WOCOM FINANCIAL SERVICES CO LTD v. YU CHOY YEE NGAN

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. The plaintiff sues as assignee of a debt against the defendant on whom notice of the assignment has been given. The claim is in the sum of $2,695,983.12. The assignee of the debt is well representated. The defendant acts in person.

2. On behalf of the plaintiff, an officer of Wocom Commodities Limited gave evidence. He is Mr Christy Choy, nephew of the defendant. Mr Choy returned from America in 1973. The defendant was then known to Mr Choy as having been fairly active in the equity market.

3. Mr Choy joined Troika Securities Limited, a company, I believe, which belongs to the New World Group and rose to the rank of Managing Director. The defendant turned to Troika Securities Limited during the tenure of Mr Christy Choy. When Mr Choy came over to Wocom Commodities Limited in March 1987, his aunt, the defendant, moved over her trading activities with him. Mr Choy accommodated the defendant well. His aunt had the use of his office and was given special authority to contact staff in the dealing room of Wocom Commodities Limited direct. As Mr Choy advanced in his profession, the defendant's trading activities also prospered.

4. The Hong Kong Hang Seng Futures Exchange was established in May 1986. A month or two later, the defendant commenced playing the Index Futures. Margin was naturally required by the Exchange then at the rate of $15,000 per contract. Margin has since been raised.

5. The defendant had, prior to the suspension of the Hong Kong Futures Exchange Market, performed moderately well. The market closed in 1987 October. Suspension was for a period, spanning from the 20th to the 24th October inclusive. During the closure, the defendant communicated with Mr Christy Choy, and upon being requested to pay in further margin she made it quite clear that she was not in the position to oblige. She further mentioned to Mr Christy Choy that her loss was to be limited to her holdings. After the reopening of the Exchange, no similar instructions as to limitation of loss were repeated. Margin demanded from the defendant was not forthcoming and consequently the defendant's position was wholly closed.

6. As a result of the liquidation, the Wocom Commodities Limited claimed against the defendant some $2,651,618.13 which together with interest accrued amounted to $2,695,983.12. The defendant was requested to reimburse Wocom Commodities Limited. She failed so to do as requested. The debt against her by her formal broker, Wocom Commodities Limited, was duly assigned to the plaintiff and notice of the assignment has been given to the defendant.

7. The defendant has had vast experience in this field of activities. She had the assistance of a relative and had been granted various facilities with Wocom Commodities Limited. She signed comprehensive documents authorising Wocom Commodities Limited to demand further margin, to transfer her funds, to liquidate her position and to claim against her as it did. It would appear that no bona fide defence could possibly be mounted to the claim of Wocom Commodities Limited and now the plaintiff's.

8. A great number of allegations have been made, but the defence is reduced to putting the plaintiff to proof and raising a point of illegality. Illegality as alleged is clearly unsustainable by reason of a recent decision in Hong Kong. Richardson Greenshields of Canada (Pacific) Limited v. Keung Chak Kiu & HK Futures Exchange Limited, [1989]1 H.K.L.R. 476. The defendant, being in person, understandably has not pursued that point with any great enthusiasm.

9. The plaintiff has, through Mr Christy Choy, proved each and every stage in the claim as formulated against the defendant.

10. The defendant now complains that she has been impoverished and is unable to meet the plaintiff's claim. She also maintains that her limitation as to loss should have driven the former broker, Wocom Commodities Limited, into action after the reopening of the market in October. That is a departure from her pleaded Defence. She seems to suggest that if the Wocom Commodities Limited had conducted itself in the way she now sees it, matters might very well have been different. Whatever lingering effect her limitation as to loss had on the former broker, Wocom Commodities Limited, after the reopening of the market, it would have been overriden by the terms in the documents signed by the defendant and referred to by Mr Bell, counsel for the plaintiff, and would not have affected the validity of the claim. Under those terms, instructions so given, even if they had been duly repeated, would not have provided the defendant with protection against loss. Needless to say, it is now difficult to tell whether compliance with any such instructions, if possible, would have brought about a different result. Sad it may well be for me to but I do conclude that the plaintiff succeeds against the defendant.

11. Mr Bell seeks interest at usual commercial rate on the capital of $2,651,618.13. Such interest, the plaintiff should have but not at what is being suggested by counsel 10% but 8% per annum from the 4th November 1987 until today. Interest on judgment debt is well regulared by the Rules of Supreme Court.

12. Judgment must therefore be given against the defendant in favour of the plaintiff in the sum of $2,695,983.12 with interest at the rate of 8% per annum on the capital thereof of $2,651,618.13 from the 4th November 1987 until judgment. Costs is to follow the event, payable by the defendant. I so order and direct.