SHING PROPERTIES LTD v. CHAN KA PO NATASHA AND OTHERS

DCCJ 2274/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2274 OF 2010

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D E C I S I O N

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1. I have two summonses before me to be decided. The summons taken out by the 1st and 2nd Defendant is for an injunction order that the plaintiff be restrained from disposing of or dealing with or diminishing the proceeds of sale of Flat B, 60th Floor, Shan Shing Building, Nos. 18 and 20, Village Road, Hong Kong (hereinafter referred to as “the property”). The summons taken out by the 3rd defendant has a similar nature in this application. The sale of the property is to be completed tomorrow. What I have to decide is whether the plaintiff has any intention to dissipate the proceeds of sale for his directors or director.

2. On 12 March 2013, there is a letter from Fan Wong & Tso Solicitors, who were acting for the 1st and 2nd defendant, to the solicitors acting for the plaintiff.  Under the last paragraph as appearing on page 38 of the trial bundle it says:

“It has recently come to our notice that your client is now about to complete the sale of his premises known as Flat B, 6th Floor, Shan Shing Building, Nos. 18 and 20, Village Road, Hong Kong (“the property”)  on 26 March 2013 two weeks later.”

On page 38 of the trial bundle it says:

“Your company is a limited company registered in Hong Kong. Apart from the property and your client’s car parking space, our clients are not aware of any other properties of significant value held by your client. Our clients have good reason to believe that it was soon after receiving and starting the final submissions or the trial, your client has decided to sell the property. There is a real risk that upon completion the sale proceeds would be dissipated by your client.”

There is no reply to this letter.

3. On 20 March 2013, the solicitors acting for the Fan Wong & Tso wrote to the plaintiff’s solicitors:

“We have reasons to believe that the plaintiff may dissipate the sale proceeds after completing the said conveyancing transaction on 26 March 2013 and that our clients require urgent protection of their costs(?) in the above action.”

On the same day, Kenneth C C Man & Co referred to this letter and wrote back but there is nothing in this letter concerning the alleged dissipation of assets of the proceeds of sale of the property.

4. Judgment of the case between the parties was handed down on 21 March 2013.  The court dismissed the plaintiff’s claim.  Mr Allan James Payne, a director and shareholder of the plaintiff, made an affirmation on 23 March 2013.  Under paragraph 38(b) of his affirmation he said the following:

“I am having a show project with my business partner and the project requires financial contribution. If we cannot obtain other finance I may apply the sale proceeds as contribution. Having said that, the contribution may not exhaust all the sale proceeds and the remaining balance together with the car park may still provide sufficient security to the defendant’s costs. Miss Shing and I can also realise our personal assets in satisfaction of the defendants’ costs.”

It is clear here that Mr Payne indicates an intention that he may use the proceeds of sale of the property for his show project.  That is to say, he may use the proceeds of sale for a business which is not the plaintiff’s business.

5. I also note that the directors of the plaintiff owe no legal liability to satisfy any debts incurred by the plaintiff.  Here under paragraph 38(b) of (the affirmation) Mr Payne, it shows an intention on his part that he may use the proceeds of sale of the property.  In this regard, I adjudge that there is a real risk that the proceeds of sale of the property (may be dissipated) by the plaintiff’s director.

6. And so I make an order in terms of paragraph 1, 2, 3, 3(a) and 4 of the summons taken out by the 1st and 2nd defendant and I make an order in terms of paragraphs 1, 2, 3 and 5 of the 3rd defendant’s amended summons.