TAN LILY v. LIN WEIWU

DCCJ 2907/2018

[2018] HKDC 833

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2907 OF 2018

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DECISION

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1.  On 5 July 2018, the plaintiff obtained an ex parte Mareva injunction (“the injunction”) to freeze the defendant’s assets in Hong Kong up to the value of AUD130,000 or its equivalent in Hong Kong dollars held in an account held by the defendant with the Bank of China (Hong Kong) Limited (“the Account”). Today is the return date specified in the injunction, and the plaintiff seeks an order in terms of an inter partes summons taken out by her on 6 July 2018 (“the summons”) to continue the injunction until the conclusion of the trial herein or until a further order made by the court in these proceedings.

2.  Having read the evidence on service adduced by the plaintiff, I am satisfied that all the documents concerning the hearing today have been duly served on the defendant.

The facts

3.  The plaintiff has made an affirmation (“the supporting affirmation”) in support of her ex parte application for an injunction.  I would first summarize the facts deposed in the supporting affirmation.

4.  The plaintiff is now 64 years old and is living in Australia.  She was born in Taiwan and is able to speak English and Putonghua.  She has retired for 3 to 4 years.  Before retirement, she was an account officer.

5.  From 22 to 24 April 2018, the plaintiff received telephone calls from various persons who claimed to be law enforcement agents in China.  They were able to tell come personal information of the plaintiff, such as name and passport number.  They also sent pictures of their badges and police identity cards to the plaintiff.  They claimed that the plaintiff had been involved in a big money laundering scheme in China.  They threatened that if the plaintiff could not prove her innocence, some Interpol officers would knock on her door and arrest her.  However, they told the plaintiff that they could help if the plaintiff would keep secret and make a deposit of money into the investigation bureau’s account (which was subsequently found out to be the Account). 

6.  Mistakenly believing in all these, on 24 April 2018, the plaintiff went to a bank transferred AUD130,000 to the Account.  Shortly after leaving the bank, the plaintiff was notified by a security officer of the bank on phone that the transfer was suspicious.  The plaintiff went back to the bank and came to realize that she had been deceived by a scam.

7.  On 26 April 2018, the plaintiff made an online report of the matter to the Hong Kong Police.

8.  On 15 June 2018, the Hong Kong Police sent an email to the plaintiff, informing the plaintiff that a sum of AUD129,999.04 had been suspended in the Account and suggesting to the plaintiff that she might engage lawyers to take necessary actions to recover the money.

The principles

9.  The principles concerning Mareva injunction are trite.  In order to obtain a Mareva injunction, a plaintiff has to show^[1]:-

(1) that he has a good arguable case on a substantive claim over which the court has jurisdiction;

(2) there are assets within the jurisdiction;

(3) the balance of convenience is in favour of grant; and

(4) there is a real risk of dissipation of assets, or removal of assets from the jurisdiction, which would render the plaintiff’s judgment of no effect.

Good arguable case

10.  On the basis of the evidence now before the court, the plaintiff may argue that the defendant has to return the AUD 130,000 to her by relying on unjust enrichment.  The questions to be determined in a claim based upon unjust enrichment are as follows^[2]:-

(1) Was the defendant enriched?

(2) Was the enrichment at the plaintiff’s expense?

(3) Was the enrichment unjust?

(4) Are any of the defences applicable?

11.  It is arguable that the defendant was enriched as a result of the transfer of AUD 130,000 by the plaintiff to the Account.  It is also arguable that the enrichment was unjust, for the defendant has not provided any consideration in support of the transfer.  Further, the Hong Kong Police’s investigation and intervention (ie freezing the Account) is evidence showing that the transfer may well be procured by some unlawful activities, and the defendant may have taken part in these activities.  These are all factors arguably in support of the unjust element.

12.  I am satisfied that the plaintiff has established a good arguable case against the defendant.

Assets within the jurisdiction

13.  The Hong Kong Police has confirmed that AUD129,999.04 are still in the Account.  Clearly, there are assets within the jurisdiction which can be frozen by an injunction granted by this court.

Real risk of dissipation of assets

14.  As said in the above, the Hong Kong Police’s investigation and intervention is evidence showing that the transfer may well be procured by some unlawful activities, and the defendant may have taken part in these activities.  In the circumstances, I am of the view that if no injunction is granted, there is indeed a real risk that the judgment obtained by the plaintiff would go unsatisfied by reason of the disposal by the defendant of his assets.

Balance of convenience

15.  By reason of the real risk of dissipation of assets mentioned above, if the injunction is not continued but the plaintiff succeeds in obtaining final judgment in these proceedings at the end, the judgment obtained by the plaintiff may well be an empty judgment.  On the other hand, if the injunction is continued but the defendant succeeds at the trial, there is no evidence showing that the prejudice suffered by the defendant as a result of the injunction is something which cannot be compensated by damages.  I am satisfied that the balance of convenience is in favour of continuing the injunction.

Undertaking as to damages

16.  The plaintiff has offered an undertaking as to damages in support of the injunction.  However, I observe that (a) the plaintiff is a retired lady; and (b) the plaintiff is a foreign plaintiff.  That being the case, the court has to consider whether the defendant can obtain damages from the plaintiff pursuant to the undertaking as to damages if the injunction is continued but the defendant is the ultimate winner in these proceedings.

17.  In my view, in the circumstances described above, it would be necessary to require the plaintiff to pay a sum into court in support of the injunction. The amount frozen by the injunction is AUD 130,000, which is about HKD 754,000.  The life of the injunction would be up to the conclusion of the trial or a further order made by the court in these proceedings.  The injunction would prevent the defendant from using the sum to invest during the life of the order.  Taking all these into account, and bearing in mind that the best lending rate at present is 5% per annum, and this action is at the very primitive stage, I would require the plaintiff to pay HKD 38,000 into court in support of the injunction.

18.  The plaintiff offers an undertaking to pay HKD 38,000 into court to fortify the undertaking as to damages within 21 days. I accept this undertaking.

Exception to the injunction

19.  I note that the injunction does not contain the exception concerning the ordinary living expenses of the defendant and reasonable expenses on legal advice and representation.  This exception is in the standard form provided in Practice Direction 11.2 (“PD 11.2”).

20.  PD 11.2 requires:-

“2. All such orders should in the future, in the absence of good reason to the contrary, now follow these forms.

3.  Where the order sought deviates in a material respect from the standard form this should be drawn to the attention of the judge hearing the application.”

21.  The plaintiff has not drawn to the attention of the ex parte judge that the usual exception concerning ordinary living expenses and legal expenses is not contained in the draft order prepared by the plaintiff.  This is a clear contravention of PD 11.2 §3.

22.  I have asked Mr Vincent Kee (counsel for the plaintiff in the ex parte hearing and in this hearing) why the deletion of the usual exception was not drawn to the ex parte judge’s attention.  Mr Kee submits that this is his omission.  With respect, this is unacceptable.

23.  An applicant for an ex parte injunction has an obligation to draw to the ex parte judge’s attention any deviation in a material respect between the order sought and the standard form in PD 11.2.  The applicant may have a reason not to follow the standard form, but that does not absolve the applicant from the duty of drawing to the ex parte judge’s attention that there is a material difference between the order proposed and the standard form.  Only when the matter is reported to the ex parte judge, the court would then be in a position to determine whether the deviation is legitimate or not in the circumstances.

24.  Although the plaintiff has a good arguable case against the defendant, one must remember that there has not been any final adjudication in this case and who would succeed at trial is unknown.  Whether the defendant is a wrongdoer as alleged by the plaintiff has not yet been finally determined.

25.  In my view, there is no good reason not to provide for the usual exception concerning ordinary living expenses and legal expenses in the injunction.  I would add the following exception to the injunction:-

“This Order does not prohibit the defendant from spending HKD 5,000 per week towards his ordinary living expenses and HKD 50,000 on legal advice and representation.”

26.  On any ex parte application, the applicant must proceed with the highest good faith[3]. The plaintiff’s non-observance of the duty laid down in PD 11.2 §3 in the ex parte hearing is a serious matter.  Having considered this case as a whole, I would not discharge the injunction as a result of this contravention.  I am of the view that the injunction would still have been granted even had the deviation between the proposed order and the standard form been properly disclosed to the ex parte judge.  However, to show the court’s disapproval of the non-observance of the duty in PD 11.2 §3, I would deprive the plaintiff 20% of the costs of the ex parte application.

Disposition

27.  I order that the injunction be continued until the conclusion of the trial or a further order made by the court in these proceedings, with the amendments indicated in this decision.

28.  There be no order as costs in respect of 20% of the costs of the ex parte application.  Save that, costs of the ex parte application for the injunction and costs of the summons be the plaintiff’s costs in the cause, with a certificate for counsel.