XCHRX HIGH FASHION GARMENTS CO. LTD. v. LAU KAM WING AND ANOTHER

1999, No. A3345

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. On 12 May, 1999, Deputy Judge Li varied an order in the form of a Mareva Injunction that had been made on 22 March 1999, and varied on 26 March 1999.

2. The basis for the plaintiff's action is that the first defendant stole goods and money to the value of $6.9 million. The second defendant was a party because it appeared initially that the first defendant had transferred $800,000 to the second defendant's bank account. Later, the plaintiff says that some of the goods stolen were found at the premises of a firm of which the second defendant was a partner. Accordingly, the plaintiff now claims the sum of $6.9 million from both defendants.

3. In his defence, the first defendant admitted that he retained a sum of $2.5 million from the proceeds of selling the plaintiff's goods. The second defendant admits she is a partner of the firm mentioned, but denies that she assisted the first defendant to sell the stolen goods.

4. The first defendant is serving a prison sentence of four years.

5. The defendants' major asset, as far as the plaintiff knows, is the net proceeds of the matrimonial home; some $2.2 million, which has been paid into court. In his reasons for ordering this sum paid into court, Deputy Judge Li held that it was "beyond dispute that . . . the money from the first defendant used to purchase the second defendant's flat must be either money belonging to the plaintiff or money the plaintiff may recover as a debt." For the reasons he gives, that conclusion may be right; if it is, I would say that there seems to be no doubt that the money may be recovered by the plaintiff as its money in equity, but the second defendant disputes this, and there is some evidence that indicates that the second defendant may show that the money did not come from the first defendant's dishonest appropriations. What the outcome of this dispute will be, I cannot say. Certainly, it cannot be resolved at this stage.

6. Under the original order, the defendants were entitled to spend $15,000 per week on living expenses and $50,000 on legal costs. The first defendant's living expenses are now not a burden on him. The second defendant applies for the order to be varied to allow her $33,000 per month for her living expenses, and the sum of $20,000 as legal costs of this application.

7. So, from a half share of about $65,000 per month under the original order, the second defendant now wants $33,000 per month for herself. That, to me, does not seem very different.

8. I accept that it may be galling for the plaintiff to see the second defendant being paid living expenses out of money that might be proved to belong to it, but I do not think that, until this dispute is settled, I can refuse the second defendant her living expenses. What she claims, in the light of the existing order, is not extravagant.

9. As for the claim for an allowance of $20,000 as cost of this application, this is also not unreasonable.

10. The second defendant claims only that the costs of this application be in the cause.

11. In the result, I make an order in term of the second defendant's summons dated 3 August 1999, as amended.