Mandarin Resources Corporation Limited v. David Cheng Heng Soon and Others

HCA007375A/1986

1986, No. A7375

IN THE HIGH COURT OF JUSTICE

HONG KONG

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BETWEEN

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Coram: Hon. Jones, J. in Chambers.

Dates of hearing: 6th, 7th & 10th - 14th of August, 1987

Date of handing down judgment: 10th September, 1987

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JUDGMENT

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1. This is an inter partes summons issued by the plaintiff to continue a Mareva injunction against the 4th, 5th and 7th defendants that was granted on an ex parte application by Mayo, J. on the 19th June 1987. The 7th defendant was not represented at the hearing and I am told does not object to the continuation of the order subject to modification. However, the 4th and 5th defendants were represented by counsel and seek a discharge of the order.

2. The evidence which included a large number of documents was voluminous, but for the purposes of this application much of it is irrelevant.

Parties to the action

3. The plaintiff Mandarin Resources Corporation Limited (Mandarin) is a public company incorporated in Hong Kong whose shares are quoted on the Hong Kong Stock Exchange, but which are at present suspended from trading. It carries on business as an investment holding company. The 9th defendant Ho Hua Min (Ho) is alleged to have owned a large number of companies in Singapore, Hong Kong, Malaysia and the United Kingdom and elsewhere which he controlled through nominees, and other persons who were under his influence and control. However, he was neither a director nor a shareholder in any of these companies. Companies alleged to have been under his control included Mandarin, the 5th defendant Markle Land Ltd. (Markle) which was a wholly owned subsidiary of Mandarin, the 6th defendant Dah Yung Leasing (D.Y. Leasing) and the 7th defendant Asiatic Fortune Company Limited (Asiatic). One of the persons under Ho's control and influence was his nephew, the 1st defendant David Cheng Heng Soon, (Cheng) who was described to be his right hand man in Singapore. Cheng was a director of Mandarin and D. Y. Leasing. D. Y. Leasing was a private company incorporated in Singapore and was a subsidiary of Dah Yung Investment Ltd., a public company incorporated in Singapore whose shares are quoted on the Singapore Stock Exchange. The 4th defendant Lucky Man Properties Limited (Lucky Man) is a public company incorporated in Hong Kong whose shares were quoted on the Hong Kong Stock Exchange. The directors of Lucky Man, Tan Kok Seng, Chan How Kiat and Sideman Ho are alleged to have been nominees of Ho. Asiatic is a private company incorporated in Hong Kong and was a shelf company, whose directors were Chan How Kiat and Sideman Ho. The 8th defendant Malayan Banking Berhad (Malayan Banking) is a bank incorporated in Malaysia which has a branch in Robinson Road, Singapore where D.Y. Leasing and Asiatic had current accounts in 1985. The 2nd defendant, Wee Liang Kai (Wee) was a stock broker in Singapore and a director of Mandarin who was alleged to have been under the control of Ho upon whom he depended for his business. The 3rd defendant Chew Kok Liang (Chew) was a director and financial controller of D.Y. Leasing. Ho and Cheng are now said to be fugitives from justice and reside in Thailand.

Case for the Plaintiff

4. Ho wanted to acquire Lucky Man and for this purpose decided to sell Mandarin's entire shareholding in its subsidiary Markle whose sole asset was a residential building known as Block C and D, Fairmount Terrace, 127 Repulse Bay Road. The sale price was $20,007,000 payable in cash together with the repayment of Markle's debts to Mandarin which amounted to about $8,500,000. Accordingly a conditional sale agreement was entered into on the 7th September 1985 through Cheng and Wee. There was no suggestion that it was not a perfectly proper commercial transaction and the proposal was subsequently approved at an extraordinary general meeting of Mandarin on the 15th October, 1985. The agreement was arranged to be completed on the following day. Mr. Stone, the Managing Director of Mandarin who has filed three affidavits in support of the application, the first of which was before Mayo J., states that on the 16th October, 1985 Ho showed him two cheques that came to a total sum of S$6,780,876.75 drawn by Lucky Man in favour of Mandarin on Mandarin's account at the Robinson Road Branch in Singapore with Malayan Banking. Ho said that he would be flying to Singapore that morning and would telephone Mr. Stone once the two cheques had been cleared. On the afternoon of that day Mr. Stone received a telephone call from Ho to the effect that the cheques had been cleared so that completion could take place. Mr. Stone was one of the signatories to the agreement.

5. Thereafter on the same day Cheng purported to accept payment of those cheques on behalf of Mandarin which were then paid into the Mandarin account. Also on the same day, Cheng and Wee signed six cheques on behalf of mandarin in favour of D.Y. Leasing on the Robinson Road account, for sums totalling S$6,750,000. A further transaction on the same day reveals that Cheng arranged for D.Y. Leasing to draw a cheque in favour of Asiatic for S$8,159,250 on the Robinson Road account which cheque was signed by Cheng and Chew whilst Cheng and Chew caused Asiatic to issue a cheque for the same amount in favour of Lucky Man which was used to subscribe for 23 million shares in Lucky Man. At the time of settlement, Lucky Man was credited with a set off of $4,500,000 but Mandarin denies that it was indebted in this amount or in any sum.

6. There are claims by Mandarin by way of conspiracy and constructive trust based upon the acts of breach of fiduciary duty by Cheng and Wee in paying the monies from Lucky Man into an unauthorised account. As against Lucky Man a declaration is sought that the conditional agreement made on the 16th October 1985 is null and void and that Lucky Man holds the shares of Markle as constructive trustee for Mandarin and against Markle that it holds the title of the Repulse Bay property on behalf of Mandarin. The agreement was formally repudiated on the 5th August 1987 by a letter from Mandarin's solicitors to Lucky Man's solicitors. However, it is conceded by Mandarin that the property belongs to Markle.

7. Essentially what is alleged in this case is that Ho and Cheng devised what is commonly known as a cheque-kiting scheme whereby after a legitimate sale of the shares in Markle had been formally approved by Mandarin and the proceeds of sale paid over, arranged for the diversion of the funds by way of the circular transactions to which I have referred.

8. Mandarin's case is well illustrated in a circular diagram in which it is revealed that Lucky Man received the shares of Markle from Mandarin and in turn issued 23 million of its own shares to Asiatic. Lucky Man remitted two amounts totalling S$8,080,000 to D.Y. Leasing and received the same amount from Asiatic. Some of the Singapore $8,080,000 was received by D.Y. Leasing and then paid to Lucky Man. From this diagram, it is clear that Mandarin received nothing in return for its shares in Markle. However, another chart prepared on behalf of the defendants differs from that presented on behalf of Mandarin for it indicates that Mandarin did receive payment for its shares in Markle.

9. In another action, A7345 of 1986, which arises as a result of the same transaction, D.Y. Leasing has instituted proceedings against Ho, Cheng, Asiatic, Lucky Man and Mandarin. In that action, a Mareva injunction, that was granted ex parte against Ho, Cheng and Asiatic on the 24th December 1986, was ordered to be continued on the hearing of an inter partes summons on the 22nd January 1987 by Mortimer, J. This order prevents the transfer of the Lucky Man shares. In coming to his decision Mortimer J. said on P.11:

"In my experience, looking at the whole of the matters before the court there is undoubtedly a risk of dissipation."

10. The writ in this action was issued on the 30th December 1986 against the first seven defendants and was amended on the 11th May 1987 to join Malayan Banking and Ho. The writ has been registered as a 1is pendens against the property and a stop notice has been issued against the 23 million shares in Lucky Man held by Asiatic. Although, doubt has been expressed by both parties as to the validity of these steps, it is unnecessary for me to express any opinion.

11. I will now deal with a number of submissions that were made by Mr. Potts who appeared on behalf of Lucky Man and Markle.

Admissibility

12. Mr. Potts submitted that the evidence placed before Mayo, J. of the proceedings in the D.Y. Leasing action was inadmissible by reason of the fact that it arises in a separate action which is not between the same parties. However, no authority was cited by Mr. Potts in support of this submission.

13. I am satisfied that the evidence in the D.Y. Leasing action is admissible. Indeed Mr. Potts in his submission purported to rely upon D.Y. Leasing's case in that action. In any event, the evidence of Mr. Stone and Mr. Tam is sufficient to support Mandarin's allegations without the assistance of the D.Y. Leasing action.

14. Mr. Potts gave a detailed analysis of the affidavit evidence, that was filed on behalf of Mandarin by Mr. Stone, in his capacity as managing director and Mr. Tam who was responsible for finance and administration. He argued that the evidence was inadmissible hearsay as the deponents had not set out their sources of information and belief or did not have direct knowledge of the facts to which they were deposing. However, upon a perusal of the evidence, the deponents do set out details of their knowledge and belief and have indicated the sources of their information. Both speak from their own knowledge, and also make reference to documents which are in the possession of Mandarin. Accordingly I reject Mr. Potts' submission that the evidence was inadmissible.

Full and Frank Disclosure

15. Mr. Potts asserted that mandarin had not made a full and frank disclosure at the ex parte hearing for there had been a deliberate failure to disclose additional evidence placed before me which was available at that time. The further evidence includes details of a floating charge executed by Mandarin over its assets in favour of its solicitors' claim for costs; a failure by Mr. Stone to disclose that he had executed the conditional sale agreement, that the directors of Mandarin had recommended the sale of Markle shares to their shareholders, that notes to Mandarin's accounts reveal a purchase by the company of three companies in Singapore and that it had a running account with D.Y. Leasing. Another criticism levelled at Mr. Stone's evidence was his failure to disclose that he had been shown by Ho several weeks before the completion of the sale a list of subscribers which numbered at least 20 persons, most of whom resided in Singapore, who were to subscribe for the Lucky Man shares whereas the evidence is to the effect that there was only one subscriber Asiatic. Whether or not Mr. Stone signed the agreement has not the slightest relevance while the recommendation to the shareholders was based upon his belief that it was a proper commercial transaction from which Mandarin would benefit. Mr. Stone's evidence with regard to the number of subscribers is a matter of evidence that can be tested by cross-examination. The matter of the floating charge goes to the question of the undertaking as to damages to which I will come back later. The purchase of the three companies in Singapore would appear to have been part of the fraudulent scheme alleged and was not arranged by Mr. Stone while Mandarin denies that they ever had a running account with D.Y. Leasing. I do not consider that there was a deliberate non-disclosure of any of these matters, but in any event, they would not have affected the decision of Mayo J.

Delay

16. There was a complaint that there had been inordinate delay in making the application. The writ, as I have said, was issued in December 1986 and the application for the injunction was not filed until June 1987. Lucky Man and Markle have issued a summons to strike out the statement of claim which is due to be heard by a Master on the 21st September. It is contended that the present application was precipitated as a result of that summons. It is plain that the facts in this case are of some complexity and a great deal of investigation and preparation had to be carried out. The investigation is in fact being conducted by Mr. Stone on behalf of a committee of the Board which was set up in October 1986. Until that time Mr. Stone says that he was unaware that Mandarin had not received the monies due from Lucky Man. It appears that great difficulty has been experienced in preparing accounts while there has been a singular lack of co-operation by various parties includeing Malayan Banking to enquiries made in the investigation. There was no evidence to support the argument that there has been any undue delay. The delay was not unreasonable, and there was no evidence to show that the defendants had suffered any prejudice as a result. The accounts were in total confusion which in all probability can be attributed to an allegation that the accounts presented at Mandarin's annual general meeting in June 1986 may have been false.

Clean Hands

17. There were veiled allegations that Mr. Stone was himself involved in the fraud and was himself a puppet which arose from allegations made by Tan Kok Seng. However, apart from a mere assertion to this effect, there was no other evidence to support this contention. In any event, if such allegations are to be made, they fall to be properly determined at the trial of the action, but on the evidence as at present before me, they do not appear to be justified. Mr. Stone, as I have said, has never been a shareholder in Mandarin. His evidence strongly supports Mandarin's allegations that Ho was in control and his evidence is supported by Mr. Tam. Mr. Stone was also only aware that Mandarin had one account in Singapore which was not with Malayan Banking.

18. There was no merit in the argument, that Mandarin has not come to the court with clean hands.

Cause of Action

19. Mr. Potts says that Mandarin has failed to show it has a good cause of action against either Lucky Man or Markle.

20. At the outset, I will deal with two matters that were raised by Mr. Potts. First, as fraud was not pleaded at the outset of the action it cannot be raised later by virtue of amendment. Mr. Potts cited Scales v. Wong⁽¹⁾ where the Court of Appeal held that fraud could not be entertained if it had not been pleaded from the outset. That case, however, did not depend upon a decision on that particular issue, and the statement can in my opinion be treated as obiter. The matter was in fact considered recently in the Court of Appeal in England in Atkinson v. Fitzwarter⁽²⁾ which was cited to me by Mr. Hunter who appeared for Mandarin. Here the Court decided that there is no such rule that can deprive a party of raising the matter of fraud at a later stage. Amendments should in any event be granted to ensure that the real matters in dispute between the parties are before the Court. I respectfully propose to follow the English decision on this point. The second issue is that the proceedings are an abuse of the process as the allegations of fraud have been wholly unparticularised as against Lucky Man. However, upon a perusal of the amended statement of claim, it is clear that the fraudulent scheme has been sufficiently put forward so as to impute knowledge to Lucky Man, through the knowledge and intentions of Ho and Cheng. It is significant that the directors of Lucky Man, at the time of the agreement, were Tan Kok Seng, who is described as Ho's right hand man in Hong Kong, Chan How Kiat and Sideman Ho. In particular, in his evidence Chan How Kiat has clearly stated that he, Cheng and Sideman Ho were under the control and influence of Ho. Chan How Kiat and Sideman Ho were also the two directors of Asiatic at the time of the completion of the conditional agreement. On the other hand, Tan Kok Seng has denied the allegations of control by Ho but he does not go beyond a pure denial in his evidence.

21. If the pleading is in any way defective, Lucky Man is entitled to make a request for further and better particulars. I find no merit in this submission.

22. The main thrust of Mr. Potts' argument has been directed at the endorsement on the writ and the amended statement of claim, which he says, fails to show a cause of action against Lucky Man either as a constructive trustee or by way of conspiracy. Essentially, he relies upon the allegations made in the D.Y. Leasing action, whereby it is alleged that there were share dealing transactions on behalf of Mandarin on the instructions of Cheng. However, in that action Mandarin denies that Ho or Cheng managed and conducted any lawful share trading business on behalf of Mandarin or if it was carried out it was done without the authority of the board of directors of Mandarin. It is further denied that Ho had authority from the Board of Mandarin to direct payment of S$8,159,250 to be debited to any running account of Mandarin with D.Y. Leasing. Mandarin admits that Cheng and Wee opened an account with Malayan Banking at the Robinson Road branch but that it was not authorised by Mandarin. Further it is denied that D.Y. Leasing carried on the business of trading in quoted and unquoted shares, but that it was conducted by Ho and Cheng in the name of Mandarin which they were not authorised to do. The contracts with D.Y. Leasing are denied. There is conflicting evidence between Sideman Ho who denied that Ho and Cheng controlled Asiatic and Chan How Kiat who said Ho was in control. During the course of the argument, I was referred to various statements of account and the running account which was alleged to operate between D.Y. Leasing and Mandarin. These allegations are in dispute. There may well have been share dealings carried out, but Mandarin's case is that they were conducted by Ho and Cheng for their own personal benefit. The pleadings in the D.Y. Leasing action do not, of course, provide evidence to support Mr. Potts' submission whilst the reliance on the documentary evidence and denials in the affidavits that Ho and Cheng were in control is strenously denied. As this is an interlocutory application, I am not entitled to resolve these matters of conflict on the affidavits before me.

23. A particular argument that was canvassed by Mr. Potts was that where a director of a company e.g. Cheng of Mandarin purports without actual authority in breach of his duties to Mandarin to cause another company D.Y. Leasing to perform an act for Mandarin, D.Y. Leasing was not prima facie fixed with notice of that directors' want of authority or breach of fiduciary duty even if the director in question is also a director of D.Y. Leasing. He submitted that this is a basic rule of company law for a company cannot as such have actual knowledge of any given fact as it can only have the knowledge of human beings imputed to it. The knowledge of its directors or servants falls to be imputed to it only when the director in question is under a duty to disclose the relevant facts to the company to which it is sought to impute the notice. Accordingly, when the director in question is acting in breach of his duties in entering into the transactions to the very company to which it is sought to attribute his knowledge, the law assumes that he will not disclose his breach of duty with the consequence that his knowledge is not attributed to that company. He went on to say that the position is a fortiori where the director in question is a director of both companies to the transaction and is in breach of his duties to both or one or other of the two companies. It is said that the law will assume that he would not perform any duty of disclosure with the consequence that his knowledge cannot be imputed to either of the two companies concerned. In support of this submission, he cited the following cases Re European Bank⁽³⁾, Re Marseille Railway⁽⁴⁾, Re Hampshire Land⁽⁵⁾, Be Fenwick Stobart ⁽⁶⁾, Re David Pain ⁽⁷⁾, and Re Belmont Finance ⁽⁸⁾. According to Mr. Potts the effect of this principle is that Lucky Man is not fixed with notice of any fraud on the part of Cheng or anyone else, and the application of the principle to the alleged unauthorised share dealings will defeat Mandarin's claim that it was not indebted to D.Y. Leasing on the 16th October, 1985. The result of this submission is that the payment of the sum of S$6,750,040 or S$8,056,250 to D.Y. Leasing instead of constituting a breach of trust on Mandarin, constituted a reduction of Mandarin's indebtedness to D.Y. Leasing and can give rise to no legitimate complaint by Mandarin. This submission, however, is premised on the assumption that the facts support a claim that there were authorised share dealings by D.Y. Leasing on behalf of Mandarin and that there was a running account between the two companies. However, these facts, as I have already said, are in issue and fall to be determined at the trial. It was an extraordinary argument for, as Mr. Hunter submitted, if it is correct it would amount to a fraudsmans charter, for all that a fraudsman would have to do is to employ nominees as directors who would carry out his instructions while at the same time keeping them ignorant of his true intentions. I agree with Mr. Hunter that the cases cited by Mr. Potts are not relevant but that the true position in law is set out in two cases that he referred to Gray v. Lewis ⁽⁹⁾ and Selangor v. Cradock ⁽¹⁰⁾. In Selangor v. Cradock at p.1578 Ungoed-Thomas, J. said:-

"In my view, a director acting in a transaction on the direction of a stranger is fixed with that stranger's knowledge of the nature of that transaction.''

In that case he cited a passage from the judgment of Mellish, L.J. in Gray v. Lewis ⁽⁹⁾ at 1056, which reads:-

24. Accepting these cases as a correct interpretation of the law and subject to an evaluation of the facts by the trial judge, the directors of Lucky Man as nominees must be fixed with the knowledge of Ho and Cheng for whom they acted.

25. In respect of Mr. Potts' submission that Mandarin had actually received the monies to which it was entitled from Lucky Man, but that it had then been misapplied by its own directors, is not Mandarin's case, for Mandarin denies receipt of any money. The money to which it was entitled, is alleged to have been diverted by Cheng and Ho to the unauthorised account in Singapore.

26. With regard to the allegation of conspiracy against Lucky Man, Mr. Potts argued that no cause of action has been shown for, it has not been demonstrated that Lucky Man was party to an agreement to injure Mandarin for the directors of Lucky Man at the relevant time were Tan Kok Seng, Chan How Kiat and Sideman Ho against whom no allegations have been made of an agreement to injure. He also contended that for a conspiracy to be actionable it must be established that the predominant purpose was to injure Mandarin, but as no such purpose can be attributed to Lucky Man or is pleaded for the same reasons as knowledge of a breach of trust cannot be attributed to Lucky Man for the purposes of the constructive trust claim. He also submitted that conspiracy is only actionable when damage results and that prima facie Mandarin suffered no damage, but instead obtained the benefit of a reduction in its indebtedness to D.Y. Leasing. Again this submission is flawed for it is made on the basis that there was an indebtedness by Mandarin to D.Y. Leasing which is denied and it was also contended by Mr. Potts that conspiracy is not actionable unless the relevant defendant performs acts in implementation of the conspiracy and that the only acts performed by Lucky Man consisted of entering into the sale agreement and performing it by payment of the agreed price. Again it is only necessary to repeat what I have already said that Mandarin maintains that monies were paid by Lucky Man on the instructions of Ho and Cheng to the unauthorised account of Mandarin after a circuitous transaction which ended up with Lucky Man. It is not correct and I accept Mr. Hunter's submission that it is not necessary in an allegation of conspiracy to prove an intention to injure. In support of his submission he referred to Belmont v. Williams No. 2⁽¹¹⁾ where Buckley L.J. at P. 404 said:-

"The classic definition of conspiracy is that in Mulcahy v. R (1868) L.R. 3 H.L. 306 at 317. A conspiracy consists not merely of the intention of two or more, but in the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means.

I have used the word 'combination' rather than the word 'agreement' used in that definition by Lord Simon, L.C., because the word 'agreement' in this context does not mean an agreement in any contractual sense but a combination and common intention to do the act which is the object of the alleged conspiracy."

Is there a Serious Question to be Tried

27. There is strong evidence that Ho was in control of Mandarin, Lucky Man, Markle and other companies which he controlled through nominees, directors and shareholders, one of whom was Cheng. After the sale of the Markle shares one would have expected a cheque in Hong Kong dollars to have been paid to Mandarin. However, the uncontradicted evidence is to the effect that two cheques were drawn by Lucky Man in Singapore dollars and were taken by Ho to Singapore, and were paid into Mandarin's unauthorised account at the Robinson Road branch of Malayan Banking. Subsequently, the further transactions in the form of circular payments were carried out on the same day. In all probability it amounted to no more than a series of bookkeeping entries. Mr. Potts although conceding that there were circular transactions, maintained that the payments started with D.Y. Leasing and ended with D.Y. Leasing. I was taken in great detail through a mass of evidence and accounts to support the defendant's evidence that payment started and finished with D.Y. Leasing, but it amounted to no more than an ingenious intellectual exercise based upon an assumption of facts that are strongly disputed. His submission could only be accepted if there was no dispute as to the facts. No explanation has been put forward by Lucky Man as to why the payment was made in Singapore dollars which also applies to the payment by Asiatic to Lucky Man for the 23 million shares which was also in Singapore dollars. Nor was any satisfactory evidence given as to why the monies should have been credited into an account in Singapore which Mandarin claims is unauthorised. Having regard to the dearth of evidence provided on behalf of the defendants it is pertinent to note the observations of Cumming Bruce L.J. in S.I.B. Limited and S.H.Limited v. Vwag⁽¹²⁾ where in his judgment of page 10 he said:

"When there is such massive evidence of nominees, puppet directors and puppet directors dancing to the first defendant's tune, it is for him to state on oath his belief, if he holds it, that one or more persons implicated in the silken skein of his spider's web has a genuine beneficial interest."

28. There is abundant evidence to support Mandarin's claim that there is a serious question to be tried on the grounds of conspiracy and constructive trust against Lucky Man. There would also appear to be a good arguable case in conversion but it has not so far been pleaded.

29. The claim for a declaration against Markle that it holds the property on behalf of Mandarin, is as I have said no longer pursued. Further, there is no allegation of conspiracy against Markle. Accordingly, Mr. Potts argued that there is no cause of action against Markle. In reply Mr. Hunter submitted that Markle seeks quia timet relief and relies upon Banker's Trust v. Shapira⁽¹³⁾ and also S.L.B. Ltd. and S.H. Ltd. v. VWAG⁽¹²⁾

30. A cause of action was defined by Diplock L.J. in Letang v. Cooper ⁽¹⁴⁾ where he said:-

"A cause of action is simply a factual situation, the existence of which entitles one person to obtain from the court a remedy against another person."

31. However, in the absence of a cause of action I do not consider that injunctive relief as against Markle is appropriate. In any event I do not consider that quia timet proceedings can be invoked for Markle has undertaken not to dispose of the property.

Balance of convenience

32. It is significant that during the course of argument, Mr. Potts said that Lucky Man has no intention to dispose of the shares. However, I reiterate that there is strong evidence to show that Lucky Man is subject to the control of Ho and/or Cheng and that they would be the ultimate beneficiaries if the injunction is lifted. Having regard to the serious allegations that have been made in this case and without coming to any findings upon the evidence before me, I am quite satisfied that the balance of convenience is in favour of Mandarin so that the injunction should be maintained. There is an undoubted likelihood of a dissipation of the assets if the order is not continued.

Undertaking as to Damages

33. Criticism was levelled by Mr. Potts as to the ability of Mandarin to comply with its undertaking as to damages having regard to the floating charge that has been created over its own assets in favour of its own lawyers' fees. In the first instance in answer to this argument, no evidence has been placed before me as to what damage if any would be suffered by Lucky Man if the order is to be continued. However, there was evidence from Mr. Stone to the effect that the financial position of the company has markedly improved. The bank debt of the group has been reduced from $57,000,000 to zero and the accounts at the re-convened annual general meeting held on the 19th May, 1987 reveal net assets of $47,000,000. There was further evidence to show that Mandarin's major subsidiary is making substantial profits. Although contingent liabilities have been calculated at the sum of about $81,000,000 out of this sum $70,000,000 is referrable to the D.Y. Leasing action which is strenuously resisted.

34. As a result, I am satisfied that the order against Lucky Man should continue and that it be discharged against Markle.

(1)    [1985] HKLR 110

(2)    [1987] 1 W.L.R. 201.

(3)    5 Ch. App. 358

(4)    7 Ch. App. 161

(5)    [1896] 2 Ch. 743

(6)    [1902] 1 Ch. 507

(7)    [1904] 2 Ch. 608

(8)    [1979] 1 Ch. 250

(9)    [1873] 8 Ch. App. 1035

(10)   [1968] 1 W.L.R. 1555

(11)    (1979) 1 All ER 118.

(12)    (Unreported 3rd April, 1985)

(13)    [1980] 1 W.L.R. 1273

(14)    [1965] 1 Q.B. 232

Representation:

Mr. Ian Hunter, Q.C. & Mr. B. Barlow (Hampton, Winter & Glynn) for the Plaintiff.

Mr. Robin Potts, Q.C. & Mr. K. Kwok (Iu, Lai & Li) for 4th & 5th Defendants.