XCHRX CHAN PUI KUEN v. LEE OI WAH

HCPI 661/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO.661 OF 2000

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REASONS FOR DECISION

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1. This is the hearing on the return date of a Mareva injunction obtained by the plaintiff ex parte against the defendant as ordered by Woolley DJ on 16 August 2000 and continued by Yam J on 25 August 2000. By the inter partes summons, the plaintiff asks for the continuation of the injunction until trial with the defendant opposing. There is also before me a summons taken out by the plaintiff for specific discovery of a number of documents in aid of the Mareva injunction under section 21L of the High Court Ordinance.

2. After hearing the parties, I ordered that the Mareva injunction and the ancillary orders thereto be discharged as against the defendant on the grounds that the plaintiff had failed to satisfy me on the evidence adduced that there was a risk of the defendant dissipating her assets either within or outside this jurisdiction. I further ordered that the plaintiff's summons for discovery be dismissed since that application was dependent upon the successful continuation of the injunction. I indicated that I shall give detailed reasons in writing which I now do.

3. The plaintiff's claim against the defendant is for damages for personal injuries. Both plaintiff and defendant reside in the Lei Muk Shu district in Kowloon. Both of them engage in buying and selling shares and, for that purpose, do attend regularly at the Lei Muk Shu branch of the Kincheng Bank. On 27 May 1999, whilst they were both at the Bank watching the price of stocks shown on a screen at the Bank, an argument arose between them when one got in the way of the other. The plaintiff alleges that during the argument she was pushed by the plaintiff and fell on the ground, resulting in her right elbow being injured. An ambulance was called by the bank staff and the plaintiff was taken to hospital where she was diagnosed to have a fractured elbow. Undoubtedly, this incident had generated bad blood between the parties already.

4. The writ was issued by the plaintiff against the defendant on 31 May 2000 which was preceded by a letter of demand before action dated 27 May 2000. The total claim by the plaintiff was for a sum of $867,000.00. On 16 August 2000, some two and a half months after the action was commenced, the plaintiff obtained an ex parte Mareva injunction against the defendant, in which the defendant was restrained from disposing of up to $1 million of her assets and was further ordered to disclose all her present assets. This ex parte order was continued by way of an interim order by Yam J on 25 August until the matter could be determined inter partes.

5. At the start of the hearing before me, counsel appearing for the defendant quite properly conceded that the plaintiff had a good arguable case and that was not a matter in issue. It was also not disputed that the defendant had assets within the jurisdiction as disclosed by her pursuant to the order of Woolley DJ. The real issue in dispute was whether the plaintiff had shown on the evidence adduced that the defendant was dissipating her assets with a view to defeating any judgment which the plaintiff may obtain at the end of the day.

Evidence of dissipation of assets

6. The evidence relied on by the plaintiff at the ex parte application before Woolley DJ as contained in the affirmation of the plaintiff showing, or attempting to show, that the defendant had dissipated her assets can be summarized as follows :

(a) At the end of May or early June, the plaintiff was told by her neighbour, a Mrs Ko, that the defendant had terminated time deposit account with the Bank of East Asia Ltd before its maturity, and that the amount should not be less than HK$100,000.00.

(b) The plaintiff was told in early June 2000 by one of her neighbour (whose name was not known to the plaintiff) that Miss Poon, one of the staff of the Kincheng Bank at Lei Muk Shu branch, had advised the defendant that the defendant could avoid paying damages to the plaintiff by transferring the defendant's monies to the defendant's children.

(c) In early June 2000, the plaintiff was told by a Madam Chan that the defendant was in the course of transferring her assets. Madam Chan also discussed with the plaintiff the terms of settlement on behalf of the defendant and told her that she would get nothing if the defendant was declared bankrupt.

(d) On 2 and 5 June 2000 and also one occasion between the 10 and 13 July 2000, the plaintiff saw the defendant withdrawing money from the Kincheng Bank at Lei Muk Shu Estate, but the amounts withdrawn by the defendant on all those occasions were not known to the plaintiff. Moreover, on another occasion on 23 June 2000, the plaintiff saw the defendant selling shares at the Stock Market and obtained a receipt for such sale but the plaintiff could not give any more details of the sale.

(e) The plaintiff was told by her neighbour, one Sim Ku, on 31 July 2000 that the defendant was seen by Sim Ku at the Kincheng Bank withdrawing a large amount of cash as she was seen to be given a stack of HK$1,000 notes together with a bag by the bank teller. According to the plaintiff, Sim Ku estimated the amount to be several tens of thousand of dollars.

(f) On 1 August 2000, the plaintiff was again told by Madam Chan that the defendant was in the course of transferring her assets and would be declared bankrupt, and further emphasised that the plaintiff would get nothing if the plaintiff did not settle the case with the defendant.

(g) On 14 August, the plaintiff was told by Madam Chan that Madam Chan saw the defendant withdrawing money from the Kincheng Bank that afternoon but the amount withdrew was not known.

(h) On 14 August, the plaintiff went to the roast meat stall and noted that the name of the stall was Leung Kee Roast Meat and found out that the name of the lady at that stall to be Mrs Wong. Mrs Wong then told the plaintiff that she did not wish to be involved in this case since people in Lei Muk Shu Estate were scared of the defendant. At the same time, Mrs Wong denied that on a previous occasion she had told the plaintiff that the defendant had assets of about $3 million but that it was Mrs Ma whom she was referring to. When further asked, Mrs Wong said that the defendant was rich but she did not know how much the defendant had.

(i) In June 2000, the plaintiff was told by a lady called Ah Chi, who lived at the 3rd floor of the same building as the plaintiff, that the defendant had been purchasing shares through Lee On Tat Investment Ltd at Central for many years.

7. The defendant on the other hand strongly denies that she is dissipating her assets with a view to defeating any judgment that may be given against her at the end of the day.

8. It can be seen at once from the above summary of the evidence, relied on by the plaintiff, that it is entirely hearsay with the exception that the plaintiff saw the defendant withdrawing money at the bank. Whilst hearsay evidence may be admissible in interlocutory proceedings, but where that hearsay evidence relates to such disputed matters as here, very little or even no weight can be attached to such hearsay evidence. That is particularly so when the hearsay evidence takes the form that it does here, namely "gossip" as between neighbours which cannot be shown to have any solid foundation. I therefore do not feel that I can attach any weight to such hearsay evidence.

9. That it is dangerous to attach any weight to such hearsay evidence is quite clearly demonstrated in this case. It is the defendant's case that at the end of May, a daughter of the defendant had recently died. This was informed to the plaintiff's solicitor by phone by a friend of the defendant at the end of May 2000. In the plaintiff's affirmation filed in support of the ex parte application for injunction, the plaintiff states that she was told by a neighbour, Mrs Mok, who lives on the 9th floor of the same building as the plaintiff, that the defendant was lying and that Mrs Mok had seen the defendant having morning tea with her daughter some time in May 2000 in a restaurant in Lei Muk Shu Estate. The plaintiff further states that she was also told by Mrs Mok that the defendant's daughter had recently returned from the U.S.A. to visit the defendant.

10. It was only when the defendant exhibited the death certificate and birth certificate to her affirmation in respect of her late daughter that the plaintiff accepted that a daughter of the defendant had in fact died as the defendant said. It further transpired that the defendant has two other daughters besides the one who has died.

11. Mr To, who appeared for the plaintiff, also sought to show dissipation of assets by referring to the plaintiff's savings account passbook with the Kincheng Bank, and pointing to various withdrawals from that account for the period from 29 May 2000 (i.e. two days after the date on the letter of demand by the plaintiff to the defendant) up until the time of the ex parte application. This bank passbook was produced by the defendant pursuant to the order for disclosure of assets ancillary to the ex parte Mareva injunction. Two of the withdrawals which stands out as being somewhat larger than the others, in the amounts of $200,000.00 and $100,000.00 have been explained by the defendant. The $200,000.00 was used for a loan to her nephew of $150,000.00, to be repaid later in the year, and the $100,000.00 was for the funeral expenses for her deceased daughter. The other withdrawals range from a few hundred dollars to $60,000.00

12. When one looks at the entirety of this savings passbook of the defendant, it can be seen that for the four months or so before 29 May 2000, there are from time to time withdrawals of amounts of $30,000.00, $40,000.00, $50,000.00 and $60,000.00. That is hardly surprising when it is common grounds that the defendant is a person who indulges in the buying and selling of shares in Hong Kong. What is more significant is the fact that from 29 May 2000 onwards, there were regular deposits into this account in June of $60,000.00 odd, $59,000.00 odd and $75,000.00 odd, as well as three deposits of $18,000.00 odd in July 2000. Furthermore, it can also be seen from this passbook that the defendant has maintained a healthy balance which is not different from the balance maintained in the same account prior to 29 May 2000.

13. In my view, nothing in this passbook leads me either to the conclusion or even to drawing any inference that the defendant was dissipating her assets with a view to defeating any judgment which the plaintiff may obtain against her.

14. Mr To further makes a number of criticism against the defendant. Firstly, he says that the defendant has not sufficiently explained a number of the withdrawals in the savings account of the defendant as well as entries in the defendant's foreign currency savings account, and other documents relating to shares transactions of the defendant so as to show that there was no dissipation of assets. Secondly, he says that the defendant's foreign currency savings account passbook commences on 22 June 2000 and the defendant has failed to disclose her financial position prior to that date so as to show there was no dissipation of her assets in that account.

15. The short answer to these criticism of Mr To is that, firstly, the onus is on the plaintiff to show dissipation of assets by the defendant and not for the defendant to prove that she had not dissipated her assets. Secondly, all the documents, whether bank account passbooks or share transaction documents, were disclosed by the defendant pursuant to the order for disclosure in aid of the Mareva injunction. An order to disclose assets in aid of a Mareva injunction imposes on a defendant the duty to disclose the whereabouts of her assets at the time either when the order is made or when the defendant is served with the order so as to ensure the effectiveness of the injunction order, in that, the plaintiff can then serve the order upon other parties, such as bankers to ensure preservation of the assets. I do not read that order as requiring the defendant to disclose what she had done with her assets at a time before the order was made. To that extent, Mr To's submission is wholly misconceived.

16. Indeed, it was due to such misconception that the summons for discovery was taken out by the plaintiff. It was clear from Mr To's submission that he required the further discovery from the defendant in order to assist him in showing dissipation of assets by the defendant. In my view, that is not what "discovery in aid of a Mareva injunction" means (see AJ Bekhor & Co. Ltd v. Bilton [1981] 2 All E R 565).

17. For the above reasons, I came to the inevitable conclusion that the plaintiff had failed to show any solid evidence from which it can be inferred that the defendant intends to dissipate her assets.