NOVEL COLLECTION LTD v. CLASSIC DIAMOND LTD AND ANOTHER

HCA 2439/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2439 OF 2014

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REASONS FOR DECISION
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1.  The plaintiff’s action against the defendants is for the return of items of jewellery, alternatively for the monetary value of such items if the items were not returned within seven days.

2.  These items were entrusted to the 2^nd defendant acting on behalf of the 1^st defendant pursuant to a contract on 13 August 2013, the ultimate purpose being their sale in order to reduce a debt owed to the plaintiff (in the sum of US$3.85 million) by Tresor House (HK) Limited, a business linked to the defendants or either of them.  The 2^nd defendant had been a witness to a formal guarantee of payment of the debt made by a Mr Ou, the director of the 1^st defendant.

3.  The agreement provided for the sale or return of the items within six months of the agreement, and payment of US$250,000 to the plaintiff within a day or so of the agreement.  In fact the 2^nd defendant paid the said sum on or about 16 August 2013.  There remained then the contractual obligation to return the items within six months if they were not sold within that period, or the specified amount of proceeds of sale, identified as likely to be US$1,600,000.

4.  The 2^nd defendant failed to meet either of the alternative obligations.

5.  On 21 April 2014 the 2^nd defendant was ordered to deposit with the court the items concerned, ie the jewellery.  He failed to do so.  He did not appeal against that order.  He has not provided any credible excuse for his failure.  That failure was to be met with judgment against him in default.  The court had applied Order 29, rule 2(1).

6.  A little over one week later, on 30 April 2015 the order was varied in accordance with the now apparent default by requiring him to deliver the items directly to the plaintiff.  There was no appeal by the 2^nd defendant against this order.

7.  Leave was granted on 10 June 2015 to the plaintiff to bring proceedings for committal against the 2^nd defendant (HCMP 1425/2015).  Subsequent to that he applied for legal aid but this obviously delayed the court’s proceedings.  I do not need to deal with any detail concerning these proceedings and the various failures of the 2^nd defendant to comply with the court’s directions and orders.

8.  The matter came back before me on 27 November 2015 with the plaintiff seeking final judgment against the 2^nd defendant under Order 27, rule 3 by virtue of his admissions.

9.  By para 4(2) of his Defence and Counterclaim he admitted that he was in possession or control of two items of jewellery, the subject of the action.  It was on the strength of this that I made the original order of 21 April 2015 and then that of 30 April 2015.    

10.  The second matter is the 2^nd defendant’s e‑mail of 13 November 2013.  In it he said to Eliad Cohen (of the plaintiff company):

“I want to remind you again that according to our meeting on 13 August 2013 you agreed that I can sell the following items within six months after paying USD250,000 (or in HK dollar $1,940,000. Date 16 August 2013):

[Jewellery items then set out.]

I shall continue to sell the items. I can promise to deliver the 2 items back to you if I fail to sell them within the period.

Best regards.

Benny Lo. [Lo Wing Hang, 2^nd defendant]”

11.  I therefore made a formal order for judgment in the terms of the plaintiff’s summons of 27 March 2015 for delivery of the specified items within seven days, failing which there shall be an assessment of their value by the court, and an order for payment of that sum.

12.  The 2^nd defendant shall pay the plaintiff’s costs of this action to include those of all necessary ancillary applications, and proceedings.

13.  Mr Colin Wright, on behalf of the plaintiff, was realistic enough to concede that although the 2^nd defendant was clearly in contempt of court, there was no practical purpose or benefit in pursuing that aspect at this stage and that the contempt proceedings should be adjourned generally.  I do so accordingly but with a reminder to the defendant that he remains in contempt of two court orders.