SOCIÉTÉ GÉNÉRALE, SINGAPORE BRANCH v. INTER PACIFIC GROUP PTE LTD AND OTHERS

HCA 1617/2019

[2019] HKCFI 2405

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1617 OF 2019

________________

________________

________________

D E C I S I O N

________________

1.  P is a bank. It is its case that as a result of a conspiracy amongst D1 to D7, P has been defrauded into providing banking facilities to the IP Group (which term P uses to denote D1 to D3). The alleged business transactions involved D2 receiving orders for marine bunkers and fuel oils from its customers, and then placing back‑to‑back purchase orders with D6. D2 then paid D6, with the facilities obtained from P, by making payments into a specific account D6 holds with the Bank of China (“D6’s BoC A/C”). P says that the underlying business transactions said to have been financed by those facilities in fact did not exist. Forged documents and instruments were employed to give the impression that they did. The monies were routed back to the IP Group for its own use. P further says D4, a director of D2 and sole director of D3, has made clear admission to P about the fraud. Loss to the extent of USD89.8 million has been claimed (the “Facility Funds”).

2.  On 30 August 2019, P obtained a Mareva injunction/ preservation order against D1 to D7.  When continued on 6 September 2019, discovery in aid was also ordered.  I collectively call them the “1^st Injunction”. On 6 September 2019, P also obtained a banker’s book order pursuant to s 21 of the Evidence Ordinance against the Bank of China (the “BoC Disclosure Order”) in respect of the account of D6’s BoC A/C. 

3.  Information disclosed by D6 and D7 as compelled by the 1^st Injunction reveals that some of the Facility Funds had been transferred from the D6’s BoC A/C to, relevantly, D10 (USD44.85 million odd), D8 (USD24.96 million odd), D9 (USD6.65 million odd) and D3 (USD3.05 million odd). Armed with those disclosures, P obtained from Deputy Judge MK Liu on 13 September 2019 a further Mareva injunction/preservation order against D8 to D10 (the “2^nd Injunction”).

4.  Before me as the Summons Judge, P has taken out a number of Summonses:

(a)  against D8‑D10, the inter partes return date Summons filed on 16 September 2019 for:

(i)  variation of the 2^nd Injunction, in terms of the addition of discovery in aid against D8 to D10;

(ii)  continuation of the 2^nd Injunction as amended;

(b)  against D4‑D7, summons filed on 17 September 2019 for:

(i)  enforcement of the of discovery in aid against D4, D6 and D7;

(ii)  leave to release information and documents disclosed or to be disclosed by D4, D5, D6 and D7 to the police;

(iii)  leave to release information and documents disclosed or to be disclosed by BoC to the police;

(c)  against the BoC, summons filed on 17 September 2019 for enforcement of the BoC Disclosure Order;

(d)  Summons dated 19 September 2019 for extension of time of 12 weeks to file its Statement of Claim;

(e)  Summons dated 19 September 2019 for amendment of the 1^st Injunction.

Continuation of the 2^nd Injunction

5.  Mr Maurellet SC appears for D8 and D9.  In short, he objects to the continuation of the 2^nd Injunction.  He submits that no risk of dissipation has been demonstrated.  He points to the fact that the parent company of D8 and D9 is a profitable listed company (the “Listco”), and there is nothing to suggest that P would be left with an empty judgment.

6.  I have considered the evidence.  I have considered in particular the admissions said to have been made by D4 to representatives of P, and the bank statements produced by D6 and D7 showing that substantial sums apparently out of the Facility Funds have been transferred from the D6’s BoC A/C to D8 and D9.  P has in my view demonstrated a good arguable case to be tried.

7.  The evidence demonstrates a deliberate fraud on P with forged documents over a protracted period of time.  Risk of dissipation can be inferred.

8.  I appreciate that the 2^nd Injunction was only served upon D8 and D9 on 17 September 2019.  I however note the substantial sum said to have been transferred to D8 and D9 (USD24.96 million odd and USD6.65 million odd respectively).  The underlying business transactions should have been substantial.  It should not have been difficult for D8 and D9 to at least inform the Court in broad terms what those businesses were.  They did not.

9.  The main basis of the objection is that D8 and D9 are the wholly owned subsidiaries of a listed company.  Albeit wholly owned, D8, D9 and their parent company are all separate entities.  No legal obligation has been demonstrated to me on the part of their parent company to honour any judgment that P may obtain against D8 and D9.

10.  In addition, I note the 2018/2019 Annual Report of the Listco.  Its profit (apparently gross) for 2019 was HK$100,466,000.  The comparative figure for 2018 was however a loss of HK$80,077,000.  Its total equity is HK$229,210,000. Hence, even by the parent company’s financial status, the total sums said to have been received by D8 and D9 (USD31.6 million, or about HK$246 million) are very substantial.  As I have observed in Tiger Resort v Kazuo Okada & Ors [2019] HKCFI 1415, going hand‑in‑hand with the question of adequacy of damages is whether the defendant is good for the money.  The evidence suggests that in the present case, even the Listco is not.

11.  Mr Maurellet submitted that D4 is now no longer a director of the Listco, and that according to the descriptions of the directors as one can find in the Annual Report, some of the directors are of reputable background, and there is nothing which suggests that they may effect any “dodgy transfers” in dissipation of the assets.  At the moment, I know very little about the board.  It should also be noted that we are dealing with a proprietary claim, and that it is cash we are concerned with, which is by nature liquid.

12.  Having considered all the evidence, and on the state of the evidence before me, my view is that the 2^nd Injunction should be continued. 

13.  I proceed to hear parties on any variation of the terms and the other Summonses.