’ contention in the Reply Letter that P1 failed to meet the sales target is apparently supported by a confirmation letter dated 31 December 2024 (“the Confirmation Letter”). The Confirmation Letter was issued by Touch Heart Innovation and Technology Limited which operates LOEE. The total sale of the Eyedrops through LOEE was HK$23 million only and not the Paid Amount.

89.  There is no legitimate reason why Ps did not disclose the Reply Letter and the Confirmation Letter in their ex parte application. This is a glaring material non-disclosure.

MND-6

90.  This alleged material non-disclosure concerns the receipt of the amount of HK$4,545,336.74 (“the Sum”) from LOEE by D3. In the Ex parte Skeleton, it is stated that the funds released by LOEE were paid to D3 in the like amount of the Sum.

91.  This statement should lead the Ex Parte Judge to believe that D3 has retained the funds traceable to P1’s monies.

92.  However, the fund flow summary chart exhibited to the supporting affirmation of P1 (DYQ-40) shows that D3 has actually transferred all the monies it received from LOEE to D2. This was not highlighted to the Ex Parte Judge.

93.  Hence, the case of Ps against D3 was made on a wrong basis in flagrant disregard of the undisputed documentary evidence. I find that MND-6 is established.

MND-7

94.  The complaint is that Ps failed to refer to the court such recent appellate authorities which make it clear that a real risk of dissipation cannot merely be inferred from the alleged low commercial morality of the defendant or a good arguable case of dishonesty.

95.  I do not find any substance in this complaint. The allegation of Ps against Ds is far more serious in the present case. D1 is alleged to be a fraudster. More often than not, a fraudster is likely to dissipate his assets to avoid judgment.

96.  I do not think that it is a material non-disclosure that such appellate authorities were not cited to the Ex Parte Judge.

97.  In conclusion, I find MNDs 1-6 to be proved. Ps failed to discharge the duty to make full and frank disclosure at the ex parte hearing. The Injunction must be discharged.     

Re-grant?

98.  In light of my conclusion that it was an abuse of process for Ps to make the ex parte without notice application despite the lack of urgency and secrecy and that there were serious material non-disclosures, I believe I should follow the general rule that the Injunction must be discharged and a renewal of the Injunction until trial should be refused.

99.  I do not think I should exercise my discretion to re-grant the Injunction in the present case. Ps have failed miserably to show a good arguable case. Ps’ own case is fraught with difficulties and cries out for explanations in many respects.

100.  To start with, I have serious doubt as to how P1 came up with the Paid Amount for her alleged investment. P1 should have no difficulties in showing the fund flow if indeed her agents used her funds to pay the purchasers. There is not a shred of such evidence. Mr Maurellet submits that the confirmation letters purportedly issued by the purchasers and some of the agents belatedly produced by P1 are unable to improve Ps’ case. They beg the question why none of them could produce underlying payment documents showing the alleged transfers. I agree with his submission.

101.  Further, an inexplicable feature of Ps’ case is that P1 went to the trouble of asking her 18 agents to look for 145 purchasers to purchase the Eyedrops with her own fund in order to earn the Bonus and the Shares under the Agreement. I do not understand why she did not purchase the 120,000 bottles of the Eyedrops simply by one single company of hers or one or two of her assistants whom she could trust instead. I do not understand why she decided to use such manpower and resources to achieve the sales target. I cannot believe that P1 could mobilize her agents and the purchasers to place the orders with her fund without paying for their services.

102.  If it had been a genuine investment in the Eyedrops, no doubt P1 should have made some contractual arrangements with retailers through her agents for the onward sale of the Eyedrops. At least, there should have been some concrete plans as to how the Eyedrops purchased from D2 should be dealt with by Ps. Alarmingly, there is no such evidence at all.

103.  Lastly, it is remarkable that despite the persistent failure to make delivery of the Eyedrops and her strong suspicion about the non-production of the Eyedrops, when P1 was first seen to make any written complaint in the Demand Letter, she merely asked for the Bonus. It is surprising that the Bonus was her priority. P1 did not confront Ds and say that the Project was a scam. She did not ask for the refund of the Paid Amount, which far exceeds the amount of the Bonus. Nor did she press for delivery of the Eyedrops.          

104.  I do not intend to further assess the merit of Ps’ claim for the purpose of this application. Suffice it to say that I am not impressed by Ps’ evidence and I am far from convinced that they have a strong arguable case against Ds.

105.  I do not believe I should exercise my discretion to re-grant the Injunction in the circumstances.

Conclusion and orders

106.  For the reasons given, I find the Injunction to be untenable and must be discharged. There should be no re-grant of the Injunction.

107.  It is unfair that in the absence of genuine urgency and secrecy, the Ex Parte Judge was required to deal with Ps’ application which was supported by 3 affirmations with voluminous documents exhibited thereto and the involvement of a number of persons and companies on an urgent basis. The application was an abuse of process. The material non-disclosures found are serious. The manner in which Ps’ previous legal team handled Ps’ case left much to be desired. The admirable efforts of Mr Lau and Ms Lee, while greatly appreciated, are unable to change my mind.

108.  Costs should follow the event. I make an order nisi that Ps should pay Ds’ costs of and occasioned by the Summons including any costs reserved, to be taxed if not agreed, with certificate of two counsel.

109.  It remains for me to thank Mr Maurellet SC, Mr Cheng, Mr Lau and Ms Lee for their thorough submissions and able assistance.