CHAN SZE SZE GABRIELLE v. TU CHRISTOPHER

                 HCA 2007/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2007 OF 2005

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JUDGMENT

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1. The plaintiff obtained an ex parte Mareva injunction before Deputy Judge To on 13 October 2005 restraining the defendant from removing his assets up to the value of HK$4 m which assets specifically included a number of paintings.  On 14 October 2005 the plaintiff issued an inter partes summons to continue the injunction.  On the return day on 21 October 2005 Yam J continued the ex parte order of Deputy Judge To but varied it to the extent that the paintings were no longer subject to the injunction upon the undertaking given by the defendant to pay into court proceeds generated from the sale of the paintings up to the extent of HK$4 m.  The inter partes summons was adjourned for argument.  That is one of the matters before me today. 

2. The other matters before me are the plaintiff’s application for summary judgment on her claim against the defendant for repayment under the Loan Agreement and there is also an application by the defendant for payment out of the sum of HK$4 m paid into court on 14 November 2005. 

3. I shall deal with the O.14 application first.  This is in relation to the plaintiff’s claim for repayment of the principal sum of HK$3 m under the Loan Agreement dated 19 August 2005 and for interest thereon.  There is also a claim for breach of the Agency Agreement also dated 19 August 2005 but this is not the subject of the O.14 application.

4. A number of matters have been raised by the defendant in the submissions of Mr. Lee which are said to give rise to triable issues.  However, I need only to deal with the question of whether the loan was a loan repayable by 18 September 2005 or at some other time.  The plaintiff’s case is that the Loan Agreement dated 19 August 2005 makes it plain that the loan was repayable by 18 September 2005 at the latest. 

5. The defendant’s case is that the agreement between the parties was partly oral and partly written. 

6. I have considered the submissions and the evidence filed on behalf of the plaintiff and the defendant.  It seems to me that there is a serious dispute of fact as to the factual matrix surrounding the signing by the plaintiff and the defendant of both the Loan Agreement and the Agency Agreement on 19 August 2005. 

7. There is also a dispute of fact as to the deletion of Clause 4.1(i) of the Loan Agreement.  The plaintiff says that Clause 3.2 should have been deleted instead of Clause 4.1(i) which was crossed out in the Loan Agreement.  The defendant says that there was no mistake in the deletion.  He says that the reason why he objected to Clause 4.1(i) was that he would be bound to repay the loan by 18 September 2005 otherwise he would be in default of the Loan Agreement pursuant to Clause 4.1(i) which meant that the loan would last for only one month.  But as the plaintiff’s appointment under the Agency Agreement was to last for one year he raised with the plaintiff before signing the two documents that it was unfair that the loan would last for one month whereas the Agency Agreement would last for a year.  For that reason, Clause 4.1(i) was deleted according to the defendant. 

8. Mr. Lee has also addressed me on the various clauses in the Loan Agreement including Clauses 1.3, 3.1, 3.2 and 4.2 which seem to suggest that it is arguable that the loan was not simply a loan for a period of one month only. 

9. Needless to say, the Loan Agreement is not a well drafted document.  It does not say in specific terms that it was to be a loan for a period of one month only.  It is important to consider the factual matrix surrounding the signing the Loan Agreement and the Agency Agreement.  There are serious disputes of fact as to this. 

10. The plaintiff’s case is also that the paintings were to act as security for the loan granted to the defendant.  However, that was not stipulated in the Loan Agreement dated 19 August 2005.  I would also observe that the plaintiff’s evidence in this regard has not been consistent.  At paragraph 23 of her 2^nd affidavit, she said that she did not insist on the idea of using the paintings as security for the loan made to the defendant. 

11. As there are serious disputes of fact which cannot be resolved on affidavit evidence, it is not appropriate to grant summary judgment to the plaintiff.  In my judgment, unconditional leave to defend should be given to the defendant and I so order. 

12. As the defendant has been given unconditional leave to defend the action, it is neither necessary nor desirable for me to express a view about the other matters raised on behalf of the defendant by way of defence. 

13. I turn to the plaintiff’s application to continue the Mareva injunction and the defendant’s application for payment out. 

14. The plaintiff has to show that she has a good arguable case against the defendant and that there is a real risk that judgment will go unsatisfied by reason of the disposal by the defendant of his assets unless restrained.

15. The plaintiff relies on conversations she had with a friend Sam, and also Messrs Wong and Tong who told her that the defendant had no money.  She also relies on what she overheard at a party she was invited to.

16. The plaintiff was served with a Notice of Interrogatories dated 5 December 2005 seeking particulars of the persons that she had mentioned.  It was only yesterday on 3 January 2006 that she filed her Answer.  The answers provided, however, do not go very far.  She is unable to give the full name of her friend Sam or to give sufficient particulars and contact information of Sam and Messrs Wong and Tong.  She is unable to name any of the other guests at the party that she attended.  It seems to me that the evidence that she has provided on this is just rumour and gossip that she has heard. 

17. It must be remembered that a Mareva injunction is a drastic remedy.  It has rightly been described as one of the law’s two nuclear weapons.  Although the plaintiff overcomes the first hurdle as there is a good arguable case against the defendant, the plaintiff must go on to show by cogent evidence that there is a real risk of dissipation of assets. 

18. The evidence relied on by the plaintiff is hardly sufficient.  In my view, the fact that the defendant may be in financial trouble does not mean that there is a real risk that he is disposing of his assets.  The evidence adduced on behalf of the plaintiff falls short of what is required to satisfy a court that the Mareva injunction should be continued.  In the circumstances I would discharge the order of Deputy Judge To made on 13 October 2005 as continued and varied by Yam J on 21 October 2005.

19. As the Mareva injunction has been discharged, there seems to me to be no reason why the sum of HK$4 m paid into court on 14 November 2005 should not be paid out to the defendant’s solicitors as applied for by the summons dated 22 December 2005.  I so order.