SUN HUNG KAI COMMODITIES LIMITED v. TO LEE WAH SAMUEL

1987. No. A8134

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is an application by the Plaintiff to continue an exparte mareva injunction. The Plaintiff's claim against the Defendant is on an account. They are commodity brokers. The Defendant was a customer. The claim is based on losses arising out of trading in October 1987 when many people sustained disastrous losses. The Defendant has filed a Defence. One of the main platforms of the Defence is that the Plaintiff did not explain the possible risk which would arise out of the customer's agreement he had entered into with them. There is also reference to a breach of Fiduciary duty, breach of the Gaming Acts and Frustration of the Contract. I have heard able submissions from Mr. Bunting and Mr. Tong on the merits of the Defence.

2. I have come to a conclusion that the Defence is very flimsy and has very little prospect of success. That, however, is only one factor to be borne in mind on a Mareva application. A more important one is whether there is evidence that the Defendant may dispose of assets so as to frustrate the satisfaction of any judgment which may subsequently be obtained by the Plaintiff.

3. I accept that I should not attempt to try the application on affidavit evidence. What however does seem to be clear is that very shortly after the writ was served on the Defendant, the completion date of the sale of business premises the Defendant owned jointly with his wife was accelerated forward from the end of February 1988 to the 14th December 1987.

4. Mr. Wu, an employee of the Plaintiff, claims that the Defendant told him in January 1987 that he had not yet sold the premises. I would add that these business premises were the main asset of the Defendant.

5. I accept the submission of Mr. Tong that I should have regard to the overall picture. In doing so, I would observe that several of the statements made by the Defendant are very unconvincing. He claims that the risks of the customer contract or agreement were never explained to him notwithstanding the fact that his initials appear next to the clause referring to this. There is also the rather dubious afterthought referred to by the Defendant to the effect that the instructions for the 5 contracts in question were to sell and not to buy. It is difficult to accept the validity of this statement in the face of the evidence that he paid a margin-call $330,000 on the contracts.

6. I have also borne in mind that very little evidence has been adduced by the Defendant of untoward consequences which would be suffered by him if the injunction continues.

7. There is also the question of the explanation given by the Defendant in his latest affidavit for bringing forward the completion date for the sale of the said business premises. None of the matters he has referred to would satisfactorily explain how the position was transformed in the short period from the 8th December to the 14th December 1987 when the completion in fact took place. Taken on top of this is what I regard as the clear inference to be drawn from the Defendant's affidavit that he was and presumbly still is under some financial pressures.

8. I accept Mr. Bunting's contention that the most important factor I must consider is the risk of the Defendant dissipating assets so as to defeat the legitimate rights of the Plaintiff. It is though my view that on the evidence before me there is undoubtedly a risk that the Plaintiffs will be denied the fruits of any judgment they may obtain.

9. There is also the disputed evidence concerning the Defendant's intention to live in Canada. I accept that I must not attempt to resolve chic on the affidavit evidence before me. I must, however, take cognizances of the fact that there is an issue outstanding on this aspect of the matter and at the very least it is possible Mr. Wu's version of what transpired is correct.

10. The final matter I will deal with is Mr. Bunting's contention that the case I am being asked to consider on this summons is an entirely different one to the case which was presented by the Plaintiff when they obtained the exparte order. This may be so. However, it is my duty to consider all of the additional evidence which has been presented to the Court. It would be unrealistic for to attempt to deal with the matter entirely on the basis of the evidence originally advanced in support of the exparte injunction. What I have to do is to weigh and consider all of the evidence before me. In doing this, I order that the injunction is to continue.

11. The terms of the order I made may need some variation. In particular, I am satisfied that Mr. Bunting is correct in his submission that I should not include in the order assets which are without the jurisdiction. I will hear the parties on this and also on costs.