HUI LONG TING v. AU SIU CHUNG AND ANOTHER

HCPI 218/2022

[2024] HKCFI 1734

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 218 OF 2022

(TRANSFERRED FROM DCPI 707 OF 2020)

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REASONS FOR DECISION

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1.  The plaintiff is at the material time a Form 1 student of the 2^nd defendant.  In the course of a barbecue event organised by the 2^nd defendant outside school in 2017, the plaintiff met a traffic accident and sustained serious injuries.  The 1^st defendant was the responsible cyclist, who was subsequently prosecuted and convicted of careless driving as a result of the accident.  In 2020, the plaintiff, then a minor, commenced action by his mother and next friend in the District Court for damages for his injuries.  Besides the 1^st defendant, the 2^nd defendant is sued as standing in loco parentis to the plaintiff at the time in overseeing the safety of the students during the event.  The 1^st defendant has not participated in the proceedings since entering appearance in 2020.  Interlocutory judgment has subsequently been entered against the 1^st defendant on liability for damages to be assessed.  The case has since been transferred to this level of court.

2.  This was the application by the plaintiff for a mareva injunction against the 1^st defendant.  As before, the 1^st defendant did not appear.  Upon satisfaction with service on the 1^st defendant, I allowed the plaintiff to proceed.  However, I dismissed the application with brief reasons at the end of the hearing.  As indicated, I now explain the decision in detail in writing.

The application

3.  By his summons, the plaintiff applied for a mareva injunction in the following terms:

“Until further order of the Court, there be an injunction restraining the 1^st Defendant to in any way dispose of or deal with or diminish the value of the property known as FLAT 9 ON 18/F OF BLOCK C, KAM HAY COURT, NO 6 HANG HONG STREET SHATIN, NEW TERRITORIES (“the Property”) or the net sale money after payment of any mortgages if it has been sold.”

4.  Insofar as mareva injunction is concerned, the present one differs from the normal one whereby the applicant is expected to specify the value of the assets of the defendant being restrained, of which specific assets such as landed property or, if sold, its sale proceeds form part.  In the present case, pending assessment of damages to be awarded to the plaintiff against the 1^st defendant, the plaintiff is unable to specify the value of the 1^st defendant’s assets being targeted to such extent.

5.  Insofar as the injunction targets specifically the Property is concerned, which in terms of the summons and counsel’s confirmation was the plaintiff’s position, counsel accepted that the plaintiff has no proprietary interest in the Property despite the judgment on liability: see Mercedes Benz AG v Leiduck [1996] AC 284 at 306C-E.  A proprietary injunction is not available to him.  The application is tantamount to one to preserve the Property from dissipation and frustration of the eventual enforcement of the monetary judgment.

6.  The land search record reveals that the Property was at all material times and still is held by the 1^st defendant and a Madam Tam as joint tenants.  As such, the relief which the plaintiff is entitled to seek in the present application should be limited to the extent of the 1^st defendant’s interest in the Property.  Counsel did not argue otherwise.

The principles

7.  Counsel emphasized that his client is seeking a post-judgment mareva injunction for protection as a judgment creditor.  In Menno Leendert Vos v Global Fair Industrial Ltd HCA 4200/1995 (25 March 2010), the court explained (at §9):

“The nature of Mareva relief is such that the majority of applications are made at a very early stage, sometimes even before commencement of action. However, a Mareva injunction may also be granted to a judgment creditor in aid of execution of his judgment even if he had not applied for or obtained one originally: see Gee on Mareva Injunctions and Anton Piller Relief, 4^th Ed at 26-30 generally and Deutsche Schachtbau-und Tiefbohr-Gesellschaft MBH v Shell International Petroleum Co Ltd [1990] 1 AC 295. The courts are much more ready to grant post-judgment Mareva injunctions because the plaintiff is a judgment creditor entitled to enforce the judgment by executing on the assets of the defendant and even to make him bankrupt or in the case of a corporation to have it wound up. As observed by Sir John Donaldson MR in Deutsche Schachtbau-und Tiefbohrgesellschaft MmbH v R’as Al Khaimah National Oil Company (No 1), [1990] 1 AC 295, such an injunction was not, strictly speaking, an injunction which fell into the Mareva category, but was an injunction granted as protection for a judgment creditor, under a jurisdiction recognised before the emergence of the Mareva jurisdiction.”

8.  The pre-requisites for granting a post-judgment mareva injunction are no different from one before judgment.  The applicant has to demonstrate that:

(1)  he has good arguable case;

(2)  the defendant has assets existed within the jurisdiction;

(3)  balance of convenience is in favour of granting an injunction; and

(4)  there is a real risk of dissipation without the injunction.

See: American Cyanamid Co v Ethicon Ltd [1975] AC 396

9.  In considering whether to grant a post-judgment mareva injunction, it is not necessary for the applicant to establish “special circumstances” over and on top of the requirements requisite for an ordinary mareva injunction.  The court recognises that usual mechanisms of executions can work in tandem with a post-judgment mareva injunction: China Citic Bank Corporation Ltd (Quanzhou Branch) v Li Kwai Chun & Ors [2018] HKCFI 1800 at §§ 26-32.

Discussion

10.  Not much needs to be said about the merits of the plaintiff’s claim against the 1^st defendant.  He has obtained default judgment on liability, and justifiably so in view of the criminal conviction of the 1^st defendant in respect of the very accident causing injuries to the plaintiff.  The conviction and the facts on which it was based would have been admissible as evidence against the 1^st defendant on liability pursuant to section 63 of the Evidence Ordinance, Cap 8.  It would have become the evidential burden of the 1^st defendant to effectively disprove liability, had judgment not been entered by default.

11.  Nor is there much to say about the existence of the 1^st defendant’s assets in the jurisdiction.  The application targeted at the Property.

12.  If the restraint or preservation of the Property from dissipation is justified, the circumstances turn not so much on the consideration of balance of convenience.  The 1^st defendant has chosen not to appear and to protest on this basis either.

13.  The difficulty which the plaintiff had to surmount in convincing me was the existence of a real risk of dissipation of assets or, as he is targeting in the present application, the Property if the injunction sought is not in place.

14.  Counsel accepted that such risk must be that of assets being hidden or secreted away and thus making enforcement impossible or more difficult: see Arrow ECS Norway AS v Xin Cheng Holdings (Intn’l) Co Ltd HCA 239/2016 (12 May 2016) at §§47-49.  I was not satisfied that the plaintiff has placed before this court sufficient materials to justify the reality of risk of dissipation of his assets or specifically the Property in such sense.

15.  Understandably, the plaintiff has no knowledge about the assets of the 1^st defendant except for the Property as at the time of the application.  The land search revealed that the Property was and still is held by the 1^st defendant and a Madam Tam as joint tenants.  However, the search, which was dated March 2024, also revealed no attempt by the 1^st defendant or the other joint tenant to deal with the Property in any manner at any time even after the interlocutory judgment on liability has been obtained in September 2020.  There is no basis for suspecting that any dealing might have been deliberately concealed, as the counterpart of any such dealing would normally be expected to ensure registration of the dealing for own protection.

16.  Dealing with the Property would not have been straightforward either.  This court took notice, and counsel confirmed its correctness, that the Property belongs to the Home Ownership Scheme whereby any alienation of interest in it would entail approval upon satisfaction of pre-conditions such as the payment of land premium.  There was no suggestion that any step had been taken by the 1^st defendant or the other joint tenant in such respect with a view to disposing of the Property.

17.  By way of affirmation in support and counsel’s submission, all that the plaintiff put forward was the fact that the 1^st defendant has taken no interest in defending or appearing in the present case.  Now faced with the judgment on liability, the 1^st defendant was said to have every reason to evade satisfying the eventual court order for paying damages, the quantum of which would be substantial.

18.  Unfortunately the above projection was speculation, and the only factual basis for it remained no more than the fact that the 1^st defendant has just let the judgment on liability be entered by default.  The real risk that a judgment would remain unsatisfied arises out of the proof of unjustified dealing with assets or such risk.  Whilst additional attributes such as strength or clarity may not assist, the evidence necessary for such proof must in fact exist and solid: see for instance, China Citic Bank Corporation Limited (Quanzhou Branch) v Li Kwai Chun & Ors HCMP 1408/2017 [2018] HKCFI 1800 at §§24; 36.

19.  As the matter stood before this court, I was not satisfied that it would be proper exercise of discretion to grant the injunction sought.  Hence my dismissal of the summons with no order as to costs.  No doubt those acting for the plaintiff would be vigilant in monitoring the situation, and nothing prevents the plaintiff from lodging another application in the event of change of circumstances.