VELATEL GLOBAL COMMUNICATIONS INC. AND ANOTHER v. CHINACOMM LTD AND OTHERS

VELATEL GLOBAL COMMUNICATIONS INC. AND ANOTHER v. CHINACOMM LTD AND OTHERS

The court allowed the variation prohibiting the 1st defendant from withdrawing funds from Chinacomm Accounts 1 and 2 to pay legal fees because the 1st defendant failed the first-stage requirement of demonstrating with full and frank evidence that there were no alternative funds available, given evidence of related parties' financial resources; accordingly the balance of justice favoured preserving the frozen funds for the plaintiffs' proprietary claim.

Citation
VELATEL GLOBAL COMMUNICATIONS INC. AND ANOTHER v. CHINACOMM LTD AND OTHERS
Parties
1st Plaintiff: VELATEL GLOBAL COMMUNICATIONS INC.; 2nd Plaintiff: TRUSSET CAPITAL PARTNERS (HK) LTD; 1st Defendant: CHINACOMM LIMITED; 2nd Defendant: THRIVE CENTURY INTERNATIONAL LIMITED; 3rd Defendant: NEWTOP HOLDINGS LIMITED; 4th Defendant: SMART CHANNEL DEVLOPMENT LIMITED
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
23 April 2012
Case Number
HCA1978/2011
Procedural Posture
Commercial Dispute Concerning Mareva Injunction and Proprietary Claim Over Funds / Interlocutory – Variation of Injunction Decided (11 April 2012); Substantive Hearing Fixed for 3 May 2012
Outcome
Variation allowed: 1st defendant prohibited from withdrawing funds from Chinacomm Accounts 1 and 2 to pay legal fees; costs in the cause.
Legal Topics
Mareva Injunction, Proprietary Claim, Variation of Injunction, Disclosure, Contempt Proceedings, Legal Costs
Source Language
EN
Commercial Law Civil Procedure Equity Company Law Injunctions Mareva Injunction Proprietary Claim Variation of Injunction +3 more

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Parties

VELATEL GLOBAL COMMUNICATIONS INC.

1st Plaintiff

TRUSSET CAPITAL PARTNERS (HK) LTD

2nd Plaintiff

CHINACOMM LIMITED

1st Defendant

THRIVE CENTURY INTERNATIONAL LIMITED

2nd Defendant

NEWTOP HOLDINGS LIMITED

3rd Defendant

SMART CHANNEL DEVLOPMENT LIMITED

4th Defendant

Procedural Posture

Commercial Dispute Concerning Mareva Injunction and Proprietary Claim Over Funds / Interlocutory – Variation of Injunction Decided (11 April 2012); Substantive Hearing Fixed for 3 May 2012

Legal Issues

  1. 1 Whether the 1st defendant may use funds subject to a proprietary claim to pay its legal fees
  2. 2 Whether the defendant has demonstrated no alternative funds or assets to pay legal fees (first hurdle)
  3. 3 Whether to lift the corporate veil or take into account related parties' resources when assessing ability to pay legal fees

Ratio Decidendi

The court allowed the variation prohibiting the 1st defendant from withdrawing funds from Chinacomm Accounts 1 and 2 to pay legal fees because the 1st defendant failed the first-stage requirement of demonstrating with full and frank evidence that there were no alternative funds available, given evidence of related parties' financial resources; accordingly the balance of justice favoured preserving the frozen funds for the plaintiffs' proprietary claim.

Court Disposition

Variation allowed: 1st defendant prohibited from withdrawing funds from Chinacomm Accounts 1 and 2 to pay legal fees; costs in the cause.

Orders

  • Variation of the 1st Injunction Order granted to prohibit the 1st defendant from withdrawing money from Chinacomm Accounts 1 and 2 to pay for its legal fees
  • Costs of the variation application to be costs in the cause