Read the full judgment text of HCA 1412/2013 on BabelCite. This Court of First Instance judgment was delivered on 28 February 2014 before Mr Recorder Houghton SC.
Commercial law – Mareva injunction – variation application – freezing order against former chairman/CEO of Hong Kong-listed company and his wholly owned corporate vehicle – principles for varying an 'ordinary' Mareva injunction – burden on defendant to show variation is for a proper purpose and that no other source of funds is reasonably available – defendant's disclosure of assets – living expenses – legal expenses – reduction of enjoined sum against corporate vehicle – alleged fictitious transactions, round-robin fund circulations and overstated financial position in IPO prospectus and 2009 annual report – SFC winding-up petition and appointment of provisional liquidators – whether court had discretion to vary – whether defendants met persuasive burden – Stephen Gee, Commercial Injunctions, 5th edn. – Mareva jurisdiction – first issue: whether variation for living and legal expenses should be granted when approximately HK$800 million received by defendants over three years but only approximately HK$40 million remaining in disclosed assets – held: defendants signally failed to discharge the burden of proving no other source of funds available – second issue: whether sum enjoined against Wellrun (the corporate vehicle) should be reduced to approximately HK$300 million (Wellrun's alleged share of dividend receipts) – held: no reduction, because Wellrun alleged to have acted as Mr Chun's alter ego in impugned transactions, to have dishonestly assisted in the IPO, and to have dishonestly concealed breaches of director's duty, with equitable damages also claimed – artificial to distinguish Wellrun from Mr Chun for injunction purposes – third issue: adequacy of defendants' asset disclosure – held: court had significant queries as to completeness and judges entitled to a 'very healthy scepticism' about assertions of enjoined parties – outcome: all summonses dismissed; costs to the plaintiffs on a nisi basis.
Legal issues: Whether defendants met burden of proving no other funds for living expenses · Whether the sum enjoined against Wellrun should be reduced · Whether the defendants' disclosure of assets was adequate
Outcome: All summonses by the 1st and 13th defendants to vary the Mareva Injunction Orders are dismissed. No variations granted.
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