XCHRX BANK OF AMERICA, NATIONAL ASSOCIATION, CANADA BRANCH v. PANG WING WAH JOHNNY & OTHERS

HCCL 6/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 6 OF 2002

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D E C I S I O N

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1. I am hearing these applications as duty judge. I have before me two summonses that would be filed today by the 1st, 2nd and 7th defendants seeking to vary a Mareva injunction granted by Stone J on 25 January 2002 as amended by Sakhrani J on 1 February 2002 concerning disclosure of information by disclosing to the plaintiff the information required to be disclosed in a sealed envelope attached to an affirmation not to be opened by the parties to the action pending these defendants' application to discharge the injunction. These summonses have been served on the plaintiff's solicitors who have appeared at this hearing.

2. I wish to say at the outset that this is not a proper way of making an application to a duty judge. Applications to a duty judge should only be made in cases of genuine urgency, not in the situation where the urgency arises out of one's own making. Here, the 1st, 2nd and 7th defendants were served with the injunction on 26 January 2002. They would have known that part of the order for disclosure must be complied with by 9 February 2002. The defendants should not have left it to 6 February to write to the plaintiff's solicitors seeking their agreement if the information required to be provided could be put in a sealed envelope.

3. That said I turn to the arguments addressed to me by Mr Thomson who appeared for the defendants and by Mr Lamplough who appeared for the plaintiff.

4. The first point I should address is the point taken by Mr Lamplough that this application should not be entertained because it is res judicata. The injunction was granted on an ex parte application by Stone J on 25 January with a return date on 1 February 2002. On that day, the parties appeared before Sakhrani J and these defendants sought to vary paragraph 2 of the injunction regarding the disclosure of information. They succeeded to some extent and the injunction was amended.

5. It was submitted by Mr Lamplough that the defendants should not be allowed to make a further application to vary paragraph 2 when they had already applied before Sakhrani J. This would be tantamount to relitigating the matter.

6. I was referred by Mr Lamplough to the Court of Appeal decision in Chu Hung Ching v. Chan Kam Ming and Others [2001] 1 HKC 396 in which reference was made to the Canadian decision of Pocklington Foods Inc. v. R in right of Alberta (1995) 123 DLR (4th) 141 by Mayo VP. It would appear that the doctrine of res judicata would apply less stringently in interlocutory matters. I have some reservations if res judicata should apply here. I am not prepared to rule against the defendants on this point.

7. The next matter I should address is whether the balance of convenience comes down in favour of the defendants in varying the injunction as sought.

8. I have taken into account three matters. Firstly, I ask myself if the position has been altered in any material way when the matter was considered by Stone J and Sakhrani J. The answer to that must be "no".

9. There is no application for discharge of the injunction in Hong Kong or of the injunction obtained by the plaintiffs in parallel proceedings in Ontario on 18 January 2002. This is a case in which the plaintiff claims that it had been defrauded under a complex scheme involving kickbacks to its employee who is the 3rd defendant in these proceedings and the sum involved is Canadian $45 million.

10. The 1st defendant has given some response in his affirmation which was prepared in support of the present application. He denies he has committed any fraud but it must be said that this denial on affidavit at this stage is a bare denial. He gives some explanation in his affirmation why he is unable to put together a case to discharge the injunctions obtained against him and he has promised to explain in detail at a later stage when he has the available information. He admits that payments had been made to the 3rd defendant but claims that these payments were made as consultancy services provided by the 3rd respondent. He has however not condescended to particulars or provided any documents in support.

11. The second matter I have taken into account is that a disclosure order in a Mareva injunction is a very useful part of the order to a plaintiff in practical terms. If proper disclosure is made and if further assets should come to light, a plaintiff would be in a position to make a further application for an injunction or an attachment to prevent the further dissipation of assets and that is essential for the effective operation of a Mareva injunction.

12. The third matter I have taken into consideration is the likelihood of dissipation of assets. On the available information, there is nothing to persuade me that the risk of dissipation of assets would be any less as compared to the situation considered by Stone J.

13. In the 1st defendant's affirmation, he stated that he has not dissipated assets in Canada. No mention is made regarding his assets in Hong Kong. The plaintiff's solicitors have complained that they have not been told of a property in Tregunter Tower that has been put on the market with a sale price of HK$15 million. The 1st defendant has paid mortgage repayments for this property, which is registered in the name of a Hong Kong company with two Hong Kong companies as shareholders. I am told by Mr Lamplough that these Hong Kong shareholders are owned by two BVI companies. Mr Thomson informed me that the property has been put on the market before the injunction was obtained. But that in my view is neither here nor there because the plaintiff's solicitors were not told about this after the injunction was served on the defendants.

14. Taking the above matters into account, I am of the view that the balance of convenience comes down firmly in favour of the plaintiff. I am also reminded that the plaintiff is a substantial bank registered and licenced in Hong Kong and that it has given the usual undertaking as to damages in the event that the injunction was wrongly obtained and that the defendants have suffered some loss and damage as a result.

15. For the above reasons, I dismiss the application made by the 1st, 2nd and 7th defendants. I will hear the parties on costs.