DEIULEMAR SHIPPING SPA AND OTHERS v. TRANSFIELD ER FUTURES LTD

HCMP 1490 /2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1490 OF 2010

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BETWEEN

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D E C I S I O N

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1.  This is a renewed application for a Mareva injunction. The matter first came before me on 5 August 2010 and on that occasion I declined to grant the injunction and I gave my decision on that occasion. On that occasion, the request was made that publication of the decision should be delayed for a month or so in order to enable consideration to be given to making an application in England. I ordered that there should be no search, inspection or publication without leave of the court.

2.  The plaintiffs came a week later before Au J, at 5 pm last night, attempting to obtain the injunction again.  As a matter of procedure, I wish to make clear, in the very strongest terms, that if a judge refuses an ex-parte injunction and those seeking that injunction are not satisfied with that refusal, they have two choices.  They can either renew that application but they must renew it in front of the same judge unless he is positively unavailable and has so indicated, or else, they can take it on appeal.  The choice is theirs.  But to go at 5 pm in front of a busy duty judge on a renewed application a week later is quite wrong.

3.  I turn then to the terms of the injunction that is sought and, for this purpose, I do not intend to repeat what I said in my earlier decision and it will be taken as being read as part of this decision.  The terms of the injunction are thus:

“ That the defendant must not:

a) remove from Hong Kong any of his (sic) assets which are within Hong Kong, whether in his own name or not and whether solely or jointly owned up to the value of HK$ 150,525,978.16, or

b) in any way dispose of or deal with or diminish the value of any of his assets whether within or outside Hong Kong, whether in his own name or not, and whether solely or jointly owned, up to the value of HK$150,525,978.16. This prohibition includes, in particular, any money in the account of number redacted at the Hong Kong and Shanghai Banking Corporation.”

Then there are provisions that if there are sufficient assets to that amount then the injunction will cease to bite. Then there is a disclosure of information order and an order for the inspection of the bank account records at the bank.

4.  The order is to be effective and bind on anybody in Hong Kong and it provides that the effect of the order outside Hong Kong would be:

“ The terms of this Order do not affect or concern anyone outside Hong Kong until it is declared enforceable or is enforced by a court in another jurisdiction and then they are to affect him only to the extent that they have been declared enforceable or have been enforced UNLESS such person is:

a) a person to whom this order is addressed or an officer or an agent appointed by power of attorney of such a person; or

b) a person who is subject to the jurisdiction of this court and (i) has been given written notice of this Order at his residence or place of business within the jurisdiction of the court and (ii) is able to prevent or act or omissions outside the jurisdiction of this court which are a breach or assist in a breach of this Order.”

Then there are provisions that the defendant may apply to the court.

5.  Importantly, I do not see any provisions in this order relating to proceedings which are currently underway in the United Kingdom for which this order is supposed to be in aid.  Nor do I see any provisions for the defendant to make payments in the ordinary course of its business or otherwise.

6.  On 5 August, I said in paragraph 5 that although there is jurisdiction for this court to grant a Mareva injunction in these circumstances in aid of the UK claim, no application for a Mareva injunction had been made in the UK proceedings.  A worldwide Mareva injunction could have been claimed.  It could have been framed and certainly the bank, which has been named, in my view, would have adhered to it, but the injunction could have been framed in terms that a further application would be made here.

7.  Now, in purported answer to that there is an affidavit of a Mr Hughes, who is a solicitor in London, in which - first of all - he seeks to explain why no worldwide Mareva injunction was sought in England.  The first reasons that he puts forward were reasons that were explained to me on 5 August.  I indicated at the time, that I considered that they were wholly inapplicable and irrelevant.  They are to the effect that the same solicitor acting for other clients has made applications in Hong Kong for Mareva injunctions, in respect of similar transactions where the parties were completely different and those proceedings were apparently successful.  So one assumes that the intent is that building on that success in completely different circumstances with different parties, the solicitor considered that Hong Kong was a good jurisdiction to strike a blow against the defendant in this case.

8.  As the affidavit of Mr Hughes pointed out, in those cases when the matter came to court on the return date, the defendants did not attend the court at all.  In this case, it seems to me that the situation is entirely different.  The defence and counterclaim in the proceedings in the Commercial Court in London has been signed by leading and junior counsel.  Far from a case which is unlikely to be defended, this does seem to be a case where the defendant has certainly taken strenuous proceedings to defend itself and, as indicated in my earlier decision, appears to have at least a viable argument.

9.  Then the second point that he has made is that it is said that paragraph 19 of the standard form of this type of injunction in London provides similar provisions to that which I have already read and were included in the draft order sought on this occasion.  However, the affidavit then says, having cited the first part, that:

“This emphasises the point that, the bank in Hong Kong would not be bound by the terms of an order obtained in England. For completeness, the bank in Hong Kong does not fall within any of the exceptions at paragraph (2).”

10.  In my view, it may be that the Hong Kong subsidiary could not be bound directly but I am not entirely convinced of that either because I do not see that the injunction could not be served on the Hong Kong directors of the bank, it is more than likely that at some point in time they would need to go to the United Kingdom and they might find themselves in considerable trouble if they did not adhere to an injunction.

11.  Nevertheless, it seems to me that if a worldwide Mareva injunction was served on the head office of what is apparently a worldwide bank in London, irrespective of the fact that the Hong Kong entity of that bank is a separate company to the extent that it must be a subsidiary of the holding company I, at the moment, am wholly unconvinced that the bank in whatever entity is in London, and has a presence in London, is unable to prevent the acts or omissions outside the jurisdiction, namely in Hong Kong, which would constitute a breach of the terms of the order.  Hence, I am not convinced that if a Mareva injunction were obtained in London that that could not be made effective by service on the head office of what is an international bank in London.

12.  But be that as it may, the important point in all this is that the plaintiff has still failed to grasp what I have indicated earlier that the injunction could have been framed in terms that a further application would be made in Hong Kong.  In these days of instant communication, it would have been entirely easy for an application to be made in London on the basis that a corresponding application would be made in Hong Kong.  That would have been on the basis that either the Hong Kong judge was standing by, or the application could have been made last thing on one day in London and the corresponding application made early the next day in Hong Kong.  If the London judge had been made fully aware of what was intended, he could have decided whether or not that was an appropriate course.  In my view, that is the correct procedure in a case like this.

13.  This application is said to be in aid of the proceedings which are in the Commercial Court in London.  I do not see that.  I see this as a total interference in the proceedings which are well underway in the Commercial Court.  The terms of the injunction which I have read out would interfere with the course which the defendant could take in London.  It would be likely to interfere with even his payment of his own legal costs in London let alone put the defendant in real jeopardy of not being able to honour any obligation which may likely arise in the immediate future given the nature of its business.  How is the Hong Kong court going to control what is a proper payment of those costs?  It cannot do so. That is a matter for the Commercial Court in London to do not a matter for the Hong Kong court.

14.  I raise all these points before I even get to the crucial point because, although the plaintiff has attempted to patch up the points which I considered presented considerable difficulties in the grant of a Mareva injunction, I regret to say that they have not done so.  What I said in my previous decision, as to the nature of the defendant’s claim and its possibility of its counter-claims and its claims against Pioneer, in my view, still stand.  The attempt to give evidence as to money owed to the brokers is simply that as a result of a telephone conversation or otherwise, that it is now said that the defendant owed the broker “a lot of money.”

15.  I see no point in saying anything further given the effect that the grant of the injunction sought would have.  That speaks for itself.  I have no doubt whatever that this injunction must be refused.  I look upon it as no more than a plaintiff trying to steal a march on the defendant, if not put it out of business altogether.  In my view, this application must now be revealed to the defendant and I will direct that the fact that these applications have been made, must be made clear to the defendant’s solicitors in London.