BEYONICS TECHNOLOGY LTD AND ANOTHER v. GOH CHAN PENG AND OTHERS

HCMP 1840/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1840 OF 2013

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D E C I S I O N

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Introduction

1. There are two applications in question.  The first is the application of the 1^st, 3^rd and 4^th defendants (respectively “Goh”, “Wyser Int’l” and “Wyser Capital” and collectively “the defendants”) to discharge the Mareva injunction (“the discharge application”).  It is opposed by the plaintiffs.

2. The other is the plaintiffs’ application for discovery of the bank records of the defendants’ bank accounts in Hong Kong (“the discovery application”).  It is opposed by the defendants.

Background

3. The plaintiffs commenced an action against the defendants in Singapore in July 2013, alleging (inter alia) that Goh (the former director and chief executive officer of the plaintiffs’ group of companies):

(a) received bribes for diverting the plaintiffs’ business to the bribe offeror;

(b) caused the plaintiffs’ fund to be paid to him unjustifiably;

(c) conspired to injure the plaintiffs

(“the Singapore action”).  The 2^nd and 4^th defendants were joined:

“… ancillary to, and in aid of the eventual enforcement of the claimant’s asserted rights against the defendant”:

TSB Private Bank International SA v Chabra [1992] 1 WLR 231; Dadourian Group International Inc v Azuri Ltd [2005] EWHC 1768 (Ch); Akai Holdings Limited & 16 Others v Ho Wing On & 19 Others HCMP 1722/2009 (24 September 2009), para 47.  The 2^nd defendant (Goh’s wife) is called “Lee” below.

4. Further, in the Singapore action, the plaintiffs sought ex parte from a Singapore judge (“the Singapore judge”), and on 26 July 2013 was granted, a worldwide Mareva injunction restraining the defendants from disposing their assets up to S$12 million (“the Singapore ex parte injunction”).

5. Based on the Singapore ex parte injunction, the plaintiffs applied also ex parte in Hong Kong for, and on 27 July 2013 (the day following the Singapore ex parte injunction) was granted, a Mareva injunction (“the Hong Kong ex parte injunction”).  The Hong Kong ex parte application was made expressly in aid of the Singapore action (pursuant to s 21M, High Court Ordinance (Cap 4)).  The Hong Kong ex parte injunction was later continued until further order.

6. The discharge application was brought about by the discharge of the Singapore ex parte injunction by the Singapore judge on 2 April 2014 after an inter partes hearing.  It should be noted that, at the same time, the Singapore judge ordered that the plaintiffs be at liberty to lodge caveats against 5 Singapore properties of Goh and Lee (“the Singapore properties”) until after trial of the Singapore action or further order (“the Singapore order”).

The discharge application

7. The principal issue which divides the parties is what the Singapore judge’s intention was when the Singapore order:

(1) discharged the Singapore ex parte injunction; and

(2) ordered the plaintiffs to have liberty to lodge the caveats against the Singapore properties.

8. On the defendants’ part, they argue that:

“… in discharging the [Singapore ex parte injunction] while granting leave to the Plaintiffs to lodge caveats against [the Singapore properties], the Singapore Court must have been satisfied that the value of the properties could adequately compensate the Plaintiffs’ claim to the extent it could be properly substantiated and there was no real risk that judgment would go unsatisfied” (para 11, defendants’ skeleton arguments).

9. On the plaintiffs’ part, they submit that the Hong Kong court’s power conferred by s 21M is engaged when:

(a) there is a good arguable case that the foreign proceedings (the Singapore action in the present context) are capable of giving rise to a judgment which may be enforced in Hong Kong; and

(b) the balance of convenience is in favour of granting an injunction to “ring-fence” the defendants’ assets to avoid the Singapore judgment being rendered nugatory (the requirement that there must be a real risk of dissipation of those assets is accepted).

10. Further, the plaintiffs submit that the Singapore order was made in the knowledge that the Hong Kong ex parte injunction had already been ordered and when it was still in place.  It can thus be inferred that the Singapore judge did not intend the Hong Kong ex parte injunction would be discharged despite the Singapore order.

11. One difficulty with knowing why the Singapore ex parte injunction was discharged (and “replaced” by the caveat) is that the Singapore court has not explained why it did so.  The defendants contend that this outcome shows that the Singapore judge must have been satisfied that the total value of the Singapore properties (which the defendants claimed to be about S$6.6 million) would provide adequate “protection” to the plaintiffs. They further contend that, implicitly the Singapore judge did not consider:

(1) the whole of the plaintiffs’ claim (of S$12 million) warranted the “protection” of an injunction or a caveat (but only to the extent of the total value of the Singapore properties);

(2) a worldwide injunction was warranted after the caveat had been lodged against the Singapore properties.

12. However, it is important here to consider what transpired at the hearing leading to the Singapore order.  A closer examination of the notes of hearing (signed by the Singapore judge’s personal secretary) (“the hearing notes”) shows that the outcome of that hearing could well have been the result of the parties’ out-of-court discussion, instead of a considered determination after full argument.  The following passages of the hearing notes (in time sequence) support this inference:

“… [Goh] could volunteer his laptop and mobile phone and computer for us to map … ” (plaintiffs’ counsel);

“First time hearing these proposals. Need instructions. Perhaps matter can be stood down” (defence counsel);

“(Discussions held on caveats by consent on [Goh’s] [the Singapore properties] and for forensic examination of his mobile phone and other electronic device)”

“Court : Stand down to 11.30 am for Counsel to verify facts and to take instructions.”;

“[Goh] and [Lee] agree to having caveats against [the Singapore properties].

If there is issue about filing of caveat, [Goh] and [Lee] will give written undertaking to dispose of [the Singapore properties].” (defence counsel);

“(1) Why have limited injunction plus the caveats? Then we might as well argue the Mareva injunction” (defence counsel).

13. Such being the case, I do not consider it appropriate to attach the weight which the defendants ask me to attach to the Singapore order.  In this connection, I also note that there was no discussion before the Singapore judge regarding the impact of the Singapore order on the Hong Kong ex parte injunction.

14. Looked at in such light, I rather consider it more appropriate to determine this application, not by drawing any inference about the Singapore judge’s alleged intention when making the Singapore order, but instead to bear in mind the plaintiffs have been afforded at least some “protection” by way of the Singapore order.

15. As regards whether the plaintiffs have established a good arguable case, both as regards the validity of the whole of its claim in the Singapore action, and as regards whether the Singapore action is capable of giving rise to a judgment which may be enforced in Hong Kong, the defendants have not put forth grounds other than those summarized in para 8 and 11 above.  Having considered the evidence adduced so far, I am satisfied that the plaintiffs have established such a good arguable case.

16. As regards “balance of convenience”, as the plaintiffs correctly point out, the Hong Kong ex parte injunction has been in place since July 2013 (about a year before this application, and more than a year before its hearing).  The defendants have not contended (whether by submissions or evidence) that irreparable damage had been (or would likely be) caused.  In fact, the Singapore order will likely result in the release of some of the defendants’ assets, which will likely enable them to pay for their legal and other expenses.

17. Such being the case, the “balance of convenience” is in favour of preserving the status quo since the Hong Kong ex parte injunction.

The discovery application

18. This is brought pursuant to s 21, Evidence Ordinance (Cap 8), and RHC Ord 38 r 13.

19. The first ground of objection put forth is in gist that both of the above provisions are similarly expressed to require a pending Hong Kong proceeding (“for any of the purposes of such proceedings” in the case of s 21, and “… for the purpose of that proceeding” in the case of Ord 38 r 13).  With the discharge of the Hong Kong ex parte injunction, there is no pending Hong Kong proceeding on which the discovery can be based.

20. The other grounds of objection put forth are:

(a) the Hong Kong ex parte injunction is not granted for the purpose of a Hong Kong proceeding, but merely in aid of the Singapore action;

(b) the plaintiffs’ application for discovery in the Singapore action having been dismissed by the Singapore courts, it is an abuse of process to bring this application.  The fact that the discovery sought in this application is different from the discovery application in Singapore is irrelevant.

21. I consider the above arguments to have no merit.  The first ground of objection falls away with the conclusion that the discharge application has no merit.

22. As regards para 20(a) above, that a discovery application is made merely to aid a foreign proceeding is not a valid ground for refusing it.  The language of the relevant statutory provisions (para 18 above) does not prohibit such a course, especially when there is in place a “substantive” order such as a local Mareva injunction, to which a discovery order can attach.  As observed in Pacific King Shipping Holdings Pte Ltd (in compulsory liquidation) v Huang Ziqiang HCMP 2464/2012 (4 April 2014):

“… there is a real prospect that the information sought [if and when discovered] will lead to the location and preservation of assets which are the subject of the substantive proceedings in Singapore …

… The plaintiff’s application is made in order to preserve assets or realistically lead to the discovery of assets covered by the freezing injunctive order”

(para 51 and 52 thereof).

23. As regards para 20(b) above, I agree with the plaintiffs’ argument that there is a difference between the discovery application and that sought in Singapore:

(1) the defendants affirmed in the Singapore action that there were no further document to discover (the Singapore application was for specific discovery), and that those documents which had not been discovered were irrelevant;

(2) the documents sought herein are bank records, which can reveal the particulars of fund movements (such as the identity of the recipients); they can also reveal the extent of the alleged bribe and its disposal.

24. Finally, none of the banks concerned has raised objection to the discovery application, nor have the defendants contended that the discovery application is onerous or oppressive.

Conclusion

25. The discharge application is dismissed.  The discovery application is granted.

Other matters

26. The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order

27. There is no reason to depart from the usual rule that costs should follow the event (and the parties have not argued otherwise). There will accordingly be a costs order that the costs of both applications be paid by the defendants to the plaintiffs.

28. I consider summary assessment of costs to be appropriate.  The above costs shall thus be so assessed.  For this purpose:

(a) the plaintiffs be at liberty to lodge with court and serve a statement of costs within 7 days from today;

(b) the defendants be at liberty to lodge with court and serve a statement of objections within 7 days thereafter.