Mareva injunction — discharged — dissipation of assets unlikely and material non-disclosure
Ms Winnie Tam SC, Mr Douglas Lam and Mr David Chen, instructed by Reed Smith Richards Butler, for the plaintiff.
Mr William Wong and Ms Ebony Ling, instructed by Boase Cohen & Collins, for the defendant.
P brought arbitration proceedings alleging D had repudiated a charterparty. D was a sizeable mineral resources company which traded internationally and had total assets of US49.15 million in 2011 and expected credit facilities in 2012 of USD500 million. D contended that P’s loss was only USD26,000 and not the claimed USD760,000. P obtained a worldwide ex parte Mareva injunction, based on statements made during two conversations which P argued implied that D was prepared to dissipate its assets to defeat an arbitral award in favour of P. D now sought to discharge the injunction.
Held, granting D’s application, that:
While P had a good arguable case on the merits. On the evidence, D had established a compelling case that it was highly unlikely it would destroy its business in Hong Kong by the dissipation of assets to avoid a potential liability of USD1.4 million inclusive of P’s legal costs. In any event, there was no justification for a worldwide injunction as D’s Hong Kong assets exceeded P’s claim. The Injunction must be discharged on this ground alone.
Second, there was material non-disclosure by P. It was unacceptable that P made an ex parte application without even attempting to enquire into D’s financial position thereby misleading the Judge. D’s failure to disclose to the Judge that the second statement was made during settlement negotiations was a serious breach of its duty. The matter should have been made clear to enable the Judge to make an informed decision as to whether an exception to the without prejudice rule applied. Moreover, it was fundamental that P draw attention to D’s defence, yet P had failed to disclose that D disputed quantum. The issue was not straightforward and it was all the more important for P to explain the dispute to the Judge and to justify its position.