HELM HONG KONG LTD v. AU TAT KEI, DECKY

HCA 1517/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1517 OF 2006

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BETWEEN

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R U L I N G

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Introduction

1.  This is a summons by the Defendant for an order that the Plaintiff do provide the particulars requested of it in a request served on the Plaintiff on 25 November 2009 in respect of the Amended Statement of Claim dated 1 September 2009, the Further and Better Particulars of Statement of Clam dated 30 July 2009 and of the Reply dated 9 November 2009.

2.  The current position is that the Plaintiff has provided Further and Better Particulars of the Amended Statement of Claim and of the Reply which is dated 15 December 2009 which the Defendant is dissatisfied with hence this summons. To a large measure, the Further and Better Particulars that have been provided amount to a refusal to provide the particulars that have been requested.

3.  The action concerns allegations of conspiracy to defraud brought against the defendant who is said to have acted together with a Mr von Torklus, the head of the Plaintiff company in Hong Kong, and with other colleagues, with former employees of the Plaintiff and with others. The pleaded case amounts to a criminal conspiracy which the Plaintiff has referred to the ICAC. It is right to say that up till now no criminal charges have been brought against the Defendant and it is far from clear whether any are contemplated.

4.  Given the extremely serious nature of these allegations, it is right to say that a plaintiff is expected to particularise his or its case in such a way that the Defendant is fairly able to understand what is being said against him and to prepare his response and marshal his evidence in readiness for the trial of the action.

5.  In this case, save for one witness for the Defendant, a Mr von Torklus, who is expected to provide a witness statement shortly, all the factual evidence on both sides has been filed and served. The pleadings are closed and discovery is complete. The Plaintiff has also served an expert report from a forensic accountant whose report I have allowed to be admitted into evidence subject to further investigation of his role in assisting the Plaintiff to prepare its pleadings, which I was only told about after I had admitted the report into evidence. In such circumstances, I have directed that my Order admitting the report should not be drawn up and entered into the court’s record until after I have further considered the expert witness’s involvement in the preparation of the Plaintiff’s pleadings which may affect his standing as independent expert in this matter, in which circumstances the Plaintiff would have to instruct another expert to provide a report.

6.  Subject to that issue and this Ruling on further and better particulars, the case is ready for trial and I have directed that it be set down for a 15-day trial not before August this year.

7.  By way of general comment, Mr Man in resisting this summons submits that it is plain that the Defendant understands very well the case that he has to meet. What better evidence of this than the fact that he has filed his pleadings and his witness statements, given and received discovery and is now in the final preparations for trial as from August this year or so soon after that as the court can provide dates. Mr Man further submits that when one properly analyses the particulars that are sought the answer to the requests are so self-evident that no particulars are needed to answer the obvious.

8.  Mr Bullett, on the Defendant’s behalf, submits that in a case of serious fraud such as this, the Defendant is entitled to know the facts and matters which the Plaintiff relies on which are said to support its case that the Defendant knew of the fraudulent activity that may well have been perpetrated by others around him. At the end of the day, it would appear that the only contentious issue in the action is going to be whether the Defendant had the necessary guilty knowledge of the criminal conduct that was being committed so that it can be said that he was fully participant in that conduct, in circumstances where the various actions carried out by him may well be freely admitted and which to a very large extent are and were entirely consistent with what he was lawfully employed to do and carried out innocently by him and in ignorance of any fraudulent conduct by others. These requests therefore need to be judged from that perspective.

9.  Whilst Mr Bullett has rather dealt with the Requests in a compendious way, it seems to me that I ought to give them separate consideration, they after all stand or fall on their individual merits. Nevertheless, what is permissible is to put them into convenient groups where identical issues arise within that grouping, just as Mr Man has done in opposing the summons.

Requests 1 and 3

10.  These are requests which concern the Defendant’s knowledge as to the impropriety of the Agency Contracts through which the Plaintiff was defrauded. Mr Man’s response is that the answer is obvious, as this was the very means by which the fraud was perpetrated. In my judgment, this is not a sufficient answer because what is required is proof of the overt acts in support of the conspiracy as well as the guilty mind which went with those acts. As matters presently stand, on the pleaded case a court may be entitled to draw the conclusion that given the commission of those overt acts by the Defendant and having regard to all the relevant circumstances of the case, the Defendant had the requisite guilty knowledge, nevertheless it seems to me that the Defendant is entitled to know whether, other than the commission of those overt acts and the overall circumstances of the case, the Plaintiff has anything else that it relies on as a fact or matter which supports its allegation of guilty knowledge and if it has it should say so. If it does not, then it should make that clear. Accordingly, I direct that it should provide such particulars if any within 28 days of the date of this order.

Request 2

11.  This is a different type of particular that is being requested. It is entirely factual, as to which sale or supply of goods was negotiated or concluded by the Defendant. It is fair to say that the Plaintiff has given the best particulars that it can. This request can go no further and I decline to order anything more from the Plaintiff.

Request 4

12.  Again it seems to me that the Plaintiff has given all of the particulars that it can and in so doing has now restricted itself to its main pleadings on these particulars in support of this allegation. No further particulars need to be given or indeed, so far as I can see, can be given by it. It’s case is as clear as it is capable of being.

Request 5(i)

13.  These particulars are sufficient and as far as they can be taken. The pleaded case in this regard proceeds on the assumed basis that the Defendant was conducting himself with the requisite guilty knowledge. If that assumption is found to be correct at the trial, then these are the fullest factual particulars that can be given. Nothing further is required from the Plaintiff.

Request 5(ii)

14.  This is a request which is directed to ascertaining facts and matters that relate to guilty knowledge at the time when the transactions with the companies referred to in Request 5(i) were being carried out. In such circumstances, this request falls very much into the category of Requests 1 and 3 and my reasoning is the same. I direct that the particulars, if there are any, should be provided. If there are none then the Plaintiff should say so. These particulars should also be provided within 28 days.

Request 6

15.  The current stance by the Plaintiff is that the Defendant is not entitled to such particulars largely because this would amount to a provision of its evidence. I disagree. This is a request in a conspiracy case for a statement of the overt acts relied on for these transactions. If the Plaintiff has no way of telling then it must frankly say so, otherwise it ought to identify those sales that it can identify and proposes to rely on at the trial so that the Defendant can deal with them as he may be advised to by evidence of his own or otherwise. This will also be a 28-day order.

Requests 7 and 8

16.  As to the Defendant’s alleged knowledge of Ella Lui’s involuntary departure from the Plaintiff’s employment, it seems to me that the Defendant is entitled to know of the basis upon which such knowledge is imputed to him. If it is merely based on the fact that he continued to deal with her then the Plaintiff should say so, if there are other reasons then these should also be particularised within 28 days. As to the payment of RMB564,187.15, the request is framed so as to ask why the Defendant knew that it was an improper payment. The current answer is tantamount to saying that he knew that it was improper because it was improper because it was part of the unlawful conspiracy. Where the issue is whether the Defendant had knowledge of such a conspiracy then apart from what has already been pleaded, which may or may not address this issue, the Plaintiff is required to state its case as to what facts and matters are relied on in support of the case that the defendant knew of the conspiracy. The point is the same as that under Requests 1 and 3 above. These particulars should also come within 28 days.

Requests 9 to 12

17.  The primary pleading is based on the allegation that the Defendant knew what was going on and was party to it. In such circumstances, apart from what is already pleaded the Defendant ought to be informed whether there are other facts and matters which are to be relied on which tend to show that he had that knowledge. These particulars, if any, should be provided within 28 days.

Request 13

18.  Here the point is identical to all the other requests which allege knowledge of the conspiracy and these particulars should also be provided within 28 days. This case will substantially turn on the Defendant’s knowledge of the unlawful conspiracy and, fundamentally, he needs to be informed of why it is said that he had that knowledge. At present a series of facts have been carefully pleaded as to the existence of the conspiracy and the Defendant’s participation in it on a factual basis where he carried out overt acts in furtherance of it. As I have said the court may (emphasis provided) draw the appropriate conclusion of his guilty knowledge, but if there are more facts and matters which are said to be capable of supporting such a plea than they ought to be provided, this request being one of a number of such requests which seek to establish what facts and matters the Plaintiff has to support this crucial aspect of its case.

19.  The costs of this summons will be reserved and decided at the adjourned Case Management Conference.