In HWH Holdings Ltd v Stephenson Harwood (a firm) [2025] 1 HKLRD 1323, the Court of Appeal considered the question of whether assets subject to a Mareva injunction can be taken into account in determining whether the Appellants have substantial assets within the jurisdiction so as to resist an application for security for costs.
The Respondent applied for security for costs against the Appellants on the basis of inter alia residence outside of Hong Kong and impecuniosity leading to difficulty in enforcing any costs order against them.
The Appellants’ primary ground of opposition was that they have significant Hong Kong assets in the form of two sums of money (amounting to more than HK$105 million), which were respectively subject to domestic and worldwide Mareva injunctions against the Appellants and paid into Court as security for a claim in another set of proceedings.
G Lam JA referred to the previous decisions of the Court of Appeal in Ming Hsieh v Xu Zhe (unrep., CACV 189/2015, 10 December 2015) and Leader Screws Manufacturing Co Ltd v Huang Shunkui [2023] HKCA 1193, which establish that the existence of a Mareva injunction does not affect a party’s ownership of its assets. Those assets remain its property until they are taken in execution, and they remain available to satisfy any costs order made against it.
The Respondent sought to distinguish those two decisions on the ground that there was a Mareva injunction in each case in favour of the party seeking security for costs, and the money frozen was not subject to other competing claims. G Lam JA rejected these submissions and held that the rationale that assets under Mareva injunctions remain the property of the Appellants applies regardless of who obtained the injunction or the presence of other creditors.
Furthermore, the Appellants argued that any costs order made against them could be enforced against a property owned by one of them in Singapore. The starting point is that, under reciprocal arrangements for the mutual enforcement of judgments, a costs order made by the Court of Appeal may by registration with the High Court of Singapore, have, for the purposes of execution, the same force and effect as a Singapore court judgment. The Respondent has failed to provide specific information as to the amount of extra time and costs involved in enforcing a Hong Kong costs order in Singapore and, as a result, failed to establish that such enforcement would lead to undue delay or expense so as to justify ordering security.
The Court of Appeal dismissed the application for security for costs and ordered the Respondent to pay costs of the application to the Appellants.
Read the judgment here at: https://legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=166555&QS=%2B&TP=JU
Mr Justin Lam acted for the Appellants.
