Peter Geoffrey De Krassel v Vincent Julia Chu And Others

HCA 1151/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1151 OF 2005

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JUDGMENT

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1. The plaintiff claims that the 3^rd, 4^th and 5^th defendants together with the 1^st and 2^nd defendants conspired to defraud him by unlawful means alternatively, conspired to injure him alternatively, committed the tort of unlawful interference with the plaintiff’s trade or business alternatively, induced a breach of the plaintiff’s contract with Messrs Mossack Fonseca (HK) Ltd (“MF”).

2. The 1^st and 2^nd defendants have not defended the claims made against them. Default judgment was entered against them.

3. On 7 April 2006 interlocutory judgment was entered against the 2^nd defendant for damages to be assessed with costs. On 10 January 2008 interlocutory judgment was entered against the 1^st defendant for damages to be assessed with costs.

4. At the pre-trial review on 28 September 2009 it was ordered that there be a split trial of the issues of liability and quantum.

5. This is the trial of the issue of liability on the plaintiff’s claims against the 3^rd, 4^th and 5^th defendants.

6. The plaintiff claims to be the owner of one of two bearer shares in China Associates Ltd (“the Company”), a BVI company. He claims that at all material times he owned one bearer share representing 50% of the Company with the other bearer share representing the other 50% of the Company being owned by his ex-wife the 1^st defendant Vincent Julia Chu also known as Zhu Liang and Tiffany Chu (“Tiffany”).

7. The plaintiff received his University education in the United States of America (“USA”) where he graduated in law. He subsequently developed an interest in the entertainment industry and moved to Los Angeles where he represented actors, producers, entertainers and studios. He is an international businessman.

8. Tiffany is the plaintiff’s ex-wife. The plaintiff and Tiffany met when they were both living in California. Tiffany was from Shanghai and went to live in California for work and further education. She had an interest to be involved in the entertainment industry. Tiffany came from a very influential family in Shanghai with many contacts and much influence. She was well connected in the fields of television broadcasting and the entertainment industry in Mainland China.

9. The plaintiff and Tiffany developed a common interest and they began business together by taking American rock bands to tour in Mainland China.

10. In 1989 Tiffany was employed by Warner Brothers which required her to move to Hong Kong. The plaintiff decided to move to Hong Kong with Tiffany to be with her. At that time the plaintiff was married to his first wife and his move to Hong Kong marked the end of his first marriage.

11. The plaintiff and Tiffany were married in 1994.

12. The Company was incorporated in the BVI with its former name CAL Hospitality Services Limited on 18 June 1992. Two bearer shares in the Company were issued on 28 October 1992.

13. The plaintiff was the sole director of the Company until his resignation on 7 October 1993.

14. Tiffany was the sole director of the Company until her resignation on 2 August 1994. CAL International Ltd was appointed as director of the Company on that day.

15. The plaintiff and Tiffany each held one share in CAL International Ltd.

16. There is one child of the family a boy born in December 1996.

17. The 2^nd defendant Wong Hui Laam, Vida (“Vida”) was employed by the Company in 1993.

18. The 3^rd defendant (“D3”) is a qualified US lawyer. He has practised as a lawyer and business consultant in the USA, Hong Kong and Taiwan for over 25 years.

19. The 4^th defendant (“D4”) and the 5^th defendant (“D5”) are companies incorporated in Hong Kong. D3 is a director and shareholder of D4 and D5. At all material times D3 ran his business consultancy in Hong Kong through D4 which primarily involved giving advice to individuals including US expatriates living in Asia upon tax planning, trusts and US investments. D4 was the corporate vehicle for D3’s business interests in Hong Kong.

20. D5 concentrated more upon D3’s business interest in Taiwan. D5 became a dormant company in July 2000.

21. D3’s brother William Silsby is employed by D4 and assists D3 in his business consultancy in Hong Kong.

22. In 2000 Tiffany filed divorce proceedings in Hong Kong in FCMC 1444 of 2000 against the plaintiff on the grounds of the plaintiff’s unreasonable behaviour. A decree nisi was granted in May 2000.

23. The plaintiff claims that he and Tiffany each held one of the two bearer shares in the Company. He produced one of the share certificates (certificate number 2) in evidence as exhibit P1 which he had removed from a safe deposit box that he and Tiffany jointly held when they were still married.

24. It is his case that he was the owner of one of the two bearer shares in the Company and that Tiffany was the owner of the other bearer share each of them owning 50% of the Company.

25. There is no dispute that Tiffany first consulted D3 for professional advice in March 1999.

26. The plaintiff’s claims arise out of a series of transactions which on his case deprived him of his interest in the Company that interest being his one bearer share and 50% interest of the Company.

27. There are 4 causes of action relied on by the plaintiff.

28. The primary claim of the plaintiff is for damages for conspiracy to defraud by unlawful means as pleaded and particularised. It is the plaintiff’s case that in or about March 1999 the defendants or any two or more together conspired to defraud him by unlawful means.

29. As Mr Wright, for the plaintiff, made plain in his opening submissions, the plaintiff’s primary claim is that the defendants conspired to injure the plaintiff by unlawful means as pleaded at paragraphs 5A.1, 22 and 22A of the re-amended statement of claim (“RASC”). Leave to file and serve voluntary particulars of the overt acts relied on was given in the course of the trial. The overt acts relied on are set out in the voluntary particulars filed on 11 December 2009 (“the voluntary particulars”).

30. The essence of the plaintiff’s complaint is that D3, D4 and D5 conspired with Tiffany and Vida to divest the plaintiff of his interest in the one bearer share of the Company.

31. The plaintiff’s alternative claim is that the defendants conspired to injure the plaintiff with the sole or predominant intention to injure the plaintiff and/or causing loss to the plaintiff by damaging or destroying his business as pleaded at paragraphs 5A.3 and 23B of the RASC.

32. The further alternative cause of action of the plaintiff is unlawful interference with trade or business. The plaintiff claims that the defendants unlawfully interfered with his trade or business thereby causing loss and damage as pleaded at paragraphs 5A.2 and 23A of the RASC.

33. Also in the alternative is the cause of action for inducement of breach of contract where the plaintiff claims that D3, D4 and D5 have knowingly induced MF to break its contractual relationship with the plaintiff causing loss to the plaintiff as pleaded at paragraphs 5A.4 and 23 (sic) of RASC.

34. D3, D4 and D5 deny the very serious allegations made against them and deny that they are liable to the plaintiff for any of the claims made.

The main issues

35. On the claim for conspiracy to defraud by unlawful means the main issues are :

(1) whether there was any agreement between D3, D4, D5 and other persons to injure the plaintiff;

(2) if so, whether any such agreement was to take an unlawful action or to do an unlawful act;

(3) if so, whether such unlawful act or acts caused loss to the plaintiff;

(4) whether D3, D4 and D5 intended to cause loss to the plaintiff.

36. On the claim for conspiracy to injure with the sole or predominant intention to injure the plaintiff the main issues are :

(5) whether there was any agreement between D3, D4, D5 and other persons to injure the plaintiff;

(6) if so, whether D3, D4 and D5 had the predominant purpose or intention to injure the plaintiff;

(7) whether any such agreement caused loss to the plaintiff.

37. On the claim for unlawful interference with trade or business of the plaintiff the main issues are :

(8) whether D3, D4 and D5 interfered with the plaintiff’s trade or business;

(9) if so, whether such interference was unlawful;

(10) whether such interference caused loss to the plaintiff;

(11) whether D3, D4 and D5 intended to cause loss to the plaintiff.

38. On the claim for inducement of breach of contract, the main issues are :

(12) whether there was a breach of the contract between MF and the plaintiff;

(13) whether D3, D4 and D5 had knowledge that they were inducing the breach of contract;

(14) whether D3, D4 and D5 intended to induce the breach of contract.

The applicable legal principles

39. As Arden LJ said in Meretz Investments NV and another v ACP Ltd and others[2008] Ch 244 at paragraph 117

“There are two types of conspiracy: conspiracy to injure by unlawful means and conspiracy to injure by lawful means. The latter requires a predominant intention to injure ……………….. Conspiracy to injure by unlawful means does not require a...