NATARAJAN SUBRAMANIAM v. LINCOLN FINANCIAL LTD AND OTHERS

HCA3150/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3150 OF 2002

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D E C I S I O N

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1. In this case, there is a Mareva injunction in place against the defendant, which secured assets in Hong Kong up to a sum of US$503,490. In this application, the plaintiff is asking for that sum to be increased to cover two further elements, they being a sum for interest and a sum for present and future legal costs.

2. I propose to make an order under both headings. I will deal with the matter in round figures as best I can. Dealing with the question of interest first. Mr Cohen who appears on behalf of the defendant does not challenge an award to cover interest in principle but there is a dispute as to quantum in respect of both the rate of interest and the period for which interest should run. Dealing with the question of the rate of interest first. The difference between the parties is that Mr Carolan, who appears for the plaintiff, submits it should be 5% and Mr Cohen submits it should be 4%. This is a US dollar claim, the prime rate in United States is 4% and thus Mr Cohen says 4% is appropriate. Mr Carolan's argument for 5% is based on the usual order being prime plus 1%. This is a commercial case and I agree that prime plus 1%, namely 5%, is appropriate.

3. On the question of the duration of the interest, Mr Carolan submits that the trial is not likely to come on for some time and the money has been due since August 2001. Mr Cohen on the other hand submits that the writ was not issued till August 2002 and the trial should come on some time at the latter part of next year 2004. Mr Carolan asks for three years interest. Mr Cohen submits that two years is the proper period.

4. Again I think Mr Carolan's argument as to the starting date is correct and therefore I use August 2001 as the date from which interest should run. However, I will not be too pessimistic about the date when the matter comes to trial. Accordingly I think a total of three years from August 2001 to August 2004 is appropriate. Therefore, using round figures, a rate of 5% for three years results in a sum for interest of US$75,000.

5. Turning now to the question of costs, there are more imponderables to consider. The estimated bill of costs produced by the plaintiff comes to a total sum of approximately US$258,000. That sum for the purpose of a Mareva injunction is excessive simply because any sum which should be added for costs to a Mareva injunction should be comparatively modest. I have considered the competing arguments of principle on whether costs should be added to a Mareva injunction and the authorities which have been cited to me. I think the simple and correct approach is to follow the observations made by Mr Steven Gee in his textbook of Mareva Injunctions and Anton Piller Relief, 4th edn, in which he succinctly states, "in practice nowadays an element for recoverable costs is usually included; ... usually the addition made is comparatively modest".

6. Adopting this approach and starting with the total estimated bill that has been referred to of US$258,000, I, first of all, deduct from that a sum of US$32,000 which has already been awarded to the plaintiff in previous interlocutory hearings "in any event". I exclude it from the total sum, not to exclude it from the Mareva sum but to take it out of the equation before making a further discount. My starting point therefore becomes US$225,000. The question now is how much of that sum should be awarded under the heading of "a comparatively modest sum" to be included in the Mareva injunction. I think the appropriate figure is one-third of that sum. One-third of US$225,000 is US$75,000. I add to that the US$32,000 already awarded, which makes a total of US$107,000 and that is the figure I award for costs. Add to that the US$75,000 which I have decided is appropriate for interest, which makes a total of US$182,000. If we add that to the US$503,490 already ordered, the new sum becomes US$685,490, and that is the amount which should be protected in Hong Kong.

7. Having also heard the parties on costs, I make a costs order in the plaintiff's favour occasioned by today's application and the hearing before Deputy High Court Judge Muttrie on 2 September 2003.