LIQUIDITY TECHNOLOGIES LTD AND ANOTHER v. MARK DAVID LAMB AND OTHERS

HCA 1646/2023

[2026] HKCFI 1758

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1646 OF 2023

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DECISION

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Introduction

1.  I have before me the following:

(1)     An application by the 1^st and 2^nd Plaintiffs (collectively, “Ps”) for partial summary judgment against the 1^st Defendant (“Lamb”), 3^rd Defendant (“D3”) and/or 4^th Defendant (“D4”) by Amended Summons dated 8 December 2025 (“SJ Summons”); and

(2)     An application by Lamb for security for costs against Ps by Inter Parte Summons dated 9 July 2025 (“Security for Costs Summons”).

2.  The following evidence was filed in respect of the SJ Summons pursuant to previous court order/directions:

(1)     6^th Affidavit of Kirill Gourov (“Gourov”) dated 10 June 2025 (“Gourov 6^th”);

(2)     Affirmation of Ewelina Anna Mielecka (“Mielecka”) dated 5 July 2025;

(3)     Affirmation of Lamb dated 5 July 2025;

(4)     7^th Affidavit of Gourov dated 6 August 2025 (“Gourov 7^th”);

(5)     5^th Affirmation of Douglas Stephen Clark dated 3 September 2025 (“Clark 5^th”);

(6)     Affirmation of Lamb dated 26 November 2025 (“Lamb Nov 2025”); and

(7)     10^th Affidavit of Gourov dated 22 December 2025 (“Gourov 10^th”).

3.  An Affirmation of Lamb dated 11 December 2025 (“Lamb Dec 2025”) and a Supplemental Affirmation of Lamb dated 5^th January 2026 (“Lamb Supplemental”) were filed without leave of the court but was agreed by Ps to be considered by me on a de bene esse basis.

4.  The following evidence was filed in respect of the Security for Costs Summons:

(1)     Affidavit of Lamb dated 11 July 2025 (“Lamb July 2025”); and

(2)     8^th Affidavit of Gourov (“Gourov 8^th”) dated 15 August 2025.

5.  Mr Lamb, a director of D3 and D4, appeared in person, not legally represented, but not having been granted leave to represent D3 and D4, was treated as representing himself only whereas D3 and D4 were treated as absent.

6.  Mr Clark, solicitor advocate, appeared on behalf of Ps.

Background Facts

7.  The 1^st Plaintiff (“P1”) is a company incorporated under the laws of the Republic of Seychelles (“Seychelles”). 

8.  The 2^nd Plaintiff (“P2”) is the wholly owned subsidiary of P1 and is a company incorporated in Hong Kong. 

9.  P1 operated a cryptocurrency exchange (“CoinFLEX”) which was co-founded by Lamb and Mr Arumugam (“Arumugam”).   CoinFLEX issued a cryptocurrency named FLEX token which can be purchased or exchanged for cash according to its market exchange rate.

10.  P2 was established to employ CoinFLEX’s Hong Kong team and operational staff running CoinFLEX.

11.  Lamb was the CEO of CoinFLEX until his removal on 8 October 2023 and a director of P1 and P2 until his removal on 22 October 2023 and 7 November 2023 respectively.

12.  Roger Ver, the 2^nd Defendant (“D2”), a well-known cryptocurrency investor, entered into a manual margin agreement dated 14 May 2021 with P1 (“the Margin Agreement”). 

13.  D3 and D4 are companies incorporated in Seychelles for which Lamb had been their sole director since their inception in 2023.  D4 is the wholly owned subsidiary of D3.

14.  On 9 July 2022, Arumugam and Lamb issued a statement on behalf of CoinFLEX stating that a large individual customer had a written manual margin arrangement with CoinFLEX but had dishonoured his obligations leaving a significant deficit of US$84M.  The statement further stated that they were looking for ways to re-finance CoinFLEX.

15.  On 28 July 2022, P1 (through its then sole director, Lamb) applied to the Supreme Court of Seychelles (“Seychelles Court”) for the approval of a Scheme of Arrangement pursuant to section 208 of the International Business Companies Act (“IBC Act”). An interim order was made by the Seychelles Court on 17 August 2022.   

16.  The Scheme of Arrangement was approved by the Seychelles Court on 6 March 2023.  The terms of the Scheme of Arrangement approved provided inter alia:

(1)     The creditors of P1 shall comprise: (a) the customers of CoinFLEX who deposited their assets on the CoinFLEX platform; (2) the lenders to P1; (3) the trade creditors of P1; and (4) other counterparties owed money or contractual obligations by P1 (“the Creditors”);

(2)     All existing equity interest in P1 shall be deemed cancelled and extinguished.  Liquidity Technologies Holdings Limited (“LTL Holdco”), a Seychelles company, shall be the sole equity owner of P1;

(3)     The shareholders of LTL Holdco shall comprise: (a) the Creditors owning 65% of its issued shares; (b) the holders of Series B Preferred (as defined therein) collectively owning 20% of its issued shares; and (c) the remaining 15% of its issued shares shall be set aside for the purposes of stock grants, performance awards and other equity linked incentives to eligible employees;

(4)     P1 shall distribute all customer assets comprising P1’s cash assets and assets held in customer accounts on the CoinFLEX Exchange to the Creditors on a pro rata, pari passu basis save for US$10M as distribution holdback (“the Holdback Sum”).  The Holdback Sum was to be allocated to the legal fees of pursuing any legal claims of P1 including the arbitration proceedings against D2 and to the operating expenses of CoinFLEX;

(5)     Four additional individuals shall be appointed to the board of directors of both LTL Holdco and P1.  Each of these individuals shall be designated by the following groups: (a) Platform depositors; (b) SmartBCH holders or SmartBCH Alliance Limited (a BVI company); (c) Series B Preferred holders; and (d) an independent director nominated by platform depositors and reasonably acceptable to Series B Preferred holders;

(6)     P1 shall retain ownership of all FLEX token currently held on P1’s balance sheet;

(7)     P1’s Memorandum & Articles of Association shall be amended and restated to reflect the conditions and terms of the Scheme of Arrangement; and

(8)     Through the Recovery Value Trust and other instruments and entities specified therein, the Creditors shall be entitled to the pro rata share of the net proceeds of all P1’s claims and causes of action against a defaulting manual margin agreement counterparty (i.e. P1’s claim against D2) together with all related claims and rights which have been or to be enforced.

17.  To implement the Scheme of Arrangement, LTL Holdco and P1 have procured inter alia:

(1)     All 100,000 issues shares of P1 were transferred to LTL Holdco;

(2)     The Certificate of Arrangement was registered on 5 July 2023;

(3)     On 28 July 2023, P1 filed the amended Memorandum & Articles of Association of P1 (“Amended M&A”) to the Registrar of International Business Companies in Seychelles; and

(4)     On 22 August 2023, Gourov, Charles Ashley Richard Melvin, Samuel Hapak and Huang Yao (“the 4 Additional Directors”) were appointed directors of P1.

18.  On 12 August 2023, P1’s arbitration in Hong Kong International Arbitration Centre against D2 for approximately US$84M based on the Margin Agreement (“the Arbitration”) was settled based on a settlement agreement purportedly entered into between P1 (through Lamb) and D2 (“the Settlement Agreement”).  Ps claim that the Settlement Agreement was entered into in breach of duty owed by Lamb to P1 by: (a) entering into the Settlement Agreement without authorisation; (b) giving instructions to counsel to terminate the Arbitration; and (c) putting himself in a position of conflict of interest where the terms of the Settlement Agreement is solely to the benefit of himself and D2, and to the detriment of P1. 

19.  Ps have commenced separate proceedings against D2 to set aside the Settlement Agreement in HCCT 87/2023 but in the event the Settlement Agreement is not set aside, P1 claims against Lamb the sum of US$84M and interests, or in the event it is set aside, all costs incurred in the setting aside.

20.  Ps further allege that Lamb, D3 and D4 have since early 2023 operated an online cryptocurrency exchange named OPNX Exchange (“OPNX”) which issues a cryptocurrency named OX Token.  OPNX(HK) Limited (“OPNX(HK)”), is a Hong Kong incorporated company wholly owned by D3.  It is alleged that Lamb established D3 and D4 or OPNX(HK) as a competing business, to transfer or licence the assets of Ps to D3, D4 or any other OPNX entity.  It is also alleged that Lamb represented to customers of Ps and the public at large that CoinFLEX will be re-branded or “transitioned” to OPNX and passed off OPNX as that of CoinFLEX or as a business in some way connected with CoinFLEX. 

21.  In the Amended Statement of Claim (“ASOC”), Ps claim that there were various misappropriations of Ps’ assets by Lamb:

(1)     A Technology License Agreement entered into on behalf of P1 and D3 on 31 March 2023 (“License Agreement”) which allowed D3 to use all CoinFLEX’s technologies for no consideration is null and void, and therefore Lamb, D3 and D4 have infringed the software and other intellectual property licensed under that agreement for which they are liable to pay damages, give an account of profits and should be subject to injunctive relief;

(2)     Lamb, as one of the administrators of CoinFlex’s account with Fireblocks (an online infrastructure used to move and store digital assets), signed on behalf of P1, and D4 an Assignment, Assumption and Consent Agreement on 25 and 26 September 2023 (“Fireblocks Assignment Agreement”) that assigned to D4 all of P1’s rights, title and interest in the License Agreement between Fireblocks and P1 dated 16 April 2020, for no consideration and which was unauthorized by P1, which resulted in Ps not having access to the Fireblocks account of CoinFLEX;

(3)     There were various alleged wrongful use or misappropriation of assets and human resources of Ps for the operation of OPNX totaling US$10,631,392.90 (“Unauthorized Payments”) for which Lamb, D3 and/or D4 is liable to repay;

(4)     There were also various misappropriations of FLEX tokens from P1 by Lamb to himself, D3 and/or D4 or their affiliates for which Lamb, D3 and/or D4 is liable to compensate, account to P1 and/or make restitution;

(5)     Lamb has divulged confidential information, records and/or trade secrets to third parties including but not limited to D3 and D4 for the benefit of OPNX; and

(6)     Lamb as registered owner of the domain name (coinflex.com) had failed to disclose information necessary to login into and act as administrator and for other infrastructure platforms as well which resulted in Ps not being able to resume business as well.

22.  In the ASOC, Ps have claimed inter alia the following relief:

(1)     Damages against Lamb, D3 and D4 for unlawful means conspiracy;

(2)     Declaration that the License Agreement is null and void and restitution of any benefits received by D3;

(3)     Declaration that various amounts of FLEX tokens of P1 misappropriated by Lamb are held on trust for P1 or damages to compensate or account for their value and any profits made therefrom;

(4)     Damages for improperly settling the Arbitration against D2 and improperly giving instructions to terminate the Arbitration, to be assessed;

(5)     Various injunctive relief against Lamb;

(6)     Order that Lamb do deliver up to Ps’ solicitors any and all confidential information which are in his possession, custody or control and to remove, delete, destroy all such information;

(7)     Declaration that all of Ps’ assets transferred to Lamb, D3 and D4 and/or their traceable proceeds are held on trust for Ps;

(8)     Orders that Lamb do deliver up to Ps’ solicitors specified information necessary for access and login to the specified accounts and to transfer ownership of the specified accounts to P1;

(9)     A declaration that the Fireblocks Assignment Agreement is null and void;

(10)     Repayment of or an account of the profits for the Unauthorized Payments;

(11)     Equitable compensation;

(12)     Order that each of the Defendants do provide a full and proper account of the profits they each made and payment of all sums found due to Ps upon such taking of account;

(13)     Interest;

(14)     Costs; and

(15)     Further and/or other relief.

23.  According to Gourov 6^th, partial summary judgment is sought on Ps’ claims regarding Lamb’s conduct after he was removed as a director of Ps and those which Ps verily believe Lamb and/or D3 and/or D4 have no defence.  These were as summarised in Ps’ Skeleton Argument dated 29 December 2025 (“Ps’ Skeleton”) as follows:

While a sole director:

(1)     Entering into drop hands the Settlement Agreement with D2 abandoning P[1]’s claim for US$84M, the principal reason for the Seychelles Court ordering the Scheme of Arrangement;

(2)     Causing P1 to transfer 17,277,778 FLEX tokens to a Singapore cryptocurrency platform named Hodlnaut in return for 20,000,000 USDT;

(3)     Signing on behalf of P1 and D3 the License Agreement;

When no longer a sole director:

(4)     Entering into Fireblocks Assignment Agreement on behalf of P1 and D4 to assign P1’s Fireblocks account (which held its digital assets) to D4 when no consideration was given and Mr Lamb had no authority to enter into the agreement;

Post removal as a director:

(5)     Mr Lamb’s failure to give access to all the books and records of CoinFLEX (in particular, electronic records) to Ps’ new board of directors;

(6)     Mr Lamb’s unauthorized transfer of the companies’ assets (6,106,188.14 FLEX tokens) in November 2023 after he has ceased to be a director, in violation of an injunction prohibiting such transfer; and

(7)     Mr Lamb continued to claim that he remained the CEO of CoinFLEX notwithstanding his removal as a director of Ps.

24.  By the SJ Summons, Ps seek:

(1)     A declaration that the License Agreement is null and void etc;

(2)     An order that D3 do account to P for any benefits received under the License Agreement;

(3)     Lamb, D3 and D4 be restrained from: (a) acting in breach of confidence or otherwise disclosing, using, divulging, copying, extracting, releasing, publishing to any third party any confidential information and/or records and/or trade secrets of Ps (“the Confidential Information”) in their possession, custody or control; (b) disposing, removing, deleting etc the Confidential Information otherwise than by delivery up or transfer to Ps; (c) making copies of the information other than by delivery up or transfer to Ps; (d) acting or holding out as being authorised to act in the name of Ps and/or CoinFLEX; (e) operating the website(s), customer account(s), trading platform(s), email account(s), telegram group(s) and/or other channels, accounts or platforms operated by and/or under the name of Ps and/or CoinFLEX; and (f) disposing of or dealing with or diminishing the value of any of the assets, intellectual properties, and other technologies of Ps and/or CoinFLEX; 

(4)     An order that Lamb do deliver up all Confidential Information and remove, delete, destroy etc, electronic copies of the Confidential Information in his possession, custody or power and file and serve an affirmation setting out his compliance of such orders;

(5)     An order that Lamb do deliver up all information for access to various accounts and transfer ownership of those accounts to P1 and file an affidavit setting out steps to comply with such orders;

(6)     Declaration that the Fireblocks Assignment Agreement is null and void;

(7)     Lamb, D3 and D4 be restrained from: (a) soliciting or canvassing employees, clients, business and/or business opportunities from Ps; (b) directly or indirectly passing off or attempting to pass off any business of Ds as that of Ps or as business in any way connected with Ps; (c) infringing P’s copyright in any software purportedly licensed under the Licence Agreement; and (d) making use of Ps’ confidential information transferred under the Licence Agreement;

(8)     Lamb do pay damages of 20M USDT or account for profits from the transfer of the 17,277,778 FLEX tokens to Hodlnaut;

(9)     Lamb do pay damage to be assessed for the unauthorized transfer/misappropriation of 6M FLEX tokens from P1 on 20 November 2023;

(10)     Assessment of damages for Ds’ acts of passing off, breach of confidence and copyright infringement; and

(11)     Lamb do pay damages to P1 to be assessed for improperly settling the Arbitration and giving instruction to terminate the Arbitration.

Applicable Principles

25.  The applicable principles for summary judgment are well-established.  In Guanghua SS Holdings Limited v Lim Yew Cheng & Another[2022] HKCFI 1052 at §13, Ng J set out a helpful and succinct summary of the proper approach to such application as follows:

(1)     The Order 14 machinery works on the basis that if the plaintiff’s application is properly constituted, it is prima facie entitled to judgment unless the defendant shows cause to the contrary;

(2)     The mere assertion in an affidavit of a given situation by the defendant responding to an application for summary judgment does not, ipso facto, ground leave to defend;

(3)     The burden is on the defendant to show a real or bona fide defence or some other reason for a trial.  The defendant must satisfy the Court that his evidence is capable of being believed and that on the basis of such evidence, there is a fair or reasonable probability of the defendant having a real or bona fide defence;

(4)     In deciding whether there is a fair or reasonable probability of the defendant having a real or bona fide defence, the Court does not isolate each factual issue and consider whether it is possible that the defendant’s story on that issue is credible.  Rather, the Court must look at the whole situation;

(5)     In assessing the credibility of the defendant’s factual case, while the Court will not embark upon a mini-trial on affidavit evidence, the Court is not obliged to suspend its critical faculties and assume that the defendant’s evidence is accurate;

(6)     If having regard to inherent plausibility, inconsistency with contemporaneous documents and other compelling evidence, the defence is not credible, the Court must say so; and

(7)     If the defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that the defendant has a real or bona fide defence.

26.  Furthermore, the summary judgment procedure is entirely inappropriate where the plaintiff’s entitlement to recover any sum is subject to any serious dispute, whether of law or fact: see Hong Kong Civil Procedure 2026, Vol.1, §14/4/9.

27.  As for the legal principles governing application for security for costs under s.905 of the Companies Ordinance, Cap 622 (“CO”), these were helpfully set out in Sunni International Ltd v Kao Wai Ho Francis [2021] 1 HKLRD 841 at §§20-24 by Ng J:

(1)     The court’s jurisdiction under s.905 of CO is engaged once it has been established that the plaintiff company will be unable to meet an adverse costs order.  The court has a discretion under s.905, just as under O.23, r.1 of the Rules of the High Court, Cap 4A, whether to order security for costs having regard to all the circumstances of the case;

(2)     Security for costs may be ordered if there is credible testimony that there is reason to believe that the plaintiff company will be unable to pay the defendant’s costs if the defendant succeeds in the defence.  The fact that a plaintiff is in liquidation is prima facie evidence that it is unable to pay such costs, unless evidence to the contrary is given;

(3)     While the Court may have regard to all the circumstances of the case, including merits, it is not the function of the Court to make a “preliminary run” at deciding the ultimate success or failure of the claim.  The Court should not delve into the respective merits of the parties’ case unless it can clearly be demonstrated one way or other that there is a high probability of success or failure.  The threshold of demonstrating the probability of success is very high; and

(4)     Other circumstances which might be taken into account in deciding whether or not to grant security for costs include, inter alia, whether the application is being used oppressively e.g. so as to stifle a genuine claim, whether the plaintiff’s want of means has been brought about by the defendant’s conduct and delay in making the application.

Discussion re: SJ Summons

Entering into drop hands the Settlement Agreement with D2

28.  In Clark 5^th, the judgment of Mr Justice Vidot of the Seychelles Supreme Court delivered on 31 July 2025 (“Seychelles Judgment”) was exhibited.  Ps rely on the Seychelles Judgment to seek judgment for their claim against Lamb for improperly settling the Arbitration:

“[28] The Defendant [i.e. Lamb] represented the Plaintiff [i.e. P1] as a Director thereof. As I have pronounced above, it is absolutely clear to this Court that the Defendant was absolutely aware of the reconstruction application made in pursuance to Section 208 of the IBC Act. He was equally aware of the Order of the 6^th March 2023 approving the scheme of reconstruction. The Plaintiff had received a Certificate of Arrangement from the FSA. Hence the Defendant, as Director needed to implement certain changes to the directorship. It is averred and not traversed that at the material time, the Plaintiff was involved in an arbitration in Hong-kong, claiming about US$84M from Mr Roger Ver. This was in response to breaches of agreement by Mr Roger Ver as regards to his trading on Coinflex. Without consultation nor knowledge of other Directors and/or shareholders the Defendant proceeded to enter into and sign a settlement with Mr Roger Ver which was to his benefit and that of Roger Ver. That irrespective that the Plaintiff through the Defendant’s directions filed with the Registrar of Companies an amended and restated M&A on 28^th July 2023.

[29] Directors of a company have a fiduciary duty towards the company. That duty should reflect a relationship of trust and loyalty between the directors, the company, its members and shareholders. Directors should exercise such fiduciary duty in conformity with the Articles of Association of the Company. The directors should act in the interest of the company. It should not be for the directors’ personal interest. It is expected that a director would act in good faith. Sections 50 to 55 inclusive of the Companies Act list the duties and powers of directors of a company. More importantly and pertinent to this case is Part 111 of the IBC Act which provides for duties of directors. Therefore, this Court has to consider whether or not the Defendant was acting in good faith when he decided to enter into a Settlement Agreement which provided for relinquishing all claims against Roger Ver at the Hong-kong arbitration for a claim of approximately US84M for breaches of agreement in relation to trading on Coinflex.

[30] The Plaintiff’s witnesses all testified that the purpose of reconstruction of the plaintiff company, thus the application before the Court for a scheme of arrangement in terms of section 208 of the IBC Act was to pursue the arbitration against Roger Ver. In fact the Defendant proceeded in breach his fiduciary duty, signed the Agreement that provided no benefit to the company and same time benefitted the Defendant to a waiver of liability against the liability Roger Ver has or may have against the Defendant. It is a necessary requirement for a director should not personally benefit from any interest he may have in a proposed transaction or arrangement. A director is duty bound not to accept benefits from third parties that compromises his relationship with the company.

[31] It is uncontroverted that Mark Lamb was made aware of the amended M&A (Exhibit P7A and P7B) of Liquidity dated 18^th July 2023. The Articles provide for the composition of the Board of Directors. Therefore, the Defendant acted in contravention of the Articles by taking the sole decision to settling the claim against Mr Roger Ver acting as sole director. In fact, section 144 of the IBC Act which deals with duties of a director provides as follows;

‘ Subject to this section and section 145, a director, in exercising his powers and performing his duties, shall-

(a) act in accordance with the company’s memorandum and articles;

(b) act honestly and in good faith and in what the director believes to be in the best interests of the company; and

(c) exercise the care, diligence and skill that a reasonably prudent person would exercise in the same circumstances.’

In entering into the agreement with Roger Ver, the Defendant was not acting in conformity with the company’s M&A and neither was he acting in good faith. The Board of Director had not resolved to settle the arbitration proceedings in Hong-kong and as a result the Plaintiff has been seriously prejudiced by such action. It is starkly evident that the Defendant breached the fiduciary duty towards the Plaintiff.

…

[35] Relying on the uncontroverted testimonies of the Plaintiff’s witnesses and having given due consideration of the various exhibits, I conclude that there is sufficient evidence that supports allegation of breach of section 144(b) by the Defendant in that:

i. he failed to inform the creditors or Creditor Directors of the settlement agreement;

ii. his Counsel, Mr Yeo opposing the approach of Mr Behlmann representing Lowenstein Sadler LLP who claimed to represent the Creditors Directors which shows direct intent to deceive the creditors;

iii. he provided no benefit nor consideration to the company or creditors of the company in the settlement agreement;

iv. he agreed to a personal waiver of liability in the settlement which is of personal interest rather than the interest of the company.”

29.  In Lamb Nov 2025, a summary of Lamb’s position regarding Ps’ claim that he improperly settled the Arbitration was set out as follows:

(1)     I deny that the Settlement Agreement dated 12 August 2023 was entered into improperly or in bad faith;

(2)     The Settlement Agreement was entered into because P1 had exhausted its legal budget, could not fund the continuation of the Arbitration, and the creditors failed to provide promised funding despite being given 5 days’ notice;

(3)     I notified the creditor representatives of the funding crisis on 7 August 2023 and repeatedly requested confirmation of funding, which was never provided;

(4)     The creditors’ own lawyer stated in writing that the creditors were “ready, willing and able” to fund, but then they went silent and provided nothing;

(5)     Settlement was the only commercially rational option in the circumstances – the alternative was the collapse of the Arbitration with zero recovery;

(6)     I received no personal benefit from the Settlement Agreement;

(7)     I was myself a creditor of P1 and suffered loss from the outcome; and

(8)     The Seychelles Judgment relied upon by Ps was obtained entirely ex parte, without the email evidence now before this Court, and should be given limited weight.

30.  The email evidence referred is Exhibit “MDL-1” and is said to demonstrate that Lamb notified the creditors of the funding crisis on 7 August 2023, the creditors promised that they were ready, willing and able to fund but went silent and failed to provide any funding and settlement was therefore commercially necessary.

31.  Lamb Nov 2025 further stated that the Seychelles Judgment cannot satisfy the requirements for issue estoppel for the following reasons:

(1)     No fair opportunity to contest.  I was not present at the hearing.  I was not represented by counsel.  I had no opportunity to present evidence or cross-examine witnesses. An ex parte judgment, by definition, involves no contest.  Ps presented their case unopposed.

(2)     Not a judgment “on the merits” in the relevant sense.  A judgment obtained without any participation by the defendant is not a determination “on the merits” in the sense required for issue estoppel.  It is a determination based solely on the evidence on one party.

(3)     Incomplete evidentiary record.  The critical documentary evidence at MDL-1 was not before the Seychelles Court.  The Seychelles findings on authority and good faith were made without the contemporaneous emails showing that I notified the creditors, sought funding, and was met with silence.

(4)     Fundamental unfairness.  To hold that an ex parte foreign judgment binds a defendant who had no opportunity to participate would be fundamentally unjust and contrary to the basis principles of natural justice.

32.  In Lamb’s Skeleton Argument, he also submitted that there is a triable issue on his authority to enter into the Settlement Agreement when the Tribunal issued a Procedural Order No. 7 on 28 August 2023 (“Procedural Order”) recording that it was satisfied that the parties were duly represented by their respective counsel, had jointly requested the termination of the Arbitration and on the basis of the Settlement Agreement terminated the Arbitration.  See also Lamb Dec 2025.

33.  However, this last argument can be disposed of quickly.  It is plain from the Procedural Order, in terminating the Arbitration, the Tribunal expressly stated it did so without deciding the validity of the Settlement Agreement and authority of P1’s board or P1’s right under the Scheme of Arrangement.  See at §43 of the Procedural Order where it was stated that: “The Tribunal decides to terminate the present proceedings in the form of a procedural order and not in the form of an award, as requested by the Parties.  It does so because there are no terms of the settlement to record.”  See also at §44, where it was recorded that in reaching its decision the Tribunal notes as follows:

(a)     The Tribunal does not make any determination as to the validity of the Settlement Agreement.  Pursuant to Clause 7.2 of the Settlement Agreement, “[t]he High Court of the Hong Kong SAR shall have exclusive jurisdiction to settle any dispute(s) which may arise out of or in connection with this Settlement Agreement and the Parties irrevocably submit to the exclusive jurisdiction of the High Court of the Hong Kong SAR.”;

(b)     The Tribunal does not make any determination as to the composition or authority of the Respondent’s [i.e. P1’s] Board or the Respondent’s right under the scheme of arrangement approved by the Supreme Court of Seychelles on 6 March 2023;

(c)     The Tribunal is satisfied, based on the powers of attorney or letters of engagement presented in the present arbitration by the Claimant and Respondent, respectively, that the Parties, duly represented by their respective counsel on record, jointly requested the termination thereof; and

(d)     The Tribunal does not rule on the merits of any claims or counterclaims presented in the present arbitration as the Parties have agreed that the Arbitration is to be terminated.

34.  I then consider whether by reasons of the Seychelles Judgment, there is no triable issue whether Lamb had no authority to settle the Arbitration as the issue is res judicata.

35.  It was not disputed that the requirements for issue estoppel are: (a) that the earlier judgment relied on must have been a final judgment; (b) that there must be identity of parties; and (c) identity of subject matter.  See Carl Zeiss Stiftung v Rayner & Keeler Ltd and Others [1967] 1 AC 853 at 909G-910A.

36.  I am of the view that a triable issue is raised whether the Seychelles Judgment is a judgment which is final and conclusive where it plainly was an ex parte decision (see §6 of the Seychelles Judgment) and it appears that it may be liable to be set aside.  In Carl Zeiss Stiftung, it was held that a judgment would not be regarded as conclusive if the judgment is capable of being reopened by the foreign court.  See at 918F-919D:

“ It is clear that there can be no estoppel of this character unless the former judgment was a final judgment on the merits. But what does that mean in connection with issue estoppel? When we are dealing with cause of action estoppel it means that the merits of the cause of action must be finally disposed of so that the matter cannot be raised again in the foreign country. In this connection the case of Nouvion v Freeman is important. There had been in Spain a final judgment in a summary form of procedure. But that was not necessarily the end of the matter, because it was possible to reopen the whole question by commencing a different kind of action: so the summary judgment was not res judicata in Spain. I do not find it surprising that the House unanimously refused to give effect in England to that summary judgment.

When we come to issue estoppel I think that, by parity of reasoning, we should have to be satisfied that the issues in question cannot be relitigated in the foreign country.   In other words, it would have to be proved in this case that the courts of the German Federal Republic would not allow the re-opening in any new case between the same parties of the issues decided by the Supreme Court in 1960, which are now said to found an estoppel here.  There would seem to be no authority of any kind on this matter, but it seems to me to verge on absurdity that we should regard as conclusive something in a German judgment which the German courts themselves would not regard as conclusive.  It is quite true that estoppel is a matter for the lex fori but the lex fori ought to be developed in a manner consistent with good sense.”

37.  In Lamb Supplemental, he says that whilst he had not applied to set aside the Seychelles Judgment because he was not properly advised on the procedural steps available to him, he is aware that D2 has commenced proceedings to set aside the Seychelles Judgment on 16 September 2025, and on 11 November 2025, Judge N Burian ordered a copy of the “Plaint” of D2 seeking to oppose and set aside the Seychelles Judgment be served on Lamb on being satisfied that D2’s application complied with the relevant provisions of the law and it was a proper case for service out of jurisdiction and ordering Lamb to appear in court on 12 December 2025 in answer to the Plaint.

38.  Mr Clark relied on the case of Nintendo of America Inc v Bung Enterprises Ltd [2000] 2 HKC 629, where it was held that the fact that a judgment is a judgment by default is not a ground for saying that the judgment is not final and conclusive: see at 634A-B.  However, that case was one where the plaintiff brought an action to enforce a default judgment entered against the defendant in the United States.   It was in that context that Recorder Edward Chan SC at 633G-H held “it is well established that for the purpose of enforcement by an action in Hong Kong, a foreign judgment may be final and conclusive even though it is a default judgment liable to be set aside in the very court which rendered it.”   

39.  The circumstances of that case are also very different to the present case as the defendant had initially defended the claim and also brought a counterclaim against the plaintiff.  Furthermore, the defendant had also applied to set aside the default judgment and succeeded but on conditions which it later decided not to comply with.  It was therefore clear that the defendant had submitted to the jurisdiction of the court in bringing a counterclaim and using its procedure in applying to set aside the judgment (at 632E-F).  It is therefore readily understandable when the learned Recorder said at 634B that, “The defendant cannot improve its position by refusing to comply with the procedural requirement of the foreign court or refusing to defend an action properly brought against him in a foreign court.”  On the other hand, in the present case, whilst there can be no doubt that Lamb had notice of the Seychelles proceedings, Lamb puts Ps to proof that the Seychelles proceedings were properly served on him and that the Seychelles court had jurisdiction over him personally.  Although Mr Clark submitted that as a director of a companies incorporated in Seychelles, Lamb must have impliedly submitted to the jurisdiction of the Seychelles court, this raises a triable issue of law.

40.  Furthermore, the question of whether a default judgment may give rise to res judicata is not all together straightforward: see Spencer Bower and Handley: Res Judicata, 6^th Edn, §2.22 referring to the more recent view of Etherton MR in R (on the application of Gray) v Chief Constable of Nottinghamshire Police [2018] 1 WLR 1609 at §52 that statements to the effect in previous authorities that default judgment may give rise to estoppel should be treated with caution.  In all, difficult questions of law are raised which is not appropriate to be resolved in an application for summary judgment.

41.  However, even if there is a triable issue whether Ps can rely on the Seychelles Judgment and even if it cannot be relied upon, it remains a bare assertion by Lamb that the settling of the Arbitration was not improper but in good faith and in the interest of P1.

42.  The clear terms of the Settlement Agreement is for P1 to give up the US$84M claim against D2 for no apparent benefit to P1 whereas Lamb himself benefitted from D2’s waiver of liability of claims which D2 has or may have against him. 

43.  The fact that settlement of (as opposed to pursuing) the Arbitration was not in the interest of Ps is also evident from the fact that Lamb had applied and deposed to the Seychelles Court in July 2022 that the Scheme of Arrangement was in the best interest of the P1 or creditors or members (under s.208 of IBC Act).  According to his evidence, it was because of D2 that caused the company to commence with the restructuring and the Scheme of Arrangement would maximize the outcome for the creditors (see Judgment of Esparon J delivered on 6 March 2023 at §§37-38).

44.  The assertion that it was in the best interest of P1 to settle the Arbitration because there was no funding is also contradicted by the Scheme of Arrangement that provided for US$10M for legal fees for the Arbitration and operational expenses of CoinFLEX.  Whilst Lamb attempted to rely on Exhibit “MDL-1”, which records Lamb’s assertion that the lawyers said they need around $852k for the arbitration and “we have run out of legal budget”, Bryan Reyhani of Lowenstein Sandler LLP (lawyer for P1) replied on 8 August 2023, “This is the first we’re hearing about any monies owed to CC [Clifford Chance] in connection with the RV matter.  What happened to the corporate funds that were earmarked to cover the legal expenses associated with the RV matter?  Such monies should be readily on hand to pay CC for the services they are providing and you should pay it promptly.  Either way, subject to learning more information, the creditors – as sole beneficiaries of the RV arbitration pursuant to CF’s scheme of arrangement – are ready, willing and able to cover any monetary shortfall.”  There was a further email on 8 August 2023 where Bryan asked for records of CC’s invoices and payments to see how the corporate funds were spent for legal services and current financial statements (“as there should be ample funds to cover legal and expert fees”).

45.  Furthermore, the assertion that CC would be pulling out unless their fees would be paid is flatly contradicted by Gourov 10^th and an Affirmation of Thomas Richard Walsh, a partner of CC, dated 10 October 2023, where it was stated that CC resigned because they found Lamb had forged a Confidentiality, Non-Disclosure and Without Prejudice Communications Agreement dated 30 June 2023 (“NDA”) entered into with D2 which was given to CC to put before the Tribunal.  The fact that the NDA was forged is confirmed by D2’s 4^th Witness Statement in the Arbitration.

46.  In all, I do not find the matters raised by Lamb in defence to the entering into the Settlement Agreement credible such as to afford a real or bona fide defence.  At the very least, judgment should be given for this part of Ps’ claim.

Re: Hodlnaut transfer

47.  In Lamb’s Defence, §4.3 he has admitted that in around May 2023, he caused P1 to transfer 17,277,778 FLEX token to Hodlnaut but claims the proceeds (20M USDT) were used to fund OPNX operations and were used in the restructuring operations.  Essentially, Lamb’s case that there was a townhall meeting attended by over 90% of creditors as evident from CoinFLEX Q&A on 6 April 2023 (“Q&A”) and that there was a formal restructuring vote which the creditors voted to create a new business and supported the OPNX restructuring plan to rescue P1 which was in financial difficulties.  Lamb also relied on the WhatsApp messages between him and Gourov in January and February 2023 where there were discussion of the valuation of CoinFLEX, the equity split and board membership of the new company.   He also submitted that given the involvement of Gourov, who represented 68% of the creditors, he had the authority to go ahead with the restructuring and all along they had acquiesced to him so acting.  In the latest reply submissions, Lamb claims that the 20M USDT belonged to OPNX and he did not have to report to P1’s Board.   Lamb also relied on ratifications by the creditors and Gourov, even if he exceeded his authority.

48.  Lamb’s case is contradicted by the terms of the Scheme of Arrangement approved by the Seychelles Court in March 2023 that P1 shall retain ownership of all FLEX token currently held on P1’s balance sheet and that part of the Holdback Sum would be used to fund operations of CoinFLEX.  There is no mention at all of OPNX’s role in the Scheme of Arrangement or transfer of assets/funds to OPNX not withstanding the alleged discussion back in January/February 2023. 

49.  The Q&A and WhatsApp messages relied upon by Lamb which I have carefully read are unequivocal and do not support Lamb’s alleged restructuring.  Lamb has essentially invited me to read those messages in the way understood and explained by him.

50.  However, given that Mr Clark has indicated Ps do not seek summary judgment on the actions in relation to the establishment of OPNX and the “bridging” of P1’s business to OPNX (see Ps’ Skeleton, §§12-13), which must be an acceptance that in relation to that claim there are triable issues raised, and given that there will be a trial of those issues, it seems to me that there is a reason for this issue to also go to trial. 

Re: License Agreement

51.  Ps rely on the fact that no consideration is stated in the License Agreement and effectively gave away all P1’s rights in intellectual property and was a one-sided contract in favour of D3.   

52.  In Lamb’s Skeleton Arguments dated December 2025, it was submitted that there are WhatsApp messages to prove inter alia that CoinFLEX became a shareholder in OPNX as consideration.   On the other hand, Mr Clark submitted the Licence Agreement contains an entire contract clause.   Insofar as Lamb seeks to rely on some sort of a collateral agreement, this has to be believable.  Lamb’s reliance on the WhatsApp conversations do not clearly support Lamb’s case that the consideration was that CoinFLEX became a shareholder of OPNX. 

53.  Lamb’s case also seems to be contradicted and internally inconsistent when in Lamb’s Skeleton in Reply dated 8 January 2026, he asserted that CoinFLEX did not become a shareholder of OPNX because Gourov (representing 68% of the creditors) blocked it.  Whilst he submitted that multiple witnesses can testify to this, no affirmations have been filed by these witnesses.  Lamb’s defence remains a bare assertion unsupported by contemporaneous document or independent witnesses and is incredible.  However, again insofar as the defence raised relates to bridging of P1’s business to OPNX, this matter should be tried together with P’s other claims in this respect.

54.  Furthermore, Ps seek a declaration that the License Agreement be declared void and an injunction against Ds for infringement of copyright and disclosure of confidential information etc. which are discretionary remedies.  Given that in the present case Lamb has raised the doctrine of “unclean hands” of Mr Komaransky who he alleged has funded and control these proceedings which should be imputed to Ps and also raised acquiescence and estoppel, it seems to me that summary judgment is not appropriate where these issues are fact-sensitive and should be matters to be investigated at trial: see Top Base Development Limited & Ors v Lloyd Laurence Philip and Fong Yin Mei (unrep) CACV 286/2007, 23 July 2008, §28 and The Incorporated Owners of Hong Kong House v Senfield Limited (unrep) CACV 117/2003, 12 November 2003, §14.

Re: Fireblocks Assignment

55.  Ps’ case is that at the time when he was no longer a sole director he represented to Fireblocks that he was the sole director and did not have actual authority of P1’s Board of Directors to sign the Fireblocks Assignment.  There can be no real dispute that at the time of entering into the Fireblocks Assignment, the 4 Additional Directors were appointed to P1’s board.  However, Lamb’s case is that he was still one of the directors and had full authority to act on behalf of P1. Furthermore, he claims that the agreement served a legitimate purpose for handling client funds for customer who had migrated from CoinFLEX to OPNX as part of the restructuring.

56.  Again, whilst I am skeptical whether Lamb has a bona fide defence to this claim where it seems the matters stated are him are unsupported by any contemporaneous documents, but insofar as he relied on the alleged restructuring to OPNX and Gourov’s alleged involvement (which Gourov 7^th at §§12 and 19 said falls outside the scope of the present application and did not address the issue of authorisation by creditors in details) and this is admittedly an issue for trial, this issue should also be tried.

Re: Lamb’s acts after his removal as a director of P1

57.  In relation to Ps’ claim that Lamb had failed to provide access to books and records of P1, it remains a bare assertion that he did not have control or access which is inherently unlikely as he was the sole director until the 4 Additional Directors were appointed to the board.

58.  In respect of the domain name, in the Response to the World Intellectual Property Organisation filed on Lamb’s behalf dated 22 March 2024, it was mentioned that the domain name was acquired by Lamb prior to the launch of the CoinFLEX business in 2019 and he had purchased the domain in his own name on around 18 December 2018 from a third party.  Lamb’s case is also contradicted by a telegram chat between Lamb and Huaxing Lu on 28 February 2025 when Lu asked Lamb to give Gourov access to emails and the domain but Lamb replied, “Happy to give it in exchange for this being over.  Obviously I’m not giving it for free.”  Whilst Lamb tried to put his gloss over this in Lamb Supplemental explaining he was prepared to help obtain access for a fee, this is plainly not what was stated. 

59.  Whilst I have real reservations on Lamb’s assertion that he had no administrative control of the domain name and the various infrastructure systems but given he also said that these were OPNX accounts not CoinFLEX accounts because of the alleged restructuring, this is a matter which should be resolved at trial.

60.  In relation to the 6,106,188.14 FLEX tokens in November 2023 from P1, Lamb puts Ps to strict proof that the CoinFLEX Fireblocks corporate wallet from which the FLEX tokens were transferred were owned by P1 and that he actually or personally initiated, authorised or procured the transfer.  I agree that I should not be and am not in a position to resolve this on affidavit evidence.  Lamb also asserted that an OPNX user requested the transfer and it was an ordinary business of OPNX which the Amended Injunction Order dated 20 October 2023 expressly permitted him to carry on the ordinary business of OPNX.  Again this relates to the “bridging” of P1’s business to OPNX and is a matter for trial.

61.  Lastly, in relation to Lamb’s holding out as a CEO of P1, there is no real response by Lamb.  By his email of 3 September 2024 to Rouben Trivedi, Lamb still claimed to be the CEO of CoinFLEX.  No response has been made by Lamb in his affirmations save at the hearing he said this signature had been left over from when he was a director.  Clearly, after he has been removed he must not hold himself out as a director or CEO of P1.  However, as the injunction sought is an equitable relief and as mentioned Lamb has raised the doctrine of “unclean hands”, whether a permanent injunction should be granted should be left to be determined at trial.

Disposition re: SJ Summons

62.  Accordingly, judgment ought to be entered against Lamb for improperly settling and giving instructions to terminate the Arbitration with damages to be assessed.

63.  As I am only prepared to enter judgment for a part of Ps’ claim, and unconditional leave to defend is granted on all the other claims, I would order costs of the SJ Summons be in the cause.  See Hong Kong Civil Procedure 2026, Vol.1, §14/7/10.

Discussion and Disposition re: Security for Costs Summons

64.  This court has a discretionwhether to order security for costs and is to have regard to all the circumstances of the case.

65.  Even if it appears by credible testimony that there is reason to believe P1 will be unable to pay Lamb’s costs because in Gourov 10^th it was admitted that P1 has been served with bankruptcy proceedings in the US on 17 November 2025 and because of the Lamb’s refusal to provide access to relevant records it is very difficult for P1 “to mount a substantive defence”, for all the following reasons, I will not exercise my discretion to order security in the present case:

(1)     I have ordered judgment be entered against Lamb for a part of Ps’ claim and damages to be assessed;

(2)     Lamb is not legally represented and his costs incurred to date should not be substantial;

(3)     Any impecuniosity of P1 is arguably caused by Lamb’s conduct in settling the Arbitration;

(4)     No material is placed before the court to enable it to come to a view on the quantum to be ordered as security.  There is a claim to HK$15.1M for security on the bare assertion of the complexity and “international scope of this litigation”.  There is no skeleton bill to provide a breakdown of the exorbitant sum sought; and

(5)     Whilst it has been asserted in Lamb July 2025 that the amount includes “solicitor-and-client costs and disbursement” and defending the claim requires “expert evidence on cryptocurrency matters” etc., there is no evidence that Lamb has engaged lawyers and/or experts to assist him.  Notwithstanding the refusal for him to represent D3 and D4, as sole director, Lamb has not even instructed lawyers to represent them with the consequence that D3 and D4 are treated as absent. 

66.  I therefore will dismiss the Security for Costs Summons with costs to Ps, to be taxed, if not agreed.

HCA 1646/2023

[2025] HKCFI 5658

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1646 OF 2023

________________________

________________________

_______________

D E C I S I O N

_______________

Introduction

1.  I have before me an application by Summons dated 3 September 2025 (“the Amendment Summons”) for leave to be granted to the 1^st and 2^nd Plaintiff (collectively, “Ps”) to amend their Summons dated 12 June 2025 for summary judgment and/or judgment on admission (“the SJ Summons”) to include an additional relief, and for leave to the parties to file further evidence in relation to the additional relief. The Amendment Summons is supported by the 5^th Affirmation of Douglas Stephen Clark (“Clark 5^th”).

2.  Ps and the 1^st Defendant (“D1”)[1] have already filed evidence in respect of the SJ Summons: 6^th Affidavit of Kirill Gourov filed on 12 June 2025 in support; Affirmation of Ewelina Anna Mielecka and Affirmation of Mark David Lamb both filed on 9 July 2025 in opposition; and 7^th Affidavit of Kirill Gourov filed on 7 August 2025 in reply. The substantive hearing of the SJ Summons has been fixed for hearing before me on 9 December 2025.

3.  I considered it appropriate to accede to Ps’ request that the Amendment Summons be disposed of by way of paper disposal and directions were given on 11 September 2025 for the lodging and serving of written submissions by the parties (“the Directions”).

4.  On 15 September 2025, Skeleton Submissions were filed on behalf of Ps.

5.  On 15 September 2025 and 16 September 2025, an “Affidavit in Opposition to Amendment Application” of 9 pages and 5 pages respectively were faxed to my clerk by D1 (collectively, “D1’s Affs”). The two affidavits appear to be the same document save that some of the printed words in the first affidavit were not completely clear and the second affidavit was not completely faxed (stopping half way through the fifth page).

6.  On 25 September 2025, an “Affidavit – Enhanced Version 2.0 (Final)” was lodged by the D1 (“the Enhanced Aff”).

7.  On 26 September 2025, P’s Reply Submissions were lodged. It did not refer to the Enhanced Aff. Apparently, the Enhanced Aff was never served on Ps and only came to their attention when I wrote to the parties on 2 October 2025, in relation to D1’s application by letter to attend the hearings scheduled before me by video conference facility (“VCF”), and I took the opportunity to seek confirmation from Ps whether they wished to lodge any reply submissions to the Enhanced Aff which was received by this Court on 25 September 2025 (and if so, to file and lodge the same by 16 October 2025).

8.  Accordingly, Ps’ Reply Submissions dated 16 October 2025 was further lodged. It was stated inter alia therein that ultimately they only obtained the Enhanced Aff from the Court after receipt of the Court’s letter of 2 October 2025.

9.  A 5^th Affirmation of Hoi Kin Long (“Ho 5^th”) was also filed on behalf of Ps on 16 October 2025 in response to the allegation in the Enhanced Aff to the effect that D1 had not been served with the relevant court documents, was not represented by counsel and was not given the opportunity to defend the proceedings before the Seychelles Court.

10.  Notwithstanding that strictly speaking there were non‑compliance with the Directions in terms of the time limits and manner to lodge and serve parties’ submissions in respect of the Amendment Summons by both Ps and D1, insofar as it is necessary and for the avoidance of doubt, retrospective leave is granted for the lodging of the various submissions, affidavits and affirmations lodged/filed by the parties and they have all been considered by me for the purposes of disposal of the Amendment Summons.

Background Facts

11.  Bearing in mind that this is not the substantive hearing of the SJ Summons, a brief summary of the background facts suffices to dispose of the Amendment Summons.

12.  The 1^st Plaintiff (“P1”) is a company incorporated under the laws of the Republic of Seychelles (“Seychelles”).

13.  The 2^nd Plaintiff (“P2”) is the wholly owned subsidiary of P1 and is a company incorporated in Hong Kong.

14.  P1 operated a cryptocurrency exchange (“CoinFLEX”) which was co-founded by D1 and Mr Arumugam. CoinFLEX issued a cryptocurrency named FLEX token which can be purchased or exchanged for cash according to its market exchange rate.

15.  P2 was established to employ CoinFLEX’s Hong Kong team and operational staff running CoinFLEX.

16.  D1 was the CEO of CoinFlex until his removal on 8 October 2023 and a director of P1 and P2 until his removal on 22 October 2023 and 7 November 2023 respectively.

17.  D2, a well-known cryptocurrency investor, entered into a manual margin agreement dated 14 May 2021 with P1 (“the Margin Agreement”).

18.  D3 and D4 are companies incorporated in Seychelles for which D1 had been their sole director since their inception in 2023. D4 is the wholly owned subsidiary of D3.

19.  On 9 July 2022, Mr Arumugam and D1 issued a statement on behalf of CoinFLEX stating that a large individual customer had a written manual margin arrangement with CoinFLEX but had dishonoured his obligations leaving a significant deficit of US$84M. The statement further stated that they were looking for ways to re-finance CoinFLEX.

20.  On 28 July 2022, P1 applied to the Supreme Court of Seychelles (“Seychelles Court”) for the approval of a Scheme of Arrangement based on the deficit of US$84M caused by the default of D2. The application was granted and the Scheme of Arrangement was approved by the Seychelles Court on 6 March 2023.

21.  Ps allege that D1, D3 and D4 have since early 2023 operated an online cryptocurrency exchange named OPNX Exchange (“OPNX”) which issues a cryptocurrency named OX Token. OPNX(HK) Limited (“OPNX(HK)”), is a Hong Kong incorporated company wholly owned by D3. It is alleged that D1, without P’s authorization, established D3 and D4 or OPNX(HK) as a competing business, to transfer or licence the assets of Ps to D3, D4 or any other OPNX entity. It is also alleged that D1 represented to customers of Ps and the public at large that CoinFLEX will be re-branded or “transitioned” to OPNX and passed off OPNX as that of CoinFLEX or as a business in some way connected with CoinFLEX.

22.  In the Amended Statement of Claim (“ASOC”), Ps claim that there were various misappropriation of Ps’ assets by D1 and claimed inter alia that:

(a)  a Technology License Agreement entered into on behalf of P1 and D3 on 31 March 2023 (“License Agreement”) which allowed D3 to use all CoinFLEX’s technologies for no consideration is null and void, and therefore D1, D3 and D4 have infringed the software and other intellectual property licensed under the License Agreement for which they are liable to pay damages, give an account of profits and should be subject to injunctive relief;

(b)  D1, as one of the administrators of CoinFlex’s account with Fireblocks (an online infrastructure used to move and store digital assets), signed on behalf of P1, and D4 an Assignment, Assumption and Consent Agreement on 25 and 26 September 2023 (“Fireblocks Assignment Agreement”) that assigned to D4 all of P1’s rights, title and interest in the License Agreement between Fireblocks and P1 dated 16 April 2020, for no consideration and which was unauthorized by P1, which resulted in Ps not having access to the Fireblocks account of CoinFLEX;

(c)  There were various alleged wrongful use or misappropriation of assets and human resources of Ps for the operation of OPNX totalling US$10,631,392.90 (“Unauthorized Payments”) for which D1, D3 and/or D4 is liable to repay;

(d)  There were also various misappropriations of FLEX tokens from P1 by D1 to himself, D3 and/or D4 or their affiliates for which D1, D3 and/or D4 is liable to compensate, account to P1 and/or make restitution;

(e)  D1 has divulged confidential information, records and/or trade secrets to third parties including but not limited to D3 and D4 for the benefit of OPNX; and

(f)  D1 as registered owner of the domain name (coinflex.com) (“the Domain Name”) had failed to disclose information necessary to login into and act as administrator to the Domain Name and to access other infrastructure platforms subscribed to and/or utilised by CoinFLEX.

23.  During the first half of 2023, D1 froze customer’s assets on CoinFLEX, and clients and creditors were prevented from withdrawing their assets. The services of CoinFLEX Exchange have since late October 2023 been suspended.

24.  In July 2023, P1 commenced HKIAC arbitration proceedings against D2 for approximately US$84M based on the Margin Agreement (“the Arbitration”). The Arbitration was settled based on a settlement agreement purportedly entered into between P1 (through D1) and D2 on 12 August 2023 (“the Settlement Agreement”). However, Ps claim that the Settlement Agreement was entered into in breach of duty owed by D1 to P1 by: (a) entering into the Settlement Agreement without authorisation; (b) giving instructions to counsel to terminate the Arbitration; and (c) putting himself in a position of conflict of interest where the terms of the Settlement Agreement is solely to the benefit of himself and D2, and to the detriment of P1. Ps have commenced separate proceedings against D2 to set aside the Settlement Agreement in HCCT 87/2023 but in the event the Settlement Agreement is not set aside, P1 claims against D1 the sum of US$84M and interests, or in the event it is set aside, all costs incurred in the setting aside.

25.  Ps has further claimed inter alia the following relief:

(1)  Damages against D1, D3 and D4 for unlawful means conspiracy;

(2)  Declaration that the License Agreement is null and void and restitution of any benefits received by D3;

(3)  Declaration that various amounts of FLEX tokens of P1 misappropriated by D1 are held on trust for P1 or damages to compensate and/or account for their value and any profits made therefrom;

(4)  Damages for improperly settling the Arbitration against D2 , forging documents in the Arbitration and improperly giving instructions to terminate the Arbitration, to be assessed;

(5)  Various injunctive relief against D1;

(6)  Order that D1 do delivery up to Ps’ solicitors any and all confidential information which are in his possession, custody or control and to remove, delete, destroy all such information;

(7)  Declaration that all of Ps’ assets transferred to D1, D3 and D4 and/or their traceable proceeds are held on trust for Ps;

(8)  Orders that D1 do deliver up to Ps’ solicitors specified information necessary for access and login to the specified accounts and to transfer ownership of the specified accounts to P1;

(9)  A declaration that the Fireblocks Assignment Agreement is null and void;

(10)  Repayment of or an account for the Unauthorized Payments;

(11)  Equitable compensation;

(12)  Order that each of the Defendants do provide a full and proper account of the profits they each made and payment of all sums found due to P upon such taking of account;

(13)  Interest;

(14)  Costs; and

(15)  Further and/or other relief.

Applicable Principles

26.  O.20, r.8(1) of the Rules of the High Court, Cap.4A (“RHC”), provides:

“For the purpose of determining the real question in controversy in any proceedings, the Court may at any stage of the proceedings and either of its own motion or on the application of any party to the proceedings order a pleading or any other document in the proceedings to be amended on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.”

27.  As for the general principles for grant of leave to amend under O.20, r.8 of RHC see Hong Kong Civil Procedure 2025, Vol.1, §20/8/6, in particular:

“It is a guiding principle of cardinal importance on the question of amendment that, generally speaking, all such amendments ought to be made ‘for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings’…

In Tildesley v Harper (1878) 10 Ch D 393, 396, 397, Bramwell L.J. said: ‘My practice has always been to give leave to amend unless I have been satisfied that the party applying was acting mala fide, or that, by his blunder, he had done some injury to his opponent which could not be compensated for by costs or otherwise.’ ‘However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs.’ An amendment ought to be allowed if thereby ‘the real substantial question can be raised between the parties’, and multiplicity of legal proceedings avoided…

The court is entitled to have regard to the merits of the case in any application to amend if the merits are readily apparent although a prolonged investigation into the merits of the case is inappropriate.”

28.  See also the helpful summary of the applicable principles by Ng J in Hsu Ming Chi v Lam Shu Chit & Ors (Unrep) HCCL 8/2013, 22 October 2014, at §§13-18:

“13. It is a guiding principle of cardinal importance on the question of amendment that generally speaking, all such amendments ought to be made ‘for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings’: Re Playmates Investments Ltd [1996] 4 HKC 577 at 582E-H (per Le Pichon J as she then was); Natamon Protpakorn v Citibank NA [2009] 1 HKLRD 455 at para. 25 (per Cheung JA); Hong Kong Civil Procedure 2014 Vol. 1 para. 20/8/6.

14. Leave is readily granted to amend before trial unless it can be shown that the new claim based on the proposed amendment is bound to fail. While the court is entitled to have regard to the merits of the case, it should only do so when the merits are readily apparent, and are so apparent as not to require prolonged investigation: Natamon Protpakorn v Citibank NA supra at para. 25 (per Cheung JA).

15. If the proposed amendments are bound to fail, no leave to amend should be granted. In this regard, the court will take the applicant’s proposed pleaded case to the highest: Bank of China v Leigh Hardwick unrep., HCA 1110 of 2006, 28 August 2013, per Anthony Chan J at para. 2.

16. Absent any real prejudice, an application for amendment, albeit late, must be decided upon the general principle that a court of law seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims or defences before the court for adjudication: VSC Building Products Co Ltd v Kono Insurance Ltd., unrep. HCA 947/2005, 9 September 2009, per A Cheung J (as he then was) at [22].

17. Where prejudice is claimed, the burden is on the party opposing the amendment to show prejudice. There is no injustice to the opposing party if he can be compensated by appropriate orders as to costs: Re Playmates Investments Ltd supra at 582H, 584C (Le Pichon J as she then was).

18. Lastly, in giving effect to the underlying objectives of the Rules of the High Court, including those concerning amendments, the court shall always recognize that the primary aim in exercising the powers of the court is to ‘secure the just resolution of disputes in accordance with the substantive rights of the parties’: RHC O 1A r 2(2).”

Discussion and Disposition

29.  By the Amendment Summons, Ps seek to include the following additional relief:

“The 1^st Defendant do pay damages to the 1^st Plaintiff to be assessed for improperly settling the Arbitration Proceedings (as defined in §10(c) of the ASOC) and giving instructions to terminate the Arbitration Proceedings” (“the Additional Relief”).

30.  The alleged unauthorized and improper settlement of the Arbitration and claim for damages to be assessed have been pleaded in the ASOC. Plainly, there can be no prejudice to D1 to include in the SJ Summons relief for a claim that D1 has always been aware of. The Amendment Summons also affords D1 the opportunity to file evidence to address this additional relief.

31.  As to why it was not included in the relief to the SJ Summons, it was explained in Clark 5^th that on 31 July 2025, after the filing of the SJ Summons, Mr Justice Vidot of the Seychelles Court handed down a judgment in an action between P1 and D1 that declared inter alia D1 had no authority to enter into the Settlement Agreement. As the authorities cited above held, absent any real prejudice, an application for amendment, albeit late, must be decided upon the general principle that a court of law seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims before the court for adjudication.

32.  In D1’s Affs and Enhanced Aff, a number of grounds of opposition to the Amendment Summons are raised by D1. I shall deal with the main grounds that are relevant to the Amendment Summons, leaving others which plainly do not concern the Amendment Summons and goes to the merits of the SJ Summons or question of costs to be considered at the hearing of the SJ Summons.

33.  Firstly, it was submitted in D1’s Affs (“the Primary Ground”) that the Seychelles Court’s findings are “res judicata between P1 and D1” and that P1 is precluded from seeking “additional relief” in the Hong Kong court against D1. In the Enhanced Aff, D1 also states “the Seychelles Supreme Court judgment of 31 July 2025 conclusively determined all issues relating to the Roger Ver Settlement. Under established res judicata principles, no further proceedings are permitted.” Whether or not the Seychelles Court’s judgment of 31 July 2025 (“the Judgment”) is res judicata between P1 and D1 and by seeking summary judgment against D1 the effect is to seek additional relief which is not permissible under the doctrine of res judicata involves questions of law which D1 has not clearly demonstrated by authorities that Ps’ case is bound to fail.

34.  Secondly, in the Enhanced Aff (“Alternative Defence”), it was further submitted that as there was violation of due process in Seychelles when: (a) D1 was not present at the hearing, (b) he was not validly served with those proceedings, (c) he was not represented by counsel; and (d) he was not given the opportunity to defend the contempt allegations, this prevents the giving of summary judgment. Factually, in so far as it is asserted that D1 was not properly served and afforded a fair opportunity to defend the proceeds etc, this is a bare assertion by D1. It is contradicted by Ho 5^th that by way of substituted service granted by the Seychelles Court, the relevant court documents were served on D1 at D3 and D4’s registered office in Seychelles and D1 confirmed receipt of the court documents. Legally, no relevant authorities were cited to support the proposition that the alleged procedural defects in Seychelles, even if factually true, prevents the entering of summary judgment based on the Judgment in Hong Kong and that Ps’ relief is bound to fail.

35.  Thirdly, in the Enhanced Aff it was submitted that there were “Devastating Contradictions” in the evidence of Kirill Gourov, in particular, the 2^nd Affidavit on 17 October 2023 and 8^th Affidavit on 15 August 2025. It is said that his evidence in the 2^nd Affidavit that D1 also attended board of directors meeting on 13 October 2023 contradicts the allegation that D1 entered into the Settlement Agreement without authority. I am afraid that D1 has misunderstood Ps’ case. It is not disputed that D1 was a director of P1 at the time of the Settlement Agreement but Ps’ case is that D1 had no authority to sign the Settlement Agreement under the Articles of Associations of P1. I therefore do not agree that there is contradiction and this somehow undermines Ps’ case to such extent P’s relief is bound to fail.

36.  Fourthly, it was submitted in D1’s Affs and Enhanced Aff that that there was a tactical two-year delay for which Ps had not provided adequate explanations. I do not accept there has been a deliberate delay for 2 years. As mentioned, the claim for damages to be assessed for the alleged unauthorized settlement of the Arbitration was pleaded from the start. As for not seeking the relief in the SJ Summons, Ps have explained the reason for amendment was because the Judgment of the Seychelles Court was only handed down after the SJ Summons was taken out. In any event, as mentioned above, lateness or delay in the absence of real prejudice should not get in the way of allowing the parties to raise all their real claims in one go and multiplicity of proceedings should be avoided. Whilst D1 also referred to criticisms by previous courts of Ps’ litigation conduct and alleged forum shopping by Ps in D1’s Affs, I do not accept in so far as concern this application to amend, it was not bona fide or amounts to an abuse of process. The threshold for so alleging necessarily is a high one and even taking into account the previous criticisms, I am not satisfied that in all the circumstances Ps acted mala fide to amend the SJ Summons.

37.  Fifthly, it was submitted in D1’s Affs and Enhanced Aff that there was a “fundamental case transformation” and the amendments would transfer a summary judgment application into a complex commercial trial which would be prejudicial to an unrepresented litigant and be a disproportionate burden on D1. I am afraid that D1 is mistaken as the inclusion of the Additional Relief does not alter the fundamental nature of the application for summary judgment and the relief remains for damages to be assessed (which is not to be embarked by the court at the substantive hearing even if after the hearing of the SJ Summons partial judgment is entered in favour of Ps.)

38.  Lastly, a number of other grounds are raised but they relate to whether triable issues are raised to make summary judgment inappropriate which is plainly a matter to be argued at the substantive hearing of the SJ Summons. There are other criticisms of the lack of evidence to show that the Settlement Agreement has been abandoned or was not for rational business reasons but with respect, again D1 seems to have misunderstood Ps’ case which is that D1 had entered into the Settlement Agreement without authority and in breach of duty as director or contrary to the best interest of P1. In any event, these are matters going to the merits which can be fully argued at the hearing of the SJ Summons and is not demonstrated as being bound to fail.

39.  Accordingly, bearing in mind the underlying objectives and applying the applicable principles to the circumstances of this case, I will exercise my discretion to allow amendments to the SJ Summons to include the Additional Relief.

40.  I see no reason why I should not make the usual costs orders: see Hong Kong Civil Procedure 2025, Vol. 1, §20/8/51. I therefore order that Ps shall pay to D1 the costs of and occasioned by the amendments in any event, but having failed to oppose the Amendment Summons, D1 shall pay to Ps the costs incurred in the filing of the submissions for the paper disposal of the Amendment Summons, such costs are to be taxed if not agreed.

41.  I will further grant leave to D1 to file and serve any further affirmation(s) limited to the Additional Relief within 14 days of the handing down of this Decision and 14 days thereafter for Ps to file any reply evidence. No further evidence shall be filed without leave of court.

42.  This necessarily means that the hearing of the SJ Summons (together with the Inter-Partes Summons dated 9 July 2025 for security for costs) scheduled for 9 December 2025 would have to be adjourned to a date to be re‑fixed. Given that D1 has previously applied to attend the hearing on 9 December 2025 by VCF for the various reasons stated in his application and Ps’ solicitors did not object, parties are directed to liaise with each other to agree a date for the adjourned hearing of the Summonses. Furthermore, if there is agreement for D1 to attend the adjourned hearing by VCF to write to this Court to check the availability of the Technology Court and for further directions in that regard.

Mr Douglas Clark (Solicitor Advocate) of Messrs Tanner De Witt, for the 1^st and 2^nd Plaintiffs

The 1^st, 3^rd and 4^th Defendants were not represented

HCA 1646/2023

[2025] HKCFI 730

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1646 OF 2023

_______________________

_______________________

________________________

DECISION

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1.  In this decision, I have to determine two applications of Ps by their two summonses respectively dated 2 October 2024 and 14 October 2024 (“the Summonses”) arising from my decision made in these proceedings dated 30 September 2024 (“the Decision”) by way of paper disposal.

2.  I shall refer to the Decision for the background facts and shall, unless otherwise stated, adopt the abbreviations and definitions therein.

3.  Briefly, the former summons is for Ps’ application for a variation of the costs orders nisi in the Decision (“Variation Summons”) and the latter summons is for Ps’ application for leave to appeal from the Decision to the Court of Appeal (“Leave Summons”).

4.  While Ps’ solicitors filed their written submissions on 31 October 2024 pursuant to my directions dated 16 October 2024, despite my direction that D1, D3 and D4 do file and serve their respective written submissions on or before 14 November 2024, nothing has been received from any of these Ds in respect of the Summonses thereafter. By their letter dated 28 November 2024, Ps’ solicitors informed the court that Ps would not file any reply submissions.

Leave Summons

5.  I shall first determine the Leave Summons.

6.  Mr Clark representing Ps correctly states the relevant principles regarding these leave to appeal applications in his written submissions. For leave to be granted, Ps have to meet the threshold that their appeal should have a reasonable prospect of success or there should be some other reason in the interests of justice why Ps’ appeal should be heard. The prospect of Ps’ appeal of succeeding must be reasonable and therefore must be more than fanciful without having to be probable: SMSE v KL [2009] 4 HKLRD 125 at §17.

7.  There is a draft Notice of Appeal attached to the Leave Summons (“the draft NOA”). The draft NOA contains 6 broad grounds. I should examine each of those grounds in turn.

8.  The first two grounds relate to the admissibility of the 6^th Affirmation of D1, which is the supporting affirmation of D1 purportedly filed in support of the Jurisdiction Summons.

9.  Ps repeat their objections about this affirmation, which was not filed and served with the Jurisdiction Summons in contravention of O.12 r.8(4). By the order dated 15 March 2024, Registrar Kwang extended the time to file the same to 2 April 2024. A copy of the 6^th Affirmation of D1 which was not affirmed before a notary public was sent to the solicitors of Ps on or about 27 March 2024. A sworn copy of the 6^th Affirmation of D1 was eventually filed and served on 4 July 2024 without any further extension obtained beforehand. Ps did not ask for any extension of time to file their written submissions after receiving the sworn copy.

10.  Indeed, Mr Clark himself made his 3^rd Affirmation dated 22 April 2024 to deal with the allegations of D1 including the Statement of Travel Records issued by the Hong Kong Immigration Department purportedly supportive of his absence in Hong Kong after 13 October 2023. Mr Clark has never made any complaint that the sworn copy of the 6^th Affirmation of D1 is in any way different from its unsworn copy served more than three months ago.

11.  The claim of the alleged prejudice that Ps have suffered as a result of the late filing of the sworn copy is unconvincing.

12.  At §§33-34 of the Decision, I noted the problems with the 6^th Affirmation of D1 and at §§41-43, I explained why I exercised my discretion to allow the belated filing of the notarised 6^th Affirmation of D1 to be a correction of the irregularity under O.2 r.1(2). I have nothing to add to those reasons and I am not persuaded that I have wrongly exercised my discretion in the circumstances.

13.  Mr Clark submits, for the first time, that the court had debarred the parties from filing further affirmations and in the absence of any application to seek relief from sanctions to file and serve the 6^th Affirmation of D1, it was not permissible for me to invoke O.2 r.1(2).

14.  I believe that Mr Clark is referring to the order dated 5 July 2024 made by this court. By the said order, this court ordered that the parties be debarred from filing further affirmations and letters and that all the summonses would be determined on papers. It is not an unless order. In the preamble of the said order, the 6^th Affirmation of D1 was included as one of the many affidavits and affirmations which this court had read before making the said order. Thus, the sworn copy of the 6^th Affirmation of D1 should not be considered as a further affirmation filed in breach of the said order. In any event, I allow the sworn copy of the 6^th Affirmation of D1 to be admitted for the reasons given above.

15.  I see no merit in these two grounds.

16.  The 3^rd ground is that I failed to consider if making no order on application for declaration that D1 had not been properly served pursuant to O.12 r.8(6) was an appropriate order.

17.  I cannot understand this ground. I acceded to the application of D1 and accepted as a fact that D1 had not been duly served the Writ. Hence, I was minded to grant him such a declaration: §63 of the Decision. There is no reason why, despite my conclusion that D1 is entitled to the declaration, I should have made no order on D1’s application so that D1 should have been treated as having submitted to the jurisdiction by reason of his having given notice of intention to defend the action.

18.  This ground is rejected accordingly.

19.  In the 4^th ground, it is stated that I erred in failing to consider or apply 東莞市東莞東祥裝飾有限公司 v Universal Right Ltd (unreported, CACV 42/1999, 22.4.1999) or Lau Ping v Lim Gary Radford[2021] HKCFI 1137. It is further stated that in the circumstances where a defendant is subject to an unless order, the defendant is required to obtain relief from sanctions, even if he makes an application under O.12 r.8.

20.  Mr Clark in his written submissions does not expressly refer to the two authorities at all. They are not included in his list of authorities. He submits that I failed to consider or apply authorities on Ps’ default judgment application and D1’s relief from sanction application in the circumstances where D1 was subject to an unless order. He goes on to say that these authorities hold that the defence must be filed if the party has consented to an unless order.

21.  I can only assume that Mr Clark actually refers to the two authorities. I have perused them and I am not convinced that the Court of Appeal in 東莞市東莞東祥裝飾有限公司 and Mr Recorder Stewart Wong SC in Lau Ping made such a holding or said anything in support of Mr Clark’s proposition at all.

22.  I find no merit in the 4^th ground.

23.  The 5^th ground concerns my refusal to enter judgment against D3 and D4. They were in default of defence without any application pursuant to O.12 r.8.

24.  I am of course aware of the default of D3 and D4. I have given my reasons for my refusal to enter judgment against them at §§90 to 96 of the Decision. I do not think I should and can add anything to those reasons. Mr Clark does not point out any problems in such reasons. In the premises, I find the 5^th ground to be bereft of substance.

25.  The last ground is that I erred in finding that D1 had not been served at an agreed address for service by providing the address at which he was served in Hong Kong as his address to both Ps.

26.  It is further stated that the Caine Road Address (referred to as the Central Address in the Decision) is D1’s usual place of residence as provided as the director’s address under section 150(1A)(a)(ii) of the SIBC.

27.  In his written submissions, Mr Clark merely says that this court erred in finding that D1 had not been served at an agreed address for service.

28.  Again, I have given my reasons in the Decision at §§57 to 63 for my rejection of Ps’ allegation that there was an agreement between D1 and Ps that the Writ could be served simply by insertion the same into the letter box at the Caine Road Address.

29.  Mr Clark does not identify any errors in those reasons. Sheer rehashing his previous arguments cannot advance Ps’ case any further. I have no hesitation in dismissing the 6^th ground as well.

Variation Summons

30.  In the Decision, I made an order that Ps do pay D1 costs of and occasioned by the Jurisdiction Summons with the exclusion of some costs forthwith, to be taxed if not agreed. I also ordered that there be no order as to costs in respect of the Relief Summons and that Ps should pay D1 his costs of and occasioned by the Default Judgment Summons forthwith, to be taxed if not agreed. These orders were made on a nisi basis.

31.  By the Variation Summons, Ps seek to vary the costs orders nisi to the effect that costs of and occasioned by the Jurisdiction Summons, Relief Summons and Default Judgment Summons be paid by D1 to Ps forthwith, to be taxed of not agreed.

32.  First, Ps rely on an open offer in their solicitors’ letter dated 14 March 2024 (“the Open Offer”). The Open Offer contained the following terms:

(1)  D1 to withdraw his application that he has not been duly served the Writ;

(2)  Ps to withdraw the Default Judgment Summons; and

(3)  D1’s forum non conveniens application be listed to be heard together with any similar applications to be made by D3 and D4.

33.  Mr Clark now draws to my attention the fact that Ps have successfully obtained an order for substituted service on 21 October 2024, about three weeks after the Decision was made and D1’s forum non conveniens challenge was rejected by this court.

34.  Mr Clark contends that D1 has achieved no better result than the Open Offer. Thus, Ps should have the costs of the application.

35.  I am unable to understand how the order I made on the Jurisdiction Summons could be said to be equal to or even less than the Open Offer. Clearly, D1 has every right to prove that the purported service of the Writ on him was ineffective. He should then be entitled to the declaration under O.12 r.8(1)(b).

36.  The reason why Ps wanted D1 to withdraw his application that he had not been duly served the Writ is very obvious. All the efforts and costs in effecting service on D1 properly by their second attempt could be spared.

37.  Now that I have accepted that the Writ was not duly served on D1 and the Default Judgment Summons must be dismissed as a result, the Open Offer clearly could not be more advantageous.

38.  This ground is thoroughly untenable.

39.  Second, Ps rely on the fact that D1 had unreasonably refused to provide an address for service. Mr Clark highlights my observation in the Decision that Ps should have applied for service out of jurisdiction on D1 upon receipt of D1’s Statement of Travel Records on 6 March 2024.

40.  D1’s refusal to provide an address for service could provide a solid ground for Ps’ application for substituted service. Ps did succeed in obtaining an order for substituted service on such evidence too. But this can never justify purported service of the Writ on D1 when D1 was clearly out of jurisdiction at the material time.

41.  Mr Clark points out that Ps did seek an order for substituted service in their ex parte application for interlocutory injunctions before DHCJ Phoebe Man on 11 October 2024 but were rejected. They did alert the deputy judge to the fact that D1 was physically out of jurisdiction.

42.  The dismissal of their application, however, could not alter the prerequisite of service pursuant to O.10 r.1(2) and justify the purported service in my view.

43.  Third, Mr Clark complains about the late filing of the 6^th Affirmation of D1. I see no substance in this complaint and my foregoing analysis is applicable.

44.  As soon as the indisputable documentary evidence in the form of the Statement of Travel Records came into the possession of Ps, they should have accepted that the purported service could not be defended when they could adduce no contrary evidence. Indeed, they relied on this to make their application for substituted service. Their opposition to the Jurisdiction Summons is unreasonable.

45.  Fourth, Ps contend that D1 consented to the making of the unless order but he did not comply with it.

46.  I do not see any reason why D1 could be debarred from challenging jurisdiction after giving his consent to the making of the unless order. If D1 had failed to prove that the purported service of the Writ was ineffective and hence his challenge to jurisdiction had been dismissed, he would have been bound by the unless order.

47.  Lastly, Ps advance an alternative ground. They contend that D1 has failed in their forum non conveniens ground. They say that Ps should not be ordered to pay this part of the Jurisdiction Summons.

48.  In his written submissions, Mr Clark points out that each party won on one of the two main grounds of the Jurisdiction Summons. He submits that this court should adopt an issue-based approach in my determination of the question of costs. He suggests that there should be no order as to costs.

49.  D1 is able to make out the improper service ground and this alone is determinative of the Jurisdiction Summons, further leading to the dismissal of the Default Judgment Summons. Had Ps accepted the absence of D1 in the jurisdiction at the material time, which they had actually admitted at the ex parte hearing, the Jurisdiction Summons could have been avoided. Their change of position is unreasonable.

50.  D1 is successful in his fundamental challenge to the validity of the service of the Writ and must be the overall winner. This cannot be altered by his failure in his alternative ground of forum non conveniens. I do not accept that Ps’ success in the alternative ground can justify any reduction of D1’s costs of the Jurisdiction Summons recoverable from them. Having the overall justice in mind, I do not think that an issue-based approach is appropriate in the present case.

51.  Therefore, I conclude that this ground is not arguable and should be rejected.

Conclusion and order

52.  For the reasons given, I conclude that Ps cannot show valid grounds to vary the cost order nisi and meet the threshold to prove that their intended appeal has a reasonable prospect of success. Both the Variation Summons and the Leave Summons fall to be dismissed.

53.  Costs should follow the event. I make an order nisi that costs of the Variation Summons and the Leave Summons be to D1, D3 and D4, to be taxed if not agreed.

54.  Lastly, I thank Mr Clark for his assistance in this matter.

Mr Douglas Clark (solicitor advocate), of Tanner De Witt, for the 1^st and 2^nd Plaintiffs

The 1^st, 3^rd and 4^th Defendants were not represented and did not appear

HCA 1646/2023

[2024] HKCFI 1821

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1646 OF 2023

_______________________

_______________________

________________________

D E C I S I O N

________________________

Introduction

1.  There are five summonses calling for determination by this court on paper. They are as follows:

(1)  D1’s summons dated 6 March 2024 (“the Jurisdiction Summons”) for a declaration that the Writ of Summons dated 12 October 2023 has not been duly served on D1 and a declaration that this court does not have and/or should not exercise jurisdiction over D1 in these proceedings.

(2)  D1’s summons dated 14 March 2024 (“the Relief Summons”) for relief from sanction in the unless order made by Master Doris To dated 19 February 2024 (“the Unless Order”) as to the filing of his Defence and Counterclaim by 4:00 p.m. on 6 March 2024 (“the Deadline”).

(3)  Ps’ summons dated 13 March 2024 (“the D1 Default Judgment Summons”) for default judgment against D1 on account of his failure to comply with the Unless Order to file and serve his Defence and Counterclaim by the Deadline.

(4)  Ps’ summons dated 24 May 2024 (“the D3 & D4 Default Judgment Summons”) for default judgment against D3 and D4 on account of their failure to file and serve their Defence and Counterclaim.

(5)  D1’s summons dated 3 June 2024 (“the VCF Summons”) for leave to attend the hearing of 5 June 2024 (“the Hearing”) by video conference facilities (“VCF”). The Hearing was fixed for the purpose of the determination of the Jurisdiction, Relief, D1 Default Judgment and D3 & D4 Default Judgment Summonses.

2.  Before examining the merit of each of these summonses in turn, I should first outline the undisputed factual and procedural background of the controversies among the parties.

Background facts and Procedural matters

3.  P1 is a company incorporated under the laws of the Republic of Seychelles (“Seychelles”). P2 is its wholly owned subsidiary incorporated in Hong Kong.

4.  P1 operated the CoinFLEX Exchange (“CoinFLEX”) which was a cryptocurrency exchange focused mainly on cryptocurrency derivatives trading. CoinFLEX issued a cryptocurrency named FLEX token (“FLEX”).

5.  P2 was an entity established to employ CoinFLEX’s Hong Kong team and the operational staff running CoinFLEX in which FLEX can be traded for cash according to its market value.

6.  D1 co-founded CoinFLEX with Mr Arumugam and was the CEO of CoinFLEX until his removal on 8 October 2023. D1 was also the director of both Ps until October 2023.

7.  D2 is a cryptocurrency investor. He had a margin agreement with P1.

8.  D3 is a company incorporated in Seychelles while D4 is its wholly owned subsidiary and also incorporated in Seychelles. D1 is the sole director of both D3 and D4 since their inception.

9.  Ps allege that D1, D3 and D4 have since 2023 operated an online cryptocurrency exchange named OPNX Exchange (“OPNX”) which issues a cryptocurrency named OX token.

10.  On 23 June 2022, D1 issued a statement on behalf of CoinFLEX that it was suspending withdrawals on the CoinFLEX Exchange “due to extreme market conditions and uncertainty involving a counterparty”.

11.  On 9 July 2022, Mr Arumugam and D1 jointly issued a statement on behalf of CoinFLEX stating that D2 had a written manual margin arrangements with CoinFLEX and D2 failed to honour his obligations to pay margin calls leading to a significant deficit of US$84 million. They further said that they were looking for ways to re-finance CoinFLEX.

12.  On 28 July 2022, P1 applied to the Supreme Court of Seychelles (“Seychelles Court”) for the approval of a Scheme of Arrangement based on the deficit of US$84 million caused by the default of D2. The application was granted and the Scheme of Arrangement was approved by the order of the Seychelles Court dated 6 March 2023.

13.  In July 2023, P1 made a claim against D2 in HKIAC arbitration proceedings (“the HK Arbitration Proceedings”) in respect of the margin agreement.

14.  It was later found out that D1 purportedly on behalf of P1 entered into a drop-handed agreement with D2 to settle the HK Arbitration Proceedings to the detriment of P1.

15.  The crux of Ps’ case against D1, D3 and D4 is that D1 transferred the business of CoinFLEX to D3 and D4 in breach of his duties to Ps. Ps further allege D1, D3 and D4 by false representations pass off their OPNX as that of CoinFLEX or as business in some way connected with CoinFLEX.

16.  On 11 October 2023, Ps made a pre-action ex parte interlocutory injunction application against D1 (“Ex parte Application”). DHCJ Phoebe Man heard the Ex Parte Application and granted an injunction (“the Injunction Order”) on 12 October 2023. By the Injunction Order, D1 is injuncted, among other matters, from acting or holding out as being authorised to act in the name of Ps and/or CoinFLEX.

17.  The deputy judge, nevertheless, refused to grant leave to Ps to serve the Writ out of jurisdiction and for substituted service on D1 on the ground that D1 was then a resident of Hong Kong and had a local address.

18.  On the same day, Ps issued the Writ of Summons herein.

19.  On 13 October 2023, a sealed copy of the Writ of Summons was purportedly served on D1 by (1) insertion through the letter box at a resident unit in Central, Hong Kong (“the Central Address”), (2) telegram message, (3) email and (4) WhatsApp message. Mr Walsh, who is a partner of Clifford Chance, the former solicitors of Ps, was the sender of the telegram message, email and WhatsApp message.

20.  On 20 October 2023, the return day of Ps’ summons for the continuation of the Injunction Order, the deputy judge, after hearing counsel for Ps and counsel for D1, continued the Injunction with amendments suggested by D1’s counsel.

21.  On 1 November 2023, Messrs Hauzen LLP (“Hauzen”) filed an Acknowledgement of Service on behalf of D1.

22.  On 13 December 2023, the Statement of Claim was served on Hauzen.

23.  Ps discontinued this action against D2 by a Notice of Discontinuance dated 22 December 2023.

24.  D1 had twice applied for an extension of time to file his Defence and Counterclaim (if any). To dispose of his second application, with the consent of the parties, Master Doris To made the Unless Order, which is in the following term,

“Unless (D1) do file and serve his Defence and Counterclaim (if any) by 4:00 p.m. on 6 March 2024, (D1) shall be debarred from so doing.”

25.  Eventually D1 has not filed any defence to comply with the Unless Order by the Deadline.

26.  Only after the expiry of the Deadline did D1 serve the Jurisdiction Summons and the 2^nd Affirmation of Ho Hau Yue (“Ho 2^nd Affirmation”) on Ps at 4:08 p.m. on 6 March 2024. . Mr Ho is an Associate of Hauzen.

27.  Ho 2^nd Affirmation consists of 5 short paragraphs only. Its sole purpose is to exhibit a signed 6^th Affirmation of D1. D1 was then in Europe. Mr Ho stated that D1 was making arrangements to affirm his 6^th Affirmation before a notary and that the original would be delivered to Hauzen by courier thereafter.

28.  D1 filed a Notice to Act in Person on 24 April 2024.

The Jurisdiction Summons

29.  There are some problems with the Jurisdiction Summons. It was taken out pursuant to O.12 r.8(1) and (2) of the Rules of the High Court (“the RHC”).

30.  O.12 r.8 (1) provides that a defendant shall make an application thereunder within the time limited for service of a defence. D1 accepts that the service of the Ho 2^nd Affirmation was effected 8 minutes after the Deadline.

31.  Apparently D1 tries to remove any obstacles caused by 8-minute lateness by paragraph 2 of the Relief Summons. He asks for an order that notwithstanding paragraph 1 of the Unless Order and insofar as necessary, the time for D1 to file and serve the Jurisdiction Summons be extended until 6 p.m. of 6 March 2024.

32.  Another problem is that O.12 r.8(3) stipulates that an application under paragraph (1) or (2) must be made by summons and the summons must state the grounds of the application. The Jurisdiction Summons does not contain any grounds of D1’s application.

33.  Furthermore, O.12 r.8(4) provides that an application under paragraph (1) or (2) must be supported by an affidavit verifying the facts on which the application is based and a copy of the affidavit must be served with the summons by which the application is made.

34.  The 6^th Affirmation of D1 was not properly notarised when it was served on Ps on 6 March 2024. After repeated reminders, a properly notarised 6^th Affirmation of D1 was only served on Ps on 4 July 2024 at long last.

35.  For the 8-minute lateness, by his 3^rd Affirmation, Mr Ho proffered an explanation. On 6 March 2024, Huazen sent a clerk and two trainees to the Court Registry at about 3:20 p.m. to file the Jurisdiction Summons and Ho 2^nd Affirmation. Due to an “extraordinary and unusually long and slow-moving queue”, the staff only managed to file the Jurisdiction Summons and Ho 2^nd Affirmation at 3:55 p.m. and left the Court Registry at 4:05 p.m..

36.  Mr Ho himself had waited at the lift lobby of the office of Tanner De Witt (“TDW”), Ps’ solicitors. Once he obtained the return day of the Jurisdiction Summons from his staff, he filled the information in a copy of the Jurisdiction Summons and served the same on TDW immediately. Despite his best effort, he managed to do so at 4:08 p.m..

37.  First of all, I accept the explanation of Mr Ho and the lateness is minimal. It is excusable in all the circumstances and D1 had no control over the situation. No conceivable prejudice could be caused to Ps. Ps do not allege that there was any.

38.  Strictly speaking, I do not think D1 needs any relief from sanction to make the application under O.12 r.8(1). He did make his application to the court by the filing of the Jurisdiction Summons and Ho 2^nd Affirmation 5 minutes before the expiry of the Deadline and was well within time. What was not done before the Deadline is the service of a copy of these documents on TDW only. The late service would not render D1’s application under O.12 r.8(1) out of time in my view.

39.  On the other hand, Ps do not complain about the lack of grounds specified in the Jurisdiction Summons. D1’s grounds of his application are clearly stated in his 6^th Affirmation and Ps have managed to deal with such grounds in their reply affirmations.

40.  Of course I disapprove of D1’s non-compliance with O.12 r.8(2). However, I believe it would be disproportionate to deny D1 a chance to have his application properly argued when the breach did not cause any practical problems or real prejudice to Ps.

41.  Lastly, concerning the copy of the 6^th Affirmation of D1, I accept that D1 did not comply with O.12 r.8(4) to serve the Jurisdiction Summons together with a proper supporting affidavit. The Ho 2^nd Affirmation, per se, has little probate value and the exhibited 6^th Affirmation of D1 is not notarised albeit signed.

42.  As with the lack of grounds stated in the Jurisdiction Summons, the failure to file and serve a proper supporting affirmation with the summons is a curable irregularity: Carmel Exporters (Sales) Ltd v. Sealand Services Inc. [1981] 1 WLR 1068 and Hong Kong Civil Procedure 2024 Vol.1 at §12/8/2.

43.  In view of the fact that the properly notarised 6^th Affirmation of D1 was eventually filed and served, in the absence of any significant prejudice caused to Ps, I am prepared to exercise my discretion to allow the belated filing of the notarised 6^th Affirmation of D1 to be a correction of the irregularity under Order 2 r.1(2).

44.  Now I turn to the individual grounds in the Jurisdiction Summons.

45.  D1 advances three main grounds for his challenge to jurisdiction:

(1)  D1 has not properly been served with the Writ;

(2)  Hong Kong is not the forum conveniens; and

(3)  In any event, D1 has not submitted to jurisdiction in Hong Kong.

46.  I do not understand why the last ground is an independent ground by itself. Ps do not say that D1 should be debarred from making the present application by reason of his submission to the jurisdiction already.

Writ not validly served?

47.  The governing rule is Order 10 r.1 of the RHC. The relevant part is as follows:

“(1) A writ must be served personally on each defendant by the plaintiff or his agent.

(2) A writ for service on a defendant within the jurisdiction may, instead of being served personally on him, be served―

(a) by sending a copy of the writ by registered post to the defendant at his usual or last known address, or

(b) if there is a letter box for that address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant.

(3) Where a writ is served in accordance with paragraph (2)―

(a) the date of service shall, unless the contrary is shown, be deemed to be the seventh day (ignoring Order 3, rule 2(5)) after the date on which the copy was sent to, or as the case may be, inserted through the letter box for, the address in question;

(b) any affidavit proving due service of the writ must contain a statement to the effect that―

(i) in the opinion of the deponent (or, if the deponent is the plaintiff’s solicitor or an employee of that solicitor, in the opinion of the plaintiff) the copy of the writ, if sent to, or as the case may be, inserted through the letter box for, the address in question, will have come to the knowledge of the defendant within 7 days thereafter; and

(ii) in the case of service by post, the copy of the writ has not been returned to the plaintiff through the post undelivered to the addressee.”

48.  The starting point is that a writ must be served personally. The two alternative modes of service are specified in r.1(2). Service by telegram, email or WhatsApp messages is not allowed. Ps do not allege that D1 has agreed service by such messages. Such purported services were therefore invalid. The fact that D1 called Mr Walsh several times showing his knowledge of his receipt of Mr Walsh’s messages is neither here nor there.

49.  Apparently Ps rely on the insertion of a copy of the Writ through the letter box at the Central Address. I have read the Affirmation of Cheung Tick Hang in which Mr Cheung who was a clerk of the former solicitors of Ps says he inserted some court documents including a copy of the Writ enclosed in a sealed envelope through the letter box at the Central Address being one of the last known addresses of D1 at 1:20 p.m. on 13 October 2023.

50.  The prerequisite of service pursuant to Order 10 r.1(2) is that the defendant must be within the jurisdiction at the time of the service of the writ. This is clearly stipulated in the rule itself: Barclays Bank of Swaziland Ltd v Hahn [1989] 1 WLR 506 applied by Cheung JA (as he then was) in Deng Minghui trading as Tianye Industrial (Hong Kong) Company v Chau Shuk Ling Elaine (CACV 309/2006, unreported, 13.2.2007).

51.  The case of D1 is that he left Hong Kong on 12 August 2023 and has never come back. At the time of the purported service of the Writ on 13 October 2023, he was in Barcelona, Spain.

52.  D1 produced a Statement of Travel Records issued by the HKSAR Immigration Department (“the Statement”). The Statement shows that after his departure at 2259 hours on 12 August 2023 through the Hong Kong International Airport, there is no further record of his entry to Hong Kong.

53.  The Statement provides solid proof of D1’s alleged absence in Hong Kong on 13 October 2023.

54.  Alarmingly, at the Ex Parte Application, Ps’ evidence indeed supports D1’s case that D1 was then in Barcelona: §9 of Affidavit of Kirill Gourov. Mr Gourov is the current director of P1. In addition, Ps’ former counsel, during the Ex Parte Application, submitted to the court that Ps might know that D1 was not physically in Hong Kong and Ps had no idea when he would return.

55.  Mr Clark, for Ps, now argues that the Statement cannot negate D1’s presence within the jurisdiction if he transited Hong Kong. This argument is, with respect, novel and without any evidential basis. The probability that D1 transited Hong Kong at the very moment when Mr Cheung went to the Central Address to attempt service must be negligible.

56.  Mr Clark further criticises the quality of the evidence of D1 about his alleged absence in Hong Kong at the material time. Such criticisms are merely nitpicking and I do not intend to set them out. To my mind, the overall picture is very clear. I accept D1’s evidence that he left Hong Kong on 12 August 2023 and has not come back ever since on balance of probabilities.

57.  Next, Mr Clark relies on the fact that the Central Address was provided by D1 to Ps and is registered in the record of P2 filed with the Companies Registry as D1’s residential address: sections 643 and 645 of the Companies Ordinance, Cap.622 (“the CO”).

58.  Mr Clark further refers to section 150(1A)(a)(i) of the Seychelles International Business Companies Act (“SIBC”). It provides that the address of a director shall be his address for service of documents. He submits that the address for service shall be his usual place of residence meaning the Central Address.

59.  Mr Clark goes on to submit that by agreeing to be a director of P1, D1 accepts to be bound by the law governing the operation of P1 and service can be effected at the agreed address, i.e., the Central Address.

60.  I cannot accept these submissions. No expert evidence of Seychelles law on the issue of service is adduced. Mr Clark’s own affirmation could not be considered as expert evidence. I have no idea what documents could be served at the address of a director under section 150(1A)(a)(i) of the SIBC but I have serious doubt as to whether they include a writ issued by P1 against D1.

61.  I am unable to accept that the Writ was validly served on D1 by service by agreement as contended by Mr Clark. As explained by Lord Bridge in Kenneth Allison Ltd. And Ors v A.E. Limehouse & Co. (a firm) [1992] 2 A.C. 105 at pp.116-117, for service of writ, if one party, knowing that another wishes to serve process upon him, requests or authorises the other to do so in a particular way which is outside the Rules and the other does so, then, unless the Rules themselves prohibit consensual service, the party so served cannot be heard to say that the service was not valid.

62.  I am unable to accept that D1’s provision of the Central Address to Ps for the purpose of the SIBC and the CO can be regarded as an agreement as to the mode of service of the Writ on him regardless of whether he was physically present at the Central Address. It should be noted that the Central Address had been provided well before any claim against D1 was intended. D1 could not have requested or authorised Ps to serve the Writ on him in anyway outside the RHC. There could be no agreement between D1 and Ps that the Writ could simply be served by insertion the same into the letter box at the Central Address.

63.  Given the foregoing analysis, I find as a matter of fact that D1 was out of jurisdiction when Mr Cheung inserted into the letter box at the Central Address a copy of the Writ. I can conclude that the Writ has never been validly served on D1. I, therefore, am minded to grant D1’s application for a declaration that the Writ has not been duly served on him.

Forum non convenien

64.  In light of my conclusion on the validity of the service of the Writ, strictly speaking, there is no issue of forum non convenien and there should be no proceedings as against D1 to be stayed in Hong Kong. I shall, nevertheless, proceed to state my view albeit briefly on this separate ground in the Jurisdiction Summons for completeness.

65.  D1 accepts that to obtain a stay on the ground of forum non convenien, he has to first show (1) Hong Kong is not the natural and appropriate forum for this dispute and (2) the most appropriate forum is Dubai or, in the alternative, Seychelles.

Hong Kong – natural and appropriate forum?

66.  To determine the appropriateness of Hong Kong as a forum, one has to consider whether Hong Kong has the most real and substantial connection with the action.

67.  Mr Clark first urges this court to take into account the submission of D3 and D4 to the jurisdiction of Hong Kong already. They are unrepresented and they have not filed any defence and they have not applied to challenge the jurisdiction of Hong Kong.

68.  I agree with Mr Clark that this is an important factor in the balance.

69.  It is not in dispute that D1 is a holder of Hong Kong Identity Card. I am aware of D1’s allegation that he was granted a 10-year “golden visa” by the government of the United Arab Emirates in May 2022.

70.  I have perused the claims of Ps against D1. The alleged breaches of duties (including authorised settlement of the Arbitration Proceedings) and misappropriation of Ps’ properties (including funds in the bank account of P2 in Hong Kong) were committed in Hong Kong.

71.  There is a passing off claim. The tort could only be committed in Hong Kong.

72.  Mr Clark refers to The Albaforth [1984] 2 Lloyd’s Rep 91. at p.96, Robert Goff LJ said this,

“If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the Courts of that jurisdiction are the natural forum.”

73.  The tortious acts were/are allegedly committed in Hong Kong. Ps have suffered loss in Hong Kong. I am satisfied that Hong Kong has the real and substantial connection with the action. Nothing advanced by Ps can persuade me otherwise.

74.  D1 stresses that Seychelles law is applicable to all the issues arising from the rescue plan which is an integral part of his defence. Seychelles law is also relevant to the terms and conditions of CoinFLEX’s services and the licence agreement between P1 and D3. That does not mean that Hong Kong is not the appropriate forum. Hong Kong Courts are well-adapted to the application of foreign law with the assistance of expert evidence: Hong Kong Civil Procedure 2024 Vol.1 §§11/1/17. I fail to understand why D1 think that Dubai courts can handle Seychelles law better.

75.  D1 has referred to a number of relevant people who are potential witnesses in this action and say that these people including D2 are not based in Hong Kong. D1 does not say that they are based in Dubai or Seychelles.

76.  Ps by way of affirmation confirm that most of these people are willing to testify in Hong Kong. There is simply no contrary evidence.

77.  With regard to D2, he is now being imprisoned in Barcelona and according to D1, he would be extradited to the United States of America. If that is the case, VCF would be the only answer to secure his live testimony no matter where the trial is to be held.

78.  D1 alleges that he has no assets in Hong Kong and any claims made by Ps against him in Hong Kong would be futile as Ps would not be able to recover any damages from him. This does not render Hong Kong an unnatural and inappropriate forum of Ps’ action.

79.  I, therefore, conclude that D1 is unable to get over the first hurdle and there is no need to consider the second hurdle, i.e. whether Dubai or Seychelles is clearly or distinctly the more appropriate forum. In passing, I should point out that D1’s evidence in this regard is also unimpressive. D1 had all along said that Seychelles is the more appropriate forum of the Ps’ claim. All of a sudden, D1 now changes the appropriate forum from Seychelles to Dubai and it only shows his lack of conviction in his contention.

80.  To sum up, I find that the application under Order 12 r.8(1)(a) in paragraph 1 of the Jurisdiction Summons is made out on the evidence.

The Relief Summons and D1 Default Judgment Summons

81.  In light of my conclusion on the validity of the service of the Writ, there can be no default judgment against D1. The D1 Default Judgment Summons falls to be dismissed with costs.

82.  As regards the Relief Summons, I have expressed my view on the necessity of D1 for an extension of time to make his application by way of the Jurisdiction Summons. On the other hand, whilst I accept the issue of the Jurisdiction Summons, per se, does not relieve D1 from the sanction in the Unless Order for his failure to file a defence and counterclaim by the Deadline, his obligation to file his Defence and Counterclaim has not yet arisen due to the invalid service of the Writ of Summons on him. As the matter now stands, D1 does not need to file any defence before the Writ is properly served on him. I, hence, need not make any order on the Relief Summons.

The D3 & D4 Default Judgment Summons

83.  By the order of Master Matthew Leung dated 16 January 2024, leave was granted for Ps to serve the concurrent writ of summons against D3 and D4 in Seychelles.

84.  Pursuant to the said order, Ps served the concurrent writ of summons and the Statement of Claim on D3 and D4 on 11 March 2024.

85.  D3 has not made any response at all. No acknowledgement of service has ever been filed.

86.  D4 filed its acknowledgement of service on 24 April 2024 out of time. It, however, has not filed any defence thereafter.

87.  D3 and D4 are not legally represented. D1, their sole director, wrote to this court shortly before the Hearing and asked to represent these defendants. D1 in his written submissions explained that the Registry had refused to accept his summons for his application to represent D3 and D4 on account of his absence in the jurisdiction.

88.  I certainly cannot accept his application. D1 should have made a proper application to the Registrar with adequate supporting evidence.

89.  The upshot is that both D3 and D4 are unrepresented and absent in these proceedings.

90.  It is trite that for the purpose of the D3 & D4 Default Judgment Application, this court cannot receive any evidence and must give judgment according to the pleadings alone.

91.  I have gone through the labyrinth of factual allegations pleaded in the Statement of Claim against D3 and D4. I am of the view that I should not exercise my discretion to enter judgement against either of them for the following reasons.

92.  First, all the allegations against D3 and D4 involve D1 as well. For example, it is alleged that D1 signed a Technology License Agreement on behalf of both P1 and D3 whereby P1 granted a perpetual, irrevocable, non-exclusive, non-transferable licence to D3 to use all the technologies of CoinFLEX for zero consideration. P1 alleges that in doing so, D1 was in a position where there was a conflict of interest. It is further alleged that the Technology License Agreement is voidable under s.149 of SIBC and is voided by the service of the Writ of Summons herein. It follows that the purported use of the technologies under the Technology License Agreement would constitute infringement of the intellectual property rights (including copyright) licensed thereunder.

93.  There are other allegations against D3 and D4 that they have unlawfully conspired with D1 to cause loss to Ps and that they assisted D1’s misappropriation of the assets of Ps. Ps also allege that they are joint tortfeasors in respect of their passing off claim.

94.  It can be seen that most if not all of Ps’ claims against D3 and D4 are inseparable from their claims against D1. Their liability if any depends very much on whether Ps’ claims against D1 can be established. It would be in the interest of justice to have Ps’ claims against D3 and D4 to be determined together with their claims against D1.

95.  Second, Ps pray for several declarations to be made against D3 and D4. Whilst this court can make a declaration in an application for default judgment where appropriate, I have to be careful when the declarations sought suggest fraudulent or dishonest acts committed by D3 and D4. Such declarations would only be granted when I am satisfied that Ps have a genuine need for them and justice would not be done if they are denied such declarations without a trial.

96.  In all the circumstances of this matter, I believe that I should not exercise my discretion to grant such declaratory reliefs against D3 and D4 before the determination of Ps’ claims against D1 for the reasons given above.

The VCF Summons

97.  The VCF Summons was taken out only two days before the Hearing. The delay was unexplained. Even if Ps did not object to this application, the court could hardly accommodate such a request at short notice practically speaking.

98.  I have no hesitation in refusing to grant the application of D1 by the VCF Summons.

Conclusion and orders

99.  For the reasons given, I shall dispose of the Summonses in the following manner.

100.  The Jurisdiction Summons be allowed and I make an order in term of paragraph 1 of the same. I am aware that Ps did intend to make an application for service out at the Ex Parte Application. When their own information about the whereabouts of D1 was confirmed by the evidence of D1 and the Statement, they should not insist on the validity of the service of the Writ by Mr Cheung at the Central Address. They should accept that D1 was not within the jurisdiction and take appropriate steps to serve the Writ on D1 properly.

101.  Costs should follow the event and Ps do pay D1 costs of and occasioned by the Jurisdiction Summons forthwith, to be taxed if not agreed save such costs arising from the late filing of the notarised 6^th Affirmation of D1 including all the reminders issued by Ps, to be taxed if not agreed, should be paid by D1 to Ps forthwith.

102.  I make no order on the Relief Summons. I can well understand why D1 took out this summons. It was taken out immediately after Ps issued the D1 Default Judgment Summons out of abundance of caution. I make no order as to costs.

103.  I dismiss the D1 Default Judgment Summons and I order that Ps do pay D1 his costs of and occasioned by this summons forthwith, to be taxed if not agreed.

104.  I order that the D3 & D4 Default Judgment Summons be stood over to the trial of Ps’ claims against D1 or until further order and costs be reserved.

105.  Lastly, I dismiss the VCF Summons and D1 should forthwith pay costs of and occasioned by this summons to Ps, to be taxed if not agreed.

106.  All the costs orders made above are on a nisi basis. In the absence of any application for variation within 14 days from the date of this Decision, these orders nisi will become absolute.

Mr Douglas Clark (solicitor advocate), of Tanner De Witt, for the 1^st and 2^nd Plaintiffs

The 1^st, 3^rd and 4^th Defendants were not represented