SPECIALTY METALS RESOURCES SA v. HUNAN CHUANGDA VANADIUM TUNGSTEN CO LTD AND ANOTHER

HCA 369/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 369 OF 2016

________________________

________________________

________________________

D E C I S I O N

________________________

1.  This is an inter parte summons of an application by the plaintiff for the following orders:

“1. (1) An injunction restraining the 2^nd defendant from:

(a) removing from Hong Kong any of its assets which are within Hong Kong, whether in its own name or not, and whether solely or jointly owned, up to the value of USD423,750.00, or

(b) in any way dispose of or deal with or diminish the value of any of its assets, which are within Hong Kong, whether in its own name or not, and whether solely or jointly owned up to the value of USD423,750.00. This prohibition includes any money in the account number 10861555 at China Construction Bank (Asia) Corporation Limited, be continued until the trial and this action on further order.

(2) If the total unencumbered value of the 2^nd defendant’s assets in Hong Kong exceeds USD423,750.00, the 2^nd defendant may remove any of those assets from Hong Kong or may dispose of or deal with them so long as the total unencumbered value of its asset still in Hong Kong remains above USD423,750.00.

2. Judgment be entered against the 2^nd defendant for USD423,750.00 plus costs of the action including costs reserved to be taxed if not agreed.

3. The plaintiff be discharged from its undertakings to provide a bank guarantee.

4. Costs of this application be in the cause.”

2.  In support of the application Mr Gilbert Henry Collins, solicitor for the plaintiff, has filed a 4^th affidavit in which he sets out a number of matters explaining the basis of the orders sought.  He states that there has been no response from the 1^st and 2^nd defendants other than a confirmation from the business centre which maintains the registered office of the 2^nd defendant which they received the relevant documents and delivered to the 2^nd defendant.  He points out, however, that there has been some communication between the plaintiff and the 1^st and 2^nd defendants, although the defendant companies made no acknowledgment of the present action.  It would appear that the defendant companies are in financial difficulties. 

3.  The underlying claim of the plaintiff against the 1^st and 2^nd defendants is for monies it paid to the 2^nd defendant which it received on behalf of the 1^st defendant on 25 January 2016 in connection with a purchase contract between the plaintiff and the 1^st defendant dated 7 December 2015 for the purchase and supply of ferro tungsten on a monthly basis from January to November 2016 (except for August 2016) which had not been shipped or delivered in breach of the contract. 

4.  The sum involved (USD423,750) concerns a commercial invoice dated 22 January 2016 as a prepayment which was made by the plaintiff to the 2^nd defendant.  The actual sum paid by the plaintiff on 25 January 2016 was USD392,819.92 which included certain set offs between the plaintiff and the 1^st defendant. 

5.  It would appear that the 2^nd defendant received the monies in its bank account as an agent for the 1^st defendant but because of its liability with the bank, the monies were debited.  Because of the financial difficulties experienced by the defendant companies, delivery of the goods pursuant to the purchase contract is unlikely as evidenced by the failure of goods to be delivered in January 2016. 

6.  Mr Collins, on behalf of the plaintiff, seeks that judgment be entered against the 2^nd defendant in default of filing the acknowledgment of service pursuant to Order 13, rule 7 of the Rules of the High Court and a post judgment injunction order in the same terms as previously granted pursuant to Order 29, rule 1.  No application is made by the plaintiff in relation to the 1^st defendant.  On 29 February 2016, leave was granted to serve the writ out of Hong Kong on the 1^st defendant in the People’s Republic of China but I am informed that as yet no steps have been taken to execute service outside the jurisdiction. 

7.  Previously, I granted to the plaintiff an injunction order against the 2^nd defendant on 5 February 2016 which was extended on 12 February 2016 until today’s date. 

8.  In the course of oral submissions by Mr Collins, it was acknowledged that the actual monies paid by the plaintiff to the 2^nd defendant was the sum of USD392,819.92 and therefore the order sought should be for this amount.  There were separate set offs under the purchase contract which was agreed between the plaintiff and the 1^st defendant.  Other minor amendments to the orders sought were acknowledged which are reflected in the terms of the orders that I set out below. 

9.  I am satisfied that the plaintiff has complied with all the requirements under Order 13, rule 7 and accordingly judgment shall be entered against the 2^nd defendant in the sum of USD392,819.92.  I am also satisfied that pursuant to Order 29, rule 1, a post judgment injunction be granted in similar terms to the one previously granted by me.  I do so for the same reasons that I have previously given and in light of the matters I have mentioned in this decision.  I grant the post judgment injunction in aid of execution of the judgment because of the acknowledged financial difficulties of the 2^nd defendant and there are grounds for believing that the assets of the 2^nd defendant will be disposed of in order to avoid execution of the judgment.  See Hong Kong Civil Procedure, 2016, at §29/1/60.  Given the circumstances of the case, I will discharge the plaintiff from its undertakings to provide a bank guarantee under the injunction order.  Of course, the other relevant undertakings as required still remain. 

10.  In light of the foregoing, I grant the following orders:

1. (1) An injunction restraining the 2^nd defendant from:

(a) removing from Hong Kong any of its assets which are within Hong Kong, whether in its own name or not, and whether solely or jointly owned, up to the value of USD392,819.92, or

(b) in any way dispose of or deal with or diminish the value of any of its assets, which are within Hong Kong, whether in its own name or not, and whether solely or jointly owned up to the value of USD392,819.92.  This prohibition includes any money in the account number 10861555 at China Construction Bank (Asia) Corporation Limited.

(2) If the total unencumbered value of the 2^nd defendant’s assets in Hong Kong exceeds USD392,819.92, the 2^nd defendant may remove any of those assets from Hong Kong or may dispose of or deal with them so long as the total unencumbered value of its asset still in Hong Kong remains above USD392,819.92.

2.  Judgment be entered against the 2^nd defendant for USD392,819.92 plus costs of the action and this application including costs reserved to be taxed if not agreed.

3.  The plaintiff be discharged from its undertakings to provide a bank guarantee under the injunction order made on 10 and 12 February 2016.