ASIA ENERGY LOGISTIC GROUP LTD v. CHAN TAT CHEE

   HCA870/2009

   IN THE HIGH COURT OF THE

   HONG KONG SPECIAL ADMINISTRATIVE REGION

   COURT OF FIRST INSTANCE

   ACTION NO. 870 OF 2009

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BETWEEN

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D E C I S I O N

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1.  By three summonses the plaintiff company (which was formerly known as Central China Enterprises Limited) applies for summary judgment pursuant to Order 14, entering judgment on admissions pursuant to Order 27 and the striking out of substantial parts of the defendant’s defence.

2.  The defendant was a former director of the plaintiff company. In September 2006, the defendant was “D1” in a criminal trial in the District Court. He was one of four defendants who faced various allegations of commercial crimes involving the plaintiff company.

3.  At the beginning of the criminal trial, he pleaded guilty to three charges (Charges 1, 6 and 10 on the charge sheet). In all, the charge sheet contained 22 charges of which 15 involved this defendant. His pleas were accepted by the prosecution. He also agreed to become “PW1” and gave evidence against the remaining defendants all of whom had pleaded not guilty. His evidence took 44 days. The evidence in the trial has now finished (subject to a defence application to adduce further evidence currently being investigated in the PRC), the verdict is pending.

4.  The defendant, as part of his guilty pleas, made detailed admissions in the form of a written summary of facts. There is no dispute that he made these admissions and the document became evidence in his case. On the basis of his pleas and admissions he was convicted on Charges 1, 6 and 10. He will be sentenced after the verdicts on the remaining defendants have been announced.

5.  The plaintiff’s claim is based entirely on his admissions, his pleas and his conviction. Since his conviction there has been no application to reverse his pleas or amend the agreed facts. Ms Diana Cheung, counsel for the defendant, has noted in this application that in some respects, albeit minor, his evidence in the District Court was at variance with the agreed facts. Ms Cheung further conceded however that such differences as there may be did not alter the fact that each ingredient of each offence was proved by the admissions and there had been no formal attempt to resile from them in any way.

6.  Thus the defendant stands convicted of the following three offences :

(1)  Dealing with property known or believed to represent proceeds of an indictable offence, contrary to sections 25(1) and (3) of the Organized and Serious Crimes Ordinance, Cap. 455.

The particulars of this offence being that :

Chan Tat Chee, between the 6^th day and the 13^th day of April 2004, in Hong Kong, knowing or having reasonable grounds to believe that property, namely the sum of $11,183,600.00 Hong Kong currency, which was equivalent to about ¥12,000,000.00 Renminbi, in whole or in part directly or indirectly represented the proceeds of an indictable offence, dealt with the said property.

(2)  Conspiracy to steal, contrary to section 9 of the Theft Ordinance, Cap. 210 and sections 159A and 159C of the Crimes Ordinance, Cap. 200.

The particulars of this offence were that :

Chan Tat Chee, Hon Ming Kong, Chow Ho Tung, Anthony and Lai Kan, also known as Lai Lai Kan, Kan and Lai Kam Tung, between the 1^st day and the 7^th day of January 2005, in Hong Kong, conspired together and with Chan Kwai Fan, Chow Suk fun and Pang King Pong, Michael to steal a chose in action, namely a debt in the amount of $4,000,000.00 Hong Kong currency owed by The Hongkong and Shanghai Banking Corporation Limited to Central China Enterprises Limited (“the Company”), later renamed China Sciences Conservational Power Limited, or the proceeds thereof, property belonging to the Company.

(3)  Theft, contrary to section 9 of the Theft Ordinance, Cap. 210.

The particulars were that :

Chan Tat Chee on or about the 28^th day of August 2004, in Hong Kong, stole a thing in action, namely a debt in the amount of $10,000,000.00 Hong Kong currency owed by The Hongkong and Shanghai Banking Corporation Limited to Central China Enterprises Limited (“the Company”), later renamed China Sciences Conservational Power Limited, property belonging to the Company.

7.  The agreed summary of facts (relating to the defendant’s criminality arising out of the three charges to which he had pleaded guilty) ran to nine pages and 46 paragraphs. I do not propose to recite the entire document herein. As already mentioned Central China Enterprises Limited was the name of the plaintiff company at the time of the offences.

8.  Stripped of the factual details the crucial admissions were that :

(a)  For Charge 1, in April 2004 the defendant, whilst chairman of the plaintiff, caused $11,183,600 out of proceeds of a sale due to be paid to the plaintiff, to be deposited in a bank account under his control with intent to use it for his own purposes.  He then did deal with the money for his own benefit by disbursing it to various parties other than the plaintiff.

(b)  For Charge 6, in January 2005, whilst an executive director of the plaintiff, with others created false documents enabling a cheque for $4 million to be drawn from the plaintiff’s bank account and transferred, via other bank accounts under the defendant’s control into his own personal account with the Wing Hang Bank.

(c)  For Charge 10, in August 2004, the defendant caused $10 million to be transferred from the plaintiff’s account ultimately to six different accounts upon the defendant’s instructions which he then used to discharge various of his personal liabilities.

9.  In each case, it was admitted that the money in question was the property of the plaintiff, in each case the money was transferred to the defendant for his own use and under his control, and in each case the plaintiff states that no money has since been repaid and neither is there any plea by the defendant that any repayments have been made or offered.

10.  The statement of claim, dated 27 March 2009, sets out the brief facts in relation to each sum, pleads its loss and damage of each sum and, relying on the above facts prays, inter alia, for the return of each sum plus interest.

11.  The pleaded Defence deals with the convictions and admissions by stating that “the admission of guilt to the alleged charge bears no or no direct relevance to the plaintiff’s claim herein”. However, it does not condescend to particulars as to the circumstances in which the defendant was knowingly culpable of the criminal offences on the one hand yet is able to defend, bona fide, the civil proceedings on the other hand.

12.  In short, the pleaded defence makes many denials or non-admissions of allegations which have been expressly admitted in the criminal proceedings. It also pleads that the defendant was acting on the instructions of, or as a result of representations made by one of his co-defendants, one Hon Ming Kong. In the light of the admissions this has no relevance in the civil proceedings.

13.  In all the circumstances, I am satisfied that the defendant’s admissions were clear and unambiguous and leave no room for any defence to the civil claim. It would be an abuse of process to permit the matter to be relitigated on any basis (whether as a result of his oral evidence in the criminal trial or the pleaded defence in the civil proceedings) which departed from the admissions and convictions. I am satisfied that by making an order in the plaintiff’s favour, no injustice will be done and time and costs will be saved.

Suitability of summary judgment under Order 14

14.  Mr Kenneth Chan, counsel for the plaintiff, recognizes a potential difficulty in seeking an Order 14 judgment.

15.  Order 14, rule 1(2)b excludes claims based on allegations of fraud.

16.  As this is plainly a fraud case Mr Chan, on the plaintiff’s behalf, informed the court that it would not pursue the Order 14 application or the strike out application if the court was satisfied that judgment under Order 27 could be made.

17.  This I propose to do. However, had I been asked to do so, I would have been favourably inclined to make an Order 14 judgment. The rationale behind excluding fraud cases from Order 14 applications is that it would be dangerous to make a final judgment on affidavits where allegations of fraud were involved.

18.  This is not such a case. This is a case of admitted fraud not disputed fraud. The RHC state “save in the clearest possible case, it is inappropriate for the court to decide in summary proceedings whether a defendant has been fraudulent or dishonest”. This court is not being asked to make such a decision, it could therefore be appropriate to enter Order 14 judgment if so requested.

Order

19.  In the circumstances, I make no order on the plaintiff’s Order 14 summons.

20.  I make an order in terms of paragraphs 1 and 4 of the plaintiff’s summons dated 26 August 2009.

21.  I make no order in respect of paragraphs 2, 3 and 5 of the same summons.

Costs and interest

22.  In view of Mr Chan’s concession on the Order 14, application Ms Cheung asked that costs be reserved pending further written submissions following this written judgment.

23.  I acceded to that request. I direct both parties to submit written submissions, limited to a maximum of three pages, on both costs and the rate and duration of interest, if not agreed, within 14 days of the handing down of this decision.