XCHRX YAU KWONG CHIU AND ANOTHER v. YAU KWONG HA

HCA No. 2607/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2607 OF 1997

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REASONS FOR JUDGMENT

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1. This is the Plaintiffs' application for an injunction restraining the Defendant from selling or otherwise disposing of her property located at Flat A, 17th Floor, Block 1, Julimount Garden, Nos. 8-12 Fu Kin Street, Shatin, New Territories, Hong Kong ("the Property").

Background

2. The First Plaintiff and the Defendant are brother and sister. The Second Plaintiff is the First Plaintiff's son. Madam Tam Ling ("the Deceased") was the mother of the First Plaintiff and the Defendant. By her last will dated 17th December 1986, the Deceased:

(a) appointed the First Plaintiff and the Defendant as her estate's executors and trustees; and

(b) devised and bequeathed all her real and personal estate to the Defendant and the Plaintiffs in equal shares.

3. In the main action, the Plaintiffs claim against the Defendant:

(1) shares in moneys withdrawn by the Defendant from a bank account ("the Joint Account") held in the joint name of the Deceased and the Defendant;

(2) shares in valuables allegedly placed by the Deceased in a safe deposit box opened in the joint name of the Deceased and the Defendant.

4. The Defendant disputes the Plaintiffs' claim and contends that the moneys transferred into the Joint Account (and whatever balance left behind) was intended to be a gift from the Deceased to the Defendant. Further, no admission is made to the Plaintiffs' claim as to valuables (if any) placed in the safe deposit box.

The Application

5. What precipitated the present application can be gleaned from the contents of an affirmation by the First Plaintiff filed on 14th April 1999 ("the Affirmation"). The relevant parts of the Affirmation are:-

"4. I am a serving Police Officer. On 24th March 1999 I was on duty at the North New Territories Police Headquarters. I forwarded my mobile phone to my office telephone. At about 4 pm, I received a phone call from the Defendant's husband. I could recognize the voice of the caller was the Defendant's husband Mr. Wong Tai. He said that he wanted to discuss with me about my claim against my sister in respect of the estate of my deceased mother.

5. In the course of the conversation, Mr. Wong threatened that as I was not qualified for having legal aid (he thought that I am not qualified for legal aid) he would lodge a complaint to the Legal Aid Department and I would be sentenced to imprisonment; he further threatened that even if I succeed in the litigation, my sister would dispose of the assets under her name and I would not be getting a single cent. I responded by saying that he is very dirty.

6. I am concerned that unless restrained by an injunction order my elder sister would take steps to dissipate her assets or would transfer her assets in order to defeat any judgment or order in favour of my son and me."

6. According to Mr. Hung for the Plaintiff, those instructing him had written to solicitors for the Defendant soliciting an undertaking not to dispose of the Property. It was because no undertaking was offered that the Plaintiffs came to court for an injunction order.

The Opposition

7. Mr. Yuen for the Defendant pointed out that this action has nothing whatsoever to do with the Property which the Plaintiffs now seek to restrain the Defendant from disposing of. The Property at all material times has been registered under the Defendant's name and has never been (or has never been suggested) to fall within the Deceased's estate. Hence, whilst not expressed in so many words, the Plaintiffs are in substance seeking a Mareva injunction restraining the Defendant from selling or otherwise disposing of the Property so as to achieve pre-judgment security over the Defendant's assets.

8. I was reminded by counsel that before a Mareva injunction is to be granted, there must be solid evidence of risk of dissipation of assets and that the burden of proof rests with the applicant. See: Third Chandris Shipping Corp. v. Unimarine S.A. [1979] 1 Q.B. 645, per Lord Denning M.R. at p.669A; Ninemia Martime Corporation v. Trave GmbH [1983] 1 WLR 1412 per Kerr L.J. at p.1422H; Ha Sheung Ping v. Lo Siu Yin [1996] 3 HKC 144 per Le Pichon J. at p.153F-I; and 1999 Supreme Court Practice, Vol. I, para.29/L/46 (at pp. 583-584). Bare assertion by a plaintiff is never enough. See: Ninemia Martime Corporation v. Trave GmbH [1983] 1 WLR 1412 per Kerr L.J. at p.1419H and Steven Gee, Mareva Injunctions & Anton Piller Relief, 4th edn., pp. 195-7 (especially at p.197 and footnote 107 thereon)

9. In this application, the only evidence adduced by the Plaintiffs is a bare allegation of an oral threat by the Defendant's husband that the Defendant would dispose of her assets. There is a glaring and total lack of independent evidence which can establish the requisite risk of dissipation.

10. The Defendant's husband denies having made such a threat. He stated on oath that he did not even know the First Plaintiff's mobile phone number or which police station (and thus the telephone number) where he can be reached. In other words, not only the husband did not make the threat, he did not even had the means to do so. More importantly, there is no suggestion nor the slightest evidence that the Defendant procured the alleged threat by her husband, or even knew about it. Given this lacuna in the evidence, the threat allegedly made by the Defendant's husband (if made and which is denied) cannot be used against the Defendant. On the contrary, the Defendant has confirmed on oath that she has not instructed or procured her husband to make the alleged threat.

11. Needless to say, there is no suggestion or any evidence that the Defendant had put up the Property for sale, or has entered into any agreement (whether provisional or formal) for the sale of the Property. There is simply no evidence or any positive conduct on the part of the Defendant that she is in the course of disposing of the Property. In any event, the threat alleged by the Plaintiffs is inherently improbable. If the Defendant really intends to dispose of her assets so as to deprive the Plaintiffs of the fruit of this action (which is denied), why would the Defendant forewarn the Plaintiffs? Not only was there no need for the Defendant to do so, there would not be the slightest motive for her to make such a warning. Indeed, that would be the last thing the Defendant would do if she really has (which is denied) an intention to dispose of her assets.

12. The Property is the residence of the Defendant and her family. The Defendant has confirmed that she has no intention to sell or otherwise dispose of the Property.

13. For good measure, the Defendant mounted some kind of counter-attack. Mr. Yuen said that a mere offer to give undertaking as to damages is of no use, unless the Plaintiffs would be in a position to honour their undertaking. The burden rests with the Plaintiffs to adduce evidence to show that they will be good for their undertaking. See: Brigid Foley Ltd. v. Ellott [1982] R.P.C. 433, per Sir Robert Megarry V.C. at pp.435-436 and Intercontex v. Schmidt [1988] FSR 575, per Gibson J. at pp.579-580. If the Court considers the Plaintiffs may not be able to honour their undertaking as to damages, this Court can and should order the Plaintiffs to fortify their undertaking by either making payment into Court or by providing a bank guarantee. See: Third Chandris Shipping Corp. v. Unimarine S.A. [1979] 1 Q.B. 645, per Lord Denning M.R. at p. 669D-E and The Mito [1987] 2 Lloyd's L. Rep. 197, per Hirst J. at p.198

14. Despite the burden is on the Plaintiffs to show that they will be good for their undertaking as to damages, no evidence has been adduced as to their financial situation. Not to mention that no evidence whatsoever has been adduced to show that the Plaintiffs or either of them would be in a position to honour their undertakings as to damages. All that we know about the First Plaintiff is that he is a police officer. The amount of earning the First Plaintiff can make is thus understandably limited. On the other hand, we know nothing about the Second Plaintiff. The Second Defendant has not put in any affirmation, nor does the First Plaintiff's affirmation deal with the Second Defendant's position. In these circumstances, it would be wholly unfair and unjust to grant the injunction sought by the Plaintiffs.

RISKS OF DISSIPATION

15. Let me point out at once that, with respect, Mr. Yuen's arguments about bare allegations by the First Plaintiff are misleading and untenable. Of course bare assertion or bare allegation is not good enough. If a plaintiff comes to court saying "I fear that the defendant will dissipate its assets", it would attract hardly the slightest attention from the court. Here the First Plaintiff has stated on oath that the Defendant's husband indicated by word of mouth intention to deprive the Plaintiffs the fruits of judgment if the Plaintiff do succeed. There is clearly evidence tending to show risks of dissipation of assets. If there is independence evidence in support, that is all the better but independence evidence is not an absolute necessity. How many cases have been decided on oral evidence without a tint of extrinsic documentary support? If what First Plaintiff has stated in his affirmation as quoted above is believed, a court may well accept that there is solid evidence of risks of dissipation. And there is more.

16. On the face of the Defence filed, I was under the impression that the monies in the Joint Account were still in that account. However, when I enquired, it transpired that the roughly $1.3 to $1.4 million had been withdrawn by the Defendant from the Joint Account. Now, since the Joint Account is in the name of the Deceased and the Defendant, prima facie at least part of the monies in that account would form part of the estate of the Deceased. Indeed there is evidence that the Defendant had agreed in writing to share the balance in the Joint Account with the Plaintiff. By withdrawing monies from the Joint Account, and no justification or explanation for doing so has been given, the Court may very well conclude that there had been efforts to dissipate assets belonging to the estate.

17. Mr. Yuen contended that the allegations by the First Plaintiff of what the Defendant's husband had said is incredible, irrelevant and contradicted by affidavit evidence filed on behalf of the Defendant. I shall deal with this evidential problem below. Even if I disregard the evidence alleging what the Defendant's husband said, for what happened to the monies that were in the Joint Account, I would conclude that there are risks of dissipation.

18. I was not impressed by the fact that no attempt had been made by the Defendant to dispose of the Property after the alleged threat to deny the Plaintiffs the fruit of judgment or despite this application being made on notice. The threatened dissipation is executory. It is given to be understood as something that will happen if and when the Plaintiffs succeed in this action. Plainly, it will be too late to wait until the Defendant carries into effect the alleged threat indicated by her husband. In any event the threat would have served its purpose if the Plaintiffs were discouraged from proceeding with this action.

Balance of Justice

19. I fully accepted that there is conflict of evidence regarding the alleged threat by the Defendant's husband. Like Mr. Yuen said, at this stage, the court cannot on the basis of paper evidence determine whether the threat did occur or whether the Defendant has any part in the making of the threat. This being so, I was attracted by the approach canvassed by Mr. Hung.

20. Mr. Hung suggested that in a situation like this, I should derive assistance from the following dicta:-

"The fundamental principal underlying this jurisdiction is that, within the limits of its powers, no court should permit a defendant to take action designed to ensure that subsequent orders of the court are rendered less effective than would otherwise be the case. On the other hand, it is not its purpose to prevent a defendant carrying on business in the ordinary way or, if an individual, living his life normally pending the determination of the dispute, nor to impede him in any way in defending himself against the claim. Nor is it its purpose to place the plaintiff in the position of a secured creditor. In a word, whilst one of the hazards facing a plaintiff in litigation is that, come the day of judgment, it may not be possible for him to obtain satisfaction of that judgment fully or at all, the court should not permit the defendant artificially to create such a situation." Derby & Co. Ltd. v. Weldone (Nos. 3 & 4) [1990] Ch. 65 per Lord Donaldson MR at 76. (Emphasis added)

"But I think it is important in this area to distinguish between fundamental principles and what are sometimes described as "guidelines," i.e. useful generalisation about the way to deal with the normal run of cases falling within a particular category. The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the "wrong" decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trail) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong" in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle." Films Rover Ltd. v. Cannon Film Sales Ltd. [1987] 1 W.L.R. 670 per Hoffman J. (as he then was) at 680. (Emphasis added)

Also, S.21L of the High Court Ordinance, Chapter 4 provides that:-

"The court of First Instance may by order (whether interlocutory or final) grant an injunction ..... in all cases in which it appears to the Court of First Instance to be just or convenient to do so".."

21. In this case, the Defendant has gone on oath to say she has no intention to sell the Property which is her residence, I really cannot see how an undertaking not to dispose of the Property or an injunction order to similar effect can cause any prejudice or inconvenience to her. I was told by Mr. Yuen that the Defendant refused to give an undertaking and opposed the application for injunction as a matter of principle. Well, for that matter, the test is balance of convenience. It is sad that the Defendant is fighting for fighting's sake only without regard to the consequences of costs and judicial resources which may be better utilized.

22. Following Lord Hoffman, I thought an interlocutory injunction would be justified.

Fortification of Undertaking

23. It was argued on behalf of the Defendant that either injunction should be refused or that the Plaintiffs be required to fortify their undertaking by way of monetary security as condition for grant of injunction. I accepted for argument's sake that the Plaintiffs might not have sufficient financial resources to honour their undertaking. However, two factors weighed heavily in my mind.

24. The first factor is that the Plaintiffs appeared to me to have a good arguable case in the action. The parties had previously reached a written agreement in the following terms:-

"AN AGREEMENT TO SHARE THE ESTATE OF THE LATE MOTHER (YAU TAM LING)

Beneficiaries: Yau Kwong Ha, Yau Kwong Chiu, Yau Shek Man (respectively son/daughter/grandson)

After the discussion, we hereby agree that the estate of late mother to be divided in the following manners. We have invited a solicitor Yap Chap Yin to witness the process, in order to avoid dispute.

Total value of the estate: HK$812,006.93 which does not include legal fee payable and miscellaneous expenses, the aforesaid amount would be divided into 3 equal parts. For details of the account, see breakdown of the accounts.

(sd.) Yau Kwong Ha

Beneficiary (signature)

(sd.) Yau Kwong Chiu

Witness by: (illegible) (illegible)

2-6-1996"

25. It is the Defendant's case that the Plaintiffs renegaded on the agreement. It is not suggested that the agreement was entered into on without prejudice basis. Thus it is likely that the Plaintiffs would eventually establish an interest or shares in monies that were in the Joint Account which is now basically empty.

26. The other factor is that the chances of calling upon the Plaintiffs to honour their undertaking are quite remote. As the Defendant stated on oath, she has no intention to sell the Property. An injunction order in terms sought preventing her from selling the Property is in the circumstances very unlikely to cause loss to the Defendant or any other party. Even if it may become necessary for the Defendant or a mortgagee to sell the Property, the time frame for conveyancing would permit the Defendant or the mortgage enough time to come before the court for variation or discharge of the order on sufficient ground.

27. In any event, as the English Court of Appeal held in Allen v. Jumbo Ltd [1980] 1 W.L.R. p.1252, a poor plaintiff should not be denied a Mareva injunction just because he is poor. The court should look at the matter at hand broadly and balance the convenience or inconvenience. The present case, in view of all relevant factors and circumstances, is , like Allen v. Jumbo Ltd, one where injunction should be granted.

Order

28. In the premises, I granted an order restraining the Defendant from disposing of the Property, the injunction to be discharged without further order upon the Defendant providing suitable security to the value of $500,000. Costs of the application be costs in the cause.