WU WEI v. LIU YI PING

HCA1452/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.1452 OF 2004

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REASONS FOR JUDGMENT

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The application

1. This is an application by the plaintiff to commit the defendant for contempt of court.

2. The plaintiff alleged that the defendant has been in breach of the prohibitory injunction granted by Deputy High Court Judge Gill on 24 January 2005, prohibiting the defendant from further dealing with the monies falling within the scope of the injunction (“the Restrained Money”). 

3. The events leading to the granting of the injunction originated from the defendant withdrawing about $3.5 million from a joint account in Hong Kong.

Background

4. The parties were husband and wife.  They lived in the Mainland but they had carried on business in Hong Kong as partners.  The money in the joint account originated from the bank account of their company named Knight Advertising Services Limited (“KAS”). 

5. The plaintiff was holding 90% of the shares while the defendant was holding the remaining 10%.  After KAS ceased its business operation, its bank account was closed and the money was transferred to the said joint account.  As at 19 March 2004, the amount was about $4.135 million.  Divorce proceedings was commenced by the defendant wife in the Mainland.  The present action was then commenced on 17 June 2004.  

6. Part of the Restrained Money had been transferred by the defendant to a bank account and the bank account of her father in the Mainland. 

The Mainland proceedings

7. In the divorce proceedings in the Mainland, the Guangzhou Intermediate People’s Court, in March 2006, required the defendant to return HK$1 million and US$100,000 back into a Mainland HSBC account.  This was part of the Restrained Money and was frozen by the Guangzhou Court in June (“the Frozen Money”).

8. However, since the injunction order of Gill J in January 2005, the Guangzhou Court announced judgment on 7 April 2006 which ruled that the defendant was entitled to, inter alia, assets as set out in the divorce agreement.   Consequently on 2 November 2006, the Guangzhou Court released the Frozen Money to the defendant. 

9. The defendant therefore believed that the plaintiff was aware that enforcement of the Mainland judgment was taking place and the Frozen Money had been released to the defendant.  The plaintiff had never lodged any complaints against such an order.  The defendant therefore withdrew part of the Frozen Money which is now the complaint of the plaintiff herein in these committal proceedings.

Admission of the plaintiff in mediation

10. Both parties had attended mediation hearings in March and April 2007 in respect of how the Mainland judgment should be implemented.  During the mediation hearing, the plaintiff on his own calculations agreed that he was indebted to the defendant in the sum of $490,000 on an overall calculation.  This was because he was indebted to the defendant in the sum of $2.18 million under the Mainland judgment and after deducting $1.2 million frozen by the Hong Kong Court and the sum of RMB530,000 odd recovered by the defendant, the plaintiff was still indebted to the defendant in the sum $490,000.  It further led that the defendant to believe that she was entitled to withdraw the Frozen Money.  In any event, on the plaintiff’s own calculation, the injunction order in Hong Kong should have been discharged.

11. Further, there was a third section of mediation hearing in May 2007 and the parties agreed to stop the proceedings in Hong Kong within seven days.  However, the plaintiff soon afterwards disappeared.  The defendant therefore had no alternative but to enforce on properties jointly held by the parties and an announcement of the execution of the properties was issued on 19 September 2007.  

12. On learning the announcement, the plaintiff reappeared and there was a further round of mediation on 28 September 2007.  The outstanding issue between the parties was those costs incurred in the Hong Kong proceedings.  It was agreed between the parties their enforcement proceedings in the Mainland would be stayed pending resolution of proceedings in Hong Kong. 

13. This further led the defendant to believe that she was entitled to use the Frozen Money released to her as living expenses since the plaintiff was still indebted to her in the sum of $490,000.

14. In other words, after the Mainland Court released the Frozen Money, the defendant was not aware that she was not allowed to deal with the money.  The plaintiff had further agreed to stop the proceedings in Hong Kong pending the resolution of the issue of costs between the parties.  In any event, the plaintiff on his own admission agreed that he still owed her $490,000. 

Conclusion

15. In the circumstances I accept the defendant’s submissions that she cannot be said to know those facts which are said to make her act contemptuous. 

16. Accordingly, I have dismissed the plaintiff’s application for contempt and award the defendant costs of the contempt proceedings to be taxed if not agreed.