SHENZHEN EASTERN EXPLOITING (GROUP) CO v. LEUNG KIT WAI t/a CUTE TOYS CO LTD

1990, No A383

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. On the 16th January 1990, I granted ex parte an injunction restraining the defendant from selling or otherwise dealing with 18,904 sets of compressors said by the plaintiff to have been wrongfully taken from a warehouse in Shenzhen where they were being held on the plaintiff's behalf. The plaintiff now seeks to have that injunction continued.

2. Chen Sui, the manager of the plaintiff, affirmed to the plaintiff and the defendant having entered into a contract whereby the defendant was to supply the plaintiff with 500 Toshiba air-conditioners. As security for payment under the contract, the plaintiff pledged to the defendant in default of payment the 18,904 sets of compressors. In Chen Sui's affirmation, he claimed that the contract was cancelled by agreement between the parties and that Madam Leung, the proprietor of the defendant company, undertook to destroy the documents evidencing in the transaction.

3. It is the plaintiff's allegation that she did not in fact do so, but instead used the documents to unlawfully uplift the compressors which she now still has in her custody. In addition, it is alledged that she forged the document which bears the seal of the plaintiff to give the impression that the goods had in fact been delivered and received.

4. Madam Leung has affirmed to having delivered the 500 air-conditioners and to have been paid in part. In her affirmation, she makes reference to a transaction between Grand Face Company Limited, a company which she says is owned by her sister, and Combined Capital Ltd. The goods were, she claims, delivered to Combined Capital at the request of Chen Sui and that the goods under that contract in fact referred to the same transaction as between her company and the plaintiff.

5. There is no evidence of the defendant ever having delivered air-conditioners to the plaintiff nor of the defendant having been paid for such goods.

6. In my view, the affirmations raise several issues which will need to be decided at trial. I am satified that at this point in the proceedings the plaintiff has established a good arguable claim to the right which it seeks to protect. There is a serious question to be tried.

7. The other matter that I need to consider is whether or not to exercise my discretion, on the balance of convenience criteria. One of the matters that Mr Chung on behalf of the defendant submits needs to be put in the balance is material non-disclosure in the affirmation of Chen Sui, filed in support of the ex parte application. It is submitted that the failure to reveal the existence of the agreement between Grand Face and Combined Capital is a material non-disclosure and that this justifies the discharge of the injunction.

8. This, however, was not a contract between the parties involved in these proceedings, and might in due course after the trial, be found to be an independent transaction. In the circumstances, I do not consider this to have been a material non-disclosure by Chen Sui. Even if I had been satisfied that it was a non-disclosure, following the approach of Mr Justice Sears in the Refco case, I would have been satisfied that there was no miss-information in the material which was disclosed compared with the material which was not disclosed.

9. I am of the view that in this case more harm would be done by refusing the injunction. The defendant company, on the accounts disclosed, is in a weak financial position. I am also asked to consider whether or not, in the circumstances, I ought to make an order for payment into Court of a substantial sum from the plaintiff. The goods which are held by the buyer, the subject to the action, are of a value of approximately HK$6 million. In those circumstances, I do not consider that it would be appropriate for me to make any order in connection with that request. I am satisfied that the injunction ought to continue and I will make an order accordingly.