WING ON FINANCE CO LTD v. CHINA METAL RECYCLING (HOLDINGS) LTD (In Compulsory Liquidation) AND OTHERS

HCA 1412/2013

[2020] HKCFI 1385

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1412 OF 2013

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RULING

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1.  This is the hearing of the summons dated 4 December 2018 (“the Summons”) taken out by Wing On Finance Company Limited (“the Applicant”) in these proceedings so that “the Mareva injunction Order against the 1^st Defendant (“D1”) dated 30 July 2013 as amended by the Orders dated 7 August 2013 and 3 June 2014 be varied (collectively the “Injunction Order”) such that the sum of HK$3,845,343 together with interest thereon at Judgment rate accruing from 28 February 2015 until payment and costs of HK$12,000 pursuant to summary assessment be excluded from the scope of D1’s assets subject to the Injunction Order”.

2.  It appears that the Summons, when issued had only been served on Mr Borrelli and Ms Chi being the liquidators of the Plaintiff.

3.  The Applicant had commenced HCA1492/2017 in or around June 2017 against D1.

4.  It obtained a default judgment before Master Lai on 20 November 2017 (“the Judgment”) for the sum as set out in paragraph 1.  It is apparent from the Statement of Claim that the basis of the judgment was the enforcement of a loan agreement entered in writing on 4 April 2014 between the Applicant and D1.

5.  It would appear from D1’s then solicitors by their letter dated 4 December 2017 that D1 was “financially capable and willing to repay the loan save that his accounts have been frozen by a Court Order in [the present proceedings]”.  It then went on to produce a list of bank accounts and other assets of D1.  The indication from D1 is thus that he is willing to pay back the loan but for the existence of the Injunction Order.

6.  The Applicant explains that after it obtained the Judgment it sought to enforce it and in that respect sought garnishee proceedings against D1’s bank accounts held with HSBC, BOC and DBS.

7.  The Court granted Garnishee Orders Absolute against HSBC on 23 February 2018 and BOC on 29 August 2018.

8.  It would appear that while HSBC felt it was not in a position to release any funds as a result of the Injunction Order, BOC felt able to do so.

9.  Lok J on 27 December 2018 upon the joint application of the solicitors of the Applicant and those of the Plaintiff by consent granted leave to the Plaintiff and D1 to file evidence in opposition if they so wished and further directed D1 should be notified of the listing appointment.  This was because the Applicant had apparently not served the Summons on D1.  Clearly D1 should be given notice of this application.

10.  The Applicant has since filed an affirmation of service of this application on D1 by sending the papers to D1’s address by ordinary post.  It does not appear that D1 responded.  Given his previous position that is not surprising.

11.  The Receivers have indicated that they do not intend to make any submissions since this application concerns the scope of the Injunction order.

12.  Mr Dobby, Solicitor Advocate for the Plaintiff has filed helpful submissions and suggested how the Injunction Order could be varied so as to achieve what the Applicant wished to achieve while keeping the original Order in its original form as much as possible.

13.  Mr Lee, solicitor for the Applicant helpfully drew to my attention the judgment of DHCJ Le Pichon in United Asia Finance Limited v Yiu Tsz Ngar [2015] 2 HKLRD 189, where her Ladyship cited with approval the dicta of Lehane J in Re Ling, Ex parte Enrobook Pty Ltd (1996) 142 ALR 87 at 92, where the precise character of Mareva relief was described in these terms:

“... It deprives the party subject to its restraint neither of title to nor of possession of the property to which it extends. It does not create a security interest, confer priority or in any sense rewrite insolvency law (AJ Bekhor & Co Ltd v Bilton [1981] 2 All ER 565 at 579, 580 per Ackner LJ …); it is an order in persona restraining the party to whom it is directed from disposing of assets or removing them from the reach of creditors. The administration of the property is not placed in the hands of a receiver, trustee or other officer of the court, nor is it assumed by the court itself. For those reasons, to speak of a Mareva injunction as ‘freezing’ assets may, with respect, be somewhat misleading: it operates as a personal restraint against the party to whom it is directed. …

…

More importantly, however, the purpose of the Mareva injunction is to prevent a defendant from dissipating assets, or putting them beyond the reach of creditors, in circumstances where there is a real fear that, unless restrained, the defendant will do so. Its purpose is not to prevent creditors from exercising their rights. …

…

… a Mareva injunction is not a form of administration of the debtor’s property and should not be taken to have the effect on creditors’ rights or claims that an administration in bankruptcy, or an external administration under the Corporations Law, has ...”

14.  Having regard to the applicable principles as set out above I have not difficulty making an Order substantially in the form suggested by the Plaintiff which was agreed to by the Applicant.

15.  It remains for me to thank both parties’ solicitors for their helpful assistance.