成都浣花驿科技有限公司 v. LI JIE AND ANOTHER

HCMP 1035/2025

[2025] HKCFI 3261

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1035 OF 2025

____________

____________

BETWEEN

____________

___________________________________

R E A S O N S    F O R    J U D G M E N T

___________________________________

A. INTRODUCTION

1.  This is the substantive hearing of the originating summons filed by the Plaintiff (a judgment creditor) (“the OS”) for a Mareva and Chabra injunction in aid of enforcement of a Mainland Judgment in Hong Kong against the Defendant (a judgment debtor).

2.  On 20 September 2024, the Plaintiff obtained a judgment from the Intermediate People’s Court of Chengdu Municipality (“Chengdu IPC”), Sichuan Province of the People's Republic of China under (2023) 川01民初1422 號 (“the Mainland Judgment”). The Chengdu IPC ordered D1 to be jointly and severally liable with 北京名赫投资集团有限公司 (“Beijing Mihot”) to pay the Plaintiff RMB70,000,000 with interest and legal fees (“the Judgment Debt”). After some execution by the Chengdu IPC, the outstanding Judgment Debt is over RMB139 million.

3.  On 18 June 2025, Master Hui granted leave for the Plaintiff to register the Mainland Judgment under the Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap 597 (“MJREO”) under action no. HCRE 26/2025.

4.  Till today, there has been no application to set aside that registration, nor had the Defendant paid any part of the Judgment Debt.

5.  Having discovered that the property might be auctioned, the Plaintiff took out the OS on 24 June 2025 seeking an injunction and disclosure order as the only reliefs. On the same day, the Plaintiff issued a summons for interim relief in the same terms as the OS.

6.  On 27 June 2025, DHCJ Alan Kwong granted, on an ex parte basis:

(1) An interim Mareva and Chabra injunction in favour of the Plaintiff (“the Injunction Order”), restraining D1 and D2 from removing from Hong Kong assets up to the value of RMB139,225,306.26 (being the judgment debt due to the Plaintiff) and, in particular, the net proceeds of sale of a property known as Flat B on the Ground Floor of Tower 5, One Mayfair, No. 1 Broadcast Drive, Kowloon (“the Property”), after payment of any mortgages from the Standard Chartered Bank (Hong Kong) Limited (“SCB”);

(2) A Mareva injunction to restrain D1 from disposing of his 100% shareholding in D2, as well as the assets of D2; and

(3) A Disclosure Order requiring the Defendants to disclose their assets of an individual value of HK$50,000 or more in Hong Kong at once, confirmed by an affirmation within 7 days of service of the Injunction Order.

7.  The Defendants have failed to appear today despite notice of hearing having been served on them.

B. D1’s ASSETS IN HONG KONG

8.  D1 is the sole director and shareholder of the one issued share of D2.

9.  D2 has been the owner of the Property since early 2014. As can be seen from the land search record, D2 entered into a sale and purchase agreement on 28 March 2014 at a consideration of HK$46,200,000. D2 was then assigned the Property subject to a mortgage dated 21 July 2014 with SCB. Hence, D2 has been holding this Property almost immediately after D1 became its sole shareholder and director.

10.  On 2 May 2025, SCB entered into possession of the Property as mortgagee.

11.  On 29 May 2025, the Plaintiff discovered that an auction of the Property was to be held on 11 June. However, the Plaintiff later learnt that SCB had closed the bidding process on 9 June 2025 and the sale price was likely to be over HK$32 million.

12.  A sale price of over HK$32 million will be more than sufficient to cover the outstanding mortgage with SCB based on the Plaintiff’s calculation:

(1) D2 initially purchased the Property in 2014 at a consideration of HK$46.2 million. The Plaintiff believes that D2 would have borrowed around HK$23.1 million, ie 50%, from SCB.

(2) D2 should have made substantial mortgage repayments over the past 10 years, amounting to about HK$7 million, about 1/3 of the mortgage.

(3) Therefore, a sale price of over HK$32 million is more than sufficient to cover the outstanding mortgage with SCB and there should be around HK$10 million to HK$15 million left to be distributed to D2 (“the Net Sale Proceeds”).

13.  In accordance with normal conveyancing practice, one would expect completion to take place about one month after the sale and purchase agreement was signed, i.e. in early July 2025. The Net Sale Proceeds will then be released to D2 any time thereafter by SCB.

C. PROCEDURAL POINTS

14.  In this case, the Plaintiff proceeded under section 21L and 21M of the High Court Ordinance, Cap 4 (“HCO”). They used the expedited form of OS permitted by Order 29, rule 8A.

15.  Section 21M(1) provides as follows:

“Without prejudice to section 21L(1), the Court of First Instance may by order appoint a receiver or grant other interim relief in relation to proceedings which—

(a) have been or are to be commenced in a place outside Hong Kong; and

(b) are capable of giving rise to a judgment which may be enforced in Hong Kong under any Ordinance or at common law.”

16.  The 2 limbs in section 21M(1) are conjunctive requirements. This sub-section has no application to the present case because, by the time the OS was issued, the Mainland proceedings have gone past the stage of being “capable of giving rise to a judgment” under limb (b) and a final judgment was granted by the Chengdu IPC. Upon registration in Hong Kong, the judgment is enforceable as if granted by the Court of First Instance: section 14(1) MJREO. That means the Plaintiff can apply for e.g. a charging order, garnishee order, just as under a Hong Kong judgment. Accordingly, the proper provision to invoke is section 21L and not section 21M.

17.  Further, the injunction sought is interim, as opposed to being permanent, to freeze assets of the Defendants to enable the Plaintiff to have time to seek enforcement and to ascertain if the Defendants have other assets on which the Plaintiff can levy execution. It is thus not necessary to issue an OS. Instead, the Plaintiff could have applied for an interim injunction under HCRE 26/2025. It would have saved time and costs because the return date for an interim injunction can be 7-14 days after an ex parte hearing, whereas that for the OS, as in this case, is 1 month. As the irregularity has not and will not cause prejudice to the Defendants, I have proceeded with the OS.

D. LEGAL PRINCIPLES

18.  To obtain a Mareva injunction, the Plaintiff must show a good arguable case on the merits, assets within the jurisdiction, a real risk of dissipation and that the balance of convenience is in favour of a grant: Hong Kong Civil Procedure 2025, Vol 1, §29/1/65.

E. GOOD ARGUABLE CASE ON THE MERITS

19.  Courts are more ready to grant post-judgment Mareva injunctions than before judgment. The fact that the judgment is a Mainland judgment does not make this approach entirely irrelevant: Beijing Renji Real Estate Development Group Co Ltd v Zhu Min [2022] 4 HKC 116, §69, G Lam JA.

20.  In this case, there is a judgment debt which D1 has never satisfied, in whole or in part. There is no application ever to have the registration set aside. There is plainly a good case on the merits.

F. ASSETS WITHIN THE JURISDICTION

21.  This is satisfied by the existence of the Net Proceeds of Sale.

G. REAL RISK OF DISSIPATION

22.  The approach to be adopted in the assessment of risk of dissipation has been laid down in Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81, at §§35-54, 77-79, Lam VP (as he then was). The principles relevant to this case include:

(1) The ultimate question is whether the plaintiff succeeds in showing objectively that there is a solid basis for concluding there is a real risk of unjustified dissipation of assets by the defendant (§53);

(2) The plaintiff must show a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets. In this context, dissipation means putting the assets out of reach of a judgment, whether by concealment or transfer (§35(1));

(3) The risk of dissipation must be established by solid evidence, and mere inference or generalised assertion is not sufficient (§35(2)).

(4) The nature and financial standing of the defendant, past or existing credit history, and the defendant’s behaviour in respect of the claim can be indicative of the risk of dissipation (§39);

(5) Since the assessment is in respect of the risk of dissipation, as opposed to the fact of actual dissipation, the exercise involves an evaluative and predictive judgment. The evidential burden can be satisfied by drawing proper inferences from a holistic consideration of all the circumstantial materials that are indicative of risk, including matters which point against such risk (§40);

(6) Evidence reflecting adversely on the defendant’s integrity could point powerfully towards an inference of risk of dissipation (§53); and

(7) The risk of dissipation must be established separately against each defendant (§35(3)).

23.  In the context of a post-judgment Mareva injunction like the present case, the Court may find that the requirement of real risk of dissipation of asset are more readily satisfied after judgment than before it: FM Capital Partners Ltd v Frederic Marino [2018] EWHC 2612 (Comm) at §§13, 16 per DHCJ Eggers QC.

24.  In the present case, D1 himself:

(1) Is subject to 2 orders of restriction on high-level consumption (限制高消費令).

(2) Has his shareholding in various Mainland companies subject to 6 freezing orders imposed by different Mainland courts.

(3) Has not paid the Judgment Debt, any partial satisfaction was due to execution by the Mainland Court.

(4) Has not complied with the Disclosure Order.

25.  Companies of which D1 has majority control is subject to various orders:

(1) Beijing Mihot - D1 is the majority shareholder, legal representative and executive director. This company was the one whose debts D1 guaranteed and led to the Mainland Judgment. An order was made by a Mainland Court in Shanxi Province putting Beijing Mihot on the List of Dishonest Enforcees (失信被執行人名單) since 27 November 2024 for its failure to repay any judgment debt in another matter. The notice stated that Beijing Mihot “had the ability to satisfy its obligations under legal documentation but refused to do so”.

(2) D1’s Mainland companies, ie駿杰尚网络科技有限公司, Beijing Mihot, and名赫商业管理(上海)有限公司are subject to 37 orders of restriction on high-level consumption (限制高消費令); D1 is the majority shareholder, legal representative and executive director.

26.  All of these demonstrate D1’s complete disregard of his legal obligations under the Mainland Judgment: Beijing Renji, at §69; 蘇州太合匯投資管理有限公司v 霍爾果斯市摩伽互聯娛樂有限公司 [2023] 1 HKLRD 342 at §§14,19. His credit history puts in doubt his ability and willingness to pay the Judgment Debt.

27.  The nature of the orders in paragraphs 24 and 25 also show low commercial morality of D1. Companies under his control have equally poor credit history and Beijing Mihot has even evaded financial liability.

28.  Assessing the evidence in a holistic manner, I am satisfied that there is a real risk of dissipation on the part of D1 and also real risk that D1 would cause D2 to dissipate the Net Sale Proceeds so as to put them out of reach of the Plaintiff for enforcement of the Mainland Judgment.

H. CHABRA INJUNCTION

29.  The principles for exercising the Court’s Chabra jurisdiction have been set out in XY, LLC v Jesse Zhu [2017] 5 HKC 479, §22, 24-25, Kwan JA (as she then was):

(1) The Chabra jurisdiction may be exercised under two limbs:

(a) first limb: where the third party holds or exercises a power of disposition over, or is otherwise in possession of, assets of the defendant judgment debtor (§25); or

(b) second limb: some process, ultimately enforceable by the courts is or may be available to the judgment creditor as a consequence of a judgment against that judgment debtor, pursuant to which, whether by appointment of a liquidator, trustee in bankruptcy, receiver or otherwise, the third party may be obliged to disgorge property or otherwise contribute to the property of the judgment debtor to help satisfy the judgment debt (§§24(1), 25).

(2) A “good reason to suppose” means a good arguable case, which is more than barely capable of serious argument, yet does not necessarily have a more than 50% chance of success (§24(2));

(3) A common example of assets falling within the Chabra jurisdiction is where there is good reason to suppose that the assets in the name of the third party are in truth the assets of the defendant (§24(4)); and

(4) Substantive control by the defendant over the assets in the name of the third party is often a relevant consideration in two ways, (a) the Court may infer that the assets are held as nominee or trustee for the defendant as the ultimate beneficial owner; and (b) such evidence may establish a real risk of dissipation (§24(5)).

30.  The Chabra jurisdiction may be invoked in this case under either limb.

31.  Under the first limb, as the sole director and shareholder of D2, D1 has absolute control over the assets of D2. The Property was purchased by D1 but was immediately transferred to D2 ever since its incorporation. The reasonable inference is that the assets of D2 are held on trust for D1 as the ultimate beneficial owner: see Jesse Zhu, §24(4).

32.  Under the second limb, the assets of D2 will be available for execution by the Plaintiff for the purpose of enforcement of the Mainland Judgment. D1’s shareholding in D2 can be charged or a receiver can be appointed over those shares. Ultimately, the Net Sale Proceeds can be brought in to reduce the judgment debt.

33.  D2 is in the control of a sole director who has low commercial morality. There is a risk of dissipation of assets.

34.  For all the reasons given in this section, it is just and fair for the Court to exercise its Chabra jurisdiction over D2 and freeze its assets.

I. BALANCE OF CONVENIENCE

35.  Where a risk of dissipation has been demonstrated, the balance of convenience will usually be in favour of a grant: see Seridom Servicos Integrados Idom SAU v Heng Wen Trade Co Ltd [2019] HKCFI 85, §129, M Ng J.

36.  In the present case, the balance of convenience is plainly in favour of the judgment creditor. If relief is refused, D1 would be able to, through D2, dissipate the substantial Net Sale Proceeds or keep them out of reach of the Plaintiff. On the other hand, no prejudice would be caused to the Defendants because D1 has to pay the judgment debt anyhow.

J. ANCILLARY DISCLOSURE ORDER

37.  It is common practice to make an ancillary disclosure order to a Mareva injunction to enable a plaintiff to ascertain the assets of the defendant and take steps to have those assets frozen as well: see Canton Plus Enterprise Ltd v Tong Zhenjun [2021] HKCFI 181, §10, DHCJ Winnie Tsui (as she then was). It will also enable third parties to be identified so that the Plaintiff can give notice of the Mareva injunction: Hong Kong Civil Procedure 2025, Vol 1, §29/1/74.

K. RELIEF

38.  For the reasons given in sections E-J above, it is appropriate to grant a Mareva and Chabra injunction and a disclosure order.

39.  The Defendants have breached the Disclosure Order. The Plaintiff will need further time to investigate the assets of the Defendants and enforce the judgment. I therefore ordered that the Injunction and Disclosure Order dated 27 June 2025 do remain in force up to and including 24 June 2031 unless otherwise discharged or varied by the Court. There shall be liberty to apply.

L. COSTS

40.  Costs (including certificates for Mr Pun SC and Mr Yip) should follow the event and be paid by the Defendants to the Plaintiff. The Plaintiff’s statement of costs was prepared but not lodged with the skeleton submissions, contrary to PD14.3, §8. The Plaintiff’s solicitors are not able to explain why.

41.  Party and party costs of the OS (including all costs reserved) shall be paid by the Defendants, to the Plaintiff, summarily assessed at $600,000.

42.  The solicitors have charged very reasonable costs. Exercising my discretion under PD14.3, §15, I would only reduce the profit costs by $10,000, which shall not be recoverable by the Plaintiff’s solicitors from the Plaintiff. Counsel and solicitors have agreed between them to split this amount of $10,000.

43.  I thank counsel for their assistance.