OVERSEAS TRUST BANK LTD v. CHANG LEE SIAN AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. In this matter the Overseas Trust Bank, the plaintiff, is suing the defendants Madam Chang Lee Sian, the 1st defendant, Madam Goh Sean Loci, the 2nd defendant and Chang Chen Tsong, Patrick also known as peter Cheung, the 3rd defendant for damages for loss suffered as a result of negligence and/or default and/or breach of duty and/or breach of trust of the defendants whilst directors of the plaintiff. The actions was commenced by writ of summons issued oh the 14th of June, 1985. On the 18th June 1985 Mr, Justice MacDougall made an ex parte order, returnable on 21st June, restraining the defendants from disposing of or removing from the jurisdiction or otherwise dealing with any of their assets at present within the jurisdiction. On 19th of June Mr. Justice Barnes had made a further ex parte order, also returnable on the 21st June, restraining the 3rd defendant from removing any money in his name or that of his wife from the jurisdiction. A summons was filed oh the 19th of June asking for an order that the defendants and each of them disclose to the plaintiff the full value of their assets within and without the jurisdiction identifying those assets with full particularity. The 21st June was also the return date of this summons. On the 21st of June the 3 matters came before Mr. Justice MacDougall. All were dealt with in a consent order which provided, inter alia, that the hearings be adjoruned to a date to be fixed.

2. The consent order also provided, in paragraph 4 that :

"The injunction granted on the 14th June 1985 shall continue until a further order save that :-

3. On the 28th of September 1985 the plaintiff took out a summons returnable before this court asking that the order of Mr. Justice MacDougall of the 21st of June 1985 be amended by deleting the saving contained in paragraph 4(b) thereof. This summons was supported by an affidavit of Mr. John Russell kelting filed on the 28th of September 1985 is which he said :

"At the time when the order was made, the Bank had , applied for a summons for an order that the defendants do disclose all their assets both within and without the jurisdiction. The Bank did not know and the 3rd defendant had not revealed hat he had immediately available to him unencumbered sums of money in the United States of America. Had this been known by the Bank, it would not have agreed to the living expenses being withdrawn from an account within the jurisdiction."

The affidavit went on to state that the plaintiff had been informed by Inspector Starling of the Commercial Crime Bureau that the 3rd defendant has two accounts in America, one of which was in the joint names of himself and his wife, with the Bank of America and one of which was with the World Banking Division Service Centre and that the former had a balance of approximately US$1,000,000 and the latter a balance of US$564,068.26.

4. The 3rd defendant filed an affidavit on the 28th of October in which he stated that: "the fact that I have a bank account in the United States must have been known to Mr. Kelting and the plaintiff bank". He suggests that this must be so because the prior affidavits of Mr. Kelting reveal that he has been in close communication with the Commercial Crime Bureau and Messrs. Ernst and Whinney the accountants appointed to assist that Bureau who, because of a receipt seized from him at the time of his arrest at the airport on 6th June, had knowledge that he had a time deposit with Citibank in the United States. The defendant goes on to say that Mr. Kelting's information that he has 2 bank accounts in the United States is not correct and that he has only one bank account which is with City Bank NA in the sum of US$564,068.24 and that his wife is the beneficial owner of at least half of the moneys deposited in the account. The 3rd defendant, later in his affidavit, takes the stance that: "at the time of the order he (Mr. Kelting) knew or ought to have known by the enquiries he made that I had the bank account ... in the United States".

5. Mr. Kelting filed a further affidavit in which he once again stated that he was not aware "of the existence of the bank account in the United States in the name of the 3rd defendant and it was not something which was disclosed to me by either the Commercial Crime Bureau or by Messrs. Crust and Whinney. At the time when the application for an injunction was made by the Bank the affairs of the Bank were in a state of considerable disorganisation and only as time passed, more and more information become available to the officers of the bank".

6. Mr. Charles Ching, Q.C. who appeared for, the 3rd defendant stressed that we were dealing with a consent order. He submitted quite rightly, that a consent order was a contract between the parties to which has been superadded the order of the court. He submitted, again quite rightly, that there was no jurisdiction in a court to vary or rescind any order once that order had been perfected and emphasized that as regards a consent order, whether it be a final or interlocutory, it could only be set aside in a fresh action on grounds such as fraud or mistake which would be sufficient to warrant the setting aside of a contract.

7. Mr. Mills-Omens who appeared for the applicant submitted firstly that the order could be amended because the plaintiff had entered into the order under a mistake, i.e. that the defendant had no assets outside Hong Kong.

8. Let me say immediately that I do not consider that mistake comes into this matter at all. At the time when the consent order was made there had been no disclosure by the 3rd defendant as to his assets. Indeed the consent order provided for the adjournment of the plaintiff's application asking that the 3rd defendant make full discovery as to his assets. Clearly the plaintiff entered into the order on the basis that the assets had not been disclosed and that whatever the assets of the 3rd defendant may have been, it was prepared at that time to consent to an order in the terms agreed.

9. Mr. Mills-Owens referred to authorities dealing with the onus upon an applicant seeking to have a Mareva order freezing his assets issued in his favour and appeared to be suggesting that some onus lay upon the 3rd defendant at the time when the consent order was made or, at least, in this application, voluntarily to disclose the extend of his assets and that the Court should bear his failure so to do in mind when considering the present application. He seemed to be suggesting that the requirement of full disclosure which rests upon a dependant who comes before the court asking that a Mareva Injunction be varied in his favour had some application to the present circumstances. I cannot see how it can properly be suggested that this should be so. At the time on the making of the consent order the Court had not ruled upon the extend to which the 3rd defendant should be required to disclose his assets. The plaintiff was prepared to agree to the making of the order before obtaining any such ruling. I do not consider that any onus lay on the 3rd defendant to make disclosure of his assets either at the time of the making of the order or at the present time.

10. I turn now to consider what, in my view, are the crucial words in the consent order as far as this application is concerned. They are the words "until further order". Mr. Mills-Ovens relied upon those words and in this regard referred to In Re Holt (1880) XVI Chancery Division 115 where Jessel, M.R. referring to an order which was made "until further order" said:

"Why should you appeal from the original order? It is only "until further order". If something has since happened to render it an improper order, you can move before the Vice-Chancellor to vary it. It is like an order for an injunction until further order; the defendant can at any time move to vary it.''

Mr. Mills-Ovens submitted relying upon the above authority that this order was only made until further order and that he was entitled at any time to move to vary it. It was his submission that, as the parties had agreed that the order should only obtain until the court made some further order, it was open to either party to ask the court, at any time, to make a further order. He pointed also to the fact that Mr. Wesly Wong, who had appeared for the 3rd defendant when the consent order was made, had, at that time, expressly stated that he was reserving his right to approach the court, if necessary, to vary the order with regard to the amount of the withdrawal which the 3rd defendant was permitted to make each month.

11. Mr. Ching submitted that In Re Holt had to be approached with caution both because it was a custody matter and because it did not deal with a consent order. It is true that very great latitude is given in custody matters but I find it difficult to see why the words "until further order" should bear any different meaning in a custody matter than the meaning they bear in any other application. In Re Holt was, it is true, not dealing with a consent order but, again why should the words "until further order" bear any different meaning in a consent order than that which they bear in an order of the court made without consent. I am satisfied that In Re Holt is authority for the propositions which Mr. Mills-Owens sought to draw from it.

12. Mr. Ching further argued that, when paragraph 4 of the consent order was properly construed, it would be seen that the words "until further order" applied only to the injunction granted on the 14th of June and had no application to the saving contained in paragraph 4(b) i.e. the paragraph which the plaintiff is seeking to vary. His main argument in this regard relies upon the fact that the words "shall continue until further order" appear immediately after the words "the injunction granted on the 14th of June 1985". He submits that these words appearing where they do can have no application to the two savings in paragraph 4(a) and 4(b). I am unable to agree with this submission. I am satisfied that after the making of the consent order the injunction contained the two savings. They became, by virtue of that order, part and parcel of that injunction. I am satisfied that the words "until further order" have, and were meant by the parties to have, application to that injunction. I am satisfied that what the parties consented to was that the injunction containing the savings should have application until further order. I am satisfied that either party can come before the court to ask for a variation of the injunction and that the court can rely on all of the facts then placed before it, when determining whether it should vary the order.

13. There was a suggestion from Mr. Ching that, given the contention of the 3rd defendant that the plaintiff knew or should have known that the 3rd defendant had a bank account in America, this court should not make a determination to vary the consent order upon affidavit evidence. I cannot accept this argument. The 3rd defendant now admits that he has a bank account in America. Mr. Kelting has sworn that the plaintiff did not know of the existence of any bank account in America and that nothing had been at that time passed on to it which would have alerted it to the existence thereof. In the light of that evidence I do not consider that any weight should be given to what is no more than a suggestion made by the 3rd defendant which I must say I find contrived and unconvincing that because documents were found on his person at the time of his arrest and because the plaintiff has been in communication with the Commercial Crime Bureau it should have known of the existence of the American bank account. In the circumstances, given that the consent order was "until further order", I am satisfied that the court can and should act upon the basis of the facts now placed before it.

14. The only matter left for me to determine is, whether given the existence of the bank account in America, the policy underlying the granting of Mareva injunctions is such as properly requires the court to accede to the application. I am satisfied that, where the defendant has assets outside the jurisdiction to which he can turn for his subsistence, the court should not allow him to dissipate his assets within the jurisdiction against which the plaintiff, if eventually successful, will have his only recourse. In all of the circumstances, I am satisfied that the application should succeed and I order in terms of the summons. I make an order nisi giving the plaintiff its costs of this application to be taxed and 1 certify for two counsel.