WONG CHING WAN AND ANOTHER v. ELITE FINANCIAL SOLUTIONS LTD

DCCJ 392/2023

[2024] HKDC 1780

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 392 OF 2023

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ASSESSMENT OF DAMAGES

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Introduction

1.  This is the hearing for assessment of damages of the claim of the 1^st and 2^nd Plaintiffs (collectively “the Plaintiffs”) for the loss and damage resulting from entering into the Migration Service Agreement with the Defendant on 18 February 2020 (“the Agreement”). This action is brought with the assistance of the Consumer Legal Action Fund.

2.  The Plaintiff seeks (i) damages equivalent to the first instalment paid under the Agreement, (ii) compensation for loss arising from purchase and subsequent sales of Bulgarian national bonds, and (iii) recovery of the expenses on financing charges, notarization fees, and certificate of no criminal conviction (“CNCC”).

3.  The Plaintiffs commenced these proceedings on 1 February 2023. Interlocutory Judgment was entered against the Defendant on 2 June 2023.

4.  The Defendant was absent at the hearing on 7 October 2024. Having read the affirmation of service filed in 3 October 2024, I was satisfied that notice of assessment hearing had been duly given to the Defendant prior to the hearing. It was the Defendant’s election not to attend the assessment hearing. I proceeded with the assessment of damages in the absence of it.

The Plaintiff’s case

5.  The Plaintiffs are a pair of married couple. The Defendant is a limited company registered in Hong Kong which provides migration consultancy services.

6.  Before the Plaintiffs entered into the Agreement with the Defendant, the 1^st Plaintiff (husband) had expressed his doubts and enquired by way of WhatsApp messages if purchasing Bulgarian national bonds would still be a viable way to obtain visa and permeant residency in Bulgaria, as he had read some news articles online suggesting the opposite. The Defendant reassured the Plaintiffs by certain representations on WhatsApp and told them the information contained in the news was false.

7.  As the first instalment of the consultancy fee, EUR30,000 was paid to the Defendant. Thereafter, the Defendant advised the Plaintiffs to simplify the migration application procedures by naming the 2^nd Plaintiff (wife) as the main applicant for visa, as the 1^st Plaintiff was born in Mainland China. The Plaintiffs did so accordingly.

8.  As advised by the Defendant, the Plaintiffs purchased 424,000 units of Bulgarian bonds, costing them EUR523,561.80. The payment of the said sum was partly facilitated by a loan from a so-called business partner of the Defendant, namely: South China Securities Limited (“South China”). In preparing for the migration application, the Plaintiffs also incurred HK$10,200 for notarization fees charged by a solicitor firm and HK$225 for CNCC issued by the Hong Kong Police.

9.  On 14 April 2021, the Defendant informed the Plaintiffs there would be a change in Bulgarian Law and that the Bulgarian national bonds would no longer be an eligible investment option for obtaining residency. On 15 July 2021, the Defendant informed the Plaintiffs that South China would no longer provide any financing to the Plaintiffs, nor would the Defendant procure another financial institution for the Plaintiffs. On 20 July 2021, the Defendant even sent a letter to “unilaterally terminate” the Agreement.

The Evidence

10.  In the present hearing, the Plaintiff called 2 witnesses, namely the Plaintiffs themselves. Their respective testimony was not subject to any challenge from the Defendant who had adduced no documentary evidence and witness evidence for the purpose of assessment of damages and was absent during the hearing. I find the respective evidence of the 1^st Plaintiff and the 2^nd Plaintiff straightforward, credible, and reliable. I accept their evidence.

First instalment paid under the Agreement

11.  According to clauses 1.1 and 1.2 of the Agreement, the Defendant should provide professional services to assist its clients to obtain visa and permanent residence and inform them of any changes in the relevant laws and procedures. It is straightforward and undeniable that by the Defendant’s wrongful termination of the Agreement, the Defendant failed to perform its obligations as set out therein.

12.  In particular, in breach of clause 1.2b, the Defendant failed to conduct reasonable assessment before the migration application. The Defendant also failed to timely inform the Plaintiffs of the change in Bulgarian law and coordinate with financial institutions for and on behalf of the Plaintiffs, contrary to clauses 12g and 12f respectively.

13.  Given the breaches, I find the Defendant should not be entitled to retain the first instalment and hence be liable to repay the Plaintiffs EUR30,000 (or its equivalence in Hong Kong dollars HK$270,486 as sought by the Plaintiff).

Loss from purchase and subsequent sales of the Bulgarian national bonds

14.  The purchase of the bonds was made on the reliance of the advice of the Defendant with a sole view to obtaining a visa and eventually permanent residency in Bulgaria. The bonds were bought at EUR523,561.80 (as per the price on 3 March 2020). After the termination by the Defendant, the bonds were sold at a loss at EUR482,308.71 on 30 September 2021. The Plaintiffs now seek the loss of EUR41,253.09 (or its equivalent Hong Kong dollars at HK$371,946.11).

15.  By citing South Australia Asset Management Corp v York Montague Ltd [1997] AC 191, the Plaintiffs submit that they were being placed in such predicament of holding the bonds not fit for the purpose of migrating to Bulgaria, due to the Defendant’s wrongs. It was the breach of duty by the Defendant, which shares the close causal connection with the Plaintiffs’ loss. The fact that the Plaintiffs took reasonable attempt to cope with the consequences of the Defendant’s breach of duty (for example by selling at a loss in the present case) does not negative such connection.

16.  I have also considered the Plaintiffs’ submissions on causation, measure of damages, and assumption of responsibilities by seeking support from Bank of China (Hong Kong) Ltd v Albert Hwang, David Chung & Co, A Firm [2002] 2 HKLRD 408 (at paragraphs 42-58).

17.  This Court is aware of the joint judgment of Mr Justice Ribeiro PJ and Mr Justice Fok PJ in De Monsa Investments Ltd v Richly Bright International Ltd, 823 Investment Ltd (18/05/2015, FACV12/2014) (2015) 18 HKCFAR 232, which observes (at paragraphs 132-133):

132. I believe the nature and object of a contract can provide an important guide to ascertaining what the parties may be taken to have had in their contemplation as well as what contractual obligations the contracting parties could fairly be said to have undertaken.

133. In Siemens Building Technologies FE Ltd v Supershield Ltd [2010] 1 Lloyds Rep 349, a decision of the English Court of Appeal, Toulson LJ, whose judgment was agreed to by the other members of the court, said:

“40. The law on remoteness of damage in relation to claims for breach of contract is grounded on the policy that the loss recoverable by the victim should be limited to loss from which the party in breach may reasonably be taken to have assumed a responsibility to protect the victim. It follows that the question of remoteness cannot be isolated from consideration of the purpose of the contract and the scope of the contractual obligation.”

18.  In light of the aforesaid authorities, I also noticed the 2^nd Plaintiff’s oral testimony where she stressed that she would not have purchased the national bonds, but for the Defendant’s advice, especially in light of the enquiries made by the 1^st Plaintiff prior to the entering of the Agreement. The Defendant specifically told the 1^st Plaintiff the news about abolition of migrating through bonds was false.

19.  It is foreseeable and within reasonable contemplation of parties that the Plaintiffs would be faced with a real risk of loss arising from purchasing such bonds, against which the Defendant ought to have taken action to guard, as a matter of contractual obligations as well as duties as a migration consultant.

20.  I find the loss suffered by the Plaintiffs consequential to the Defendant’s acts. As such, it is reasonable and logical to allow the Plaintiffs to recover such loss from the Defendant.

Financing charges, notarization fees, and CNCC fee

21.  Firstly, the Plaintiffs claim US20,335.53 (or its equivalent HK dollars HK$158,322.27) which is the total amount of interest paid to South China. Secondly, they claim HK$10,200 in total[1] which was incurred in the performance of clause 2.6 of the Agreement by engaging Messrs K Y Woo & Co for notarization services of various documents such as birth certificates for the migration application. Thirdly, they claim the fee of HK$255 paid to the Hong Kong Police for obtaining a CNCC.

22.  The Plaintiffs cited Anglia Television Ltd v. Reed [1972] 1 QB 60 and seek to recover the above as wasted expenditure. I accept it was reasonably within the contemplation of the parties that all the aforesaid expenditure would be wasted if the Agreement was broken by the Defendant. They were only spent by the Plaintiffs acting on the advice given by the Defendant for the purpose of obtaining visa.

23.  The aforesaid three categories of charges and fees are reasonably incurred. I allow the Plaintiffs to recover the same from the Defendant.

Conclusion

24.  The Plaintiffs are entitled to recover from the Defendant the following:[2]

(1)  First instalment paid under the Agreement:		HK$270,486.00
(2)  Purchase and sales of Bulgarian national bonds:		HK$371,946.11
(3)  Expenditure on	(a)  financing charges:	HK$158,322.27
	(b)  notarization:	HK$10,200.00
	(c)  CNCC:	HK$255.00 ______________
	TOTAL:	HK$811,209.38

25.  I order that the Defendant do pay the sum of HK$811,209.38 to the Plaintiffs with interest on the said sum at the best lending rate of HSBC plus 1% from the date of Writ, ie 1 February 2023 to the date of the Interlocutory Judgment and thereafter at judgment rate to the date of full payment.

26.  Costs should follow the event in the present case. I order the Defendant to pay the Plaintiffs’ costs, to be taxed if not agreed.