ORION ENGINEERED CARBONS GMBH v. GAN YUQI (ALSO KNOWN AS GAN YU QI) AND OTHERS

HCA 322/2025

[2025] HKCFI 3328

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 322 OF 2025

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____________

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REASONS FOR DECISION
AND DECISION ON COSTS

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A.  INTRODUCTION

1.  At the hearing on 4th July 2025, I discharged the proprietary and Mareva injunctions granted on an ex parte basis on 18th February 2025 against the 36th Defendant. I now give my reasons for so doing, and deal with the question of costs and the Plaintiff’s application to be released from its cross-undertaking in damages.

B.  THE BACKGROUND

B1.  The obtaining of the ex parte Injunctions

2.  The Plaintiff was deceived into transferring funds in the total value of about $400,000,000 to various recipients in July and August 2024. The 36th Defendant was a third-tier recipient of $77,858 (“the Sum”) of these funds. The Sum was transferred to her Bank of China (“BOC”) account from one Xie Junye on 3rd August 2024.

3.  On 18th February 2025, Alex Lee J granted, on an ex parte basis, a proprietary injunction in respect of the $77,858 transferred to the 36th Defendant’s BOC account, and a top-up Mareva injunction (“theInjunctions”) (and similar relief in relation to 20-odd second-tier and 80-odd third-tier recipients).

4.  At the ex parte hearing, the Plaintiff’s evidence was contained in the 1st Affidavit of Christian Eggert (“Eggert 1st”).[1] The Plaintiff was represented by counsel Mr Ernest Ng, who lodged a skeleton (“the Ex Parte Skeleton”). It was said that there was a good arguable case that the defendants were all “fraudulent recipients”.

5.  As regards possible defences which the 36th Defendant might have, the following was stated in Eggert 1st and the Ex Parte Skeleton:

5.1  that it was not yet clear what role each of the defendants had played in the matter, and whether they had acted in concert with each other or other persons;[2]

5.2  that it was possible that some of the second-tier and third-tier recipients might seek to raise a defence of having received the money from the first-tier or second-tier recipients as a bona fide recipient of a commercial transaction and/or change of position; nevertheless, the Plaintiff had no relationship with the defendants and did not otherwise have information or knowledge concerning their business interests or activities.[3]

6.  As regards the risk that the 36th Defendant might unjustifiably dissipate her assets, the following was stated in Eggert 1st and the Ex Parte Skeleton:

6.1  that the Plaintiff’s Mr Eggert, colleagues and business partners had never heard of any of the defendants;[4]

6.2  that none of the 109 defendants had any substantive internet presence, according to searches conducted by the solicitors for the Plaintiff, Messrs Tanner De Witt (“TDW”);[5]

6.3  that the Hong Kong Police had frozen various accounts (but not the 36th Defendant’s) by way of a “Letter of No Consent” or a “Suspicious Transaction Report”;[6]

6.4  that the Hong Kong Police had frozen a number of other accounts (but not any of the 109 defendants’, including the 36th Defendant’s);[7]

6.5  given that there had been email fraud and disclosure showing that the most of the money transferred by the Plaintiff had been dissipated, there had already been dissipation by the first-tier and second-tier recipients, and there was a very real risk of dissipation by the third-tier recipients;[8]

6.6  based on the evidence available to the Plaintiff, there was nothing to suggest why any of the third-tier recipients had any reason or justification to receive sums from the second-tier recipients or to retain the Plaintiff’s money; the absence (at the ex parte stage) of evidence to support a credible defence reinforced the risk of dissipation.[9]

7.  The ex parte injunctions against the various defendants were continued by order of DHCJ Alan Kwong on 28th February 2025, either until trial, or (as many defendants had not been served) until the hearing on 16th May 2025 before me.

8.  The Writ was amended on 7th April 2025 to (inter alia) change the addresses of a number of the defendants. The address for the 36th Defendant was amended from that of BOC to an address in Hong Kong.

9.  At the hearing on 16th May 2025, the Plaintiff was again represented by Mr Ng. His skeleton lodged for that hearing (“the May Skeleton”) referred to and relied on the Ex Parte Skeleton and Eggert 1st. The 36th Defendant fell into a category of “foreign defendants” in respect of which the Plaintiff sought a further adjournment of its application for continuation (and continuation of the injunctions against them in the meantime). The period of adjournment sought was twelve months, as “time is needed” for service.[10] Footnote 2 in the May Skeleton related to the 36th Defendant and read “Who has informed P’s solicitors that she is in the United Kingdom [not in bundle]”. A table was annexed to the May Skeleton, with the 36th Defendant falling into the category of “Adjourn for 12m (pending service)”.

10.  Nothing more was said about the circumstances of the 36th Defendant. In other words, the representation to the court as regards any possible defences which the 36th Defendant had, the risk of dissipation as regards the 36th Defendant, and the state of the 36th Defendant’s account, remained the same as that put forward in the Ex Parte Skeleton and Eggert 1st of 18th February 2025. Furthermore, the submission that twelve months was needed for service rested on the basis that all that was known about the 36th Defendant was that she had told TDW that she was in the United Kingdom.

11.  Prior to the hearing on 16th May 2025, I became aware of a letter dated 6th May 2025 which had been sent to the court by a person claiming to be the 36th Defendant.[11] Amongst other things, she stated that she had received the Plaintiff’s amended documents by email on 28th April 2025. She sought to submit a summons seeking discharge of the Injunctions, and a notarised supporting affirmation which stated her London address, together with supporting documents.

12.  In her affirmation, the 36th Defendant stated that she had never dealt with the Plaintiff, and had never been involved in the fraudulent activities alleged in these proceedings. She stated that in July 2024, she had engaged in a lawful over-the-counter (“OTC”) cryptocurrency-to-fiat exchange with the assistance of a trusted friend Xingshun (Ansen) Wen, with her transferring cryptocurrency USDT to Ansen Wen’s BitMart account through an internal transfer, and Ansen Wen then assisting her to convert the USDT into Hong Kong dollars in a verified trade through the Huobi cryptocurrency exchange (“Huobi”), and finally one Xie Junye, a verified OTC merchant on Huobi, transferring Hong Kong dollars to the 36th Defendant’s BOC account. The 36th Defendant said that she had no relationship with Xie Junye.

13.  The 36th Defendant further stated that she had provided full documentation to the Plaintiff’s solicitors demonstrating what she described as the legitimate nature of her transaction, including BitMart transfer records, WeChat and WhatsApp communications with Ansen Wen, screenshots evidencing the OTC transaction, and timeline records. She complained that despite this, the Plaintiff’s solicitors demanded payment of $77,858, and later, $50,000.

14.  It therefore appeared that there had been correspondence between the 36th Defendant and TDW, and that at the very least, TDW was aware that the 36th Defendant’s stance was that she had a good defence to the Plaintiff’s claim. At the hearing on 16th May 2025, I asked why these matters had not been disclosed to the court, given that the Plaintiff had not yet served the 36th Defendant and the matter remained ex parte, and why it was said that a further twelve months was necessary to effect service on a London address.

15.  Upon Mr Ng taking instructions, it transpired that there had in fact been quite a bit of correspondence between the 36th Defendant and TDW, although Mr Ng said that he had not been told of the same (save to the extent to enable him to write footnote 2 in his May Skeleton), and that no application had yet been made to seek leave to serve the 36th Defendant out of the jurisdiction.

16.  A clear account of what had passed between the 36th Defendant and TDW could not be provided, as Mr Ng had apparently not been briefed about it (and had not inquired into it despite his footnote 2). Nor was there a proper explanation of why the 36th Defendant’s stance had not been disclosed to the court.

17.  In the circumstances I ordered that the matter be adjourned to 4th July 2025 and that the Injunctions be continued in the meantime, but upon TDW’s undertakings, inter alia, to:

17.1  file an affidavit within seven days to identify all the defendants with whom TDW had been corresponding, including the 36th Defendant, who had not as at 16th May 2025 been formally served with the Writ or the injunctions against them;

17.2  in respect of each such defendant, insofar as he had indicated to TDW prior to 16th May 2025 that he was not involved with the fraud complained of or otherwise had a defence, and sought to discharge or vary the injunctions against him, explain what had been indicated to TDW and exhibit the statements made and supporting documents provided by defendant in question;

17.3  explain why TDW had failed to disclose the aforesaid matters to the court when (a) the defendants in question had not been served with the Writ or the injunctions, (b) the Plaintiff was applying to the court for continuation of the injunctions, obtained since 18th February 2025 on an ex parte basis, for a further twelve months from 16th May 2025, on the grounds (inter alia) that there was no evidence to support a credible defence, and, in the case of the 36th Defendant, only stating through counsel’s May Skeleton that the 36th Defendant had told TDW that she was in the United Kingdom.

18.  I also gave leave to the Plaintiff to issue a concurrent Amended Writ against the 36th Defendant and to serve it out of the jurisdiction on her at her London address or elsewhere in the United Kingdom. As will be seen below, the Plaintiff never attempted to effect service on the 36th Defendant.

B2.  The explanations for the non-disclosure

19.  TDW filed the 1st Affidavit of Troy Joshua Greig on 23rd May 2025 (“Greig 1st”) to comply with its undertakings. There had in fact been extensive correspondence between TDW and the 36th Defendant.

19.1  On 18th March 2025, the 36th Defendant emailed TDW, saying that she had learned from BOC that her account had been frozen, and the bank had provided TDW’s contact information. The 36th Defendant asked for various details of the court order, the nature of the Plaintiff’s case, and how it related to her account. She further indicated that she was fully willing to cooperate and provide any necessary information to resolve the matter, and asked what documents or evidence needed to be submitted to demonstrate that she had no connection to the case. She politely requested a prompt response, saying that the situation affected her ability to access her funds. She gave her phone number and her email address.

19.2  On 19th March 2025, TDW emailed the 36th Defendant, saying that it acted for the Plaintiff, who was a victim of fraud, and that part of the money stolen from the Plaintiff (the Sum) had been transferred to the 36th Defendant’s BOC account from Xie Junye on 3rd August 2024. TDW further provided a link at which (it said) the 36th Defendant could see copies of (inter alia) the Writ, the ex parte injunctive orders of 18th February 2025, the 1st Affidavit of Leung Lok Yan Brianne, the Ex Parte Skeleton, and the inter partes summons returnable on 28th February 2025 (that is, prior to the date of the email). TDW further stated that DHCJ Alan Kwong had ordered on 28th February 2025 that the summons be adjourned to 16th May 2025 and that the Injunctions be continued in the meantime (but a copy of the order was not provided). TDW asked the 36th Defendant to contact it should she have any questions.

19.3  On 19th March 2025, the 36th Defendant replied, saying that the matter had nothing to do with her, and that she had no knowledge of what had happened. She said that she did not know Xie Junye and had not had any interaction with him. She had reviewed her records and she could confirm that on 31st July 2024, she had arranged an OTC transaction through Ansen Wen, who lived in the United States and who facilitated a cash-out transaction for her legitimate cryptocurrency investment. She had sent her USDT to Ansen Wen and not Xie Junye. She attached her chat history and OTC transaction records for TDW’s reference, and indicated that she was happy to provide any additional supporting documentation to demonstrate the legitimacy of her funds. In this email she also stated that she had been residing in the United Kingdom since 2014 and had declared her permanent departure from Hong Kong under oath.

19.4  Later that day, the 36th Defendant sent a second email, saying that she sympathised with the Plaintiff’s situation as a victim of fraud, but reiterated that the matter had nothing to do with her. She had located additional WeChat records confirming that the transaction was purely an OTC transaction between her and a trusted friend, which she attached. Her friend was prepared to provide supporting evidence to demonstrate that they were only conducting a legitimate OTC transaction. She was willing to provide a witness statement to clarify that she had no connection to the case. She believed that she had been wrongly included in the proceedings. She also indicated that she would contact the Hong Kong court directly to seek clarification and explore necessary steps. She said that she would appreciate reconsideration of her involvement as it was clear she had no connection to the alleged fraud.

19.5  On 25th March 2025, TDW emailed the 36th Defendant, first reminding her to seek independent legal advice, then saying that the attachments sent by the 36th Defendant were not sufficient for the Plaintiff to consider discharging the Injunctions or discontinuing the action against her. “For example, the attachments do not show the wallet addresses of the seller and buyer in the alleged transaction. This is simply one illustration and it is for you to decide what further information to provide to show your case.” The email concluded “If you would like to have the Injunction Order discharged and/or the Action discontinued against you as soon as possible, one option for you to consider is paying money into Court, another is making our client an offer of settlement.”

19.6  On the same day, the 36th Defendant replied, “to provide further clarification”. She responded directly to the concern that TDW had expressed, giving further particulars of how the transaction had taken place. She explained that the transfer of USDT to Ansen Wen had been conducted “entirely within the BitMart platform, which means no blockchain wallet addresses were generated, as the transaction occurred off-chain. This is standard practice for centralized exchanges. The absence of a wallet address is not suspicious, and the attempt to present it as such is either a misunderstanding or a deliberate mischaracterization. BitMart internally logs all transfer history between users, and this can be verified by the platform if needed. Ansen Wen subsequently conducted an OTC trade via HTX (formerly Huobi), in which Xie Junye transferred HKD 77,858 to my account. I had no contact with Xie Junye and no knowledge of the origin of his funds. This was a standard P2P transaction facilitated by HTX. A video of the transfer was also provided by the counterparty, as is common in such arrangements.” The 36th Defendant attached a screenshot of the USDT transfer within BitMart, and screenshots of the HTX OTC transaction record. The 36th Defendant explained that she used her own USDT to acquire Hong Kong dollars, and did not knowingly receive proceeds of crime. She expressed frustration with TDW’s attempt to “maintain pressure on low-level defendants without due consideration of individual facts”. She stressed that she had voluntarily contacted TDW and provided material it had no access to, and had communicated transparently throughout; she had also contacted the High Court Registry and submitted relevant correspondence including TDW’s recent letter.

19.7  On 26th March 2025, TDW emailed the 36th Defendant. The opening line read “Thank you for your email. I will not respond to the balance of your email as it is gratuitously erroneous.” It then went on to say that to resolve the matter, the Plaintiff was prepared to accept $50,000 in full and final settlement of its claim, to be paid within seven days.

19.8  On the same day, the 36th Defendant replied, reiterating that she had no involvement in the fraud alleged, complaining that TDW disregarded the facts, and saying that she would not be coerced into settling something which had nothing to do with her.

19.9  On 24th April 2025, TDW emailed the 36th Defendant, attaching a sealed copy of DHCJ Alan Kwong’s order of 28th February 2025, which, amongst other things, had adjourned the hearing of the application to continue the Injunctions (as amended by DHCJ Alan Kwong) to 16th May 2025.

19.10  On the same day, the 36th Defendant replied, informing TDW that she had submitted two letters to DHCJ Alan Kwong, one in March 2025, and one in April 2025 “according to the court’s direction” with her witness statement and supporting documents.[12] She said that she was overseas and had not received a formal reply from the Court but would notify TDW once she did so.

19.11  On 28th April 2025, TDW emailed the 36th Defendant, attaching a copy of the Amended Writ.

19.12  On the same day, the 36th Defendant replied. She pointed out that the Amended Writ incorrectly stated a Hong Kong address for her. She continued, “As I have previously informed both the Court and your firm, my current and only address for service is [a London address]”.

19.13  On 7th May 2025, the 36th Defendant emailed TDW, attaching a copy of her summons and affirmation. She reiterated that she had no involvement in the fraud and asked TDW to discontinue the proceedings against her. She reserved her rights to claim for her postal and notarisation expenses, loss due to the wrongful freezing of her bank accounts, and compensation for the time and stress caused by the Plaintiff’s unfounded claims.

20.  The Plaintiff had not hitherto disclosed any of this correspondence, or indeed even the mere fact of its existence, to the court. The explanations given for the non-disclosure in Greig 1st were as follows.

“ 6. As I explain below, TDW did not deliberately withhold disclosing the aforesaid matters to the Court, nor did it intend to do so. This firm has always acted in accordance with its professional obligations.

7. As we understand it, no formal application has been filed by the 36th Defendant for a discharge of the Injunction Order against her despite her repeated reference to addressing the matter through “appropriate legal channels” and so on. It was genuinely believed that any documents provided, unless and until filed into Court, does not constitute evidence. [Emphasis as in the original text.] TDW appreciates the concern expressed by Her Ladyship on 16 May 2025 but genuinely believed should the 36th Defendant sees fit, it is incumbent on her to properly make a formal application to the Court to seek for a discharge of the Injunction Order against her, whether or not she intends to participate or if so, whether it is to be solely done by written materials. In short, there is no defence, and unless one is filed and tested at trial, a court should be very reticent to accept an unsubstantiated and untested narrative.

8. We respectfully say that it is not ordinary nor fair to discharge, particularly when the 36th Defendant has full knowledge of this Action and the Injunction Order, based on some correspondences while other defendants had to obtain Court directions to file an affirmation in opposition for the Court to decide whether the Injunction Order should be discharged against them. Respectfully, all defendants should be treated the same – the 36th Defendant should seek directions from the Court to file evidence in opposition to the Injunction Order and appear before the Court to argue why the Injunction Order should be discharged against her.”

21.  Greig 1st further disclosed that the 36th Defendant’s BOC account had been closed on 15th January 2025 with zero balance. At the hearing on 4th July 2025, in answer to my queries, Mr Ng said that TDW had in fact learnt, as early as 26th February 2025, that the account had been closed, and that by 20th March 2025 it had obtained the account statements from the bank. None of these matters had hitherto been brought to the court’s attention at the hearings of 28th February 2025 or 16th May 2025.

22.  In the skeleton lodged by Mr Ng for the 4th July 2025 hearing (“the July Skeleton”), all that was said about the non-disclosure by TDW was:

“ It is submitted that Greig 1st has already provided full and frank explanation in respect of the correspondence with D36 and the Court is respectfully referred thereto.”

23.  As to service, no mention was made of what steps had ever been taken by the Plaintiff to comply with its obligation, pursuant to the undertaking given to Alex Lee J on 18th February 2025, to serve the Writ, or the summons for the return date, “as soon as practicable” on the 36th Defendant. At the hearing of 4th July 2025, when asked about what steps had been taken to serve the Writ, Injunctions, and inter partes summons for continuation of the Injunctions on the 36th Defendant, given that TDW had been aware of her address latest by 28th April 2025, Mr Ng said that TDW dealt with the 36th Defendant via email and did not take steps to serve the 36th Defendant. When asked why this was the case despite leave to serve out of the jurisdiction having been given at the hearing of 16th May 2025 and despite the Plaintiff having given an undertaking to serve the Writ and Injunctions “as soon as practicable”, Mr Ng answered that this was because steps were taken to discontinue the action against the 36th Defendant. When it was pointed out that the Notice of Discontinuance was only filed on 17th June 2025, more than a month after leave had been given to serve the 36th Defendant out of the jurisdiction, Mr Ng said that (1) the Plaintiff considered that the undertaking did not apply because it had decided to discontinue the action, and (2) time was taken to consider the Plaintiff’s position.

B3.  Other events

24.  As mentioned, prior to the hearing on 4th July 2025, the Plaintiff filed a Notice of Discontinuance against the 36th Defendant on 17th June 2025. It also issued an ex parte summons, returnable on 4th July 2025, for discharge of the Injunctions. The Plaintiff therefore did not object to the discharge of the Injunctions, but it objected to their being discharged on the grounds of material non-disclosure.

C.  RELEVANT LEGAL PRINCIPLES

25.  The basic and fundamental principles regarding the duty to make full and frank disclosure, and to give a fair presentation, are set out in Gee, Commercial Injunctions, 7th ed. They are trite, but given the circumstances of this case, it is appropriate to revisit them.

“ (1) GENERAL PRINCIPLES

(i) The general principles

[9-001] An applicant to the court for relief without notice must act fairly in all material respects in preparing and presenting the application and afterwards in connection with it and the ex parte order obtained. This includes a duty to act in the utmost good faith and to disclose to the court all matters which are material to be taken into account by the court in deciding whether or not to grant relief without notice, and if so on what terms …

If an application is made on informal notice to the defendant (i.e. ex parte on notice) and the defendant does not appear, the rule requiring full disclosure still applies. …

It applies not just to disclosure of facts but to absolutely anything which the judge should consider. It is part of the duty of an applicant for without notice relief to present the application fairly. …

Counsel and solicitors are to be expected to be aware of the duty of disclosure. …

[9-002] This rule applies with special force to applications for Mareva or Anton Piller relief, which by their nature are particularly liable to cause substantial prejudice to a defendant or other parties…

The duty continues after the ex parte application and includes a duty to return to court with new developments, until proceedings have reached the stage where the defendant is in a position to make his own application to discharge or vary the injunction, which normally will be once there has been service of the claim form, order and supporting documents: see below “Effect of new developments after the ex parte application, including fresh information”. This is separate from and additional to the duty to correct affidavit or witness statement evidence which was materially misleading at the time it was sworn or signed or deployed before the court. …

(ii) Materiality

[9-003] … The test as to materiality is an objective one, and it is not for the applicant or his advisers to decide the question; hence it is no excuse for the applicant to subsequently say that he was genuinely unaware, or did not believe, that the facts were relevant or important. …

(iii) Duty to make inquiries

[9-004] The duty to disclose applies to matters known to the applicant or his agents, or matters which they would have known, had they made all the inquiries which should reasonably have been made prior to the application. The case must be presented fairly, and this includes making these inquiries. …

(v) The cause of action and defences

…

[9-006] … Facts relevant to the strength or weakness of the case on the merits should be put before the court. A thorough check should be made to ensure that all defences actually raised by the defendant are identified and fairly summarised in the affidavit.

Furthermore, on the hearing of the without-notice application it is the duty of counsel to ensure that defences and evidence in support of them are specifically drawn to the attention of the judge. Merely mentioning the existence of such material without showing it to the judge may in itself be misleading, or give the case a different flavour. Counsel has a personal duty to the court to ensure that the judge sees all the relevant material.

It is usual for a skeleton argument to be used on an application of any complexity. If a skeleton argument is used, it will be one of the primary documents used by the judge in hearing the application and it is very important that it is an entirely fair document. It must not, by failing to mention matters, divert the judge’s attention away from material which he should have in mind if he is to have a fair view of the case. …

The applicant must identify any defences, which. although not yet taken, would have been available to be taken by the defendant had he been present at the application, provided that:

(1) the defence is one which can reasonably be expected to be raised in due course by the defendant or is an arguable defence;

(2) the defence is not one which can be dismissed as without substance or importance…

This is simply an aspect of the applicant’s duty to give a fair account of the case for and against the defendants, identifying the crucial points for and against the granting of the application. The duty of full disclosure and fairness requires the applicant to place before the court relevant legal points. Thus, if there is an obvious answer to the claim … The applicant must refer to it even if the defendant has not explicitly raised it. The judge should be provided with relevant case law. The applicant must take on the burden of informing the court of all matters which if he were representing the defendant or a third party with the relevant interest, he would be saying to the judge. …

(ix) Inter partes relief and what is ex parte

[9-013] The reason for the duty to make full disclosure on a without-notice application is that the applicant is himself asking the court to undertake the hazardous course of granting relief against a party in his absence and without the opportunity of presenting his case. The duty applies at a hearing made without the three days’ notice required under the CPR, and even if the defendant is represented at that hearing. …

(5) EFFECT OF NEW DEVELOPMENTS AFTER THE EX PARTE APPLICATION, INCLUDING FRESH INFORMATION

[9-026] The duty of the applicants for ex parte relief to act with the utmost good faith towards the court does not cease with the granting of the application. The court is exercising a jurisdiction which is obviously very hazardous and liable to cause serious prejudice to the defendant or third parties. The granting of ex parte relief is an exception to the general rule that no order is to be made to the prejudice of a party unless he has had the opportunity of being heard in his defence. …

When the court grants ex parte relief of this nature, it is entrusting the applicant with its order, at least for the period immediately following the application, on the basis that the applicant will be using the order to forward the interests of justice. It is not for the applicant to act as judge in his own cause and decide what effect, if any, new developments are to have on the ex parte relief. Thus the general principle on the ex parte application is that an applicant may not select the material to be placed before the court. This applies with equal force in relation to new developments in the case, at least while the defendant is under a continuing disability in relation to protecting its own interests.

Thus in Commercial Bank of the Near East Plc v A [[1989] 2 Lloyd’s Rep 319], Saville J considered the position in relation to Mareva relief when, following the application, the plaintiff had obtained leave to register cautions of the property belonging to the defendants in Greece. Although the case was not one in which the court been misled or complete information had been given on the initial ex parte application, Saville J held that “while the proceedings remain on an ex parte basis”, the applicant has a duty to the court to bring to its attention any subsequent material changes in the situation, i.e. any new or altered facts or matters which, had they existed at the time of the application, should have been disclosed to the court. This principle applies to ex parte orders including permission to serve proceedings out of the jurisdiction.

In O’Regan v Iambic Productions [(1989) 139 NLJ 1378], the applicant, who had been granted Anton Piller relief, received a letter from the defendant offering to allow the plaintiff access to premises to search for certain items. Other items were returned to the plaintiff with an explanation that there had been an unsuccessful attempt to return the items a short time earlier. The applicant then executed the Anton Piller order without having first informed the court of the new developments. Sir Peter Pain held that the applicant and the solicitor involved were in breach of the duties to the court and failing to return to the court before executing the order, and he followed the approach which had been adopted by Saville J. … If a claimant has obtained ex parte relief on a basis which he knows he can no longer support, he should apply to the court either to discharge the order, or to continue the order on a new basis.

….

In Commercial Bank of the Near East Plc v A (above), Saville J said that the duty continued while the proceedings remained on an ex parte basis. The circumstances in question there, however, were also known to the defendants, so that once the defendants had been fully apprised of what had occurred on the ex parte application, they would themselves have been in a position to apply to the court to discharge or vary the order in the light of the change of circumstances. The duty ceases to apply to developments which occur after the proceedings cease to be on an ex parte basis, namely where the defendant is in a position to defend himself. …”

26.  The observation in Gee that the duty ceases to apply once a defendant is apprised of what has occurred on the ex parte application “or when he is in a position to defend himself” is based on JSCBTA Bank v Mukhtar Ablyazov [2018] EWHC 259 (Comm). That was a case where the second defendant’s solicitors had acknowledged on affidavit that the ex parte freezing order against the defendant was ex parte only until the date on which he received the claim form and freezing order, rather than the slightly later date on which he was served; where the second defendant had appeared by counsel at an inter partes hearing prior to the date of service (seeking to defer the disclosure ordered against him); and where the second defendant did not complain that he was not properly informed of the basis of the making of the freezing order. In the circumstances of that case, Sir Andrew Smith (sitting as a Deputy Judge of the High Court) observed that after receiving the freezing order, the second defendant could have applied to the court to put before it any information he considered relevant. Ultimately, however, the judge proceeded on the basis that the proceedings remained ex parte up to the time of service of the claim form, the plaintiff having accepted that it remained under a duty to make full and frank disclosure until that time.

27.  Where a plaintiff has served the defendant with the writ, the proceedings will no longer be ex parte.

28.  Where a plaintiff has served the defendant with a summons in compliance with the rules of court, the hearing of the summons will no longer be ex parte, and the plaintiff will have absolved himself of the obligation to make full and frank disclosure in respect of that application. See Alpha & Leader Associates Ltd v Victory Mega Trading Ltd[2023] HKCFI 2322 at [147] to [151] (Tsui J).

29.  Even if an applicant is not subject to the duty to make full and frank disclosure, it remains under a duty not to mislead the court: Alpha & Leader Associates Ltd at [159]. The duty is borne not just by the applicant but also by counsel and solicitors, as officers of the court.

D.  APPLICATION TO THE PRESENT CASE

30.  In the present case, the 36th Defendant has never been served with the Writ, the Injunctions or any inter partes summonses in accordance with the Rules of the High Court, although the 36th Defendant was apparently on notice of the Writ and Injunctions since about 19th March 2025 through her email communications with TDW. The internet link in TDW’s email of 19th March 2025 had apparently also provided access to a copy of the inter partes summons returnable on 28th February 2025, but that date had of course already passed by the time the link was provided on 19th March 2025. The email mentioned that DHCJ Alan Kwong had on 28th February 2025 adjourned the summons to 16th May 2025, but no copy of that order was emailed to the 36th Defendant until 24th April 2025. Emailing is not a proper mode of service: RHC O.65 r.5. The 36th Defendant expressly volunteered a London address as the proper address for service, but the Plaintiff never took any steps towards serving documents on the 36th Defendant.

31.  There was a faint suggestion by Mr Ng at the hearing of 4th July 2025 that “at the hearing of 16th May 2025, the matter is coming arguably to an inter partes stage” as the 36th Defendant had been told of that hearing. He did not seriously pursue this argument or produce any authorities in support of this proposition. I reject the suggestion that the hearing of 16th May 2025 should be treated as an inter partes hearing:

31.1  at the hearing on 16th May 2025, the Plaintiff sought a twelve‑month adjournment of the application for continuation of the Injunctions against the 36th Defendant, and a continuation of the Injunctions against her in the meantime, on the basis that time was needed to serve the 36th Defendant. Furthermore, all that was told to the court about her was that she had told TDW that she was in the United Kingdom. In other words, the continuation of the Injunctions was sought to be justified on the very basis that the matter was still proceeding ex parte;

31.2  put another way, it was not the Plaintiff’s stance at the hearing on 16th May 2025 that it had served the 36th Defendant with a summons for the hearing or otherwise given proper notice of the hearing such that the hearing should be treated as inter partes. Whilst it now transpires that prior to the hearing, the Plaintiff had provided, via email, an internet link by which it was said that the 36th Defendant could have downloaded the Writ and Injunctions, this was not what the Plaintiff told the court at the time; still less had it put any evidence before the court as to which of the documents in this link had been accessed by the 36th Defendant;

31.3  it was not the case that the 36th Defendant had accepted that the matter should be treated on an inter partes footing (cf. the second defendant in JSCBTA Bank);

31.4  it was not TDW’s stance (as expressed in Greig 1st) that it was relieved from the duty of full and frank disclosure at the hearing of 16th May 2025 by reason of any informal notification given to the 36th Defendant;

31.5  even as at 4th July 2025, the Plaintiff treated the proceedings as being ex parte in nature: on 17th June 2025 it issued an ex parte summons, returnable on 4th July 2025, for discharge of the Injunctions; and Mr Ng filed his July Skeleton for the same hearing seeking an order regarding costs and discharge of the cross-undertaking as to damages “ex parte on the basis that the Writ has not been served”.

32.  At most, it could be said that the hearing of 16th May 2025 was ex parte on notice to the 36th Defendant. In such circumstances, the Plaintiff remained a duty to give full and frank disclosure. It would not be satisfactory, to say the least, that a plaintiff who obtains an ex parte order against an undertaking to serve the proceedings and order on the affected party as soon as practicable, but fails to do so in accordance with the rules of court, for months, without any adequate explanation,[13] should be relieved from being bound by the duties attendant on the obtaining of such an order simply by pointing to informal notification by a link sent via email (and without even having to provide evidence of the efficacy of the same).

33.  In any event, as Mr Ng accepted, counsel and solicitors were under a duty not to mislead the court at the hearing of 16th May 2025. I would add that particular care should have been taken to make sure that the presentation of the case was fair, given that, as TDW knew, the 36th Defendant was acting in person.

34.  Whether the duty at the hearing of 16th May 2025 was one of giving full and frank disclosure, or one of not misleading the court, this was clearly breached. It will be recalled that the representations made in the Ex Parte Skeleton, which skeleton was expressly relied on in the May Skeleton, were that:

34.1  it was not yet clear what role each of the defendants had played in the matter, and whether they had acted in concert with each other or other persons;

34.2  whilst it was possible that some of the second-tier and third tier recipients of the Sum might seek to raise a defence of having received the money as a bona fide recipient of a commercial transaction and/or change of position, the Plaintiff had no relationship with the defendants and did not have information or knowledge about their activities;

34.3  there was a risk of dissipation by the defendants as, inter alia, there was no evidence to support a credible defence.

35.  In fact, by the time of the hearing on 16th May 2025, the 36th Defendant had provided a detailed account of the circumstances in which she came to receive the Sum, with supporting documents not previously available to the Plaintiff, and expressed her willingness to cooperate and to provide any information required. She had also provided an answer to the only point which TDW raised with her as casting suspicion on that account. At the very least, all of these matters put a very different complexion on the assertion that the Plaintiff knew of nothing to suggest that the 36th Defendant had any reason to receive or retain money originating from the Plaintiff, and that there was a solid basis for the view that the 36th Defendant might unjustifiably dissipate her assets so as to avoid any eventual judgment against her.

36.  Furthermore, by the time of the hearing on 16th May 2025, it was already known that no funds remained in the Plaintiff’s account which was the subject of the proprietary injunction, and the account had been closed. However, this was not mentioned in the May Skeleton, or any updating affidavit. No explanation was given as to what property of the 36th Defendant the proprietary injunction was supposed to operate over. Cf. Orion Engineered Carbons GmbH v Gan Yuqi and others[2025] HKCFI 2992 at [6] and [7].

37.  As set out in Gee above, the duty to disclose material matters extends to “absolutely anything which the judge should consider”; the duty continues after the initial ex parte application and includes a duty to inform the court of new developments; it is for the court and not the applicant or his advisers to decide what is material; matters relevant to the merits of a case should be put before the court and potential defences should be identified; counsel and solicitors are expected to be aware of the duty of disclosure, and to make reasonable inquiries to discover matters which should be disclosed. In the light of these basic principles, the approach taken in the present case by counsel and solicitors towards their duty of disclosure, and to present an accurate and fair picture to the court, even after concerns were raised at the hearing of 16th May 2025 as to whether there had been material non-disclosure, is worrying.

37.1  It was asserted by TDW (and repeated orally by Mr Ng at the hearing of 4th July 2025) that the 36th Defendant’s claims had not been filed with the court and did not constitute evidence, and therefore did not need to be referred to. This misses the point: disclosure of what TDW had learnt about the 36th Defendant’s stance should have been made for the purpose of giving an accurate picture to the court when deciding whether to make the orders sought by the Plaintiff. Whether or not the 36th Defendant’s claims were “evidence” strictly so called or not, they were matters that TDW had learnt of (and which counsel would have learnt of had he asked TDW what the correspondence with the 36th Defendant was about) after the time of the original ex parte application, and were relevant for the court to take into account in deciding whether or not the Injunctions should be continued for twelve months, on the claimed basis, and for the claimed purpose of enabling the Plaintiff to serve the writ on the 36th Defendant. If anything, they should have been put into the evidence by the Plaintiff itself (whether through TDW or otherwise). It was open to the Plaintiff’s lawyers to submit that the 36th Defendant’s claims were incredible or irrelevant, but it was not for them to decide that the matters should not be disclosed at all.

37.2  It was asserted by TDW that it was for the 36th Defendant to apply to discharge the Injunctions against her. However, it was the Plaintiff who was seeking to continue the Injunctions for twelve months on the basis that the 36th Defendant had not been served and that nothing had changed since the time of the Ex Parte Skeleton. It was therefore the duty of the Plaintiff and its legal team to draw the court’s attention to the fact that there had been developments which might contradict, or at least put in a different light, what had been said in the Ex Parte Skeleton.

37.3  It was asserted by TDW that it was unfair that other defendants had to obtain Court directions to file evidence in support of an application for discharge whilst the 36th Defendant did not have to do so. Again, this misses the point – the Plaintiff, TDW and counsel had a duty to give full and frank disclosure, and not to mislead the court. Their earlier assertions that they were not aware of any credible defence should have been corrected, given all that the 36th Defendant had told TDW.

38.  The undertaking to effect service upon the defendants “as soon as practicable” as given to Alex Lee J also does not appear to have been taken seriously. TDW was aware of the 36th Defendant’s London address latest by 28th April 2025,[14] but even by 16th May 2025, no steps had been taken to even apply for leave to serve proceedings on her out of the jurisdiction. And even after leave was given at that hearing, no steps were ever taken to effect such service. The submission that the Plaintiff considered that the undertaking did not apply because it (subsequently) decided (a month later) to discontinue the action is, with respect, astonishing. Whilst the Plaintiff may have wished to consider its position, this does not mean that its obligation to comply with its undertaking to the court was suspended in the meantime.

39.  One may have every sympathy for victims of fraud. However, this does not provide a licence to them or their legal advisers to ignore fundamental duties to the court or to ride roughshod over rules of procedure, which are there to safeguard the rights of all parties to the proceedings (who may include persons equally innocent of wrongdoing).

E.  CONCLUSION

40.  I therefore dismissed the Summons insofar as it related to the 36th Defendant, and ordered that the Injunctions against her be discharged.

41.  The 36th Defendant had earlier written to the court to ask for an order of costs against the Plaintiff. She incurred costs of £53.25 in posting various documents to the court, including a summons and supporting affidavit; and costs of £204.00 in having the summons and supporting affidavit notarised. Mr Ng accepted that an order of costs should normally follow upon discharge of an injunction for material non-disclosure. He also accepted that the costs of postage and notarisation would normally be recoverable as costs. He opposed an order for costs solely on the basis that the summons and supporting affidavit were not properly filed and only sent to the court as correspondence. However, although the 36th Defendant failed to properly complete the steps required to file the documents, this does not mean that her earlier steps in preparing the documents were wrongly taken (and it was not suggested otherwise by Mr Ng). I therefore order that the Plaintiff pay costs of £257.25 to the 36th Defendant.

42.  The 36th Defendant also complained of suffering stress and disruption arising from the Injunctions, which she sought to quantify as £1,200.00 less the costs of postage and notarisation. These do not appear to me to be properly claimable either as costs or as an actionable head of damages under the cross-undertaking as to damages, and I decline to make any order in relation thereto.

43.  The Plaintiff asked for a discharge of the cross-undertaking as to damages. It is premature for me to make any such order which appears to be an attempt to pre-empt any application on the part of the 36th Defendant to enforce the cross-undertaking. I decline to give the discharge.

44.  I direct that the Plaintiff should serve a copy of this decision on the 36th Defendant.

Mr Ernest Ng, instructed by Tanner De Witt, for the Plaintiff

HCA 322/2025

[2025] HKCFI 2992

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 322 OF 2025

____________

____________

__________________________________

REASONS FOR DECISION

__________________________________

A.  INTRODUCTION

1.  By summons of 20th February 2025 (“the Summons”), the Plaintiff sought the continuation of the proprietary and Mareva injunctions granted on an ex parte basis on 18th February 2025 against the 68th Defendant.

2.  I dismissed the application at the hearing of 4th July 2025 with costs to the 68th Defendant, summarily assessed.  I now give my reasons for so doing.

B.  THE BACKGROUND

3.  The Plaintiff was deceived into transferring funds in the total value of about $400,000,000 to various recipients in July and August 2024.  The 68th Defendant is a third-tier recipient of $300,000 (“the Sum”) of these funds.  The Sum was transferred to his Bank of China (“BOC”) account from one Fan Xiang on 9th August 2024.

4.  On 18th February 2025, Alex Lee J granted, on an ex parte basis, a proprietary injunction in respect of the $300,000 transferred to the 68th Defendant’s BOC account, and a top-up Mareva injunction (“theInjunctions”) (and similar relief in relation to various other second‑tier and third-tier recipients).  On 28th February 2025, the Plaintiff’s application to continue the Injunctions was adjourned by DHCJ Alan Kwong to 16th May 2025, with the Injunctions continuing in the meantime.  Counsel for the 68th Defendant appeared at the hearing before me on 16th May 2025 and the matter was adjourned to 4th July 2025 for substantive argument, with the filing of evidence in the meantime.

5.  The 68th Defendant’s evidence was that that he is a professional investor and a licensed individual with the Securities and Futures Commission for regulated activities, including asset management, and advising on and dealing in securities and futures contracts.  He said that he had had about eight years of experience in cryptocurrency trading. He registered a user account with the Binance online platform and had been conducting person-to-person trades on the platform since 2021, about eight to ten times a week.  He received the Sum during one such trade, in exchange for cryptocurrency in the amount of 37,878.78 USDT.  He said he had nothing to do with the fraud practised on the Plaintiff.

C.  THE PROPRIETARY INJUNCTION

6.  The relevant legal principles for the obtaining of a proprietary injunction were set out in Zhang Yan v ASA Bullion Ltd[2019] HKCFI 179 at [11] (Mr Recorder Eugene Fung SC):

(1)  Where a plaintiff asserts title to property or seeks to trace property which belongs to him, the Court has jurisdiction to grant a proprietary injunction restraining the disposal of that property: see A v C [1981] 1 QB 956 at 958D-959D (Robert Goff J).

(2)  For the grant of a proprietary injunction, there are three elements which the plaintiff has to demonstrate, following the American Cyanamid approach: (a) that there is a serious issue to be tried on the merits; (b) that the balance of convenience is in favour of granting an injunction and (c) that it is just and convenient to grant the injunction.  It is not necessary to show any risk of dissipation of assets.  See eg Madoff Securities International Ltd v Raven [2012] 2 All ER (Comm) 634 at §§127‑128 (Flaux J).

(3)  A proprietary injunction must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff: see 任俊國 v Chin Choi Ming (unreported, HCA 2017/2017, 6 November 2017) §20 (Chow J).

(4)  In order to justify the grant of a proprietary injunction, the plaintiff should ordinarily adduce some reasonable evidence of the existence of the specific asset (or its traceable proceeds) and that the same is being held by or under the control of the defendant.  Where the asset forming the subject matter of the proprietary claim has been dissipated and can no longer be traced, a proprietary injunction cannot ordinarily be granted.  See 任俊國v Chin Choi Ming (above) §§21-22 (Chow J).

7.  The learned Recorder further analysed the propositions in (3) and (4) above in Welly Grace Ltd and another v Well Zone Trading Ltd[2023] HKCFI 3082 at [19] to [30].  The following principles are relevant for present purposes:

7.1  The function of a proprietary injunction is to preserve the property in the defendant’s hands which is said to belong to the plaintiff.  Where a plaintiff can no longer identify the property in question or its traceable substitute, it follows that there is nothing for the proprietary injunction to preserve.

7.2  In the context of obtaining a proprietary injunction, the plaintiff needs to demonstrate a serious issue to be tried in relation to his proprietary claim, which would involve not only a consideration of the merits of the claim being brought by the plaintiff, but also an examination of the tracing exercise pursuant to which the asset in question has been identified.  As far as the tracing exercise is concerned, the plaintiff should adduce reasonable evidence to show a serious issue to be tried that the asset or its traceable substitute is being held by or under the control of the defendant.  As to what would constitute reasonable evidence to show “the existence of the specific asset or its traceable proceeds and that the same are still being held by or under the control of the defendant”, that must naturally depend on the facts and circumstances of each case, including but not limited to the stage of the proceedings, the information available to the plaintiff at the time when the proprietary injunction is sought, and any materials with sufficient cogency from the defendant.

7.3  The plaintiff would at least need to show a prima facie case that the specific asset or its traceable substitute is still being held by the defendant.  The mere fact that a defendant has received property from a plaintiff, and has not adduced evidence as to whether he retains the property or its traceable proceeds, does not necessarily support an inference that the defendant does retain such property.

8.  In the present case, the Plaintiff obtained discovery of the bank statements of the 68th Defendant’s BOC account which showed that the account was closed some three months after receipt of the Sum.

9.  The 68th Defendant’s evidence was that he initially tried to transfer the Sum to his Citibank account, but was unsuccessful as he had reached his daily transfer limit.  Subsequently, he used the Sum for his everyday purposes, including cryptocurrency trades, and payment of Justin Chan, a colleague.  He said that he closed his BOC account in December 2024 as he had not used it for a while.

10.  Mr Sik Chee Ching, counsel for the 68th Defendant, submitted that although the BOC account statements appeared to have been available to the Plaintiff since February 2025 (and the Plaintiff did not deny this), there was no attempt to plead or identify the relevant traceable property or proceeds which were said to be subject to the Plaintiff’s claim, and that it was insufficient for the Plaintiff to simply say that it sought an injunction over “traceable proceeds” of the Sum, whatever those might be.  There was therefore nothing over which the proprietary injunction could operate.

11.  Mr Ernest Ng, counsel for the Plaintiff submitted that he only needed to show that there was a serious issue to be tried that the Sum or its traceable proceeds were still in the control of the 68th Defendant.

12.  Whilst I agreed that this is all that the Plaintiff needed to have shown at this stage, I did not agree that this had been done.

12.1  Insofar as the original Sum itself is concerned, that was clearly no longer in the 68th Defendant’s BOC account and could not be under the 68th Defendant’s control in that form.

12.2  Insofar as the Plaintiff was saying that part of the Sum still remained under the control of the 68th Defendant, it had not attempted to identify (whether through application of tracing rules or otherwise) which part or how much of the Sum was under such control and therefore could be subject to the proprietary injunction.

12.3  The 68th Defendant’s evidence was that he had already used the Sum for his everyday purposes, having received it many months before the Injunctions took effect.

13.  Furthermore, as Mr Sik submitted, the Injunctions were obtained some six months after the 68th Defendant received and used the Sum.  Since then, a further five months had passed.  In all likelihood, the proceeds of the Sum would already have been mixed with other funds, or channeled into other property, and it would be very difficult, if not impossible, to identify whether any “traceable proceeds” remained in the hands of the 68th Defendant, so that he would not be in a position to know which, if any, of his property was subject to the proprietary injunction.  It would be impossible to comply with the injunction, and the 68th Defendant would be at risk of being in breach of the injunction without even knowing it.

14.  I therefore agreed that the proprietary injunction should be discharged.

D.  THE MAREVA INJUNCTION

15.  The proper approach in assessing risk of dissipation was considered in Convoy Collateral Limited v Cho Kwai Chee [2020] 6 HKC 81 at [35] to [54] (Lam VP).  The following principles are relevant for present purposes.

15.1  A plaintiff must show a real risk, judged objectively, that a future judgment would not be met because of an unjustified dissipation of assets.  In this context dissipation means putting the assets out of reach of a judgment whether by concealment or transfer.

15.2  There must be a solid basis for concluding that there is a real risk of dissipation.  Mere inference or generalised assertion is not sufficient.

15.3  The risk of dissipation must be established separately against each defendant.

15.4  It is not enough to establish a sufficient risk of dissipation merely to establish a good arguable case that the defendant has been guilty of dishonesty; it is necessary to see whether the dishonesty in question points to the conclusion that assets may be dissipated.

15.5  What must be threatened is unjustified dissipation.  The purpose of a Mareva is not to provide the plaintiff with security; it is to restrain a defendant from evading justice by disposing of, or concealing, assets otherwise than in the normal course of business in a way which will have the effect of making it judgment proof.  Similarly, it is not intended to constrain an individual defendant from conducting his personal affairs and the way he has always conducted them, providing of course that such conduct is legitimate.

15.6  There are cases where a good arguable case on the underlying substantive claims might be regarded as supporting a case of real risk of dissipation.

15.7  A solid basis to support an inference of a risk of dissipation is to be contrasted with unsupported or bare statements of fear which carry little weight.

15.8  Each case is fact-specific, and relevant factors must be looked at cumulatively and holistically.

16.  Mr Sik submitted that the Plaintiff failed to establish a real risk of dissipation against the 68th Defendant.  Looking at the matter holistically in the light of the materials available to the court, I agreed.

16.1  The mere fact that the Plaintiff’s claim concerned email fraud and that there had been actual dissipation by first-tier and second-tier recipients did not mean that there was therefore a “very real risk of dissipation”^[1] by the third-tier recipients.  The Plaintiff did not point to anything that implicated the 68th Defendant in the fraud.  The court cannot infer dishonesty from facts which are consistent with honesty.  See Peconic Industrial Development Ltd & anor v Yu Ka Hong Paul & anor [2006] 4 HKC 406 at [33] (Cheung JA), citing Three Rivers District Council & others v Bank of England (No3) [2003] 2 AC 1 at [184] to [186].

16.2  The Plaintiff relied on the fact that the Hong Kong Police had received suspicious transaction reports, or had issued letters of no consent, in respect of a number of accounts.^[2]  However, it was also the Plaintiff’s case that they did not relate to the 68th Defendant.

16.3  The fact that the Plaintiff did not know the 68th Defendant, and had not heard of the dealings between any of the defendants, did not mean that the 68th Defendant was implicated in the fraud.  As the Plaintiff accepted,^[3] it had no knowledge of the dealings between the second-tier and third-tier recipients.  Therefore, it could not be said that the 68th Defendant did not have good reason to receive the Sum from Fan Xiang.

16.4  It was said that the third-tier recipients did not have any internet presence (if an individual) or connections to Hong Kong (if a company).^[4]  In fact, the 68th Defendant is a licensed representative with the Securities and Futures Commission.  Mr Sik submitted that this information was readily available online, and the Plaintiff’s sweeping assertion (made across the board in respect of over eighty third-tier receipients) raised the question of whether any research had actually been conducted in respect of the 68th Defendant.  Furthermore, it was said that the 68th Defendant’s status as a licensee tended to suggest that he is considered to be a fit and proper person for the holding of such a licence, and was suggestive of integrity, rather than the other way round.

16.5  It was said that the absence of evidence at the ex parte stage to support a credible defence reinforced the risk of dissipation.^[5]  However, as Mr Sik pointed out, at that stage, the 68th Defendant had not even been notified, so the lack of evidence to support his defence could hardly be said to have evidenced a risk of dissipation.  In any event, the 68th Defendant has now given his account of the circumstances in which he received the Sum.

16.6  In his skeleton for the inter partes hearing, Mr Ng submitted that the 68th Defendant failed to show a meritorious defence (of change of position or bona fide purchaser for value).  At this stage of the proceedings, I cannot of course reach any definitive view about the defence.  However, it seemed to me that the 68th Defendant has given an explanation, with supporting documents, to show that he did indeed receive the Sum in the course of a cryptocurrency trade.  It was said that the features of the transaction which should have alerted the 68th Defendant to impropriety, such as the fact that the trader used a third party account, a personal savings account, and that Binance was “questionable”, being an unlicensed and unregulated platform against which the Securities and Futures Commission has warned.  However, the fact that there may be regulatory concerns about Binance does not necessarily mean that all of its users must be acting in bad faith.

16.7  Mr Ng further submitted that the fact that the funds “have already been dissipated” shows a risk of dissipation. As Mr Sik pointed out, what the Plaintiff needed to show was that there is a risk of unjustified dissipation, and not simply that the 68th Defendant had dealt with the Sum.  Furthermore, the statements for the BOC account showed that there were movements into and out of the account for a while after the receipt of the Sum, and about $73,000 was left in the account until it was closed in December 2024.  It was not as if the amount was immediately transferred away and the account closed.

16.8  Mr Ng further submitted that the fact that the Sum was not transferred in accordance with the 68th Defendant’s original intention to transfer it to his Citibank account, even after he raised the transaction limits to enable him to do so, “raises suspicion”.  I cannot see why it should be suspicious for the 68th Defendant not to have transferred the amount out to his Citibank account.  To say that “this attempt could well be an exercise to complicate the transaction”^[6] was, with respect, an unsupported and bare statement of fear (cf. Convoy).

16.9  Mr Ng further submitted that the explanations provided by the 68th Defendant of having given money to Justin Chan and conducting another trade were bare assertions without support.  He also submitted that other assets or bank accounts of the 68th Defendant remain unknown.  However, unless an applicant has raised a prima facie case to support a freezing order, the respondent is not obliged to provide any explanation or answer any questions posed; nor can a purported failure to do so be held against the respondent.  It is only if the applicant has raised material from which a real risk of dissipation can be inferred that the respondent will be expected to provide an explanation.  Then, in appropriate circumstances, the lack of a satisfactory explanation may give rise to an adverse inference.  See China NPL Holdings Pte Ltd v Mo Haidan [2021] 1 HKLRD 344 at [83] (Lam VP), citing Holyoake v Candy [2018] Ch 297 at [51] (Gloster LJ).

16.10   Mr Sik submitted that there were various factors which tended to suggest that there was no real risk of dissipation as alleged.  The Sum was not of such a magnitude as would provide an incentive for the 68th Defendant to dissipate all his assets so as to avoid judgment; there was nothing to suggest that any of the other transactions disclosed in the statements of the BOC accounts were wrongful; there was nothing to contradict the 68th Defendant’s account that he carried on with his daily life as usual for the six months after receipt of the Sum before his accounts were frozen; the 68th Defendant left $73,000 of the $300,000 Sum in the account until it was closed months later, which would have been an easy target for enforcement action, so that this was an unlikely course of action for someone involved in the fraud.

17.  Taking all the factors into account cumulatively and holistically, I considered that the Plaintiff failed to establish a real risk of dissipation on the part of the 68th Defendant.

E.  CONCLUSION

18.  I therefore dismissed the Summons insofar as it related to the 68th Defendant, and ordered that the Injunctions against him be discharged.