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HCA 1617/2019
[2019] HKCFI 2947
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1617 OF 2019
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| BETWEEN |
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SOCIÉTÉ GÉNÉRALE, SINGAPORE BRANCH |
Plaintiff |
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and
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INTER-PACIFIC GROUP PTE LTD |
1st Defendant |
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INTER-PACIFIC PETROLEUM PTE LTD |
2nd Defendant |
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CHUANG XIN (CHINA) GROUP LIMITED
(創新 (中國) 集團有限公司) |
3rd Defendant |
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CHEUNG LAI NA (張麗娜) also known as ZOE CHEUNG |
4th Defendant |
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LAU KAI YUNG (劉繼勇) also known as STEPHEN LAU |
5th Defendant |
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LEGEND SIX HOLDINGS LTD
(陸駿股份有限公司) |
6th Defendant |
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CHEN CHUN JOHN (陳俊) |
7th Defendant |
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PACIFIC DRAGON (HONG KONG) ENERGY LIMITED |
8th Defendant |
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DAISHO MICROLINE LIMITED |
9th Defendant |
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ORIENTAL EVERISE LIMITED |
10th Defendant |
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NEWOCEAN PETROLEUM COMPANY LIMITED |
11th Defendant |
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Before: Mr Recorder Stewart Wong SC in Chambers
Date of Hearing: 29 November 2019
Date of Decision: 5 December 2019
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D E C I S I O N
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Introduction
1. On 30 August 2019, the plaintiff bank obtained a Mareva injunction/preservation order against the 1st to the 7th defendants. Discovery in aid was ordered on 6 September 2017, when the said injunction/order was continued.
2. The plaintiff claims that it was defrauded into providing banking facilities and is seeking to recover funds paid under the facilities.
3. From the disclosure, it appears that some of the funds which the plaintiff is now seeking to recover had been transferred to inter alios the 8th defendant (US$24.96 million odd) and the 9th defendant (US$6.65 million odd). The plaintiff therefore sought a further Mareva injunction/preservation order against the 8th, the 9th and the 10th defendants(the last of which was also apparently transferred some of the relevant funds). On 13 September 2019, DHCJ M K Liu granted, ex parte, the further Mareva injunction/preservation order against the 8th, the 9th and the 10th defendants.
4. The injunction/order granted was continued by K Yeung J on the return date (20 September 2019), with amendments ordered by the learned Judge, which was subsequently further amended on 27 September 2019 by Mr Recorder Eugene Fung SC (the further amendment apparently does not concern the 8th and the 9th defendants). I shall call the injunction/ order as amended (twice) the “2nd Injunction”.
5. The 2nd Injunction restrained the 8th defendant from removing or in any way dispose of or deal with the sum of US$24,963,178.64 paid into its bank account during the period 1 June to 31 August 2019, or the traceable substitute(s) thereof. The order against the 9th defendant is in essentially the same terms save that the amount is US$6,652,507.63.
6. The 2nd Injunction contains the usual exception for legal and business expenses:
“This Order does not prohibit (i) each of the 8th, 9th and 10th Defendants from spending HK$60,000 per month towards its ordinary and proper business expenses; (ii) in the case of each of the 8th and 9th Defendants, from spending HK$150,000 on legal advice and representation until the final determination of the Plaintiff’s summons to be taken out seeking continuation of the present Injunction Order; (iii) in the case of the 10th Defendants, from spending HK$300,000 on legal advice and representation until the final determination of the said summons to be taken out by the Plaintiff.”
7. The hearing for substantive arguments on the continuation of inter alia the 2nd Injunction is now fixed for 5 February 2020. From the 8th affirmation of Mr Lee Man Kwong (“Mr Lee”), a director of the 8th and the 9th defendants and of their parent (which wholly owns them), made in opposition to the continuation, the 8th and the 9th defendants are challenging whether the plaintiff has a good arguable case against them, whether the balance of convenience is for or against the continuation of the 2nd Injunction, and material non-disclosure. It does not appear that the lack of any risk of dissipation is stated as a ground, although under “balance of convenience” that is briefly mentioned.
8. However, on 19 November 2019, the 8th and the 9th defendants issued a summons seeking a variation of the 2nd Injunction (“the Summons”). The Summons asks for the following orders:
“1. The 8th Defendant do cause the sum(s) totaling HK$3,445,888.78 (being the available bank balances as held in its bank accounts as of 26th September 2019) to be paid into Court (subject to the deductions of reasonable legal costs for legal advice and representations and the ordinary and proper business expenses as proposed in (4) & (5) below;
2. The 9th Defendant do cause the sum(s) totaling HK$6,783,017.52 (being the available bank balances as held in its bank accounts as of 26th September 2019) to be paid into Court (subject to the deductions of reasonable legal costs for legal advice and representations and the ordinary and proper business expenses as proposed in (4) & (5) below;
3. By reason(s) of the payment into Court as proposed in (1) & (2) above, the ex parte order to the extent of USD24,963,178.64 (against the 8th Defendant) and USD6,652,507.63 (as against the 9th Defendant) as granted by Deputy High Court Judge M K Liu (the ‘Ex Parte Order’), which was continued and amended by the Honourable Mr. Justice K Yeung on 20th September 2019, and Mr. Recorder Eugene Fung SC on 27th September 2019 (‘the Inter Partes Orders’) (collectively, the ‘Injunction Order’) be discharged;
4. Leave be granted for the 8th Defendant and the 9th Defendant to jointly withhold and deduct HK$3,767,795.00 out of the said sum(s) stated in (1) and (2) above for seeking legal advice and representation;
5. Leave be granted to the 8th and the 9th Defendant to jointly withhold and deduct HK$3,898,483.00 out of the said sum(s) stated in (1) and (2) abtowards [sic] the ordinary and proper business expenses;
6. Alternatively, the Injunction Order be varied that the 8th Defendant be permitted to use its bank account number 239-562226-883 maintained with Hang Seng Bank Limited for the ordinary and business transactions.
7. Alternatively, the Injunction Order be varied that the 9th Defendant be permitted to use its bank accounts number 239-401540-001 and 239-401540-883 maintained with Hang Seng Bank Limited, 517-0-002353-7 and 517-1-003445-7 maintained with Nanyang Commercial Bank Limited, 344-0-005-964-9 and 344-1-011004-3 maintained with Standard Chartered Bank (Hong Kong) Limited for the ordinary and proper business transactions.
8. Costs of the Plaintiff’s Summons dated 16th September 2019, including costs of this application be to the 8th Defendant and the 9th Defendant (to be taxed forthwith if not agreed)”.
9. When the 2nd Injunction was granted by DHCJ M K Liu, and continued by K Yeung J, their Lordships were of course satisfied that, on the evidence then before them, that there was a good arguable case against the 8th and the 9th defendants and that there was a risk of dissipation.[1] At the hearing of the Summons, Mr Kenneth C L Chan[2], for the 8th and the 9th defendants, clarifies that his case is that with more evidence now filed on behalf of his clients, it is clear that there is no risk of dissipation and so the 2nd Injunction, in so far as it is a Mareva injunction, ought to be discharged. It is not the case that he accepts that a risk of dissipation exists but is addressed by the proposed payment in. In so far as the 2nd Injunction is also a proprietary injunction (which I think it is) in that the plaintiff is seeking to restrain disposal of monies held by the 8th and the 9th defendants being from the original funds or traceable proceeds thereof, Mr Chan says that, even on the plaintiff’s case that all the monies in his clients’ bank accounts came from the plaintiff, they are now proposing to pay all the monies (in the sums stated in §§1 and 2 of the Summons) into Court (subject to the deductions being asked for) and that would offer sufficient protection for the plaintiff. Before me, while Mr Chan does not accept the plaintiff’s case against the 8th and the 9th defendants, he does not make submissions on the merits of the plaintiff’s proprietary claim to the monies in the bank accounts of his clients. However, he denies that any future sums that may be received by the 8th or the 9th defendants, the use or disposal of which will not be restrained if I discharge the 2nd Injunction, are traceable by the plaintiff and thus would not fall within the proprietary injunction in any event.
The application to discharge
10. In his Decision of 20 September 2019, K Yeung J summarised the...
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