FACV No. 11 of 2022

[2023] HKCFA 25

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 11 OF 2022 (CIVIL)

(ON APPEAL FROM CACV NO. 548 OF 2018)

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BETWEEN

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DECISION

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The Court:

1. On 6 February 2023, the Court handed down its judgment allowing this appeal and entering judgment for the appellant (“Tugu”) for the amount of certain unauthorised debits together with interest thereon. Under the order, interest on the judgment sum was to be paid “at the prime rate plus 1% from 6 October 2006 until judgment and thereafter at the judgment rate”.

2. Thereafter, the respondent (“Citi”) has paid the judgment sum in the amount of US$43,122,729.35. Citi has also paid the sum it has calculated as being due by way of pre-judgment interest, in the sum of HK$31,137,859.56, and also post-judgment interest. For the rate to be applied in calculating pre-judgment interest, Citi used the “prevailing US Dollar best lending rate offered by HSBC in Hong Kong” as the basis for “prime rate”.

3. An issue has arisen between the parties as to the correct amount of interest. That is because the period for which interest is to be paid includes a period, prior to 2009, for which HSBC has not retained a record of its prevailing best lending rate. Citi therefore used a methodology (described below) to calculate a proxy for HSBC’s best lending rate for the period from 6 October 2006 to 31 December 2008 and employed that proxy as a substitute for “prime” in the applicable “prime plus 1%” rate for pre-judgment interest.

4. The methodology used by Citi to calculate the proxy used by it to calculate a substitute for the prime rate of interest was based on the fact that, from at least 1 January 2009 until the date of judgment in this appeal, HSBC’s best lending rates were consistently 0.75% lower than the corresponding historical US Dollar prime rates published by JP Morgan Chase & Co (“the JP Morgan US Rates”). Citi therefore used rates that were 0.75% lower than the JP Morgan US Rates as a proxy for prime and so was thereby able to apply prime plus 1% in calculating the pre-judgment interest.

5. For its part, Tugu disputes the appropriateness of the proxy used by Citi for pre-judgment interest in the period prior to 2009. In correspondence between the parties, it proposed that pre-judgment interest should be calculated based on the US Dollar prime rates published by JP Morgan and the Bank of America. This would result in an additional amount of interest in the sum of approximately US$5.3 million as compared with the method of calculation adopted by Citi. Subsequently, Tugu further proposed that the US Dollar prime rates published by Citi should instead be used as the basis of calculating pre- and post-judgment interest.

6. Interest is awarded on a judgment sum as a way to compensate a successful plaintiff for being kept out of his money for a peri