JESSOP & BAIRD (HONG KONG) LTD v. NEO HWEE KHIM AND OTHERS

HCA 2572/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2572 OF 2016

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D E C I S I O N

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1.  For today’s purpose, the bone of contention is paragraph 1 of the injunction, which requires D3 and D5 to return and deliver up all properties belonging to the plaintiff, including but not limited to machineries, raw materials, work in progress, etc, which are in their possession, custody, power or control.

2.  This injunction is in the nature of what I may call a mandatory injunction.  The test to be applied is for the court to be satisfied to a high degree of assurance that at the trial the injunction was rightly granted: Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041, Ma J (as he then was).

3.  In this case, this part of the injunction will effectively dispose of the plaintiff’s claim in conversion against D3 and D5. 

4.  The core facts are that, on the plaintiff’s case, these properties that form the subject matter of the mandatory injunction belong to the plaintiff and they are now in the factory of D5.  D3 does not dispute these.

5.  According to evidence in previous proceedings, D3 has been providing support by way of provision of initial purchase orders to the company through companies that he held an interest in, back-office support, manufacturing and facilities, and assisting in the set-up of its business.  One of such companies was D5, which operated a factory and provided back-office support to the plaintiff. 

6.  In today’s argument, D3 now says that he has no control over D5 and he asks for suspension of the mandatory injunction whilst continuing the prohibitive injunction in paragraph 2 of the order.

7.  The history of the litigation between the parties, including the petitions filed, have been placed before me in bundle A, with the affidavits previously filed.  D3 featured heavily in the dispute with the plaintiff. 

8.  The present injunction granted on ex parte basis was heard with arguments, D3 being then represented by Senior Counsel.  I am told that, at that hearing, Senior Counsel Mr Barlow had told the court that there was no dispute that D3 was the beneficial owner of D5.

9.  I do not have the transcripts before me to verify this statement, but, for present purposes, I am happy not to place weight on this statement.

10.  In my view, D3’s assertion that he lacked control over D5 is completely contradicted by a prior letter from PC Woo, who represented him, dated 23 September 2016.  At that time, PC Woo acted for Marrakesh, which was a 50 per cent shareholder of the plaintiff and ultimately beneficially owned by D3.

11.  One could see from this letter that D3/Marrakesh was putting forward an offer for a buy-out agreement.  This offer was coupled with a threat that if Tangiers and Marrakesh did not enter into a buy-out agreement within the next few days, then Mr Ng would be forced to close down the Zhongshan factory and to pay off all the workforce who had until now been employed on behalf of the company.  This letter reiterated that it is a notice of the prospective closure. 

12.  I am told that this threat has been put into action.  It was clear that D3 has power over D5.

13.  Mr Chang suggests that D3 was the owner of the piece of land on which D5’s factory stood.

14.  I do not think the letter of 23 September had ever used the ownership of land and its recovery as the focus of the offer.

15.  Mr Chang also suggests that, in the present application for injunction, the plaintiffs have not shown that damages do not form an adequate remedy.

16.  My attention has been drawn to the evidence of the plaintiff that its properties, including computers, hardware and records of customers’ records, have not been returned to them.  Clearly, these were kept at D5’s factory.  The plaintiffs were not even able to identify which orders they needed urgently to attend to and notify customers accordingly.

17.  In circumstances like these, failure to meet orders of customers can also bring about not only monetary loss but also damage to goodwill.

18.  Having considered all the circumstances, I am of the view that there is nothing to persuade me to depart from the view taken by the Deputy Judge in granting the mandatory injunction in the first place.  In my view, as an interim measure, the mandatory injunction should continue.

(Discussion re timetable)

19.  14 days for D3 to file and serve affidavit in opposition.  14 days thereafter for the plaintiff to respond, if so advised, and then 14 days for D3 to file and serve affidavit in reply, if so advised. 

20.  No further affidavit without leave.

(Discussion re adjournment of summonses and timetabling)

21.  The plaintiff’s summons dated 5 October and the defendant’s summons dated 11 October adjourned to be heard before the Companies Judge on a date to be fixed in consultation with the diaries of Mr William Wong SC and Mr Barlow SC, with three hours reserved.

(Discussion re D3’s application for more time for delivery up)

22.  I vary paragraph 1 to the extent that D3 and D5 do deliver up by 5 pm on Tuesday, ie 18 October 2016.

23.  D3’s position that this is without prejudice to the argument that he is not in control and the plaintiff’s position that without prejudice to the argument that D3 has breached the ex parte order are noted.

(Discussion re location and timing of delivery up)

24.  I note the administrative proposals offered and I make no order to that effect.

(Discussion re costs)

25.  Costs reserved.