When a person realizes that he has been frauded to pay money into bank accounts in Hong Kong, the firsrt thing he should do is to inform both the remitting bank and the receiving bank to stop the payment if the remittance is still on the way. However, in most cases, the funds may have already reached the recipient’s bank account. In such cases, the priority task for the victim is seek to have the recipient bank account frozen so that any funds paid into the accounts may not be dissipated. This article will introduce the issues involved in the freezing of the bank account by applying to the court for a Mariva Injunction order (freezing order).
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Injunction and Freezing Order: Legal Ground
Under Section 21L of the High Court Ordinance, Cap. 4, it provides that “the Court of First Instance may by order (wehther interlocutory or final) grant an injunction … in all cases in which it appears to be just or convenient to do so. Any such order may be made either unconditionally or on such terms and conditions as the Court thinks just.” The above Section 21L provides a direct legal ground for the Court to grant an injunction order when it appears to be just or convenient to do so.
Requirements for granting a Mariva Injunction Order
The principles upon which injunctive reliefs are granted derived from the longsettled criteria set down by Lord Diplock in American Cyanamid v Ethicon Ltd. [1975] AC396. In order to invoke the jurisdiction of the Court to grant such an injunction, the Plaintiff must satisfy the Court that:
- It has a good arguable case;
- There are assets within the jurisdiction;
- The balance of convenience lies in favour of the grant; and
- There is a real risk of dissipation or removal of assets outside the jurisdiction.
In fraud cases, the victim plaintiff can establish a good arguable case on the ground of unjust enrichment, proprietary interest, constructive trust and had and receiving.
As to the element of “assets within the jurisdiciton”, the court held in Akai Holdings Ltd. v. Ho Wing On & Christopher & Accolade Inc. (Intervener) unrep., HCMP1718 that the court may grant a Mareva injunction against assets held by a third party, which the defendant has no legal or equitable right to , but nonetheless has substantive control over.
As to “the real risk of dissipation”, it is now well established that it is not necessary for the plaintiff to show subjective intent on the part of the defendant to dissipate the assets for the purposes of defeating any judgment. Instead, the applicable test is that formulated by the English Court of Appeal in Ninemia Maritime Corporation v Trave Schiffahrtsgesellschoft GmbH (The Niedersachen) [1983]1 WLR 1412 at 1422 as follows: “…. whether, on the assumption that the plaintiffs have shown ‘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.
Procedure for Applying for a Mariva Injuntion Order
The procedure for applying for an Mariva Injunction Order is provided in the Practice Direction 11.2 for Mareva Injunctions and Anton Piller Orders issued by the Judiciary. In short, the Plainitff will need make an ex parte application on urgent basis to the duty judge. As it is an urgent applicationm, the duty judge will usually hear the application on urgent basis at the same day or next day when the application is made. The lawyer representing the Plaitiff will need attend the hearing before the duty judge to make oral submission in addition to written submission with evidence in support submitted in advance. Upon the urgent hearing, if the duty judge consider it is just and convenient to make an injunction order, the duty judgment will first make an interim injunction order to freeze the recipient bank accounts for the period of 3-4 weeks.
The Plaintiff will need take out another inter parte application to have the interim injuntion application be renewed upon the expiration of the period. This is because the interim injunction order is granted by the court only hear the submission of the Plaintiff’s side and have not hear any argument from the Defendant and the bank. On the hearing of the renewal of the injunction order, the Defendant and the bank will have the chance to submit their argument and evidence to be considered by the court to oppose the injunction order if they would like to. Upon hearing the parties’s submission, the court will then decide whether the Mariva injunction order be continued or be discharged.
Legal Costs and Costs Order for Mariva Injunction Application
Depending on the complexity of the case, our experience is that in most cases the legal costs for making an ex parte applicaiton of Mariva Injunction would be around HKD 100,000 to HKD 150,000. For the inter parte hearing of the renewal of the injunction order, it is opposed by Defendant, it is hard to estimate the costs but it certainly will be expensive. If it is not opposed only a small amount of costs will be incurred.
The costs order for the continued injunction order will usually be costs in the cause of the action meaning that the party who lose the litigation in the end will need pay not only legal costs of its own side, but also legal costs incurred by the winning party.
For urgent application of injunction order, we usually can complete the ex parte application in around 3-5 work days depending on the complexity of the case.
Please do not hesitate to contact our Hong Kong Litigation Team for a consultation for any issue regarding intended application for a Mariva Injunction.