Bank of India v. Murjani Industries (HK) Ltd and Another

HCA001404/1989

HCA 1045 & 1404/89

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

and BETWEEN

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Coram: The Hon. Mr. Justice Barnett in Chambers

Date of Hearing: 30th & 31st March, 3rd, & 4th April, 1989

Date of Delivery of Decision: 4th April, 1989

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D E C I S I O N

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The two actions with which I am concerned involve common issues and therefore are being dealt with together.

On the 14th of March this year, the Plaintiff obtained ex parte Mareva injunctions against all the defendants. These injunctions first froze the defendants' assets worldwide up to a sum of some US$10 million. And second, the injunctions required worldwide discovery of assets within three working days. Not unnaturally perhaps both parties shortly thereafter appeared before the Judge who had granted the injunctions and sought a variation of the period within which discovery was to be given.

On the 17th of March, the Orders were amended to provide for discovery within fourteen days of service of the Order on the defendants. Subsequently, it was agreed that discovery be extended until the hearing of the defendants' applications to set aside the two injunctions as amended.

All the defendants, (with the exception of the 3rd Defendant in action 1404 who, I understand, has been served but being located out of the jurisdiction has so far taken no steps) applied by summons dated the 17th March to set aside the Orders. However, Murjani Industries (HK) Ltd. which is the 1st Defendant in action 1045 and the 5th Defendant in action 1404, on the same day, that is to say, the 17th of March, resolved to go into voluntary liquidation and liquidators were appointed on the 20th of March. In the circumstances, I adjourned the application by Murjani Industries sine die and stayed the Order for discovery until further Order of this Court.

For the remaining defendants, Mr. Thomas who appeared on their behalf conceded for this application only that the Plaintiff has a good arguable case in each action. That, of course, is the first hurdle for a, Plaintiff to jump when seeking Mareva relief. Mr. Thomas relied on a number of grounds for arguing that Mareva relief should not have been granted. The principal grounds may, I think, be expressed under three headings:

1)That there was no or no sufficient evidence of any disposable assets or assets that ought to be the subject of restraint.

2)There was no or no sufficient evidence of a real risk of local assets being dissipated still less worldwide assets, and

3)There was no justification for making an Order ex parte for discovery.

These grounds involved a careful analysis of the jurisprudence of Mareva relief and of the distinction which Mr. Thomas argues, exists between domestic and worldwide Mareva injunctions. It is now, of course, well understood that this form of relief which was originally confined to assets within the jurisdiction, that is to say, domestic relief, has now so developed as to include assets worldwide.

It is recognised, I think, that this decision following as it does upon an analysis of the jurisprudence is of some importance to the profession and indeed to the commercial world. For this reason, the parties have agreed to publication of my decision.

Dealing first with domestic relief, there was a useful early statement of the principles by Lord Denning in Third Chandris Shipping Corporation v. Unimarine S.A. [1979] 1 Q.B. 645. At p. 668 Lord Denning set out the guidelines. After referring to the need for full and frank disclosure and the need to give particulars of the claim and of any points made against the plaintiff by the defendant, he went on:

"(iii) The plaintiff should give some grounds for believing that the defendant has assets here. I think that this requirement was put too high in MBPXL Corporation v. Intercontinental Banking Corporation Ltd. August 28, 1975. Court of Appeal (Civil Division) Transcript No. 411 of 1975. In most cases, the Plaintiff will not know the extent of the assets. He will only have indications of them. The existence of a bank account in England is enough, whether it is in overdraft or not.

(iv) The Plaintiff should give some grounds for believing that there is a risk of the assets beign removed before the judgment or award is satisfied. The mere fact that the defendant is abroad is not by itself sufficient. No one would wish any reputable foreign company to be plagued with a Mareva injunction simply because it has agreed to London arbitration. But there are some foreign companies whose structure invites comment. We often see in this court a corporation which is registered in a country where the company law is so loose that nothing is known about it - where it does no work and has no officers and no assets. Nothing can be a found out about the membership or its control, or its assets, or the charges on them. Judgment cannot be enforced against it. There is no reciprocal enforcement of judgments. It is nothing more than a name grasped from the air, as elusive as the Cheshire Cat. In such cases the very fact of incorporation there gives some ground for believing there is a risk that, if judgment or an award is obtained, it may go unsatisfied. Such registration of such companies may carry many advantages to the individuals who control them. but they may suffer the disadvantage of having a Mareva injunction granted against them. The giving of security for a debt is a small price to pay for the convenience of such a registration. Security would certainly be required in New York. So also it may be in London. Other grounds may be shown for believing there is a risk. But some such should be shown."

The Court of Appeal dealt with Mareva injunctions in Z Ltd. v. A-Z and AA-LL [1982] 1 Q.B. 558. There, Kerr L.J. said at p. 585:

"However, the jurisdiction must not be abused. In particular, I would regard two types of situations as an abuse of it. First, the increasingly common one, as I believe of a Mareva injunction being applied for and granted in circumstances in which there may be no real danger of the defendant dissipating his assets to make himself 'judgment-proof'; where it may be invoked, almost as a matter of course, by a plaintiff in order to obtain security in advance for any judgment which he may obtain; and where its real effect is to exert pressure on the defendant to settle the action."

There was some confusion in the thinking of judges in England about what dissipation of assets involved. This was laid to rest by the Court of Appeal in Ninemia Maritime Corporation v. Trave G.m.b.H. [1983] 1 W.L.R. 1412. Again, it was Kerr L.J. in giving the judgment of the court who said at p. 1422:

"In our view the test is whether on the assumption that the plaintiffs have shown at least "a good arguable case", the court concludes, on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiffs would remain unsatisfied."

The courts continued to be concerned about abuse of the jurisdiction by plaintiffs seeking nothing more than security. And on the same page of the Ninemia case, Kerr L.J. said:

"But, as the law stands, this jurisdiction cannot be invoked for the purpose of providing plaintiffs with security for calims, even when these appear likely to succeed - we are speaking generally and not with reference to this case - and even when there is no reason to suppose that an order for an injunction, or the provision of some substitute security by the defendants would cause any real hardship to the defendants."

In PCW (Underwriting Agencies) Ltd. v. Dixon and another [1983] 2 All ER 158, the defendant applied to vary the Mareva order which had been made against him in order to allow him additional living expenses and funds from which he could satisfy other proper debts. Lloyd J. said at p. 162:

"What should be the correct approach for the court to take in these circumstances? The first reported case in which a similar question was considered is Iraqi Ministry of Defence v Arcepey Shipping Co SA, The Angel Bell [1980] 1 All ER 480, [1981] QB 65. In that case Robert Goff J. held that it was consistent with the policy underlying the Mareva jurisdiction that the defendant should be allowed to pay his debts as they fall due. The purpose of the jurisdiction is not to secure priority for the plaintiff; still less, I would add, to punish the defendant for his alleged misdeeds. The sole purpose or justification for the Mareva order is to prevent the plaintiffs being cheated out of the proceeds of their action, should it be successful, by the defendant either transferring his assets abroad or dissipating his assets within the jurisdiction: see Z Ltd v A [1982] 1 All ER 556 at 561, 571, [1982] QB 558, at 571, 584 per Lord Denning MR and Kerr LJ.

I am not going to attempt to define in this case what is meant by dissipating assets within the jurisdiction or where the line is to be drawn but wherever the line is to be drawn; this defendant is well within it. It could not possibly be said that he is dissipating his assets by living as he has always lived and paying bills such as he has always incurred. I say nothing about the cost of defending himself in these proceedings. The Mareva jurisdiction was never intended to prevent expenditure such as this or to produce consequences such as would inevitably follow if this ex parte order is upheld."

Those remarks of Lloyd J. were echoed very forcefully by Hunter J. (as he then was) in the local case Hsin Chong Construction Company Limited v. Yaton Realty Company Limited Construction List 1986 No. 2, where he said at p. 6:

"The matte is put there quite obviously and simply upon the basis that this plaintiff is looking for security. It is seeking to make sure first of all that the property is not used to satisfy the demands of any creditors, it says so in terms; and secondly that there should be no sale or transfer or disposition of the property."

and later he went on:

"In my judgment, this approach is simply not well-founded. It is, in my belief, totally contrary to the principles on which Mareva injunctions are granted in any circumstances, directly or indirectly. There is a great weight of authority for the proposition but the purpose of the Mareva is not to give the claimant security. It is not to re-write the laws of insolvency. It is not to give a claimant the right of a creditor."

And the Judge went on to refer amongst others to passages from the cases of Z v. A-Z. and the Ninemia.

With those passages and many others to which I was referred, Mr. Thomas argued that in relation to domestic Mareva relief, the principles are clear. Assuming that there is a good arguable case, a plaintiff must show the existence of or reason to believe in the existence of assets in the jurisdiction and that there is a real risk of dissipation of those assets in the Ninemia sense. A defendant should be permitted to pay his debts that is to say that payment of legitimate debts does not amount to dissipation and the relief should not be abused by giving a plaintiff what is no more than security for any judgment that he may gain. And finally, the relief must be just and convenient.

However, where assets situated outside of the jurisdiction are concerned, Mr. Thomas argued that a plaintiff must show more. He must show, first, that there is a higher degree of risk than real risk and second, that there is some element of reprehensible conduct on the part of the defendant.

As late as 1986, it was held that Mareva relief could not be obtained against assets outside of the jurisdiction. Dillon L.J. in the Court of Appeal set out the reasons for this in Ashtiani and another v. Kashi [1987] 1 Q.B. 888. The reasons which Dillon L.J. advanced were first of all the oppressive nature of the relief when applied tooverseas assets; the difficulty of enforcement; the invasion of privacy involved in the discovery aspect and the possibility of simply giving security overseas to the plaintiff if relief, of this type was ordered. Although it is now settled that jurisdiction can extend to assets worldwide, subject to proper safeguards, Mr. Thomas contended that the reasons advanced by Dillon L.J. are still valid and that courts should take them into account. He said that it is important to lay down stringent requirements for the ground of worldwide relief, otherwise, the jurisdiction will be abused and Hong Kong's reputation as a place in which it is convenient to carry out commercial dealings and business will suffer.

In 1988, the Court of Appeal in England again considered the worldwide aspect of relief in Republic of Haiti and others v. Duvalier and others [1989) 2 W.L.R. p. 261. The jurisdiction to grant Mareva relief over worldwide assets was in fact conceded by the defendants in that case.

At p. 271, Staughton L.J. in his decision said:

"The problem was extensively reviewed by this court in Babanaft International Co. S.A. v. Bassatne, ante, p. 232. That was a post-judgments case, and what was said as to injunctions before judgment wad obiter. The court upheld a worldwide injunction on dealing with assets, subject to a proviso which I shall consider later. There were some features in the Babanaft case that are similar to those in the present case. The judgment was against two individuals, whom Kerr L.J. described as 'unusually peripatetic in their lifestyle and elusive in the way they do business and hold assets,' for $15 million. He said ante, at pp. 237H - 238A:

'All 'their' assets appear to be held in the names of a large network of companies incorporated in many countries in which they or members of their families hold bearer shares.'

The judge below had found that they would be likely to take any step open to them to frustrate the execution of the judgment. I do not attempt to summarze the reasoning of Kerr L.J. He concluded, ante p. 242H:

'I therefore Proceed on the basis that in appropriate cases, though these may well be rare, there is nothing to preclude our courts from granting Mareva type injunctions against defendants which extend to their assets outside the jurisdiction.'

Neill L.J. said, ante, p. 253B:

'I was a party to the decision in Ashtiani v. Kashi and I remain of the opinion that it accurately reflected the way in which the jurisdiction to grant Mareva injunctions had been exercised and developed in England. ... I am satisfied, however, that the court has jurisdiction to grant a Mareva injunction over foreign assets and that in this developing branch of the law the decision in Ashtiani … may require further consideration in a future case.'

Nichol1s L.J. declined to express any

Opinion on the pre-judgment position.

For my part, if the point had not been conceded before us, I would have agreed with the view expressed by Kerr L.J., for the reasons give in his judgment, that there is jurisdiction to grant a Mareva injunction, pending trial, over assets worldwide; and that cases where it will be appropriate to grant such an injunction will be rare - if not very rare indeed."

But, Staughton L.J. went on at p. 273 para. D:

"It is beyond question that the injunction granted by Knox J. and upheld by Leggatt J. was a most unusual measure, such as should very rarely be granted. But this case is most unusual. It is not the nature or strength of the republic's cause of action which puts it in that category. What to my mind is determinative is the plain and admitted intention of the defendants to move their assets out of the reach of the courts of law, coupled with the resources they have obtained and the skill they have hitherto shown in doing that, and the vast amount of money involved. This case demands international co-operation between all nations. As the judge said, if ever there was a case for the exercise of the court's powers, this must be it. Or to quote Kerr L.J. in the Babanaft case:

'some situations ... cry out - as a matter of justice to the plaintiffs - for disclosure orders and Mareva type injunctions covering foreign assets of defendants even before judgment.'

and I think that this is such a case. If the Duvalier family have a defence to the substantive claim, and feel that they are being persecuted, then their remedy, as I have said, is to co-operate in securing an early trial of the dispute. It is not to secrete their assets where even the most just decision in the world cannot reach them."

Mr. Thomas, having referred me to those passages, emphasized the use of the words "race" and "cries out"; he also emphasized the facts in that case, that is to say, that there was an admitted and brazen effort to secrete assets and that vast sums were involved He pointed out that these facts were as Staughton L.J. said, "determinative". He also pointed out the aspect of international co-operation.

The Court of Appeal in England came to consider Mareva injunctions yet again in Derby & Co. Ltd. and others v. Weldon and others [1989] 2 W.L.R. p. 276. I shall be referring to this case again and I will simply call it Derby 1 and 2 in the future.

This case emphasized that worldwide relief is exceptional. May L.J. in his decision said at p. 280:

"F. In his submissions in the instant appeal, counsel for the defendants submitted that, other things apart, a worldwide Mareva should only be made where there was evidence either that the defendant had in fact secreted or alternatively had attempted to secret assets of his outside the jurisdiction so as to render nugatory any judgment to which the plaintiff might ultimately be entitled. Counsel based this submission not only on Duvalier's case to which I have already referred, but also on Hospital Products. Ltd v. Ballabil Holdings Pty. Ltd. [1874] 2 N.S.W.L.R. 662 and (1985) 1 N.S.W.L.R. 155; Coombs and Barei Constructions Pty. Ltd v. Dynasty Pty. Ltd. (1986) 42 S.A.S.R. 413 and In re Clunies-Ross, Ex parte Totterdell (1987) 72 A.L.R. 241. As counsel originally submitted, all these authorities show that as wide an order as that sought in the instant case should only be made where there is evidence of previous malpractice or nefarious intent. Counsel originally contended that one could deduce this as a principle of law from the authorities; in his reply, however, he accepted that the highest he could put it was that the cases demonstrated that at least evidence of this nature, or of equivalent persuasive effect, was needed before the court was entitled to make so draconian an order as that sought in this case.

I entirely accept that it will only be in an exceptional case that the court will make such an order. Nevertheless each case must depend on its own facts."

In the same case, Parker L.J. after

considering the submissions of counsel said at p. 282:

"(1) It was submitted for the defendants (i) that if a worldwide Mareva could be granted on no more than a good arguable case and a risk of dissipation of assets it would follow that such an order could be made in the vast majority of commercial cases in which material existed for the grant of an internal Mareva, and (ii) that this would conflict with statements in Ashtiani v. Kashi [1987] Q.B. 888; Babanaft International Co. S.A. v. Bassatne, ante, p. 232 and Republic of Haiti v. Duvalier, ante, p. 261 that an extraterritorial Mareva, albeit effective only in personam would only rarely be granted and would require exceptional circumstances.

I do not accept the first of the above submissions. The mere fact that the plaintiff shows a good arguable case and a real risk of disposal or hiding of English assets - the requisites foran internal Mareva - clearly cannot by itself be sufficient to justify an extraterritorial Mareva either worldwide or at all. Such a Mareva would clearly be unjustified if, for example, there were sufficient, English assets to cover the appropriate sum, or if the court were not satisfied that there were foreign assets or that there was a real risk of disposal of the same, or if it would in all the circumstances be oppressive to make the order.

Here, however, it is accepted that there are foreign assets. The Judge has found, correctly in my view, that there is a high risk of disposal of such assets, The English assets are wholly insufficient to afford protection. The defendants are clearly sophisticated operators who have amply demonstrated their ability to render assets untraceable and a determination not to review them. In those circumstances it appears to me that there is every justification for a worldwide Mareva, so long as, by undertaking or proviso or a combination of both, a) oppression of the defendants by way of exposure to a multiplicity of proceedings is avoided, b) the defendants are protected against the misuse of information, gained from the ordinary order for disclosure in aid of the Mareva and c) the position of third parties is protected. Whether, ultimately, the order in personam will be converted into an order attaching some or all of the assets disclosed will of course depend on (i) the court here giving the plaintiffs leave to proceed in a jurisdiction in which assets have been found and (ii) the decision of the court in such jurisdiction whether to make an order."

"There are in essence only three issues; (i) has the plaintiff a good arguable case; (ii) has the plaintiff satisfied the court that there are assets within and, where an extra- territorial order is sought, without the jurisdiction; and (iii) is there a real risk of dissipation or secretion of assets so as to render any judgment which the plaintiff may obtain nugatory:"

Again, in the same case, Nicholls L.J. said at p. 287:

"In my view each case must depend on its own facts. An order restraining a defendant from dealing with any of his assets overseas, and requiring him to disclose details of all his assets wherever located, is a draconian order. The risk of prejudice to which, in the absence of such an order, the plaintiff will be subject is that of the dissipation or secretion of assets abroad. This risk must, on the facts, be appropriately grave before it will be just and convenient for such a draconian order to be made. It goes without saying that before such an order is made the court will scrutinise the facts with particular care. In the instant case there are present the special factors to which May and Parker L.J.J. have referred. I do not think that it is correct that, if an order is made in the present case regarding overseas assets, such an order will become, or should become, the norm in cases where a restraint order is made regarding assets within the jurisdiction."

Mr. Thomas pointed out that in that case, Derby 1 & 2, fraud, deceit and breach of fiduciary duty were at the heart of the case. Coupled with the passages cited and the general tenor of the case, Mr. Thomas argued for the degree of risk required as being greater than real risk and for simplicity, he attaches to it the label "grave". And he argued that there is a need for some form of reprehensible conduct.

The most recent authority on the subject is the Court of Appeal's decision in England in Derby Co. Ltd. and others v. Weldon and others [1989] 2 W.L.R. 412. I shall be referring to this case again and for simplicity, I shall refer to it simply as Derby 3 & 4. In that case, Neill L.J. said at p.435:

"It remains true of course that the jurisdiction must be exercised with care.

The legitimate interests of the defendant must be respected and he must be allowed to continue his normal business and to have funds to meet his reasonable living expenses. I anticipate that orders against a defendant's foreign assets or in cases where the defendant has no assets with in the jurisdiction will be unusual. In such cases it will be necessary to safeguard the position of third parties outside this country."

Mr. Thomas placed emphasis upon the words "exercised with care" and "unusual".

In the same case, Lord Donaldson M.R. said at p. 419:

"The Mareva JurisdictionGenerally

The fundamental principle underlying this jurisdiction s that, within the limits of its powers, no court should permit a defendant to take action designed to ensure that subsequent orders of the court are rendered less effective than would otherwise be the case. On the other hand, it is not its purpose to prevent a defendant carrying on business in the ordinary way or, if an individual, living his life normally pending the determination of the dispute, nor to impede him in any way in defending himself against the claim. Nor is it its purpose to place the plaintiff in the position of a secured creditor. In a word, whilst one of the hazards facing a plaintiff in litigation is that, come the day of judgment, it may not be possible for him to obtain satisfaction of that judgment fully or at all, the court should not permit the defendant artificially to create such a situation."

But, Lord Donaldson went on at p. 422:

"In my judgment, the key requirement for any Mareva injunction, whether or not it extends to foreign assets, is that it shall accord with the rationale upon which Mareva relief has been based in the past. That rationale, legitimate purpose and fundamental principle I have already stated, namely, that no court should permit a defendant to take action designed to frustrate subsequent orders of the court. If for the achievemnet of this purpose it is necessary to make orders concerning foreign assets, such orders should be made, subject, of course, to ordinary principles of international law. When the Vice-Chancellor said that special circumstances had to be present to justify such an exceptional order, I do not understand him to have been saying more than that the court should not go further than necessity dictates, that in the first instance it should look to assets within the jurisdiction and that in the majority of cases there will be no justification for looking to foreign assets:"

Relying upon these passages and the general tenor of the authorities, Mr. Thomas argued that having regard to the origins of the Mareva injunction and the type of organisation that troubled Lord Denning, having regard to the recent statements of the Court of Appeal and the facts of the cases involved, that is to say, the Duvalier case and the Derby 1 & 2 and 3 & 4 cases, clear principles emerged. First, there must be established a higher degree of risk before worldwide restraint will be granted. Mr. Thomas, as I said, gives it the label "grave" risk. Second, there must be evidence of reprehensible behaviour and third, there should be some element of calculation or design on the part of the defendant. In my view, perhaps the second and third principles overlap.

For the plaintiff, Mr. Tang maintained that the same principles apply to both domestic and worldwide Mareva relief. He said that this is a developing jurisdiction where the courts are meeting the growing mobility of persons and money.

In Derby 3 & 4 at p. 419, Lord Donaldson said: "In Beddow v. Beddow (1878) 9 Ch. D. 89, Sir George Jessel M.R. said, at p. 93:

'… I have unlimited power to grant an injunction in any case where it would be right or just to do so: and what is right or just must be decided, not by the caprice of the judge, but according to sufficient legal reasons or on settled legal principles.'

That remains the position to this day, the only issue being whether in particular circumstances the grant is 'right or just'. What changes is not the power or the principles but the circumstances, both special and general, in which courts are asked to exercise this jurisdiction. This can and does call for changes in the practice of the courts. We live in a time of rapidly growing commercial and financial sophistication and it behoves the courts to adapt their practices to meet the curret wiles of those defendants who are prepared to devote as much energy to making themselves immune to the courts' orders as to resisting the making of such orders on the merits of their case. Hence it comes about that, as was pointed out by Neill L.J. in Babanaft International Co. S.A. v. Bassatne [1989] 2 W.L.R. 232, 251, and by May L.J. in Derby v. Weldon (No. 1) [1989] 2 W.L.R. 276, 280, this is a developing branch of the law. To that I would add that a failure or refusal to grant an injunction in any particular case is an exercise of discretion which cannot, as such, provide a precedent binding upon another court concerned with another case, save in so far as that refusal is based upon basic principle applicable in both such cases."

In the same case, Neill L.J. said at p. 434:

"3. As I ventured to suggest in the course of my judgment in the Babanaft case [1989] 2 W.L.R. 232, 251 the practice as to the grant of Mareva injunctions is still in the course of development. Having regard to the changes in the practice which have already taken place since 1975 I see no good reason for saying that a practice which has so recently come into existence has already become ossified. Circumstances change. It is to be remembered that exchange control was withdrawn in the United Kingdom as recently as 1979. The transfer of fund from one jurisdiction to another grows ever more speedy and the methods of transfer more sophisticated."

But, Neill L.J. went on p. 436:

"In the course of this appeal some reference was made to the fact that assets, like the Cheshire cat, may disappear unexpectedly. It is also to be remembered that modern technology and the ingenuity of its beneficiaries may enable assets to depart at a speed which can make any feline powers of evanescence appear to be sluggish by comparison."

I should observe that that passage appears under a heading "The discovery of assets", but it is quite clear that Neill L.J. was referring to Mareva relief in general.

In the same case, Butler-Sloss L.J. said at p. 437:

"It "(meaning the Mareva jurisdiction)" is adapting to meet changing circumstances and the increased mobility of assets and interchangeability of international companies. The developing practice was referred to by Kerr L.J. in Babanaft International....."

That, said Mr. Tang, is the way to approach the issue, rather than to rely upon reasons and guidelines formulated at a much earlier stage of development albeit mostly in the present decade. With that in mind, he took me to the various authorities which had already been cited by Mr. Thomas.

Mr. Tang pointed out that in Derby 3 & 4, Nei11 L.J. at p. 434 cited the Ninemia test but said nothing to qualify it other than to say that such orders will be unusual.

In the same case, at p. 438, Butler-Sloss L.J. used the words "likely the defendants will dissipate their assets". Mr. Tang said that it is in effect no different from a description of real risk and put the degree of risk no higher.

Again, in the same case, Lord Donaldson at p. 422, in the passage to which I have already referred, used the word "necessity". Mr. Tang said that this means no more than "cry out".

In Derby 1 & 2, the headnote refers to "real risk". This said Mr. Tang is supported by the passage which I have already read from Parker L.J.'s decision on p. 283.

In the same case, May L.J. at p. 280 referred to the dictum of Kerr L.J. in Babanaft to the effect that the case must "cry out" for relief. But Mr. Tang argued that this did not form part of the reasoning for Lord Justice May's decision.

Further, it is clear to me that May L.J. made no finding, as I have already cited, as to whether malpractice or nefarious intent is required. May L.J. simply said that each case will depend on its own facts. Therefore, it cannot be said, in my view, that he in any way disturbed the real risk principle.

In the same case, that is Derby 1 & 2, Nicholls L.J. in his judgment at p. 287 used the words "appropriately grave". Mr Tang argued that that does not mean a grave risk, the label of course which Mr. Thomas has latched upon. Mr. Tang argued that it simply means real risk.

In the Duvalier case, the Court of Appeal again referred to Kerr L.J.'s "cry out" dictum. In that case, said Mr. Tang, the court was feeling its way in a new area and he submitted that it is not authority for increasing the degree of risk and, if it was, it could not stand with the decision in Derby 3 & 4.

As I indicated during the course of the hearing, for my own part I am in some doubt as to whether there is really any difference between "real" and "grave" as applied to risk. Either there is a risk, that is to say, something other than a fanciful risk and that risk has been shown to exist, or there is not. In terms of risk, it seems to me to be difficult to take the concept further.

Accepting, however, that there can be a difference of degree is Mr. Thomas justified, in saying that the stricter test is necessary in order to obtain worldwide relief?

In my judgment, he is not.

In Derby 3 & 4, the Court of Appeal had the benefit of full argument and, through Lord Donaldson, expressed itself bound by Derby 1 & 2, a case upon which Mr. Thomas heavily relies in so far as the latter case decided any matters of law.

From my part, I cannot see anything in Derby 3 & 4 to suggest that there was a departure from the real risk principle. Whilst not bound by the decisions of the English Courtr of Appeal, I see no reason why I should depart from such a well-established and satisfactory principle.

I accept the various exhortations to use especial care when considering the relief in relation to worldwide assets. If that is done, as I apprehend will be done most scrupulously by judges, the right and just result will be reached.

I also echo the remarks made by Neill L.J. and Butler-Sloss L.J. in Derby 3 & 4. It is necessary for the courts to keep abreast of developments in modern technology and alive to the realities of the modern commercial world.

Thus, while I would never have anything but the greatest respect for Lord Denning his emphasis in the Third Chandris case on the foreign shell company (or cash box as Mr. Thomas called it) does seem very removed from latest developments. I would have equal regard for the reasons given by Di11on L.J. in the Ashtiani case. But I think those reasons do no more than emphasise the care with which such applications should be scrutinized.

Nor do I think that Mr. Thomas was on any firmer ground in arguing for a requirement of reprehensible conduct. Clearly, if such conduct is shown by a plaintiff, it will be easier for him to obtain the relief which he seeks. But, in my judgment, that remains a matter of evidence. I can see no warrant in any of the cases to which I have been referred for elevating this aspect to a matter of principle.

I hold, therefore, that the same principles apply both to domestic and foreign assets.

What I do accept, however, is that the Ninemia test involves a plaintiff in showing something more that there is simply a risk of assets being disposed of or dissipated. Mr. Thomas, relying upon the passage from Lord Donaldson's judgment in Derby 3 & 4 to which I have already referred, suggests that there must be something shown in the conduct or design of a defendant.

In my view, the Ninemia test encompasses an element of artificiality on the par of a defendant.I acknowledge straightaway my debt to Lord Donaldson for the use of this word. The Ninemia test does not rest on ordinary and regular business dealings or a defendant's manner of livelihood which will of necessity, but for legitimate reasons, dissipate a defendant's assets.

There will, of course, always be a risk that a judgment will not be satisfied. What is envisaged in my judgment is not only that there should be a real risk but that that risk should be one which is unfair to a plaintiff.

Having dealt, I hope with the law, I must turn to the facts. I do not intend to go into the background and the facts in any great detail. In so far as they are set out in Mr. Tang's note which he handed me yesterday morning, I accept them. But I do not necessarily accept the inferences which I have been invited to draw or the constructions that Mr. Tang sought to put on them.

Mr. Tang referred me to the judgment of Lawton. L.J. in the Chandris case. At p. 671, he said:

"There must be facts from which the Commercial Court, like a prudent, sensible commercial man, can properly infer a danger of default if assets are removed from the jurisdiciton. For commercial men, when assessing risks, there is no commercial equivalent of the Criminal Records Office or Ruff's Guide to the Turf."

(And I must interpose that I am indebted to Mr. Tang for explaining to me what Ruff's Guide to the Turf is.)

"What they have to do is to find out all they can about the party with whom they are dealing, including origins, business domicile, length of time in business, assets and the like; and they will probably be wary of the appearances of wealth which are not backed up by known assets. In my judgment the Commercial Court should approve applications for Mareva injunctions in the same way. Its judges have special experience of commercial cases and they can be expected to identify likely debt dodgers as well as, probably better than, most businessmen. They should not expect to be given proof of previous defaults or specific incidents of commercial malpractice. Further, they should remember that affidavits asserting belief in, or the fear of, likely default have no probative value unless the sources and grounds thereof are set out: see R.S.C., Ord. 41, r. 5(2). In my judgment an affidavit in support of a Mareva injunction should give enough particulars of the plaintiff's case to enable the court to assess its strength and should set out what inquiries have been made about the defendant's business and what information has been revealed, including that relating to its size, origins, business domicile, the location of its known assets and the circumstances in which the dispute has arisen. These facts should enable a commercial judge to infer whether there is likely to be any real risk of default. Default is most unlikely if the defendant is a long established, well known foreign corporation or is known to have substantial assets in countries where English judgments can easily be enforced either under the Foreign Judgments (Reciprocal Enforcement) Act 1933 or otherwise. But if nothing can be found out about the defendant, that by itself may be enough to justify a Mareva injunction."

Mr. Tang suggested that, using my keen commercial nose, I should have no difficulty in sniffing out the defendants in these two actions as debt dodgers.

Mr. Tang submitted first that there are in existence assets to be restrained. I turn first to Lawful (Holdings) Limited. Mr. Tang accepted that this is a professional trustee company. He said that it clearly had the ability to dispose of the trust assets which must exist if it was so minded. But I note that this defendant is in effect Messers Johnson Stokes and Master, a well-known firm of solicitors in Hong Kong. It seems to me inherently improbable that this company would have or will move the assets, whatever they are, to defeat the plaintiff. It is more likely, as Mr, Thomas said, that the company would retain the assets so as to have recourse as trustee to those assets if a judgment is obtained against it.

I also note that Lawful have notified Messrs Johnson Stokes & Master by a letter dated 29th of March that on the 17th of March this year it was removed as trustee. But the company stated specifically that it is taking no steps to divest itself of the assets and books of the trust in view of the injunction in force against it

Mr. Tang argued that if the injunction is lifted there is nothing to stop the assets being transferred to the new trustee and the plaintiff will thereby suffer. That of course is perfectly true but it does not seem to me to be a good reason for continuing an injunction which in my view had no justification in the first place. There was never any evidence, as I can see, to suggest that there was any risk in the Ninemia sense. In those circumstances, straight-away the injunction in relation to Lawful Holding must be discharged.

The next defendant with which I deal is Lucky Pierre Limited. A company search showed that in July last year the company was indebted for HK$100 million. The following month, its property at 52 Wah Kwong Street was sold for HK$106 million and of the proceeds HK$40 million was used to pay, as it now turns out, various creditors of Murjani Industries (HK) Limited. As far as can be ascertained this defendant remains a tenant of that building.

Whatever may be said about the fact that Lucky Pierre's money was apparently used to pay creditors of another company, albeit connected through one of the trusts, the fact remains that it is described, as a property holding company. But it is not now holding any property or, at least there is no evidence to show that it is. In my judgment, there is no evidence to show that this company has now any assets or at least, any assets which an injunction should properly restrain, either in Hong Kong or elsewhere. In view of the lack of evidence about assets, in my judgment the injunction in must be discharged.

The next defendant is Murjani Macau Limited. This company has a property in Macau which is mortgaged to a local bank for approximately HK$5 million. There is no other evidence about this company. Mr. Tang asked me rhetorically what other assets it might have, what about rental income from the premises which it owns in Macau? Mr. Tang said that any assets should not be used for the liabilities of other companies within the Murjani Group.

Mr. Thomas said that lack of knowledge on the part of the plaintiff about this company is insufficient to found the Mareva injunction. He said that if there is, for example, any equity in the Macau property, the plaintiff could quite easily have established this. Therefore he said, there is no evidence of disposable assets outside of Hong Kong. I find, however, that there is sufficient evidence of asssets outside of Hong Kong, although if the injunction is continued the injunction must be confined to assets in Macaau.

The next defendant is Murjani Designs Limited. This is described in a diagram of the Murjani Group at p. 291 of the bundle as having business relating to trademark applications. There is no evidence of it having any particular assets. It is said, however, that as a guarantor for some US$4 million, I should infer that it must have assets. Mr. Thomas said that there is no evidence of any assets held by this company now, even if I could draw an inference that the company held assets in 1985 when the guarantee was given.

The company, as I said, is described as holding trademark applications. There is evidence that the Murjani Group relied substantially upon trademarks or the use of licensing rights from trademarks. In my judgment, therefore, there is sufficent evidence from which I can infer that this company does have assets overseas which might properly be retrained.

I come then to the only two other defendants who are still involved in his proceedings. They are Mr. B.K. Murjani and Mr. M.B. Murjani, and for simplicity, I will refer to them as the father and the son. The father, it is acknowledged, is head of the family which has as its business interests the Murjani Group. There is at, p. 265 of the bundle, what has been referred to as a memorandum or proposal about which I shall say more presently. But that proposal referred to the injection into the Group of some US$14 million by Murjani family interests. The father is also the trustee of one of the family trusts, the Sheela trust, although there is no evidence to show that he has any actual interest in that trust. He also lives in a large house which he no longer owns. It is the property of the trust. I am asked to infer, therefore, that the father has assets some of which are likely to be overseas in view of the earlier rupee deposits which were maintained in India. They are evidenced by the document at p. 263. It was pointed out by Mr. Tang that the father made no denial of having any assets.

As far as the son is concerned, it is now agreed that he lives in England, that supports himself and his family both in England and the U.S.A. He, of course, is part of the family which contributed the injection of capital into the Group. I am asked again therefore to infer that the son has assets outside of the jurisdiction and it is pointed out that he has made no denial of having any assets.

It is also, I think, accepted that the father and the son, particularly the son, clearly control the Murjani Group Companies. Although the evidence is not strong, using my commercial nose as I have been asked so to do, I think there is sufficient evidence in my view to justify a finding that both father and son have assets worldwide.

For those companies which are still in the running, that is to say where I have not already discharged the injunction against them, what is the risk in the Ninema sense that they will dissipate their assets?

Mr. Tang principally relied upon the affirmation of Mr B. Chakravarty which has been filed in action 1404. In his affirmation, Mr. Chakravarty after producing a substantial quantity of documents, affirms as follows at paragraph 29.

"I verily believe that the following matters, inter alia, show that there is a substantial risk that the Defendants and each of them were removed and or dissipated assets in order to prevent the plaintiff from satisfying any judgment which may be obtained.

(a)    The 1st Defendant has disposed of his beneficial interest in the Henderson Road property at an apparent under value to a trustee in favour of his wife for which he is the trustee."

(I interpose that the 1st defendant here referred to is the father.)

"(b) Lucky Pierre Limited had sold the premises at Wah Kwong Street and after discharge of the Mortgage to the Hongkong & Shanghai Banking Corporation has used the balance to pay unidentified trade creditors. The premises are still occupied by some of the Defendants but it is not known the basis on which they do so.

(c) In the undated Memorandum exhibited "BC-17" it is stated that "In addition, Murjani family interest have made cash injections totalling nearly US$14 million since January 1988 in support of the Group". However, the source of this fund is not stated but it does suggest that the Murjani family have substantial assets and that the 1st Defendant as patriarch of the family and Mr. M.B. Murjani as his son are likely to be in control of or have beneficial interest in such assets.

(d) In the same document it is stated how the proceeds of sale of the Gloria Vanderbilt trade mark rights had been applied. It is not however indicated whether the "trade creditors" were secured or unsecured creditors or indeed of which company within the Murjani Group they were creditors.

(e)    As stated above, the 1st Defendant, the father Mr. Mohan, B. Murjani the 4th Defendant, Murjani World-wide B.V. (not a Defendant, but was the owner of the Gloria Vanderbilt trade mark right) have disposed of assets. The proceeds of sale of such assets have been used allegedly to repay creditors but not the Plaintiff and therefore to the prejudice of the Plaintiff. Although in the case of the Henderson Road property and the Coombe Road property, the Plaintiff paid US$3.8 million for their release, the Plaintiff as a substantial creditor of the 1st Defendant and Mr. M.B. Murjani is nevertheless concerned about their disposal and more importantly, the disposal of the proceeds of sale. The Plaintiff is unaware of the source of the US$3.8 million paid to the Plaintiff to obtain the release of the two properties. However, in view of the timing, they would not seem to be the proceeds of sale for the two properties. In any event, the proceeds of sale would have been insufficient."

As far as paragraph (b) of that affirmation is concerned, Mr. Tang says that the real complaint is that it was creditors of Murjani Industries who were paid. And for that he relies on an affirmation of the son which has been filed in these proceedings.

In relation to Gloria Vanderbilt, as there is nothing to suggest that the holder of the rights, Murjani Worldwide, which of course is not a party to these proceedings, actually trades or had trade creditors, Mr. Tang said it is feared that the trade creditors paid off were not the creditors of Murjani Worldwide. And in so far as the US$6.3 million was applied for the Coca-Cola settlement, there is no evidence that Murjani Worldwide had any liabilify to Coca-Cola. The inference therefore, said Mr. Tang, is of an ability and the tendency to move funds around without any consideration as to where they should be properly applied.

Mr. Tang also suggested that the Coca-Cola settlement gives rise to suspicion for reasons advanced by Mr. Chakravarty in his affidavit which was affirmed on the 30th of March in action 1045. I can say immediately that I do not accept this. This was not a secret sale but a formal settlement on an international basis involving a well known international corporation. It seems to me it would be hardly likely that the Coca-Cola Corporation would accept as a purchaser of its licensing rights, and a purchaser which was to assume on behalf of Murjani debts of US$27 million, a company which was somehow associated with the Murjani Group.

Mr. Tang also criticized the sale of the properties at Henderson and Coombe Road. He also criticized the proposed sale of the Tommy Hilfiger rights, and the changes of trustees which took place on the 17th of March but which were only drawn to the plaintiff's and indeed to the court's attention on the first day of this hearing.

He also submitted that the Murjani Group network, although not set up for any nefarious purpose, will enable the defendants to move their assets about swiftly any secretly and to the detriment of the plaintiff, if the defendants are so minded.

Finally, he contended that the undated memorandum or proposal which contains the son's proposals for the future course of dealing between the parties is hardly an honest document. It contains, he says, no really constructive suggestion and in particular gives no disclosure of the assets of the guarantors of the bank, and how they might repay the sums outstanding.

Mr. Thomas, while commenting in detail on the various individual points which were raised, advanced two main arguments as to why no case of risk has been made out.

His first ground was that counsel cannot go beyond the grounds stated in the affidavits filed on behalf of a plaintiff. Counsel may not rely upon a ground or grounds which he himself can extract from documents but which the plaintiff has not mentioned. He accepts, of course, that counsel may canvass exhibits to make good those grounds affirmed by the plaintiff or on his or its behalf.

Mr. Thomas said that the plaintiff's grounds for seeking Mareva relief were essentially set out in Mr. Chakravarty's main affirmation, paragraph 29 of which I have just read. The affirmations which were filed in action 1045 really added nothing to this. The only other matter is the Chakravarty affidavit of the 30th of March in which it is alleged there suspicion about the Coca-Cola settlement. I have of course already dealt with that. What paragraph 29 of Mr. Chakravarty's affirmation really boiled down to, said Mr. Thomas, is a complaint that the defendants or at least one of them are paying off other creditors but not the plaintiff.

It is common ground that payment of other creditors by a debtor, as long as they are his own creditors, is not a basis for Mareva relief. But Mr. Tang submitted that, in relation to Lucky Pierre at least, on the son's own evidence some of Lucky Pierre's funds went to pay off creditors of Murjani Industries, that is to say, creditors other than those of Lucky Pierre.

Mr. Thomas said that this was not a ground advanced by Mr. Chakravarty, and that the plaintiff cannot rely on it. Futher he pointed out that the affirmations which have been filed on behalf of the plaintiff really only make a case against the father, the son and Lucky Pierre in the sense that they are the only defendants specifically referred to.

I accept Mr. Thomas' argument and that, in my opinion, is almost enough to dispose of this application. It is imperative that a defendant when served with a Mareva injunction should be able at once to ascertain from accompanying affidavits why it is alleged that he is likely to dissipate his assets. He will then be in a position to know what case he has to meet on the plaintiff's inter partes summons or how to frame his arguments if he himself applies for discharge of the injunctions. He will also be able sensibly to consider what evidence if any he should adduce. I commend to practitioners that they read the guidelines set out by Kerr L.J. in the Z. v. A-Z case at p. 588.

However, I shall also deal with Mr. Thomas' other main submission which is that, far from showing the defendants, and the father and son in particular, as objects of suspicion, the evidence casts them in a favourable light as honest, open and helpful businessman.

It is pointed out that although the Murjani Group have been losing money since 1984, the plaintiff increased its credit facilities from a total of HK$50 million in 1981 to US$14 million in 1985 and it was only at that relatively late stage that it sought real security for the facilities, that is to say, the mortgages on the Henderson and Coombe Road properties in addition to the guarantees which had already been taken. Therefore, to date, said Mr. Thomas, the defendants had substantial credit lines and the plaintiff for its part had ample opportunity to judge the father and the son and their companies. There is no real evidence, said Mr. Thomas, to show why the plaintiff has had a change of mind about them.

Referring to the network of Murjani companies, including those outside of Hong Kong, Mr. Thomas said that these are not a sign of lack of integrity. The documents which had been exhibited showed that the network relates to real trading activity and there is no attempt by any of the defendants to hide the structure of the Group - indeed quite the opposite. Consolidated accounts have been produced. These accounts were prepared by reputable international accountants. These accounts show the history and thedescription of the Group, with detailed information of their activities and financial figures.

Mr. Thomas pointed out that, as I have already said, the Group has been in financial trouble since 1984, and the plaintiff must have been aware of this. But it is a fair inference from the documents that the father and son made significant efforts over the subseguent years to continue the Group's trading activities in the interests of all the creditors including of course the plaintilff.

For examples of these, he pointed to the consolidated accounts for 1985 at p. 285 of the bundle which, he said show efforts to keep the lines of credit going. He pointed also to a letter from the Group sent to the plaintiff on the 19th of May, 1987. It is at p.337 of the bundle. This letter contains a full description of the Group and its structure. It seeks lines of credit and release of mortgages.

More significantly perhaps, at the beginning of February this year, when the trouble really started between the parties, 4 meetings were held between the son and representatives of the plaintiff. Mr. Chakravarty whom I have already mentioned, attended all these meetings. There was also one other meeting with Mr. Gupta of the State Rank of India.

Mr. Chakravarty condescended to give no details of these meetings except that there was an admission of liability on the part of the defendants. It is a fair inference therefore, said Mr. Thomas, that the son gave no indication of any intention to do anything improper and there were at least some attempts to solve the mutual problems. No doubt the proposal or undated memorandum, to which I have referred, was on the agenda at these meetings. Mr. Chakravarty makes no comment about this beyond what I have already quoted. But Mr. Thomas maintained that this was an open honest statement by the son on behalf of the Group, containing at least some proposal for future dealings between the parties even if those were on their face unpalatable.

That memorandum contains reference to three matters of some importance. The first matter was the Coca-Cola settlement. As I have said, the plaintiff hints at something suspicious behind the disposal by the Group of its licence rights. But I have already dealt with that. Second, there was the disposal by the Group of its rights under licence from Gloria Vanderbilt. But, again, the Group acknowledged that it hoped to use some of the funds from the sale of these rights to pay off banks including the State Bank of India. As I said, the Group acknowledged that it did hope to use the funds fort this purpose. But, in the event, it said that it had to use the balance of funds from that sale to top up the Coca-Cola settlement. There seems to me to be nothing particularly sinister or secret about that.

The third matter relates to the Tommy Hilfiger rights. Whatever complaints the plaintiff has about this, the plaintiff and the other Indian Banks in Hong Kong were offered a stake in these rights. Because they declined to take a stake the son proposed to sell the rights elsewhere. It seems to me that it cannot be said there was anything suspicious or clandestine about that.

I also observe that the son returned to Hong Kong for talks and, as it turned out, he returned at no little personal risk to himself because he is now confined to Hong Kong by way of a prohibition order. Perhaps that is another sign of good faith on his part.

There was also, as I have said an injection of cash by Murjani family interests of US$14 million. Again, that could be said to be a sign of good faith by the family.

Against all that, Mr. Tang had little more than the circumstances of the sale of the properties at. Henderson and Coombe Roads and the use of Lucky Pierre's funds to pay Murjani Industries debts. All of those matters were comparatively stale.

In all the circumstances, I cannot see that there is or was any justification for making the orders which were made. I am wholly unable to say that there is evidence going anywhere near establishing any intention or activity on the part of the defendants which will result in the plaintiff being frustrated, unfairly or artificially, of the fruits of any judgments it may obtain against the defendants.

I say that, however, with the greatest deference to and in no way in the spirit criticism of the duty judge who made the orders in the first place because he had not been treated, as I have been, to three days of very careful argument. But in the circumstances, the injunctions are discharged in respect of all the surviving applicants.

In view of my decision about the restraint part of the Mareva relief, it is not necessary for me to deal with the discovery aspect. But, I think, in deference to the arguments which had been advanced and for the assistance of both I hope practitioners and fellow judges in future, I think I should make my views known even if they are only obiter.

Mr. Thomas submitted that an order for discovery should in principle not be made ex parte unless directed at a third party or unless it is in support of an Anton Piller order.

In the Duvalier case, Staughton L.J. said at p. 265:

"Notice that not only was the order made in the absence of the defendants and without their knowledge; it was also not to be communicated to them until after their solicitors had complied with that part of it relating to disclosure of information. In those respects it was in line with current English practice. Whilst there may hot be much point in making an order that a defendant himself disclose documents or provide information ex parte since he will have to know of the order before he complies with it, the situation is different where information or documents are sought from some third party (see Bankers Trust Co. v. Shapira [1980] 1 W.L.R. 1274) or even the solicitors as in this case, or when there is to be a compulsory search by an Anton Piller order (Anto Piller KG v. Manufacturing Processes Ltd. [1976] Ch 55). That is why particular caution is needed in making such orders."

In the Hsin Chong case, Hunter J. in his usual forthright style said at p. 10:

"I have no idea how an order in those terms came to be made ex party and in these sort of circumstances. It does not seem to me to start to accord with the principles of Bekhor v. Bilton. I will say no more about it except that no attempt had been made to enforce that part of the order, no harm had been done, and therefore I need say no more than that part of the order must likewise be discharged."

Mr. Tang argued that there is no authority that discovery should not be ordered as a matter of principle. He said that Staughton L.J. in Duvalier simply said that there is not much point in ordering discovery but that he did not say it is wrong in principle.

In Babanaft International Co. S.A. v. Bassatne and Another [1989] 2 W.L.R. 232, Kerr L.J. said at p. 251:

"The orders for the disclosure of the defendants' assets abroad pursuant to R.S.C., Ord. 48, were not in issue on this appeal, and their jurisdictional justification was not open to question in view of the decisions of this court in Interpool Ltd. v. Galani [1988] O.B. 738 and Maclaine Watson & Co. Ltd. v. International Tin Council (No. 2). [1988] 3 W.L.R. 1190. However, in my view there is equally no jurisdictional objection to such orders before judgment. The cautionary comments in the judgments in Ashtiani v. Kashi [1987] Q.B. 888 should no doubt be borne in mind in this context. But in extreme situations, which justify a pre-judgment Mareva injunction covering a defendant's assets outside the jurisdiction, orders fur the disclosure of the nature and location of such assets must be equally justifiable. Prima facie, both types of orders should be considered in parallel."

It seems to me that there Kerr L.J. was in effect saying that, if the situation warrants making a Mareva injunction in respect of assets overseas, then discovery must more or less automatically follow. But I accept that that was a dictum only. I also note that the various authorities to which I have already referred or been referred, talk of discovery as being ancillary or concomitant to restraint.

Without discovery Mr. Tang argued it is difficult to police Mareva relief and the relief granted may not have the desired effect.

In my judgment, discovery may be properly ordered upon an ex parte application if the circumstances so warrant. If discovery is ordered, it puts a defendant on notice at the earliest opportunity. Preparation of necessary affidavits can be put in hand. If the order is not subsequently discharged, the plainitiff will not then be delayed further in obtaining the discovery to which he is entitled.

I should also like to say something about the practice and procedure in relation to orders of this nature. There has been debate about this during the hearing, debate which I hasten to add was prompted by me. And I repeat what I have said during the hearing that any comments I do make are riot meant as criticism of the procedure adopted by the plaintiff in this case.

As I remember the practice until about two years ago, the practice was for the ex parte order to contain provision for the plaintiff to take out an inter partes summons and the order in fact gave a return date for that summons a few days later. It was usually at 9.30 am, a half hour appointment.

The current practice seems to be for the order simply to provide for a defendant to apply for discharge of the order made against him on two days' notice.

My research shows that possibly two things led to the change of practice.

(1)    Although I cannot trace it, I recall that the then Chief Justice, Sir Denys Roberts, gave a direction that a plaintiff should no longer obtain an immediate return date but that, having obtained the relief which he sought should in conjunction with the defendant consult the Clerk of Court and fix a date for a full hearing of an inter partes summons.

(2)    I understand that the Judge in charge of the Commerical List directed that the practice of the Commerical Court in London should be adopted, that is to say, it should be left up to a defendant to apply for discharge of the order.

Mr. Thomas helpfully referred me to two authorities. The first was the Z Ltd v. A-Z case to which I have already referred. In that case Lord Denning said at p. 577.

"When granting a Mareva injunction ex parte, the court may sometimes think it right only to grant it for a few days until the defendant and the bank or other innocent third party can be heard. The injunction is such a serious matter for all concerned that all of them should be given the earliest possible opportunity of being heard. The plaintiff will, of course, in his own interest, give notice to the bank or other innocent third parties at once - either by telephone or telex - and he must follow it up immediately by a written confirmation to be delivered by hand or earliest means. The notice should set out the terms of the injunction, and request that it be observed. The plaintiff should also serve the defendant straight away so that he can apply to discharge it if so advised : see Negocios Del Mar S.A. v. Doric Shipping Corporation S.A. [1979] 1 Lloyd's Rep. 331. But in other cases where service on the defendant is not immediately practicable, for some reason or another, the return day could be later."

It seems to me there that Lord Denning was contemplating that either practice could be adopted.

In the Ninemia case, Kerr L.J. in his decision at p. 1426 said :

"Whether the inter partes hearing takes the form of an application by the defendants to discharge the injunction, as is usual in the Commercial Court, or whether - as in the Chancery Division - the injunction is only granted for a limited time and there is then an inter partes hearing as to whether or not it should be continued, the judge must consider the whole of the evidence as it then stands in deciding whether to maintain or continue, or to discharge or vary, the order previously made."

Again, it appears there were two practices. Mr. Thomas suggested that in Hong Kong the Chancery practice is preferable. He said that the Duty Judge system necessarily means that difficult applications such as these will inevitably be dealt with from time to time by Judges whose primary work is not in this field. That, he says, is neither fair to the Judge nor to the parties.

Mr. Tang suggested that no real hardship is caused to defendants if the practice of the Commercial Court is adopted, because defendants may apply to set aside the order and they may apply ex parte if the matter is urgent. He said that on an inter partes hearing where the defendant has applied, as in this case, to set aside the injunctions the defendant will have the advantage of going first and last while at the same time the plaintiff retains the burden of satisfying the court that the injunction should continue.

For my part, I always found that an early return on a plaintiff's summons to be useful. In my view, the balaned comes down in favour of the Chancery practice. I think the better practice is for the court to require the plaintiff to take out an inter partes summons forthwith, with a short return date. Upon the short return date, as very often happened in my experience, the matter was disposed of and not subsequently heard of again. Alternatively, proper and sensible directions can be given for the future conduct of the inter-partes summons, and as a matter of urgency, time limits for complying with discovery or a stay thereof can be dealt with. So as I said, in my judgment the proper procedure to be adopted in future is for the plaintiff either to undertake to issue or for and serve an inter partes summons or the Judge to embody a requirement in his order.

Other than that I do not think there is anything I can usefully add.

Representation:

Mr. M. Thomas, Q.C. & Mr. Faulkner instructed by M/s J.S.M. for D1, D2, D4, D6, & D7 in 1404/87 & D2 in 1045/87 & D2 in 1045/87

Mr. R. Tang, Q.C. & Mrs. Kaplan, instructed by M/s Wilkinson & Grist for the Plaintiff

Mr. C. Jo Jo of Alsop Wilkinson Driver & Co for D1 in 1045/89 & D5 in 1404/89