Fenn Kar Bik Lily v. Goh Kim Lay and Another

HCA009177/1992

[Woo J. has directed that this judgment be published.]

1992 No. A9177

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Hon. Woo J. in Chambers

Dates of hearing: 26 and 29 July, 22 August and 2 September 1994

Date of handing down judgment: 12 September 1994

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J U D G M E N T

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1. There were two summonses before me, one dated 17th May 1994 taken out by the Plaintiff for the continuation of the Mareva injunction against the Defendants granted ex parte by Wong J. on 16th May 1994 and the other dated 19th July 1994 taken out by the 1st Defendant for consolidation of this action with two District Court actions and for directions and other relief ancillary thereto.

2. The two District Court actions are respectively District Court Civil Jurisdiction No. 10183 of 1993 ("DC10183/93") and No. 16458 of 1993 ("DC16458/93"), whose parties are the 1st Defendant in this action and Versatile Advertising Co. Ltd. ("Versatile"). Versatile did not appear before me during the early part of the hearing, but in the afternoon of 26th July 1994, it appeared by Mr. Lim. By agreement between counsel for the Plaintiff and the Defendants, the court heard the Plaintiff's summons first and was prepared to hear the Defendants' summons thereafter. Mr. Lim came in during the course of arguments on the Plaintiff's summons which does not concern Versatile. By reason of the fact that such arguments took longer than envisaged, the hearing of the Defendants' summons was on 29th July 1994 adjourned to a date to be fixed before another judge, with estimated time of one whole day.

3. When the parties returned before me on 22nd August 1994, they agreed to have the Mareva injunction granted by Wong J. and other related undertakings given by the Defendants and their solicitors discharged. The parties were then only concerned with costs on which they could not agree. Mr. Cheng for the Defendants submitted that his clients should be entitled to all the costs arising out of the Plaintiff's application for Mareva relief, on a full indemnity basis. Miss Sze on behalf of the Plaintiff submitted that the Defendants were only entitled to costs up to 29th July 1994 and on a party and party basis, and later she submitted that the Defendants should only be awarded their costs up to 24th May 1994 and the Plaintiff be entitled to her costs thereafter.

4. Mr. Cheng's arguments were based on a number of grounds, namely,

(a) the Plaintiff's application for Mareva injunction was improper and an abuse of process because it was for securing her costs and not her claims;

(b) the Plaintiff was guilty of non-disclosure of material facts when applying ex parte for the Mareva injunction; and

(c) the Plaintiff acted in an unconscionable manner and conducted various court proceedings, including the Mareva application, improperly for the purpose of oppressing the Defendants or the 1st Defendant, entirely out of spite and ill-will.

MAREVA RELIEF AS SECURITY FOR COSTS

5. As can be seen from the Statement of Claim, the Plaintiff's claim is for an injunction to restrain the Defendants from assaulting, harassing and intimating her and damages for harassment and intimidation. The economic loss specified amounts to $6,000 arising from her failure to attend the conferences that she would have attended as a solicitor but for her fear that was caused by the Defendants' alleged acts of intimidation. The writ herein was issued on 28th December 1992 and an ex parte injunction restraining the Defendants from assaulting, harassing and contacting the Plaintiff was obtained by her on the same day. That ex parte injunction was discharged on 6th January 1993 by Deputy Judge Pang upon the Defendants giving an undertaking in similar terms to the Court. The Plaintiff has not complained that either of the Defendants has interfered with or molested her after the grant of the ex parte injunction.

6. Miss Sze, for the Plaintiff, fairly admitted that the monetary value of the Plaintiff's claim was in the region of several thousand dollars. However, she stressed that because of the Defendants' acts and steps taken by them in these proceedings, the legal costs incurred and to be incurred by the Plaintiff in this action had gone out of all proportions and become the major concern of the Plaintiff. In fact, the affirmations filed on behalf of the Plaintiff in support of the ex parte application for the Mareva injunction show that the purpose of the application was to restrain assets of the Defendants to the extent of $650,000, being only the costs already incurred and to be incurred by the Plaintiff in this action, without mentioning any amount for the substantive claims of the Plaintiff. This is also borne out clearly by the Order dated 24th May 1994 made by Deputy Judge Cheung recording the undertaking made by the Defendants' solicitors based upon which the ex parte Mareva injunction was suspended. Before 29th July 1994, the date of her 7th Affirmation filed herein, the Plaintiff had not expressly relied on the value of her substantive claims.

7. The Plaintiff further relied on the fact that the 2nd Defendant had sold a property in Taikoktsui ("the Taikoktsui property") owned by him sometime in February 1993 soon after this action was commenced and the fact that the Defendants intended to sell their jointly owned property in Shatin ("the Shatin property") just days before the Mareva injunction to ground her fear that the Defendants were dissipating assets to avoid any possible judgment that she might obtain.

8. Miss Sze argued that the judgment the Plaintiff might obtain would include an order for costs and therefore the Mareva injunction ought to continue to secure the possible judgment debt inclusive of costs. She relied on Charles Development plc v. Cronin [1980] FLR I, an action dealing with infringement of copyright. At p. 10 of the report, the learned judge said:

"Since the defendants admit the infringement, it is very likely that they will have to bear some part of the plaintiff's costs in this action and it appears from Gee and Andrews on Mareva Injunctions Low and Practice, pages 21 and 22, that the current practice is usually to include an element for recoverable costs. Since the object of a Mareva injunction is to ensure that if the plaintiff recovers judgment the judgment is not defeated by the defendants having removed their assets from the jurisdiction, it seems to me that there is a case for making some addition to the amount secured in respect of costs which are likely to be recovered; but I think it should be a modest amount. This does seem to me to be a case in which it would be appropriate to add an element for recoverable costs, but I do not think it should exceed ?5,000.

9. The passage in Gee and Andrews on Mareva Injunctions: Law & Practice at pp. 21-22 referred to in the judgment reads as follows:

"At one time doubts were expressed as to whether it would be appropriate to include an element for the plaintiff's costs (on the grounds that this would be tantamount to ordering a defendant to put up security for costs), but in practice nowadays an element for recoverable costs is usually included."

10. The same passage is repeated in Gee on Mareva Injunctions & Anton Piller Relief, 2nd Ed., 1990, at pp. 30-31. No authority was cited by the authors in either book in support, nor did it appear that any arguments on the point were proffered by counsel before the judge.

11. Miss Sze also relied on a decision of Rhind J. in Hong Kong in Capacious Investments Ltd. v. The Personal Representatives of Tang Man Sit, decd. (HCA 9745/91, Jan. 6, 1994, unreported) where the learned judge ordered a continuation of a Mareva injunction. The purpose of the injunction can be seen from p. 5 of the judgment, which states:

"With a judgment debt of approximately $20.5 million (including interest and costs) in its favour, the Plaintiff is moving against the estate on several fronts for the purpose of levying execution. Incidental to such execution, the Plaintiff has taken out a Mareva injunction to preserve the estate's assets. It is common ground that, in principle, there can be a Mareva injunction to preserve the debtor's assets between judgment and execution...."

12. It should be noted that, similar to Charles Development, no arguments were raised by counsel or dealt with by the judgment on whether a Mareva injunction could or should be made to provide protection in respect of the applicant's costs.

13. Miss Sze also referred me to Faith Panton Property Plan Ltd. v. Hodgetts and another [1981] 2 All E.R. 877, where the plaintiff was granted an injunction restraining the defendants from disposing of his assets in order to protect the plaintiff in whose favour an order for costs had been made, prior to the taxation of the costs.

14. Both Capacious and Faith Panton dealt with the situation where an order for costs had been granted by the court in favour of the applicant and a Mareva injunction was granted in each case to cover costs. In Charles Development, although no order for costs had been awarded to the plaintiff, the judge was of the view that the defendants had to bear some part of the plaintiff's costs by reason of their having admitted the infringement.

15. The power of the High Court to grant injunctions including a Mareva injunction is contained in section 21L of the Supreme Court Ordinance, which provides:

"(1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the High Court to be just or convenient to do so.

(2) Any such order may be made either unconditionally or on such terms and conditions as the Court thinks just.

(3) The power of the High Court under subsection (1) to grant an interlocutory injunction restraining a party to any proceedings from removing from the jurisdiction of the High Court, or otherwise dealing with, assets located within that jurisdiction shall be exercisable in cases where that party is, as well as in cases where he is not, domiciled or resident or present within that jurisdiction."

Order 29, rule 1 of the R.S.C. provides:

"(1) An application for the grant of an injunction may be made by any party to a cause or matter before or after the trial of the cause or matter, whether a claim for the injunction was included in that party's writ, originating summons, counterclaim or third party notice, as the case may be."

16. It can be seen therefore that whether the power of the Court to grant an injunction, including a Mareva injunction, should be exercised depends on the sole criterion whether it is just or convenient to do so.

17. On the other hand, Order 23, rule 1 of the R.S.C. specifically provides for situations where security for costs may be ordered. Security for costs can only be ordered against a plaintiff or a person in the position of a plaintiff such as a defendant who raises a counterclaim. No security for costs can be ordered against a defendant (see also The Supreme Court Practice, 1993, Vol. 1, para. 23/1-3/16).

18. On behalf of the Defendants, Mr. Cheng submitted that the Mareva injunction was applied for by the Plaintiff purely for protecting her in respect of costs, and not in respect of any of her substantive claims, and as such the application was tantamount to one for security for costs against the Defendants, which is not allowed under Order 23, rule 1. Factually speaking, Mr. Cheng is correct for no where in any affirmation filed on behalf of the Plaintiff in support of her application for Mareva injunction or for its continuation until her 7th Affirmation filed on 29th July 1994 after the hearing before me had started was there mention that the purpose was also to get protection for her claim for damages for harassment and intimation. Indeed, no amount of her substantive claim had ever been alluded to. Mr. Cheng submitted that the footing of the Plaintiff's application was completely wrong and therefore it should be dismissed.

19. Miss Sze's argument is to the effect that the Plaintiff's claim herein, quantified or unquantified, is very small, in the region of a few thousand dollars. However, the proceedings have taken such a turn, purely because of the Defendants' acts or steps taken by them, that the legal costs have been blown up out of all proportions, and that the Plaintiff is compelled to get protection for any order for costs she might obtain at the conclusion of the trial in view of the risk of the Defendants' dissipating their assets.

20. Although it is true that the Court should be very careful not to allow its process to be abused by ordering in effect security for costs against a defendant contrary to the express terms of Order 23, rule 1, I am of the view that there is jurisdiction to grant a Mareva injunction protecting orders for costs that may be obtained by a plaintiff, for section 21L is wide enough to confer that power on the Court, and the sole restriction is that the jurisdiction should be exercised in cases where it is just or convenient to do so. Order 23, rule 1 is a rule of practice which, I think, cannot displace the clear jurisdiction granted to the Court.

21. However, the exercise of that jurisdiction must be closely guarded for allowing it to be used freely will diminish, if not eradicate, the protection given to the defendant by Order 23, rule 1, which was designed, doubtless, to deal specifically with applications for security for costs.

22. Where orders for costs have been awarded to the plaintiff and other conditions for the grant of a Mareva injunction exist, then as in Capacious and Faith Panton, the grant of such an injunction to protect the plaintiff in costs is more readily made, for there is in effect a sum that will be due, albeit not quantified before taxation. On the other hand, if there are but chances of the plaintiff eventually winning the action and therefore there may be an order for costs granted in his favour, the situation is different. If the plaintiff's chances of success are so high, then doubtless he can obtain summary judgment against the defendant. If the plaintiff has but a prima facie case, or even a strong case, then regard must be had to the defendant's position. Despite the prima facie or strong case of the plaintiff, it cannot rule out the possibility that the defendant may eventually succeed. It would, in such circumstances, be unfair to the defendant to have a Mareva injunction against him for protecting merely the plaintiff's probable recovery of costs. The plaintiff brings an action against the defendant and the costs that he has to incur for doing so must normally be a matter within his contemplation and expectation. On the other hand, a defendant has every right to defend himself against the plaintiff's attack. That right should not normally be diminished or prejudiced by any intervention of the court. Allowing the plaintiff to get round Order 23, rule 1 by way of a Mareva injunction ordering in effect security for the plaintiff's costs against the defendant will certainly prejudice the defendant's right to defend. Where the defendant incurs costs for defending himself, Order 23, rule I allows him to apply for security for costs against the plaintiff upon the requirements of that rule being satisfied. But the contrary is not true. A plaintiff is the active party whereas a defendant the reactive party. A plaintiff can choose his defendant, but the defendant is forced to face the plaintiff and get involved in litigation which is nowadays very often costly. The right to sue and the right to defend must therefore be viewed in this light. In normal circumstances, therefore, the court's power to grant a Mareva injunction to purely protect the costs that may be recovered by the plaintiff should only be exercised sparingly.

23. Whether the Plaintiff's application for Mareva injunction purely for securing costs was an abuse of process or whether any impropriety was involved must be viewed in the surrounding circumstances, which I now turn to examine.

CONDUCTS OF THE PARTIES AND MATERIAL NON-DISCLOSURE

24. The Plaintiff was at all material times a shareholder, director, legal adviser and legal representative of Versatile.

25. The relationships between the Plaintiff, the 1st Defendant and Versatile stemmed from the 1st Defendant being employed by Versatile in March 1992 as a marketing manager and the termination of her employment in December 1992. Apart from a person surnamed Wong who has been the majority shareholder in Versatile, most of the other shareholders and directors of Versatile were the Plaintiff and her close family members. The Plaintiff signed the contract of employment made between Versatile and the 1st Defendant. On 19th December 1992, Versatile, rightly or wrongly on which I am not going to comment, terminated the employment contract with the 1st Defendant. The letter of termination was signed by the Plaintiff. Thenceforth, the 1st Defendant and her husband the 2nd Defendant allegedly behaved in certain ways which form the basis of the Plaintiff's claim for assault, harassment and intimation.

26. The Plaintiff is and was at all material times a solicitor by profession, and a partner of Messrs. T. L. Ip & Co. since 1986. Until 19th May 1994, T. L. Ip & Co. acted for Versatile in the two District Court actions. The Plaintiff was a director and the legal adviser of Versatile and handled all its legal matters. In representing Versatile in the District Court actions, she personally handled most if not all proceedings on behalf of Versatile.

Chronology of events

27. Counsel for the Plaintiff and the Defendants each very helpfully provided me with a chronology of the steps and events that took place after the parties commenced resort to the courts. I will set out what I understand to be the scenario in the following chronology.

The Plaintiff's capacities and involvement

28. What is important to note is that the Plaintiff was all along acting in several capacities. She is the plaintiff in this action. Until her resignation as director and sale of her only share in Versatile on respectively 25/5/94 and 26/5/94, she used to be a director and shareholder of Versatile. She signed the contract of employment on behalf of Versatile with the 1st Defendant and she also signed the letter of termination of employment. She has been pursuing the proceedings herein with great zeal, getting the injunction restraining the Defendants from interfering with her and eventually the undertaking from the Defendants in similar terms. She had a large part of the Defence struck out, and she obtained the Mareva injunction against the Defendants. She also acted for Versatile to have the Defendants' third party proceedings herein struck out.

29. Pausing here for a moment, Miss Sze for the Plaintiff put the blame on the Defendants or the 1st Defendant because, she argued, the steps taken by them had been the cause for most if not all of the steps taken by the Plaintiff and Versatile. In fact, the only thing which the Defendants or their lawyers did wrong was to try to join the 1st Defendant's claim against Versatile for salaries, etc. with the Plaintiff's claim herein against them. That wrong had been rectified by the Plaintiff and Versatile having part of the Defence and the third party proceedings struck out.

30. The Plaintiff attempted to act for Versatile in the Labour Tribunal, presumably as its director. She was and is a partner in T. L. Ip & Co. who were at all material times acting for Versatile in the District Court actions. T. L. Ip & Co. issued DC10183/93 on behalf of Versatile against the 1st Defendant. The Plaintiff personally handled most, if not all, matters in her firm's representation of Versatile in the District Court actions.

The default judgment

31. The Plaintiff through T. L. Ip & Co. pursued Versatile's claim in DC10183/93 with continuous rigour, step after step. The writ in DC10183/93 was issued on 16/7/93 (event 16 in the chronology above), and it was served twice on respectively 17/7/93 and 17/8/93 by inserting it in the mail box of and posting it to the Taikoktsui address. As from 7/8/93 (event 17), T. L. Ip & Co. attempted three times to obtain judgment in default of defence against the 1st Defendant and succeeded in doing so on 15/9/93 (event 22). Before 15/9/93, there were ample opportunities for the Plaintiff to notify the 1st Defendant or her solicitors about the application for default judgment as they were involved in this action and the Labour Tribunal proceedings at that time (see events 18 and 20), but she did not do so.

32. The Shatin address of the 1st Defendant was made known to Versatile as early as 30/3/93 (event 11) in the Labour Tribunal proceedings and at least Versatile's staff knew about it when filing Versatile's Counter-claim No. E1012 of 1993 with the Labour Tribunal on 15/4/93 (event 12). The Plaintiff signed the second page of that Counter-claim with the Shatin address on the first page. She said she was not informed about the Shatin address by Versatile's staff and that the Taikoktsui address was the only address in the records of T. L.

Ip & Co. She merely used the Taikoktsui address for the issue and service of Versatile's writ in DC10183/93. Even accepting the Plaintiff's story, when the 1st Defendant took out the summons to set aside the default judgment on 9/11/93 (event 27), without mentioning any merits of her available defences, it would have been apparent to the Plaintiff, as a lawyer specializing in civil litigation, that there was something wrong with the service. At the latest, the Plaintiff must have known of the Shatin address by reading the affirmation of Ms. Van Langenberg filed in DC10183/93 on 15/11/93 (event 29). Notwithstanding, even as late as the hearing before District Judge Yeung on 11/5/94, the Plaintiff maintained that the 1st Defendant had two concurrent addresses, the Taikoktsui one and the Shatin one, and refused to let the default judgment be set aside as an irregular judgment.

33. Nothing was deposed to by the Plaintiff as to what steps she had taken to investigate the addresses and on what ground that she asserted the addresses were the 1st Defendant's concurrent addresses at the time when she issued and served the writ in DC10183/93 in July 1993 (event 16), except to say that the 1st Defendant's address revealed in this action in early 1993 was the Taikoktsui address. She put the blame on the 1st Defendant in not making known at the Labour Tribunal hearing on 13/9/93 (event 20) that the District Court writ had not been served on the 1st Defendant when Versatile informed the Tribunal that Versatile had commenced a District Court action against the 1st Defendant. I must say that this is no excuse, for there was no allegation made before the Tribunal that the writ had been served for the 1st Defendant to refute, and no occasion had arisen whereby the 1st Defendant would be obliged or even prudent to inform the Tribunal that she had not been served.

34. The Plaintiff did not explain why she did not serve the writ on the 1st Defendant's solicitors either, while knowing that the 1st Defendant had expressed at the Labour Tribunal that she wished to be legally represented and that she consented to an order of the Tribunal on 13/9/93 (event 20) that her Claim E879/93 be transferred to the District Court and be consolidated with Versatile's District Court action. Instead, the Plaintiff continued to press on with Versatile's application for default judgment.

35. Construing the facts most favourably for the Plaintiff, she had at least clouded her mind regarding Versatile's position and hers as litigants and also mixed up her position as solicitor for Versatile with that of Versatile. As far as Versatile was concerned the usual and last known address of the 1st Defendant must be the one the latter disclosed in her Labour Tribunal Claim E879/93 on 30/3/93 (event 11), and not that she disclosed in the High Court proceedings. The Plaintiff should have checked the 1st Defendant's Labour Tribunal papers and also, if thought necessary, should have conducted an investigation on the Taikoktsui address. She would have then realised that the Taikoktsui property was sold by the 2nd Defendant on 2/2/93. On the contrary, however, the Plaintiff continued to take many steps on behalf of Versatile to enforce the default judgment on the basis that it was valid until set aside and for protecting Versatile's interest, while as a lawyer specializing in civil litigation, she should well have appreciated that there was a real risk that the judgment would be set aside and Versatile would waste all the costs incurred for all such steps. She also allowed her personal knowledge as a litigant in the High Court proceedings to be mixed with the knowledge of Versatile.

36. The explanations she gave in her 7th Affirmation as late as 28/7/94 after the hearing before me had started are that no one drew her attention to the Shatin address and she was not aware that the 1st Defendant's address in the Labour Tribunal proceedings was different from the Taikoktsui address. She argued that "My oversight, at the most, only amounts to negligence and there was nothing sinister on my part." I am of the view that if her story is accepted, she was negligent in handling DC10183/93 for Versatile in that it was her responsibility to ascertain the proper address of the 1st Defendant as Versatile's opponent in the action, and she as the director and legal adviser of Versatile was in a position of control over Versatile's staff who knew the Shatin address. In fact, it was she who signed Versatile's Counter-claim E1012/93 bearing the 1st Defendant's Shatin address. She could not shed from those responsibilities by simply saying that she did not know.

37. The effect of not knowing the Shatin address when issuing and serving the writ in DC10183/93 on the 1st Defendant not only amounts to negligence on her part in the discharge of her duties towards Versatile as her client, causing wastage of costs on the part of Versatile in that action, but also caused costs to be incurred by the 1st Defendant in dealing with all those steps taken by the Plaintiff to exert Versatile's right in enforcing the default judgment.

As a solicitor specializing in civil litigation for a number of years and a partner since 1986, the Plaintiff must have realised at latest from mid- November 1993 that she made a mistake as to the 1st Defendant's address in DC10183/93 or at least there was a real risk of the default judgment being set aside. Yet she still advised and caused Versatile to take a large number of steps to enforce that default judgment against the 1st Defendant. Her counsel now blamed the steps taken by the Plaintiff for Versatile as being caused by the 1st Defendant's conduct and behaviour that were unreasonable, such as not applying for a stay of execution of the default judgment although applying to set it aside (event 25), not setting out merits in support of the application to set aside the judgment sooner and not attending the hearing on 12/1/94 (event 32). The 1st Defendant or her solicitors might not have acted with utmost care, but that should not alone have given a licence for the Plaintiff to have done what she did. The application to set aside the judgment had never been withdrawn and the 1st Defendant was opposing the Plaintiff's various applications left right and centre. The Plaintiff must have realised that the 1st Defendant's attitude was confrontational, and it would have been obvious to her that the 1st Defendant would not have so uncharacteristically let a judgment be entered by default against her. I am of the view that it would not be unreasonable to draw the conclusion that the Plaintiff mixed her position as the legal representative of Versatile with her own to further her own course, which was to take whatever steps available to pursue the 1st Defendant, without paying regard to the risk of the costs to be incurred by Versatile and by the 1st Defendant and the court's time being totally wasted.

38. Miss Sze on behalf of the Plaintiff complained that the fault lay with the 1st Defendant in that had she disclosed merits in her application to set aside right from the start, the Plaintiff would have been agreeable to have the default judgment set aside and a lot the costs incurred subsequently by Versatile and the 1st Defendant in DC10183/93 would have been saved. It was argued that this attitude of the Plaintiff could be readily seen by the position taken by her counsel before Judge Yeung on 11/5/94 that if the default judgment was treated as a regular one, the Plaintiff would agree to have it set aside. I treat this as a pure argument without taking into account the facts. When the Labour Tribunal transferred the 1st Defendant's claim therein to be consolidated with the District Court action taken out by Versatile, as a civil litigation lawyer the Plaintiff must have realised that there was bound to be a counterclaim amounting to a defence to Versatile's claim. A District Court action number, being DC16458/93, had also been assigned to the 1st Defendant's claim. She did not need to see the 1st Defendant's actual defences being mentioned on affidavit in DC10183/93 in order to know of the existence of the defences available.

The acceptance of the payment into court

39. On 24/3/94, the 1st Defendant paid $44,300 into court (event 41) under a notice of payment in stating that it was pursuant to Judge Bokhary's Order in DC10183/93 (event 36), albeit out of time. On the next day, 25/3/94 (event 42), T. L. Ip & Co. filed a notice of acceptance purportedly pursuant to Order 22, rule 3 of the R.S.C. that the money was accepted by Versatile in satisfaction of the judgment. That was when the hearing of D1's summons to set aside the judgment was still pending. After they received the money, T. L. Ip & Co. released it to Versatile (event 45). Versatile did not return the money despite repeated requests from the Registrar of the District Court in the latter part of April 1994 (events 46 and 47). There is no explanation given by the Plaintiff as to why she did not cause investigation to be made as to the true nature of the payment in, or why the money was released to Versatile, or indeed why the money was not returned pursuant to the requests. The money had been kept by Versatile even after 11/5/94 when Judge Yeung ordered Versatile to return the money to the Registrar (event 51(b)). The refund was only made as late as 1/8/94 after the hearing before me had adjourned from 29/7/94.

40. The Plaintiff's explanations regarding this matter took different turns. When the 1st Defendant's solicitors received the notice of acceptance filed by T. L. Ip & Co., they wrote on 26/3/93 to protest (step 43). The Plaintiff affirmed that there was no record of this letter in T. L. Ip & Co.'s records. The 1st Defendant's solicitors wrote again on 21/4/94 pointing out that the money was paid in as a security pursuant to the Order of Judge Bokhary made on 19/1/94 (event 36) and that the acceptance of the money by Versatile under Order 22, rule 3 of the R.S.C. was totally misconceived. They sought a refund. T. L. Ip & Co.'s reply dated 21/4/94 was that at the hearing before Registrar Gould on 23/3/94 (event 40), in view of the fact that any payment in to be made by the 1st Defendant would be out of the time allowed by Judge Bokhary's Order, the Registrar warned the 1st Defendant's solicitors that unless the 1st Defendant "was prepared to admit liability" of Versatile's claim, the 1st

Defendant should not pay the money into court without first applying for an order for extension of time to effect payment. As the 1st Defendant still chose to pay the money into court despite the said warning, Versatile was entitled to treat the payment in as the 1st Defendant's admission of liability of Versatile's claim made pursuant to Order 22, rule 1 of the R.S.C. and thus put an end to the action.

41. It is therefore clear that at the time of filing the notice of acceptance (event 42), the Plaintiff was of the view that Versatile was entitled to payment out on the basis of the 1st Defendant's admission of liability. However, such basis must be unsound for the notice of payment in filed together with the money clearly showed that it was made pursuant to Judge Bokhary's Order. No matter whether or not Registrar Gould did utter the said warning, the notice of payment in clearly displaced any misconception, if any, on the Plaintiff's mind. Ignoring the terms of the notice of payment in demonstrates how unreasonable the Plaintiff was in handling matters for Versatile vis-a-vis the 1st Defendant.

42. A different explanation was proffered by the Plaintiff. She said in paragraph 39 of her 7th Affirmation that after the notice of acceptance had been filed: "It is my understanding that Versatile has to make application to the District Court for payment out under Order 22. Neither Versatile, T. L. Ip & Co. nor myself had ever written any letter or made application by summons or otherwise howsoever for payment out." Her explanation was that as the District Registry sent T. L. Ip & Co. the money, they must have done it in accordance with the alleged warning of Registrar Gould.

43. The Plaintiff, as a civil litigation specialist, should have known that she did not need to make another application after filing the notice of acceptance in order to obtain the money. The filing of a notice of acceptance entitles the plaintiff to receive payment without the leave or order of the court (see Order 22, rule 3(6) and The Supreme Court Practice, ibid., para. 22/3/8). Anyhow, if it was the Plaintiff's understanding that Versatile had to make application for payment out in addition to the notice of acceptance and no such application had been made, she should have realised that there must have been some mistake some where when the money was paid out to her firm. If her claim of understanding or misunderstanding is genuine, when she knew the money had been paid out to T. L. Ip & Co. she should have at least checked with the court to ascertain the exact reason for the payment out. However, she did nothing of the kind and instead she simply released the money to Versatile on 16/4/94 (event 45), and she refused to cause the money to be returned to the District Registry despite its two subsequent requests.

44. Miss Sze told me that the Plaintiff's intention to file the notice of acceptance on 25/3/94 was to build a foundation for argument at the hearing on 11/5/94 that there was an estoppel. This further explanation is as unreasonable as the other two given by the Plaintiff herself and just blindly ignores the terms of the notice of payment in. Having examined all the circumstances, I am of the view that there was simply no good reason for the Plaintiff to have filed the notice of acceptance or for her to release the money to Versatile. The proper and reasonable inference to be drawn from the unsoundness of all these reasons proffered by the Plaintiff is that she acted in an unreasonable and unconscionable manner.

The failure to return the money

45. After the money was paid out to T. L. Ip & Co., the District Registry made two requests to them to return the money to the court (events 46 and 47). The Plaintiff did not give any explanation why Versatile did not return the money at this stage. She conveniently refused the two requests by taking the position that Versatile was entitled to keep the money "since this action had already come to an end", while at the same time knowing well that the application to set aside the judgment was still afoot.

46. The Plaintiff said that she advised Versatile to return the money pursuant to the Order of Judge Yeung of 11/5/94 (event 51(b)), yet Versatile insisted not to return the money for various reasons. She said that Versatile was "willing and prepared to pay the sum of HK$44,300.00 into Court as part payment of" the 1st Defendant's security for costs that Versatile was to apply for but not to be released to her (the 1st Defendant). Whatever Versatile's reasons, the Plaintiff should have known that Versatile's attitude was defiant towards an order of a court. Despite her position as the solicitor, legal adviser and director of Versatile, she did not insist or cause the money to be returned. It is worthwhile to note that of all the matters she dealt with in her lengthy 7th Affirmation, this seems to be the only occasion that Versatile did not comply with her advice. She was a director and shareholder of Versatile and handling DC10183/93 for it and as such, she would be personally subject to the risk of being in contempt of the order. Yet there is a loud silence from her in offering any explanation for this matter in her position as a shareholder and director of Versatile. I must say that she has suspicion brought upon herself that she was recalcitrant in complying with Judge Yeung's order of 11/5/94 (event 51(b)), especially bearing in mind that she was warned of contempt by the letter dated 14/5/94 from the 1st Defendant's solicitors (event 52).

The charging order

47. On 10/5/94 T. L. Ip & Co. sent by registered post the charging order absolute to the Shatin Land Registry requesting it to be registered against the Shatin property (event 50). The next day, Judge Yeung set aside the default judgment (event 51(a)) which was the foundation of the charging orders nisi and absolute. The Plaintiff did not take any step to stop the request for registration. Her explanation proffered by counsel was that once a request had been made for registration, no step could be taken to stop it unless an order for vacation was obtained from the court. The 1st Defendant's solicitors sent a letter of 14/5/94 (event 52) requesting T. L. Ip & Co. to vacate the charging order nisi, concluding in these terms:

"Should you fail to discharge/vacate/cancel the Charging Order forthwith and to return the security money again, we would hold you liable for contempt of Court and take out a Summons for directions from (sic.) His Honour Judge Yeung."

48. The Plaintiff simply made no response to the letter. Even if accepting that the request for registration of the charging order absolute sent on 10/5/94 could not be stopped, in view of the apparent disobedience of Judge Yeung's Order of 11/5/94, the Plaintiff should have taken the opportunity to explain the situation, whatever that may be, to the 1st Defendant's solicitors. But nothing was done. The charging order absolute was registered against the Defendants' Shatin property on 17/5/94, apparently in blatant disregard, if not defiance, of Judge Yeung's order setting aside the default judgment for irregularity. The Plaintiff again has herself to thank for having the suspicion of contempt of court brought upon her.

The other acts

49. The Plaintiff said that Judge Yeung's order dated 11/5/94 for return of the money was only effective when served on 19/5/94. On the same day, her firm ceased to act for Versatile. There is no explanation as to why T. L. Ip & Co. ceased to act for Versatile in DC10183/93 in which Versatile was recalcitrant to comply with the order but continued to act for Versatile in DC16458/93. The Plaintiff also resigned as a director of Versatile on 25/5/94 and sold her only share on 26/5/94, with the explanation that she could not spare the time to deal with Versatile's business. I must say that these strange acts justifiably give rise to suspicion as to the fides of the Plaintiff.

50. With or without the advice of the Plaintiff as solicitor or legal adviser, Versatile refused to comply with the Registrar's requests to return the $44,300 at the end of April 1994. Versatile again refused to return the money despite Judge Yeung's order of 11/5/94. Strictly, contempt of court was committed, and if contempt proceedings were taken, Versatile would be duty bound to explain to the court. Very timely, however, T. L. Ip & Co. ceased to act for Versatile in DC10183/93 on 19/5/94 when Judge Yeung's order was served on it, and the Plaintiff resigned as its director on 25/5/94. Versatile did not appear before Judge Yeung on 23/5/94 (event 60), but simply continued to disobey the order of 11/5/94 and refused to pay the judgment debt ordered on 23/5/94. As I said before, the Plaintiff being Versatile's director, legal adviser and person handling DC10183/93 at the material time, laid herself open to attack for contempt. Yet she did not give any explanation to me why Versatile refused to take her advice to return the money.

51. I dwell on the Plaintiff's acts and conduct in the District Court proceedings in such details because they are part and partial of all the surrounding circumstances the consideration of which is required for making a decision on costs in this matter.

The Mareva injunction - material non-disclosure

52. Soon after the default judgment had been set aside on 11/5/94, the Plaintiff vigilantly obtained the ex parte Mareva injunction herein on 16/5/94 against the Defendants. Her Affirmation in support was made on 14/5/94, only 3 days after Judge Yeung's order setting aside the default judgment. The facts concerning the steps taken by Versatile and the Plaintiff as its legal adviser in the District Court proceedings, and in particular the orders of 11/5/94 made by Judge Yeung, were not made known to Wong J. in the ex parte application. Those matters must have been freshly on the Plaintiff's mind, especially in view of the letter 14/5/94 from the 1st Defendant's solicitors warning of contempt (event 52). I have no doubt that these facts were material for the consideration of the learned judge whether to grant the Mareva injunction and should have been disclosed to him. For a summary of the law on material non-disclosure, see Gee on Mareva Injunctions & Anton Piller Relief, ibid., pp. 79-97 and the The Supreme Court Practice, ibid., pp. 522-523.

53. The Plaintiff mentioned the charging order nisi against the Shatin property when applying for an ex parte Mareva injunction before Wong J. but there was no intimation at all that the charging order, nisi or absolute, was quite ineffective in view of Judge Yeung's order setting aside the judgment which was the foundation of the charging order.

54. The Plaintiff's explanation for the non-disclosure is that "I simply concentrated on the main issues of the Mareva Injunction and did not deal with the side issues regarding the two District Court Actions, which are irrelevant to the Mareva Injunction. I did not wish to cloud the main issues of the case." I must say that her alleged understanding that Judge Yeung's order regarding the foundation of the charging order being irrelevant to her ex parte application for Mareva injunction is totally misconceived. The Mareva injunction sought was, inter alia, to restrain any dealing with the Shatin property to the extent of the $650,000 being frozen by the injunction. The charging order was also for securing the same property for a certain judgment debt. Both worked as a blot on the dealing with, albeit not the title of, the property. Wong J. might have been misled into thinking that a Mareva injunction regarding the property did little more than the registration of the charging order nisi. Anyhow, the actual status of the charging order on the property must be a relevant and material matter for the consideration of the learned judge. Moreover, the history of the proceedings in DC10183/93 between Versatile and the 1st Defendant was also a material matter for the learned judge's consideration. The Plaintiff was a director and legal adviser of Versatile who dealt with the 1st Defendant in the termination of her employment which resulted in the Plaintiff's claims herein.

She also dealt with the 1st Defendant in DC10183/93 in the capacity of Versatile's solicitor. There were so many legal scuffles in the District Court action which resulted in the charging order being discharged in effect, so shortly before the ex parte application. The Plaintiff's is not an understanding that should be held by an experienced civil litigation solicitor. Counsel was briefed for the conduct of the ex parte application, but according to Miss Sze, the Plaintiff did not mention Judge Yeung's orders to counsel. In the case of doubt as to materiality, it is always advisable to disclose the information instead of running the risk of having a Mareva injunction obtained ex parte discharged. The Plaintiff, as an officer of the court, should have leaned over backwards to make sure that there was full disclosure. She must have known that the Mareva relief is a drastic measure for the court to take with serious effect on the Defendants' rights to deal with their properties. Yet she failed to ensure full disclosure and she did not even confide in or seek advice from counsel.

The purpose of the Mareva application

55. The Mareva injunction was sought mainly to secure costs, and the only order for costs awarded to the Plaintiff was that made by Master Burrell when he struck out part of the Defendants' Defence on 10/11/93 (event 28), which had not been taxed. Yet the injunction sought was to cover all the Plaintiff's costs, estimated at $650,000. The monetary value of the Plaintiff's claim was a few thousand dollars, and she went to the extent of getting a Mareva injunction to freeze the Defendants' assets to the extent of $650,000. From her experience as a litigation lawyer, and even from her experience as a litigant in these proceedings, she must have realised that litigation is very costly, and yet she decided to press on and on. There could be no fear of any repetition of assault, harassment or intimation, even if her claim be true, after the interlocutory injunction restraining the Defendants from contacting her. Her main complaint against the 1st Defendant appears to be that the 1st Defendant and her solicitors made a number of attacks on her and her reputation as a person and as a solicitor. For that, I must say that the Plaintiff was the creator of her own misfortune. According to her own story, she was negligent in not knowing the Shatin address of the 1st Defendant when she caused the writ in DC10183/93 to be served, and after realising her mistake, she vigilantly continued to take a number of steps to enforce the default judgment under challenge. As a solicitor and officer of this Court, if she felt very strongly about the allegations against her character and reputation, she must know that there are avenues open to her. She cannot fairly use those things as an excuse for employing various legal proceedings to give the 1st Defendant a hard time in retaliation. All in all, the steps taken by and acts of the Plaintiff since July 1993, as solicitor for Versatile, were unreasonable and unconscionable, and were oppressive and vexatious for the Defendants, and her application for Mareva injunction to secure costs should properly be viewed in this unhappy history. Not only that the 1st Defendant had to incur costs because of the acts of the Plaintiff, but the 1st Defendant had also to undergo the anguish and anxiety and suffer the trouble and inconvenience.

The Plaintiff's fides

56. At the hearing on 2/9/94 before me, Miss Sze started with addressing me on the fides of the Plaintiff. She submitted that if spite were the Plaintiff's motivation for applying for the Mareva injunction, in order to make the Defendant incur further costs that they could ill afford, the obvious move would be to appeal against Judge Yeung's orders, e.g., inter alia, his order that T. L. Ip & Co. pay the 1st Defendant her costs on solicitor and own client basis on grounds that the order was ultra vires (Order 62, rule 8(2) of the R.S.C.), irregularly made and contrary to the rule of natural justice. I was quite surprised to learn just before the conclusion of the hearing that this example as an illustration of the mala fides of the Plaintiff had in fact come into fruition on 1/9/94 in the form of an application by T. L. Ip & Co. in High Court Action No. A8090 of 1994 (being the consolidated DC10183/93 and DC16458/93 as transferred to the High Court) to set aside that order of Judge Yeung.

CONCLUSION

57. I think there is absolutely no justifiable or reasonable excuse for the Plaintiff to behave in the manner she did, as an officer of this Court. I have therefore no hesitation whatever that this is an appropriate case to order that the Defendants do have costs against her on an indemnity basis, and that such costs be taxed and paid forthwith. I do so order.

58. Let me sound a hearty reminder to the parties in this action. In view of the history of this matter and what had happened in the District Court proceedings, I have no doubt that any judge hearing this action and the District Court actions (as transferred to this court) will watch developments very closely. The parties may have very low opinion of each other, but whatever they feel, they should follow the law and the rules of the courts faithfully. Do not even try to abuse the legal process to oppress or for other ulterior motive!

59. I am of the view that this matter is of importance to be made known to the public, or some might harbour the erroneous belief that the Court would favour lawyers when laymen are involved in litigation with them. The public's trust and faith in the fair and proper administration of justice must not be shaken. I therefore direct this judgment to be published.

Representation:

Miss SZE Kin (on the instructions of Messrs. Ford Kwan & Co.) for the Plaintiff

Mr Tom CHENG (on the instructions of Messrs. Van Langenberg & Lau) for the Defendants

Mr Patrick LIM (on the instructions of Messrs. T. L. Ip & Co. on 26/7/94 and on the instructions of Messrs. T. C. Lau & Co. on 29/7/94) for Versatile Advertising Co. Ltd.