SEATRANS SOLUTION PTE LTD v. CHINA RAILWAY (HK) TRADING LTD

HCCT 90/2024

[2024] HKCFI 2521

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 90 OF 2024

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D E C I S I O N

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DHCJ Yuen:

1.  On 30 August 2024, I dismissed the applicant’s ex parte application for a post-judgment worldwide Mareva injunction, for reasons given orally and summarized in a Note of Decision provided to the applicant on 4 September 2024 (attached). 

2.  As can be seen from the Note of Decision, the main reason for the exercise of discretion to refuse the application was that, even though the application was post-judgment, I was not satisfied with the evidence of real risk of dissipation put forward by the applicant, which were essentially:

(a)  the releases of charges over two deposit accounts at two banks (of which nothing more was known) and

(b)  the allegation of “low commercial morality” based on the “false parent company” point (which had been considered and dismissed by the Arbitral Tribunal when it refused the applicant’s Mareva application).

3.1.  On 3 September 2024, by an ex parte summons in CAMP172/2024, the applicant applied directly to the Court of Appeal for leave to appeal. 

3.2.  In a letter dated 4 September 2024, Kwan VP informed the applicant’s solicitors that the ex parte summons would not be processed as no application had been made to me for leave, and the Vice-President was not satisfied that there was extreme urgency to justify not doing so. 

4.1.  Subsequently on the same day (4 September 2024), the applicant’s solicitors wrote to the court stating that they were in the process of confirming instructions as to whether to seek leave from myself.

4.2.  On 9 September 2024, the applicant then issued an ex parte summons seeking leave to appeal from the CFI.  The matter was then fixed to be heard by myself on 16 September 2024.

5.  At the hearing, the applicant sought:

(1)  leave to appeal;

(2)  an interim-interim injunction if leave is granted;

(3)  alternatively to (2), non-disclosure relief.

(1)  Application for Leave to Appeal

6.  I have considered the grounds of appeal.  The first ground focuses on the fact that this is a post-judgment application.  I was aware of this fact.  Although the courts are more prepared to grant post-judgment Mareva injunctions both in terms of assessing risk of dissipation and as to the likelihood of the respondent sustaining damages as a result of the grant of an injunction¹, that does not do away with the applicant’s burden to adduce adequate evidence of a real risk of dissipation.  There must still be such evidence from which the court may infer (albeit more readily than before a judgment) that the respondent might be disposing of its assets to avoid or delay execution.

7.  As for the evidence before this court, the releases do not show that the respondent was paying away assets to other creditors in order to put its assets out of the applicant’s reach.  The two banks were secured creditors anyway. There was no other evidence that other funds at the banks or other assets have been dissipated, and the respondent would clearly have been aware of the Award in July 2024 and that enforcement proceedings would follow.

8.  As for the “low commercial morality” allegation, the only evidence of this was the “false parent company” allegation.  The applicant had argued this in the Mareva application before the Tribunal.  The Tribunal had reviewed the messages exchanged between the parties during negotiations for settlement last year, which messages showed that the entity proffered by the respondent as co-primary obligor was actually an internal division of the China Railway Group Ltd, rather than a company itself.  The Tribunal concluded that the reason for the internal division being proffered was the respondent’s uncertainty over the specifics of the relationships between the entities in the group.  The applicant has not challenged that reasoning, and the fact that there has been a subsequent award and unpaid judgment does not in my view amount to a change of circumstances such that the reasoning is rendered defective, or turn the allegation into adequate evidence of “low commercial morality”.

9.  For the above reasons in the exercise of my discretion, I would decline to give leave to appeal and I would order that §1 of the ex parte summons filed on 9 September 2024 be dismissed.

(2)  Application for interim-interim injunction

10.  The applicant also asked for an interim-interim worldwide Mareva injunction if I grant leave to appeal.  In view of my decision on (1), it follows that this is not applicable.

(3)  Non-disclosure relief

11.  The applicant also asked for an order that the order of 30 August 2024 and the order made on the ex parte summons filed on 9 September 2024 shall remain unsearchable in the Court file until 35 days after this order, and that this Decision shall only be provided to the applicant at the first instance and shall not be published on the Judiciary website until 35 days hereafter.  I shall make an order as below:

“The Order dated 30 August 2024 and Note of Decision thereof and this Order and Decision dated 19 September 2024 (“this Order”) shall remain unsearchable in the Court file until 35 days after the date of this Order, and shall only be provided to the applicant at the first instance and shall not be published on the Judiciary website until 35 days after the issuance of this Order”.   

Before:  DHCJ Yuen in chambers (Not Open to the Public)

Date of ex parte hearing and Decision:  30 August 2024 (12:30 pm)

NOTE OF DECISION

DHCJ Yuen:

I would dismiss this summons for the following reasons.  I am not satisfied with the evidence of real risk of dissipation.  The Arbitral Tribunal had given cogent reasons for rejecting the Applicant’s application for a Mareva injunction in March this year.

“ ... the Respondents Charterers are a Hong Kong registered Company and appear to be an indirect subsidiary of the HK-listed and State-owned China Railway Group Ltd.  The Charterers are apparently engaged in ongoing business, and they were previously reported to have net assets of RMB 66 million.  The Charterers have previously made payments to the Claimant Owners in respect of the subject voyage charterparty of over US$4.6 million ...”.     

There has been no change in circumstances, apart of course from the making of the Award and the Respondent’s releases filed with the Companies Registry on 20 & 28 August respectively.  However nothing is known about those releases, and if they were done with a view to avoid payment of the Award, they would have been done soon after the Award was given in July 2024. 

Insofar as the Applicant has suggested that the releases were evidence of real risk of dissipation because of the Respondent’s “low commercial morality”, the allegation of “false parent company” has already been dealt with by the Tribunal when it rejected the Mareva application with cogent reasons. Further, there is no evidence showing that the Respondent is unable to satisfy the Award with their local assets.  

Mr Edward Ng instructed by Haiwen & Partners LLP for the Applicant