ALEKSANDER JANEZIC AND OTHERS v. YEO TENG HWEE AKA YEO TENG HWEE AND OTHERS

HCA 9/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9 OF 2009

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REASONS FOR DECISION

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1.  Judgment has been entered in this action in favour of the Plaintiffs against the 2^nd Defendant (“First Prime”) and the 3^rd Defendant (“Pacific Wealth”) in the sum of US$597,325.73 and €15,000 plus interest and costs.

2.  The Plaintiffs have taken steps to enforce the judgment by means of garnishee proceeding in respect of First Prime’s money in Fubon Bank (Hong Kong) Limited (“Fubon Bank”).  This is the Plaintiffs’ application to make the garnishee order nisi absolute.

3.  Fubon Bank is taking a neutral stance.  The application is, however, opposed by the Claimant (“Mr Thakur”).

4.  At the conclusion of the hearing, I ordered the garnishee order nisi to be made absolute.  What follows are my reasons.

Background

5.  The background of this action and other related proceedings have been fully set out in Saunders J’s judgment dated 14 April 2009 (“the Judgment”).  I shall only highlight some of the more relevant matters below to put the application in context.

6.  The Plaintiffs, Mr Thakur and one Mr Al Husseini are all victims of the fraudulent “cold calling” scheme perpetrated by the 1^st Defendant (“Christopher Yeo”) through First Prime and Pacific Wealth.  They all suffered a loss represented by the money they deposited into various bank accounts operated by Christopher Yeo and in the names of First Prime and Pacific Wealth.  More particularly:

(a)  The 6 Plaintiffs deposited a total sum of US$597,325.73 and €15,000 into various bank accounts (including a total sum of US$249,370.18 deposited by the 2^nd, 3^rd and 4^th Plaintiffs into Fubon Bank).

(b) Mr Al Husseini deposited a total sum of US$139,400 into Fubon Bank.

(c)  Mr Thakur deposited a total sum of US$92,894.85 into Fubon Bank.

7.  The judgment obtained by the Plaintiffs in this action is a global judgment.  It does not set out the respective entitlement of each plaintiff or the basis of their entitlement.  Apart from the subject garnishee order nisi in respect of First Prime’s money in Fubon Bank, the Plaintiffs also obtained a garnishee order nisi in respect Pacific Wealth’s money in Cathay Bank.

8.  Mr Al Husseni has also obtained judgment against First Prime in HCA 124/2009 for US$139,400 plus interest and costs.  He subsequently obtained a garnishee order nisi in respect of First Prime’s money in Fubon Bank.

9.  Insofar as Mr Thakur is concerned, he has only commenced an action in HCA 521/2009 against First Prime, Christopher Yeo and one First Prime International Limited claiming, inter alia, the total sum of US$450,501.93 (including the US$92,894.85 he deposited into Fubon Bank as mentioned above).  No judgment has been entered in that action.

10.  Faced with competing claims, Fubon Bank took out an interpleader proceeding on 9 February 2009 in HCMP 223/2009 for disposal of the money standing in credit in First Prime’s bank accounts.  First Prime has two bank accounts in Fubon Bank: a current account and a US$ fixed deposit account. 

11.  On 13 March 2009, the Plaintiffs’ two garnishee orders nisi and Mr Al Husseni’s garnishee order nisi all came before the Registrar.  The learned Registrar made all these garnishee ordersabsolute despite Mr Thakur’s objection.  Mr Thakur appealed.

12.  Both the interpleader proceeding and Mr Thakur’s appeal came before Saunders J on 7 April 2009. 

13.  By the Judgment handed down on 14 April 2009, the learned Judge ruled (at paragraph 57) that:

“In those circumstances it seems sensible that each of those three groups of claimants, the three Croatian defendants [i.e. the 2^nd, 3^rd and 4^th Plaintiffs herein], Mr Al Husseini and Mr Thakur, should be entitled to trace their funds, retrieve them, and any balance in the account at Fubon Bank, (after the Bank’s costs), be available to any other general creditors.”

And the learned Judge concluded (at paragraphs 61 and 62) that:

“For the foregoing reasons the appeal against the orders of the Registrar making the garnishee orders absolute, and the consequent costs orders, must be allowed.  The garnishee orders absolute are set aside, and the garnishee orders nisi restored.  All orders for costs made by the Registrar below are set aside…” (emphasis added)

“No submissions were made to me in respect of the appropriate course to be adopted should it be necessary to determine the competing claims between the claimants.  The solicitors for the Croatian defendants [i.e. the Plaintiffs herein], and for Mr Thakur should be able to agree on an appropriate procedure. Leave is reserved to the parties to apply should they not be able to agree upon an appropriate order.  I note however that already boasts of these parties have expended far too much in the way of legal costs in these proceedings.  The sensible and just way of resolving the matter appears to me to lie in paragraph 57 of this judgment.”

14.  Upon further application by the parties, Saunders J made an order on 22 April 2009 that the money in First Prime’s current account at Fubon Bank be paid out as follows:

(a)  HK$60,000 be paid to Fubon Bank as their costs;

(b) US$249,370.18 be paid to the 2^nd, 3^rd and 4^th Plaintiffs (and Mr Thakur be entitled to payment of his legal costs in the sum of HK$300,000 from this amount);

(c)  US$139,400 be paid to Mr Thakur; and

(d) the balance be paid to the 1^st, 5^th and 6^th Plaintiffs.

15.  Saunders J’s above orders have left the money in First Prime’s US$ fixed deposit account with Fubon Bank undisposed of.  According to Fubon Bank’s affirmation filed in HCMP 223/2009,there was a credit balance of US$10,144.18 in that account as at 9 February 2009.

The Plaintiffs’ application

16.  According to Mr Ip’s 4^th affirmation filed in support of the application, the Plaintiffs have already obtained payment of:

(a)  US$131,294.79 from Cathay Bank under the garnishee order relating to Pacific Wealth’s money in Cathay Bank; and

(b) US$223,890.77 from Fubon Bank in pursuance of Saunders J’s order.

Hence, the amount remaining unpaid under the judgment stands at US$232,140.17 and €15,000 plus interest and costs.

17.  The Plaintiffs now want to obtain the money in First Prime’s US$ fixed deposit account with Fubon Bank to further satisfy their judgment. 

18.  Fubon Bank and Mr Al Husseini have indicated, though their respective solicitors, that they do not wish to take part in this application.

Mr Thakur’s opposition

19.  It is most unfortunate that Mr Thakur is not legally represented at the hearing.  Much time was wasted in dealing with his misunderstanding and confusion about this case and for him to articulate his opposition.

20.  A number of points were taken by Mr Thakur.  First, he accuses the Plaintiffs of improperly taking money from Cathay Bank and says we should also be dealing with the Plaintiffs’ garnishee order nisi in respect of First Prime’s money in Cathay Bank: see paragraph 3(d) of Mr Thakur’s 4^th affirmation.

21.  Unfortunately, no one has drawn up Saunders J’s order dated 14 April 2009 and paragraph 61 of the Judgment seems to suggest that both the garnishee order nisi relating to Fubon Bank and the garnishee order nisi relating to Cathay Bank have been restored: see the emphasis in thequotation in paragraph 13 above.

22.  Mr Ip, who participated in the hearing before Saunders J, recalls that the hearing was concerned with Fubon Bank only.  He further refers me to the written submission of Mr Thakur’s counsel to confirm that Mr Thakur had not challenged the Cathay Bank garnishee order.

23.  In any event, the Plaintiffs have already obtained payments from Cathay Bank and that should be the end of that garnishee proceeding.  I agree that we should only deal with the garnishee order nisi relating to Fubon Bank.

24.  Secondly, Mr Thakur complains that he has not been paid his legal costs of HK$300,000 as ordered by Saunders J.

25.  In response, Mr Ip refers me to a letter from Fubon Bank’s solicitors confirming payment of a sum of HK$300,000 directly from Fubon Bank to Mr Thakur’s solicitors.  Eventually, Mr Thakur accepts that he has been paid his costs.

26.  Thirdly, Mr Thakur says the Plaintiffs have not been consistent in accounting for the money they received from Fubon Bank.  Hegoesso far as to accuse the Plaintiffs’ solicitor of concealing the truth and misleading the court: see paragraph 3(e) of Mr Thakur’s 4^th affirmation.

27.  Mr Thakur must havemisunderstood the situation. 

28.  On 22 April 2009, Saunders J ordered:

(a)  US$249,370.18 to be paid to the 2^nd, 3^rd and 4^th Plaintiffs; and

(b) the balance in the account (after satisfying all other payments) to be paid to the 1^st, 5^th and 6^th Plaintiffs.

By their letter, Fubon Bank confirmed payment of:

(a)  a sum of US$210,660.50 (i.e. US$ 249,370.18 – HK$ 300,000) to the 2^nd, 3^rd and 4^th Plaintiffs; and

(b) the balance to the 1^st, 5^th and 6^th Plaintiffs. 

Hence, Mr Ip deposed to in his affirmation that the Plaintiffs have received the total sum of US$223,890.77 from Fubon Bank.

29.  Mr Thakur, however, has a point when he said that that part of the Plaintiffs’ judgment representing the US$249,370.18 which the 2^nd, 3^rd and 4^th Plaintiffs had deposited into Fubon Bank should be taken to have been fully satisfied.  This is because the learned Judge did order the full amount of US$249,370.18 to be paid to the 2^nd, 3^rd and 4^th Plaintiffs.  The reason why they have received a lesser sum of US$210,660.50 instead of the full amount is because the learned Judge also ordered paymentof Mr Thakur’s costs out of the money received by the 2^nd, 3^rd and 4^th Plaintiffs.  The fact that Mr Thakur eventually obtained payment directly from Fubon Bank does not alter the fact that such costs came out of the Plaintiffs’ money.

30.  In my view, the Plaintiffs should have taken the full amount of US$249,370.18 into account (rather than the US$210,660.50 actually received) in calculating the outstanding balance of the judgment.  Hence, the amount remaining unpaid under the judgment should really be US$193,430.49 and €15,000 plus interest and costs.

31.  Be that as it may, this should not affect the outcome of this application as there are insufficient funds in First Prime’s US$ fixed deposit account to fully satisfy the Plaintiffs’ remaining judgment.

32.  Fourthly, Mr Thakur argues that his remaining claim in HCA 521/2009 (after deducting the US$ 92,894.85 he has received) is also based on “constructive trust or proprietary interest” and should be repaid with priority.

33.  Mr Thakur has misread the Judgment.  Saunders J was referring to the US$92,894.85 which Mr Thakur had deposited into Fubon Bank (see paragraph 27 of the Judgment) when the learned Judge said at paragraph 35 (as amended by the Corrigenda dated 22 April 2009) that:

“The claims by three of the Croatian defendants, the 4^th 5^th and 6^th defendants [i.e. the 2^nd, 3^rd and 4^th Plaintiffs herein], Mr Al Husseini and Mr Thakur, based upon a constructive trust or proprietary interest, are identical in all respects.  It is right that the three Croatian defendants and Mr Al Husseini have entered judgment and obtained a garnishee orders nisi, but that goes nowhere to any distinction between the quality of the three claims to the funds in the Fubon bank account.”

34.  Mr Thakur has confirmed at the hearing that his remaining claim in HCA 521/2009 represent the money he deposited into other banks but not Fubon Bank.  As such, his remaining claim is not based on “a constructive trust or proprietary interest”. 

35.  The learned Judge has commented (at paragraph 36 of the Judgment) that the balance of the Plaintiffs’ claim (after deducting the US$249,370.18 which the 2^nd, 3^rd and 4^th Plaintiffs deposited into Fubon Bank) does not have priority:

“The balance of the sum claimed generally against First Prime by the three Croatian defendants who deposited funds in the Fubon Bank, and the remaining Croatian defendants, for which judgment has been entered, relates to deposits paid into other banks, not the Fubon Bank.  While the Croatian defendants may have a right to take steps in execution in reliance upon the judgment they have obtained, their claim for any other funds or balance due to them by First Prime, by way of general damages, apart from a proprietary claim, to funds in the Fubon Bank account, must logically follow in priority to any claimant who has a right to a proprietary interest in funds in the account.”

36.  Mr Thakur’s remaining claim is similar in nature to the balance of the Plaintiffs’ claim.  The difference between them is that Mr Thakur does not havea judgment and so he is not entitled to take steps in execution just like the Plaintiffs. 

37.  Now that all claims with priority have been satisfied, there is nothing to stop the Plaintiffs from taking steps to attach their outstanding judgment on the remaining funds of First Prime in Fubon Bank. 

38.  Lastly and which is perhaps Mr Thakur’s main complaint, he relies on paragraph 57 of the Judgment (quoted in paragraph 13 above) and argues that he and other general creditors should be entitled to share in the remaining funds ofFirst Prime in Fubon Bank.

39.  In my view, Mr Thakur is reading paragraph 57 of the Judgment out of context.  As I have explained above, the learned Judge has envisaged that after satisfaction of all claims with priority the Plaintiffs may take steps in execution.

40.  When this application first came before me on 10 August 2009, Mr Thakur requested for an adjournment for him to take legal advice and to consider petitioning for the winding up of First Prime and Pacific Wealth: see paragraph 4 of his 4^th affirmation.  An adjournment was granted. 

41.  When the hearing resumed on 23 September 2009, Mr Ip confirms that no winding up proceeding has been commenced against First Prime.  In those circumstances, allowing the Plaintiffs’ application will not have the effect of preferring one creditor over another.

Conclusion

42.  None of the objectionsraised by Mr Thakur has any substance.  In my view, the Plaintiffs should be entitled to enjoy the fruit of their judgment by executing on First Prime’s money in Fubon Bank.  I have therefore made the garnishee order absolute on 23 September 2009.

43.  On costs, Mr Ip has asked for indemnity costs against Mr Thakur as Mr Thakur has made serious allegations against the Plaintiffs’ solicitor and much time at the hearing was wasted in dealing with Mr Thakur’s own confusion.

44.  I have decided only to award costs on a party and party basis to the Plaintiffs.  First, costs normally follow the event and so Mr Thakur should rightly pay for the Plaintiffs’ costs caused by his own failed opposition.  Secondly, both the Plaintiffs and Mr Thakur are in fact victims of a crime and they have all lost substantial sums of money.  What Mr Thakur did in terms of his opposition was an attempt to minimize his own loss and, in so doing, he might have overstepped the line.  Given the chequered history of this case, the competing interest of the victims, and the fact that Mr Thakur was not legally represented, I do not think there is sufficient unusual feature to justify indemnity costs.     

45.  After receiving further submissionson quantum, I ordered Mr Thakur to pay the Plaintiffs the costs of the hearings on 10 August and 23 September 2009, assessed by summary assessment on a party and party basis at $12,800.