HCMP 1490 /2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1490 OF 2010

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BETWEEN

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D E C I S I O N

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1.  This is an application for a Mareva injunction. It is in respect of an alleged debt which is due by the defendant to the plaintiffs on what are called forward freight swap agreements, or “FFAs”. Those are little more than futures contracts which are not, as has been indicated in the application, intended to result in any freight moving, but are intended to result in the payment of differences between one party and another.

2.  The plaintiffs are locked in litigation with the defendant and they say that their case, which started in the middle of June in the Commercial Court in London, is that the defendant is liable to them, in respect of the first plaintiff in the sum of $10,385,973.89 and in respect of the second plaintiff $5,788,157.24, both being US dollars.

3.  A defence and counterclaim has been filed and the defendant avers that the grounds upon which the plaintiffs are claiming to be entitled to their money do not exist, because it says there was not an event of default.  It says, on the contrary, that it is owed some US$26 million by the first plaintiff and US$15 million by the second plaintiff.

4.  There has been a certain amount of skirmishing in this case, because the defendant then went and tried to arrest and did succeed in arresting two of the plaintiffs’ ships on the mainland.  They have been released on the basis that there was no ground for arresting the ships on the basis of these contracts.

5.  Although there is jurisdiction for this court to grant a Mareva injunction in these circumstances in aid of the UK claim, no application for a Mareva injunction has been made in the UK proceedings.  A worldwide Mareva injunction could have been claimed.  It could have been framed and certainly the bank which has been named, in my view, would have adhered to it, but the injunction could have been framed in terms that a further application would be made here.

6.  I do not see at the moment that it is right for this court to grant an injunction on the basis of assisting the UK court in these circumstances, given this is a case where there is clearly a large degree of factual dispute between the parties and I, for my part, do not see that the defendant has got a bad case at all.

7.  The plaintiffs’ case, in a nutshell, that there is an event of default, is based on three propositions.  Dealing with them in reverse order, the plaintiffs say that the defendant has not paid on demand the demands which the plaintiffs have made, but that is, I regret to say, just simply hauling themselves up by their own bootstraps and I disregard that entirely.

8.  The main ground is that the defendant has not paid the liquidator of another company, namely Pioneer Freight Forwarders Futures Company Limited BVI, but in respect of that, it is quite clear from a judgment which has been drawn to my attention that, at least from January 2009, that company, Pioneer Freight Futures Company Limited BVI, was in default itself, and it is quite clear that there are grounds for considering that it may well have been in default earlier than that in October 2008.  That is indeed what the defendant is saying in this case.

9.  Indeed, it is the defendant’s case in their pleaded case in London that in fact Pioneer owe them US$74 million.

10.  Finally, the other matter of default which the plaintiffs rely on is that Transfield has failed to pay sums due to its brokers in respect of the freight forwarding contracts trading.  The pleading is as bald as that.  It says:  “Transfield Futures has failed to pay sums due to its brokers in respect of its FFA trading, whether as they become due or at all.”  Well, the answer to that, not surprisingly, is in paragraph 16 of the defence and counterclaim.  “The allegation at paragraph 8(2) is embarrassing for lack of any particularity. Transfield Futures reserves the right to plead further to this allegation if and when it is particularised by the claimants.”

11.  Quite right.  In my view, the allegation is embarrassing.  Short of any evidence from the brokers, I would not consider that what has been suggested is correct.  Quite clearly people have running accounts with their brokers, and I have no doubt in this case that Transfield has running accounts with brokers and whether or not there are sums due at any particular time is clearly something which may occur.

12.  I am not satisfied that the plaintiffs’ case is necessarily that strong that it behoves me to grant an injunction on that basis alone.  The parties seem to me to be in an equal position and I am not satisfied that the circumstances make it necessary for this court to grant a Mareva injunction which, despite the arguments which have been put forward, are still regarded as a very serious type of injunction to be granted in any circumstances.

13.  Therefore, I am not prepared to grant it.