Chan Shu Chun and Another v. Dr Kung Yan Sum and Others
Read the full judgment text of HCA 832/2014 on BabelCite. This High Court CFI judgment was delivered on 18 May 2017.
1. On 14 May 2014, Mr Chan Shu Chun (1 st plaintiff, “ P1 ”) and a Hong Kong company King Base Engineering Limited (2 nd plaintiff, “ P2 ”) (collectively, “ Ps ”) commenced the present action against Dr Kung Yan Sum (1 st defendant, “ D1 ”), a British Virgin Islands (“ BVI ”) company Hero Fortune Limited (2 nd defendant, “ D2 ”), a Hong Kong company Chinachem Charitable Foundation Limited (3 rd defendant, “ D3 ”) and a solicitor firm practising in Hong Kong Messrs Philip KH Wong, Kennedy YH Wong
Cited by 4 cases · Cites 19 cases
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HCA 832 /2014 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 832 OF 2014 ____________
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_______________ JUDGMENT _______________ I. INTRODUCTION 1.On 14 May 2014, Mr Chan Shu Chun (1st plaintiff, “P1”) and a Hong Kong company King Base Engineering Limited (2nd plaintiff, “P2”) (collectively, “Ps”) commenced the present action against Dr Kung Yan Sum (1st defendant, “D1”), a British Virgin Islands (“BVI”) company Hero Fortune Limited (2nd defendant, “D2”), a Hong Kong company Chinachem Charitable Foundation Limited (3rd defendant, “D3”) and a solicitor firm practising in Hong Kong Messrs Philip KH Wong, Kennedy YH Wong & Co (4th defendant, “D4”) (collectively, “Ds”) to claim for a sum of $50,000,000 (“$50M”) and damages for conversion together with interest and costs. 2.Ps’ Statement of Claim (“SoC”) was endorsed on the Writ of Summons (“WoS”). On 13 June 2014, Ps filed the Amended WoS (“AWoS”) with Amended SoC (“ASoC”) endorsed thereon. On 25, 11 and 10 July 2014, D1, D3 and D4 respectively served their Defence. At that stage, Ps had not issued any Concurrent AWoS against D2. 3.As seen below, Ps’ claim against D4 as pleaded in the AWoS/ ASoC essentially included allegations of (a) breach of duty of care owed to Ps, (b) negligence and/or (c) conversion. 4.On 23 September 2014, D4 filed a summons (“D4 Summons”) for the following reliefs:
5.On 15 January 2015, Ps filed a summons (“Ps Summons”) for leave to re-amend the AWoS/ASoC in the manner marked in green as per the draft annexed thereto and set out in the Schedule to this Judgment (“Draft Amendments”) and to file/serve the same within 7 days, and for costs of the application to amend and costs of and consequential upon the amendments to Ds in any event to be taxed if not agreed. The Draft Amendments proposed to introduce a new claim against all Ds for conspiracy to defraud and also additional heads of damages arising from Ds’ alleged conspiracy. 6.The main protagonists in respect of the Ps and D4 Summonses were Ps and D4 with Ps opposing the D4 Summons and D4 opposing the Ps Summons. D1, D2 and D3 did not take any active part in relation thereto. II. PARTIES 7.Ps claimed (but D4 did not admit) P1 was/is the sole director/ shareholder of P2 and the sole shareholder of a BVI company Tian Liang Limited (“Tian Liang”), which in turn was/is the sole shareholder/operator of a PRC company Tian Yao (Xiamen) Property Development Limited (“Tian Yao”) whose main business was/is real estate development of a residential building in Xiamen, PRC (“Xiamen Project”). Ps claimed that by a Chinese tripartite agreement dated 16 January 2009 (“Tripartite Agreement”) made by Tian Liang, Tian Yao and a company wholly owned the Chinachem Group[1] called Right Margin Limited (“Right Margin”), it was agreed inter alia to appoint Right Margin as the sales agent of the Xiamen Project.[2] 8.Ps claimed (but D4 did not admit) P2 maintained/maintains a bank account with DBS Bank (Hong Kong) Limited (formerly known as Dao Heng Bank Limited, “DBS”) (“P2 Account”). 9.There was no dispute between Ps and D4 that (a) D1 was/is a director and the chairman of D3 and the chairman of the Chinachem Group, (b) D2’s sole director/shareholder was a Madam Song Hui Fang (“Song”) who was born on 8 September 1934 and who held a PRC identity card, (c) D2 had a bank account with DBS, Macau branch (“DBS Macau”) (“D2 Account”), and (d) D3 was engaged in litigation against a Mr Chan Chun Chung over disputed entitlement to the estate of the late Madam Nina Wang (“Estate Litigation”). III. PLEADINGS OF Ps AND D4 10.Alleged investment agreement Ps averred P1 and D1 became friendly during negotiations leading to the Tripartite Agreement, and on/ about 20 January 2009 D1 in his personal capacity presented to P1 an “investment opportunity in real estate properties, land development and securities” in Hong Kong and Macau with his good friend Song (whose full name and background were not disclosed to P1 at that time) (“Investment Opportunity”) for an investment sum of $50M. Relying on D1’s representation that the proposed investment was for Ps’ participation in the Investment Opportunity (“D1 Representation”), P1 agreed to invest with Song. On 21 January 2009, P1 delivered to D1 a cheque (without naming the payee) for $50M drawn on the P2 Account (“Cheque”), and D1 produced an undated Chinese memorandum of investment cooperation in duplicate that Song executed on behalf of D2 (“MOU”).[3] 11.D4 in their Defence put Ps to strict proof of the matters in the above paragraph, and averred as follows:
12.Shanghai meeting Ps claimed (but D4 did not admit) nothing further was heard from D1/D2 on the proposed investment, so at P1’s request D1 accompanied him to Shanghai on 12 January 2011 to introduce Song to him, but Song did not turn up. D1 told P1 Song wanted to cancel the MOU and return $50M within 12 months. After their return from Shanghai, in/about January or early February 2011 D1 produced for P2’s execution an undated cancellation agreement for the MOU (executed in duplicate by Song on behalf of D2) (“Cancellation Agreement”).[4] 13.Money trail Ps averred that on 16 July 2012 (a) P1 on behalf of P2 wrote to D1 enclosing a copy letter of even date to D2 demanding payment of $50M under the Cancellation Agreement and (b) P2’s former solicitors requested D1 to inter alia disclose details of D2, but there was no reply.[5] It was common ground between Ps and D4 that (a) on 9 August 2013 P2 commenced HCMP1949/2013 against DBS, (b) on 11 September 2013 Lok J ordered DBS to disclose details of the D2 Account with relevant bank statements, and (c) discovery by DBS pursuant thereto (“DBS Discovery”) revealed that in February 2009 a sum of $49,950,009 (“Sum”) was transferred from the D2 Account to D4’s bank account with DBS in Hong Kong (“D4 Account”) (“D2/D4 Transfer”).[6] Ps averred they learned from the DBS Discovery Song’s full name/identity and the D2/D4 Transfer was made on 9 February 2009. 14.D4 in their Defence averred (and the documents in the D4 File revealed):
15.Alleged discovery of deception Ps averred (but D4 did not admit)[8] that following a reported ICAC operation in/about April 2014 they discovered D4 had paid $50M out of the D4 Account to fund D3’s Estate Litigation, so the D1 Representation was false, fraudulent and a sham, and the real intent/purpose was to use D2 as conduit for receiving $50M to enable D1 to fund D3’s Estate Litigation. Ps claimed P2 therefore suffered loss and damage by delivering the Cheque to D1. 16.Alleged breach of duty of care Ps alleged that upon receipt of $50M each/both of D3 and D4 (a) knew or had reasonable grounds to believe the aforesaid payments directly or indirectly represented any person’s proceeds of an indictable office, (b) dealt with misappropriated monies, and (c) was obliged to disclose to an authorised officer (see footnote 45 below) their knowledge of each payment of misappropriated monies under sections 25 and 25A of OSCO as soon as it was reasonable to do so. 17.D4 denied paragraph 16(a) above, and averred (a) D4 upon receipt of the Sum from D2 did not know or have reasonable grounds to believe the payments represented any person’s proceeds of an indictable offence, (b) D4 had no good reason to believe payments made to D3 (a well‑known charitable foundation) were not genuine charitable donations, and (c) D4’s clients (Song/D2) did not acquire any benefit from D3’s Estate Litigation and D3 was not required to repay any money to D2. 18.D4 did not admit paragraph 16(b) above save to agree they on behalf of D2 delivered $50M to D3 by 2 donations during February 2009 pursuant to client instructions. 19.D4 did not admit paragraph 16(c) above, and averred (a) by reason of paragraph 17 above D4 did not know/suspect the payments to D3 represented any person’s proceeds of an indictable offence so there was no duty to disclose under section 25A of OSCO, (b) D4’s suspicion was only raised when they became aware in February 2011 that D3 was being investigated, and (c) whilst D4 continued to believe the payments made to D3 were genuine charitable donations and not any person’s proceeds of an indictable offence, out of abundance of caution they obtained counsel’s advice and reported the matter to the Joint Financial Intelligence Unit (“JFIU”) (“JFIU Report”). 20.Ps claimed (but D4 denied) (a) by reason of paragraphs 15-16 above each of D3 and D4 owed Ps a duty to exercise reasonable care to comply with their obligations to make disclosure to the relevant authorities under the OSCO, and (b) by reason of paragraph 16 and (a) above each of D3 and D4 was in breach of its duty owed to Ps. 21.Ps claimed (but D4 denied) they relied on D3 and D4 to make timely reports to the relevant authorities as required by the law when D3 and D4 received the misappropriated monies in whole or in part, and had either of them done so police investigation would have commenced and D1’s deception and D2’s role as conduit for receiving misappropriated monies would have been intercepted, prevented or curtailed. Ps further claimed (but D4 denied) that as a result of D3’s/D4’s negligence and/or breach of duty Ps suffered loss of $50M, and by reason of the above matters each/all of Ds had converted the Cheque and its proceeds to their own use or alternatively to the use of D3, and Ps thereby suffered loss and damage. IV. FURTHER AND BETTER PARTICULARS OF ASoC 22.On 23 June 2014, D4 sought particulars of D4’s alleged knowledge or reasonable grounds for belief that the D2/D4 Transfer represented proceeds of an indictable offence. On 26 June 2014, Ps filed their answer (“FBP”) and later D4 by their Defence responded thereto as follows:
V. PROCEDURAL HISTORY 23.On 28 January 2015, I granted leave for Ps to file/serve further affidavit for the Ps Summons, but subject thereto the proceedings between Ps and D1/D3/D4 were stayed for Ps to serve the AWoS/ASoC on D2 out of jurisdiction. On 9 April 2015, Master A Ho granted leave for Ps to issue a Concurrent AWoS for service of the same on D2 out of jurisdiction in BVI. The Ps/D4 Summonses were restored for directions hearing on 17 September 2015 when I granted directions for filing/serving affidavit evidence as between Ps and D4, and for excusing further attendance by D1 and D3 if they would adopt a neutral position in respect of the Ps Summons, abide by the decision of the court (subject to any appeal) on such summons, and agree for costs of and occasioned by the Ps Summons as between Ps and D1/D3 (including any reserved costs) to be disposed of on nisi basis upon determination of such summons. On 24 September 2015, D1 and D3 by their respective solicitors gave such confirmation. 24.According to the 4th affirmation of Ps’ solicitor Ms Lam Yan Fong Flora (“Ms Lam”) filed on 11 September 2015, the Concurrent AWoS was served on D2 in BVI on 3 June 2015. At a further call-over hearing on 3 December 2015, I granted case management directions for inter alia filing/serving affidavit of service and adjourning the Ps/D4 Summonses for argument. According to 2 affirmations of service by the process server of Ps’ solicitors filed on 2 and 11 December 2015, the Ps/ D4 Summonses with supporting affirmations, the notice of hearing and my order dated 17 September 2015 were served on D2 in BVI by post on 19-20 October 2015. D2 did not file any acknowledgment of service. 25.For the D4 Summons, D4 filed the 1st and 2nd affirmations of D4’s partner Mr Kennedy Ying Ho Wong (“Mr Wong”) in support on 24 September and 3 November 2014 respectively (“Wong 1st and 2nd Affs”), and Ps filed P1’s affirmation in opposition on 14 October 2014 (“P1 Aff”). For the Ps Summons, Ps filed Ms Lam’s 1st affirmation in support on 15 January 2015 (“Lam 1st Aff”) and her 5th affirmation in support on 5 November 2015, and the affidavit of their solicitor Mr Lam Ping Cheung (“Mr Lam”) in support on 5 February 2015 (“Lam Aff”), and D4 filed the 2nd affirmation of their solicitor Mr Tony Leung (“Mr Leung”) in opposition on 15 October 2015. On 10 December 2015, Ps’ solicitors confirmed Ps would also rely on paragraphs 8-15 of Ms Lam’s 2nd affirmation filed on 9 February 2015[12] in support of Ps Summons. Mr Leung’s 1st affirmation filed on 27 January 2015 on matters leading up to the case management hearing on 28 January 2015 was not particularly relevant for the argument hearing that came before me on 22 April 2016 (“Hearing”). VI. AFFIRMATION EVIDENCE FOR D4 SUMMONS 26.Synopsis D4 claimed that despite the serious allegations made against D4 in the ASoC, Ps’ case against D4 was in fact unsustainable as it was not capable of reasoned argument, was without foundation and could not possibly succeed, and hence the ASoC should be struck out and Ps’ action as against D4 should be dismissed with costs. Ps disagreed and further denied their claim against D4 was frivolous or vexatious and/or an abuse of the process of the court. 27.Striking out application D4 claimed the alleged breach of OSCO was a statutory issue and not a civil matter, and in fulfilment of their obligations under OSCO D4 made the JFIU Report upon suspicion being raised, so Ps had no cause of action against them in tort for breach of statutory duty simpliciter. D4 further claimed as a matter of law they did not owe Ps any duty of care, so likewise Ps had no cause of action against them in tort for breach of common law duty. But even if D4 were in breach of OSCO and such breach was actionable in private law (which D4 denied), there was still no causal link between D4’s alleged wrongdoing in failing to make a timely report (and D4 did make the JFIU Report in any event) and Ps’ alleged loss of $50M which Ps claimed to have suffered when they gave the Cheque to D1. In short, it was said since such loss would have occurred in any event, D4’s alleged breach of duty (which Ps denied) did not cause Ps to suffer the loss complained of. D4 contended Ps’ allegation that had D4 made a timely report the monies would have been “intercepted, prevented or curtailed” was too remote. On such basis, it was said Ps’ claim against D4 was without any solid basis in fact or law. 28.On the other hand, the P1 Aff pointed out (a) a money launderer can be convicted of an offence under section 25 of OSCO if viewed objectively he has reasonable grounds to believe the property he handles represents any person’s proceeds of an indictable offence, and (b) the exoneration of guilt under section 25A of OSCO requires the person who handles the property to disclose his suspicion to an authorised officer, and such disclosure must be timely, ie before he handles the property or on his initiative as soon as it is reasonable to do so after he has handled the property. Ps noted the JFIU Report was made only 2 years later in February 2011 after taking counsel’s advice following revelation of an investigation into the affairs of D3. 29.Mr Wong disagreed with paragraph 28(b) above and claimed the factual position was:
30.The P1 Aff referred to the FBP (see paragraph 22 above) and went on to say (a) $50M being misappropriated monies were first deposited in the D2 Account on or about 21 January 2009[13] but was transferred from the D2 Account to the D4 Account on/about 10 February 2009[14] (and Wong was asked by DBS to confirm such transaction),[15] and (b) D3’s Defence revealed on 12 and 16 February 2009 D4 drew the 1st and 2nd $25M Cheques in favour of D3. But Mr Wong referred to D4’s Defence and denied the D4 Partners had any personal and/or first-hand knowledge of the above matters. 31.Abuse of process Mr Wong claimed Ps’ action in the ASoC against D4 was a sham and without substance, and he believed Ps made such claim against D4 because they could not recover their loss of $50M from D2, and as an afterthought (as they had no reasonable cause of action against D4) joined D4 to fish for documents/information that might assist their claims against the other Ds. D4 contended this was an abuse of the process of the Court, but Ps denied this and claimed it was evident from the ASoC they had obtained adequate information from the DBS Discovery to unveil the paper trail in respect of misappropriation of $50M. 32.Order 14A application Ps pleaded in the ASoC a cause of action in tort, ie (a) D4 owed Ps a duty to exercise reasonable care to comply with their obligations to make disclosure to the relevant authorities under OSCO as required by law, (b) D4 breached such duty of care by failing to make timely report to the authorities, and (c) as a result Ps suffered loss of $50M. D4 contended the Question was suitable for determination without full trial of the present action, and if the court would determine the Question in favour of D4, it would finally determine (subject only to appeal) Ps’ pleaded cause of action in tort against D4 for negligence and/or breach of duty, and hence the entire matter. VII. AFFIRMATION EVIDENCE FOR PS SUMMONS 33.By the Draft Amendments Ps sought to introduce a claim for conspiracy to defraud against all Ds. Ms Lam said this was not the first time fraud was pleaded as the ASoC had particularised discovery of the money trail in respect of $50M and related deception, and the FBP also pleaded other matters from the DBS Discovery now included in the Draft Amendments. But Mr Leung disagreed fraud had previously been pleaded against D4 in the ASoC, and claimed fraud was only asserted in relation to the D1 Representation. D4 claimed Ps pleaded fraud (of any sort) as against D4 for the first time by introducing a claim against all Ds for conspiracy to defraud in the Draft Amendments. 34.Ms Lam / Mr Lam noted the DBS Discovery revealed the money trail after presentation of the Cheque for payment, and Ps’ solicitors also requested/obtained more documents from D4 on 15 July 2014 and from DBS on 22 July 2014. They reiterated the particulars in the ASoC (see paragraphs 10 and 12-13 above), FBP (see paragraph 22 above) and Draft Amendments (see the Schedule to this Judgment), and added as follows:
35.Ms Lam / Mr Lam claimed the Cheque was given to D1 (who was a director and the chairman of D3 being the ultimate beneficiary of $50M) on 21 February 2009 without name of payee, and D2 had been incorporated for only a short time before that. It was said the Attendance Note showed that on 30 January 2009 D4 (who assisted in incorporating D2 and in opening/handling the D2 Account) knew in advance $50M would come from P2 before D2 actually received such monies.[21] Shortly after the Cheque was deposited in the D2 Account on/about 6 February 2009 (see paragraph 6 of the Lam 1st Aff), the D2/D4 Transfer was effected on/about 9 February 2009, and $50M was then transferred to D3 to fund the Estate Litigation. 36.It was said D4 knew D2 was formed and the D2 Account was opened for the purpose of carrying out Song’s intention to invest in projects in Macau,[22] but D4 “later agreed to be the conduit in passing [$50M] to [D3] through [the D4 Account]”. It was further suggested the close temporal proximity of the deposit of $50M in the D2 Account for investment purpose, the D2/D4 Transfer and the donation of $50M to D3 should put D4 on enquiry as to the nature of the monies they handled (see paragraphs 13(e)-(f) of the Lam Aff). On such basis and with legal advice, Ps wished to raise a cause of action on conspiracy to defraud which they claimed was necessary for determining the real question in controversy between the parties. 37.But Mr Leung said the Draft Amendments were badly pleaded as they failed to provide necessary particulars for the cause of action on conspiracy to defraud, and even the affirmations/affidavit Ps filed (which merely supported the Ps Summons but did not form part of the proposed pleading itself) failed to provide such necessary particulars. Since the Draft Amendments sought to introduce a new, serious and offensive cause of action after the close of pleadings without necessary particulars, Mr Leung suggested this showed Ps either did not know how to sufficiently plead their new proposed cause of action or had not made up their mind as to the subject matter of their claim for conspiracy to defraud. 38.Ms Lam disagreed, and claimed sufficient material facts and particulars had been pleaded with supporting documents exhibited to Ps’ supporting affirmations/affidavit. Ms Lam reminded that Ps obtained information on the money trail in this matter through the DBS Discovery, and upon further legal advice it was considered necessary for determining the real question in controversy between the parties that Ps should pursue a claim for conspiracy to defraud against all Ds. VIII. D4 SUMMONS: STRIKING OUT (a) Legal principles 39.The principles governing striking out applications are well established. Hong Kong Civil Procedure 2017 provides as follows:[23]
But the fact a question of law appears difficult/obscure does not necessarily preclude the court from striking out pleadings if it is satisfied it has all the necessary information to decide the question, and has come to the conclusion after full argument in the face of all relevant information that the case is plainly and obviously one for striking out. In such circumstances, the court “should not decline to do so on the ground that the issues are difficult or complicated”.[24] 40.No reasonable cause of action A reasonable cause of action means “a cause of action with some chance of success when only the allegations in the pleadings are considered ……”.[25] No affidavit evidence is admissible on an application under Order 18 rule 19(1)(a) of the RHC.[26] 41.Frivolous or vexatious claim Hong Kong Civil Procedure 2017 states that:[27]
42.Abuse of the process of the court Order 18 rule 19(1)(d) of the RHC confers upon the court powers hitherto exercised under the court’s inherent jurisdiction where there appears to be an abuse of the process of the court. The process of the court must be used bona fide and properly, and the court will, in a proper case, summarily prevent its machinery from being used as a means of vexation/oppression in the process of litigation.[29] Hong Kong Civil Procedure 2017 states as follows:[30]
Likewise, To J in Falcon Private Bank Ltd v Borry Bernard Edouard Charles Limited & anor said as follows:[31]
43.Amendment Hong Kong Civil Procedure 2017 states inter alia as follows:[32]
In Total Lubricants Hong Kong Limited & ors v Christophe de la Cropte de Chanterac & ors, Poon J (as he then was) said as follows:[33]
(b) No reasonable cause of action 44.Mr Kim, counsel for Ps, orally confirmed at the Hearing Ps’ pleaded causes of action in the ASoC covered breach of both statutory duty simpliciter and common law duty of care. Mr Lee, counsel for D4, submitted it was plain and obvious Ps had no cause of action against D4 on either basis. 45.I note at the outset Ps’ claim against D4 was a civil claim by Ps via their solicitors in contra-distinction to a criminal prosecution by the government via the Department of Justice. Whilst Mr Lee’s research unearthed some criminal case law on section 25 of OSCO,[34] neither counsel was able to identify any case law on private law claims for breach of statutory duty simpliciter or breach of common law duty in relation to sections 25 and/or 25A of OSCO. As Mr Kim urged me to voyage into such virgin legal territory, it is necessary to turn to the relevant legal principles. 46.But before doing so, I note Mr Kim vigorously complained[35] against D4’s alleged attempt to rely on the Wong 1st and 2nd Affs on the question of whether or not there was a reasonable cause of action.[36] But as seen below, Mr Lee’s submissions in respect of D4’s striking out application for no reasonable cause of action did not require bolstering by the Wong 1st and 2nd Affs. Ironically, it was Mr Kim who in his oral submissions attempted to resort to affirmation/affidavit evidence to shore up Ps’ pleas in the ASoC against D4, which approach on his own written submissions was quite impermissible. 47.Statutory duty simpliciter Mr Lee submitted that breach of statutory duty under OSCO is a statutory issue which cannot support any civil claim. The principles for determining whether a cause of action exists for breach of statutory duty simpliciter have been discussed by the Court of Appeal (“CA”) in Dah Sing Insurance Services Ltd v Gill Gurbux Singh[37] (“Dah Sing CA”), and I agree they remain valid even though such decision was overturned on the facts by the Court of Final Appeal (“CFA”) in Gill Gurbux Singh v Dah Sing Insurance Services Ltd (“Dah Sing CFA”).[38] 48.In Dah Sing CA/CFA, the plaintiff insurance agent appointed the defendant as technical representative, but subsequently terminated his appointment by notice. The former failed to report the latter’s termination of appointment and his Continuing Professional Development (“CPD”) credits to the Insurance Agents Registration Board (“IARB”) as required by the Code of Practice for the Administration of Insurance Agents (“Code”) and relevant Guidance Note issued by the IARB. The first instance judgment in favour of the defendant was reversed on appeal (ie the CA held inter alia there was no actionable breach of statutory duty), but the CFA allowed the defendant’s appeal. 49.In Dah Sing CA, Kwan JA referred to the principles in X (Minors) v Bedfordshire County Council[39] for determining whether a cause of action exists for breach of duty simpliciter:
50.Where a statute enforces an obligation by a specified manner, normally it is not to be enforced by another manner. But exception arises where on true construction of the statute the obligation is imposed for the benefit of a particular class of individuals. Kwan JA at page 197 of Dah Sing CA referred to Lord Kinnear’s observations in Butler (or Black) v Fife Coal Co Ltd as follows:[40]
To answer the crucial question of whether the legislative intent is to protect a particular class of the public, Morgan J in Digicel (St Lucia) Ltd v Cable and Wireless plc[41]distilled a list of questions. But even though Mann J in paragraph 16 of his judgment in Leon Di Marco v Morshead Mansions Limited[42] referred to such list of questions, he held in paragraph 17 that the basic question was “overall, having regard to the above and any other relevant matters, what did the legislature intend as regards actionability of a breach of duty?” and “the preceding points are points which assist in answering that basic question”. Kwan JA at pages 197-198 in Dah Sing CA explained those questions will not be answered all one way, and the key is what weight should be given to various answers in different directions in order to arrive at the crucial answer to which all those questions are directed. 51.By applying the above principles, Dah Sing CA[43] found the legislature’s intent was to protect public consumers, so as a matter of statutory construction it ought not to be inferred that breach of duty by insurance agents was actionable by technical representatives, hence there was no cause of action for breach of statutory duty simpliciter. Dah Sing CFA did not disturb this aspect of the CA’s decision. 52.Here, Ps averred in the ASoC that D4 was in breach of statutory duty simpliciter under section 25 of OSCO. OSCO’s long title provides such statute is:
Sections 25 and 25A of OSCO (which provisions came into effect on 2 December 1994)[44] provide as follows:
53.OSCO is silent on whether breach of its provisions would give rise to a civil cause of action.[46] As Kwan JA reminded at p 96 in Dah Sing CA, this is not unusual and “ …… [one] must look to indicators such as whether there is legislative intent to protect the class in question and whether the statute provides any other adequate remedy for its breach”. Charlesworth & Percy on Negligence also explains:[47]
54.Mr Lee submitted neither OSCO itself, including its long title (see paragraph 52 above), nor materials placed before the Legislative Council (“LegCo”) at the time of considering/enacting OSCO (or its major amendments) showed any legislative intent to protect a limited class of the public and/or individual claimants such as victims of breach of statutory duty (ie the reporting requirements under OSCO) which Ps seemed to claim they were. 55.In respect of OSCO itself, Mr Lee argued OSCO as a whole is intended to protect the public at large against evils of organised crimes in their multifarious manifestations in Hong Kong (eg syndicated drug trafficking, syndicated illegal gambling, syndicated money laundering etc) rather than to protect a specific class of persons, hence any private civil claim for breach of statutory duty simpliciter fails in limine. 56.In respect of relevant materials placed before LegCo, Mr Lee referred me to the LegCo debate on 18 December 1991 before the enactment of OSCO in which the Administration as well as LegCo members expressed concerns about organised crime in Hong Kong.[48] The then LegCo member Mrs Rita Fan moved for a member’s motion on the White Bill on Organised Crime published on 9 August 1991 to support the Administration’s efforts to combat organised crime, to urge the Administration to carefully consider the views of LegCo members and the public on the White Bill, and to ensure the final proposals for legislation would take full account of Bill of Rights implications. Mrs Fan said inter alia as follows:
Other LegCo members expressed support for Mrs Fan’s motion. The then Secretary for Security Mr Ian Robert Strachan responded as follows:
In my view, the above debate clearly showed the focal object of the White Paper on Organised Crime was to combat the societal problem of organised crimes rather than to afford protection to a limited class of the public. 57.When the then Secretary for Security Mr Alistair Peter Asprey moved for the 2nd reading of the Organised and Serious Crimes Bill (“OSCB”) on 15 July 1992, he noted the purpose of OSCB was as given in the long title of OSCO (see paragraph 52 above) and went on as follows:[50]
This showed the purpose of OSCB was to fight organised crimes rather than to protect a limited class of persons, say, actual victims of perpetrated organised crimes. 58.Upon resumption of the LegCo debate on the 2nd reading of OSCB on 12 October 1994, the then LegCo member Dr Philip Wong summarised OSCB’s crime-fighting measures against organised crimes, and various LegCo members addressed on the need for proper/reasonable balance between combating organised crime and protecting right to privacy/silence. Dr Wong noted the proposed money laundering offence in clause 25 of OSCB (eventually section 25 of OSCO) would extend the then provision in the Drug Trafficking (Recovery of Proceeds) Ordinance Cap 405, and said as follows:[52]
Again, there was no indication of any private right to claim for breach of statutory duty or any protection for a limited class of persons. 59.OSCO was enacted in 1994 and certain provisions (including sections 25 and 25A) came into effect in December 1994. Other provisions came into effect in April 1995. Amendments were enacted in 1995, and sections 25 and 25A of OSCO became the current version. 60.In November 1999, the Narcotics Bureau of the Security Bureau presented a paper for discussion by the LegCo Panel on Security on 11 November 1999 on inter alia proposed amendments toOSCO. The paper noted the anti-money laundering provisions had improved significantly after amendment of OSCO in 1995, but the working group[53] set up to improve the quantity/quality of suspicious transaction reporting noted a major obstacle for such reporting was the small number of convicted money laundering cases, which in turn discouraged people from reporting those transactions. Hence, the Administration proposed a number of amendments to inter alia OSCO, including:
61.In the paper presented in January 2001[56] to elaborate on the difference between “reasonable grounds to believe” and “reasonable grounds to suspect”,[57] the Security Bureau put forward reasons for introducing a new money laundering offence using the latter mental element as follows:
I agree with Mr Lee that nowhere from these papers submitted to LegCo could it be discerned the existing provisions in sections 25 and 25A of OSCO were to protect a particular class of persons. 62.Mr Kim argued OSCO was to improve the effectiveness of anti-money laundering legislation by imposing a duty upon persons who may otherwise knowingly/recklessly deal with proceeds of crime which obviously have originated from victims, so the legislative intent is to protect victims of crime from hampering detection of movement of crime proceeds, and as a matter of statutory construction a private cause of action arises from breach of OSCO’s provisions in the present context. Mr Kim reminded the threshold test for striking out pleadings is a high one, and courts should not decide difficult points of law in an area of law that is in the process of developing. 63.But when pressed on how this can be said to be an uncertain and developing area of law as opposed to application of established principles to particular legislative provisions, Mr Kim was unable to elaborate further except to reiterate (a) this was a difficult area of law not fit for a striking out application, and (b) the available materials showed Ps’ claim for breach of statutory duty simpliciter has reasonable prospect of success. 64.In my view, this is not a developing area of law. The applicable legal principles are trite, and the issue is the application of such principles to sections 25 and 25A of OSCO. In this respect, I disagree with Mr Kim’s construction of OSCO’s legislative intent. There will be victims for every piece of legislation that creates criminal offences and imposes criminal sanctions, but it does not necessarily follow every such statute gives rise to private law claims. In my view, given the legislative framework, the LegCo proceedings and other legislative materials, and looking at the matter as a whole, it is plain and obvious OSCO is designed to protect the public at large against the evils of organised crimes rather than to protect any limited class of persons. Unlike other legislation in footnote 46 above, OSCO is silent on any private right of action (which is consistent with the view that OSCO is not intended to protect a limited class of persons). Sections 25 and 25A of OSCO also provide for serious criminal penalties by fine and/or imprisonment (see paragraph 52 above) for deterring breaches of obligations thereunder. Overall, I find it plain and obvious the LegCo did not intend any private right of action in damages for mere breach of statutory duty laid down in sections 25 and 25A of OSCO, so no cause of action for breach of statutory duty simplicter arises, and such cause of action as pleaded in the ASoC against D4 ought to be struck out. 65.Common law duty of care Mr Lee submitted that whether it is appropriate to superimpose on the statutory regime a common law duty of care giving rise to a claim in damages is to be determined by reference to the tests adopted by the House of Lords in Caparo Industries Plc v Dickman & ors:[58]
66.The leading local authority is Luen Hing Fat Coating & Finishing Factory Ltd v Waan Chuen Ming,[59] which essentially adopts the approach in Caparo Industries plc as explained by Sir Donald Nicholls VC in the English Court of Appeal in White & anor v Jones & anor.[60] These principles have been helpfully summarised by Cheung CJHC in Lam Pak Keung v Ip Tsz Ping as follows:[61]
67.The CFA in Dah Sing CFA held the plaintiff insurance agent owed a tortious duty of care to the defendant technical representative on the basis that (a) viewed objectively the plaintiff could be said to have assumed responsibility to report the cessation of the employment and the CPD credits of the defendant, (b) given such assumption of responsibility the foreseeability of loss and the defendant’s reliance on the plaintiff to make those reports rendered it fair, just and reasonable to impose a duty of care at common law on the plaintiff, and (c) the employment contract was not inconsistent with tortious liability and could not exclude the duty of care. 68.Tang PJ at pp 461-462 reiterated that whether a common law duty will arise turns on the application of orthodox common law concepts of “foreseeability of loss”, “proximity” or “neighbourhood” and “assumption of responsibility” which should be viewed objectively, but as explained by Lord Hoffmann in Customs and Excise Commissioners v Barclays Bank plc,[62]
69.I agree with Mr Lee the circumstances of Dah Sing CA/CFA (where there was a direct contractual relationship between the insurance agent and the technical representative) were dissimilar to the present circumstances (where there was no relationship between D4 (solicitors) and Ps (non-clients who placed funds with D4’s clients or, to put it in a different way, counterparties in commercial relationship with D4’s clients)). 70.At first, Mr Kim relied on general tort principles and alluded to the oft-cited case of Hedley Byrne & Co Ltd v Heller & Partners Ltd to say the pleaded facts in the ASoC/FBP gave rise to D4’s duty of care that was owed to Ps. But upon further research over lunch, Mr Kim enlightened this court with the House of Lords case of White & anor v Jones & anor[63] as referred to in Bokhary, Sarony and Srivastava, Tort Law and Practice in Hong Kong,[64] but he only provided the reported judgment of the English Court of Appeal.[65] In that case, a solicitor delayed preparation of a will for a client, and the client died leaving his proposed beneficiaries without their intended legacies. The client’s estate had a valid claim against the solicitor for negligence, but it suffered no loss. The House of Lords held the intended beneficiaries who suffered loss had a valid claim as the solicitor’s duty of care to the client extended to the client’s intended beneficiaries. 71.Two matters are of note in relation to that case. First, the House of Lords adopted/applied the Caparo test, and held it was satisfied as the loss was foreseeable, there was a proximate relationship between the client and the proposed beneficiaries, and there was no reason why liability could not be fair, just and reasonable. This, in my view, was nothing more than applying the Caparo test to particular circumstances, and did not take the legal discussion any further. Indeed, Tort Law and Practice in Hong Kong[66] noted White & anor is “not of universal application. In Trend Publishing (HK) Limited v Vivien Chan & Co (a firm),[67] Keith J held that there was no duty of care owed by a landlord’s solicitor to a tenant in preparation of the tenancy agreement”. 72.Secondly, the majority in White & anor emphasised that in a “will” situation there would be no remedy for the solicitor’s negligence if he was not under a duty to the intended beneficiaries. At p 262 Lord Goff discussed the situation of an inter vivos gift which was ineffective due to a solicitor’s negligence and held there was no claim by the intended donee against the solicitor as “[it] is enough …… that the donor is able to do what he wishes to put matters right”. He went on to say as follows:[68]
Thus, the House of Lords came to its conclusion only because it was reasonably foreseeable from the nature of the transaction (preparation of a will) that the solicitor’s client/estate could not claim against the solicitor for loss suffered by the intended beneficiaries, and it would have been unjust for his negligence to go unremedied. 73.On the above analysis, I cannot see how White & anor could assist Ps (non-clients) in their claim against D4 (solicitors). Unlike the testator and intended beneficiaries, there was possible conflict of interest as Ps were counterparties of Song/D2 (D4’s clients) (and indeed Ps also sued D2 in the present action), and Mr Kim did not explain how a duty of care could arise in such circumstances. I cannot see how it could be said Ps and D4 had a proximate relationship at the relevant time in February 2009. In any event, it was plain and obvious there were other remedies available to Ps, not least against D1, D2 and D3 (whom Ps were also suing in the present action for the same reliefs) and (if they saw fit) possibly Song too. 74.Viewed objectively, on the pleas in the ASoC/FBP, I am unable to see how D4 assumed responsibility vis-à-vis Ps. There was no suggestion in the ASoC that D4’s receipt of $50M from D2 and payment of $50M to D3 were not in accordance with clients’ instructions, and there was no pleaded foundation for the “foreseeability” element. Rather, the pleas in the ASoC/FBP (ie descriptions of what D4 did for their clients Song/D2) appeared to assume the existence and breach of a common law duty of care without sufficient material averments on the anterior elements of “foreseeability”, “proximity” and “neighbourhood” and/or “assumption of responsibility” that are essential for establishing the existence of a common law duty of care. On such basis, there was paucity of necessary pleas in the ASoC/FBP to show why it would be fair, just and reasonable to impose a duty of care on D4 at common law for the benefit of Ps. 75.Mr Kim suggested this was an inappropriate forum to consider/decide whether any common law duty of care should arise in a novel context, which issue, he said, should be adjudicated on the basis of law and evidence ventilated at trial. But he did not condescend on arguable contentions as to why so sailing into uncharted waters was tenable (even on the threshold for striking out applications) in light of the clear and obvious legal propositions explained above. On this I bear in mind that Lord Bridge of Harwich said at page 618 in Caparo Industries plc that:
In my view, there were no unusual or exceptional circumstances in the present situation to give rise to a duty of care at common law. 76.At the Hearing, Mr Kim drew attention to a note (not found in or annexed to his written submissions) said to be downloaded from the JFIU website that referred to Practice Direction P issued by the Law Society of Hong Kong (effective since 1 July 2008) and also to 2 further documents, ie “The New Practice Direction P and its Implications” and “Practice Direction P – Guidelines on anti-money laundering and terrorist financing”, but Mr Kim did not provide any of these 3 documents for consideration by Mr Lee or this court. 77.The note Mr Kim produced referred to “some of the common red-flag indicators”, and he placed particular emphasis on the following indicators:
Mr Kim argued that since decisions on fairness, justice and reasonableness are policy decisions inspired by legal or public policy,[69] it must be a clear policy issue for solicitors confronted with the aforesaid “common red-flag indicators” to make proper/timely report under the OSCO requirements and to be visited with a common law duty of care actionable by private law civil claim. 78.Mr Lee could have taken the point that the note from the JFIU website was extraneous to Ps’ pleadings, which point was all the more regrettable by silence on the subject in both the P1 Aff and Mr Kim’s written submissions. But Mr Lee’s brief but fundamental point was that the note drawn from the JFIU website did not advance understanding any further because the common red-flag indicators referred therein would at best assist solicitors in complying with the statutory reporting requirements, but there was nothing in the note itself to demonstrate D4 would therefore owe a common law duty of care to actual victims of organised crimes or to their clients’ counterparties in commercial arrangement. 79.Further, I am unable to see how some of the common red-flag indicators would be pertinent in any event. Eg, for paragraph 77(d) above, according to the Attendance Note D4’s Wong did meet Song face to face in Shanghai, and for paragraph 77(e) above, $50M that P2 gave to D2 did not “u-turn” back to P2. Mr Kim also did not explain how these points would be relevant to a striking out application based on no reasonable cause of action when matters extraneous to Ps’ pleadings would not be considered. This brings me to the next point. 80.Despite his vigorous complaint against D4’s attempt to resort to the Wong 1st and 2nd Affs (see paragraph 46 above), it was Mr Kim who travelled beyond the ASoC/FBP and who resorted to D4’s Defence and available affirmation evidence (eg the JFIU Report) in the course of his oral submissions at the Hearing to suggest D4 owed a common law duty of care to Ps. I reject such approach. If D4 was constrained to mount their striking out application for no reasonable cause of action on the basis of the ASoC/FBP alone, I cannot see how Ps could marshal other evidence/ materials (eg the JFIU Report exhibited to the Wong 2nd Aff) to assert there was a viable cause of action “on their pleadings”, especially when Mr Kim in his written submissions invited this court to expunge the Wong 1st and 2nd Affs “for the purpose of the no reasonable cause of action ground of striking out”. I will consider Mr Kim’s other arguments on the striking out application in Part VIII(c) below. 81.By reason of the above matters, Ps’ case as pleaded in the ASoC/FBP had no reasonable cause of action for breach of statutory duty simpliciter (by reason that breach of sections 25 and 25A of OSCO is not actionable by a private law civil claim) and/or for breach of common law duty of care (by reason that D4 did not owe any duty of care to Ps). Since Ps’ claim on conversion vis-à-vis D4 was made “[by] reason of the facts and matters aforesaid” (see paragraph 26 of the ASoC), it would also fall away. 82.Causation/remoteness/loss Mr Lee further argued even if (a) D4 had a statutory duty to report to an authorised person, (b) D4 was in breach of such obligation and (c) such breach was actionable in private law (which D4 denied), Ps’ claim against D4 was still unsustainable because there was no sufficient plea that D4’s alleged breach caused Ps’ loss. Paragraph 19A of the ASoC pleaded that “[by] reason of [D1’s] false representations aforesaid [ie D1 Representation] [P2] has suffered loss and damage by and as a result of delivering the Cheque to [D1] as referred to in paragraph 10 above” (ie on 21 January 2009), so Mr Lee submitted Ps would have suffered the loss of $50M in any event irrespective whether D4 subsequently made timely report to JFIU or not. But in light of the conclusion in the above paragraph, there is no need for me to consider this argument. (c) Mr Kim’s oral submissions at the Hearing 83.At the Hearing, Mr Kim underlined contradictions between pleas in D4’s Defence on one hand and (a) the contents of the JFIU Report dated 1 March 2011 (signed by Mr Wong and Wong on behalf of D4), and (b) information available from the DBS Discovery on the other hand. 84.The JFIU Report stated inter alia as follows:
85.Mr Kim submitted the JFIU Report suggested D4 knew (a) Song intended to jointly invest together with other investors in projects in Macau, (b) her instructions to buy a BVI shelf company (ie D2) was “for the said purpose”, (c) she wanted to open a Macau bank account (ie D2 Account) “for the aforesaid purpose”, and (d) the Cheque given by Song’s investment partner P2 was “its share of investment capital” which P2 asked D4 to deposit in the D2 Account, and (e) D4 via Wong was instrumental in setting up and operating the D2 Account as particularised in the FBP. Mr Kim also reminded that the DBS Discovery showed the Cheque was deposited in the D2 Account on 6 February 2009,[70] and the D2/D4 Transfer was made on 9 February 2009. 86.But Paragraph 13(2) of D4’s Defence[71] was not inconsistent with paragraph 85(a)-(b) above. Paragraph 20(1) of D4’s Defence that averred D4 had copy Cheque on the D4 File did not appear to contradict the JFIU Report. So Mr Kim must have been referring to paragraph 20(2) of D4’s Defence that averred the copy Attendance Note dated 30 January 2009 on the D4 File recorded Song told Wong (a) money received from P2 was deposited in the D2 Account and she would instruct DBS Macau to remit the monies to the D4 Account, and (b) she was considering donating the money to D3 and would confirm her instructions. It was said (a) above contradicted the DBS Discovery that revealed the Cheque was only received in the D2 Account on 6 February 2009, and (b) above contradicted the JFIU Report that stated P2 last told D4 on 21 January 2009 the Cheque for $50M was its share of investment capital. 87.I am afraid these arguments could not assist Ps. First, these contentions were irrelevant to a striking out on the ground of no reasonable cause of action. One had to look at Ps’ ASoC/FBP (and not D4’s Defence or Ps’/D4’s affirmation evidence) to see if there was a reasonable cause of action, and if there was none, the strength/weakness of D4’s defence contentions would be neither here nor there. Secondly, even if Mr Kim were right in saying the aforesaid alleged discrepancies in relation to D4’s case (in contra-distinction to the sufficiency of Ps’ case) would raise red‑flag indications for making report to an authorised person under OSCO, it did not follow (as Mr Kim would have this court conclude) a common law duty of care would be applicable in such circumstances. The discussion in paragraphs 65-81 above explained otherwise. Thirdly, it also did not follow (as Mr Kim submitted) the present circumstances would be akin to the situation in White & anor, and I refer to the discussion in paragraphs 70-73 above. 88.As Mr Lee said, it was a bold submission (which I do not accept) for Ps to suggest the points in paragraphs 84-86 above in relation to the JFIU Report would give rise to sufficient “proximity” or “neighbourhood” between D4 and Ps to found a common law duty of care when Ps were unable to point to any legal proposition to support the contention that solicitors do owe a duty of care to their clients’ counterparties in a commercial arrangement to make proper and timely report under OSCO, especially when such counterparties had potential avenues of recourse against other parties (see paragraph 73 above). In my view, the present circumstances were a far cry from the situation in White & anor. For all these reasons, I am unconvinced Mr Kim’s arguments in paragraphs 83-86 above took the matter any further. 89.Mr Lee made 2 further points. First, he submitted there was no material inconsistency as alleged, especially when the brief account in the JFIU Report on the transit of monies was made in 2011 in the immediate aftermath of Mr Wong becoming aware of an investigation into suspected money laundering by D3 thereby raising suspicion that led to the report, and the pleadings were made several years later upon fuller understanding of the situation but which in no way altered the substance of the matter. Secondly, Mr Lee argued that even if the contents of the FBP were to be considered,[72] they would not have advanced Ps’ case as the same group of averments had been recycled twice for inconsistent purpose (see paragraphs 110-112 below). However, in light of the aforesaid analysis, there was no need for me to deal with these further points. (d) Frivolous or vexatious claim (e) Abuse of the process of the court 90.The court’s process must be used bona fide and properly. Since, as I have found, the ASoC against D4 disclosed no reasonable cause of action, Ps’ pleaded claim against D4 must be frivolous or vexatious and/or an abuse of the process of the court. So there was no need for me to go further to consider whether or not (a) Ps’ pursuit of their pleaded claim against D4 was because they were unable to recover the alleged loss of $50M from D2, especially when Ps did not effect service of originating process on D2 until June 2015 (see paragraph 24 above)[73] and/or (b) Ps joined or appeared to have joined D4 in the present proceedings as an afterthought (as they had no reasonable cause of action against D4) to fish for documents/information that might assist their claims against the other Ds. IX. D4 SUMMONS: ORDER 14A APPLICATION (a) Legal principles 91.Order 14A rule 1 of the RHC provides that:
92.Hong Kong Civil Procedure 2017 states as follows:[74]
In Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd & anor,[75] Chan PJ reiterated that “if it is necessary for the court to hear evidence to resolve a factual dispute in order to come to a determination on the question of law ......, it would not normally be suitable to invoke O.14A”. Likewise, Order 14A procedure will be unsuitable if the legal viability of a cause of action is unclear (perhaps because the law is in transition). But Sir Thomas Bingham MR in E (a Minor) v. Dorset County Council and other appeals[76] reminded that if after argument the court can be properly persuaded no matter what (within reasonable bounds of the pleading) the actual facts are the claim is bound to fail for want of a cause of action, there is no reason why the parties should be required to prolong the proceedings before that decision is reached. Indeed, Korso Finance Establishment Anstalt v John Wedge referred to in Hong Kong Civil Procedure 2017[77] reminded that a respondent to an Order 14A application should not be allowed to hunt around for evidence or to hope something may turn up on discovery. 93.A 3-point approach was adopted in Rockwin Enterprises Limited v Shui Yee Ltd & ors:[78] (a) whether the question was one of law or construction of a document, (b) if so, whether the question (ie (i) whether the court has all necessary facts/matters such that the question is suitable for determination without trial, (ii) if so, whether it will determine (subject to appeal) the entire cause/matter or any issue/claim therein, and (iii) whether the court in its discretion is satisfied the question ought to be determined under O14A of the RHC) should be determined under Order 14A procedure,[79] and (c) if so, what determination and consequential orders are to be made. (b) Question 94.Hong Kong Civil Procedure 2017 states that “[in] many cases in which the application to strike out a pleading under O.18, r. 19 depends upon a point of law, it is advisable to apply in the alternative to have the relevant point of law determined under O.14A ……”[80] Further, Order 14A rule 1(5) of the RHC provides “nothing in this Order shall limit the powers of the Court under Order 18, rule 19 or any other provision of these rules”. Since I have found the ASoC/FBP as against D4 discloses no reasonable cause of action, there is no need for me to deal with D4’s Order 14A application, but I shall do so briefly for the sale of completeness. 95.In my view, the Question was clearly a question of law that was precisely framed and suitable for determination without a full trial. It was a dominant feature of the pleaded case in the ASoC between Ps and D4, and determination of the Question would finally determine (subject to possible appeal) Ps’ entire claim against D4 in the ASoC. 96.Mr Kim submitted the Question would entail detailed examination of the law on private law causes of action arising from statutory breaches and the legislative intent in the present context, and such legal issues were interwoven with issues of fact, hence it would be undesirable to proceed with an application under Order 14A of the RHC. But I disagree the law on duty of care owed in tort is uncertain/complicated or “in a state of transition”. After all, firm guidance and established principles have fallen from the CA/CFA, and the application of such principles to the present circumstances for determination of the Question would not involve or require resolution of controversial issues of fact (as evident from the discussion in Part VIII(b) above on D4’s striking out application for no reasonable cause of action), and would not turn on assumed or hypothetical facts. Rather it would turn on the pleadings and legal authorities, and I have found it plain and obvious that Ps had no cause of action in tort against D4 for breach of statutory duty simpliciter or for breach of the common law duty. I therefore answer the Question in the negative, ie D4 did not owe Ps a duty of care to comply with the obligation to make disclosure to the relevant authorities under OSCO, and on such determination there was no reason to prolong Ps’ pleaded claim against D4 towards trial and thereby cause Ps and D4 to incur unnecessary costs. I would strike out Ps’ claims in the ASoC/FBP against D4. X. Ps SUMMONS (a) Legal principles: amendment of pleadings 97.Order 20 rules 5 and 8 of the RHC provide as follows:
98.The broad principles summarised in Ketteman v Hansel Properties Ltd[81] suggest that generally all amendments ought to be made as may be necessary for determining the real question in controversy between the parties[82] unless the applicant has been acting mala fide or the mistake he has made causes injustice to the other party.[83] But as a result of the Civil Justice Reform the CA in Topwell Corp Ltd v Kwan Kam Kee put in a caveat as follows:[84]
99.It behoves the party seeking the amendment to ensure adequate particularity,[85] and it is no defence to argue particulars can always be ordered.[86] After all, it is essential for a party to plead all necessary averments of his cause of action, and it is not the function of particulars to take place of such necessary averments in order to fill in the gaps to make good an inherently bad pleading.[87] 100.“The court will always look at the materiality of the proposed amendment. …… An inconsistent or useless amendment will not be allowed ……; nor an addition of some irrelevant matters or an amendment which fails to give the necessary material facts or particulars ……”[88] As explained in Hsu Ming Chi v Lam Shu Chit & ors,[89]
(b) Legal principles: pleading fraud 101.Allegations of fraud must be pleaded distinctly and with the utmost particularity, and should not be left to be inferred from the facts.[90] (c) Legal principles: pleading conspiracy to defraud 102.In relation to an “unlawful means” conspiracy in which the participants combine together to perform acts which are themselves unlawful, the plaintiff must plead and prove the following necessary elements: (a) a combination or agreement between 2 or more individuals, (b) an intent to injure, (c) pursuant to which combination or agreement and with that intention certain acts were carried out, and (d) resulting loss and damage.[91] In Yong Weng Chye v Ho Yu Kuen & ors, I explained as follows:[92]
(d) Discussion 103.“Fresh” cause of action Conspiracy to defraud is a “fresh” cause of action pleaded in the Draft Amendments. Paragraph 28 of Mr Kim’s written submissions dated 6 April 2016 appeared to suggest the Ps Summons was “in the alternative” to dismissal of D4 Summons, but it was clarified at the Hearing that Ps’ pursuit of the Ps Summons was irrespective of the outcome of the D4 Summons. 104.Ps’ contentions Mr Kim submitted the “fresh” cause of action on conspiracy to defraud in the Draft Amendments did not “fundamentally change the story” and was not brought “to support a hopeless case”. Rather, the Draft Amendments came about because of facts and matters elicited from the DBS Discovery (part of which had been set out in the FBP) and D4’s Defence, and they were necessary for determining the real question in controversy between the parties. Mr Kim submitted these facts and matters now fully particularised in the Draft Amendments gave “all details pertaining to all [Ds] and their involvement in the conspiracy to defraud [Ps]”. He argued the facts/pleas spoke for themselves, and even on a cursory perusal there was nothing to suggest they could be subject to any further application to strike out. 105.Conspiratorial agreement, overt acts and unlawful means Mr Kim submitted paragraph 27 of the Draft Amendments pleaded P’s primary case of the actual conspiratorial agreement and paragraph 28 of the Draft Amendments pleaded Ps’ fall‑back case of inferring a conspiratorial agreement from the acts particularised therein. Mr Kim referred to paragraph 83 of Yong Weng Chye to say that more often than not it would be necessary to look at the overt acts as pleaded to see what inferences can be drawn as to the existence or otherwise of the alleged conspiratorial combination or agreement, and paragraph 28 of the Draft Amendments had sufficiently pleaded the overt acts so D4 should have no difficulty in understanding Ps’ cause of action against them on conspiracy to defraud and/or in responding to such claim. Mr Kim submitted paragraph 29 of the Draft Amendments also pleaded with particularity the unlawful acts/means by which P2 was injured. On such basis, it was said that all elements of the cause of action on conspiracy to defraud were made out in the Draft Amendments. 106.Mr Lee complained the Draft Amendments lacked important and/or necessary particulars for such new cause of action, and failed to plead any overt act committed by D4. It was also said the Draft Amendments failed to plead (a) a conspiratorial agreement alleged against Ds had been entered into by D4 and any other of the Ds, (2) there was an intent by Ds to injure Ps, (3) the conspiratorial agreement was implemented, and (4) such implementation caused the damage to Ps. 107.I agree that paragraph 27 of the Draft Amendments of itself could not amount to a primary case for conspiracy to defraud for it is no more than a bare assertion of an unlawful means conspiracy without any particulars. But that was not the end of the matter. Paragraph 28 of the Draft Amendments pleaded what Mr Kim submitted was Ps’ fall-back case of conspiracy to defraud that was “apparent from or alternatively is to be inferred from” a set of “facts and matters”. Mr Lee submitted this alternative basis was insufficient as it was not pleaded with utmost particularity, and also the conspiratorial combination or agreement in establishing an overt act (which Ps failed to “plead”) could not be inferred. I am mindful of the observations by Poon J (as he then was) in paragraphs 18-19 in Total Lubricants Hong Kong Limited that inferences are pleas of evidence (not of material facts) and are liable to be struck out, but as I have explained in Yong Weng Chye:
108.In gist, D4’s overt acts as pleaded in paragraph 28(a)-(h) and (j)-(l) of the Draft Amendments were (a) D4 aided their client Song to incorporate D2 and to open the D2 Account, and (b) assisted their clients Song/D2 to receive the Sum from P2, to transfer $50M to the D4 Account and to donate $50M to D3 for funding the Estate Litigation. The gravamen of Ps’ complaint against D4 was in paragraph 28(f), (l) and (m) of the Draft Amendments that (i) D4 made payments totalling $50M from the D4 Account to D3 to fund the Estate Litigation when D4 knew D2 had been incorporated for only a short period and when D4 on behalf of D2 (whose sole director/shareholder was Song) answered DBS’ due diligence questions for opening the D2 Account to the effect that D2 was “engaged in the business of property investment in Hong Kong / Macau having 2 employees” (even though Song had not submitted proof/credentials on such experience), and (ii) D4 was aware of and participated in Song’s change of mind over a short time over use of $50M for the original investment purpose to the subsequent donation to D3 to fund the Estate Litigation. This fed Ps’ averment in paragraph 29(4) of the Draft Amendments that D4 “knowingly and dishonestly assisted” in incorporating D2, opening/maintaining the D2 Account, effecting the D2/D4 Transfer and transferring $50M to D3. It was said this dishonest knowledge coloured D4’s acts and characterised their unlawful nature, and this “knowing” assistance in relation to the overt acts demonstrated D4 did not act independently but in a concerted manner that involved conspiratorial combination(s) or agreement(s) with the other Ds. 109.Mr Lee suggested the averments as to D4’s knowledge in paragraph 29(4) of the Draft Amendments were thin, and hence the alleged overt acts by D4 were not “unlawful means”. But Peter LJ in Rigby v Decorating Den Systems Ltd[93] observed that:[94]
I also refer to the observation in paragraph 64 in Yong Weng Chye. In my view, although the Draft Amendments were not perfect, there were enough averments/particulars to sustain the cause of action for conspiracy to defraud involving D4. It might well be that, as Mr Lee submitted, if leave were granted for Ps to re-amend the ASoC as per the Draft Amendments, D4 would like to apply for further and better particulars of Ps’ new claim, but the question here is whether it would be a suitable case for an application to strike out the Draft Amendments. I am not convinced D4 would not understand the thrust of Ps’ cause of action on conspiracy to defraud from the pleaded averments or the Draft Amendments were unsustainable. 110.Pleading inconsistent alternatives Mr Lee submitted the Draft Amendments pleaded inconsistent claims (breach of duty of care and conspiracy to defraud) which was embarrassing and expressly impossible under Order 18 rule 12A of the RHC.[95] He suggested there is a distinction between advancing mutually inconsistent allegations of fact (which would make it impossible to verify such pleadings) and advancing alternative positions based on the same underlying facts (eg advancing a fall-back position in law in the event the court held contrary to a party’s primary contention).[96] On the other hand, Mr Kim suggested the underlying facts in Ps’ original claim in the ASoC/FBP and their “fresh” claim in the Draft Amendments were the same, and these two claims were alternative causes of action in the Draft Amendments. It was said there was no hard and fast rule to amendment of pleadings which is a matter of discretion, and Yu Man Fung Alice v Chau Sing Chi Stephen demonstrates it is permissible to put forward “different legal formulations of the cause of action of the Plaintiff”.[97] In that case, the draft amendments were reasonably arguable and did not purport to support a hopeless case; they were allowed as the plaintiff did not fundamentally or radically change her story. 111.There was no doubt the Draft Amendments raised a “fresh” cause of action, and I agree this was the 1st time fraud was asserted against D4. The complaint against D4 in paragraph 25 of the ASoC in respect of D4’s negligence and/or breach of duty did not connote intentional fraud or dishonesty. Mr Lee submitted Ps’ proposed “unified claim” in the draft Re-Amended SoC containing inconsistent averments of carelessness versus fraud/dishonesty were not “alternative” pleas under Order 18 rule 12A(b) of the RHC, and this would be sufficient to disallow the Draft Amendments. In this respect, I note that right at the beginning of the pleas for the “fresh” cause of action for conspiracy to defraud in paragraph 27 of the Draft Amendments Ps pleaded it was a “furthermore” claim rather than “further or alternative” claim, so it appeared Ps’ “fresh” cause of action on conspiracy to defraud was not an alternative to the existing causes of action against D4 on breach of duty simpliciter and/or breach of the common duty of care. But this complaint is now immaterial because I had struck out the existing causes of action against D4, and the concern over conflicting pleas fell away. 112.Mr Lee also argued no reasonable grounds had been made out for pleading inconsistent alternatives (see Order 18 rule 12A(a) of the RHC). The Lam Aff suggested conspiracy of defraud was introduced as a result of the DBS Discovery and D4’s Defence (in 2014) which supposedly implicated D4, but Mr Lee submitted Ps did not apply to re-amend until 2015 and no justification was given as to why a claim of fraud should now sit atop an earlier claim of carelessness. As explained above, the concern over inconsistent allegations fell away upon striking out the existing causes of action against D4, and fraud had been pleaded against D1 in the ASoC in relation to the D1 Representation. In any event, Mr Lee’s complaints above essentially went to alleged delay in raising the Draft Amendments rather than the merits of such pleas themselves, which I have found to be sustainable. At this rather formative stage of the present action (when discovery and witness statements were not yet complete), I am not with Mr Lee on this contention. 113.Knowing assistance Mr Lee submitted the new cause of action on unlawful means conspiracy to defraud Ps pleaded D4’s unlawful act as one of dishonest assistance (see paragraph 29(4) of the Draft Amendments). Mr Lee argued the main elements for a claim for dishonest assistance[98] are (a) the commission of primary breach of trust or some other breach of duty by the trustee or person in a fiduciary relationship with the claimant, and (b) the defendant accessory’s assistance in the primary breach was given dishonestly.[99] Mr Lee submitted that (a) above had not been pleaded in the Draft Amendments or discernible from other parts of the ASoC, so a claim against D4 for dishonest assistance was not made out, and hence the Draft Amendments did not disclose a sufficiently particularised claim of unlawful means conspiracy. 114.But as Mr Kim submitted, there was no independent cause of action on knowing assistance on the part of D4. Rather the pleaded “assistance” was D4’s overt acts that implemented the conspiratorial combination(s) or agreement(s), and the pleaded “knowledge” went to the question of dishonesty that characterised D4’s overt acts/statements as unlawful acts of the conspiracy. Whilst fraud/dishonesty must be distinctly alleged and sufficiently particularised, it was reasonably clear from paragraphs 28-29 of the Draft Amendments that Ps were relying on (a) the circumstances and temporal proximity of the overt acts and facts/matters pleaded in paragraphs 28-29 of the Draft Amendments to colour the nature of the monies/transfers, and (b) the manner in which $50M was applied (for donation to D3 to fund the Estate Litigation) so very shortly after D4 became aware such $50M was for investment and D4 in turn made known to DBS D2 was established for investment purpose, to find/infer that D4 knew the alleged overt acts were unlawful acts/statements in furtherance of concerted conspiracy by Ds. 115.Limitation defence Mr Lee submitted the payments in question and the alleged conspiracy occurred latest by February 2009 (ie D4 on behalf of D2 transferred $50M to D3 on 12 and 16 February 2009), so the time limit for bringing the claim for conspiracy to defraud would have expired in 6 years (ie February 2015),[100] hence leave to amend should not be given if its effect would be to deprive D4 of a limitation defence which would otherwise be lost as a result of the operation of the relation back rule.[101] Mr Lee acknowledged that on the state of the existing authorities (which were binding on this court) the appropriate time to determine the expiry of the limitation period is when the application to amend was made (ie 15 January 2015) rather than the date on which leave to amend is granted (ie date of this Judgment).[102] Mr Lee argued such approach attracted different views in Hong Kong and was at odds with authorities in other jurisdictions, and D4 would like (and Mr Kim had no objection) to reserve their right to pursue this ground of opposition against leave to amend on appeal if necessary and if so advised. 116.Other reasons I am unable to agree with Mr Lee’s suggestion that in introducing a new claim against all Ds for conspiracy to defraud in 2015 after close of pleadings based on facts elicited from the DBS Discovery (summarised in the FBP) and D4’s Defence in mid-2014 (when, Mr Lee submitted, the parties ought to have focused on preparation for trial) constituted an abuse of the process of the Court that was oppressive. I am also unconvinced that the new cause of action was introduced so late in the day that it would cause irremediable forensic prejudice to D4. Further, as the facts and matters pleaded in the Draft Amendments were largely elicited from the DBS Discovery and D4’s Defence, it could hardly be said the new cause of action for conspiracy for defraud was (as pleaded) a sham. Whether or not it was actually so would be a matter of evidence and/or trial. I do not believe the Draft Amendments would prejudice, embarrass or delay the fair trial of the action. After all, the parties still required time/preparation in terms of discovery and witness statements before they would be ready for trial. In my view, the Draft Amendments were necessary for determining the controversy among the parties. The proposed new cause of action on conspiracy to defraud should be allowed. XI. CONCLUSION 117.In respect of the D4 Summons, I order that (a) paragraphs 20‑26 of the ASoC against D4, (b) items 1-2 in the prayer of reliefs in the ASoC against D4 and (c) the FBP be struck out, and the causes of action and reliefs therein against D4 be dismissed. There is no reason why costs should not follow event, and I grant a cost order nisi that Ps shall pay D4 costs of and occasioned by the D4 Summons (including all costs reserved if any) to be taxed forthwith if not agreed. 118.In respect of the Ps Summons, I grant leave for Ps to re-amend the AWoS and ASoC in the following manner:
119.I also grant consequential directions under the Ps Summons as follows:
120.There is no reason why usual costs order should not apply. I therefore grant the following cost order nisi:
121.I further direct Ps to forthwith serve a copy of this Judgment on the respective solicitors for D1 and D3, and also on D2.
Mr Minju Kim, instructed by Lam & Co, for the 1st and 2nd plaintiffs Oldham, Li & Nie, for the 1st defendant, excused from attendance The 2nd defendant, in person and absent Woo, Kwan, Lee & Lo, for the 3rd defendant, excused from attendance Mr Thomas Lee, instructed by Howse Williams Bowers, for the 4th defendant Schedule Conspiracy to Defraud
…… AND THE PLAINTIFFS CLAIM AGAINST THE 1ST,2ND,3RD AND4TH DEFENDANTS: ……
…… [1] group of companies comprising inter alia Chinachem Group Corporation Limited and Chinachem Group Company Limited [2] D4 agreed Right Margin was appointed as sales agent of the Xiamen Project [3] on its face the MOU (a) was made/signed by P2 and D2 (signed by Song), (b) stated in the recitals P2 and D2 agreed to investment in real estate project, land construction and stock purchase in a preliminary estimated sum of $100,000,000 with each party bearing 50% of the investment sum and having 50% interest in such investment, and (c) stated it was agreed (i) P2 had paid D2 $50M being its share of the investment sum for which D2 acknowledged receipt, (ii) D2 held total investment sum of $100,000,000 from P2 and D2, and (iii) P2 and D2 were looking for appropriate investment project for approval in writing by the parties [4] on its face the Cancellation Agreement (a) was made/signed by P2 and D2 (signed by Song), (b) stated in the recitals that friendly negotiations to identify appropriate investment project were in vain so P2 and D2 agreed to cancel the MOU, and (c) stated it was agreed D2 would return investment money of $50M to P2 within a year of signing the Cancellation Agreement [5] D4 claimed D4 Partners had no knowledge of such letters until copies were received from Ps’ solicitors on 3 June 2014 [6] D4 claimed D4 Partners had no knowledge what documents were disclosed pursuant to the DBS Discovery or what Ps discovered from those documents until 3 June 2014 [7] according to the letter from DBS’ solicitors dated 22 July 2014, the written instructions dated 9 February 2009 signed by Song on behalf of D2 gave an incorrect beneficiary account number, so written instructions dated 10 February 2009 signed by Song on behalf of D2 with correct beneficiary account number was re-sent [8] but D4 agreed (a) there was a reported ICAC investigation in relation to D3 in/about April 2014, (b) D4 received from D2 the Sum ($50M less bank charges) during February 2009, and (c) D4 on behalf of and as instructed by D2 delivered $50M to D3 by 2 donations during February 2009 [9] D4 claimed the D4 Partners had no knowledge of the contents of such document(s) before copy(ies) was/were received from Ps’ solicitors on 4 July 2014 [10] Ps claimed D4 knew D2 had been established for just a short period and its only director/shareholder was a 75 years old lady living in PRC [11] but D4 did not have proof/credentials that Song had relevant experience [12] filed for Ps’ application for leave to serve proceedings on D2 out of jurisdiction [13] see paragraph 9 of the P1 Aff (but the DBS Discovery revealed that instructions were given by D2 (signed by Song) on 3 February 2009 for collection of the Cheque and (if paid) to credit proceeds to the D2 Account (see paragraph 14(b) above), and the current account statement dated 27 February 2009 in respect of the D2 Account showed that $50M was credited to such account as “good fund” on 6 February 2009) [14] see footnote 7 above (and the DBS Discovery included DBS’ SWIFT transfer record dated 9 February 2009 for the D2/D4 Transfer with supplemental SWIFT record on 10 February 2009 to amend beneficiary account number) [15] according to the letter from DBSs solicitors dated 22 July 2014, DBS’ officer telephoned Wong (as Delegated Person for Confirmation in respect of the D2 Account) on 9 and 10 February 2009 to confirm instructions for the D2/D4 Transfer [16] the amount suggested it could be payment of annual charges to Offshore Inc Limited [17] Offshore Inc Limited was a well-known company for selling BVI shelf companies [18] see paragraph 12(n) of the Lam Aff where Mr Lam claimed it was Wong who reported to Song (but see paragraph 14(a) above and paragraph 20(2) of D4’s Defence that averred it was Song who informed Wong) [19] but see footnote 13 above which suggested $50M was received as good fund in the D2 Account on 6 February 2009 [20] see paragraph 30(a) and footnotes 14-15 above which suggested that written instructions were signed by Song on behalf of D2 [21] Mr Lam queried why Wong (who knew of Song’s intention to donate $50M to D3) did not advise Song to donate directly to D3 from the D2 Account [22] according to what D4 told DBS, D2 was for investment in properties and stocks in Hong Kong and Macau (see paragraph 22(f) above) [23] Vol 1 para 18/19/4 at pp 458-460 [24] see Byjoy Ltd v Thorogood Estates Ltd [1985] 2 HKC 746, 758 [25] see Hong Kong Civil Procedure 2017 Vol 1 para 18/19/5 at p 460 [26] see Order 18 rule 19(2) of the RHC [27] Vol 1 para 18/19/7 at p 462 [28] To J in Falcon Private Bank Ltd v Borry Bernard Edouard Charles Limited & anor HCA1934/2011 (unreported, 9 July 2012) at para 212(d) stated that: “…… In an appropriate case, the court ought not to be slow to exercise the power to strike-out in order to dispose of proceedings which are hopeless and without foundation in law. In those cases, such power is required by the very essence of justice to be exercised, so as to prevent the defendant from being harassed and put to expense by frivolous vexatious or hopeless claims: Riches v DPP [1973] 1 WLR 1019 at 1027” [29] see Hong Kong Civil Procedure 2017 Vol 1 para 18/19/9 at p 463 [30] Vol 1 para 18/19/9 at p 463 [31] HCA1934/2011, To J (unreported, 9 July 2012) para 212 [32] Vol 1 para 18/19/4 at p 460 [33] HCA1694/2008, Poon J (as he then was) (unreported, 15 December 2009) [34] see HKSAR v Pang Hung Fai (2014) 17 HKCFAR 778 and HKSAR v Yeung Ka Sing, Carson FAMC28&29/2015 (unreported, 14 August 2015) (which appeal was eventually dismissed by the Court of Final Appeal in HKSAR v Yeung Ka Sing Carson (2016) 19 HKCFAR 279) (see also Seng Yuet Fong v HKSAR [1999] 2 HKC 833) [35] see paragraphs 14-21 of Mr Kim’s written submission dated 26 January 2015 which he adopted for the Hearing [36] Mr Kim assumed the Wong 1st and 2nd Affs were filed/served to support D4’s striking out application for no reasonable cause of action because he perceived nothing in such affirmation evidence to establish a strike out on the frivolous or vexatious / abuse of process grounds that they pertained to be in support of [37] [2014] 4 HKC 179 [38] (2016) 19 HKCFAR 454 [39] [1995] 2 AC 633, 731-732 [40] [1912] AC 149, 165 (quoted by Lord Diplock in Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173, 185) [41] [2010] EWHC 774 at Annex H [42] [2013] EWHC 1068 (Ch) [43] read in light of the plaintiff’s role as insurance agent and the defendant’s role as technical representative as explained by the CFA in Dah Sing CFA [44] certain other provisions of OSCO came into effect later on 28 April 1995 [45] section 2(1) of OSCO defines “authorized officer” to mean (a) any police officer; (b) any member of the Customs and Excise Service established by section 3 of the Customs and Excise Service Ordinance (Cap 342); and (c) any other person authorized in writing by the Secretary for Justice for the purpose of OSCO (and an “authorized officer” includes JFIU) [46] in contra-distinction to section 108 of the Securities and Futures Ordinance Cap 571, section 76(1) of the Sex Discrimination Ordinance Cap 480 and section 94(1) of the Banking Ordinance Cap 155 [47] 13th ed para 12-25 at p 944 [48] see Hong Kong Legislative Council: Official Record of Proceedings, 18 December 1991 (extracts at pp 1-5 and 47-99, and in particular pp 48-52 and 94-99) [49] I do not agree with Mr Kim’s suggestion that this sentence reflected OSCO’s legislative intent for protecting a particular class ie victims of organised crime since the concern thereby expressed that “everyone” “may become …… victims” at best referred to the general public who might fall victim to organised crimes rather than a limited class of actual victims who suffered loss as a result of organised crimes actually perpetrated on them [50] see Hong Kong Legislative Council: Official Record of Proceedings, 15 July 1992 (extracts at pp 1-5 and 66-78, in particular pp 75-78) [51] this was eventually reflected in sections 25 and 25A of OSCO [52] see Hong Kong Legislative Council: Official Record of proceedings, 12 October 1994 (extracts at pp 67-70 and 122-150, in particular pp 122-128 and 148-149) [53] comprising law enforcement agencies, financial regulators and professional bodies (eg the Law Society) [54] this was to address the operational difficulty in proving that a person knows or has reasonable grounds to believe the proceeds are those of an indictable offence [55] to deter people from dealing with property known or believed to represent proceeds of an indictable offence and to reflect the gravity of the offence [56] in response to requests by LegCo members at the Bills Committee meeting on the Drug Trafficking and Organized Crimes (Amendment) Bill 2000 [57] see Paper No CB(2)820/00-01(01): Drug Trafficking and Organized Crimes (Amendment) Bill 2000, Note on “reasonable grounds to suspect”, “reasonable grounds to believe” and reasons for introducing two money laundering offences using different mental elements by Security Bureau, January 2001 (see also Paper No CB(2)1073/00-01(01): Drug Trafficking and Organized Crimes (Amendment) Bill 2000: Proposed mental element of “Having reasonable grounds to suspect” by Security Bureau, March 2001) [58] [1990] 2 AC 605, 617-618 [59] (2011) 14 HKCFAR 14 - not cited by either Mr Kim or Mr Lee [60] [1993] 3 WLR 730 [61] [2016] 3 HKLRD 139, 147-148 – reasons for judgment handed down on 17 May 2016 shortly after the Hearing [62] [2007] 1 AC 181, 189 and 199 [63] [1995] 2 AC 207 [64] 3rd ed para 4.036 at p 168 [65] [1993] 3 WLR 730 [66] 3rd ed para 4.037 at p 168 [67] [1996] 2 HKLRD 227 [68] see also observations by Lord Browne-Wilkinson at p 276 that “…… negligence in the preparation and execution of a will has certain unique features ……” in that (a) there can be no conflict of interest between the solicitor and client (testator) and the intended beneficiary which eliminates the objection to imposing on the solicitor a duty towards a third party, and (b) inter vivos transactions takes effect immediately and the consequences of solicitors’ negligence are immediately apparent so that upon discovery they can be rectified by the parties or damages recovered by the client [69] see Tort Law and Practice in Hong Kong para 4.041 at p 170 (but careful study of the relevant paragraph therein showed the discussion there concerned legal policy arguments that are often seen in the court’s desire to limit the number of claimants and prevent floodgates of claims rather than to expand the scope of the common law duty of care) [70] see bank statement of the D2 Account dated 27 February 2009 [71] ie Song’s initial instructions to D4 were that she intended to invest in projects in Macau and to incorporate a company (D2) in connection with her investments in these projects [72] which Mr Lee submitted gave particulars of alleged breach of statutory obligation to report to an authorised officer payments of alleged misappropriated monies rather than particulars of the distinct/different concepts of “proximity” and “neighbourhood” that would have given rise to a duty of care [73] Mr Lee submitted Ps’ solicitors confirmed on 7 November 2014 they only attempted to serve the WoS on D2 by leaving it at D4’s address even though by that time D4 no longer represented or had contact with D2, and was not authorised (and had not informed Ps or Ps’ solicitors) they had authority to accept service of the present proceedings for D2 [74] Vol 1 paras 14A/2/2 and 14A/2/4 at pp 302-303 [75] (2003) 6 HKCFAR 222, 230 [76] [1994] 4 All ER 640, 649 [77] Vol 1 para 14A/2/4 at p 302 (unreported, February 15, 1994, CA Transcript 94/387) [78] [2003] 3 HKC 174, 183-185 [79] the court in the exercise of its residual discretion will bear in mind whether the question of law or construction is a dominant feature of the case as going to an important issue, and whether it may/will enable parties to avoid the expense of trial and assist them in the efficient disposal of the action if the question is dealt with [80] Vol 1 para 18/19/3 at p 458 [81] [1987] AC 189, 212 [82] see G L Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216, 1231 [83] see Tildesley v Harper (1878) 10 Ch D 393, 396-397 [84] [2014] 5 HKLRD 1, 13 (see also Li Shiu To v Li Shiu Tsang & anor HCA416/2003, DHCJ Lok (as he then was) (unreported, 14 August 2012) paras 14 and 16, and Igal Dafni v CMA CGM SA [2013] 2 HKLRD 73, 81) [85] see Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & ors [1994] 2 HKC 264, 269-270 which explains that the purpose of particularised pleadings is to inform the other side of the nature of the case he has to meet, prevent the other side from being taken by surprise at trial, limit the generality of the pleadings, claim and evidence, limit/define the issues to be tried (and to which discovery is required), and tie the hands of the party so that he cannot without leave go into any matters not included [86] see Tang Poon Lap also known as Tang Tak Ning v Tang Kam Kai & ors HCA761/1996, A Cheung J (as he then was) (unreported, 23 December 2003) paras 7, 8 and 13, and Wong Hing Faat v Hong Kong and Yaumatei Ferry Co Ltd [1992] 1 HKC 497, 503-504 [87] see Hong Kong Civil Procedure 2017 Vol 1 para 18/12/1 at p 430 [88] see Hong Kong Civil Procedure 2017 Vol 1 para 20/8/24 at p 505 [89] HCCL8/2013, Ng J (unreported, 22 October 2014) [90] see Aktieselskabet Dansk Skibsfinansiering at p 270 and Hong Kong Civil Procedure 2017 Vol 1 paras 18/12/1 and 18/12/6 at pp 430 and 432 [91] see Total Lubricants Hong Kong Limited & ors v Christopje de la Cropte de Chanterac & ors HCA1694/2008, Poon J (as he then was) (unreported, 15 December 2009) para 81 [92] HCA1303/2009 (unreported, 17 March 2010) [93] [1999] EWCA Civ 986 (unreported, March 15, 1999) (see Yong Weng Chye para 64, C Y Foundation Group Limited & anor v Best Max Holdings Limited & ors HCA787/2011, Recorder Lisa KY Wong SC (as she then was) (unreported, 3 June 2013) para 43, and Pulse Mediatech Limited v Ucan Technology Holdings Limited formerly known as Ucan Technology (Macau) Company Limited & ors HCA1157&1158/2014, Recorder Winnie Tam SC (unreported, 13 August 2015) paras 9-10) – not cited by either Mr Lee or Mr Kim [94] see Peconic Industrial Development Limited & anor v Yu Ka Hong Paul & anor CACV285/2005 (unreported, 30 May 2006) para 37 – not cited by either Mr Lee or Mr Kim [95] “A party may in any pleading make an allegation of fact which is inconsistent with another allegation of fact in the same pleading if – (a) the party has reasonable grounds for so doing; and (b) the allegations are made in the alternative.” [96] see Yiu Ka Fung Vincent trading as Confidence Services Centre v Info-Vantage Ltd & anor CACV96/2014 (unreported, 3 July 2015) paras 62 and 65 [97] HCMP307/2015 and CACV13/2016 (unreported, 20 January 2016) paras 25-28 [98] see Twinsectra Ltd v Yardley & ors [2002] 2 AC 164,194-195 and McGhee, Snell’s Equity 23rd ed paras 30-077 – 30-079 at pp 798-800 [99] according to an objective standard of an ordinary honest person, who would have the same knowledge of the circumstances as the accessory did, and sharing some of his personal characteristics such as his age and experience (see Snell’s Equity 23rd ed para 30-79 at p 799) [100] see Snell’s Equity 23rd para 30-087 at pp 802-803 and section 20 of the Limitation Ordinance Cap 347 [101] see section 35(1)(b) of the Limitation Ordinance Cap 347 [102] see Sun Focus Investment Ltd v Tang Shing Bor [2012] 1 HKLRD 738, Bowardley Enterprises Ltd v Millennium Group Ltd [2012] 4 HKLRD 492 and Lim Ban Thoon v Chintung Securities Ltd [1991] 2 HKC 204 | |||||||||||||||||||||||||||||||||||||||
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