XCHRX MINERALOGY PTY LTD. v. FUND WEALTH FINANCE CO. LTD.

1999 HCA No. 5563

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. I am satisfied that the Plaintiff has established that it has an arguable case that, by agreeing to sell the yacht to Barbara Karran or Frank Curcio on 22nd March, Fund Wealth was in breach of its agreement of 9th March with the Plaintiff to sell the yacht to the Plaintiff. However, of greater significance for present purposes is the fact that I am also satisfied that the Plaintiff has established that it has an arguable case that, by reason of the equitable doctrine of conversion, its agreement of 9th March with the Plaintiff gave rise to a constructive trust which has given the Plaintiff an equitable interest in the yacht. I say that because I am satisfied that the Plaintiff has established that it has an arguable case that the agreement of 9th March is one which the court will specifically enforce. I have reached that conclusion because I am satisfied that the Plaintiff has established that it has an arguable case that the criteria for the specific enforcement of the agreement have been satisfied, i.e. that the agreement itself is an enforceable one, that the Plaintiff has been ready, willing and able to perform its side of the bargain, and that damages for Fund Wealth's breach of the agreement will not be an adequate remedy for the Plaintiff. In that connection, I am satisfied, on the basis of Mr. Wyatt's 2nd affidavit, that the Plaintiff has established that it has an arguable case that a yacht of the kind to which the agreement related, if not unique, is sufficiently distinctive as not to be readily available on the open market.

2. I am also satisfied, on the basis of the draft affidavit to be sworn by Mr. Palmer, that the Plaintiff has established that it has an arguable case that Barbara Karran knew, when it agreed to purchase the yacht on 22nd March either on its own behalf or on behalf of Mr. Curcio, that Fund Wealth had already agreed to sell the yacht to the Plaintiff, and that Barbara Karran therefore knew, when it took delivery of the yacht, (a) those facts which in law are said to have rendered Fund Wealth a constructive trustee of the yacht and (b) those facts which are said to have rendered Fund Wealth's sale of the yacht to Barbara Karran or Mr. Curcio on 22nd March as having been in breach of trust. If it is found that Barbara Karran purchased the yacht as agent for Mr. Curcio, the Plaintiff has satisfied me that there is an arguable case that Mr. Curcio's imputed knowledge of what Barbara Karran knew has not been rebutted.

3. Having said all that, I am not prepared to grant the Plaintiff interlocutory relief in relation to both the yacht itself and the proceeds of its sale to Barbara Karran or Mr. Curcio. Mr. Jonathan Harris for the Plaintiff accepts that both types of claim are alternative to each other, and that at the trial of the action the Plaintiff can only obtain one form of relief and not the other. He accepts that the Plaintiff will have to elect one remedy and not the other at some stage prior to the trial, but he maintains that the Plaintiff should not be required to make that election until it is an informed one. He says that the election can only be an informed one when the Plaintiff is able to assess the strength of its claims against Barbara Karran and Mr. Curcio.

4. I have not been persuaded that that is a sufficient basis on which to grant interlocutory relief against both the yacht and the proceeds of sale. I have not discerned any particular reason why the Plaintiff would be so disadvantaged by having to make the election now as to justify granting the Plaintiff interlocutory relief which is greater than the relief which the Plaintiff would be entitled to at trial. I take Mr. Harris's point that double relief would be the consequence of the Plaintiff establishing an arguable case of breach of trust against both Fund Wealth and either Barbara Karran or Mr. Curcio, but I do not see why, even for the time being, the Plaintiff should have the benefit of both forms of relief.

5. In these circumstances, I grant the Plaintiff leave to amend the writ of summons to add Mr. Lee, Barbara Karran and Mr. Curcio as 2nd, 3rd and 4th Defendants, and to claim the relief set out in the draft attached to Mr. Harris's written submissions. I grant the Plaintiff leave to serve the amended writ on Mr. Curcio out of the jurisdiction pursuant to Ord. 11 r. 1(1)(b) and Ord. 11 r. 1(1)(i) of the Rules of the High Court. I put the Plaintiff to its election as to the nature of the relief it seeks. Mr. Harris told me that, if the Plaintiff was put to its election now, the Plaintiff would elect for relief over the yacht. I therefore grant to the Plaintiff the interlocutory injunctions it seeks against Barbara Karran and Mr. Curcio. I give Barbara Karran and Mr. Curcio liberty to apply for the variation or discharge of those interlocutory injunctions because the application made today has been, in effect, ex parte on notice as against Barbara Karran and ex parte as against Mr. Curcio.

6. Finally, the sum which the Plaintiff must pay into court to fortify its cross-undertaking as to damages must be $500,000.00. It would have been less if the only relief which I had granted was relief in relation to the proceeds of sale. If that sum is not paid into court by 4:30 p.m. next Friday, i.e. 16th April, the interlocutory injunctions will lapse, but I give the Plaintiff liberty to apply for any extension of time which it might need.