Galsworthy Ltd v. Liu Cheng Chan and Others

HCA 560/2017

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 560 OF 2017

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BETWEEN

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D E C I S I O N

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1.This is the application of the Defendants for variation of the Mareva Injunction Orders (Orders) against them, which were granted ex parte on 9 March 2017, in respect of the provisions for legal expenses. It is said that the existing provision of HK$3 million had long been exhausted. I have to say that the proposed new provision of, inter alia, HK$2.5 million per month is, on any view, alarming. The court has been informed that the costs incurred by the Defendants had exceeded those of the Plaintiff by more than 100%.

2.Regrettably, I have to say that the material before the court reveals that the Defendants have been suffering from serious injustice in that the Orders have the effect of freezing 3 times the amount of damages which the Plaintiff alleges that it is entitled to pursuant to its Statement of Claim.  That is clear from the terms of the Orders, each one of the Defendants has their assets frozen up to the value of the Plaintiff’s claim, namely, about US$60 million.  I am unable to see how it can be right that the Plaintiff is entitled to any injunction which exceeds the value of its claim.   There is no rider or qualification in the Orders which may mitigate against such injustice.

3.On the evidence before the court, the 3^rd Defendant has assets of over US$80 million.  The estate of the 1^st Defendant is valued at about US$60 million.  The assets of the 2^nd Defendant are about US$36 million.  Hence, as a matter of fact, the Orders have frozen assets of about US$126 million against a claim of US$60 million.

4.This state of affairs is plainly wrong.  It must not be forgotten that the Plaintiff has not proven its case against any of the Defendants in this action, and a Marvea Injunction is not meant to be a guarantee for the Plaintiff.  Ironically, no complaint has been made by the Defendants in respect of this issue.

5.The parties have not been able to work out a satisfactory variation of the Orders as an interim measure pending the argument of the discharge application in September despite having been given an opportunity to do so.  However, I believe that the Defendants’ proposals that the order against the 2^nd Defendant be discharged is more than reasonable, and I order accordingly.

6.The discharge will render the variation application superfluous.

7.I shall hear the parties on costs.

Mr Jason Toms of Reed Smith Richards Butler, for the Plaintiff

Mr Dominic Geiser of Herbert Smith Freehills, for the 1^st to 3^rd Defendants