Test for risk of dissipation
1. In Convoy Collateral Limited v. Cho Kwai Chee  HKCA 537 (3 July 2020), the Hong Kong Court of Appeal (“Hong Kong CA”) held that, for the purposes of obtaining a Mareva injunction, the applicant must show objectively a solid basis for concluding that there is a real risk of unjustified dissipation of assets by the defendant (§53). Since Convoy, the English Court of Appeal (“English CA”) had occasion to revisit and examine the principles for identifying a risk of dissipation in Ambassadeurs Club Ltd v. Yu  EWCA Civ 1310.
2. In that case, the applicant invited the English CA to put a gloss over the test of “real risk of unjustified dissipation” by describing a “real” risk as one that is “more than fanciful”. The English CA rejected this invitation. It held that the test of a “real” risk sets the bar lower than “more likely than not” (§§35-36):
“Whilst I find no difficulty in accepting the proposition that “real” in this context does mean something which is “more than fanciful”, and lawyers are used to those concepts being treated as two sides of the same coin in other contexts (such as applications for permission to appeal), there is an obvious danger that putting such a gloss on the well-established test will create an impression that the threshold is lower than it actually is…
The focus should be on whether, on the facts and circumstances of the particular case, the evidence adduced before the court objectively demonstrates a risk of unjustified dissipation which is sufficient in all the circumstances to make it just and convenient to grant a freezing injunction. Plainly a risk which is theoretical, fanciful or insignificant will not meet that threshold; but the judge should be addressing the question whether he or she is satisfied that the alleged risk is real, and that does not require any comparative exercise to be carried out, or the attaching of some other label to a risk which falls short of the threshold. Judges and practitioners have been addressing the test for many years without the need for such a gloss. I would not wish it to be suggested that henceforth, in every case in which a freezing order is sought, in order to avoid being criticized for making an error of law, the Judge must specifically turn his or her mind to the question whether the risk of dissipation is real “rather than fanciful”.”
3. It may be that, in practice, the principles adumbrated by the English CA will likely lead to the same results as the Hong Kong CA’s approach in Convoy. This is because in Les Ambassadeurs Club Ltd v. Yu at §31, the English CA followed and applied the reasoning in Holyoake v. Candy  EWCA Civ 92;  Ch 331 at §34, where the English CA held that:
“it is not every risk of a judgment being unsatisfied which can justify freezing order relief. Solid evidence will be required to support a conclusion that relief is justified, although precisely what this entails in any given case will necessarily vary according to the individual circumstances.” [Emphasis added]
4. The emphasis on the need for “solid evidence” mirrors the requirement for a “solid basis” in Convoy.
5. The English CA stated that the test of a “real risk” is lower than a test of likelihood. The expression that there is a “real risk” that a judgment will go unsatisfied is not to be equated with “likely” or “more likely than not”. It sets a lower standard (§27).
Refusal to pay is not to be equated with a risk of dissipation
6. The English CA emphasised that an important distinction needs to be drawn between a defendant who can pay but refuses to pay his debts until he is forced to do so, and a defendant who is so determined not to pay that he would take active steps to frustrate the recovery of sums due to his creditors by transferring or concealing assets or by some other form of unjustified dissipation (§19). In order to avoid the undesirable situation in which the nuclear remedy of a freezing order would become a commonplace threat, there must be cogent evidence from which it can at least be inferred that the defendant falls into the latter category (§19).
7. The English CA re-iterated that a freezing injunction is not intended as a safeguard against insolvency, nor as a means of providing security for a claim, however strong that claim may be and however large a sum of money may be involved. Hence, a freezing injunction is not just another standard means of securing enforcement of a judgment in favour of the applicant, like a charging order or third-party debt order (§14).
Risk of dissipation is not easier to infer in a post-judgment situation
8. The English CA also rejected the suggestion that, in a post-judgment situation, an adverse judgment against the defendant will make it easier to infer a risk of dissipation. An adverse judgment may provide more of an incentive to the defendant to put his assets beyond the reach of the claimant than a mere claim, but that tells one nothing about whether the evidence establishes a real risk that he may do it (§18).