YUNG KA TIM TIMOTHY v. CHEUNG YIN HA SELINA

CACV 69/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 69 OF 1999

(ON APPEAL FROM HCA 1585 OF 1993)

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J U D G M E N T

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Mayo, J.A.:

1. This is an appeal from the judgment of Sears, J. dated 12th January 1999 when he entered judgment for the Plaintiff in the sum of $2 million.

2. The Plaintiff had sued the Defendant on a loan of $900,000 and under an agreement in writing dated 10th July 1992 whereby the Defendant agreed to pay the Plaintiff $2 million in settlement of various claims he was making against her.

3. During the hearing before the Judge the parties agreed that the Plaintiff would not proceed with his claim for the repayment of $900,000 loan and the Defendant agreed not to prosecute the counterclaim she was pursuing against the Plaintiff.

4. It is necessary to consider the background to the dispute between the parties. At the relevant time the Defendant was employed as the vice-president of the private sector banking section of the Manufacturers Hanover Trust Company Bank ("the Bank"). The Plaintiff was one of her customers. The Bank introduced to its customers what they described as a new product which has been referred to as a currency options trading account. Put very simply the customer is required to put up a margin. The Bank then advances large amounts of money which are used to trade in currency futures. As can readily be appreciated this is a highly speculative activity. By its nature it is open-ended. If the market goes against the speculator there is virtually no limit to the losses he can sustain as his stake is highly leveraged. The Defendant recommended to the Plaintiff that he should trade in these options. The procedure which was adopted was for the Defendant to make recommendations to the Plaintiff. If the recommendations were accepted he would then authorise the Defendant to proceed with the transaction. The Plaintiff put up US$140,000. He claimed that he was under the impression that his liability was limited to this stake. Initially all went well. It is common ground that the early trades which were entered into were highly remunerative and the Plaintiff made substantial gains.

5. One of the controversial areas in this litigation was the nature and extent of the authority reposed in the Defendant to enter into trades on his behalf.

6. Be that as it may the Defendant did enter into three trades without informing the Plaintiff. Unfortunately the market went against the Plaintiff.

7. At the beginning of July 1992 the Plaintiff received a telephone call from Mr. David Lam, the Defendant's superior. He suggested a meeting. At the meeting he informed the Plaintiff that if the positions he had taken in the market were to be maintained it would be necessary for him to immediately deposit a further $14 million with the Bank. He went on to explain the extent of his exposure. It transpired that the latest trades which had led to this situation had been placed by the Defendant on the Plaintiff's behalf and that he had not been advised of them. As can be imagined this information came as something of a shock to the Plaintiff.

8. Following this there were a number of meetings between the Plaintiff and the Defendant. It was also relevant to add that the Plaintiff obtained assistance from a friend of his Ms Bonnie Wong who was a qualified solicitor. Ms Wong was also an acquaintance of the Defendant.

9. There were discussions concerning the attitude of the Bank and whether it would agree to some form of compromise along the lines that the Bank would not pursue any claim against the Plaintiff over and above the assets which were presently lodged with them.

10. While the Plaintiff was quite prepared to proceed with discussions along these lines, he was also anxious to seek some form of redress from the Defendant as it was his contention that the Defendant had had no authority to enter into the transactions in question without his knowledge.

11. The Defendant appears to have accepted that she had been in some way responsible for what had transpired. It would also appear that she was fearful that if the Plaintiff was not prepared to resolve the matter amicably with the Bank and was to make complaints concerning her conduct there was a risk that the Bank may terminate her employment with them.

12. Some of the meetings and telephone conversations were taped by the Plaintiff.

13. This briefly was the background against which the agreement of 10th July 1992 was concluded. Ms Wong attended the meeting when the agreement was signed by the Defendant and indeed she drafted the agreement.

14. In the defence and counterclaim the Defendant alleged that she only signed the agreement under duress. The duress under which the Defendant signed the agreement was a threat that if she did not do so action might be instituted against her. She also claimed that she only did so on Ms. Wong's representation that the document was not a legally binding document.

15. At the trial the Defendant was not legally represented. The Plaintiff and the Defendant both gave evidence as did Ms Wong. It is clear from the judgment delivered by the Judge that he found the Plaintiff and Ms Wong to be truthful and reliable witnesses. He did not accept the Defendant's evidence. He found that there was consideration for the agreement and that the Defendant had not been subjected to duress. He was also satisfied that she was fully aware of the nature of the agreement. It was in these circumstances that the Judge found for the Plaintiff.

16. On this appeal the Defendant was represented by Mr. Maurice Ng. The Grounds of Appeal he lodged clearly supersede those prepared by the Defendant.

17. Having regard to the manner in which the first four Grounds of Appeal have been prepared it is convenient to deal with them together.

18. They read as follows:

"1. The finding(s) of facts that there was/were considerations, namely

(a) entering into a settlement agreement with a 3rd party, the superior of the Defendant; and/or

(b) forbearance to sue the Defendant ('the Contract of Compromise'),

for a sum of $2,000,000.00, was/were neither supported by nor consistent with the Plaintiff's evidence in toto.

2. In the alternative to the foregoing paragraph 1 (a), the learned judge erred in law by failing to rule that the Contract of Compromise was made under duress and/or undue influence, namely a threat to prosecute the Defendant by the said and/or another 3rd party, and thus voidable and unenforceable.

3. In the alternative to the foregoing paragraph 1 (b), the learned judge erred in law by failing resolve the conflicts of evidence in, find or rule upon

(a) the causal connection between the said forbearance to sue and the request therefor from the Defendant; and

(b) thus the intention on the part of the Plaintiff to pursue any claims against the Defendant in the first place.

4. For the reasons as set out in the foregoing paragraph, the learned judge ought to have found that the aforesaid claims against the Defendant were invalid and that the Contract of Compromise was void and unenforceable."

19. With respect to counsel these grounds are misconceived. An attempt is made to go behind clear findings of fact. This is not a permissible exercise.

20. The Judge was fully mindful of the background to this dispute. He was aware of the conflicting contentions and was satisfied that the Defendant had felt herself to be responsible for the dilemma the Plaintiff found himself in and was most anxious from her point of view that the Plaintiff should effect a compromise with the Bank as she feared that untoward consequences might otherwise ensue against her. In these circumstances there was ample reason for her to promise to pay the Plaintiff $2 million and there was no reason to believe that any undue influence was exercised upon her. All of this was entirely consistent with the passages which we were referred to from the tapes.

21. As a result of the agreement being entered into between the parties the Plaintiff had a valid claim against the Defendant. These grounds must fail.

22. Ground 5 reads as follows:

"5. Further, the learned judge failed to ensure a fair trial to the Defendant, while acting in person, by failing to:-

(a) explain to her the importance of questioning the witnesses for the Plaintiff upon matters with which she disagreed;

(b) bring out her defence as set out in her Amended Defence, in particular, in the foregoing paragraph 2;

(c) rule the evidence of tapes inadmissible on the grounds that:-

(i) the evidential basis for their admission has not been made out, in particular, the person who taped them and the chain of evidence thereafter; and

(ii) there was no evidence for their authenticity."

23. It is evident from reading the transcript of the proceedings that the Judge did indeed advise the Defendant that she should proceed upon the basis of the amended defence and counterclaim which had been prepared for her.

24. There is a limit to the extent of which a Judge can give guidance and advice to a litigant in person. It has to be remembered that the Judge has to assume an impartial role and he cannot be seen to act as the adviser of one of the protagonists. The case was a relatively simple one and the main issues would not have been difficult for a person of the Defendant's education and background to fully comprehend. It needs to be borne in mind that at the relevant time she was holding down a highly responsible position as a vice-president of a large American Bank.

25. Ground 5(c) does deal with a substantive matter. The Judge did not make a specific ruling that the 39 tape recordings be admitted as evidence. It is however clear from the overall tenor of the judgment that the Judge accepted the Plaintiff as a truthful witness and implicit within this must be an assumption that he accepted that the tape recordings were authentic and that the contents of the tapes should be receivable as evidence.

26. It is also perhaps significant to add that the Defendant did not at any time deny the contents of the tapes. The situation which emerged was that she was unable to reconcile her evidence with what she had said on the tapes. It is also of significance that when addressing us on the evidence at large Mr. Ng submitted that the contents of the tapes were inconsistent with the evidence of the Plaintiff gave in the witness box. It is difficult to see how Mr. Ng can claim this and at the same time question the provenance of the tapes.

27. It needs to be said that the tapes were not particularly helpful as for the most part the conversations were of a rambling and inconclusive nature.

28. This ground must also fail.

29. For the reasons I have given in my view this appeal should be dismissed and the plaintiff should receive his costs.

Wong, J.A.:

30. I agree.

Nazareth, V.-P.:

31. I agree.

32. The Plaintiff's claim was founded on the agreement dated 10th July 1992. The defence in this respect was that the Defendant did not appreciate the legal effect of that document. However, the Judge accepted the evidence of the Plaintiff and rejected that of the Defendant. For the Defendant, Mr Morris Ng, who did not appear below (the Defendant having been unrepresented), now seeks to fault that acceptance by the Judge of the Plaintiff's evidence and the rejection of the Defendant's evidence, primarily, upon the absence of evidence in the tapes of the signing of the agreement. He points out that there appears to be nothing of the day on which that agreement was reached. This is not a matter the Judge could possibly have overlooked. In any case, it is not one that in my view, even comes to close to undermining the conclusions the Judge reached, nor warranting interference with the Judge's conclusion on the credibility of the parties' evidence.

33. I might add that the contents of the tapes upon which Mr Ng sought to rely, which he contended were inconsistent with the Defendant's evidence, also do not in my view warrant interference with those conclusions.

34. The other aspect of Mr Ng's submission before us concerned certain legal points. Having considered those, I have come to the conclusion that they also cannot be sustained. In that regard, I do not find it necessary to add anything to what my Lord, Mayo J.A. has said.

35. I have likewise reached the conclusion that the appeal must be dismissed. I also can see no reason why the Plaintiff should not have his costs.

36. We accordingly dismiss the appeal and having heard counsel, order that the Plaintiff is to have his costs of the appeal.