XCHRX D.P.I. (HK) LTD. AND ANOTHER v. WONG ZE KEI MAIMEI AND OTHERS

HCA 11191/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11191 OF 1997

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J U D G M E N T

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1. The application by the Defendants for variation of the Mareva injunction is for provision to be made for legal expenses in the defence of the criminal case, and the Applicant has also made application for variation of the Mareva injunction to provide for payment of the legal costs incurred by them when they were acting as solicitors for the 1st and 2nd Defendants which legal costs have been taxed and allowed at the sum of $338,158.

2. Mr Clough for the Plaintiffs has objected to both applications and he has submitted that this case is different from the usual Mareva case in that the Plaintiff here is making a proprietary claim against these Defendants and the basis of that proprietary claim is quite simply that these Defendants had allegedly embezzled or stolen the monies which have now been frozen from their previous employers who are the Plaintiffs of the civil case. Mr Clough therefore submits that the usual Mareva principles making provision for living expenses and legal expenses should not apply because of the proprietary claim in this case.

3. I would have been sympathetic to that submission had it not been for the fact that in this particular case the matter was complicated by the fact that before the Defendants were arrested, the Department of Justice applied for, and subsequently obtained, a Restraint Order, restraining or freezing all the assets of the 1st and 2nd Defendants under the Organised and Serious Crimes Ordinance. Mr Tang for the Applicant, has relied upon O.117, r.5(1) which provides for reasonable living and legal expenses of a defendant under an Organised and Serious Crimes Ordinance Restraint Order. In addition, when Mr Adrian Bell, then appearing for the Plaintiffs before Findlay J, in applying for the Mareva injunction, submitted to Findlay J that the Mareva order should mirror but not duplicate the order made in the Restraining Order for living expenses of the Defendants, and insofar as the provision for legal fees was concerned, Mr Bell said :

"Provision for legal fees has also been made in the [Restraint] Order. It is accepted these are intended to cover the criminal proceedings and not these proceedings [the civil proceedings]. Consequently, further provision should be made."

4. It is not clear whether when Findlay J made the Mareva injunction he had in mind provision for legal expenses to defend in the criminal case, but in view of what Mr Bell had said to him, in my view, Findlay J must have had in mind provision for legal expenses to defend in the criminal case. In any case, it is my view that these Defendants should not be permitted to appear as Defendants in a criminal case without legal representation.

5. At the last hearing, I adjourned the proceedings so that they could apply for legal aid for legal representation in the criminal case. It has now transpired that the application for legal aid was refused, and therefore if no provision is made for legal expenses, they will have to appear in the criminal case which is scheduled to commence next week on Wednesday, 13th January, without legal representation. That, to my mind, is clearly undesirable.

6. Insofar as the claim of the Applicant is concerned, the bulk of those expenses, which were taxed, were incurred in respect of the criminal case, and only a small portion of that was incurred in the civil case. The 1st Defendant was arrested on 18th October 1997, and the 2nd Defendant on the following day, charges were laid on 20th October 1997. The Restraint Order by Deputy Judge Lugar-Mawson was made on 21st October 1997. Thereafter, of course, all the funds belonging to the Defendants were frozen. The Restraint Order remained in force until it was discharged on 26th May 1998. In the meantime, Findlay J, on 6th November 1997, issued a Mareva injunction, and it is the variation of that Order which is now sought.

7. In the circumstances, I will vary Findlay J's Order to this extent : that there be provision for payment out of the restrained funds for payment of the sum of $338,158 to Messrs Ong & Chung. Secondly, that there be provision for legal expenses for the lawyers who are presently retained by the Defendants to defend the criminal charges. I will specify the amount (as mentioned in the estimate given to me) which is estimated at $2,110,000 which is to pay for both Solicitors and Counsel. These costs will have to be taxed at the end of the criminal case if the Plaintiffs take the view that they are in any way excessive, and after taxation if any amount is disallowed by the Taxing Master, then the instructing solicitor will have to reimburse the Plaintiffs the amount which is not allowed by the Taxing Master.