LY ECO LTD v. THOMAS KARIM BELLEHCHILI

HCMP 548/2018

[2020] HKCFI 2538

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 548 OF 2018

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R E A S O N S   F O R   D E C I S I O N

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1.  Earlier today, upon the inter partes application of the abovenamed defendant, I discharged the ex parte Mareva injunction granted by Anthony Chan J on 13 April 2018 against the defendant, as continued by myself on 20 April and 25 May 2018 (“Injunction”) and dismissed the originating summons issued herein on 16 April 2018 (“OS”) with costs against the plaintiff. I now give reasons for such decision.

2.  The Injunction was granted in pursuance of s 21M of the High Court Ordinance (Cap 4) in aid of certain French proceedings by the plaintiff against the defendant (“French Proceedings”). 

3.  By an inter partes summons taken out herein on 22 September 2020 (“Discharge Summons”), the defendant applied for the discharge of the Injunction and the dismissal of the OS for, inter alia, the reason that the French Proceedings had come to a final conclusion, apparently on jurisdictional ground, against the plaintiff on 30 January 2020.

4.  The plaintiff accepted that the Injunction cannot be sustained once the French Proceedings, in aid of which the Injunction was in the first placed applied for and granted, had fallen away.  It nevertheless sought to have the Discharge Summons adjourned because the plaintiff has in the meantime issued against the defendant in the High Court of Hong Kong a writ of summons and an inter partes summons for a fresh Mareva injunction under s 21L in support of such new local proceedings (“New Injunction Summons”).  I was told that the New Injunction Summons is returnable before the Summons Judge on 30 September 2020, i.e. next Wednesday.   It was impressed upon this court that an immediate discharge of the Injunction before the determination of the New Injunction Summons would leave the defendant free in the meantime to dissipate what assets he has in Hong Kong and render the New Injunction Summons nugatory to the great prejudice of the plaintiff.

5.  I am not unappreciative of the plaintiff’s predicament.  However, I am afraid I have no sympathy.  The difficulty the plaintiff now faces is entirely of its own creation. 

6.  The French Proceedings formed the substratum of the Injunction.  The resolution of such proceedings against the plaintiff means the loss of the substratum of the Injunction.  Upon the dismissal of its appeal in France, the plaintiff could and should have of its own volition promptly informed the court of such outcome of the French Proceedings and consequently the loss of the substratum of the Injunction.  Where appropriate (e.g. when there has not been a determination on the merits in the foreign proceedings), a plaintiff who finds itself in such a position may institute local action and apply for another Mareva injunction in aid of the home proceedings under s 21L.  Had the plaintiff in this case acted properly, it could well have left no gap in its protection by making the application for the second Mareva injunction at the same time when it reported to the court the outcome of the French Proceedings.

7.  Instead, in breach of its duty to proceed with these proceedings diligently and expeditiously, the plaintiff has taken no further step after securing the continuation of the Injunction until the final determination of the OS or further order.  It has certainly not brought the OS to a final substantive hearing.  It chose to lie low even after losing the French Proceedings.  In these circumstances, it does not lie in the plaintiff’s mouth to cry “prejudice” to appeal for the court’s indulgence in face of the Discharge Summons by the defendant.  The court strongly disapproves of such litigation strategy. 

8.  It is wrong in principle to allow an interim injunction to remain in place for any longer than it should be.  As stated by Bannister J in VTB v Nutritek International Corp, Claim no BVIHC (Com) 103 of 2011,unreported, 20 and 27 March 2013:

“ 5. The [English] proceedings in support of which the BVI Injunction was granted and continued having coming to an end, it seems obvious to me that there can be no justification for keeping it on foot. Mr Malofeev has an absolute right to have it discharged. There is no justification for making him wait until 28 May 2013, or any other date, to have his application dealt with, nor can there be any good reason for refusing to discharge the freezing order…an injunction granted in support of foreign proceedings must fall away as of right when such proceedings become abortive. The reason for this is that the juridical basis for the grant of the injunction and, with it, the Court’s reason for granting it has fallen away. The point is incapable of further elaboration.”

9.  For these reasons, I discharged the Injunction and dismissed the OS with costs against the plaintiff this morning.