JEANNINE E FREDERICK v. WIN PROFIT PROPERTIES LTD

DCMP 1845/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 1845 OF 2011

_____________________________

BETWEEN

_____________________________

DECISION

1.  This is an application by way of Originating Summons for a declaration from this Court that a sum of USD$72,110, transferred from the Plaintiff into the HSBC account of the Defendant on 3^rd June 2009 (“the Sum”) together with interest thereon accrued since 3^rd June 2009 are funds held on trust for the Plaintiff.

Background

2.  The Plaintiff’s case is supported by her affirmation filed on 27^th July 2011. The main facts deposed therein are set out in the following.

3.  The Plaintiff is a 76-year old American lady residing is USA at all material times.

4.  On 22^nd May 2009, a David Turner (“Turner”) called the Plaintiff by telephone. Turner introduced himself as an attorney for the Defendant and told the Plaintiff that she won a prize in the sum of USD$500,000 for the 2^nd place. Turner suggested to the Plaintiff that in order to get the prize money, she could pay the taxes up front and thereafter she could have all her monies back, including the purported taxes and the prize money.

5.  On 26^th May 2009, Turner called the Plaintiff again and told her that the winner for the 1^st place in the sum of USD$1.2 million had become un-eligible for the prize. He said that he could make the Plaintiff to be the 1^st prize winner but the Plaintiff would have to pay the purported taxes up front.

6.  On Turner’s directions, the Plaintiff made 14 transfers of money in the total sum of USD$144,100 to various bank accounts of various parties between May and June 2009. In particular and to the concern of this case, on 3^rd June 2009, Turner directed the Plaintiff to transfer the Sum (which is USD$72,110) into the Defendant’s bank account with the HSBC (account no. 0044-044-1857-6863) (“the HSBC account”). The Plaintiff did so accordingly. On the same day of 3^rd June 2009, Turner represented to the Plaintiff that the prize money would be sent to the Plaintiff on 11^th June 2009.

7.  However, the Plaintiff never received the money.

8.  A report was thus made to the Hong Kong Police. The Hong Kong Police investigated into the matter and informed the Plaintiff’s solicitors that it has frozen the HSBC account.

9.  According to the Affirmation of Fung Chi Wai (appearing before me today) filed on 6^th September 2011, both the Hong Kong Police and the HSBC have indicated that they did not object to the HSBC releasing the Sum back to the Plaintiff provided this Court make the order so prayed for.

Analysis

10.  Today is the first hearing of the Originating Summons.

11.  According to the two Affirmations of Service filed by the Plaintiff’ solicitors on the Plaintiff’s behalf, the Originating Summons, the supporting affirmation and a Notice of Appointment to hear Originating Summons have been served on the Defendant. From these documents, I am satisfied that service of these proceedings on the Defendant is sufficient and good.

12.  It is clear the Defendant has not filed any Acknowledgement of Service, nor does the Defendant appear before me today.

13.  Generally speaking, a declaration cannot be obtained by default (See Order 15 rule 16, Rules of District Court). But Mr. Fung for the Plaintiff has rightly referred me to the case of Wong Kum Chi v Lee Tit Ying [2003] 1 HKLRD 594 in which Deputy Judge A Cheung (as he then was) held that a court can proceed to deal with the originating summons in the first hearing in the absence of a defendant. The learned Judge says the following in his Judgment:

“Moreover, as I said, the proceedings were commenced by way of originating summon; therefore, O.28 apply to this case. Order 28 r.1 provides, amongst other things, that O.32 r.5 shall apply in relation to originating summons as they apply in relation to other summonses. Order 32 r.5 provides that where any party to a summons fails to attend on the first or any resumed hearing thereof, the court may proceed in his absence if having regard to the nature of the application, and it thinks it expedient so to do.” (emphasis added)

14.  The above case quoted by Mr. Fung concerns Order 28 of the Rules of the High Court, but I cannot see why the same principles enunciated in the case should not be applied to the Rules of the District Court.

15.  I would further add that Order 28 rule 3 of the Rules of the District Court does allow matters of a originating summons be dealt with at the first hearing if the facts are sufficiently clear and liability is established.

16.  Based on the facts set out in aforesaid affirmation of the Plaintiff (which I accept), it is sufficiently clear that the Defendant through Turner has made false representation to the Plaintiff in order to induce the Plaintiff to transfer the Sum into the HSBC account of the Defendant. Under these circumstances, it is clear to me that a case of constructive trust, as submitted by Mr. Fung for the Plaintiff, has made out (Michael Chen Kang Huang v Peter Lit Ma, HCA 218 /2005). It would be, in my view, expedient to proceed even in the absence of the Defendant. It would be unjust to make the Plaintiff wait any longer or to leave the Plaintiff with no remedy at all.

17.  There remains one last minor matter to clarify, which I have done so during the hearing, that is, the date when interest of the Sum should start to accrue. Given the time difference between USA and Hong Kong, I think it is just prudent and fair to say that interest should not be accrued from 3^rd June 2009. Because the transfer was made in USA time on 3^rd June 2009, it does not necessarily mean that the HSBC would receive the Sum on the same day of 3^rd June 2009 Hong Kong time.  Mr. Fung for the Plaintiff has fairly agreed to this proposition. So, I am minded to amend first two lines of the Schedule attached to the Originating Summons to read:

“…all interest accrued on that amount since the amount was deposited in the bank account, particulars of which are as follows:

Bank: The Hong Kong and Shanghai Banking Corporation Limited (“HSBC”)...” (the underlined parts are the amendment)

Costs

18.  The Plaintiff asks for summary assessment of costs and I think there is really no reason why this should not be done at this stage.

19.  In considering the Plaintiff’s application for costs as set out in the amended statement of costs for summary assessment, I would have the following observations:

(i) Mr. Fung was admitted in 2008, which means up to now, Mr. Fung is of 3 years’ post-qualification. He claims his hourly rate to be $1,650, which to me is on the top end of the solicitors’ fees for experience of 2 to 4 years. That said, I would reduce the hourly rate of Mr. Fung to $1,500 per hour.

(ii) I would say that this is a rather simple matter. To be frank, it can be quite anticipated that the Defendant would be absent in this case. So the time allegedly spent on items C2, D1, D2 is to me a little bit overstated.

(iii) Given the rather simplicity of this matter and it seems that most of the work was actually done by Mr. Fung, I cannot see why Mr. Cohen needs to spend 2 hours on the general care and conduct of the case.

20.  So when I give a summary assessment of the costs, I bear in mind the above observations and I will give a broad-brush approach. The costs is assessed to be $25,000.

Conclusion

21.  So, my order is as follows:

(1) a declaration that the funds, more particularly described in the Schedule (as amended) attached to the Originating Summons filed herein on 27^th July 2011, being funds subject to a hold imposed by the Hong Kong and Shanghai Banking Corporation Limited to the order of the Hong Kong Police Force, are funds held on trust for the Plaintiff.

(2) The Funds be forthwith released and returned to the Plaintiff.

(3) The costs of and incidental to this application be to the Plaintiff and such be assessed by way of summary assessment in the sum of $25,000.