MANEK BHARATI SAVJIBHAI t/a B. MANEK & CO. v. WU YAT CHOI STANLEY AND ANOTHER

HCA No. 13010/1996

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 13010 OF 1996

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ASSESSMENT OF DAMAGES

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Introduction

1. The plaintiff was at all material times a solicitor of Hong Kong and the sole proprietor of his own firm of solicitors, Messrs. B. Manek & Co. ("the Firm"). The 1st defendant was a conveyancing clerk of the firm. The 2nd defendant was a conveyancing clerk of another firm of solicitors, Messrs. Massie & Pickavant.

2. The plaintiff alleged that he was the victim of a mortgage fraud perpetrated by the 1st and/or 2nd defendants on or about 30th September 1996, full particulars of which are set out in the Statement of Claim filed herein on 17th April 1997.

3. The Writ of Summons was issued against the 1st and 2nd defendants on 14th November 1996. The 1st defendant did not file any Notice of Intention to Defend and hence the plaintiff obtained an Interlocutory Judgment against the 1st defendant on 25th March 1997 for damages to be assessed and costs to be taxed, if not agreed.

4. On 13th February 1998, Master Chu (as she then was) granted leave to the plaintiff to proceed with an Assessment of Damages against the 1st defendant under the said Judgment of 25th March 1997, and the assessment was heard before me on 30th March 2001.

The Claims

5. The plaintiff's claims are for the following loss and damages:-

(1) liability for the sum of $1,260,000.00 plus interest at the rate of 11.5% per annum from 30th September 1996 to the date of payment to Chase Manhattan Bank ("Chase");

(2) liability in costs to Chase; and

(3) costs incurred in defending High Court Action No. A13421 of 1996 ("HCA 13421/96").

6. The plaintiff also claims interest pursuant to s.48 of the High Court Ordinance, Cap. 4 in such sums and for such period as the Court sees fit.

Evidence

7. The evidence for this assessment came from the Witness Statement of Melanie Pritchard, which was ordered by Master Poon on 30th April 1998 to stand as evidence in chief of the witness at the hearing of the assessment of damages.

8. In the said witness statement, it was stated that the damages suffered by the plaintiff consisted mainly its liability to pay compensation to Chase. The plaintiff was sued by Chase in HCA 13421/96 for recovery of mortgage funds which the defendants fraudulently misappropriated. The Hong Kong Solicitors Indemnity Fund Limited ("the Fund") was duly notified by the plaintiff and took over conduct of the defence of the action brought by Chase. The fund also exercised its rights of subrogation as the plaintiff's insurers and issued this action in the plaintiff's name.

9. It was also stated that on 28th January 1997, judgment was granted in favour of Chase in HCA 13421/96 for the sum of $1,260,000.00 together with interest on this amount at the rate of 11.5% per annum from 30th September 1996 to 28th January 1997 and thereafter at the judgment rate until payment together with costs to be taxed if not agreed. On 23rd December 1996 the Fund, on behalf of the plaintiff, made a payment into Court of $904,437.24 and after judgment was awarded, the payment into court plus accrued interest was paid out to Chase. On 5th February 1997 the Fund paid a further sum of $381,763.40 to satisfy the judgment debt. On 24th February 1997, the Fund paid a further sum of $25,160.31 to settle interest on the judgment debt, including interest accruing from 6th February 1997 to 24th February 1997. On 7th July 1997, the Fund also paid a sum of $100,000.00 to settle Chase's claim for its costs in HCA 13421/96. In total, the Fund has paid $1,411,360.90 to satisfy the judgment awarded in HCA 13421/96 together with costs and interest thereon.

10. It was further stated in the witness statement that the Fund has incurred approximately $126,000.00 in defending the proceedings in HCA 13421/96.

11. As the 1st defendant did not appear at the hearing of the assessment, the aforesaid evidence was not challenged at all. I have no reason to disbelieve the evidence disclosed in the said witness statement and I accept the same as the facts for the purpose of the assessment.

12. I therefore find that the plaintiff has suffered loss and damages as follows:-

(1) liability to Chase for the judgment sum and interest in HCA 13421/96 totalling $1,311,360.90;

(2) liability to Chase for costs in HCA 13421/96 in the sum of $100,000.00; and

(3) costs incurred in defending HCA 13421/96 in the sum of $126,000.00.

Measure of Damages

13. In Doyle v. Olby (Ironmongers) Ltd. and others [1969] 2 All ER 119 at 122, Lord Denning said the following:

"In fraud, the defendant has been guilty of a deliberate wrong by inducing the plaintiff to act to his detriment. The object of damages is to compensate the plaintiff for all the loss he has suffered, so far, again, as money can do it. In contract, the damages are limited to what may reasonably be supposed to have been in the contemplation of the parties. In fraud, they are not so limited. The defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement."

14. Since the plaintiff has suffered loss and damages as a result of the 1st defendant's fraudulent acts, I will adopt the measure of damages as stipulated by Lord Denning in the aforesaid case, i.e. the plaintiff shall be compensated for all the actual damages directly flowing from the fraudulent acts of the 1st defendant.

Assessment

15. I find that the plaintiff's liability to Chase for the judgment sum, interest and costs in HCA 13421/96, as well as the cost incurred in defending HCA 13421/96 as aforesaid were all actual damages flowing from the 1st defendant's fraudulent acts, and the 1st defendant shall be liable for the same.

I therefore assess the damages of the plaintiff to be in the total sum of $1,537,360.90 as follows:-

(1)	liability to Chase for the judgment sum and interest in HCA 13421/96	$1,311,360.90
(2)	liability to Chase for costs in HCA 13421/96	$100,000.00
(3)	costs incurred in defending HCA 13421/96	$126,000.00
	Total:	$1,537,360.90
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Interest

16. The plaintiff is entitled to interest on the sum assessed, i.e. $1,537,360.90, at judgment rate from the date of the Writ, i.e. 14th November 1996 to the date of the Judgment pursuant to s.48 of the High Court Ordinance, Cap.4.

Order

17. Accordingly, I enter judgment for the plaintiff against the 1st defendant for the sum of $1,537,360.90 together with interest thereon at judgment rate from 14th November 1996 until the date of this judgment.

18. I also make an order nisi that the 1st defendant do pay the costs of this assessment to the plaintiff; such costs shall be taxed if not agreed. The order nisi is to be made absolute after the expiration of 14 days from the date of this Judgment.