Suzanne Ruth Henderson v. Scott Henderson

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1780 OF 2013

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Before: Hon Au-Yeung J in Chambers

Date of Hearing: 22 October 2014

Date of Decision: 23 October 2014

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D E C I S I O N

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1.This is the defendant’s application for leave to appeal against part of my order dated 27 August 2014 (“the Order”). I shall use the same abbreviations in my decision of the same date (“the Decision”).

2.Those parts of the Order which the defendant intends to appeal against are:

(1) Paragraph 4 of the Order:

“With immediate effect and until further order,

Notwithstanding exception (1) under “EXCEPTIONS TO THIS ORDER” made by the Honourable Mr. Justice L Chan on 22^nd July 2013 as amended on 5^th August 2013 (“the Chan Order”),

Notwithstanding paragraph (1) of the Order of Deputy High Court Judge Hartmann dated 4^th October 2013,

(a) the Defendant is to be prohibited from withdrawing any part of his salary or income from his bank account number 648-085843-833 or in any other bank account, whether in cash or any other form until further order; and

(b) such salary or income is to remain frozen pursuant to the Chan Order; (“Paragraph 4 of the Order”);”

(2) The order for costs to the plaintiff on indemnity basis, summarily assessed and allowed at $100,000.

3.The defendant intends to ask the Court of Appeal to delete Paragraph 4 of the Order and make no order as to costs instead.

The legal principles

4.Leave to appeal will be granted if the applicant can show that there is reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.  Reasonable prospects of success involve the notion that the prospects of succeeding must be ‘reasonable’ and therefore more than ‘fanciful’, without having to be ‘probable’: SMSE v. KL [2009] 4 HKLRD 125, para 17. 

5.The Court of Appeal will not interfere with a judge’s exercise of discretion in the award of costs unless it can be shown that he (i) failed to exercise the discretion; (ii) exercised it upon a false principle; (iii) did not exercise it judicially; or (iv) the exercise of discretion was demonstrably flawed: Hong Kong Civil Procedure 2014, Vol 1, para 62/2/11, page 1114.

The grounds of appeal

6.The first 2 grounds of appeal are that I have erred in failing to consider the legal principle that any defendant against which a Mareva-type injunction is granted should be allowed to make use of his money to pay for his ordinary living expenses (unless there is reason to believe that he has other assets to which the injunction does not apply and which would be available for that purpose) and legal expenses.

7.The third ground of appeal is that Paragraph 4 of the Order effectively and substantively altered the meaning and effects of the  Hartmann Order which formed the subject matter of the application then before me.

The defendant’s contentions

8.Mr Leung, counsel for the defendant, submits that the intended effect of Paragraph 4 of the Order is to prohibit the defendant from using any of his liquid assets or bank balances for any purpose, including defraying his living expenses and legal expenses even if he pays CAD9,774 per month to the FRO pursuant to paragraph 1 of the Hartmann Order.  It would amount to a total “ban” on spending any of his income anywhere in the entire world on any expense, indefinitely.

9.He also submits that the “cause” for the existence of the Mareva injunction has already been disposed of by the Registrar of the District Court in favour of the defendant on the one hand.  On the other hand, the defendant faces numerous proceedings: judicial review, his application for discharge of the injunction and committal proceedings.  The total “ban” on using his bank balances to pay for legal expenses is bound to stifle any rights he has.

10.Further Mr Leung submits that there is tension between Paragraph 3 of the Order which requires the defendant to pay the arrears of Support Payments and Paragraph 4 of the Order banning him from withdrawing any of his salary or income to meet such payments.

11.Mr Leung also submits that Paragraph 4 of the Order does not achieve either the goal of amending the Hartmann Order under the slip rule or compel the defendant to pay up the arrears.  It was substantively and effectively altering the meaning and effect of the Hartmann Order.

Analyses of the grounds of appeal

12.I agree with the legal principle stated in paragraph 6 above.

13.However, the intended grounds of appeal must be considered in the proper context, namely, that the intended appeal does not challenge:

(a) This court’s interpretation of the Hartmann Order (paragraphs 18, 43 and 44 of the Decision);

(b) This court’s adding a paragraph on the Mechanism for payment to the Hartmann Order; and

(c) This court’s view that the defendant has withdrawn his salary without paying the past Support Payments and that the past dues had accumulated to CAD117,288 by the time of the Order.

14.The effect of the Hartmann Order was clearly to ban the defendant from using his salary unless he first paid the past (then only 2 months) Support Payments and monthly accrued Support Payments; and second, required the Mechanism to be set up.  The Hartmann Order was never appealed against.  The “ban” imposed in Paragraph 4 of the Order was in line with the Hartmann Order.

15.It has been made clear that the “ban” was a stop gap measure.  See my Ruling dated 31 July 2014 immediately after the hearing and paragraph 36 of the Decision.

16.Paragraph 5 of the Order required the parties to submit the proposed Mechanism for my approval within 14 days, ie by 10 September 2014.  In paragraph 35 of the Decision, it is stated that,

“I did not think that there should be any substantial prejudice to the defendant because if he had withdrawn his salary for July 2014 (paid on about 26^th looking at the past pattern of payment) that should be sufficient to sustain him for about 2 months (up to the end of September 2014) under the effect of the Hartmann Order.”

17.Compliance with paragraph 5 of the Order was expected to be within a period in which the court expected to create no substantial prejudice to the defendant.  The so called “tension” which Mr Leung identified in paragraph 10 above would not have arisen upon compliance with paragraph 5 of the Order.

18.Read in the proper context, Mr Leung’s arguments in paragraphs 8  and 10 are unarguable.

19.The rest of the arguments can be dealt with quickly.

20.Firstly, whilst it is correct that the registration of the Ontario AR Order has been refused by the Registrar of the District Court, there are pending proceedings for judicial review on that refusal.  The Mareva injunction still has its purpose to serve and has not yet been discharged. 

21.Secondly, Paragraph 4 of the Order was directed only at the salary/income of the defendant and not his other assets.  If he had or has assets above the value of CAD803,610.50, he was and is at liberty to use them. The Order did not and had no intention of rewriting the Chan Order or Hartmann Order.

22.Thirdly, I have already stated in paragraph 22 and 23 of the Decision as to why, notwithstanding the disclosure of the provident fund as an “asset” or “property” of the defendant, the provident fund was not an available asset until it is vested to the defendant.  That was based on Mark Hoyle, Freezing & Search Order (4^th ed), at §4.28 applicable to injunctions.

23.In this leave application, Mr Leung refers to the definition of “property” in the Bankruptcy Ordinance, Cap 6, which includes “money, goods, things in action, land and every description of property, whether real or personal and whether situation in Hong Kong or elsewhere, also obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as above defined.”

24.In Ng Shiu Fan [2008] 4 HKLRD 813, it was held that the provident fund benefits payable on the bankrupt’s retirement was an immediate chose in action which constituted “property” formed part of that person’s estate under section 2 and 43 of the Bankruptcy Ordinance and vested in the Official Receiver pursuant to section 58 of the Bankruptcy Ordinance. 

25.With respect, the definition of “property” in the Bankruptcy Ordinance has no application to an injunction like the present one.  Even if that definition and Ng Shiu Fan are applicable, the other test of being available on execution of a judgment has not been met.  By way of illustration, there are no provident fund benefits now available against which the arrears of the Support Payments due under the Hartmann Order and/or the Order can be enforced.

26.I am not satisfied that the defendant has shown any arguable grounds of appeal for the first 2 grounds.  Nor is there any other reason in the interests of justice why the appeal should be heard.

27.As for the intended appeal against the costs order, Mr Leung has not advanced any legal submission after I told him in broad terms at the hearing why I made the order absolute.

Conclusion

28.I dismiss the leave application.  Costs should follow the event and be to the plaintiff. 

29.I apportion the costs so that today’s hearing time is only 5 minutes.  The application involves only legal arguments.  No affidavit has been filed by any party, nor is it needed.  The work is principally that of counsel’s.  I do not allow any costs for solicitors’ research.  I make an order that the defendant should pay the plaintiff a quarter of counsel’s brief and some costs for solicitors to consider counsel’s submission and liaison with counsel and client.  I summarily assess the costs of this summons and order the defendant to pay the plaintiff $12,000 forthwith.

30.I thank counsel for their assistance.

Mr Felix Ng, instructed by Deannie Yew & Associates, for the plaintiff

Mr Paul H M Leung, instructed by Hampton, Winter & Glynn, for the defendant