CHAN FAI CHEUNG v. HO CHI WING t/a HANSON ENGINEERING CO AND ANOTHER

HCPI 354/2016

[2018] HKCFI 399

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO 354 OF 2016

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D E C I S I O N

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1.  I am not satisfied to the requisite standard that the ex parte Injunction granted on 13 February 2018 should be continued.

2.  The Plaintiff has no proprietary claim against the 1^st Defendant, as he accepts.  Although any injunction granted on Plaintiff’s case should, even if justified, have been a Mareva injunction restraining the disposal of the 1^st Defendant’s assets, the order made was directed against the disposal of the entire sale proceeds of a specified property of the 1^st Defendant, without any limit as to amount of the proceeds up to the maximum of the Plaintiff’s claims against the 1^st Defendant.  On his own case, that is no more than $1.32 million, and that does not take into account any deduction of the ECC compensation payable and which is provided for in separate proceedings. 

3.  In particular, I am not satisfied that the Plaintiff had established a risk of dissipation of assets to justify the grant of the Injunction in the first place.  Prior to the ex parte application, there had been correspondence from the solicitors for the Plaintiff on 27 December 2017 (7 weeks before the ex parte application on 13 February 2018), and from the solicitors for the 1^st Defendant on 2 January 2018, the former threatening to apply for a Mareva injunction and the latter explaining the reason for the sale of the property in question ie for satisfying the judgment debt in favour of the Plaintiff in the EC proceedings.  Apart from that, the Plaintiff had in fact also applied for and obtained a Mareva injunction in the District Court on 15 December 2017, which injunction was discharged by consent of the parties on 21 December 2017 upon terms of disposal of the EC proceedings.

4.  If there was any intention on the 1^st Defendant’s part to dissipate his assets, the 1^st Defendant had had ample notice and opportunity to do so, since December 2017, and before 13 February 2018. 

5.  The test of dissipation of assets is objective. The Court is concerned with the effect of the defendant’s conduct as opposed to the motives underlying the conduct.  So it is not necessary to show that a defendant would remove his assets out of reach of the plaintiff for the purpose of defeating any judgment that the plaintiff might obtain against him.  However, the mere fact that the conduct of a defendant is likely to deplete his assets available for judgment is not sufficient.  A defendant is entitled to incur expenses in going about his ordinary life or business, repay his genuine debts as they fall due, and to spend money in defending himself against the plaintiff’s claim.  It has never been the purpose of a Mareva injunction to give to a plaintiff security over a defendant’s assets in priority to other creditors.  Something more than a real risk that the judgment will go unsatisfied is required.  (See TTMI Ltd of England v ASM Shipping Ltd of India [2006] 1 Llyod’s Rep 401.) Despite the tendency to refer to a defendant’s alleged “unacceptably low standard of commercial morality” as the basis for seeking a Mareva injunction, the courts have warned against too readily drawing inferences of a real risk of dissipation from the conduct of a defendant.

6.  In this case, even if the 1^st Defendant’s sale of his property may have the effect that the property or its proceeds would be out of the Plaintiff’s reach in the eventual execution of any judgment in his favour, it cannot be established that such sale would have the effect of depleting the 1^st Defendant’s assets which would otherwise be available for execution of the judgment: since the sale and the use of the proceeds of sale are shown to be for legitimate purposes: of discharging the 1^st Defendant’s obligations under the various court orders made against him, including his liability to the Plaintiff, and for legitimate expenses in and consequential to the sale.  There is no sound basis to draw the inferences which the Plaintiff has asked the court to draw against the 1^st Defendant’s series of conduct outlined, including his petition for divorce.

7.  The injunction is discharged and the Summons for its continuation is dismissed, with costs to be paid by the Plaintiff to the 1^st Defendant.  The Plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.