A.C. AGROBIOLOGICAL CORPORATION AND ANOTHER v. BUCK SALES LTD AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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DECISION

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1. I have a number of summonses before me, upon which I have been addressed most helpfully by Mr. Kaplan. Unfortunately Mr. Barlow, who was retained by the 1st plaintiff, is detained in another Court and I have been unable to hear any argument from him. Mr. Roome feels considerable embarrassment about endeavouring to address me on the subject at all. So I have had to do the best I can having heard only argument from one side. But that is net to be put against the 2nd plaintiff.

2. The first summons in point of time is, the 1st plaintiff's summons to strike out Mr. Justice Rhind's ex parte order joining the 2nd plaintiff in this action as 2nd plaintiff as having been brought about by material non-disclosure. That summons was taken out on 20th August. It first came before me on 28th August, when I remember being pressed to make an order then, which I declined to do. The most remarkable feature about that summons is that it was issued some fortnight after the execution by a gentleman who was described as the 1st plaintiff's attorney, and who produced a power of attorney, an Austrian lawyer, the execution by that gentleman of an assignment in effect of the 1st plaintiff's cause of action in this case.  There are various consequential promises by the 1st defendant to give all possible aid to the 2nd defendant in the suit. It really is astonishing, first, that the summons is issued in the face of that document; and secondly, that in the light of my order for directions on that occasion, giving leave to the 1st defendant to file evidence, none has been filed. No explanation has been offered by the 1st plaintiff of their conduct in any shape or form in this litigation since they executed that assignment. I am bound to say, it seems to me, that this calls for some explanation. As to this the 1st plaintiff's summons to strike out, it seems to me to have no basis at all. Likewise there does not seem to me to have been any material non-disclosure at all. The step the 2nd plaintiff then took to have themselves joined as 2nd plaintiff in this action has since been shown to be wrong, because instead of marching hand in hand with the 1st plaintiff in the suit, they are now very much at loggerheads with them. But that is not something which the 2nd plaintiff can be criticised for not realising at the time they made their application to Rhind, J. So that summons, stands dismissed.

3. The next summons is the 2nd plaintiff's application to be joined as a 3rd defendant, in the light of the differences that have now emerged between the present 2nd plaintiff and the 1st plaintiff. Again having looked at this matter as best I can, I cannot see any possible objection to that course. It is essential for both ACA, as I shall call the 1st plaintiff, and CENTRO, as I shall call the 2nd plaintiff, to continue to be parties in this action. They plainly cannot continue to be co-plaintiffs and therefore they must be on opposite sides of the fence. The matter, it seems to me, is the reverse of the situation where there is an argument between assignor and assignee, and where the one party suing, on failing to obtain the consent of the other, has to join that other as a co-defendant. I can see no objection to the principal relief asked for by the summons of the 27th August. Therefore I make an order under paragraph 2 of that summons in a slightly amended form which is that "the 2nd plaintiff hereafter do cease to be 2nd plaintiff and do become 3rd defendant in the action".  Paragraph 3 of the summons asks for disclosure. That seems to me a proper order to make and I make it in those terms. Then a number of directions have been sought. I think I shall preface these directions by saying I make the following directions in the action in substitution for the directions originally made by Mr. Justice Macdougall on 26th July which directions were totally proper at the time but are now completely out-of-date. The directions that I make are as follows:

4. There is an obvious problem about service upon the two existing defendants. They were both originally represented by solicitors but those solicitors came off the record on 3rd September last. As far as the 1st defendant Buck Sales is concerned it has not got any registered office in Hong Kong, or any place in Hong Kong at which service can properly be effected. But a gentleman by the name of Joffe has put an affirmation on the file already, asserting a substantial interest in this Company.  He has provided the 3rd defendant's solicitors with an address in Johannesburg, so I direct that service on Buck Sales Ltd., the 1st defendant, be effected by posting any document by prepaid registered post to Mr. Joffe at P.O. Box 84513, Greenside, Johannesburg 2034, South Africa, and that service be deemed to be effected three days after the date of such posting.

5. The same problem arises with Mr. Maxwell/Morringer as he apparently goes under both names. In his case Centro, the new 3rd defendants, an Austrian Company, have provided their solicitors with an address in Austria for this gentleman. Austria was his original home or his residence before he passed fleetingly through Hong Kong. As far as he is concerned likewise I shall direct that service on him be effected by prepaid registered post addressed to Humphrey Bernard Maxwell and to Reiner Morringer at Hessen Platz 8, A4020 Linz, Austria, I likewise direct that service shall be deemed to have been effected three days after the date of such posting. I think that deals with all the necessary directions in the action.

6. I then turn to the balance of the 2nd plaintiff's summons seeking a Mareva injunction which was not dealt with in the Court of Appeal. These are paragraph 2, 3 and 4 of a summons dated the 5th September 1985.  Paragraph 2 of that summons asks for relief by way of discovery against the 1st plaintiff and the 1st and 2nd defendants It goes to accounts at three named banks in Hong Kong, all of which have been affected by the transfers of the moneys which Centro claim as having been improperly removed from them by the 1st plaintiffs. The named persons in that paragraph are either human beings who have been connected at some time or other with the transfer of these moneys, or companies, limited and otherwise, who had been associated with those named persons, or otherwise associated with the transfers of these funds. I am satisfied that there is a powerful prima facie case that the moneys which came to Hong Kong via Singapore were moneys abstracted from Centro by fraud by a false discounting arrangement perpetrated in Europe, and that there is a strong prima facie case that Centro can claim to be able to trace these moneys. It is upon that basis that this application for discovery is primarily based. There is ample authority in my judgment for the view that the Court can make such orders on a Mareva application, and also in the exercise of its equitable Jurisdiction, in support of such tracing orders, in order to find out the present whereabouts of the moneys and also to find out information from third parties as to where the moneys have gone to.With proper safeguards those orders can be made not simply against the parties to the suit, but also against the innocent bankers whose facilities have been used or perhaps bused by the fradulent party. Those authorities I should perhaps refer to as being the decision of the Court of Appeal in England is Bankers Trust v. Shapiro (1980) 1 W.L.R. 1724; an unreported decision in a case called The Mediterranean No, 4019 of 1978, which was in fact cited with approval by Lord Denning in the Bankers Trust case, particularly a citation from the judgment of Templeman, L.J. and a decision given some years earlier by Robert Goffs in A & C which was eventually reported in (1981) 1 Q.B. 956.

7. Having looked at the papers before me and having had the benefit of hearing Mr. Kaplan's argument, I have no doubt at all that this is a proper case for the exercise by this Court of its discovery jurisdiction. I therefore make the order as asked in paragraph 2 of that summons save that for the period 1st April 1985 to 31st August 1985 I substitute the period 1st April to 10th October 1985. I make the order as asked in paragraph 3. Likewise I make the order as asked in paragraph 4 with this additional qualification or proviso that the order in paragraph 4 is made upon the 3rd defendant's undertakings:

Both those "requirements" are alluded to by Lord Denning in Shapiro at p. 1282.

8. Then there is the question of costs. Were it is submitted by Centro, the new 3rd defendant, first, that the 1st plaintiff's strike out application, should never be made, particularly in the light of the agreement of the 9th August; secondly, that the application to join should not have been resisted; and thirdly, that this is in any event a proper case for discovery. I suppose it might have been said that this plaintiff should have been assenting to discovery of the whereabouts of the funds which both it and the 3rd defendant now claim. I think there is great force in those submissions. I am somewhat embarrassed by the 1st plaintiff's conduct of this litigation since the execution of that assignment, without a word of explanation. I think that the proper order for costs here is that the costs of these three summonses should be the 2nd plaintiff's and now the 3rd defendant's costs in any event, and I include the costs that I reserved when this matter first came before me on the 28th August.

9. Finally I think the Mareva injunction granted by the Court of Appeal, and possibly the earlier Mareva injunction have at the moment only been granted until today which was the return date for the inter parte hearing. It seems to me that both these injunctions were, with respect to those who granted them originally, wholly properly made and are wholly necessary in this suit. I direct that both those injunctions are to continue until the trial of this action or further order; and I further to direct that they are to take effect from today as if they had been granted to the Centre Internationale as 3rd defendant and not as 2nd plaintiff. The intent of that direction is that the injunctions should continue as before in favour of Centro in their new capacity as 3rd defendant in the save way as they were granted in their original capacity as 2nd plaintiff.