XCHRX HOLIDAY RESORTS HOLDING LTD. AND ANOTHER v. FONG LAI KUEN AND OTHERS

HCA4442/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.4442 OF 2001

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J U D G M E N T

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1. This is the hearing of the inter partes summons issued by the plaintiffs for a continuation of the ex parte order granted by Deputy Judge some time last month. I think it is rather unfortunate that this matter could only be dealt with today although it came before the summons judge some three weeks ago.

2. At the hearing, the main objection to the continuation of the ex parte order was made by counsel for the 2nd - 4th defendants. The important party in this case being the 4th defendant Cosmos Mutual Limited. No relief was sought in the injunction application against the 1st defendant Ms Fong.

3. The objections raised really are two-fold. One is as to the amount of the Mareva in the sum of $3.7 million which has been reduced by Mr Lau for the plaintiffs at the beginning of the hearing to $1.7 million but which concession he then retracted and wishes now to push back to $2 million. There was objection by these defendants to that sum of $2 million sought by the plaintiffs on this inter partes hearing. The second objection is to the disposition of the transfer of properties injunction.

4. The underlying basis of the plaintiffs' claim against the various defendants is really this : under the 2nd consolidated action, an order had been made by the judge for costs on indemnity basis in favour of the plaintiffs. The amount of the costs said to have been incurred in the 2nd consolidated action comes to something like $1.7 million. Mr Lau says, on top of that, one should add for the purposes of the inter partes summons the interest on it and also the further costs that had been incurred in obtaining the Mareva and defending the Mareva and the hearing of today's application, so that is why he justifies the sum of $2 million.

5. The main trust really of the objection against the $2 million figure is this : be on taxation the amount is going to be brought down and possibly having regard to what was said in the judgment about the costs in each action (there are altogether five actions), the defendants here will not be reliable for as much as $1.7 million.

6. I think this case like all cases in Mareva must be considered on the basis of the best case of the plaintiffs on quantum and I think on the best case of the plaintiffs, it is likely that the plaintiffs will recover order against the defendants here, $1.7 million plus interest thereon costs plus costs of the injunction applications. Therefore the $2 million now sought under today's order is not too high. So, I think there is no merit in the objection to the figure of $2 million.

7. So far as the second part of the objection is concerned, that relates to the disposition of properties. The case of the plaintiffs is really this : that in anticipation that 4th defendant has to pay, i.e. the high costs of $2 million, various properties have been transferred out and that they are likely to be further transferred out and that is why the plaintiffs are seeking an avoidance of the dispositions and for an interim order that no further disposition transactions should take place.

8. If the plaintiffs are right, at the end of the day, then the plaintiffs no doubt would be able to show that to protect his claim for $2 million for the costs payable to, not only the orders sought in the endorsement of the writ should be made, but that interim order should also be made to prohibit interim disposition. I think there is substance in the plaintiffs' relief for injunction preventing interim disposition.

9. I think there is a subsidiary point made by Mr Chung for the 2nd - 4th defendants that, in any event, three properties are too much the subjects of disposition having regard to the amount of claim. I think the same answer can be given as I referred to earlier, that is to say the plaintiffs have to be given the benefit of their best possible case. Having regard to the affidavit material, especially to the possibility of the three properties not being even sufficient in real value to cover the claim, I do not think the order covering three properties made by Deputy Judge Longley was too wide. I am prepared to continue the injunction order.

10. Mr Fok for the 5th - 7th defendants wisely did not pursue any independent point of his. Any objection is met with the same fate as the arguments of Mr Chung.

11. The order therefore I make is that the injunction should continue. The ex parte order of Deputy Judge Longley is to continue subject to the reduction variation of the Mareva from $3.7 million to $2 million.