Ncs Co, Ltd v. Bao Harvest Holding Ltd

HCCT 31/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

ACTION NO 31 OF 2012

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J U D G M E N T

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1.This is NCS’ application for leave to appeal against a judgment of this court dated 6 September 2012 (“the Judgment” ) by which a worldwide Mareva injunction obtained ex parte by NCS against Bao Harvest on 5 July 2012 was discharged on the grounds that there was no risk of dissipation of assets by Bao Harvest and material non‑disclosures by NCS in its ex parte application.  I adopt herein the nomenclature employed in the Judgment.

2.I approach this application with an open mind, recognising that I may be wrong however convinced I am as to the correctness of the Judgment.  Further, the threshold which NCS has to meet is not very high. It has to demonstrate a reasonable prospect of success in its appeal.  Whilst it has to be shown that the appeal is more than just arguable, it is unnecessary to demonstrate that it will probably succeed – see Hong Kong Civil Procedure 2012, Volume 1, page 1033, paragraph 59/2A/4.

3.However, I am unable to see any merits in NCS’ appeal.  I will deal with the grounds of appeal contained in NCS’ draft Notice of Appeal briefly.

4.In respect of the challenge to the findings on risk of dissipation, it must be right that the Statements had to be assessed in the context of the undisputed and/or indisputable facts.  Bao Harvest was a substantial company, and the arbitration was proceeding normally.  There was simply no indication or reason why Bao Harvest would kill off its prospering business in Hong Kong to avoid a potential liability of US$1.4 million.

5.This court had taken into account the criticisms made by NCS in respect of Bao Harvest’s financial evidence but, with respect, was not swayed by them.  Bluntly, to insist that Bao Harvest was not a substantial company is to turn a blind eye to the evidence.  The cash balance in one of Bao Harvest’s bank accounts in Hong Kong well exceeded US$1.4 million (see Judgment page 5S to 6B).

6.As regards the material non-disclosures, firstly, it is quite wrong for NCS not to have done anything to enquire into Bao Harvest’s assets.  The burden was not on this court or Bao Harvest to identify the proper inquiry which should have been embarked upon.  If it was NCS’ case that no information could have been obtained (as I said to Miss Tam SC at the hearing, that did not accord with my experience) that should have been stated on evidence for the consideration of the ex parte judge.  The proposition that inquiries would have alerted Bao Harvest (see paragraph 9(2) of NCS’ skeleton submissions) was not a point taken before this court.  See also paragraph 8 below. 

7.Secondly, with respect, it is idle to argue that the without prejudice rule did not prima facie apply to the 2^nd Statement.  NCS simply failed to address this issue before the ex parte judge. 

8.Thirdly, it is now suggested that all three non‑disclosures which were upheld by this court were inadvertent.  Such argument was not made before this court nor addressed in evidence, and therefore not dealt with.  I do not see how the argument can be made on appeal - see Flywin Company Ltd. v Strong & Associates Ltd. [2002] 2 HKLRD 485.

9.For these reasons, I dismiss the application with costs to Bao Harvest.

Mr David Chen, instructed by Reed Smith Richards Butler, for the plaintiff

Mr William Wong and Miss Ebony Ling, instructed by Boase, Cohen & Collins, for the defendant