Eric Chan & Co.V. Wong Kwok Wang Warren

DCCJ1155/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1155 OF 2008

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J U D G M E N T

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PART I　INTRODUCTION

A. 　Background

A.1　The applications

1.The proceedings giving rise to the applications in this judgment have a checkered history.  Although the writ in this action was issued more than 8 years ago on 17 March 2008, the parties are still locked in bitter disputes that have now found their ways to the applications to be discussed in this judgment.

A.1.1　Plaintiff’s applications  

2.On 2 September 2015, the plaintiff issued a summons (“Plaintiff’s Summons”) to apply for the following orders:

(1) The entry of final judgment for the sum of $508,221;

(2) Interest on the said sum from the date of the Writ until payment;

(3) Costs of the proceedings to be taxed on an indemnity basis;  and

(4) Payment out from the Security Payment (referred to in para 13 below) for the satisfaction of the judgment, interest and costs.

3.Owing to a dispute having arisen between the parties as to whether the plaintiff’s sanctioned offer was to be disclosed before the determination of the Plaintiff’s Summons, this court, in a directions hearing on 20 January 2016, ruled that before determining para (3) of the Plaintiff’s Summons regarding costs, it was necessary to firstly dispose of paras(1) and  (2) of the Plaintiff’s Summons  (“the applications for paras (1) and (2) of the Plaintiff’s Summons are jointly referred to as the “Plaintiff’s Applications”).

4.By my order granted by consent on 16 March 2016 under para (1) of the Plaintiff’s summons, final judgment (“Final Judgment”) for the sum of $508,221 (“Judgment Sum”) was entered. Thus, para (1) of the Plaintiff’s Summons has been dealt with. Further, it is also not in dispute (according to the defendant’s confirmation in the hearing on 22 March 2016) that the plaintiff is entitled to interest on the Judgment Sum from the date of the Final Judgment on 16 March 2016 until satisfaction.

5.Thus, the only remaining issue for the Plaintiff’s Applications is para (2) of the Defendant’s Summons, which concerns the dispute over pre-judgment interest on the Judgment Sum. This dispute will be dealt with in Part II of this judgment.

A.1.2　Defendant’s applications

6.By the defendant’s summons dated 12 January 2016 (“Defendant’s Summons”), the defendant applied for, among other things, damages for the grant of an interlocutory Mareva injunction order by the court earlier in these proceedings. The Defendant’s Summons will be dealt with in Part III of this judgment.

A.2　Background facts

7.For the facts leading to these two applications, I would respectfully adopt the relevant parts of the judgment of the Court of Appeal[1] , CACV 92 of 2013, (“Appeal Judgment”), which are set out below:

“I. The appeal

1.1 Mr Eric Chan is a solicitor and the proprietor of the plaintiff. The defendant was his former client. Mr Chan claimed that service had been rendered by his firm to the defendant. The plaintiff claimed for the sum of HK$695,496 against the defendant. [After a trial on liability before,] H H Judge Chow decided that the defendant was liable to the plaintiff and ordered the amount of the claim to be assessed by a District Court Master for the purpose of determining its reasonableness.

1.2 …. Master Ian Wong assessed the amount recoverable by the plaintiff at $505,488. The plaintiff was dissatisfied with the assessment and sought leave to appeal from the Master. On 22 April 2013 the Master granted the plaintiff leave to appeal in respect of two sums, namely, $1,667 and $13,667. …….the Master ... amended [the] assessment… [to] $508,221.

1.3. The plaintiff, however, was still dissatisfied with the Master’s decision… A notice of appeal was then served by the plaintiff in respect of the sums of $1,667 and $13,667.

II. Background of this appeal

2.1 Prior to Mr Chan setting up his own firm in July 2005 he had worked in two other firms namely, Messrs Au-Yeung, Cheng, Ho & Tin, Solicitors (‘AYCHT’) and Huen & Partners (‘Huen’).

2.2 In December 2002 while Mr Chan was working in AYCHT he was instructed by the defendant who … was … charged with the offence of conspiracy in the High Court (‘the criminal case’).

2.3 In December 2003 Mr Chan left AYCHT and joined Huen. He took the criminal case with him to Huen. On 1 March 2004 the defendant entered into a written retainer with Huen in respect of his criminal case for an agreed fee of $700,000…

2.4 However Mr Chan… was summarily dismissed by Huen on 20 October 2004. Mr Chan then rejoined AYCHT.

2.5 In anticipation of this move back to AYCHT, the defendant on 15 October 2004 retained AYCHT to represent him in the criminal case in place of Huen.

2.6 The defendant’s criminal case was to commence in the High Court on 18 October 2004. At that time ……there was a dispute between Huen and Mr Chan on the fees concerning the criminal case. …... Huen had refused to use the money paid by the defendant on account for the discharge of counsel’s fees. ……. Huen issued a fee note for the sum of $700,000 and returned a balance of $10,000 to the defendant. …….

2.7 Mr Chan advised the defendant to challenge Huen’s fee note. On 23 October 2004 the defendant retained AYCHT for the purpose of the challenge. On 2 November 2004 the defendant commenced HCMP 2843/2004 seeking, among other things, taxation of the amount of the money due to Huen (‘the taxation proceedings’).

2.8 ……. [On] 14 January 2005 … the defendant ……. [was] convicted and sentenced to a term of imprisonment.

2.9 Mr Chan’s association with AYCHT again did not last long and in July 2005 he left AYCHT and set up the plaintiff.

2.10 On 4 August 2005 the defendant signed a retainer with the plaintiff in respect of the taxation proceedings.

2.11 On 2 September 2005 Mr Chan visited the defendant in prison with a solicitor from Tong and Tsoi (‘T & T’) and as a result the defendant retained T & T to represent him in the taxation proceedings and the defendant verbally instructed Mr Chan to assist T & T.

2.12 On 25 April 2007 a Consent Order was reached between the defendant and Huen concerning the taxation proceedings. Huen was ordered to refund $640,000 to the defendant together with costs.

2.13 On 4 July 2007 the plaintiff tendered a bill of $711,511 (“Bill”) to the defendant in respect of its fees for the taxation proceedings. AYCHT had assigned to the plaintiff its entitlement to the fees in respect of the taxation proceedings.

2.14 On 17 March 2008 the plaintiff commenced the present action against the defendant for the recovery of $695,496 which was the difference between $711,511 and the refund of balance of deposit taxing fees.

4.3 As to Mr Chan, while Judge Chow had ruled in his favour on the issue of liability, he seems to have forgotten that the fees that he earned from the defendant in the taxation proceedings only arose because of the dispute he had with Huen which saw his departure from that firm and the defendant being forced to change from one firm of solicitors to another in order to retain his service. If not for Mr Chan’s own dispute with his former employer and his departure, Huen would continue to serve the defendant, the issue of fees would not have occurred because there would be no immediate transfer of work to AYCHT which necessitated the billing from them and the defendant would not have to incur extra expenses to challenge Huen’s fee for which Mr Chan had remunerated himself on top of the fees he had charged for the criminal case. All this is in the context of a client who had to face a very serious criminal charge in a trial then soon to begin in the High Court and in which he was eventually convicted and imprisoned. In such circumstances, one would expect Mr Chan to act with restraint in his dealings with the defendant when he was awarded $505,488. But it was not to be and he pursued two leave applications (in one of which he failed totally) and lodged this appeal which involved two extremely small sums.” (Bold prints are added)

8.The abbreviations used in the Appeal Judgment above, unless otherwise expressly specified, will be adopted in this judgment.

A.2.1　Interlocutory applications before and after the trial on liability

9.In order to put the defendant’s arguments in context for both the Plaintiff’s Applications and the Defendant’s Summons, it is necessary to refer to, by way of additional background, two interlocutory applications brought by the plaintiff – the application for summary judgment (“Order 14 Application”) and an ex parte application for an interlocutory Mareva injunction (“Mareva Injunction Application”), which were respectively issued before and after the entry of the judgment (“Interlocutory Judgment”) by HH Judge Chow (“Judge Chow”) on 4 October 2011 in favour of the plaintiff.

A.2.1.1　Order 14 Application

10.The plaintiff was unsuccessful in his Order 14 Application. By the order of HH Judge Lok (as he then was) (“Judge Lok”) dated 8 May 2009, the defendant was granted unconditional leave to defend.

A.2.1.2　Mareva Injunction Application

11.The plaintiff succeeded in the Mareva Injunction Application, which was supported by the filing of his 10^th Affirmation (“10^th Affirmation”) on 27 October 2011. By the order of Judge Chow (“Injunction Order”) of the same day, the defendant was, among other things, prohibited from removing and disposing of his assets to the value of $1.8 million (“Injuncted Value”). Judge Chow further ordered that the Injunction Order would cease if the defendant could provide security by paying into court a sum of $1.8 million.

12.At the inter-partes hearing for the continuation of the Injunction Order on 1 December 2011, Judge Chow declined to discharge the Injunction Order as the defendant had requested, and further adjourned the hearing to 5 January 2012.

13.Before the adjourned hearing on 5 January 2012, the defendant, on 6 December 2011, paid into court a sum of $1.8 million (“Security Payment”) for the discharge of the Injunction Order. Accordingly, the Injunction Order ceased to have effect upon the defendant’s payment of the Security Payment.

PART II　Pre-judgment interest

14.As stated in para 5 above, the only dispute left to be decided in the Plaintiff’s Applications is pre-judgment interest on the Judgment Sum. This dispute consists of two issues: (i) the period for which, and (ii) the rate at which, pre-judgment interest (“Interest”) on the Judgment Sum should be awarded.

B. 　LEGAL Principles Governing pre-judgment Interest

15.By s 49 of the District Court Ordinance (“Ordinance”), this court is statutorily empowered to determine pre-judgment interest “at the rate [it] thinks fit in a judgment for a debt or damages, on the debt or damages …for the period between the date when the cause of action arose and … (b) for the sum for which judgment is given, the date of the judgment”.

16.As to how the court should exercise its statutory power for  determining pre-judgment interest, the principles can be found  in the leading Court of Appeal case of Komala Deccof & Co & 2 Ors v Perusahaan Pertambangan Minyak [2], which are perhaps best articulated in the illuminating passage of Kerr, J in Panchaud v Pagnan Cons JA quoted at para 11 of Komala Deccof  as follows:

“… that prima facie the losing party should be ordered to pay interest at a reasonable rate running from the date when the amount or amounts due should reasonably have been paid. Further, if and in so far as delay on the part of the winning party might in an exceptional case require a modification of this exercise of the discretion, then the tribunal must for this purpose at least have before it some material indicating that the winning party has been to blame for the delay or has gained something by the delay, so that it would be right to deprive it, either wholly or more usually partly, of the interest which the losing party should prima facie be ordered to pay. … An unexplained delay cannot be any basis for a refusal to award interest. The onus must rest on the losing party to show some sufficient reason why the usual practice should not apply in a particular case. An unexplained delay may be the joint responsibility of both parties and one for which the losing party must take the main blame. … As to this I would however repeat, in line with what was said by Mr. Justice Devlin and Mr. Justice Donaldson, that at any rate in commercial cases the prima facie rule of practice should generally be followed and that mere delay should generally not be regarded as a ground for modifying this rule.”

17.These principles expounded in Komala Deccof have continued to bind and have been applied in later decisions, for example, Owt Asia Limited v CPCNET Hong Kong Ltd & a third party[3], Waddington Ltd v Chan Chun Hoo Thomas & 4 Ors[4] and Tadjudin Sunny v Bank of America, National Association[5] , cases cited by the defendant.

18.Based on Komala Deccof and the later authorities such as the above-mentioned as well as those[6] relied on by the plaintiff , the principles can be summarized as follows:

(1) An award of pre-judgment interest is a matter of discretion: Komala Deccof per Cons JA at para 15;

(2) Prima facie, a losing party should pay pre-judgment interest at a reasonable rate from the date when the sum became due or should reasonably have been paid, viz, pre-judgment interest should run from the date of the accrual of the cause of action in respect of money then due, or loss which had by then accrued: Owt Asia, per Barma J (as he then was) at para 6; Tadjudin Sunny, per To J at para 7.

(3) The onus is on the losing party to show something exceptional to warrant a departure from the prima facie position: Komala Deccof per Cons JA at para 14, followed by Owt Asia at para 10 and Tadjudin Sunny at para 7.

19.Accordingly, the plaintiff is prima facie entitled to Interest on the Judgment Sum from the date when the cause of action arose until the date of the Final Judgment. In this case, the defendant, as the losing party, bears the onus in showing exceptional circumstances to justify a departure from the prima facie position.

C.　PERIOD FOR WHICH INTEREST SHOULD BE AWARDED

C.1　Special circumstances the defendant relied on

C.1.1　Primary position: Interest only from 4 October to 6 December 2011

20.The special circumstances the defendant relied on to advance his primary argument for awarding Interest to the plaintiff for only 2 months and 2 days from 4 October (the date of the Interlocutory Judgment) to 6 December 2011 (date of the Security Payment) are the plaintiff’s alleged “professional misconduct” and the “general misconduct in handling this case”[7].

21.The allegations are rather prolix. They are mostly recitations of the various adverse remarks and criticisms contained in the Appeal Judgment, the assessment of damages judgment of Master I Wong and the Order 14 Application judgment of Judge Lok.

C.1.2　Alleged “professional misconduct”

22.This alleged misconduct is mainly about the plaintiff’s unsatisfactory conduct before this action. As stated in the Appeal Judgment in para 7 above, the plaintiff had been criticized for the unsatisfactory way he had acted for the defendant in the criminal case and the subsequent taxation proceedings.

23.To further highlight the plaintiff’s unsatisfactory conduct, the defendant also quoted from the judgment of Master I Wong who criticized the plaintiff for having failed to inform the defendant on a regular basis of  the approximate amount of the costs as required by Principle 4.06 of the “Hong Kong Solicitors’ Guide to Professional Conduct” [8]. In addition, the defendant also relied on the criticisms of the plaintiff by Judge Lok relating to the taxation proceedings. In the Order 14 Application judgment, the learned Judge criticized the plaintiff for, amongst other things, having improperly placed himself in a position of conflict in the taxation proceedings by acting as an advocate for the defendant and as a witness at the same time.[9]

C.1.3 　Alleged “general misconduct in handling this case”

24.Similarly, the allegations under this head (see paras 29 to 45 of the defendant’s written submissions) are equally repetitious. They seem to be mainly targeted against the plaintiff’s alleged misconduct in respect of the Order 14 Application and the Mareva Injunction Application.

C.1.3.1　Order 14 Application

25.It is alleged that the bringing by the plaintiff of the Order 14 Application was an abuse of process.  The defendant suggested that since the plaintiff’s claim arose from the taxation proceedings, it must have been obvious to the plaintiff that the Order 14 Application was an inappropriate application. It was therefore alleged that the Order 14 Application had been issued with an improper motive of lengthening the proceedings and escalating costs.  As a consequence of the alleged improper invoking of the Order 14 Application, the plaintiff, the defendant contended, should be deprived of Interest for the period from 17 March 2008 (the date of the writ) and 8 May 2009 (Judge Lok’s judgment on the Order 14 Application).

C.1.3.2　Mareva Injunction Application

26.In his contentions, the defendant alleged that in the 10^th Affirmation the plaintiff filed in support of the Mareva Injunction Application, the plaintiff had, amongst other things, made false sworn statements and exaggerated the amount of the Injuncted Value.  These false statements, coupled with the plaintiff’s failure to comply with his undertakings attached to the Injunction Order, are, the defendant further contended, very serious acts of misconduct.

C.1.3.3　Other alleged misconduct

27.Additionally, the defendant, repeating the criticisms in the Appeal Judgment, contended that as a result of the plaintiff’s lack of restraint in pursing an unwarranted appeal[10], the plaintiff should be denied the usual Interest.

28.Lastly, there is also one, what is in my view unrelated recent complaint about the plaintiff’s Amended Submissions dated 13 January 2016. The defendant complained about the plaintiff’s submissions being false accusations.

C.2　Discussion: does the alleged misconduct constitute special circumstances?

29.The defendant, as the losing party in these proceedings, is required to show exceptional circumstances in depriving the plaintiff’s prima facie entitlement to Interest. Of all the allegations the defendant has made to support his argument for the exceptional circumstances, it is my judgment that all except the misconduct in relation to the appeal discussed in para 27 above, fail. These allegations are now discussed in turn below.

C.2.1　Alleged “professional misconduct”

30.In my view, the defendant has failed to show that the plaintiff’s undesirable conduct in the earlier taxation proceedings constitutes a special circumstance that should deprive the plaintiff of the usual Interest. By referring to the plaintiff’s misconduct before the commencement of the action, the defendant is perhaps trying to justify the deprivation of the plaintiff’s Interest on the ground that the action could have been avoided but for the plaintiff’s misconduct. Owing to the bitter acrimony between the parties caused by the antecedent events before this action, it is most unlikely, in my judgment, that the defendant, without this claim, would ever have paid the plaintiff any of the legal costs in the plaintiff’s Bill.  In my view, the defendant was as fervent as, if not more than, the plaintiff in the conduct of these proceedings.  Throughout the proceedings, the defendant vigorously contested both liability and quantum. In terms of liability, for example, the defendant, in his Amended Defence dated 3^rd September 2010, mounted a defence of complete denial to the plaintiff’s claim for the costs contained in the Bill[11].

31.The defendant’s denial stance continued throughout to trial. Thus, the plaintiff could only obtain the Interlocutory Judgment in his favour after a hotly-contested trial that lasted for 7 days consequent on  Judge Chow disbelieving in the defendant’s evidence and rejecting his defence.

32.In his judgment on liability, Judge Chow had clearly preferred the plaintiff’s evidence to that of the defendant, who was found to be “not telling the truth[12]”.

33.Contrary to the defendant’s suggestion that this claim has been occasioned by the plaintiff’s misconduct, Judge Chow had instead found that it was the defendant’s refusal to settle the plaintiff’s legal costs that led to the claim and the trial on liability.

C.2.2　Alleged abuse of the Order 14 Application

34.In my judgment, the defendant is unable to show that the plaintiff had the ulterior motive of using the Order 14 Application to prolong the proceedings and escalate costs as the defendant alleged.

35.The defendant’s main argument in this allegation is largely based on the number of adverse remarks Judge Lok made in the judgment of the Order 14 Application[13]. There can be no doubt, in my view, that the plaintiff’s conduct as a solicitor, according to the learned Judge’s remarks, left a lot to be desired. For example the plaintiff had been criticized for his conduct as the defendant’s solicitor in the criminal case, and his lack of sensitivity and placing himself in the position of conflict in the taxation proceedings, which also had the unfair and unacceptable consequence of making the defendant have to pay two sets of legal costs.  Irrespective, however, of these harsh criticisms, Judge Lok did not find that the Order 14 Application had either been wrongly brought or made with the ulterior motives the defendant alleged. Instead of dismissing the Order 14 Application (which he would likely have done were he to have found that the Order 14 Application was wrongly made), the learned Judge granted the defendant unconditional leave to defend for he found the defendant’s account “capable of being believed at the trial”[14] . 

36.At the end however, the defendant’s veracity failed to stand up the scrutiny of the trial when Judge Chow found that the defendant had not told the truth and disbelieved in him when rejecting his defence.

37.In the circumstances, I am not persuaded by the defendant’s argument in relation to the Order 14 Application. In any event, I believe that the plaintiff, given the bad blood between the parties, would have no choice but to litigate to the very end as the facts have shown to be the case.

C.2.3　Mareva Injunction Application

38.I also reject, as to be discussed in Part III below, all of the  allegations the defendant made against the plaintiff concerning the (i) false sworn statements in the 10^th affirmation (ii) exaggeration of the amount of the Injuncted Value and (iii) failure to comply with the undertakings attached to the Injunction Order.

C.2.4 　Alleged pursuit of unwarranted appeal 

39.The alleged pursuit of the unwarranted appeal is in relation to the plaintiff’s appeal to the Court of Appeal against the assessment of damages by Master I Wong. This complaint, in my view, is valid for the reason that the Court of Appeal, as shown in the extracted part of the Appeal Judgment set out above, was extremely critical not only of the plaintiff’s pre-action conduct but also of his senseless pursuit of the appeal involving disputes over small sums of money.

40.The plaintiff’s unwarranted appeal, in my view, constitutes a special circumstance causing me to exercise my discretion to deny the plaintiff a period of Interest. In my judgment had the plaintiff not acted so unreasonably in mounting a wholly unmeritorious appeal (as the Court of Appeal had found) against the assessment of damages, final judgment could have been entered on 25 April 2013, the date of the sealing of the Master’s certificate for the judgment in the sum of $505,488, the amount Master I Wong assessed. Owing to the plaintiff’s unwarranted appeal, the entry of the Final Judgment had been delayed until 16 March 2016.

41.The senseless appeal, in my view, justifies a disallowance of Interest for the period after 25 April 2013 (the date of the sealing of the certificate of damages) until 16 March 2016 (the entry of the Final Judgment).

C.3　Conclusion for the defendant’s primary contentions

42.For the reasons above, I reject the defendant’s primary position that the plaintiff should only be allowed Interest for the period between 4 October and 6 December 2011.

43.The only special circumstance that justifies some departure from the prima facie course is the plaintiff’s unwarranted pursuit of the appeal to the Court of Appeal. Thus, I’m inclined to exercise my discretion by disallowing Interest from and including 26 April 2013 until 16 March 2016.

44.After disposing of the defendant’s primary position, I will next discuss his alternative case that the court should deprive the plaintiff of Interest for the three periods specified below as a result of the alleged special circumstance of delay caused by the plaintiff.

C.4 　Defendant’s alternative case: disallowing Interest for delay

45.In his alternative case, the defendant argues that should the court award Interest for the period longer than the defendant has contended for, the court should deny the plaintiff’s Interest for the following periods:

C.4.1　Between 4 July 2007 and 8 May 2009

46.This contention is almost identical to the defendant’s primary argument in relation to the Order 14 Application, in that it was contented that due to the improper institution of the Order 14 Application, the plaintiff should be denied Interest from 4 July 2007 (the date when the plaintiff sent the Bill to T & T: see para 2.13 of the Appeal Judgment in para 7 above) and 8 May 2009 (the date of the judgment for the O14 Application).

C.4.2　Between 30 January 2010 and 8 February 2011

47.In his contentions, it was suggested that the plaintiff should not be entitled to Interest for this period occasioned by the plaintiff’s delay in responding to the defendant’s written request on 30 January 2010 for the copies of the AYCHT’s bill and Huen’s list of objections, both of which are allegedly crucial documents for the taxation proceedings.

48.Since, it was contended, the plaintiff was only able to confirm on 8 February 2011 that the AYCHT’s bill the defendant had requested was the same bill the defendant’s law costs draftsman had prepared, the taxation proceedings had been delayed for more than one year. The delayed response, the defendant argued, had not only made the defendant bear extra costs for the law costs draftsman, but had also delayed the conclusion of the taxation proceedings.

49.Although this complaint about the AYCHT’s bill  admittedly  had already been canvassed at the assessment of damages hearing, the defendant argued that it was proper for him to advance the same argument here as it went to the heart of the issue I needed to decide: the plaintiff’s irresponsible conduct as a solicitor.

C.4.3　As from 6 December 2011 (the date of the making of the Security Payment)

50.It is the defendant’s contention that the plaintiff should not be awarded Interest after the date of the Security Payment on 6 December 2011 on the ground of the plaintiff’s deliberate delay in enforcing the Interlocutory Judgment.

51.Had the plaintiff (the defendant argued) taken prompt steps to enforce the adjudged sum assessed by Master I Wong instead of mounting a frivolous appeal to the Court of Appeal, the plaintiff could have satisfied a judgment much earlier from the Security Payment. In effect, the defendant has, it was further stated at the hearing, become a victim of the plaintiff’s deliberate delay for his alleged ulterior motive of prolonging the proceedings so as to earn more interest.

C.5　What kind of delay would constitute special circumstances?

52.Before a party should be denied pre-judgment interest, the onus (according to the authorities discussed in Section B above) is on a paying party in showing that there was culpable or unreasonable delay as such kind of delay can constitute an exceptional circumstance.: Komala Deccof at para 14.  Further, if it is found that “… there is a significant period of inactivity on the part of [a] [p]laintiff”  “in the bringing and prosecution of [one’s] claim”, such delay can be taken into account when considering the period for which interest should be awarded: Owt Asia per Barma J (as he then was) at para 7.

C.6　Was there capable or unreasonable delay?

53.With these principles in mind, I will now consider each of the alleged periods of delay in turn below.

C.6.1　Between 4 July 2007 and 8 May 2009

54.This period in fact straddles the two periods before and after the commencement of these proceedings. It is therefore more convenient to divide this period into two, first that before the issuance of the writ, i.e. between 4 July 2007 (the date when the plaintiff sent the Bill to T & T) and 17 March 2008 (the issuance of the writ), and the second being a period after the writ was issued, i.e. between 17 March 2008 and 8 May 2009 (the date of the judgment of the Order 14 Application). This period should be more relevant to the prosecution of the proceedings

C.6.1.1　Before the writ was issued

55.This period being the pre-action stage, would seem to be more relevant to the consideration of whether there was delay in the plaintiff’s bringing of the claim.

56.The plaintiff denies there was any delay in the bringing of the action. In support of this assertion, the plaintiff prepared a chronology for the hearing entitled “Plaintiff’s Chronology (since Defendant’s request for bill of costs on 19/5/2007 to issue of Writ on 17/03/2008) (Re: Date of cause of action)”. Attached to this chronology are correspondence exchanges (in a tabular form) the plaintiff extracted from the trial bundles previously used at the trial before Judge Chow.

57.According to the chronology (and the correspondence exchanges), the following are the undisputed facts:

(1) On 4 July 2007, the plaintiff sent the Bill to T & T;

(2) On 15 November 2007, the plaintiff demanded the defendant to pay the amount of his costs of $711,511 in the Bill;

(3) On 3 December 2007, the defendant responded to the plaintiff’s demand for payment by stating that the Bill had been sent to Huen;

(4) On 17 December 2007, the plaintiff demanded the defendant to settle the Bill by the final deadline date of 15 January 2008;

(5) On 29 January 2008, T & T responded by stating that the defendant agreed to refer the Bill for taxation provided that the plaintiff would agree to bear the costs of the taxation; and

(6) On 31 January 2008, plaintiff rejected T & T’s proposed condition for the referring of the Bill to taxation.

58.From the summary of the undisputed facts above, it is noted that before the writ was issued, the plaintiff had been, during the period of about 9 months between 4 July 2007 and 17 March 2008, engaged in active negotiations with the defendant’s solicitors, T & T, in respect of his outstanding costs set out in the Bill.  When the parties failed to reach a settlement for his costs upon the plaintiff’s rejection on 31 January 2008 of T & T’s proposal, the writ was issued in less than two months.  Based on this chronology, I am unable to find any unreasonable delay in the plaintiff’s bringing of this claim.  

C.6.1.2 　After the writ was issued

59.With respect to the defendant, this allegation of delay based on the ground of the improper institution of the Order 14 Application is plainly a repetition of the defendant’s allegations about the plaintiff’s misconduct and has been dealt with in Section C.2 above.

60.In my judgment, there was no delay caused by the Order 14 Application, which was issued 3 months on 20 August 2008 after the defendant’s reply to the plaintiff’s request for further and better particulars of the defendant’s defence.

C.6.2　Between 30 January 2010 to 8 February 2011

61.Based on the various criticisms by the various courts as already discussed above, the defendant’s grievance about the plaintiff’s pre-action conduct is probably justified.  But a grievance is one thing, relevance is another. The defendant’s incessant harping on the same issue regarding AYCHT’s bill, in my view, cannot help advance the defendant’s case at all.  This is because whether or not the plaintiff had delayed in responding to the defendant’s request for AYCHT’s bill is only a red-herring. It bears little relevance to this claim. The defendant’s position, as discussed in paras 30-31 above, was none but a complete denial in respect of the plaintiff’s claim for the outstanding legal costs.  Even if the plaintiff had unreasonably caused delay in the taxation proceedings, it would only have impacted on the taxation proceedings, which proceedings had already concluded (see para 2.12 of the Appeal Judgment at para 7 above).  In the circumstances, I find no justification in disallowing Interest for this period.

C.6.3　As from 6 December 2011

62.In Section C.2.4 above, I have already decided to deprive the plaintiff of Interest for the period from 26 April 2013 to 16 March 2016, which period in fact overlaps with part of the period the defendant is contending for the disallowing of Interest. That being the case, I only need to discuss whether the plaintiff had caused unreasonable delay for the remaining part of the period, i.e.  from 6 December 2011 to 25 April 2013.

63.I consider that the defendant’s argument that the plaintiff was at liberty to enforce the Interlocutory Judgment from the date of the Security Payment is plainly wrong. The quantum of the claim had not yet been assessed at the time when the Security Payment was made. The earliest date the plaintiff could have enforced the judgment would have been 25 April 2013, the date when the certificate for the sum of $505,488 Master I Wong had assessed was sealed. Thus, I have marked the court’s disapproval of the plaintiff’s conduct by depriving the plaintiff of Interest for the period after 25 April 2013. As for the period before 25 April 2013, I am not persuaded that there is any unreasonable delay that warrants a departure from the prima facie position in awarding Interest on the Judgment Sum from the first part of this period of 6 December 2011 to 25 April 2013.

C.7 　Conclusion on the defendant’s contentions

64.For the reasons discussed above, I find that the defendant is only able to show that the Plaintiff should be denied Interest from the period from 26 April 2013 to 16 March 2016 but has failed to justify a deprivation of Interest for the other periods the defendant has contended for.

C.8　Date on which Interest should be awarded

C.8.1　Plaintiff’s position: from accrual of the cause of action, 19 May 2007

65.The plaintiff is seeking Interest from 19 May 2007, the date the plaintiff suggested as the date of the accrual of the cause of action.  Upon the written request by T & T on 19 May 2007 for the plaintiff’s bill of costs, the plaintiff argued that the cause of action accrued on that day.

66.Pausing here, it should however be mentioned that the plaintiff had originally asserted 4 July 2007[15] rather than 19 May 2007 to be the date of the accrual of the cause of action. At a directions hearing on 16 March 2016, I granted permission to the plaintiff to advance his case in contending for 19 May 2007 as the date of the accrual of the cause of action.

67.In the result, the plaintiff’s primary position is that he is entitled to Interest from 19 May 2007, or alternatively that he should be awarded Interest from 17 March 2008, the date of the issue of the writ.

68.Thus, the remaining question in respect of the period for which Interest should be awarded is to decide the date on which Interest should commence.

69.In my judgment, the plaintiff’s contention for 19 May 2007 as the date of the accrual of the cause of action is groundless. The cause of action would not have accrued on 19 May 2007 when T & T had only requested the plaintiff to render a bill of costs.  

70.After having rejected 19 May 2007 as the asserted date of the accrual of the cause of action, I should also mention another date that could arguably be the date of the accrual of the cause of action: 4 July 2007, the date when the plaintiff sent the Bill to T & T.  Since I have received no submissions as to whether this date could be the date for the accrual of the cause of action, I should refrain from making a definite ruling in respect of this date.  

71.In the circumstances, I consider that Interest should only start to run from the date of the issue of the writ. 

C.9　Conclusion: period for which pre-judgment interest should be awarded

72.In conclusion, I award Interest (pre-judgment interest) on the Judgment Sum of $508,221 from 17 March 2008 until 25 April 2013.  For clarity, there shall be no interest from 26 April 2013 until 16 March 2016.

D. 　Rate at which Interest should be awarded

D.1 　The conventional rate and the parties’ respective positions

73.There is no dispute that the rate of interest is also a matter within the discretion of the court: Komala Deccof at para 19.  The general practice in Hong Kong (as established by Komala Deccof) has been, at least since 1984, to award interest reflecting the theoretical cost to the plaintiff of borrowing the sums withheld at the rate of prime plus 1% unless the evidence in a particular case makes the adoption of another rate appropriate: Polyset Ltd v Panhandat Ltd[16], Ribeiro PJ at para 13, approving Komala Deccof.

74.In this case, neither the plaintiff nor the defendant supports the application of the conventional rate of interest of prime plus 1%.  As would have been expected, the plaintiff sought a rate above the conventional rate while the defendant sought a rate below the conventional rate.

75.Irrespective of the plaintiff’s contentions for two alternative bases  of interest rate to be awarded, one being judgment rate (currently at 8% per annum) and one being prime (being at 5%) plus 3%,  both rates are incidentally the same at 8%.  The plaintiff’s contention for a rate above the conventional rate is apparently based on the alleged higher borrowing costs the plaintiff, as a one-man practising solicitor, would have needed to incur.

76.Conversely, the defendant referred to the recent decisions of Waddington Ltd v Chan Chun Hoo Thomas & Ors (No.2)[17] and Tadjudin Sunny in support of his contention for a rate below the conventional rate, of between 2.5% to 2.85 %.

D.2　Discussion

D.2.1　Is the judgment rate (for which the plaintiff contended) appropriate?

77.The plaintiff’s primary contention for Interest to be awarded at the judgment rate is rejected.  For the reasons stated below, I consider that the judgment rate is not suitable for pre-judgment interest.

(1) Judgment rate usually applies to (in the absence of any specific order) a judgment debt: s 50 of the Ordinance.  In the absence of any special reasons, judgment rate is inappropriate for pre-judgment interest. 

(2) Judgment rate is penal in nature. Unlike pre-judgment interest,  which is  to compensate a successful plaintiff for the return which he could have expected had he invested the amount in question, or to deprive a defendant of the profit which he wrongfully made out of the money he withheld (Wan Chi Hing, supra, quoting Tate & Lyle Food and Distribution v Greater London Council [1982] 1 WLR 149 at 154B F (Forbes J); Komala Deccof [1984] HKLR 219 at 223D G),  judgment rate is to encourage the paying party to honour a money judgment as soon as possible: see Wan Chi Hing v Strong Master Corporation Limited[18] , per Deputy High Court Judge Eugene Fung SC at para 19(2), following Man Ping Nam v Man Fong Hang (No 2) (2007) 10 HKCFAR 140 at para 23 (Ribeiro PJ).

D.2.2　Is a rate above the conventional rate (for which the plaintiff contended also) appropriate?

78.I also reject the plaintiff’s alternative contention for a rate above the conventional rate, of prime plus 3%.  The reasons are as follows.

79.First, there is little evidence to support the plaintiff’s assertion for a higher rate on the ground of the alleged higher cost of borrowing. The plaintiff produces no evidence (apart from the instalment tax payments that he had alluded to) on any borrowing or interest and fees of the borrowing.

80.In my view, the plaintiff’s references to the payment of an additional surcharge and the payment of the tax amount $48,948 by 11 instalments for the 2005/2006 tax year and the payment for the monthly maintenance fee of $180 for 8 months in 2012 for maintaining his Standard Chartered Bank account are hardly supportive of this assertion. Such information perhaps discloses more of the plaintiff’s poor financial state rather than supporting his claim that as a sole proprietor, he needed to pay higher borrowing costs.

81.Second, the court received no evidence at all to support an upward adjustment to the conventional rate of prime plus 1% since Komala Deccof.

82.Third, although a court always retains a discretion to increase the 1% above the prime rate “to 2% or even 3% in the case of smaller or less well established concerns” (Komala Deccof per Cons, J.A. at para 20), the plaintiff, apart from referring to only two instances concerning his personal financial state as discussed in para 80 above, has provided no evidence to establish that his personal concern is such that warrants the exercise of a discretion to make an upward adjustment. 

D.2.3　Is a downward adjustment of the conventional rate (for which the defendant contended) appropriate?

83.After having considered the defendant’s submissions and the authorities that he referred to, I also reject his contention for a downward adjustment of the conventional rate.  The reasons are as follows.

84.First, the defendant, as has already been discussed above, bears the onus to show sufficient reason to justify a departure from the prima facie position for the rate of the pre-judgment interest (which is the conventional rate). The defendant, similar to the plaintiff, had also not provided this court with any, let alone any credible, evidence that the defendant would be required to adduce to contend for a downward adjustment of the conventional rate. The defendant, apart from relying on Waddington Ltd (in which 2.5% was awarded )and Tadjudin Sunny (in which 2.85% was awarded) to support his contention for a rate of between 2.5% 2.85%,   has adduced no evidence of any sort to show that there is a more appropriate rate than the conventional rate of “prime plus 1%”.

85.Second,  the authorities, of Waddington Ltd and Tadjudin Sunny, which the defendant relied upon in support of his proposition for the downward adjustment of the conventional rate, are not directly relevant to the present case. The decision of the learned Recorder in Waddington Ltd  in awarding the pre-judgment interest of 2.5% seemed to have been influenced by the Bank of England base rate applied in the CFA case of Libertarian Investment Ltd v Thomas Alexej Hall[19],which isa case involving a judgment sum in pounds sterling. The same cannot be said for the present case, where the Judgment Sum is in local currency. Thus, in the absence of any evidence that the Bank of England’s base rate is a suitable pre-judgment rate of interest, I’d be disinclined to apply the judgment rate of 2.5% adopted in Waddington Ltd.

86.Unlike the judge in Tadjudin Sunny who clearly had received some evidence on interest rates (HIBOR rate of interest, for example), I received no evidence on interest rates from the defendant. I’d be also disinclined to apply the rate of 2.85% as the pre-judgment interest rate for this case.

D.2.4　Suitable rate to be applied

87.Since Komala Deccof, there have been, as I have discussed above, instances wherein courts have departed from the conventional rate. Notwithstanding this, the conventional rate of prime plus 1% propounded in Komala Deccof remains a good conventional rate for pre-judgment interest. Deputy High Court Judge Eugene Fung in Wan Chi Hing  (at paras  21-22) when applying the conventional rate, has so aptly stated, “…the general practice in Hong Kong has, at least since 1984, been to award interest reflecting the theoretical cost to the plaintiff of borrowing the sums withheld.  This is a rate taken to be prime plus 1% unless the evidence in a particular case makes adoption of another rate appropriate.  See Komala Deccof (above) at 221‑223 (Cons JA); Polyset Ltd v Panhandat Ltd (unrep, FACV 28/2000, 25 April 2002) §13 (Ribeiro PJ). The Court of Final Appeal followed this practice in Man Ping Nam (above) at §25 (Ribeiro PJ)”.

88.In the circumstances, I consider, in the absence of any other suitable rates put forward to be the rate of pre-judgment interest rate, that the conventional formula of “prime plus 1%” should be applied to the present case.

E.　DISPOSAL OF THE PLAINTIFF’S APPLICATIONS

E.1　Disposal of paras (1) and (2) of the Plaintiff’s Summons

89.The Final Judgment having been entered on 16 March 2016 (i.e. para (1) of the Plaintiff’s Summons), I further dispose of para (2) of the Plaintiff’s Summons by ordering the defendant to pay the plaintiff:

(1) Pre-judgment interest on the Judgment Sum at 6% per annum from the 17 March 2008 to 25 April 2013.

(2) Post-judgment interest at judgment rate from the date 16 March 2016 until full payment.

E.2　Costs of the Plaintiff’s Applications

90.The only substantial disputes in relation to the Plaintiff’s Applications are the disputes on the period for and rate of the pre-judgment interest. Notwithstanding having been awarded pre-judgment interest, the plaintiff was not entirely successful. The plaintiff has neither succeeded in obtaining an award of pre-judgment interest for the full period he sought for nor the rate of interest that he contended for.  In the circumstances, I consider that the fair order for costs should be no order as to costs. This order is nisi and shall become absolute unless an application is made by an inter-partes summons to vary this costs order nisi within 14 days of the handing down of this judgment.

PART III　DEFENDANT’S SUMMONS

F.　THE DEFENDANT’S APPLICATION 

91.In the Defendant’s Summons, the defendant seeks the following orders:

“(1) HK$1,291,779, being the balance of the security payment of HK$1,800,000 paid into court pursuant to a term of the Mareva Injunction Order dated 27 October 20112 ("Mareva Injunction Order") after deducting the Judgment Sum of HK$508,221, be released back to the Defendant forthwith.

(2) The Plaintiff do comply with the undertakings as set out in Schedule 2 of the Mareva Injunction Order and compensate the Defendant's damages incurred due to the interest loss from 6 December 2011 (being the date of payment into court) up to the date of release of the payment into court to the Defendant, such interest to be calculated at judgment rate.

(3) Costs and further or other relief”.

F.1　Application for payment out

92.Since Final Judgment has already been entered, para (1) of the Defendant’s Summons for an order of payment out to the defendant of the balance amount (if any) of the Security Payment after the payment of the Judgment Sum should not have been controversial. This would have been the case had the defendant not changed his stance after his agreement to an order of payment out to be made in terms of para (1) of the Defendant’s Summons upon the entry of the Final Judgment by consent at the hearing on 16 March 2016.  The defendant objected to payment out , as stated in my oral decision (para 2) for the grant of leave to the defendant to withdraw his consent to payment out, on the basis that:

“... he would require the plaintiff to make a payment into court as security for costs in relation to the plaintiff’s earlier application for the Mareva injunction, which, the defendant submitted, had been improperly made”.

93.Accordingly, it seems that the defendant is suggesting that before a payment out can be made; the court needs to determine the amount the plaintiff should pay him for the latter’s allegedly improper issuance of the Mareva Injunction Application.  In the circumstances, the court would need to firstly determine para (2) of the Defendant’s Summons on damages before considering the question of payment out.

F.2　Application for damages

94.Paragraph (2) of the Defendant’s Summons seems to consist of two- part applications: an order to (a) compel the plaintiff to “comply with the undertakings as set out in Schedule 2 of the Mareva Injunction Order”, and to (b) compensate the defendant's “damages incurred due to the interest loss from 6 December 2011 (being the date of payment into court) up to the date of release of the payment into court” to the defendant.  Thus the first part is concerned with an alleged breach of the undertakings whilst the second part will be about damages.

95.However, it was then clarified at the hearing of the Defendant’s Summons that the defendant did not wish to pursue the first part of the application concerning the undertakings. He had included that part of the application in the Defendant’s Summons only because he wanted to complain about the plaintiff’s alleged non-compliance with the undertakings in having allegedly failed to give notice to the banks of the discharge of the Injunction Order.

96.With this clarification, para (2) of the Defendant’s Summons is only concerned with the second part of the application - an order for compensation or damages.

97.Due to the defendant’s objection to the payment out, I will deal with paras (1) and (2) of the Defendant’s Summons in the reverse order.

G.　IS THE DEFENDANT ENTITLED TO DAMAGES?

G.1　Nature of the application

98.The defendant relies on clause (1) of the Undertakings (“Undertakings”)in Schedule 2 to the Injunction Order to ground his application for compensation, which clause provides:

“If the court later finds that this [Injunction] Order has caused loss to the defendant or any other party and decides that the defendant or that other party should be compensated for that loss, the plaintiff will comply with any order the court may make.”

99.The defendant’s application for compensation, according to the defendant’s 12^th affidavit (“12th Affidavit”)filed in support of the Defendant’s Summons as well as his 13^th affidavit (“13^th Affidavit”) filed in reply to the plaintiff’s 18^th affirmation in opposition to the application, seems to be primarily based on the defendant’s assertion that the Injunction Order had been wrongly made as a result of the alleged false evidence contained in the 10^th Affirmation.

100.Thus, once the defendant is able to show that the Injunction Order was wrongly made, he would then rely on clause (1) of the Undertakings to ask the court to make an inquiry as to the amount of damages the plaintiff should be ordered to pay to him.  

G.2　Legal Principles for enforcing undertakings in a Mareva injunction

101.Before deciding in the next section below the question of whether the Injunction Order was wrongly made, I need to briefly set out the legal principles governing the defendant’s application for damages in seeking the enforcement of Undertakings in the Mareva Injunction Application. Neither party referred to any authorities in this regard.  I believe that the legal principles are well established, and they can be distilled from the English Court of Appeal decisions of Yukong Line Limited (S.K. Shipping Limited) v Rendsburg Investments Corporation[20], and Ladidi Investment Corporation of Liberia, Dimitrios Nicholas Yamviras, VAL Investments Inc., Den Norske Bank A/S and Cheltenham & Gloucester Building Society (Formerly Portsmouth Building Society) v Ricketts & Ors[21] , which were subsequently followed by a Hong Kong CFI decision in Jau-Hwa Stewart v E. Excel Ltd & Ors[22].

102.The consideration of the defendant’s application, according to the legal principles discussed in the authorities referred to in the preceding paragraph, involves a two-stage process. The first stage is to decide whether the court should enforce the undertaking. Should the court decide to enforce the undertaking, the next stage will be for the court to determine whether the defendant has suffered any damage.

G.2.1　Stage One: whether an undertaking should be enforced

103.First, whether an undertaking should be enforced is essentially a question of discretion, which is usually exercised by the trial judge “since he is bound to know more of the facts of the case than anyone else”: Cheltenham per Neill L.J at p16 quoting Financiera Avenida v Basil Mutei Shiblaq[23]. As to how the discretion should be exercised, the court should consider matters such as (i) the circumstances in which the injunction was granted, the success or otherwise of the plaintiff at the trial; (ii) the subsequent conduct of the defendant; and (iii) all the circumstances of the case.

104.Second, in the event that the court finds that an interlocutory injunction has been wrongly or “improperly” obtained, the court will, save for special circumstances; exercise its discretion in favour of the defendant by enforcing the undertaking. Those special circumstances may be an undue delay by the defendant in making the application or the inequitable conduct of the injunctee at the time the injunction was obtained or later conduct in relation to the obtaining or continuing of the injunction or the enforcement of the undertaking that makes it inequitable to enforce the undertaking.

105.Finally, the court will retain discretion not to enforce an undertaking and order an inquiry if it appears to the court that it is pointless to do so because the intended claim for damages is plainly unsustainable. Thus, the defendant is required to adduce some credible evidence that he has suffered loss as the result of the making of the injunction: Yukong Line Limited per Potter LJ at para 35.

G.2.2　Stage Two: whether the defendant has suffered any damage

106.Once the court determines that an undertaking should be enforced, the court will order an inquiry as to damages.

G.3　Defendant’s grounds of the application

107.In support of his application for damages, the defendant alleges that the plaintiff “… (i)  has committed serious perjury by giving untrue statements in … [the 10^th Affirmation]  ...; and (ii) the amount of [S]ecurity [P]ayment demanded under the Mareva Injunction was grossly exaggerated and unreasonable in the circumstances of the case” (13^th Affidavit, para 2).

108.It is the defendant’s contention, based on the number of allegations contained in the 12^th Affidavit and the defendant’s written submissions, that the Injunction Order was wrongly made. The myriad number of allegations can be divided into five, which are that the plaintiff has (i) breached his duty in handling costs orders; (ii) given untrue statements in the 10th Affirmation; (iii) made false allegations against the defendant and failed to make full and frank disclosure of the material facts; (iv) exaggerated the amount of the Injuncted Value in the 10^th Affirmation; and (v) committed serious perjury.

109.These five allegations, albeit having been separately itemized, essentially can be considered, as I shall demonstrate below, as one single allegation. All of the allegations stem from the allegedly untruthful and misleading contents of the 10^th Affirmation.

G.3.1　Breach of duty in handling costs order

110.One of the grounds (though not a main ground) the plaintiff relied on in support of the Mareva Injunction Application was the allegation that the defendant had failed to pay costs to satisfy three interlocutory costs orders made in the case management conferences (“CMC Costs Orders”). In each of the CMC Costs Orders, the court ordered costs to be, “assessed summarily in the sum of $1,000, be costs in the cause”.[24]

111.The parties however only recently realized that the CMC Costs Orders were not costs orders in favour of the plaintiff. It is presently common ground that the plaintiff was wrong in making the allegation about the defendant’s default on the CMC Costs Orders.

112.Refusing to accept that the plaintiff had made a genuine mistake, the defendant instead alleged that it was a deliberate act of falsity and perjury and accused the plaintiff of having breached his duty as a solicitor.

G.3.2　Failure to make full and frank disclosure of material facts

113.It is the defendant’s allegation that in the 10^th Affirmation, the plaintiff had deliberately misled the court by painting a distorted picture of him as a criminal, a person of dubious conduct so as to colour the court’s judgment into believing that the defendant was, in the defendant’s words, “running away with money (走「老」, 走錢)”.

114.In respect of the plaintiff’s main ground in support of the Mareva Injunction Application concerning the sale of the defendant’s residence at Tai Koo Shing (“TKS Property”), the defendant alleged the plaintiff  had not only deliberately misled the court when referring to the defendant’s otherwise perfectly normal sale of the TKS Property as a “stealthy” sale  in order to carry “out [the defendant’s] plan to thwart the [liability] Judgment” (the plaintiff’s written submissions for the Injunction application dated 27 October 2011[25]), but more seriously, had concealed a number of material facts from the court.

115.The material facts the plaintiff was alleged to have failed to disclose are: the defendant  (i) had never defaulted in complying with any court orders; (ii) was never absent from any hearings and the court was always able to contact him; (iii)  had, at all times, informed the court of his updated address (hence, it was wrong for the plaintiff to allege in the 10^th Affirmation that the defendant had refused to disclose his updated address after the sale of the TKS Property); (iv) needed to sell the TKS Property because he had just been discharged from prison and needed money; and  (v) left the court in a CMC hearing on 10 October 2011 because he was represented by a solicitor and counsel and personal attendance was not required.

G.3.3　Exaggeration of the amount of the Injuncted Value in the 10^th Affirmation

116.In this contention, the defendant argued that the Injunction Order was improper because the plaintiff had deliberately exaggerated the Injuncted Value. It is now evidently clear, the defendant contended, that the plaintiff had inflated the amount of the Injuncted Value by 3.5 times the Judgment Sum. As a result of the wrongful exaggeration, it was further argued, that the amount the Injunction Order restrained should not have been $1.8 million. This has caused him loss by paying a much bigger sum for the Security Payment.

117.The defendant had also briefly made another point though it did not seem to have been vigorously pursued[26]. It was suggested that the Injuncted Value of $1.8 million exceeded the District Court’s jurisdictional limit of $1 million. It was therefore contended that the plaintiff should have brought the Mareva Injunction Application in the High Court and the District Court had no jurisdiction to grant the Injunction Order.

G.3.4　Perjury

118.Based on the untrue statements the plaintiff had allegedly made in the 10^th Affirmation, the defendant therefore concluded that :

“[t]he Court was misled into granting the Mareva Injunction Order in favour of the Plaintiff based on his perjury and on wrong premises put forward by the Plaintiff. In this regard, the Plaintiff should no longer be entitled to demand the Defendant for paying $1,800,000 as security payment into Court pursuant to the Mareva Injunction Order. As a professional solicitor, the Plaintiff should be held liable for his grave misconduct and all the damages suffered by the Defendant arising from his unlawful acts”.

119.Thus, the perjury ground seems to be a hotchpotch of all of the defendant’s allegations in support of his application for damages allegedly caused by the plaintiff “negligence and perjury”, which conduct had allegedly misled Judge Chow into granting the Injunction Order.

G.4　The defendant’s alleged loss and damage  

120.The damage and loss the defendant submitted that he had suffered included tangible (investment opportunities) and intangible (loss of livelihood) losses. The defendant however has not claimed these alleged losses. Instead, the defendant claims that he has suffered the loss of interest as a result of the Security Payment. The amount of damages the defendant is seeking is set out in the calculation as follows[27]:

$1,291,779 x 8% x [365(4) + 94]/365 = $439,983.

121.According to the defendant’s written submission, the sum of $1,291,779 is the balance of the Security Payment after payment of the Judgment Sum. The 8% is the judgment rate of interest that the defendant submits the plaintiff should compensate him for the loss.

122.The above-mentioned calculation, according to the defendant, applies only if the court rejects the allegation of perjury. In the event, however, if the plaintiff were found to have committed perjury as the defendant alleged, the defendant submitted that he should be awarded a higher level of damages, which should be, according to the defendant’s submissions, $613,085.  The said sum of $613,085 has been calculated by substituting $1,291,779 in the calculation shown in para 120 with $1,800,000 (the full amount of the Security Payment).

G.5　The plaintiff’s response

123.The plaintiff disputed that the Injunction Order was wrongly granted as the defendant alleged. It was submitted that the plaintiff was entirely correct to make the Mareva Injunction Application, which, according to established legal principles, is very often granted in aid of a post-judgment execution. Since, it was further suggested, when the Mareva Injunction Application was made, the plaintiff had already obtained an Interlocutory Judgment; the Mareva Injunction Application had been based on a strong ground.

124.The plaintiff also refuted the defendant’s allegations of falsity and perjury concerning the contents of the 10^th Affirmation.

125.In relation to the plaintiff’s admittedly wrong allegation about the defendant’s default of the CMC Costs Orders, the plaintiff denied that he was deliberately misleading the court. It was submitted that it was clearly due to a genuine mistake, which mistake seemed to have been shared also by the defendant’s solicitors, Lam & Co. who did not dispute the plaintiff’s assertion of entitlement to the costs under the CMC Costs Orders.

126.The plaintiff strongly denies the defendant’s allegation of having failed to make full and frank disclosure. It is submitted that the plaintiff, in the 10^th Affirmation, only stated that the contents were true “to the best of his knowledge and belief at that time” as stated in the body of the 10^th Affirmation. Thus, it was suggested that the plaintiff was entitled to set out what to his belief was as to the truth. According to the facts that were known to the plaintiff at the time of the Mareva Injunction Application,  the plaintiff submitted that he had a sound basis for believing that there was a real risk of dissipation. Those facts would have included: (i) the sale of the TKS Property shortly before the trial on liability; (ii) the defendant had failed to provide to the plaintiff the defendant’s updated address and the bank statements showing that the defendant had not dissipated his assets as well as an undertaking to the court that he had the means to satisfy the judgment.

127.Finally, it is disputed that the plaintiff had exaggerated the amount of the Injuncted Value. The plaintiff pointed out that the defendant, from the explanation provided in the 10^th Affirmation for the calculation of the Injuncted Value of $1.8 million, would have clearly known that the $1.8 million had included the amount of the claim together with its interest and the estimated costs. Further, it is submitted that the fact that the costs were by that time not quantified was not a hurdle against the grant of a Mareva injunction[28].

128.Jurisdictionally, Judge Chow was empowered to grant the Injunction Order, the plaintiff submitted. Under ss 52 and 52B of the Ordinance, the plaintiff submitted that the District Court is empowered to grant injunctions “of whatsoever nature”.  More importantly, the plaintiff argued, the fact that making of the Security Payment shortly after the granting of the Injunction Order would have been implicitly suggestive of the defendant’s connivance as to the propriety of the Injunction Order.

129.As for alleged loss and damages, the plaintiff contended that not only were the defendant’s complaints frivolous; the defendant had also failed to adduce any evidence to support his alleged loss having allegedly been caused by the granting of the Injunction Order. Thus, the plaintiff submitted that the defendant’s application should be dismissed.  

G.6　Analysis: Was the Injunction Order wrongly made?

130.It is trite that a Mareva injunction is designed to protect a claimant against the dissipation of assets against which he might otherwise execute judgment whether immediately or in the future. An application for a Mareva injunction can be made at any stage of the proceedings, even before the issue of a writ. Further, due to the drastic nature of the relief, the court would usually only exercise its discretion to grant such drastic relief if it can be satisfied that (i) the claimant has a good arguable case against the defendant; and that (ii) there is a real risk that a judgment will go unsatisfied by reason of the disposal by a defendant of his assets, unless he is restrained by the court order from disposing of them.

131.When applying these principles mentioned in the preceding paragraph to the present case, there can be no dispute that the plaintiff, who had been granted a favourable Interlocutory Judgment, was only required to demonstrate to the court that there existed a real risk of the dissipation of the defendant’s assets when making the Mareva Injunction Application.

132.Based on the evidence adduced by way of the 10^th Affirmation in support of the Mareva Injunction Application, I consider that the evidence that was placed before Judge Chow at the time of the granting of the Injunction Order would seem to have been able to demonstrate the existence of a real risk of dissipation such as to enable a court to grant the order.

133.More importantly, it is noted that before the making of the Security Payment, the defendant in fact had availed himself of the opportunity to file evidence to refute the plaintiff’s alleged untrue allegations in his 9^th affidavit filed on 25 November 2011 in support of his application to discharge the Injunction Order. 

134.Furthermore, as already mentioned in paras 12 and 13 above, the defendant, before making the Security Payment on 6 December 2011, also had had the opportunity to apply to discharge the Injunction Order but failed. After the defendant failed to discharge the Injunction Order on 1 December 2011, he had chosen not to appeal or argue for the discharge at an inter-partes hearing fixed to be held on 5 January 2012.  This course of events, in my view, can only be regarded as an implicit acknowledgment by the defendant that the plaintiff had demonstrated the risk of dissipation and that the Injunction Order had therefore been justified.

135.After having carefully considered the evidence and the parties’ submissions, I can find none of the circumstances alleged by the defendant exists.

136.First and the foremost, I reject the defendant’s allegation of perjury against the plaintiff.  A charge of perjury connotes conduct of a criminal nature and it requires cogent evidence before a finding of perjury can be made. Looking at the defendant’s allegations in the round, I simply cannot be satisfied that the allegation of perjury is substantiated.  The reasons are as follows.

(1) The matter about the CMC Costs Orders is undoubtedly, in my judgment, a mistake of all parties, not just that of the plaintiff alone.

(2) The plaintiff’s belief in the defendant’s attempt to dissipate his assets, upon the sale of the TKS Property by the defendant, was justified in view of the proximity of the sale with the trial.

137.Neither am I able to find any error or misapplication of law in the form of the lack of jurisdiction the defendant seemed to be suggesting. First, concerning the defendant’s complaint of the plaintiff’s deliberate exaggeration of the Injuncted Value, I accept that the plaintiff was entitled, when estimating the amount sought to be injuncted against the defendant’s assets, to include interest and costs. Thus, I find the allegation unfounded. Second, section 52B (1) of the Ordinance provides that “the court may by order (whether interlocutory or final) grant an injunction or …in any action or proceedings in the Court and within its jurisdiction in which the Court considers it just or convenient so to do”.  These words should, in my view, confer jurisdiction on the District Court to grant a Mareva injunction irrespective of the amount sought to be injuncted.

138.In conclusion, I am not persuaded that the Injunction Order was wrongly granted.

G.7　Conclusion 

139.After having considered the circumstances in which the injunction was granted and all the circumstances of the case, and the subsequent conduct of the defendant after the grant of the Injunction Order, I’m not inclined to exercise my discretion to allow the defendant to rely on clause (1) of the Undertakings and award damages to him.

H. 　IF THE Injunction Order were wrongly granted, should the discretion be exercised in favour of the defendant?

140.In the event that I were found to be wrong to have concluded above that the Injunction Order was not wrongly made, I should, for completeness , further consider whether my discretion should be exercised in favour of the defendant.  For the special circumstances stated below, I’d still be disinclined to exercise my discretion in favour of the defendant.

H.1　Defendant’s undue delay in making the application

141.The defendant made this application for the enforcement of clause (1) of the Undertakings more than 4 years after the granting of the Injunction Order without providing any explanation for the delay in making the application. Apart from the allegations relating to the CMC Costs Orders, which mistake he only discovered after one of the directions hearing of the Plaintiff’s Summons, all of the defendant’s allegations that the defendant relied on in this application were in fact almost identical to those he had already cited in the 9^th Affidavit filed for the discharge of the Injunction Order heard on 1 December 2011.  The defendant gave no explanation why he had failed to issue the application more promptly.

142.It would not have been fair, in my judgment, for the court to exercise its discretion in the defendant’s favour for the bringing of this late application which seems to have been brought as an afterthought to vent his long-standing bitterness against the plaintiff, or even perhaps for counteracting the Plaintiff’s Summons rather than for the purpose of obtaining genuine relief.

H.2　Lack of credible evidence that the defendant has suffered loss

143.The defendant claims that the Injunction Order has caused him significant loss, both tangible and intangible.  His claim for the compensation for interest loss for the Security Payment, in my view, looks arbitrary and without any valid basis.  Since there is not a scintilla of evidence that the defendant has suffered loss as a result of the making of the Injunction Order, the defendant’s claim for damages is plainly unsustainable.

I.　CONCLUSION

144.For the above reasons, I am not satisfied that the defendant is entitled to any damages or compensation. Paragraph (2) of the Defendant’s Summons is thereby dismissed.

145.In the light of my ruling, the defendant is currently not entitled to any payment out from the Security Payment.   Thus, para (1) of the Defendant’s Summons is also dismissed.

J.　COSTS OF THE DEFENDANT’S SUMMONS

146.Since the Defendant’s Summons is dismissed, the costs should follow the event. I thus grant an order nisi that the costs of the Defendant’s Summons, including the costs reserved, shall be paid by the defendant. These costs are to be summarily assessed if they not agreed. 

147.The costs order nisi shall become absolute unless an application is made within 14 days of the handing down of this judgment by an inter-parties summons to vary the costs order nisi.

148.For the summary assessment of costs, the plaintiff should, within 14 days of this costs order nisi becoming absolute, lodge with the court and serve on the defendant a costs statement.  The defendant’s objections to the costs statement, if any, should likewise be lodged and served within 14 days of the service on the defendant of the plaintiff’s costs statement. Unless otherwise directed, the assessment of costs shall be disposed of on paper without any hearing.

149.Lastly, I wish to thank both parties for their industry in preparing the submissions and hearing bundles.

The plaintiff, represented by Mr Chan Hing Wing Eric, appeared in person

The defendant appeared in person