ACCENT DELIGHT INTERNATIONAL LTD AND ANOTHER v. YVES BOUVIER AND ANOTHER

HCMP 573/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 573 OF 2015

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REASONS FOR DECISION

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Introduction

1. The plaintiffs commenced this action on 13 March 2015.  The originating summons herein seeks an injunction in the nature of a Mareva injunction.  The supporting affidavit deposes that the said injunction is in aid of foreign proceedings (a) already commenced in Monaco, and (b) intended to be commenced in Singapore.

2. Further to the above, on 12 March 2015 the plaintiffs also sought, and was granted, on an ex parte application an interim injunction in terms similar to that sought in the originating summons herein.

3. The application for the ex parte injunction to be continued came before me.  The defendants instructed their legal representatives to oppose the same (and also to discharge the ex parte injunction) shortly before the hearing before me.

4. Because of the short time available to them before this hearing, the legal representatives of the defendants indicated that:

(a) the plaintiffs’ application to continue the ex parte injunction (and the defendants’ corresponding application to discharge the same) (and the originating summons hearing itself) should be adjourned to enable them to proper prepare the defence case;

(b) there is no objection for an interim order to be made in terms similar to the ex parte injunction until the determination of the said applications or further order.

5. The main disagreement between the parties related to:

(1) the ex parte order for the defendants to disclose their assets within Hong Kong, together with an inter partes application for disclosure of additional information (especially relating to assets);

(2) the application for an order for the bankers to disclose the defendants’ assets (“the bankers’ disclosure order”),

before the determination of the said inter partes hearing.  The plaintiffs argued that (i) the ex parte order should be complied with (the latter part of sub-para (1) above was also adjourned for full argument (see para 4(a) above)), and (ii) the bankers’ disclosure order should be granted, while the defendants contended otherwise.

6. At the end of the hearing before me, I agreed with the plaintiffs and disagreed with the defendants (and made the corresponding orders accordingly).  Below are the brief reasons for the said conclusion.

7. In relation to para 5(1) above, the main thrust of the defendants was that any disclosure now made pursuant to the ex parte order would effectively render part of their discharge application to be practically meaningless.  This is because, once the information sought has been provided by them to the plaintiffs, the disclosure cannot be “reversed” even if the defendants should succeed in having the ex parte injunction (including the disclosure obligations) discharged.

8. Such an effect is almost inherent in any disclosure obligations imposed at the ex parte stage; it is a risk which the court in making such kind of order has to grapple with: see, for example, Raja v van Hoogstraten [2004] EWCA Civ 968, para 104.

9. Whereas there can be no doubt whether to make a disclosure order is a matter of discretion, the general guidance is summarized in the following passages.  In the Raja decision, the court observed:

“The need to strike a balance between the prejudice to the defendant if he is required to disclose assets which it is later held he should not have been required to disclose and the prejudice to the claimant if the defendant is not required to disclose assets which it is later held he should have been required to disclose was recognized by this court in the [Motorola Credit Corp v Uzan [2002] EWCA Civ 989]. The decision in that case illustrates that there is no general rule that a party against whom a freezing order has been made is entitled to a stay of the disclosure obligations ancillary to that order until after it has been finally determined whether the freezing order should stand. Indeed, it provides support for the proposition that, in a normal case, a stay of the disclosure obligations is likely to be refused … ” (emphasis supplied) (para 105 thereof).

Further, Hong Kong Civil Procedure 2015, Vol 1, para 29/1/74 (p 673) says:

“For the purpose of rendering a Mareva injunction effective … the court may make [disclosure] orders …

[Having set out the purpose of such an order] … The defendant has no general entitlement to a stay of a disclosure obligation ancillary to a Mareva order pending the determination of the defendant’s application to discharge that order … While in the ordinary course, the application for a stay would be refused, the Court ultimately needs to strike a balance between depriving a plaintiff of the ‘teeth’ of an injunction, and the potential prejudice to the defendant in making the disclosure … ” (emphasis supplied).

10. The critical question in this case is how the balance should be stuck.  The plaintiffs’ allegations herein are serious: breach of fiduciary duty (and breach of an agent’s contractual duty), and fraudulent misrepresentation (dishonesty, or at least a lack of commercial morality, is implicit in the last-mentioned cause of action).  While the agency relationship is denied by the defendants, there are contemporaneous documents emanating from the defence which can provide support for such a relationship. On the other hand, as stated earlier, the defence complained of insufficient time available to present a proper case; consequently, none has been put forth by their legal representatives.

11. Further, that the plaintiffs’ claim can also have a proprietary nature (other than a pure personal monetary claim) means that they may be entitled to the equitable relief of tracing: Snell’s Equity (2010) 32^nd Ed, para 30-054 (similar to (2015) 33^rd Ed, para 30-054).

12. Besides the above, the other factor which tipped the balance in the plaintiffs’ favour is the usual undertaking which they were prepared to give not to put the disclosed information to use without the leave of the court.  The “usual undertaking” refers to an undertaking having the same effect as that set out at para 8, Schedule 2, Practice Direction 11.2.  In particular, this should provide adequate safeguard for the “self-incrimination” concern of the defendants in relation to the on-going criminal proceedings in Monaco.

13. There is no need to elaborate on the disagreement relating to para 5(2) above (the bankers’ disclosure order) suffice it to say similar arguments have been raised by the defendants: para 38 to 40, defendants’ skeleton submissions. Considerations similar to those set out in para 7 to 12 above are applicable here.

Other matters

14. 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 need for brevity and the comprehension of the reasons for the decision.  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.