Kwan Shuk Man Angela v. Gold Victory Industries Limited

HCA005942/1995

1995 No. A5942

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: the Hon Mr Justice Findlay, in chambers

Dates of hearing: 4 and 9 August 1995

Date of handing down of judgment: 14 August 1995

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JUDGMENT

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1. On 21 June this year, the plaintiff issued a summons against the defendant claiming the sum of $225,000 on the basis of a dishonoured cheque. On 17 July, the plaintiff obtained a Mareva injunction against the defendant to the extent of $325,000. The defendant now applies to discharge that injunction.

2. Mr Chung concedes that the plaintiff has a good arguable case on the merits. He says that the plaintiff failed to make proper disclosure at the ex parte stage, and that there is insufficient evidence of a real risk of dissipation of the defendant's assets.

3. Mr Lin, on the other hand, accepts that there is little direct evidence of any intention to dissipate the assets of the defendant; in the main, he bases his case on the approach adopted by Godfrey, J. (as he then was) in Monsaico Trading Ltd v Hong Yiah Seng Co Ltd [1990] 1 HKLR 235, in which it was said, at page 240 -

". . . if I come to the view that [the defendant's] conduct . . . leaves me so uneasy that I am driven to the conclusion that there is a real risk that a judgment in favour of the plaintiff might remain unsatisfied, then I conceive it to be my duty to grant the injunction. . . . I have, however, come to the conclusion that the defendant has exhibited an unacceptably low standard of commercial morality in its dealings with the plaintiff; and this drives me to conclude that there is a danger that if the defendant thought it was in its best interests to do it, it would not shrink from attempting to defeat the interests of the plaintiff under any judgment the plaintiff might obtain here."

4. There is, however, one piece of direct evidence of the risk. It is contained in an affirmation by Mr Leung Ho Kee (Mr Leung) of 14 July, filed in support of the ex parte summons. He says that on 21 June he met Mr Chan Hok Kin (Mr Chan) and Mr Chow Chun Bong (Mr Chow), directors of the defendant, to discuss the plaintiff's claim. It should be said here that Mr Leung is a friend of the plaintiff. Mr Leung says that at this meeting Mr Chow said "the business of the defendant could not be continued and after they received [certain money], the defendant would be closed down. He further said that he would not repay any money to anyone. I asked how he could treat a woman like this. Chan then said that if I wanted to pay her, I could pay her with my own money."

5. It hardly needs to be said that Mr Chan and Mr Chow deny that there was a meeting as described by Mr Leung, and deny that they made the statements attributed to them.

6. I cannot, of course, resolve this issue on the papers. The probabilities, if anything, favour the defendant. It seems hardly likely that the directors of the defendant would have disclosed their hand in this way.

7. Broadly, the plaintiff's version is that, on 8 October 1994, Mr Chow asked her to lend $100,000 to the defendant. She agreed to do so. She went to the bank to withdraw the money. Mr Chow accompanied her. She gave the money to Mr Chow. They went to another bank where Mr Chow deposited the money.

8. On 24 October 1994, Mr Chow asked her to lend US$12,000 (HK$92,802) to the defendant. She agreed to do so. She was asked by Mr Chow to remit the money to the defendant's representative in Sri Lanka. She did so.

9. On 29 October 1994, Mr Chow repaid to her $40,000.

10. On about 15 November 1994, Mr Chow asked her to lend another $200,000 to the defendant. She agreed to do so. Again Mr Chow accompanied her to her bank. She withdrew $200,000 and gave it Mr Chow.

11. On 15 March 1995, the plaintiff asked Messrs Chow and Leung for repayment. She agreed to accept repayment in two instalments. She was given cheques for $115,996.70, dated 15 March 1995, and for $225,000, dated 15 April 1995. These were drawn to include interest. The cheque for $115,996.70 was presented and honoured. The other cheque, which is the subject of this action, was dishonoured.

12. Mr Leung supports this version.

13. The defendant's version is given by Mr Chow. He says that Mr Leung was allotted 500,000 shares in the defendant in September 1994. He says - "I understand that the sums of $100,000 and $200,000 paid by the plaintiff to the defendant company in October and November 1994 were in fact part payment of the outstanding Shares Price from Leung to the defendant company. I am not aware of the plaintiff having advanced any money to the defendant company and I have never requested the plaintiff to make such advancement."

14. Mr Chow agrees that he accompanied the plaintiff to her bank on 8 October 1994. He admits he received the money and says he deposited it into the defendant's account. He says that Mr Leung told him that the plaintiff had agreed to advance the money to him. Mr Chow agreed that he would deposit this money as part payment of the share price into the defendant's account. He says that the plaintiff endorsed the pay-in slip with the Chinese characters for "Leung Ho Kee current account". He says he does not recall accompanying the plaintiff when she withdrew the sum of $200,000, although Mr Leung told him he had borrowed this sum from the plaintiff to make a further part payment for the shares

15. Mr Chow says was unaware that the plaintiff was given the cheques she mentions. He says Mr Leung used cheques signed in blank for this purpose. He did not repay $40,000 to the plaintiff.

16. Other evidence supports Mr Chow's version in one way or another.

17. According to the minutes of the board of the defendant on 30 September 1994, 500,000 shares were allotted to Mr Leung "subject to the receipt of the relevant subscription monies". Mr Yeung says it was agreed that he would pay for the shares by deduction from his monthly salary, so he had no need to borrow from the plaintiff. There is a shareholders agreement, but there is no mention of this mode of payment.

18. There are other allegations and denials, and counter-allegations and denials, in the voluminous affirmations on which I have been addressed and which I have read again. I could recite these at length, but to no purpose. I cannot decide on the papers, or on the probabilities, where the truth lies. The general picture is of a pretty inefficiently run ship, with some rather slack commercial procedures. But, at the end of the day, I cannot find sufficient facts that lead me to the conclusion that the defendant's conduct leaves me so uneasy that I am driven to believe that the injunction should be continued. In my view, it would be unjust, at this stage and on what I have before me, to find that the defendant and the individuals acting on its behalf have exhibited an unacceptably low standard of commercial morality in their dealings with the plaintiff.

19. It follows that the ex parte injunction should be discharged, and I so order. As to costs, I must say that I have some suspicions regarding the case put up by the defendant. It may be, that when all is said and done, the plaintiff will establish that she was right, that I have lied to, and that the defendant's case is totally without foundation. My inclination is to order that costs be in the cause, and I make an order nisi accordingly.

Representation:

Mr Kenny Lin, instructed by Messrs KC Chan & Co, for the plaintiff.

Mr Andrew Chung, instructed by Messrs Yuen Sun & Co, for the defendant.