XCHRX KAMSHAN HOLDINGS LTD. v. CHAN TUNG MAN

HCA 7959/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7959 OF 1997

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D E C I S I O N

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1. This is an urgent application made ex-parte on notice by a defendant for a Mareva injunction against the plaintiff. The history of the matter is as follows.

2. In 1997, the Plaintiff sued the Defendant for an amount of $80,650.00 with costs. The matter was heard and in April 1999, a deputy judge held that the Plaintiff succeeded in the trial. In July of 1999, the Defendant paid the Plaintiff $80,650.00.

3. The Defendant appealed. On 8 October 1999, the appeal was heard by the Court of Appeal which allowed the Defendant's appeal and gave an order nisi that the Plaintiff pay the Defendant's costs in the action and of the appeal, to be taxed if not agreed.

4. After that costs order nisi was made by the Court of Appeal, the Plaintiff applied to vary that order. On 2 November 1999, the Court of Appeal heard that application and ordered that the costs order nisi be varied only to the extent that the Plaintiff pay the Defendant the costs of the action and of the appeal, but that the Defendant pay the Plaintiff's costs in the sum of $500.00. The costs of the summons for the variation was ordered to be costs in the cause of the appeal, so the upshot of that is that the Plaintiff is liable to pay the Defendant's costs of the action and of the appeal and to return to the Defendant the $80,650.00 which the Defendant had paid the Plaintiff in July of 1999.

5. As far as the Defendant's costs are concerned, there is a draft bill of costs before me which shows the costs to be in the region of about $500,000.00 and which for present purposes, I am prepared to accept.

6. I also accept that pursuant to the authority of Jet West Ltd. v Haddican [1992] 1 WLR 487 a Mareva injunction may be granted in support of an order for costs whether or not the exact sum payable has been quantified at the date when the order is made and the injunction is sought.

7. In support of its application for Mareva relief, the Defendant has relied on the following pieces of evidence. First, that the Plaintiff is a BVI company which apparently does not carry on business in Hong Kong and secondly, that the Plaintiff has on 24 September 1999, before the hearing of the appeal, entered into an agreement for sale and purchase to sell one of the three units which it owns in a building in Hong Kong.

8. I should add that it would appear from the Land Searches that none of these three units has been mortgaged. Mr. Sham has said, from the evidence in the action, it would appear that the value of the units would be around $700,000.00 each, although, of course, that would depend on the individual unit in question.

9. In my view, having considered carefully the contents of the affirmation of Melanie Shu Mei Wong filed on behalf of the Defendant, there is no evidence that the Plaintiff intends to dissipate the proceeds of the sale of the 2nd floor of No. 922 Canton Road, Kowloon, nor is there any evidence that the Plaintiff intends to dispose of the other two units in the same building namely, 5th floor and 6th floor, or that if it were intending to dispose of those other two units, that it would dissipate the proceeds of sale.

10. Mr. Sham refers to the demand made by the Defendant for the return of the $80,650.00 which he says had been ignored, but it is relevant to note that those demands were made at the time when the costs order was still an order nisi, and I would note that after the Court of Appeal made its costs order on 2 November 1999, there has been no correspondence between the parties as to the return of the $80,650.00.

11. In my view, the Mareva relief that the Defendant is seeking is one of the most draconian and powerful weapons in the court's armoury and it should not be lightly deployed.

12. In my view, there is insufficient evidence in the documents before me that the Plaintiff intends to dissipate its assets, and weighing all the matters which have been placed before me, and in the exercise of my discretion, I would dismiss this application.