ANTHONY MICHAEL SMITH v. THOMPSON BRIGHT LTD

DCCJ 4673/2021

[2024] HKDC 2047

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4673 OF 2021

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DECISION

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Introduction and background

1.  I have before me an application by the Plaintiff (“P”) by Summons dated 11 November 2024 (“the Summons”) for an order to discharge the Mareva injunction order granted by HH Judge E Lin dated 7 August 2023 (“the Injunction Order”). The Injunction Order prohibited the Defendant (“D”) from disposing of, dealing with, or diminishing its assets up to the value of HK$850,635.02 including funds maintained in D’s bank account with Bank of China (Hong Kong) Limited (“BOC”).

2.  The 8^th Affidavit of Nicholas Christian Lin (“Supporting Affidavit”) has been filed in support of the Summons by P. The salient background as set out in the Supporting Affidavit are as follows:

(1)  On 5 October 2021, P issued a Writ of Summons against D to recover funds totalling US$82,430.46 which he claims he was falsely induced to transfer into the bank accounts of D and AWDH Trading Ltd;

(2)  D has never filed any acknowledgment of service;

(3)  On 28 February 2022, P was granted interlocutory judgment in default of acknowledgment of service with damages to be assessed;

(4)  On 7 August 2023, P obtained the Injunction Order;

(5)  The Injunction Order was continued by the order of Deputy District Judge S. P. Yip dated 11 August 2023 until the determination of the assessment of damages set down for 6 September 2023 at 9:30 am or further order;

(6)  On 12 September 2023, Master Isaac Yung handed down his judgment whereby final judgment was entered against D and D was ordered to pay P damages in the total sum of US$70,706.87 together with interests and costs;

(7)  On 15 September 2023, P applied for a garnishee order to show cause against BOC which was granted by an order of Master Vienne Luk dated 11 June 2024 (“Garnishee Order Nisi”);

(8)  On 9 September 2024, by order of Master Ross Li, the Garnishee Order Nisi was made absolute (“Garnishee Order Absolute”);

(9)  Upon obtaining the sealed copy of the Garnishee Order Absolute, on 4 October 2024, P’s solicitors wrote to BOC to request payment of the sums of US$70,706.87, US34,201.20 and HK$1,260.00 to their account;

(10)  On 8 October 2024, Mr Chan of BOC informed that BOC is unable to release any funds from D’s account while the Injunction Order remains in place and that the Injunction Order would need to be varied or discharged for BOC to agree to release the relevant funds.

Discussion and disposition

3.  In the Skeleton Submissions of the Plaintiff dated 20 November 2024 (“P’s Skeleton”), it was stated that D has been served the Summons and Supporting Affidavit on 11 November 2024. Whilst strictly speaking, unless otherwise directed by the Court, service of the Summons on D is not required pursuant to O 65, r 9 of RDC, where personal service is not required under the rules and D is in default as to acknowledgment of service, P has subsequently supported this assertion by an affirmation of service filed on 27 November 2024.

4.  Given that D has never appeared to contest these proceedings, I acceded to P’s application by letter dated 20 November 2024 to determine the Summons on paper and to vacate the hearing of the Summons scheduled on 28 November 2024.

5.  In the Supporting Affidavit and P’s Skeleton, it was stated that the Injunction Order must be discharged for BOC to release the relevant funds from D’s bank accounts.

6.  However, it is plain that the Injunction Order was only continued up to 12 September 2023 (when the assessment of damages was determined) and was not, nor could it have been (see O 32, r 11 of RDC), continued by any further order of Master Isaac Yung.

7.  Accordingly, I am of the view that the application for discharge of the Injunction Order is misconceived as it is unnecessary when the Injunction Order is plainly no longer in effect.

8.  I therefore will dismiss the Summons with no order as to costs.

Written submissions by Karas So LLP, for the plaintiff

No written submissions by the defendant

DCCJ 4673/2021

[2023] HKDC 1252

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4673 OF 2021

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BETWEEN

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ASSESSMENT OF DAMAGES

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INTRODUCTION

1.  This is the assessment of damages of the plaintiff’s claim against the defendant in respect of damages suffered by reason of a conspiracy to injure the plaintiff using unlawful means by the defendant and others.

2.  In the absence of notice of intention to defend, the plaintiff obtained final and interlocutory judgment against the defendant on 28 February 2022. It was adjudged that the defendant do pay the plaintiff (1) the sum of US$11,723.59 or the Hong Kong dollar equivalent at the time of payment together with interest thereon at the rate 8% per annum from 10 August 2016 to the date of the final and interlocutory judgment and thereafter at judgment rate until payment; (2) damages to be assessed; and (3) costs.

3.  By order of Master Maurice Lam dated 5 May 2023 (“the 5 May 2023 Order”), assessment of damages was set down for 6 September 2023 at 9:30 AM in Court No 18, with the estimated length of hearing being 1 day.

4.  By the same order, the plaintiff was ordered to draw up, file and serve the Order on the defendant.

5.  By the 4^th affirmation of Lam Kwai Lung dated 9 August 2023 and filed on behalf of the plaintiff, it was affirmed that the 5 May 2023 Order had been served on the defendant by leaving the same at the defendant’s registered address.

6.  In such circumstances, while the defendant was not represented and was absent at the hearing, I am satisfied that the defendant has due notice of today’s assessment hearing. I shall therefore proceed with the assessment in the defendant’s absence.

THE PLAINTIFF’S CASE

7.  Between August and November 2016, the plaintiff paid funds in a total amount of US$82,430.46 (“Funds”) into the respective bank accounts of the defendant and AWDH Trading Ltd (“AWDH”):

(a) US$11,723.59 was transferred to and deposited in the defendant’s account at Bank of China (Hong Kong) Limited, account number 01258492134843 on 10 August 2016;

(b) US$50,506.87 was transferred to and deposited in AWDH’s account at DBS Bank (Hong Kong) Limited, account number 0167886898530 on 27 October 2016 (“First DBS Sum”); and

(c) US$20,200.00 was transferred to and deposited in AWDH’s account at DBS Bank (Hong Kong) Limited, account number 0167886898530 on 28 November 2016 (“Second DBS Sum”).

8.  According to the plaintiff, he had made those payments in the belief that the Funds would be used to purchase shares in various publicly listed companies on his behalf.

9.  The plaintiff’s belief was induced by statements made to him by a person purporting to be a Mr Shawn Wellington of LV Partners, and by other persons purporting to be associates of Mr Wellington (“Mr Wellington and his associates”).

10.  On 17 May 2017, the plaintiff received a letter from the Australian Securities and Investments Commission informing him that he had been identified by the Hong Kong Police as a potential victim of a Hong Kong investment scam.

11.  The plaintiff then realized the statements made to the him by Mr Wellington and his associates were false and made with the intention to deceive him, and did deceive him, resulting in him suffering the loss of the Funds.

12.  Therefore, the defendant, AWDH and Mr Wellington and his associates acted in combination to deceive the plaintiff and by means of that deception caused the plaintiff injury through the loss of the Funds.

LEGAL PRINCIPLES

13.  The plaintiff seeks compensation from the defendant, despite the fact that the First DBS Sum and the Second DBS Sum were transferred to the bank account of AWDH. This is consistent with the starting point that a defendant to a successful conspiracy claim will be jointly and severally liable to the claimant in respect of the damage caused by the conspiracy: Civil Fraud: Law, Practice & Procedure by Grant & Mumford (1^st ed) at [2-129].

14.  In terms of the damages to be awarded, damages for unlawful means conspiracy should put the innocent party back in the financial position he was in before he sustained the wrong: Chan Shu Chun v Dr Kung Yan Sum[2023] HKCFI 840 per Hon Au-Yeung J at [218].

EVIDENCE

15.  The only witness is the plaintiff himself. He adopted his witness statement dated 4 April 2023 during his examination-in-chief. He also answered questions I raised during the hearing.

16.  I find the plaintiff to be an honest witness and have no hesitation in accepting his evidence, which is also consistent with the documentary evidence of this case.

17.  In particular, there are contemporaneous documents showing the transfer of the First DBS Sum and the Second DBS Sum from the plaintiff to AWDH on 27 October 2016 and 28 November 2016 respectively.

DAMAGES

18.  The plaintiff seeks damages in the sum of US$50,506.87 and US$20,200.00, being equivalent to the First DBS Sum and the Second DBS Sum respectively.

19.  Based on the evidence before me, I am satisfied damages assessed at US$50,506.87 (or the Hong Kong dollar equivalent at the time of transfer) and US$20,200.00 (or the Hong Kong dollar equivalent at the time of transfer) should put the plaintiff back in the financial position he was in before he fell victim to the abovementioned unlawful conspiracy.

PRE-JUDGMENT INTEREST

20.  The plaintiff originally sought pre-judgment interest at judgment rate on the damages to be awarded by this court.

21.  Pre-judgment interest is awarded to compensate a plaintiff for being kept out of his money, on the footing that it is to be taken as having borrowed commercially the amount of its successful claim so that he would not have any shortfall in his funds pending the determination of his action: Waddington Ltd v Chan Chun Hoo Thomas CACV 10/2014 (unrep, 20 May 2016) at [172].

22.  It was observed by the Court of Appeal that courts have consistently awarded pre-judgment interest at the rate of 1% above prime, although there have been occasions when this practice has been departed from.

23.  This practice has not changed despite the involvement of foreign currency. In Sahara Investment Group Private Ltd v Liu Zhijia and Others[2018] HKCFI 16, the plaintiff company had transferred a sum of US$4.5 million to an entity unknown to it because of an internet fraud. For the damages awarded in favour of the plaintiff, Anthony Chan J ordered pre-judgment interest to run from the date of transfer to the date of judgment at US dollar prime rate plus 1% and thereafter at judgment rate until payment.

24.  At the hearing, Mr Raymond Shek, solicitor appearing on behalf of the plaintiff, agreed with the principles laid down by the Court of Appeal in Waddington Ltd v Chan Chun Hoo Thomas (supra) and therefore he no longer sought pre-judgment interest at judgment rate. Instead, he agreed pre-judgment interest on damages awarded should run from the date of transfer to the date of judgment at US dollar prime rate plus 1% and thereafter at judgment rate until payment.

COSTS

25.  Costs should follow the event. Mr Shek confirmed the plaintiff would only seek costs of the action in the amount of HK$1,260, which I shall allow in full.

DISPOSITION

26.  Based on the aforesaid matters, I enter final judgment in favour of the plaintiff against the defendant and order as follows:

(1) The defendant do pay the plaintiff damages in the sum of US$50,506.87 (or the Hong Kong dollar equivalent at the time of transfer) with interest to run from 27 October 2016 to the date of judgment at US dollar prime rate plus 1% and thereafter at judgment rate until payment.

(2) The defendant do pay the plaintiff damages in the sum of US$20,200.00 (or the Hong Kong dollar equivalent at the time of transfer) with interest to run from 28 November 2016 to the date of judgment at US dollar prime rate plus 1% and thereafter at judgment rate until payment.

(3) The defendant shall pay the plaintiff’s costs of the action (including the assessment of damages), summarily assessed at HK$1,260.

Mr Raymond Shek of Karas So LLP, for the plaintiff

The defendant was not represented and did not appear