XCHRX MEI YU LAU v. SHIU LI LAU and Others

1995 No. A1063

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. I have a summons by the second defendant before me dated 15 August 1995 applying for an order varying part of a Mareva injunction allowing the second defendant to expend money on legal advice and representation from $100,000 to $300,000. The second defendant has applied to amend the summons to increase the sum to $500,000. I said I would decide whether to allow this amendment only if it became necessary to do so.

2. As well as defending the plaintiff's action, the second defendant wishes to apply for security for costs against the plaintiff, for a stay of proceedings and to discharge the injunction.

3. The second defendant has submitted a skeleton bill of costs up to the stage of discovery on a party and party basis. This is said to include "a detailed and itemised account of the costs and disbursements, including counsel's fees, which have been incurred to date and which are estimated will be incurred in the future conduct of this action . . . including the aforesaid applications and up to the stage of discovery". The skeleton did not include this application for a variation of the injunction. However, the skeleton bill of costs shows only a few items for work actually done, with profit costs totalling $1600. The rest of the bill relates, apparently, to work not yet done.

4. On 6 September 1995, the plaintiff's solicitors wrote to the second defendant's solicitors saying that "We are surprised that in view of the work that appears on the record you have already expended the $100,000 which has been available to your client. In the circumstances, we consider your application for the release of a further HK$500,000 is premature and unwarranted. Furthermore, we have already suggested to you that the sum of HK$150,000 is more than sufficient for the steps you propose to take." This offer is ambiguous. The writer seemed to think that the second defendant's application was for a "further" sum of $500,000, and offered a further sum of $150,000. Ms Casewell confirmed to me that the intention was to agree to the total sum being increased to $250,000, and said that this offer was still on the table.

5. It seems that the second defendant's solicitors realised that they had not explained what had happened to the original sum of $100,000. They filed a third affirmation by Ms Kitty Tsui of 6 September 1995. She "confirms" that the $100,000 allowed "has almost been exhausted". "An interim bill up to the period until the end of June 1995 covering our firm's costs and certain fees payable to the law cost draftsman and counsel, has been issued in the total sum of $80,750." A copy of this bill has not been shown to me. Details showing how the sum of $80,750 is made up are not disclosed.

6. In these circumstances, I cannot be satisfied that the second defendant needs the sum requested. I have been given no details of how the original sum of $100,000 has been spent, if that is so. I am not satisfied, in any event, that I should increase the amount, at this stage, to cover three further applications in the future. I am prepared to go only so far as increasing the amount to the sum offered by the plaintiff, although I am inclined to think, in the circumstances, that this is on the generous side.

7. The amount that the second defendant is permitted to expend on legal advice and representation is increased to $250,000. The plaintiff is entitled to her costs in any event, and I so order.

8. There is also another summons before me; this one by the plaintiff, dated 1 September 1995, by which the plaintiff seeks an order in aid of the Mareva injunction requiring the second defendant to discover on oath its assets.

9. The injunction against the second defendant restrains it generally from dealing with its assets, any sum in certain accounts, and a property in Nathan road, "save in so far as the aggregate value of such assets . . . exceeds the sum of US$4,168,771.15 . . ."

10. Except in relation to the property in Nathan road, what assets the second defendant has, and what the amounts are in the various accounts, are unknown. The second defendant has not been forthcoming about this. The most that is said is that all its assets are frozen, implying that the total value of those assets does not exceed the sum mentioned.

11. It seems to me that where there is a Mareva injunction restricting a defendant generally from dealing with his assets, such an order cannot be effective unless one knows to what specific assets it refers. In other words, how is it possible to know that a defendant has breached an order by disposing of an asset, or sending it out of the jurisdiction, unless one knows of the existence of that asset? When an eventual accounting take place, perhaps in execution, one cannot know what is missing unless one knew what was supposed to there in the first place.

12. When the court makes an order for discovery in these circumstances, all it is doing is requiring the defendant to state what assets are affected by the injunction.

13. The jurisdiction to make an order of this nature was recognised in A J Bekhor & Co Ltd v Bilton [1981] 1 QB 923, although in that case an order was not made because "There was no question as to on what property the Mareva injunction was to bite"; the defendant having disclosed his assets.

14. This is a case in which, I believe, an order should be made requiring the second defendant to disclose on oath its assets so that it is known by all on what property the injunction is biting. I make an order in terms of the summons dated 1 September 1995. The plaintiff is entitled to her costs of this application in any event, and I so order.