YAN YU YING v. LEUNG WING HEI

HCA 2295/2019

[2024] HKCFI 3524

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2295 OF 2019

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________________________

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D E C I S I O N

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Background

1.  On 23 July 2024, I dismissed the application of plaintiff (“P”) for the issue of a letter of request to the Superior Court of California, County of Santa Clara, USA and/or the United States District Court, Northern District of California, USA, for the production by Google of certain documents (the “Decision”)[1]. I refer to the Decision for the background of the present case and will continue to adopt the abbreviations used therein.

Applications

2.  There are two summonses before the court:

(1)  By summons dated 5 August 2024, P applies to vary the Court’s costs order nisi (the “Costs Variation Summons”).

(2)  By a Summons dated 6 August 2024, P applies for leave to appeal against the Decision (the “Leave to Appeal Summons”).

The Leave to Appeal Summons

3.  P’s proposed grounds of appeal against the Decision are set out in the draft Notice of Appeal attached to the Leave to Appeal Summons. They are as follows:

(1)  The court had erred in holding that P “has not shown that it is material, or necessary in the interests of justice” for the letter of request to be issued at Paragraph 19 of the Decision. The records requested are directly relevant to resolving the Blue Tick Issue, and so necessary in the interest of justice: -

(a)  If records of a SEC-M confirmation email is found, this supports the authenticity of the SEC-M Screenshots.

(b)  Conversely, if the records are such as to exclude the possibility of P having deleted a SEC-M confirmation email, for example by showing records of her deletion of other emails in July 2017, this detracts from the authenticity of the SEC-M Screenshots.

(c)  In this respect, the court had erred at Paragraph 17(a) of the Decision in that Paragraph 1 of the amended Summons (cited in Paragraph 3(a) of the Decision) does cover the situation “where an email has been deleted from the mail trash bin”, in that the confirmation email must have been received in July 2017 before such “hard” deletion (cf. Paragraph 22 of the Decision).

(d)  The court had further erred at Paragraph 17(e) to 17(f) of the Decision in that the Blue Tick Issue is a distinct issue from P’s factual case that she never heard of or used SEC-M.

(e)  P’s burden is not to show that it is decisive of P s overall case or outcome of the trial, but instead that the requested documents assist in the resolution of the Blue Tick Issue (a matter argued exclusively between the experts, without direct evidence from P or D).

(2)  The court had erred at Paragraph 31 of the Decision in holding that P “has failed to demonstrate that the documents exist and are likely to be in the possession of the person from whom production is sought” in that

(a)  The records requested in Paragraph 1 of the amended Summons (cited in Paragraph 3(a) of the Decision), namely

“Record of any and all email messages received by [email protected] in July 2017”

exist and are likely to be in the possession of Google.

(b)  The court had erred in finding that “whatever data that is available to the account holder would be within the control of him/her” (at Paragraphs 21 and 29 of the Decision) in that, in Rocky Mountain Bank v Google Inc, Google had by way of court filing provided to the Court data about a message which was “auto-deleted and is no longer available to the user”, i.e. more than what is available or within the control of the account holder.

(3)  The court had erred in rejecting Mr Pong’s uncontradicted opinion: -

(a)  Concerning Google’s big data business model on the basis that he is not “an expert on Google’s policy on the retention of emails” (Paragraph 22 of the Decision). Unlike Mr Jeffries, Mr Pong did not speculate on Google’s internal policy on retention of emails. Instead, he pointed out the commercial incentives for international conglomerates such as Google to collect and retain large amounts of data.

(b)  Concerning deletion as “speculation” on the basis of “general knowledge” (Paragraph 22 of the Decision). Deletion in relation to computer files is a technical concept, and what a user experiences as deletion (even “hard delete” (cf. Paragraph 22 of the Decision)) is not equivalent to the disappearance of data from Google's computers.

Both of these matters are within Mr Pong (and Mr Jeffries’s) agreed expertise on digital and forensic investigations. In the absence of positive contradiction by Mr Jeffries, Mr Pong’s opinions on the above matters should be accepted.

(4)  To any extent necessary: -

(a)  The court had erred in rejecting P’s US legal advisors Messrs Kronenberger Rosenfeld, LLP’s uncontradicted opinion that there is no reason to believe Google was unable or unwilling to comply with the subpoenas filed in relation to Gmail records in Optiver Australia Pty. Ltd. & Anor. v. Tibra Trading Pty. No. C 12-80242 EID (PSG), judgment on 23 January 2013.

(b)  The court had erred in giving Mr Jeffries’s opinion (at Paragraph 14(a) and 14(b) of the Decision) any weight in considering the application, in that his opinion was abandoned by D at the hearing in favour of another Google policy annexed to the Skeleton without leave to adduce new evidence. Given such abandonment, Mr Jeffries’s opinion that “Google would unlikely retain records of email which had been deleted 7 years ago in 2017” (Paragraph 14(b) of the Decision) has no basis and should not be given any weight.

Applicable Principles – Leave to Appeal

4.  The applicable principles concerning applications for leave to appeal against interlocutory orders pursuant to section 14AA of the High Court Ordinance and Order 59 rule 2B of the Rules of the High Court are well-settled, namely, that the applicant has to show that the intended appeal has a “reasonable prospect of success” or there is “some other reason in the interests of justice” why the appeal should be heard.

5.  The Decision was an exercise of discretion as well as a case management decision. As submitted by Mr Bernard Man SC and Mr Jonathan Ng, counsel for D, a case management decision is only subject to appeal in rare circumstances and P faces a “very high hurdle” in trying to overturn it. The Court of Appeal will not interfere unless the judge below has “misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible”[2].

Ground 1: Error in holding that P “has not shown that it is material, or necessary in the interests of justice”

6.  Mr Laurence Li SC together with Mr Jasper Wong appeared for P. It was said that I had erred in paragraph 19 of the Decision in coming to the view that although the evidence sought may be relevant, P has not shown that it is material, or necessary in the interests of justice.

7.  The crux of my decision on the issue of relevance, materiality and necessity lies in the formulation of the request. The presence or the absence of an email or a list of emails do not reach the conclusion sought by P. I refer to my reasoning in paragraphs 17 – 19 of the Decision. I maintain my view that although the evidence sought may be relevant, P has failed to show that the evidence sought would be material or necessary in the interests of justice.

Ground 2: The documents exist and are likely in Google’s Possession

8.  In the Decision, I arrived at the conclusion that P had failed to show that the documents do exist and to be likely in Google’s possession[3].

9.  It was submitted by Mr Li that I had erred in relying on Google’s standard reply to P and read it as meaning “whatever data that is available to the account holder would be within the control of him/her.” The case of Rocky Mountain Bank v Google was relied upon to show that Google does retain data which has been “auto-deleted and is no longer available to the user”, i.e., it retains more than what is available to, or within the control of, the account holder.

10.  Further, it was submitted that “deletion” is not permanent. Even a “hard delete” – deleting the data from the bin would not erase the data. It was further submitted that even if the relevant email has been permanently deleted, there would still be useful data, and that Google need not provide a copy of the email; any record of the email being received in the user’s mailbox, will already help resolve the Blue Tick Issue.

11.  However, the main point is that there is no evidence to suggest that the evidence sought would still be in existence or in the possession of Google. Mr Li fairly accepted that no one other than Google could know what the retention policy is. He merely argued that it is possible that Google, being a company that makes its profit from data would have an incentive to keep data. The arguments put forward have already been canvassed at the substantive hearing. Suffice it to say that my views as set out in paragraphs 20 – 31 of the Decision remain unchanged and there is no need to repeat them herein.

12.  I maintain my view that P has failed to demonstrate that the evidence sought would still be available, bearing in mind that the relevant email is said to be more than 7 years ago.

Grounds 3 & 4

13.  No submissions were made at the hearing on grounds 3 & 4 of the draft Notice of Appeal. In any event, I maintain my view that the area expertise of Mr Pong was not on Google’s retention policy. The US legal adviser’s opinion was also mere speculation. Insofar as it was suggested that I had relied on Mr Jeffries’ opinion in reaching my decision, I refer to paragraphs 20 – 30 of the Decision which set out the bases of my reasoning, which show no reliance on Mr Jeffries’ opinion.

The Costs Variation Summons

14.  P’s complaint was that Mr Jeffries (D’s expert) relied on the email retention policy of Google Workspace in his expert evidence, which is clearly inapplicable, as P’s email account is a non-paying account. It was submitted that as the expert evidence of Mr Jeffries was not relied upon at the hearing by counsel, the costs of his expert report should be disallowed and the costs of P’s expert and related costs (total of HK$48,600), insofar as they deal with that part of Mr Jeffries’ evidence, ought to be borne by D.

15.  P is essentially asking the court to dissect out only one part of Mr Jeffries’ opinion as being irrelevant and disallow the costs thereto.

16.  The general principle in relation to the award of costs is that “costs follow the event”. Here, as D is the successful party in the application, he ought to be entitled to costs unless there are circumstances which the court considers to be sufficient to disallow him costs. I do not understand the position to be if there are parts of the evidence which have not been accepted or relied upon by the court, such costs of the successful party should be disallowed.

17.  Here, although I did not rely on that part of Mr Jeffries’ opinion in my Decision, I do not think there was any intention to mislead the court in quoting the policy of Google Workspace.

18.  In the present circumstances, I do not think there is sufficient grounds, nor is it appropriate to vary the costs order as suggested by P in the Costs Variation Summons.

Conclusion

19.  For the reasons set out above, I am of the view that there is insufficient basis to say that this court was wrong or plainly wrong in exercising its discretion to dismiss the application for a letter of request. The intended appeal has no reasonable prospect of success. Accordingly, the Leave to Appeal Summonses is dismissed. The Costs Variation Summons is also dismissed. Costs of both applications be paid by P to D, to be summarily assessed with a certificate for 2 counsel.

20.  The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

21.  In the absence of any variation of the costs order, D do lodge and serve his statement of costs within 7 days thereof. P do lodge and serve her list of objections to D’s statement of costs within 7 days thereafter for purposes of summary assessment.

22.  I thank counsel for their able assistance.

Mr Laurence Li SC leading Mr Jasper Wong, instructed by Edwin Yun & Co, for the plaintiff

Mr Bernard Man SC leading Mr Jonathan Ng, instructed by Ho & Ip, for the defendant

HCA 2295/2019

[2024] HKCFI 1770

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2295 OF 2019

________________________

________________________

________________________

DECISION

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Applications

1.  By summons dated 21 November 2023 (the “Summons”), the plaintiff (“P”) applies for the issue of a letter of request to the Superior Court of California, County of Santa Clara, the United States of America (“USA”) and/or the United States District Court, Northern District of California, USA, for the production by Google LLC (“Google”) of the documents specified in the schedule annexed to the Summons.

2.  There is another summons dated 15 April 2024 (the “Amendment Summons”) issued by P for leave to amend the schedule annexed to the Summons. The defendant (“D”) does not oppose the Amendment Summons. I shall therefore make an order in terms of the Amendment Summons, with costs to P, summarily assessed at HK$1,045.

3.  After the amendment, the documents requested are as follows:

(a)  Record of any and all email messages received by [email protected] in July 2017, including the original message file and all relevant metadata, including (without limitation) the message(s)'s Message ID:, Created at:, From:, To:, Received: [date and time] information, subject, read/unread status, and (where applicable) date deleted, whether in the “inbox” folder, “spam mail” folder, “junk mail” folder, “mail trash bin” folder or any other folder.

(b)  Record of any and all email messages received by [email protected] from the email address [email protected] or any other email from any sender purporting itself to be “SEC-M”, “Secret-Message” or “密安訊” or “密安讯”, including the original message file and all relevant metadata, including (without limitation) the message(s)'s Created at:, From:, To:, Received: [date and time] information, subject, read/unread status, and (where applicable) date deleted, whether in the “inbox” folder, “spam mail” folder, “junk mail” folder, “mail trash bin” folder or any other folder.

(c)  This record specifically excludes, to the extent applicable as requester is the account holder and is seeking her own information, any information that is prohibited by the Stored Communications Act. 18 U.S.C. § 2701, et seq. ("SCA"). Specifically, while the subject lines of emails are content under the SCA. the requestor is seeking her own records, which is permissible under the SCA. 18 U.S.C. § 2701(c)(2).

4.  There is no dispute that the email address by [email protected] belongs to P.

Background Facts

5.  The facts of this case had been set out by Yeung J in his decision dated 7 June 2022[1] on P’s application for an injunction, which I gratefully adopt as follows:

“4. The dispute between the parties relates to 999.9900261[2] Bitcoins (the ‘Subject Bitcoins’). P says that D has stolen them from her. D’s case is that P transferred them to him in exchange for 885,210.866 of D’s The Public Coin (the ‘TPC’) under a swap agreement reached between them in March 2018 (the ‘Swap Agreement’). TPC is said to be another and a newer type of cryptocurrency.

5. In August 2018, P reported her alleged loss of the Subject Bitcoins to the police. In September 2018, D was arrested.

6. On 12 December 2019, P took out the writ herein. The claim is based on fraud and internet theft. She seeks amongst others restitution of the Subject Bitcoins, a declaration that D holds them and all assets derived from them in unjust enrichment or on trust for her, or damages in the alternative.

7. The Injunction Summons first came before Lisa Wong J on 10 January 2020. It was adjourned for substantive argument (subsequently fixed to take place on 25 April 2022 with 2 days reserved, i.e. the present hearing).

8. When before Her Ladyship on that occasion, P made an application for interim‑interim relief. It was refused.

9. Subsequently D was charged and prosecuted for the alleged theft of the Subject Bitcoins. His trial took place in the District Court between late October and early November 2020 before Deputy District Judge Colin Wong (the ‘Criminal Trial’, the ‘Learned Deputy District Judge’). P gave evidence as one of the prosecution witnesses. D also chose to testify. A number of expert witnesses were also called. On 4 December 2020, D was acquitted of all charges he faced.”

6.  Essentially, P alleges that D has misappropriated the Subject Bitcoins. D on the other hand says that P had transferred the Subject Bitcoins in exchange for D’s TPC under a Swap Agreement. D says the Swap Agreement was recorded in a conversation between P and D in an instant messaging app called Secret-Message (“SEC-M”). P says she had no knowledge about SEC-M and that the messages on SEC-M are fabricated.

7.  To this end, D has produced screenshots from the SEC-M (“SEC-M Screenshots”) which show details of the transactions between D and P. P alleges that the SEC-M Screenshots are forged.

8.  As such, the authenticity of the SEC-M screenshots produced by D are in dispute and is an issue which may determine the case.

9.  In the Criminal Trial, DDJ Colin Wong accepted the messages as shown in the SEC-M Screenshots to have been the accurate record of correspondence between D and P[3].

Applicable Principles

10.  Parties agreed on the applicable principles, which have been recently summarised by Cheng J in China Metal Recycling (Holdings) Limited (In Liquidation) v Deloitte Touche Tohmatsu[4]:

(a)  The court has an inherent jurisdiction to issue a letter of request to another court for assistance in obtaining evidence; whether to do so involves an exercise of discretion.

(b)  In exercising its discretion, the Court would consider the following factors:

(i)  Whether it is necessary and in the interests of justice to obtain the documents. This includes a consideration of whether the evidence is relevant and material.

(ii)  Whether the application is made with such promptness as not to cause unreasonable delay.

(iii)  Whether the documents exist and are likely to be in the possession of the person from whom production is sought.

11.  Of the “necessary in the interest of justice” requirement, Coleman J in Delco Participation v HWH[5] held that:

“25. It also falls to the applicant to satisfy the court that the evidence to be obtained is necessary in the interests of justice. The actual wording to be found in Order 39 rule 1 is ‘necessary for the purposes of justice’, which seems to me to identify one requirement of necessity, and not two separate requirements of (a) necessity and (b) in the interests of justice. In so far as any submissions have seemed to suggest two separate requirements, I reject that point. The necessity is tied to the purposes of justice.

26. One important feature is to consider whether the witness can give substantial evidence material to an issue in the trial, requiring the court to identify the issue to which the evidence is said to relate, and then to consider whether the evidence sought is relevant to that issue. That approach identifies that the relevant interests or purposes of justice are the interests of all the parties to the litigation (not just the applicant). That triggers a consideration of potential prejudice as well as benefit in the letter of request procedure, but it should be obvious that one of the purposes of justice is to seek to reach the fair adjudication of the factual issue(s) in question.”

12.  Delay is to count against the application if it is inordinate, or if it causes real prejudice which cannot be compensated in costs.[6]

P’s Stance

13.  Mr Jasper Wong, counsel for P, submitted that based on the following, the court should exercise its discretion to issue the letter of request:

(a)  The records sought are directly relevant to the key issue of authenticity of the SEC-M Screenshots produced by D, and as such is necessary in the interest of justice.

(b)  D initially did not oppose to the relevant evidence being requested from Google.

(c)  The requested evidence exists. In support of such contention, Mr Wong relies on several US cases (Federal Trade Commission v Ameridebt, Inc, Optiver Australia Pty Ltd. & Anor. v. Tibra Trading Pty) where disclosure orders similar to those presently sought had been granted.

(d)  It is unlikely for Google to have discarded data which are likely to be plain text format as data storage has become extremely cheap.

D’s stance

14.  Mr Bernard Man SC leading Mr Jonathan Ng, counsel for D, submitted that the court should not exercise its discretion to issue the letter of request for assistance in obtaining evidence from Google for the following reasons:

(a)  P fails to discharge the onus to show that the relevant records are likely to be in Google’s possession. This is based on a Q&A Article on Google’s website which states that administrators could not recover emails that had been deleted more than 55 days ago.

(b)  D’s expert has opined that Google would unlikely retain records of email which had been deleted 7 years ago in 2017.

(c)  P cannot rely on the US judgments as they are inadmissible and cannot be relied upon by P as evidence of any alleged facts in relation to Google’s retention of deleted emails. A judgment in personam is no evidence of the truth of the decision or its grounds[7].

Discussion: Whether Necessary in the Interest of Justice

15.  In determining if such evidence is necessary in the interests of justice, one needs to identify the issue to which the evidence is said to relate, and then to consider whether the evidence sought is relevant and material to that issue.

16.  P says the evidence sought amounts to direct evidence on the “blue tick issue” – namely, as D has produced a screenshot showing a blue tick against P’s email address in the SEC-M app, it seems to indicate that P had registered for and verified a SEC-M account. This would support D’s defence that there was a Swap Agreement and that P had messaged with D on the SEC-M app. What P seeks to achieve is essentially to show that if there was no such email received from SEC-M as confirmed by Google, that refutes the “blue-tick” issue.

17.  However, although the evidence sought may be relevant, I am not convinced that the answer from Google would, as suggested by Mr Wong, assist the court in the resolution of the “blue-tick issue”:

(a)  Under the present formulation of the request, it only asks for emails “whether in the ‘inbox’ folder, ‘spam mail’ folder, ‘junk mail’ folder, ‘mail trash bin’ folder or any other folder”. It does not deal with the situation where an email has been deleted from the mail trash bin. As such, it still leaves open for D to argue that P could have deleted the email herself from the mail trash bin.

(b)  Thus, even if no email can be found by Google, before one can reach the conclusion sought by P (refuting the “blue-tick” issue by saying that there was never any email sent from SEC-M that reached P’s email address), there would need to be the following:

(i)  An acknowledgment from Google that they have not deleted any emails belonging to P’s email account since 2007.

(ii)  An acknowledgment from Google that even if an account holder has permanently deleted an email from their account, they would still retain a copy of it.

Such acknowledgments are currently not within the formulation of the Letter of Request and will thus unlikely be provided by Google.

(c)  Mr Wong argues that such answers are not required by P; if D requires them, it is for D to make an application. I do not think that is the correct analysis. P needs to show to the court’s satisfaction that what they are seeking is relevant and material. In doing so, P cannot just seek what satisfies their case only, without regard to any possible rebuttal that D is likely to have on the interpretation of the information sought.

(d)  The likelihood of Google, an international conglomerate, willingly divulge information concerning its internal policy that it has chosen to not made available generally to the public, is unknown.

(e)  Conversely, if Google finds an email in P’s email account that was sent from SEC-M, Mr Wong fairly accepts P will not concede failure, as she would still run her case on the basis that she has never used SEC-M, even in the event that an email is found in her account. In that case, the court will still need to decide between the different expert opinions and the credibility of P and D.

(f)  It can thus be seen that whatever the outcome, the court is not assisted, as neither possibility would determine the “blue-tick” issue.

18.  It is entirely foreseeable that there is a likelihood that the Letter of Request sought would generate more questions than it would answer, and the answers to the questions generated are not readily available or easily obtained.

19.  I am therefore of the view that although the evidence sought may be relevant, P has not shown that it is material, or necessary in the interests of justice.

Discussion: In Existence or in Possession of Google?

20.  Parties’ arguments concentrated on whether the evidence sought would still be in existence or in possession of Google. In analysing this issue, it must be borne in mind that the burden is on P to demonstrate to the court’s satisfaction that the evidence sought would still be available after 7 years, and NOT that there is no evidence to show that it is no longer available.

21.  What is of note in this case is that the information sought is from 7 years ago. The preliminary requests from P to Google had not been fruitful. This is even though P is simply seeking information of her own account. The standard reply from Google seems to suggest that an account holder can simply access their own data stored within their account, and that there is no restriction for an account holder to access the information in their own account. Such standard reply suggests that whatever data that is available to the account holder would be within the control of him/her. The other content from the standard reply seems to relate to a request from someone other than the account holder to access the data.

22.  Mr Wong relies heavily on the opinion of Mr Pong, P’s expert, on the likelihood of such emails having been retained. With respect, Mr Pong is not an expert on Google’s policy on the retention of emails. All Mr Pong could do is to speculate, using general knowledge on why it might be possible that such emails still exist. I cannot accept such opinion to be evidence showing the existence of such information on Google’s part. There might be various considerations by Google on how and for what period they would retain emails, or emails that had been hard-deleted by an account holder. Technological limits may not be the only considerations taken into account by Google.

23.  Mr Wong relied on three cases from the US in support of the contention that the records sought are still in existence.

24.  In Federal Trade Commission v. Ameridebt, Inc.[8], the court made a subpoena against Google for:

“[a]ll documents concerning all Gmail accounts of Baker, including but not limited to the Gmail account of [email protected], for the period from January 1, 2003 to present, including but not limited to all e-mails and messages stored in all mailboxes, folders, in-boxes, sent items and deleted items and all links to related web pages contained in such e-mail messages.”

25.  However, as submitted by Mr Man, the context of this case is completely different from our present one: in Ameridebt, the email account in question belonged to a third party. The focus of the case was also not on the existence of such documents.

26.  In Optiver Australia Pty. Ltd. & Anor. v. Tibra Trading Pty[9], the court granted a disclosure order concerning the “the recipient(s), sender, subject, date sent, date received, date read, and date deleted” of, among others, emails in a Gmail email address deleted 6 years prior to the order.

27.  Again, the party seeking disclosure is the opponent of the account holder. The focus of that application was not on the existence of the documents but on whether disclosure was prohibited under certain US law.

28.  It is also important to note that in neither of the US cases was it apparent that Google was able to produce the information sought. P cannot rely on the terms of an order having been made as evidence of Google’s retention policy and that the documents sought are still in existence.

29.  Rocky Mountain Bank v Google Inc[10] also does not assist P as Google was only asked to provide information on 23 September 2009 in respect of an email received by a user on 12 August 2009 and deleted on 19 September 2009.

30.  None of the US cases relied upon can be taken as evidence of the existence of the documents or information sought from Google.

31.  As such, P has failed to demonstrate that the documents exist and are likely to be in the possession of the person from whom production is sought.

Delay

32.  D also complains that there has been undue delay on P’s part in taking out the current application. P first had notice of Jeffries’ 2^nd Report as early as in April 2021. P’s request was first denied by Google on in December 2022. However, the Summons was only taken out on 23 November 2023 (more than 2.5 years after Jeffries’ 2^nd Report has been adduced in this action), when the action (which was commenced in 2019) is almost ready to be set down for trial.

33.  Mr Wong complains that D has never raised delay as a ground in opposing the present application before written submissions were lodged, and that P is prejudiced as she could have adduced evidence to rebut the alleged delay.

34.  In any event, this is not a point heavily relied upon by D as there was no submission on whether the alleged delay has caused real prejudice which cannot be compensated in costs.

35.  Further, in light of my views on the other requirements, it is not necessary to come to a view on whether there was delay on P’s part, it being a relatively subsidiary point.

Determination

36.  As P has failed to discharge her burden in showing that:

(a)  it is necessary and in the interests of justice to obtain the documents, and

(b)  the documents exist and are likely to be in the possession of Google;

P’s application fails.

Costs

37.  Costs follow the event. I make an order nisi that costs of the Summons be to D, to be summarily assessed if not agreed, with certificate for 1 counsel. Such costs order will become absolute if there is no application is taken out within 14 days hereof for variation.

38.  D do lodge and serve his statement of costs within 14 days hereof. P do lodge and serve her list of objections, if any, within 14 days thereafter; failing which the court will proceed to assess costs summarily on paper.

39.  I thank counsel for their assistance.

Mr Jasper Wong, instructed by Edwin Yun & Co, for the plaintiff

Mr Bernard Man SC leading Mr Jonathan Ng, instructed by Ho & Ip, for the defendant

HCA 2295/2019

[2023] HKCFI 1839

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2295 OF 2019

________________

________________

_________________

J U D G M E N T

_________________

1.  In the 1^st Notice of Appeal dated 2 September 2022, the Defendant is appealing against and to set aside paras. 1 and 3 of the Order of Master Kent Yee dated 19 August 2022 (“Order”) that:

(1)  The Defendant should provide to the Plaintiff the documents specified in paras. 1(1) to 1(5) and 3(1) to 3(2) of the Schedule (“Schedule”) to the Summons dated 25 April 2022 (“Discovery Summons”) (para. 1 of the Order); and

(2)  There be costs order nisi that the Defendant do pay the Plaintiff’s costs of the Discovery Summons with certificate for two counsel (para. 3 of the Order).

2.  The Defendant is putting as an alternative of filing an affirmation making discovery of the documents mentioned in para. 1 of the Order of Master Yee.

3.  In the 2^nd Notice of Appeal dated 2 February 2023, the Defendant is appealing the Order of Master Yee dated 19 January 2023 refusing the Defendant’s application to vary the costs order nisi.

4.  In the 3^rd Notice of Appeal dated 2 February 2023, the Defendant is appealing the order of Master Yee’s dated 19 January 2023 in refusing the Defendant’s application for stay of execution of the Order.

Background

5.  The Plaintiff alleged that the Defendant had misappropriated 999.9000261 Bitcoins (“Subject Bitcoins”), cryptocurrency belonging to her, by deceit or fraudulent misrepresentations.

6.  The Defendant averred that that the Plaintiff had transferred the Subject Bitcoins in exchange for the Defendant’s The Public Coin (“TPC”), another type of cryptocurrency, under a swap agreement between Plaintiff and the Defendant dated 1 March 2018 (“Swap Agreement”). Both parties had completed the transfers under the Swap Agreement.

7.  The Defendant averred that the existence of the Swap Agreement and the details of the transactions were recorded in the conversation between the Plaintiff and the Defendant in an instant messaging App called Secret-Message (“SEC-M”).

8.  On 19 September 2018, the Defendant was arrested by the Police. At the time of the Defendant’s arrest, around 600 of the Subject Bitcoins had remained in his possession.

9.  The Defendant was charged with one count of fraud and four counts of dealing with property known or believed to represent proceeds of an indictable offence. The Defendant was tried in the District Court (DCCC 493/2019). During the criminal trial, both the Plaintiff and the Defendant testified as witnesses.

10.  The Defendant adduced evidence in the criminal trial of the forensic images of SEC-M messages in support of the Swap Agreement with expert evidence from Mr Jeffries and Mr Frankstien. The Prosecution adduced evidence that the SEC-M could have been forged.

11.  On 4 December 2020, Deputy District Judge Colin Wong acquitted the Defendant on all five charges, holding that the Prosecution could not prove the forgery of the SEC-M beyond reasonable doubt.

12.  Following the Defendant’s acquittal, the restraining order of the Police lapsed and the Subject Bitcoins were returned to the Defendant.

Interlocutory Injunction

13.  The Plaintiff applied for an interim-interim injunction against the Defendant, restraining him from disposing the Subject Bitcoins which remained in his possession, and an order for the Defendant to disclose their whereabouts.

14.  On 8 October 2021, K Yeung J granted an interim injunction. On 21 October 2021, the Defendant disclosed that 364.46378963 of the Subject Bitcoins had remained in his possession, custody and power.

15.  In His Lordship’s judgment dated 7 June 2022 after the substantive hearing of the injunction, K Yeung J ordered a proprietary injunction restraining the dealing of the 364.46378963 of the Subject Bitcoins, conditional upon the Plaintiff paying into court HK$5,500,000 as fortification of her undertaking as to damages. K Yeung J held that while the Plaintiff managed to satisfy the threshold of serious issues to be tried in relation to the SEC-M messages for a proprietary injection. His Lordship held that the Plaintiff had failed to establish a good arguable case for a freezing Mareva injunction.

Expert Evidence in the Civil Claim

16.  In the present action for conversion and/or restitution, the Defendant relied on the same expert evidence on the SEC-M as in the criminal trial.

17.  Matters as to the expert evidence (apart from the present issue) have been dealt with by consent.

Discovery Summons

18.  Separately, on 25 April 2022, the Plaintiff took out the present Discovery Summons, seeking production of various documents in relation to the expert evidence specified in the Schedule to the Discovery Summons.

19.  The documents sought were forensic images of the SEC-M messages captured by the Defendant’s expert Mr Jeffries’ devices, because the Defendant had lost his own mobile phone and the SEC-M server in the Cloud had shut down permanently.

20.  The Schedule to the Discovery Summons reads as follows:

“Documents relating to the SEC-M screenshots

1. The following documents (or forensic images thereof) referred to in the 1^st and 2^nd report of the Defendant’s expert Mr Alan Jeffries disclosed by the Defendant:-

(1) The ‘expert report’ of ‘Robert Whitaker (Blockchain Intelligence Group) dated Jan 30, 2019’ mentioned on p.4 of the 1^st report;

(2) the ‘forensically wiped and factory reset android mobile telephone’ mentioned at p.9 of the 1^st report;

(3) the ‘second mobile device’ mentioned at p.10 of the 1^st report;

(4) the mobile device(s) used to obtain the results of the 2^nd report;

(5) the original files of the screenshots taken by the ‘screen recorder’ used by Mr Jeffries; and

(6) the audio record of the voice messages alleged to be the Plaintiff’s voice.

Documents relating TPC

2. The following document referred to in the report of Dr KP Chow dated 03.02.2020 disclosed by the Defendant:-

(1) The ‘folder with name TPC Wallet’ provided by the Defendant.

3. The following documents referred to in report and supplemental report of the Defendant’s expert Mr Illa Frankstein disclosed by the Defendant, described by Mr Frankstein in the following terms:-

(1) A letter titled ‘Acknowledgement of Receipt of Copies of Documents’ dated 2018-12-11;

(2) A set of documents labelled as: ‘Photocopy of Documentary Seized from Deft’, dated 2018-09-27, 223 pages;

(3) The ‘source code of TPC chain, online wallet, and mobile wallets’; and

(4) ‘TPC Explorer records’ and ‘Cryptofundex screen captures’.

Documents relating to the concluded criminal trial DCCC 493/2019

4. The following documents which are in the Defendant’s possession:-

(1) Lists of Prosecution and Defence Exhibits;

(2) Written submissions filed by the Prosecution and the Defence; and

(3) Any expert reports referred to in the criminal trial that have not been disclosed, including PW4 Chan Lee Chun’s witness statement dated 02.11.2020.”

21.  Prior to taking out the Discovery Summons, the Plaintiff’s solicitors had written to the Defendants’ solicitors on 21 March 2022 asking for the underlying evidence to the 1^st and 2^nd Report of Mr Jeffries, and listed the documents which are now mentioned in paras. 1(2) to 1(6) of the Schedule.

22.  At the hearing before Master Yee, the Defendant resisted the Discovery Summons primarily on the ground that the documents sought by the Plaintiff were irrelevant and/or unnecessary.

23.  Further, the Defendant averred in his 7^th Affidavit that he was unsure whether the documents under paras. 1(2) to 1(5) of the Schedule were in his possession, custody or power and was still in the process of locating the same.

24.  In his Decision dated 19 August 2022, Master Kent Yee rejected the Defendant’s arguments and held that the disclosure of the documents sought in the Schedule were necessary for disposing fairly the core issues in this action, and ordered, inter alia, that “the defendant should provide to the plaintiff the documents specified in paras. 1(1) to 1(5) and 3(1) to 3(2) of the Schedule to the Summons within 14 days from today.”

25.  Salient points of Master Yee’s Decision referred to in submissions are as follows:

“8. Mr Man (leading counsel for the Defendant) argues that the plaintiff has not served any notice under r.10(1). He submits that the margin note to the Summons makes no reference to r.10(1). Nor does the supporting affirmation of the plaintiff. He rightly submits that the mechanism under O.24 r.7 differs from that of O.24 r10.

9. Mr Li (leading counsel for the Plaintiff) submits that the letter of the plaintiff’s solicitors dated 21 March 2022 (‘the Letter’) can be treated as a notice served under O.24 r.10(1). Mr Man disagrees and points out that the Letter did not even mention that rule.

10. I accept Mr Li’s submission that there is no prescribed form of such notices served under O.24 r.10(1). One has to look at the substance. Upon my perusal of the Letter, I find that in the Letter; the plaintiff requested for, among other things, the disclosure of those documents in §1 of the Schedule, making particular reference to the expert, reports of Mr Jeffries. There can be no doubt to the defendant’s solicitors that the request was made pursuant to O.24 r.10(1).

11. The defendant did not reply to the Letter before the Summons was taken out.

…

14. Given the express references to the expert reports of the defendant in the Schedule, the defendant should have no doubt about the nature of the present application.

…

26. Mr Man submits that the defendant may not have in his possession those mobile telephones. In his affidavit, the defendant stated that he was still in the process of locating those documents in §§1(2) to (5) of the Schedule including the forensic images of the mobile telephones.

27. I do not think this assertion suffices to be a good cause to refuse the plaintiff discovery of those forensic images. The court has jurisdiction under O.24 rr.10 and 11(1) order discovery whether or not the document is in the possession, custody or power of the party in whose pleading or affidavit or witness statement the references were made to the document. The absence of possession, custody or power may amount to a good cause for avoiding such a discovery order but will not invariably do so: see HKCP 2022 Vol.1. §24/10/1 at p.717.”

26.  On 2 September 2022, the Defendant took out a summons for the stay of Master Yee’s order for production pending the appeal to the Judge in chamber (“Stay Summons”).

27.  The Defendant filed his 8^th Affidavit partly in compliance of Master’s order and partly in support of the Stay Summons stating that the mobile devices referred to the paras. 1(2) to 1(4) of the Schedule were no longer available and no forensic images had ever been retained, as there was no appeal by the Prosecution and there was no reason for Mr Jeffries to retain them. Mr Jeffries also filed an Affidavit confirming the same.

28.  The Defendant averred that those documents were no longer in the Defendant’s possession, custody or power, and hence unable to produce them.

29.  On 19 January 2023, Master Yee dismissed the Stay Summons on paper.

Applicable principles

30.  Appeals against Masters’ decisions are hearings de novo, i.e. an actual rehearing of the application and the Judge treats the matter as though it came before him/her for the first time. The Judge would give the Master’s decision the weight it deserves but is in no way bound by it. The Judge’s discretion is in no way fettered by the previous exercise of discretion by the Master (see Hong Kong Civil Practice 2023 §58/1/2).

31.  The following provisions of Order 24, Rules of the High Court (Cap. 4A) have been referred to in submissions:

“7. Order for discovery of particular documents (O. 24, r. 7)

(1) Subject to rule 8, the Court may at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified or described in the application or any class of document so specified or described is, or has at any time been, in his possession, custody or power, and if not then in his possession, custody or power when he parted with it and what has become of it.

(2) An order may be made against a party under this rule notwithstanding that he may already have made or been required to make a list of documents or affidavit under rule 2 or rule 3.

(3) An application for an order under this rule must be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought under this rule has, or at some time had, in his possession, custody or power the document, or class of document, specified or described in the application and that it relates to one or more of the matters in question in the cause or matter.

…

8. Discovery to be ordered only if necessary (O. 24, r. 8)

(1) On the hearing of an application for an order under rule 3 or 7 the Court, if satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, may dismiss or, as the case may be, adjourn the application and shall in any case refuse to make such an order if and so far as it is of opinion that discovery is not necessary either for disposing fairly of the cause or matter or for saving costs.

(2) No order for the disclosure of documents shall be made under section 41 or 42 of the Ordinance, unless the Court is of opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.

9. Inspection of documents referred to in list (O. 24, r. 9)

A party who has served a list of documents on any other party, whether in compliance with rule 2 or with an order under rule 3, must allow the other party to inspect the documents referred to in the list (other than any which he objects to produce) and to take copies thereof and, accordingly, he must when he serves the list on the other party also serve on him a notice stating a time within 7 days after the service thereof at which the said documents may be inspected at a place specified in the notice.

10. Inspection of documents referred to in pleadings and affidavits (O. 24, r. 10)

(1) Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings, affidavits or witness statements served under Order 38, rule 2A, or experts’ reports, reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof.

(2) The party on whom a notice is served under paragraph (1) must, within 4 days after service of the notice, serve on the party giving the notice a notice stating a time within 7 days after the service thereof at which the documents, or such of them as he does not object to produce, may be inspected at a place specified in the notice, and stating which (if any) of the documents he objects to produce and on what grounds.

11. Order for production for inspection (O. 24, r. 11)

(1) If a party who is required by rule 9 to serve such a notice as is therein mentioned or who is served with a notice under rule 10(1)—

(a) fails to serve a notice under rule 9 or, as the case may be, rule 10(2), or

(b) objects to produce any document for inspection, or

(c) offers inspection at a time or place such that, in the opinion of the Court, it is unreasonable to offer inspection then or, as the case may be, there,

then, subject to rule 13(1), the Court may, on the application of the party entitled to inspection, make an order for production of the documents in question for inspection at such time and place, and in such manner, as it thinks fit.

(2) Without prejudice to paragraph (1), but subject to rule 13(1), the Court may, on the application of any party to a cause or matter, order any other party to permit the party applying to inspect any documents in the possession, custody or power of that other party relating to any matter in question in the cause or matter.

(3) …

The Defendant’s submissions

32.  Mr Anthony Chan, SC, leading counsel for the Defendant, indicated that the argument of lack of relevance and/or necessity before the Master would no longer be pursued in the appeal.

33.  It was also submitted that the issue of alleged transfer of the TPC to the Plaintiff is not relevant for the present purpose.

34.  The Defendant has complied with the Master’s Order insofar as possible by providing to the Plaintiff documents specified in paras. 1(1), 1(5), 3(1) and 3(2) of the Schedule. For this appeal, the Court is only concerned with paras. 1(2) to 1(4) of the Schedule.

35.  Mr Chan also indicated that costs appeal would rise and fall with the outcome of the main appeal.

36.  Mr Chan’s main point was that the Discovery Summons was defective and Master Yee had no jurisdiction to make the production order as O.24 r.11 had not been engaged. In order to invoke the jurisdiction for production under O.24 r.11, the requesting party must first serve a notice under O.24 r.10(1), which is a substantial condition precedent.

37.  Mr Chan further submitted the Court would not usually order production without first having ordered the party to file an affidavit stating whether the documents are within the its possession, custody and power under O.24 r.7.

38.  Even if the Court were minded to order disclosure of the documents, the Court should not make an immediate production order, but to ordered the Defendant to make an affidavit on discovery instead. However, since the Defendant had already filed an affidavit that the documents were no longer in his possession, custody and power, there is really no utility to order his to file another affidavit on the matter.

39.  Mr Chan submitted that the different rules under O.24, RHC deal with different aspects of discovery and set out different considerations for the Court to take into account (see Innovisions Ltd v Chan Sing Chuk [1992] 2 HKLR 306; and Re Prudential Enterprises Ltd HCCW 594/1999, dated 10 August 2001 para 3). Mr Chan submitted that that the different rules and applicable principles must not be conflated.

40.  Mr Chan pointed out that in the Discovery Summons, the Plaintiff sought an order that “The Defendant shall provide to the Plaintiff the documents specified in the Schedule herein within 14 days”. But the margin note of the Discovery Summons stated that the Plaintiff was relying on only O.24 rr.7 and 11 as the basis of its application.

41.  An order made under O.24 r.7 is fairly narrow in its scope. It is not for the actual provision or production of the documents, but to order a party to make an affidavit stating “whether any document specified or described in the application … has at any time been, in his possession, custody or power, and if not then in his possession, custody or power when he parted with it and what has become of it” (see Re Prudential Enterprises Ltd supra para 4).

42.  Insofar as the Plaintiff were seeking an order of production under O.24 r.11, she had not served the requisite notice under O.24 r.10(1), as the specific rule had not been identified in the Plaintiff’s letter dated 21 March 2022 requesting the documents, nor in the Discovery Summons itself. Further, the letter dated 21 March 2022 was only in the context of correspondence dealing with the filing of expert evidence.

43.  Mr Chan referred to Canton Plus Enterprise Limited v Tong Zhenjun (No. 2) [2019] 6 HKC 173, per DHCJ Saunders (as he then was) paras. 44, 58 that inspection under O.24 r.10 should not usually be ordered without there having been a prior order for an affirmation under O.24 r.7. Hence, an affirmation under O.24 r.7 is a precursor to a series of further steps which might give rise to an order for inspection.

44.  Mr Chan submitted that it is manifestly oppressive and wrong for the Court to immediately grant an order for provision of documents. This is particularly the case when the O.24 rr.10-11 extend to documents which are referred to in an exhibit to an affidavit (see SCC Venture VI Holdco G Ltd v Zhao Changpeng [2018] 3 HKC 442, para. 34. There are many situations where a party would (for entirely valid and legitimate reasons) not be in possession of documents falling within the scope of O.24 rr.10-11.

45.  Mr Chan submitted that the Defendant’s 7^th Affidavit before the Master stated that he was still in the process of locating the documents sought by the Plaintiff, and in his 8^th Affidavit that the documents mentioned in paras. 1(2) to 1(4) of the Schedule were not in his possession, custody or power, and he is unable to provide the same to Plaintiff.

46.  As such, if the Court makes an immediate production order, there is a serious possibility that the Defendant will be unable to comply with the order and may be liable for contempt of court. Mr Chan submitted that is oppressive and cannot be right.

47.  On 14 September 2022, the Defendant’s solicitors wrote to the Plaintiff’s solicitors asking whether the Plaintiff would undertake not to enforce Master Yee’s Order in light of the Defendant’s 8^th Affidavit, and if so, the Defendant would not proceed with the present appeal.

48.  In the reply by the Plaintiff’s solicitors dated 11 October 2022, the Plaintiff refused to give the undertaking as it might prejudice the Plaintiff’s right of redress against the Defendant and/or Mr Jeffries for destruction of evidence after the commencement of the present action; and to invite the Court to draw adverse inference against the Defendant.

49.  Mr Chan submitted that the Plaintiff’s response was surprising and devoid of merit, as there is no reason why Mr Jeffries, an independent expert, would conspire in the destruction of evidence.

The Plaintiff’s Submissions

50.  Mr Lawrence Li, SC, leading counsel for the Plaintiff, pointed out that the Discovery Summons expressly stated the order for production. He referred to Premier Fashion Wears Ltd v Li Hing Chung [1994] 1 HKC 213, the headnotes, where the Court of Appeal (Litton, Bokhary and Godfrey JJA) rejected the argument that relief must be refused if the margin note did not state the correct rule. The point was adopted in the Hong Kong Civil Practice 2023 p. 865 para. 32/6/7.

51.  Mr Li submitted that there is no specific form for the notice under O.24 r.10(1), and the Plaintiff’s letter dated 21 March 2022, which referred to the very documents sought in the Discovery Summons, would suffice. The Defendant never responded to the letter, and would hardly be taken by surprise if the Plaintiff were to apply for a production order.

52.  Mr Li referred to Canton Plus Enterprise Limited v Tong Zhenjun, supra where DHCJ Saunders said the Court would not usually order production under O.24 r.11 without first having ordered an affidavit under O.24 r.7. However, it all depends of the type of document in the context of the case. In SCC Venture VI Holdco G Ltd v Zhao Changpeng, DHCJ K Yeung (as he then was) ordered production without first ordering an affidavit. Mr Li submitted that ultimately, the consideration is relevance.

53.  Mr Li also complained about the additional evidence of the Defendant’s 8^th Affidavit without taking out a proper summons for that. The Defendant’s 7^th Affidavit which stated that he was till locating the documents was before the Master. The 8^th Affidavit went on to say the Defendant was no longer in possession, custody or power of the documents. Mr Li submitted that they were just bland statements.

54.  That point was not vehemently argued on the appeal, and as noted by the Master, “the absence possession, custody or power may amount to a good cause for avoiding such a discovery order but not invariably so”: Hong Kong Civil Practice 2022 Vol.1 p.717 para. 24/10/1).

55.  Mr Li stated that the Plaintiff had not taken any enforcement action on the Order of Master Yee. Hence, contempt is not relevant.

Analysis

56.  The process of discovery is essential in civil proceedings

in order to avoid trial by ambush. The first rule of evidence is relevance. All the relevant evidence should be disclosed for the fair disposal of the cause. On the other hand, discovery should not be abused to become a fishing exhibition. Relevance must be judged in the context of the case.

57.  In the context of the present case, the Defendant has sought to produce the expert evidence which have been produced in the criminal case in support of the Swap Agreement

58.  It is a fact that those documents did exist at the time of the criminal proceedings. And it would hardly be a surprise to expect civil action for recovery notwithstanding the Defendant’s acquittal in the criminal proceedings, because the burden and standard of proof and the rules of evidence (including inferential evidence) are different. Hence, it is to be expected the expert evidence be preserved for the civil proceedings, and unusual or extraordinary to say the documents have now been lost.

59.  I agree with Mr Li that the documents underlying the expert reports are most relevant, and in the process of locating and now the loss of those documents are just bland statements. If the matter were to go to trial without the documents sought, any astute cross examiner would no doubt wedge in the loss of the documents, as the matter is relevant both as to credibility and/or inferences. In such context, an order for production should be granted, unless there are overiding reasons to the contrary.

60.  I agree with Mr Li based on the authorities he cited that an O.24, r.7 affidavit is not a prerequisite before an order for production under O.24, r.11; the letter dated 21 March 2022 can be regarded notice under O.24, r.10(1); and an order for production can be made even the Defendant has deposed to the loss of the documents.

61.  An order for production could compel the Defendant to exert more efforts to locate or retrieve the documents, failing which the Defendant should at least condescend to particulars in the explanation of non-compliance so as to hone in the bland excuse of loss.

62.  As to possible contempt, since willfulness is an element of contempt, similar considerations as in the explanation of non-compliance would have to be called for anyway, and it is not in any way oppressive.

63.  The ultimate question is whether it is fair to order production. Given the context of the existence and then non-existence of the documents, the order for production must be a fair disposal of the cause or matter.

Conclusion

64.  The main appeal, costs and stay appeal are dismissed.

65.  I thank Mr Chan and Mr Li for their helpful submissions.

Mr Laurence Li SC, Mr Foster Yim and Mr Jasper Wong, instructed by Edwin Yun & Co. for the plaintiff

Mr Anthony Chan SC and Mr Jonathan Ng, instructed by Ho & Ip, for the defendant

HCA 2295/2019

[2022] HKCFI 1660

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2295 OF 2019

______________

BETWEEN

______________

______________

DECISION

______________

A. Matters before the court

1.  Before the court are the following matters:

(a) the substantive hearing of the summon of 24 December 2019 taken out by the plaintiff (“P”) against the defendant (“D”) for an injunction against disposal of assets (the “Injunction Summons”);

(b) two summonses of 9 December 2021 and 17 March 2022 taken out by D against P for fortification (the “1^st Fortification Summons”, the “2^nd Fortification Summons”, and collectively the “Fortification Summonses”); and

(c) the issue of costs arising from P’s withdrawal of its summons of 22 November 2021 (the “Variation Summons”) for variation of the interim-interim injunction which this court granted on 8 October 2021 (the “Interim-interim Injunction”).

2.  Mr Laurence Li SC leading Mr Foster Yim and Mr Jasper Wong appeared for P. Mr Bernard Man SC leading Ms Vivian Henrietta Ho and Mr Jonathan Ng appeared for D.

3.  Despite the 2 days reserved, there was insufficient time for all the above matters to be covered. Towards the end of the hearing, I gave directions for parties to file further written submissions on the issue of costs in relation to the Variation Summons, with the view of that issue being dealt with on the papers. Parties have since done that.

B. Events leading to the present applications

4.  The dispute between the parties relates to 999.9900261[1] Bitcoins (the “Subject Bitcoins”). P says that D has stolen them from her. D’s case is that P transferred them to him in exchange for 885,210.866 of D’s The Public Coin (the “TPC”) under a swap agreement reached between them in March 2018 (the “Swap Agreement”). TPC is said to be another and a newer type of cryptocurrency.

5.  In August 2018, P reported her alleged loss of the Subject Bitcoins to the police. In September 2018, D was arrested.

6.  On 12 December 2019, P took out the writ herein. The claim is based on fraud and internet theft. She seeks amongst others restitution of the Subject Bitcoins, a declaration that D holds them and all assets derived from them in unjust enrichment or on trust for her, or damages in the alternative.

7.  The Injunction Summons first came before Lisa Wong J on 10 January 2020. It was adjourned for substantive argument (subsequently fixed to take place on 25 April 2022 with 2 days reserved, i.e. the present hearing).

8.  When before Her Ladyship on that occasion, P made an application for interim-interim relief. It was refused.

9.  Subsequently D was charged and prosecuted for the alleged theft of the Subject Bitcoins. His trial took place in the District Court between late October and early November 2020 before Deputy District Judge Colin Wong (the “Criminal Trial”, the “Learned Deputy District Judge”). P gave evidence as one of the prosecution witnesses. D also chose to testify. A number of expert witnesses were also called. On 4 December 2020, D was acquitted of all charges he faced.

10.  On 30 September 2021, P took out an ex parte summons on notice (the “Ex Parte Summons”). It came before me as the Summons Judge on 8 October 2021. P renewed thereby her application for interim-interim relief pending the hearing of the Injunction Summons. Change of circumstances was relied upon, principally the lapsing of the letter of no consent which the police had previously issued in relation to the Subject Bitcoins. Having heard parties, I on 8 October 2021 granted the Interim-interim Injunction and stated the reasons in my decision of 8 October 2021 (the “8/10/21 Decision”)[2]. The 8/10/21 Decision may be referred to if necessary. I will also so far as possible and unless specified otherwise adopt the same terms and abbreviations as they are used in that Decision.

11.  Paragraph 4 of the Interim-interim Injunction orders D to disclose by affidavit the number of the Subject Bitcoins that remain in his possession, custody and control and their current whereabouts.

12.  On 28 October 2021, D’s 2^nd affidavit (dated 21 October 2021) was filed (“D/Aff2”). Certain disclosure was made.

13.  P was not happy with the extent of the disclosure. Correspondence between the parties ensued.

14.  On 22 November 2021, P filed the Variation Summons with the intention of seeking further disclosure from D. A draft amended order is attached thereto (“Draft Ver.1”).

15.  The Variation Summons was returnable before this Court on 17 December 2021.

16.  On 22 December 2021, D’s 3^rd affidavit (dated 9 December 2021) was filed (“D/Aff3”). Certain further disclosure was made.

17.  On 10 December 2021, apparently before sight of D/Aff3, Mr Li filed his written submissions in support of the Variation Summons. Attached to it is a version of the draft amended order (“Draft Ver.2”) which is different from Draft Ver.1. Comparing Draft Ver.1 with Draft Ver.2, one notes that:

(a) the part of Draft Ver.1 in relation to §1 of the Injunction (seeking an order compelling D to transfer the Subject Bitcoins to an independent third party) was no longer being pursued, and had been deleted from Draft Ver.2, and

(b) whilst the disclosure sought had been reined in, if remained extensive. Draft Ver.2 sought inter alia:

(i) “for those of the subject Bitcoins held by [D] using cold wallet(s) …a list of all persons who have possession custody or control of the cold wallet(s)”;

(ii) “for those of the subject Bitcoins held by [D] with hot wallet(s)”:

(1) “if the hot wallet … is an account at exchanges … a list of all persons who holds the password or otherwise have possession custody or control of such account…”

(2) “if the hot wallet … is a software from a software provider … a list of all persons who have possession custody or control of the machine or device and/or the software installed on such machine or device …”

(3) “if the hot wallet is some other means of software, system or device, the details of those software, system or device, and a list of all persons who have possession custody or control of such software, system or device.”

18.  Having had sight of D/Aff3, Mr Li filed his Supplemental Skeleton Submissions. At §8 thereof, Mr Li accepted that D had by then disclosed most of the key information which Mr Li said had been missing. He proposed that the Court needed not formally determine the Variation Summons. He submitted that P should however be entitled to costs.

19.  In the meantime, D filed the 1^st Fortification Summons for fortification of P’s undertaking as to damages which D may suffer as a result of the Interim-interim Injunction. It was returnable before this court also on 17 December 2021.

20.  The estimated time for the Variation Summons was said to be 30 minutes, and that of the 1^st Fortification Summons 15. As a result, those matters came before this Court on 17 December 2021 during a 9:30 slot. At the hearing, the Variation Summons was formally withdrawn. There was insufficient time to deal with the issue of costs, or the 1^st Fortification Summons. Both matters were adjourned to be heard together with the Injunction Summons.

21.  On 21 March 2022, D took out his 2^nd Fortification Summons, and seeks an order that in the event that the Interim-interim Injunction being continued or a new injunction being granted, the injunction shall be conditional upon payment in court by P a sum stated in §§15 to 18 of D’s 5^th affidavit of 16 March 2022 (“D/Aff5”).

22.  Hence, all the matters as set out in §1 above are now before this Court.

C. The main affirmations

23.  P has made 5 affirmations (“P/Aff1” to “P/Aff5”)[3]. She also relies on the 2 affirmations of Mr Ronald Pong (“Pong”, “Pong/Aff1” and “Pong/Aff2”)[4]. Pong is the Chief Executive Officer of Nexusguard Consulting Limited (“NCL”). NCL is a consulting firm in the area of information security and defence. Pong’s evidence is adduced as expert evidence primarily on the authenticity of certain messages between P and D on an instant messaging platform called Secret-Message (“SEC-M”).

24.  D has made 6 affirmations (“D/Aff1” to “D/Aff6”)[5]. He has himself in his affirmation referred to certain expert opinions given by other information technology experts, principally those of Mr Alan Jeffries (“Jeffries”)[6], Mr Ilia Frankstein[7], and Dr Chow Kam Pui[8] (“Dr Chow”).

D. Two preliminary matters

D1. Application to expunge part of the evidence

25.  Mr Man invites this court to expunge §§19, 20, 23 to 30 and 36 to 37 of P/Aff4 on the basis they are not matters in reply to D/Aff4, and are hence outwith the leave granted to P to file P/Aff4 (which is to respond to D/Aff4). Mr Man further submits that there is no reason for YYY-35, which is said to be “the full transcript of [D’s criminal] trial”, to be produced.

26.  On the first day of the hearing, Mr Man informed this court that he was content to have those matters placed before the court on a de bene esse basis, and that I would rule on their admissibility in the end.

27.  In my view:

(a) §§19, 20, 23 to 25, and 29 to 30 relate to the SEC-M messages, which are within the ambit of a reply, bearing in mind in particular Jeffries/Rep3 produced by D via D/Aff4 (as LWH-30);

(b) §§26 to 28 of P/Aff4 relates to TPC, which do not arise from D/Aff4;

(c) In §§36 and 37, P only seeks to correct one misquote she has made in P/Aff4 in relation to the issue as to whether any Trezor cold wallet has been plugged into P’s desktop on 5 March 2018. To avoid any unnecessary argument, I grant P leave to do so.

28.  YYY-35 is not the full transcript of D’s criminal trial. It is only the transcript of the oral evidence of PW4, D and Jeffries. I do not accept Mr Man’s submissions that YYY-35 serves no purpose. As explained by P[9], the reason why she produces the full transcript of the evidence of those witnesses is to avoid unnecessary argument over selective production of chosen pages of the same.

29.  I order only §§26 to 28 of P/Aff4 to be expunged.

D.2. Whether P should be confined to the draft order annexed to the Injunction Summons

30.  The draft order annexed to the Injunction Summons is not the same as that annexed to the Ex parte Summons. The former seeks a Mareva Injunction, whilst the latter seeks both a proprietary and a Mareva Injunction.

31.  The Interim-interim Injunction is proprietary in nature. I have explained that in the 8/10/21 Decision.

32.  In his written submissions, Mr Li urges this Court to grant an injunction in terms of the draft order annexed to Ex Parte Summons.

33.  Mr Man initially objected to this, on the basis that the Ex Parte Summons had already been disposed of by this Court on 8 October 2021, that no summons has been taken out for the continuation of the Interim-interim Injunction, and that the present hearing concerns the Injunction Summons, which seeks an order in terms of the draft order annexed thereto. Ultimately, in the light of certain prior communications between the parties discovered in the course of the hearing[10], the objection is no longer maintained.

E. The Injunction Summons

34.  I consider the Injunction Summons first.

35.  The applicable legal principles are not in dispute and have been repeated before me. The onus is on P to establish serious issues to be tried in relation to his application for a proprietary injunction, and good arguable case for a Mareva injunction. Given the nature of the allegations P makes against D, the Re H principles has been highlighted. I bear the above in mind.

36.  Mr Man submits that the Injunction Summons must be dismissed on the following main reasons:

(a) P fails to raise a good arguable case (for Mareva Injunction) or even a serious issue to be tried (for a proprietary injunction);

(b) P fails to show a real risk of unjustified dissipation;

(c) D will suffer very substantial losses should the injunction be wrongly decided, and that P has offered no meaningful cross-undertaking in damages;

(d) in light of the overwhelming merits of D’s case, in balancing the risk of injustice, the risk which involves the least risk of injustice in the circumstances would be to refuse the injunction.

37.  In the course of his oral submissions, Mr Man placed specific emphasis on the following matters. Mr Man urged this Court to look at the application in a macro matter. There are very serious disputes between the parties. The court would have to decide on a course which would cause the least injustice. P has not bothered to tell the court whether she is good for her undertaking for damages. There is also little risk of dissipation when gauged in the light of the history of the matter and P’s delay in prosecuting her application.

38.  Despite the manner in which Mr Man has skillfully made his oral submissions, I prefer to approach the application in the established and principled approach in accordance with America Cyanamid.

F. Whether a good arguable case / any serious issue to be tried

39.  There are multiples factual issues relevant to the merits of the parties’ respective underlying cases which are in dispute. They cannot be resolved on affirmations. They need not and ought not to be, bearing in mind the thresholds in relation to proprietary and Mareva injunction. I reiterate the warning Parker LJ gave in Derby & Co Ltd v Weldon [1990] 1 Ch 48 against any attempt to persuade a court to resolve disputed questions of fact whether relating to the merits of the underlying claim in respect of which a Mareva is sought or relating to the elements of the Mareva jurisdiction such as that of dissipation.

40.  Mr Man pointed out in the course of his oral submissions that Derby was an extreme case, which application took 26 days before the judge. Whilst this application is not such a case, the same principles and considerations in my view apply.

41.  There can be no dispute that the Subject Bitcoins originally belonged to P. There is further no dispute that they subsequently got transferred to D. The circumstances in which they were so transferred, and the reason therefor, are factual issues crucial to P’s claim and D’s defence.

42.  I consider first the circumstances in which the Subject Bitcoins were transferred to D.

43.  To appreciate those rather unusual circumstances which I am going to explain, the following features of Bitcoin, the digital keys, their storage in “wallets”, and how wallets are initialized are relevant[11]:

(a) Bitcoin involves no physical coin;

(b) Bitcoin technology is a distributed, peer-to-peer system. Bitcoin users communicate with each other using the Bitcoin Protocol;

(c) There is no central control or authority that issue Bitcoin. Nor is there any centralized ledger similar to traditional banking and payment systems. Bitcoin transactions are recorded in open distributed ledger using blockchain technology;

(d) Ownership of Bitcoin is established through digital keys, Bitcoin addresses, and digital signatures;

(e) A Bitcoin transaction is the operation that allows the payment of Bitcoin from one owner to another;

(f) Each Bitcoin transaction requires a valid signature to be included in the blockchain, which can only be generated with valid digital keys. Anyone with a copy of those digital keys has control of the Bitcoin in that account;

(g) In the payment portion of a Bitcoin transaction, the recipient’s public key is represented by its Bitcoin address, which is used in the same way as the beneficiary’s name on a cheques. The Bitcoin address is generated, and corresponds to a public key;

(h) Digital keys come in pairs of a private key and a public key. In traditional banking systems, public key is similar to a bank account number, and the private key is similar to a signature on a cheques;

(i) In slightly more technical terms, and as summarized by Dr Chow at §25 of his report of 4 March 2019[12]:

“… Bitcoin transaction relies on digital signature to confirm the ownership of Bitcoins that can be spent by the payer. Digital signature used in Bitcoin is based on elliptic curve public key cryptography, of which the public key is generated from a randomly generated private key, and the Bitcoin address (used as the recipient’s address) is generated from the public key. With the private key, the recipient is able to use Bitcoins that are received by the Bitcoin address that is generated by the corresponding public key.”

(j) Digital keys are stored in a “wallet”;

(k) A wallet may be “hot”, in the sense that it is connected to the internet, or “cold”, in the sense that it is not;

(l) One brand of hardware device in which cold wallet (or hardware wallet) may be created is Trezor;

(m) A cold wallet in a Trezor hardware (nor indeed any other hardware wallet) does not actually “store” Bitcoin. The purpose of such a wallet is merely to generate and store the private keys that are associated with the “wallet”. It also provides an interface for carrying out cryptocurrency transactions. One wallet can contain multiple accounts, and one account can contain multiple “addresses”;

(n) Trezor wallet can receive Bitcoin;

(o) Trezor wallet can send Bitcoin;

(p) A Trezor wallet needs to be initialized. A set of 24 words would be created as recovery seed. As explained and summarized by Dr Chow[13]:

“c. When initializing a new Trezor wallet [say TW-1], a set of 24 words will be created for recovery purpose. A new Trezor wallet [say TW-2] can recreate the Trezor wallet [TW-1] using the 24 words that were created for recovery purpose, and the Bitcoins that were [associated with the private keys] stored in the Trezor wallet [TW-1] will also exist in the Trezor wallet [TW-2].”

44.  What exactly happened is in dispute. P’s case in summary is that after D had assisted her in the sale of some of her Bitcoins, he had gained her trust. D then expressed concern about the security of P storing her Bitcoins in hot wallet. He urged her to store them in cold wallet, and offered to assist her in setting one up. On 5 March 2019 in the afternoon, they met for that purpose (the “5/3 Meeting”). P had purchased 3 what he claimed to be new Trezor wallets for her. He on the spot set one up for P (“Trezor X” containing “Wallet X”). P took it home. In that same evening, she used her desktop computer at home and transferred the Subject Bitcoins into Wallet X contained in Trezor X. She then locked it in a safe. On 13 June 2018 when she intended to sell some of the Subject Bitcoins and when she accessed Trezor X for that purpose, she discovered the Subject Bitcoins had gone.

45.  As things turned out, and there is and can be no dispute about it, what meant to be Trezor X containing Wallet X, and what P took away after 5/3 Meeting thinking that they were, were in fact not a new Trezor hardware set up during that meeting, but was a Trezor hardware (“Trezor A”) which D had set up himself at his home earlier that day, and contained Wallet A D himself created.

46.  As Trezor A was set up by D, he had the recovery seed. As explained by Dr Chow, with the recovery seed, and with a new Trezor device, D had the ability to re-create Wallet A, and could then have access to the private keys associated with the Subject Bitcoins which P subsequently in the evening of 5 March 2018 transferred to Wallet A (whilst believing it to be Wallet X, and without knowing that D had access to it).

47.  D accepts that P ended up having his Trezor A containing his Wallet A. There is no dispute that P had in fact transferred the private keys associated with the Subject Bitcoins into Wallet A, and that they got transferred out from Wallet A.

48.  D’s defence is that he took Trezor A along to the 5/3 Meeting for the purpose of receiving P’s Subject Bitcoins pursuant to the Swap Agreement. D says that P however refused to effect the transfer then. There was then an inadvertent mix-up during the 5/3 Meeting, which P ended up having Trezor A, and he ended up having possibly Trezor X, though he is not sure. He is not sure as he in the evening simply wiped clean that device, and re-created Wallet A with that device using the recovery seed.

49.  In the above regards Mr Man relies heavily on certain forensic evidence suggesting that during the 5/3 Meeting, 2 different Trezor devices had been plugged into the laptop computer which P brought along. He submits that that is consistent with and support D’s case.

50.  I have taken the relevant forensic evidence into account. Whilst it may be more consistent with D’s case, it hardly leads to the conclusion that P has shown no serious issue to be tried.

51.  I note another aspect of the forensic evidence:

52.  Whether P plugged Trezor X in her desktop on 5 March 2018:

(a) D claims that P’s evidence that she plugged Trezor X into her desktop on 5 March 2018 is contradicted by the forensic evidence. At §95(1) of D/Aff1[14], D refers to §140(xix) of the witness statement dated 4 March 2019 of PC8084 (“§140(xix)”). PC8084 was an expert called by the prosecution during the Criminal Trial. The summary at §140(xix) appears to be inconsistent with P’s case in this regard;

(b) However, what D has failed to point out is that in the course of the Criminal Trial, evidence was adduced showing that PC8084 had given a subsequent statement on the matter. He clarified that he had not examined other Windows artifacts of P’s desktop which might contain plug in/unplug time of Trezor devices, and that his findings at §140(xix) were concluded on that basis;

(c) In other words, and as explained by P at §158 of P/Aff3, no doubt with the assistance of Pong, the plug in/unplug records on which PC8084 stated his findings at §140(xix) were incomplete, as he had only looked at the traces found in “Windows Registry”, but not traces at other places;

(d) Citing only §140(xix) of PC8084’s statement of 4 March 2019 without citing also his clarification verges on being misleading;

(e) P has engaged Pong to look at that issue. Pong has prepared a report on the same. It has been produced as YYY-34[15]. His conclusion is that a Trezor device was indeed plugged into P’s desktop on 5 March 2018;

(f) In D/Aff4; D only reserves his right to respond to YYY-34, claiming insufficiency of time. I note however that YYY-34 was produced via P/Aff3 which was filed in September 2021;

(g) In the end, as confirmed by Mr Man in the course of the hearing, this aspect of the forensic evidence is not relied upon of the purpose of these applications.

53.  The reality of the matters is that D ended up having control of the wallet (Wallet A) into which P transferred the private keys associated with the Subject Bitcoins. He had the ability to access the Subject Bitcoins. The circumstances in which that state of affairs arose warrant serious and thorough consideration during the trial. Did D have knowledge of what he called a mix-up? If he did, why he did not inform P of that, knowing that P would transfer digital keys of very valuable Bitcoins into it? If he did not, which apparently is his case, the issue arises as to whether that is believable given the way Trezor A and Trezor X were respectively initialized.

54.  The reason for the transfer is also in hot dispute.

55.  As I have mentioned before, P’s case is that it was a theft. D’s case is that the Subject Bitcoins were swapped with TPC as a result of the Swap Agreement.

56.  In the course of the Criminal Trial, D produced the SEC-M records. I have considered them. There can be little doubt that those records (the messages and the related transcript), if genuine, go a very long way in proving the existence of the Swap Agreement.

57.  In the Criminal Trial, the Learned Deputy District Judge was not satisfied on the evidence before him that the prosecution was able to prove beyond reasonable doubt that the SEC-M records were fabricated[16]. That finding also bore adversely upon his view on P’s credibility as a witness[17].

58.  However, since D’s acquittal, P has obtained the transcript of the Criminal Trial. She has engaged Pong. In Pong/Aff1:

(a) he explains that he has conducted research on the on-line presence of SEC-M. He notes that SEC-M seemed to have been first seen on June 2018. There were only two captures of the SEC-M website by WAYBACK Machine, an internet archive. Apart from those, almost nothing more was known about SEC-M;

(b) as illustrated in his PowerPoint entitled “Creating back-dated SEC-M messages with someone else’s email accounts: a demonstration”[18], Pong concludes such forgery was possible and demonstrates how it could have been done.

59.  Pong’s report has not however comprehensively tackled all issues relevant to the alleged fabrication of the SEC-M records. He acknowledges that at §16 of Pong/Aff1. He explains that in the expert reports prepared on his behalf, reliance has been placed on a “blue tick” next to P’s alleged SEC-M account (the “good account”), which allegedly shows that the account had been verified by email.

60.  In Jeffries/Rep3, Jeffries highlights what he describes as 3 key features in the SEC-M records, namely the registration date of the good account, the blue tick and the modified dates of the backup files.

61.  Mr Man criticizes the demonstration given by Pong, in that he could not have missed those other features given in particular the reliance by the Learned Deputy District Judge upon them.

62.  But as Mr Li has pointed out in his oral reply, the Learned Deputy District Judge has indeed at §69 of the Reasons for Verdict raised as an important point the issue relating to the accuracy and genuineness of the SEC-M records. I do not find it entirely unreasonable for Pong to deal with that issue first.

63.  As things turned out, and as explained by Pong also in Pong/Aff1, when he came back to the SEC-M website and tried to do further tests, he found that the SEC-M system had become inoperative, and he was unable to even log on the same.

64.  Whilst those might be the reasons behind, the bottom line remains that there are aspects of the SEC-M records in support of D’s case which P/Pong have not been able at this stage to deal with.

65.  I have on the other hand considered the other evidence which Mr Li has highlighted to me. There is the existence WeChat messages found on the phone seized by the police which are consistent with P’s case but not D’s, which messages according to D’s case were only a smokescreen. There is also what D has stated in his affirmation filed in support of his bail application, wherein he complained that he was not able to have access to his Chat account on his phone or computer which the police had seized, when in fact the SEC-M messages were according to his defence subsequently run in a special purpose phone that had been lost in the Mainland, but had never been seized by the police.

66.  There are problems in relation to the forensic evidence which P faces. However, despite those problems, given the forensic evidence before me at this stage, I remain of the view that the authenticity of the SEC-M records, and according the existence of the Swap Agreement, remain serious issues to be tried, which need to be investigated during the trial.

67.  On all the evidence before me, for the above reasons, and without meaning to conduct any mini-trial on affirmation at this stage, I am of the view that P has established serious issues to be tried. However, given the problems highlighted above, I am not satisfied that good arguable case has been established.

G. Risk of unjustified dissipation

68.  I repeat §15 of the 8/10/21 Decision. As explained by Flaux J in Madoff Securities International Ltd & Anor v Raven & Ors [2012] 2 All ER (Comm) 634, at §§127 – 128, that:

“MSIL seeks a proprietary injunction against the Kohn defendants. It is essentially common ground that there are three elements which the claimant has to demonstrate for the grant of a proprietary injunction, following the approach prescribed by American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504, [1975] AC 396: (1) that the claimant has shown that there is a serious issue to be tried on the merits; (2) that the balance of convenience is in favour of granting an injunction and (3) that it is just and convenient to grant the injunction.

In other words, both the basis for a proprietary injunction and the circumstances in which it will be granted are different from the case of a freezing injunction: see Polly Peck International plcv Nadir (No2) [1992] 4 All ER 769 at 787 per Lord Donaldson of Lymington MR. In particular, unlike in the case of a freezing injunction, it is not necessary to show any risk of dissipation of assets and, even if there has been delay in making an application which might lead to refusal of a freezing injunction, a proprietary injunction may nonetheless be granted: see Cherney v Neuman [2009] EWHC 1743 (Ch) at [101]–[102] per Judge Waksman QC sitting as a Judge of the High Court.”

69.  Given my findings above, P’s application for a Mareva injunction will fail. On the other hand, when it comes to her application for a proprietary injunction, it is not necessary to show any risk of dissipation.

70.  I note however the following facts, which can be relevant when I come to take a macro view of the matter which Mr Man urges me to take.

71.  Between the transfer of the Subject Bitcoins and D’s arrest, there was a time gap of some 6 months.

72.  When D was arrested, around 600 of the 1000 Subject Bitcoins were still with him.

73.  Upon D’s acquittal in December 2020, and between the time when the police returned to D those around 600 of the 1,000 Subject Bitcoins and the date of the Interim-interim Injunction, there was another gap of about 10 months. As revealed by D’s disclosure pursuant to the Interim-interim Injunction, he still has about 400 of the Subject Bitcoins with him.

74.  Whilst D has indeed since March 2018 alienated around 600 of the 1,000 Subject Bitcoins, this is not a case in which D has rushed off dissipating all the Subject Bitcoins and rendering them beyond P’s reach.

H. Balance of convenience, fair and convenience, and fortification

75.  Whilst it should be acknowledged that balance of convenience, fair and convenience, and fortification are conceptually distinct matters, very often the relevant considerations overlap. For example, when balancing the convenience, one needs to consider whether the defendant would if need be adequately compensated under the plaintiff’s undertaking as to damages, which question of adequacy in turn is related to the question of fortification.

76.  On the facts of the case, and given the issues which parties have raised, I am of the view that balance of convenience, fair and convenience, and fortification may best be considered together in the round.

77.  400 of the 1,000 Subject Bitcoins which D still have can be traced back to P. They are part of the very subject matters of P’s claim.

78.  I have found that P has established serious issues to be tried.

79.  I see in the circumstances good reasons for those 400 of the Subject Bitcoins be preserved.

80.  The granting of interlocutory injunction, the requirement to give cross-undertaking for damages, and whether the plaintiff is good for the undertaking are all interlinked. As Ribeiro J (as the Permanent Judge then was) sitting in the Court of Appeal explained in Wah Nam Holdings Co Ltd v Excel Noble Development Ltd [2000] 3 HKC 118 at 126B, intrinsic to the nature of an application for interim restrain is the grant of such relief without the merits having been canvassed. As a safeguard for the defendant which enables the court to do that, the plaintiff will, save in extremely rare cases, be required to provide a cross-undertaking as to damages. That requirement is a necessary part of the mechanism for granting injunctions.

81.  Not all cross-undertakings as to damages are required as a rule to be fortified. Fortification is not the necessary starting point. Mr Man accepts that. As has been usefully summarized by Anthony To J in Sun Yan v Superb Jade Ltd (HCA 813/2014, 23 October 2015) at [11], and recently applied by Deputy Judge Douglas Lam SC in Banco De Chile v Yong Ming Tai Technology Trade Co Ltd [2019] 1 HKLRD 1290 at §15, that:

“The legal principles applicable to fortification are well settled. The court has a general power to order fortification where it appears just and proper to protect the defendant by making such an order (Chow Chor Leung v Rafaella Sportswear Inc [1990] 1 HKLR 449 at p.453H). Usually, merit of the parties’ case is not a necessary consideration. However, if the plaintiff has a strong case, it may not appear just and proper to make the protection available to the defendant. The burden of showing the need for fortification and the appropriate quantum falls on the defendant seeking fortification (Hui Chi Ming v Koon Wing Yee [2011] 1 HKLRD 260, at [45]). He must show the likelihood of a significant loss arising as a result of the injunction, and demonstrate why he believes the plaintiff will be unable to make good that loss (Chatwani v Bhimji (No 2) [1992] BCLC 387, at 404). The court will approach these issues by taking a broad view of the evidence, usually without the need of a detailed enquiry. Whilst there is no obligation on the plaintiff to give full and frank disclosure of his own financial means, circumstances might arise where the absence of financial disclosure by a plaintiff might entitle adverse inference as to his ability to meet his cross-undertaking in damages to be drawn (Hui Chi Ming at [45]).”

82.  Whilst fortification is not the necessary starting point, and whilst noting Wah Nam is a case on material non-disclosure of the plaintiff’s financial position in the context of the adequacy of its undertaking as to damages, I am of the view that the approach suggested by Ribeiro J Wah Nam at page 129C-D is equally valid when deciding whether it is just and proper to order fortification. The approach is whether a plaintiff’s financial position is such that, viewed fairly, may be said to raise realistic doubts as to the plaintiff’s ability to honour the cross-undertaking.

83.  In that same context, the absence of financial disclosure by a plaintiff might also entitle adverse inference as to his ability to meet his cross-undertaking to be drawn – see Banco De Chile above.

84.  I have observed and found that whilst P has established serious issues to be tried, no good arguable case has been established. This is hence not a case in which the merits of P’s case are such that it is not just and proper to make the protection of a meaningful undertaking available to D.

85.  P has described herself as a housewife[19].

86.  D has in his affirmations on at least two occasions raised the challenge that P had not adduced any evidence to show that she had the financial means to satisfy the undertaking[20].

87.  Despite such express challenges, P has still chosen not to. In P/Aff5 filed specifically in opposition of the 2^nd Fortification Summons, P says that it is not just and fair for fortification to be ordered as a pre-condition to allowing the Injunction Summons in light of her strong case against D of fraudulent misappropriation. I have expressed my view on her case. She further criticizes D’s application by saying that there is “[no] intelligent estimate of [D’s] loss”. There remains no evidence on her financial worth or means to satisfy her undertaking.

88.  In his oral reply:

(a) Mr Li submitted first that resisting D’s application for fortification does not mean that P is “not good [for] the money”. He also relies on Zimmer Sweden Ab v Kpn Hong Kong Ltd and Another, (unreported, HCA2264/2013, 2 May 2014) where Deputy Judge Kent Yee at §97[21] observed that the burden of showing the need for fortification and the appropriate quantum falls on the defendant seeking fortification, and that there is no obligation on a plaintiff to give full and frank disclosure of financial circumstances in opposition. However, P’s financial position should still be viewed fairly to see whether it may be said to raise realistic doubts as to her ability to honour the cross-undertaking. The stance D has taken means that there is no positive evidence on her worth which I can take into account in her favour for the purpose of the present exercise;

(b) Mr Li then submitted that P has given her residential address in her affirmations. He further submitted, expressly to be on instructions, that “land search shows solely self-owned; net value HK$18m”. I am not prepared to accept such matters from the bar table without affirmation, which P has had ample opportunities to make;

(c) Mr Li then referred to one the statements which P has given to the police which suggested that she at one stage had 1,500 Bitcoins. He further referred to an Excel table prepared by Dr Chow[22] showing apparently that P had at one stage 1,250 Bitcoins. Even assuming in her favour that she did, the question remains whether she still has them. She has revealed nothing in this regard;

(d) Mr Li also referred to certain evidence by D[23] which Mr Li interpreted as meaning that P also invested in real estate. There are however no particulars at all in relation to any such investments, whether from P or D.

89.  On the evidence before me, there is no evidence showing that P is good for her undertaking. She has chosen not to adduce any evidence in that regard despite express challenges. The evidence, viewed fairly, at least raises realistic doubts as to P’s ability to honour the cross-undertaking.

90.  I repeat the matters I note and observe in §§70-74 above, which have to be noted in D’s favour.

91.  Mr Li then relies on Banco De Chile and submits in effect that irrespective of P’s financial position, D has failed to show the likelihood of a significant loss arising as a result of the injunction. In that regard, he also relied on of JSC v Pugachev [2016] 1 WLR 160 (CA), wherein Lewison LJ observed at §99 that:

“It is not difficult to imagine a case in which a defendant is able to give evidence that up to the grant of a freezing order he was in the habit of making deals or engaging in business ventures over a sustained period and that his established pattern of business enterprise would be stifled by the grant of an order freezing all his assets. In such a case the defendant may have real difficulty in predicting what particular business opportunities are likely to arise in the future. But it would be necessary in such a case to establish by evidence a continuing pattern of business activity …”

92.  In D/Aff5, D says that he would invest his assets in different products, sectors and geographical locations for diversification. He has given “some examples of [his] investments”, namely an overseas real property in Brisbane purchased in May 2018, investments in 2 unit trust funds in July 2021, certain pre-IPO investments in Great Health Investment Limited Partnership and We Doctor Holdings Limited (“We Doctor”), investment in Creator Universal Limited, Kingly Interior Design Limited, in the film industry, and an aborted contemplated investment in a cryptocurrency fund known as VQR. He has provided some particulars on some of those investments.

93.  Mr Li, relying on P’s evidence in P/Aff5, criticizes those investments, primarily on the absence of any particulars on their returns. He also queries the genuineness of D’s investments in We Doctor (as the related IPO application had lapsed) and VQR (as its founder had been convicted and sentenced for fraud). In reply, D in D/Aff6 says that the mere fact that We Doctor’s previous IPO application was unsuccessful does not detract from the nature of his pre-IPO investment, and that recent news suggest that We Doctor is looking for alternative listing options. In relation to VQR, D says that he was mistaken about the name of the fund involved, but that the point remains that he has always been looking for investment opportunities.

94.  Mr Li also criticizes those investments for their timing, on the basis that they all took place after the alleged misappropriation of the Subject Bitcoins. No authority has however been placed before me which shows the relevance of the criticism. If D’s defence turns out to be accepted by the court, he would have a case for seeking damages arising from his inability to invest the Subject Bitcoins as a result of any interim injunction.

95.  Mr Man has referred this Court to §§52 and 53 of Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2015] 1 WLR 2309 where Tomlinson LJ observed that:

“52. … I agree with Hamblen J’s resort to symmetry—since the claimant has obtained a freezing order preserving assets over which it may be able to enforce on the basis of having shown the court that it has a good arguable case, it is only appropriate that if the defendant can show that it too has a good arguable case that it will suffer loss in consequence of the making of the order, it should equally be protected. It may be said that what the defendant in such circumstances obtains is security whereas the claimant obtains something less, but in many cases, of which the present is probably one, a freezing order has the practical if not theoretical effect of giving security to the claimant for its claim.

53. It is completely contrary to principle to require proof on the balance of probabilities on such an application and so to do would encourage wasteful satellite litigation. In my judgment Briggs J was correct in Jirehouse Capital v Beller [2008] EWHC 725 (Ch) to summarise the principles as he did at para 25:

‘Broadly speaking, they require an intelligent estimate to be made of the likely amount of any loss which may be suffered by the applicant for fortification (here the defendants) by reason of the making of an interim order. They require the court to ascertain whether there is a sufficient level of risk of loss to require fortification. They require that the loss has been or is likely to be caused by the granting of the injunction.’ ”

96.  On the evidence before me, I am satisfied that D has shown a likelihood of a significant loss arising as a result of the Injunction, to the threshold of “a good arguable case”.

97.  To the above I add this. I am discussing this question of fortification in the context of a proprietary injunction covering the number of the Subject Bitcoins which D still retains. I note the discussion on symmetry. On the facts of this case, given my view on the evidence, I am not concerned with the interesting issue as to whether D only needs to surmount the threshold of “serious issue to be tried”.

98.  On the evidence before this court, having balanced the convenience, and having looked at the macro picture of overall justice, I am of the view that this is an appropriate case to order some fortification of P’s undertaking for damages.

99.  That leaves the issue of the amount.

100.  A number of factors (both on facts and law) have been urged upon me:

(a) I accept the approach explained by Tomlinson LJ at §53 of Energy Venture. It involves an intelligent estimate to be made, or as explained in Sun Yan and Banco De Chile, the adoption of a broad view of the evidence[24];

(b) The amount of fortification may reflect the amount of the yield of or costs for borrowing the amount restrained;

(c) As a matter of facts, Mr Li points out that D has alienated some 600 of the Subject Bitcoins. The total amount of the investments D has set out in D/Aff5 is only about HK$30 million. If this Court is only to grant a proprietary injunction in respect of those of the Subject Bitcoins which D still has, he would still have a lot of other assets (in terms of the proceeds of those 600 of the Subject Bitcoins) to spend.

101.  Another difficulty this court faces is the values of Bitcoins, which fluctuate significantly.

102.  I note §18 of D/Aff5. He is there dealing with the scenario of this Court granting an injunction covering those of the Subject Bitcoins which D still has (which according to D/Aff2 and D/Aff3 are 364.46378963 Bitcoins). He values them at around USD14.5 million. Taking 5% per annum as the current best lending rate, and assuming 2 years between the injunction and trial, he seeks fortification in the amount of USD1.45 million.

103.  That amount of USD1.45 million is calculated on the basis of D borrowing the full USD14.5 million for 2 years. However, the investment pattern D has demonstrated does not show any pattern of him investing all the assets he has had. As submitted by Mr Li, according to the evidence, the value of the Subject Bitcoins on 5 March 2018 was around USD11.6 million. The total value of the investments D has disclosed in D/Aff5 is in the region of HK$30 million. That represents strictly in terms of arithmetic calculation about one third of the total value of the Subject Bitcoins. That however is not entirely accurate given the time period over which those investments were made and the fluctuation of Bitcoins in the meantime.

104.  Given the difficulties this Court faces as outline above, noting that any proprietary injunction of the 364.46378963 Bitcoins will keep D from their use, Mr Man’s submissions that D is a businessman in the blockchain industry[25] and that trading in Bitcoins (rather than sitting on it) is the thing he does, that he has previously realized about 64% of the Subject Bitcoins, but noting on the other hand the investment pattern he has shown, and making the best I can an intelligent estimate, I direct that P shall pay fortification to cover the costs for D borrowing 50% of the value of the 364.46378963 Bitcoins for two years, which I round off at HK$5,500,000.

I. Disposition of the Injunction Summons and the Fortification Summonses

105.  For the reasons set out above:

(a) I grant a proprietary injunction retraining dealing of and in the 364.46378963 of the Subject Bitcoins which D retains;

(b) The grant of the proprietary injunction is conditional upon P paying into court within 21 days from the date hereof HK$5,500,000 as fortification of her undertaking as to damages;

(c) The Interim-interim Injunction is to be extended up to 21 days from the day hereof, or the payment-in by P in accordance with (b) above;

(d) Should P make the payment-in in accordance with (b) above, the Interim-interim Injunction will be discharged, and be replaced by the proprietary injunction pursuant to (a) above;

(e) Should P fail to make the payment-in in accordance with (b) above, the Interim-interim Injunction will be discharged, and the Injunction Summons dismissed.

106.  For the sake of completeness and to avoid doubt, I add two matters:

(a) I order no further disclosure of the 364.46378963 of the Subject Bitcoins because, as Mr Li has accepted, that has been dealt with by D/Aff2 and D/Aff3;

(b) I come back to the second of the 2 preliminary objections which Mr Man has made (Section D.2 above). Whilst Mr Man is no longer maintaining his original objection, he maintains his complaint in another form. He submits that had P indicated earlier that she is seeking continuation of the Interim-interim Injunction, D could have resisted that application on the basis of material non-disclosure (see Wah Nam). I have considered that complaint. I am now allowing the Injunction Summons to the extent as I have indicated. In my view, the complaint based upon D’s possible application for discharge of the Interim-interim Injunction has little role to play, and in any event does not affect my view on the overall fairness of the matter.

J. The costs of the Variation Summons

107.  With the view to the costs of the Variation Summons being dealt with on the papers, parties have (between 3 and 12 May 2022) filed further written submissions.

108.  I have summarized above the events leading to the withdrawal of the Variation Summons, and in particular, the difference between Draft Ver.1 and Draft Ver.2. I have also highlighted the scope of the disclosure which P had been seeking.

109.  The starting point is that P did not get any of the discovery she sought. This is thus not even those cases in which an applicant withdraws an application because he has or has substantially, for example from the materials filed by the respondent in opposition, got what he set out to obtain, so that there is no longer any need to keep the application going.

110.  P’s main complaint is that in D/Aff2, the disclosure he made was ambiguous. In particular, P complained that when disclosing the whereabouts of those Subject Bitcoins that remained with him (except 3.4920), he disclosed only three codes which he described as “public key”. Upon receipt of those codes, P engaged an expert called Dr Chow to investigate into the matters. I refer to the affirmation of Edwin Yun of 22 November 2021 filed on behalf of P in support of the Variation Summons. It is said therein that the “public keys” do not of themselves allow for the monitoring of the disposal of the Subject Bitcoins. It is also said therein that to P’s surprise, Dr Chow discovered that the Bitcoins balances associated with 2 of the disclosed “public keys” were zero. It is then said that D has been disposing of some of the Subject Bitcoins.

111.  As later revealed, those “public keys” which D disclosed in D/Aff2 are actually “extended public keys”.

112.  There is no clear expert evidence before me as to what the differences are between “public keys” and “extended public keys”. I gather from the submissions that an “extended public key” corresponds to multiple Bitcoins addresses. What appears has happened is that when Dr Chow investigated the “public keys” disclosed by D in D/Aff2, he did not investigate all the addresses that correspond to them, and hence the inaccurate results he obtained. Those of the Subject Bitcoins which D retains are still there.

113.  However, irrespective of whether it might be said to be misleading to use the term “public key” as opposed of “extended public key” in D/Aff2, Ho & Ip on D’s behalf in the course of correspondence by letter of 4 November 2021 (the “4/11 Letter”) informed P through her legal advisers that:

“As stated in paragraphs 5(1)-(3) of [D/Aff2], the subject Bitcoins are stored in three wallets as identified by the three stipulated extended public keys …

Your client’s suspicion and your experts’ confirmation that it is not possible to know the whereabouts of the subject Bitcoins with the extended public keys are indisputably wrong. A third party can easily find out the number and addresses of the Bitcoins stored in a particular wallet (by reference to an extended public key) via an online search, such as https://www.blockonomics.co/.”

114.  As has been pointed by Ms Ho in her written submissions of 10 May 2022, the Variation Summons was only issued on 22 November 2021, well after the 4/11 Letter.

115.  D/Aff3 has added little beyond D/Aff2 and the 4/11 Letter combined.

116.  As I have summarized above, it has been accepted that D has disclosed most of the key information which P once claimed had been missing.

117.  On the facts of this case, I am not satisfied that P has discharged the burden of demonstrating that she had meritorious grounds to take out the Variation Summons in the first place – see Cheng Siu Fai v Swenson Global Opportunities Funds SPC[2021] HKCA 1005 at §30 (Kwan VP).

118.  I order that P should bear the costs of the Variation Summons.

119.  I add that this case is a useful illustration that in future applications of similar natures, when it comes to the scope of discovery in aid concerning the whereabouts of digital assets, cryptocurrency in particular, it may be necessary to specify with more technical accuracy the information that has to be disclosed. Whilst discovery is not a game of words, it is only fair that the discovery duty, backed up by pain of sanction, should be clear and unambiguous. Such clear delineation will also avoid disputes, save costs, resources, and court time.

K. Overall costs

120.  On the question of costs, I make the following orders.

121.  In relation to the Injunction Summons, a costs order nisi, that:

(a) should P be able to meet the Fortification as ordered so that the proprietary injunction is granted, the costs of the Injunction Summons shall be P’s costs in the cause of the action; and

(b) should P be unable to meet the Fortification as ordered so that the Injunction Summons is dismissed, D shall have the costs of the Injunction Summons.

122.  In relation to the Fortification Summonses, a costs order nisi, that:

(a) should P be able to meet the Fortification as ordered, the costs of the Fortification Summonses shall be D’s costs in the cause of the action; and

(b) should P be unable to meet the Fortification as ordered, D shall have the costs of the Fortification Summonses.

123.  In relation to the Variation Summons, a costs order (notnisi) that P shall bear the costs of the same.

124.  For all three sets of costs, there be certificate for 2 counsel.

125.  Given the prospect that certain of the costs are to be costs in the cause (albeit of specific parties), and that even the costs of the Variation Summons would require apportionment, I am not at this stage minded to order summary assessment.

126.  Subject to any application for variation in the meantime, the costs orders nisi are to become absolute within 14 days. Any application for variation may be made to this court by letter directly, upon receipt of which this court will hand down further directions. Agreed proposed directions are encouraged.

Mr Laurence Li SC, leading Mr Foster Yim and Mr Jasper Wong, instructed by Edwin Yun & Co, for the Plaintiff

Mr Bernard Man SC, leading Ms Vivian Henrietta Ho and Mr Jonathan Ng, instructed by Ho & Ip, for the Defendant

HCA 2295/2019

[2021] HKCFI 3160

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2295 OF 2019

______________

______________

____________________

DECISION

____________________

1.  This is the application by the plaintiff (“P”) for interim‑interim relief against the defendant (“D”), pending the hearing of P’s summons of 24 December 2019 (the “2019 Summons”).  The application is made ex parte on notice.  The application was taken out on 30 September 2021.  It was served on D on 4 October 2021.  The matter now comes before me as the Summons Judge.

2.  The dispute between the parties relates to 999.9900261 Bitcoins (the “Subject Bitcoins”).  P says that D has misappropriated them.  D’s case is that P transferred them to him in exchange for D’s The Public Coin (“TPC”) under a swap agreement reached between them in March 2018.  TPC is said to be another and a newer type of cryptocurrency.

3.  The interim‑interim relief sought is a proprietary/Mareva injunction to restrain D from dealing with the Subject Bitcoins and assets up to the value of HK$328,363,760, said to be the value of the Subject Bitcoins.

4.  Parties have previously come before the Court.  By the 2019 Summons, P is seeking in effect the same relief.  The 2019 Summons was before Lisa Wong J on 10 January 2020.  It was adjourned for substantive arguments, due to take place on 25 April 2022 with 2 days reserved.  When before Her Ladyship on that occasion, P made an application for interim‑interim relief.  It was refused.

5.  P now renews her application for interim‑interim relief.  She says that there have been changes of circumstances, as follows.

6.  As a result of the dispute between the parties, P contacted the Police in August 2018.

7.  D was arrested in September 2018.

8.  On 1 August 2019, the Police informed P that letters of no consent had been issued to a number of banks and companies, practically freezing the Subject Bitcoins and D’s assets.

9.  D was subsequently prosecuted for a number of offences (fraud and money laundering) which were said to have arisen out of the same set of facts that grounds the present proceedings.  The trial took place before Deputy District Judge Wong.  P was the 1^st prosecution witness.  After trial, D was acquitted.  The Court ruled that it could not on a beyond reasonable doubt basis accept P’s evidence.  The acquittal took place on 4 December 2020.

10.  One aspect of the evidence which the learned Deputy Judge took into account comprised certain messages between P and D on an instant messaging platform called Secret‑Message (“Sec‑M”).  They were adduced by D.  Those messages, if genuine, support D’s case based on the existence of the swap agreement between them.  The prosecution case was that they were forged.  The learned Deputy Judge ruled that on the evidence, the prosecution could not prove their forgery beyond reasonable doubt.  The learned Deputy Judge further accepted the defence submissions suggesting the contrary, including P’s acceptance that the email address of her Sec‑M account belonged to her, and the timing of the creation of that account.

11.  Subsequent to D’s acquittal, P started to put together expert evidence which she says shows that the Sec‑M communications could have been forged.  The evidence she has adduced takes the form of a PowerPoint presentation by NCL. The dates of demonstration were 23 and 25 June 2021.  She also seeks to rely on another report by NCL dated 17 May 2021.  One aspect of P’s evidence given during D’s criminal trial was commented by the learned Deputy Judge as being impossible.  She says, relying on this further report of NCL, that what she said is actually possible. 

12.  P submits that there have been material changes of circumstances in favour of revisiting her application for interim‑interim relief.  Prior to D’s acquittal, the Subject Bitcoins and D’s assets had practically been frozen by the number of no consent letters issued by the Police.  Those letters have since lapsed, following D’s acquittal.  There was also indication through what D’s lawyer said during a hearing on 3 February 2021 that D intended to use the Subject Bitcoins to fund his legal fees.

13.  As observed and explained by the Court of Appeal in China Shanshui Cement Group Limited v Zhang Caikui[2018] HKCA 409 at [13] per Lam VP, the grant of interim‑interim relief is meant to be an urgent temporary stop‑gap measure and the circumstances were such that the court has to do practical justice on the balance of fairness even though it may not have sufficient time to consider the matter fully.

14.  Mr Chang objects to the grant of any interim‑interim relief.  He relies on delay on P’s part in bringing the present application.  He submits that P on 3 February 2021 by the latest knew that the Police had returned the Subject Bitcoins to D.  One of the NCL reports is dated 17 May 2021. The PowerPoint was demonstrated in June 2021.  P could not demonstrate any “extreme urgency”.  Further, there is no risk of dissipation.  Had D intended to dissipate, he would have plenty of time to do so before his arrest, and after the lapsing of the no consent letters.

15.  With respect, none of those objections takes into account the proprietary nature of P’s claim.  As explained by Flaux J in Madoff Securities International Ltd & Anor v Raven & Ors [2012] 2 All ER (Comm) 634, at §§127‑128, that:

“ 127. MSIL seeks a proprietary injunction against the Kohn defendants.It is essentially common ground that there are three elements which the claimant has to demonstrate for the grant of a proprietary injunction, following the approach prescribed by American Cyanamid Co v Ethicon Ltd [1975] 1 All ER 504, [1975] AC 396: (1) that the claimant has shown that there is a serious issue to be tried on the merits; (2) that the balance of convenience is in favour of granting an injunction and (3) that it is just and convenient to grant the injunction.

128. In other words, both the basis for a proprietary injunction and the circumstances in which it will be granted are different from the case of a freezing injunction: see Polly Peck International plc v Nadir (No 2) [1992] 4 All ER 769 at 787 per Lord Donaldson of Lymington MR.  In particular, unlike in the case of a freezing injunction, it is not necessary to show any risk of dissipation of assets and, even if there has been delay in making an application which might lead to refusal of a freezing injunction, a proprietary injunction may nonetheless be granted: see Cherney v Neuman[2009] EWHC 1743 (Ch) at [101]–[102] per Judge Waksman QC sitting as a Judge of the High Court.”

16.  Mr Chang submits that P has not established any extreme urgency for interim‑interim relief.  I remind myself that the test remains one of balance of fairness, as explained and propounded by the Court of Appeal.

17.  On the evidence before me, P has established serious issue to be tried. Whilst it is not necessary to show risk of dissipation, the lapsing of the no consent letters substantially increase any risk of dissipation, so that the matter warrants revisiting.  D has indeed expressed an intention on his part in using them to fund his legal expenses at the least.

18.  In any event, as observed by the Court of Appeal in Convoy Collateral Ltd v Cho Kwai Chee & Others [2020] 6 HKC 81, delay per se would not necessarily bar relief, and the ultimate question is still whether the plaintiff could show a real risk of dissipation despite delay.

19.  On the issue of delay, Mr Chang submits further that P was aware of the Sec‑M messages when the Police interviewed her further in respect of the Sec‑M messages.  The technical sides of the matter are complicated.  It is in my view unrealistic to expect P to compile the expert evidence as she now has before D’s acquittal, and before she had obtained the transcript of the criminal proceedings.   

20.  The value of the Subject Bitcoins is high.  D has indicated difficulty in footing his legal expenses for senior counsel without the Subject Bitcoins. The clear inference is that without the Subject Bitcoins, he would not be able to satisfy any judgment which P may obtain against him.  The duration of any interim‑interim relief is not going to be long.  It is a stop‑gap measure between now and the hearing and disposition of the 2019 Summons.  Balance of convenience in my view is in favour of the grant.

21.  This is clearly not the opportunity to go into the details of the expert evidence.  But upon my views as explained above, and applying the test of balance of fairness, I conclude that this is an appropriate case for interim‑interim relief to be granted.

22.  However, even though interim‑interim relief may be appropriate, it is still necessary to consider whether it is on the balance of fairness appropriate to grant both the proprietary injunction restraining dealing of the Subject Bitcoins and the Mareva injunction, or just the former.  In my view, the balance of fairness lies in the grant of the proprietary part of the injunction only, so that the subject matter of the dispute is preserved.  I will therefore grant the application to that extent.  I refuse otherwise any interim‑interim relief for a Mareva injunction.

23.  In terms of the scope of the proprietary injunction and the disclosure obligations thereunder, I accept Mr Chang’s submission that this is a stop‑gap measure.  I accept also his submissions that disclosure at this stage as part of the stop‑gap measure of historical transactions may give rise to difficulties so as to potentially render the exercise oppressive.  This is particularly so given the history of the matter, the time that has lapsed since D first got the Subject Bitcoins, and the time since the lapsing of the no consent letters.  I will therefore confine the scope of the order and the disclosure obligations to those Subject Bitcoins that remain in the possession custody and control of D.

24.  It goes without saying that any observation I made above are provisional in nature.

25.  I will hear parties further on the precise terms of the order and costs.