KWOK SIU MING SIMON v. ROTHSCHILD BANK AG AND OTHERS

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JUDGMENT

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1. This is the judgment in High Court Commercial List No. 140 of 1997 between Kwok Siu-ming, Simon, Plaintiff, and Huang Yuan-yuan, lan, Aug Su-wen, Pauline, and Alidex Portfolio SA, Defendants.

2. On 12^th July 1997, the manager of the Hennessy Road Branch of the Hongkong Bank (the "Bank") received a letter under the signature of the Plaintiff herein, Mr. Simon Kwok. It was a letter authorizing the Bank 'to make a remittance of US$3,232,000.00 to Rothschild Bank AG, Zurich, Switzerland ...., in the reference of Mr CHUWTSAMUEL" and further requesting the debit amount and charges to be taken from Account No. 495-323735-001. The Bank duly complied with this request, and by a remittance advice dated 14^th July 1997, addressed to the Plaintiff, the Bank confirmed that this remittance had taken place.

3. As a matter of interest, the account of the Plaintiff from which the remittance had been made contained an overdraft line of HK$25,000,000.00, and after the remittance in question only about HK$6,000.00 remained available in this account; in other words, the remittance had virtually exhausted the available monies in the account.

4. The problem with what, on its face, appeared to be an unremarkable, albeit significant, transaction was that until the remittance advice was first drawn to his attention on 25^th July 1997, Mr Kwok, the Chairman of a well known and Hong Kong publicly-listed company, Sa Sa Cosmetic Company Limited, knew nothing whatever about the transfer of these monies, the bulk of which, I am told by Counsel, currently remain frozen in the Rothschild Bank in Zurich and are the subject of a restraining order granted by a Swiss Court upon a request for assistance by the Hong Kong Department of Justice pursuant to arrangements between Switzerland and Hong Kong under the Mutual Legal Assistance in Criminal Matters Ordinance, Cap.525.

5. It is these events which form the subject matter of this case, wherein Mr. Kwok seeks the recovery of these monies and sues his former personal assistant, Miss Pauline Ang Su-wen, the 3^rd Defendant, her companion Mr Ian Huang Yuan-yuan, the 2^nd Defendant, and a BVI company known as Alidex Portfolio SA, the 4^th Defendant herein, which company appears, at the very least, to be the nominee of and controlled by Mr. Lan Huang, and in whose name he established the account at the Rothschild Bank in Zurich into which the remittance of US$3,230,000.00 was placed.

6. In a nutshell, Mr Kwok comes to this Court and says that he has been the subject of a well-planned fraud executed by Miss Ang and Mr Huang, and in which the Rothschild Bank finds itself an unwitting participant. In this latter respect, although proceedings were originally issued against the Rothschild Bank AG as 1^st Defendant herein, I am informed that subsequent to the Writ, the action against the Rothschild Bank was not pursued, and indeed the case against that bank has recently formally been discontinued by the Plaintiff.

7. In response, and on the face of the pleadings at least, Mr Kwok's allegations are strongly denied by Mr Huang, Miss Ang and Alidex. In the Points of Defence and Counterclaim filed on behalf of the 2^nd, 3^rd and 4^th Defendants, it is alleged that through the introduction of Miss Ang , Mr Huang met Mr Kwok in December 1996, and thereafter engaged in a series of meetings with Mr Kwok which culminated in a joint venture agreement for the development and production of mobile video telephones.

8. It is further alleged that in April 1997 Mr Kwok actually committed himself to participating in the joint venture, but that he asked Mr Huang to wait until after Mr Kwok's cosmetics company, Sa Sa, had been listed on the Hong Kong Stock Exchange in June 1997, and that thereafter by a written Investment Agreement dated 24^th June 1997, Mr Kwok agreed to invest US$3 million from his personal funds into the joint venture. Pursuant to this Agreement, it is further pleaded that Mr Huang opened an account with Mr Kwok for the purpose of the joint venture, which account was subsequently changed into the name of Alidex Portfolio SA, the 4^th Defendant herein, on 14^th July 1997.

9. And further it is said that on or about 5^th July 1997 an oral agreement was reached between Mr Kwok and Mr Huang, wherein Mr Huang personally agreed not to act in competition with the joint venture, the price for such being apparently US$230,000.00. The end result of this, pursuant to the foregoing arrangements alleged to have taken place between Mr Huang and Mr Kwok, was that, and here I quote from paragraph 13 of the Defence:

"The Plaintiff authorized a remittance of US$3,230,000.00 from his account with the Hongkong & Shanghai Banking Corporation Limited and that the said funds were then duly remitted to the joint venture account following upon the confirmation by the Plaintiff and/or his authorized agent to an officer or officers of the Hongkong & Shanghai Banking Corporation Limited that the remittance was in accordance with the Plaintiff's instructions and upon the usual checks being undertaken by the staff of the said bank."

10. Given such diametrically opposing versions of events, one or other of these accounts was clearly false, and no doubt it was reasonable to anticipate that at this trial the respective versions would be tested, and that the Court would be able to determine, as between the two accounts, where the untruth lay. Regrettably however, this has not occurred, and the Court has been denied the opportunity of evaluating the evidence of each side.

11. During the week preceding the commencement of this trial, the 2^nd, 3^rd and 4^th Defendants made fax applications to the Court seeking to postpone the case and to vacate the trial dates. These requests were rejected by this Court. It has been made clear to the Defendants that the case would commence in this Court on the morning of Monday 16^th November at 10 a.m. and that any such adjournment application should be made upon an inter partes basis.

12. Notwithstanding this direction, however, Miss Ang and Mr Huang, who had given a Singapore address and fax number in the communications to which I have referred, did not choose to come Hong Kong to attend this case, whether on the first day or thereafter. The end result of this was that only the Plaintiff appears, represented by Mr Alan Leong S.C. together with his junior, Mr Paul Shieh. In his opening address Mr Leong reviewed the history of the case to-date, including the fact that these Defendants appeared to have been represented in the past by probably three sets of solicitors, and certainly two, and he asked the Court firmly to reject any request for an adjournment, and not to countenance any suggestion of further delay in all the circumstances of this case. In the event, after considering the situation, the submissions of Mr Leong and the Court's direction upon the matter of the previous week, and having taken into account the fact that the 2^nd and 3^rd Defendants have clearly elected not to attend this trial, the Court permitted the case to proceed.

13. In the course of this hearing, a total of six witnesses of fact were called on behalf of the Plaintiff of which the main witness was Mr Simon Kwok himself. I found Mr Kwok to be both impressive and believable in his evidence. A self-made and obviously highly successful businessman with, on his own admission, little formal education and little grasp of English, particularly in its written form. Mr Kwok told the Court that he had hired the 3^rd Defendant, Miss Pauline Ang, whose educational qualifications (subsequently found to be highly questionable) appeared impressive, to be his personal assistant in early December 1996. This was at the outset of a period immediately before the public listing of his company, and one of Miss Ang's main functions was to present documents for his signature, at the same time explaining the contents thereof if necessary, and particularly and necessarily so if these documents were in English. In addition, Miss Ang was also in charge of, and had full access to, all of Mr Kwok's personal banking matters.

14. Nor, asserted Mr Kwok, had he ever had any dealings with Mr Ian Huang, the 2^nd Defendant herein, far less entered into any alleged joint venture agreement. Indeed, Mr Kwok said that the only occasion that he had laid eyes on this particular gentleman was upon one occasion when he had been introduced to Mr Huang by Miss Ang as "my husband" at a time when Mr Kwok was simply passing through his office and had encountered this gentleman sitting at Miss Ang's desk. As Mr Kwok recalled, he had either nodded or simply said hello or both, but that that was the extent of his contact, and that there had been no subsequent contact or meeting with Mr Huang whatsoever.

15. In his evidence Mr Kwok was unable to state categorically that his signature on the bank authorization letter of 12^th July 1997 was a forgery. More likely, he thought, is that the nature of the document in question (which unlike previous legitimate authorizations for money transfers, on this occasion contained no Arabic numerals designating the monetary amount, and which also contained reference to the name of his friend and business associate, Mr Samuel W T Chu) had been misrepresented to him by Miss Ang amongst the huge amount of documentation he had been required to sign on a daily basis. As he said in evidence to this Court, he had had no time during that period of his life to read every document. His weakest point was his very poor English ability, and that he "had to trust" the personal assistant who 'was employed to explain English documents to me for my signature".

16. I accept Mr Kwok's evidence without hesitation, as I do the other evidence called on his behalf, the bulk of which dealt with circumstantial matters, in particular the duties of Miss Ang in the office, her departure on holiday on 19^th July 1997, ostensibly to visit her sick mother, and the discovery in her absence of the remittance advice from the Hongkong Bank, and the increasingly urgent enquiries which followed, including reports made to the Commercial Crime authorities whom, I am told, remain interested in the case. The bank remittance advice did not in fact come to light until 24^th July 1997 when the unopened mail on Miss Ang's desk was opened and thereafter on the following day, that is 25^th July 1997, the matter was brought to Mr Kwok's attention, and he began to investigate the situation.

17. Perhaps also I should refer specifically to the evidence of Miss Pamela Fong, a supplier of cosmetics to Mr Kwok's company, who alluded to a meeting with Mr Kwok on the afternoon upon which it appears to have been alleged that Mr Kwok received a signed copy of the joint venture agreement from Mr lan Huang, thereafter allegedly endorsing his own signature thereon before faxing it back to Mr Huang. In this connection, Miss Fong said that to her knowledge during the meeting in Mr Kwok's room on 24^thJune 1997 between 5.30-7.00 p.m. she had not seen him using a fax machine to send and receive any document.

18. Interestingly in this context, the alleged Joint Venture Agreement, which is in the bundle of documents before the Court and which was allegedly so signed by Mr Kwok, contains at the top of the document the answer-back legend "Simon Kwok, 24^thJune 1997 5.47 p.m.", and in evidence Mr Kwok described running a test on his fax machine after the event, thereby demonstrating that his fax machine used a different typeface to the answer-back appearing upon the alleged Agreement.

19. After having reviewed all the evidence placed before me, I am in no doubt whatever, and find as a fact, that Mr Kwok has been the victim of a skilful and well-planned fraud perpetrated by Miss Ang and Mr Huang acting in concert, and that the relevant monetary transfer of US$3.23 million was facilitated by a misrepresentation on the part of Miss Ang, who was acting in breach of the trust Mr Kwok clearly reposed in her.

20. On the evidence, the probabilities are overwhelming that, although he cannot say precisely when it happened, Mr Kwok was induced to sign the letter of authorization by Miss Ang without having had the true contents explained to him -indeed I have no doubt by having had the contents misrepresented to him - and this against the background wherein so far as one can see from the discovered documents, in late June 1997 Mr Huang had set up the relevant account with the Rothschild Bank in Zurich to await the receipt of the US$3,230,000.00 sum.

21. I note in passing here that on the evidence before the Court, there appear also to have been three other unauthorized remittance instructions, not the subject of a claim in these proceedings, and of which Mr Kwok was at the time unaware, with regard to one of which ostensibly to a Maria Louisa Huang (thought to be Mr lan Huang's first wife), Mr Kwok has been unable to recover the US$125,000.00 so "remitted". However, as I have said, these other matters are not the subject of the present proceedings, at least in terms of Mr Kwok's claim, and I say no more about them. Against this background therefore, it is perhaps unsurprising that in the circumstances Mr Kwok actually received a letter from Miss Ang dated 31^st July 1997 wherein Miss Ang observed that she was "shocked and disturbed" to learn that "she has become a suspect of an unfortunate incident concerning Mr Kwok while I have been away' and that 'due to the seriousness of the accusation I have been advised by my lawyer to request for an extended period of leave until such matter settles".

22. I also find as a fact that Mr Kwok had no business dealings of any kind with Mr Ian Huang, and that he was not knowingly a party to the alleged Investment Agreement dated 24^thJune 1997. Once again the overwhelming probabilities are that in the circumstances prevailing, Mr Kwok was induced by Miss Ang's misrepresentation to sign this particular document in the like manner as he had been induced to sign the letter of authorization to the Bank.

23. I have had the advantage in this case of excellent skeleton arguments from Counsel in terms both of the opening and closing submissions, and I have no hesitation upon the evidence in accepting the case as advanced by the Plaintiff against the 2^nd, 3^rd and 4^th Defendants respectively. In this connection Mr Leong puts his case against Miss Ang in terms of the breach of fiduciary duty owed by Miss Ang to Mr Kwok, at least in relation to Mr Kwok's personal financial affairs, in terms of a conspiracy to commit a wrongful act with intention to injure Mr Kwok, and finally also in terms of an allegation that Miss Ang holds any monies she may have as constructive trustee. As against Mr Huang, the 2^nd Defendant, Mr Leong runs the like causes of action with the addition that he says that Mr Huang knowingly assisted Miss Ang in her breach of fiduciary duty, and as against Alidex, which I have taken throughout, again on the over-overwhelming probabilities, to be Mr Huang's instrument, Mr Leong has advanced, in addition to the causes of action against Miss Ang and Mr Huang, a case of money had and received. In other words, I accept that Mr Kwok has amply proved his case on liability against the 2^nd, 3^rd and 4^th Defendants herein, and indeed has proved it to a level beyond the normal civil standard of a balance of probabilities, notwithstanding the absence of direct evidence as to precisely when, as a matter of mechanics, Mr Kwok's signature was actually secured both upon the letter of authorization, but also upon the so-called Investment Agreement which also, for the avoidance of doubt, I find to be a sham, and to be a document created solely for the purpose of advancing the story Mr Huang advanced.

24. The result of the foregoing therefore is that the Plaintiff's case succeeds against the 2^nd, 3^dr and 4^th Defendants, and I grant the following relief: