TRIPOLI INVESTMENTS LTD (IN LIQUIDATION) v. WELBACK INTERNATIONAL INVESTMENTS LTD

DCCJ 1333/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1333 OF 2005

--------------------

--------------------

_____________

Decision

_____________

1. The Plaintiff obtained default judgment and a garnishee order nisi against the Defendant.  The Defendant applies to set aside these two orders.  It conceded that the writ of summons with the Statement of Claim was duly served.  It admitted that, as pleaded in Paragraphs 3 and 4 of the Statement of Claim, it was indebted to the Plaintiff a sum of $1,321,472.12.

2. The Defendant wholly owns the Intervenor.  The Defendant and other companies are part of the Welback Group.

3. The Defendant's defence is that on 20th May 2003 the Intervenor repaid $900,000 to the Plaintiff on its behalf, leaving only a balance of debt in the sum of $1,472.12.  The Intervenor had no other purpose apart from paying the money to the Plaintiff for the Defendant.  This defence is contradicted by the Defendant's own evidence.  In the affirmation of Tse Tsang Yao (the former General Manager of the Intervenor) dated 4th August 2005 Mr. Tse stated that the cheque in the sum of $900,000 was signed by him as one of the two signatories for the purpose of making a temporary loan to the Plaintiff.  He further said that "Due to the fact that the auditor considered that the recoverability of loan of HK$900,000.00 lent to Tripoli Investments Limited is doubtful, provision has to be made for that debt.  Accordingly, the receivable of HK$900,000.00 was not included in the balance sheet."

4. The judgment obtained by the Plaintiff is a regular judgment.  In order to be able to set aside the judgment, 'It is not sufficient to show a merely "arguable" defence that would justify leave to defend under O.14.  The defendant must show that he has "a real prospect of success".  To do so, he must satisfy the court that his case and the evidence that he adduces in support of it is potentially credible and carries some degree of conviction.  Thus, the court must form a provisional view of the probable outcome of the action ......': Hong Kong Civil Practice 13/9/14.  The Defendant has put up a defence which is contradicted by the evidence it adduced.  There is no real prospect of success for the Defendant in its defence.  I therefore dismiss the Defendant's application.

5. The Intervenor is not a party to this action.  Because the Plaintiff is in liquidation, if it intends to claim against the Plaintiff, it has to obtain leave of the court, pursuant to section 186 of the Companies Ordinance.  There is no evidence that it has obtained such leave.  Therefore its application must be dismissed.

Costs

6. I make an order nisi, to be made absolute in 14 days' time, that the Defendant and the Intervenor do pay costs of this application to the Plaintiff, to be taxed, if not agreed.