DAVID OWEN v. MAIN CROWN ENTERPRISES LTD AND OTHERS

DCCJ 1981/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1981 OF 2012

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D E C I S I O N

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1. There are three applications before the court:

(a) the Plaintiff’s application for judgment on admission;

(b) the Plaintiff’s application for summary judgment; and

(c) the 1^st Defendant’s application for security for costs.

The applications are opposed by the respective respondent(s).

Background

2. The essential facts of this action, as pleaded in the Amended Statement of Claim (“ASOC”), are as follows:

(a) In June 2011, the Plaintiff received a telephone call from a person who claimed to be David Turner from a firm Smith & Olsson.  The Plaintiff was led to believe that the firm was an independent advisory firm based in the USA providing advice and brokerage services for investments in US securities.

(b) There followed a series of telephone calls and emails from the said David Turner and his colleague Benjamin Dickson whereby the Plaintiff was persuaded to invest in US securities through their firm.

(c) In reliance of the representations made by the said David Turner and Benjamin Dickson as well as one David Bacon, the Plaintiff transferred a total of US$729,492.15 into various bank accounts in Hong Kong, London and Luxemburg for the purported purchases of US securities.

(d) In particular, a sum of US$69,568.80 was transferred into the 1^st Defendant’s bank account with HSBC on 19 October 2011.  Another sum of US$28,474.36 was transferred into the same bank account on 21 October 2011.

(e) Thereafter, the Plaintiff was unable to contact anyone from Smith & Olsson and he received no confirmation whether his purported sale and purchase of US securities had occurred.  The Plaintiff later discovered from the internet that Smith & Olsson was fictitious and involved in a scam.

(f) The Plaintiff subsequently found out that the 2^nd Defendant (a Belgium citizen) was the ultimate owner and directing mind of some companies including the 1^st and the 4^th Defendants.  The 2^nd Defendant claimed to have been asked by a personal friend (the 3^rd Defendant) to receive and disburse about US$100,000.  He caused the 1^st Defendant to receive the aforesaid two sums of money from the Plaintiff, and later caused the 1^st Defendant to remit US$75,400 to the account of Daniel Stone Realty & Development Corp held with Banco De Oro Unibank Inc in the Philippines and caused the 4^th Defendant to remit US$23,750 to the account of TD Canada Trust held with Toronto Dominion Bank.

(g) The Plaintiff says there was no legitimate commercial reason or other reason for him to transfer money to the 1^st Defendant.  The aforesaid receipts and remittances were all without his prior consent, authority or knowledge and were made as a result of a fraudulent scheme of misappropriation.

3. Based on these facts, the Plaintiff has built a case against all defendants.  The Plaintiff has pleaded that:

(a) the 1^st Defendant is liable to him based on (i) dishonest assistance and/or knowing receipt; (ii) money had and received; and (iii) conspiracy to injure by unlawful means; and

(b) the 2^nd to 4^th Defendants are each liable to him based on (i) dishonest assistance; and (ii) conspiracy to injure by unlawful means.

4. So, the Plaintiff is alleging the following causes of action in this action:

(a) dishonest assistance;

(b) knowing receipt;

(c) money had and received; and

(d) conspiracy to injure by unlawful means.

5. So far, the Plaintiff has only served the writ on the 1^st, 2^nd and 4^th Defendants and his present applications for judgment are made against these defendants only.

6. The 1^st, 2^nd and 4^th Defendants (hereinafter collectively called “the Defendants”) are represented by the same firm of solicitors.  They filed a common defence, and the 1^st Defendant has additionally mounted a counterclaim against the Plaintiff.

Discussion

7. It is common ground that if the Plaintiff succeeds in either or both of his applications for judgment, there will be no need to consider the 1^st Defendant’s application for security for costs.  I shall therefore begin by considering the Plaintiff’s applications.

(a)   The Plaintiff’s application for judgment on admission

8. There is annexed to the Plaintiff’s summons a schedule setting out the 17 admissions relied on by him.  These admissions come from 2 sources: (i) the Defendants’ Amended Defence and Counterclaim filed in this action (“AD&CC”), and (ii) the affidavit of the 2^nd Defendant herein filed in HCA 483/2012.

9. HCA 483/2012 was commenced by an Australian company called Aesthetics Architecture Pty Ltd (“AA”) in the High Court of Hong Kong against the 1^st Defendant herein.  According to the Statement of Claim filed in that action, AA alleges a similar fraud perpetrated by Smith & Olsson and its representatives (including David Turner, Benjamin Dickson and David Bacon) as a result of which AA transferred a total of US$714,251.53 into the 1^st Defendant’s HSBC account in November 2011.  Judgment was entered in that action against the 1^st Defendant in default of notice of intention to defend.  The 1^st Defendant’s subsequent applications to set aside the default judgment were dismissed by the Master and Suffiad J respectively.  The affidavit relied on by the Plaintiff for his present application was filed by the 2^nd Defendant in that action in their bid to set aside the default judgment.

10. The 17 admissions relied on by the Plaintiff are fully set out in the schedule annexed to the summons and I shall not regurgitate them here.  Briefly, they amount to admissions of the 2^nd Defendant’s background, the relationship between the 2^nd Defendant and his companies (including the 1^st and 4^th Defendants), the friendship between the 2^nd and 3^rd Defendants, the requests made by the 3^rd Defendant to the 2^nd Defendant to receive moneys in both instances (ie from AA and from the Plaintiff) and the agreement of the 2^nd Defendant to do so, the actual receipt of the moneys, the subsequent instructions from the 3^rd Defendant to the 2^nd Defendant to remit moneys to third parties and the actual remittances.  There are also the explanations as to why the 4^th Defendant was involved in both cases.  In the present case, it was said that the 1^st Defendant did not have enough money in its bank account at the time to effect the remittance.  In HCA 483/2012, it was said that the 1^st Defendant’s account had been frozen by the Hong Kong Police.  Lastly, there was the 2^nd Defendant’s admission in HCA 483/2012 that: “Apart from the dealings relating to the two sums of money, neither the Defendant nor myself have had any other transaction with Michael recently.”

11. In addition, Mr Lamplough (the solicitor representing the Plaintiff) prays in aid two further admissions:

(a) “In the premises, paragraph 1 is not admitted.  [The Defendants] had no knowledge of the Plaintiff at all material times.”[1]

(b) “During the telephone conversation, he [ie the 3^rd Defendant] told me that he was embarking on a new joint venture with a business associates and, for this purpose, would be receiving from the business associate approximately US$100,000.00, which had to be disbursed partly to the Philippines for certain property business and partly to a trust company in Canada.  However, as the 3^rd Defendant only had bank accounts in Israel which were subject to remittance restrictions, he could not handle the fund flow and had to ask me to do it for him.  Confident of the integrity of the 3^rd Defendant and believing in his assurances that there was nothing illegal or untoward with the fund flow and my involvement in it, I agreed and told him I would arrange the 1^st Defendant to receive and disburse the money in accordance with his instructions.”[2]

12. By the terms of the summons, the Plaintiff’s present application does not cover his claim based on conspiracy to injure by unlawful means and Mr Lamplough confirms that to be so at the hearing.  So, I shall only discuss the other three causes of action in the ensuing paragraphs.

13. For the cause of action of dishonest assistance:

“Dishonest assistance in a breach of trust is a kind of accessory liability. It depends on the defendant’s wrongful participation in a primary breach committed by the trustee.”[3]

“The defendant must have lent assistance to the commission of a primary breach of trust, or in some other breach of duty by a person in a fiduciary relationship with the claimant.”[4]

“The defendant’s assistance in the breach of trust must have been given dishonestly. This is an objective standard which implies a more serious degree of fault than ordinary negligence… The finding of dishonesty depends on how precisely he knew the facts which amounted to the breach of trust, and the extent to which his assistance in the transaction involved a commercially unacceptable risk of knowingly implicating himself in the trustee’s breach. For this purpose, knowledge and a deliberate choice by the defendant not to confirm his suspicions are treated alike. A negligent or incompetent failure to realise that the transaction was unlawful is not enough.

The defendant need not appreciate the precise legal significance of the transaction as amounting to a breach of trust. It is enough that he realises that the person whom he assists is misappropriating money over which he does not have a right of free disposal.But he must have some suspicions about the particular transactions to which he gives his assistance. A general suspicion, for example, that the transaction is of a kind consistent with possible money laundering is not direct enough to support a finding of dishonesty.”[5]

14. Mr Chan (the Defendants’ counsel) takes two points in relation to this cause of action:

(a) This cause of action is a kind of accessory liability and the Plaintiff must establish the primary breach of trust before he can hold the Defendants liable.  According to §§18-20 of ASOC under the heading “Breach of trust and/or fiduciary duties or by unknown person or persons”, the Plaintiff is referring to the alleged Smith & Olsson fraud as the primary breach of trust.  But these paragraphs have not been admitted by the Defendants.[6]

(b) A finding of dishonesty is essential.  That depends on how much the Defendants knew of the facts of the primary breach of trust at the time. Again, there is no admission.

15. I accept Mr Chan’s submission.  Nothing urged upon me by Mr Lamplough has persuaded me to think otherwise.

16. For the cause of action of knowing receipt:

“Where the defendant receives the property beneficially he may be liable to give restitution of its value in an action for knowing receipt. The basis of the defendant’s liability is that he received property in which the claimant had a subsisting equitable interest…”[7]

“The defendant must be at fault when he receives the trust property. This justifies his continuing liability to restore its value to the claimant even after he may no longer have the original property to restore by a proprietary claim. Fault means that the defendant must know enough of the facts surrounding the misapplication of trust property to make it unconscionable for him to retain the benefit of his receipt… The degree of knowledge which might make the defendant’s conduct unconscionable varies with the context. This allows the court to set a standard that is appropriate to exigencies of the transaction in question.

… In commercial transactions where there is no customary practice of making routine inquiries into title and where transactions need to be concluded promptly, the defendant may need to be subjectively aware that he is receiving tainted property before his receipt could be stigmatized as unconscionable… But in gratuitous transactions, where the defendant has no reasonable justification to rely unquestioningly on the trustee’s authority to transfer the property to him, it may be reasonable to impose a duty of inquiry on him. The recipient’s knowledge of facts that would put a reasonable person on inquiry might amount to unconscionable knowledge…”[8]

17. Mr Chan submits that:

(a) To establish knowing receipt, it is essential to prove that the recipient of the property has received it beneficially.  Here, the 1^st Defendant has only admitted that it was the agent of the 3^rd Defendant in receiving the two remittances.[9]  Nothing relied on by the Plaintiff can amount to any express or implied admission that the 2^nd Defendant received the funds beneficially.

(b) The Defendants must know enough of the facts surrounding the misapplication of trust property to make it unconscionable for him to retain the benefit of his receipt.  Again, the Defendants have not admitted the underlying Smith & Olsson fraud.

18. In answer to the second submission of Mr Chan, Mr Lamplough refers me to §105 of Lord Millett’s judgment in Twinsectra Ltd v Yardley [2002] UKHL 12 in which His Lordship is reported to have said:

“Liability for ‘knowing receipt’ is receipt-based. It does not depend on fault. The cause of action is restitutionary and is available only where the defendant received or applied the money in breach of trust for his own use and benefit: see Agrip (Africa) Ltd v Jackson [1990] Ch 265, 291-292; Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378, 386. There is no basis for requiring actual knowledge of the breach of trust, let alone dishonesty, as a condition of liability. Constructive notice is sufficient, and may not even be necessary. There is powerful academic support for the proposition that the liability of the recipient is the same as in other cases of restitution, that is to say strict but subject to a change of position defence.”

19. He submits that based on the admissions in §4 of AD&CC and §7 of the 2^nd affidavit of the 2^nd Defendant, the 1^st Defendant did not know from whom the money came and to whom it was remitting the money.  He submits that that should be sufficient to fix the 1^st Defendant with liability for knowing receipt.

20. Mr Chan has urged caution in reading too much into Lord Millett’s judgment.  First, he observes that that was a dissenting judgment.  The majority of the House of Lords (consisting of Lord Slynn of Hadley, Lord Steyn, Lord Hoffmann and Lord Hutton) allowed the appeal whereas Lord Millett gave a dissenting judgment dismissing the appeal.  Secondly, he says that Lord Millett did not mean to discuss “knowing receipt” comprehensively in the judgment.  Rather, His Lordship was there contrasting the distinction between “knowing receipt” of trust money and “knowing (or dishonest) assistance” in a breach of trust, and that was meant to be the prelude to the thorough discussion of “knowing (or dishonest) assistance” that followed.

21. I generally agree with Mr Chan.  There is an interesting discussion in §§30-072 to 30-073 of Snell’s Equity as to whether liability under this cause of action should be strict although Twinsectra was not cited.  It seems that the argument for strict liability has been rejected:

“It has been argued that equity should recognize an alternative ground of liability where the defendant receives misapplied trust property. It would not depend on proving that the recipient was at fault, but on the principle of reversing unjust enrichment. The defendant’s liability would be strict but subject to a defence of change of position… The argument for the strict liability claim in restitution has not been accepted in the authorities…”

In the premises, I accept all the submissions of Mr Chan in relation to knowing receipt.

22. Now, I come to the cause of action of money had and received.

23. In Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, the Court of Final Appeal has this to say about this common law cause of action:

“66. The common law cause of action asserted by the plaintiff for money had and received where consideration has totally failed is now generally regarded as a species of claim for restitution based upon principles of unjust enrichment: see eg, Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 61-64; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 255-257; Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662 at 673; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 375; cf Gummow J's views in Roxborough v Rothmans of Pall Mall (2001-2002) 208 CLR 516 at 543 et seq, discussed in Birks, "Failure of consideration and its place on the map" (2002) 2 OUCLJ 1; and in Beatson and Virgo, "Contract, unjust enrichment and unconscionability" (2002) 118 LQR 352.

67. A useful framework for approaching such claims which was adopted by both parties involves asking four questions:

(a) Was the defendant enriched?

(b) Was the enrichment at the plaintiff's expense?

(c) Was the enrichment unjust?

(d) Are any of the defences applicable?

68. This approach was evolved and is generally accepted in academic writings: see eg, Birks, An Introduction to the Law of Restitution, (1989 Rev Ed) Ch 1; Burrows, The Law of Restitution, (2002), p 15; Goff and Jones, The Law of Restitution, 6th Ed, §1-016; and Hedley and Halliwell, The Law of Restitution, (2002), §1-16; Virgo, The Principles of the Law of Restitution (1999) p 9. It has received substantial judicial support and will be adopted in this judgment: see eg, Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 559 and 578; Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at 75; Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221, at 227 and 234; and Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at 408.”

24. In Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd, unreported, HCA 1957/2005, 28 July 2001, Poon J said that:

“123. Money had and received is now regarded as an action for restitution on the basis of unjust enrichment: see Goff & Jones on the Law of Restitution (7th edn), at para.1-003. The general approach is to look for an unjust factor, something which makes it unjust to allow the payee to retain the benefit: Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, per Lord Hope at p.409B. Such unjust factors include mistake, whether of fact or law, and duress. The burden is on the payer to show that the payment was unjust by reason of the factor.”

25. The editors of the latest edition of Goff & Jones, The Law of Unjust Enrichment, 8^th Edition (2011) have also said that:

“The law must say when an enrichment at another’s expenses is an unjust enrichment. As we have noted already, civil and mixed legal systems commonly approach this question by asking whether there is a legal ground for the transfer from claimant to defendant: if not, then the defendant’s enrichment is unjustified and restitution will follow. English law approaches the task differently, by identifying specific grounds for restitution, sometimes referred to as ‘unjust factors’ because they are legally recognized factors that make the defendant’s enrichment unjust…”[10]

“In line with these judicial statements, the discussion of grounds for restitution in Chs 8-26 proceeds on the basis that claimants in unjust enrichment must demonstrate a positive reason for restitution…”[11]

26. Returning to this action, the Plaintiff’s case against the 1^st Defendant based on money had and received is pleaded in §§38-42 of ASOC.  It refers back to the alleged Smith & Olsson fraud pleaded earlier in §§7-17.  I have confirmed with Mr Lamplough that that is indeed the “unjust factor” relied on by the Plaintiff.  Additionally, he submits that the Plaintiff is also relying on §36 of ASOC.

27. As I have observed above, the Defendants have never admitted the existence of the alleged Smith & Olsson fraud or that the Plaintiff was a victim of it.  Quite to the contrary, the Defendants have pleaded no admission to §§7-17 of ASOC and have specifically denied any knowledge of David Turner, Benjamin Dickson and Smith & Olsson and that they have any association with the alleged fraud.[12] Furthermore, the Defendants have denied the particulars of dishonesty pleaded against each of them (including §36 of ASOC).[13]

28. It has been said in §27/3/1 of Hong Kong Civil Procedure 2014 that: “Such admissions may be express or implied, but they must be clear and unambiguous.”  As demonstrated above, there is really no admission on the part of the Defendants (whether express or implied) that would ground any judgment against them.  I shall dismiss the application for judgment on admission.

29. Mr Chan has taken many other points in his bid to convince me that each of the causes of action relied on by the Plaintiff is defective. Given the limited scope of this application and that this is not the trial of this action, I shall refrain from saying too much unnecessarily.  In my view, the above is sufficient to dispose of the Plaintiff’s application.

(b)  The Plaintiff’s application for summary judgment

30. I am afraid the Plaintiff’s application for summary judgment under Order 14 of the Rules of the District Court is also plague with difficulties.

31. Order 14, rule 1(2)(b) specifically provides that Order 14 does not apply to “an action which includes a claim by the plaintiff based on an allegation of fraud”.  In Pacific Electric Wire & Cable Co Ltd v Harmutty Ltd [2009] 3 HKLRD 94, the Court of Appeal said that:

“19. The wording of Order 14 r. 1(2)(b) makes quite clear that what is excluded is an action where there is a claim which is based on an allegation of fraud. Two matters are clear from that. The first is that there may be one or more claims in the action and the rule envisages that one of the claims may not be based on an allegation of fraud but another may be. In those circumstances it is clear that an application for summary judgment under Order 14 will not lie. Secondly, the rule is not confined to excluding actions in which one of the claims is a claim for damages for fraud, what is excluded is any action where there is a claim in respect of which the underlying allegations on which the claim is based constitute an allegation of fraud. It is clear that if rule 1(2)(b) applies there is no jurisdiction for the court to entertain an application for summary judgment.”

32. Mr Lamplough has submitted that: “the Plaintiff is the victim of a fraudulent and dishonest scheme, known as a ‘boiler room scam’.  The involvement of the Defendants in the upstream fraud is unknown.  The involvement of the Defendants in the downstream fraud is clear.”  And it is pleaded in ASOC that:

“28. The receipt of the First and Second Payments by the 1^st Defendant and the remittances by the 1^st and 4^th Defendants, as pleaded in paragraphs 25 and 26, without the Plaintiff’s prior consent, authority or knowledge and by reason of the fraudulent scheme of misappropriation.”

“31. As a result of the fraudulent scheme of misappropriation as pleaded above, the Plaintiff suffered loss and damage in the sum of US$98,043.16.”

33. The cases relied on by Mr Lamplough (namely, Skink (In Liquidation) v Comtowell Ltd [1994] 2 HKC 286; Comsec Travel Ltd v Fok Hing Tours Co Ltd [2002] 4 HKC 679) all pre-dated Pacific Electric and should now be read subject to it.

34. In my view, it is pretty clear that this is an action which includes a claim based on an allegation of fraud.  As such, there is no jurisdiction for the court to entertain any application for summary judgment and the Plaintiff’s summons falls to be dismissed.

(c)  The 1^st Defendant’s application for security for costs

35. Both parties have addressed me fully on this. 

36. Basically, the 1^st Defendant is complaining that the Plaintiff is residing overseas (in Cyprus) and has no assets within the jurisdiction.  In the event it succeeds in defending this action and a costs order is made in favour of it and against the Plaintiff, it will be unable to enforce the order.  This is all the more so as the Plaintiff’s solicitor has gone on affirmation to relay the message that:

“Having suffered a total loss of US$729,492.15, the Plaintiff has informed me that he has lossed nearly all of his entire life savings as a result of the fraud, to which the Defendants are alleged to be party. In addition, the Plaintiff has had to incur legal costs in issuing these proceedings in Hong Kong.”

37. It has been noted in §23/3/3 of Hong Kong Civil Procedure 2014 that:

“Rule 1(1) provides that the court may order security for costs ‘if, having regard to all the circumstances of the case, the court thinks it just to do so’. These words have the effect of conferring upon the court a real discretion, and indeed the court is bound, by virtue thereof, to consider the circumstances of each case, and in the light thereof to determine whether and to what extent or for what amount a plaintiff (or the defendant as the case may be) may be ordered to provide security for costs. It is not an inflexible or rigid rule that a plaintiff resident abroad should provide security for costs (Lauria v Le Salon Orient (Hong Kong) Ltd [1996] 2 HKLR 37; Henrik Andersen and Michael Serring (suing as receiver of the Estate of Huang Kuang Yuan) v Huang Kuang Yuan [1997] HKLRD 1360; Re Greater Beijing Region Expressways Ltd (No 3) [2000] 2 HKLRD 776. The court has to strike the balance between what would be too oppressive to the plaintiff and what would give the defendant a measure of security, and will take into account the bona fide nature of the claim and any element of overlap between the claim and the counterclaim (Dragages et Travaux Public v Hong Kong Chinese Insurance Co Ltd & Multi Sky Ltd (third party) [1993] 1 HKC 617).

38. Having regard to the circumstances of this case as it is, I do not think it will be just to order the Plaintiff to provide security for the 1^st Defendant’s costs.

39. First, there is prima facie evidence that the Antwerp criminal court has found the 2^nd Defendant (the directing mind of the 1^st Defendant) guilty of laundering money to the extent of an estimated value of EUR2,400,000 and sentenced him to 18 months’ imprisonment in June 2010.[14] The Plaintiff’s solicitors have written to the Defendants’ solicitors to confirm if the article appearing in the Belgian news website actually refers to the 2^nd Defendant, but the Defendants’ solicitors have so far not responded.  What is perhaps more revealing is the fact that neither the 2^nd Defendant nor his solicitor (who have both gone on affidavit/affirmation for the purpose of these applications) have denied the conviction.  The Defendants’ counsel has only mounted a legal challenge in arguing that foreign convictions should not be admissible as a matter of evidence even in civil action, citing the English authority of Hollington v F Hewthorn & Co Ltd [1943] KB 587 and the local case of Pacific Electric Wire & Cable Co Ltd v Harmutty Limited, unreported, HCCL 17/2009, 9 November 2010.  In return, Mr Lamplough cited Director of Assets Recovery Agency v Virtosu [2009] 1 WLR 2808 at 2819 in which a High Court Judge in England is reported to have doubted the correctness of Hollington.  In reply, Mr Chan submits that the discussion in Virtosu was within the context of section 241 of the English Proceeds of Crime Act 2002 and influenced by European jurisprudence and has no general application.

40. For the present purpose, I need not decide if Hollington is still good law in Hong Kong.  That may be relevant when it comes to trial but we are not quite there yet.  The fact remains that I have to take all the circumstances of this case into account and I do not think I can ignore the conviction especially when it has not been refuted.

41. Secondly, there is still a valid judgment against the 1^st Defendant in HCA 483/2012.  The fraud that featured in that case is strikingly similar to the present allegations.  Like the present case, AA was persuaded to invest in US securities by someone from Smith & Olsson (including David Turner, Benjamin Dickson and David Bacon) who posed themselves as investment advisers and brokers.  At the arrangement of the 2^nd Defendant, moneys were transferred into the 1^st Defendant’s bank account.  Thereafter, moneys were remitted by the 1^st and 4^th Defendants to third parties on the instructions of the 2^nd Defendant.  All these happened more or less at the same time as the present complaint.

42. Mr Chan is of course correct in saying that the Defendants are appealing against that judgment, but unless and until the judgment is set aside, the 1^st Defendant is still bound by it.  More importantly, Suffiad J has found that the explanation offered by the Defendants in the High Court action (which is basically repeated here) are not manifestly arguable on the merits.[15]

43. Thirdly, the 2^nd Defendant is caught lying.  He deposed to in HCA 483/2012 that:

“Apart from the dealings relating to the two sums of money, neither the Defendant [ie the 1^st Defendant herein] nor myself have had any other transaction with Michael [ie the 3^rd Defendant herein] recently.”

44. Mr Lamplough has helpfully merged the chronologies of these 2 cases together.  The Defendants’ dealings in relation to the High Court action occurred between June 2011 and March 2012.  Here, the 3^rd Defendant has admittedly called the 2^nd Defendant in September 2011 and asked the 2^nd Defendant to receive approximately US$100,000 for him.  That resulted in the two transfers from the Plaintiff to the 1^st Defendant’s account in October 2011.  Thereafter, the 3^rd Defendant instructed the 2^nd Defendant to make two remittances on his behalf, which culminated in the two remittances in October 2011.[16]  All these happened at the same time as the dealings in the High Court action.

45. I am entitled to take a dim view of the Defendants.  Given the present circumstances, it would not be just for me to order the Plaintiff to pay security for the costs of the 1^st Defendant in defending this action.

Conclusion

46. For the above reasons, I shall dismiss all three summonses.

47. As no one has succeeded in any application before me, I make an order nisi that there be no order as to the costs of all the summonses.