W v. W AND ANOTHER

H.C.D.J. No. 7 of 1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. The Petitioner in this matter is the wife of the First Respondent. They were married to each other in 1965. Two sons have been born of their marriage, both are now adults. Both Petitioner and First Respondent (whom I shall call 'wife' and 'husband') came from humble backgrounds. However, during the course of their marriage they built a number of successful hotel businesses and took an interest too in certain nightclub enterprises.

2. In 1997, unhappy differences which existed between the wife and the husband resulted in the wife instituting divorce proceedings. Among other things, she accused her husband of having an affair with a woman, Pang Siu Chi, who has been cited as Second Respondent.

3. The matrimonial dispute between the couple spilt over into their shared business enterprises and it is in respect of these enterprises that two of the three summonses before me relate.

4. The first summons seeks interim relief in respect of the hotel businesses by way of the appointment of receivers to manage the financial affairs of those businesses and also by way of interlocutory injunctions prohibiting the husband, his servants and agents, from taking any part in their management.

5. The second summons seeks interim relief in respect of certain dividends from the couple's nightclub interests. It is the wife's application that the husband be restrained from dealing in or disposing of these dividends.

6. The third summons seeks directions in respect of contempt proceedings brought by the wife against the husband arising out of his alleged breach of certain undertakings formally given to this court on 19th December 1997.

7. Before considering the separate summonses, it should be recorded that on the day of the hearing, having heard argument, I gave oral rulings in respect of the first and third summonses. I did so because clearly the first summons required urgent resolution while the third was essentially uncontentious. I reserved judgment in respect of the second summons. Although I gave two oral rulings, I advised counsel at the time that I would expand upon those rulings in written form. This I have now done, consolidating them with the reserved judgment, so that the parties have the convenience of one written document only rather than three.

The 'hotel' summons

8. To better understand the respective positions of the parties, certain background must be given. There has been no oral testimony and accordingly the material is drawn from the affirmations. I am, of course, aware that I am unable make findings of credibility based on affirmations alone.

9. What is the wife's position in respect of the hotel businesses? In her affirmation dated 11th December 1997 she described her role in the building of those businesses in the following terms:

"The hotel businesses have been built up by me by over 20 years of extreme hard work with little, if any, assistance rendered by the [husband]. From mid-1970s until March 1997, when the [husband] with his triad associates used brute force and threats of violence to remove me from the management of the hotel businesses ..... the business had all along been managed solely by me, and in the last 2 years, with the assistance of my elder son, Wong Kwok Kwong."

10. She continued:

"The [husband] and I started the hotel businesses by setting up "Hilton Villa" in around 1971. At the time, only 3 workers were employed who helped cleaning and tidying the guest rooms and 2 of them were on the night shift. With their assistance I myself took up all the work including tidying and cleaning the guest rooms and being the cashier and receptionist. Apart from working as the cashier and receptionist occasionally, the [husband] did not take part in the operation of the hotel. I worked very long hours and very often until after midnight. Throughout the 1970s, a number of other hotels were set up and companies were formed or acquired in the names of the [husband] and me for the purpose of the hotel businesses and other investments."

11. She then went on to affirm:

"In fact, as from the mid-1970s, the [husband] has not taken part in the running and day-to-day management of the hotel businesses and only indulged himself in sauna or massage parlours and nightclubs and womanising activities. All along I devoted my whole time and energy to establishing, running and developing the hotel businesses ...."

12. The wife spoke in glowing terms of the assistance given to her in the hotel businesses by her elder son, detailing a number of improvements that he had instituted. It was, however, the wife's contention that her son was physically evicted from the businesses by the husband who at the time was supported by certain triad cronies. The son's eviction, she said, was a considerable loss to the well-being of the businesses.

13. The wife contended that shortly thereafter, in 1997, she too was effectively evicted from the businesses, only being able to go to them if accompanied by a bodyguard. She said that she was in fear of her husband and his associates. The wife argued in her affirmations that the husband had not assumed control of the businesses with any genuine desire to ensure their continued success but rather to spite her and to treat them as his personal fiefdoms, placing his mistress and his associates into paid positions although they fulfilled no worthwhile function and drawing funds from the businesses as the whim took him. To this end, it was a matter of grave concern to the wife that the husband had ceased to channel business funds into the business accounts but rather had given instructions for such funds to be paid into his own personal account.

14. The husband, of course, has denied treating the businesses in the cavalier fashion alleged. He has admitted placing Ms. Pang in the businesses but has argued that it was a decision rationally made. Similarly, while he admits giving instructions for business funds to be paid into his personal bank account, he has contended that it was necessary to take that action as the wife refused to sign business cheques. The wife, in return, has contended that this allegation is a gross exaggeration as she did no more than query certain payments which appeared to her to be for the husband's personal benefit and not that of the businesses.

15. Against this background, it is clear to me that, as concerns both the financial management and the general management of the hotel businesses, a position of deadlock has been reached between the parties. The husband himself has accepted this. In his affirmation dated 18th December 1997 he said the following:

"Given the present relationship between the [wife] and me, I verily believe that it will not be possible for us to co-manage the hotels. During an earlier hearing, my legal advisers have suggested to previous counsel acting for the [wife] that, as an interim measure, I am prepared to split the management of the hotels between us on terms to be agreed. Up-to-date, the [wife] has not responded to my suggestion. As there are 5 hotels, in order to avoid any argument, my suggestion is that we should each be given the management of 2 hotels and the 5th one should be sold together with the property."

16. In my judgment, however, it would be wrong in principle to order a split of the businesses on an interim basis as suggested by the husband. If two of the hotel businesses are to go to the wife, which two do I chose? Which two do I choose for the husband? I know nothing of the respective values of the individual hotel businesses or of their potential. I have no business valuations before me and no indication of the degree to which those businesses do or do not inter-relate. Any order I make would, therefore, be a complete shot in the dark. In any event, if a split was made and the businesses fell under the control of the individual spouses how would the trial judge at the final ancillary relief hearing begin to try and unravel the values and potential before the split with those at the time of the final hearing? I will effectively have pre-empted his discretion. I am of the opinion, therefore, that the hotel businesses must continue to be managed together as they have been in the past. Any possible split will be a matter for the judge at the final ancillary relief hearing.

17. In light of this, with there being admitted financial deadlock, it seems to me that the only reasonable solution is the appointment of receivers. I believe that the appointment is not one that can be delayed. The urgency springs from the current crisis over the renewal of the various hotel licences. Correspondence has been exhibited which reveals that the wife's solicitors have been in active liaison with the licensing authority of the Home Affairs Department in order to effect renewal of the licences. However, the authority has not been prepared to renew the licences while the present impasse exists. A letter from the wife's solicitors to the licensing authority dated 23rd January 1998 refers to earlier meetings and confirms the attitude of the authority. In part that letter reads:

"Under Section 8(3)(c) of the Hotel and Guesthouse Accommodation Ordinance (Cap. 349) ("the Ordinance"), the Hotel and Guesthouse Accommodation Authority ("the Authority") may refuse to issue a licence in respect of a hotel or guesthouse on the ground that it appears to them that the operation, keeping, management and other control of the hotel or guesthouse would not be under the continuous and personal supervision of the person to whom the licence is issued ....

You concurred that our client is required to have continuous and personal supervision of the hotels within the meaning of Section 8(3)(c) of the Ordinance before the application for the hotel licences will be granted.

In view of the fact that at present our client has no control over the income and receipts of the hotels and companies, you also agreed that if and when a receiver is appointed to handle the income and receipts of the hotels and the application of the same, such problems will be resolved. You understood that falling short of Mr. Wong agreeing to the appointment of a receiver or the parties agreeing upon some other arrangements whereby our client resumes control over the income and receipts of the hotels, the matter will have to be decided by the Court at the adjourned hearing of our said Summons, which is unlikely to be held until at least several weeks from now."

18. It is not disputed that in the past the wife has been the licensee of the businesses. The husband has agreed that she should remain the licensee. That there is considerable urgency in ensuring the renewal of the licences is also agreed. Without the licences, the businesses will cease to function. The husband, however, has not favoured the appointment of receivers. In his affirmation of 18th December 1997, he expressed his opinion in the following terms:

"I object to the appointment of a Receiver, the same is financially unjustifiable and it is not clear how much the Receiver will charge, though given the proposed Receiver I can imagine that it will not be cheap, and given the present economy the businesses of all the hotels are not good. It is also unclear what the Receiver is going to do. It appears that the [wife] is suggesting that she should be given the management of the hotels and the Receiver is only to take care of the accounts."

19. This is, in fact, what the wife has requested. She wishes to resume the day-to-day management of the businesses but seeks to place the finances under the control of the receivers. I see good sense in her suggestion that she take over day-to-day management leaving financial control in the hands of the receivers. I say so for a number of reasons.

20. First, it is not really disputed that in the past the wife has managed the hotel businesses on a day-to-day basis and would be doing little more than continuing where she left off. She has an intimate knowledge of the businesses and what makes them successful.

21. Second, the businesses are almost unique in nature. They are not standard hotels or boarding houses; they are establishments in which rooms are rented by the hour. The husband's counsel has described them as 'love hotels'. Finding receivers with sufficient knowledge of the managerial skills required for this type of business would present substantial difficulties.

22. Third, as Ms. Eu S.C., counsel for the wife, has emphasised, it is one thing for receivers to take over financial control, it is another entirely to give them full managerial responsibility and place them on the board of directors. Even if they were to agree, the receivers would need to make thorough investigations first, if only to protect their own interests. During the course of the hearing, I was advised by Ms. Eu that enquiries had been made of the prospective receivers and that they had expressed reservations at the prospect of taking over full management.

23. Fourth, the husband accepts that, as far as he is concerned, the management of the hotel businesses is not a matter of immediate and critical concern. He expressed his opinion in his December affirmation in the following terms:

"I would like to point out that as far as the "management" of the hotels are concerned, there is really very little to manage since the businesses are all well-established. Neither the [wife] nor I need even attend the hotel in person, certainly not everyday, although we can do so at any time. I therefore deny that in the past I have not taken part in the management of the hotels. The only "management" involved is really to receive and peruse the daily accounts which the staff of the hotels will prepare and send to the office at Parke Street every morning, the intakes will then be deposited and from them expenses paid ...."

24. The wife, of course, does not accept that there is only a minimal need for management of the businesses. It is her contention that businesses of this kind require constant monitoring and supervision carried out by somebody with experience in the field. I sympathise with that view. I would have thought it prudent to ensure that businesses of this kind, in Hong Kong's present economic climate, faced with stiff competition from other such hotels, do have the benefit of experienced 'hands-on' management.

25. What then of the costs of bringing in receivers to control the finances? Messrs. Arthur Andersen, an international firm of accountants, has agreed to undertake the work and has set out a scale of its fees. The fees are substantial. But they must be considered in light of the responsibilities undertaken and in light of the value of the businesses. There are, I am told, five hotel businesses; they are -

(a) The Baccarat Hotel operated by Baccarat Hotel Limited;

(b) The Beverly Hotel (Hong Kong) and The Beverly Hotel (Kowloon) operated by Beverly Hotel Limited;

(c) China (Hong Kong) Hotel in Hong Kong Island operated by Gemsland Hotel Limited;

(d) China (Hong Kong) Hotel in Kowloon operated by Travellers' Paradise Limited,

26. Together, I am told, these businesses, in approximate terms, have a value of some HK$200,000,000.00. This value, however, does not take into account such considerations as goodwill and appears to be anchored essentially to the real estate value of the various hotel premises. In short, we are dealing with businesses of considerable substance, businesses which could experience the greatest difficulties if deadlock between the spouses persists. The result would be the loss of assets which would otherwise, when financial matters have been resolved, be distributed equitably to the spouses.

27. I am therefore satisfied that the appointment of receivers to manage the finances of the hotel businesses is amply justified. But does the law support the wife's application for such appointment?

28. Ms. Eu, for the wife, has referred me to a number of authorities. The founding principle is to be found in Featherstone v. Cooke (1873) L.R. 16 Eq. 298, the headnote of which reads -

"The existence of disputes between different members of the governing body of a company which prevent its affairs being carried on properly, is a ground for the intervention of the Court by injunction and receiver to protect the property of the company, but the interference of the Court will be continued only until a governing body is duly appointed."

29. In the judgment itself, Sir R. Mallins, V.C. said (page 301):

"With regard to private partnerships, nothing is of more frequent occurrence than the quarrels of partners. If parties quarrel, oust each other from the management, or so conduct themselves that the partnership cannot go on with advantage, it is every day's practice for the Court to interfere by injunction, and appoint a receiver if necessary. With regard to public companies, I apprehend the same principle is applicable. If a state of things exists in which the governing body are so divided that they cannot act together, and there is the same kind of feeling between the members as there is frequently in the case of private partnerships, it is clearly within the rule of this Court to interfere, and it will do so."

30. A recent judgment of this court; namely Chinese United Establishments Ltd. v. Cheung Siu Ki [1997] 2 HKC has been of assistance. On page 223 of that judgment, having considered the relevant law, Rogers J. (as be there was) said the following:

"The principles for the grant of an interlocutory injunction have now been set out of course in American Cyanamid Co. v. Ethicon Ltd. [1975] AC 396.

My view of the matter is that the appointment of a receiver to act under the powers of the court must like an interlocutory injunction be a flexible power since it is a discretionary power. It should be exercised as is said in Snell on a similar basis to that of an interlocutory injunction.

As I have already indicated, I consider in any event that the plaintiff does have a strong arguable case for the purposes of today. Even if I did not so hold I would approach it on the basis that what must be the aim of the court is to preserve the assets over which a receiver is sought to be appointed if it is thought to be necessary to put both parties in as good a position as possible when it comes to a court deciding the final merits at the trial seeking to do justice between the parties."

31. It is clear that the principles apply equally in matters of family law. Poon v. Poon [1994] 2 FLR 857 illustrates the principle. At page 859 of the judgment, Thorpe J. said:

"Mr. Irwin on behalf of the wife submits that any dispute regarding the function or control of the company must be resolved in the Companies Court. He submits that the Family Division has no jurisdiction to invade the proper territory of that court. I reject that submission which I regard as unrealistic and contrived. This is a family business which the family chose to incorporate. All current dispute within the family should be litigated in this one court.

The principle that sensibly applies in this division is that pending the final hearing every effort is made to preserve the status quo and to discourage or prevent either spouse from pre-emptive strike.

On the application of that principle it is to me unthinkable that the wife should be allowed to go ahead to emasculate the husband's control of the company. His application on the merits at the final hearing will be for transfer of the wife's shareholding in the company. He may succeed in that. In the interim it would be quite wrong if he were stripped of the commercial function which he has exercised for over a decade. Equally there would be a danger that in the interim the wife would take steps to strip out the assets of the company in ways perhaps similar to the attempt that was made in November 1992. On the other hand the husband's application may fail and at the conclusion of the trial the wife may find herself the more or less absolute owner and controller of the company. In that case it is important that she should find herself queen of an undiminished kingdom."

32. In conclusion, the judge said:

"I have reached the conclusion, therefore, that in an endeavour to ensure that neither takes unfair advantage in the interim, the conclusion that I should reach in the exercise of my discretion is to grant the relief sought by the husband on the basis of undertakings to comply with the wife's request for the appointment of an independent director to join the board, a professional secretary to take over his functions and to accept in principle the reinstatement of Mr. Michael Lee, subject to exchanges designed to ensure the minimum relationship to enable them to co-operate between now and the final herring."

33. I am, therefore, satisfied that the law does grant to me the discretionary power to order the appointment of receivers to manage the financial affairs of the hotel businesses and that I should exercise my discretion in this instance. There will, therefore, be an order in terms appointing Messrs. Arthur Andersen.

34. Of course, in fairness to Mr. Ronald Tang, who appeared (at short notice) for the husband, his major concern, as I understand it, was focused on the wife's application for interlocutory injunctions excluding the husband (and his agents and servants) from any involvement in the day-to-day management of the hotel businesses.

35. To exclude the husband from the day-to-day management of the hotel businesses is not a step to be lightly taken. Poon v. Poon supra makes that clear. But do I have any other choice? In all the circumstances, I think not. Both parties accept that there is managerial deadlock. They simply cannot work together. A high degree of emotion has coloured recent events. The wife has made allegations against her husband of triad intimidation. She accuses him of employing his mistress and his friends for no other purpose than to place those loyal to him in positions of authority. Whatever the husband's reasons, for him to place his mistress in the family businesses at this critical time may be seen at best as being tactless.

36. The receivers have expressed reservations over assuming management responsibilities and would only be prepared to do so after a thorough (and no doubt costly) investigation. This leaves the husband or the wife. The husband, however, does not seem to believe that day-to-day management is required. In his opinion, the businesses are 'well-established' and it is really a question a checking the daily accounts - a function now to be carried out by the receivers. As concerns the husband, from a reading of the affirmations and from what both counsel have said to me, I have gained the clear impression that his past involvement in the businesses had been focused more on the general 'external' task of promoting them rather than taking an active interest in the mundane details of day-to-day management. If that is the case, if I give to the wife the sole interim responsibility of attending to day-to-day management responsibilities, it will not in any way prevent the husband from continuing on an 'external' basis to promote the businesses by an active use of his commercial contacts and his public relations skills. I am satisfied that the wife actively seeks to preserve the businesses as viable concerns. Her application for the appointment of receivers and the active steps taken on her behalf by her solicitors to ensure a renewal of the business licences are, in my opinion, evidence of this. I have already spoken of her knowledge and experience.

37. As concerns the business licences, I have taken into account that the wife is (and has been) the licensee and that in terms of the Hotel and Guesthouse Accommodation Ordinance, Cap 349, the businesses must be under the continuous and personal supervision of the licensee. By law, therefore, the wife is obliged to remain in active managerial control.

38. The purpose of the injunctions sought by the wife against her husband are essentially to ensure that the hotel businesses are placed under viable management and are therefore preserved as assets until the rights of the parties have finally been determined. In my judgment, the preservation of the status quo can only be achieved by placing the wife in effective control of the hotel businesses. Having said that, there must be limits on her interim powers. The wife may, for example, believe that large amounts of capital expenditure are required to renovate one or more of the businesses, a move which the husband may believe to be commercially unsound. While the wife has interim responsibility for the day-to-day management of the businesses, therefore, I will order that no capital expenditure in excess of $50,000.00 be spent on any single business without the consent of the board of directors of each business and no capital expenditure in excess of $200,000.00 on the businesses generally without such consent. There will, of course, be liberty to apply.

The 'nightclub' summons

39. I have already referred to the fact that during the course of their marriage, on the face of it, the wife and the husband acquired joint financial interests in certain nightclubs.

40. In her affirmation of 11th December 1997, the wife spoke of the family nightclub interests being held by a company, Stead Young Company Ltd., in which she and her husband each held 50% of the issued shares. There were no other shareholders. The wife has contended that her 50% shareholding reflected her contribution to the nightclub enterprises. The husband has argued that she was no more than his trustee and that he was at all material times the sole beneficial owner of all the shares.

41. In his affirmation of 15th January 1998, the husband said that all the nightclub investments were made by him from moneys he alone had earned from other business interests. Initially, he said the investments were in his own name but as they grew and diversified he began to use limited liability companies to hold the investments. As to his wife's shareholdings, he said:

"At the material time, my relationship with the [wife] was good and it was natural that I asked her to be the other shareholder/director as in the case of other companies which ran the various hotels."

42. According to the husband, in 1991 a number of nightclubs agreed to join together to form a body of clubs known as the China City Group. To enable this to happen, all the shares in the individual companies were exchanged for shares in a holding company called China City Night Club Holdings Ltd. As a result, he said, for his interests in some five nightclubs, he was personally allotted 2,791 shares, giving him approximately 9.75% of the total issued share capital.

43. It has not been disputed that the shares in the holding company were allotted to the husband only and not the wife. But that, the wife has argued, does not alter the fact that she and her husband together were still regarded by the holding company as owning those shares equally either through Stead Fast or through the husband personally. In this regard, the wife has pointed to various reports by the accountant of the holding company and to various dividends paid to Stead Young Company Ltd. and not to the husband alone. The wife has gone so far as to allege that over the years, her husband has 'misappropriated' dividends paid by the holding company to the extent of at least HK$9,800,000.00. As she said in her supporting affirmation:

"In the premises, the [husband] has to account for the dividends and other payments payable to Stead Young which he has misappropriated so far. As for all future dividends and other payments payable to Stead Young, the same should be shared equally between the [husband] and me or alternatively paid into an account of Stead Young to be opened, pending the determination of the ancillary relief herein. I verily believe that if the injunctions in terms of the Summons filed herein were not granted, the [husband] will dissipate the funds misappropriated by him and continue to misappropriate the dividends and other sums distributed or paid to Stead Young by the China City group."

44. It should be mentioned that the nightclub interests are held (either jointly by the couple or solely by the husband) in a complex network of companies; the holding company of the businesses being incorporated off-shore while a separate, publicly listed company apparently now holds the real estate assets of the businesses. But leaving aside the corporate complexities, there is a profound conflict of fact as to whether the wife has held a substantive interest in the nightclub investments or has acted only as a trustee for her husband. That conflict can only be resolved at trial.

45. At this juncture, I should mention that there is no question of either the wife or the husband being deprived of their ability to live by reason of any order made. Counsel have accepted that the two spouses have substantial assets, certainly enough to allow them both to live to an acceptable standard until financial matters are resolved.

46. The wife has sought injunctions to prevent the husband continuing his practice of 'misappropriating' the dividends and dissipating them, funds to which, she says, she is entitled to 50%. Her counsel has argued that the wife has established that she has a good arguable claim to the right she seeks to protect. She has shown, therefore, that there is a serious question to be tried.

47. The husband on the other hand, while not vigorously contesting that there is a serious question to be tried, has argued the matter on two grounds. First, that there is no evidence that he has or will dissipate the dividends and, second, that, given the high value of the known assets in the 'family pot', there is simply no need for the injunctions sought as the court will, in its final judgment, be able to correct any perceived imbalances.

48. Counsel for the husband has emphasised his argument by saying that effectively the wife is seeking a mareva injunction to freeze the husband's income. With respect to counsel, however, that appears to me to be begging the question. It is the wife's contention that she is (and has been) entitled to 50% of the dividends. It is, therefore, not a question of laying claim to the husband's income, it is a matter of the wife alleging that the husband has appropriated 50% of her income and will continue to do so unless stopped.

49. How then am I to exercise the court's discretion, having regard to the balance of convenience?

50. There is no suggestion that the husband will suffer hardship in any way if he is restrained from using either all or half of the dividends to be paid to him between now and the final resolution of financial matters.

51. In addition, while the assets in the 'family pot' may be very substantial, at this early stage I have no idea of the extent of the liquid assets. I can see good reason, therefore, for preserving the liquid assets that come by way of disputed dividend payments until the court can make a final order. That will enable both the wife and the husband to easily recover any lump sum order that may be made in their favour.

52. On his part, the husband has given no undertaking concerning the dividends he has received or will receive. Given the highly emotional background to this matrimonial dispute and the degree of enmity already engendered that causes me concern.

53. As I understand it, the husband holds that he is entitled to use and deal in the disputed funds as he so wishes on the basis that the wife has been unable to prove that he has a clear intention of dissipating those funds. But, in my judgment, having regard to the history of the matter, I believe there must be some real concern that the husband will, with the intention of defeating the wife's claim, 'deal with' the disputed dividends. In such circumstances, the court has the jurisdiction under Section 17(1)(a) of the Matrimonial Proceedings and Property Ordinance, Cap. 192, to make such order as it thinks fit to restrain such dealing.

54. What then of the argument that this court has no power to grant an injunction restraining the husband from disposing of assets which he does not at this time possess and in respect of which there is no certainty that he will possess? In my judgment, that is answered by Roche v. Roche (1981) 11 Fam. Law 243 in which the Court of Appeal exercised jurisdiction to restrain assets not yet certain; namely, a claim in the course of litigation for damages for personal injuries.

55. Although the dispute over the 'nightclub' dividends bears the trappings of a commercial dispute, it is in reality a family dispute and this court must exercise its discretion to preserve assets in dispute to ensure that at the end of the day justice is doing between the spouses (see Shipman v. Shipman [1941] 1 FLR 250).

56. In all the circumstances, I am satisfied the balance of convenience dictates that all the disputed dividends should be paid into a joint interest bearing account and be held until final resolution of the financial matters. I will make an order accordingly.

The 'contempt' summons

57. In this matter, the wife has done no more than seek directions for trial. As it turned out, all directions were agreed and are set out in the orders which follow.

Costs

58. Concerning the 'hotel' summons, having heard argument, I am satisfied that costs must be awarded to the wife; that is in respect of both the application for the appointment of receivers and the interlocutory injunctions. There will be a certificate for two counsel.

59. Concerning the 'nightclub' summons, costs are to be in the cause. To assist the trial judge, I indicate that I consider two counsel to have been necessary.

60. Finally, concerning the 'contempt' summons, costs are reserved.

Orders

61. My orders, therefore, are as follows -

A. In respect of the hotel summons:

62. Upon the Petitioner by her Leading Counsel undertaking not to incur expenditure of a capital nature in respect of any individual hotel business in excess of HK$50,000.00 and any expenditure of a capital nature in respect of the hotel business generally in excess of HK$200,000.00 without the approval of the board of directors.

63. It is ordered that:-

1. (1) 2 partners of Messrs. Arthur Andersen, Certified Public Accountants, be appointed as receiver ("the Receiver") until further order to collect, get in and receive all sums of money hereafter received or receivable as income or otherwise in respect of the respective hotel business ("the Hotel Business") operated by the companies ("the Companies") particularized as follows:-

(a) The Baccarat Hotel operated by Baccarat Hotel Limited,

(b) The Beverly Hotel (Hong Kong) and The Beverly Hotel (Kowloon) operated by Beverly Hotel Limited,

(c) China (Hong Kong) Hotel (Hong Kong) operated by Gemsland Hotel Limited,

(d) China (Hong Kong) Hotel (Kowloon) operated by Travellers' Paradise Limited.

(2) The Receiver shall pay the expenses of the Companies and the Hotel Business and the costs charges and expenses of the Receiver incurred in the execution of his powers and duties out of the sums received as aforesaid.

(3) The Receiver do, not less than 3 weeks prior to the hearing of the ancillary relief herein, file in Court and serve with each of the parties hereto a copy of his Accounts on the sums received and paid as aforesaid.

(4) The Petitioner and the 1st Respondent do forthwith deliver or cause to be delivered to the Receiver all the books and accounts relating to the Companies in their possession, order or control to be kept in the possession and custody of the Receiver, with access to the same to the Petitioner and the 1st Respondent upon giving appropriate undertakings satisfactory to the Receiver.

(5) The Petitioner and the 1st Respondent do allow the Receiver and his servants or agents access to the office premises at Rooms 1302 and 1303, Parkes Commercial Centre, Nos. 2-8 Parkes Street, Kowloon, the respective premises of the Hotel Business and the respective registered offices of the Companies for the performance of the duties of the Receiver.

(6) The Petitioner and the 1st Respondent shall throughout the course of the appointment of the Receiver not interfere in any way with the Receiver in the performance of his duties and shall disclose to the Receiver such information as he shall reasonably require regarding the books and accounts of the Companies and if requested to do so by them swear Affidavits confirming the same.

2. The 1st Respondent whether by himself his agents or servants or otherwise howsoever be restrained until further order from:-

(1) dealing in any way with any sum or sums of money hereafter received or receivable as income or otherwise in respect of the respective Hotel Business operated by the Companies; and

(2) involving howsoever in the day to day management and operation of the Hotel Business otherwise than receiving notices of, attending and voting in directors' and shareholders' meetings of the Companies.

3. The 1st Respondent do within 21 days from the date hereof make and file with the Court and serve a copy upon the Petitioner's solicitors an affirmation disclosing, identifying and stating with full particularity and supported by relevant documents in respect of each sum of money receivable as income or otherwise for the Hotel Business and deposited into the personal account(s) of or received by way of cash by the 1st Respondent after 16th March 1997 how the same were applied and when and under what circumstances and what has become of the same.

4. The costs of and occasioned by this application be to the Petitioner in any event with Certificate for two Counsels for the Petitioner.

B. In respect of the nightclub summons

64. It is ordered that:-

1. The 1st Respondent, whether by himself his agents or servants or otherwise howsoever, be restrained until further order from disposing of or in any way dealing with any sum or sums of money which shall be payable as dividends or repayment to shareholders to himself, to himself and the Petitioner jointly, or to any corporate body, arising from or in respective of the 1st Respondent's and/or the Petitioner's investments in various nightclubs in the China City Group including the following:-

(i) China City Night Club,

(ii) Club Cabaret,

(iii) New Tonnochy Night Club,

(iv) Oriental (Ballroom) Night Club,

(v) Mandarin Palace Night Club,

(vi) Dai-ichi Club,

(vii) Caesar Night Club,

("the Night Clubs"), whether held directly or indirectly in or through companies in Hong Kong or otherwise including any of the following companies:-

(i) China City Night Club Limited,

(ii) Hispeed Development Limited,

(iii) Full Dit Investments Limited,

(iv) New Life Development Limited,

(v) China City Night Club Holdings Limited,

(vi) Polybest Enterprises Limited,

(vii) Sealtree Company Limited,

(viii) Writers Limited,

(ix) Ling Yip Investments Limited,

(x) Takugin International (Asia) Limited,

(xi) Studio 21st Century Entertainment Management Company Limited,

(xii) Merton Holding Limited

("the Companies"), otherwise than forthwith by depositing the whole of the said sum or sums of money or causing the same to be deposited into a bank account to be opened in the name of Stead Young Company Limited ("Stead Young's Account") with both the Petitioner and the 1st Respondent being the joint authorised signatories thereof and the 1st Respondent do take such steps as may be necessary for the opening of the said Account.

2. The 1st Respondent do within 14 days from the date hereof make and file with the Court and serve a copy upon the Petitioner's solicitors an affirmation disclosing, identifying and stating with full particularity and supported by relevant documents:

(1) the nature and extent of any interest of the Petitioner and the 1st Respondent, whether the same be held in their respective own name or held jointly between them, or held jointly between the 1st Respondent and any other individuals or companies, or held by nominees, trustees or agents or otherwise or in or through individuals or companies, in:-

(a) the Companies and

(b) the Night Clubs;

(2) the identity of the individuals through whom or of the companies through which the said interest of the Petitioner and the 1st Respondent is held respectively in each of the Companies and the Night Clubs;

(3) in respect of each of the sums of money identified in paragraphs 20, 31, 44 and 45 of the Petitioner's 7th Affirmation made on the 11th day of December 1997, the accounts into which each of such sums of money were deposited and how such sums of money were applied and when and under what circumstances and what has become of the same.

3. Costs to be costs in the cause.

C. In respect of the contempt summons:

65. It is ordered that:

1. The 1st Respondent do have leave to file an affirmation in reply within 21 days from the date hereof;

2. The Petitioner do have leave to file an affirmation in reply within 21 days thereafter;

3. No further affidavit evidence be filed without the leave of the Court; and

4. Costs be reserved.