In Bowers v Marbury Ridge Limited [2024] HKCA 640, the Court of Appeal held that, where the debt underlying a statutory demand, was a debt founded upon a signed loan agreement which consolidates previous indebtedness of the debtor, the doctrine of contractual estoppel precludes the debtor from challenging that part of the previous indebtedness which contained unenforceable penalty interest.  The Court of Appeal ruled in favour of the Respondent, and upheld the Court of First Instance’s decision not to set aside the statutory demand.  The Respondent was represented by Felix Ng in both the Court of Appeal and in the court below (Bowers v Marbury Ridge Limited [2023] HKCFI 8).

The Court of Appeal went into a detailed analysis of the construction of the relevant clauses in the loan agreement (which founded the debt underlying the statutory demand).  The Court of Appeal held that mere exchange of promises by the parties are sufficient to constitute good consideration for the loan agreement, even though those mutual promises remain unperformed before the loan agreement was breached.

Citing its previous judgement in Ng Kin Siu v Gentle Sora Limited [2023] HKCA 944 at paragraph 18, the Court of Appeal pointed out that, insofar as challenge is made to the findings of fact made by the judge on the evidence, the well-established principle is that the appeal court should be reluctant to interfere with the judge’s evaluation of the evidence, unless it is demonstrated that the judge had fallen into palpable errors in the finding of fact.  This is so even though the judge’s evaluation of evidence and findings of fact were based on affidavit evidence and contemporaneous documents rather than oral evidence.

The full judgment can be read in here.

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In Purple Surgical UK Ltd v Win Billion Investment Group Ltd [2024] HKCFI 1643, the High Court of Hong Kong held that the seller had engaged in fraud with respect to a US$27 million contract for the sale of medical products during the Covid pandemic. Nick Luxton led by Rachel Lam SC, and instructed by Stephenson Harwood, acted for the plaintiff buyer, who obtained judgment against the seller and its sole director based in Hong Kong.

In April 2020 (during the early stages of the Covid pandemic), the plaintiff entered into a contract with the UK government to supply surgical masks. The plaintiff was introduced to Win Billion Investment Group Ltd, the first defendant, which was operated by Wu Yun Fai, the second defendant. In order to perform the contract with the UK Government, the plaintiff agreed to purchase the masks from Win Billion.

Under the terms of its contract with Win Billion, the plaintiff paid US$27 million to a lawyer based in the United States, purportedly acting as an escrow agent. However, the masks were not supplied, and the transferred funds were not returned.

The plaintiff obtained freezing orders against Win Billion, Mr Wu and certain other recipients of the funds. Further, the plaintiff obtained a number of disclosure orders, which established that the funds had been transferred to third parties, without the plaintiff’s consent and without manufacturing or paying for the masks. Subsequently, the plaintiff was able to recover over US$17 million from certain recipients of the funds in Hong Kong, and the escrow agent in the United States.

In the High Court action, the plaintiff claimed against Win Billion and Mr Wu for the balance of the funds that the plaintiff had transferred under the sale contract. The defendants argued that they had attempted to supply the masks, but had been unable to do so, and that the plaintiff had terminated the contract prematurely. Win Billion said that it had:

• entered into a supply contract with a South Korean company, but the company was described as a lamp and lightbulb business;
• paid a deposit to a company in Georgia, Eastern Europe, even though the masks were to be manufactured in the United States, and the deposit was returned;
• paid substantial funds to a middle-man in China, who was not identified;
• paid millions of US dollars in dividends to Mr Wu, even though the masks were not supplied.

Deputy High Court Judge Kent Yee held that it was a case of serious and complex fraud. As the sole director and controlling mind of Win Billion, Mr Wu knowingly procured Win Billion to engage in such misconduct. There was substantial evidence that Win Billion had misrepresented its intentions to perform its obligations under the sale contract. The learned judge rejected the defendants’ remarkable explanations.

A copy of the judgment is available here: legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=160860&currpage=T

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On 28 March 2024, the High Court handed down its reasons for judgment in Valsalan Ivy Vimala v Castka Richard Patrick Josef & Castka Gillian Hancer [2024] HKCFI 912. Lut Chi Au and Anthony Wong obtained an order to demolish the fence in a boundary dispute of land in the New Territories.

In gist, this was a dispute about the re-establishment of land boundaries. The Plaintiff and the Defendants are neighbours. Their respective lots of land are adjacent to each other and had a common boundary. The Defendants erected a fence, part of which protruded and cut the northern corner of the Plaintiff’s lot.

There were several survey plans by different surveyors, all of which showed that there was encroachment despite to different extents. The Joint Expert Report also concluded that there was encroachment. On the other hand, the Defendants’ case was that the fence was built along the tiles which were previously laid down by a construction company. The Defendant’s Expert unilaterally prepared a Supplementary Report which sought to establish a boundary different from the Joint Expert Report by following the tiles.

At issue was whether the floor tiles of the two lots can be a feature to re-establish the common boundary and hence any encroachment. The Court found that the laying out of the tiles cannot be regarded reliable evidence that survey work was done or the work was done accurately. The Court hence found in favour of the Plaintiff.

LC and Anthony were instructed by Tsang, Chan & Woo Solicitors & Notaries. The Court’s reasons for judgment can be found here.

LC was called to the Bar in 2013. He has a civil practice and is regularly instructed in chancery and commercial cases, including land, contentious probate, administration of high value estate, trust, civil fraud litigation and personal injuries matters. View LC’s profile for more details.

Anthony was called to the Bar in 2023. Anthony is developing a broad civil and criminal practice, and accepts instructions in all areas of Chambers’ work. He is an Associate of the Hong Kong Institute of Arbitrators, and is also developing a practice in alternative dispute resolution. View Anthony’s profile for more details.

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Au Lut Chi and Hannah Tang acted for the Defendant in Lau Wai Kwong v Lau Cheung Kam Ling Margaret née Cheung, Kam Ling Margaret [2023] HKCFI 1097 and successfully opposed a claim for rectification by mistake of a settlement entered in a big money case in the matrimonial proceedings.

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On 30 June 2022, the High Court handed down its reasons for judgment in Lau Tung Hoi Kent v Lau Tung Kuen [2022] HKCFI 1921. Au Lut Chi and Griffith Cheng represented the Plaintiff. They removed the Defendant as executor of the estate in question. The Plaintiff is the younger brother of the Defendant and a beneficiary of the estate under Will.

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A hearing for an opposition to trade mark application was heard before the IP Department on 27 August 2021 and the decision was handed down on 5 November 2021. The opposition concerns a registration of a trade mark “金佛水” under class 35 by an earlier trade mark “大佛水”.

Ian Chu acted for the applicant in the said hearing. In short, the IP Department was of the view that:-

• There is insufficient evidence supporting that the earlier trade mark has been widely used in Hong Kong for a long time and therefore the use of it does not make the earlier trade mark more distinctive;
• The degree of similarity between two marks is only medium; and
• While the wholesale and retailing of medicines, Chinese herbal medicine and nasal spray under the subject class 35 (“Class A Services”) are complementary to the goods covered by earlier trade mark, others including the sale of tonic food, cosmetic and skincare products and nutritious food etc (“Class B Services”) are not similar to the goods covered by the earlier trade mark.

Accordingly, the IP Department rejected the opposition to the registration of the subject trade mark under Class B Services.

For the full Statement of Reasons for Decision by the IP Department, please see https://www.ipd.gov.hk/chi/intellectual_property/trademarks/trademarks_decisions/decision/DEC304805190OP.pdf or contact our Ian Chu.

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Recently, the Hong Kong courts have considered two important issues for lenders relating to jurisdiction clauses in finance documents:

1. Should the Hong Kong courts dismiss a winding up or bankruptcy petition if the relevant finance document is subject to an exclusive jurisdiction clause (EJC) in favour of a foreign court?

2. Will the Hong Kong courts give effect to asymmetric jurisdiction clauses?

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Written by Timothy Harry and Dr Nisha Mohamed

There have been two recent decisions of the Supreme Court in England which it would be useful for any Hong Kong practitioner to consider when dealing with the fundamental questions of (1) whether the relationship is one to which vicarious liability principles apply and (2) whether, even if it is such a relationship, the employee’s wrongdoing is such that liability should attach to the employer.

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