LIAO CHEN TOH v. LOYAL INTERNATIONAL ENTERPRISES CO. LTD. AND OTHERS

LIAO CHEN TOH v. LOYAL INTERNATIONAL ENTERPRISES CO. LTD. AND OTHERS

On the interlocutory record the plaintiffs established a serious issue to be tried that they are prima facie the owners of the two sums transferred; given the sums remain in UBS related accounts and absent convincing proof that injunction would catastrophically harm Mainland companies, equity requires preservation of those sums pending trial; plaintiffs provided undertakings (including by a related beneficiary) and disclosure from UBS should be ordered via a Bankers Trust order; accordingly proprietary injunctions and a Bankers Trust order were granted and costs ordered nisi.

Citation
LIAO CHEN TOH v. LOYAL INTERNATIONAL ENTERPRISES CO. LTD. AND OTHERS
Parties
Plaintiff (original Action): Liao Chen Toh; 1st Defendant (original Action): Loyal International Enterprises Co. Ltd.; 2nd Defendant (original Action) and 1st Plaintiff (counterclaim): Success House Industries Limited; 3rd Defendant (original Action) and 2nd Plaintiff (counterclaim): New Success House Industries Limited; 4th Defendant (original Action): Loyal Investment Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 March 2016
Case Number
HCA2302/2014
Procedural Posture
Civil Counterclaim Concerning Preservation/proprietary Injunctions and Bankers Trust Order / Interlocutory Applications/hearing on Preservation Orders and Bankers Trust Order (reasons Given)
Outcome
Applications allowed in part: proprietary preservation injunctions granted against the 2nd Defendant in respect of the two sums and a Bankers Trust order granted; costs ordered nisi
Legal Topics
Preservation Order, Proprietary Injunction, Constructive Trust, Bankers Trust Order, Discovery, Director's Duties, Knowing Receipt
Source Language
EN
Equity Company Law Trusts Civil Procedure Banking Law Injunctions Preservation Order Proprietary Injunction +5 more

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Parties

Liao Chen Toh

Plaintiff (original Action)

Loyal International Enterprises Co. Ltd.

1st Defendant (original Action)

Success House Industries Limited

2nd Defendant (original Action) and 1st Plaintiff (counterclaim)

New Success House Industries Limited

3rd Defendant (original Action) and 2nd Plaintiff (counterclaim)

Loyal Investment Limited

4th Defendant (original Action)

Procedural Posture

Civil Counterclaim Concerning Preservation/proprietary Injunctions and Bankers Trust Order / Interlocutory Applications/hearing on Preservation Orders and Bankers Trust Order (reasons Given)

Legal Issues

  1. 1 Whether the plaintiffs have a proprietary base to support preservation/proprietary injunctions over two sums transferred to 2nd Defendant
  2. 2 Whether a preservation order would cause unacceptable damage to third‑party Mainland companies
  3. 3 Adequacy of undertaking as to damages and whether associated parties can provide adequate undertakings

Ratio Decidendi

On the interlocutory record the plaintiffs established a serious issue to be tried that they are prima facie the owners of the two sums transferred; given the sums remain in UBS related accounts and absent convincing proof that injunction would catastrophically harm Mainland companies, equity requires preservation of those sums pending trial; plaintiffs provided undertakings (including by a related beneficiary) and disclosure from UBS should be ordered via a Bankers Trust order; accordingly proprietary injunctions and a Bankers Trust order were granted and costs ordered nisi.

Court Disposition

Applications allowed in part: proprietary preservation injunctions granted against the 2nd Defendant in respect of the two sums and a Bankers Trust order granted; costs ordered nisi

Orders

  • Injunction restraining 2nd Defendant by Counterclaim from dealing with the two sums of money transferred from the 1st and 2nd Plaintiffs (US$87.26m and US$5.59m) pending trial
  • Bankers Trust order directing UBS to provide bank statements and related disclosure concerning the Recipient and Related Accounts to the 1st and 2nd Plaintiffs