Racp Pharmaceutical Holdings Ltd v. Li Xiaobo

HCA 490/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATION REGION

COURT OF FIRST INSTANCE

ACTION NO. 490 OF 2007

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BETWEEN

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Before: Hon Wright J in Chambers

Date of Hearing: 14 March 2007

Date of Judgment: 14 March 2007

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J U D G M E N T

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1.In this matter, I grant the applicant’s application for leave to enforce commencement proceedings in Canada.  The order will be in the form of the draft order before me, save that paragraph 1 will read:

“Leave be given to the plaintiff to begin proceedings in Canada to enforce, until 23 March 2007 or further order, the injunction order made by Deputy High Court Judge Muttrie on 9 March 2007.” 

2.I will give brief reasons for granting this order.

3.The background to this matter is that on 9 March 2007 Deputy Judge Muttrie granted an order in favour of the applicant, the effect of which was to freeze, on a worldwide basis, the respondent’s assets up to a value of US$6 million. 

4.Once that order was granted, the applicant approached the Hongkong and Shanghai Banking Corporation in Hong Kong to ascertain the amount standing to the credit of an account known to be operated by the respondent.  The bank indicated that it would abide any order of this court but absent such an order it would not disclose the information sought by the applicant.

5.Consequently, the applicant returned to court for an order pursuant to section 21 of the Evidence Ordinance, Cap. 8, which in due course I granted.  The basis of that application was that before the applicant is able to enforce proceedings in Canada it will have to be able to show to the court in British Columbia, where the applicant knows the respondent is possessed of assets in the form of immovable property, that the respondent has insufficient assets within the Hong Kong jurisdiction to satisfy the order.

6.Consequent upon the order being served upon the Hongkong and Shanghai Banking Corporation, it informed the applicant’s solicitors of the balance standing to the credit of the respondent’s account.  It transpires that that amounts to a little over HK$130,000. 

7.Consequently, the applicant now returns to court for leave to begin proceedings to enforce the injunction order in British Columbia.  It needs that leave by virtue of an undertaking given by the applicant’s solicitors in the proceedings before Deputy Judge Muttrie.

8.There is before me an affirmation by the solicitor acting on behalf of the applicant which sets out, effectively, what I have outlined before and to which is attached a draft affirmation by a Canadian practitioner detailing the nature of the respondent’s assets, the nature of the proceedings that it is contemplated will be instituted in British Columbia and asserting that in order to enforce the proceedings, it is necessary to demonstrate the paucity of assets within this jurisdiction.

9.I have been referred, on behalf of the applicant, to the decision of the English Court of Appeal in Dadourian Group International Incorporated & Ors v Simms & Ors [2006]3 All ER 48 in which judgment there appear a number of guidelines which that court believed to be applicable in situations of this nature.  Insofar as I am aware, this is the first occasion when these guidelines are likely to have been considered by the courts in Hong Kong.  They are summarised at paragraph 25 of that judgment as follows:

“…. a number of guidelines can …. be stated about the exercise of discretion to grant permission to enforce a worldwide freezing order abroad.

Guideline (1): the principle applying to the grant of permission to enforce a WFO abroad is that the grant of that permission should be just and convenient for the purpose of ensuring the effectiveness of the WFO and the addition that it is not oppressive to the parties to the English proceedings or to third parties who may be joined to the foreign proceedings.

Guideline (2): all the relevant circumstances and options need to be considered.  In particular, consideration should be given to granting relief on terms, for example, terms as to the extension to third parties with the undertaking to compensate for costs incurred as a result of the WFO and as to the type of proceedings that may be commenced abroad.  Consideration should also be given to the proportionality of the steps proposed to be taken abroad and in addition to the form of any order.

Guideline (3): the interests of the applicant should be balanced against the interests of the other parties to the proceedings and any new party likely to be joined to the foreign proceedings.

Guideline (4): permission should not normally be given in terms that would enable the applicant to obtain relief in the foreign proceedings which is superior to the relief given by the WFO.

Guideline (5): the evidence in support of the application for permission should contain all the information so far as it can reasonably be obtained in the time available necessary to enable the judge to reach an informed decision including evidence as to the applicable law and practice in the foreign court, evidence as to the nature of the proposed proceedings to be commenced and evidence as to the assets believed to be located in the jurisdiction of the foreign court and the names of the parties by whom such assets are held.

Guideline (6): the standard of proof as to the existence of assets that are both within the WFO and within the jurisdiction of the foreign court is a real prospect, that is, the applicant must show that there is a real prospect that such assets are located within the jurisdiction of the foreign court in question.

Guideline (7): there must be evidence of a risk of dissipation of the assets in question.

Guideline (8): normally the application should be made on notice to the respondent but in cases of urgency where it is just to do so, the permission may be given without notice to the party against whom relief will be sought in the foreign proceedings but that party should have the earliest practicable opportunity of having the matter reconsidered by the court at a hearing at which he is given notice.”

10.I apply those guidelines to the present matter.

11.Guideline (1): it is, plainly, on the evidence before me just and convenient that the applicant be permitted to commence proceedings to enforce the WFO in British Columbia, as only by doing so is it likely to ensure the effectiveness of the order.  There is nothing to suggest that by following this course such a course will be oppressive to any of the parties who are or who may be joined.

12.Guideline (2): the relief has been granted on terms as suggested by the applicant which terms are acceptable to me.

13.Guideline (3): the only other party to the proceedings at this stage is the respondent himself although there is a suggestion in earlier papers that one of the three properties said to be registered in the name of the respondent in Canada is subject to a mortgage.  The undertakings given by the applicant in this matter are sufficient, in my view, to protect any third party holding a mortgage over the properties.

14.Guideline (4): the applicant would be obtaining the same relief in British Columbia as it has already obtained in Hong Kong: that appears from the affirmation of the Canadian practitioner.

15.Guideline (5): the issues in this matter insofar as this application is concerned are relatively straightforward and I am satisfied that the information which the applicant has been able to place before me in the very limited time at its disposal is adequate.  The affirmation of the Canadian practitioner sets out the nature of the proposed proceedings.  He also sets out the nature of the assets.  Those assets are said to be owned personally by the respondent.

16.Guideline (6): it follows from what I have said, in respect of guideline (5), that there is, at least, a real prospect that the assets are located in British Columbia.

17.Guideline (7): there is a risk of dissipation of the assets in question.  In the original application papers that risk was said to exist by way of inference to be drawn from the lack of probity in the respondent’s conduct in the dealings which gave rise to the action.  Further, it is now apparent from the affirmation of the Canadian practitioner that at least one of the properties is on the market for sale in British Columbia.

18.Guideline (8): in the circumstances of this matter, it is obviously appropriate to grant the relief on an ex parte basis.  The applicant has responsibly sought a short return date, which is appropriate.

19.In all the circumstances, I am satisfied that this is a matter in which it is appropriate for me to exercise my discretion in favour of the applicant.  I do so and there will be an order in the terms already indicated.

Mr José-Antonia Maurellet, instructed by Messrs Oldham, Li & Nie, for the Plaintiff