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13 October 2015
Deciding whether to apply for an injunction ex parte in civil proceedings in Hong Kong requires a more careful exercise of judgement on the part of an applicant's lawyers than used to be the case. Recently, the courts have continued the trend in scrutinising an applicant's need to apply ex parte for injunctive relief (ie, without notice to the respondent). The lessons are clear: ex parte applications are for cases of genuine urgency or secrecy. Get this wrong and an injunction granted on an ex parte basis is liable to be discharged with costs against the applicant and a tactical initiative lost. The recent decision in Grande Cache Coal LP v Marubeni Corp is a case in point.(1)
In Hong Kong, as with other common law jurisdictions, applying for court orders without notice to the other side is not the norm.(2) In Hong Kong, two days' notice is usually required for most routine applications in civil proceedings in the High Court. This includes injunction applications that are not urgent and can wait until what is known as Friday 'Summons Day'.(3)
Ex parte injunction applications should be reserved for cases of genuine urgency and/or secrecy.(4)
A practice has also evolved of sometimes applying for an injunction ex parte on notice (also known as 'opposed ex parte' applications). Some jurisdictions rather unhelpfully refer to this as 'without notice on notice'. In such situations, the applicant gives the respondent prior notice of the ex parte court hearing, but does not necessarily serve any supporting court documents on the respondent. The advance notice might be by email, fax or telephone to the respondent or its lawyers. Such notice should give the respondent or its lawyers reasonable time to attend the ex parte hearing should they choose to. Unlike some jurisdictions, in Hong Kong most lawyers' offices are a relatively short journey from the courts (whether by foot, taxi or public transport). The respondent or its lawyers may decide not to attend the ex parte on notice hearing, but rather wait to be served with the injunction (if granted) and supporting documents. Ex parte on notice (like ex parte applications generally) is not the norm.
In Grande Cache Coal the plaintiffs obtained an ex parte injunction restraining the defendant from (among other things) instructing the second defendant (a bank) to release funds to the defendant pursuant to a guarantee that was in the nature of a performance bond. The injunction also restrained the bank from releasing the funds to the defendant.(5)
The plaintiffs obtained the injunction ex parte on notice on September 14 2015. The ex parte court hearing did not take place until 6:00pm and it appears that the plaintiffs' lawyers gave notice of the hearing to the defendant by email only at 5:59pm on the same day. It also appears that by the time that the defendant's lawyers arrived at court at 6:25pm, the ex parte court hearing had finished and the injunction had been granted.
On September 23 the court heard the defendant's application to discharge the ex parte injunction; that application was based on a number of substantive and procedural grounds. On the substantive arguments, the defendant successfully argued that, at the interlocutory stage, the plaintiffs were unable to establish an adequate enough case on the merits to justify the grant of the injunction, particularly bearing in mind that a court would not usually restrain a bank from making a payment pursuant to a performance bond, save in exceptional circumstances (eg, fraud). Therefore, the court ordered that the injunction be discharged on this ground alone.
Of equal interest is the court's observation that the ex parte injunction should be discharged, in any event, because (among other things) the judge granting the court order had not been made aware by the plaintiffs that they had given the defendant only one minute's notice of the ex parte hearing. The court considered that this amounted to a non-disclosure on the plaintiffs' part. In the court's opinion, having chosen to apply for the injunction ex parte on notice on September 14 (on the basis of urgency), the plaintiffs' lawyers could have requested that the court give more notice of when the ex parte hearing would be on that day and, in turn, the plaintiffs' lawyers should have given the defendant or its lawyers more notice than they did.
Grande Cache Coal is another recent case in Hong Kong in which an ex parte injunction has been discharged further to a defendant's challenge at an inter partes 'return hearing'. In this case, the ex parte injunction was discharged on both substantive and procedural grounds, although it appears clear from the judgment that the judge would have discharged the injunction solely on the basis of the plaintiffs' material non-disclosure and in the absence of argument on the merits of the plaintiffs' claim. The court's criticism of the plaintiffs was not that their application lacked urgency, but rather that, having chosen to apply ex parte on notice, the plaintiffs' lawyers then (among other things) gave inadequate notice to the defendant.
It is, perhaps, worth noting that the judge in Grande Cache Coal is experienced in matters of ex parte injunctions and is the same judge who recently discharged an ex parte injunction in Jen Kit v Chan Sau Wai on the basis of substantive and procedural irregularities.(6)
As already noted, the practice of applying ex parte on notice for an injunction is a result of how things have evolved in Hong Kong, but it is not the norm. Such a practice is not an excuse for cutting corners or for being less frank before the court compared with an ex parte without notice application.(7)
Of particular interest in Grande Cache Coal is the court's observation that an applicant who chooses to apply ex parte on notice should still give a defendant or its lawyers adequate notice.(8) Clearly, one minute's notice is inadequate. In practice, bearing in mind the nature of Hong Kong, a matter of a few hours to half a day is more appropriate. Indeed, applying for an injunction ex parte on notice can be problematic in itself (as Grande Cache Coal demonstrates). Where injunctive relief is needed as a matter of genuine urgency and/or secrecy, it is often better to apply ex parte without notice, while observing an applicant's duty of full and frank disclosure to the court and trying to avoid the pitfalls often associated with making an ex parte application.(9)
For further information on this topic please contact Jonathan Cary or Warren Ganesh at Smyth & Co in association with RPC by telephone (+852 2216 7000) or email (firstname.lastname@example.org or email@example.com). The RPC website can be accessed at www.rpc.co.uk.
(1)  HKEC 2008, HCA 2136/2015, September 23 2015.
(2) L v C, CACV 333/2003, April 20 2004; a decision of the Court of Appeal that is deserving of more attention.
(3) Practice Direction 5.3 ("Listing and Hearing of Summonses for Interlocutory Orders and Injunctions"), paragraph 1. Also see Rules of the High Court Order 32, rule 3.
(4) Supra note 2.
(5) In subsequent related proceedings, the second plaintiff also failed to obtain an ex parte on notice injunction directly against the bank: Up Energy Finance Ltd v CMBC Ltd  HKEC 2046, HCA 2267/2015, October 2 2015.
(7) In certain cases, ex parte on notice may be justified where the application is urgent and the court would benefit from representations on behalf of the defendant at the ex parte hearing (eg, the defendant's lawyers are already on the record as acting). Also see Hong Kong Civil Procedure 2016, Volume 1, 29/1/50-52.
(8) At paragraph 34(2) of the judgment, the judge refers to such notice as needing to be "meaningful and not illusory".
(9) Supra note 6.
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