BANCA POPOLARE DI VICENZA SOC. COOP. AND ANOTHER v. ALUTECH (FAR EAST) CO LTD AND OTHERS

HCA 1973/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1973 OF 2007

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J U D G M E N T

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1.  This is an application by the Plaintiff for an order of committal of the 5^th Defendant, Mr Grant, on the grounds that he has been breach of an injunction prohibiting of disposal of assets worldwide.

2.  On 20 September 2007, an injunction was issued prohibiting the disposal of the assets held by the 3^rd Defendant and Mr Grant.  That was a worldwide Mareva Injunction. 

3.  There is no dispute that the injunction was properly served on Mr Grant and that at that time he has solicitor acting for him.  He accepts before me now that the injunction was explained to him by his solicitor.  The injunction is quite clear.  It prohibits the disposal of any assets that do not exceed HK$10,800,000.00, whether those assets are outside Hong Kong or inside Hong Kong.

4.  The injunction required Mr Grant, in the usual way to file an affidavit setting out details as to his assets.  On the day prior to swearing that affidavit, Mr Grant signed a Power of Attorney in favour of his wife which enabled her to subsequently sell a house property owned by both Mr Grant and his wife in Australia.

5.  Mr Grant asserted me today, he did not understand the true meaning of the injunction.  He had solicitors, the document is in English.  He read it himself, and it was explained to him by his solicitors.  It is in plain terms.  I simply do not believe his assertion that he did not understand the terms of the injunction.

6.  I am satisfied that he knew, and must have known, when he signed the Power of Attorney that it would be used to sell the property in Australia, and that that was in clear breach of the interim injunction.

7.  The Plaintiffs now seek orders committing Mr Grant, and orders requiring him to swear an affidavit which will show where the proceeds of sale had gone. 

8.  Under normal circumstances, a person is committed to prison when in contempt of court until such time as they are able to remedy the contempt that it has been occasioned, and there is resulted in all is being made against them.  Nothing can be done now to unwind what has taken place, although it may be possible for the Plaintiffs to pursue the proceeds of sale if they can establish somehow that Mr Snowdon, the purchaser of the land was in connivance with Mr Grant or his wife, and was aware what was happening.  That is a matter which I will have to leave to the Plaintiff’s solicitors.

9.  But I cannot let the matter go, just because the contempt cannot be remedied.  Mr Grant has to understand that what he did was a serious matter.  The signing of the power of attorney was a deliberate breach of the court order designed to frustrate the terms of that order. 

10.  I am satisfied that in those circumstances, Mr Grant should stand committed to prison for a period of six months by way of punishment for the breach of the order. 

11.  Mr Grant says that he will be able to file an affidavit in terms of the request by the Plaintiffs and the draft order that has been shown to him.  The draft order asks for 14 days; that is an unrealistic time bearing in mind that the information is in Australia will have to be obtained from Australia.

12.  I am going to give Mr Grant 42 days to file the affidavit.  That will give him sufficient time to send a copy of the order to Australia, so the people down there know just what information he will require in order to file a proper affidavit.

13.  There is no reason why the costs of the motion in the committal should not be paid by Mr Grant, and in the usual way that must be on an indemnity basis.

HCA 1973/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1973 OF 2007

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J U D G M E N T

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1.  This is an application by summons of the plaintiffs dated 4 August 2008 to continue various injunctions granted previously against the 1^st, 3^rd, 4^th and 5^th defendants.  There is no argument to the contrary from counsel for the 1^st and 4^th defendants. 

2.  The 3^rd defendant is at the moment on record represented by Messrs Wong, Fung & Co., and they do not appear today and we do not know the reason why. 

3.  The 5^th defendant, I was told this morning only, that he is now on remand in Lai Chi Kok Center and we have not been requested to issue a body order so that he could attend court hearing albeit behind the bar in the dock.  I have already decided that we should go ahead with the hearing in spite of the slip on the part of the plaintiffs’ solicitors.  Transcript of today’s hearing should be given to the 5^th defendant should he consider it necessary and proper to set aside an order which is made in his absence after papers have already been served on him. 

4.  For the aforesaid reason I order in terms of paragraphs 1 to 6 of the continuation and variation of injunction order sought from me.  In paragraph 7, in respect of costs, I order that costs of this application be to the plaintiffs against the 1^st, 3^rd, 4^th and 5^th defendants, to be taxed if not agreed.  That disposed of the plaintiffs’ summons. 

5.  In respect of the 1^st and 4^th defendants, there are two applications.  The 1^st application is a stay of execution of the judgment entered by Master Lung.  This summons has a missing part in paragraph 4.  I think the intention of the 1^st and 4^th defendants’ solicitors and counsel who drafted the summons mean :

“(1)  Execution of the judgment in favour of the plaintiff had granted by Master Lung on 31 July 2008 be stayed pending the 1^st and 4^th defendants’ appeal from the said judgment by notice dated 6 August 2008.”

6.  I heard the summons and therefore impliedly granted leave to hear the summons by way of abridgement of time.  

7.  Together with this application with the stay of execution there was in fact another application from the bar table for and on behalf of the 1^st and 4^th defendants.  These two defendants would also like to withdraw those what they called “outstanding living” and “legal expenses” which they said they were entitled under the previous Mareva injunction order against them.  The trouble arose because the defendants, on a frolick of their own, decided to withdraw those expenses on a 5-weekly basis before judgment is entered.

8.  I was told by Ms Cindy Sin, counsel for the 1^st and 4^th defendants, that they adopted that modus operandi because of the bank charges imposed on each and every withdrawal.  However after the summons for summary judgment by way of Order 14 has been issued by the plaintiff against them, no one in their legal team has ever advised them that withdrawal of living and legal expenses would come to an end if judgment is entered against them.  That is a very clear legal position.  However no one has been alerted to this fact or this possibility at least.  Of course the original Mareva injunction only stipulated that they could withdraw these two kinds of expenses up to the date of judgment.  Thereafter the two defendants would, by operation of law, be holding those money in the bank on trust for the plaintiffs.  In short, they would be the plaintiffs’ money from which the defendants could not withdraw anything. 

9.  The question now before this court is whether these two defendants can say they should be given a so-called “rain-cheque” for these expenses.  No authority has been cited by Ms Sin that the defendants are still entitled to a rain-cheque as the expenses were their entitlements under the original Mareva injunction orders.  However, we have to consider the actual legal position.  No one has forced or otherwise misrepresented to the defendants to adopt a 5-weekly withdrawal modus operandi.  It was the defendants’ decision to withdraw on a 5-weekly basis. 

10.  After the Order 14 summon has been issued the possibility of a judgment being entered is not just a mere possibility, it is to my mind a probability.  The original Mareva injunction orders are clear.  The entitlement to withdraw those expenses would be up to the date of the judgment, and therefore these two defendants have never been misled as to their entitlements.  It would not be fair to the plaintiffs that the defendants should be given a rain-cheque for these two kinds of entitlements.  Further, the defendants had not put in affidavits that they have already incurred living expenses which they must have in order to live on.  These defendants in fact are still living.  (The 1^st defendant is a limited company whereas the 4^th defendant is a person).  No evidence has been put before this court that how they could survive for the period between 6 and 31 July 2008.  They had not again disclosed what legal expenses have been incurred by them during this period of time. 

11.  By now judgment has already been entered, and it is the decision of a court in Hong Kong that these two defendants owe nearly EU$1 million to the plaintiffs.  Balancing the competing equities between the parties, I considered that, even as a the matter of law, the defendants are at a moment not entitled to withdraw those expenses which they had not withdrawn from the bank accounts.  It is only their own lookout. 

12.  For that reason I refuse the application of the 1^st and 4^th defendants made through their counsel from the bar table to allow them to withdraw the said expenses in the said period by way of variation of the Mareva injunction which I have continued and varied only according to the plaintiffs’ summons as aforesaid. 

13.  The last outstanding item is the application by the 1^st and 4^th defendants for stay of execution of the summary judgment entered by Master Lung on 31 July 2008 pending appeal.  The rigour of the application put before me through submissions of counsel is that the appeal would be rendered nugatory should the defendants succeed in the appeal. 

14.  From the papers before me I do not consider that there is any strong ground of appeal.  Apart from that, I have enquired from counsel for these two defendants as to how the appeal would be rendered nugatory should they succeed in the appeal.  I think there are two points made by Ms Sin for the defendants.  Although Ms Sin said in paragraph 42 of her written submissions that “Should a stay not be granted, the house might be sold and business closed down in order to satisfy the judgment”.  I enquired further what house what business of the 1^st and 4^th defendants.  I was told by Ms Tsui for the plaintiffs, that according to the affidavits of disclosure, both defendants did not disclose any house nor any business.  In fact the 1^st defendant said that they are winding down their business since the Mareva injunction. 

15.  Ms Sin was instructed that the 1^st defendant, being a limited company, is still running aluminum equipment business and now some health food business on a small scale.  That of course was not disclosed in the previous disclosure affidavit or affirmation.  Be that as it may, Ms Tsui said that the only available assets now are those small sums of money in the two bank : Bank of East Asia and HSBC, and the total sum was only $1.7 million.  I said “only” because the judgment sum is a little bit less than EU$1 million which is equivalent to more than HK$12 million.  

16.  The only execution the plaintiffs can think of at the moment is by way of garnishee order which they have already done so, and there will be a hearing on 5 September before a master to consider whether the garnishee order should be made absolute.  In my view, even if the garnishee order is made absolute, it cannot be said that the appeal would be rendered nugatory should the defendants succeed in their appeal. 

17.  Lloyd Adriatico SPA is a limited insurance company in Italy but it is a related company to the Lloyds in London.  The 1^st plaintiff’s Banca Popolare Di Vicenza Soc Coop, I was told by Ms Tsui, is a chain of central banks in Italy with a Hong Kong office.  It is inconceivable that these plaintiffs would risk their worldwide reputation and runaway with HK$1.7 million and would not repay HK$1.7 million back into our court should a Hong Kong Court order them to do so. 

18.  For that reason, I do not think there is any point in the stay of execution.  On one hand HK$1.7 million is far from the judgment sum ordered and the plaintiff should not be deprived of the fruit of litigation after they have obtained the judgment to that effect.  On the other hand the risk of rendering an appeal nugatory is to my mind minimal. 

19.  For the aforesaid reason I dismiss 1^st and 4^th defendants’ summons for a stay of execution pending appeal with costs to the plaintiffs, to be taxed if not agreed.

HCA 1973/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1973 OF 2007

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D E C I S I O N

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1.  On 13 September 2007, the Plaintiff obtained a Mareva Injunction against a number of Defendants including the 4^th Defendant, Mr Lo.  On 21 September 2007, Mr Lo was arrested and was remanded in Lai Chi Kok Reception Centre. 

2.  Pursuant  to the Mareva injunction, he was required to make an Affidavit disclosing all bank accounts held by him.  He made an affidavit from Lai Chi Kok on 5 October 2007.

3.  In that affidavit, he recorded the fact that he did not then have in his possession the documents evidencing the matters required to be disclosed.  There was an exhibit attached to the affidavit.  That exhibit showed that Mr Lo had an HSBC account, stated the number of the account, which held two amounts, one amount described “about HK$200,000” and the other described “AUD30,000”.

4.  The solicitors for the Plaintiff received the affidavit, and sometime thereafter, prior to 1 November 2007,  received a copy of the HSBC account bank statement which was dated 5 October 2007.  That showed that at that time there was, in the account, AUD30,874 and HK$266,758.80.

5.  On 1 November 2007, the solicitors for the Plaintiff wrote to the solicitors for Mr Lo asserting that the affidavit showed that his bank account held in excess of HK$200,000.  The letter incorrectly fails to recognize that Mr Lo had also asserted as the AUD30,000.  The letter informed Mr Lo’s solicitors that as the solicitors for the Plaintiff were of the view that Mr Lo had intentionally failed to comply with the terms of the Mareva Injunction and announced that they intended to seek a Committal Order against Mr Lo.

6.  Although the letter did not in terms seek a reply was appropriate, and a reply was given by Mr  Lo’s solicitor’s on 7 November 2007, denying the failure, and asserting that any application for committal would be vigorously contested.

7.  At all relevant times, at and after the issue of these committal proceedings, the solicitors for the Plaintiff  were in possession of a bank statement which showed that Mr Lo had “about AUD30,000” and “about HK$200,000”.  

8.  They had not been mislead they had not been confused.  The affidavit contained an adequate explanation as to why accurate figures were not given.  It was an affidavit which asserted that was made in the absence of documents while a man was in Lai Chi Kok on remand. 

9.  Far too often in this jurisdiction, solicitors leap on to the committal bank wagon in an effort to achieve result for their clients.

10.  This was an entirely unnecessary application.  There was nothing more Mr Lo could do other than to say:  “I did not know precisely what the exact amounts were, so I said “about” and to exhibit the bank statement which the solicitors already had.  When pressed Mr Wong was unable to say what Mr Lo might have done in order to purge any contempt that there may have been.  The only justification there can be for the application for committal is to “punish Mr Lo for not stating the exact amounts”.

11.  The inaccuracy is not likely, in all circumstances, to attract the attention of the court certainly not so far as committal proceedings are concerned.  If there was any contempt, and I am satisfied there was none, it was de minimus and may be disregarded.

12.  The application for committal is dismissed.

13.  The application for committal was unnecessary, expensive and the Plaintiff must pay the price of the application.  The Plaintiff must pay the Mr Lo’s costs on the application together with today’s hearing, to be taxed on the indemnity basis.