Cosimo Borrelli As Trustee of the Sfc Litigation Trust v. Allen Tak Yuen Chan

HCMP 2174/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 2174 OF 2014

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D E C I S I O N

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1.I have before me an application by Hu Liang Mei, Chan Wing Yan Grace and Chan Wing See Joyce (hereinafter collectively referred to as the “Third Parties”) for an extension of time to comply with a disclosure order contained in paragraph 3 of an earlier order made by me on 9 January 2015 (“the Order”).

2.The background facts of this matter are set out in my decision given on 9 January 2015 and I shall not repeat them here.

3.On 9 January 2015, I varied a Mareva injunction order granted by Mr Justice Anthony Chan on 29 August 2014 (as subsequently continued and amended) by extending it to cover three specific bank accounts held in the names of the Third Parties respectively at Standard Chartered Bank (Hong Kong) Limited into which the defendant’s company, Win Fair Holdings Group Ltd, transferred the total sum of US$6.5 million (“the Monies”) on 9 June 2011.  The variation was an interim order made pending the substantive hearing of the plaintiff’s summons issued on 5 January 2015.  I also made an ancillary order (“the Disclosure Order”) requiring the Third Parties to disclose, by affidavit to be filed and served within seven days, on how the Monies received by them had been used and expended and the current whereabouts of the Monies (or any part thereof) with full particulars and documents in support.

4.The time for the Third Parties to comply with the Disclosure Order expired on 16 January 2015.

5.On 14 January 2015, the Third Parties, through their solicitors, wrote to the plaintiff’s solicitors seeking an extension of 14 days (ie up to 30 January 2015) to comply with the Disclosure Order on the ground that they “need time to locate bank records & related documents in order to make disclosure by affidavit”.  The Third Parties’ solicitors requested for a reply by the close of business on 14 January 2015.

6.By a letter dated 15 January 2015 (which apparently was received by the Third Parties’ solicitors at around 10:18 am on that date), the plaintiff’s solicitors replied stating that the plaintiff would only agree to an extension of time up to 23 January 2015 on an “unless” basis, ie unless the requisite affidavits were filed and served by 23 January 2015 the Third Parties be barred from filing evidence in opposition to the plaintiff’s summons issued on 5 January 2015 as provided for in paragraph 4 of the Order.

7.The Third Parties then took out the summons on 15 January 2015, returnable on 23 January 2015.  In that summons, the Third Parties sought an extension of 14 days from the date of the order to be made therein to file the requisite affidavits, in other words by 6 February 2015.

8.Apart from the assertion in the Third Parties’ solicitors’ letter dated 14 January 2015, and repeated in their subsequent letter dated 19 January 2015, that the Third Parties needed time to locate bank records and related documents in order to make disclosure by affidavit, the Third Parties have not explained, whether by affidavit or in letter form, where the relevant bank records and documents are kept and why they could not be readily retrieved.

9.As mentioned in my earlier decision given on 9 January 2015, I was not prepared to impose a blanket Mareva injunction to cover all the assets of the Third Parties because of the absence of evidence that the Monies or any part thereof were still held by the Third Parties, and what had become of the Monies.  I considered that, in fairness to the Third Parties, a more limited form of Mareva injunction should be granted covering only the three specific bank accounts into which the Monies were paid, but I also required the Third Parties to make disclosure of how the Monies received by them had been used and expended and the current whereabouts of the Monies (or any part thereof) with full particulars and documents in support so that the plaintiff could carry out further investigation and, if necessary, apply for further injunctive relief from the court.

10.In those circumstances, I considered that a tight timeframe ought to be imposed for the Third Parties to make the requisite disclosure, and a time limit of seven days was set.

11.In considering the present application by the Third Parties for extension of time, the following matters are also of relevance:

(1) The transfers concerned a single payment of a substantial sum to each of the Third Parties.  The receipt of the Monies by the Third Parties did not appear to be routine in nature, although I accept that it may be more difficult to ascertain or identify how the Monies were subsequently used or expended.

(2) The Third Parties have been put on notice since 22 October 2014 that the plaintiff was inquiring into the transfers and seeking information thereon.

(3) The information and documents which the Third Parties are required to disclose are peculiarly within their knowledge.  As earlier mentioned, the Third Parties have not explained where the relevant bank records and documents are kept and why they could not be readily retrieved.

12.Late yesterday, Chan Wing Yan Grace and Chan Wing See Joyce each filed an affidavit, and the defendant filed an affirmation on behalf of Hu Liang Mei (apparently because she is currently in the PRC taking care of her sister), in compliance or purported compliance with the Disclosure Order.

13.In view of the late filing of the aforesaid affidavits and affirmation, the plaintiff is still considering whether the Disclosure Order has been sufficiently complied with, and what (if any) further action to take as a result of the disclosure made by the Third Parties.  Also, it appears that Chan Wing See Joyce purchased a motor vehicle on 16 January 2015 but it is not clear as to the source of the funds which she used for this purpose.

14.Ms Sit for the plaintiff has informed the court that in light of the recent development, the plaintiff is not insisting on the court granting an “unless order”.  In all the circumstances, I grant a retrospective extension of time up to 22 January 2015 to Chan Wing Yan Grace and Chan Wing See Joyce to comply with the Disclosure Order.  I also grant an extension of time up to 3 February 2015 to Hu Liang Mei to file an affidavit to confirm the contents of the 2^nd affirmation of the defendant to comply with the Disclosure Order.

15.Nothing that is said in this decision shall affect the further action which the plaintiff may take after due consideration of the recent disclosure made by the Third Parties.

16.As for costs, as submitted by Ms Sit, a disclosure order in aid of a Mareva injunction is part of the interim mandatory injunction carrying the contempt sanction for non‑compliance, and an application for extension of time to comply with a disclosure order is not just any time summons.  Also, the Third Parties were seeking an extension of effectively up to 6 February 2015 and the plaintiff’s position was that an “unless order” should be granted.  While I had not made up my mind whether to grant an “unless order” had it been necessary for me to decide this issue, I consider that the plaintiff was fully entitled to raise the issue of “unless order” today.

17.In all the circumstances, I consider that it is appropriate for the plaintiff to attend by counsel today, and I order the Third Parties to pay the costs of the application to the Plaintiff to be assessed summarily and not on the fixed costs basis.

18.I direct the plaintiff to lodge and serve his costs statement within seven days, and the Third Parties to lodge their objections to the plaintiff’s costs statement within seven days thereafter.  I shall give my ruling on paper afterwards.

Ms Eva Sit, instructed by Lipman Karas, for the plaintiff

Mr Tsang Chung Yu, of C Y Tsang & Co, for the defendant

Mr Ng Man Kin, of Kwok Ng & Chan, for the third parties