DONGGUAN CITY LONG LIAN TRADING CO. LTD. v. SO KIT AND OTHERS

CACV 274/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 274 OF 1999

(ON APPEAL FROM HCA 13667/1999)

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J U D G M E N T

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Rogers JA :

1. This is an appeal from a decision of Waung, J given on 7 September 1999 whereby he continued Mareva injunctions against the 2nd and 3rd defendants which he had previously granted ex parte. The 2nd defendant alone appeals.

2. The matters arise in this way.

3. The plaintiff is a company trading in the Mainland in computers. It desired to obtain Hong Kong dollars to the tune of approximately 13 million and for that, it obtained a bank draft in the sum of RMB14.6 million. That draft was taken from one of the plaintiff's employees by a trick. The proceeds of that draft went apparently in two directions. Some $10,830,000 ended up with the 3rd defendant and some HK$1,792,453 was paid into the 2nd defendant's bank account on 17 August.

4. The reason that the plaintiff was carrying out transactions in what was, perhaps, not a conventional manner is unnecessary for this court to go into. Suffice it to say, investigations were made by the police in the Mainland and as a result of that, the customer advice issued by the Nanyang Commercial Bank showing the payment in of the money into the 2nd defendant's bank account was produced. A copy of that advice is exhibited in evidence.

5. In short, the 2nd defendant says that this money was paid into his account by a customer of a man named Mr Lo. Mr Lo is stated to live in Macau and carry on business as a currency dealer. The 2nd defendant's evidence states that Mr Lo does not possess a bank account in Hong Kong and we were told that he does not have travel documents which are now valid to enable him to travel to Hong Kong. The 2nd defendant says that after the money was paid into his account, Mr Lo contacted him and informed him of the amount that was paid in and this tallied with the 2nd defendant's own investigations and as a result, he withdrew the money and paid it to Mr Lo as requested. There are many difficulties with the 2nd defendant's version of events. In particular, Mr Lo is clearly the most nebulous of characters.

6. The 2nd defendant complains that the judge below did not allow his third affirmation to be admitted in evidence. That third affirmation exhibited a copy of a statement which was said to have been made by Mr Lo in the presence of the 2nd defendant's solicitors.

7. As a matter of caution, we have considered that document with the 2nd defendant in the course of his submissions to us, but really that document namely the statement said to have come from Mr Lo, assists the 2nd defendant in no way.

8. In summary, the judge below came to the conclusion that the 2nd defendant's version of events was not such as could be relied upon and indeed, went no way to dispelling the plaintiff's clear evidence that it was their money which was paid into the 2nd defendant's account.

9. The judge said on page 5 of his judgment :-

"I find the story of Leong [the 2nd defendant] about his dealing with Lo difficult to believe, specially the dealing on the 17th of August. In my view, the quality of the defence evidence of the 2nd Defendant is, in a different way, as poor as that of the 3rd Defendant and therefore taking such evidence of the 2nd Defendant into account, I have also little doubt that the Plaintiff has clearly shown more than a good arguable case of fraud against the 2nd Defendant."

The judge, a little later, went on and said :-

"There is no doubt that on the undisputed material presented to the court (Plaintiff deprived of its money and the Defendants gained by the receipt of the Plaintiff's money) that the Plaintiff has a good arguable case on this cause of action [that of money had and received]. The quality of the defence evidence presented to the court cannot and does not render the case of the Plaintiff on this cause of action less than a good arguable case."

10. In my view, having read the evidence in this case, I have no doubt that the judge was correct in his conclusions. Given the fact that it was the plaintiff's money that was paid into his account, it behoved the 2nd defendant, if he was to show that there was no fraud on the plaintiff, to explain exactly how that money came in and where that money came from. Even with his third affirmation, he has wholly failed to do that.

11. As a temporary measure until the trial of this action, it seems to me undoubtedly right for the court to consider freezing such assets of the 2nd defendant as would satisfy the plaintiff's claim. But the 2nd defendant complains that the imposition of the injunction has affected his living and he cannot operate his business anymore. Furthermore, he had bought 5 properties in Macau on which he has to pay mortgage instalments and unfortunately, the values of those properties have dropped since the time when he purchased them. The 2nd defendant also complains that he has a family of five to support and after his money has been frozen, he has nothing to live on but he has had to borrow money. This is an unfortunate consequence of the order but in my view, it is a necessary consequence because of the clear evidence which is against the 2nd defendant and the failure of the 2nd defendant to dispel the clear conclusions that would have to be drawn by the court at this stage, that he was implicated in the theft of the RMB14.6 million from the plaintiff.

12. In my view, this court has got no alternative but to dismiss the 2nd defendant's appeal.

Wong JA :

13. I agree that the appeal must be dismissed.

Ribeiro J :

14. I agree and there is nothing that I can usefully add.