ACTION NO. HCA 5370 OF 1993
|Panco Industrial Holdings Limited
|Zheng Lie Lie
|Ng Hiu Nam
|Deng Liu Gen
|China Projects Limited
|Kenrey Finance Limited
Coram: Deputy High Court Judge Carlson in Court
Date of Hearing: 29 January 2004
Date of Judgment: 30 January 2004
J U D G M E N T
1. I am now required to make a ruling on an application for a Mareva Injunction by the successful plaintiff in HCCL 98/95, Panco Industrial Holdings Limited, consequent upon my judgment on the 27 January. There are also directions that I need to give as to the assessment of damages and/or the taking of an account which must follow the judgment. Finally, I also have to make an order for costs in both actions.
The Mareva Injunction
2. What has been applied for appears in the plaintiff's summons of 28 January. The object of the summons is to preserve the 5th defendant's shares in SFC pending the outcome of the assessment of damages or the taking of the account so that once an amount is known the plaintiff company in exercising its various options as to the execution of judgment may have tangible assets against which execution may be levied. Otherwise, the judgment which the plaintiff has obtained may prove to be illusory.
3. In the course of my judgment (paragraphs 98 and 99) I gave reasons for my refusal to order the return to the plaintiff by China Projects, the 5th defendants, of its shares in SFC. My assessment was that the Shenzhen authorities would not countenance a transfer of any shares in SFC to Mr Peng or to a company controlled by him. I was also concerned not to be seen to meddle in a restructuring process that had been carried out by the Shenzhen authorities over ten years ago following a lengthy and careful investigation into SCIC and Mr Peng's conduct of its affair. I also took into account the considerations that persuaded me to refuse Mr Whitehead's application for an injunction made on the 19th day of the trial to restrain any dealings by the defendants in China Project's shares in SFC.
4. Now with the benefit of this judgment in his favour, Mr Whitehead invites me to grant the injunction which he submits is quite different in nature from an order directing the return of Panco's shares in SCIC/SFC by China Projects. To this extent, Mr Whitehead must be right. The shares will remain with China Projects subject to the order that there must be no dealing in them until further order which, in effect, will mean until the process of execution has been completed.
5. This being the case, his task is less formidable than the one the plaintiff had set itself by asking for a transfer back of its shares. What is now proposed is, in essence, an order of the type which I declined to make during the course of the judgment. Before judgment, the purpose of the injunction would have been to preserve the shares, the plaintiff's ultimate goal, pending the outcome of the trial. Now the purpose is to do the same pending execution of the judgment. I have absolutely no doubt that if these shares were those of a publicly-listed company in Hong Kong, I would have had every inclination to do what Mr Whitehead has asked for and, I daresay, that having regard to my findings in the judgment I would also have made the primary order which is to order the return of the shares to their rightful owner, the plaintiff company.
6. My principal concerns, which I have already expressed in my ruling of 31 October, relate to the effects of such an order on third parties, such as creditor banks, other shareholders and investors. The other aspect of my concern is that such an order would run across the regulatory regime of the Shenzhen stockmarket authority which no doubt has its own rules and regulations as to the terms under which shares are traded. I apprehend that a court in a foreign jurisdiction should be very wary about making orders that would have a substantial impact on the trading of shares on the stockmarket of another jurisdiction. I say that notwithstanding the fact that, as a Hong Kong company, China Projects is fully amenable to the effects of any order of this court.
7. Mr Whitehead has sought to allay any concern that I may have...