Clark Quantum Kent v. Ihag Holding Ag and Another
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HCA 596/2023 [2026] HKCFI 5768 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 596 OF 2023 ____________ BETWEEN
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____________ D E C I S I O N ____________ A. INTRODUCTION 1.The Plaintiff is the beneficial owner of substantial funds under a trust, which were stolen by the trustee. In a prior action in 2017, he claimed against the Defendants and others for dishonest assistance of the trustee, knowing receipt and conspiracy, but leave to serve the writ out of jurisdiction on the Defendants was set aside in 2019. 2.The Plaintiff filed the writ in this case on 20 April 2023 (“the Writ”) with allegedly new facts discovered from criminal prosecutions by the Department of Justice in the United States (“DoJ”). He obtained leave from Master J Wong, on 6 April 2024, (a) to renew the validity of the Writ by 12 months (“the Renewal Order”) and (b) to serve the same on the Defendants out of jurisdiction in Switzerland (“the Service Out Order”). 3.This is the hearing of a summons dated 6 May 2025 issued by the Defendants (the “Set Aside Summons”), seeking to set aside:
4.The grounds relied on by the Defendants are:
5.The Plaintiff denies that the claims are time-barred. Due to fraud and deliberate concealment, the limitation period is postponed. New evidence, including admission by the Defendants’ employees and agents in US criminal proceedings, supports this new action. If there was material non-disclosure, the Plaintiff asks for a re-grant, as there is no prejudice to the Defendants and there should not be a disproportionate outcome. B. BACKGROUND B1. Loss of Trust Funds 6.The Plaintiff is the sole beneficiary of a Trust, the Trust Deed of which was executed on 3 July 2007. The Trustee was part of the AFP Group headed by AFP Holdings Limited (“AFP Holdings”). Mr Schnellmann was at all material times a director of the Trustee from 18 May 2009 until 27 April 2010. Mr Lampert was a director of APF Holdings. 7.D1 was and is the parent company of D2 (a private bank incorporated under the laws of Switzerland) and Helvetic Investments Pte Ltd (“Helvetic”). D1 was represented by Mr Wälchli until 29 September 2021. D2 was represented by Dr Gubser. 8.As at May 2009, the total assets of the Trust were valued at an amount slightly above €5 million (the “Trust Funds”). About 90% of the assets comprised of liquid assets held in a Swiss bank account of the Trust (the “Trust Account”), and 10% were illiquid (the “Illiquid Trust Funds”). 9.The Plaintiff is a US citizen and has financial reporting obligations. He claims to have entrusted the Trust Funds to professional financiers. A substantial amount of the Trust Funds was transferred through schemes, the purpose of which was to anonymize the beneficial ownership of the Plaintiff, to avoid US tax. The implementation of those schemes was done allegedly without the Plaintiff’s knowledge or consent, resulting in loss of trust funds amounting to €4,346,000. B2. CTS Scheme and Titian Scheme 10.In 2009, D2 adopted a policy which required American nationals who had deposits with it (of which the Plaintiff was one) to disclose their accounts to the IRS of the USA. Certain individuals in D1 and D2 worked with those of the AFP Group and the associated Allied Finance Group to develop a solution for account holders who wished to maintain their undisclosed accounts with D2. 11.A CTS Scheme was thus devised for the Trust such that the Trust Funds would be transferred to the bank accounts of corporate vehicles owned or controlled by the AFP Group. The Dubai vehicle, which ultimately received these funds, would use them to subscribe to the Rosmerta Fund, managed by Helvetic. The funds of the Trust would end up in a bank account with D2. A company named Karim Limited (“Karim”) would appear in the records as the beneficial owner of the shares in the Rosmerta Fund with no attribution of the beneficial ownership to the Plaintiff or the Trust. 12.The CTS Scheme was implemented such that:
13.The funds in the Karim account came to be “blocked”. The Titian Scheme was thus devised, whereby Karim would acquire the right to receive the sale price of an expensive painting by some apparently unrelated parties using the “blocked” funds (€4,346,000). If successful, Karim would receive the sale proceeds and would be able to use them to subscribe to the Rosmerta Fund. 14.However, the Titian Scheme was not completed, and Karim was unable to recover the sum of money representing the blocked funds. These events are alleged to have taken place between December 2009 to January 2011. 15.On the Plaintiff’s pleaded case, the Titian Scheme was devised by Mr Schnellmann. The Defendants are only alleged to have agreed to an agreement to try to resolve the problem that arose during the implementation of the Titian Scheme, but are said to have withdrawn from this arrangement within 2 days. 16.Dr Gubser and Mr Wälchli are said to be the officers of the Defendants who participated in devising and implementing the CTS Scheme for the Trust, and the negotiation in respect of the Titian Scheme. It was primarily their knowledge that would be imputed to the Defendants to ground the alleged liability of the Defendants. 17.The Plaintiff allegedly discovered the CTS Scheme and the Titian Scheme and the loss of the Trust Funds in or about July/August 2012. B3. Loss of Illiquid Trust Funds 18.On 13 August 2009, the Illiquid Trust Funds were credited to a trust account with AFTAG Zurich (an entity in the Allied Finance Group) in the books of D2 (the “AFTAG Zurich Trust Account”), without D2 recording the beneficial ownership of the same. 19.Allegedly, in 2010, these Illiquid Trust Funds and/or their proceeds of sale were partly transferred to the Rosmerta Fund and partly back to the AFTAG Zurich Trust Account. They had not been accounted for by the Trustee or D2 since 13 August 2009. As at 1 July 2010, the value of the remaining Illiquid Trust Funds was €249,969.47. B4. Loss in the form of administrative fees 20.A total sum of not less than €460,541.17 was paid from the Trust Funds to various entities including D2 as fees charges arising from and in connection with the CTS Scheme. Further, D2 charged Helvetic a total of €1,939.36 as administrative fees which were paid out of the Illiquid Trust Funds. These occurred during the period from 25 June 2010 to 25 June 2011. B5. The 2017 Action 21.The writ in HCA 961/2017 was filed on 20 April 2017 against 13 defendants, including D1 and D2 who were the 4th and 5th defendants in that case (the “2017 Action”). Insofar as D1 and D2 were concerned, they had allegedly taken part in the CTS Scheme or the Titian Scheme and the same 3 causes of action of dishonest assistance, knowing receipt (as against D2 only) and conspiracy were pleaded. The 2017 Concurrent Amended Writ of Summons was served on, amongst others, D1 and D2, out of jurisdiction. 22.Upon D1 and D2’s application, DHCJ Le Pichon, on 7 November 2019, set aside the leave for service out of jurisdiction, on the grounds that neither the pleadings nor the evidence in support could show serious issues to be tried in respect of the 3 pleaded causes against D1 and D2 (the “2019 Decision”). D1 and D2 also raised limitation issues but the Court found it unnecessary to deal with it (at §90). 23.The Plaintiff’s application for leave to appeal to the Court of Appeal was dismissed by DHCJ Le Pichon on 5 March 2020; and by the Court of Appeal on 20 November 2020 (the “2020 CA Decision”), respectively. The Court of Appeal held that the claim in conspiracy did not contain particulars of the requisite elements (§20). Whilst D1 and D2 were involved in devising generic schemes for their US clients to anonymize their ownership of their accounts, there was not sufficient evidence to show that D1 and D2 knew that it amounted to a breach of the Trust by the Trustee (§§21-29) B6. The US Indictment Proceedings 24.On 24 November 2015, D2 signed a “Non-Prosecution Agreement” with the DoJ, pursuant to which D2 adopted a statement of facts detailing its conduct in respect of its US related accounts, including the following:
25.On about 13 September 2021, the Plaintiff learnt about the US Indictment dated 15 September 2021. 26.On 29 March 2023, Mr Wälchli was convicted, on his own guilty plea, by the US District Court in New York of the offence of conspiracy to defraud the United States by concealing income and assets of certain US clients with undeclared bank accounts at D2, under the US Indictment. 27.On 22 December 2023, Mr Schnellmann also pleaded guilty and was convicted of conspiracy in the same Indictment. B7. Distinction between the CTS Scheme and the Singapore Solution 28.Whilst the Plaintiff pleads in the SOC that the CTS Scheme was described by the DoJ as the Singapore Solution, the 2 schemes were in fact not to the same. As alluded to in §78 of the 2019 Decision, the CTS Scheme, which had no connection with Singapore, was developed for the Trust. There were other CTS schemes in general, such as the Singapore Solution, developed for D2’s US clients. 29.This is in fact also clear from DSOC §31, in which the Plaintiff avers that the “Trust CTS Scheme employed in this case (ie the CTS Scheme in relation to the Trust) was of the same nature as those utilised for the accounts which had been the subject of the adverse allegations of the DoJ and findings of the US District Court”. In other words, the CTS Scheme and the subject Scheme in the US Indictment were not the same. To avoid confusion, Mr Keith Lam has referred to the generic schemes developed for D2’s US clients, unrelated to the Trust or the Plaintiff and formed the subject matter of the US Indictment as the “Singapore Solution”. 30.The Singapore Solution, was also for the purpose of helping US clients of D2 to evade US tax obligations, with undeclared accounts. The funds of the US clients were transferred in round trips from D2 in Switzerland through structures abroad, by a “cash out, cash in” method that would leave little paper trail.[1] At the end of this process the funds would move back to bank accounts of D2 held nominally by a Singapore asset manager, and the US clients would continue to be the beneficial owners.[2] 31.The important distinction is that: (1) the Trust was under the management of the Trustee, which was part of the Allied Finance Group, but neither the Trust nor the Plaintiff were a client of the Defendants; (2) D2’s US clients participated in the Singapore Solution voluntarily, so there could not have been any breach of trust.[3] 32.All of the pleas of criminal proceedings or investigation by the IRS of the US and criminal proceedings in Switzerland related only to the Singapore Solution but not the specific CTS Scheme for the Trust or the Plaintiff: see DSOC §§31-43, in particular §31; SOC §§69-74. 33.Indeed, it was already clear in the 2017 Action that the Defendants were involved in devising a scheme of a generic nature to enable their customers to anonymize the ownership of those customers’ funds, but what was lacking in evidence was whether they knew there was a breach of the Trust. See the 2020 CA Judgment at §§21-22. B8. The present action and the ex parte applications 34.The Plaintiff issued the Writ for the present action on 20 April 2023 against the Defendants. Although the claims are essentially the same 3 causes of action in dishonest assistance, conspiracy and (against D2) knowing receipt, the Statement of Claim (“SOC”) (35 pages) is a revamp of the Draft Statement of Claim (“DSOC”) (89 pages). It was the DSOC which formed the bases of the ex parte applications for renewal of the Writ and leave to serve out. 35.On 18 April 2024, the Plaintiff sought leave, ex parte (i) to extend the validity of the Writ for 12 months and (ii) to issue and serve a Concurrent Writ on the Defendants out of jurisdiction in Switzerland. The application was supported by the affidavit of Marc Nicholas Sturzenegger (“MNS 1”), which:
36.On 26 April 2024, the Renewal Order and Set-Aside Order were made. 37.On 5 November 2024, upon the ex parte application of the Plaintiff and supported by the affirmation of James David Henson, the Master Kot Order was made, granting leave to amend the Concurrent Writ (on an aspect that was not material) and to issue a Concurrent Amended Writ of Summons. No new material facts were relied on in Henson’s affirmation different to those in MNS 1. 38.On 13 January 2025, the Amended Writ was served on the Defendants. 39.On 8 April 2025, the Plaintiff filed the SOC. 40.On 6 May 2025, the Defendants issued the Set-Aside Summons. 41.I shall deal with the Limitation Ground first, as it permeates all 3 Grounds. C. LIMITATION GROUND C1. Primary limitation period 42.The Defendants did not accept any fiduciary duty in relation to the Trust. The Plaintiff’s claims founded on dishonest assistance and knowing receipt indicate that the Defendants are category 2 trustees, the limitation period for which is 6 years pursuant to s.20(2) of the Limitation Ordinance, Cap. 347 (“LO”): Timmerton Co Inc v Equity Trustee Ltd [2015] 1 HKLRD 247 at §§9-10, 18-21, CA; Hui Chun Ping v Hui Kau Mo (2024) 27 HKCFAR 634 at §§36-37. 43.In respect of the claim for conspiracy which is founded on tort, s.4(1)(a) LO provides that the 6-year limitation period applies. 44.The limitation period for various causes of action has accrued as follows:
45.Therefore, the primary limitation period of all of the Plaintiff’s claims started to run from August 2012, at the latest. The Writ was only issued on 20 April 2023, over 4 years after expiry of the limitation period in August 2018. C2. Postponement of limitation period 46.Section 26(1) LO provides that:
C3. Action based on fraud of the Defendants 47.Mr Todd (with him, Mr Zenith Chan) submits that it is highly arguable that “fraud” includes unconscionable conduct of the kind grounding liability for dishonest assistance, knowing receipt and/or other species of accessorial liability for breach of trust. This argument was made on the sole basis of the reasoning in China Metal Recycling (Holdings) Ltd (In Liq) v UBS AG [2021] 4 HKLRD 594, §§35-40, G. Lam JA. The Court of Appeal declined to define “fraud” at the interlocutory stage of that case. 48.It is not necessary for the plaintiff to have known facts which put the defendant’s participation in the fraud beyond all reasonable doubt. It would be sufficient if the plaintiff knows facts which would amount to a prima facie case of fraud, so that the plaintiff could, with reasonable diligence, have been expected to commence proceedings: Peconic Industrial Development Ltd v Lau Kwok Fai [2009] 12 HKCFAR 139 at §56, Lord Hoffmann NPJ. 49.Even accepting that “fraud” arguably has the meaning suggested by Mr Todd, the Plaintiff has known facts which would amount to a prima facie case of fraud, latest when he instituted the 2017 Action. C4. Deliberate concealment of relevant facts 50.In Sun Tian Gang v Changchun High & New Technology Industries Development Parent Co [2025] 3 HKLRD 1 at §68, Kwan VP held that:
51.In the 2017 Action, the cause of action was incomplete in that there was lack of sufficient material on the Defendants’ actual or constructive knowledge of the Trustee’s breach of the Trust, and absence of dishonesty relating to the breach of the Trust. It meant no serious issues to be tried in relation to the claim for dishonest assistance. See §§21-26 of the CA Decision. 52.Mr Todd submits that the missing piece in the puzzle, ie pleas of dishonesty and knowledge, are based on representations and admissions made by the Defendants’ officers in the US Indictment Proceedings. They amount to New Facts which ground the causes of action against the Defendants in the present case. 53.The New Facts have been identified in §23 of MNS 1 and §§13 and 15 of MNS 2:
54.SOC §§69-73 are purportedly premised on such New Facts. However, in my view, they do not advance the Plaintiff’s case. 55.Firstly, the New Facts are not really relevant:
56.Secondly, the New Facts are not really new, in that they have been pleaded or relied on in affidavits in the 2017 Action, with different wording:
57.I find no new relevant facts identified in the US Indictment Proceedings to fill any missing piece in the causes of action in the SOC. Accordingly, I am not satisfied that there had been deliberate concealment of relevant facts to justify postponement of the limitation period. 58.The Defendants has a complete defence in limitation to the claim and that is sufficient to grant relief to the Defendants under the Set-Aside Summons. D. MATERIAL NON-DISCLOSURE GROUND D1. Legal principles on material non-disclosure 59.The general principles on material non-disclosure in ex parte applications have been summarized in Ozner Water International Holding Ltd (in liq) and Anor v Ernst & Young (A Firm) and Anor [2025] HKCFI 4203 at §36, Au-Yeung J.
60.Limitation is a frequent reason used to set aside service of a writ. It is thus incumbent on the plaintiff to mention this possible defence when applying for extension of validity of writ or service out of jurisdiction. D2. Each party’s case 61.The Defendants’ case is that the Plaintiff has, at the ex parte stage before the Masters, failed to disclose the limitation defence and misrepresented the “New Facts” as new facts when they were not. 62.The Plaintiff, on the other hand, asserts that:
63.Further, the Plaintiff contends that he had fully complied with the duty of full and frank disclosure at the ex parte stage, in that:
64.Alternatively, if there was material non-disclosure of the limitation defence (that was not adjudicated upon in the 2017 Action), the Plaintiff says that this was at worst “an innocent oversight” of facts which were not absolutely necessary for the proper exercise of the discretion in the ex parte application. Thus, the Court should exercise its discretion not to discharge the order. D3. Material non-disclosure in respect of the limitation defence 65.Any extension of the validity of the writ should not deprive a defendant of a reasonably arguable limitation defence: China Medical Technologies, Inc. (in liq) v Bank of China (Hong Kong) Ltd [2018] HKCFI 1395 at §34, Au-Yeung J. 66.In China Medical v BOC, at §§90 and 95, Au-Yeung J set out 4 categories of cases in which a limitation issue can arise in an application for extension of validity of a writ:
67.In respect of a category (4) case, the mere issue of the writ would have deprived the defendant of the limitation defence and the defendant would have to incur costs on striking it out: China Medical v BOC at §§105-106. Not mentioning the limitation defence would mislead the court into believing that the plaintiff would be denied an unexpired claim if the writ was not extended: China Medical v BOC at §107. 68.The importance of limitation issues in this context was reaffirmed by the Court of Appeal in China Medical Technologies, Inc. (in liq) v Bank of China (Hong Kong) Ltd [2019] 2 HKLRD 710, at §§83 and 84, Kwan JA (as she then was).
69.Applying the above principles, this is a category (4) case. The limitation period had expired some 5 years before issue of the Writ. The Plaintiff has failed to justify the applicability of section 26(1) of LO (paragraphs 51-57 above). 70.There was non-disclosure of the limitation defence in MSN 1. Even if the Plaintiff has a good arguable case case for postponement of the limitation period, he ought to have brought that to the attention of the Masters. As the 2019 Decision did not express a view on the limitation defence, there was all the more reason for the Plaintiff to mention the limitation defence to the Masters. 71.Further, DSOC §60 pleads that there was deliberate concealment of relevant facts from a meeting on 20 July 2012 and an email dated 2 August 2012. If that had been drawn to the Master’s attention, the Master would have known immediately that there was an apparent and potential limitation defence. 72.Instead, §§49-52 of MNS 1 stated that the Plaintiff had been collecting evidence for pleading further particulars that were held to be insufficient in the 2017 Action and that the reason for the time taken was that the Plaintiff was waiting for progress in the criminal proceedings in New York against Mr Walchli of D1. It was also stated that if leave to renew the Writ was granted, the Defendants “would not be prejudiced because they have had notice of the Plaintiff’s claims against them since at least 2018 when the writ in the 2017 Action was served on them out of the jurisdiction” and that renewal of the writ extension should be granted “to keep the Action for equitable relief alive”. 73.Such evidence would have misled the Court into thinking that the Plaintiff would be denied a claim well within the limitation period if the Writ was not renewed. 74.The non-disclosure was material and the Plaintiff must have known that it was so, having regard to his experience in the 2017 Action:
75.Mr Sturzenegger was a non-practising but qualified solicitor of the Supreme Court of New South Wales. He deposes that the limitation issue was one of “limited or no materiality” in the context of an Order 11 application for service out of jurisdiction. Because the 2019 Decision did not deal with the limitation point in detail, “there was not much that he could disclose”. 76.Such evidence coming from a qualified solicitor and supported by Mr Todd’s submission, are totally against the weight of the evidence and the authorities. If a claim is stale and not extended, the Court should not give leave to serve out. The limitation issue is most material to both applications, for a Renewal Order and Service Out Order. 77.In any case, only §90 of the 2019 Decision mentioned something about “limitation” but did not recite all the limitation arguments. Even if Master J Wong had read the 2019 Decision, he would not have known what the limitation issues were. 78.Even if the limitation defence is to be resolved at trial, or the Plaintiff might be able to establish postponement of the limitation period, still it ought to have been disclosed to the Master. As Mr Todd concedes in §77 of his written submission, it is no answer to a complaint of non-disclosure that the relevant information giving rise to the defence was contained in an exhibit (in this case, the 2019 Decision and the DSOC), without being specifically drawn to the Court’s attention: Ozner Water at §41. 79.Worse still, the non-disclosure was a conscious decision. When Mr Sturzenegger deposed to the fact that he considered it no longer necessary for him to raise the limitation issue in this case because the matter has been fully argued and mentioned in the 2019 Decision, it meant that he was conscious of there being a limitation defence and made a conscious decision not to disclose it to the court. 80.In light of the analyses in Section D3, I find that there was material non-disclosure in respect of the limitation issues and it was a conscious decision of the Plaintiff. This is one of those cases where the Court can say with confidence that, had there been full and frank disclosure of the limitation defence, the Court would not have granted the Renewal Order and Service Out Order in the first place. D4. Material non-disclosure in respect of the New Facts 81.According to MNS 1, the application for a Renewal Order was made as a result of the Plaintiff’s “on-going efforts to collect additional evidence”. I have referred to the alleged New Facts in paragraph 53 above. 82.Firstly, despite the clear wording of the underlined sentence in §23 of MNS 1, Mr Todd boldly contends that it would be a literal and pedantic reading to interpret that sentence as implying that all the “New Facts” were not pleaded in the 2017 Action. He claims that an ordinary reader with common sense would have understood Mr Sturzenegger to mean that those identified paragraphs of the DSOC were premised on newly discovered facts. In my view, that is not a fair interpretation. 83.Secondly, the Plaintiff did not produce the 2017 SOC to the Court, so the Master was deprived of the opportunity to refer to the 2017 SOC for verifying whether the “New Facts” were truly not previously pleaded. This renders §23 of MNS 1 even more misleading. 84.Thirdly, I have explained in paragraphs 55-56 above why the New Facts are neither relevant nor new. 85.Fourthly, the New Facts are not minor. They comprise many paragraphs in the DSOC. The pleader could not have overlooked their significance. 86.In the light of the analyses in Section D4, I am of the view that there was material non-disclosure and misrepresentations to the Court in respect of the New Facts. E. WHETHER THERE SHOULD BE A RE-GRANT OF THE ORDERS 87.Mr Todd admits orally that he is aware of the profound difficulty he faces and his focus is a regrant. 88.In considering whether discretion should be exercised to re-grant an order, the Court should take into account the degree and extent of the culpability of the non-disclosure, with regard to the proportionality between the punishment and offence: Ozner Water International at §36(8) and (11). 89.In China Medical v BOC, the plaintiff, acting through its liquidators, made material non-disclosure or misrepresentations in relation to the limitation defence in an ex parte application to renew the writ. There, the Court made these observations:
90.Computation of the 6-year limitation period would have posed no difficulty in this case. The Court should similarly take a hard stance against the Plaintiff in this case, given that Mr Sturzenegger was a solicitor, and was no doubt assisted by a team of Hong Kong lawyers who already had the experience of making ex parte applications in respect of the same claims in the 2017 Action. 91.The non-disclosure is conscious and egregious enough to justify setting aside the Renewal Order and Service-Out Order without a re-grant. This is not a disproportionate sanction because the material non-disclosure relates to the entirety of the claim for €5 million. In the absence of any of the New Facts, the application for a Renewal Order simply had no bases. Till now, the Plaintiff is still unable to give particulars of the Defendants’ mental state in the alleged breach of the Trust in the SOC. 92.Any re-grant would be prejudicial to the Defendants who would have to incur costs to strike out this stale claim on limitation grounds. The claims in question date back 17 years to 2009. The Defendants could (and I put it no higher) face difficulty in gathering evidence, especially since Dr Gubser and Mr Wälchli, have long left the employ of the Defendants. 93.I therefore set aside Master J Wong Order and Master Kot Order without a regrant. F. THE GATEWAY GROUND 94.The onus is on a plaintiff seeking leave to serve proceedings out of jurisdiction to show, at the time the order is made, not at the time of the discharge hearing, that:
95.A clear case of limitation defence eliminates any serious issues to be tried: Hong Kong Civil Procedure 2026, Vol 1, §11/1/53. 96.In a set-aside application, a lack of serious issues to be tried is equivalent to saying that the plaintiff’s claim is liable to be struck out: Ren Yun Liang v China Merchants Bank Co Ltd HCA 1456/2005 (unrep., 29 January 2007) at §32, Recorder Benjamin Yu SC. 97.Applying paragraphs 95 and 96 here, the Plaintiff cannot even get through the threshold issue, there is no need to consider the individual gateways under Order 11, r.1(1). G. CONCLUSION 98.The claims of the Plaintiff were time-barred at the time the ex parte applications were made. The Plaintiff committed material non-disclosure. He consciously failed to mention the limitation defence and misrepresented the New Facts as new. For all these reasons, the Master J Wong Order and Master Kot Order should be set aside without re-grant. 99.Costs should follow the event and be borne by the Plaintiff. As this is a case of conscious material non-disclosure and misrepresentation to the Court, costs should be on indemnity basis. I summarily assess such costs and, on a nisi basis, allow a sum of HK$1,800,000, payable by the Plaintiff in the first instance, subject to what I have to say below. 100.It is bad enough for there to be material non-disclosure and misrepresentation to the Court. It is worse for counsel’s submission to contain facts that have not been pleaded or supported by evidence and hence does not give page references. For example, §22 of Mr Todd’s written submission refers to a statement of Mr Schnellman that Mr Todd admits is not in the hearing bundles. 4 pages reply submission of Mr Keith Lam are devoted to pointing out the substantial incorrect facts and matters not supported by evidence in Mr Todd’s written submission. This problematic mode of referring to unpleaded matters and evidence not before the Court had happened before in the 2017 Action. See the decision on leave to appeal against the 2019 Decision [2020] HKCFI 393, §§14, 22-24 (with only Mr Todd acting for the same Plaintiff). 101.Such written submission of counsel in the present case wastes the Plaintiff’s costs and the Court’s time. In addition, it also raises the question as to why two counsel in the same team would have allowed that to happen, and why the Plaintiff’s 3 solicitors spending hours perusing documents and preparing for the hearing have not spotted the problem. An attempt to add page references would have easily exposed the problem. 102.Seeking to set aside the Master J Wong Order and Master Kot Orders depends a lot on the lawyers’ work, as opposed to the client giving instructions. I do not see why the Plaintiff should be made to bear costs wasted by his own legal team. 103.The total counsel’s fees for this hearing are HK$255,000. I am of the tentative view that counsel should bear 1/3 of such wasted fees, which shall not be borne by their solicitors or the Plaintiff. 104.The total solicitors’ costs for perusal of documents, preparation for hearing and attending hearings are HK$177,814. Taking a broad-brush approach, I am of the tentative view that solicitors should bear 1/3 of such wasted costs, which shall not be borne by the Plaintiff. 105.In addition, I am of the tentative view that the Plaintiff’s counsel and solicitors should personally and jointly bear 1/3 of the costs awarded to the Defendants. 106.I therefore direct Mr Todd, Mr Zenith Chan and Holman Fenwick Willan to show cause in writing to this Court within 14 days concerning the matters stated in paragraphs 100-105 above, and why a wasted costs order should not be made against each of them personally. 107.I thank Mr Keith Lam for his assistance.
Mr. Richard Todd and Mr. Zenith Chan, instructed by Holman Fenwick Willan, for the Plaintiff Mr. Keith Lam, instructed by Baker & McKenzie, for the 1st and 2nd Defendants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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