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HCA 1555/2018
[2019] HKCFI 179
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1555 OF 2018
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| BETWEEN |
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ZHANG YAN ( 张燕 ) |
1st Plaintiff |
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CAO SHIHU (曹世虎) |
2nd Plaintiff |
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CHEN JINGYUN (陈井云) |
3rd Plaintiff |
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CHEN YIDE (陈义德) |
4th Plaintiff |
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CHI HUANZHEN (迟焕珍) |
5th Plaintiff |
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CUI XUEYI (崔学义) |
6th Plaintiff |
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DAI YUFEN (代玉芬) |
7th Plaintiff |
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DING SHUZHEN (丁淑珍) |
8th Plaintiff |
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FAN YUQING (樊玉清) |
9th Plaintiff |
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GAO SHUMEI (高树梅) |
10th Plaintiff |
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GAO YING ( 高英 ) |
11th Plaintiff |
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GAO YUEPING (高曰平) |
12th Plaintiff |
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GU XINXIN (谷心心) |
13th Plaintiff |
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GUAN FENGLAN (管风兰) |
14th Plaintiff |
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GUAN JIAHONG (管佳红) |
15th Plaintiff |
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GUAN SHIYU (管诗羽) |
16th Plaintiff |
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GUAN WEIXIA (管卫霞) |
17th Plaintiff |
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HOU JUNXIA (侯俊霞) |
18th Plaintiff |
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HOU XIUYING (侯秀英) |
19th Plaintiff |
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JI BAILING (计百灵) |
20th Plaintiff |
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JI YANG ( 计洋 ) |
21st Plaintiff |
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JIANG HAIJIANG (蒋海疆) |
22nd Plaintiff |
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JIAO TIYUAN (焦体源) |
23rd Plaintiff |
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JIN GUIZHEN (金桂珍) |
24th Plaintiff |
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LENG TENGFEI (冷腾飞) |
25th Plaintiff |
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LI FUMEI (李福梅) |
26th Plaintiff |
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LI MEIYING (李梅英) |
27th Plaintiff |
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LIU FENGSUI (刘风遂) |
28th Plaintiff |
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LIU GUIYUN (刘桂云) |
29th Plaintiff |
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LIU KAI ( 刘凯 ) |
30th Plaintiff |
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LIU YING ( 刘颖 ) |
31st Plaintiff |
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LV GUOJIANG (吕国江) |
32nd Plaintiff |
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LV HUA ( 吕华 ) |
33rd Plaintiff |
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MA YIWEI (马一为) |
34th Plaintiff |
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MENG XIANGLIANG (孟祥亮) |
35th Plaintiff |
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MIAO ZENGHUA (苗增花) |
36th Plaintiff |
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PENG LIMEI (彭丽梅) |
37th Plaintiff |
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QUAN HUIFANG (全慧芳) |
38th Plaintiff |
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SONG BINGBING (宋兵兵) |
39th Plaintiff |
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SONG JINFENG (宋金风) |
40th Plaintiff |
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SONG ZHIPENG (宋志鹏) |
41st Plaintiff |
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SUN YONGPING (孙永平) |
42nd Plaintiff |
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TAN WENXING (谭文兴) |
43rd Plaintiff |
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WANG GUOFENG (王国峰) |
44th Plaintiff |
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WANG JIQI (王继琪) |
45th Plaintiff |
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WANG JING ( 王靜 ) |
46th Plaintiff |
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WANG JUAN ( 王娟 ) |
47th Plaintiff |
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WANG PEICHUN (王培春) |
48th Plaintiff |
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WANG YUEHUA (王月华) |
49th Plaintiff |
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WANG ZHENYU (王震宇) |
50th Plaintiff |
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WANG ZHENGBO (王政波) |
51st Plaintiff |
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WANG ZHILIANG (王志亮) |
52nd Plaintiff |
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WANG ZHIWEI (王志伟) |
53rd Plaintiff |
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XIAO YAN ( 肖岩 ) |
54th Plaintiff |
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XING GUICHUN (邢桂春) |
55th Plaintiff |
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XUE YUQING (薛玉青) |
56th Plaintiff |
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XUE SHUANG ( 薛双 ) |
57th Plaintiff |
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YAO QIANGHUA (姚强华) |
58th Plaintiff |
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YIN FENGXIA (尹凤侠) |
59th Plaintiff |
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ZHANG HUI ( 张慧 ) |
60th Plaintiff |
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ZHANG JIANZHOU (张建周) |
61st Plaintiff |
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ZHANG YUEMEI (张越美) |
62nd Plaintiff |
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ZHAO JIAN ( 赵健 ) |
63rd Plaintiff |
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ZHAO MENG ( 赵萌 ) |
64th Plaintiff |
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ZHAO YUNFENG (赵云凤) |
65th Plaintiff |
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ZHAO YUNLI (赵云立) |
66th Plaintiff |
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ZHAO ZIGUANG (赵子光) |
67th Plaintiff |
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and |
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ASA BULLION LIMITED
(日昇金銀業有限公司)
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Defendant |
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| Before: |
Mr Recorder Eugene Fung SC in Chambers |
| Date of Hearing: |
7 January 2019 |
| Date of Decision: |
23 January 2019 |
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D E C I S I O N
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A. INTRODUCTION
1. On 9 July 2018, DHCJ S Leung granted an ex parte injunction(“the Injunction”) in favour of the plaintiffs (“Ps”) to restrain the defendant (“D”) from dealing with its assets in Hong Kong up to US$10,578,027.07. By an inter partes summons dated 10 July 2018 (“the Continuation Summons”), Ps applied to continue the Injunction until trial or further order. On 13 July 2018, the Injunction was continued by DHCJ M Ng (as she then was) until the determination of the Continuation Summons or further order of the Court.
2. On 31 July 2018, D issued a summons (“the Variation Summons”) to vary the Injunction. By the Order of DHCJ K Yeung SC dated 23 November 2018, this was adjourned to be heard together with the Continuation Summons.
3. This is the substantive hearing of both the Continuation Summons and the Variation Summons.
B. BRIEF FACTUAL BACKGROUND
4. Ps claim to be individual investors resident in the Mainland.
5. D is licensed in the Chinese Gold and Silver Exchange Society and carries on bullion trading business in Hong Kong. It operates an internet trading platform for gold bullion trading and investors/customers can set up accounts with it for the buying and selling of bullions in the market.
6. Ps’ case is that they are a group of victims of a scheme of fraud perpetrated by D, and D’s agent in the Mainland, Qingdao Mutong Assets Management Limited (“Mutong”). They claim that they deposited funds into their investment accounts with D (totalling US$13,147,992.99) and that Mutong used Ps’ funds to purchase gold and immediately sold it at a loss. Such buying and selling were carried out repeatedly (“the Alleged Wrongful Transactions”) and resulted in a complete loss of Ps’ funds.
7. On 6 July 2018, Ps took out a generally indorsed Writ against D. In their Statement of Claim filed on 12 September 2018, Ps claim the following reliefs against D: (1) damages for the torts of deceit, negligence, unlawful means conspiracy or lawful means conspiracy; (2) alternatively equitable compensation for dishonest assistance; (3) an inquiry as to damages or equitable compensation; (4) an account of profits; (5) alternatively an order to disgorge any enrichment acquired at Ps’ expense; (6) alternatively a declaration that D is a constructive trustee for all funds injected into Ps’ accounts with D; (7) an account; (8) interest and (9) costs.
8. On 30 October 2018, D filed its Defence denying all liabilities.
C. CONTINUATION SUMMONS
9. Ms Cherry Xu, on Ps’ behalf, submitted that the Injunction granted by DHCJ S Leung was both a proprietary injunction and a Marevainjunction, and should be continued on both bases.
10. Mr Kenneth C L Chan (together with Mr Billy N P Ma), on behalf of D, submitted that there cannot be a proprietary injunction, that the requirements for granting a Mareva injunction are not satisfied, and that the Injunction should not in any event be continued because of serious material non-disclosures.
C1. Proprietary injunction
11. The relevant legal principles regarding a proprietary injunction are as follows:
(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 issueto 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 byor 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).
12. On behalf of Ps, Ms Xu submitted that it is highly arguable that Ps have a proprietary claim on the basis of a constructive trust over misappropriated funds where such funds could be traced.
13. In order for Ps to continue the Injunction on the basis of a proprietary claim, they need to adduce some reasonable evidence that the sum of US$10,578,027.07 is being held by or under the control of D.
14. However, no such evidence has been adduced by Ps. Further,it is common ground that D had a total balance of HK$26,166,675.09 in its bank accounts in Hong Kong as at 9 July 2018 (ie, the date when the Injunction was granted). Ps have not adduced any evidence to show that any part of HK$26,166,675.09 in D’s accounts belonged to them.
15. Ms Xu submitted that the evidence shows that D was the onlyrecipient of all the proceeds of the Alleged Wrongful Transactions, and such proceeds have been mixed up with the funds in D’s accounts. She fairly acknowledged that it is impossible to trace the whereabouts of the funds after they were transferred into D’s accounts, and that Ps can only suggest there is a chance that some of funds in D’s accounts represent Ps’ assets.
16. It is clear to me that Ps cannot establish a serious issue to be tried that the sum of US$10,578,027.07 is being held by or under the control of D. In these circumstances, the Injunction cannot be continued on the basis of a purported proprietary claim.
C2. Mareva injunction
17. For the grant of a domestic Mareva injunction, the plaintiff must show that:
(1) he has a good arguable case on a substantive claim over which the court has jurisdiction;
(2) there are assets within the jurisdiction;
(3) the balance of convenience in favour of grant;
(4) there is a real risk of dissipation of assets, or removal of assets from the jurisdiction, which would render the plaintiff’s judgment of no effect;
(5) he must comply with a strict duty of...
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