XCHRX Yuen Chui Chun and Another v. Cung Shirly Tu Nhan

DCCJ7251/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 7251 OF 2001

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J U D G M E N T

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1. I shall deal with the "by-consent" matter first:

"Upon the Defendant by counsel undertaking to deposit a sum of HK$550,000 out of the proceeds of sale of her property known as Flat D, 14th Floor, Block 7, No. 6 Tak Hong Street, Whampoa Garden, Site 11, Kowloon, Hong Kong, upon the completion of its sale and purchase with her solicitors, Messrs Chan & Wan, which sum of money shall be retained by the said solicitors until further order,

And upon the Plaintiffs by counsel undertaking that if the court later finds that the aforesaid undertaking (and the costs order to be made below) has caused loss to the Defendant and decides that the Defendant shall be compensated for that loss, the Plaintiffs will comply with any order the court may make.

By consent, no order is made in respect of the plaintiffs' summons herein dated 3 September 2001 (except as to costs as to be ordered below.)"

2. This morning I heard an application for a Mareva Injunction by the Plaintiffs against the Defendant. The injunction was applied for in aid of the Plaintiffs' claim for a principal sum of $500,000, being the prices for the purchase of some jewellery allegedly from the Defendant. The Plaintiffs claim that the jewellery was not genuine and was sold by the Defendant to them through fraudulent, reckless or negligent misrepresentations and so forth.

3. This was not the first time the Plaintiffs applied for a Mareva Injunction. They applied for one before Stone J while this case was being handled before its transfer by the Court of First Instance of the High Court. They did not successfully obtain a Mareva Injunction but got a Prohibition Order instead.

4. Today, the application for injunction was made before me on the ground that since the Plaintiffs' application last time for a Mareva Injunction, a further expert report had been obtained by the Plaintiffs confirming that the jewellery items in question were not genuine and that they had recently discovered that the Defendant was selling one of her two known properties in Hong Kong, i.e. a flat in Hung Hom, for over HK$2.4 million. The Plaintiffs said that this was therefore evidence of an intention on the part of the Defendant to dissipate her asset to render herself, as it were, judgment-proof, the transaction having been entered into so near to the trial date, i.e in July this year.

5. The Plaintiffs also relied on the general nature of their case against the Defendant, i.e. fraudulent or reckless misrepresentation and the very fact of their being sold fake jewellery allegedly by the Defendant, to support their suspicion that they had in this litigation an adversary whose integrity and morality were very much in doubt. In this regard, the Plaintiffs relied on cases like Honsaico Trading Limited v Hong Yiah Seng Company Limited [1990] 1 HKLR 235 decided by Godfrey J (as he then was) and referred to in the relevant passages of the (local) White Book dealing with Mareva Injunction (i.e. para. 29/1/73).

6. The Plaintiffs also relied on the fact that they had previously successfully obtained a Prohibition Order against the Defendant, albeit on an ex parte basis. However, the Defendant did not apply to discharge the Prohibition Order. I note that one of the prerequisites for the obtaining of a Prohibition Order in the Ordinance, i.e. the High Court Ordinance, is that a plaintiff should satisfy the court that it has a good cause of action against the defendant. That the Plaintiffs must have done when they successfully obtained the Prohibition Order from Stone J, albeit as I have said, on an ex parte basis, but I also note that the Defendant never applied to discharge the Prohibition Order.

7. At the conclusion of submission by counsel, Mr Siu upon instructions, offered an undertaking to deposit a sum of $550,000 out of the proceeds of sale of the Defendant's property with the Defendant's solicitors until further order. That undertaking was accepted by the Plaintiffs who also by counsel gave a cross-undertaking as to damages.

8. With that agreement, the substantive application for a Mareva Injunction before me today was disposed of by consent; in other words, by consent, no order was made by me in respect of the Plaintiffs' application for a Mareva injunction upon those two undertakings being given by the parties respectively.

9. But the parties could not agree on the question of costs. Mr Siu for the Defendant suggested no order as to costs or to put another way, each party to bear its own costs since there was no final determination of the merits of the application for injunction.

10. Mr Yeung for the Plaintiffs argued that his clients should get the costs of this application because, in effect, his clients were successful in substance in getting what they wanted or perhaps (according to Mr Siu) slightly more than what they wanted.

11. Costs are a matter of discretion. Of course, a discretion has to be exercised along good, reasonable and relevant principles and considerations. I bear in mind all the matters I outlined above. I bear in mind that at the end of the day, as a result of the Plaintiffs' application the Defendant did proffer an undertaking which no doubt fully satisfied the Plaintiffs' concern which had prompted them to apply for a Mareva Injunction in the first place. That I consider as a relevant and important matter to be taken into account in the exercise of my discretion. In other words, there is indeed an "event" in this application, i.e. as a result of the application by the Plaintiffs for an injunction, the Defendant proffered an undertaking to deposit a sum sufficient to cover the principal claim of the Plaintiffs with their solicitors pending further order from the court, in other words, pending the final determination of this action.

12. Another matter which I think I should take into account is this: Had there been no undertaking offered by the Defendant, I would have no difficulty in coming to the conclusion that the Plaintiffs had, on balance and based on the materials before me, made out a case for the obtaining of some relief in order to prevent any attempt on the part of the Defendant to render herself judgment-proof in relation to the Plaintiffs' claim.

13. So bearing those matters in mind and bearing all the circumstances in mind and, in particular, one other matter which I should also mention, i.e. that the Plaintiffs had given a cross-undertaking as to damages so that whatever costs which the Defendant would have to pay as a result of the order as to costs which I am going to make to the Plaintiffs, might be recovered by the Defendant in case the court should eventually find that the undertaking given by the Defendant had caused the Defendant loss and decide that the Defendant should be compensated for that loss, including the costs to be ordered by me, in the exercise of my discretion, I order that the Defendant pay the Plaintiffs the costs of the Plaintiff's application by the said summons, together with a Certificate for counsel, to be taxed if not agreed, in any event.

14. I should also make clear that this is without prejudice to any future finding or determination by the court relating to the Defendant's loss, if any, occasioned by the Defendant's undertaking given herein and any order that the court may make against the Plaintiffs pursuant to the Plaintiffs' aforesaid undertaking. So the intention should be clear that this costs order should not, in any event and in any way, tie the hands of any subsequent court conducting an inquiry as to damages. So that would, I think, protect fully the position of the Defendant and leave open any further argument as to whether in such an event the costs should form part of the loss in question.

15. I also give liberty to apply.