AGEAS INSURANCE COMPANY (ASIA) LTD v. LAM HAU WAH INNEO

CACV 86/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 86 OF 2010

(ON APPEAL FROM HCA NO. 1840 OF 2009)

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JUDGMENT

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Hon Kwan JA:

1.  The plaintiff in these proceedings applied for summary judgment and succeeded before Master Kwang and Fok J. Judgment was given in its favour in the sum of $31 million odd. On 3 May 2010, to comply with the judgment against him, the defendant had made full payment to the plaintiff of $33.4 million odd, being the judgment sum with interest.

2.  The defendant appealed to this court.  We gave him leave to adduce new evidence and allowed the appeal.  By the judgment we handed down on 28 October 2010, we varied the Master’s judgment by entering judgment for the plaintiff for $7.6 million odd with interest and giving the defendant unconditional leave to defend the balance of the amount claimed of about $23.4 million.

3.  Having succeeded on appeal, and on 28 October 2010, the defendant’s solicitors demanded repayment from the plaintiff the sum of $23.4 million plus the corresponding interest that had been paid.  

4.  The plaintiff refused to comply.  Hence the defendant issued the present summons before this court for an order of repayment with interest, under O 59 r 14 and the inherent jurisdiction of this court.

5.  The defendant’s position is straightforward.  He had paid money to the plaintiff in May 2010 in satisfaction of the Master’s judgment, that judgment was set aside and varied by the Court of Appeal.  The money he had paid in excess of the sum for which judgment is now entered in the plaintiff’s favour should be returned to him with interest.  This is his right of restitution, see Goff & Jones on Restitution, 7^th ed, paragraph 16-001; Man Ping Nam v. Man Fong Hang (No. 2) (2007) 10 HKCFAR 140.

6.  One would have thought there should be no controversy about the defendant’s position.  However, the plaintiff’s legal advisers thought otherwise.  

7.  The plaintiff resisted repayment on two broad grounds.  It was contended that the principles of restitution would only apply where a judgment has been reversed and the court has made a determination on the rights of the parties.  The plaintiff’s counsel, Mr. Harry, submitted restitution should have no application here, as the Court of Appeal has merely held there is a dispute which should go to trial and granted the defendant unconditional leave to defend.  Until the dispute has been resolved at trial, the defendant has not established his entitlement to be repaid the sum paid in excess of the judgment of the Court of Appeal.  Until he has succeeded at trial, it is too early to say the plaintiff has been unjustly enriched at the defendant’s expense.  

8.  The plaintiff further contended the excess amount should not be returned to the defendant but should be paid into court or put into an escrow account or a joint solicitors’ deposit account to abide the outcome of the trial, in view of the fact that the plaintiff had significant difficulty and had incurred considerable expense in executing the judgment of the Master.  Alternatively, the court should grant a stay of the order for repayment sought by the defendant.

9.  In my view, the plaintiff’s propositions are thoroughly without merit.  There is no authority in support of the plaintiff’s contentions.  Mr Harry could only distinguish established propositions and decided cases.  Furthermore, one of the cases he cited was against him.  This is the decision of the Court of Appeal in New South Wales in TCN Channel 9 Pty Ltd. v Antoniadis [No. 2] (1999) 48 NSWLR 381.   

10.  The legal principles are clear.  In a decision of the Privy Council on appeal from Hong Kong, Rodger v. Comptoir d’Escompte de Paris (1869-71) LR 3 PC 465, there is the classical statement of Lord Cairns at 475: “one of the first and highest duties of all Courts is to take care that … no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court.”

11.  A submission similar to that of the plaintiff was made in TCN Channel 9 that the principle in Lord Cairns’ statement had no application where an intermediate appellate court had only ordered a new trial and not finally disposed of the proceedings.  This was rejected in paragraph 11 at page 384.  The court recognised that that situation was not raised by the facts in Rodger but held that Lord Cairns’ language, properly understood, “does not support any qualification to the general principle”.  The court further stated as follows:

“The opponent, to use other language of Lord Cairns (at 475; 125), has ‘by mistake and by wrong obtained possession of the money under a judgment which has been reversed’, and remains in possession of that money without any existing right to do so. In our judgment the Court is bound to make orders for restitution to redress this continuing wrong.”

12.  By an act of the court, being the judgment given by the Master, which was upheld on appeal by Fok J, the plaintiff was paid a sum which was subsequently held by the Court of Appeal to be in excess of the amount which was indisputably due.  An injury was done to the defendant, for which he should have redress.  The fact that the plaintiff has other claims against the defendant in the action yet to be resolved is beside the point.  The plaintiff was entitled to retain the monies paid while the judgment of the Master remained in force.  That judgment having been set aside to the extent as allowed on appeal by the Court of Appeal, the plaintiff no longer has any right to the money paid in excess and has been remitted to the position of a party having a claim to a sum in dispute, see TCN Channel 9 paragraph 13.

13.  There is no justification to require the money being the disputed claims to be paid into court or an escrow account pending trial of the action.  To accede to the plaintiff’s proposal would be to circumvent the judgment of this court giving unconditional leave to the defendant to defend the disputed claims.  

14.  The defendant should be repaid immediately the amount paid in excess of the judgment allowed to be entered by this court.  The correct amount to be returned, we are told by Mr. Smith, SC, is the figure mentioned in the affidavit of the plaintiff’s solicitors, $24,994,814.41.  The defendant would also be entitled to interest at the rate sought in his summons, following the decision of Man Ping Nam, paragraph 23.

15.  We will hear counsel on the costs of this application.

Hon Sakhrani J:

16.  I agree with the judgment of Kwan JA.