ESSILOR MANUFACTURING (THAILAND) CO., LTD v. WONG KAM WAI (TRADING AS SUN WAI LOK HK INTERNATIONAL COMPANY) AND OTHERS

HCA 159/2020

[2020] HKCFI 756

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 159 OF 2020

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R U L I N G

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1.  There are 3 controversies between the Plaintiff and the 10^th Defendant (“D10”) which require the ruling of the court this morning.

2.  First, in respect of the filing of evidence, it may be seen that the substantive merits of this case turn upon the defence of D10 because it is not really disputed the Plaintiff is the victim of a fraud and that part of the proceeds of the fraud, which belonged to the Plaintiff, had been received by D10.  Therefore, I believe that D10 should have the last word in the filing of evidence.

3.  In respect of the submissions of the Plaintiff that it bears the burden of proof on risk of dissipation, with the filing of another round of evidence by the Plaintiff it would have plenty of opportunity to marshal the evidence in this regard, and I do not see why that factor should tilt the balance in favour of the Plaintiff to have the last word.

4.  As regards the timetable, I am not persuaded that 28 days are required for the Plaintiff to file its evidence to reply to the existing evidence of D10, bearing in mind that the Plaintiff has had more than 14 days to consider the same.  For obvious reasons, matters of interlocutory injunctive relief must be dealt with expeditiously.  I would allow 21 days for the Plaintiff to complete its evidence. 

5.  Secondly, I see no reason why the Plaintiff is not entitled to a proprietary injunction against D10.  Although most of the Plaintiff’s money which went into D10’s bank account had been paid out (“Payments”), there remains a small balance of about US$700.  More importantly, the proprietary claim extends to the traceable substitutes of the Plaintiff’s money.  No disclosure has yet been made by D10 as to the purposes of the Payments, and there is no reason to believe that those Payments were made without anything in return.

6.  There is a related issue concerning the disclosure order ancillary to the proprietary injunction.  In my view, the disclosure order is appropriate for safeguarding the effectiveness of the injunctive relief and policing its compliance.  I would therefore allow it. 

7.  Thirdly, D10 seeks to draw a sum of HK$231,200 from the amount frozen by the injunction to fund the costs of its application to discharge the same.  Save for the sum of about US$700, the money frozen by the injunction is not the Plaintiff’s property.  Therefore, the “Non-Proprietary Test” applies (see SFC v Mo Shau Wah [2017] 4 HKLRD 347, §37). 

8.  The evidence is that D10 is essentially a shell company which performs “treasury functions” for the group of companies to which it belongs.  It is unlikely for D10 to have assets, other than the money frozen under the injunction and possibly the substitutes of the Payments.  The suggestion of the Plaintiff that D10 should have receivables in its books is, on the material before the court, somewhat speculative in terms of their existence, value and convertibility into cash to meet the costs in question. 

9.  Further, it is clear that the withdrawal of this relatively modest sum is for a legitimate purpose.  I would allow it. 

10.  Finally, on the continuation or re-grant of the two injunction orders before the court, I am satisfied on the evidence that they should be acceded to.  It should also be said that there is no resistance from any of the Defendants in respect of the same (in the case of D10, it takes no issue that they should be re-granted until the substantive hearing).  I shall hear counsel on a few of the details in the draft order.