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Can Default Judgment be obtained against a Defendant when a Mareva Injunction is already in place?

In a recent judgment made by Deputy High Court Judge Saunders on 24 May 2016 in Båsløkka Invest AS v Lambert and Sons Incorporated & Ors [2016] HKCU 1261, it was decided that in circumstances where a plaintiff, who has obtained a Mareva injunction over the assets of a defendant, and who now wants to apply under Order 13 Rule 5 of the Rules of the High Court (Cap. 4A) (RHC) for default judgment against the defendant, the Court can exercise its inherent jurisdiction to grant default judgment, despite the wording in Order 13 Rule 6 of the RHC, which appears to suggest that the plaintiff needs to abandon its claim for injunctive relief before default judgment can be entered against the defendant.

The facts of the case are as follows:-

  • As a result of an email fraud, the Plaintiff was induced to make various payments to the 4 Defendants.
  • The Plaintiff obtained a Mareva Injunction against all 4 Defendants on 11 March 2016.
  • The Plaintiff subsequently issued a summons for default judgment pursuant to Order 13 Rule 5 of the RHC.

At first instance, the Summons for default judgment was dismissed by Recorder Linda Chan SC on 1 April 2016, but the Mareva Injunction was continued. The Recorder took the view that she had no jurisdiction to give final judgment as a result of Order 13 Rule 6 of the RHC. 

On a straight reading of Order 13 Rule 6 of the RHC, it appears to preclude a plaintiff from entering default judgment against a defendant where the indorsement on the Writ does not contain or include a claim which is not squarely within Rules 1 to 4 of Order 13 (which refers to claims for liquidated demand; liquidated damage; detention of goods or possession of land), and requires the plaintiff to proceed with the action as if the defendant had given notice of intention to defend. If, therefore, the indorsement on the Writ contains a claim for an account, injunction, specific performance, declaration or rectification or other remedy or relief which falls outside the descriptions specified in Rules 1 to 4 of Order 13, the plaintiff cannot enter default judgment against the defendant unless the plaintiff expressly abandons every such remedy or relief. 

Having considered the problems raised by the Recorder, the Plaintiff filed a new Summons for default judgment against the Defendants, and drew the Court's attention to the notes to Order 13 Rule 6 in Hong Kong Civil Procedure 2016, which provide that the court has power under its inherent jurisdiction to give the plaintiff leave to enter judgment for a debt or liquidated demand, notwithstanding that the Writ is indorsed with a claim for an injunction and the plaintiff has in fact obtained a Mareva injunction against the defendant, and at the same time the court can order that the Mareva injunction should continue in force, after the judgment, in aid of execution, for only then could effect be given to the policy underlying the Mareva injunction (Stewart Chartering Limited v. C. & O. Managements SA [1980] 1 W.L.R. 460).

Applying the aforesaid, Deputy High Court Judge Saunders ruled that it would be quite wrong if the Plaintiff were not able to obtain judgment enabling its money losses to be properly assessed only on the basis that it must lose the Mareva injunction. The judge went on further to say that that would have the effect of immediately permitting the Defendants to defeat the purpose of the Mareva injunction and to spirit their funds (if any) out of the jurisdiction.

Accordingly, Deputy High Court Judge Saunders exercised the Court’s inherent jurisdiction and made an order for final judgments in default against all 4 Defendants. He also ordered that the Mareva injunction against the Defendants be continued until damages had been assessed and the judgments satisfied.

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