HMM (HONG KONG) LTD (FORMERLY KNOWN AS HYUNDAI MERCHANT MARINE (HONG KONG) LTD) v. MA CHUN KIT AND OTHERS

HCA 619/2016

[2023] HKCFI 197

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 619 OF 2016

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REASONS FOR DECISION
AND RULING ON COSTS

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A. Introduction

1.  This is the summons of D1 (“Ma”)  taken out on 9 August 2022 to vary a post-judgment injunction order so as to release funds for his appeal to the Court of Appeal against a conviction in theft. 

2.  The injunction order was first made against him on 10 March 2016, with 6 subsequent variations until 26 August 2022 (“Injunction Order”).  The amount frozen thereunder is HK$654,223,293.24.  The Injunction Order provides, amongst others, that D1 was not prohibited from spending a one off sum of HK$100,000 on legal advice and representation.

3.  Specifically, on 27 April 2022 when final judgment in this case was handed down, DHCJ Winnie Tsui ordered that the Injunction Order do continue for 12 months post-judgment.

4.  Ma’s summons does not set out the precise variation sought.  However, judging from §8 of his affirmation filed on 16 August 2022 (“Supporting Affirmation”), Ma is seeking a withdrawal of HK$1.5 million out of the frozen assets in order to pay his contribution to the Director of Legal Aid (“DLA”)  towards the legal costs for his appeal against conviction in theft. 

5.  The application is opposed by the Plaintiff on the ground that the D1 has not shown himself to be in lack of other available assets to justify the variation. 

6.  After hearing the parties, I dismissed Ma’s Summons.  Here are my reasons. 

B.  Background

7.  D1 used to be employed by the Plaintiff as an accounts clerk and was promoted to Deputy General Manager of the Account Department before his employment was terminated. His last salary was HK$37,900.  During his employment between 2009 and 2016, he transferred a total of HK$387,655,303.70 from the Plaintiff’s bank accounts to his own.  He used the money for his own purposes and to lead a lavish life style.  The Plaintiff discovered the dishonest acts of D1 and confronted him on 29 February 2016, to which he confessed the embezzlement.  Ma was summarily dismissed on 4 March 2016.  On 10 March 2016, the Plaintiff applied for and obtained the Injunction Order. 

8.  Pending trial of this action, D1 had been found to be in breach of the Injunction Order in respect of 6 items of expenses amounting to more than HK$3 million.  He was sentenced to 4 months’ imprisonment: [2018] HKCFI 328, 9 February 2018,A Chan J, §26.

9.  In criminal proceedings in HCCC 20/2018, which arose out of the same acts of misappropriation, Ma was convicted on 16 December 2020 of 4 counts of theft and was sentenced to 15 years’ imprisonment.  He is currently serving his sentence at the Stanley Prison. 

10.  In delivering the sentence, the trial judge, Remedios J, described D1 as “a dishonest man” and his behaviour as “a wholly premeditated and calculating theft” and “an egregious example of selfishness and greed”.

11.  The present action was tried before DHCJ Winnie Tsui in August 2021.  D1 told the learned Deputy Judge on the first day of trial that he did not wish to participate in the trial.  After trial in his absence, DHCJ Winnie Tsui held that D1 had acted dishonestly and misappropriated a “colossal sum of money” over 260 transactions carried out between 2009 and 2016.  D1 was found liable for breach of fiduciary duties, breach of implied duty of fidelity, breach of confidence and conversion: [2022] HKCFI 1153, §§59-61.  He was ordered to pay damages of HK$387,655,303.70, plus compound interest of P + 1%, which have rolled to HK$657,282,052.90 by September 2022.

12.  It is estimated that the value of D1’s assets is about HK$55.85 million.  The Plaintiff has only recovered about HK$2 million of the judgment debt from garnishee orders absolute and another HK$500,000 from D1’s bail money pursuant to Recorder William Wong SC’s order: decision dated 23 December 2022 in the present action.  There are also charging orders over properties in the name of D1, but the properties are yet to be sold. 

C.  Legal Principles for Variation of Injunction

13.  Where a post-judgment injunction has been granted, the burden is on the party seeking variation to justify it.  Since the creditor has already detained judgment, the creditor’s interest is one of the factors for the Court to consider. 

14.  The court will apply the same principle when considering whether or not to grant a Mareva injunction, and ask whether it is just and convenient to allow the variation.  As the purpose of Mareva relief is to prevent unjustifiable disposal, the court would bear in mind that the assets belong to the defendant and that the injunction is not intended to provide the plaintiff with security for his claim or to create an untouchable pot which will be available to satisfy an eventual judgment: Alltogether Land Co Ltd v China Create Capital Limited [2022] HKCFI 2726, §23, Linda Chan J.

15.  Generally, the applicant for variation should make full and frank disclosure, by sufficient evidence, that (a)  he does not have other assets available to meet those expenses; and (b)  the purpose of the application is not an attempt to dissipate the assets to frustrate the plaintiff’s enforcement of a judgment.  In considering (a), the Court is not limited to the funds to which the defendant has a strict legal right if there are reasonable grounds for believing that the defendant can obtain money elsewhere.  The court must seek to balance the risk of deliberate dissipation of frozen assets by the defendant against the abuse of the freezing order to pressure the defendant illegitimately.  See Hong Kong Civil Procedure 2023, Volume 1, §29/1/79. 

D.  Application of the legal principles

16.  D1 has produced the Offer of a Legal Aid Certificate from the DLA that determined a maximum contribution fee of $15,882,685 as costs of the criminal appeal proceedings. The contribution that D1 has to pay upon acceptance of the offer is $1,472,550.  There is a valid purpose for his application to vary the injunction.

17.  However, D1 has not, by his Supporting Affirmation or affirmation filed on 10 October 2022, made full and frank disclosure as to whether he has other assets available to meet the legal fees.

18.  Firstly, in §3 of his Supporting Affirmation, he claimed that he had not used or diminished the value of the frozen assets and that the assets have appreciated in value by 2022.  However, he has not adduced evidence to contradict the estimated value of HK$55.85 million put forth by the Plaintiff. 

19.  Secondly, in his oral submission, D1 claims that all his assets have been frozen by the Mareva injunction and, being in jail, he has no other available assets.

20.  As the past comments in various judgments show, D1 has been found to be a dishonest person in the context of criminal and civil proceedings.  The Court is entitled to hold a healthy skepticism towards D1’s assertions.

21.  I agree with Ms Ng, counsel for the Plaintiff, that it is impossible for the Plaintiff to know if the Defendant has disclosed all his assets.  Full and frank disclosure of D1 is thus of utmost importance in the present application.  D1 has made applications in the past for variation of an injunction to release funds for this action and the criminal proceedings, and has been informed of the legal principles applicable: [2019] HKCFI 1057, §§18 and 19, Au-Yeung J. 

22.  In Au-Yeung J’s case, D1 has disclosed his “means” in terms of eg borrowings from others and loans owed by “friends”.  The Court rejected his case (at §§27-32)  but D1 has not provided further evidence to address the Court’s comments.  In the present application, he has not even made an assertion that he no longer has such means.

23.  Thirdly, D1 claims in §9 of his Supporting Affirmation that the Plaintiff unreasonably dismissed him and owed him retirement fund or long service pay of about HK$2 million.  D1 reserves his right to claim against the Plaintiff. 

24.  In my view, given the conviction and the final judgment of DHCJ Winnie Tsui, D1’s claim in the previous paragraph is simply shameless.  Even if the Plaintiff still owes him $2 million, it is still far short of the judgment sum that he has to pay.  

25.  In the premises I am not satisfied that D1 has made full and frank disclosure that he does not have other assets available to meet his legal costs for the appeal.  

26.  In any case, the assets owned by D1 are far below the judgment sum due to the Plaintiff. Balancing the potential prejudice to each party if a variation is not granted, this Court is of the view that it is not just and convenient for D1 to obtain release of funds for his appeal, which would deprive the Plaintiff of the fruits of their judgment.  For the foregoing reasons, I dismiss Ma’s summons.

27.  On a nisi basis, costs should follow the event and be to the Plaintiff.  As the Plaintiff’s solicitors have failed to lodge a costs statement together with counsel’s submissions, I reduce the costs in sections C and D to mark the Court’s disapproval of their failure to follow such a basic rule of practice.  Costs are summarily assessed at $80,000.  The Plaintiff’s solicitors shall inform this Court in writing within 7 days as to whether they would give an undertaking not to recover (or, if already received, to repay to the Plaintiff)  the difference between this amount and the total amount on the costs statement.    

28.  I thank Ms Ng for her assistance.