Mareva injunctions, Taiwanese, comity thus permits TCRLO to seek same on Taiwan

Chiou v Wang [1994] FJHC 160;

Hbc0466d.94s (31 October 1994)

IN THE HIGH COURT OF FIJI

(AT SUVA)

CIVIL JURISDICTION

ACTION NO. HBC0466 OF 1994

BETWEEN:

GRACE CHIOU

of No. 7 Lane 25

Sung Teh Road, Taipei, Taiwan

Plaintiff

AND

JOHNNY WANG

of 40 Bouwalu Street,

Lautoka

First Defendant

FORTUNE TIMBER COMPANY LIMITED

a company incorporated in Fiji and

having its registered office at

40 Bouwalu Street, Lautoka

Second Defendant

FORTUNE GARMENT COMPANY LIMITED

a company having its registered

office at 40 Bouwalu Street,

Lautoka

Third Defendant

P. Sharma for the Plaintiff

P. Cowey for the Defendants

Dates of Hearing: 7th, 12th October 1994

Date of Interlocutory Judgment: 31st October 1994

INTERLOCUTORY JUDGMENT

This is an application by the Defendants to discharge a Mareva Injunction I granted

the Plaintiff against the Defendants Ex-parte on the 18th of August 1994. The Writ in

the action was issued on the 17th of August 1994 and the two-paragraph Indorsement

of Claim states that the Plaintiff's claim is for:

(i) A declaration that the transfer by the Plaintiff of her shares in the Second and Third

Defendants to the First Defendant is void.

(ii) An injunction restraining the First Defendant from causing the Second and Third

Defendants to do anything in pursuance of transfer of shares.

To date, and despite the order of Sadal J. on the 2nd of September 1994 that a

Statement of Claim be delivered and filed by the 8th of September, no such Statement

of Claim has yet been filed.

The Plaintiff is a national of Taipei, Taiwan and also resides in Taiwan. On the 18th

of August 1994 the Plaintiff applied to the Court Ex-parte for a Mareva Injunction

against the Defendants. Her Motion was supported by an affidavit sworn by Pravesh

Prakash Sharma an Associate in the Law Firm of Munro, Leys & Co. solicitors for the

Plaintiff who stated that his firm has been instructed throughout by Messrs Y.C. Lee

& Pang, of Hong Kong solicitors for the Plaintiff. The affidavit of Mr. Sharma

annexes to it a faxed true copy of an affidavit deposed to by the Plaintiff. The original

of that affidavit was filed in the Lautoka Registry of this Court on 5th September

1994 and then forwarded to this Registry.

Having considered the Motion and the supporting affidavits I granted an Interim

Mareva Injunction against the Defendants:

(i) Restraining them and each of them until further order from transferring, dealing with,

charging, mortgaging, assigning, disposing of or removing from the jurisdiction any

of their properties or moneys or assets over which the Defendants or each of them

have ownership or control within the jurisdiction of this Court including:

(a) ANZ Bank Lautoka Account Numbers

91-457507-00

2525996700

2525996701.

(b) Bank of Baroda Account Number

2-252620-15-1.

(c) Shares in Second and Third Defendants.

(ii) Requiring them to forthwith disclose and within fourteen days after the service of the

order on them make and serve on the Plaintiff's solicitors an affidavit disclosing the

full value of all and each of their assets within the jurisdiction of this Court

identifying with full particularity the nature and whereabouts of all such assets and

whether the same be held in their own name or jointly or by nominees or companies

on their behalf and particularly specifying:

(a) The identity of all bank, financial institution or other accounts held in their name or names

either jointly or by nominees on their behalf and the balance of each of such accounts

and the name and address of the branch at which it is held.

(b) Any other assets, money or goods owned by them or each of them and the whereabouts of

the same and the names and addresses of all persons having the possession, custody or

control of such assets, moneys or goods at the date of service of this order.

The date of service was directed to be the 25th of August 1994 and liberty to apply to

all parties on 72 hours written notice was given.

The order also directed that the action be transferred to the Lautoka Registry of this

Court and a Penal Notice pursuant to Order 45, Rule 6 of the High Court Rules 1988

was appended.

On the 31st of August 1994 the Defendants issued a Motion in the High Court

Lautoka returnable on the 2nd of September 1994 seeking the following orders:

(1) That the Plaintiff file a full Statement of Claim within fourteen days of the date of the

order.

(2) That the Plaintiff pay into Court security for costs to the amount of F$200,000.00 within

such time as the Court ordered.

(3) That the Ex-parte order made by me on the 18th of August 1994 be rescinded or stayed

pending the hearing of the application.

(4) That there be an abridgement of time for service of the application to one day.

The Motion was supported by an affidavit of the First Defendant sworn on the 6th of

September 1994. The First Defendant had previously sworn and filed an affidavit

pursuant to my order of the 1st of August deposing to the assets of the Second and

Third Defendants and Mr. Wang's own assets.

The matter came before Sadal J. on the 2nd of September when His Lordship

adjourned it for hearing on the 8th of September and ordered that by that date a

Statement of Claim and an Affidavit in Reply on behalf of the Plaintiff be filed.

On the 8th of September 1994 all parties were represented before Sadal J. who made

orders by consent varying my order of the 18th of August to this extent:

(i) That the Defendants are permitted to operate the Australia and New Zealand Banking

Group Account No. 91/734279/00 to an overdraft limit not exceeding $100,000.00.

(ii) That the Bank of Baroda Account No. 2/252620/15/1 be operated by the Defendants on

the basis that all deposits paid thereto may be withdrawn to be deposited to Australia

and New Zealand Banking Group Account N. 91/734279/00.

The Judge further ordered that the action be transferred to the Suva High Court for

hearing of the Defendants' motion of the 31st of August and that the Plaintiff file her

Affidavit in Reply within twenty-one days from the date of the order, i.e. by 29th

September 1994.

As at the date of this judgment neither a Statement of Claim nor Affidavit in Reply

have been filed by the Plaintiff.

So much for the present history of this matter. I now turn to the Affidavits which have

been filed on behalf of the parties and the submissions made on their behalf.

In her only affidavit at present on record the Plaintiff deposes that she is a Director

and the major shareholder in the Second and Third Defendants. She annexes to her

affidavit true copies of the Annual Returns of the Second and Third Defendants for

the period ended 30th March 1994 filed with the Registrar of Companies on the 6th of

May 1994. The Annual Returns are signed and delivered for filing by the First

Defendant who is the Secretary of both the companies.

The Annual Return in respect of the 2nd Defendant shows that the Plaintiff is the

holder of 1,774,190 shares in that company. The remaining 1,182,793 shares are held

by the First Defendant.

The Annual Return in respect of the Third Defendant shows that the Plaintiff is the

holder of 1,866,400 shares. The First Defendant owns 1,244,266 shares in the Third

Defendant.

The Plaintiff deposes that she has been informed and verily believes (though not

stating by whom) that the First Defendant has by fraudulent means convinced the

Australia and New Zealand Bank as bankers of the Second and Third Defendants that

the Plaintiff is no longer a Director or shareholder in the Second and Third

Defendants. She claims that she has thus been denied access to the Bank Accounts of

information relating to both companies.

She annexes to her affidavit true copies of a letter faxed by her dated 1st July 1994 to

the Manager Commercial Business of ANZ Bank Lautoka Branch and a reply by the

ANZ Bank dated 7th July 1994.

The facsimile letter to the Bank refers to "Our Company, Fortune Garments Co. in

Fiji" and gives three accounts.

The Plaintiff asks whether any person has used her property or her company's name to

mortgage or apply for loans from the Bank during the last sixteen months, the period

since she left Fiji. The letter then contains this paragraph:

"I want to inform you that I'm not responsible if any person has already applied for

a loan from your Bank including my partner, Mr. Johnny Wang because I never

signed any paper about this matter."

The Plaintiff also asks the Bank to inform her whether "We had send money by T/T

from Taiwan `Fortune Horse Enterprise Ltd.' amounting to a total of $US300,000.00

on the 3rd and 20th of August 1992".

The ANZ Bank replied to the Plaintiff on the 7th of July 1994 in a personal form

stating so far as relevant the following:

(1) The Fiji based Director, Mr. Johnny Wang had lodged with the Bank recently

documentation to the effect that the Plaintiff was no longer a Director and a

shareholder of the companies she mentioned. In addition, Account Authorities had

been amended to remove the Plaintiff as a signatory to the bank account.

(2) Legal advice had been given the bank indicating that such documentation was in order

and in addition, certain representations had been made by Messrs Young &

Associates the Defendants' solicitors supporting Mr. Wang's actions.

(3) Accordingly, and in line with Mr. Wang's instructions the Bank was unable to provide the

Plaintiff with the information she sought.

Three Law Firms were then mentioned as being well known to the Bank, including

her present solicitors, in the hope that this would help her.

The Plaintiff then deposes that she believes that the First Defendant has without her

authority utilised blank share transfer forms dated 1st October 1993 signed by her and

handed over to the First Defendant. Copies of these forms are annexed to her

affidavit.

She claims that these forms were prepared in 1993 at the time when negotiations were

being conducted with potential buyers from Mainland China. She says that the buyers

were concerned that there would be some difficulty in transferring the shares of the

Second and Third Defendants and for the purpose of re-assuring them she signed the

blank transfer forms and handed them to the First Defendant to be utilised if the

transaction took place. The negotiations were unsuccessful and there was therefore no

cause to utilise the transfers she had signed.

She declares that the blank transfer forms were never intended to transfer her shares to

the First Defendant and such use of them by the First Defendant is without her

knowledge and permission and fraudulent.

In any event she says the blank transfer forms are dated 1st October 1993 and the

companies' Annual Returns filed on the 6th of May 1994 and covering the period to

the 30th March 1994 continue to list herself as a major shareholder and Director of

the companies.

She further states that the Defendants' present solicitors who had always acted for the

companies had by letter dated 9th June 1994 notified the First Defendant that they had

prepared a Deed of Trust and transfers of shares in respect of both companies to be

executed by her. A copy of this letter is annexed to her affidavit.

By letter dated 26th June 1994 the Plaintiff replied to Messrs Young & Associates

indicating that she did not intend to transfer her shares to the First Defendant.

She states that she has not transferred nor intends to transfer her shares in either

company and believes that some one had by fraudulent means convinced the ANZ

Bank otherwise.

She deposes that the First Defendant is a  Taiwanese  national and is therefore

fearful that he might convert the assets of the Second and Third Defendants and

transfer the proceeds out of the jurisdiction of this Court. She then gave an

undertaking as to damages. It was on the strength of that affidavit that I granted her

the injunction on the 18th of August.

I now refer to the three affidavits which have been filed on behalf of the Defendants.

They have all been sworn by the First Defendant and the first of them dated the 5th of

September 1994 lists the following assets of the Defendants. The Second Defendant's

assets comprise:

(i) Crown Lease No. 9836 including recently reclaimed land of approximately 10.5 acres.

(ii) A commercial building which together with the Crown Lease altogether are valued at

$F3,700,000.00.

(iii) Mazda 929 Registration No. CC838 estimated value $15,000.00.

The assets of the Third Defendant comprise the following:

(i) Sewing machines and equipment estimated value F$200,000.00.

(ii) Mini bus Registration No. CL139 estimated value $15,000.00.

The First Defendant states that he has a personal external Bank Account in United

States dollars with the ANZ Banking Group Limited and National Bank of Fiji which

are approximately $US18,000.00 and $US3,000.00 respectively. He also has a Fiji

currency account with the National Bank of approximately $10,000.00.

In his second affidavit sworn on the 6th of September 1994 the First Defendant refers

to the affidavit of the Plaintiff.

As to her claim that she had sent money by Telegraphic Transfer from Taiwan

amounting to the sum of $US300,000.00 on the 3rd and 20th of August 1992 the First

Defendant agrees that these sums were paid into the Defendant companies' account.

He says that these payments were in regard to the payment received by Fortune Horse

Enterprise Limited on behalf of Fortune Garment Company Limited pursuant to

fifteen invoices issued against Daisy Industries Inc., a customer of Fortune Garment

Company Limited which had ordered, purchased and was delivered garments listed in

the invoices copies of which are annexed to Mr. Wang's affidavit.

These invoices show the value of the goods in the form of garments and material sent

as $US873,962.40.

The First Defendant states that the Plaintiff was acting as his agent for Fortune

Garment Company Limited and was entitled to 5 percent commission on all payments

and that on the basis of those invoices Fortune Garment Company Limited paid the

Plaintiff approximately $US43,000.00 in commission.

Mr. Wang states that in referring to the Plaintiff's claim to have paid $300,000.00 she

has intentionally attempted to mislead this Court that she has made some payments in

Fiji in consideration of acquiring the shares. The First Defendant states that the

Plaintiff has never paid for the shares she was listed to hold.

The third and by far the most comprehensive affidavit sworn by the First Defendant is

dated the 1st of September 1994 and I refer to it as the third affidavit because of the

detail it gives compared with his later affidavits.

Again Mr. Wang claims that at all material times the Plaintiff was holding her shares

in the Defendant companies in trust for him.

He denies the Plaintiff's allegation that he had by fraudulent means convinced the

ANZ Bank that the Plaintiff was no longer a Director or shareholder in the Second

and Third Defendant companies and that he had without the Plaintiff's authorization

utilised blank transfer forms dated 1st October 1993.

He admits that he was negotiating the sale of all the shares in the respective

companies with potential buyers from Mainland China - The People's Republic of

China.

He says the Plaintiff was never involved in such negotiations nor was she concerned

or interested in the negotiations.

He says that the transfers of the shares in the Second and Third Defendant companies

were signed by the Plaintiff because she had no interest in the shares as "it was given

to her by me when I originally paid for the shares in 1991 when the previous majority

shareholders were Robert Tsai and Lei-Miao Ting also of Taipei, Taiwan".

In 1990 when Messrs Tsai and Ting were still shareholders of the Second and Third

Defendant companies, the First Defendant held one share in the Third Defendant.

Earlier to that he was asked by them to manage the company and Mr. Wang began

residing in Fiji from about May 1988.

He was then made a Director of the Second Defendant company and, on the

incorporation of the Third Defendant company on the 4th of November 1988, he was

also made a Director of that company.

He says that in about July 1991 Tsai and Ting approached him to purchase the shares

of the Second and Third Defendant companies.

On the 3rd of September, 1991 Tsai and his lawyer arrived in Fiji and discussed with

the First Defendant the sale of the shares. By then the Plaintiff and the First Defendant

were already living in Fiji together as lovers. Furthermore Mr. Wang says he was the

only  Taiwanese  national left in Fiji to look after the Second and Third

Defendant companies. After preliminary discussions Tsai returned to Taiwan.

The Plaintiff and the First Defendant returned to Taiwan on or about the 22nd of

September 1991 where they continued to negotiate the sale of the shares of the

Defendant companies with Tsai.

The Sale and Purchase Agreement was then signed by the parties and a copy of this in

the Chinese language together with an English translation of the same are annexed to

Mr. Wang's affidavit.

The buyer in the Sale and Purchase Agreement was a company called Soundbow

Limited incorporated in Hong Kong and was used as a vehicle to negotiate and

purchase the shares in the Second and Third Defendant companies. The Plaintiff and

the First Defendant are shareholders in Soundbow Limited.

Mr. Wang states that this company was specifically incorporated in Hong Kong to

sign the Sale and Purchase Agreement as a purchaser. Soundbow Limited was

registered by Messrs Y.C. Lee & Pang, solicitors of Hong Kong who it is alleged

instructed the Plaintiff's Fiji solicitors in these proceedings.

Mr. Wang says that he did not use his own name in the Sale and Purchase Agreement

because he was a long time business associate of Tsai and Ting and it would have

been an embarrassment to them in a Chinese tradition if the Agreement reflected that

Mr. Wang had purchased the shares. He says that Tsai and Ting would have "lost

face" by selling to him directly. The First Defendant then deposes that he paid for the

acquisition of the shares from his bank account in the Shanghai Commercial Bank

Limited in Hong Kong as follows:

$US100,000.00 on 4/11/1991

$US66,000.00 on 7/11/1991

$US110,000,00 on 11/11/1991

He deposes that Fortune Horse Enterprise Limited to which the purchase price was

remitted is a company in Taipei of which the Plaintiff is the major shareholder and

Director.

Mr. Wang states that a further sum of $US76,000.00 was then transferred to the

Plaintiff's personal account on 24th February 1992 and he annexes a copy of a

confirmation advice from his bank in Hong Kong.

The First Defendant claims that his payment for acquisition of the shares which he

then states was $US352,000.00 although the figures he gives amount to only

$US276,000.00 was dispersed in various ways comprising:

$US100,000.00 - commission to Tsai.

$US220,000.00 - for the purchase of all the shares in the Second and Third

companies.

$US32,000.00 - being the balance of the loan to the Plaintiff which he claims

she still owes to him.

The obvious discrepancy between these amounts and the earlier payments mentioned

by the Second Defendant for acquisition of the shares in 1991 will have to be clarified

later but it is largely irrelevant for present purposes.

Mr. Wang also swears that he had earlier lent the Plaintiff $5,480,000.00 New Taiwan

dollars (equivalent to $US210,000.00) on or about 10th of October 1991, the receipt

of which the Plaintiff acknowledged on or about the 1st of October 1991.

The Plaintiff and the First Defendant returned to Fiji in or about December 1991 after

the First Defendant had made the payment of $US110,000.00 on 11th of November

1991.

The First Defendant deposes that the share transfers executed in blank by Tsai and

Ting were then completed and he gives details. He says that as early as 1988 he had

brought in funds from abroad and up to March 1992 he personally remitted a total of

$F2,653,483.00 to the Second Defendant company and $F1,110,666.00 to the Third

Defendant company.

He says that his Accountants Messrs Peat, Marwick advised him in or about March

1992 after he had received the blank transfers signed by Tsai and Ting to capitalise

those funds as shares in the Second and Third Defendant companies which he

instructed them to do. He then instructed his Accountants to apply to the Reserve

Bank of Fiji to have the shares in the Second and Third Defendant companies allotted

as follows:

The Plaintiff was registered as the holder of 1,774,190 shares and 1,866,400 shares in

the Second and Third companies respectively while the First Defendant was

registered as holder of 1,182,793 shares and 1,244,266 shares in the Second and Third

Defendant companies respectively.

On the 22nd May 1992 the Reserve Bank of Fiji approved the additional issue of

shares.

Mr. Wang says that he was previously advised by his Accountants that the Second

and Third Defendant companies require two shareholders and since the Plaintiff and

he were lovers he did not hesitate to have the shares which he had purchased in the

Second and Third companies registered as described.

The Plaintiff and Mr. Wang continued in their de facto relationship in Fiji until

February 1993 when they travelled to Seattle in the United States of America where

they lived together for some four months. They rented an apartment and for that

period he says he paid all the expenses which amounted to $40,000.00 which included

helicopter flying instruction fees for the Plaintiff. He says he had previously spent

other money on her including a trip to Tahiti, Los Angeles and Vancouver in 1990.

He also claims he paid her father's trip and expenses to the People's Republic of China

in 1991 and for the Plaintiff to Los Angeles for Christmas and thereafter to San

Francisco and other parts of the West Coast of United States together with diamond

rings and jewellery. He also gave her his visa credit card on his account with the

Shanghai Commercial Bank Limited, all of which outlays he says would have

amounted to more than $US100,000.00. The Plaintiff and First Defendant then

returned to Taipei in early June 1993.

He says that because they had domestic arguments while they were in the United

States he suggested to her that they separate for a while which she agreed.

He says that even when they were in Taipei she suggested that she transfer the shares

in the Second and Third Defendants back to him but he told her to wait as it would

cause practical problems. These included:

(i) Getting the Reserve Bank of Fiji's approval which he says was a long and difficult process.

(ii) If he found a buyer, having to get the Reserve Bank of Fiji's approval again. He

says, and it seems the Plaintiff agrees, that he told the Plaintiff in about July 1993 that

he was negotiating with the parties in the People's Republic of China to buy the shares

concerned.

It appears that the Plaintiff wrote to the First Defendant on the 14th of July 1993 and

he annexes to his affidavit a copy of the Plaintiff's faxed letter written in Chinese and

a copy of the English translation done by a Dr. Yang who has translated all the other

documents exhibited to the First Defendant's affidavit.

The letter if true appears to be friendly and among other things contains this short

passage:

"You also have asked about those papers I sent. I believe they should be received by

now. They were sent by registered mail on 28th of June."

Mr. Wang says that the Plaintiff has not returned to Fiji since February 1993.

In or about August 1993 he travelled to the People's Republic of China and there

secured an agreement from certain individuals to buy a total of 70 percent of the

shares of the Second and Third Defendant companies.

He then returned to Fiji and requested the Plaintiff to sign the transfer of shares which

he had prepared and sent to her by courier.

The Plaintiff acceded to his request and he received the blank transfers signed by her

as previously mentioned.

Mr. Wang then lists the securities which are presently held by ANZ Banking Group

Limited which are as follows:

Fortune Timber Company Limited

1. Mortgage Debenture dated 15th March 1990.

2. Mortgage over Crown Lease No. 9836.

Fortune Garment Company Limited

Mortgage Debenture dated 15th March 1990.

The above securities were stamped collateral to each other and secured advances up to

$2,000,000.00. Since he acquired the shares, Mr. Wang says the Defendant

companies' facilities in the Bank ranged from as high as $2,000,000.00 and fluctuated

depending on the financial requirements of the Defendant companies but from June

1993 the Second and Third Defendants had arrangements with the ANZ Banking

Group Limited to have facilities up to $F100,000.00. The overdraft was temporarily

increased to $200,000.00. He says that at the date of my order of the 18th of August

they had only utilised some $40,000.00 of that facility.

He repeats that the Second Defendant owns Crown Lease No. 9836 and that since

October 1993 $250,000.00 has been paid to reclaim 10.5 acres. He again repeats that

in about March 1994 he sold some logging machinery for $220,000.00 and the

purchase money was paid into the Third Defendant company's Bank Account.

Since the 11th of June 1993 Mr. Wang says he has caused to transfer from overseas

into his account the following sums of money:

11/6/93 - $US39,982.50

25/11/93 - $US99,961.00

He annexes a letter from the ANZ Banking Group Limited dated 25th of August 1994

confirming this.

He says that the remittance of $US100,000.00 to Fortune Horse Enterprises Limited

on the 29th of May 1993 was for the purpose of paying the cost of fabric and

accessories for garment export orders of the Third Defendant company. He also says

that the Plaintiff has never brought any of her own money into Fiji nor does she

presently own any property or bank account in Fiji.

He deposes that when he returned to Taipei in June this year with the Deed of Trust

and Transfers prepared by his solicitors he met the Plaintiff on June 11th. They began

to talk about what happened to each other in their absence. She mentioned that she

had heard that he was reclaiming land on Crown Lease No. 9836. She then informed

him that she was upset about rumours which she had heard from one Dr. Chung Shiu

Ying previously of Suva (who was residing with her in Taipei then) and one Mrs. Paul

Cheng of Lautoka (who had returned to Taipei) that the First Defendant was having

an affair with another woman. He admitted this to be true and says the Plaintiff was

visibly upset with him. He then asked her to sign the documents, explaining to her the

purpose of the same. He informed her that she had always been holding the shares in

trust since she was first registered as a shareholder and he reminded her of the transfer

of the shares signed in blank. He also informed her that if she signed the trust

documents this would save him paying stamp duty. The Plaintiff then took the

documents away and later the same day informed Mr. Wang that she refused to sign

the documents.

Mr. Wang then returned to Fiji and completed the transfer of the shares and paid

stamp duty of $2,994.50 and $1,761.50 respectively on the transfer of the shares of

the Second and Third Defendants.

He says that the Second and Third Defendant companies presently have six

employees and they have Fiji Electricity Authority, Public Works Department and

Post and Telecom costs and other expenses to pay. He says that since 1992 the Third

Defendant company has ceased garment manufacturing operations temporarily

because of Trade Union problems. He hopes to resume operations later. He says that

the Mareva Injunction will prevent him from doing so as he will not be able to

administer the company with the Injunctions held over them.

He says that he always believed that the Plaintiff would sign the Trust Deed without

hesitation and did not expect her to refuse.

He also says that the transfer of shares signed by the Plaintiff as exhibited in her

affidavit was witnessed by her own Solicitor/Attorney Mr. Lee Chin Tse and was sent

by her to him.

Mr. Wang believes that the Plaintiff is being vindictive and has issued these

proceedings to harass him.

Since he received the signed transfer of shares from the Plaintiff she has not

communicated with him regarding the share transfers nor the finances or the affairs of

the Second and Third Defendants.

He says that the share certificates of the Plaintiff in the Second and Third Defendant

companies were always held by him and he also held share certificates of the shares

he owned. He annexes copies of these certificates to his affidavit.

Also annexed to Mr. Wang's affidavit are copy bank statements from the ANZ Bank

setting out the current financial position of the companies.

The Law

Since the case which gave its name to Mareva Injunctions was decided, namely

Mareva Compania Naviera SA v. International Bulk Carriers SA "The Mareva" 1 All

E.R. 213 the rules relating to the granting of such injunctions have become reasonably

well defined although I have little doubt that in the course of time they may yet be

further enlarged. I will discuss some of these rules when dealing with particular parts

of the evidence in this case but two basic propositions are clear:

(i) Any Applicant for a Mareva Injunction must show that so far as the merits of his proposed

actions are concerned he has a good arguable case.

(ii) The Defendant has assets within the jurisdiction and there is a real risk that if not

restrained he will remove the assets from the jurisdiction or dissipate them within it.

These two basic principles were amplified by Lord Donaldson of Lymington M.R. in

his judgment in Polly Peck International plc v. Nadir and Others (No. 2) (1992) 4 All

E.R. 769 at pp 785-786 and it is appropriate to quote from his judgment here. His

Lordship said:

"I therefore turn to the principles underlying the jurisdiction. (1) So far as it lies in

their power, the courts will not permit the course of justice to be frustrated by a

defendant taking action, the purpose of which is to render nugatory or less effective

any judgment or order which the plaintiff may thereafter obtain. (2) It is not the

purpose of a Mareva injunction to prevent a defendant acting as he would have

acted in the absence of a claim against him. Whilst a defendant who is a natural

person can and should be enjoined from indulging in a spending spree undertaken

with the intention of dissipating or reducing his assets before the day of judgment,

he cannot be required to reduce his ordinary standard of living with a view to

putting by sums to satisfy a judgment which may or may not be given in the future.

Equally no defendant, whether a natural or a juridical person, can be enjoined in

terms which will prevent him from carrying on his business in the ordinary way or

from meeting his debts or other obligations as they come due prior to judgment

being given in the action. (3) Justice requires that defendants be free to incur and

discharge obligations in respect of professional advice and assistance in resisting

the plaintiff's claims. (4) It is not the purpose of a Mareva injunction to render the

plaintiff a secured creditor, although this may be the result if the defendant offers a

third party guarantee or bond in order to avoid such an injunction being imposed.

(5) The approach called for by the decision in American Cyanamid Co. v Ethicon

Ltd. [1975] UKHL 1; (1975) 1 All E.R. 504, (1975) AC 396 has, as such, no

application to the grant or refusal of Mareva injunctions which proceed on

principles which are quite different from those applicable to other interlocutory

injunctions."

As to what constitutes a good arguable case our own Court of Appeal in Civil Appeal

No. 31 of 1993 Girdharlal Raniga v. Merchant Bank of Fiji and Civil Appeal No. 38

of 1993 Merchant Bank of Fiji v. Girdharlal Raniga said in a judgment delivered as

recently as the 11th of August 1994 at p.5:

"Successive cases have made it clear that there is a difference (albeit a subtle one)

between a "good arguable case" and a "serious question"."

The Court then went on to refer to the remark of Parker L.J. in Derby Weldon (No. 1)

(1990) 1 Ch. 48 at p.64 to illustrate the difficulty in defining that difference. Parker

L.J. said:

"In my view the difference between an application for an ordinary injunction and a

Mareva injunction lies only in this, that in the former case the plaintiff need only

establish that there is a serious question to be tried, whereas in the latter the test is

said to be whether the plaintiff shows a good arguable case. The difference .... is

incapable of definition ...."

The Court of Appeal then continued that a good arguable case requires a higher

standard of proof than for a serious question.

As to what constitutes a good arguable case in practice depends on the facts of each

case but I would attempt to define it as at least a case which is more than barely

capable of serious argument and yet not necessarily one which a Judge believes to

have a better than 50 percent chance of success.

The Plaintiff's claim is based on the fact that the First Defendant has transferred

certain shares to himself.

The First Defendant says that contrary to the records the shares never belonged to the

Plaintiff and that the Plaintiff held them on trust for him. So far the Deed of Trust

alleged by the Defendants had not been produced but the Court does have the copies

of transfer documents exhibited to the affidavits both of the Plaintiff and the

Defendants.

It would appear that the Plaintiff bases her claim principally on non est factum and

alleges that the transfer documents do not mean what they appear to.

It was held in Saunders v. Anglia Building Society (1970) 3 All E.R. 961 in the House

of Lords that the plea of non est factum can only rarely be established by a person of

full capacity and that the burden of establishing the plea falls on the party seeking to

disown the document and that party must show that in signing the document he acted

with reasonable care.

At p.963 Lord Reid said that there must be a heavy burden of proof on the person who

seeks to invoke this remedy.

Lord Reid also said that the essence of the plea non est factum is that the person

signing believed that the document he signed had one character or one effect whereas

in fact its character or effect was quite different.

This case was applied later by the Court of Appeal in United Dominions Trust Ltd. v.

Western and Another (1975) 3 All E.R. 1017 when the Court held that no valid

distinction could be drawn between a person who signed a form of contract without

reading the contents and a person who signed one in blank leaving the details to be

filled in by a third party. In either case the signatory was under a duty of care to the

other contracting party to ensure that the completed document represented his true

contractual intention.

In the instant case the evidence is that the transfer forms were signed by the Plaintiff

in the presence of her Hong Kong solicitor and then sent to the Defendants.

The Court is entitled to assume from this in the absence of any other evidence that the

Plaintiff knew what she was doing and her solicitors who witnessed her signatures

had condoned her action.

In her later annexure "J.1" with the translation annexure "J.2" to the Defendants'

affidavit of 1st September 1994 the Plaintiff did not stipulate any pre-conditions as to

the use by the Defendants of the signed transfers. The Plaintiff merely said: "If you

need other documents please let me know."

The Plaintiff must also give some grounds for believing that the Defendants have

assets within the jurisdiction and that there is a risk that the assets will be removed

before any judgment is satisfied.

In Ninemia Maritime Corporation v. Trave G.m.b.H. (1983) 1 W.L.R. 1412 at p.1422

Kerr L.J. speaking for the Court said:

"In our view the test is whether, on the assumption that the plaintiffs have shown at

least "a good arguable case." the court concludes, on the whole of the evidence

then before it, that the refusal of a Mareva injunction would involve a real risk that

a judgment or award in favour of the plaintiffs would remain unsatisfied."

Various other similar statements are to be found in the cases including that of Sir

Robert Megarry V.-C in Barclay-Johnson v. Yuill (1980) 1 W.L.R. 1259 at p.1264

who said:

"It seems to me that the heart and core of the Mareva injunction is the risk of the

defendant removing his assets from the injunction and so stultifying any judgment

given by the courts in the action. If there is no real risk of this, such an injunction

should be refused; if there is a real risk, then if the other requirements are satisfied,

the injunction ought to be granted. If the assets are likely to remain in the

jurisdiction, then the plaintiff, like all others with claims against the defendant ,

must run the risk, common to all, that the defendant may dissipate his assets, or

consume them in discharging other liabilities, and so leave nothing with which to

satisfy any judgment. On the other hand, if there is a real risk of the assets being

removed from the jurisdiction, a Mareva injunction will prevent their removal."

Although the Plaintiff claims to be a majority shareholder in the Defendants her

evidence to date shows a surprising lack of knowledge about the affairs of all the

Defendants which I find hard to explain. She appears to know about the acquisition of

Crown Lease No. 9836 but appears to know nothing about the current financial

situation of all the Defendants as revealed in the copy bank statements annexed to the

First Defendant's affidavit of 1st September 1994. There is also the evidence of

exports by the Defendants to the United States and even the value of the shares held

by the First Defendant alone, disregarding for the moment those which the Plaintiff

claims to own. According to the evidence the First Defendant's paid up shareholding

in Fortune Timber Company Limited amounts to $1,182,783.00 and in Fortune

Garment Company Limited $1,244,266.00. These are substantial holdings and if one

adds to them the amount allegedly spent by the First Defendant on the Plaintiff, which

she does not deny, the clear inference is that the First Defendant is a person of some

substance.

A mere assertion by the Plaintiff, unsupported by evidence that a Defendant will

remove or dissipate assets will not suffice to satisfy the mandatory requirement of a

Plaintiff to show that there is a real risk that the Defendant, if not restrained, will

remove his assets from the jurisdiction.

In Polly Peck International plc v Nadir and Others (No. 2) 4 All E.R. 769 to which I

have previously referred Scott L.J. said at p.775:

".... the strength of the case sufficient to support the grant of a Mareva injunction is

dependent to some extent on the consequences to the defendant of the injunction, as

well, of course, as on the consequences to the plaintiff if an injunction is not

granted."

Later at p.784 His Lordship said:

"It is in my opinion, wrong in principle to grant a Mareva injunction so as, before

any liability has been established, to interfere with the normal course of business of

the defendant. To impose a Mareva injunction that will have that effect in order to

protect a cause of action that is no more than speculative is not simply wrong in

principle but positively unfair."

There is nothing in the evidence before me to satisfy me that the Defendants are about

to dissipate any assets they have in Fiji and for these reasons I am not satisfied now

that the Plaintiff has established a good arguable case. Evidence against this view may

emerge later but in my judgment does not of itself warrant the continuation of the

injunction against the Defendants.

I pass now to the other pre-requisite for the granting of any injunction ex-parte

namely that there must be full and frank disclosure by the Plaintiff of any material

facts or matters which, if the Defendant had been present, he might rely on in

opposing the grant of the order.

This requirement was highlighted in relation to Mareva injunctions by Donaldson L.J.

in Bank Mellat v. Nikpour (1985) FSR 87 who said at pp. 91-92:

".... the court will be astute to ensure that a plaintiff who obtains an injunction

without full disclosure - or any ex parte order without full disclosure - is deprived of

any advantage he may have derived by that breach of duty ... The rule requiring full

disclosure seems to me to be one of the most fundamental importance, particularly

in the context of the draconian remedy of the Mareva injunction. It is in effect,

together with the Anton Piller order, one of the law's two "nuclear" weapons. If

access to such a weapon is obtained without the fullest and frankest disclosure, I

have no doubt at all that it should be revoked."

Most of the other relevant principles relating to full and frank disclosure were set out

by Ralph Gibson L.J. in Brink's-MAT Ltd v. Elcombe (1988) 3 All E.R. 188 at p.192

who said that to constitute full and frank disclosure a Plaintiff must mention all the

material facts. His Lordship continued:

"The material facts are those which it is material for the judge to know in dealing

with the application as made; materiality is to be decided by the court and not by the

assessment of the applicant or his legal advisers: see the Kensington Income Tax

Comrs case (1917) 1 KB 486 at 504 per Lord Cozens-Hardy MR, citing Dalglish v

Jarvie (1850) 2 Mac & G 231 at 238, 42 ER 89 at 92, and Thermax Ltd v Schott

Industrial Glass Ltd (1981) FSR 289 at 295 per Browne-Wilkinson J. The applicant

must make proper inquiries before making the application: see Bank Mellat v

Nikpour (1985) FSR 87. The duty of disclosure therefore applies not only to

material facts known to the applicant but also to any additional facts which he

would have known if he had made such inquiries. The extent of the inquiries which

will be held to be proper, and therefore necessary, must depend on all the

circumstances of the case including (a) the nature of the case which the applicant is

making when he makes the application, (b) the order for which application is made

and the probable effect of the order on the defendant..."

In this case in my judgment when applying for the injunction the Plaintiff ought to

have disclosed her relationship with the First Defendant.

Although it would be wrong for me to hold at this stage that her reason for instituting

proceedings was the act of a jilted lover, nevertheless it is a factor which must be put

in the scale to decide whether or not to continue the injunction. Also I consider that

the Plaintiff should have disclosed that she never held original copies of the share

certificates and, equally importantly that she had never paid for the shares. In my

opinion she should also have referred to the various letters which she had written to

the First Defendant regarding transferring of the shares to the First Defendant's own

name and the fact that she was lent money by the First Defendant.

In Ninemia Maritime Corporation v. Trave G.m.b.H. (supra) Mustill J. who granted

the Mareva injunction ex-parte and subsequently discharged it after a hearing inter

partes said:

"Having been reminded of the authorities, and after hearing full argument, I am

bound to say that I am doubtful whether the ex-parte relief should have been

granted in the first place."

Like His Lordship I now find myself in a similar position. I have had the benefit of

very comprehensive submissions for the Defendants and although by comparison

those for the Plaintiff are very brief, caused probably by the fact that Mr. Sharma was

forced to prepare the submission at very short notice and had no prior knowledge of

the case, nevertheless I am satisfied for the reasons I have given that the injunction

should now be dissolved. There remains the question of the Plaintiff providing

security for costs.

The Defendants submit that since the Plaintiff is a foreigner from Taiwan and there

are no assets that she owns in Fiji whereby a judgment for damages or undertaking

can be attached in Fiji the Plaintiff should provide some security for the Defendants'

costs of the action. This application is made under Order 23 of the High Court Rules

which states:

"That where on the application of the Defendant to an action or other proceedings

in the High Court, it appears to the Court:-

(a) that the Plaintiff is ordinarily resident out of the jurisdiction ... then having regard to

all the circumstances of the case, if the Court thinks it just to do so, it may order the

Plaintiff to give such security for the Defendant's cost of the action or other

proceedings as it thinks just."

The principle in determining the amount of security is found in Procon (GB) Limited

v. Provincial Building Company Limited (1984) 2 All E.R. 368 in which the Court of

Appeal held that the Court's decision under Order 23 Rule 1 to order the Plaintiff to

give such security for the Defendant's costs of the action in the High Court as thought

just is unrestricted and there is no justification for any `conventional approach' of

fixing a sum of two-thirds of the estimated party and party costs rather than ordering

security on a full indemnity basis.

The Defendants submit a figure of $50,000.00 as appropriate but do not provide any

details as yet.

Furthermore they submit that the Court ought to order security for the Plaintiff's

undertaking on the ground that the Plaintiff may not have funds to make good her

undertaking in damages.

There is no doubt that the Court has power to require such an undertaking.

In the "Mito" (1987) 2 Lloyd's Law Reports 197 at p.198 Hirst, J. said:

"May I make it plain at the start that there is no doubt in my judgment that the

Court has power at the time of either granting or extending a Mareva injunction to

order security in support of the usual cross-undertaking, in other words to fortify

the injunction by security in the manner which was ordered, for example, by Mr.

Justice Roxburgh in the case of Baxter v. Claydon, (1952) W.N.376. In other words

if the Court considers that the cross-undertaker, usually the plaintiff, might not be

worth powder and shot if it be held that he is obliged to fulfil his cross-undertaking,

the Court can strengthen the undertaking by requiring some sort of security."

The Defendants ask the Court to require the Plaintiff to pay a further sum into Court

of $150,000.00 under this heading but the difficulty I have in regard to both

applications is that the Defendants have so far not given any details. In Procon (GB)

Limited v. Provincial Building Company Limited full details of how the judge in the

Court Bingham J. (as he then was) fixed an amount of ú6,000,000.00 for security for

costs were given by the judge. Before he did so he had sworn evidence of a highly

reputable commercial solicitor as to his estimate of the cost of the litigation

concerned.

In the present case at the moment I have no such information. I therefore propose to

hear further argument on this question. The only order I shall make at the present time

is that the interim injunction I granted the Plaintiff on the 18th of August 1994 is

dissolved and the Plaintiff must pay the Defendants' costs to be taxed if not agreed.

JOHN E. BYRNE

J U D G E

The following cases are cited in judgment:

(1) Bank Mellat v. Nikpour (1985) FSR 87.

(2) Barclay-Johnson v. Yuill (1980) 1 W.L.R. 1259.

(3) Brink's-MAT Ltd v.Elcombe (1988) 3 All E.R. 188 and (1988) 1 W.L.R. 1350.

(4) Derby v. Weldon (No. 1) (1990) 1 Ch. 48.

(5) Girdharlal Raniga v. Merchant Bank of Fiji - Civil Appeal No. 31 of 1993.

(6) Ninemia Maritime Corporation v. Trave G.m.b.H. (1983) 1 W.L.R. 1412.

(7) The `Mito" (1987) 2 Lloyds Rep. 197.

(8) Poly Peck International plc v. Nadir and Others (No. 2) 4 All E.R. 769.

(9) Procon (BG) Limited v. Provincial Building Company Limited (1984) 2 All E.R.

368.

(10) Saunders v. Anglia Building Society (1970) 3 All E.R. 961.

(11) United Dominions Trust Ltd. v. Western and Another (1975) 3 All E.R. 1017.

The following additional cases were cited in argument:

(1) American Cyanamid Co. v. Ethicon Ltd. (1975) A.C. 396.

(2) Commercial Bank of New East Plc v. A, B, C & D (1989) Lloyds Rep. 319.

(3) Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings (1988) 1 W.L.R. 1337.

(4) O'Regan v. Iambic Productions Ltd. (1989) NLJR 1378.

(5) Siporex Trade S.A. v. Comdel Commodities Ltd. (1986) NLJR 538 and (1986) 2 Lloyd's

Rep. 428.

(6) Thermax Ltd. v. Schott Industrial Glass Ltd. (1981) FSR 289.