HOTUNG INVESTMENT (CHINA) LTD v. ERIC SHEA KIM HOTUNG

HCA 77/2012

[2020] HKCFI 2720

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 77 OF 2012

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J U D G M E N T

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INTRODUCTION

1.  This is the hearing for assessment of damages suffered by the Plaintiff. 

2.  By a judgment dated 28 April 2017 (“2017 Judgment”), final judgment was entered against the Defendant whereby he was ordered to deliver up within 14 days to the Plaintiff 300 ounces of American Eagle gold coins (“Gold Coins”) or any part thereof in his possession and an antique ivory screen as described in the will of the late Sir Robert Hotung (“Ivory Screen”), failing which damages would be assessed.  

3.  The 2017 Judgment was entered into after L Chan J had by his written decision dated 24 March 2017 (“2017 Decision”) given the Defendant conditional leave to defend the action by paying HK$481,640 into court within 28 days but which the Defendant had subsequently failed to do so. 

4.  Following the 2017 Judgment, the Defendant has never delivered up the Gold Coins or the Ivory Screen. This is therefore the hearing to assess the damages suffered by the Plaintiff as a result of the Defendant’s failure to deliver up the items. 

BACKGROUND

5.  The background to this action has been summarised in §§2-35 & 39-47 of the 2017 Decision and will therefore not be repeated in full below. 

6.  The Plaintiff is and was at all material times a Hong Kong incorporated company with the principal activities of holding family properties belonging to Mr Eric Edward Hotung (“EEH”) on trust for six of his eight children. 

7.  The Defendant is one of EEH’s children but is not a beneficiary of this particular trust. 

8.  The Plaintiff alleges that the Defendant has misappropriated, wrongfully detained and/or converted the Gold Coins and the Ivory Screen.  A chronology of events detailing the Plaintiff’s account of the material events may be found in §12 of the 2017 Decision.  Relevantly, the Plaintiff’s case is as follows:

(a)  The Plaintiff purchased the Gold Coins from a bullion brokerage firm, Mocatta & Goldsmid, for US$131,680 on 22 January 1986.

(b)  Upon purchase, the Gold Coins were kept in a safe deposit box in BNP Bank in Hong Kong.  They were under the custody of EEH as trustee/bailee for the Plaintiff.

(c)  In around 2004, BNP Bank no longer provided safe deposit box services and EEH transported the Gold Coins to another safe deposit box in Sun Trust Bank, Virginia, USA (“Deposit Box”).  

(d)  Subsequently in 2009, EEH appointed the Defendant a joint custodian and signatory of the Deposit Box. EEH also informed the Defendant that together with EEH, they held the Gold Coins as trustee/bailee for the Plaintiff.  

(e)  In around 2009 or earlier, the Ivory Screen was placed in the Deposit Box.  

(f)  In the later part of 2010 or early 2011, EEH gifted the Ivory Screen to the Plaintiff.  The Defendant also removed the Gold Coins and the Ivory Screen from the Deposit Box. 

(g)  Subsequently in 2011, EEH requested the Defendant to deliver up the Gold Coins and the Ivory Screen to him.  The Defendant promised to return the items on or before 31 August 2011. 

(h)  As the Defendant failed to return the Gold Coins and/or the Ivory Screen, the Plaintiff issued the present proceedings against the Defendant on 13 January 2012 seeking, inter alia, an order of delivery up of the Gold Coins and the Ivory Screen or for an amount equivalent to their value. 

9.  On 22 April 2016, the Plaintiff issued an application for summary judgment against the Defendant. 

10.  On 17 November 2016, Master H Au-Yeung gave the Defendant leave to defend the action on the condition that he paid US$141,405 into court by 29 December 2016. 

11.  By the 2017 Decision, L Chan J allowed the Defendant’s appeal by reducing the sum ordered to be paid into court to HK$481,640. 

12.  As the Defendant has neither paid the sum of HK$481,640 into court pursuant to the 2017 Decision nor delivered up the Gold Coins and the Ivory Screen pursuant to the 2017 Judgment, this Court is now tasked to assess the damages suffered by the Plaintiff. 

13.  In terms of evidence for the assessment hearing:

(a)  Mr Sean Eric Hotung (“SEH”), son of EEH and director of the Plaintiff, filed two factual supplemental witness statements dated 16 October 2017 and 16 July 2019 on behalf of the Plaintiff.  The Defendant also filed two factual supplemental witness statements dated 21 November 2017 and 16 July 2019.  However, only SEH testified at the hearing and the Defendant did not.  As accepted by the Defendant’s Counsel, Mr Anthony Michael Gormley, the Defendant’s two supplemental witness statements were accordingly expunged. 

(b)  Pursuant to leave granted by Master Ho on 3 April 2018 and 15 May 2019, the Plaintiff adduced expert reports from Mr Henry C H Li (“Mr Li”) of Emperio Gold and Silver Coins (Hong Kong) Limited dated 6 September 2017 and Ms Zhang Zhuohan (“Ms Zhang”) of the Association of Chinese Collectors UK dated 1 November 2018 in relation to the valuation of the Gold Coins and the Ivory Screen respectively. Both Mr Li and Ms Zhang testified at the hearing. 

(c)  The Defendant never sought leave to adduce expert evidence.  He produced appraisal reports attached to his supplemental witness statement dated 21 November 2017 and through discovery without leave. The same were ordered to be expunged by Master Ho on 15 April 2019 and 15 May 2019. 

THE LEGAL PRINCIPLES

14.  The 2017 Judgment is a final judgment against the Defendant for the delivery up of the Gold Coins and the Ivory Screen.  The basis of such judgment is that the Defendant possesses those items. 

15.  Hence, as submitted by the Plaintiff’s Counsel, Mr Mike Lui (who appeared with Mr Timothy Lam), the Plaintiff’s claim against the Defendant is in detinue, which is a continuation of the tort of conversion in persistently withholding those items and refusing to redeliver them.  See Chun Sang Plastics Co Ltd v Commissioner of Police [2018] 2 HKLRD 511 at §18 per DHCJ Seagroatt. 

16.  A plaintiff in an action for detinue asserts and maintains his/her property in the goods up to the date of the verdict or judgment.  For this reason, the damages awarded where the goods are not returned are the market value of the goods (together with any consequential damage that is not too remote) as at the date of the verdict or judgment and not the date of the defendant’s failure to return.  This is so even if the defendant liable in detinue has converted the goods by selling them, since the plaintiff in such a case is entitled to elect to claim in detinue rather than in conversion.  See Halsbury’s Laws of Hong Kong, 2^nd ed, Vol 47, §§380.435 & 380.453; Rosenthal v Alderton & Sons, Limited [1946] 1 KB 374 at 377-379 per Evershed J; Wilkinson v Verity (1871) LR 6 CP 206 at 210-211 per Willes J. 

17.  In the Plaintiff’s written opening submissions, it was suggested that the applicable date for assessment of damages in this case should be 22 May 2017.  During oral opening submissions, this Court queried whether in light of the abovementioned authorities, the relevant date should instead be 28 April 2017 which is the date of the 2017 Judgment.  Mr Lui explained that the 22 May 2017 date was proposed because the Plaintiff informed the Defendant of the 2017 Judgment on 8 May 2017 and demanded delivery up within 14 days thereafter.  Upon reflection, Mr Lui accepted during his oral closing submissions that the proper date should be 28 April 2017.  Mr Gormley did not otherwise dispute the adoption of 28 April 2017 as the assessment date. 

18.  In the circumstances, and given the authorities referred to in §16 above, I shall adopt 28 April 2017 as the date of assessment of the market values of the Gold Coins and the Ivory Screen in this case. 

GOLD COINS

19.  The Gold Coins in question are a series of American Eagle gold coins minted in 1986 comprising of 500 pieces of 1/10 oz, 400 pieces of 1/4 oz, 200 pieces of 1/2 oz and 50 pieces of 1 oz coins.

20.  In valuing the Gold Coins, the Plaintiff relies on the expert opinion of Mr Li.  He is the founder and managing director of Emperio Gold and Silver Coins (Hong Kong) Limited, a precious metal retailer and wholesaler in Asia specialising in the trading of gold and silver bullion and collectible coins, including American Eagle gold coins. He is also a registered representative of the Chinese Gold and Silver Exchange Society.  As at the time of Mr Li’s expert report dated 6 September 2017 (“Li Report”), he had worked in the field for more than 5 years. 

21.  There was no challenge to the expertise of Mr Li. 

Estimated Value of the Gold Coins and the Valuation Methodology

22.  According to the Li Report, the value of the Gold Coins was US$540,168 as at 22 May 2017.  It would appear that this date was chosen as the Plaintiff had been proceeding on the basis that the date of assessment would be 22 May 2017. 

23.  Mr Li’s valuation methodology as set out in the Li Report and elaborated in his testimony is as follows:

(a)  The spot price of gold was US$1,337.85 as at 6 September 2017 and US$1,258.85 as at 22 May 2017.  Such prices were obtained from the internet and are objectively verifiable public information. 

(b)  The market price of a gold bullion coin is comprised of the spot price of gold and the bullion premium. 

(c)  Mr Li used the spot price of gold and the market value of the American Eagle gold coins as at 6 September 2017 (as he was unable to find the market value as at 22 May 2017) to find out the relevant bullion premium.  In this regard, Mr Li obtained the market values of the American Eagle gold coins as at 6 September 2017 from Professional Coin Grading Service (“PCGS”), Numismatic Guaranty Corporation (“NGC”) and Apmex.  PCGS and NGC are professional valuation agencies and Apmex is an online trading platform for gold coins and other precious metals.  He then took the average from the 3 sources and calculated the following market prices of American Eagle gold coins as at 6 September 2017:

1 pc	PCGS (US$)	NGC (US$)	Apmex (US$)	Average Price (US$)
1/10 oz	170	250	174.05	198.02
1/4 oz	575	600	395.13	523.38
1/2 oz	1,000	1,050	735.25	928.42
1 oz	1,565	1,825	1,410.49	1,600.16

(d)  Mr Li then deducted the gold spot price from the average price from PCGS, NGC and Apmex as at 6 September 2017 and obtained the bullion premium.  He also calculated the bullion premium in the form of a weighting percentage by dividing the gold spot price by the average price.  These calculations are expressed in the form of a table at page 5 of the Li Report as follows:

Weight (Oz)	Average Price (US$)	Gold Spot Price as at 6 Sept / Weight (US$)	Bullion Premium (US$)	Weighting of Spot Price on Average Price (%)
1/10	198.02	133.785	64.235	67.56
1/4	523.38	334.4625	188.9175	63.90
1/2	928.42	668.925	259.495	72.05
1	1,600.16	1,337.85	262.31	83.61

(e)  Assuming that the weighting percentage (and hence the bullion premium) to be constant during the material times, Mr Li then multiplied the gold spot price as at 22 May 2017 with the weighting percentage to arrive at the market values of the Gold Coins totalling US$540,168. 

24.  In light of my query over the use of 22 May 2017 as the assessment date (see §17 above), I asked Mr Li during the hearing to calculate the market values of the Gold Coins as at 28 April 2017 based on his abovementioned valuation methodology.  After obtaining the gold spot price as at 28 April 2017 (being US$1,266.45), Mr Li then calculated the total market value of the Gold Coins as at 28 April 2017 to be US$543,427 as follows:

Weight (Oz)	Gold Spot Price as at 28 Apr / Weight (US$)	Weighting of Spot Price on Average Price (%)	Value per coin (US$)	Quantity (Piece)	Amount (US$)
1/10	126.645	67.56	187.45	500	93,725
1/4	316.6125	63.90	495.48	400	198,192
1/2	633.225	72.05	878.87	200	175,774
1	1,266.45	83.61	1,514.71	50	75,736
Total Amount				543,427

25.  Mr Gormley did not challenge Mr Li as to his valuation methodology or the accuracy of his figures or calculations.

Assumptions Made in Mr Li’s Valuation of the Gold Coins

26.  The Defendant’s main challenge of Mr Li’s valuation was directed at the assumptions made by him in relation to the conditions of the Gold Coins. 

27.  In this regard, as Mr Li did not have the opportunity to physically examine the Gold Coins, he assumed at page 4 of the Li Report that “the subject items are in virtually fully struck with miniscule imperfections visible upon close inspection”. 

28.  Mr Gormley attacked Mr Li’s assumption that the Gold Coins were in perfect condition when he had not conducted a physical examination of them.  Given Mr Li’s acceptance during cross-examination that the Gold Coins could be damaged (for example by a drop of one metre onto a concrete surface) and that he had no knowledge as to how the Gold Coins were stored or transported from Hong Kong to the USA, it was said that it was unreasonable for Mr Li to assume that the Gold Coins are still in perfect condition after being minted more than 33 years ago.

29.  In the circumstances, Mr Gormley submitted that in light of the uncertainty as to the conditions of the Gold Coins and thus the appropriate bullion premium to be ascribed to them, this Court should simply adopt the spot price of gold to assess the value of the Gold Coins since the spot price is not dependent on the conditions of the Gold Coins. 

30.  In my view, Mr Gormley’s submission is misplaced for the following reasons:

(a)  Mr Li explained in his testimony that as he did not have the opportunity to physically examine the Gold Coins, he assumed that they are in a “fair” (as opposed to “perfect”) condition for the purpose of his valuation.  This is what he meant by the Gold Coins being “virtually fully struck with miniscule imperfections visible upon close inspection”. 

(b)  Mr Li further explained that the grading of American Eagle gold coins would affect their value.  PCGS and NGC adopt a similar grading system and give the same price or value to American Eagle gold coins scoring in the range of 60 to 66 (in a scale with the top score of 70).  American Eagle gold coins scoring 67 or above have a much higher value, and in fact those with a score of 70 could be 4 times more expensive than those with a fair condition (ie scoring 60 to 66). 

(c)  Whilst Mr Li said that even in the worst scenario, American Eagle gold coins with the worst mark up to 66 would have the same value, that was because the worst American Eagle gold coins that he had ever come across in his experience would at least have a score of 63 and therefore shall fall within that class of gold coins with “fair” conditions. He was not ignoring the conditions of gold coins for the purpose of his valuation. 

(d)  Mr Gormley had confirmed in his written opening submissions that the Defendant still retains the Gold Coins and the Ivory Screen in question.  As such, to the extent that the Defendant is suggesting that the Gold Coins have been damaged (whether during their transportation from Hong Kong to the USA or otherwise) to such an extent that they are not worth any premium, one would have expected the Defendant or his expert to come forward and testify to their conditions or otherwise produce them for inspection. Yet, the Defendant has adduced no corroborative evidence whatsoever.  In the circumstances, it seems to me to be unreal for the Defendant to attack the reasonableness of Mr Li’s assumption of fair condition of the Gold Coins for the purpose of his valuation. 

Conclusion as to the Value of the Gold Coins

31.  In light of the above, I accept Mr Li’s opinion that the market value of the Gold Coins was US$543,427 as at 28 April 2017.  I therefore assess the damages suffered by the Plaintiff in respect of the Defendant’s failure to deliver up the Gold Coins to be US$543,427. 

THE IVORY SCREEN

32.  The Ivory Screen in question is an antique Chinese table screen made of six rosewood panels with ivory pictorials all hinged together.  The ivory inserts placed within the panels vary in size within the rosewood panels of approximately 25.4cm x 31.75cm. 

33.  In valuing the Ivory Screen, the Plaintiff relies on the expert opinion of Ms Zhang.  She is the holder of a certificate of Senior Art and Antiques Appraiser of the PRC and is the Executive President of the Association of Chinese Collectors UK.  She has more than 10 years of experience in the antique business specialising in Chinese antiques, porcelain, fine European jewellery and silver and has worked at Duton’s Auctioneer and Vine Auctioneers as a senior art appraiser.  She has also prepared appraisals of antique items for insurance companies such as Highworth Insurance and Assetsure Insurance. 

34.  There was no challenge to Ms Zhang’s expertise.

Factual Evidence of SEH

35.  Before turning to Ms Zhang’s evidence in detail, I will first deal with Mr Gormley’s challenge that the expert only conducted her valuation on the basis of high resolution digital photographs of the Ivory Screen (“High Resolution Photographs”) obtained from SEH and did not physically examine the antique item.  As SEH did not know with certainty who took the High Resolution Photographs or personally witness the handing over of the Ivory Screen by EEH to the Defendant, Mr Gormley submitted that I should view Ms Zhang’s opinion with scepticism. 

36.  With respect, I do not see any merit in Mr Gormley’s challenge for the following reasons:

(a)  SEH explained in his testimony that because of the 1997 handover, his father, EEH, sold his residence in Hong Kong in May 1997.  By June 1997, his father had shipped belongings in Hong Kong to a house that he had bought in Virginia.  His father was not an American and had stay restrictions.  SEH was an American and was hired by EEH to manage the property in Virginia.  He took up the job in May 1997 and ran the Virginia property until early 1999, during which time the Ivory Screen was in his custody.  In 1999, he was asked to return the Ivory Screen, so he arranged for its return in front of his father’s lawyer.  SEH is therefore familiar with the appearance of the Ivory Screen. 

(b)  Before returning the Ivory Screen, SEH had taken some polaroid photographs of it but they were of poor quality. After EEH passed away in September 2017, a departing staff member of his father named Ms Esther Sze turned over to him certain files and computer in her possession.  Whilst reviewing these items, SEH discovered the High Resolution Photographs which were then passed on to Ms Zhang. 

(c)  SEH confirmed in his testimony that he has no doubt that the High Resolution Photographs depict the Ivory Screen.  The Ivory Screen was in his possession from 1997 to 1999 and that SEH and his father had attended the Deposit Box in 2008 or 2009 where the item had been kept.  SEH is certain that his father only had one ivory screen and the High Resolution Photographs indeed show the Ivory Screen.  

(d)  In the circumstances, the fact that SEH does not know who took the High Resolution Photographs and did not personally witness the handing over of the Ivory Screen to the Defendant is largely immaterial and does not detract from SEH’s firm testimony, which I accept, that the High Resolution Photographs which he passed to Ms Zhang depict the Ivory Screen in question.  

Ms Zhang’s Valuation of the Ivory Screen

37.  Ms Zhang opines in her report dated 1 November 2018 (“Zhang Report”) that the Ivory Screen has a value of US$4 million as of the date of her report.  Upon query by this Court during the hearing as to the value of the Ivory Screen as at 28 April 2017, Ms Zhang confirmed that the value would be the same.  She testified that whilst there has been an annual growth in the value of antiques of several percentages, her valuation of US$4 million as at 1 November 2018 is already quite conversative. As such, her valuation as at 28 April 2017 would not be different. 

38.  This valuation of US$4 million is based on the following observations as stated in the Zhang Report:

(a)  The Ivory Screen “dates from the Qian Long (Chien Lung ) period of C. 1740”.

(b)  The “superb master craftsmanship of” the Ivory Screen “is of the highest quality in the arts of ivory”.

(c)  The “handicraft is of exceptionally good quality with fine details”.

(d)  The Ivory Screen is “considered to be a rare item and will definitely attract great interest from Chinese collectors”.

(e)  The Ivory Screen “comes from one of Hong Kong’s most prominent family, namely the Sir Robert Hotung collection.  This will attract more interest from collectors and its price will be multiple times the value of similar items from an average source”.

(f)  The Ivory Screen is “of a very good quality depicting high levels of skills used by the makers, making it a very desirable piece of art”.

39.  In her testimony, Ms Zhang identified six criteria which she took into account in valuing the Ivory Screen and explained her observations as follows:

(a)  First, its shape and form.  The Ivory Screen is a stationery, and in the area of antique valuation, stationery items are substantially more valuable than other items such as big screens even if the latter are larger in size.  The Ivory Screen is made up of six screens. An item consisting of more than one component is also worth more. 

(b)  Second, materials.  The Ivory Screen is made of elephant (as opposed to mammoth or walrus) ivory as well as Hainan rosewood.  Such materials are extremely valuable and exquisite. Although Ms Zhang had not physically inspected the Ivory Screen, she could tell that it is made of elephant ivory by looking at the macroscopic characteristics of the ivory, which ought to have 115 degree angles in cross-sections for elephant ivory. 

(c)  Third, year of production and origin.  The Ivory Screen was made by grandmasters in the studio in the Forbidden City in the early Qianlong era.  In reaching this view, Ms Zhang compared the Ivory Screen with an item in the Forbidden City Palace Museum, and noted that the skills involved in their making are very similar.  She noticed that there is no signature on the Ivory Screen, which is also consistent with the historical fact that in the Qianlong period, grandmasters making artworks were prohibited from putting their signatures on their works. 

(d)  Fourth, craftsmanship.  The craftsmanship of the Ivory Screen is very sophisticated.  The inscriptions demonstrate a very high level of detail with various tiny figures inscribed three-dimensionally, and the fact that those figures are inscribed within very small areas has made the Ivory Screen exceptional in terms of craftsmanship. 

(e)  Fifth, quality and condition.  No crack was detected upon examination of the High Resolution Photographs and this reinforces Ms Zhang’s opinion that the Ivory Screen is made of the best quality elephant ivory.  The value of an antique will multiply if it is well preserved.

(f)  Sixth, provenance.  The fact that the Ivory Screen comes from the Hotung family collection increases its value substantially. 

40.  Ms Zhang also explained that she made reference to various comparable antique items in her valuation, including an ivory screen which was auctioned for £330,000 in 2006 and the following three ivory items which were auctioned by Sotheby’s Hong Kong on 3 October 2018:

(a)  Qing Dynasty (Kangxi period) ivory brush holder with an estimated value of around HK$1.5 million. 

(b)  Qing Dynasty (Qianlong period) pair of ivory candleholders with an estimated value of around HK$7 million. 

(c)  Qing Dynasty (Qianlong period) pair of ivory panel with an estimated value of around HK$5 million. 

41.  Ms Zhang opined that the Ivory Screen is superior to the above comparables in terms of sophistication of sculpture work, materials used and conditions such that its value should be much higher.  Indeed, she said that her valuation of US$4 million is already a conservative estimate and the Ivory Screen is likely to be sold at a much higher price in an auction, since antiques from the Qianlong period are highly sought after by many Chinese collectors. 

42.  Mr Gormley invited this Court to be suspicious of Ms Zhang’s valuation given that the Ivory Screen is smaller in size than the screen and panel referred to in her comparables but yet has a much higher estimated value. 

43.  However, as explained by Ms Zhang in her testimony, size is only one factor and that smaller antique items are often worth more than the bigger ones.  Whilst Ms Zhang could not confirm the historical period for the screen auctioned in 2006, she stressed that the artistic quality of the Ivory Screen is much higher than those comparables auctioned by Sotheby’s Hong Kong.  She also noted that the comparable referred to in §40(c) above comprised of only one panel, whereas the Ivory Screen consists of six panels. 

44.  As regards the year of production and origin, Mr Gormley said that Ms Zhang could not identify the precise time in which the Ivory Screen was made. 

45.  However, Ms Zhang is able to deduce that the Ivory Screen was made in the early Qing Dynasty under the reign of Qianlong in around 1740 based on the following observations:

(a)  In 1694, the previous ban on sea trade was lifted and there was an import of ivory in the 1700s. 

(b)  The craftsmanship in the Ivory Screen with high quality three dimensional effect of the people, trees and mountains is unique to the Qianlong era. 

(c)  As mentioned in §39(c) above, the lack of any signature on the Ivory Screen is consistent with the fact that grandmasters making artworks were prohibited from putting their signatures on their works. 

46.  Mr Gormley further said that Ms Zhang could not identify which expert craftsman created the Ivory Screen.  He raised with Ms Zhang during cross-examination the possibility of the Ivory Screen being a counterfeit.  However, Ms Zhang ruled out such a possibility for the following reasons:

(a)  There was no technology in the 1740 era which could create counterfeit ivory products.  There were only very few grandmasters who could undertake such types of work and they were all working within the Forbidden City. 

(b)  There was also no technology subsequent to the 1740 era which could produce counterfeits in the likes of the Ivory Screen.  Whilst counterfeit technology existed in Europe in the 19^th century, this was limited to using an ivory look alike plastic material called “bakelite” to make balls, beads and boxes.  Since bakelite was unsuitable for carving, it could not be used to imitate items such as the Ivory Screen.

47.  In light of Ms Zhang’s explanations above and the lack of any evidence from the Defendant to contradict such explanations, I am not persuaded that there is any credible evidence before me which would suggest that the Ivory Screen is a counterfeit.

48.  Mr Gormley also reminded me that Ms Zhang was unable to identify the provenance of the Ivory Screen beyond that it was in the possession of Sir Robert Hotung.

49.  However, given Ms Zhang’s evidence that the Ivory Screen was made by grandmasters during the reign of the Qianlong emperor in around 1740 and that it could not be a counterfeit, I do not see any reason to reject or otherwise doubt her valuation on this basis. 

Conclusion as to the Value of the Ivory Screen

50.  Overall, despite Mr Gormley’s challenges, I accept the expert opinion from Ms Zhang who has given her evidence in a clear, coherent and fair manner.  In particular, I accept Ms Zhang’s valuation that the market value of the Ivory Screen was US$4 million as at 28 April 2017.

51.  I therefore assess the damages suffered by the Plaintiff in respect of the Defendant’s failure to deliver up the Ivory Screen to be US$4 million. 

COSTS

52.  Insofar as costs are concerned, the Plaintiff’s costs incurred in this action up to 28 April 2017 have already been awarded to the Plaintiff pursuant to the 2017 Judgment, so no further costs order is required from this Court in respect of that period. 

53.  As for the costs after 28 April 2017 (including the costs of and incidental to the assessment of damages), I can see no reason why the Plaintiff should not have its costs since it has been entirely successful in the assessment trial. 

54.  In this regard, Mr Lui submits that the costs to be awarded to the Plaintiff should be assessed on an indemnity basis. 

55.  Mr Gormley opposes costs to be ordered on an indemnity basis. 

56.  The principles regarding the court’s discretion to award costs on an indemnity basis as laid down in Town Planning Board v Society for Protection of the Harbour Ltd (No 2) (2004) 7 HKCFAR 114 have been summarised by Bokhary NPJ in the recent decision of Commissioner of Inland Revenue v Poon Cho Ming John (No 2) (2020) 23 HKCFAR 74 at §4 as follows:

(a)  In certain circumstances, costs may be awarded on a more generous than usual basis of taxation so as to achieve a fairer result.  

(b)  It is for the receiving party to show that the case has some special or unusual feature.  

(c)  Such features are not confined to an ulterior motive, an improper purpose, deception or underhand conduct on the part of the paying party.  

(d)  Neither the attributes of the parties nor the character of the proceedings are irrelevant to the question of whether a more generous than usual basis of taxation should be ordered. 

(e)  The discretion to order a more generous than usual basis of taxation is not to be fettered or circumscribed beyond the requirement that such taxation be ordered only when it is appropriate to do so.  

(f)  As to that, the grounds on which a more generous than usual basis of taxation is to be ordered must be connected with the case.  That extends to – but no further than to – any matter relating to the litigation and the parties’ conduct in it, and also to the circumstances leading to the litigation. 

57.  In my view, there are special or unusual features in this case which justify the imposition of an indemnity costs order against the Defendant. 

58.  It would be apparent from my discussions above that the Defendant has been attacking the Plaintiff’s case on the basis that its experts have not physically examined the items in question. In this regard, SEH gave the following evidence which was not challenged by Mr Gormley during cross-examination:

(a)  The Defendant had refused to disclose the whereabouts of the Ivory Screen or allow the Plaintiff physical inspection of the Ivory Screen despite the Plaintiff’s repeated requests. 

(b)  The Plaintiff took out an application by way of summons filed on 14 May 2019 that the Defendant shall make the Ivory Screen available for physical examination by the Plaintiff’s expert.  The Plaintiff even offered to have its expert travel to the jurisdiction where the Ivory Screen was located to conduct the examination. However, at the hearing on 15 May 2019, the Defendant made clear that he would refuse inspection of the Ivory Screen, despite his Counsel admitting at the earlier hearing on 18 January 2019 that the Defendant had the Ivory Screen and would produce an expert report based on a physical examination.  The Plaintiff therefore had to abandon its application. 

59.  It seems to me that the Defendant’s conduct in refusing inspection of the Ivory Screen and at the same time attacking the Plaintiff’s expert for not having examined the item is obstructive and unreasonable. 

60.  Further, the egregiousness of the Defendant’s conduct is exacerbated by the delaying tactics that he has employed, including:

(a)  the non-delivery of the Gold Coins and the Ivory Screen pursuant to the 2017 Judgment;

(b)  the filing of two factual supplemental witness statements but not attending court to testify without any explanation for his absence;

(c)  his securing of an adjournment of the assessment of damages trial by indicating at the hearing on 18 January 2019 that he would also produce an expert report based on a physical examination of the Ivory Screen but then thereafter acted inconsistently. 

61.  Mr Gormley described the Defendant’s conduct (especially in relation to his change of mind over the submission of the Ivory Screen for inspection) as nothing more than the “ordinary course of litigation” between two parties engaged in a bitter feud. 

62.  However, the reality is that the Defendant has conducted a defence in these assessment proceedings without factual or expert evidence and which was wholly unmeritorious.  The Defendant’s conduct has unnecessarily lengthened these proceedings and resulted in wastage of the court’s resources. 

63.  In view of the Defendant’s conduct as described above, I am of the view that there exist special or unusual features in this case and that a fairer result would be for the Plaintiff to be awarded costs on an indemnity basis, together with certificate for two counsel.

INTEREST

64.  The Plaintiff has claimed interest against the Defendant in its Amended Statement of Claim. 

65.  During closing submissions, I invited Mr Gormley to address this Court on the issue of interest and he confirmed that he has no submission in this regard. 

66.  As for pre-judgment interest, I do not see any reason for departing from the conventional rate of 1% above prime rate: Chow How Yeen Margaret v Wex Pharmaceuticals Inc [2018] 3 HKLRD 163 at §§49-59 per Lam VP.  

67.  Further, since the cause of action in detinue accrues at the date of the wrongful refusal to deliver up the goods (Rosenthal at 378 per Evershed J; General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 1 WLR 644 at 648 per Diplock LJ), the applicable period of pre-judgment interest in this case should run from 1 September 2011 (being the day after the last day of return of the items as referred to in §8(g) above) to the date of this judgment. 

68.  As for post-judgment interest, I will follow the usual rule of awarding interest at judgment rate from the date of this judgment until full payment. 

ORDERS

69.  Based on the matters aforesaid, I make the following Orders:

(a)  The Defendant do pay the Plaintiff the sum of US$4,543,427 as damages suffered by the Plaintiff as a result of the Defendant’s failure to deliver up the Gold Coins and the Ivory Screen pursuant to the 2017 Judgment. 

(b)  The Defendant shall pay to the Plaintiff interest on the US$4,543,427 sum mentioned above at prime rate plus 1% from 1 September 2011 to the date of this judgment and thereafter at judgment rate until payment in full. 

(c)  The Defendant shall pay the Plaintiff’s costs incurred after 28 April 2017 (including the costs of and incidental to the assessment of damages), with certificate for two counsel, on an indemnity basis, to be taxed if not agreed. 

70.  I thank Counsel for their assistance.