THE ADIRONDACK TRUST CO v. ALLIED MASTER INVESTMENT LTD

HCA 1167/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

court of FIRST INSTANCE

ACTION no. 1167 of 2009

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BETWEEN

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D E C I S I O N

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1.   I have before me two summonses in this case. One is for disclosure of bankbooks and records and the other is a summons for what might be regarded as conventional discovery in an action such as this when an ex-parte Mareva injunction is granted.

2.   This action commenced with a Mareva injunction which was granted by Deputy High Court Judge Line on 11 May. It stemmed from a transfer from the plaintiff - which is a bank in Singapore - to the defendant of a sum of US$495,460.90. That came about because the bank had mistakenly transferred that money because it thought that the banker’s draft which had been deposited in its account was a genuine document. It turned out not to be a genuine document.

3.   The action has proceeded relatively fast. There is a statement of claim in which that is set out. There is a defence. The defence is that the defendant says that it actually had a contract to supply cotton indigo real wax for just over a half a million US dollars and this money was treated as being the balance of the money that was payable under that contract. As a result, they let go of the goods. That is the essence of the defence.

4.   But what the plaintiff says now as regards the banker’s books disclosure is that they need this disclosure because it has reason to believe, not that there has been any breach of the Mareva injunction order by the bank in respect of whom the order is sought, but because it has reason to believe that money has been deposited into those accounts. That might well show that the defendant has been paid for those goods by another source. What the plaintiff says is that the purchaser of those goods might also have paid the money, so that that would knock out the defence. Well, that seems to me to be a relevant consideration. Whether or not it ends up in practice I do not know and nobody knows. But I am prepared to make the section 21 disclosure order on that basis.

5.   I turn then to the more general order which is sought, that is that:

“the defendant do, within seven days of the service of the order, make and serve on the plaintiff’s solicitors an affidavit disclosing the full value of its assets within Hong Kong, identifying with full particularity the nature, value and details of all such assets and their whereabouts, and whether the same be held in its own names or held jointly or held by nominees or otherwise on its behalf and without prejudice to the generality of the foregoing, specifying:

(a) the identity of all bank and other accounts in the sole names or jointly held or held by nominees or otherwise on its behalf and the sum standing to its credit in such accounts; and

(b) any real property, assets, money or goods owned by it and the whereabouts of the same, and the names and addresses of all persons who have or may have in possession, custody or control of all assets money or goods at the date of the order made.”

6.   Quite simply, given the nature of the plaintiff’s case, which is a proprietary claim, I consider that the plaintiff is entitled to that. I have been shown the case of RACP Pharmaceutical Holdings Limited v Li Xiaobo, in respect of which I was one member of the Court of Appeal deciding that, it is CACV 139/2007. That case though involved something which was simply a claim for damages based on misrepresentation and otherwise, but it was not a proprietary claim. The present case which I am dealing with now is a proprietary claim and I consider that these are standard orders.

7.   Mr Carolan has also said that he would be entitled to this discovery for the purpose of seeing whether this action is worth the candle, in other words whether the defendant has got sufficient funds to make it worthwhile proceeding with the case. It is not a basis upon which I would grant the order and I leave that open as far as today is concerned and I can say simply that this is standard discovery for the purposes of a Mareva injunction based on a proprietary claim.

8.   There is only one matter with regard to the orders sought, that the plaintiff seeks an order that unless the defendant complies with the order it should be barred from taking any further steps in the action and defending the action. I will hear the parties on that, but that is not an order which I would make at this stage without a great deal of persuasion.

(Discussion re orders sought and costs)

9.   Costs as per summons.