YUEN SHUI CHUN AND ANOTHER v. CUNG SHIRLEY TU NHAN

DCCJ 7251/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 7251 OF 2001

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JUDGMENT

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1. By consent of the parties, it was ordered by me acting as Master in the High Court on 3rd April 2001 that the two Plaintiffs' cases be split and to be heard one after the other. At the present hearing before me, the parties asked for all of the witnesses to be called in one hearing so as to save time and to avoid duplication. I consented to the re-arrangement. I also propose to deliver one judgment dealing with both Plaintiffs' cases. I do not see any conflicts between them.

Background

2. The 1st Plaintiff and the Defendant are friends. The 2nd Plaintiff is a jewel trader and a friend of the 1st Plaintiff. In these proceedings, the Plaintiffs are claiming for the rescission and damages of the contract of the purchases of two ruby rings for fraudulent or negligent misrepresentation. It is the two Plaintiffs' case that the ruby gemstones of the two rings were subsequently tested to be synthetic and not genuine natural rubies.

3. The two Plaintiffs claimed they each bought a ruby ring in early January 1997 from the Defendant in reliance of the certificates from Hong Kong Gems Laboratory GL 1369 and 1370 and the Defendant's representation. The Defendant claimed they had bought the two rings from her husband Hung Lam Kwok (hereinafter referred to as "Hung") not from her. Further, the Defendant claimed she did not make any representations to the Plaintiffs and the Plaintiffs had relied on the expertise of the 2nd Plaintiff, who is a jewel trader himself and the certificates from the Hong Kong Gems Laboratory.

The 1st Plaintiff's case

4. The 1st Plaintiff gave evidence on her own behalf. She claimed she and the Defendant became friends in 1996 and they had gone on two overseas golf trips together in 1996-97. She had regarded the Defendant as a good friend at the time. In early January 1997, the Defendant had shown her some ruby rings and asked her to find purchasers for these rings. She chose a ruby ring which the Defendant had asked for HK$300,000 and she introduced the 2nd Plaintiff to the Defendant. The 2nd Plaintiff also bought a ruby ring from the Defendant for $250,000. The 1st Plaintiff wrote a cheque for the payment of the ruby ring and on the Defendant's instructions made out the payee's name on the cheque to the Defendant's husband. The 2nd Plaintiff also made payment by cheque. He left the payee column blank.

5. The 1st Plaintiff claimed she bought the ruby ring because the Defendant had represented to her it was a genuine ruby and because of the certificate from Hong Kong Gems Laboratory GL13869 (Exhibit P-1) certifying the ruby on the ring to be a natural colour ruby. Under cross-examination, the 1st Plaintiff admitted that after purchasing the said ruby ring the ruby on the ring had been removed and placed in a new ring setting.

6. On or about 25th November 1999, the 1st Plaintiff after reading a newspaper report of the issue of a writ against the Defendant concerning the sale of fake ruby jewellery, became suspicious of the ruby ring she bought from the Defendant. She got in touch with the Defendant immediately, the Defendant denied knowledge and told her to contact her husband in Japan. In early January 2000, together with a friend Jimmy Tsang who also bought a ruby ring from the Defendant, she met with the Defendant and her husband. At that meeting, the Defendant's husband agreed to reimburse Tsang for the ruby ring, however, the Plaintiff's claim for reimbursement was not satisfied.

7. Not having any success with their pursuits for refund, the two Plaintiffs took their ruby rings to Dabera Limited, the Jeweler and Gemological Laboratory (hereinafter referred to as "Dabera") in late January 2000 for examination and it was confirmed by the gemologist at Dabera that both rubies were synthetic rubies.

The 2nd Plaintiff's Case

8. The 2nd Plaintiff's evidence lent support to the 1st Plaintiff's evidence. He said that he was shown a ruby ring by the 1st Plaintiff, he became interested and by arrangement of the 1st Plaintiff, he went with a friend to the office of the 1st Plaintiff's husband where he met the Defendant from whom he bought a ruby ring. He said the reason he bought the ruby ring was because the price was reasonable and that the Defendant was the 1st Plaintiff's friend and the Hong Kong Gems Laboratory certificate number GL 13870 produced by the Defendant that accompanied the ring certified the ruby gemstone to be a natural ruby.

9. Subsequently, he reset the ruby and sold it to a customer. On 25th November 1999, he was informed of the newspaper report by the 1st Plaintiff in late November 1999, he then retrieved the ruby ring from his customer and refunded her. He then took the ruby to Dabera for examination. The result of the examination confirmed the ruby to be a synthetic ruby. The 2nd Plaintiff also had a meeting with the Defendant and her husband at a hotel coffee shop in Tsim Sha Tsui, but he too was unsuccessful in getting his money back.

10. The 1st Plaintiff called PW3 Miss Sue Leung Sui Har the gemologist from Dabera who examined the two rubies handed over by the 1st Plaintiff and the 2nd Plaintiff (the two gemstones produced by PW1 and PW2 were exhibited as exhibited as P.2 and P.5 respectively). PW3 confirmed the examinations conducted by her and the tests undertaken, she certified they were synthetic rubies in her reports (see exhibits P.9 and P. 10).

11. PW3 on the other hand testified that she found the dimensions in width and length of P.2 and P.5 were close to the descriptions of the two gemstones described in GL 1369 and GL 1370 (exhibited as P.1 and P.4), but the differences in the depths of the two gemstones compared to what were stated in P.1 and P.4, were too wide for them to be the same gemstones certified by Hong Kong Gems Laboratory in Exhibit P.1 and P.4, on the other hand, neither could she say positively they were different gemstones.

12. The Defendant does not challenge the chain of evidence from the time the Plaintiffs took the ruby rings to Dabera for examination to the date of trial.

The Defence Case

13. The Defendant gave evidence at the hearing. She claimed that she came to know the 1st Plaintiff and her husband in 1994 at a golf course promotion dinner. She produced photographs taken at the event as supporting evidence. Since then, it is her case that they became good friends, frequently playing golf in Hong Kong and abroad. She also claimed that she would purchase air-tickets from the 1st Plaintiff's husband's travel company whenever she visited her husband who resided and operated a jewellery business in Japan. She said she regarded the 1st Plaintiff as an elder sister.

14. It is the Defendant's case that the 1st Plaintiff had requested her husband to find large size rubies for her after having seen them on a visit to Japan. Her husband, after some effort, was able to find some large size ruby rings for the 1st Plaintiff and took them to Hong Kong on 28th December 1996. She was told that gemologist certificates would be required and through the Tourist Association she found the name and address of Hong Kong Gems Laboratory. After bringing them to the Hong Kong Gems Laboratory for examination, her husband obtained certificates for the ruby rings on 2nd January 1997.

15. On 4th January 1999 before noon, she went to the 1st Plaintiff's office with her husband and it was her husband who showed the 1st Plaintiff a number of ruby rings. They then went to the race-course for horse racing and lunch after the 1st Plaintiff locked up the rings in the office safe. On 6th January 1997, she and her husband went to the 1st Plaintiff's office, there they met the two Plaintiffs and another man. She recalled the 1st and 2nd Plaintiffs had a discussion about the ruby rings with her husband and the 2nd Plaintiff had examined the ruby rings with a jewellery lens. She claimed she then went to the travel office next door to pick up the air-ticket for her husband. By the time she returned, she saw her husband and the Plaintiffs were shaking hands and saying goodbye.

16. It is the Defendant's case that the 2nd Plaintiff had come to examine the ruby rings at the 1st Plaintiff's request, and at the meeting on 6th January 1997, the 1st Plaintiff bought a ring for $300,000, while the 2nd Plaintiff bought one for $250,000. There was no payment until 9th January 1997. On 8th January 1997 her husband had called up the 1st Plaintiff from the airport and finalised the details of price and payment. She was told to go to the 1st Plaintiff's office the next day to pick up two cheques, both made out to her husband. She recalled the two cheques were on the 1st Plaintiff's desk already written out with her husband's name in the payee's column.

17. As to the meeting with the 1st Plaintiff and Mr. Tsang in January 2000 at the Shangri-la Hotel Coffee Shop, the Defendant claimed that it was arranged between her husband and the 1st Plaintiff. Her husband agreed to refund Mr. Tsang his money because he did not wish to lose his friendship with the 1st Plaintiff and her husband. He agreed to arrange the refund by instalments.

18. She claimed she had no interests in jewellery, and had never studied with any gemologists. She worked briefly at her husband's Hong Kong office between 1990-1994. Her husband's jewellery business was in Japan, that he sold jewellery of value under than HK$10,000 and not large size gems. She claimed it was her husband who, on the requests of the 1st Plaintiff, found these large size rubies and sold to the 1st Plaintiff and the 2nd Plaintiff, that was why the two cheques were made out to him. She denied having made any representations to the Plaintiffs.

Findings

19. After hearing evidence from the witnesses and considering the documents filed and articles referred to by the parties, I find the evidence adduced to be unsatisfactory. The reason may be due to the long lapse of time since the events took place or that the witnesses have their own reasons for not disclosing all the facts relevant to the dispute.

20. One of the issues in dispute between the 1st Plaintiff and the Defendant is the year they came to know each other. This may not be an important issue in the case, however, the background and the length of their friendship tend to throw light on the relationship between the 1st Plaintiff and the Defendant at the relevant time. The photographs produced by the Defendant tend to establish that they had met before 1996, and not in 1996 as the 1st Plaintiff insisted in her evidence.

21. From the evidence before me, I am satisfied that the 1st Plaintiff and the Defendant were good friends in 1996-97. They played golf together and often had lunch together. Whenever the Defendant's husband came to Hong Kong from Japan or when the 1st Plaintiff and her husband visited Japan, they would meet and go out together.

22. When the Defendant's husband brought back some ruby rings in late December 1996, the Defendant informed the 1st Plaintiff of it, the 1st Plaintiff expressed great interests, she also informed her friends whom she thought might be interested and this led to the transactions in early January 1997.

23. I am satisfied that the 1st Plaintiff purchased the ruby ring in reliance of the Hong Kong Gems Laboratory certificate without which she would not have bought the ring. I am also satisfied that she also relied on the expertise of the 2nd Plaintiff who had been her jeweller since 1994. She obviously also trusted the Defendant and her husband as they were her friends who were in the jewellery business.

24. It is incumbent on the Plaintiffs to discharge the burden of proof that the two rubies they had taken to Dabera for examination were the same rubies on the two rings they had purchased in January 1997 from the Defendant and her husband. In other words, they have to show exhibit P.2 and P.5 were the same two rubies from the two rings they bought in January 1997.

25. Though there is no dispute from the Defendant on the chain of evidence of the two rubies from the time they were taken to Dabera for examinations in late January 2000 to the date of trial, no admission is made that they were the same gemstones on the two ruby rings sold to the two Plaintiffs.

26. The evidence of identification of the two rubies came from the 2nd Plaintiff. He said he could recognise the two gemstones on the 1st Plaintiff's and his ruby rings by the sizes and colours of the stones. As the size of these stones were not commonly found in the open market, it is his claim that he was able not only to recognise the ruby ring he bought but also the ring the 1st Plaintiff bought.

27. The 1st Plaintiff had difficulties in recalling who reset her ruby ring. Not only could she not recall the date of the resetting, she could not recall where the original ring was or who kept the reset ring after Dabera removed the ruby from the ring for examination. The 2nd Plaintiff when giving evidence at the hearing produced the 1st Plaintiff's ring from which Dabera had removed the ruby (exhibit P-7). His evidence was he did not reset it for the 1st Plaintiff, and that P-7 was a new ring setting. He had kept P-7 for the 1st Plaintiff after he was told the ruby gemstone was removed by Dabera. He was not present when the 1st Plaintiff took the ring to Dabera for examination.

28. Given the inadequacy of the evidence adduced, there is a gap in the evidence which left me in serious doubt as to when and who reset the ruby ring for the 1st Plaintiff. There was no evidence adduced on whether it was the Defendant or her husband who reset the 1st Plaintiff's ruby ring, the Defendant was not cross-examined on this aspect at all. The Defendant on the other hand said in evidence that the 1st Plaintiff had shown her the ring after it was reset. It is of course possible that when the 1st Plaintiff's sent the ruby ring for resetting, the original ruby could have been replaced by another gemstone.

29. The evidence of Miss Leung PW3 the gemologist from Dabera's was that she was unable to say positively that the two ruby gemstones described in the two Hong Kong Gems Laboratory Certificates (P.1 and P.4) were the same stones she examined. When questioned as to whether she was able to identify the two gemstones P-2 and P-5 by sight, PW3 said she is not able to do so. It was her evidence that it is impossible for someone to be able to recognise the same gemstone by sight three years later after having examined it for a short time, unless that person had been in possession of the gem for a long while. This contradicted the evidence of the 2nd Plaintiff who said he had seen the 1st Plaintiff's stone for a short while before the 1st Plaintiff purchased it and perhaps for a second time when the 1st Plaintiff took it to him to seek his advice in resetting the ring later on.

30. PW3's evidence further contradicted the 2nd Plaintiff's evidence that he was able to identify the ruby ring he bought. He had reset the ring and sold it to a customer. Three years later in January 2000, he retrieved it from his customer. According to PW3's evidence, gemologists do not identify gemstones by their colour because colours may vary depending on the lighting and the angle they are viewed. The particulars of the gemstones are recorded after they are measured. The 2nd Plaintiff admitted he did not keep any record of these two ruby rings. It seems he was simply working from his memory of the appearances of the two ruby rings.

31. I find it difficult on a balance of probability to accept that the Plaintiffs were able to positively identify the two rubies from the two ruby rings they purchased in January 1997 were the same gemstones that they had sent to Dabera for examination. It is the gemologist PW3's evidence that after numerous tests on Exhibit P-2 and P-5 the particulars would be recorded, and that she would not identify the stones by simply looking at their colours or sizes. According to PW3, examination of gemstones are performed after the gemstone was removed from the setting of the ring and examined under a microscope. Though different electronic rulers may produce minor different results; the width, length and depth should not vary too much. She agreed that the descriptions of the gemstones in P-1 and P-9, were of two different gemstones and P-4 and P-10 were of two different stones. Though ruby gemstones of 6 karat and such quality is rarely seen in the open market, when comparing the descriptions of P.1 and the gem she tested described in P.9 she found the differences in depth of 6.20 mm in P.1 and her measurement of 6.49 mm in P.9 to be too wide a difference for them to be the same gemstone.

32. The descriptions of the gemstones in P.1 the Hong Kong Gems Laboratory certificate and P.9 the Dabera report are as follows:

	P.1	P.9
weight	6.60/52.53 cts (including setting)	6.60 ct
measurements	12.07 x 9.98 x 6.20 mm	12.12 x 10.01 x 6.49 mm
shape/cut	cushion cut set with diamond in finger ring	transparent oval mixed cut red stone

33. Whereas the differences in the descriptions of the gemstone in Exhibit P.5 that the 2nd Plaintiff produced for examination by PW3 in P.10 and the descriptions of the gemstone in P.4 are even more pronounced. They are:

	P.4	P.10
weight	5.88/8.82 cts (including setting)	5.87 ct
measurements	11.54 x 9.90 x 5.20 mm	11.63 x 10.04 x 6.16 mm
shape/cut	cushion cut set with diamond in finger ring	transparent oval mixed cut red stone

34. When cross-examined by Defence Counsel Mr. Wong, PW3 admitted that though technically difficult, it is possible to get a technician to cut a gemstone to look exactly like another gemstone in appearance and measurement. On 16th February 2000, the two Plaintiffs' then solicitors Messrs. George Tung, Jimmy Ng and Valent Tse wrote to the Hong Kong Gems Laboratory for its comments on the differences in description of the gemstones in P.1 and P.9 and P.4 and P.10. The Hong Kong Gems Laboratory's reply to the two Plaintiff's solicitor's inquiry through its solicitors Messrs. Chan Lau and Wai on 22nd February 2000 was they were not the same gemstones examined by their client. These letters were exhibited in the two Plaintiffs' affirmations filed on 25th February 2000 as" YSC-5 and 6" and "LLH-3 and 4".

35. On the basis of PW3's evidence and the letter in reply from Hong Kong Gems Laboratory of 22nd February 2000, there is no evidence before me that the two Plaintiffs have produced the same two rubies in the two rings they purchased from the Defendant and that they were synthetic rubies rather than natural rubies when they were sold to them by the Defendant. The gemstones could have been replaced at the time of resetting or at any time before it was taken to Dabera for examination in the case of the 1st Plaintiff. And, in the 2nd Plaintiff's case, by his customer or anyone else who had custody of the ruby ring in the three intervening years. I cannot be satisfied on a balance of probability that the two gemstones the Plaintiffs said they purchased from the Defendant were the same two gemstones examined by PW3 and produced at the trial. It follows that the Plaintiff's claim must fail and should be dismissed with costs with certificate for counsel. The payment deposited into Court by the Defendant shall be released and returned to the Defendant forthwith.

36. In view of the above finding, it may not be necessary for me to rule on the question whether the Plaintiffs purchased the two ruby rings from the Defendant or from her husband. However, for the sake of clarity, from the evidence before me, and in view of Paragraphs 4,13, 21 and 24, I find the Plaintiffs had purchased the two rings from the Defendant and her husband.