GOLDDECADE INTERNATIONAL LTD v. HUANG ZIQIANG

HCA 1521/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1521 OF 2015

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REASONS FOR DECISION
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1.  The plaintiff was a BVI company that provided inter alia investment services.

2.  By a loan agreement dated 15 February 2009, Rising Glory Investment Limited (“Rising Glory”) lent and the defendant agreed to borrow US$2,000,000 (“Loan”).  On 3 March 2009, Rising Glory remitted the Loan to the defendant.  On 10 February 2015, Rising Glory demanded repayment of the loan.  The defendant failed to make any repayment.  By a deed of assignment dated 11 May 2015, Rising Glory assigned its rights in respect of the Loan to the plaintiff.  On 11 May 2015, Rising Glory notified the defendant of such assignment.  On the following day, Rising Glory via its agent sent notification of assignment to the defendant. 

3.  On 7 July 2015, the plaintiff commenced the present action against the defendant for recovery of the Loan with interest and costs.  On 13 July 2015, leave was granted for the plaintiff to file a concurrent writ of summons and to serve the same on the defendant in Singapore. No notice of intention to defend was filed.  On 6 October 2015, the plaintiff entered final judgment against the defendant for (a) the sum of US$2,000,000 or the Hong Kong dollar equivalent at the time of payment (“Sum”) with interest on the Sum at the rate of 8% pa from 22 July 2015 to the date of the judgment and thereafter at judgment rate until payment, and (b) HK$11,045 fixed costs (“Judgment”)

4.  On 12 November 2015, the plaintiff obtained a garnishee order nisi against Edmund Cheung & Co as garnishee.  The said garnishee order nisi is returnable before Master Chow on 18 December 2015.

5.  On 30 October 2015, the plaintiff filed a summons under Order 24 rule 7A(2) and Order 29 rule 1 of the Rules of the High Court (“RHC”) for an order that The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) do within 7 days disclose to the plaintiff’s solicitors the account numbers and current balance of all HSBC accounts in Hong Kong held by the defendant (“Summons”).

6.  On the same day, the plaintiff filed the 3^rd affirmation of the plaintiff’s director Feng Minhzhi (“Feng”).  Feng confirmed that as at the date of his affirmation, the defendant had not satisfied the Judgment.  Feng explained there were difficulties in enforcing the Judgment since (a) the plaintiff had limited means of contacting the defendant, and (b) the plaintiff was unable to locate the defendant and did not know his current location (so an order for examination under Orders 48 and/or 49B of the RHC might be impracticable and/or not feasible). 

7.  However, Feng believed the defendant had bank accounts with HSBC.  Feng (a) obtained some presentation slides prepared by Ferrier Hodgson for the creditors’ meeting of Pacific King Shipping Holding Pte Ltd (in compulsory liquidation) (“Pacific King”) dated 27 June 2014 (“Slides”) from a creditor of Pacific King, and (b) came to know about a circular to creditors prepared by Ferrier Hodgson dated 11 May 2015 (“Circular”).  Feng explained that the defendant was a former director of Pacific King, which sued the defendant for inter alia breach of fiduciary duties and misappropriation of company funds, and obtained a worldwide mareva injunction against the defendant in Singapore (“Mareva Order”), a freezing injunction in Hong Kong and a disclosure order against HSBC in HCMP2464/2014.

8.  Feng pointed out that in page 16 of the Slides, it was stated that “[on] 4 April 2014, the Company obtained an order for variation of the injunction order.  The Hong Kong Court ordered that HSBC provide the Company with documents relating to Huang’s bank accounts with HSBC in Hong Kong”.  Feng believed “Huang Zi Qiang” referred to in the Slides is the same as the defendant “Huang Ziqiang” because the passport number of “Huang Zi Qiang” in the Mareva Order (as referred to in the Slides) matched that of the defendant in the loan agreement dated 25 February 2009.  Feng therefore believed the defendant held accounts with HSBC in Hong Kong, but he did not know the account numbers since they were not set out in the Slides and/or the Circular.

9.  Feng believed HSBC had information in respect of the defendant’s assets, and suggested that the plaintiff required information as to the HSBC accounts held by the defendant and the current balance thereof in order to consider whether to commence garnishee proceedings.  The plaintiff had to seek such information from HSBC because it was impracticable to seek such information from the defendant himself through examination of judgment debtor.  Feng urged the court to grant an order in terms of the Summons to enable effective enforcement of the Judgment.

10.  I also note that in Pacific King Shipping Holdings Pte Ltd v Huang Ziqiang [2015] 1 HKLRD 830, 839, it was recorded that paragraph 52 of the first instance judgment by Zervos J took note that the defendant “maintains two bank accounts with HSBC which purportedly hold substantial funds”.

11.  Section 42 of the High Court Ordinance Cap 4 (“HCO”) provides that:

“(1) On the application, in accordance with rules of court, of a party to any proceedings in which a claim is made, the Court of First Instance shall, in such circumstances as may be specified in the rules, have power to order a person who is not a party to the proceedings and who appears to the Court of First Instance to be likely to have or to have had in his possession, custody or power any documents which are relevant to an issue arising out of that claim-

(a) to disclose whether those documents are in his possession, custody or power; and

(b) to produce such of those documents as are in his possession, custody or power to the applicant or, on such conditions as may be specified in the order-

(i) to the applicant's legal advisers; ……”

12.  In North Shore Ventures Limited v Anstead Holdings Ltd & ors [2011] EWHC 178 (Ch), the judgment creditor sought third party disclosure under section 34(2) of the Senior Courts Act 1981 and Civil Procedure Rules 31.17 to elicit information about the defendants’ assets so that the judgment creditor could seek to enforce the judgment it had already obtained.  The third parties in question, ie the judgment debtors’ wives, argued there was no power to order third party disclosure for enforcement purposes.  Floyd J disagreed.  He held that section 34(2) of the Senior Courts Act 1982 (ie the English equivalent of section 42 of the HCO) gave the court jurisdiction to order disclosure against a non‑party after as well as before judgment.  The word “proceedings” in the provision was a term which applied to proceedings both before and after judgment.  The learned judge reminded there is a general policy that the court should come to the assistance of judgment creditors (see Maclaine Watson & Co v International Tin Council (No 2) [1989] 1 Ch 286, 301), and to hold that the general rules of court which provide for measures such as third party disclosure should, without clear language, cease to have effect at the date of judgment would be contrary to such policy.  In that case, Floyd J exercised his discretion to make the order sought.

13.  I am satisfied I have the jurisdiction to make the order sought under the Summons.  In the circumstances, I need not consider the further arguments by Mr Wong, counsel for the plaintiff in the present action, that section 21L of HCO also gave jurisdiction for the court to grant a post-judgment disclosure order.  The authority Mr Wong cited, ie Mercantile Group AG v Aiyela [1994] QB 366 concerned a disclosure order ancillary to a post-judgment Mareva order.  Since the present application for disclosure was to aid enforcement of the Judgment and not ancillary to any injunction, Mr Wong decided at the hearing not to rely on such argument, and I need say no more on this.

14.  I remind myself that disclosure against third parties is the exception rather than the rule, so it will in general be difficult to satisfy the threshold of necessity required for such order where there exists alternative or better means of obtaining the information in question.

15.  Here, HSBC took a neutral stance.  By their letter dated 5 November 2015 to the plaintiff’s solicitors, they confirmed they would not contest the Summons and agreed to be bound by any order made in terms of the Summons which might be made by the court.  The defendant did not appear in the present action, and had not come forth to contest the application.  Feng had deposed to the difficulties in enforcing the Judgment since examination of the judgment debtor (ie the defendant) would likely be impractical.  The information intended to be sought from HSBC would enable the plaintiff as judgment creditor to properly consider the next step of enforcement.  In all the circumstances, I am satisfied that the plaintiff had shown sufficient basis for the order sought.

16.  At the hearing of the Summons, I granted an order that HSBC do within 14 days of the service of this order on them disclose to the plaintiff’s solicitors documents that show the account numbers and current balance of the HSBC accounts in Hong Kong held by the defendant, and that HSBC’s costs of and occasioned by the application and costs of complying with this order be paid by the plaintiff (“HSBC Costs Order”).

17.  Mr Wong submitted that the Summons was necessitated by the defendant absenting himself from the present action, failing to satisfy the Judgment, and failing to properly disclose his financial details, and hence the defendant should bear costs of the application.  I agree, and at the hearing of the Summons, I granted an order that the costs of and occasioned by the Summons (including the plaintiff’s costs incurred pursuant to the HSBC Costs Order) be paid by the defendant to the plaintiff to be taxed if not agreed.