Read the full judgment text of HCA 807/2001 on BabelCite. This High Court CFI judgment was delivered on 8 January 2002 before Geoffrey Ma J.
Civil procedure – Mareva injunction – ancillary disclosure orders – cross-examination of deponent on affirmations – discretion – pre-judgment application – whether to order cross-examination – application granted – costs. The plaintiff obtained a Mareva injunction from Waung J on 19 February 2001 freezing the 1st defendant's assets up to HK$4,950,000. The 1st defendant purported to comply with disclosure obligations by Mr Yu's 2nd affirmation of 6 March 2001 stating that the 1st defendant held 244,169,585 shares in Prosper eVision Limited ('PeV') valued at about HK$38.8 million, and later by Mr Yu's 4th affirmation of 15 June 2001 (made pursuant to a consent order) stating that the PeV shares were pledged to a third party in Beijing as security for a HK$46.1 million loan, leaving the 1st defendant effectively with no unencumbered assets. The plaintiff applied for an order that Mr Yu be cross-examined on his two affirmations. The court confirmed that it has undoubted jurisdiction to order cross-examination of a deponent on any affirmation made in compliance with a Mareva disclosure order (Bekhor v. Bilton; House of Spring Gardens Ltd v. Waite). Whether to exercise that jurisdiction is a matter of discretion, and pre-judgment cross-examination orders are exceptional and rare, requiring satisfaction that they are necessary in the interests of justice (Grand Empire Holdings Ltd v. Marco International (HK) Ltd; Steven Gee QC, Mareva Injunctions and Anton Piller Relief). The court rejected the argument that the Mareva injunction's terms alone were sufficient, holding that ancillary orders are needed to make the injunction effective and practical by identifying specific assets, including those held by third parties. Applying the test whether there is a real risk that justice will not be done without cross-examination, the court held that an order was warranted because the 1st defendant's financial picture had changed dramatically between the two affirmations, no documents supported the encumbrance claim, the 1st defendant had refused to answer repeated enquiries about encumbrance, and the application for an increased legal costs allowance (from HK$100,000 to HK$1 million) was inconsistent with claimed inability to pay, suggesting undisclosed assets. Ma J granted the application, giving the 1st defendant a further opportunity to file affidavit evidence before cross-examination took place, and awarded costs of the application to the plaintiff in any event.
Legal issues: Court's jurisdiction to order cross-examination on affirmations filed pursuant to Mareva injunction disclosure orders · Whether pre-judgment cross-examination of deponent on Mareva disclosure affirmations should be ordered · Whether terms of Mareva injunction alone are sufficient without cross-examination
Outcome: Application granted; the 1st defendant was given leave to file further affidavit evidence, and Mr Yu was ordered to attend for cross-examination on his 2nd and 4th affirmations, together with any other deponents of further affidavit evidence. Costs of the application were awarded to the plaintiff in any event.