AXHT COMPANY LTD v. 李克凡

HCMP 1257/2024 &
HCMP 1258/2024
(Heard Together)

[2026] HKCFI 34

HCMP 1257/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1257 OF 2024

________________________

________________________

________________________

AND

HCMP 1258/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1258 OF 2024

________________________

________________________

________________________

(Heard Together)

________________________

J U D G M E N T

________________________

I.  INTRODUCTION

1.  Before me are:-

(1)  The money lender’s Originating Summons filed on 19 July 2024 in HCMP 1257/2024 against 王一诚 (“Wang”) for an outstanding principal of loan in the sum of HK$12,500,000 and interest thereon under a loan agreement between the Plaintiff as lender and Wang as borrower dated 7 November 2019 (the “Wang Loan Agreement”); and

(2)  The money lender’s Originating Summons filed on 19 July 2024 in HCMP 1258/2024 against 李克凡 (“Li”) for an outstanding principal of loan in the sum of HK$4,000,000 and interest thereon under a loan agreement between the Plaintiff as lender and Li as borrower dated 3 October 2019 (the “Li Loan Agreement”)

II.  BACKGROUND

2.  The two Loan Agreements are not in dispute. The Loan Agreements respectively named Wang and Li as borrowers. On the same dates of the Loan Agreements, both Wang and Li also executed charge agreements and signed confirmation letters respectively to confirm their loans. Further, on 22 December 2023, both Wang and Li issued a letter (“Wang and Li’s 2023 Letter”) to the Plaintiff seeking time extension for repayment of the loans. In that letter, Wang and Li named themselves as borrowers, and signed as borrowers. The Plaintiff also produced evidence of advancements of the loans thereunder to Wang and Li respectively. WhatsApp conversation was also produced showing Wang and Li’s respective attempts to repay the loans. On such evidence, I find that the Plaintiff did advance the loans to Wang and Li as renewed or consolidated under the Loan Agreements. I should also mention that in Wang’s affirmation and in Li’s un-affirmed (but signed) affirmation filed in opposition to the Plaintiff’s application for Mareva injunction, they did not dispute all these at all save and except that they alleged subsequently that one Wong Wai Hong Andrew (“Andrew Wong”) had taken up the responsibility to repay the loans. I shall deal with such allegation later.

3.  It is noted that after the execution of the Loan Agreements, on 31 March 2023, Andrew made a written statement (“Andrew Wong’s Statement”) to the Plaintiff alleging that both Wang and Li had repaid the loans, and he was the actual borrower and the actual user of the loans. He further wrote that he would repay these loans and any dispute and liability arising from the loans should be borne by him.

4.  However, despite Andrew Wong’s Statement made on 31 March 2023, Andrew Wong executed a Deed of Guarantee dated 12 July 2023 (the “Guarantee”) in respect of the loans under the Loan Agreements.

5.  Subsequently, as mentioned above, Wang and Li issued Wang and Li’s 2023 Letter to the Plaintiff seeking time extension for repayment of the loans until 31 March 2024. As mentioned above, they both signed the Letter as borrowers. Nothing was mentioned about Andrew Wong or any third party taking up the loans.

6.  Despite the Plaintiff’s repeated requests and demands to Wang and Li, the loans remained outstanding.

III.  EVIDENCE

7.  From Wang, there is only one affirmed affirmation, namely, the Affirmation of Wang Yicheng filed on 17 December 2024 in opposition to the Plaintiff’s application for Mareva injunction. In that only properly affirmed affirmation, Wang did not raise any issue on the merits of the Plaintiff’s claim, but only gave evidence on real risk of dissipation and his assets within jurisdiction.

8.  All the evidence in opposition to the present proceedings filed on behalf of Wang is three affirmations of a solicitor of the solicitors firm acting for them (dated 17 February 2025, 28 February 2025 and 3 December 2025) exhibiting three signed, but unaffirmed, affirmations. The solicitor, of course, did not confirm the contents to be true and correct – first, it would not be proper for him to do so, and second, in any event, he did not have any personal knowledge of the matter. What the solicitor said in respect of these signed but unaffirmed affirmation has all along been repeatedly that Wang himself confirmed to him that the contents were true and correct, that Wang was not in Hong Kong and would arrange for affirming the affirmations, and that the affirmed affirmation would be filed when available. There has not even been the usual undertaking made by the solicitor to have the affirmations properly affirmed as soon as possible and to file the same when available. No such affirmed affirmations have ever been filed.

9.  In respect of Li, he has not affirmed any affirmation at all. All the evidence filed on his behalf in the proceedings is four affirmations (dated 17 December 2024, 17 February 2025, 28 February 2025 and 3 December 2025) made by the same solicitor exhibiting signed but unaffirmed affirmations of Li, saying that Li confirmed to him the contents to be true and correct, giving the same reason to explain why the affirmations were not affirmed and indicating, short of any undertaking, that he would file affirmed affirmations when available. Again, the same solicitor of course did not confirm the contents of the unaffirmed affirmations to be true and correct.

10.  The only explanation given to me during the hearing for failure to produce proper affirmations is that Wang and Li have been in the PRC. This explanation is not a good explanation – it is common for affirmants nowadays to make necessary arrange for affirmations to be affirmed out of jurisdiction. No explanation is given as to why such arrangement had not been made. In the circumstances, there is no evidence before me on the defence of Wang and Li. I am not being technical here – the Court relies on affirmations because of the potential consequences of falsely affirming or swearing affirmations on oath. Since the potential consequences could be serious, strict procedures would have to be followed, and if the affirmations were not properly affirmed or sworn, there could well be arguments that no such consequences as consequences of making false affirmations should attach, and so, the unaffirmed affirmations, effectively no more than a signed statement tendered through a third party, should not be given weight at all especially in interlocutory applications where no cross-examination would be conducted. Further, Wang and Li’s solicitor only deposed that Wang and Li confirmed to him that the contents of the unaffirmed affirmations were true. However, such alleged confirmations were, in substance, no difference as if a solicitor making an affirmation exhibiting written instructions from his client and asking the Court to rely on hearsay evidence. I do not accept such affirmations at all as evidence, given that the present proceedings were not interlocutory but final, and thus such hearsay evidence is inadmissible by virtue of Order 41 rule 5(1). In any event, as mentioned above, the tender (that is, the solicitor) does not even confirm to the draft affirmations to be true. I do not place any weight on such evidence even if admissible.

11.  The lack of evidence from Wang and Li would be sufficient for me in the circumstances to enter judgments as sought by the Plaintiff on the facts I found above.

IV.  IN ANY EVENT, NO MERITS

12.  When I raised this issue of lack of evidence during the hearing, Mr Ko informed me that if necessary, those instructing him could give an undertaking to the Court to file properly affirmed affirmations. However, even if I were not take the unaffirmed affirmations as proper evidence, I would find that the defence raised had no merits at all as explained below.

13.  The only defence raised by Wang and Li was that Andrew Wong took up the obligations to repay under a loan swap agreement (the “Loan Swap Agreement”) in May 2019 whereby Wang’s and Li’s liability to repay the Plaintiff was assigned to Andrew Wong in exchange for Wang and Li’s help to repay Andrew Wong’s loans due immediately. In other words, they raised a defence of novation. The law on novation is well established, as set out in Wing Hing (1956) Company Limited v Nissin Foods Company Limited[2021] HKCFI 638 at §§67-69. One of the issues is whether the Plaintiff consented to the alleged novation (if any). Such consent may be inferred by conduct, and the burden lies upon the party asserting novation to “clearly establish” it by evidence “as being only consistent with the intent of achieving a novation”. Mr Jason Ko, leading Mr Chris Wong, counsel for Wang and Li, also draws my attention to Evans v SMG Television Ltd [2003] EWHC 1423 (Ch) at §181 for the “proper approach to deciding whether a novation should be inferred” with reference to “business efficacy to what actually happened” and reminds me that the burden for inference of consent is not high. It is, in my view, a question of fact and degree depending on the evidence and the circumstances of a particular case.

14.  In the present case, as pointed out by Mr Kevin Hon, leading Mr Tommy Cheung, counsel for the Plaintiff, there is no document evidencing such consent at all. In my view, although such consent could be inferred from conduct, it would be inherently improbable that the Plaintiff would consent by conduct having considered the following holistically:-

(1)  The Loan Swap Agreement was, even on the Defendants’ case, made in May 2019. After this Loan Swap Agreement, the Loan Agreements in question were entered into after that. If Andrew Wong would like to take up the loan as a borrower, he could simply have done so, without any need to go through the convoluted way to be a guarantor on paper. This is so even if the Loan Agreements were said to be loan agreements to renew or consolidate existing loans. The time of the execution of the Loan Agreements would be the opportunity for the three parties to make everything clear, if there were any consent of the Plaintiff to the novation (if any). At least there should be some documentation.

(2)  Although after the execution of the Loan Agreements were the Andrew Wong’s Statement dated 31 March 2023, this was a unilateral statement only. I note that nothing in that statement indicated any consent from the Plaintiff; nor was there anything seeking the Plaintiff’s consent.

(3)  Instead, after Andrew Wong’s Statement, by the Guarantee executed on 12 July 2023, he agreed to be a guarantor. If he himself had already been the borrower, he would not have to be a guarantor of his own liability at the same time. If the Plaintiff had already consented to any novation, there would be no point for any guarantee to the Plaintiff.

(4)  Consistently with the Guarantee, Wang and Li themselves confirmed their status of borrowers by Wang and Li’s 2023 Letter issued in December 2023.

(5)  There is no evidence at all as to how and when the Plaintiff was informed that there was such a loan swap as alleged. Mr Ko points out Wang and Li’s evidence at §13 of Wang’s 2^nd unaffirmed affirmation that Andrew Wong reassured them that the Plaintiff would agree to such loan swap. However, first, §13 was in the context of May 2019, before the execution of the Loan Agreements, and second, there is no evidence of whether Andrew Wong did inform the Plaintiff of such loan swap and if so, what the Plaintiff’s response was. Put to the highest to Wang and Li, in my view, assuming that Andrew Wong did make such assurance and assuming such assurance was relevant though made in May 2019, it would be a matter between Wang and Li on the one hand and Andrew Wong on the other hand on such alleged reassurance.

(6)  Mr Ko submits that I should assess the evidence on the whole in respect of the reassurance. I agree that I should assess evidence holistically, and this is what I am doing here. Mr Ko submits that it would not be coincidence that there was such reassurance and the Plaintiff received interests from persons other than Wang and Li. In this regard, Mr Ko relies upon the decision of DHCJ Yuen in dismissing the Plaintiff’s application for Mareva injunction [2025] HKCFI 4568, where her Ladyship said at §35 that the interest payments was some weighty evidence supporting Wang and Li’s case that Andrew Wong stepped into their shoes as debtor to the Plaintiff. However, her Ladyship expressly made it clear at §36 that her view was in relation to real risk of dissipation only, and in any event, further evidence had since been filed after that interlocutory stage, and at this final stage before me, I consider all the evidence holistically.

(7)  Here, even assuming that the Plaintiff knowingly received interest payment from Andrew Wong, it does not necessarily follow that there was any consent to any alleged novation. The acceptance is entirely consistent with the proposition that from the Plaintiff’s perspective, it cared about whether the interests were paid, rather than the source of the payments. One could well argue that even assuming that the Plaintiff knew that Wang and Li would on-lend the loans to Andrew Wong and thus it was Andrew Wong repaying, from the Plaintiff’s perspective, Wang and Li would still be the borrowers and the on-lending was a matter between Wang and Li on the one hand and Andrew Wong on the other. Whether Andrew Wong would regard Wang and Li as his nominee was, similarly, a matter between them.  Whether the Plaintiff would regard Wang and Li as nominees for Andrew Wong such that Andrew Wong was the borrower begs the question I have to decide – whether there was any valid novation. All that said, I am not saying that the Plaintiff’s acceptance of interest from third party or even knowingly from Andrew Wong is not a relevant factor. However, it is only a relevant factor in my holistic assessment of the evidence, and it is not a factor that seems so strong as Mr Ko submits.

(8)  The Plaintiff was a licenced money-lender and for any new borrower, the Plaintiff would have to have proper documentation of the loan under the Money Lenders Ordinance. There is no such evidence.

(9)  In his statement of affairs filed in his self-bankruptcy petition in HCB 5609/2024, Andrew Wong mentioned no such loans indebted to the Plaintiff at all. The Defendants’ “evidence” exhibiting WeChat messages where a director of the Plaintiff Wong King Wai asked Andrew Wong whether Andrew Wong had reported to the Official Receiver about the debts due and owed to the Plaintiff is consistent with Andrew Wong’s role as a guarantor.

(10)  Mr Ko submits that the absence of reference to the loans in question shows that Andrew Wong did not take the guarantee liability either. This may be right, and if so, Andrew Wong’s statement of affairs would help neither the Plaintiff’s nor Wang’s and Li’s case. However, the burden lies upon Wang and Li to “clearly establish novation” by evidence “as being only consistent with the intent of achieving a novation”. Absence of reference to the loans in question understood in the context of Andrew Wong’s guarantee liability and of Wong King Wai’s query whether the loans were reported to the Official Receiver can be consistently understood as Andrew Wong’s deliberate intention not to report the guarantee liability to the Official Receiver – this also explains why Wong King Wai asked Andrew Wong if he had reported the “loans” to the Official Receiver. In any event, taking this statement of affairs at highest, this is some neutral evidence on which Wang and Li could not rely on to discharge their burden of proof.

(11)  Mr Ko also submits that some WeChat messages have been missing and so adverse inference should be drawn against the Plaintiff. With respect, I do not agree. The burden lies upon Wang and Li to establish the defence of novation (or for the present purpose, at least some reasonably arguable or triable defence of novation). On such evidence, I do not think that any missing messages would constitute any ground for adverse inference against the Plaintiff. For the same reason, I do not think that the Plaintiff’s failure to have affirmations from Andrew Wong would result in any adverse inference against the Plaintiff.

(12)  If the defence of novation were true, Wang should have set it out when making his only affirmed affirmation, that is, the affirmation to oppose the Mareva injunction. However, in this only affirmed affirmation, Wang did not mention any defence at all.

(13)  For completeness, I should mention that Andrew Wong had been a founding director of the Plaintiff and was a contact point between the Plaintiff and Wang and Li. Given that Andrew Wong was not a director of the Plaintiff at the material times, rightly in my view, no point is made that in the alleged novation, Andrew Wong also represented (actually or apparently) the Plaintiff and that Andrew Wong’s knowledge of the alleged swap loan agreement was imputed to the Plaintiff.

15.  In the circumstances, even if I were to accept the unaffirmed affirmations as evidence, I would find that the defence of novation is so inherently incredible that no taking oral evidence would be necessary, and that the Plaintiff did not consent to any alleged novation and so there could not be any valid novation at all.

16.  Therefore, it is not necessary for me to accept any undertaking given by Wang and Li’s solicitors to file properly affirmed affirmations, which would serve no practical purpose.

V.  CONCLUSION

17.  In the premises, I make an order in terms of §§1-2 of the respective Originating Summonses.

18.  Costs should follow the event. By Clause 9.2 of the Loan Agreements, Wang and Li agree to indemnity the Plaintiff against costs and expenses in respect of their breaches. So, I order:-

(1)  Wang to pay forthwith the Plaintiff costs of HCMP 1257/2024 on an indemnity basis with certificate for two counsel, summarily assessed at HK$900,000; and

(2)  Li to pay forthwith the Plaintiff costs of HCMP 1258/2024 on an indemnity basis with certificate for two counsel, summarily assessed at HK$800,000.

19.  In the assessment, I took into account the fact that the issues in the two Originating Summonses are substantively identical.

20.  It remains for me to thank counsel for their assistance.

Mr Kevin Hon and Mr Tommy Cheung, instructed by Cheung & Choy, for the Plaintiff in HCMP 1257/2024 and HCMP 1258/2024

Mr Jason Ko and Mr Chris Wong, instructed by Cedric & Co., for the Defendant in HCMP 1257/2024 and HCMP 1258/2024

HCMP 1257/2024 and HCMP 1258/2024
(Heard Together)

[2025] HKCFI 6199

HCMP 1257/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1257 OF 2024

________________________

________________________

AND

 HCMP 1258/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1258 OF 2024

________________________

________________________

(Heard Together)

________________________

DECISION

________________________

1.  On 30 September 2025, I handed down a Decision in these proceedings dismissing the plaintiff’s inter partes summons for a Mareva injunction against each defendant.

Plaintiff’s applications

2.  On 14 October 2025, the plaintiff filed a summons in each proceeding for:

(1)  leave to appeal the Decision on the sole ground that I had erred in law and/or in the exercise of discretion when holding at §37 that “there is insufficient evidence from which the court should infer a real risk of dissipation” (“leave to appeal application”)  and

(2)  stay of execution of the Decision, such that the order made by the duty judge on 20 December 2024 (as varied in a consent order made during the hearing before me on 11 September 2025)  do continue pending the determination of the leave to appeal application, or if leave is granted, until the determination of the appeal (“stay application”).

3.  On the same day, the plaintiff wrote to the court with proposed directions. 

4.  On 17 October 2025, the defendants’ solicitors replied to those proposals. 

5.  On 21 October 2025, Hon Au-Yeung J gave directions pursuant to which written submissions were provided. 

6.  Pausing here, it would be noted that even though in an affirmation in support of the summons, the plaintiff’s director had alleged that “... the defendant will likely dissipate the assets in the meantime”, the plaintiff did not ask at any stage for an interim stay pending the disposal of the applications.  It is trite that an application for a stay does not have the effect of an interim stay.

Principles

7.  It is well established that leave to appeal is not to be granted unless the appeal has a reasonable prospect of success (meaning more than fanciful, without having to be probable).  As was held in Convoy Collateral Ltd v Cho Kwai Chee & ors[2020] HKCA 537, §33, where the decision in question relates to an injunction which involves the exercise of discretion, the appellate court will not interfere unless there is an error of law, or misapplication of the law by the judge failing to take into account relevant considerations, or taking into account irrelevant considerations, or the decision is plainly wrong, in that the exercise of discretion is outside the generous ambit within which reasonable disagreement is possible. 

8.  The plaintiff has not suggested that leave to appeal should be granted on the ground that there is some other reason in the interests of justice why the appeal should be heard.

Discussion

9.  The plaintiff says that the following two aspects “have not been taken into account” in the Decision when I decided that it had failed to show a real risk of dissipation:

  (1)  the defendants “dishonestly changed their cases”;

  (2)  the defendants’ defences are “recent fabrications” and documents they relied on were contradicted or “substantially weakened” by other documents placed before me.

10.  I shall deal first with (1).  The plaintiff relies on the fact that it was only in their 3^rd affirmations that the defendants put forward the “loan swap arrangement”.  This had been taken into account in the Decision as shown in §31:

“I do not accept the Plaintiff’s submission that the defendants have had a change of case as they had not mentioned the arrangement in their first affirmations challenging the application for Mareva Injunctions. I note that each defendant said specifically that the affirmation (filed only 4 working days after the Plaintiff’s application for a hearing 7 working days after the application)  was ‘without prejudice to my right to put forward my substantive defence at trial’ and that the focus was on the Plaintiff’s failure to demonstrate any real risk of dissipation”. (Emphasis added).

11.  The defendants’ second affirmations were brief ones updating their bank statements.  It was under these circumstances that the defence of the loan swap arrangement was first put forward in their 3^rd affirmations.

12.  I accept that the defendants were represented by lawyers who could have chosen to ask for a longer period of time to file one comprehensive affirmation covering both the evidence showing no transfer of the defendants’ assets out of Hong Kong despite knowing of the plaintiff’s claims for 5 months, as well as the loan swap arrangement, in one go.  However, given the state of the plaintiff’s evidence on the requirement of real risk of dissipation (discussed in §28.2), the defendants’ lawyers cannot be faulted for challenging the Mareva injunction at the earliest opportunity by relying on evidence showing no transfer of the defendants’ assets out of Hong Kong.

13.  Coming then to (2), the plaintiff submitted that “no sufficient regard or consideration was given” to some documents which it says contradicted or “substantially weakened” the documents exhibited by the defendants.  I will not repeat the discussions in the Decision relating to these documents, including different versions of one document, in §§32-35.  

14.  However, it is important to note the following.

(1)  As recorded at §26.1 and discussed at §§27-28, the focus of the hearing was on Requirement (4)  of Convoy i.e. whether there was a real risk of dissipation or removal of assets.

(2)  The plaintiff was seeking to rely on the documents in §32 to bolster its case of real risk of dissipation, on the ground that the documents showed the defendants were dishonest and fraudulent or were guilty of wrongdoings reflecting adversely on their integrity. 

(3)  Those documents (and other documents at §§33-34 including another version of a document in §32)  were expressly considered. Weight is a matter for the judge in the exercise of discretion.  Notably in the immediately following paragraph (§35), “more weight” was expressly accorded to the change in method of payment of interest.

(4)  I considered the plaintiff’s documents did not salvage its unsuccessful attempt to show a real risk of dissipation (§36):  

“I must emphasize that the above considerations do not go towards Requirement (1), but to Requirement (4)  in the context of rejecting the Plaintiff’s submission that there is evidence of dishonest and fraudulent conduct or other serious wrongdoings which formed the basis of the claims, and which reflected adversely on the integrity of the defendants, with which it sought to bolster its arguments regarding a real risk of dissipation of assets which I have rejected above. If the defendants were persons of low commercial morality, they would have realized and transferred all the assets out of Hong Kong during the 5 months between the demand letters and the issue of the OS in July 2024 and the issue of the application for the Mareva Injunction in December 2024".

(5)  Thus at §37, it was held:

“As the courts have noted, the purpose of a Mareva injunction is not to provide a plaintiff with preferential security for its claim (Lakatamia Shipping Co Ltd v Toshiko Morimoto [2019] EWCA Civ 2203, [34] quoted in Convoy §35). Requirement (4)  is a stand-alone requirement which I find the Plaintiff has not satisfied. There were ample opportunities for the defendants to transfer their assets away which they did not do in the 5 months before the application for the Mareva Injunction, and in light of the matters discussed above, there is insufficient evidence from which the court should infer a real risk of dissipation”.

15.  As the matters at §9(1)  and (2)  had been taken into account, and given the undisputed fact that the defendants did not transfer their assets out of Hong Kong during the substantial period of 5 months after the plaintiff’s demand letters and issue of the OS, I do not see a reasonable prospect of success in the proposed appeal.

Disposal of the summons

16.  I would therefore dismiss the application for leave to appeal.  It follows that the application for stay pending leave to appeal or appeal should also be dismissed. 

Costs

17.  The defendants had in their submissions lodged on 7 November 2025 requested costs and annexed a statement of costs for summary assessment.  No opposition to that course of action was taken in the plaintiff’s reply submissions. 

18.  There is no reason why costs should not follow the event.  Having considered the defendants’ statement of costs and in view of the fact that their case is that the defendant in HCMP 1258 was only an agent for the defendant in HCMP 1257, and that the submissions of the plaintiff and the defendants applied to both proceedings, I would assess the costs in each proceeding at $52,000.   

Mr Richard Leung and Mr Tommy Cheung, instructed by Messrs Cheung & Choy, for the Plaintiff (in HCMP 1257/2024 & HCMP 1258/2024)

Mr Jason Ko and Mr Chris Wong, instructed by Messrs Cedric & Co, for the Defendant (in HCMP 1257/2024 & HCMP 1258/2024)

HCMP 1257/2024 and HCMP 1258/2024
(Heard Together)

[2025] HKCFI 4568

HCMP 1257/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1257 OF 2024

______________________

______________________

AND

HCMP 1258/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1258 OF 2024

____________________

______________________

(Heard Together)

______________________

D E C I S I O N

______________________

1.  This is the hearing of the Plaintiff’s inter partes Summons for a Mareva Injunction in each of the above proceedings.

Introduction

2.1.  By an Originating Summons (“OS”) issued on 19 July 2024 in HCMP1257/2024, AXHT Co Ltd (the Plaintiff) sued the defendant (“Mr Wang”) for repayment of a loan said to be owed by him under a Loan Agreement dated 7 November 2019.

2.2.  By an OS issued on the same day in HCMP 1258/2024, the Plaintiff sued the defendant (“Mr Li”) for repayment of a loan said to be owed by him under a Loan Agreement dated 3 October 2019.

3.  Mr Wang and Mr Li acknowledged service through solicitors on 23 and 24 September 2024 respectively.

4.  On 18 November 2024, the Plaintiff filed an affirmation of Wong King Wai (“WKW”) in support of the OS in each proceeding.

5.  On 11 December 2024, the Plaintiff issued a Summons for a Mareva Injunction in each proceeding. This was supported by the 2^nd affirmation of WKW filed on the same day.

6.  On 17 December 2024, Mr Wang made an affirmation in Hong Kong in opposition to the application for a Mareva Injunction. As for Mr Li, he signed an affirmation on the mainland which was exhibited to an affirmation of his solicitor filed on the same day.

Deputy High Court Judge Andrew Li’s Order

7.  On 20 December 2024, Deputy High Court Judge Andrew Li gave an interim-interim order in:

(1)  HCMP1257 restraining Mr Wang from disposing of his assets within Hong Kong up to the sum of HK$13,494,535.52 including funds and securities held at a securities company Anli Securities Ltd (“ASL”) in account no. P003187, and requiring him to disclose other assets;

(2)  HCMP1258 restraining Mr Li from disposing of his assets within Hong Kong up to the sum of HK$4,318,251.37 including funds and securities held with ASL in account no. P003165, and requiring him to disclose other assets.

8.1.  After the interim-interim order, further evidence was filed. In HCMP1257,

(1)  on 18 February 2025, Mr Wang’s solicitor filed an affirmation exhibiting Mr Wang’s 2^nd affirmation;

(2)  on 28 February 2025, the solicitor filed another affirmation exhibiting Mr Wang’s 3^rd affirmation;

(3)  on 20 March 2025, the Plaintiff filed WKW’s 3^rd affirmation;

(4)  on 22 April 2025, the Plaintiff filed WKW’s 4^th affirmation.

8.2.  Similar evidence was filed in HCMP1258 with Mr Li’s 2^nd and 3^rd affirmations exhibited to his solicitor’s affirmations.

9.  The Summonses were adjourned to 11 September 2025, when I heard both inter partes Summonses at the same time. By reason of the Plaintiff’s submissions discussed later in this Decision, it is necessary to go into a little detail on the factual background.

Background

10.  The Plaintiff is a licensed money-lender. One of its founding directors in 2015 was Andrew Wong Wai Hong (“Andrew WWH”). Andrew WWH was also a director of ASL from 2013 until 2022.

11.  Mr Wang says that through Andrew WWH’s introduction, he opened an account with the Plaintiff to obtain loans and an account with ASL to trade in securities in 2016 - 2017. The modus operandi was that securities in the ASL account were charged to the Plaintiff, and interest payable on loans from the Plaintiff was deducted from the ASL account.

12.1.  Mr Wang also said in his affirmation that Mr Li was his agent for the above purpose.

12.2.  In Mr Li’s 3^rd affirmation, he said that Mr Wang sometimes asked him to act as his agent to enter into loan agreements on his behalf, and he usually agreed. Apart from disputing that the subject loan (see below) was made, he said that he only acted as agent for Mr Wang.

13.1.  The Plaintiff says that on 7 November 2019, Mr Wang as borrower signed a Loan Agreement for Loan No. D-00083-04, which stated:

(1)  it was consolidated with Loan Agreements No. D-00083-02 and D-00083-03, and

(2)  the loan amount was HK$12.5 million.

13.2.  The Plaintiff says that on 3 October 2019, Mr Li as borrower signed a Loan Agreement for Loan No. SM-00059-05, which stated:

(1)  it was consolidated with Loan Agreement No. SM-00059-04, and

(2)  the loan amount was HK$4 million.

13.3.  Both Loan Agreements stated that:

(1)  the interest rate was 13% pa,

(2)  the loan date was 1 October 2019,

(3)  the 1^st repayment date was 1 November 2019,

(4)  the tenor was 3 months,

(5)  the guarantor was Andrew WWH, and

(6)  the security was the borrower’s respective securities account with ASL.

13.4.  In both cases, on the same day, there were executed:

(1)  a Facility Agreement between the borrower and the Plaintiff for a term loan facility in the maximum sum of the loan amount,

(2)  a Charge Agreement under which the borrower charged his securities trading account with ASL to the Plaintiff to secure liabilities under the loan agreement (a blank day in October 2019 in Mr Li’s case),

(3)  a Notice of Charge under which the borrower gave notice to ASL that he had charged his interest in his account with ASL to the Plaintiff. ASL signed the document to signify agreement.

14.  The Plaintiff has also exhibited a document bearing only the year 2019 addressed to ASL signed by each borrower authorising ASL, upon receiving the Plaintiff’s written notice, to repay all amounts outstanding to the Plaintiff from the borrower’s account with ASL.

15.  No documents similar to the above after 2019 have been exhibited, but there is a document in Chinese dated 22 December 2023 (“the co-signed document”) referring to:

(1)  a loan of HK$4 million to Mr Li under Loan Agreement No. SM-00059-18 (for which Andrew WWH was guarantor);

(2)  a loan of HK$12.5 million to Mr Wang under Loan Agreement No. D-000813-17 (for which Andrew WWH was guarantor); and

(3)  a loan of HK$6 million to Anli Holdings Ltd under Loan Agreement No. D-00116-44 and No. D-00116-48 (for which one Song Rui was guarantor).

The borrowers stated that although they had earlier undertaken to repay the total sum of HK$22.5 million to the Plaintiff by 31 December 2023, due to the adverse global economy, they requested an extension of the repayment date to 31 March 2024. It was signed by Mr Li, Mr Wang and apparently by Andrew WWH as an authorised signatory of Anli Holdings. Anli Holdings was a shareholder of ASL.

16.  I shall refer to the alleged loans in 15 (1) and 15 (2) above as “the subject loans”.

17.  The Plaintiff’s case is that there was default in repayment of the subject loans on 1 May 2024. On 3 July 2024, the Plaintiff sent a demand letter for HK$12,772,232.34 to Mr Wang and a demand letter for HK$4,087,124.66 to Mr Li, followed by the issue of the OS in each proceeding on 19 July 2024.

Evidence before the interim-interim order

18.  As mentioned above, the OS were supported by the 1^st affirmation of WKW. It did not mention any risk of dissipation of assets. It was only on 11 December 2024 (5 months after the demand letters and more than 4 and a half months after the OS were issued) that the Plaintiff filed the Summonses for Mareva Injunctions. The affirmation in support stated:

(1)  the Plaintiff did not have full knowledge of the defendant’s assets apart from the ASL account, and he “may only have limited assets in Hong Kong”,

(2)  regarding the requirement to show a real risk of dissipation, that (i) the defendant was not “willing to act sensibly and co-operatively” and make proposals for repayment; (ii) the defendant and ASL were not willing to provide an undertaking not to dissipate assets; and (iii) Andrew WWH who was “the contact point” between the Plaintiff and the defendant, and the guarantor for the loans, “without any good reason and justification, … applied for self-bankruptcy to evade repayment obligations on his part”.

19.  The 1^st affirmation of Mr Wang and Mr Li stated first that it was “without prejudice to my right to put forward my substantive defence at trial” and that the focus was on the Plaintiff’s failure to demonstrate any real risk of dissipation.

20.  Mr Wang and Mr Li said they had no knowledge of Andrew WWH’s bankruptcy.

21.1.  As for assets,

(1)  Mr Wang exhibited the statements of his ASL account which showed that from November 2023 to November 2024 (i.e. even after the demand letters and the issue of the OS in July 2024), there had never been any withdrawal of funds, and that reductions in the value of the assets (standing at HK$8.9 million as at November 2024) were due to fluctuations in the value of securities;

(2)  Mr Li exhibited the statements of his ASL account which showed that from November 2023 to November 2024, the value of the assets (standing at HK$5.3 million as at November 2024) throughout the period was higher than the sum demanded by the Plaintiff (HK$4.08 million).

21.2.  Mr Wang also exhibited statements of his integrated account with HSBC which showed that even after the demand letters and the issue of the OS, there had not been a substantial net reduction in the value of his investments, which stood at HK$2.4 million as at November 2024.

22.  Notwithstanding the above, an interim-interim order was made against both Mr Wang and Mr Li.

Evidence after the interim-interim order

23.  As mentioned above, further evidence was filed by both sides after the interim-interim order.

24.  Apart from updating the financial documents to include December 2024 statements, the defendants’ evidence related to their defence that they are not liable to the Plaintiff because of an arrangement made between Mr Wang (for himself and on behalf of Mr Li his agent) and Andrew WWH in 2019 for a “loan swap arrangement” or “plan” (“the arrangement”) whereby in consideration for Mr Wang making payments to, or on behalf of, Andrew WWH, Andrew WWH became the borrower of the subject loans and thus became responsible for their repayment. Although described initially as an “assignment of liabilities”, in the course of submissions before me, counsel for the defendants identified the arrangement in legal terms as a novation. I shall discuss the evidence relating to the arrangement later in this Decision.

Principles governing applications for Mareva Injunctions

25.  The principles governing applications for Mareva Injunctions are well known and it is not necessary to reproduce them in detail here. The Plaintiff accepts (§11 of its skeleton submissions) that it has the burden of satisfying the following requirements:

(1)  “the plaintiff has a good arguable case on a substantive claim;

(2)  the defendant has assets within the jurisdiction;

(3)  the balance of convenience is in favour of granting the injunction;

(4)  there is a real risk of dissipation or removal of assets, which would render the plaintiff’s judgment of no effect”.

26.1.  The court’s approach on Requirement (4) above was discussed by the Court of Appeal in Convoy Collateral Ltd v Cho Kwai Chee & ors[2020] HKCA 537, and it is this requirement that was the focus of the hearing before me.

26.2.  In Convoy, the CA held that the burden should be described as a “solid basis for concluding that there was a real risk of dissipation”. The court’s assessment necessarily involved an evaluative and predictive judgment, the question to be answered by examining the evidence holistically. Evidence of dishonest and fraudulent conduct or other serious wrongdoings which formed the basis of the claims, and which reflected adversely on the integrity of the defendant, could point powerfully towards an inference of such risk. Delay on the part of the plaintiff after the defendant knew about the claim could militate against the risk of dissipation, but delay per se would not necessarily bar relief, and must be considered on its own circumstances, the ultimate question still being whether the plaintiff could show a real risk of dissipation despite its delay.

Discussion

27.  Applying the above principles, I am not satisfied that the Plaintiff has discharged the burden of Requirement (4) as discussed by the CA in Convoy.

28.1.  First, the demand letters were sent more than 5 months and the OS were issued more than 4 and a half months before the applications for the Mareva Injunction were made. The time was not taken up by mutual proposals for settlement, as the Plaintiff deposed that the defendants were not willing to make proposals or provide undertakings, and ASL also was not willing to provide any undertakings to the Plaintiff.

28.2.  The point here is not just delay (which per se would not bar relief). Apart from the unexplained delay, the point here is that during this period of 5 months, there was nothing to stop the defendants from realizing the securities in the ASL accounts and transferring the proceeds away. The same applies to Mr Wang’s cash at ASL and the securities in his integrated account at HSBC (although Swiss francs equivalent to HK$1 million was withdrawn from HSBC on 28 November 2024 apparently for payment of HK$1 million to China Best the next day, about 2 weeks before the application for Mareva Injunction). The statements of the ASL accounts and the HSBC account generally showed no substantial realizations or transfers despite the letters of demand and the issue of legal proceedings 5 months previously, or in the period between the service of the application for the Mareva Injunction and the hearing before DHCJ A Li. Indeed, there were occasional increases in the value of the assets in the securities accounts, and monetary deposits were sometimes made into the HSBC account.

29.  Second, there is nothing to support the Plaintiff’s allegation that Andrew WWH’s bankruptcy was “without any good reason and justification” or was “to evade repayment obligations on his part”.

30.  Third, I am not satisfied that there is evidence of dishonest and fraudulent conduct or other serious wrongdoings which formed the basis of the claims, and which reflected adversely on the integrity of the defendants. The term “low commercial morality” is not some sort of cure-all. The court has said that even sharp commercial practice cannot by itself give rise to the inference of a real risk of dissipation, and as was held in Convoy, it must examine with care allegations of dishonesty before inferring therefrom a real risk of dissipation (§43).

31.  I do not accept the Plaintiff’s submission that the defendants have had a change of case as they had not mentioned the arrangement in their first affirmations challenging the application for Mareva Injunctions. I note that each defendant said specifically that the affirmation (filed only 4 working days after the Plaintiff’s application for a hearing 7 working days after the application) was “without prejudice to my right to put forward my substantive defence at trial” and that the focus was on the Plaintiff’s failure to demonstrate any real risk of dissipation.

32.  I have taken into account the documents signed in 2019, Mr Li’s authorisation letter to ASL on 30 March 2022 allowing the Plaintiff to control his securities account in the event of default in payment of Loan Agreement No. SM-00059-15, the co-signed document, and screenshots of Wechat messages in 2024 in a group comprising WKW, Mr Wang and Andrew WWH.

33.  However, there is also documentary evidence from the defendants in support of the arrangement. Mr Wang has exhibited cheques showing that on 29 October 2019, he made a payment of HK$6.36 million to Andrew WWH, and on 27 December 2019 he made another payment to him of HK$10.2 million and a payment of HK$8 million to a finance company China Best Finance Ltd which he says was made on behalf of Andrew WWH.

34.  Moreover, the defendants have exhibited a document showing that on the first page of a copy of the co-signed document, Andrew WWH signed an endorsement (I note it was dated 31 March 2023) stating that the 3 loans had all been repaid by Mr Li, Mr Wang and Song Rui, that he (Andrew WWH) was the actual borrower and user of the 3 loans, and he would repay the sums owing and be responsible in the event of all legal and financial disputes.

35.  Of more weight is the evidence that after the arrangement alleged by the defendants, interest payable to the Plaintiff previously deducted from the defendants’ securities accounts at ASL was no longer deducted from those accounts. The Plaintiff has exhibited its own general journal indicating payments of instalments in Mr Wang’s account, and also certain cheques (some apparently drawn by ASL) some of which sums do, and some of which do not, correspond with the instalments. WKW said the Plaintiff had no part to play in the change in the mode of payment. Be that as it may, it is notable that counsel for the Plaintiff accepted at the hearing before me that the payments by ASL to the Plaintiff were not reflected in the defendants’ securities accounts with ASL, unlike the pre-arrangement modus operandi. In other words, the defendants were not debited by ASL with the payments it made to the Plaintiff. The Plaintiff could not provide evidence to suggest why that was so. The above is some corroboration for the defendants’ case that after the arrangement, Andrew WWH had stepped into their shoes as debtor to the Plaintiff, so that the defendants no longer needed to make repayments to the Plaintiff. As was held in Convoy, the Plaintiff’s allegations of dishonesty against the defendants must be examined with care before the court could infer a real risk of dissipation (§43).

36.  I must emphasize that the above considerations do not go towards Requirement (1), but to Requirement (4) in the context of rejecting the Plaintiff’s submission that there is evidence of dishonest and fraudulent conduct or other serious wrongdoings which formed the basis of the claims, and which reflected adversely on the integrity of the defendants, with which it sought to bolster its arguments regarding a real risk of dissipation of assets which I have rejected above. If the defendants were persons of “low commercial morality”, they would have realized and transferred all the assets out of Hong Kong during the 5 months between the demand letters and the issue of the OS in July 2024 and the issue of the application for the Mareva Injunction in December 2024.

37.  As the courts have noted, the purpose of a Mareva Injunction is not to provide a plaintiff with preferential security for its claim (Lakatamia Shipping Co Ltd v Toshiko Morimoto [2019] EWCA Civ 2203, [34] quoted in Convoy §35). Requirement (4) is a stand-alone requirement which I find the Plaintiff has not satisfied. There were ample opportunities for the defendants to transfer their assets away which they did not do in the 5 months before the application for the Mareva Injunction, and in light of the matters discussed above, there is insufficient evidence from which the court should infer a real risk of dissipation.

Order

38.  For the reasons above, I would dismiss the Summons issued on 11 December 2024 in both proceedings with an order nisi that the Plaintiff pay the costs of the Defendants including the costs reserved by DHCJ A Li on 20 December 2024.

Mr. Richard Leung and Mr. Tommy Cheung, instructed by Messrs. Cheung & Choy, for the Plaintiff (in HCMP 1257/2024 & HCMP 1258/2024)

Mr. Jason Ko and Mr. Chris Wong, instructed by Messrs. Cedric & Co., for the Defendant (in HCMP 1257/2024 & HCMP 1258/2024)