EXCEL COURAGE HOLDINGS LTD AND ANOTHER v. WONG SIN LAI AND OTHERS

HCCL 34/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 34 OF 2013

(Transferred from High Court Action No 1827 of 2013)

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(By Original Action)

AND BETWEEN

AND BETWEEN

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DECISION
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1. I have an application before me by summons filed on 3 July 2015 to vary a Mareva injunction.

2. In September 2013, the 2^nd plaintiff (then the only plaintiff in this action) obtained a Mareva injunction against the 1^st defendant (then the only defendant) restraining him from removing from Hong Kong any of his assets up to the value of some HK$146 million.

3. In October 2013, Deputy High Court Judge Mayo discharged the injunction for material non-disclosure of both fact and law and refused to re-grant the injunction afresh.  The plaintiffs succeeded on appeal to the Court of Appeal against the refusal to re-grant the injunction.  As a result, the Mareva injunction was reinstated.  Nevertheless, the Court of Appeal upheld the judge’s order that the costs of the hearings on 4 and 10 October 2013 be paid by the 2^nd plaintiff to the 1^st defendant forthwith.

4. These costs, together with the costs of another hearing on 21 October 2013, have since been taxed in the sum of $973,943.  A sum of $1,053,993.10 had been paid by the plaintiffs to the 1^st defendant’s solicitors pursuant to the allocatur together with interest accrued in November 2014.  In relation to the hearing on 21 October, the Court of Appeal had ordered that the plaintiffs’ costs be in the cause, the amount of which the parties had agreed in the sum of $116,182.  This has been returned to the plaintiffs.  As things stand, the net sum of $937,811.10 is now held by the 1^st defendant’s solicitors. 

5. On 9 February 2015, the 1^st defendant’s solicitors asked the plaintiffs’ solicitors, in order to avoid unnecessary argument as to whether the amount was subject to the Mareva injunction, to agree to a variation of the Mareva injunction.  The 1^st defendant undertook that the sum held by his solicitors would be paid to the solicitors themselves in satisfaction of costs already incurred.  The plaintiffs’ solicitors initially agreed to the variation, but subsequently retracted from that position.

6. The 1^st defendant has therefore taken out an application to vary the injunction by providing that it does not prevent the 1^st defendant from spending $937,811.10 currently stakeheld by his solicitors towards the settlement of his legal costs already incurred in this action.  The 1^st defendant has undertaken that the money will be used by his solicitors to settle their own outstanding costs.  The money would not therefore leave the solicitors’ firm at all if the application was granted.

7. Mr Lai opposed the application on behalf of the plaintiffs on the ground, inter alia, that the 1^st defendant had not adduced enough evidence about his unfrozen assets outside the jurisdiction.  But it has been said that this is not an inflexible requirement: Gee, Commercial Injunctions (5^th ed) paragraph 20-052; Kea Corporation v Parrot Corporation Ltd (unreported, English CA, 24 September 1986).  Mr Lai also submitted the 1^st defendant has not sufficiently explained his ability or otherwise to pay legal costs.

8. In my view, what distinguishes this application from the usual situation seen in the authorities that have been drawn to my attention this morning, is that the money in the account was not originally the 1^st defendant’s to deal with.  It was money paid by the plaintiffs pursuant to the court’s order, on account of the liability of the 1^st defendant incurred, after proceedings had been brought against him, to his solicitors in respect of fees and disbursements. 

9. The purpose of the application to allow that money to be paid to the 1^st defendant’s solicitors in settlement of their unpaid bills would not prima facie be to dissipate the 1^st defendant’s assets so as to frustrate execution of any judgment the plaintiffs may obtain against the 1^st defendant. 

10. As Ms Ho pointed out, the relevant costs order was made by the judge and upheld by the Court of Appeal as a sanction on the 2^nd plaintiff for his non-disclosure.  The costs were ordered to be paid forthwith.  The courts were unimpressed by the 2^nd plaintiff’s material failure to make disclosure on the ex parte application.  They decided that the 1^st defendant should have his costs forthwith.  The plaintiffs’ solicitors, who were there at the hearing before Deputy Judge Mayo and the Court of Appeal, confirmed in correspondence earlier this year that the purpose of the order was “to allow the 1^st defendant (and practically, his legal advisers) to recover his costs forthwith”.

11. Accordingly, as of March 2015 the plaintiffs had no objection for the sum to be paid to the 1^stdefendant’s solicitors directly in settlement of costs already incurred.  Nothing has been said by the plaintiffs to gainsay the proper interpretation of the orders according to their own solicitors who were privy to the entire factual background leading to the making of the orders.

12. Looking at the overall justice of the matter, I do not think it would be just for the plaintiffs, effectively, to withhold the benefit of the sum they were required to pay, as a penalty, by relying on the Mareva injunction.

13. Finally, Ms Ho confirmed that the 1^stdefendant had no assets overseas and has undertaken to file a supplemental affirmation to that effect.

14. For these reasons I accede to the 1^stdefendant’s application.