PC FORTUNE CO LTD AND ANOTHER v. MASTERMIND ASSET MANAGEMENT LTD

DCCJ 4479/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4479 OF 2010

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D E C I S I O N

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1. This is the plaintiffs’ application for costs of and incidental to their application for Mareva injunction which came before me on 20 December 2013 with certificate for counsel as well as the costs of and incidental to the interpartes summons dated 20 December 2013 returnable on 2 January 2014 before his Honour Judge Alex Lee in chambers (“Interpartes Summons”). The plaintiffs further ask for the costs of this summons and the costs of today’s hearing.

2. I shall adopt the chronology of Mr Ho, who represents the defendant today, as follows.

3. The action was heard by his Honour Judge Chow, who gave judgment in favour of the plaintiffs on 9 October 2013.  The defendant was ordered to pay the plaintiffs’ costs of the action.  The plaintiff sought leave to appeal to the Court of Appeal, which application was refused by Judge Chow.  On 15 November 2013, the solicitors for the plaintiffs sent to the defendant their estimated costs and disbursements in relation to the action, and the defendant, represented by Mr Ho’s firm, wrote back on 5 December 2013, giving their comments on the plaintiffs’ estimated costs and disbursements.  On 20 December 2013, the plaintiffs took out an ex parte application for Mareva injunction which, as I said, came before me on 20 December 2013.

4. Subsequently, the parties reached an agreement and took out a consent summons on 30 December 2013 applying for the injunction order granted by me to be discharged and for the plaintiffs to withdraw the Interpartes Summons so that the hearing of 2 January 2013 could be vacated.

5. The application was duly granted by his Honour Judge Alex Lee on 30 December 2013, and the only outstanding matter was the costs of and incidental to the Interpartes Summons and the consent summons, which were reserved.

6. The consent order also provided for liberty to the parties to apply for determination of the costs of the originating application for injunction as well as the Interpartes Summons.

7. Apparently having failed to reach an agreement on the costs issue, the matter subsequently came before Master Lam, who adjourned the matter for argument before me today.

8. Mr Ho appeared on the defendant’s behalf today to oppose the plaintiffs’ application.  He referred me to the general legal principles for the granting of Mareva injunction as summarised by Deputy Judge Winnie Tam, SC, in Eastment Chemical Limited v Heyro Chemical Company Limited [2012] 3 HKLRD 307 and further highlighted the reminder of Anthony Chan J in Chan Zhixuan v Fung Man Kwong (HCA 172/2013) unreported, 1 March 2013 that the jurisdiction to grant a Mareva injunction is not to be exercised lightly, and that the relief serves a useful purpose to prevent the dissipation of assets to defeat a judgment so that the plaintiff must make out a case of dissipation of assets on the defendant’s part.  Mr Ho submitted that the plaintiffs should not have taken out the injunction application in the first place because the plaintiff had failed to first invite the defendant to put up money by way of security for costs to cover the plaintiffs’ costs of the action when there was a two‑month time gap between the signing of the sale and purchase agreement and the scheduled completion of the defendant’s landed property and one month between the plaintiffs’ application for injunction and the scheduled completion.

9. Of course, Mr Ho could not say what the defendant would have responded had they been asked to put up money by way of security for costs other than that the result might have been different had the plaintiffs asked, and that costs and the court’s time might have been saved.

10. In arguing for the defendant today, Mr Ho’s immediate difficulty lies in the absence of any evidence from the defendant as to the parties’ communication around the time of the plaintiffs’ application in December 2013 or in answer to the plaintiff’s saying that there was a risk of dissipation of the defendant’s assets upon the sale of the landed property.  More importantly, after the granting of the ex parte injunction, there was no application by the defendant to discharge the same on the grounds of it not having been properly applied for or otherwise.  Instead, the injunction was discharged by way of consent, so that the need for attendance by the parties on the return date was absolved, leaving only the loose end of the costs issue.

11. Putting aside Mr Ho’s complaint about the lack of effort on the plaintiffs’ part to save the need for an injunction application, Mr Ho’s argument in effect seeks to impeach my injunction order.  For one thing, this ignores the fact that the order was discharged by consent.  More importantly, the absence of any evidence from the defendant is fatal to his argument.

12. All this court has today is but the same evidence from the plaintiffs in support of the injunction application which points to the plaintiffs’ effort in communicating with the defendant, albeit through a different solicitors’ firm who was handling the defendant’s sale of the landed property at the time, and which points to the plaintiffs’ inability to secure any comforting result from the defendant before they took out the injunction application.

13. While the defendant did see sense subsequently in agreeing with the plaintiffs on the disposal of the injunction order, there was no guarantee that the same sensible result would have been achieved without the injunction relief granted by this court.

14. In these circumstances, I can see no basis for entertaining the defendant’s attack on the ex parte order granted by me.

15. As to Mr Ho’s suggestion that the plaintiffs should have asked the defendant to put up security for costs instead of jumping to an injunction application, I accept that this court can take this into account in exercising its discretion on costs.

16. First, I note that what Mr Ho suggested today is exactly what the parties achieved by way of consent.  Having taken into account the factual circumstances set out in the above, and in particular, in the light of the lack of any positive response from the defendant or its then solicitors to allay the plaintiffs’ concern about possible dissipation of the defendant’s assets once his landed property was turned into cash, I am unable to say that the plaintiffs should not have taken out the injunction application in the first place.

17. In the circumstances, I see no basis for depriving the plaintiffs of their costs of the ex parte application as well as the Interpartes Summons.

18. I therefore grant the plaintiffs’ application in terms of paragraph 1(a) and (b) of their summons dated 10 February 2014.  Having granted the application, I see no reason why I should not also award the plaintiffs costs of today’s summons as well as today’s hearing (counting from 9:45 am).