DAIMLER AG v. HERBERT HEINZ HORST LEIDUCK AND ANOTHER

HCMP 960 /2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 960 OF 2010

(ON AN INTENDED APPEAL FROM HCA NO. 4089 OF 1994)

________________________

________________________

D E C I S I O N

________________________

Hon Rogers VP:

1.  This is an application for leave to appeal. In respect of that, I wish to say as little as possible so as not to prejudice the appeal since I am minded to grant leave to appeal.

2.  The matter arises in this way.  As long ago as 1994, a Mareva injunction was obtained against the individual defendant, who was the first defendant, and against his company, which was the second defendant.  At the time, the first defendant was not available because he was detained in Monte Carlo and was not released until some time afterwards.  The basis upon which that Mareva injunction was obtained, which the defendants say had a devastating effect on the second defendant’s business, was an affidavit of the solicitor who happens to no longer be with the plaintiff’s solicitors firm but is now a barrister.

3.  Be that as it may, paragraph 13 of that affidavit refers to the investigating magistrate in Monaco having expressed himself as having believed that he had found evidence that there had been a crucial movement of money, namely, US$6 million, which had been used to discharge a bank loan in Luxembourg.  That paragraph itself goes on to indicate that the French lawyer for the plaintiffs had, indeed, inspected the documents which were in the possession of the magistrate.  The next paragraph goes on to state bald facts, including the payment of that money.

4.  The defendants immediately objected to that and said that the particular loan had not been paid off.  The solicitor’s letters which then followed from the plaintiff’s solicitors indicated that the information as to the payment of that loan had come from the magistrate.  As I have already indicated, the affidavit would indicate that not only did it come from the magistrate, but it was confirmed by the plaintiff’s own lawyers, sight of the documents.

5.  On the basis of that, an agreement was reached between the solicitors acting on behalf of the second defendant, who, it is now said, were instructed by a person who had a nominal shareholding in the second defendant, that the second defendant’s costs would be paid on an indemnity basis, on the condition that they would not claim damages.

6.  It is that which has given rise to the present proceedings because it is, in a nutshell, the defendants’ case that the obtaining of the Mareva injunction was a fraud, start to finish.  First of all, the magistrate was bribed in order to come out with his statement and, secondly, that the individual, who was giving instructions to the solicitors, who had the nominal shareholding was also bribed.  So the judge below considered that there were two different conspiracies and two different frauds.

7.  In my view, it is all part and parcel of the same thing and it is now rather compounded by the fact that an affidavit has been filed by one Rene von Sampson-Himmelstjerna, who is the senior legal counsel of the plaintiff, who puts the blame for the misstatement not on the magistrate but the fact that the magistrate’s findings were later found to have been misunderstood by the plaintiff’s solicitors in Paris, who conveyed the same to the plaintiff’s solicitors in Hong Kong.  So really, two stories have been given by the plaintiff for the inaccurate facts on which this injunction was obtained and one can, therefore, draw one’s own conclusion from that.

8.  The defendants have now applied for an inquiry as to damages and of course, as a result, they have to show that the agreement that was reached as to not claiming damages was not binding on them.  They have filed points of claim re fraud and that is going to what can best be called a trial.  As part of that, they wish to add paragraph 13A, which is the subject of the application below, and to administer interrogatories.  13A reads:

“By non-disclosure of the facts of the fraud in obtaining the ex parte Mareva injunction as pleaded in paragraphs 8-13 above while admitting that the basis of the Mareva injunction as against the 2nd Defendant was wrong, the Plaintiff has fraudulently misrepresented to the 2nd Defendant that the Mareva injunction as against the 2nd Defendant was obtained on the basis of a bona fide mistake on the part of the Plaintiff. In reliance on the fraudulent misrepresentation, the 2nd Defendant entered into the said agreement. In the premises, the said agreement was vitiated by fraud.”

9.  It seems to have been the kernel of the decision in the court below, at paragraph 32 of the judgment of the Deputy Judge, that he said, in refusing the application for leave:

“I do not think the Plaintiff was then under any duty to explain to the 2nd defendant how or why the Mareva injunction was wrongly obtained and its solicitors did not do so.”

10.  First of all, the solicitors have attempted to do so twice, in two different ways, and secondly, it certainly is the responsibility of a plaintiff who obtains a Mareva injunction and has to have it discharged to explain, both to the court and to the defendants, as to how and why that injunction was obtained.  I wish to take this opportunity to disabuse anybody of any misconception that that is not the requirement.

11.  That said, that does not seem to be the point relied upon by Mr Jat, SC, this morning, who appears on behalf of the plaintiff.  What he says is that paragraph 13A is not maintainable because any representations that were made back in 1994, have been there on the paper all the time and, anyway, they do not, when analysed, amount to representations which would have caused the defendants to agree to waive an inquiry as to damages.  Simply that a mistake was made in obtaining an injunction does not let the plaintiff out of his requirement to honour the undertaking as to damages.

12.  In my view, what has gone wrong in this case is that this is being viewed as discrete frauds and discrete conspiracies.  Really what it is, is it is a global thing which must be looked at as a whole.  These are not discrete conspiracies; they are not discrete frauds.  The whole thing has to be looked at together.  So in my view, having said probably very much more than I should have done on a leave to appeal, I would, for my part, grant leave to appeal.

Hon Le Pichon JA:

13.  I agree.