JOHN BAPTIST WU v. TSOI KAY AND ANOTHER

1987 No.HCA4983

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION No. 4983 of 1987

______________________________

INQUIRY as to DAMAGES

______________________________

1. This inquiry as to Damages is held pursuant to the judgment of Mr Justice Stone dated 14th November 1997, where his lordship gave leave to the 2nd defendant to apply for such an inquiry.

Background

2. In this action, the plaintiff, a former agent of the defendants claimed against the defendants for his commission. The defendants counter-claimed for balance of monies owed and loss of profits. The plaintiff had obtained a Mareva Injunction against the 2nd defendant on 9.12.96. In the course of the application for an injunction, the plaintiff had given the usual undertaking as to damages. At the trial before Stone J. the plaintiff was represented by counsel, whilst the defendants appeared in person. After trial the judge found for the defendants against the plaintiff and gave judgment to the defendants on 14.11.97 in the sum of $36,160.01 with interest and costs.

3. The Mareva Injunction obtained by the plaintiff against the 2nd defendant was discharged after trial. That injunction was granted initially by Sears J on 9.12.96. It was continued by Le Pichon J on 13.12.96. and varied by Rogers J on 20.12.96. In its final Re-Amended form that Mareva Injunction ordered :-

"The 2nd defendant whether by himself, his servants or agents or otherwise howsoever be enjoined and restrained from disposing of, assigning, selling, mortgaging, charging, pledging, transferring, or otherwise dealing in or with any interest in land in Hong Kong including in particular Units I (including the Flat-Roof Appurtenant Thereto) & Unit J (including the Flat-Roof Appurtenant Thereto) 5th Floor, Yip Win Factory Building, 10 Tsun Yip Lane, Kowloon until after trial in this action or further order." with costs of the injunction to be in the cause.

4. The relevant parts of the plaintiff's undertaking as to damages were :-

" (3) To abide by any order that the court may make as to damages in case this court shall hereafter be of the opinion that that the 2nd defendant shall have sustained any damages by reason of this order, which, in the opinion of the court the plaintiff ought to pay.

(4) To indemnify any person other than the 2nd defendant to whom notice of this order is given against any costs, expenses, fees or liabilities as are reasonably incurred by any such person in complying with this Order to such extent if any as to this Court may seem just."

5. The plaintiff appealed against the judgment of Mr Justice Stone. The Court of Appeal dismissed the plaintiff's appeal on 23.7.98..

6. On 5.10.98. the 2nd defendant took out a Summons for an inquiry into the damages he had suffered as a result of the imposition of the Mareva injunction.

7. That inquiry as to damages could not take place because the plaintiff took out a Summons for the 2nd defendant's Inquiry as to Damages to be adjourned until after his application to the Court of Final Appeal ("CFA") was heard.

8. After that, the plaintiff dismissed his lawyers and continued the proceedings in person. The plaintiff filed a Notice to Act in person on 8.10.98. When the application to adjourn the Inquiry into Damages came before Master Lok on 9.12.98. he acceded to the plaintiff's request and adjourned the 2nd defendant's Inquiry into Damages until after the plaintiff's application to appeal to the Court of Final Appeal.

9. The plaintiff was refused leave to appeal to the CFA on 22.1.99.

10. After being refused leave to appeal to the CFA, the plaintiff left Hong Kong and moved back to Brussels. He filed a Notice of Change of address on 30.4.99. when he left an address in Brussels.

Service of Notice of Hearing of the Inquiry as to Damages on the Plaintiff

11. The 2nd defendant came to fix a date for the adjourned hearing of the Inquiry as to Damages on 5.5.99. The plaintiff was absent. Presumably the plaintiff had already left Hong Kong for Brussels by then.

12. The 2nd defendant was told by staff of the Registry that he had to inform the plaintiff of the hearing date. The 2nd defendant sent the Notice of the hearing scheduled to be heard on 21.9.99. to the plaintiff at Rue de la Presse 4, 1000 Brussels, Belgium, ("the plaintiff's address in Brussels") which was the address stated in the plaintiff's Notice of Change of Address.

13. The 2nd defendant told the court that on 5.5.99. he had sent a copy of the letter "Exh D3" to the plaintiff by Registered Post and by airmail to the plaintiff's address in Brussels. The letter sent by Registered Post was returned. A label was attached on the envelope of the registered letter by the Post Office in Brussels. That label had a series of boxes that the Post Office worker could place a tick against. The boxes deal with various situations such as "Left without forwarding address" or "Address insufficient" or "Deceased" or "Does not live at that address".

That letter was marked with a tick against the word "Refusé" when it was returned to the 2nd defendant.

14. On 24.5.99. the 2nd defendant sent another Notice of the hearing for Assessment of Damages scheduled for the 21st September 1999 to the plaintiff by registered post to the plaintiff's address in Brussels. It met with the same fate as the first registered letter. That letter was also marked with a tick against the word "Refusé" when it was returned to the 2nd defendant.

15. In addition to the 2 letters sent by registered post, the 2nd defendant also sent a Notice of the Hearing on the 21st September 1999 to the plaintiff by ordinary airmail. That letter sent by ordinary airmail to the plaintiff's address in Brussels was not returned.

16. Having considered all the evidence in relation to this matter, I find that there was good service of the hearing on 21.9.99. on the plaintiff for the following reasons.

17. By logical inference one can see that the registered letters reached the plaintiff at the plaintiff's address in Brussels. If the plaintiff had moved from that address, the Post Office would have said so by indicating that with a tick in the appropriate box. Similarly if the address was incorrect or insufficient, the Post Office would have said so. There was only one tick, and that was against the word "Refusé".

18. Anyone with an elementary command of the French language will know that"Refusé" simply means "turned away" or "refuse to accept" in English. The 2 registered letters were clearly marked with the name and address of the sender. In one case the name and address of the 2nd defendant was typed in the upper left corner of the envelope. The name and address of "Good Years Flower and Leaf Factory" was printed on the upper left corner of the other registered letter.

19. The recipient (plaintiff) could therefore tell at a glance the name and address of the sender. The plaintiff had left Hong Kong knowing full well that the hearing of the assessment of damages relating to the injunction had been adjourned, since it was adjourned upon his application. He would be anticipating the receipt of notice of the adjourned hearing at any time. The only logical inference to draw in the circumstances is that the plaintiff deliberately refused to accept delivery of the registered letters. Upon that refusal, the Belgian post office marked the registered letters with the word "Refusé" sent them back to Hong Kong.

20. Even if I am wrong in drawing the above inference, the evidence shows that service of the hearing on the plaintiff was good service. There was a 3rd letter sent to the plaintiff by ordinary airmail to the plaintiff's address in Brussels. This letter has not been returned. It was sent to the plaintiff's last known address. On that basis I find that the plaintiff was duly served with notice of the hearing on the 21st September 1999.

The heads of damage claimed by the 2nd defendant

21. In his written application the 2nd defendant claimed that he had suffered 4 heads of damage as a result of the Mareva Injunction. These 4 heads of damage as those listed in page 2 of his affirmation dated 8.12.97. I will deal with them in turn.

1. Lawyers' fees in the sum of $27,858

22. The 2nd defendant explained that the assets frozen by the Mareva were properties known as Units I & J Yip Win Factory Building. These properties were mortgaged to the Banque Nationale de Paris ("BNP"). The 2nd defendant claimed that BNP foreclosed on the mortgages as a result of the injunction. He had to pay BNP's costs of the mortgage application. The 2nd defendant submitted that he was entitled to claim those expenses back from the plaintiff.

23. Halsbury's Laws of England 4th Edition states at para 987 that "the damages must be confined to loss which is the natural consequence of the injunction in the circumstances of which the party obtaining the injunction has notice when he makes his application."

24. In the supporting affirmation of BNP's mortgage action, MP2765 of 1997, the bank's representative deposed that the bank took action because of non-payment of mortgage instalments. There was no mention of the injunction at all in any of the documents adduced in that action. The 2nd defendant is unable to show that BNP foreclosed on the mortgage because of the injunction. He is therefore unable to show that the payment of BNP's legal costs in the mortgage action was a "natural consequence of the injunction". For these reasons the claim under this head fails.

2. Loss of Opportunity of sale

25. In or around December 1996, before the injunction, The 2nd defendant owned 4 properties. These were Units A&B and Units I&J in that factory building. The 2nd defendant had planned to sell all 4 units.

26. Prior to the injunction he had already sold Units A&B. he had put Unit I on the market for $650,000; and Unit J for $850,000. At the time the injunction was imposed, the 2nd defendant had received an offer for Unit J for $780,000. Which he had refused. He was holding out for his asking price of $850,000.

27. Once the Mareva Injunction was imposed, the 2nd defendant lost the right to dispose of Units I & J. The property market has dropped since then. The 2nd defendant claimed damages of $300,000 to $400,000 under this head.

28. I accepted the 2nd defendant's evidence that he would have sold Units I&J had it not been for the injunction. I also accept his evidence and find that it was highly probable that Units I&J would have been sold in or around December 1996.

29. The 2nd defendant supplied the court with a Survey Report Exh D8 in support of the value of those properties. That report dated 27.1.98. was prepared by Chung, Chan & Associates, Chartered Surveyors. In the report a valuation was given for both properties Units I&J together. The properties were valued at $1,280,000 as at 10th December 1996, and valued at $930,000 as at 10th December 1997.

30. I found that the report was reasoned and fair. Having considered the contents, I accepted the valuations therein.

31. The trial judge Stone J. discharged the Mareva injunction on 14.11.97. The measure of damages must be the difference in the valuation of the property at the time of the imposition and the lifting of the injunction. In this case it is the difference between $1,280,000 and $930,000 which comes to $350,000.

32. I find the measure of damages under this head to be $350,000.

3. Damages

33. Under this head the 2nd defendant claimed for damages for suffering

34. "psychological pressure" and a sum of $1002.70. He says his business was severely affected by the injunction. He cited an example of how his bankers cancelled Letters of Credit facilities previously granted to him and the 1st defendant trading as "Good Years Flower and Leaf Factory". The 2nd defendant claimed that had he not been burdened by the injunction, his L/C facilities would not have been affected, and there would be no need to pay $1002.70 charges to open a letter of credit.

35. Having examined the evidence adduced, I found that the 2nd defendant was unable to prove that the matters complained of was a direct consequence of the injunction. No evidence was adduced in support of the "psychological pressure".

36. The bank may have cancelled the Letters of Credit facilities previously granted to him for any number of reasons. In the circumstances of the case, it is not open to the court to infer that the actions of the bank were a direct consequence of the imposition of the Mareva injunction. For those reasons I find the 2nd defendant has not been able to prove his claim under this head.

4. Costs in the form of lawyers fees

37. I need not deal with this head of damages because the 2nd defendant abandoned his claim at the hearing on 21st September 1999.

Conclusion

1. I find the damages suffered by the 2nd defendant as a result of the Mareva Injunction to be $350,000.

2. Judgment on damages in the sum of $350,000 will be entered for the 2nd defendant against the plaintiff.

3. Such sum will carry interest at judgment rate from 14.11.98. until payment.

4. The costs of this application will be to the 2nd defendant against the plaintiff, to be taxed if not agreed.