In the Court of Final Appeal of the Hong Kong Special Administrative Region
Total Page:16
File Type:pdf, Size:1020Kb
FACV No. 17 of 2008 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 17 OF 2008 (CIVIL) (ON APPEAL FROM CACV NO. 248 OF 2006) _____________________ Between : PECONIC INDUSTRIAL DEVELOPMENT LTD Plaintiff (Appellant) - and - LAU KWOK FAI 1st Defendant (Respondent) ALBERT K.K. LUK & CO. (a firm) 2nd Defendant K.F. LAU & CO. (a firm) 3rd Defendant (Respondent) _____________________ FACV No. 18 of 2008 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 18 OF 2008 (CIVIL) (ON APPEAL FROM CACV NO. 245 OF 2006) _____________________ - 2 - Between : PECONIC INDUSTRIAL DEVELOPMENT LTD Plaintiff (Appellant) - and – LAU KWOK FAI 1st Defendant ALBERT K.K. LUK & CO. (a firm) 2nd Defendant (Respondent) K.F. LAU & CO. (a firm) 3rd Defendant _____________________ Court : Mr Justice Bokhary PJ, Mr Justice Chan PJ, Mr Justice Ribeiro PJ, Mr Justice Litton NPJ and Lord Hoffmann NPJ Dates of Hearing : 9 to 11 February 2009 Date of Judgment : 27 February 2009 J U D G M E N T Mr Justice Bokhary PJ : 1. I agree with the judgment of Lord Hoffmann NPJ. Mr Justice Chan PJ : 2. I agree with the judgment of Lord Hoffmann NPJ. Mr Justice Ribeiro PJ : 3. I agree with the judgment of Lord Hoffmann NPJ. - 3 - Mr Justice Litton NPJ : 4. On 1 June 2006, after trial, the judge ordered Danny Lau to pay to Peconic the sum of HK$350,534,416, leaving the question of interest and cost for later determination. He also gave judgment against the firms Albert K.K. Luk & Co. (―AKKL‖) and K.F. Lau & Co. (―KFL‖), but left the amount of the award to be agreed between the parties, with liberty to apply to him for directions and determination if necessary. In August 2006 final liability was determined in these terms : ―1. final judgment in favour of the Plaintiff against the 2nd and 3rd Defendants be entered on the figures of HK$328,056,559 and HK$18,671,481.92 respectively; 2. the 1st, 2nd and 3rd Defendants do pay interest for the respective sums of HK$422,372,611.37, HK$396,712,372.34 and HK$21,222,568.86 on the respective Judgment sums of HK$350,534,416, HK$328,056,559 and HK$18,671,481.92 calculated at the rate of 1% above prime rate from the respective dates of payment by the Plaintiff until 31 May 2006 together with interest at Judgment rate thereafter; ….‖ 5. Take the case of the 2nd defendant, AKKL, where the award was HK$328,056,559. Paragraph 2 of the judge‘s order required the firm to pay interest of ―HK$396,712,372.34 … on the … Judgment sum of … HK$328,056,559 … calculated at the rate of 1% above prime rate from the respective dates of payment by the Plaintiff until 31 May 2006 …‖. This made, on the face of the order, a total liability of HK$724,768,931.34 which then carried interest at the judgment rate prescribed under the High Court Ordinance, Cap. 4, until payment. 6. Where the order referred to ―the respective dates of payment by the Plaintiff‖ it meant presumably the various dates in 1991 when Peconic paid out to Asiagreat Ltd the total sum of about HK$515 million for the purchase of the Mai Po land. On the face of the order, the interest which AKKL was required to pay, covering a period of nearly 15 years, exceeded by - 4 - a considerable amount the principle sum awarded. 7. This has some bearing on a proper appreciation of the policy which lies behind the Limitation Ordinance, Cap. 347. If one asked the general question: Why limit the time within which parties are required to institute proceedings? The short answer must be: Public interest leans against delay. The consequence of delay in the institution of proceedings might be the extravagant result which we see in the judge‘s order in this case. 8. As regards the proper application of s.26(1) of the Limitation Ordinance, the crucial question, as I see it, is whether Peconic could, with reasonable diligence, have discovered Danny Lau‘s participation in Chio‘s fraud, prior to August 1996. Danny Lau was, seemingly, a solicitor of good standing, rendering legal service to Asiagreat. But once the possibility of Chio having an interest in Asiagreat arose, then the shadow of suspicion must inevitably fall on Danny Lau whose firm was receiving the purchase money for Asiagreat: For here you have Chio, a director of Peconic, causing the company to pay out vast sums to buy the land, and Chio, under the mask of Asiagreat receiving the money. The suggestion that Danny Lau had no curiosity with regard to the beneficial interest behind Asiagreat, the company that he had caused to be formed shortly before the purchases began, is too far fetched. Once Mr Huang came to be appointed as managing director of Peconic in November 1992 and began his inquiries, the first question he ought to have asked is: Who is Asiagreat? Assuming that a search at the companies registry got him nowhere – the persons named as company secretary and the two directors seemingly acting as mere nominees – Mr Huang‘s curiosity (or that of the objective inquirer in Mr Huang‘s shoes) would not have ended there. And when the receipts issued by Danny Lau to JSM came to light – showing that the purchase money for the vendors, - 5 - distributed by Danny Lau, was recorded in his firm‘s books as coming from ―Elsie Chan‖ – further questions would (and should) have been asked. If ―Elsie Chan‖ was indeed the ―celebrity‖ called ―陳奕詩 Elsie‖ (Chan Yik Sze Elsie) then the link to Chio would have been all too apparent. Elsie Chan was at that time in her early twenties. The notion that she was entering into this transaction in her own right was improbable. Her link to Chio, at that time a legislator in Macau and a person of some renown, would have been well-known. 9. By 1999 Peconic had sufficient material in hand to institute the first action: against Chio, Elsie Chan and the persons registered as nominee directors and company secretary of Asiagreat. Why Danny Lau was not joined as a party in the first action has not been satisfactorily explained, particularly, as the judge found (para. 696 of his judgment), that the results of the ICAC investigations were made known to Peconic the year before, in December 1998. 10. In the defence of Danny Lau (1st defendant), para. 8A, lodged in the second action, he said : ―a. Chio did not at any time give any business or name card to the 1st Defendant; b. the 1st Defendant only became aware that the full name of Elsie Chan‘s boyfriend was 陳繼杰 (transliterated as ‗Chan Kai Kit‘) in mid or late 1992 when the 1st Defendant was requested to sponsor a congratulatory advertisement in a Chinese newspaper relating to Chan Kai Kit‘s appointment as Consul of a certain county; and c. The 1st Defendant was at all material times not concerned with, nor did not he pay any attention to, the names 陳繼杰 (transliterated as ‗Chan Kai Kit‘) or ‗Chio Ho Cheong‘ in all his dealings with Elsie Chan.‖ Here is a clear admission that, by ―late 1992‖ Danny Lau was aware of the close connection between Elsie Chan and Chio. - 6 - 11. Moreover, in Leung Kwan Pui‘s witness statement (Leung was the Deputy General Manager of Star Glory Investment Ltd, the 2nd plaintiff in the first action) he said that he was introduced to Chan Kai Kit and ―his girl-friend Chan Yik Sze. They appeared to be well acquainted‖. This introduction took place when Star Glory, a ―window company‖ of the Foshan sub-branch of the Agricultural Bank, was considering the land investment in Mai Po, in early 1991. 12. Factually, the evidence seems overwhelming that, at an early stage, Danny Lau was aware of the close connection between Elsie Chan and Chio. The notion that Peconic was unaware of this fact, and could not with the exercise of reasonable diligence have found out, is untenable. 13. I have had the advantage of reading in draft Lord Hoffmann‘s judgment and agree with it. I too would dismiss the appeals. Lord Hoffmann NPJ : 14. In 1991 the Agricultural Bank of China (―the bank‖) was the victim of a fraud. A Macau businessman named Chio Ho Cheong (―Chio‖) dishonestly induced it to invest in a Hong Kong land speculation by false representations about the prospect of making a large profit. The bank funded the purchase of the land through a joint venture company called Peconic Industrial Development Ltd (―Peconic‖), (of which Chio became a director and 25% shareholder), at a price of about HK$515 million. The immediate vendor was Asiagreat Ltd (―Asiagreat‖), a recently formed company which had just contracted to buy the land from a number of individual owners for about HK$151 million. Chio represented to the bank that Asiagreat was controlled by a third party but he was in fact its beneficial - 7 - owner and he personally made a secret profit of some HK$350 million from the transaction. The bank made a very considerable loss. 15. In 1999 the bank commenced proceedings against Chio and various other individuals who had participated in the fraud. In 2002 it commenced separate proceedings against a solicitor named Lau Kwok Fai, known in English as Danny Lau, the firm of Albert K.K.