BANK OF CHINA LTD v. EVER JOINT PROPERTIES LTD AND OTHERS

HCA 2841/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2841 OF 2006

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D E C I S I O N

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1.  This claim is based on a massive scheme of fraud and misappropriation of a money.  It involves over 1 billion Renminbi.  The details can be seen in my judgment in HCA5291/2001, which was given on 18 July 2005.

2.  The 1^st to 15^th defendants are the alleged corporate vehicles through which the misappropriations were effected.  The three main culprits in this fraud and misappropriation scheme are Xu Chaofan, Yu Zhendong and Xu Guojun.  The 16^th and 17^th defendants are said to be their accessories.  The 18^th defendant is the wife of Xu Chaofan, and the 19^th defendant the wife of Xu Guojun. 

3.  There is an application for a Mareva and proprietary injunction against the 16^th and 17^th defendants.  Prima facie, the plaintiff is entitled to this injunction because of the details in my said judgment and the matters pleaded in the statement of claim of this action.  These two defendants are involved in fraudulent conduct and it is justifiable to grant a Mareva and proprietary injunction over all their assets.

4.  These two defendants have raised the question that they owe their lawyers $1.2 million or thereabouts by way of costs for defending criminal proceedings.  I want to assure these two defendants that if their lawyers would want to recoup the legal costs from their assets, there are ways and means in our system for them to make their claim, although they may have to contest the entitlement with the plaintiff in this action.  The same applies to any variation of the order for payment of legal expenses or school fees for their daughter.  They have to apply for the same with proper evidence.

5.  In the premises, I grant the order as prayed for by the plaintiff against the 16^th and 17^th defendants.  I also order that the costs of this application be reserved. 

6.  There is another application against the 18^th and 19^th defendants for default judgment.  The claim is for the return of the misappropriated money given to them by their husbands.  The Writ of Summons has been served on them, and they have filed their acknowledgements of service, indicating their intent to contest this action.  The acknowledgements were filed on 21 February 2007.  The Statement of Claim was served on them on 7 May 2007.  The time for them to file the defences expired on 21 May 2007.  They have, however, failed to file any defence up till now. 

7.  The Statement of Claim has disclosed a proper cause of action against both of them.  In the premises, I give judgment against the 18^th and 19^th defendants as prayed in the Statement of Claim, together with the costs of the action insofar as they are concerned.