YU CHIU KONG t/a MEGA KIND INTERNATIONAL CO v. SHAOBAIXING TRADE CO LTD

DCCJ 1624/2018

[2018] HKDC 463

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1624 OF 2018

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DECISION

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1.  By an inter partes summons filed on 20 April 2018 (“the summons”), the plaintiff seeks a Mareva injunction against the defendant, freezing the defendant’s assets which are within Hong Kong up to the value of USD 29,600 (or its equivalent in Hong Kong Dollars), and in particular, prohibiting the defendant from removing or diminishing the money in the defendant’s account (“the Account”) in Dah Sing Bank Limited.

The facts

2.  The facts deposed in the plaintiff’s affirmation filed on 20 April 2018 in support of the summons are as follows.

3.  The plaintiff carries on the business of trading in electronic goods under the style or firm name of Mega Kind International Company. 

4.  On 1 February 2018, he placed an order for purchase of 100 CPU units with Solar Energy International Company Limited (“Solar Energy”) at USD 296 per unit, and the total amount payable was USD 29,600.  Subsequently, the plaintiff received an email, which on the face of it was from Solar Energy, directing him to pay the said sum of USD 29,600 to the Account.

5.  On 7 February 2018, the plaintiff paid USD 29,600 into the Account.

6.  On 8 February 2018, the plaintiff instructed his staff to make enquiry with Solar Energy and was informed that no payment had been received by Solar Energy and the Account was not Solar Energy’s account.

7.  On 9 February 2018, the plaintiff instructed his staff to report the matter to the police, and the staff did so.

8.  On 24 March 2018, the plaintiff received a letter from the police (“the Police’s Letter”), in which the police advised the plaintiff that the holder of the Account was the defendant, which was a company located in Hong Kong.  The police further advised the plaintiff that he might apply for a civil injunction, and if there was no civil claim, the police would apply for confiscation of the money in the Account.  The police requested the plaintiff to indicate to them before 24 May 2018 whether the plaintiff would commence civil proceedings to recover the USD 29,600.

9.  On 20 April 2018, the plaintiff issued the writ of summons herein and commenced these proceedings.

The principles

10.  It is well established that in order to obtain a Mareva injunction, a plaintiff has to show^[1]:-

(a) that he has a good arguable case on a substantive claim over which the court has jurisdiction;

(b) there are assets within the jurisdiction;

(c) the balance of convenience is in favour of grant; and

(d) there is a real risk of dissipation of assets, or removal of assets from the jurisdiction, which would render the plaintiff’s judgment of no effect.

Good arguable case

11.  Based upon the evidence produced by the plaintiff, the plaintiff may argue that the defendant has to return the USD 29,600 to him on the ground of unjust enrichment.  For the purpose of establishing unjust enrichment, the relevant questions are as follows^[2]:-

(a) Was the defendant enriched?

(b) Was the enrichment at the plaintiff’s expense?

(c) Was the enrichment unjust?

(d) Are any of the defences applicable?

12.  In my view, it is arguable that the defendant was enriched as a result of the payment of USD 29,600 by the plaintiff into the Account.  It is also arguable that the enrichment was unjust, for the defendant has not provided any consideration in support of the payment.  Further, in the Police’s Letter, the police has urged the plaintiff to commence civil proceedings and to apply for a civil injunction, otherwise the police would apply for confiscation of the money in the Account.  This letter is prima facie evidence showing that the payment may be induced by some unlawful activities, and the defendant may have taken part in these activities.  All these are factors arguably in support of the unjust element.

13.  I am satisfied that the plaintiff has shown a good arguable case against the defendant.

Assets within the jurisdiction

14.  The Police’s Letter is evidence showing that there is money in the Account.  Otherwise, the police would not urge the plaintiff to apply for a civil injunction, and would not say that the police would apply for confiscating the money if the plaintiff is not going to commence any civil action.

15.  I am satisfied that there are assets within the jurisdiction which can be frozen by an injunction granted by this court.

Real risk of dissipation of assets

16.  As said in the above, the Police’s Letter is evidence showing that the payment may well be induced by some unlawful activities, and the defendant may have taken part in these activities.  In the circumstances, I am satisfied that if no injunction is granted, there is indeed a real risk that the final judgment obtained by the plaintiff (if the plaintiff succeeds at the end in these proceedings) would go unsatisfied by reason of the disposal by the defendant of its assets.

Balance of convenience

17.  By reason of the real risk of dissipation of assets mentioned above, if no injunction is granted but the plaintiff succeeds in obtaining final judgment in these proceedings at the end, the judgment obtained by the plaintiff may well be an empty judgment.  On the other hand, if the injunction sought by the plaintiff is granted but the defendant succeeds at the trial, there is no evidence showing that the prejudice suffered by the defendant as a result of the injunction is something which cannot be compensated by damages.  I am satisfied that the balance of convenience is in favour of granting the injunction.

Undertaking as to damages

18.  An undertaking as to damages is essential for the purpose of obtaining an interlocutory injunction.  Ms Cheng representing the plaintiff has offered such an undertaking in this hearing.  However, there is no evidence before me showing the financial ability of the plaintiff.  After taking instructions, Ms Cheng provides the following information to this court:-

(a) The plaintiff is the owner of a property known as Flat B, 51^st Floor, Block 1, Island Resort, Siu Sai Wan, Hong Kong.

(b) The market value of the property is about HKD 9 million.  It is subject to a mortgage, and the loan secured by the mortgage is about HKD 2.1 million.

19.  Ms Cheng on behalf of the plaintiff undertakes that the plaintiff will file and serve an affirmation verifying the aforesaid information on or before 4 May 2018.  On this basis, I am prepared to accept the undertaking as to damages offered by the plaintiff.

Other matters

20.  Usually, a Mareva injunction would contain an exception allowing the defendant to spend certain sums towards his ordinary living expenses, ordinary and proper business expenses and expenses for legal advice and representation. However, in this application, Ms Cheng submits that this exception should not be included in the injunction, for the plaintiff’s claim is a proprietary claim.

21.  If the claim made by the plaintiff is a proprietary claim, the court may not allow the sum frozen by the injunction to be used by the defendant to meet these expenses unless the defendant can show by proper evidence that he has no other assets which can be used[3]. Accordingly, Ms Cheng’s submissions are made on a sound basis.  I accept these submissions.

22.  The duration of the injunction would be until the conclusion of the trial or a further order made by the court in these proceedings

23.  I have heard submissions on costs.  Ms Cheng submits that costs be reserved.  I would accede to this request.

Disposition

24.  For the reasons above, I grant the plaintiff’s application and give the injunction sought by the plaintiff.

25.  I thank Ms Cheng for the assistance rendered to the court.