REM ASSETS LTD v. MIR INVESTMENTS LTD AND ANOTHER

HCA 626/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 626 OF 2008

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J U D G M E N T

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I.   INTRODUCTION

1.  REM has sued Mir for some Euros 3 million due and owing under a Loan Note.  It has also sued Mr. Riccio for fraudulent misrepresentations said to have induced REM to lend monies to Mir.

2.  REM obtained a prohibition order against Mr. Riccio on 11 April 2008.  That order has been extended from time to time, most recently by Master Yu on 20 January 2009. 

3.  Mr. Riccio has filed a Defence denying that he made the representations alleged in the Statement of Claim.  He now appeals against the Order of Master Yu extending by one month the prohibition against him leaving Hong Kong.

4.  REM neither opposes nor agrees to the appeal.

II.  DISCUSSION

5.  By High Court Ordinance (Cap.4) s.21B, the Court has jurisdiction to grant a prohibition order where a civil claim is made against a person for money or damages.  But the Court shall not make such an order against the alleged debtor unless it is satisfied that there is probable cause for believing certain matters.

6.  Those matters are:-

(1) there is a good cause of action;

(2) the debtor incurred the alleged liability while he was:-

(a)    present in Hong Kong;

(b)   carried on business here; or,

(c)   was ordinarily resident here;

(3) the debtor is about to leave Hong Kong; and,

(4) by reason of such departure, satisfaction of any judgment that may be obtained against the debtor is likely to be obstructed or delayed.

7.  Order 44A additionally provides that, on an application by an alleged debtor to discharge a prohibition order, the Court shall discharge the order if the debtor “satisfies the Court that he has a substantial defence to the plaintiff’s claim”.

8.  In my judgment, whether or not the previous grant of a prohibition was justified, the conditions for an extension of the prohibition implicit in s.21B and Order 44A are not all presently satisfied.  In particular, I am not satisfied on the evidence that Mr. Riccio is about to leave Hong Kong.  Further, in my view, Mr. Riccio has a substantial defence to the plaintiff’s claim.

9.  Let me consider the evidence adduced by REM in relation to the probability of Mr. Riccio leaving Hong Kong soon.

10.  First, REM contends that Mr. Riccio is about to leave Hong Kong because he deposed in a number of affidavits that:-

(1) he would leave Hong Kong for Tortola; and,

(2) he would in any event relocate to the Mainland with his then girlfriend Ms. Meng (who has a flat in Beijing).

11.  But the first statement (about going to Tortola) must be read in context.

12.  Mr. Riccio previously applied for the whole of these proceedings to be stayed to the British Virgin Islands (BVI) because of a clause in the Loan Note giving the BVI Courts jurisdiction over disputes arising from the Note.  That application was ultimately unsuccessful.

13.  Nonetheless, in the course of making his stay application, Mr. Riccio deposed that, if he were successful in the same, he would go to Tortola to conduct his defence. 

14.  I cannot read such a statement as any indication that Mr. Riccio intends to leave Hong Kong imminently, especially where his stay application has proved unsuccessful.

15.  Insofar as the second statement is concerned, Mr. Riccio points out that he is no longer going out with Ms. Meng.  Mr. Riccio (who claims to have lost substantial amounts in his investment business) says that, at the time of deposing to re-locating to Beijing with Ms. Meng, he had little option but to consider Ms. Meng’s offer for him to live with her in Beijing.  Harsher financial circumstances have (he argues) made living in Hong Kong more expensively onerous for him.

16.  I cannot read the second statement as evidence of an intention to leave Hong Kong imminently in light of Mr. Riccio’s present separation from Ms. Meng.

17.  Second, REM observes that, though he has been resident in Hong Kong for over 10 years, Mr. Riccio does not appear to own a flat here.  He rents his accommodation on a short term basis.  He can leave at any time once a given existing lease expires.  He also has no connection with Hong Kong in the sense of having a present girlfriend or other relation here.

18.  I am unable to accept such contention by REM as any cogent evidence of an intention to leave Hong Kong in the near or foreseeable future.  Mr. Riccio (who is originally from Italy) has lived here for sometime.  The likelihood is that, just as he has done in the past, he will obtain a short-term lease to some accommodation and continue to live here.

19.  Third, apparently REM places some reliance on remarks attributed to Mr. Riccio.  It is said that Mr. Riccio told the Court’s Listing Clerk that the prohibition order has caused him serious hardship.

20.  If such remark was truly made, I am unable to see how it constitutes evidence of anything.  Any restriction on a person’s right to travel is bound to cause “hardship”.

21.  Let me now turn to Mr. Riccio’s Defence, which has only recently been filed.

22.  This action does not seem to me to be a matter for summary judgment.  REM firmly deposes to fraudulent oral representations. Mr. Riccio equally adamantly says on oath that he never said what he is alleged to have stated.  One needs to go to trial to determine who is telling the truth.

23.  In the premises, by any yardstick, Mr. Riccio must have a “substantial defence” whether that expression means (simply) an arguable defence or (more stringently) a defence with a reasonable prospect of success.

III. CONCLUSION

24.  For the foregoing reasons, Mr. Riccio’s appeal is allowed.  The prohibition order is discharged.