SECURITIES AND FUTURES COMMISSION v. LEUNG ANITA FUNG YEE MARIA AND OTHERS

CAMP 211 /2024, [2025] HKCA 444

On appeal from [2024] HKCFI 1210

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 211 OF 2024

(ON AN INTENDED APPEAL FROM HCMP NO 1917 OF 2019)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

A. INTRODUCTION

1.  By his decision dated 6 May 2024 (“Decision”)[1], Deputy High Court Judge Jonathan Wong (“Judge”) allowed the petitioner’s summons dated 19 September 2023 (“Injunction Summons”) and granted a worldwide Mareva injunction against the 1^st respondent (“R1”). At the hearing of the Injunction Summons on 6 February 2024, the Judge dismissed R1’s summons dated 29 January 2024 for an adjournment (“Adjournment Summons”).

2.  This is R1’s renewed application by summons dated 30 October 2024 for (1) leave to appeal to the Court of Appeal out of time against the Decision (“Leave Application”); and (2) leave to refer to the expert report prepared by Mr Alan Jeffries dated 27 March 2024 (“Jeffries Report”) in the Leave Application, as well as in the substantive appeal in the event leave to appeal is granted (“New Evidence Application”). It is R1’s contention that the Injunction Summons ought to have been dismissed and the Mareva injunction granted by the Judge discharged accordingly.

3.  R1’s two aforesaid applications had been refused by the Judge in his decision dated 16 October 2024 (“Leave Decision”)[2].

4.  Having considered the papers, it is in our view appropriate to determine R1’s renewed application on paper without an oral hearing.

B. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

5.  The background of this case has been set out in the Decision. We do not intend to repeat all of the background facts and would only set out those facts which are material to the understanding and disposal of the present application.

6.  In 1995, R1 and her late husband (the 2^nd respondent (“R2”)) founded the 4^th respondent (“Company”) and its subsidiaries (together, the “Group”). On 30 June 2004, the Company was listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 2366). It was eventually wound up in November 2020.

7.  Between 2002 and 2013, R1 held a number of positions in the senior management of the Company. These positions included chief executive officer, executive director, chairman, authorized representative, and non-executive director. R2 was the chairman and a non-executive director of the Company from 2002 to 2012. R1 and R2 were also previously substantial shareholders of the Company, but from June 2012 to July 2013, they reduced their aggregate interests in the Company’s issued share capital from 22.47% to below 5%.

8.  At the heart of these proceedings are 10 sale and purchase agreements (“10 SPAs”) entered into with 9 BVI companies (“BVI Signatories”) between 2 June 2010 and 7 July 2011, whereby the Group purchased the TV license rights of 48 TV dramas and made payments totaling $327,750,310 to 7 BVI companies (“BVI Intermediaries”). Thereafter, from 15 September 2011 to 26 December 2011, the Group entered into licensing agreements (“Licensing Agreements”) with 4 BVI companies (“Appointed Buyers”), granting them the right to broadcast 13 out of the aforementioned 48 TV dramas, which generated revenue of approximately $47.1 million. All of these aforesaid matters are uncontroversial.

9.  On 25 October 2019, the petitioner commenced proceedings against the respondents pursuant to section 214 of the Securities and Futures Ordinance, Cap 571, alleging, inter alia, that:

(1)  R1, R2, and the 3^rd respondent (“R3”) had, using the 10 SPAs, orchestrated and executed, or had implemented, a fraudulent scheme (“Scheme”) under which substantial assets were misappropriated from the Company and transferred to R1 and companies owned by R1 and/or R2;

(2)  Specifically, the 10 SPAs were not genuine arms-length transactions, in that the TV license rights acquired were grossly overvalued, and the overvalued price had been paid to the BVI Intermediaries pursuant to the 10 SPAs;

(3)  The BVI Signatories and the BVI Intermediaries were not entities at arms-length from the Group, but were in fact nominees of R1 and/or R2;

(4)  The Licensing Agreements were not genuine arms-length transactions between the Group and independent third parties, but were transactions caused by R1 to be executed for the purpose of concealing the Scheme. In particular, the Appointed Buyers were controlled by and/or were R1’s nominees, and the purpose of the Licensing Agreements was to fabricate revenue apparently generated by the Group’s acquisition of the TV licence rights of the 48 TV dramas by way of the 10 SPAs;

(5)  As a result, the Company had suffered significant losses which ought to be compensated by R1 to R3.

10.  Both R1 and R2 deny any wrongdoing. It is, inter alia, their case that:

(1)  The 10 SPAs and the Licensing Agreements were genuine arms-length transactions entered into with third parties as part of the usual and ordinary trading business;

(2)  R1’s role in the Company as CEO was supervisory in nature, and the entering into of the 10 SPAs, and certain aspects of the Licensing Agreements, were not her responsibility but that of the CFO and COO;

(3)  The 10 SPAs were brokered through a PRC entity, Fujian QJY Production Center, which was entrusted to source and recommend appropriate TV programmes to be purchased by the Company;

(4)  None of the BVI Signatories, the BVI Intermediaries, nor the Appointed Buyers, were nominees of R1 or R2; and

(5)  The consideration for the acquisition of the TV license rights under the 10 SPAs were not at an overvalue.

11.  On 2 August 2023, a former employee of the Company, Madam Zhao Huixia (also known as Ellen Chiu) (“Zhao”), contacted the petitioner. From 3 August 2023 to 13 September 2023, Zhao provided the petitioner with new information relating to these proceedings (“New Information”). The New Information included WeChat messages which, on the face of it, appeared to have been sent by R1 to Zhao on 20 August 2023 and 6 September 2023 (“WeChat Messages”). The WeChat Messages were to the following effect:

(1)  On 20 August 2023, R1 warned Zhao as to the consequences of betraying her and to think of Zhao’s daughter; and

(2)  On 6 September 2023, R1 informed Zhao that she was in the process of selling her property in Hong Kong, and that she would consider giving Zhao some money as living expenses if the sale price was favourable and Zhao did not betray her. R1 also informed Zhao that upon completion of the sale of her properties in Hong Kong and Shanghai, R1 would permanently relocate to Canada and would not return to Hong Kong.

12.  The petitioner was of the view that the New Information provided by Zhao strengthened its case against R1 to R3. Based on the New Information and the WeChat Messages, the petitioner carried out investigations as to R1’s assets and her dealings with them. The petitioner discovered that R1 was seeking to dispose of a number of her properties. The following properties of R1, in particular, had recently been listed for sale:

(1)  Unit B, 35/F and 36/F, Kensington Hill, 98 High Street, Hong Kong (“Kensington Hill Property”);

(2)  上海青浦區滬青平路2222弄銀濤高爾夫119號 (“Shanghai Property”); and

(3)  150 Mountain Drive, Lions Bay, Vancouver, British Columbia, Canada (“Lions Bay Property”).

13.  In light of the above, the petitioner issued the Injunction Summons. At this juncture, the following parts of the procedural history in relation to the Injunction Summons are noteworthy:

(1)  The WeChat Messages had been exhibited to the 6^th affirmation of Yip Yuk Yu filed on 19 September 2023 in support of the Injunction Summons;

(2)  As set out in §§8 to 10 of the 2^nd affidavit of Chiu Pak Yue Leo (a solicitor of Messrs Chiu & Partners (“C&P”)) filed on 21 September 2023, it was R1’s position that she had not sent the WeChat Messages. R1 had also adduced the signed statements of Dr Alice Wong and Mr Warren Chan, both of whom confirmed that they did not see any WeChat messages sent by R1 to Zhao from 26 August 2023 onwards;

(3)  In response, the petitioner filed the 8^th affirmation of Yip Yuk Yu on 22 September 2023, which stated that it was not possible for a WeChat user to retrospectively add or fabricate messages from someone else in a WeChat conversation. In addition, the petitioner exhibited further WeChat messages between R1 and Zhao;

(4)  At the call-over hearing on 22 September 2023, directions were given to the parties for the filing of evidence. Deputy High Court Judge Jonathan Chang SC further ordered inter alia that, pending the determination of the Injunction Summons, R1 was (a) to give written notice to the petitioner upon the execution of any sale and purchase agreement in respect of 7 properties (which included the Shanghai Property and the Lions Bay Property) (“Notification Injunction”); and (b) restrained from disposing of, dealing with or diminishing the value of the purchase price of the aforesaid 7 properties unless 28 days had elapsed from the notification given under the Notification Injunction;

(5)  Thereafter, R1’s solicitors gave notification to the petitioner that R1 had already signed sale and purchase agreements in relation to the Shanghai Property dated 14 August 2023 (“Shanghai SPA”) and the Lions Bay Property dated 15 August 2023 (“Lions Bay SPA”). As a result, by summons dated 17 October 2023, the petitioner sought interim relief against R1 to restrain the completion of the Shanghai SPA and the Lions Bay SPA. On 19 October 2023, Cheng J granted an order embodying R1’s undertaking that, pending the determination of the Injunction Summons, R1 would inter alia not implement or proceed with the Shanghai SPA or the Lions Bay SPA without the petitioner’s written consent or leave of the court;

(6)  In §53 of her 4^th affirmation filed in opposition to the Injunction Summons on 11 December 2023 pursuant to an unless order, R1 alleged that the WeChat Messages were fabricated and reserved the right to adduce expert evidence as to its authenticity, and stated that such expert evidence would be provided to the court as soon as possible; and

(7)  In view of R1’s aforesaid stance, the petitioner exhibited 2 reports prepared by Deloitte Advisory (Hong Kong) Limited (“Deloitte”), namely, the Phase 1 Report and the Phase 2 Report, to the 11^th affirmation of Yip Yuk Yu filed on 19 January 2024 as the petitioner’s evidence in reply. Notably, the Phase 1 Report and the Phase 2 Report were based upon an analysis of the data in relation to the WeChat communication records extracted from Zhao’s phone.

14.  It was against the above procedural history that R1 issued the Adjournment Summons on 29 January 2024 to adjourn the hearing of the Injunction Summons scheduled for 6 February 2024. While the Adjournment Summons was made on 2 bases, in view of the grounds advanced by R1 in her draft Notice of Appeal, the material basis for present purposes was that R1 needed further time to file further evidence in response to the evidence in reply filed by the petitioner on 19 January 2024.

C. THE DECISION

15.  As mentioned above, the Judge dismissed the Adjournment Summons at the hearing on 6 February 2024 and granted a worldwide Mareva injunction against R1.

16.  In particular, the Judge held that an adjournment of the Injunction Summons was not justified by R1’s request to file further evidence in response. The Judge’s reasoning was as follows:

(1)  Save for the WeChat Messages, counsel for the petitioner, Mr Pao SC, had agreed not to place any reliance on the matters identified by R1 as requiring further evidence in reply. As such, the scope of the matters to which R1 requested further time to file further evidence in reply was reduced to expert evidence in response as to the authenticity of the WeChat Messages;

(2)  Some of the conclusions reached by Deloitte were not “rocket science”. The differences in timing between the WeChat messages produced by Zhao and the WeChat messages produced by R1 were attributable to the fact that they were in different time zones;

(3)  The procedural history (consistent with what we have set out in §13 above) showed that the authenticity of the WeChat Messages was raised by R1 in as early as 21 September 2023. There was nevertheless no explanation from R1 as to why she did not adduce any expert evidence to support her allegation that they were fabrications;

(4)  Leading Counsel for R1, Mr Nip SC, had accepted that the petitioner has a good arguable case on the merits irrespective of the WeChat Messages;

(5)  In any event, Mr Pao was prepared to proceed on the basis that the authenticity of the WeChat Messages was in dispute, and allowing R1 to adduce expert evidence as to its authenticity would not materially change the character of the debate (although the disagreement would be raised to the level of expert evidence). Mr Nip did not suggest that the effect of the expert evidence intended to be adduced by R1 was of such cogency that it would conclusively undermine the Phase 1 Report and the Phase 2 Report;

(6)  The WeChat Messages were predominantly only relevant to the issue of risk of dissipation, the assessment of which involved looking at the matter holistically. In particular, the WeChat Messages were only relevant to the petitioner’s allegation that (a) R1 has low regard of the law (in making threats to Zhao); and (b) R1 has plans to emigrate to Canada. Whether the aforesaid allegations made by the petitioner were supported by solid evidence was an exercise carried out in the light of all the evidence, of which the WeChat Messages were only one aspect. In this connection, the petitioner’s allegation that R1 has low regard for the law was also supported by Mr Nip’s acceptance that the petitioner had a good arguable case on the merits of the underlying claim (based on fraud and dishonesty). The petitioner’s allegation that R1 has plans to emigrate to Canada was also supported by indisputable records from the Immigration Department of Hong Kong showing R1’s prolonged absence from Hong Kong.

17.  As set out in his Decision, the Judge granted a worldwide Mareva injunction against R1. In view of the grounds of appeal contained in R1’s draft Notice of Appeal, we would focus on the Judge’s analysis as to the existence of a real risk of dissipation, which was as follows:

(1)  With reference to Convoy Collateral Ltd v Cho Kwai Chee [2020] 6 HKC 81, the Judge noted that the burden was on the petitioner to show objectively there is solid basis for concluding that there is a real risk of dissipation of assets by R1, and that this question was to be answered by examining the evidence holistically;

(2)  The 4 factors relied upon by the petitioner (as set out below), amply provided solid basis for inferring a real risk of dissipation of assets by R1;

(3)  First, Mr Nip SC had accepted there was a good arguable case on the merits against R1, and the nature of such claims demonstrate that R1 is adept at using an extensive network of corporate and offshore entities as nominees for channelling funds and for concealing illicit activities. It was of the type which provided a basis for the court to infer a risk of dissipation;

(4)  Second, there were unusual features in the Shanghai SPA and the Lions Bay SPA (as particularized in §5.20 of the Decision). R1 had acknowledged that they were unusual when considered in isolation from their background, but sought to explain that the sale of such properties was to enable her to make repayment of debts owed for over 10 years (which were unsecured and interest free) and to complete various charitable projects in commemoration of R2, both of which would ensure that her affairs are properly arranged and allow her to achieve physical health and mental serenity;

(5)  However, the Judge did not find R1’s explanation to be convincing. In particular, the Judge took the view that physical and mental serenity is difficult to be verified objectively, and the cogency of R1’s explanation must be assessed holistically. On the present material, the Judge was of the view that the chronology of events strongly suggested that the Shanghai SPA and the Lions Bay SPA (executed on 14 and 15 August 2023 respectively) were in part a result of R1 realizing that Zhao had turned against her (since Zhao had first approached the petitioner on 3 August 2023). It thereafter led to the first of the WeChat Messages on 20 August 2023, whereby R1 warned Zhao as to the consequences of betraying her;

(6)  Third, the timing of the WeChat Messages sent on 20 August 2023, when viewed with the timing of the Shanghai SPA and the Lions Bay SPA, painted a picture that R1 was incensed at the discovery of Zhao’s betrayal and measures were put in place to counter that development. The WeChat Messages sent on 6 September 2023 (mentioning the sale of the sale of the property in Hong Kong, ie the Kensington Hill Property) are also consistent with the petitioner’s discovery of its listing for sale in that period. R1’s statement to Zhao in the WeChat Messages that she would permanently relocate to Canada and would not return to Hong Kong is also entirely consistent with the matters discussed in (7) below;

(7)  Fourth, R1 had an intention to permanently relocate to Canada, which could be inferred from the following evidence: (a) the indisputable evidence of R1’s attempt to sell the Kensington Hill Property; (b) R1’s own evidence that her liquid assets in Canada are worth far more than those in Hong Kong; and (c) the objective evidence (ie the records from the Immigration Department of Hong Kong) showing R1’s prolonged absence from Hong Kong since December 2021; and

(8)  In view of the above, there was compelling and solid basis for an inference to be drawn as to the risk of dissipation of assets. While these proceedings were commenced by the petitioner against R1 in 2019 and the Injunction Summons was only issued in 2023, the delay in the issuing of the Injunction Summons was explained by Zhao’s provision of the New Information in August to September 2023, which revealed R1’s attempts to dispose of her properties contemporaneously with R1’s discovery that Zhao had turned against her. The stable door had not yet completely opened, as various properties are now subject to the Order dated 22 September 2023 and the Order dated 19 October 2023. As such, there can be no suggestion that equity will act in vain where the Mareva injunction is granted.

D. R1’s DRAFT GROUNDS OF APPEAL

18.  The grounds of appeal in R1’s draft Notice of Appeal had previously been raised before the Judge, and can be categorised into 2 groups: (1) grounds pertaining to the Judge’s dismissal of the Adjournment Summons; and (2) grounds pertaining to the Judge’s analysis of the real risk of dissipation in relation to the Injunction Summons. They are summarised below:

Group 1: The Judge’s Dismissal of the Adjournment Summons

(1)  The Judge had erred in dismissing the Adjournment Summons. The authenticity of the WeChat Messages was a core issue in relation to the Injunction Summons, and as a matter of procedural fairness, R1 ought to have been given a proper chance by an adjournment to respond to the Phase 1 Report and the Phase 2 Report adduced by the petitioner by reply affidavit evidence on 19 January 2024;

(2)  Without affording R1 an opportunity to properly respond, the Judge was wrong to have “heavily relied” upon the WeChat Messages in coming to the Decision;

(3)  If the Adjournment Summons had been granted, the Judge would have had the benefit of the Jeffries Report, which confirmed that the WeChat Messages were not sent by R1 to Zhao;

Group 2: The Judge’s Analysis of the Risk of Dissipation in Relation to the Injunction Summons

(4)  The Judge had failed to take into account and/or consider sufficiently or at all the inherent improbability of certain features of the WeChat Messages;

(5)  In placing reliance upon the WeChat Messages, the Judge had failed to take into account sufficiently or at all the fact that Zhao had previously signed a document (“Zhao’s Report”) for the purpose of supporting R1’s defence in these proceedings, the contents of which are contradictory to the evidence now given by Zhao on behalf of the petitioner;

(6)  In light of Grounds (1) to (5) above, the Judge had erred in finding that it is “more likely than not that the WeChat Messages were not fabricated”; and also erred by relying on the WeChat Messages to find the existence of a real risk of dissipation on R1’s part or that R1 had any plans to leave Hong Kong or had the intention to permanently relocate to Canada;

(7)  The Judge had erred in holding that the petitioner’s underlying claim (being one of fraud and dishonesty) was a factor showing a real risk of dissipation on R1’s part, because these proceedings were commenced in 2019 and there was no evidence or allegation of dissipation until 2023. The lack of dissipation during this period showed that the nature of the petitioner’s underlying claim should give rise to no additional evidence or basis to infer the existence of a risk of dissipation; and

(8)  The Judge had erred in holding that the Shanghai SPA and the Lions Bay SPA are dubious, or that such terms by themselves are sufficient to give rise to any evidence of a real risk of dissipation on R1’s part.

E. APPLICABLE LEGAL PRINCIPLES

19.  Under section 14AA of the High Court Ordinance, Cap 4, leave to appeal from an interlocutory order shall not be granted unless the court is satisfied that the intended appeal has a reasonable prospect of success, or that there is some other reason in the interests of justice why the matter should be heard by the Court of Appeal. For this purpose, a reasonable prospect of success involves the notion that the prospect of success must be more than fanciful, without having to be probable: SMSE v KL [2009] 4 HKLRD 125 at §17.

20.  The approach to determine an application for extension of time to appeal is well established. In the exercise of its discretion, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party if the application is granted.

21.  An application for an extension of time for leave to appeal should be supported by an affidavit deposing to any facts relied on by the applicant and giving a full account of, and explanation for, the whole of the delay since time expired: §16 of KNM v HTF (HCMP 288/2011, 7 September 2011).

22.  As discussed in Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd & Anor [2001] 1 HKC 125 at 133E to F:

(1)  Where the delay was inexcusable although insubstantial, the party seeking an extension of time must show a real prospect of success on the merits; and

(2)  Although the existence of prejudice to a would-be respondent to an appeal is a ground for refusing an extension of time, the absence of prejudice to a would-be respondent is not a ground for extending time.

23.  With these principles in mind, we will consider R1’s application for an extension of time for leave to appeal.

F. LENGTH AND REASONS FOR DELAY

24.  R1’s application for leave to appeal against the Decision was made 14 days out of time. In support of her application, R1 filed the 6^th affidavit of Chiu Pak Yue Leo (R1’s solicitor), to explain that the application for leave to appeal could only be made on 3 June 2024 for the following reasons:

(1)  R1’s bank accounts were all frozen as a result of the Mareva injunction granted by the Decision;

(2)  R1 had already incurred substantial legal costs in defending the proceedings and in opposition to the Injunction Summons, and was severely hampered by a lack of financial resources. R1 was also obliged to render further disclosure under the Mareva injunction (which she duly complied with on 28 May 2024);

(3)  While R1 had intended to sell the Shanghai Property in order to raise the necessary funds, she was ultimately able to borrow further funds from her friend recently to fund her application for leave to appeal;

(4)  C&P only received costs on account on 29 May 2024; and

(5)  R1’s application was made promptly thereafter on 3 June 2024.

25.  We agree with the Judge that R1’s delay is inexcusable[3]. We are not satisfied with the explanation proffered, and do not think it is sufficient to excuse R1 from due compliance with the time limit imposed by the Court rules:

(1)  Insofar as R1 suggests that she was prevented by the Mareva injunction from providing C&P with funds to make the application for leave to appeal, it is notable that Exception (1) in the Mareva Injunction enables R1 to spend $150,000 per month on ordinary living expenses and up to $250,000 per month for legal advice and representation. In this connection, R1 had not sought to increase the said limits. In fact, as pointed out by the Judge in Footnote 3 to the Leave Decision, the costs incurred by R1 in relation to the application before him was $212,011, which fell below the ceiling of $250,000 for legal costs in Exception (1);

(2)  The explanation that R1 was hampered by a lack of financial resources, and was only recently able to borrow funds from her friend to fund the application is a bare assertion devoid of any particulars (such as the amount of the loan, the identity of the lender, the date of R1’s request, and the date on which R1 received the funds). Moreover, it was only made by R1’s solicitor, who has no personal knowledge of the matter; and

(3)  There is no evidence that R1’s legal team was unwilling or unable to commence such works (and/or had not undertaken such works) prior to the receipt of funds by C&P on 29 May 2024.

26.  While §5 of the 6^th affidavit of Chiu Pak Yue Leo asserts that the petitioner would not suffer any prejudice as the Mareva injunction is already in place, the absence of any prejudice is not a ground for extending time.

27.  Given the inexcusable though relatively insubstantial delay, the proposed grounds of appeal must have a real prospect of success.

G. THE NEW EVIDENCE APPLICATION

28.  Before addressing the chances of R1’s appeal succeeding, we would first deal with the New Evidence Application, since the Jeffries Report has a bearing on the merits of R1’s draft grounds of appeal.

29.  An application to adduce further evidence on appeal cannot be entertained until leave to appeal has been granted. What the court can do in an application for leave to appeal is to consider the new evidence proposed to be adduced on a de bene esse basis, if it can be shown it is reasonably arguable that leave to admit such evidence would be granted under the criteria in Ladd v Marshall [1954] 1 WLR 1489 at 1491: Man Lin Heung the Administratrix of the Estate of Man Kwai Yin also known as Man Kwai Yin v 梁根林 [2019] HKCA 846 at footnote 1[4]; and Lee Ah Keung & Anor v 李國忠 transliterated as Lee Kwok Chung & Anor [2023] HKCA 449 at §7. We would consider the Jeffries Report on this basis.

30.  The 3 conditions in Ladd v Marshall for determining whether new evidence should be admitted for an appeal are: (1) the evidence could not have been obtained with reasonable diligence for use at the hearing below; (2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; and (3) the evidence must be such as is presumably to be believed or it must be apparently credible, though it need not be incontrovertible. All three conditions must be satisfied for new evidence to be admitted on appeal.

31.  For the purpose of the abovementioned analysis, the Jeffries Report is summarised below:

(1)  As set out in the instructions received by Mr Jeffries, the methodology adopted was a physical inspection of R1’s iPhone 14 Plus (“R1’s iPhone”) and an analysis of the WeChat communications based upon the data extracted therefrom. Mr Jeffries was not provided with Zhao’s phone;

(2)  A total of 38,430 WeChat messages were identified for the period of 11 March 2023 to 11 February 2024. Out of these messages, 1,954 messages were deleted (and are either entirely or partially retrievable) and implies the existence of routine deletions. Of these 1,954 deleted messages: (a) 13 were identified as sent by R1, but none of these were addressed to Zhao; (b) neither the sender nor the receiver of 1,939 messages could be identified; and (c) 2 were identified as messages received from other persons (who were neither Zhao nor R1);

(3)  A forensic search using search terms derived from the WeChat messages was conducted on the WeChat messaging data (including the 1,954 recovered messages), but no search hits were identified;

(4)  There were only 6 messages between Zhao and R1, all of which were sent by Zhao to R1 between 27 August 2023 and 23 September 2023. 2 of such messages were not documented in the Phase 1 Report and the Phase 2 Report, and it is Mr Jeffries’s hypothesis that they had been erased from Zhao’s phone as examined by Deloitte. No messages on R1’s iPhone were sent by R1 to Zhao; and

(5)  Currently, no fewer than 6 devices (of which the ownership to 2 were unidentified) have access to R1’s WeChat account. Moreover, additional devices may have been deleted from the existing list.

32.  Having set out the above, we do not agree with R1 it is reasonably arguable that the aforesaid criteria for the admission of further evidence on appeal are met. In particular, the first condition in Ladd v. Marshall (ie it must be shown that the evidence could not have been obtained with reasonable diligence for use at the substantive hearing of the Injunction Summons) is not satisfied for the reasons set out below[5]:

(1)  Having regard to the procedural chronology set out in §13 above, the WeChat Messages had been adduced by the petitioner on 19 September 2023, and R1 had, on 21 September 2023, already indicated her position that she had not sent the WeChat Messages. Thus, it is plain that the authenticity of the WeChat Messages was at issue as early as 21 September 2023;

(2)  Despite this, R1 did not adduce any expert evidence in relation to the authenticity of the WeChat Messages when she filed her 4^th affirmation in opposition to the Injunction Summons on 11 December 2023. As set out in §53 thereof, R1 continued to allege that the WeChat Messages were fabricated, and reserved the right to adduce expert evidence, with such expert evidence being provided to the court as soon as possible – this was even before the Phase 1 Report and the Phase 2 Report had been filed on 19 January 2024;

(3)  While R1 avers that the Jeffries Report was adduced in response to the Phase 1 Report and the Phase 2 Report, it is apparent from its substance that this is not the case. Notably, the analysis undertaken in the Jeffries Report and the conclusions drawn were based upon an analysis of the data extracted from R1’s iPhone, while the evidence contained in the Phase 1 Report and Phase 2 Report was based upon an analysis of the data extracted from Zhao’s phone. As mentioned, Mr Jeffries had conducted his analysis without being provided with Zhao’s phone;

(4)  Moreover, although R1’s counsel Mr Vincent Chen submits that the Jeffries Report had pointed out that 2 messages sent by Zhao to R1 were not documented in the Phase 1 Report and the Phase 2 Report (and it was therefore made in response thereto), this is of secondary importance when the issue at hand was the authenticity of the WeChat Messages (which, on the face of it, were sent by R1 to Zhao);

(5)  Similarly, although Mr Chen also points to the statement in the Jeffries Report that a forensic search was conducted using search terms derived from the WeChat messages detailed within the Phase 1 Report and the Phase 2 Report, the WeChat Messages (and therefore such search terms) were available to R1 since their disclosure in September 2023 as mentioned in §§13(1) and (3) above. As such, it is plain that the analysis conducted by Mr Jeffries could have been undertaken without the Phase 1 Report and the Phase 2 Report; and

(6)  In the premises, there is no reason why the Jeffries Report could not have been obtained by R1 with reasonable diligence for the hearing of the Injunction Summons. In both the 5^th affidavit of Chiu Pak Yue Leo (filed by R1 in support of the Adjournment Summons) and the 6^th affidavit of Chiu Pak Yue Leo (filed in support of the New Evidence Application), no explanation is proffered by R1 as to why the preparation of such expert evidence had not been undertaken earlier in view of the procedural chronology set out above.

33.  Nor do we think it is reasonably arguable that the second condition (ie the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive) has been met[6]. In particular:

(1)  Mr Pao SC[7] has pointed to a number of limitations in the Jeffries Report, including: (1) the fact that neither the sender nor the receiver of 1,939 deleted messages could be identified; and (2) Mr Jeffries’s analysis was conducted on the basis of the data extracted from R1’s iPhone, but he had also identified the existence of no fewer than 6 other devices which have access to R1’s WeChat account. In this regard, Mr Chen accepts that the Jeffries Report is ultimately not conclusive on the issue of whether the WeChat Messages were sent by R1; and

(2)  Accordingly, it is not reasonably arguable that the Jeffries Report would probably have an important influence on the result of the Injunction Summons since the authenticity of the WeChat Messages remains in dispute. That being the case, there has not been any change from the position when it came before the Judge, who had already approached his analysis of the risk of dissipation on the basis that the authenticity of the WeChat Messages was in dispute.

34.  As neither the first nor second conditions are met, and in view of the fact that the authenticity of the WeChat Messages remains a live issue in these proceedings, it is unnecessary and undesirable to express our views as to the third condition in Ladd v. Marshall (ie the evidence must be such as is presumably to be believed or it must be apparently credible, though it need not be incontrovertible).

35.  In view of the above, we shall disregard the Jeffries Report for the purpose of the Leave Application and consider the merits of the draft grounds of appeal in this light.

H. GROUP 1 – DISMISSAL OF THE ADJOURNMENT SUMMONS

36.  As mentioned above, Group 1 of the draft grounds of appeal pertain to the Judge’s dismissal of the Adjournment Summons. The Judge’s decision not to adjourn the hearing of the Injunction Summons was a case management decision. The approach of the Court of Appeal to appeals against case management decisions are well established, see §23 of NPYJ v SMRC [2020] HKCA 832:

(1)  Case management is pre-eminently within the province of the trial judge and the appellate court will only interfere in very exceptional circumstances; and

(2)  An appellant faces a high hurdle in showing that the first instance judge had gone clearly wrong and made orders which clearly involved an injustice or an inability for the trial court to carry out its task or had erred in principle or that his order was irrational.

37.  In view of the above principles, we do not find Grounds (1) and (2) to have any real prospects of success:

(1)  In light of our views expressed in §32 above as to the procedural chronology leading up to the Jeffries Report and the lack of any explanation from R1 as to why the preparation of expert evidence had not been undertaken earlier and filed in time together with R1’s 4^th affirmation, there is no merit to R1’s complaints based on procedural fairness and her contention that she had not been afforded an opportunity to adduce expert evidence. The position is markedly different from the facts of New Sparkle Roll International Group Limited & Ors v Sze Ching Lau & Anor [2024] HKCA 336, where the judge placed significant weight on an erroneous understanding that the defendant had chosen not to file any evidence in opposition despite the defendant’s position that he was prepared to do so where the court was minded to adjourn the application instead of having the matter argued on the basis of the existing materials[8];

(2)  There can be no suggestion that the dismissal of the Adjournment Summons involved an injustice or an inability for the Judge to carry out his task in relation to the Injunction Summons, when Mr Nip did not suggest that the effect of the expert evidence intended to be adduced by R1 was of such cogency that it would conclusively undermine the Phase 1 Report and the Phase 2 Report. In any event, the Judge had approached his analysis of the risk of dissipation on the basis that the authenticity of the WeChat Messages was in dispute; and

(3)  We will return to R1’s suggestion that the Judge was wrong to have “heavily relied” upon the WeChat Messages when we consider Ground (6).

38.  In light of our rejection of the New Evidence Application, there is no evidential basis to Ground (3). Therefore, Ground (3) has no prospects of success.

I. GROUP 2 – ANALYSIS OF REAL RISK OF DISSIPATION

39.  Group 2 of the draft grounds of appeal pertain to the Judge’s analysis and view as to the existence of a real risk of dissipation on R1’s part. The approach of the Court of Appeal to an appeal against the granting of an interlocutory injunction is summarised in §68 of New Sparkle:

(1)  The granting of an interlocutory injunction is an exercise of discretion of the court. It is well-established that the appeal court must defer to the judge’s exercise of discretion and not interfere with it merely on the ground that it would have exercised the discretion differently; and

(2)  The appeal court will not disturb the judge’s exercise of discretion unless one or more of these grounds are established: the judge had misdirected himself with regard to the principles or the evidence in accordance with which his discretion had to be exercised; he had taken into account irrelevant matters; he failed to take into account relevant ones; his exercise of discretion is so plainly wrong that it is outside the generous ambit within which reasonable disagreement is possible.

40.  In view of the above principles, we do not find Grounds (4) and (5) to have any real prospects of success:

(1)  It is apparent from Mr Chen’s submissions that Grounds (4) and (5) are now directed towards the fact that Zhao had previously signed Zhao’s Report for the purpose of supporting R1’s defence in these proceedings;

(2)  In this connection, it is plain from §4.19 of the Decision that contrary to what is suggested in Grounds (4) and (5), the Judge did take into account the existence of Zhao’s Report;

(3)  Insofar as Mr Chen submits that it is unsafe to rely upon the WeChat Messages where there has been a change of stance on Zhao’s part in support of the contention in Grounds (4) and (5) that the Judge had failed to give sufficient consideration to this point, it is also plain from §4.23 of the Decision that the Judge had considered the fact that the New Information was independently analysed and verified by the petitioner. Moreover, as mentioned in §§17(6) to (7) above, the Judge had also noted that the WeChat Messages are entirely consistent with the other evidence demonstrating R1’s intention to permanently relocate to Canada;

(4)  In view of the above, it is clear that R1’s contention that the Judge had failed to give sufficient consideration and/or weight to the existence of Zhao’s Report does not constitute proper basis to disturb the Judge’s exercise of discretion, and is in any event unmeritorious.

41.  In light of our conclusions on Grounds (1) to (5), we do not find Ground (6) to have any real prospects of success for the following reasons:

(1)  To begin with, the Judge had, as summarised in §17(1) above, correctly adopted the approach in Convoy Collateral and analysed the risk of dissipation by examining the evidence holistically. There is no suggestion by R1 that the Judge had fallen into error in this respect;

(2)  As such, there is little merit in R1’s contention that the Judge had erred simply by having regard to the WeChat Messages, particularly when the WeChat Messages were only one out of the 4 factors which the Judge had regard to, also bearing in mind that the Judge had expressly approached the WeChat Messages on the basis that its authenticity was in dispute;

(3)  In our view, it is plain from the Decision that the Judge’s statement at §5.26 (ie “On the present material, it seems to me more likely than not that the WeChat Messages were not fabricated”) did not constitute a finding, and did not detract from the Judge’s acknowledgement that its authenticity was in dispute. Read in its proper context, the Judge was merely providing reasons for not disregarding the WeChat Messages altogether simply for the reason that its authenticity was disputed by R1;

(4)  Importantly, the WeChat Messages (insofar as they state that R1 would permanently relocate to Canada and would not return to Hong Kong) were not considered by the Judge in isolation, but together with other evidence. As summarised in §17(6) to (7) above, the Judge was of the view that the WeChat Messages were consistent with R1’s intention to permanently relocate to Canada as inferred from: (a) the indisputable evidence of R1’s attempt to sell the Kensington Hill Property; (b) R1’s own evidence that her liquid assets in Canada are worth far more than those in Hong Kong; and (c) the objective evidence (ie the records from the Immigration Department of Hong Kong) showing R1’s prolonged absence from Hong Kong since December 2021; and

(5)  In light of the above, we do not agree with R1’s contention that the Judge had “heavily relied” upon the WeChat Messages in his analysis of the risk of dissipation, and do not find any merit in R1’s contention that the Judge had misdirected himself as to the WeChat Messages.

42.  We do not find Ground (7) to have any real prospects of success for the following reasons:

(1)  Mr Chen submits that the petitioner’s underlying claim (being one of fraud and dishonesty) is a neutral factor in view of the lack of dissipation by R1 from 2019 (when these proceedings were commenced) to 2023 (when the Injunction Summons was issued). Relying upon §79 of Convoy Collateral, he submits that where there has been a lack of dissipation notwithstanding a defendant’s knowledge of the claim for a period of time, this can be evidence negating an inference of the risk of dissipation, and the Judge had therefore erred in relying upon the petitioner’s underlying claim in his analysis;

(2)  However, as set out in §§78 to 79 of Convoy Collateral, the significance of delay in each case must be considered on its own circumstances, and the ultimate question is still whether the plaintiff could show a real risk of dissipation despite delay; and

(3)  In the present case, the Judge had, as summarised in §17(8) above, accepted that the delay was explained by Zhao’s provision of the New Information in August to September 2023, which revealed R1’s attempts to dispose of her properties contemporaneously with R1’s discovery that Zhao had turned against her. In our view, the Judge was plainly entitled to come to the conclusion that the petitioner had shown a real risk of dissipation despite the delay, and we do not see any basis for us to disturb the Judge’s exercise of discretion.

43.  Lastly, we do not find Ground (8) to have any real prospects of success for the following reasons:

(1)  While R1 contends that the Judge had erred in holding that the Shanghai SPA and the Lions Bay SPA were dubious, no submissions have been advanced to dispute the features of the Shanghai SPA and Lions Bay SPA set out under §5.20 of the Decision; nor does R1 suggest in her draft Notice of Appeal that the Judge had erred by taking such matters into account. As recorded in §5.21 of the Decision, these features were acknowledged by R1 to be unusual when considered in isolation from the explanation given by R1;

(2)  While Mr Chen re-asserts that R1 has already given a full explanation and avers that R1 was at liberty to deal with her own properties in any way she saw fit, R1 has failed to identify any error in the Judge’s finding and/or reasoning that R1’s explanations were not at all convincing when examined together with the other evidence holistically;

(3)  Further, it is clear from the Judge’s reasoning that he had not, as contended by R1 in Ground (8), held that the terms of the Shanghai SPA and the Lions Bay SPA themselves were sufficient to give rise to any evidence of a real risk of dissipation on R1’s part. Instead, as made plain from §5.25 of the Decision, the Judge had considered its terms together with the other evidence holistically; and

(4)  In light of the above, we do not see any basis for us to disturb the Judge’s exercise of discretion.

J. DISPOSITION

44.  For the reasons set above, R1 has failed to show it is reasonably arguable that leave to admit the Jeffries Report would be granted under the criteria in Ladd v Marshall, and that there are any real prospects of success in her intended appeal. As such, we dismiss R1’s summons dated 30 October 2024.

45.  We make a further order under Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes as the applications are wholly without merit.

46.  There is no reason to depart from the general rule that costs should follow the event. We order R1 to pay the petitioner’s costs of these applications. Having considered the petitioner’s statement of costs lodged on 13 November 2024 for summary assessment, we assess reasonable fees payable to the petitioner at $113,000.