PROGETTO JEWELLERY CO LTD v. LAU CHIU YING AND ANOTHER

PROGETTO JEWELLERY CO LTD v. LAU CHIU YING AND ANOTHER

On the evidence (documentary, CCTV and witness credibility) the court preferred Progetto’s witnesses, accepted PJ’s stock and banking calculations and found that Joy misappropriated finished goods and failed to account for sales; Joy Design was a nominee/agent of Progetto and not an independent proprietor of the diverted goods; Joy was negligent in the Italy seizure; many bank withdrawals were not substantiated as legitimate business expenses and must be repaid; JD's counterclaims fail because JD held no separate beneficial interest. Pre-judgment interest was ordered from dates appropriate to each head (seizure: 22 Jan 2013; misappropriation and unaccounted sales: 1 Apr 2014; other sums:...

Citation
[2020] HKCFI 209
Parties
Plaintiff (original Action); 2nd Defendant (by Counterclaim): Progetto Jewellery Company Limited; 1st Defendant (original Action): Lau Chiu Ying (Joy); 2nd Defendant (original Action); Plaintiff (by Counterclaim): Joy Design Company Limited; 1st Defendant (by Counterclaim): Fung Pui Wa (Ruby)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
22 January 2020
Case Number
HCA2548/2014
Procedural Posture
Company/shareholder and Commercial Dispute (misappropriation, Accounting and Negligence) / Trial Judgment (court of First Instance)
Outcome
Judgment in favour of Progetto Jewellery Company Limited in respect of misappropriation, unaccounted sales, negligence in Italy seizure, failure to attend HKTDC exhibition, withholding of confidential information; Joy Design Company Limited’s counterclaims dismissed
Legal Topics
Misappropriation of Assets, Breach of Fiduciary Duty, Conversion and Accounting, Unjust Enrichment, Agent/nominee Agency, Duomatic Principle, Pre Judgment and Post Judgment Interest, Discovery/specific Discovery, Customs Seizure
Source Language
EN
Company Law Commercial Law Tort (negligence) Equity and Fiduciary Duties Civil Procedure (disclosure) Misappropriation of Assets Breach of Fiduciary Duty Conversion and Accounting +6 more

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Parties

Progetto Jewellery Company Limited

Plaintiff (original Action); 2nd Defendant (by Counterclaim)

Lau Chiu Ying (Joy)

1st Defendant (original Action)

Joy Design Company Limited

2nd Defendant (original Action); Plaintiff (by Counterclaim)

Fung Pui Wa (Ruby)

1st Defendant (by Counterclaim)

Procedural Posture

Company/shareholder and Commercial Dispute (misappropriation, Accounting and Negligence) / Trial Judgment (court of First Instance)

Legal Issues

  1. 1 Whether Joy misappropriated finished goods and loose diamonds and failed to account for sale proceeds
  2. 2 Whether Joy Design Company Limited was a separate proprietor of goods or an agent/nominee of Progetto
  3. 3 Whether Joy was negligent in respect of the seizure of goods in Italy and liable for the loss

Ratio Decidendi

On the evidence (documentary, CCTV and witness credibility) the court preferred Progetto’s witnesses, accepted PJ’s stock and banking calculations and found that Joy misappropriated finished goods and failed to account for sales; Joy Design was a nominee/agent of Progetto and not an independent proprietor of the diverted goods; Joy was negligent in the Italy seizure; many bank withdrawals were not substantiated as legitimate business expenses and must be repaid; JD's counterclaims fail because JD held no separate beneficial interest. Pre-judgment interest was ordered from dates appropriate to each head (seizure: 22 Jan 2013; misappropriation and unaccounted sales: 1 Apr 2014; other sums:...

Court Disposition

Judgment in favour of Progetto Jewellery Company Limited in respect of misappropriation, unaccounted sales, negligence in Italy seizure, failure to attend HKTDC exhibition, withholding of confidential information; Joy Design Company Limited’s counterclaims dismissed

Orders

  • Progetto’s claims allowed to the extent set out in judgment; Joy Design’s counterclaim dismissed
  • Defendants to repay sums found due to Progetto (including unauthorised withdrawals and sums relating to misappropriated goods and unaccounted sales) and reimburse tax penalties and related payments caused by non-return of company records