MICHAEL JOHN UREN v. GCHAIN LTD AND OTHERS

DCCJ 1987/2019 & DCCJ 1988/2019

(Heard Together)

[2019] HKDC 1301

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1987 OF 2019

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1988 OF 2019

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REASONS FOR DECISION

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INTRODUCTION

1.  The plaintiffs in the above 2 cases took out 2 separate summonses under Order 19 rule 7 of the Rules of the District Court for default judgment.

2.  At the end of the hearing on 24 September 2019, I granted the applications in terms of the summonses.  I said I would provide the reasons for my decision in due course.  Here are the reasons.

BACKGROUND

3.  The plaintiffs in these 2 actions are represented by the same firm of solicitors. They are both New Zealand nationals.

4.  Both of them allege that they are victims of an identical fraud scheme where they have been defrauded into investing in some investment products. 

5.  It has been pleaded in the statement of claim that, by false and fraudulent representations made by telephone and/or documents, the plaintiffs were deceived into remitting sums of money to the bank accounts of the 9 different defendants in the above 2 cases.  In both cases, it has been falsely and fraudulently claimed by the fraudsters that the monies would be used for the purchase of various investment products.  However, no investment products existed and/or were purchased for the account of the plaintiffs in both cases, as a result of which the plaintiffs (each of them) have suffered loss and damage.

6.  The statement of claim also sets out details of the particular sums transferred, including the date, amount, destination bank, the name of the receiving party (ie each of the defendant) and the bank account number to which the transfer was made.

DISCUSSION

7.  A common feature which runs through all the defendants’ identity is that they are all recently incorporated company in Hong Kong, with a single director who is a Mainland resident with a reported address in a remote part in the Mainland.  Each company has a small paid up capital of HK$10,000 only.

8.  At least 2 companies, namely 5^th and 6^th defendants in DCCJ 1987 of 2019 and 3^rd and 4^th defendants in DCCJ 1988 of 2019 are the same defendants who had received monies from the plaintiffs in both cases.

Service of documents

9.  There is no question that both the proceedings and summonses have been properly served on each and every defendant on its registered address by ordinary post pursuant to section 827 of the Companies Ordinance, Cap 622. This can be verified in the affirmations of service of Chan Shuk Lin, the trainee solicitor at the plaintiff’s solicitor firm.

10.  No acknowledgment of service on behalf of any of the defendants has been filed or any other form of documents or communications from any of them has been received by the plaintiff or by the Court.

11.  I am therefore satisfied that both the writ of summons together with the statement of claim and the summonses herein have been properly served on the defendants in both cases and that they have not responded to them.

The plaintiffs’ ownership and proprietary claims

12.  In each of the above 2 cases, the statement of claim sets out the basis of the plaintiff’s claim to ownership and proprietary rights and claims for damages in relation to the monies claimed therein.

13.  Based on the pleaded facts, rather than the evidence, I am satisfied that the plaintiffs in both cases are entitled to the claims made individually against each of those defendants named in the writ and the statement of claim.

14.  I am also satisfied that in both cases a declaratory relief should be granted to the plaintiff in order to secure the plaintiff’s proprietary claim as opposed to merely his personal claim, particularly given the possibility that the defendants may have other creditors.

Tort of conspiracy to default

15.  In my view, the only issue which needs to be considered more carefully is whether there was a conspiracy to defraud against the plaintiffs in each of these 2 cases.

16.  Of course, if the plaintiff is able to prove the tort of conspiracy, then in additional to the constructive trust and/or proprietary claim made against each of the defendant, he is also entitled to claim the full amount of his loss against each of defendant as they will be jointly and severely liable.

17.  For the plea of the tort of conspiracy to succeed, the plaintiff must allege at least one overt act which is that each of all the alleged conspirators committed.  And the overt act or overt acts pleaded must be such as to show: 

(1)  that the conspiratorial agreement alleged against the defendant has been entered into by each and every one of them;

(2)  that the agreement, and not merely the intention of one person alone, was implemented; and

(3)  that such implementation caused the damage complained of:

See §18/12/8 of the Hong Kong Civil Procedure 2019 and the case of Aktieselskabet Dansk Skibsfinansiering v Wheelock Marden & Co Ltd & Others [1994] 2 HKC 264; see also Bullen & Leake & Jacobs on Precedents of Pleadings (18^th edition), Vol 2 Section 59 at §59-02 and §59-03.

18.  In the case of i3 International Inc v Imperial Global Trading Limited & Another [2018] HKCFI 1478, Deputy High Court Judge Alexander Stock SC held on the facts of that case that, given the close proximity in time and similarity of means by which the wire transfers were procured, the court was prepared to accept the argument that the tort of conspiracy existed.

19.  In our 2 cases, I take into account of the fact that none of the defendants have entered any acknowledgment of service, despite both the proceedings and the summons have been properly service on them.   Hence, the facts pleaded in the statement of claim are deemed to be admitted by them.

20.  In other words, they are the recipients of money under the same fraudulent scheme perpetuated against the plaintiff in each case.  Further, they had received the money within close proximity of time, ie all within a few weeks of each other and from the same victim under the same pretext in the accounts held by the defendants.  

21.  Given the above, I am satisfied that a tort of conspiracy has been made out against the defendants on the pleadings itself and that judgment should be entered against each of the defendant both individually as well as jointly and severally.

Orders made

22.  For the reasons stated above, I ordered that judgment be entered against the respective defendant in the sums as stated in the draft orders prepared by the plaintiff’s solicitors as amended in court during the hearing, with the costs summarily assessed at HK$49,040 in each case.