SU SU v. LI WING CHIU

HCA 2225/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2225 OF 2013

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J U D G M E N T

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Introduction

1.  There were 4 matters before this court which followed from this court’s judgment handed down on 18 February 2014 (“Main Judgment”), and I shall adopt the same legend herein as in the Main Judgment.

2.  The 4 matters were :-

(i)   P’s summons, and D’s summons, for variation of the costs order nisi made in the Main Judgment (“Costs Summonses”);

(ii)   D’s summons dated 3 March 2014 for leave to appeal against the Main Judgment (“Leave Summons”);

(iii)           P’s amended summons dated 28 April 2014 (“Variation Summons”) for variation of the Mareva Injunction, as granted under the Ex-Parte Order and varied on 22 November 2013 (“Mareva Order”);

(iv)           D’s summons dated 24 April 2014 (“Release Summons”) for the release of a sum of HK$680,000 from the sum of HK$17,680,000 paid by D into court.

3.  I propose to consider the Leave Summons first, followed by the Variation Summons and the Release Summons.  I will then deal with the Costs Summonses.

Leave Summons

4.  Regarding applications for leave to appeal in interlocutory appeals, Section 14AA (4) of the High Court Ordinance (Cap 4) provides that:-

“Leave to appeal for the purpose of subsection (1) shall not be granted unless the court hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard”.

5.  To meet the “reasonable prospect of success” test, the applicant is required to show more than just an arguable case, but an appeal that has merits and ought to be heard, although he does not have to demonstrate that the appeal will probably succeed[1].

6.  The phrase “reasonable prospect of success” in this context has also been explained by Le Pichon JA in SMSE v KL [2009] 4 HKLRD 125 (at §17):-

“Leave to appeal under Order 59 rule 2B is not lightly granted. The relevant test appears in section 14AA (4) of the High Court Ordinance. In granting leave, the judge must have considered that the test set out in section 14AA (4) had been met. The section requires that the court be satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard before granting leave. Reasonable prospects of success involves the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’.”[2]

7.  In the context of interlocutory injunctions, it has been said that the Court of Appeal will generally be slow to interfere with the decision of a judge on an application for an interlocutory injunction in view of the wide discretion given to the judge.  The burden of proof is on the applicant and the burden can be discharged by the applicant showing an arguable case or mere possibilities of success[3].

8.  As submitted by D’s Counsel, Mr Chan, the grounds set out the draft Notice of Appeal (“Draft Notice”)[4] could be summarized into four broad grounds:-

(a)    The court erred in failing to hold that there were non-disclosures and misstatements on the part of P (see Ground nos 1, 2, 3, 10 and 12 of the Draft Notice ) (“Non-disclosure Ground”);

(b)   The court erred in ruling that the P had established a good arguable case by ignoring the Chen Agreement, and the failure of the P’s to fulfil and/or discharge her obligations under the Transfer Agreement, 1^st Consultancy Agreement and the 2^nd Consultancy Agreement (see Ground nos 4, 5, 6, 7, 8, 9, 11 and 13 of the Draft Notice ) (“ Good Arguable Case Ground”);

(c)    The court erred in finding that there was a real risk of dissipation of assets by the D (see Ground no 14 of the Draft Notice) (“ Risk of Dissipation Ground”);

(d)   The court erred in holding that further fortification of HK$1.5m would be adequate without giving due regard of the damages suffered or would be suffered by the D due to the Mareva Injunction (see Ground no 15 of the Draft) (“Fortification Ground”).

Non Disclosure Ground

9.  As mentioned in the Main Judgment, P’s case was a simple one and was based on the Transfer Agreement she signed with D.  It was stated in the opening paragraph of the Transfer Agreement that, in view of the expiry of the 1^st Exclusivity Agreement entered into by Neuf Capital and the Provisional Liquidators in relation to the Restructuring Project for the re-listing of the Company, the parties, namely P and D, agreed that :

i. the Restructuring Project would be continued by a company solely owned by D called Thousand Jade;

ii. P was to transfer to D all her rights and interests in her investments in the Restructuring Project at the consideration set out in the Transfer Agreement.

10.  D’s complaint was that when applying for the Ex-Parte Order, P had failed to disclose various agreements pursuant to which P had disposed of the entire portfolio, or a substantial part, of her right and interest in her investments in the Re-structuring Project held by Golden Winner in Neuf Capital.  As a result of P’s disposals aforesaid, D’s case was that the Transfer Agreement would have been rendered void and null for non-existence of subject matter.

11.  As stated in paragraphs 8 and 9 of the Main Judgment, there were originally 3 investors in the Re-structuring Project for the re-listing of the Company, namely P, D and Chan.  Neuf Capital was the corporate investment vehicle used by them to sign the 1^st Exclusivity Agreement for the Re-structuring Project.  The interests of P, D and Chan were in turn represented by 3 offshore companies, one of which was Golden Winner, and P was the 67% beneficial owner of Golden Winner.

12.  Each of the 3 investors was responsible for contribution of capital, to be paid by instalments, and that each would be entitled to subscribe for and to be allotted certain number of shares after the completion of the Restructuring Project and re-listing of the Company.

13.  Further, it was not disputed by D that he was aware of P having to raise funds for her share of the capital from various persons in Mainland China, who were her sub-investors/financiers.  Thus, for such purposes, P had had entered into various agreements, including the Chen Agreement, the Miao Agreement, and the Zheng Agreements under which sums/loans were extended to P by those sub-investors/financiers in return  for shares in the Company after re-listing. 

14.  These various agreements which P entered into with the sub-investors/financiers were not disclosed by P to DHCJ Lok at the time of her application for the Ex-Parte Order, although by the time of the inter-partes hearing, D had referred to the Chen Agreement in support of his application for discharge, which was considered by D to be the most material of those various agreements.

15.  At the respective dates of those agreements, what P held, through Golden Winner and Neuf Capital was only a right/entitlement to subscribe for and to be allotted certain number of shares in the Company, after its re-listing.  Some of the agreements did not seem to make this clear, but notwithstanding this, in effect P could only transfer the shares set out in the various agreements to the sub-investors/financiers, after re-listing of the Company.

16.  As set out in the Main Agreement, I was of the view that the various agreements with sub-investors/financiers entered into by P should not affect the validity of her agreement with D, namely the Transfer Agreement pursuant to which D was to buy out P’s interest in the Re-structuring Project, which was held through her shareholdings in Neuf Capital through Golden Winner.  

17.  As a result of the Transfer Agreement, P agreed to Neuf Capital dropping out of the Re-structuring Project upon expiration of the 1^st Exclusivity Agreement, and Neuf Capital was replaced by Thousand Jade of which D was the sole beneficial owner, and it was Thousand Jade which signed the 2^nd Exclusivity Agreement with the Provisional Liquidators.  Thousand Jade was eventually successful in re-listing the Company.

18.  I have set out in paragraphs 43-70 of the Main Judgment that I concluded that the Chen Agreement, whether superseded by the Undertaking or the 2^nd Chen Agreement or not, was not relevant in the weighing operation at the ex-parte hearing, and in my view the non-disclosure of those documents was not material.  I had also considered those other agreements with sub-investors/financiers, and did not consider the non-disclosure of those agreements material.

19.  In my view, by raising all those agreements with the sub-investors/financiers, D was only clouding the main issue, which was his own obligations towards P under the Transfer Agreement.  I am not satisfied that D has a reasonable prospect of success of the appeal on this ground.

Good Arguable Case Ground

20.  The submissions by D’s Counsel Mr Chan on the Good Arguable Case Ground was based mainly again on the Chen Agreement.   I stated in paragraph 65 of the Main Judgment that if the Chen Agreement was a valid and effective agreement, Golden Winner would then be holding 70 m shares (or whatever the amount after consolidation) in trust for Chen, and Mr Chan submitted that that this indicated that this court recognized that Chen became the beneficial owner of 70m shares of the Company immediately upon his entering into the Chen Agreement.

21.  P could not have given away what she herself or Golden Winner had not got.  As mentioned earlier, what P had at the time of the Chen Agreement through Golden Winner/Neuf Capital was only a right or entitlement to subscribe for and to be allotted certain number of shares in the Company after re-listing, and what Golden Winner purported to transfer to Chen, or to hold in trust for him, was, if anything, that right to subscribe for or be allotted 70m shares after re-listing. 

22.  Anyway, what this court said in paragraphs 64 and 65 of the Main Judgment concerned only Chen and Golden Winner, and further in paragraph 108, this court had said in the event that the Chen Agreement was eventually held to be a valid and effective agreement, Chen’s recourse would be against Golden Winner and/or P, and I was of the view that this should not affect D’s obligations towards P under the Transfer Agreement.

23.  In the above circumstances, I am not satisfied that there is a reasonable prospect of success on this ground.

Risk of Dissipation Ground

24.  I have set out my reasons in paragraphs 110 to 117 of the Main Judgment on why there was a real risk of dissipation.  I am not satisfied that there is a reasonable prospect of success on this ground.

The Fortification Ground

25.  Again I have set out my reasons in paragraphs 119-123 of the Main Judgment on why I increased the fortification to HK$2m.  I am not satisfied that there is a reasonable prospect of success on this ground.

Conclusion

26.  In light of what I have said above, I decline to grant leave to appeal.

P’s Variation Summons

27.  Paragraph 1 of the Mareva Order restricts D from removing from Hong Kong or dealing with his assets up to HK$17m, and in particular, if the total unencumbered value of D’s assets in Hong Kong exceeds HK $17m, he may remove, dispose of, or deal with those assets, so long as the total unencumbered value of his assets still in Hong Kong remains above HK$17m[5] (“Paragraph 1”).

28.  Under paragraph 2 of the Mareva Order[6], D must file an affidavit within 14 days confirming his disclosure of all his assets of an individual value of HK$50,000 or more which are within Hong Kong, whether in his own name or not, and whether solely or jointly owned, giving the value, location and details of all such assets (“Paragraph 2”).

29.  On 10 December 2013, about 18 days after the inter-partes hearing, D’s solicitors wrote to P’s solicitors indicating that D was ready and willing either to secure HK$17 m until the substantive hearing on 10 January 2014 as to whether the Mareva Order should be discharged (“Substantive Hearing”), or to pay the amount of HK$17 m into court.

30.  There was some delay on P’s side, and it was not until 16 December 2013 that P’s solicitors wrote to say, subject to P’s liberty to apply for further variation, if necessary, the sum of HK$17m should be paid into court pending the outcome of the Substantive Hearing, and that D should pay a further sum of HK$680,000, being 2 months’ interest at 2 % per month.  D said he had no alternative but to agree.  A consent summons was later signed by the parties, and an order was made on 19 December 2013 (“Consent Order”).

31.  It is clear that the Mareva Order only sets out the sum of HK$17m as a ceiling, with no mention of interest.  In the Variation Summons, P sought a variation to the following effect:

(i) There be added after every reference to HK$17m, the amount of interest thereon at 2 % per month since 9 November 2013;

(ii) D to make a further provision of security of HK$680,000, being 2 months’ interest at 2 % per month on the sum of HK$17m from 9 January 2014 to 9 March 2014;

(iii) D to pay a monthly sum of HK$340,000, by way of monthly interest on the sum of HK$17m, at 2 % per month on 9^th day of each month commencing from 9 April 2014;

(iv) In default of the above, D to comply with Paragraph 2 within the days as set out.

Legal Principles

32.  P’s Counsel, Mr Liang had referred this court to paragraph 5.002 in Gee on Commercial Injunctions (5^th).  It is stated therein :-

“In Mareva cases, the limit of the injunction will be assessed on the basis of the amount for which the claimant has a good arguable case together with an allowance for interest and costs: Mayor and Burgesses of the London Borough of Lambeth v Clarke. Likewise, if the defendant wishes to substitute security for assets caught by the Mareva injunction, then in principle he is free to do so, by providing security in an amount equivalent to the value of the assets released. If the assets are earning interest (eg bank accounts), then it is to be expected that the substitute security will include an appropriate uplift to put the claimant in the same position as if interest had continued to accrue on assets caught by the injunction…

  However, the limit to a Mareva injunction can be raised or a new injunction granted before judgment when it is just to do so.  If an earlier injunction has been varied or discharged by agreement, it is material to take into account the terms of that agreement, including whether it was part of the contract that no new Mareva relief would be sought by the claimant against the defendant pending judgment.  Such a promise, if given, will provide a strong reason for the matter not being reopened.  But it is not conclusive.  The question is whether it is just in all the circumstances which have arisen that the new relief should be granted to the claimant.  Even if such a promise has been given stron reason might be shown by the claimant for not giving effect to that promise.  If such a promise has not been given then whether it is just to grant the new relief still depends on the particular circumstances.[7]”

33.  As seen from Charles Church Development Plc v Cronin [1990] FSR 1, the court can add interest to the amount of the claim in a Mareva injunction, and further the figure in the Mareva injunction can be varied on application.

34.  It is, however, stated in paragraph 29/1/34 of the Hong Kong Civil Procedure 2014 Vol 1 that where an interim order has been made by consent, or following a full inter partes hearing, the person seeking to discharge or vary the order is not entitled to do so as of right or to re-argue it as if it were a re-hearing.  The court would generally only consider varying or discharging an interim injunction on good grounds or due to a change in circumstances or facts coming to light that could not reasonably have been found out before hand.  Further, an application to vary or discharge may be made where the injunction by its terms shows that the application was not substantially disposed of, but adjourned sine die with liberty to apply[8].

Whether there was any basis for variation 

35.  There was no real dispute between the parties in relation to the above general principles on variation of a Mareva injunction, but the   main issue raised by Mr Chan was that the Mareva Order had in fact ceased to have effect upon D’s provision of security by way of payment of HK$17m into court and there was thus no basis for any variation.

36.  In the Mareva Order, at the ex-parte stage, under the heading “Duration”, the order was to remain in force up to and including the return date, unless D paid the sum of HK$17m into court or made provision for security in that sum.  The effect of the Mareva Order being continued on the return date was that the order was to remain in force until further order, until D paid the sum of HK$17m into court or made provision for security in that sum.

37.  The wording of paragraph (3) of the Mareva Order under “Exceptions To This Order” was also quite clear, namely the Mareva Order was to cease to have effect if D provided security by paying the sum of HK$17m into court. 

38.  The Substantive Hearing was in relation to P’s summons dated 18 November 2013, which sought an order that the Mareva Order was to continue until further order, which was opposed by D.  There had been no summons issued by or on behalf of D to either set aside or to discharge the Mareva Order, although it seemed clear in Mr Chan’s skeleton submissions at that time, what D was seeking was a discharge of the Mareva Order.

39.  The issue of whether Mareva Order had ceased to have effect was not raised during the Substantive Hearing, nor was the effect of the Consent Order, or any issue over payment of further interest or variation. 

40.  As a result of the Substantive Hearing, this court ordered that the Mareva Order was to continue until further order as sought by P, subject to the top up of the P’s fortification as to damages.

41.  At the present hearing, Mr Liang submitted that the effect of the Consent Order was to have varied the Mareva Order, but as there was a clause providing to liberty to apply, P could apply to vary the Mareva Order to seek security for payment of interest.

42.  The Consent Order states that, among other things, D shall pay the sum of HK$17m into court within 7 days, together with HK$680,000, being 2 months’ interest at 2 % per month, and :-

“All other obligations on the part of the Defendant under the Mareva Order including but not limited to the filing of the affirmation for disclosure of information under paragraph 2 of the Mareva Order shall be stayed pending the outcome of the hearing of the Plaintiff’s Summons for continuation of the Mareva Order dated 18 November 2013 on 10 January 2014. …”

43.  At the inter-partes hearing, the time for D to comply with his obligations under Paragraph 2 was extended to 16 December 2013.

44.  D’s solicitors first wrote to P’s solicitors on 10 December 2013 proposing the security for HK$17m or payment into court, and pointing out that the Mareva Order was to cease to have effect, and that all directions under the Mareva Order concerning, inter alia, filing of affirmation for disclosure of information etc was to be dispensed with upon such provision of security.  It then went on to say that, for avoidance of doubt, D would oppose the continuation of the Mareva Order notwithstanding any provision of security.

45.  D’s solicitors did not respond substantively until the actual day of the deadline, namely 16 December 2013, and they replied to state that under clause 6 of the Transfer Agreement, P was entitled to interest on the outstanding sum of HK$17m at 2% interest per month as a result of D’s default, and they had standing instructions to apply to vary the Mareva Order to freeze D’s assets up to value of HK$21.08m, being HK$17m plus one year’s interest of HK$4.08m, and that P would only agree to D’s proposal subject to D paying HK$21.08m into court, failing which P would apply to court to vary the Mareva Oder accordingly.

46.  It was in D’s above letter that interest was first raised and as stated therein D indicated that they would to apply to vary the Mareva Order, if P was not to agree to pay interest for 12 months.  A flurry of letters then followed.

47.  D said due to the deadline and the shortage of time, and to save time and costs, he had no alternative but to propose to pay 2 months’ interest until the Substantive Hearing and his solicitors then responded to the above letter by proposing that the sum of HK$17m and 2 months’ interest of HK$680,000 be held in escrow by them.

48.  D’s proposed payment of 2 months’ interest was accepted by P who, however, insisted on payment into court of the sum of HK$17,680,000, and P stated that the acceptance was subject to P’s liberty to apply for further variation, if necessary.

49.  This resulted in the present form of the Consent Order, and so far as the liberty to apply clause, those words “for further variation, if necessary” had been, however, omitted.

50.  The effect of the Consent Order was no doubt to vary the Mareva Order, as stated in paragraph 1 of the Consent Order itself.

51.  There were 2 main obligations imposed on D under the Mareva Order, namely restrictions on movement/dealings of his assets under Paragraph 1 and disclosure of assets under Paragraph 2.  In my view, sub-paragraphs (1) (a), (1) (b) and (2) of Paragraph 1 were varied  by paragraphs 1 (a) and (b) of the Consent Order, to the extent only to allow D to procure a company Astrum Capital Management Limited, which was holding the sum of HK$17m, to pay that sum into court, and further to allow D to make a further security of payment of HK$680,000 into court for 2 months’ interest.  Subject to these variations, the rest of Paragraph 1 remained unaffected.

52.  Hence, upon payment of the sum of HK$17m, plus the agreed further security of HK$680,000 into court, the restrictions in Paragraph 1 of the Mareva Order would be uplifted and ceased to have effect, as provided under paragraph (3) under “Exceptions”.  The parties’ then intention can also be gleaned from paragraph 1 (d) of the Consent Order, which seemed to provide for the D’s spending limits on his ordinary and proper business expenses to be discharged. 

53.  Although the restrictions in Paragraph 1 were uplifted and Paragraph 1 ceased to have effect, this would only be while the agreed security was in place.  

54.  The parties also clearly did not agree to a discharge of the Mareva Order.  There was no provision for discharge in the Consent Order and indeed had this been the parties’ intention at that time, there would not be any need for the Substantive Hearing.  Further, under paragraph 1 (c) of the Consent Order, the parties agreed to “all other obligations” being stayed pending the Substantive Hearing.  Although this seemed to refer to D’s disclosure obligations under Paragraph 2 of the Mareva Order, such obligations are only ancillary to render the Mareva Order effective, as can be seen from paragraph 29/1/74 of Hong Kong Civil Procedure 2014 Vol 1.  On my understanding of the Consent Order from the letters between the parties, the common intention of the parties at the time of the Consent Order was in my view only a temporary arrangement pending the result of the Substantive Hearing, and it was also clear from the correspondence that P had the liberty to apply for a variation. In the circumstances, I do not accept Mr Chan’s submission that there was no basis for any variation.

Whether P entitled to the variation sought

55.  I am satisfied on the authorities and on the evidence before the court that P is entitled to vary the Mareva Order to raise the ceiling of HK$17m to take into account of interest.

56.  Mr Chan submitted that the authorities referred to by Mr Liang did not involve an unlimited amount in a Mareva injunction. In particular, he referred to Mayor and Burgesses of the London Borough of Lambeth Court of Appeal (Civ Div) Transcript No 1563 of 1993 ( December 22, 1993) where the Court found that the claim by the plaintiff for a £4m limit including interest and costs was “clearly excessive” and the limit was eventually allowed at £250,000.

57.  I understand that P has taken out an Order 14 summons for summary judgment which has been adjourned on 7 April 2014 to a date to be fixed for substantive arguments.  It is not clear at this stage whether D intends to proceed further in light of my decision  not to grant leave to appeal.

58.  Having considered all the circumstances of the case so far, I am only prepared at this stage to vary the Mareva Order, to raise the ceiling of HK$17m referred therein to a total amount to include interest at 2 % per month since 9 November 2013 for a total of 12 months.  Thus, the new ceiling will be HK$21.08m.  I do not see any need to make any other orders regarding payments of various sums for interests as sought by P in the Variation Summons, save that, under Paragraph 2, I will allow D an extension of time of 14 days from this order to meet his obligations thereunder, in the event of there being no additional security provided by D.  So far as D’s spending limits under “Exceptions”, I will again leave this to the parties’ agreement, failing which D is at liberty to apply.

D’s Release Summons

59.  As a result of my above orders, D’s Release Summons must fail.

60.  In any event, D had agreed to make the payment of HK$680,000 under the Consent Order, and he had had a stay of his obligations under Paragraph 2, and there are no sufficient grounds as to why the HK$680,000 interest he agreed to pay should now be returned to him.

Costs Summonses

61.  In the Main Judgment, I made an order nisi for D to pay P’s costs of and incidental to her inter-partes summons for continuation of the Mareva Order (“Order Nisi”).

62.  P issued a summons to vary the Order Nisi, to also include the costs of and incidental to her summons issued on 8 January 2014 which was for leave to file her 3^rd affirmation, and also for costs to be summarily assessed and paid forthwith by D.  She was represented by her solicitor Mr To on this application.

63.  D did not apply for any variation of the Order Nisi within time, but the day before the P’s summons was due to be heard, D issued a summons for extension of time for him to apply for variation of the Order Nisi.  Although it was late, and out of time, I saw no prejudice to P, and gave leave accordingly.

64.  In D’s skeleton submissions, Mr Chan asked for costs to be in the cause, or alternatively the costs in relation to further fortification be to D or in the cause.

65.  On the general approach towards costs in interlocutory applications, both Mr To and Mr Chan had referred this court to the pre CJR judgment of the then Chu J in Golite International Limited v Golden Power Industries Limited, HCA 2262/2005, 18/03/05.  It is clear from the judgment and the authorities referred therein that while the court will not investigate the merits of a case at the interlocutory application stage, it does not mean that the court cannot make a final costs order, and that the court in exercising its discretion on costs at an interlocutory stage should bear closely in mind the need to balance the two risks of injustice[9].

66.  After CJR, Order 62 rule 3(2) of Rules of the High Court now states that if the court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any interlocutory proceedings, it may, subject to Order 62, order the costs to follow the event or make such other order as it sees fit.

67.  Further, Order 62 rule 5 of the Rules of the High Court now also sets out special matters to be taken into account, as appropriate, by the court in considering costs.

68.  Mr Chan had also referred this court to paragraph 29/1/55 in Hong Kong Civil Procedure 2014, Vol 1.  As stated therein, for many years, it has been the normal practice for a successful plaintiff granted an interlocutory injunction to be granted his costs in the cause and for a successful defendant to be granted his costs in the cause, but the rationale of that practice is perhaps not clear and the courts are showing a greater willingness to depart from it.  It is further stated therein that when deciding on costs, the court should consider the merits of the injunction application. 

69.  In the present case, Mr To agreed that costs of the ex-parte application should be costs in the cause, and only sought costs of the inter-partes summons.

70.  Mr To referred this court to 4 unreported post CJR judgments in relation to costs ordered against the defendant who failed in his opposition/discharge application against a Mareva injunction, namely (i) Falcon Private Bank Ltd v Borry Bernard Edouard Charles Ltd & Anor, HCA 1934/2011, 09/07/12, (ii) Velatel Global Communications INC Trussnet Capital Partners (HK) Ltd v Chinacomm Ltd & others, HCA 1978/2011, 26/10/12, (iii) BITH, LCC v GCA Forex Corp, HCA 1743/2008, 06/05/09, (iv) Hornor Resources (International ) Co Ltd v Savvy Resources Ltd, HCA 335 /2010, 23/03/10.

71.  Mr Chan tried to distinguish those cases by pointing out that in none of those 4 cases in relation to a Mareva injunction was there a fortification of the undertaking as to damages ordered.

72.  Mr Chan further tried to distinguish Falcon from the present case, as in that case, the court held the view that most of the grounds relied on by the defendants’ application to discharge the ex-parte injunction were frivolous and the proceedings were conducted by the defendants and their legal team in an abusive matter.  I accept there were no such critical comments in the Main Judgment.

73.  However, as pointed out by Mr To, in BITH, even though the limit of the Mareva injunction was reduced, the court applied the normal rule of costs to follow the event and the defendant was ordered to pay the plaintiff’s costs for continuation.

74.  This was also the case in Hornor, when the defendant failed in its opposition to the continuation of the Mareva injunction and its application for discharge, the court ordered the defendant to pay the costs of the discharge application.

75.  In Velatel, the plaintiffs’ summons for continuation of the injunction orders was granted and that the defendants’ application to discharge was dismissed.  DHCJ Au Yeung, as she then was, took the view that notwithstanding there was an argument about the capacity to sue in relation to one of the plaintiffs, the time taken for argument on this issue was relatively short, and the plaintiffs were the overall winners, she made an order nisi that the defendants were to pay the plaintiffs’ costs of both summonses, to be taxed and payable forthwith.

76.  Although D did succeed in raising the amount of fortification, the total amount of HK$2m ordered was far from the amount of HK$10m submitted on his behalf, and the time spent on this issue was relatively short.  Having considered all the circumstances of this case, I am of the view that P was the overall winner and D should pay P’s costs of and incidental to her inter partes summons for continuation of the Mareva Order.  Such costs should include her summons for leave to file her 3^rd affirmation, which was in reply to new matters raised by D in his 2^nd affirmation, and also costs of the Costs Summonses.

77.  As for whether costs should be ordered to be summarily assessed, I see no reason as to why such costs should not be summarily assessed.

78.  As to whether such costs should be paid forthwith, Mr Chan relied on China Agri-Products Exchange Limited v Wang Siu Qun & Anor HCA 1807/2011, 16/01/14, namely the court should have regard to the effect on the respective parties’ cash flow and unfairness of hampering the further conduct of the action by the unsuccessful party when determining a costs order.

79.  Mr Chan also referred to the Court of Final Appeal decision in The Liquidator of Wing Fai Construction Company Ltd (in compulsory liquidation) v Yip Kwong Robert & Others, FACV 3 /2011, 24/05/12 that it was necessary to factor in any possible unfairness or prejudice which the party against whom an order for immediate payment of costs was sought might suffer in consequence of such an order.

80.  According to Mr Chan, the Mareva Order had already caused tremendous adverse effect on D’s cash flow as deposed to in his affirmations and that further costs obligation on D at this preliminary stage would certainly hamper D in the further conduct in defending P’s various interlocutory applications.

81.  D obtained about HK$46m from his sale of shares in November 2013.  D had referred to his alleged commitments under an investment agreement and a loan agreement.  Apart from forfeiture of a deposit, and likelihood of being sued or having to attend arbitration under those agreements, there was no sufficient evidence from D as to what adverse effect on cash flow he was facing.

82.  Having considered all the above, I am of the view that the costs should be summarily assessed with a certificate for Counsel, save for the Costs Summonses, and be paid forthwith by D.  Mr To submitted a statement of costs for P.  I direct that D to submit his list of objections , if any, to the quantum within 14 days, and leave for P to reply within 7 days thereafter, if any.  Costs will be summarily assessed and will be paid forthwith.

Orders

83.  In light of what was said above, my orders in respect of the 4 matters are as follows:

(1)   D’s summons dated 3 March 2014 for leave to appeal is dismissed;

(2)   The Mareva Order is varied as follows:

(i)   The ceiling of HK$17m referred therein be raised to HK$21.08m

(ii)   The time for D to comply with paragraph 2(1) and (2) be extended to 14 days from the date of this order

(3)   D’s summons dated 24 April 2014 for release of a sum of HK$680,000 from the sum of HK$17, 680,000 paid into court is dismissed.

(4)   As for the costs of the Main Judgment, I order D to pay P’s costs of and incidental to her inter-partes summons issued on18 November 2013 and her inter-partes summons issued on 8 January 2014, with certificate for Counsel, such costs to be summarily assessed and paid forthwith by D.  I also order D to pay P’s costs of and incidental to P’s inter-partes summons issued on 11 March 2014 and D’s inter-partes summons issued on 7 April 2014, such costs also to be summarily assessed and paid forthwith by D.  D to submit a list of objections, if any, to P’s statement of costs within 14 days, and leave to P to submit any reply within 7 days thereafter, if any. 

Costs of (i), (ii) and (iii) above

84.  D is to pay P’s costs of his summons for leave to appeal.  D is also to pay P’s Variation Summons and D’s Release Summons, with certificate for Counsel.  These are all costs orders nisi which shall be made final after 21 days.