BARCLAY PHARMACEUTICALS LTD v. ANTOINE MEKNI AND OTHERS

HCMP 2094/2017

[2018] HKCFI 436

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2094 OF 2017

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DECISION

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1.  In this application, the plaintiff seeks a receivership order against the 1^st, 4^th and 6^th defendants pursuant to a summons dated 6 February 2018. The plaintiff also seeks leave to amend the originating summons and concurrent originating summons, both dated 29 September 2017 and further, seeks leave to serve the 1^st and 4^th defendants in France.

2.  The 1^st defendant operated a pharmaceuticals limited liability partnership, Waypharm LP in the United Kingdom. Waypharm supplied pharmaceutical products to the plaintiff and in turn the plaintiff granted a letter of credit in favour of Waypharm.  The plaintiff claimed that Waypharm acted fraudulently by presenting false invoices to make wrongful drawdowns against the letter of credit. 

3.  The 1^st and 4^th defendants are husband and wife.  The 2^nd defendant is their son and the 3^rd defendant is their daughter-in-law.  The 2^nd and 3^rd defendants are respectively the sole registered director and shareholder of the 5^th defendant, a Hong Kong company.  The 4^th defendant is the sole director and shareholder of the 6^th defendant. 

4.  By a judgment dated 28 February 2012, Mrs Justice Gloster of the English Commercial Court found the 1^st defendant personally liable to the plaintiff for the tort of conspiracy causing loss by unlawful means and/or inducing a breach of contract.  More than four years later and by anorder dated 28 September 2017, Mrs Justice Carr of the English Commercial Court made a freezing injunction against the 1^st to 4^th defendants and a Dorian Hedy Mekni, the 1^st defendant’s other son.  Schedule D of the English injunction specifically applies to the shares of the 6^th defendant. 

5.  By an order dated 29 September 2017, Deputy High Court Judge Li, in Chambers, ordered an injunction prohibiting disposal of assets in Hong Kong, in particular, the shareholding of the 6^th defendant. A continuation order dated 13 October 2017 was made by Madam Justice Lisa Wong to extend the Hong Kong injunction.  By a receivership order dated 11 January 2018, issued by the English Commercial Court, receivers were appointed to receive all the shares of the 6^th defendant, but not its assets. 

6.  The plaintiff’s present receivership order application is to mirror and complement the UK receivership order.  And the draft order provided by the plaintiff covers all the assets of the 6^th defendant. 

7.  The 1^st, 4^th and 6^th defendants do not appear in this court today.  Yesterday, the court received a letter from the 1^st and 4^th defendants indicating that they were in Europe and attaching medical certificates indicating that both the 1^st and 4^th defendants were suffering from various medical ailments.  In the said letter, the defendants applied to this court to adjourn today’s application to sometime in May of this year. 

8.  Miss Cheung, counsel for the plaintiff, has resisted the paper application by the 1^st and 4^th defendants to adjourn this matter.  She has noted that this matter has gone on now for a long time, that injunction orders were made in September of last year and continued in October, and that in the October proceedings the defendants again attempted to adjourn those proceedings by way of a letter.  The main thrust of Miss Cheung’s argument however in resisting this application is that she says there is strong prima facie evidence that the 1^st and 4^th defendants have been complicit in breaches of the injunctive orders made by the Hong Kong courts such that the assets of the 6th defendant are currently being dissipated or, at very least, are at serious risk of dissipation.  In these circumstances, Miss Cheung submits that this matter simply cannot be delayed any further. 

9.  With respect, I agree with these submissions. In my view, this matter has to be dealt with today.  It is a matter of some urgencyand for the reasons submitted by Miss Cheung, I decline to adjourn today’s hearing. 

10.  Turning now to the substance of the plaintiff’s application, I can deal with this matter fairly shortly.  The principles applicable to the appointment of receivers in relation to proceedings commenced outside Hong Kong are well established and I will not repeat the same here. 

11.  As noted, two differently constituted courts in Hong Kong have granted and continued the Mareva injunction having been satisfied that there is a serious issue to be tried and a risk of dissipation. I bear this in mind when I come to consider these matters myself. 

12.  Having considered the relevant affirmation evidence and the plaintiff’s submissions and authorities, I conclude as follows. Final judgment, having been obtained in the United Kingdom, I have no doubt there is a good arguable case that the English judgment may be enforced in Hong Kong.  The evidence establishes that the 6^th defendant has assets in Hong Kong, and furthermore establishes that there are good reasons to believe that the 1^st defendant is the ultimate beneficial owner of the shares and assets in the 6^th defendant and had, and has, substantial control over the same. 

13.  With regard to the question of the balance of convenience and the question of risk of dissipation, I am assisted by the dicta of Zervos J in JSC BTA Bank v Mukhtar Kabulovich Ablyazov [2014] 5 HKC 209 at page 218, paragraph 25 where Zervos J was considering the appointment of receivers.  He said this:

“ In the circumstances of this case, the key question in relation to the appointment of receivers is whether a freezing order would provide adequate protection to the plaintiff. It is acknowledged that where a freezing order is breached, or there is a real risk of such a breach, the appropriate remedy is the appointment of a receiver over the assets which are the subject matter of the freezing order. If this be the case, the existence of alternative remedies such as contempt proceedings does not justify the deviation from the appropriate remedy of receivership.”

14.  There is abundant evidence before me of prima facie breachesof the freezing injunctions now in place.  I stress, however, that I make no final determination of this matter here.  There is, at very least, a real risk in my view of a breach.  As such, an order for appointment of receivers is clearly appropriate to protect the value of the 6^th defendant and to ensure the effectiveness of the freezing orders. 

15.  I have considered the prospect of damage to the defendants if receivers are appointed.  In all the circumstances, I can see no risk of any significant damage and I note the plaintiff’s undertaking as to damages in the draft order before me.

16.  I have also considered, together with the able assistance of Miss Cheung, whether the defendants have any substantial defence to today’s application.  I can find none. 

17.  In all the circumstances, it is in my view just and convenient that receivers now be appointed. 

18.  I make an order that there be an order in terms of the plaintiff’s summons dated 6 February 2018, as amended by the court this morning.