DAH YUNG LEASING PTE LTD. v. HO HUA MIN AND OTHERS

1986 No. A7345

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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D E C I S I O N

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1. I propose to give my decision then I will hear counsel upon the exact nature of the Order that I should give (the terms of it) when I've given my reasons.

2. The Plaintiff in this matter is a Singaporean company. It is the wholly owned subsidiary of a public company there. It obtained an ex-parte Mareva injunction against the three defendants on 24th of December last year. The return date for the inter-partes hearing was the 8th January. That was the first date on which it came before me. There was an adjournment until the 14th January to enable further evidence to be filed.

3. On this inter-partes hearing the 1st defendant does not appear but the 2nd and 3rd defendants appear by counsel. The evidence in the case has become detailed and somewhat voluminous. Much of it is unnecessary for the particular purposes of this hearing but it provides background. No doubt the reason for this is that some of the deponents are in Singapore and there was an anxiety to cover as many matters relating to the background of the matter as was possible.

4. The background is of importance. The Plaintiff's case is this. The 1st defendant owned and controlled a number of companies in Singapore, in Hong Kong, in the Isle of Man and, for all I am aware, in other places as well. In relation to the companies which he owned and controlled, he was neither a registered shareholder nor a director of any of which the court is aware. He owned the companies through nominees and probably layers of nominees. He controlled the companies by exercising the control over the directors. Sometimes he exercised control through others. For example through the 2nd defendant in this case. The Plaintiff contends that the 1st defendant was in absolute control not always maintaining the most ethical standards. The commercial situation is further complicated. Often one company which he owned through nominees was the owner of other companies and, in relation to this case, those companies then owned real property in Hong Kong.

5. The commercial reasons for this arrangement are irrelevant. It is not necessary or desirable that I speculate about them. They may not be unconnected with the fact that the 1st defendant is on the run from the police in Singapore and the 2nd defendant has absconded from there.

6. The court can only hope that, exercising proper discretion in accordance with the law, the commercial arm of the law is long enough to do justice between the parties.

7. I make it clear that it is not my task to make any decisions upon the issues in the case, but it is consistent with the Plaintiff's case, as put by counsel for the 3rd defendant, that the 1st defendant was really a puppeteer controlling his puppets. It would be as apt to describe him as the controller of certain puppeteers who themselves pulled the strings. It is consistent with this view that the 1st defendant does not appear. The 2nd defendant and directors of the 3rd defendant have approached this matter by not offering the greatest assistance to the court upon the central issues but by indulging in a defence directed at inconsistencies and omissions in the Plaintiff's case; not to say this is not a perfectly proper approach but it may have limitations.

8. In making those remarks, I have reminded myself, as I have been reminded by counsel in the course of the hearing, that whatever view I may form about the approach that the defendants have taken, I must be very careful not to reverse the burden of proof which is of the greatest importance because of the nature of the proceedings and the nature of the Order if granted or if continued.

9. The Plaintiff, as I have said, is a subsidiary of a Singaporean company. That company is a public company controlled by the 1st defendant. I now deal with the Plaintiff's case.

10. The 2nd defendant was, at material times, a director of the Plaintiff and the Plaintiff's business was that of dealing in shares not only on behalf of the companies controlled by the 1st defendant but also on behalf of others. That dealing in shares included for the purposes of this case dealing in shares for Mandarin Resources Ltd.; a Hong Kong public company. The immediate background relates to real property in Hong Kong; Fairmont Terrace, Repulse Bay. There are, I am told, four blocks : A, B, C and D. Blocks A and B are owned by Broadwood Development; a company acquired in about June 1985 by Lucky Man; another public company in Hong Kong. At about the same time, the 1st defendant obtained a controlling interest in Lucky Man and, for reasons not known, Lucky Man wanted to acquire Blocks C and D as well as controlling blocks A and B. C and D were owned by Markle Land, a wholly owned subsidiary of Mandarin Resources Ltd. Lucky Man wanted to buy the whole of the share capital of Markle Ltd. from Mandarin Resources.

11. No reasons have been given. I will not speculate why this was desirable. In order to make the transaction, Lucky Man needed HK$29,670,000; HK$20,300,000 for the Markle Land shares, HK$8,000,000 as a repayment of a loan owed by Markle to Mandarin and the balance HK$1,370,000 as extra working capital.

12. The Plaintiff's case is that this exact sum was to be raised by Lucky Man by the issue of 23,000,000 shares.

13. The 3rd defendant, according to the Plaintiff, was a shell company controlled by Ho. By shell company I mean that it was used just for individual and certain transactions. The Plaintiff's case is that the 3rd defendant has no real business. It was not a company in business owning shares as nominee. The accounts, disclosed without the benefit of any auditor's certificate, support the Plaintiff's view.

14. An agreement was made by the 3rd defendant to acquire those 23,000,000 shares in Lucky Man. The 3rd defendant had not the means to aequire them. A deal was therefore put into effect by the 2nd defendant. On the whole of the Plaintiff's evidence (if accepted), the 1st defendant must have been closely associated with the transaction. It was put into effect in this way. A director and financial controller of the Plaintiff, Mr. Chew, would sign a bundle of blank cheques. Those were blank cheques of the Plaintiff. As later appeared although not known to Chew at the time, on the 16th October, 1985, the 2nd defendant signed a cheque for S$8,159,250. This was necessary for he was an authorized signatory as well as Mr. Chew. That cheque was drawn in favour of the 3rd defendant.

15. It is now known that on that same day there were a number of financial transactions which on their face must have been arranged by the 2nd defendant and the 1st defendant. The one of immediate importance was that the 2nd defendant instructed a director of the 3rd defendant to draw a cheque for exactly the same sum in favour of Lucky Man. That was done and it bore the same date. In fact the same day six cheques from Mandarin Resources were drawn in favour of the Plaintiff, and on the same date a cheque in favour of the Plaintiff from Lucky Man was drawn. On all those cheques from Mandarin Resources and from Lucky Man, one of the two signatures is the same. It appears that all the cheques were cleared on the same day. The reason was that all those companies had accounts at the same bank and at the same branch; the Malayan Banking Berhad, Robinson Road, Sub-branch, Singapore.

16. The present management of the Plaintiff was unaware of the detail of this transaction. The result was that shares were issued by Lucky Man to the 3rd defendant. The Plaintiff's financial director, Mr. Chew, became aware of the payment out of the Plaintiff's bank account of the S$8 million odd when the account came to him at the end of the month. Consequently, he asked what the payment was for. He was told that it was a payment on behalf of Mandarin Resources, so it was posted as such in the Plaintiff's accounts. The slip in front of me was made out by someone on his instructions to that effect. So the matter remained. Towards the end of the year, however, Mr. Chew raised this payment again. The reason was that on its face here was an unsecured loan made by the subsidiary of a public company in Singapore. The auditors would be certain to raise questions about it.

17. He was told by the 1st defendant, confirmed by the 2nd defendant, that the payment had been made on behalf of Mandarin to purchase Astanet shares. Astanet was also a company controlled by the 1st defendant. Indeed, the 2nd defendant produced to him bought notes and share certificates for the Plaintiff to hold as security. This satisfied the auditors and the indebtedness of Mandarin at that time was recorded at about S$22,000,000.

18. It is right to say from all the information now before the court that by inference there were a large number of transactions by the Plaintiff on behalf of Mandarin which involved the purchase of shares and the holding of those shares by the Plaintiff as collateral. There is a letter in front of me dated the 20th October, 1986 which shows that at that time there was a balance due from Mandarin to the Plaintiff in excess of S$19,999,000. The record shows that a total of nearly S$50,000,000 had been purchased about that time. The point made by the Plaintiff is that there was nothing unusual in the Plaintiff purchasing shares on behalf of Mandarin and holding them as collateral.

19. So the matter remained until the 1st and the 2nd defendants left Singapore. After they left they were occasionally met by Chew in Thailand or in Hong Kong. After the 1st and the 2nd defendants left the 2nd defendant ceased to be a director of the Plaintiff and the 1st defendant ceased to be in control of the Plaintiff.

20. Sometime in mid 1986 an extraordinary thing happened. A letter arrived in the 1st defendant's accounts department. It is a letter dated the 16th October from the 3rd defendant, signed by Sideman Ho, one of its directors. The letter confirms S$8,159,250 as due from Asiatic Fortune to the Plaintiff on the 16th October 1985. It says that Asiatic, the 3rd defendant, undertakes to provide sufficient collateral by way of shares to secure the amount; and says that the undersigned will convene a board meeting to ratify the above mentioned matters as soon as possible. That letter caused Mr. Chew for the Plaintiff to make verbal enquiries about that sum. No doubt he recognised the date and the exact sum as that of which the 1st and 2nd defendants had given him information earlier.

21. In due course he obtained the cheque back from the bank. It was not the practice for the Plaintiff to have cheques returned from the bank. He had not seen that cheque before. When he obtained it he saw the cheque and the letter were entirely consistent. Enquiries were pursued by him with the 1st and 2nd defendants in order to try and resolve matters. Enquiries were made with Mandarin. Mandarin denied any indebtedness in relation to this matter.

22. It appeared therefore to the Plaintiff that the information in the letter must be the only proper basis upon which the transaction could have been undertaken. If the 2nd defendant had caused this sum to go to the 3rd defendant, knowing the nature of that company, the only basis upon which he could allow that to happen would be if (as was the fact) he and the 1st defendant had control over the 3rd defendant. They could then cause the 3rd defendant to give collateral by way of shares. The only collateral that the 3rd defendant could supply were the shares purchased by the use of the money provided by the Plaintiff. When that became obvious to the Plaintiff and when they had made necessary enquiries, on the 14th November, a demand was made on behalf of the Plaintiff to the 3rd defendant for the return of the money which had been provided. Seven days were given in the letter for payment. Matters so remained until the 23rd December. The bulk of those Lucky Man shares purchased by the 3rd defendant remained registered in the 3rd defendant's name.

23. On the 23rd December, there was substantial dealing on the Hong Kong stock market in Lucky Man shares. Knowing the background of this matter, the Plaintiff concluded that there was considerable risk that the 3rd defendant or the 1st and the 2nd defendant, or all of them, were disposing of the shares in Lucky Man which ought to have been with the Plaintiff as collateral for this payment of S$8 million odd.

24. In fact we now know that those particular shares were not being disposed of on the Hong Kong market. The 3½ million shares in Lucky Man were sold by a company called Crownhall. That company was also a company controlled by Ho. There is no direct evidence but the inferences are overwhelming. With that background of the Plaintiff's knowledge on the 24th December, an application was made as a matter of urgency for the ex-parte Mareva. It was granted.

25. Although the background to the matter sounds complicated when set out, the Plaintiff's case is perfectly simple. There was a payment made by the Plaintiff to the 3rd defendant, arranged by the 1st and the 2nd defendants, who absolutely controlled both. The basis was that the shares bought in Lucky Man by the 3rd defendant would be deposited as security with the Plaintiff.

26. I now first consider (on the evidence in front of me without deciding the issues raised) whether the Plaintiff establishes a cause of action against each of the defendants, and whether the evidence shows that he has a good arguable case against each of them. I shall deal with some evidence which was not in front of the learned Judge who granted the ex-parte injunction. My conclusion is first, the Plaintiff has a good cause of action against each of the defendants, and second that against each of them it has a good arguable case.

27. The Plaintiff has a cause of action against the 3rd defendant for the repayment of the money and against the 2nd defendant for breach of his fiduciary duty as director of the Plaintiff, in causing the Plaintiff to pay over that money without security and without ensuring by use of his powers that the security was later given.

28. I am also satisfied that there is a good cause of action against the 1st defendant. Although he was never appointed a director, he acted as a director in complete control of the Plaintiff and, in exercising that control, he undertook all the duties and liabilities of a director in law. In any event he was acting together with and in agreement with the 2nd defendant.

29. The evidence of the payment of the money is clear and is not contested. The basis upon which it was paid is confirmed by the letter from the 3rd defendant. The 1st and 2nd defendants caused the payment and they could all only cause the payment in these circumstances if they were going to ensure within their power that there was collateral.

30. In all the circumstances I am also satisfied that it is arguable that the 1st and 2nd defendants impliedly agreed with the Plaintiff to cause the 3rd defendant to give that security by depositing the shares. This is a proper inference from all the evidence which is before me.

31. Digressing for one moment, when this action comes on for trial it may be that other more serious allegation are made against and 1st and 2nd defendants. I an not going to speculate.

32. In considering whether there is a cause of action, and whether there is a good arguable case against each of the defendants, I have taken into account, the possibility of an alternative claim against Mandarin Resources on the basis that the payment was made on its behalf. When all the evidence is considered it includes all the information imparted by the 1st and 2nd defendants to the Plaintiff's financial controller after the payment out of S$8,000,000 had been discovered. First, it was said to have been on behalf of Mandarin; second that it was for the purchase of Astanet shares which were produced; then when the letter of 16th October came to light the results of investigations were consistent with its contents. On this I have no doubt the Plaintiff (if properly advised) can pursue  either Mandarin or the defendants in this action. The fact that they may have an alternative claim against Mandarin, should further evidence come to light, does not affect my view as to the viability and strength of Plaintiff's case against these defendants.

33. I also take into account the action now being taken by Mandarin against a number of defendants, included the Plaintiff, Lucky Man, and the 3rd defendantis in these proceedings, (that is High Court Action 1986 A7375) commenced after the ex-parte proceedings in this action, on the 30th December, 1986. I also take into consideration the suggestion, based upon the transfer of moneys between accounts and the Plaintiff's bank statement No. 56 dated the 2nd November, 1985, that the sum of money which went to the 3rd defendant from the Plaintiff was part of a circulation for the purchase of Lucky Man shares using its own money.

34. My decision is that there is a good arguable case against each of the defendants.

35. Has each of the defendants got assets within the jurisdiction? It is not seriously suggested that there is any evidence against any of them of assets within the jurisdiction save for the shares issued by Lucky Man in respect of this transaction. There is of course clear evidence although it is disputed whether the 3rd defendant, as registered owner, is the beneficial owner of those shares. The 1st and 2nd defendants undoubtedly have control over the 3rd defendant (on a good arguable case), so I am satisfied that by inference that each of the defendants has assets within the jurisdiction.

36. Is there a risk that these defendants or any, or all of them will dissipate those assets in order to defeat any judgment which may have made against them? The argument is that there is no risk because those assets would have been dissipated already and reference is made to the letter of demand on the 14th November asking for the money. However, looking at the whole of the evidence in this case, (it is relevant to consider the evidence filed on both sides), I have rarely seen a case where the risk of dissipation of the assets is greater. Indeed on one view of the matter, the purpose lying behind the whole of the transaction was to obtain the Lucky Man shares, and then by means of nominees hold them. The dissipation was originally to hide the basis of the payment from the Plaintiff to the 3rd defendant. In my experience, looking at the whole of the matters before the court there is undoubtedly a risk of dissipation.

37. The 1st and 2nd defendants must be, from the nature of the transaction which took place, well aware of the basis of it. As is their right they have chosen to say little themselves or through those whom they may well control. The only evidence put forward by the 3rd defendant, who is the registered owner of the shares, is to say that it is limited from saying who the beneficial owners are, because it holds as nominees. I know of no basis for saying that. Indeed if there was a proper basis for saying "I do not wish to disclose to the court", these proceedings are in chambers if there was some difficulty there is a well known procedure for putting the names in a sealed envelope attached to an affidavit and then argument can be heard later as to disclosure. It was not thought right to disclose even the name of the representative of the nominees. One can only take the view that for some reason, which is not at all apparent, the 3rd defendant finds it necessary to make some disclosure but not a full disclosure.

38. Now having said that, it is not in any way incumbent upon any defendant to do any thing in these proceedings. They can sit quietly and say, as in other types of proceedings, "you do your worst, you prove your case". The defendants are perfectly entitled to do that. Of course if they do file evidence, that becomes evidence in the case; it does not reverse the burden of proof.

39. The defendants say that there has been material non-disclosure on the ex-parte application. Therefore it is said I should refuse any Order in my discretion. This is not a mere technicality. If there is non-disclosure of material facts, it is a matter which the court has to take very seriously.

40. It is trite law that if a party comes to the court applying for a Mareva injunction ex-parte, it is such Draconian order which infringes the right to deal with property without that party being heard, the applicant undertakes a very serious responsibility to disclose all material matters which are relevant to the court's exercise of discretion to grant or refuse the Order. The party applying must make all reasonable enquiries and urgency of the application is no excuse for non-disclosure. The party must ensure that all relevant matters are in front of the court. The reasons are obvious. If a party obtains a Mareva without disclosing something which is adverse to his case or which would affect the strength of his case or which is a known possible defence to the action, he may obtain an Order which he would not otherwise have obtained. It becomes impossible later to say whether or not a Judge would have exercised discretion in the Plaintiff's favour. In those circumstances the Plaintiff may obtain an unjust advantage of the defendant when the defendant has not being heard.

41. It is the non-disclosure of adverse matters to the Plaintiff's case which is the most important feature. That is not to say that the party should simply present part of his case, although it would be very foolish to do so without good reason; where the non-disclosure of material matters bites is if there is something adverse to the Plaintiff's case which has not been disclosed.

42. If there is non-disclosure the court may in its discretion deprive the Plaintiff of any unjust advantage he has obtained and may refuse further relief at the inter-partes hearing. The reason why further relief may be refused is not simply as a means of punishing the Plaintiff for his offence because, of course, the court may decline to punish the Plaintiff knowing that the defendant may then depart with ill-gotten assets. The usual reason why further relief is not granted in these circumstances is that having obtained an unjust advantage, it is not possible for the court to say what the position would have been at the inter-partes hearing had the original Order not been improperly obtained. This is particularly so in the case of a Mareva because if the assets had not been frozen at the ex-parte hearing who can then judge what the situation would have been with regard to those assets at the inter-partes hearing?

43. In exercising discretion after a material non-disclosure, the court must take into account all the circumstances. Obviously the question whether the non-discretion was deliberate is of great importance; also the question whether it was culpable, in other words whether it was culpable or a simple error of judgment. Even if a simple error of judgment results in non-disclosure, it is still of such importance that the court may refuse relief. On that point the judgment of the Court of Appeal in Inter-Continental Housing Development Ltd. and Quek Kak Huet and others unreported 1986 No. 67 of the 3rd July 1986 was cited. Fuad, J.A. page 17 said : "However, what has constantly been said in the authorities about the Draconian nature of the Mareva remedy and the need for full and fair disclosure must in my view firmly be born in mind, so if non-disolosure was both material and deliberate I find it difficult to envisage circumstances in which it would ever be proper to exercise the court's discretion in the applicant's favour by granting fresh relief. Even where the non-disclosure is not deliberate a court will be slow to assist the applicant because he has gained an advantage to which he was not entitled and of which he should normally be deprived".

44. Now in that passage, the Court of Appeal is setting out the usual way in which discretion is exercised. I am satisfied that the Court of Appeal is not seeking to limit the discretion which a Judge has in these matters. The Court of Appeal is giving guidance as to the way in which it may, in those circumstances, be appropriate to exercise that discretion.

45. As I have said it is the whole of the circumstances that have to be taken into account. The nature of the non-disclosure, in other words is it a non-disclosure of something which is part of the Plaintiff's case and supporting his case or is it a non-disclosure of a matter adverse to his case. If it is adverse to his case and is not disclosed, the court may take an entirely different view of the non-disclosure.

46. Where the defendant relies upon material non-disclosure for the court's consideration, he should normally set out the matters relied upon in his affidavit. The reason is that those issues may then be known to the Plaintiff. It is not necessary for a defendant to do this in order to take the point. The importance of non-disclosure is non-disclosure at the ex-parte stage for when there is an inter-partes hearing then by its nature the parties have the opportunity to set everything before the court in their favour, and contrary to the other party.

47. There is little reference in the affidavits to the matters relied upon by the defendants as material non-disclsoure. However, it was made clear by Mr. Chan, on behalf of the 3rd defendant, on the 8th January that at the resumed hearing the allegation would be of material non-disclosure in particular in relation to the letter of the 16th October, 1985.

48. I should add that in this case the fact that these matters have not been raised in the affidavits does not seem to me to be of any particular relevance or importance. The parties have found it possible to deal with all the matters without an adjournment. Indeed at one stage the Plaintiff was asked whether or not an adjournment was necessary in order to deal with the matters raised. The Plaintiff indicated through counsel that an adjournment was not necessary.

49. The defendants relied upon three matters, in particular, which it is said the Plaintiff ought to have disclosed to the Judge at the ex-parte hearing, which were known to it or ought to have been known and were adverse to its case.

50. The first is the letter of the 16th October, 1985 from the 3rd defendant signed by Sideman Ho. The second is that the Plaintiff ought to have disclosed to the Judge that there was an alternative claim against Mandarin Resources in respect of this money. The third is that it ought to have been disclosed that Mandarin Resources own shares in Lucky Man were deposited with the Plaintiff. In the course of argument and after disclosure of documents a further matter arose. It was said that the possibility of the payment being (in part) a circular payment by Lucky Man through others for the shares ought to have been disclosed.

51. So far as the letter of the 16th October, 1985 is concerned, it is convenient to deal with that along with the allegation that the Plaintiff ought to have disclosed the alternative claim against Mandarin Resources Ltd.

52. In my judgment the Plaintiff ought to have disclosed to the learned Judge something about the alternative claim. The reason is this. It is not simply that there was an alternative claim. Often it will be unnecessary for a Plaintiff to tell a Judge that there is a possibility of an alternative claim against someone else. His responsibility is to make out a good arguable case against the defendant whom he intends to sue.

53. Here the matter goes further. It is because of the way in which the claim against the 3rd defendant and the other two defendants came to light. It was in my judgment necessary for the Plaintiff at least to outline those matters. The reason is that the present management of the Plaintiff were not in control at the relevant time and were not privy to the transactions. It is unlikely that those who were working in the Plaintiff knew what was happening in Mandarin, in the 3rd defendant, in Lucky Man, and the other companies who were controlled by Ho, whereas there is every reason to think that the 1st and the 2nd defendants knew of the transactions. The Plaintiff ought to have disclosed to the learned Judge the way in which these matters came to light and set out the history of the matter for his consideration. It would have followed that the letter would have been disclosed as part of the history before the cheque was asked for. All that history is now set out in the affidavits. It's not necessary for me to rehearse it. These were matters which ought to have been shown to the Judge.

54. In fact, in my judgment, if this history had been disclosed it would not on a proper view have been a disclosure of matters adverse to the Plaintiff's case, it would have demonstrated to the Judge that there were other matters worthy of consideration. It would have demonstrated to the Judge that which the 1st and 2nd defendants had been saying. It would have included the cheque and the letter which led to the cheque being discovered. It would have been necessary to set out the denial by Mandarin of any indebtedness as a result of the transaction.

55. It is argued that the letter ought to have been disclosed in any event because the letter is not consistent with the Plaintiff's case. First, because it undertakes to provide sufficient collateral by way of shares but does not say by way of the shares in Lucky Man. The defendants say that is a matter which ought to have been in front of the Judge. As I have indicated, I think the letter ought to have been in front of the Judge to describe the history. I do not take the view that that letter is inconsistent with the Plaintiff's case as set out, for it is quite clear that the 3rd defendant could not have provided anything other than the shares involved in this case. Second, a point is made that it would have been necessary to convene a board meeting to ratify the collateral and there is no evidence of such. I am unimpressed by that having regard to the control which the 1st and 2nd defendants had over Asiatic Fortune - the 3rd defendant; according to the Plaintiff's case.

56. If all these matters had been disclosed, they would not, in the end, have damaged the Plaintiff's case. It is a non-disclosure which ought to be there for consideration, but having been considered the Plaintiff's case is none the weaker.

57. The non-disclosure must have been deliberate because all this was known to the Plaintiff.

58. I am, however, satisfied by the way in which have developed in these proceedings and the way in which the letter was sent by the Plaintiff's solicitors to the Defendants that there was no intention on the part of the Plaintiff to deceive the court. The reasons were that it was an urgent matter (which it was) and there was some difficulty in communication. Those are not excuses but I am quite clear that there was no unfair advantage and no unjust advantage gained by the Plaintiff consequent upon this material non-disclosure, deliberate though it must have been. The motives are understandable but are not an excuse. Looking at the whole of the circumstances, I have no doubt that I ought to exercise my discretion in the Plaintiff's favour in respect of this matter.

59. The possibility of a circular payment arises because of the action by Mandarin. Certain remarks are made (somewhat loosely) in the affidavits about the nature of that action, and the cause of the payments made into the Plaintiff's bank account on the 16th October. I do not find that this was a matter which the Plaintiff ought to have drawn to the learned Judge's attention at the time of the ex-parte hearing. There was nothing on the face of it to put anyone in the Plaintiff on enquiry. Other moneys were being paid from Mandarin or from other Ho controlled companies. It is noticeable that there is no hint of this in the defendants' affidavits. If there was a circular payment it must have been known to the defendants who must have arranged it. As I have said this action was not commenced until the 30th December. On the evidence this was not knowing to the Plaintiff before then. Correspondence has been disclosed between Mandarin and the Plaintiff. No correspondence has been put before me which relates to that action. I am satisfied, therefore, that this possibility was not one of which the Plaintiff was aware. Transactions with Mandarin were a normal part of business and the 1st and 2nd defendants were unwilling when still in Singapore to disclose the nature of the dealing.

60. I am satisfied that everything that can be disclosed about this matter has now been disclosed to me. Two of the defendants are here and the 1st defendant could have been here to make any points and to put in any affidavits about this matter had they chosen to do so. In respect of this matter I am satisfied that I am aware of all that I need to know. My view remains that there is a good arguable case against these three defendants on the cause of action alleged.

61. I can deal simply with the allegation that the Lucky Man shares already deposited with the Plaintiff ought to have been disclosed. I do not consider this relevant to these proceedings. There was no reason whatsoever why the Plaintiff should even consider disclosing them.

62. Finally there were other submissions by the defendants about inconsistencies and vagueness in affidavits. It was also suggested that the reason for these proceedings being brought was because of the Plaintiff's financial difficulties. Having considered these matters, they do not alter my view of the case. I have born them in mind.

63. The result is that in the exercise of my discretion I think it is just and equitable to make an order freezing and tracing these shares. The balance of convenience is that this Order should be made.

64. It would not surprise me, having seen the writ in the case Hong Kong 1986 A7375, if there was an application for a similar Order on behalf of Mandarin in respect of these shares. That is not a matter which concerns me.

65. I will now hear counsel about the nature of the Order I ought to make.