YUNG YUEN LING ALICE v. WONG MING KAN MICHAEL

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 231 OF 2004

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REASONS FOR JUDGMENT

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1.  There were two summonses before me, one of the plaintiff and one of the defendant.  That of the plaintiff sought that payments made out of assets subject to a Mareva injunction be varied, in an unspecified manner, or dispensed with, whilst that of the defendant sought that the injunction be discharged.  It is axiomatic that if the defendant were to succeed, the plaintiff’s summons falls to be dismissed.  After hearing argument on 3 April 2007 I discharged the Mareva injunction, dismissed the Plaintiff’s summons and ordered, in each instance, that the Plaintiff pay the Defendant’s costs.  These are my reasons.

2.  I related the background to these proceedings in my judgment of 1 December 2006 relating to discovery:  I do not propose to repeat it in detail.  The plaintiff and defendant are, at present, married.  All that it is now necessary to say is that the action by the plaintiff relates to the return of moneys which she alleges were her property but which she transferred into the possession of the defendant as a result of misrepresentations which he made to her.  Matters have moved on only in the sense that pending matrimonial proceedings have now been transferred from the District Court to this Court.

3.  I recognise that I do not sit on appeal of the granting of the original order.  The issue before me is whether, in the circumstances presently prevailing and in the exercise of my discretion, the injunction should continue.

4.  I discharged the injunction because the cumulative effect of the delay in prosecution of the action (which in itself would have justified the discharge of the injunction), the reduction in the apparent prospects of success by the plaintiff in the main action and the tenuous nature of the risk of dissipation of the assets rendered it appropriate, in the interests of justice, to exercise my discretion in favour of the defendant.

Delay

5.  Whether a Mareva injunction should be discharged during its term is a matter for the discretion of the court hearing the application:  one of the considerations, but not the sole consideration, will be the question of delay.  Whether a plaintiff has prosecuted diligently a particular action will be a matter of fact and degree in each instance.

6.  A Mareva injunction is an exceptional and intrusive remedy.  In Newsgroup Newspapers Limited versus Mirror Group Newspapers (1986) Ltd [1991] FSR 487 Hoffman, J. said:

In my judgement it is incumbent upon a plaintiff whose position has been protected... by an interlocutory injunction to proceed with the action with due diligence so as to limit as far as possible the period during which the defendant’s liberty is restricted without there having been any determination of the merits.  In Lloyds Bowmaker Ltd versus Britannia Arrow Holdings plc (1988) 1WLR 1337 Glidewell, L.J. said (at page 1347) in relation to a Mareva injunction that a plaintiff who has succeeded in obtaining such an injunction is "in my view under an obligation to press on with his action as rapidly as he can so that if he should fail to establish liability in the defendant the disadvantage which the injunction imposes upon the defendant will be lessened so far as possible".

Dillon, L.J. said (at page 1349) "where a party has obtained a Mareva injunction, that party is bound to get on with the trial of the action - not rest content with the injunction.  The injunction is merely ancillary to the trial of the action to hold the position until the action comes on trial."

A Mareva injunction is a particularly onerous form of restriction on the defendant’s liberty and to that extent the obligation upon a plaintiff to bring on the action as soon as possible is the stricter...

7.  In Sanwa Development Ltd (in liquidation) and Chan Kar-keung and Another CACV 310/1998, Liu, J.A.  reiterated

5.	It is trite law that proceedings in which a Mareva has been obtained must be diligently prosecuted and that delay, if any, is only a factor for considering whether the Mareva obtained should be discharged.

and further

9.

Counsel further argues that the judge failed to weigh the overall justice of the case in which serious and unanswered allegations of fraud were raised, particularly, so counsel says, when both defendants are no longer Hong Kong based.  However, the emigration movement of these defendants has not been shown to be closely linked to any real prejudice.  Counsel voices Mr Lau's concern as to liability to pay damages.  Damages, if payable for a discharge of the Mareva not on the merits but for delay, are only to be expected...

8.  By way of example in Lloyds Bowmaker Ltd there had been a delay of 2½ years from the grant of the Mareva injunction, during which period the action had still not been set down for trial.  In Sanwa Development Ltd the delay was in excess of three years.  It is not the absolute period of time that is of importance, but the diligence, or lack of it, on part of the plaintiff in prosecuting the action.

9.  In the present matter it is convenient to have regard to the proceedings in two distinct time periods:  the first period is from 7 February 2004 when the Mareva injunction was granted up to December 2005 when the plaintiff was admitted to hospital; the second period is from December 2005 to now.  During the first period the plaintiff was in charge of the proceedings whilst in the second period that duty has fallen on the Official Solicitor.  In my judgment, the Plaintiff personally and thereafter through the Official Solicitor failed diligently to prosecute the action.

10.  Although I have had regard to the entire conduct of these proceedings, a selection of dates adequately illustrates the history:

7 February 2004	Mareva injunction granted
9 February 2004	Writ of summons
11 February 2004	Plaintiff discharges first solicitors
13 February 2004	Injunction continued
1 March 2004	Defendant offers to repay $6,700,000.00 plus interest to Plaintiff
3 March 2004	Defendant requests Plaintiff to file Statement of Claim, the statutory time for doing so having passed
11 March 2004	Plaintiff applies for Legal Aid – action stayed
12 March 2004	Plaintiff opposes defendant’s application to vary injunction to allow for payment into court of $6,700,000.00
17 March 2004	Second application for Legal Aid by plaintiff
19 March 2004	Plaintiff admitted to Kwai Chung Hospital: diagnosed with “adjustment disorder”:
22 March 2004	Plaintiff discharged with medication
26 March 2004	Plaintiff seen as outpatient – defaulted on medication
22 April 2004	Stay of proceedings uplifted
7 May 2004	Plaintiff ordered, pursuant to a summons by Defendant, to file Statement of Claim by 21 May 2004
18 May 2004	Second firm of solicitors engaged by Plaintiff
21 May 2004	Third application for Legal Aid by plaintiff
24 June 2004	Statement of Claim filed
9 September 2004	Defence and counterclaim filed
27 September 2004	Plaintiff files notice to act in person
30 September 2004	Third firm of solicitors engaged by plaintiff
5 October 2004	Legal Aid granted
20 October 2004	Reply and defence to Counterclaim
12 November 2004	Plaintiff’s application for Summary Judgment
10 May 2005	Order for Summary Judgment
11 August 2005	Plaintiff files notice to act in person
11 August 2005	Plaintiff files a summons for “general directions to proceed the action to another phase” returnable on 12 September 2005
13 September 2005	Hearing of summons for directions
October 2005	Correspondence regarding discovery
16 November 2005	Defendant’s summons for discovery
18 December 2005	Plaintiff admitted to hospital consequent upon apparent suicide attempt
19 December 2005	Defendant’s summons for discharge of injunction
9 February 2006	Official Solicitor appointed Plaintiff’s Next Friend
7 March 2006	Discovery Summons vacated by consent: four summonses set down for hearing on 24 and 25 May 2006
28 April 2006	Official Solicitor appointed guardian ad litem of the plaintiff in respect of the matrimonial proceedings
11 May 2006	Official Solicitor obtains order for vacation of hearing dates of summonses, not to be refixed for hearing before 15 July 2006
18 August 2006	Official Solicitor appointed as Committee of the plaintiff’s estate pursuant to Part II of the Mental health Ordinance
12 October 2006	Affirmation by Official Solicitor opposing discharge summons filed
1 November 2006	Order relating to discovery
1 December 2006	Further order relating to discovery
29 December 2006	Notice to Act filed by solicitors acting for Official Solicitor

11.  It is worth highlighting that the plaintiff

11.1	delayed almost five months from the grant of the injunction until filing her Statement of Claim – and even then beyond the time limit prescribed by an order of court;
11.2	made no effort to prosecute the action during the period Summary Judgment proceedings were pending, from 12 November 2004 to 11 August 2005;  and
11.3	has engaged three different firms of solicitors:  during the periods between which different firms of solicitors were engaged, and subsequent thereto, the plaintiff has acted in person.

12.  The plaintiff was entitled to change solicitors and to represent herself throughout the first period.  The effect of doing so, inevitably, was delay.  That is not a situation which should result in prejudice to the defendant.  Whether intentionally or by way of simple inactivity, the plaintiff failed to expedite the main action:  she has repeatedly had to be urged by the defendant to move the proceedings along.

13.  The submission is made on behalf of the plaintiff that at least some of the delay during the first period is attributable to the defendant’s conduct in opposing the Summary Judgment proceedings.  Just as the plaintiff has been entitled to exercise her rights in regard to representation, so has the defendant in resisting, upon formal legal advice, the summary judgment proceedings:  the difference, however, is that the defendant pursued his opposition to those proceedings expeditiously.

14.  There was nothing to prevent the plaintiff from having pursued with the main action whilst the summary judgment proceedings were pending.

15.  The Official Solicitor now has been representing the plaintiff for a period in excess of a year.   No doubt there has been an inability to obtain instructions from the plaintiff consequent upon her health but the purpose of the appointment is so that decisions may be made in the plaintiff’s best interests without the necessity of obtaining her consent.  

16.  On the evidence before me no such decisions have been made, nor has the main action progressed other than in accordance with orders of court:  on that evidence, more attention has been devoted to quibbling than to pursuing the action or resolving it – see, by way of example, paragraphs 11 to 15, 19 and 20 and 42 to 44 of the affirmation dated 11 October 2006 by the Official Solicitor.

17.  During both periods the striking characteristic of the manner in which the main action has been conducted is the lack of a sense of urgency or purpose.  I am satisfied that the plaintiff has failed to diligently pursue the main action  in such a manner as is required where a Mareva injunction has been granted.  On this basis alone, I would have made the order.

Prospects of success

18.  In order to obtain the relief sought the plaintiff needed to show a good arguable case in the main action.  Inherent in demonstrating that fact is the issue of prospects of success in the main action.  Given the lapse of time since the injunction was granted, I apply the same test at this stage when deciding whether the injunction should continue.

19.  There is no dispute that the plaintiff paid over to the defendant the moneys which are the subject matter of the action.  What is in dispute is did the defendant give certain moneys as gifts to the plaintiff and, if so, why did she transfer those moneys back to him, together with moneys of her own?    How that question will be resolved will depend to a large extent on the oral evidence of the plaintiff and the defendant and the question of credibility. 

20.  It is here that the plaintiff runs into, on the face of it at this stage, real, practical difficulties, possibly through no fault of her own.  On 18 December 2004 the plaintiff was admitted to Kwai Chung Hospital as a result of an apparent suicide attempt.  Since that date she has remained mute.  Whether that condition is, in fact, a result of a medical condition or whether it is simply a decision on the part of the plaintiff not to communicate is unclear on the medical reports before me.

21.  A medical report dated 21 March 2006 which outlines her medical history continues

When she was first seen, she stayed in bed, covered her head with a blanket, actively refused interview.  She remained mute and did not attempt to communicate…She was diagnosed to be suffering from depression; another possibility being dissociative stupor.  She is considered to be a mentally disordered person.

On 13 February 2006 a man from a law form handed a letter to [the plaintiff], but she refused to receive. A few days later, she wrote to us sensibly that she would not acknowledge any letters from law firms, as she was a patient and she had no ability to process the letters. She did not let relatives process the letters on her behalf either.   She refused to receive any subsequent letters, and she signed allowing us to return the letters.

22.  In a medical certificate dated 25 May 2006 in support of an application under Part II of the Mental Health Ordinance, Cap. 136,  a Dr CHEN Kin-shing expressed the opinion that the plaintiff is capable of appreciating her surroundings, that “The prospect of mental recovery was unsatisfactory.” and that “It would be most desirable if she would communicate with us…”.  The latter observation suggests that Dr CHEN regarded the plaintiff as being capable of communication should she so wish.

23.  In a further certificate in those proceedings, Dr CHAN Kwok-ling noted that

She actively refused to involve in anything related to legal proceedings of her divorce though she might communicate with others by writing or gestures on other matters.

24.  In a report dated 18 November 2006 the following appears:

She was willing to communicate with us by gestures and head movements and with her relatives by writing.  She made vocal sound at times too though she did not speak.  She expressed that she did not want to be bothered by the legal issues, including meeting the solicitors and receiving any letters.

…On 11 June 2006, [the plaintiff] was allowed to be absent [from hospital] for hair cut …Since 24 July 2006, [the plaintiff] was more keen to communicate by gestures, and she started to communicate with her case doctor by writing… She was allowed to be absent [from hospital] on 9, 10 and from 22 to 23 September 2006… Her relatives opined that she had improvement in mental state…. [the plaintiff] was allowed to be absent…from 6 to 8 and 28 to 30 October 2006…She was last seen by us on 16 November 2006…There was no evidence of mood disturbance or psychotic symptoms. We do not recommend her to attend court hearings on her issue of divorce because she did not bother with the legal issues, and we anticipate that she will neither speak nor communicate in the court hearings.

25.  The most recent report is dated 2 March 2007.  That relates:

[The plaintiff] was allowed to be absent…again from 18 to 20 November 2006, from 21 to 26 December 2006 and from 30 December to 2 January 2007 to be with her relatives.  [The plaintiff] refused to be a voluntary patient…Arrangement was made for her to attend the Mental Health Review Tribunal…on 5 February 2007…[the plaintiff] did not speak or attempt to communicate by any means in the Tribunal.  The Tribunal was satisfied that [the plaintiff] was no longer acutely ill and her latest mental condition did not warrant further compulsory detention in hospital for treatment…[the plaintiff] still refused to be a voluntary patient…she accepted the idea that she would stay [in hospital] as an informal patient.

…She was last assessed…on 1 March 2007.  She did not bother with the legal proceedings, and she let solicitors act on her behalf…There was no problem with her mood, and she denied any psychotic symptoms or suicidal ideas.

…[the plaintiff] did not bother with the legal proceedings, and did not bother that someone was appointed and her capital would be resorted to.  Hence it would be hard to simply say that [the plaintiff] was just unwilling to deal with the legal proceedings.  We believe that there was unresolved psychological problem which prevented [the plaintiff] from speaking normally and acting normally to carry on her usual daily life activities.  We anticipate that [the plaintiff] will neither speak nor communicate in the court hearings.  We opine that [the plaintiff] is mentally unable to deal with the legal proceedings.  We cannot predict when [the plaintiff] will be in a position to deal with the legal proceedings, but we hope that [her] mental condition…will improve further with time and interventions. [Emphasis supplied]

26.  The theme which recurs in the reports is the plaintiff’s stance that she will not be “bothered” with matters relating to her legal affairs, despite all other progress which she is recorded as making.  There appears to be no change in that attitude, whatever may be the cause of it, despite some 16 months of treatment – nor is there any confidence expressed by those treating her that that attitude will change. 

27.  In a matter where the outcome of an action will substantially depend upon the oral evidence of the parties, the unwillingness or inability of one of them to be concerned with the proceedings and, thus to testify, obviously must affect fundamentally that party’s prospects of success.  The Official Solicitor in an affirmation dated 11 October 2006 states that “By reason of her mental conditions…the plaintiff is not in a position to make an affirmation on her own…”

28.  On the evidence presently before me unless the plaintiff is able to testify at trial her prospects of success must be limited in the extreme.

Risk of dissipation of assets

29.  Jiangmen Chao Cheng Thread Co., Ltd v NG Siu Lun and Another CACV47/2000, related to a dispute between spouses, similar to the instant matter.  The Court of Appeal allowed an appeal against the grant of a Mareva injunction on the grounds that there was insufficient evidence that there was real risk of dissipation or concealment of assets.  Rogers, JA., observed

…it can only be emphasised, yet again, that a Mareva injunction is a very serious matter and the implications of a Mareva injunction are far wider than ordinary injunctions.

30.  The plaintiff continues to rely upon an act of the defendant to which she referred when launching these proceedings as the basis for showing that there is a real risk of dissipation of the assets, absent the injunction.  I am entitled to revisit those allegations in arriving at my decision.

31.  The act upon which she primarily relies is an instruction given by the defendant to HSBC Bank International Limited to change the nature of a fixed deposit account.  She deals with this in detail at paragraph 30 of her first affirmation dated 7 February 2004 in these terms:

When I called Mr Mak on the afternoon of 6 February he confirmed that the Intended Defendant did see him at the bank and gave instructions to transfer the US$1.4 million from the fixed deposit the a savings account at Jersey when it matured on 9 February. He wanted to transfer US$60,000.00 to a third party’s account with Bank of China.  Mr Mak told him that since the bank had already been informed by me on 3 February that the Intended Defendant had deceived me…the banks could not transfer the money to the third party until receiving advice form its legal department in Jersey, Channel islands.  Mr Mak said that the then Intended Defendant cancelled the instruction to transfer the US$60,000.00.  But Mr Mak further told me that since the Intended Defendant was already the owner of the money at the offshore account…he could give instruction at any minute now to the bank to break the deposit account and transfer the money anywhere he wanted. [Emphasis supplied]

32.  The plaintiff thus positively asserts that she had contacted the banker concerned and had a discussion with him during which he furnished this information to her.  If that in fact occurred it would obviously be  a factor to which substantial weight should be attached. 

33.  That this is not what happened appears from a subsequent affirmation dated 25 May 2004 by the plaintiff.  At paragraph 25 she asserts

I did not call Mr Mak myself.  My lawyer called him and told me of the conversation.

34.  Nowhere in that affirmation is the “lawyer” identified.  There is no supporting affirmation from that “lawyer” regarding this most fundamental of issues. 

35. Brink's Mat Ltd v. Elcombe [1988] 1 WLR 1350 (CA) is authority for the proposition that where there is non-disclosure - a position analogous to false disclosure -  the court has a discretion as to whether to order the immediate discharge of the ex parte order, or to continue the order or to make a new order on terms.

36.  Whether one personally has a telephone conversation of such a nature or whether the contents of such a conversation are related to one by a third party is not a matter which admits of error.  It seems to me to be naïve to suggest, as does the Official Solicitor in the affirmation dated 11 October 2006, that this does not matter.  In my judgment the plaintiff has been, and remains, less than frank concerning this vital aspect of the matter.

37.  Without deciding any question of fact, it is to be noted that the defendant acknowledged having given an instruction to HSBC Bank International Limited and has provided a detailed explanation of why he did so.  The Official Solicitor expresses the view that the defendant’s explanation for instructions given to Mr Mak is “incredible and shadowy”.  No sensible basis is given for this opinion, which appears to have been formed absent instructions from the plaintiff. 

Conclusion

38.  In the light of all these factors I was satisfied that this is a matter in which it is appropriate that I exercise my discretion in favour of the defendant.

39.  Upon the granting of the order setting aside the Mareva injunction the plaintiff's counsel made application that the effect of the order be stayed for a period of 21 days in order that the plaintiff's position could be considered. 

40.  No good ground was advanced for this application.  Stay of the effect of an order is neither automatic nor granted simply upon request of an affected party.

41.  In particular, nothing was placed before me to show that there was any greater risk of dissipation of the assets by the defendant than had originally been relied upon when the injunction was granted.  In my judgment and especially in the light of all the further information which is before me in the numerous affirmations which have been filed by both parties since the original grant of the injunction, the plaintiff falls woefully short of demonstrating nay real risk of dissipation of assets by the defendant. 

42.  I consequently refused the further application.