CHU WEN JING JENNIFER v. SIN HON WAI

HCA 10/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 10 OF 2016

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AND

HCA 6/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 6 OF 2016

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AND

HCA 121/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 121 OF 2016

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(Consolidated pursuant to the Order of Master Hui of the High Court dated 23 February 2016 with HCA 10/2016 being the lead action)

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D E C I S I O N

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Introduction

1.  This concerns the plaintiff’s application for the continuation of an ex parte Mareva injunction order (which in effect prohibits the defendant from depleting his assets below $22.58 million) until judgment in this action (HCA 10/2016) or further order.  It is opposed by the defendant.

Background

2.  The summary of the background appearing below is largely undisputed.

3.  The plaintiff has been a practising medical doctor which earns a substantial amount of medical fee.  The defendant has been in various jobs, including teaching, computer, finance, and, from about 2010 to 2015, a fortune-teller operating over the internet.

4.  After the parties became acquainted, their relationship became intimate, and (at least according to the plaintiff (which the defendant does not deny)) this developed to the stage of their discussing the prospect of marriage (some time before the defendant stopped contacting the plaintiff in December 2015).

5.  During the time of their amicable relationship, the plaintiff has given to the defendant:

(a) various personal gifts, such as a watch, smart-phone and computer tablets and a used car;

(b) various sums of money.

Parts of the money given to the defendant (totaling $22.58 million) became the subject-matter of this action.  The plaintiff claims that they were her money; the defendant should therefore account for them.  The defendant, on the other hand, asserts that they were (like the chattels mentioned in sub-para (a) above) also personal gifts.

6.  Further, the defendant is the registered owner of 6 residential units:

(1) 5 units are located in Tuen Mun (“the Tuen Mun units”);

(2) 1 unit is located in Tseung Kwan O (“La Cite Noble unit”).

(collectively “the suit properties”)

7.  The defendant frankly admitted, during the hearing, parts of the money given to him by the plaintiff had been used to purchase (at least) some of the suit properties (except perhaps for the unit purchased in July 1997).

Good arguable case

8.  The relevant legal principles are undisputed. The first hurdle for an applicant seeking an interlocutory Mareva injunction is to show that he has a good arguable case on a substantial claim over which the court has jurisdiction (Hong Kong Civil Procedure 2016, Vol 1, para 29/1/65 to 29/1/66).

9.  There are references to “serious question to be tried” in the defendant’s skeleton submissions (para D1 and D2 thereof) but I take them to refer to the test of “good arguable case” instead.

10.  The essence of the defendant’s argument regarding this aspect is that the plaintiff’s case is so inherently implausible it ought to be rejected outright.

11.  In relation to the La Cite Noble unit (despite the plaintiff’s explanations):

(a) there was no sensible reason for the unit to be registered in the defendant’s sole name.  This is particularly so when the plaintiff has purchased another residential unit elsewhere in her sole name (both units were later rented out);

(b) the plaintiff has changed her case as to when she decided to rent out the La Cite Noble unit; she initially claimed that she did so shortly before completion (in November 2015), but later claimed effectively that she was persuaded by the defendant to do so much earlier (even before the date of the provisional sale and purchase agreement (7 July 2015));

(c) criticism similar to sub-para (a) above has been levied against the defendant’s sole name bank account (said to have been used for investment purpose).  The plaintiff already has her own investment account; further, another joint-name bank account was opened on the same occasion.

12.  While the defence may justifiably consider the above to be good materials for cross-examination, (especially in the factual context of this action (summarized in para 4 to 5 above and para 13 below)) I do not consider them to warrant a conclusion that the plaintiff’s case completely lacks substance (in an application which is summary and interlocutory in nature).

13.  On the other hand, as the plaintiff correctly points out, the defence case is not necessarily “perfect” either:

(1) although $5.5 million (of the total of about $22 million) was deposited into a HSBC bank account which was in the defendant’s sole name, the bank statements were sent to the plaintiff’s residence instead;

(2) the La Cite Noble unit was admittedly wholly paid for by the plaintiff;

(3) the defendant was married to his wife in about mid-2014.  Even on his own case the money and the La Cite Noble unit were given to him out of love and affection.  But instead of informing the plaintiff of his marriage, he continued to collect these (the money involved was $8 million) as if their romantic relationship remained unchanged;

(4) further to sub-para (3) above, the defendant promised in December 2015 (about one and a half years after his marriage) to attend a ball as the plaintiff’s partner, but failed to turn up as promised.

14.  With the above in mind, the plaintiff’s case is “more than barely capable of serious argument” (Hong Kong Civil Procedure 2016, Vol 1, para 29/1/66).  Accordingly, I am satisfied that the plaintiff has established a good arguable case against the defendant.

Balance of convenience

15.  Relatively little has been said by the defendant regarding this aspect.

16.  The main argument put forth relates to the suit properties (all registered in the defendant’s name (or in his de facto ownership)).  This argument will be discussed under the next heading.

17.  The defendant complains that the terms of the injunction order were couched in language which is too wide and resulted in all of his funds being “locked up”; banks simply refused all his withdrawal requests irrespective of whether the bank accounts have been specifically referred to in the injunction order.

18.  The first point to note is that the language used by the injunction order generally follows the standard form Mareva order (see, for example, the standard order appended to Practice Direction 11.2).

19.  Secondly, if the defendant considers that the total of his assets should exceed the amount enjoined by the injunction order, and therefore he should be able to make use of the excess, it is for him to satisfy concerned third parties (including the banks) that such is the case. In fact, para 1(2) of the injunction order expressly permits the defendant to do so.  As will be further mentioned below, in this connection, the defendant appears to be “playing his cards too close to his chest”.

20.  The plaintiff’s claim is at least partly proprietary in nature.  There is no basis for thinking that continuing the injunction order will result in a greater risk of injustice to the defendant, the balance of convenience lies in continuing the same.

The defendant’s undertaking (in lieu of injunction)

21.  The defendant undertakes (in his affirmation):

“... not to dispose of or diminish the value of [the suit properties], all of which are without any attached mortgage(s) (as accepted by the Plaintiff in paragraphs 44, 59, 61 and 63 of the Plaintiff’s Affirmation ...), and either held under my sole name or via Bright East (a limited company of which I am the sole shareholder and director (as accepted in paragraph 62 of the Plaintiff’s Affirmation ... )” (para 4 thereof).

22.  It may be an over-statement to assert that the plaintiff has accepted the above.  The actual contents of the plaintiff’s affirmation merely summarize the land search records (which do not show any encumbrance having been registered against the suit properties).

23.  The terms of the injunction order do not require the defendant to disclose details of his assets (contrast para 2, standard form Mareva order).  The defendant has not voluntarily done so either.  This effectively means that the defendant has provided little information regarding his financial state.

24.  The importance of the above is that the plaintiff is justified to view his said undertaking with suspect.  For example, the defendant may have extensive debts which are now unknown to her.  Further, the defendant has in effect only offered not to encumber the suit properties; he has not confirmed that they have not been encumbered (the above quoted passage used the phrase “without any attached mortgage(s)”).

25.  Such being the case, I do not consider the defendant’s above undertaking to be a sufficient answer to the plaintiff’s application for continuation of the injunction order.

Conclusion

26.  The injunction order is to continue until judgment in this action or further order.

Other matters

27.  The defendant’s skeleton submissions also seek in effect a variation of the injunction order (para 42 thereof).  The variation sought is that $2 million be released to him to meet further legal expenses.

28.  Two points are relevant here:

(a) (as stated above) there is scant information as to the defendant’s overall financial state;

(b) no detailed information has been provided as regards the amount of further legal expenses.

29.  The defendant’s 3^rd affirmation seeks a release of $2 million for meeting legal expenses (including counsel fee) to be incurred (para 3 thereof).  The letter exhibited thereto gave the following breakdown:

(1) costs up to mediation: $200,000 (based on a hourly rate of $4,000, that amounts to about 50 hours of work (or some 6-1/4 of an 8-hour working day));

(2) costs up to discovery: $400,000 (which, based on the same hourly rate, amounts to about 100 hours of work (or 12-1/2 of an 8-hour working day));

(3) costs for preparing witness statements: $500,000 (which, based on the same hourly rate, amounts to about 125 hours of work (or some 15-1/2 of an 8-hour working day));

(4) costs for interlocutory applications: $300,000 (which, based on the same hourly rate, amounts to about 75 hours of work (or some 9-1/4 of an 8-hour working day));

(5) costs for pre-trial review and trial: $600,000 (which, based on the same hourly rate, amounts to about 150 hours of work (or 18-3/4 of an 8-hour working day)).

In total, the cost estimates are based on about 500 hours of work (or 62-1/2 of an 8-hour working day).

30.  Nothing said here is intended to fetter the taxing master’s discretion (if the matter should later require taxation of costs). But past litigation experience tends to show that the above cost estimates are either too vague because little is known of the amount of work involved (para 29(1), (2) and (4) above) or too early (para 29(5) above) or both (para 29(3) above).

31.  By reason of the matters set out above, assuming the above part of the defendant’s affirmation is a formal application for variation of the injunction order, the materials put forth in support are far from sufficient, and should thus be refused.

32.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order nisi

33.  There is no apparent reason to depart from the usual rule that the costs of this application should be the plaintiff’s costs in the cause.  There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) to such effect.