XCHRX SVENSKA HANDELSBANKEN AB (PUBL) v. PEARL POND LTD.

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS.11582 and 19374 OF 1998

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HCA11582/98

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R U L I N G

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1. There are two cases before me, HCA11582/98 and HCA19374/98. These two cases have been consolidated pursuant to the Order of Yeung J. dated 12th November 1998.

2. The Plaintiff's application before me is for the continuation of a Mareva injunction against the Defendant. In HCA19374/98, that injunction was firstly granted ex-parte by Yeung J. on 12th November 1998 and continued by Order of Sakhrani J. on 20th November 1998 which was made inter-partes. The Plaintiff also asked for ancillary order for disclosure of information.

3. The Plaintiff is a Swedish bank licensed to carry on banking business in Hong Kong and it started HCA11582/98 on 14th July 1998. In that action, the Plaintiff obtained summary judgment against the 2nd Defendant, Pearlbond Limited, on 15th October 1998 as ordered by Master Jones.

4. The Defendant in the present action is by the name of Pearl Pond Limited, a company which was initially incorporated on 10th July 1998 under another name and subsequently the name was changed to Pearl Pond Limited. The Plaintiff's claim against the present Defendant in this action, Pearl Pond, is on the basis that Pearlbond had recently transferred its business to Pearl Pond with a view to avoid any execution of the judgment obtained against it by the Plaintiff in HCA11582/98.

5. The Plaintiff's claim against Pearl Pond is for the amount of the said judgment on the ground that Pearl Pond is the transferee of Pearlbond's business and therefore liable for the judgment by virtue of s.3 of theTransfer of Business (Protection of Creditors) Ordinance. The Plaintiff also seeks Mareva injunction against Pearl Pond in aid of execution of the said judgment on the ground that assets belonging to Pearlbond have been transferred to Pearl Pond. In this respect, the Plaintiff relies on the following matters, namely :-

(1) Pearl Pond was only very recently incorporated on 20th July 1998, at that time, it was known as Sharp Future Trading Limited. That company commenced business on 23rd July 1998 and on 10th August 1998, changed its name to Pearl Pond. Both Pearl Pond and Pearlbond have the same registered office which is at 13/F, Pat Tat Industrial Building, No.1 Pat Tat Street, San Po Kong, and therefore both companies have the same business premises and same registered office.

(2) Both these companies have the same majority shareholder, namely, Mr Tang Kam Wah, Edwin Peter ("Mr Tang") who holds 99.5% shares of Pearlbond and 75% shares in Pearl Pond.

(3) Mr Tang is a common director of both these companies and that all the directors of Pearl Pond were appointed on 23rd July 1998. The said business premises in which both these companies traded are registered in the name of Mr Tang and that both companies have the same company secretary. Both companies have at least one common employee, namely, a Miss Ann Lam, who was described as the contact person and Manager of Pearlbond and the Manager/Merchandiser of Pearl Pond.

(4) Both companies carry on the same line of business, namely, clothing, wholesalers and manufacturers, that the two names of both companies are very similar to each other and that Pearl Pond is using four telephone lines, the numbers of which were previously used by Pearlbond, that Pearl Pond is using one fax line, the number of which was previously used by Pearlbond.

(5) Moreover, a recent search of the telephone directories, both the white and yellow pages, on the internet shows that there is no longer any registration in the name of Pearlbond and that a Miss Qunnie Yip, the Assistant Manager of Pearl Pond, told investigators from FactFinders Limited engaged by the Plaintiff on 30th November 1998 that :-

(i) Pearlbond had been operating for more than 10 years;

(ii) That they had changed the name two weeks ago from Pearlbond to Pearl Pond, as one of the directors have left whilst the others wished to have a different name for their company; and

(iii) That the business had stayed exactly the same and only the name had changed.

(6) The Plaintiff also seeks reliance on the fact that when the clerk from the Plaintiff's solicitors attended Pearlbond's registered office to serve a statutory demand in respect of the said judgment debt obtained by the Plaintiff (in HCA11582/98), he was told by the receptionist that the company had changed its name to Pearl Pond. This is evidenced by the receipt chop of Pearl Pond placed on the copy of the statutory demand.

6. These matters, or most of these matters, are not in dispute by the Defendant and on the basis of these matters relied on by the Plaintiff, Mr Chow, appearing on behalf of the Plaintiff, has submitted that there is a strong prima facie case of transfer of business from Pearlbond to Pearl Pond within these last five months or so.

7. The argument put forward by Mr Wong on behalf of the Defendant is that while he does not disagree that there is a prima facie case to be tried, he says that it has not been shown by the Plaintiff that there has been any dissipation of assets on the part of the Defendant such as to warrant a Mareva injunction being granted against it.

8. What has been shown by the Plaintiff from all the matters which I have related above is that there is a great possibility that there has been a transfer of the business of Pearlbond to the newly formed company Pearl Pond, the Defendant in HCA19374/98. Before a Court can grant a Mareva injunction, it has to be satisfied that there is a real risk of dissipation of assets which would render the Plaintiff's relief nugatory.

9. Even if I were to accept that there was a transfer of the business of Pearlbond to Pearl Pond, as submitted by Mr Chow, with a view to defeating the judgment obtained against Pearlbond by the Plaintiff, any such dissipation of those assets of Pearlbond to Pearl Pond of itself still does not render the Plaintiff's relief nugatory, as the Plaintiff can, in those circumstances, proceed after Pearl Pond under the Transfer of Business (Protection of Creditors) Ordinance.

10. There is no other evidence before me to show that Pearl Pond, has either dissipated, or attempted to dissipate its assets. In the circumstances, the Plaintiff has not satisfied me as to one of the requirements for a Mareva injunction, namely that there is a real risk of dissipation of assets which would render the Plaintiff's relief nugatory.

11. In the circumstances and accordingly, the injunction granted against Pearl Pond by the Orders of Yeung J. on 12th November 1998, and continued by Sakhrani J. on 20th November 1998 will be discharged.

[Submission on Costs]

12. Costs of the injunction and application to set aside the injunction be to the Defendant in any event.