TING YUK AND OTHERS v. TING YEE WA AND OTHERS

HCA 422/2012

[2018] HKCFI 893

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.422 OF 2012

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ASSESSMENT OF DAMAGES

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INTRODUCTION

1.  This is the assessment of damages of the claim by the 1^st and 2^nd plaintiffs (together, the “plaintiffs”) against the 1^st to 5^th defendants (together, the “defendants”) in respect of damages suffered by reason of the defendants’ fraudulent misrepresentations made to the plaintiffs.

2.  There were originally 3 plaintiffs in the action.  Due to the withdrawal of legal aid on 20 June 2014, the 3^rd plaintiff had since ceased to participate in the action.

3.  Interlocutory judgment was entered in favour of the plaintiffs on 13 May 2014 for damages with interest to be assessed and costs to be taxed upon all of the defendants’ failure to give notice of intention to defend. 

4.  For the avoidance of doubt, this assessment of damages hearing did not concern the alleged damages suffered by the 3^rd plaintiff.

5.  Pursuant to an Order for substituted service dated 19 February 2016, the Notice of Appointment for Assessment of Damages was duly served on the defendants by airmail to their respective last known addresses.

6.  Pursuant to an Order dated 2 September 2016, the defendants were debarred from adducing any documentary evidence or witness statements at the assessment hearing by reason of their failure to file and serve any list of documents or witness statements within the prescribed time.

7.  Although at the beginning of the hearing there was no affirmation of service filed by the plaintiffs in relation to the notice of hearing of the assessment of damages, solicitors for the plaintiffs had produced the respective letters of service dated 28 June 2017 and had filed the affirmation of service by the end of the first day of hearing on 6 March 2018.  I am satisfied that the defendants had been properly served with the hearing for assessment of damages.  The hearing proceeded in the absence of all the defendants.

The plaintiffs’ case

8.  The plaintiffs are husband and wife.  The 1^st defendant is the elder brother of the 1^st plaintiff.  The 2^nd defendant is the wife of the 1^st defendant.  The 3^rd and 4^th defendants are the daughters of the 1^st and 2^nd defendants.  The 5^th defendant is the husband of the 3^rd defendant.  In other words, the plaintiffs and the defendants are family members.

9.  The plaintiffs and the 1^st defendant were originally from Fujian province, the PRC.  The plaintiffs subsequently became permanent residents of Hong Kong and helped the 1^st to 4^th defendants to become permanent residents of Hong Kong also in or about 1984-1987.

10.  The 3^rd and 4^th defendants went to study in Australia in or about 1992 and subsequently became Australian citizens.  The 1^st and 2^nd defendants later joined their daughters and became Australian citizens also.

11.  The 1^st and 2^nd defendants were respectively the chairman and managing director of a company called Wealth Prime Australia Pty Ltd. (“Wealth Prime”).  They have businesses in Fujian province, the PRC, Hong Kong as well as Australia.

12.  The facts relevant to the fraud practised by the defendants on the plaintiffs may be summarized as follows. 

13.  In or about beginning of 2002, the 1^st and 2^nd defendants persuaded the plaintiffs to apply to emigrate to Australia.  The 2^nd defendant fraudulently represented to the plaintiffs that she was well acquainted with some Australian immigration officers and all it needed was A$100,000 from the plaintiffs to acquire immigration status for their family.  The 2^nd defendant further guaranteed that the immigration visa would be issued within 3 months after payment and she would use her best endeavour to help the plaintiffs.  The 5^th defendant represented to the plaintiffs that he was a former pilot and knew many prominent people such as Justices of the Peace, lawyers, accountants and immigration officers.  The 2^nd, 3^rd and 4^th defendants also persuaded the 1^st plaintiff to take her family to visit Australia to see if they would like living there permanently.

14.  The defendants in 2002 took the plaintiffs’ family sightseeing, visiting friends and businesses operated by those who were from Fujian province who had subsequently emigrated to Australia. The 3^rd defendant encouraged the plaintiffs’ family to emigrate to Australia and promised to introduce a job for the 2^nd plaintiff. The 3^rd defendant then introduced the plaintiffs to a bank officer of HSBC in Sydney and told them that they would assist them in their investment in Australia.  The defendants also represented that they engaged an immigration agent by the name of Suzannah Lu to assist with the plaintiffs’ application.

15.  The plaintiffs said that all these representations from the defendants were in fact the beginning of a fraudulent scheme which eventually cost the plaintiffs everything they had owned.

16.  After this, in the span of about 7 years that followed, the defendants managed to persuade the plaintiffs to transfer over large sums of money on multiple occasions using different fabricated excuses, with the ultimate and overall purported aim of assisting the alleged immigration application for the plaintiffs.  These fabricated excuses and the consequential remittances are dealt with in paragraphs 31 to 54 hereinbelow.

17.  All these were subsequently discovered to be lies when the plaintiffs finally managed to contact the immigration agent, Suzannah Lu, in 2009.  Ms Lu denied having ever received or processed any application for the plaintiffs.  In fact, according to Ms Lu she had not received any instructions to further process the immigration application after meeting the plaintiffs in February 2004.  All the purported communication between her and the plaintiffs were in fact carried out by the defendants impersonating Ms Lu. 

18.  At that point, the plaintiffs had already suffered huge losses and damage which, upon confrontation, the defendants had refused or failed to compensate.  The plaintiffs had since then been unable to contact the defendants.  The defendants had not participated in any part of the present proceedings.

The Claims

19.  As the defendants were not represented nor present at the hearing (and indeed, throughout the proceedings), the Court needs to be satisfied that each of the various claims were properly pleaded, particularised and supported by documentary and/ or oral evidence, and that the plaintiffs had proven their case on damages.

20.  The plaintiffs’ Counsel, Mr Ho had taken the Court through their opening which set out the different claims. 

21.  To put it mildly, the claims as pleaded in the Amended Statement of Claim and as presented by Mr Ho at the hearing were very disorganized.  They were not put under separate heads of claims with various items and particulars set out. Instead, the claims seemed to be put together at first in accordance with the chronology of events. Subsequently when more evidence emerged, such claims were simply just added to the ending part of the Amended Statement of Claim, with no particulars pleaded on how they were caused by the defendant’s fraud. 

22.  This meant that many of the claims were not properly pleaded or at all.  Despite there being some documentary evidence, there was often no pleading explaining how certain damages claimed arose or how they were related to the acts of the defendants.

23.  There were also instances of the same items of claim appearing in different parts of the Amended Statement of Claim, but for different amounts.  These had to be picked up by the Court in the course of going through the documents.    

Principles to the award of damages

24.  The guiding principle to the award of damages in tort, both generally and specifically as regards fraud, is contained in the celebrated passage from the speech of Lord Blackburn in Livingstone v Rawyards Coal Co. (1880) 5 App Cas 25 at 39:

“I do not think there is any difference of opinion as to its being a general rule that, where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. That must be qualified by a great many things which may arise—such, for instance, as by the consideration whether the damage has been maliciously done, or whether it has been done with full knowledge that the person doing it was doing wrong. There could be no doubt that there you would say that everything would be taken into view that would go most against the wilful wrongdoer—many things which you would properly allow in favour of an innocent mistaken trespasser would be disallowed as against a wilful and intentional trespasser on the ground that he must not qualify his own wrong, and various things of that sort.”

That passage was cited by Lord Browne-Wilkinson in Smith New Court Securities Ltd v Citibank NA [1997] AC 254at 262-263.

25.  A great majority of the items claimed by the plaintiffs are return of funds remitted plus consequential losses, such as interests from loans taken out by the plaintiffs to fulfil the payment requests from the defendants.

26.  Where a plaintiff’s change of position consequent upon the deceit is not the conclusion of a contract, the measure of damages is to be based on the actual damage directly flowing from the fraudulent inducement.  (§49-036, McGregor on Damages, 20^th Ed.)

27.  It was held in Archer v Brown [1985] Q.B. 401 that a plaintiff, having obtained judgment in deceit, could recover damages in deceit, which would include repayment of purchase price, and that the measure of such damages was all expenditure reasonably and properly incurred in consequence of and flowing directly from the deceit.  I respectfully adopt such an approach.

28.  The plaintiffs also claimed for damages for pain and suffering and loss of amenities by reason of mental sufferings or exemplary damages.  It has now been firmly established that there can be damages for mental distress caused by deceit.  Such damages will become aggravated damages if they fall to be increased because the heinousness of the defendant’s conduct is considered to have added to the plaintiff’s suffering.  (§49-045, McGregor on Damages, 20^th Ed.)

29.  The Court bears in mind these principles when considering the various claims of the plaintiffs.

30.  After going through the exercise of verifying the pleadings in the Amended Statement of Claim, the documentary evidence, the witness statements and the oral testimony of the plaintiffs, and the “revision of plaintiffs’ claim” handed up by Mr Ho on the 3^rd day of the hearing (where a number of claims were abandoned), the Court is satisfied that the following remittances were damages flowing from the defendants’ fraudulent misrepresentation and were substantiated.

The Damages – return of remitted funds

31.  A HK$298,000 loan was made by the plaintiffs to the defendants between March 2001 to August 2002. This loan was made by the plaintiffs to the defendants purportedly for their businesses under Wealth Prime.  The loan was purportedly repaid by the defendants pretending to remit A$50,000 on the plaintiffs’ behalf as part of the security deposit required to be sent to the Australian Government for their application to emigrate to Australia leaving a balance of HK$20,000 unpaid.  There was in fact no payment of security deposit.  I am satisfied that the plaintiffs had suffered a loss of HK$298,000.  I do not think the original claim for A$50,000 plus HK$20,000 was an accurate calculation of damages.

32.  A remittance of A$142,000 was made by the plaintiffs to the defendants into the account of Wealth Prime in October 2002.  This was purportedly for an investment into a coffee shop belonging to the 3^rd and the 5^th defendants so that the plaintiffs would be able to work in their coffee shop after their application were successful.  The plaintiffs had to obtain a mortgage to raise funds for this remittance.  I was shown the bank documents and calculation of interest and am satisfied that the plaintiffs had incurred a total of HK$119,893.39 as interest and other expenses paid in relation to this mortgage.  I am also satisfied that the obtaining of the mortgage was a natural consequence of the fraud perpetrated by the defendants.

33.  A remittance of A$100,000 was made by the plaintiffs to the defendants through the account of Wealth Prime in December 2002.  This was purportedly the fee required for acquiring immigrant status for the plaintiffs.

34.  A remittance of A$150,000 (A$150,000 in 2 tranches of A$6,000 and A$144,000) was made by the plaintiffs to the defendants through the account of Wealth Prime in October 2003.  This was purportedly for a security deposit required by the Australian Government.  The plaintiffs raised the money for this remittance by mortgaging the 2^nd plaintiff’s property (“Sun Kwai Hing Gardens”).  I was shown the bank documents and calculation of interest and am satisfied that the plaintiffs had incurred a total of HK$34,918.91 as interest and other expenses paid in relation to this mortgage.  I am also satisfied that the obtaining of the mortgage was a natural consequence of the fraud perpetrated by the defendants.

35.  A remittance in the amount of A$83,300 was made to the defendants (a remittance of A$81,400 and A$1,900 in cash) made by the plaintiffs through the account of Wealth Prime as well as cash paid to the 3^rd and the 4^th defendants in 2004.  This was purportedly for payment of a cash bond and lawyer’s fee incurred in a fabricated criminal charge against the plaintiffs’ son when he carried an uneaten bun through customs when they went to Australia.

36.  HK$190,000 worth of electrical appliances, tools, equipment and other items for daily use were sent over to the defendants in 2004 as the 1^st to 4^th defendants represented to the plaintiffs that their application were very near success and they should prepare to move over to Australia.  These were ultimately all taken by the defendants for their own use.

37.  A remittance of A$23,000 was made into the 3^rd defendant’s bank account in February 2005 as the 1^st, 2^nd and 3^rd defendants told the plaintiffs that the immigration officer whom they knew well was soon to be promoted and leave his post and they had to pay a fee of A$30,000 to expedite their application.  It was represented to the plaintiffs that otherwise all the work and money put into the application thus far would have been all wasted. Only A$23,000 was eventually remitted to the 3^rd defendant’s bank account.  It was alleged that a further A$2,000 was paid by way of the plaintiffs paying off the 3^rd defendant’s credit card bill but there is no evidence in support of such payment by the plaintiffs.

38.  A remittance of A$126,000 to the 3^rd defendant’s bank account was made in March and April 2005, purportedly because of a change in the policy the security deposit had to be increased by A$150,000.  It was alleged that the shortfall of A$24,000 was paid by way of a set-off by the 5^th defendant in favour of the plaintiffs.  The plaintiffs raised the money for this remittance by mortgaging the 1^st plaintiff’s property Hoi Po Mansion and the 2^nd plaintiff’s property, Sun Kwai Hing Gardens.  I was shown the bank documents and calculation of interest and am satisfied that the plaintiffs had incurred a total of HK$58,464.93 and HK$149,824.03 as interest and other expenses paid in relation to the mortgages.  I am also satisfied that the obtaining of the mortgages was a natural consequence of the fraud perpetrated by the defendants.

39.  HK$22,500 was paid to a person for sitting at the plaintiffs’ home to receive calls allegedly from Australian officials to verify their emigration application ($150 per day for 150 days).  This was suggested by the defendants as they said the plaintiffs (who did not speak any English) had failed to answer verification calls from the Australian immigration officials, thus delaying the approval of their application.

40.  These phone calls from the so-called Australian officials were in fact calls made by the defendants pretending to be officials in charge of the application.  The Court only had the oral evidence of the 2^nd plaintiff in relation to this claim. After hearing evidence and having looked at the notes he had for answering these calls, I am of the view that the 2^nd plaintiff was an honest witness.  I believe that he did incur such costs and suffered losses when he paid heed to the suggestions of the defendants.  I am also satisfied that this was a direct result of the defendants’ fraud.

41.  A remittance of A$38,000 was made into the bank account of the 3^rd defendant in June 2006.  This was purportedly for a new case file fee when the plaintiffs had supposedly failed the “verification process” leading to the termination of their original application.  The plaintiffs raised the money for this remittance by applying for a 3^rd mortgage of Hoi Po Mansion.  I was shown the bank documents and calculation of interest and am satisfied that the plaintiffs had incurred a total of HK$29,137.85 as interest and other expenses paid in relation to this mortgage.  I am also satisfied that the obtaining of the mortgage was a natural consequence of the fraud perpetrated by the defendants.

42.  A remittance of A$120,000 was made into the bank account of the 3^rd defendant in July 2006.  This was purportedly for yet another change in the immigration policy and a requirement for increased security deposit.  The plaintiffs’ case was that this remittance was made with a RMB270,000 loan from the 1^st plaintiff’s sister and nephew.  The loan was made possible by the sister and the nephew mortgaging their home. 

43.  The plaintiffs had put forward a claim for HK$20,333.33 and RMB356,612 as interests paid to the nephew for the mortgage loan he took out.  There was no direct documentary evidence on this interest payment.  There was an agreement setting out the terms of the mortgage.  There was separately a hand-written note detailing payment of HK$5,000 from the plaintiffs to the nephew.  The 1^st plaintiff gave oral evidence that this payment was to compensate the nephew for the mortgage interest plus a little bit more to subsidise her sister’s livelihood since she has dragged her into the scam which cost the sister her home.  I find the 1^st plaintiff to be a credible witness.  I am prepared to allow the claim on interest on the basis that the 1^st plaintiff had paid HK$5,000 a month for 52 months and 1 month of HK$20,000 as evidenced in her hand-written note, giving a total of HK$280,000.  I am also satisfied that this was a direct result of the defendants’ fraud, as there was evidence to suggest that the defendants had asked the plaintiffs to borrow money from the 1^st plaintiff’s sister and nephew.

44.  A remittance of A$80,000 was made into the bank account of the 3^rd defendant in September 2006.  This was purportedly a guarantee fee for the opening of a new file for the application.

45.  The plaintiffs claim a total of HK$40,000 for the expenses of the 5 trips to Australia for both the plaintiffs and their son for the purposes of planning their emigration. There is no documentary evidence.  I have heard oral evidence from the 1^st plaintiff and found her to be a reliable witness.  I am satisfied that a total of HK$40,000 should be allowed as a direct consequence of the defendants’ fraud.

46.  A remittance of A$170,000 was made into the bank account of the 3^rd Defendant in January 2007.  This was purportedly for an investment in a reservoir project.  The 3^rd Defendant told the plaintiffs that if they invested in the project, they would not need to wait for verification phone calls anymore.  The plaintiffs’ case was that this remittance was made possible by the plaintiffs borrowing from relatives in Fuzhou.  The interest arising from the various loans the plaintiffs purportedly took out was not pursued by the plaintiffs, as presented in Mr Ho’s “Revision of the plaintiffs’ claims” handed up at the last day of the hearing.

47.  A remittance of A$10,000 was made into the account of the 3^rd Defendant in June 2007 as a purported fee for dealing with complaint from the immigration department that their remitted funds were all borrowed and that they did not have the financial capability to apply for immigration themselves and their application was suspended.

48.  A remittance of A$40,000 (in 3 tranches of A$13,180, A$11,415, A$15,405) was made into the bank accounts of the 2^nd Defendant and 3^rd Defendant respectively between July and November 2007 purportedly as a guarantee fee upon the approval of their investment into the reservoir project.

49.  Remittances of a total of A$131,443.96 (in 7 tranches of A$7,943.96, A$27,000, A$8,000, A$42,500, A$10,000, A$4,000, A$32,000) were made into the bank accounts of the 2^nd, the 3^rd and the 4^th Defendants between January and March 2008, purportedly as schooling expenses for the son, security deposit and physical examination fee, and living expenses in Sydney, as the defendants purported that the plaintiffs’ application would be approved soon.

50.  Remittances of a total of A$81,500 (in two tranches of A$68,000 and A$13,500) were made into the accounts of the 2^nd and 4^th defendants in April 2008, purportedly as physical examination fee and yet another increase in security deposit which would be returned.

51.  A remittance of A$3,800 was made into the account of the 3^rd defendant in June 2008 purportedly as lawyer’s fee to review a decision to revoke the application due to the alleged criminal record caused by the son having brought an unconsumed bun across customs.

52.  A remittance of A$6,500 was made into the bank account of the 3^rd defendant in June 2008 as purported outstanding balance of increased security deposits.

53.  Remittances of A$30,000 (in two tranches of A$10,000 and A$20,000) were made into the bank account of the 3^rd defendant in August  and September 2008 as purported litigation fees to remove the criminal record of the plaintiffs’ son.  The 1^st plaintiff arranged a 4^th mortgage of Hoi Po Mansion to raise the funds for these remittances.  I was shown the bank documents and calculation of interest and am satisfied that the plaintiffs had incurred a total of HK$52,300 (out of HK$56,500 claimed) as interest and other expenses paid in relation to this mortgage.  I am also satisfied that the obtaining of the mortgage was a natural consequence of the fraud perpetrated by the defendants.

54.  Remittances of A$48,760 (in 4 tranches of A$20,000, A$17,260, A$3,000, A$8,500) were made into the bank account of the 2^nd defendant and Wealth Prime (the company belonging to the 1^st and 2^nd defendants) between March and May 2009 as purported security deposit for the approval of the application.  A claim for interest arising from a loan in the amount of HK$5,702 is also claimed but there is no documentary evidence in support of such loan or interest.  The claim for interest is thus not made out.

55.  Thus, the amount of damages (items in bold above) under this section (as return of remitted funds) respectively in Hong Kong currency and Australian currency comes to:

   In Hong Kong currency:

   HK$298,000 + HK$119,893.39 + HK$34,918.91 + HK$190,000 + HK$58,464.93 + HK$149,824.03 + HK$22,500 + HK$29,137.85 + HK$280,000 + HK$40,000 + HK$52,300 = HK$1,275,039.11.

   In Australian currency:

   A$142,000 + A$100,000 + A$150,000 + A$83,300 + A$23,000 + A$126,000 + A$38,000 + A$120,000 + A$80,000 + A$170,000 +A$10,000 + A$40,000 + A$131,443.96 + A$81,500 + A$3,800 + A$6,500 + A$30,000 + A$48,760 = A$1,384,303.96.

56.  Thus, the damages in relation to the remittances come to: HK$1,275,039.11 and A$1,384,303.96

Loss sustained by the sale of properties

57.  The plaintiffs claim that due to the fraud by the defendants, they were forced to sell 2 of their landed properties, namely, Sun Kwai Hing Gardens and Hoi Po Mansion.  Hoi Po Mansion was sold pursuant to foreclosure action taken by the bank upon failure of the plaintiffs to repay the mortgages.  Sun Kwai Hing Gardens was sold to raise funds for the various remittances sent to the defendants.  The plaintiffs thus claim the loss suffered from the forced sale of these properties.

58.  Mr Ho urged the Court to assess the loss by accepting the valuation of the property as at the date of the hearing, instead of the date of the Amended Statement of Claim. This is because between the date of the Amended Statement of Claim (5 June 2012) and the date of the hearing (6 March 2018), the market value of Sun Kwai Hing Gardens had risen from HK$3,450,000 to HK$5,830,000, whereas the market value of Hoi Po Mansion had risen from HK$2,950,000 to HK$5,300,000.

59.  Whilst I accept that the Court has the power to assess the loss as at the date of the hearing so as to put the plaintiffs back to the position before the fraud (i.e. to have the property back), it was never pleaded in the Amended Statement of Claim that the plaintiffs seek to have the property valued at the time of the hearing.  There was also no application for and on behalf the plaintiffs to further amend the Amended Statement of Claim. 

60.  This might have been due to the fact that such an application at the hearing would likely have resulted in an adjournment as the defendants were absent at the hearing. Nonetheless, the fact remains that the Amended Statement of Claim only seeks loss based on the market price of the properties as at the date of the Writ. Under these circumstances, and the fact that the defendants were absent at the assessment hearing, the Court cannot simply proceed on the basis that the properties should be valued as at the date of the hearing.

61.  Thus, the loss suffered by the plaintiffs by reason of the forced sale of Sun Kwai Hing Gardens is HK$3,450,000 – HK$1,850,000 = HK$1,600,000.  I also accept that expenses of HK$32,100 was incurred for the sale of the property.  Thus the total loss suffered for the forced sale of Sun Kwai Hing Gardens is HK$1,600,000+HK$32,100= HK$1,632,100.

62.  Similarly, the loss suffered by the plaintiffs by reason of the forced sale of Hoi Po Mansion is HK$2,950,000 – HK$1,310,000 = HK$1,640,000.  I also accept that expenses of HK$19,800 and HK$33,000 as compensation for evicting the tenant were incurred for the sale of the property.  Thus the total loss suffered for the forced sale of Hoi Po Mansion is HK$1,640,000+HK$19,800+HK$33,000= HK$1,692,100.

63.  The plaintiffs also claim that they were forced to sell 2 taels of gold to raise funds for the remittances to the defendants. There was no documentary evidence in support of the value of gold at the time of sale nor at the time of the Writ.  More fundamentally, this loss seemed to have been suffered by the 3^rd plaintiff as the gold belonged to her.  There was no pleading on whether the plaintiffs had to repay the 3^rd plaintiff and thus the damage was suffered by them instead of the 3^rd plaintiff. As we were only concerned with the loss suffered by the 1^st and 2^nd plaintiffs, this loss was not made out.

64.  Thus the damages in relation to the loss sustained by the sale of the properties come to HK$3,324,200.

Loss sustained by the forced sale of shares

65.  In or about February 2009, the plaintiffs had to liquidate their investment in various shares to meet the payment obligations from the various loans and mortgages taken out for the remittances to the defendants.  The plaintiffs claim that they were forced to sell shares at a loss to repay the various loan interests.  The plaintiffs claimed that they would have otherwise kept the shares as investments. 

66.  Having heard the 1^st plaintiff give oral evidence on the issue, I accept her evidence that she kept a little notebook which recorded the acquisition costs and sale prices of the various shares that she had.  The notebook was shown to the Court which confirmed her oral testimony.  The handwritten trading record also confirmed the 1^st plaintiff’s testimony that she never sold shares when they were trading at a loss.  I am satisfied that the plaintiffs were only forced to sell the shares due to the various loans taken out to fulfil the defendants’ various payment requests.  I accept that such losses amounting to HK$442,444.45 are a direct consequence of the defendants’ fraud.

Loss of earnings

67.  The 2^nd plaintiff claimed a loss of earnings in the amount of HK$350,650.  It was said that pursuant to the defendants’ request, the 2^nd plaintiff had to stay home to wait for calls from the Australian immigration officers between July 2004 to January 2007 as part of a verification process for the emigration application.  The 2^nd plaintiff was originally a decorator by profession earning HK$600 per day.  During this time he had to stay home during daytime and could only work at a supermarket as a night shift worker earning a much reduced salary. 

68.  By the 2^nd plaintiff’s calculation, he had assumed he would have been able to work for 26‑27 days a month and 313 days out of 365 days a year.  There was some documentary evidence of his income at the supermarket.  There was however little documentary evidence in support of how much he earned as a decorator annually before the fraud.  There is little basis for the Court to assume that during the period of 2.5 years the 2^nd plaintiff would have been able to secure employment for all of those days.

69.  Further, it was the 2^nd plaintiff’s own case that from 7 November 2005 to 7 April 2006, he had to pay a Mr Loong to answer calls for him.  This was the basis of his claim for HK$22,500, which the Court accepts.  Thus, it is not reasonable for the 2^nd plaintiff to have stayed home during this period and not work as a decorator earning a higher income.

70.  Under these circumstances, there is simply insufficient evidence which makes it impossible for the Court to calculate loss of income suffered.

71.  In addition there is the issue of mitigation and whether it was reasonable for the 2^nd plaintiff to have decided to stay at home and waited for calls for 2.5 years, especially in light of the fact that he speaks little to no English.

72.  I am not satisfied that this claim was made out.

Other claims unparticularised or not pleaded

73.  Other than the claims above, the plaintiffs had pleaded other claims under paragraph 188 of the Amended Statement of Claim.  The majority of these claims related to interests and expenses arising out of various mortgages of properties in the PRC.  These amount to RMB 1,028,745.45 and HK$29,000. 

74.  However, these claims had not been properly pleaded or particularized.  There was no pleading explaining how these mortgages relate to the various remittances and payments to the defendants.  Counsel for the plaintiffs accepted that under these circumstances such damages have not been made out and these claims were abandoned.

75.  There is a claim for HK$891,671.85 and RMB 1,935 being loss suffered by sale or early termination of life insurance policies of the Plaintiffs and related expenses.  Likewise, these claims had not been properly pleaded or particularized.  There is no pleading explaining how these mortgages related to the various remittances and payments to the defendants.  Counsel for the plaintiffs accepted that under these circumstances such damages had not been made out and these claims were abandoned.

76.  A claim for HK$19,284.85 as interest for borrowing from AIA on the insurance policies by the plaintiffs was made.  Again, there was no pleading explaining how the borrowing related to the various remittances and payments to the defendants. Counsel for the plaintiffs accepted that under these circumstances such damages had not been made out and these claims were abandoned.

77.  There were also claims of HK$855,499.7, HK$24,290, RMB259,316 as interest on loans from various banks.  There were no particulars given for this item.  Counsel for the plaintiffs abandoned this claim.

78.  A claim was made in the sum of HK$269,800 for the loss suffered by reason of sale of gold.  Another claim was made for the loss suffered from the sale of shares in the sum of HK$360,560 to acquire immigration status.  There were no particulars given and no pleading was present on how it was related to the acts of the defendants.  I am not satisfied that these claims were made out.

79.  Claims for paying the fees amounting to HK$85,785 for payments made on behalf of Wonder Wealth (the company of the 1^st and 2^nd defendants) were abandoned at the hearing, for lack of particulars.

80.  A claim was made for expenses incurred for long distance calls wasted in the sum of HK$4,057.50.  I am satisfied that HK$2502.50 was substantiated as long distance calls expenses from the documents, and that this loss stemmed directly from the defendants’ fraud.

81.  The plaintiffs claim a total of HK$62,400 as air tickets expenses wasted.  I am satisfied that this loss stemmed directly from the defendants’ fraud.

Claim for pain and suffering, aggravated damages

82.  The plaintiffs submit that this is an obvious case where the plaintiffs ought to be able to claim for pain and suffering for having been defrauded by their own relatives.

83.  Having heard both plaintiffs in their oral testimony, I accept that they were deeply traumatised and shocked by the fraud practised upon them by their own relatives.  They had lost all of their properties, savings and investment.  They became deeply in debt both to their other relatives and to financial institutions.  The plaintiffs were on the brink of suicide at one point.  The plaintiffs and their son all ended up having depression in different degrees and require psychiatric treatment.  From a family which held two landed properties and investments, they had become a family who had to depend on social welfare for their day to day lives.

84.  The plaintiffs submitted that the damages for pain and suffering inflicted upon them by reason of the fraud should be no less than HK$200,000 for each of the 1^st and 2^nd plaintiffs, making a total of HK$400,000. 

85.  As set out in the case of Kinch v Rosling [2009] EWHC 286 QB, the law recognises general damages under the head of humiliation, distress and anxiety may be awarded on a modest scale. See McGregor on Damages 20^th Ed. §49‑045.  In that case where the claimant and the wife suffered anxiety and distress over seven years, an amount of £10,000 was awarded.

86.  Having considered cases where damages for pain and suffering had been awarded in the past and looking at the facts of this case, I am of the view that an amount of HK$100,000 for each of the 1^st and 2^nd plaintiffs, a total of HK$200,000 is appropriate given the level of humiliation they had to go through, caused by their close relatives.

Claim for exemplary damages

87.  The plaintiffs claim for exemplary damages against the defendants.  Taking into account the factors affecting the award of exemplary damages (§13-031 – 13-044, McGregor on Damages, 20^th Ed.), the ones relevant to the present case would include: 1) the plaintiff being the victim of the behaviour requiring deterrence, 2) moderation in awards, 3) the means of the parties, 4) the conduct of the parties, and the relevance of the amount awarded as compensation

88.  In the case of Promo International Ltd. v Chae Man Tock [2018] HKCFI 284, The Hon. Chu J. summarised the principles for the award of exemplary damages in Hong Kong.  She referred to Allan v Ng & Co (a firm) [2012] 2 HKLRD 160 and said:

89.  “As said by Kwan JA in the above case, the rationale for exemplary damages is not to compensate but to punish. They are additional to an award which is intended to compensate a plaintiff fully for the loss he has suffered, both pecuniary and non-pecuniary.  Kwan JA further cited an extract from Lord Nicholl's judgment in  A v Bottrill [2002] UKPC 44, [2003] 1 AC 449, [2002] 3 WLR 1406 , which included the following : 

"… In the ordinary course the appropriate response of a court to the commission of a tort is to require the wrongdoer to make good the wronged person's loss, so far as a payment of money can achieve this. In appropriate circumstances this may include aggravated damages. Exceptionally a defendant's conduct in committing a civil wrong is so outrageous that an order for payment of compensation is not an adequate response. Something more is needed from the court, to demonstrate that such conduct is altogether unacceptable to society. The wrongdoer may be ordered to make a further payment, by way of condemnation and punishment."

However, Kwan JA went on to say that it is firstly important to distinguish the different roles of compensatory and exemplary damages and that it is easy to lose sight of this distinction if the court is to make a "combined award" of compensatory and exemplary damages and that the second important thing which follows from the rationale is that exemplary damages are a remedy of last resort. She then referred to the "if, but only if" test mentioned by Lord Devlin in Rookes v Barnard, the effect of which is that if, but only if, the compensatory award is inadequate to punish the defendant for his outrageous conduct, then the court can award some larger sum to mark disapproval of such conduct and to deter the defendant from repeating the conduct.”

90.  Applying the above principles to the facts of the present case and bearing in mind the cruelty of the defendants in inflicting such pain and depriving their own relatives of all they possessed, I come to the conclusion that the defendants’ behaviour required deterrence. Applying the “if, but only if” test, I am of the view that the compensatory award is inadequate to punish the defendants for their outrageous conduct.  Having considered cases where exemplary damages had been awarded, I am of the view that exemplary damages in the amount of HK$200,000 is appropriate.

Calculation of total damages

91.  Thus the total amount of damages awarded are:

a.   In Australian currency: A$1,384,303.96; and

b.   In Hong Kong currency: HK$1,275,039.11 + HK$3,324,200 + HK$442,444.45 + HK$2,502.5 + HK$62,400 + HK$200,000 + HK$200,000 = HK$5,506,586.06

Interest – Compound Interest?

92.  The plaintiffs seek interest in paragraph 194 of the Amended Statement of Claim:

“Further, in equity or alternatively pursuant to section 48 of the High Court Ordinance, the Plaintiffs are entitled to interest on the amount to be found due to them at such rate, at compound interest if granted under court equitable jurisdiction.”

93.  The plaintiff’s counsel, Mr Ho urged the Court to order compound interest against the defendants with half yearly rests or monthly rests. The only basis given in Mr Ho’s written submissions on interest was the case of Wallersteiner v Moir (No.2) [1975] 1 QB 373 and that the acts of the defendants involved deceit and that is much more condemnable than a breach of fiduciary duty (as in the Wallersteiner case).

94.  However, the position on interest is far more complicated than that advanced by Mr Ho.  In the recent case of Promo International Ltd. v Chae Man Tock (supra), The Hon. Chu J. analysed the case of China Everbright-IHD Pacific Ltd v Ch’ng Poh (2002) 5 HKCFAR 630:

“Mr Leung referred this Court to China Everbright-IHD Pacific Ltd v Ch'ng Poh HCA 12873/1995 , unreported, judgment 27 February 2001. In that case, the causes of actions included conspiracy, conversion and breach of fiduciary duties. Yuen J, as she then was, ordered compound interest on monthly rests.

The case eventually went all the way to the Court of Final Appeal, namely China Everbright-IHD Pacific Ltd v Ch'ng Poh (2002) 5 HKCFAR 630 . It was accepted by the Court of Final Appeal that there was equitable jurisdiction to award compound interest in cases of fraud. Having accepted this, Lord Millett NPJ however and pointed out that the law of England at the time in relation to the award of interest had developed in a fragmentary and unsatisfactory manner, and that the refusal of English law to award compound interest at common law in cases of fraud while making such an award as a matter of course in equity was very difficult to defend. Lord Millet NPJ had suggested, obiter, that the courts of Hong Kong should consider abandoning the stance of the common law against awarding compound interest, but said the question did not arise for decision in the case before him.

Since then, there has been no subsequent decision by the Court of Final Appeal adopting Lord Millett's proposal.

In England, there have however been further developments. The House of Lords held in Sempra Metals Ltd (formerly Metallgesellchaft Ltd) v Inland Revenue Commissioners & Another [2007] UKHL 34 , amongst other things, that in principle it would always be open to a claimant to plead and prove his actual interest losses caused by late payment of a debt; that those losses might include an element of compound interest; that such losses would be subject to the principles governing all claims for damages for breach of contract, such as remoteness and failure to mitigate; and that, accordingly, the courts had a common law jurisdiction to award interest, simple and compound, as damages on claims for non-payment of debts as well as on other claims for breach of contract and tort .

The Sempra case has been followed in a recent decision of DHCJ Sir Richard Field in Joe Zhiziong Shou and Saif Partners II L P & Another [2018] HKCFI 357, HCCL 16/2016 (unreported) judgment dated 14 February 2018.”

95.  However, it must be noted that in the case of Sempra, Lord Nicholls said:

“the House should now hold that, in principle, it is always open to a claimant to plead and prove his actual interest losses caused by late payment of a debt….But an unparticularised and unproved claim simply for ‘damages’ will not suffice. General damages are not recoverable. The common law does not assume that delay in payment of a debt will of itself cause damage. Loss must be proved. … The loss may be the cost of borrowing money. That cost may include an element of compound interest. Or the loss may be loss of an opportunity to invest the promised money. Here again, where the circumstances require, the investment loss may need to include a compound element if it is to be a fair measure of what the plaintiff lost by the late payment. Or the loss flowing from the late payment may take some other form.”

96.  DHCJ Sir Richard Field ultimately rejected a claim for compound interest in Joe Zhixiong Zhou and Saif Partners II L P & Another [2018] HKCFI 357, HCCL 16/2016 (unreported) judgment dated 14 February 2018,

“In my judgment, the failure to plead a claim for compound interest and the failure to plead and prove particulars of how such a loss occurred, are fatal to Mr Zhou’s claim for compound interest, which I reject. He is, however, entitled to interest pursuant to sections 48 and 49 of the High Court Ordinance, such interest having been claimed in the Statement of Claim’s prayer as noted above.”

97.  This approach was also followed by Chu J. in Promo International Ltd. v Chae Man Tock (supra):

“In the present case, as mentioned earlier, in the re-amended statement of claim, P only sought interest generally pursuant to the Court's equitable jurisdiction and or s 48 of the High Court Ordinance. There was no specific claim for compound interest pleaded. Further, there were no particulars pleaded as to any actual interest losses caused by Ds' misconduct or suffered by P. I am of the view that, whether under the Court's equitable jurisdiction or under common law, a claim for compound interest should be pleaded.”

98.  In the present case, although the plaintiffs did seek compound interest in the Amended Statement of Claim, there were no particulars explaining why such compound interest is warranted or how such compound interest is to be calculated.  The Court is unclear as to whether such compound interest was sought as interest as damages, or interest on damages.

99.  In these circumstances, to blindly order compound interest simply because of the defendants’ fraudulent acts might result in unfairness: e.g. the mortgage interests paid to banks (which are already allowed as damages suffered) might have been already calculated on the basis of compound interest.  There would thus be a danger of double counting. The Court is simply not in a position to order compound interest in the present case without any detailed particulars and pleading or submissions on the basis and exact calculation.  The plaintiffs’ claim for compound interest is thus rejected.

Rate of Interest

100.  Instead of adopting the practice of awarding interest at the base rate plus 1 per cent in commercial cases, Mr Ho submitted that the Court should adopt the judgment rate for damages deriving from moneys transmitted to the defendants throughout the whole period of some 6 years from March 2003 to May 2009 as it “appears to be most convenient as the effective dates of judgment rates from 1992 to 2016 are specified …”.  Mr Ho also relies on the case of Pinnock v Wilkins & Sons, The Times, 29 January 1990 for the proposition that:

“when a court is considering the appropriate rate of interest for a period from the date of the cause of action to the date of the judgment, the rate payable on the judgment debts is a convenient starting point.”

101.  However, as pointed out in Powell on Professional Liability,  (§3-024, 8^th Ed.) the approach in Pinnock v Wilkins & Sons is only an option and should not be applied without considering whether some other rate is more appropriate.

102.  Pinnock v Wilkins & Sons is a case dealing with solicitors’ breach of duty.  In that case the Court of Appeal was divided as to whether or not the judge who had awarded interest at the judgment debt rate had exercised his discretion in such a way which should be interfered by the Court of Appeal.  Gibson LJ in the minority held that it was a wrong exercise of discretion as he would have awarded interest at the short term investment/special account rate (12%).  Nicholls LJ, with whom Fox LJ agreed, upheld the judgment debt rate (15%), concluding that the judge exercised his discretion in a way which could not be criticised. 

103.  The rationale for adopting the judgment rate as set out by Lord Justice Nicholls was that:

“the interest payable from time to time on money in the special account is compound interest, the interest accruing twice-yearly. So an award of simple interest at the special account rate will not put the judgment creditor in the same position as having received the money and paid it into the special account as an investment, for had he done so he would effectively have received the higher rate which compound interest would have yielded for him.”

104.  Further:

“to fix one rate for the whole period might work unjustly to one party or the other, given the wide fluctuations in interest rates which occurred today and given also that the period from the date on which the cause of action arose until the judgment might be long.”

105.  Most importantly, Nicholls LJ said:

“Whatever rate a judge might choose as a convenient starting point, he would consider all the circumstances of the case when making his decision. In particular, if a plaintiff and his advisers have not been diligent in commencing the proceedings”

106.  In the English case of Parabola Investments Ltd v Browallia Cal Ltd [2009] 2 All ER (Comm) 589 where damages for fraudulent misrepresentations were awarded, the Hon. Flaux J. awarded interest on those damages at the Bank of England base rate plus 3.25%. 

107.  Whilst I understand it will be a complicated task to calculate the amount of interests payable on the various remittances from the respective dates of payment up to the day of judgment, one must bear in mind that interest is to compensate a claimant for being deprived of his money for a period of time.  It will thus be unfair, without further justification, for a Court to simply say for convenience and ease of calculation a single rate (or the Judgment rate) should be applied.

108.  Further, it must also be borne in mind that interest does not serve as punishment for the damage done to a claimant.  The deplorable actions of the defendants had already been reflected in the award for damages for pain and suffering as well as exemplary damages.  As such it is inappropriate to award the higher rate of judgment rate to penalise the defendants.

109.  In my judgment, the appropriate pre-judgment interest rate in the particular circumstances of this case, for the entire period from March 2003 to May 2009 to the date of judgment is the rate of 1% over the commercial borrowing rate. 

110.  I thus award interests as follows:

a) For damages in relation to the remittances - HK$1,275,039.11 and A$1,384,303.96, pre-judgment interest at the commercial rate plus 1% from the respective dates of payment until date of judgment and thereafter at judgment rate until payment.

b) For all other damages (amounting to HK$4,231,546.95), pre-judgment interest at the commercial rate plus 1% from the date of the service of the Writ until date of judgment and thereafter at judgment rate until payment.

Costs

111.  There will be a costs order nisi that the plaintiffs should have costs of the action, including all costs reserved, on a party and party basis, with the plaintiffs’ own costs to be taxed in accordance with the Legal Aid Regulations.

Order

112.  I thus make the following Order:

(i)   The 1^st to 5^th defendants do pay the 1^st and 2^nd plaintiffs, jointly and severally, the sum of HK$5,506,586.06 and A$1,384,303.96 for damages arising out of the fraud practised upon the 1^st and 2^nd plaintiffs.

(ii)For damages in relation to the remittances, namely HK$1,275,039.11 and A$1,384,303.96, the 1^st to 5^th defendants do pay the plaintiffs jointly and severally pre-judgment interest at the commercial rate plus 1% from the respective dates of payment until date of judgment and thereafter at judgment rate until payment.

(iii)For all other damages amounting to HK$ 4,231,546.95, the 1^st to 5^th defendants do pay the plaintiffs jointly and severally pre-judgment interest at the commercial rate plus 1% from the date of the service of the Writ until date of judgment and thereafter at judgment rate until payment.

(iv)  Order nisi that costsof the action be to the 1^st and 2^nd plaintiffs, including all costs reserved, on a party and party basis.

(v)The 1^st and 2^nd plaintiffs’ own costs be taxed in accordance with the Legal Aid Regulations.