Ko Lai Kuen v. Li Tak Ming and Others
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HCA 1731/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1731 OF 2010 ____________
Before: Hon Chung J in Chambers Date of Hearing: 6 June 2012 Date of Decision: 13 June 2012 _____________ D E C I S I O N _____________ Introduction 1.This is the defendants’ application to set aside the judgment entered on 3 September 2011 in default of defence. 2.The background leading to this application can be summarized as follows. 3.It is common ground the plaintiff was a successful business lady, and the 1st defendant (“Li”) was an experienced bullion trader and he introduced himself as such to the plaintiff. 4.The plaintiff was introduced to Li in mid-April 2009. She told Li she had no idea about investing in the bullion market. Li on the other hand told her of his experience and track records in investment. 5.They met again in September 2009 when the plaintiff indicated she was interested in investing in bullion through Li. At this point the parties’ version of event diverge. 6.Li claims that he introduced two investment plans to the plaintiff: a basic plan which was supposedly more conservative and a high risk plan which was more aggressive. He says the plaintiff chose the high risk plan. 7.On the other hand, the plaintiff says in September 2009 she still could not decide whether to invest in bullion. Li kept boosting his expertise and previous successes in the matter. A prospectus outlining the basic plan was given to the plaintiff by Li. 8.Finally, in October 2009, the plaintiff signed several documents:
9.The net effect of the above documents was that the plaintiff authorized the 2nd defendant (“Marketing Strategic Mgt”) to manage her fund of US$500,000. Li claims that the authorization was for aggressive trading in bullion (which term would include gold and silver) whereas the plaintiff says she only authorized Li to make mid-term investment in bullion (judging from the contents of her 2nd affirmation, she considered this to refer to gold only). Issues in this application 10.The parties’ dispute in this action, gathered from the contents of the statement of claim and the parties’ affirmations, is factual in nature. 11.On the plaintiff’s part, she asserts in gist that:
12.On the defendants’ part, it is said that the plaintiff chose the high risk investment plan. Her loss was caused by the subsequent unfavourable investment environment, and not the defendants’ fault. It is also the defence case Li has fully explained the investment risks to the plaintiff, and that she was kept abreast of the state of her investment account until its liquidation. 13.According to the account statement attached to Li’s 4th affirmation (exhibit “LTM-11”):
14.For the reasons set out below, I do not accept the defendants’ version of events to be believable. 15.First, Li asserts in his 4th affirmation:
16.Secondly, also according to Li’s 4th affirmation:
17.The transaction details in the account statement (see para 13(a) to (d) above) do not support what Li told the plaintiff. 18.It is not entirely accurate to say the plaintiff’s investment “had suffered a total loss” on 24 March 2010. As stated above, trading could continue beyond 24 March 2010 (up to 23 April 2010) because of Millennium’s further deposits into the plaintiff’s trading account (see para 13(c) and (d) above). 19.In other words, if the 24 March 2010 events were as deposed to by Li, he has not told the plaintiff the whole story in relation to her investment capital. 20.Moreover, allegation of the written promise to refund the plaintiff’s capital having been obtained by threat (para 16 above) (which logically should have brought about an end to the plaintiff’s investment) is inconsistent with the trading activities in the plaintiff’s account afterwards. If these reflect the defendants’ attempt to recoup their financial loss, this shows an extremely cavalier attitude on the defendants’ part with regard to the good practice of keeping client’s fund separately from their own. 21.Apart from the above, Li’s assertion about offering the so-called basic investment plan would not have made any practical difference (whatever the precise terms of such plan were). This is because as long as the plaintiff has authorized Marketing Strategic Mgt to trade in bullion on her behalf, precisely the same loss would still be incurred during the same period (9 October 2009 to 23 April 2010). 22.In view of the above matters, I have grave doubt as to Li’s credibility with regard to the other parts of his 4th affirmation. Conclusion 23.The guiding principles for the exercise of the court’s discretion in a setting aside default judgment application are trite. The defendants accept that they have the burden of showing a real prospect of success on the merits of their defence. 24.Because I have rejected Li’s evidence for lack of credibility, the defendants have not been able to discharge the burden. 25.Li also argues that it is the plaintiff’s own pleaded case the misrepresentations were those of Marketing Strategic Mgt and Millennium, and he was only their agent (para 10, statement of claim). It is not the law an agent can never be held liable for tortuous act(s) he committed as an agent. The factual context of this case shows that Li ought to be held liable as well. After all, Li must have been the individual in whom the plaintiff reposed trust and it must have been Li’s words which led her to enter into the agreement to invest in bullion. 26.Millennium also argues that the plaintiff has sued the wrong party: she has expressly pleaded that she was suing a Hong Kong company. However, it can be seen from the Investment Agreement (Chinese) that the other contracting party was a BVI company. 27.Several things should be noted in this connection:
28.It can be inferred from the above that both companies were part of the same scheme devised by Li (either alone or with others) to entice the plaintiff (perhaps also other investors) to take part in the investment plan promoted by Li. The judgment against Millennium cannot therefore be considered erroneous. 29.For the above reasons, this application is dismissed. Costs order nisi 30.There is no apparent reason to depart from the usual rule that costs should follow the event. There will accordingly be a costs order nisi pursuant to Ord 42 r 5B(6) that the costs of this application be paid by the defendants to the plaintiff. 31.I consider summary assessment of costs to be appropriate. The above costs shall thus be so assessed. For this purpose:
Mr Peter K C Wong, instructed by Chan, Wong & Lam, for the plaintiff Mr Paul H M Leung, instructed by Yeong & Co, for the defendants Please refer to CACV141/2012 for the relevant appeal(s) to the Court of Appeal. | |||||||||||||||||||||||
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Further hearings and rulings under HCA 1731/2010