RAMUKA TRADING Pte LTD v. AVA FASHION LTD AND OTHERS

DCCJ 72/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 72 OF 2015

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REASONS FOR DECISION

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1.  On 7 January 2015, being the same day of the issuance of the writ of summons, the plaintiff took out an inter-parte summons against the 1^st – 4^th defendants for a mareva injunction seeking to restrain them from disposing assets in the following amounts:-

(a)As against the 1^st and 2^nd defendants, a total of US$22,321.

(b)As against the 3^rd and 4^th defendants, a total of US$59,345.

2.  On 19 January 2015, in absence of the defendants, I granted the plaintiff’s application for an injunction against the 1^st and 3^rd defendants with reasons reserved.  The application for an injunction against the 2^nd and 4^th defendants was abandoned at the hearing.  I now give my reasons for granting the injunction.

Proprietary injunction

3.  The reliefs sought in paragraphs 1(b) and 2(b) of the plaintiff’s summons, namely, to restrain the sums transferred by the plaintiff into the 1^st and 3^rd defendants’ respective bank accounts, are more properly considered as an application for a proprietary injunction.

4.  The appropriate test to consider whether to grant the proprietary injunction is set out in the case of American Cynamide Co v Ethicon Ltd (No 1) [1975] AC 396.  

Serious issue to the tried

5.  The plaintiff claims the 1^st and 3^rd defendants committed the tort of deceit.

6.  The plaintiff is a company incorporated in Singapore carrying on business in trading and financing. On 9 October 2014 and 20 October 2014, she received emails purportedly from her business partner, PT Admiralindo Bintang Terang (“PT Admiral”) in which invoices were enclosed.  The invoice sent on 9 October 2014 (“the First Invoice”) requested payment in the sum of US$22,321 to be deposited into the 1^st defendant’s bank account. The invoice sent on 20 October 2014 (“the Second Invoice”) requested payment in the sum of US$59,345 to be deposited into the 3^rd defendant’s bank account.

7.  Believing the invoices and emails were genuine, the plaintiff caused the sums of US$22,321 and US$59,345 (collectively known as “the said sums”) to be transferred to the 1^st and the 3^rd defendants’ bank accounts respectively.

8.  On 20 October 2014, PT Admiral informed the plaintiff that they did not send the 2 emails or the First and Second Invoices attached.  Moreover, PT Admiral confirmed they had no connection with or knowledge of the 1^st and 3^rd defendants.  

9.  Although the plaintiff immediately took steps to stop the bank transfers, the bank was unable to do so because the said sums have already been transferred into the 1^st and 3^rd defendants’ bank accounts.

10.  Prior to issuing the writ of summons, the plaintiff tried to contact the 1^st and 3^rd defendants for the return of the funds but the defendants did not respond.  Up until the date of the hearing, the 1^st and 3^rd defendants have continued to fail to respond to the plaintiff and have failed to return the said sums to the plaintiff.

11.  Having considered the matters affirmed by the plaintiff and the documents produced in support of their allegations, I am satisfied the  evidence before me discloses a viable cause of action against the 1^st and 3^rd defendants. I am satisfied there is a serious issue to be tried. 

Balance of convenience

12.  In considering where the balance of convenience lies, the court must consider, amongst other things, the preservation of status quo and adequacy of damages.

13.  Mr. Beel submitted it is important to preserve the assets as the 1^st and 3^rd defendants are “shell companies”.  The 1^st defendant has a share capital of $1 and the 3^rd defendant has a share capital of $100.  The sole directors of the defendants reside out of jurisdiction and have not responded to any of the plaintiff’s correspondence.  Moreover, the affirmations of service and the incorporation forms filed with the company registry show that the registered offices of the 1^st and 3^rd defendants are occupied by their respective company secretaries and not by the defendants themselves. 

14.  Mr. Beel submitted there was a high risk that the sums of money would be transferred out of the bank account and once the money is transferred out of the bank accounts, it would be almost impossible to trace the said sums.

15.  Having considered those submissions and in absence of any evidence to the contrary, I accepted Mr. Beel’s submissions that the circumstances of the case are such that it is pertinent to restrain the said sums. By reason of the need to preserve the said sums transferred into the 1^st and 3^rd defendants’ bank accounts and the plaintiff’s undertaking as to damages, I am satisfied that the balance of convenience lies in favour of the plaintiff in granting the injunction as set out in paragraphs 1(b) and 2(b) of the summons.    

Just and convenient to grant the injunction

16.  In the absence of any evidence to the contrary and by reason of the matters set out above, I fail to see any injustice or inconvenience that would be caused to the 1^st and 3^rd defendants if the injunction was granted.

Mareva injunction

17.  In addition to the proprietary injunction, the plaintiff also seeks a mareva injunction to restrain the 1^st and 3^rd defendants from dissipating their assets up to the sum of US$22,321 and US$59,345 respectively (see paragraphs 1(a) and 2(a) of the summons).

18.  The requirements that must be satisfied before a mareva injunction could be granted are succinctly set out in paragraph 29/1/65 of the Hong Kong White Book 2015.

Good and arguable case

19.  Having considered the evidence and submissions made by Counsel, I am satisfied there is a good and arguable case on the substantive claim. I am satisfied that the plaintiff has produced sufficient evidence to show she remitted the said sums into the 1^st and 3^rd defendants’ bank accounts and that such remittances were procured by deceit. I am satisfied the plaintiff’s case is “more than barely capable of serious argument.” (see Akai Holdings Ltd and others v. Ho Wing On and others (unrep, HCCL 37/2005 and 40/2005, 2 February 2009)

Assets in the jurisdiction

20.  By reason of the remittance of the said sums into the 1^st and 3^rd defendants’ bank accounts, the defendants have assets in this jurisdiction capable of being restrained.

Real risk of dissipation

21.  In respect of whether there is a real risk of dissipation of the assets, I accepted Mr. Beel’s submissions that the circumstances of the case point to a real risk of dissipation of assets. The evidence submitted by the plaintiff suggests that the said sums were perpetrated by fraudulent emails. Up to the date of the hearing, the said sums have been transferred into the 1^st and 3^rd defendants account for almost 3 months. However the 1^st and 3^rd defendants have failed to contact the plaintiff or return the said sums to the plaintiff. By reason of the defendants’ failure  to return the said sums to the plaintiff, the plaintiff made a report to the Hong Kong police and Singapore police.

22.  I accepted Mr. Beel’s submission that the circumstances suggest the 1^st and 3^rd defendants do not intend to return the said sums to the plaintiff and it is highly likely the said sums will be dissipated in the near future to avoid detection by the relevant authorities. Since the 1^st and 3^rd defendants’ respective share capital is nominal, it is doubtful they have sufficient assets to satisfy any judgment that may be awarded to the plaintiff on the said sums. In all the circumstances, I accept Mr. Beel’s submission that there is a real risk the 1^st and 3^rd defendants will dissipate their assets up to the amount of the said sums.   

Balance of convenience

23.  For the same reasons given at paragraphs 12 – 15 hereinabove, I am satisfied that the balance of convenience lies in favour of granting the injunction. Moreover I am satisfied that the scope of the order as per paragraphs 1(a) and 2(a) and the discovery provisions of the plaintiff’s summons is not oppressive or unfair.

24.  For reasons given hereinabove, I am of the view that the injunction should be granted.

25.  I therefore allowed the plaintiff’s inter-parte summons and granted the injunction in so far as it related to 1^st and 3^rd defendants with costs to be reserved.

26.  Mr. Beel submitted a return date was appropriate in all the circumstances.  I have queried whether a return date was suitable since the application was made by way of inter-parte summons. However having considered the absence of the 3^rd defendant at the hearing, and the previous refusal of the 3^rd defendant’s company secretary to accept the plaintiff’s correspondence sent to the registered address, I acceded to Mr. Beel’s request and ordered the return date to be fixed on 5 February 2015 at 2:30pm in Court 26.