STANDARD CHARTERED BANK (HONG KONG) LTD v. LING MEI

DCCJ5678/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5678 OF 2006

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REASONS FOR DECISION

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Background

1.  The Plaintiff is a licensed bank carrying on banking business in Hong Kong. The Plaintiff issued the Writ of Summons in the present proceedings on 16^th November 2006 and served the same on the Defendant by insertion into the letterbox of the Defendant’s last known address at Flat B, 23^rd Floor, Park Mansion, No.3 Ting Yue Square, Kowloon (“Property”) on the following day (see affirmation of Sum Tak Chung William dated 20^th November 2006).

2.  By its Statement of Claim, the Plaintiff claimed that in/about July 1997 it approved the Defendant’s written application for a credit card known as Smartone Master Card and issued the said credit card (“1^st Card”) to the Defendant subject to the Defendant’s undertaking and agreement to be bound by the terms of the Plaintiff’s SmarTone Smart Credit Card Cardholder Agreement (“1^st Agreement”) from time to time in force.

3.  The Plaintiff claimed that since the issue of the 1^st Card to the Defendant, the Defendant had been granted credit card facilities, and as at 15^th November 2006 the Defendant was indebted to the Plaintiff for a total sum of HK$101,142.38 being the total outstanding balances in the Defendant’s Smartone Master Card Account with the Plaintiff comprising the outstanding principal sum of HK$99,024.04 together with interest accrued on the outstanding balance from 23^rd October to 15^th November 2006 in the sum of HK$2,118.34.

4.  By its Statement of Claim, the Plaintiff further claimed that in/about January 1998 Manhattan Card Company Limited approved the Defendant’s written application for a credit card known as Visa Card and issued the said credit card (“2^nd Card”) to the Defendant subject to the Defendant’s undertaking and agreement to be bound by the terms of the Manhattan Gold Visa/Manhattan Visa Cardmember Agreement (“2^nd Agreement”) from time to time in force.

5.  The Plaintiff claimed that since the issue of the 2^nd Card to the Defendant, the Defendant had been granted credit card facilities, and as at 15^th November 2006 the Defendant was indebted to the Plaintiff for a total sum of HK$24,745.39 being the total outstanding balances in the Defendant’s Manhattan Visa Card Account with the Plaintiff comprising the outstanding principal sum of HK$24,308.52 together with interest accrued on the outstanding balance from 23^rd October to 15^th November 2006 in the sum of HK$436.87.

6.  The Plaintiff further claimed that despite repeated requests and demands the Defendant had failed and refused to pay the sums of HK$101,142.38 and/or HK$24,745.39 or any part thereof to the Plaintiff. So the Plaintiff claimed against the Defendant for the aforesaid outstanding balances, further interest thereon and damages for all costs and expenses on a full indemnity basis.

Ex parte application

7.  On 21^st November 2006, the Plaintiff made an ex parte application to a master of the District Court under Order 44A rules 7 and 8 of the Rules of the District Court (“RDC”). The application was supported by the affirmation of Steven John Cheng, a partner of the Plaintiff’s solicitors, dated 20^th November 2006.

8.  Mr Cheng by his affirmation verified the facts and matters pleaded in the Statement of Claim and exhibited the 1^st and 2^nd Agreements. He confirmed that the Defendant was/is justly and truly indebted to the Plaintiff in the sum of HK$125,887.77 together with interests as pleaded in the Statement of Claim.

9.  In addition, Mr Cheng referred to the Standard  Chartered Bank (Hong Kong) Limited (Merger) Ordinance (Ordinance No.6 of 2004) whereby the Plaintiff was vested inter alia the undertakings of respectively Standard Chartered Bank Hong Kong Branch and Manhattan Card Company Limited. By section 5 of such Ordinance, all the businesses and properties of the Hong Kong operation of the Standard Chartered Bank Hong Kong Branch and Manhattan Card Company Limited had become vested in the Plaintiff with effect from 1^st July 2004.

10.  Mr Cheng also exhibited to his affirmation copies of (a) the reverse side of the Plaintiff’s periodic statements to its customers setting out the prevailing interest rates and/or finance charges for its SmarTone Smart Credit Card and (b) the Notice of Change in Fees and Charges and Manhattan Credit Card Cardmember Agreement setting out the prevailing interest rate for the Manhattan Visa Card Account.

11.  Mr Cheng was advised by the Plaintiff’s officer in charge that on/about 18^th September 2006 the Plaintiff had already stopped the Defendant from using the 1^st and 2^nd Card accounts and that the Plaintiff’s staff had chased the Defendant for payment of the outstanding balances by calling the Defendant’s mobile, home and office telephone numbers as follows :

(a) On 27^th July and 3^rd August 2006 respectively, the Plaintiff’s staff called the Defendant’s home and business telephone numbers, but no one answered such calls.

(b) On 11 occasions between 4^th August and 1^st September 2006 respectively, the Plaintiff’s staff attempted to contact the Defendant via his/her mobile telephone number but each time the message was there was no registered user for such mobile telephone number.

(c) On 11^th September 2006, the Plaintiff’s staff called the Defendant’s referee (ie the Defendant’s cousin), but no one attended such call.

(d) On 6 occasions between 12^th and 21^st September 2006 respectively, the Plaintiff tried to call the Defendant’s home and business telephone numbers, but all such calls were unattended.

(e) On 6 occasions between 27^th September and 16^th October 2006 respectively, the Plaintiff’s staff attempted to contact the Defendant on his/her business telephone number, but was unable to leave any message for the Defendant to return call since the mailbox was full on each occasion.

(f) On 4^th and 10^th October 2006 respectively, the Plaintiff’s staff tried to call the Defendant’s business telephone number, which was busy on both occasions.

(g) On 12^th October 2006, the Plaintiff’s staff telephoned the Defendant’s business telephone number, but it had already been disconnected.

(h) On 7^th, 8^th and 10^th November 2006 respectively, the Plaintiff’s staff tried to call the contact telephone number of the Defendant’s referee, but such calls were again unattended.

(i) On 16 occasions between 18^th October and 11^th November 2006, the Plaintiff tried to call the Defendant’s home telephone number, but such calls were unattended on all occasions.

12.  The Plaintiff issued two demand letters both dated 7^th November 2006 (posted to the Property on the same day by prepaid post) to the Defendant demanding payment of the outstanding balances in respect of the 1^st and 2^nd Cards. Since the Plaintiff did not receive payment of the outstanding balances or any part thereof, the Plaintiff’s officer in charge instructed the Plaintiff’s solicitors to issue (which they did) the Writ of Summons against the Defendant. As explained above, the Plaintiff’s solicitors served the Writ on the Defendant at the Property.

13.  The land search records of the Property dated 16^th November 2006 exhibited to Mr Cheng’s affirmation showed that the Defendant was the registered sole owner of the Property subject to a first charge in favour of The Bank of East Asia, Limited (“1^st Charge”) and a second charge in favour of the Hong Kong Housing Society (“2^nd Charge”).

14.  The aforesaid land search records further revealed that an agreement for sale and purchase dated 31^st October 2006 (“SP Agreement”) for sale of the Property by the Defendant in favour of Luk Kwan Hoi for a consideration of HK$1,000,000.00 was registered at the Land Registry on 11^th November 2006. As at the date of Mr Cheng’s affirmation, the Plaintiff’s solicitors were unable to obtain a copy of the SP Agreement to ascertain the actual date of completion of the sale and purchase thereunder.

15.  Mr Cheng pointed out that under normal conveyancing practice, upon signing the SP Agreement, the Defendant should have received at least a deposit of 10% of the price, which would almost fully settle the outstanding balances owed to the Plaintiff. However, the Defendant still failed/refused to settle such outstanding balances.

16.  Mr Cheng said the Plaintiff was not aware of the current value of the Property, but at that stage there was nothing to suggest that the price of HK$1,000,000.00 did not represent the current market value of the Property.

17.  The aforesaid land search records did not show any assignment having been delivered to the Land Registry for registration. The Plaintiff and Mr Cheng were not aware of any assets of the Defendant apart from the Property. They verily believed that the Defendant was about to dispose of the Property with the intent to obstruct or delay the execution of any judgment that the Plaintiff might obtain against the Defendant in the present proceedings.

18.  On 21^st November 2006, the learned Master made no order in respect of the Plaintiff’s application.

Appeal

19.  On 22^nd November 2006, the Plaintiff filed an inter partes Notice of Appeal against the learned Master’s decision and prayed for the following reliefs :

(a) the said decision by the learned Master be set aside;

(b) an attachment order against the interest of the Defendant in the Property be granted;

(c) costs be to the Plaintiff.

20.  On 22^nd November 2006 at about 7:30pm, the Plaintiff’s solicitors served the Defendant with a copy of the Notice of Appeal enclosed in a sealed envelop addressed to the Defendant by leaving the same at the Property (see the affirmation of Yuen Wai Keung dated 24^th November 2006).

21.  At the hearing of the appeal, I enquired with Ms Tsui, counsel for the Plaintiff, whether the appeal was an inter partes or ex parte application. Ms Tsui confirmed that the affirmation of Steven John Cheng, ie the primary supporting affirmation for the Plaintiff’s application pursuant to Order 44A rules 7 and 8 of the RDC which was before me by way of rehearing, had not been served. In the circumstances, she accepted that the present appeal was made ex parte, albeit on notice.

Fresh evidence

22.  On 24^th November 2006, the Plaintiff’s solicitors served the Defendant with copies of the skeleton submissions and list of authorities of the Plaintiff’s counsel and the affirmation of Yuen Wai Keung all enclosed in a sealed envelop addressed to the Defendant by leaving the same at the Property (see second affirmation of Sum Tak Chung William dated 25^th November 2006).

23.  Ms Tsui applied for leave to rely on the affirmation of Yuen Wai Keung for the appeal hearing. It is not unusual for judges hearing appeals against the decisions of masters to allow further evidence to be relied upon as such appeals are by way of de novo rehearing (see Wong Hung Yu Richard v Wu Ming Fat [2002] 2 HKC 687 and Secretary for Justice v Chun Kam Chiu HCA919/2002, A Cheung J (unreported, 13^th November 2002)). But the courts do not automatically allow the reception of such evidence. In fact, the courts have to exercise their discretion whether to grant or refuse leave for further evidence to be relied upon. Such leave may be refused where a party raises a wholly different defence or radical change of case from the one advanced before the master (see Core Resources (Far East) Ltd v Sky Finders Ltd [1992] 1 HKLR 193).

24.  Turning to the affirmation of Yuen Wai Keung, clerk to the Plaintiff’s solicitors, I do not see a radically different case being raised here.

25.  Mr Yuen in his affirmation said that he attended the Property at about 7:30pm on 22^nd November 2006, but no one responded when he pressed the doorbell of the main entrance for a long time. He made enquiries with the female occupant of the unit adjacent to the Property (Flat A on the same floor) and was informed that (a) she had not heard of the Defendant at the Property, (b) to her best knowledge the Property was vacant and (c) she had no knowledge of the present whereabouts of the Defendant. Mr Yuen made further enquiries with a female occupant of the other unit adjacent to the Property (Flat C on the same floor) and was informed that she had not heard of the Defendant at the Property and that she had no knowledge of the whereabouts of the Defendant. No one at the other adjacent units (Flats D and E on the same floor) answered Mr Yuen’s call.

26.  Mr Yuen made enquiries with the caretaker of the building where the Property was located. The caretaker told Mr Yuen that he had not heard of the Defendant at the Property and to his best knowledge there had been no one entering and leaving the Property for a long time. However, someone (whom the caretaker did not recognise) would collect mail from the Property’s letterbox from time to time. The caretaker further told Mr Yuen the management office was also unable to contact the owner(s)/occupier(s) of the Property, and if the management office wanted to contact the owner(s)/occupier(s) or notify them of any particular matter, the management office could only insert a written notification into the Property’s letterbox. Mr Yuen therefore inserted a written note into the Property’s letterbox that gave the contact number of the Plaintiff’s solicitors and asked the Defendant to contact the Plaintiff’s solicitors for service of the court documents on him/her.

27.  Mr Yuen also exhibited a copy of the SP Agreement to his affirmation. Part III of the First Schedule of the SP Agreement provided that the completion date was “on or before the 28^th day of November 2006”. Part IV of the First Schedule of the SP Agreement provided that the purchase price of the Property was HK$1,000,000.00 with an initial deposit of HK$10,000.00 already paid by the purchaser to the Defendant direct and a further deposit of HK$140,000.00 paid by the purchaser to the Defendant on the signing of the SP Agreement. The Defendant acknowledged receipt of both sums in the SP Agreement.

28.  I note that the matters set out in the affirmation of Yuen Wai Keung all occurred after the decision by the learned Master. They related to enquiries made at the Property and adjacent units as to the present whereabouts of the Defendant, and to the production of a copy of the SP Agreement, which was previously not available when the affirmation of Steven John Cheng was made. Since these matters naturally followed the matters raised in the affirmation of Steven John Cheng, they did not raise any totally different matter, so I was prepared to adopt a more relaxed attitude. At the hearing I granted leave to the Plaintiff to rely on the affirmation of Yuen Wai Keung.

29.  Having read and considered the fresh evidence, I now turn to the circumstances of the present appeal.

Application under Order 44A rules 7 and 8 of the RDC

30.  Order 44A rule 7(1) of the RDC provided as follows :

“ If in any action the defendant, with intent to obstruct or delay the execution of any judgment that may be given against him in the action, is about to dispose of his property or any part thereof, or to remove any such property from the jurisdiction of the Court, the plaintiff may, either at the institution of the action or at any time thereafter until final judgment, apply to the Court to call upon the defendant to furnish sufficient security to produce and place at the disposal of the Court, when required, his property, or the value of the same, or such portion thereof as may be sufficient to answer any judgment that may be given against him in the action, and, in the event of his failing to furnish such security, to direct that any property, movable or immovable, belonging to the defendant shall be attached until the further order of the Court.” (my emphasis)

31.  Order 44A rule 8(1) and (2) of the RDC provided as follows :

“ (1) If the Court, after making such investigation as it may consider necessary, is of opinion that there is probable cause for believing that the defendant is about to dispose of or remove his property or some part thereof, with such intent as aforesaid, it shall be lawful for the Court to issue a warrant to the bailiff commanding him to call upon the defendant, within a time to be fixed by the Court, either to furnish security, in such sum as may be specified in the order, to produce and place at the disposal of the Court, when required, the said property, or the value of the same, or such portion thereof as may be sufficient to answer any judgment that may be given against him in the action, or to appear before the Court and show cause why he should not furnish such security.

(2) The Court may also in the warrant direct the attachment until further order of the whole or any portion of the property of the defendant within Hong Kong. (See Appendix C, Form 1) ” (my emphasis)

32.  Ms Tsui did not cite any previous authorities on the above statutory provision. She submitted that such previous authorities of which there were not many were largely determined on the basis of the particular facts of each case and did not purport to set out any general guiding principle on the application of the statutory provision.

( a) Furnishingsecurity and/or attachment of property

33.  Ms Tsui submitted a draft order seeking inter alia that :

(a) the Defendant be called upon to furnish security in the sum of HK$125,887.77 together with interests on the sums of HK$99,024.04 and HK$23,308.52 at the rate of 23.93% pa (or 0.082% per day) from 16^th November 2006 to the date of order and thereafter at judgment rate until payment, or to produce and place at the disposal of the court the Property or the value of the same or such portion thereof as may be sufficient to answer any judgment that may be given against the Defendant in these present proceedings;

(b) the Defendant be called upon to appear before a Master on an appointed day to show cause why he/she should not furnish such security; and

(c) the Defendant’s Property be attached forthwith.

34.  Whilst I accept this court has jurisdiction under Order 44A rules 7 and 8 of the RDC to call upon the Defendant to furnish security, I expressed doubt to Ms Tsui as to whether this court could at this stage make an immediate and absolute attachment of the Property.

35.  I referred Ms Tsui to Bernell V Shaw v James F Brown Jr CACV38/1970 (unreported, 30^th April 1971). In that case, an application was made ex parte to Mr Commissioner Morley-John on 22^nd October 1969 for leave to the intended plaintiff to issue a writ of summons and to serve notice of the writ on the intended defendant overseas. Having obtained an order to such effect, the plaintiff applied ex parte and obtained an order under Order 44A rule 7(1) as follows :

“the defendant do furnish security to meet the plaintiff’s claim by depositing in court …… the sum of HK$34,825.25 within ten days of the date of such order and in default thereof the account of the defendant with Commercial Investment Co. Ltd …… estimated at a value of US$6,621.53 be immediately thereon attached until further order of the Court with liberty to apply in the event of the defendant attempting to remove his moneys from the said Commercial Investment Co. Ltd.”

36.  No security was paid into court in compliance with the order of 22^nd October 1969, and pursuant to the liberty given to him by that order, the plaintiff made further application on 31^st October 1969 under Order 44A rule 7(1) for an order that the defendant’s account be attached forthwith; and his application was granted.

37.  The Court of Appeal unanimously allowed the appeal and discharged the aforesaid orders on various grounds. The relevant ground for present purposes related to the interpretation of Order 44A rules 7 and 8. Blair-Kerr J at paras. 29-34 and 37-39 said as follows :

“29. Order 44A rr.7-9 deal with interim attachment of the property of a defendant. As in the case of r.1, r.7 simply prescribes the circumstances in which a plaintiff may make an application and the nature of the relief sought. Whereas the Indian r.5 enables the Court to direct the defendant to furnish security, and to direct conditional attachment of his property, O.44A r.7 does not give the Hong Kong Court power to make any order. Upon the making of an application in proper form under r.7, r.8 contemplates that the Court itself will then make some sort of investigation, after which it may form the opinion that there is probable cause for believing that what the plaintiff alleges is true.

30. If the Court should form that opinion, the next step is the issuance of a warrant to the bailiff commanding him to call upon the defendant either to furnish security, etc. or, alternatively, to show cause why he should not furnish such security.

31. The Court may also in the warrant direct the attachment, until further order, of the property of the defendant within the Colony. [r.8(2)].

32. If the defendant shows such cause or furnishes the required security, and there has been an interim attachment under r.8(2), the Court then withdraws the attachment. [r.9(1)].

33. If the defendant fails to show cause or to furnish the required security, the Court may then direct that the property, if not already attached, shall be attached until further order. [r.9(2)].

34. Rules 7-9 must be read together. The application under r.7 is “to the Court to call upon the defendant to furnish security” etc. The only mode of calling upon the defendant appears to be that provided by r.8, that is to say the Court issues a warrant to the bailiff “commanding him to call upon the defendant ...........” A defendant whose last known address was within the jurisdiction could not defeat an interim attachment under r.8(2) by going into hiding and thereby preventing the execution of a warrant issued pursuant to r.8(1). If the Court were satisfied that he was obstructing the execution of the warrant, no doubt it would allow the interim attachment under r.8(2) to stand until the conclusion of the proceedings.

……

37. But even assuming that O.44A does apply to a defendant resident out of the jurisdiction and that the court may call upon such a defendant to furnish security or show cause by some method other than by a warrant issued to the bailiff, the orders made by the Commissioner in this case were for the attachment absolutely of the appellant's property and that upon an ex parte application without notice of any kind to the appellant. The order of attachment which was made by the Commissioner on 22^nd October 1969 certainly appears to be an interim order. It was to stand "until further order". But no reference was made to r.8 in the summons; and there is no reference to this rule in the record of the proceedings or in the order as formally drawn up. In particular, the order, as drawn up, does not recite the fact that the Court, “after such investigation as it considered necessary”, had formed the opinion that there was probable cause for believing that the defendant was about to dispose of, or remove, the whole or any part of his property with intent to obstruct or delay the execution of any judgment that might be given against him. Clearly, the order of 22^nd October was not made under r.8(2). It appears to have been made under r.7 - which, in my view, does not give the Court power to make any order.

38. As regards the order made on 31^st October 1969, it does not appear to be an interim order. Despite the fact that the application was ex parte, the order was that the investment account be “attached forthwith”. Whether the intention was that this should be read together with the order of 22^nd October so as to give the Court power to withdraw the attachment upon the appellant putting up the necessary security or showing cause why he should not be required to do so, seems doubtful.

39. At any rate, it appears that the order was made under r.7 and not under r.8(2) or r.9(2). Therefore, I would, myself, have been prepared to allow the appeal also on that ground.”

38.  Mills-Owens J also held that Order 44A rules 7 and 8 required the defendant to be called upon to give security and in default thereof, or on failure to show cause, to suffer attachment. He added as follows :

“…… Calling upon him to give security, or to appear and show cause, necessarily involves serving him with process. In the present case it is apparent that the plaintiff proceeded by way of exparte summons, knowing moreover perfectly well that the defendant had left for the United States months earlier.

What the plaintiff asked form, and obtained, without any form of notice to the defendant, was an absolute attachment. The defendant is entitled, ex debito justitiae, to have that attachment set aside not only as an absolute order made without notice to him or opportunity to be heard ……

But the fundamental point arising in the appeal, in my view, is that no absolute order of attachment can be made under Order 44A unless the defendant is first called upon to furnish security or show cause why his property should not be attached. That is a condition precedent. Calling upon the defendant must serving him, and that means - according to the procedure laid down by rule 8 - sending the bailiff with a warrant to bring him before the Court. It is true that the court somethings (sic) modifies the rigours of this method of proceeding by issuing a summons instead in the first instance, or by ordering that the bailiff do not execute the warrant unless the defendant is unwilling to appear. But whichever way it is done, the defendant is given the opportunity to furnish security or show cause. Here that was not done. The orders complained of were made simply on ex parte applications and therefore are clearly wrong. I am not condemning the provision for interim attachment under rule 8(2); I presume that means attachment in the interim pending the furnishing of security or appearance of the debtor to show cause. ……”

39.  In my view, although (as Mills-Owens J opined) the rigours of sending the bailiff with a warrant to bring the debtor before the court can be dispensed with in the first instance, it is plain from Shaw v Brown, which authority is binding on me, that absolute attachment cannot be granted before the debtor has been called upon to give security or to appear and show cause, and calling upon the debtor to give security or to appear and show cause requires serving the debtor with process for such purpose. In the circumstances, even if the Plaintiff satisfies the requirements in Order 44A rules 7 and 8, it may only apply for (a) an order calling upon the Defendant to give security or to appear and show cause and (b) an interim attachment under Order 44A rule 8(2) pending the furnishing of security or appearance of the Defendant to show cause.

(b) Requisite intent

40.  Ms Tsui submitted that a plaintiff might adduce direct evidence of the defendant’s state of mind or indirect evidence based on which the court might draw an inference or both. I agree. Indeed, Sakhrani J in Wang On Shopping Management Limited v Lai Kin Man & anor HCA18763/1998 (unreported, 27^th November 1998) explained as follows :

“It is incumbent on the Plaintiff to provide sufficient evidence for the Court to draw the inference that the Defendant had the intent to obstruct or delay the execution of any judgment that may be given against him. That is the intent that must be shown and it is also incumbent to show that the Defendant is either about to dispose of his property or any part thereof, or to remove any such property from the jurisdiction of the Court. That is provided for in O.44A, r.7(1).”

41.  Ms Tsui submitted that analogy could be drawn with an application for a Mareva injunction where a plaintiff has to adduce evidence to show there is a real risk of dissipation of assets by a defendant. She referred to Hoyle, The Mareva Injunction and Related Orders (3^rd ed, 1997) at p.33 which stated as follows :

“In many cases where Mareva injunctions are granted there is in fact less evidence about the intent of the defendant and more about his ability to dispose of or transfer assets. Although a defendant can always apply to discharge a Mareva it is submitted that it cannot be right that a defendant is subject to a Mareva merely because he could, if he so wished, dispose of his assets. In this electronically advanced world anyone with a bank account or other intangible financial asset can transfer it with one telephone call. Consequently, there must be evidence that a defendant is either disposing of assets in such a manner that the only inference to be drawn is that he is making himself judgment-proof, or it must be shown that he is living or trading in a manner so different from his general pattern or from normal explicable practice that the only inference to be drawn is that he is deliberately creating a state of affairs where he cannot meet any likely judgment debt.”

42.  Ms Tsui also cited Gee, Commercial Injunctions (5^th ed, 2004) at para.12.039 at pp.353-355 which stated as follows :

“The claimant must adduce “solid evidence” to support his assertion that there is a real risk that the judgment or award will go unsatisfied. Since each case depends on its own facts it is impossible to lay down any general guidelines on satisfying this evidential burden, but some of the factors that may be relevant are as follows:

  ……

(9) The defendant’s behaviour in response to the claimant’s claims: a pattern of evasiveness, or unwillingness to participate in the litigation or arbitration, or raising thin defences after admitting liability, or total silence, may be factors which assist the claimant.”

43.  Ms Tsui urged me to adopt the same approach when determining whether the Defendant in the present proceedings evinced an intent to “obstruct or delay” the execution of any judgment.

44.  In my view, although there is a duplication of relief between Order 44A rules 7 and 8 of the RDC and the Mareva injunction, both of which are concerned with pre-trial preservation of the debtor’s assets, I am not persuaded that the criteria for granting the respective reliefs are exactly the same.

45.  Hong Kong Civil Procedure Vol.1 para.29/1/56 at p.527 stated that for a domestic Mareva injunction, the plaintiff must show:

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

(b) that there are assets within the jurisdiction;

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

(d) that 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;

(e) the plaintiff must comply with a strict duty of full and frank disclosure; and

(f) in the case of “worldwide” Mareva injunctions, additional factors become relevant.

From the above criteria, it is evident that, as stated in Hoyle, Mareva injunctions are less concerned with the intent of the debtor and more concerned about his ability to dispose of or transfer assets.

46.  However, under Order 44A rules 7 and 8 of the RDC, the “intent to obstruct or delay the execution of any judgment that may be given against [the debtor] in the action” is an essential criterion that must be satisfied. As observed by Blair-Kerr J in para.21 of his judgment in Shaw v Brown, unless the rules are strictly followed, Order 44 rule 7 could operate harshly on a defendant.

47.  Plainly, as frankly accepted by Ms Tsui, there is in the present proceedings no direct evidence of the Defendant’s intent to obstruct or delay the execution of any judgment that may be given. The question is whether this court should infer such intent from the Defendant’s reluctance to have any contact with the Plaintiff and from his/her entry into an agreement to sell the Property. If either matter is considered separately, I agree that there is insufficient evidence of the requisite intent. However, when the totality of the evidence before me is considered as a whole, I accept that the evidence before the court goes beyond a bare assertion. 

48.  There is evidence before this court that the Plaintiff had terminated the Defendant’s use of the 1^st and 2^nd Cards and made persistent attempts over several months to contact the Defendant through his/her mobile, home and office telephone numbers and through his/her referee, which were all in vain. The responses to these attempts varied from failure to answer, no registered user message, full mailbox, busy calls and ultimately disconnection (see paragraph 11 above).

49.  Although the Defendant’s neighbours at Property and the caretaker of the building where the Property was located did not know the Defendant and believed the Property to be vacant, the caretaker said someone came to collect mail from the Property’s letterbox from time to time. This coupled with the fact that the Defendant was/is the registered sole owner of the Property suggest that the Defendant or someone on his/her behalf collected the mail, including the Plaintiff’s two demand letters dated 7^th November 2004 posted to the Property (see paragraph 12 above). I also bear in mind that in the SP Agreement dated 31^st October 2006, the Defendant still gave the Property as her address.

50.  Yet despite all the aforesaid efforts by the Plaintiff, there was no response from the Defendant. Instead, whilst the Plaintiff was pressing for payment and issuing demand letters, the Defendant proceeded to sell the Property. Presumably the negotiations for sale and purchase took place before 31^st October 2006 (ie the date of the SP Agreement). Further, the Defendant received the initial deposit of HK$10,000.00, but no attempt was made to reduce the outstanding balances due to the Plaintiff.

51.  Ms Tsui submitted that the Defendant received the further deposit of HK$140,000.00, which could also have been used to reduce/satisfy the outstanding balances owed to the Plaintiff. However, clause 15.1 of the SP Agreement provided inter alia that “[it] is hereby agreed that [the Defendant’s solicitors] may release any balance of deposit money to the [Defendant] if the balance of the Purchase Price is sufficient to pay off all principal interest and other moneys payable under the said mortgage(s)/legal charge(s). The [Defendant] hereby further undertakes to his own costs and expenses to redeem the [Property] and obtain a receipt on Discharge/Reassignment/Release thereof on or before completion.” The Property is subject to the 1^st and 2^nd Charges, and there is no evidence before me that the balance of the price will be sufficient to pay off the 1^st and 2^nd Charges. Ms Tsui reminded me that the Defendant acquired the Property in 2002 for the sum of HK$870,000.00 that was wholly paid by advances under the 1^st and 2^nd Charges. Ms Tsui argued that the “profit” of HK$130,000.00 (given the price of HK$1,000,000.00 under the SP Agreement) would have entitled the Defendant to receive a large proportion of the initial and further deposits. However, she acknowledged such analysis did not take into the interest factor. In all the circumstances, I am not satisfied that the further deposit of HK$140,000.00 was necessarily paid directly to the Defendant instead of being retained by the Defendant’s solicitors.

52.  Even so, in my view, the Plaintiff has shown a case that despite (a) being notified of the Plaintiff’s claim for the outstanding balances pursuant to the demand letters before issuance of the present proceedings and the Writ of Summons (which were all served on the Property being the Defendant’s address even as late as 31^st October 2006), (b) the Plaintiff’s attempt to contact the Defendant via his/her various telephone numbers, and (c) receipt of the initial deposit referred to in the SP Agreement, the Defendant failed to contact the Plaintiff, respond to the present proceedings and/or satisfy or reduce the outstanding balances due to the Plaintiff. The evidence is more than bare assertion or mere suspicion.

53.  The only known active step taken by the Defendant in face of the above matters is the sale and disposal of the Property. The Defendant is in the course of doing so since the completion date of the sale and purchase is on/before 28^th November 2006. The Plaintiff also confirmed it was unaware of any other property of the Defendant within the jurisdiction sufficient to satisfy any judgment that may be given against the Defendant in the present proceedings.

54.  I am satisfied that the Plaintiff has on the evidence before me shown probable cause for believing that the Defendant is about to dispose of property with intent to obstruct and delay the execution of any judgment that may be given against him/her.

Order granted

55.  I therefore made the following orders at the hearing in terms of an amended revised draft order submitted to the court :

(a) the decision given by the learned Master on 21^st November 2006 that the Plaintiff’s application under Order 44A rules 7 and 8 of the RDC be refused be set aside;

(b) the Defendant be called upon to furnish security in the sum of HK$125,887.77 together with interest on the sums of HK$99,024.04 and HK$24,308.52 at the rate of 29.93% pa (ie 0.082% per day) from 16^th November 2006 to the date of my order or to produce and place at the disposal of the court the Property or the value of the same or such portion thereof as may be sufficient to answer any judgment that may be given against the Defendant in this action within 7 days from the service of my order on the Defendant or to appear before a Master on a date and time to be appointed (“Return Date”) to show cause why the Defendant should not furnish such security;

(c) the costs of the hearing before the learned Master and costs of the appeal be reserved;

(d) there be interim attachment of the Property which shall remain in force up to and including the Return Date unless before then the aforesaid interim attachment order is varied or discharged by further order of the court;

(e) my Order, the affirmations referred to above, the skeleton submissions and list of authorities of the Plaintiff’s counsel be served on the Defendant forthwith.

Costs

56.  I note that the Plaintiff in the Notice of Appeal applied for costs in its favour. However, the draft Order attached to Ms Tsui’s written submissions asked for costs be reserved. Ms Tsui submitted that costs should be reserved. I agree and made the costs order in paragraph 55(c) above.