Injunctions: Property & Financial

Injunctive Relief on Financial assets

Mareva Injunctions

The court has the inherent jurisdiction or pursuant to Order 29 of either Rules of the High Court or Rules of the District Court to grant an injunction to freeze the family assets against disposition by one party.

The injunction may be granted to freeze assets within or outside the jurisdiction.

Such application may be made ex parte and normally the court requires undertaking from the applicant to give an undertakings to pay any damages suffered by the Respondent if the application is not justified.

However, it was argued in the matrimonial context that such undertaking may not be necessary.

Anton Pillar Injunction

This is an injunction to permit the applicant to enter the Respondent’s premises to search for and retain documents in order to prevent any attempts to destroy or dispose of it.

In the matrimonial law context, this would be used when there is a possibility of failure to give full and frank disclosure of one’s assets.

The applicant for such injunction would have to give an undertaking as to damages for loss caused to the Respondent.

   S. 17 Application under MPPO (‘matrimonial mareva’)

Section 17 gives the court power to restrain a party from disposing of assets and to set aside a disposal already made with the intention to defeat the other party’s claim for financial provision.

17 (1) of the MPPO provides, “Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as “financial provision”) are brought by a person (hereafter in this section referred to as “the applicant”) against any other person (hereafter in this section referred to as “the other party”), the court may, on an application by the applicant-

(a)  if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;”

If a disposition is about to take place, the court can grant an injunction to freeze the disposition or such attempt to dispose any asset. This is similar to a ‘Mareva Injunction’ in the civil proceedings.

If any document or other items are being improperly withheld or there is a risk that such documents or other items may be disposed of, the court can grant a search order for the production of the documents or the items. This is an ‘Anton Pillar’ injunction.

Kemmis v Kemmis (Welland Intervening) [1988] 1 WLR 1307 – The Court of Appeal held that:

(1)  The husband’s intention to defeat the wife’s claim for the purposes of s. 37(2) [i.e. s.17 of MPPO] had to be a subjective intention, and an intention that was not necessarily the only or the dominant one as long as it played a substantial part in his intentions as a whole.

The judge had heard all the evidence, and from it and from the inference that a party making a disposition knew and intended the inevitable result of his action, had found the necessary intention to satisfy the requirements of s. 37(2).

Disposition out of the Jurisdiction

Where the property situated outside the jurisdiction, the English courts will not make any order if this will depend on its recognition or enforcement by the courts of the foreign country and it can be shown that these would be denied. It is considered that “This is related to the fact that the jurisdiction under s 37 is exercised in personam against persons who are subject to the courts’ powers to enforce orders. The orders do not operate directly on the property, in rem.”

Tan Li Hui Cheng v Tan Kian Chee – [1997] 4 HKC 94

Le Pichon J. (as she then was) held that Apart from s 17 of the Matrimonial Proceedings and Property Ordinance, where the applicant had to satisfy the court of the other party’s intention of defeating the claim for financial provision in the making of a disposition of property, the court clearly had inherent jurisdiction to grant injunctions in several proceedings to preserve assets. In deciding whether to exercise its inherent jurisdiction, the court was not required to have regard to the many restrictions and safeguards surrounding the use of worldwide Mareva injunction and to assimilate the use of and procedure for injunctions in the Family Court to those in commercial law. Roche v Roche (1981) 11 Fam Law 243 and Shipman v Shipman [1991] 1 FLR 250 applied.”

Section 17(1)(b) provides that “if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property);”

Le Pichon JA said, ““The threshold of a section 17 application is different from an ordinary Mareva application inasmuch as the applicant has to satisfy the Court of the Respondent’s ‘intention of defeating the claim for financial provision’ : see Will v. Will & anor (supra) …

For the purposes of the present application, it is unnecessary to come to any conclusion as to whether the presumption in s.17(3) has in fact been rebutted.  Apart from section 17, the Court clearly has inherent jurisdiction to grant injunctions in several proceedings to preserve assets.

See the English Court of Appeal decisions of Roche v. Roche [1981] 11 Fam. Law 243 and Shipman v. Shipman [1991] 1 FLR 250.  In deciding whether to exercise its inherent jurisdiction, the Court is not required to have regard to the many restrictions and safeguards surrounding the use of worldwide Mareva injunction and to assimilate the use of and procedure for injunctions in the Family Division to those in commercial law. In Shipman the learned Judge held that the matrimonial field called for a different approach, I respectfully agree …”

Yuen Tam Wan  v Ho Chan Yuet & Anor – [1993] 2 HKC 66 – The Court of Appeal held that:

“In order to exercise the power to set aside the disposition under s 17(1)(b), the court has to be satisfied that three requirements were met: (a) that the other party made a disposition; (b) that the other party made such a disposition with the intention of defeating the claim for financial provision; and (c) that if the disposition were set aside, financial provision or different financial provision would be granted to the applicant.”

If the applicant for s. 17 had constructive notice of the Respondent’s intention to defeat his or her claim for ancillary relief, such disposition could be set aside if there is valuable consideration.

Do you need an undertaking as to damages for s. 17 application?

Tan Li Hui Cheng  v Tan Kian Chee – [1997] 4 HKC 94

Le Pichon JA quoted from the case of Will v Will [1993] 2 HKLR 398 and said,

“Such an undertaking was not part of the orders made although in her supporting affirmation, the petitioner did offer such an undertaking. Whether an undertaking should be required in applications made by a spouse in matrimonial proceedings was considered by the Court of Appeal in Will v Will (supra). Fuad VP concluded (at p 405) that —

 ‘… good practice does not require that an undertaking in damages be given in applications made by a spouse in matrimonial proceedings unless specifically required by the judge.’

At p 406 he said:

‘I have not considered it to be either necessary or desirable to attempt to suggest the kind of circumstances in which it would be, and would not be, appropriate for the court to require an undertaking in this kind of case. But I would express the view that the strength of the case put forward, the maximum amount, on a realistic view, the applicant might ultimately be awarded, as well as the impact of the proposed order, would surely all be factors.’

The other members of the court were of the same view. Penlington JA recognised that a s 17(1)(a) order can have very serious consequences to a businessman in Hong Kong in restraining him from carrying out normal financial transactions and may have the effect of creating doubt on his creditworthiness which can be highly damaging. Nevertheless,

‘… in the context of matrimonial proceedings with the bitterness which is often inevitably present, such considerations may not be given full weight.’

See per Penlington JA at p 407.

‘In the light of the Court of Appeal’s decision and weighing all the relevant factors, in my judgment, it would not be appropriate to require an undertaking as to damages in the present case.’”(pp.104 – 105)

Presumption of Disposition

Section 17(3) provides the presumption that a disposition is made with the intention to defeat if the disposition is made within 3 years before the date of application or to a disposition or other dealing with property which is about to take place and the court is satisfied:

(a) in a case falling within subsection 1(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or

(b) in a case falling within subsection (1)(c), that the disposition has had the consequence, of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.

Section 17(4) defines “disposition” to mean that it “does not include any provision contained in a will or codicil but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise;”