TIN LIK v.DEUTCHE BANK AG AND OTHERS

HCCL 17/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 17 OF 2011

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D E C I S I O N

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1.  I gave the following directions in my Judgment in this action:

“243. I grant leave to the parties to apply within 28 days under the slip rule to correct any errors of calculation that I may have made in this judgment.

244. I direct the parties to exchange within 28 days written submissions on the award of interest I ought to make and specifying the rate or rates of interest and the period or periods over which I ought to award interest. The parties are also directed to exchange with 14 days thereafter written submissions in reply.

245. I make a costs order nisi that Tin pay to the defendants the costs of the action that were incurred on his claims which I have dismissed, on an indemnity basis, to be taxed if not agreed.  Those costs are exclusive of the costs incurred and the time expended on the defence of set-offs.  I direct the parties to exchange within 28 days written submissions on the proper apportionment of the costs incurred on Tin’s claims and the costs incurred on the set-offs and on the costs order that I should make in respect of the set-offs.  The parties are also directed to exchange with 14 days thereafter written submissions in reply.”

2.  I have received the following applications and submissions pursuant to these directions.

Application to correct typographical errors under the slip rule

3.  In §3 of his submissions dated 14 March 2016, Tin applied under the slip rule to correct the figure of HK$226,596,671 appearing in §242 of the Judgment.  He submitted that the proper figure was HK$226,496,671 (HK$104,417,794 + HK$122,078,877 was HK$226,496,671, not HK$226,596,671), such that the balance due to Tin should be HK$10,999,727 and not HK$10,899,727.

4.  There is indeed a typographical error in §242 of the Judgment.  However, the error was not the sum of HK$226,596,671, but the sum HK$104,417,794:

(1)  The sum of HK$104,417,794 in §242 of the Judgment was derived from §209 of the Judgment, which, according to footnote 271, was made up of HK$69,663,000, HK$29,283,112 and HK$5,471,682.

(2)  However, HK$29,283,112 was a typographical error.  This sum of HK$29,283,112 was wrongly mentioned in §205 of the Judgment.  The correct figure should be HK$29,383,112. This is the difference between HK$63,640,636 (at line 11 of §205 of the Judgment) and HK$34,257,524 (wrongly stated as HK$34,257,254 at line 15 of §205 of the Judgment).

(3)  Therefore, the correct sum in §209 of the Judgment should be HK$104,517,794 (being HK$69,663,000 + HK$29,383,112 + HK$5,471,682).

(4)  If the correct figure of HK$104,517,794 had been used in §242 of the Judgment, that would produce the sum of HK$226,596,671, and the balance due to Tin in the sum of HK$10,899,727 would be correct.

5.  Accordingly, I direct that  the following errors be corrected under the slip rule and pursuant to §243 of the Judgment:

(a)  Line 15 of §205: HK$34,257,524, instead of  HK$34,257,254;

(b)  Line N of §206: HK$29,383,112, instead of HK$29,283,112;

(c)  Line K of §209: HK$104,517,794, instead of HK$104,417,794;

(d)  Footnote 271: HK$69,663,000 + HK$29,383,112 (instead of HK$29,283,112) + HK$5,471,682; and

(e)  Line L of §242: HK$104,517,794, instead of HK$104,417,794.

In the result, the judgment sum due to Tin, HK$10,899,727, was and remains correct.

Indemnity Costs

6.  I am not persuaded that the costs order that I made against Tin should be taxed on a party and party basis, and not on an indemnity basis.   I accept the submissions of the Bank and the Manager contained in §§6 to 8 of their written submissions dated 14 March 2016.  The costs order nisi I had made against Tin is hereby made absolute.

Interest

7.  Pursuant to my direction, Tin applied for an award of interest on the sum due to him which, notwithstanding the errors mentioned and corrected above, remains at HK$10,899,727.  Tin applied for an award of interest at the rate of 1% above HSBC prime for the period from 1 May 2008 until the date of judgment, 15 February 2016.  He did so on the basis that the Retention Sum was to be released to him on the 30^th day after the completion of the audit of the accounts of the “Companies” for the 2007 financial year, or on 31 May 2008 (whichever came earlier)[1]; and that the audits of the Companies’ accounts were completed on 2 April 2008 by KPMG – as could be seen from the 2007 Annual Report for the RREEF China Commercial Trust[2].  Thus, the Retention Sum became payable on 1 May 2008[3].

8.  The Bank and the Manager referred to the audited accounts of the Companies which they asserted were only completed on 30 June 2008 (as could be seen from items 53 and 54 of the Trustee’s discovery documents).  Thus, they submitted that, in any event, the Retention Sum could not become payable before 31 May 2008.

9.  The “Companies” referred to in Clause 6.3.2 of the Sale and Purchase Agreement dated 4 June 2007 were defined in Clause 1.1 thereof as the BVI Property Company and the HK Property Company, not as RREEF CCT.  Hong Kong Gateway Plaza Co Ltd (“Hong Kong Gateway”) was the HK Property Company, within the meaning of Clause 1.1, a wholly owned subsidiary of Beijing Gateway Plaza (BVI) Ltd (“Beijing Gateway”), which was the BVI Property Company, within the meaning of Clause 1.1.  If not already admitted into evidence, I grant leave to the Bank, the Manager and the Trustee to adduce before me items 53 and 54 of the Trustee’s discovery documents, being the auditor’s report of Beijing Gateway and the auditor’s report of Hong Kong Gateway, both dated 30 June 2008.  The audited accounts Tin relied upon were the audited consolidated financial statements of RREEF CCT and its subsidiaries.  However, they are not the “Companies” referred to in Clause 6.3.2.  Having reviewed these documents, I conclude that the sum of HK$10,899,727 was payable on 31 May 2008.

10.  The Bank, the Manager and the Trustee also relied on Clause 6.3.2 of the SPA (cited at §195 of my Judgment) which provided that the Retention Sum was to be withheld by the Trustee and released on the 30^th day after completion of the 2007 audit “subject to there being no material breach of the Warranties which, in the sole opinion of the [Trustee] acting on the recommendation of the Manager, will have a material adverse effect on the financial condition, prospects, earnings, business, undertaking or assets of RREEF CCT or on the Property, in each case, taken as a whole.”

11.  I do not construe the above clause as relieving the Manager and the Trustee from their obligation to repay the sum of HK$10,899,727 to Tin on 31 May 2008.  I am not persuaded by the other submissions I have received that I should exercise my discretion in any other way but to award interest on the sum of HK$10,899,727 at the rate of 1% above HSBC prime for the period from 1 May 2008 until the date of judgment, 15 February 2016.

Apportionment

12.  I have considered the parties’ respective submissions on the apportionment of the costs incurred on Tin’s claims and in respect of the set-offs.  Taking a broad brush approach, I conclude that 70% of the time, before and at trial, was spent on Tin’s claims and 30% on the set-offs.

Costs Order in respect of the set-offs

13.  I do not accede to the Trustee’s submissions that I should have regard to the Trustee’s “without prejudice save as to costs” letters issued before these proceedings were commenced when making a costs order in respect of the set-offs.  Once proceedings were started, a sanctioned offer could have been made to Tin.  Even though the terms of Order 62, r.5(1)(d) RHC do not apply to “without prejudice save as to costs” letters issued before the proceedings were commenced, the absence of a sanctioned offer, after the proceedings were commenced, is a matter I can and do take into account.  The other matter I take into account in the fact that Trustee’s “without prejudice save as to costs” letters required Tin to grant releases under deed to the Trustee which might have adversely affected his ability to bring his own claims, which he later did in these proceedings, including his claims for damages for intimidation, deceit and misrepresentation, breach of warranty, and breach of contractual and statutory duties.

14.  Although Tin had to come to court in order to get a judgment in his favour in the sum of HK$10,899,727 against the Manager and the Trustee, the Bank, the Manager and the Trustee were wholly successful in their defence of set-off.  The disputed issue in the context of the set-offs, was whether the balance due to Tin was HK$287,496,398 (or part thereof), as contended by Tin, or whether the balance due to Tin was HK$10,899,727, as contended by the Bank, the Manager and the Trustee.  Each of Tin’s challenges to the set-offs failed.  In the circumstances, I order Tin to pay 80% of the costs of the Bank, the Manager and the Trustee, to be taxed, if not agreed, on a party and party basis.