Chen Wenjun v. Liu Luyuan and Another

HCMP 1802/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1802 OF 2014

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Before: Hon L Chan J in Chambers

Date of Hearing: 8 August 2014

Date of Decision: 8 August 2014

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D E C I S I O N

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1.The ex parte injunction order of Poon J made on 23 July this year will continue in force until the determination of the originating summons or further order.

2.I allow the defendants to have six weeks from today to file evidence in opposition to the originating summons which shall include the evidence of the defendants’ summons to discharge the interlocutory injunction. 

3.I give four weeks thereafter for the plaintiff to file evidence in reply which, again, shall include the evidence for the plaintiff’s opposition to the defendants’ summons to discharge. 

4.There will be no further evidence after the defendants’ evidence in opposition, save with leave of the court. 

5.I grant leave to set down the originating summons for hearing with one day reserved to be heard together with the defendants’ summons for discharge, and the parties be at liberty to proceed to fix the date forthwith subject to the condition that the hearing date shall be after 17 October 2014.  There will be liberty to apply and costs be in the cause.

6.So these are the matters which are not hotly contested. 

7.I now come to the contested matters, namely, on variation in order to provide money for the 1st defendant as living expenses and legal expenses for the 1st and 2nd defendants.

8.The 1st defendant seeks HK$30,000 a week as living expenses.  I think that is a reasonable sum.  The objection is that it is a proprietary claim and hence the court need not allow such expenditure.  On the undertaking of the 1st defendant to file an affidavit within a week in the same terms as that filed by his solicitor Mr Chan Kam-man, I allow him HK$30,000 a week as living expenses, because on his affidavit to be filed, he has no significant resources to deploy as living expenses.

9.For legal expenses, for the same reason, I allow the variation at HK$300,000 a week subject to a cap of HK$2.1 million.  I stress that this cap is more as a reporting line rather than as an assessed cap because I do not wish to play the role of a costs assessor - at least not at this stage.

10.That disposes of the issue for variation in relation to living and legal expenses. 

11.Now on the stay of the disclosure order.  I have been referred to the case of Raja v Van Hoogstraten [2004] EWCA Civ 968, a decision of the English Court of Appeal in July 2004.  Chadwick LJ pointed out in paragraphs 104 and 105 that disclosure orders are usually made in Mareva injunctions or freezing orders, and whether the court should make it together with Mareva injunction prior to adjudicating the summons for discharge is a balancing exercise.  Normally, the disclosure order would not be truncated from the injunction.

12.Mr Fung very ably argued for the defendants that I should stay the operation of the disclosure order together with an inspection order because if the defendants should succeed in discharging the interlocutory injunction, then whatever disclosure that the defendants may be required to make in the meantime would become matters prejudicial to their interest because if the injunction should be discharged, then there would not have been any need or justification for them to make such disclosure. 

13.Furthermore, the plaintiff’s claim as made by her in the BVI is purely a proprietary one, and Mr Fung submits that it is highly arguable that even if she should succeed in that claim, which is disputed by the defendants, she may still have no right to lay her hands on any cash that may be deposited in the defendants’ bank accounts because the cash is not to be subject to the proprietary claims.

14.Furthermore, there is also an order no. 7 in the disclosure order which requires the defendants to explain the whereabouts of certain dividends of the 2nd defendant and that is not part of the usual order as referred to in the practice direction. 

15.Furthermore, the BVI proceedings, according to Mr Fung, are merely ancillary proceedings to the divorce proceedings that are being fought in the mainland.  Hence, there is a question of whether the section 21M proceedings launched by the plaintiff in this jurisdiction is a set of viable proceedings as it may not be viable to have ancillary proceedings in favour of ancillary proceedings.  But then I doubt whether the BVI proceedings can be regarded as ancillary because the plaintiff is making substantive claims in those proceedings - although her success may depend on the outcome of the divorce proceedings in the mainland.

16.I also take note of the fact that there will be another four to six months before the originating summons and also the discharge application will be heard, and in the meantime there is the need to police the Mareva injunction and to preserve the assets in question. 

17.Secondly, this is a proprietary claim that has been brought by the plaintiff. The injunction is to preserve assets of a proprietary claim which is not the usual monetary claim.

18.Thirdly, the affidavit to be filed by the 1st defendant is a brief one which does not contain much information about his assets, and bearing in mind his being a CEO of a listed company, the brevity prima facie does not tally with his position in life. 

19.I therefore would allow the disclosure order to remain pending the hearing of the originating summons and the discharge summons.  But I would not allow the inspection order to continue in the meantime, and I would stay that pending the outcome of the substantive hearing on the originating summons and the discharge summons.  But I stress that there is liberty for the plaintiff to apply to lift this stay.  If upon disclosure by the 1st defendant there should then be justification for the stay to be removed or there should be any further event that may transpire which may justify that, then the plaintiff may apply.  But I am not extending an invitation to the plaintiff to do that.  I am just reminding the plaintiff that the liberty to apply applies to lifting this stay as well.

20.Since the injunction order has been served on the 1st and 2nd defendants for a few days already, and I think money is just being made available for them to get their lawyers to work on the disclosure, I give them two weeks to comply with the disclosure order from today.

21.Costs of today.  Since both sides have attained something and not all, it is not a total success for either side, so I propose to order the costs of today be in the cause of the originating summons with certificate for two counsel. 

(Discussion with counsel)

22.It does not appear to me to be a terribly complicated case, but then it involves a lot of money.  I do order that the date be fixed in consultation with counsel’s diaries. 

23.The plaintiff’s revision to the meaning of the word “Sum” be included in the order.

24.Leave to appeal be granted to the defendants but no interim stay of the disclosure order.  

Mr Jeremy Bartlett, instructed by Howse Williams Bowers, for the plaintiff

Mr Eugene Fung, SC leading Mr Wilson Leung, instructed by Wilkinson & Grist, for the 1st and 2nd defendants

Please refer to CACV168/2014 for the relevant appeal(s) to the Court of Appeal.