VINCY ENGINEERING AND TRANSPORTATION CO. LTD. v. WORLD UNION DEVELOPMENT LIMITED AND ANOTHER

1986, No. 4456

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

_____________

_____________

RULING

_____________

1. This matter comes before me for continuation of two injunctions granted ex parte to the plaintiff by the then duty judge. The injunctions granted fall into two parts. The second part of the injunctions were proprietary in form. They restrained the defendant from selling or disposing or parting with possession of a quantity of carpet. Rightly, this morning, it has been conceded by counsel for the plaintiff that those injunctions are insupportable. They are insupportable for a number of reasons. They are insupportable first because there was no claim in the writ for any such injunction. The total claim in the writ was a damages claim alleged in conversion. Secondly, they were insupportable because the writ itself showed that there was no right of property in the plaintiff in respect of these carpets. The carpets were said to have been sold by the plaintiff to a partnership.

2. It is difficult from the pleadings to tell whether the partnership was a combination of plaintiff and defendant, or whether the defendant company was being used as the partnership corporate entity, because the partnership was said to be oral and to have been dissolved orally. It is perfectly obvious that neither of those points was properly put before the duty judge or he could never have granted these injunctions in this form.

3. By way of substitution it was suggested that the injunctions should be varied to apply to the proceeds of sale of these carpets. This is a totally unworkable form of relief. It would mean that the partnership on the plaintiff's pleadings, having existed and having been disssolve, this partnership property can be sold by the surviving partner, but he has to put all the proceeds of sale into some bank account and cannot discharge any of the proper costs of bringing about that sale. It is an attempt by way of injunction to produce a quasi unilateral receivership where you can dispose of the goods but you cannot discharge any proper expenses. One of the troubles with partnerships when the partners fall out and you have got partnership properties, is how it should be disposed of. If the parties are sensible they come to some working arrangement whereby one or other disposes of it on a certain agreed terms or on certain minima, because receivers are all expensive people. But a receivership or its equivalent by way of agreement is in practice the only way out that I am aware of.   The sort of order which was proposed here is plainly unworkable and is not a way out at all.

4. That leaves the injunction which was originally granted in Mareva terms. This operated to restrain "the withdrawing or disposing or parting with or otherwise dealing with the money or any part thereof contained in or deposited with the 1st defendant's current/savings/deposit account (a number is given) with the Chiu Yue Bank Corporation" of a particular address. It said that that was the 1st defendant's banking account. This paralysed the defendant's banking facilities. It is very difficult to envisage any circumstances where an injunction in those terms would ever be justified. Today, for the plaintiff, Mr Chong says he does not want to put the plaintiff out of business which was what this injunction does. But he is quite unable to offer any sort of amendment to an injunction in those sort of terms. The only way in which you can formulate an injunction against a bank account which does not put somebody out of business is to limit it in some way or other, and usually by reference to some global sum. No such limitation can be put forward, or has been put forward in this case.

5. If one looks further in this, no basis, as far as I can see, has been properly made out for any Mareva injunction at all. Indeed, this whole litigation bears the hallmarks of a habit, which is all too prevalent in this jurisdiction, of a party who thinks he has got a good claim, rushing in for ex party relief to obtain some tactical advantage, and I have often thought in the hope of putting himself in the best negotiating position. I have a strong personal feeling that altogether too many of these applications are granted. This is one which, with the greatest respect to the duty judge, in my judgment should never have been granted.

6. There is no proper evidence here to show that in the context of the Mareva cases this plaintiff has a good arguable case which is the first requirement. The whole thing is in a mess in the Statement of Claim, which is put in a whole series of alternatives. It is a mess in the affirmation, and the heart of it is an allegation of an oral partnership which seems to have come into existence over a prolonged period on the vaguest possible terms, and was orally dissolved, at one place it was said by one party and in another by another. It could not be more vague.

7. As for the allegations about removal of assets from the jurisdiction this is little more than gossip from some employee, and what is described as a "casual conversation" last May. That is the sole foundation of that allegation. The gentleman concerned apparently now disputes it, but there was nothing of any sort that can be called solid evidence being advanced. This came down today to an allegation of dissipation for selling carpets below cost. That on examination collapsed when one looks at the figures.

8. So in my judgment there was never a case for a Mareva injunction in this case at all. The only proper order I can make is that both these orders are to be discharged forthwith. The costs both on the ex party proceedings and before me are to be to the defendants in any event.