UNIVERSAL EXPORTS GROUP LTD v. ZECHIN TECHNOLOGY CO LTD

HCA 2613/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2613 OF 2016

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REASONS FOR DECISION

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Decision on 2 December 2016

1.  On 2 December 2016, I dismissed the defendant’s summons for leave to appeal issued on 4 November 2016 and said reasons for my decision would be handed down later.  As the plaintiff did not ask for costs, I made no order as to costs.

2.  My reasons follow.

Relevant background

3.  On 19 May 2010, the defendant was incorporated in Hong Kong with its registered office in Central, Hong Kong.

4.  At all material times, the defendant maintained a bank account in Hong Kong with The Hongkong & Shanghai Banking Corporation Limited (“HSBC”).  This account was frozen under all the Mareva injunctions in this case.

5.  On 7 October 2016 (Friday), the plaintiff issued the writ against the defendant.

6.  On the same date, ie 7 October 2016, the plaintiff applied ex parte and obtained a Mareva injunction against the defendant.

7.  On 11 October 2016 (Tuesday), the plaintiff issued an inter parte summons for the continuation of the Mareva injunction until trial or further order.

8.  (1)   14 October 2016 (Friday), was the return date of the 11 October 2016 inter parte summons.

(2)   On 14 October 2016, the plaintiff was represented by Mr Patrick Siu of counsel.

(3)   The defendant was absent from, and unrepresented at, the hearing on 14 October 2016.  It had not acknowledged service of the writ.  No evidence had been filed on its behalf.

9.  On 14 October 2016, I made the following orders:

(1) The injunction order dated 7 October 2016 be discharged.

(2) The summons dated 11 October 2016 be dismissed.

(3) Costs of ex parte application and inter parte application be borne by the plaintiff.

Reasons for my decision were handed down on 24 October 2016, Monday (“Reasons for Discharging first ex parte Mareva”) which I incorporate by reference.

10.  On 17 October 2016 (Monday), the plaintiff applied ex parte again and obtained a Mareva injunction against the defendant.

11.  On 18 October 2016 (Tuesday), the plaintiff issued an inter parte summons for the continuation of the Mareva injunction until trial or further order.

12.  (1)   On 21 October 2016 (Friday) was the return date of the inter parte summons.  It was returnable before another judge.

(2)   On 21 October 2016 was originally listed for handing down the Reasons for Discharging first ex parte Mareva.

(3)   In the event, the court was closed on 21 October 2016 because of the hoisting of typhoon signal number eight.

13.  (1)   On 22 October 2016 (Saturday), Au‑Yeung J adjourned the inter parte summons to 24 October 2016 (Monday) before me.

(2)   The handing down of the Reasons for Discharging first ex parte Mareva was postponed to 24 October 2016 (Monday).

14.  On 19 October 2016 (Wednesday), Gallant acknowledged service of the writ on behalf of the defendant.

15.  (1)   On 24 October 2016, the plaintiff was represented by Ms Janine Cheung of counsel and the defendant by Mr Benny Lo of counsel. 

(2)   The plaintiff has filed further evidence since the hearing on 14 October 2016.

(3)   The defendant has not filed any evidence by 24 October 2016.

16.  On 24 October 2016, after hearing counsel for the plaintiff and counsel for the defendant, I continued the Mareva injunction until trial or further order, conditional upon the plaintiff fortifying its undertaking to pay damages by payment into court of HK$9 million by three instalments.  I declined the defendant’s request to adjourn the inter parte hearing for the defendant to file evidence in opposition.  The defendant had offered to continue the injunction until the determination of the adjourned inter parte hearing.  I ordered costs in the plaintiff’s cause.

17.  By summons issued on 4 November 2016 (Friday), the defendant applied for leave to appeal against my decision on 24 October 2016.

18.  The application for leave to appeal came on for hearing before me on 2 December 2016 (Friday).  After Mr Benny Lo had concluded his submissions, I dismissed the defendant’s application without calling on Mr Jonathan T Y Chang for the plaintiff.  As the plaintiff did not ask for costs, I made no order as to costs.

The hearing bundles

19.  The defendant submitted the following bundles for the hearing on 2 December 2016:

(1) A “Paginated Bundle of Court Documents for Hearing”; and

(2) A “Paginated Bundle of Exhibits for Hearing”.

20.  The two bundles contained a total of no less than 595 pages of documents.  The time estimate of the hearing was 30 minutes.  Very few of the documents had been referred to at the hearing.  It seems that the defendant’s legal advisers had not taken heed of the court’s repeated criticism of the indiscriminate inclusion of documents in hearing bundles.

Affirmation of Li Nianbiao affirmed on 15 November 2016 on behalf of the defendant

21.  An Affirmation of Li Nianbiao affirmed on 15 November 2016 (Tuesday) on behalf of the defendant was included in the “Paginated Bundle of Court Documents for Hearing”.  The Affirmation was made after the hearing on 24 October 2016.  So far as I am aware, the defendant had made no application for leave to admit such evidence, whether under Order 59, rule 10 of The Rules of the High Court, Cap 4A, or at all.

22.  I asked Mr Benny Lo whether this Affirmation was admissible.  He asserted that it was.  When asked for the reasons, he gave some sort of reasons.  In the end, he stated categorically that he was not relying on the Affirmation.  As he was not relying on it, it is not necessary for me to consider its contents and not necessary for me to rule on its admissibility.

Section 14AA, High Court Ordinance

23.  Section 14AA of the High Court Ordinance, Cap 4, provides (so far as relevant):

“(1) Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted by the Court of First Instance or the Court of Appeal.”

“(4)[1] Leave to appeal for the purpose of subsection (1) shall not be granted unless the court hearing the application for leave is satisfied that —

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

Defendant’s arguments

24.  The defendant relied on the fact that the defendant’s only shareholders and directors were individuals residing outside Hong Kong in Mainland China and that the defendant had not been legally represented in these proceedings until 19 October 2016 when it filed an Acknowledgment of Service.  The defendant contended that I “plainly erred” by not giving the defendant a sufficient opportunity to file evidence and obtain legal advice and assistance; that I “failed to observe the fundamental rules of natural justice, due process, procedural fairness and/or audi alteram partem” and that I failed to recognise the primary aim “as provided for under RHC O.1A r.2(2)”.

25.  The defendant’s arguments conveniently ignored the fact that the defendant is a corporate entity incorporated in Hong Kong, with a registered office in Central, Hong Kong and maintained a bank account in Hong Kong with a bank in Hong Kong.  These are matters of choice.  In this day and age, residence outside the jurisdiction is of no or only marginal relevance in terms of time required to put in affidavit evidence.  The subject matter is an interlocutory Mareva injunction which by its nature is required to be dealt with expeditiously.  Legal representation is a matter of choice and it is incumbent on the defendant if it wishes to be legally represented to instruct lawyers in time for the hearing.  The defendant has between 7 October 2016 (or 11 October 2016) and 24 October 2016 to file evidence in opposition, or at least explain why it had still not done so.  But the defendant had filed no affidavit evidence and had come to court expecting an adjournment on demand.  Plainly, if the defendant and its legal advisers had acted with due diligence, the defendant could have filed evidence in opposition, or at least provided a cogent reason why it had not and justifying its request for time. The defendant’s expectation, even with an offer of continuation of the Mareva injunction, is not a legitimate expectation.  A purpose of a return date is to dispose of cases with no ground for resistance.  This was such a case.  Plainly, the court’s time could be better used.

26.  There are grounds for the exercise of my discretion in refusing an adjournment.  The appeal does not have a reasonable prospect of success and there is no other reason why the appeal should be heard.

[1] The relevant sub‑section is not section 14AA(3), as stated in §15 of “Defendant’s Skeleton Argument in support of application for leave to appeal”.