WU CHOI YAU t/a YUEN HING PLASTIC MATERIALS FACTORY v. BEELEE INDUSTRIES LTD

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

[Where a judgment debtor is a limited company which, on the evidence, is plainly insolvent, the judgment creditor's remedy is to present a petition to wind-up the company, not to apply to the court for a Mareva injunction, unless the evidence also shows that the company has assets and that there is a real risk that it will attempt to dispose of them so as to defeat the judgment]

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JUDGMENT

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1. This is an application for a Mavera injunction after judgment. There is no doubt about the jurisdiction of the Court to grant such an order in aid of execution; see Orwell Steel (Erection and Fabrication) Ltd. v. Asphalt and Tarmac (U.K.) Ltd.  [1984]1 W.L.R. 1097.  The purpose of such an injunction is to preserve the defendant's assets until execution can be levied. But as Farquharson, J. pointed out in the case cited (at p.1100) : -

"Plainly an injunction will only be granted where the plaintiff can adduce evidence of a kind which normally supports an application for a Mareva injunction, namely, that there are grounds for believing that the judgment debtor will dispose of his assets to avoid execution. Perhaps such grounds may be more readily established after judgment than before it."

I have to consider whether, in the present case, the plaintiff has established such grounds.

2. On 29th October 1990, the plaintiff obtained judgment under order 14 upon 3 dishonoured cheques for a total of $151,724.80. By an order made on 3rd January 1991, execution was stayed on condition that the instalments referred to in the order were duly paid. The first of those instalments, of $50,000, was due to be paid on 9th January 1991. It was never paid. The plaintiff has tried unsucessfully to levy execution at the address where the plaintiff has done business with the defendant for some two years.  The defendant is clearly insolvent. It is unable to pay its debts as they fall due.

3. There is no evidence that the defendant has any assets sufficient to satisfy the judgment, let alone that there is a real risk that it will dispose of them prior to execution. All the evidence suggests that the defendant is impecunious and will be unable to satisfy any debt, including this judgment debt.

4. The defendant is a limited company. The correct remedy for the protection of the plaintiff (and all other creditors) is a petition to wind up the defendant. That will have the effect, as from the date of presentation of the petition, of making it impossible for anyone to pay the defendant any money and get a good discharge. There is accordingly no need for a Mareva injunction in the present case even if there had been any evidence of the necessary character.

5. The defendant is apparently the beneficiary named under two letters of credit, one confirmed by the Hong Kong & Shanghai Bank and the other confirmed by the Deutsche Bank AG, under which moneys may become, at some future date, payable to the defendant (if they have not become payable and been paid already). The presentation and advertisement of petition to wind up to which I have referred will protect the plaintiff against this. There is no evidence (beyond the usual bare assertion by the plaintiff) that the defendant will dissipate its assets so as to avoid execution and therefore no sufficient ground for the grant of the (much abused) remedy of a Mareva injunction here and accordingly I refuse this application.