Read the full judgment text of HCA 007585/2000 on BabelCite. This High Court CFI judgment was delivered on 27 April 2001 before Mr Recorder Edward Chan SC.
Civil procedure – service out of jurisdiction – Order 11 rule 1(1)(b), (c), (f) and (p) of the Rules of the High Court – tort of fraudulent misrepresentation – constructive trust – claim for money had and received – 'sham' management agreement – vicarious liability – knowing assistance in the commission of a tort – Mareva injunction – re-amendment of writ and statement of claim – Plaintiff subscribed US$13 million for Part II debentures issued by 1st Defendant – certificates signed by 4th Defendant on behalf of 1st to 3rd Defendants that representations and warranties were true – alleged stripping of assets of 2nd Defendant by 4th and 6th Defendants through sham management and financial adviser's agreements – 6th Defendant resident in Singapore – whether Plaintiff showed good arguable case under O.11 r.1(1)(f) for tort of fraudulent misrepresentation committed within jurisdiction – Court held no good arguable case as no allegation in Statement of Claim that 6th Defendant made, authorized, or was aware of any representation in the certificates; mere participation in acts that rendered the representation untrue was insufficient – whether 'sham' management agreement could make 4th Defendant the agent of 6th Defendant for purposes of vicarious liability – Court held a sham agreement cannot, by definition, give rise to the legal relations it appears to create, and so could not vest management and control in the Grande group or render the 4th Defendant the 6th Defendant's agent – whether tort of knowing assistance exists in Hong Kong – Court held there is no such tort; following Credit Lyonnais, liability in tort for the act of another depends on agency, conspiracy, or joining in a common design, not on mere knowing assistance – whether Plaintiff showed good arguable case under O.11 r.1(1)(p) for constructive trustee claim against 6th Defendant – Court held no, because Citibank as escrow agent was not in breach of trust in paying over funds on receipt of the certificates and had no duty to verify the truth of their contents, and the necessary averments of the 6th Defendant's knowledge of the breach and of receipt of trust monies were not pleaded – whether 6th Defendant was a necessary or proper party under O.11 r.1(1)(c) – Court held no, because the Plaintiff had not shown a good cause of action against the 6th Defendant, and it would not be a proper case for service out of the jurisdiction under rule 4(2) – whether 3rd Defendant's summons to set aside Cheung J's ex parte order of 13 October 2000 should succeed – Court held the order did not on its face affect the 3rd Defendant, so the relief sought was misconceived and the summons was dismissed, but with no order as to costs because the misunderstanding was largely caused by the Plaintiff's solicitors – whether Plaintiff should be granted leave to further re-amend the writ and Statement of Claim to align with the concurrent re-amended pleading – Court granted leave, finding the amendments did not change the case against the 3rd Defendant and the 3rd Defendant would not be prejudiced, without prejudice to the 3rd Defendant's right to apply to strike out the re-amended pleading – leave to serve 6th Defendant out of jurisdiction and to join him as a party set aside; Plaintiff ordered to pay 6th Defendant's costs; Plaintiff granted leave to re-amend with costs orders in favour of the existing defendants.
Legal issues: Setting aside Cheung J's ex parte order (3rd Defendant's summons) · Whether good arguable case for tort of fraudulent misrepresentation under O.11 r.1(1)(f) · Effect of 'sham' management agreement on vicarious liability of 6th Defendant · Whether tort of knowing assistance exists in Hong Kong · Good arguable case under O.11 r.1(1)(p) for constructive trustee claim · Whether 6th Defendant is necessary or proper party under O.11 r.1(1)(c) · Whether Plaintiff should be granted leave to re-amend writ and Statement of Claim
Outcome: The 3rd Defendant's summons of 5 December 2000 was dismissed with an order nisi for no order as to costs. The 6th Defendant's amended summons of 6 March 2001 was allowed: the ex parte leave granted by Cheung J on 13 October 2000 to serve the 6th Defendant out of the jurisdiction and to join him as a party was set aside. The Plaintiff's application of 15 March 2001 for leave to further re-amend the writ and Statement of Claim as against the 1st, 3rd and 4th Defendants was granted, without prejudice to the 3rd Defendant's right to apply to strike out the re-amended Statement of Claim.
Cited by 12 cases