MICHAEL ERIC ALEXANDER BOS MAK v. WOCOM COMMODITIES LTD

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JUDGMENT

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Mayo, J.A.:

1. This is an appeal from a judgment of Rogers J. The case lasted 69 days during the early part of 1994. The appellant was the plaintiff in these proceedings. He had been a client of the respondent who was the 1st defendant in the court below. The respondents are brokers and deal in futures in commodities and in spot foreign exchange transactions. The other two defendants were accounts executives employed by the respondent who were involved in the transactions which were the subject matter of the proceedings. This appeal does not seek to set aside the orders made by Rogers J concerning these defendants.

2. Put very simply the appellant sold ?0 million sterling short in July 1990. The market went against the appellant. The main issue before Rogers J was whether the appellant had placed a stop loss-order at the Sheraton Hotel in the early hours of 9th July 1990 thus reducing his exposure to the rise in the value of the pound sterling. There were also allegations that subsequent stop loss orders were given during the day which were not executed by the respondent. In point of fact the respondent did eventually close out the position themselves to protect their own interests but by this time the limits which had been imposed by the respondent on the appellant's trading had been exceeded and he was no longer permitted to take positions with the respondent. There was also controversy as to the appellants settlement limit.

3. One of the problems of this litigation was the extensive amendments made to the pleadings by all parties. When the case had originally been due to be heard the issues in general terms were as outlined above. The defendants' case was that they were agents and not principals in respect of spot foreign exchange transactions.

4. Shortly before the hearing the respondent realised that the appellant wished to ventilate the issue that the respondent had acted as an agent and thereby owed him all the duties consistent with such a role. The respondent obtained leave to amend their defence and counterclaim to enable them to plead that they had in fact been acting as principals. The implications of these amendments were such that it was not possible for the trial to proceed as originally envisaged. It was accordingly adjourned for a future date to be fixed so that the case could be prepared by the parties to join this additional issue.

5. When the case did eventually come on for trial before Rogers J this was an important aspect of the case and a considerable amount of time was expended on it.

6. Rogers J heard lengthy evidence from witnesses for the main protagonists. In his lengthy judgment he found that no stop loss orders had been given by the appellant at the times claimed and that notwithstanding the unsatisfactory position concerning the pleadings which we have referred to he was satisfied that the true position was that the respondent had in fact been acting as a principal in respect of the transaction under consideration. He dismissed the appellant's claims and allowed the respondents' counterclaim.

7. The appeal was confined to the issue as to whether the respondent was entitled to act as a principal in these transactions with the appellant. Mr Charles Ching, Q.C. for the appellant accepted that Rogers J's other findings of fact could not realistically be the subject of an appeal.

8. Mr Ching went further. He conceded that the transactions in question had been conducted by the respondent as a principal. This left the sole question of their entitlement so to do.

9. The general agreement for customer accounts which was signed by the appellant commences with this paragraph.

10. From this it can be seen that it was envisaged that the respondent could act either as an agent or as a dealer.

11. Mr Ching submitted quite correctly in our view that the appellant would have to give his informed consent to the respondent acting as a principal.

12. In the context of this case that meant the appellant must have known that the respondent was acting as a principal.

13. There was a great deal of evidence on this. So far as the respondent was concerned reliance was placed mainly upon Mr Leung the 2nd defendant in the action. Mr Leung gave evidence that he clearly advised the appellant at an early stage that the respondent would in his words be acting as banker so far as spot foreign exchange transactions were concerned. He was satisfied that the appellant clearly understood this meant that the respondent would be acting as principal in such transactions.

14. The respondent also placed reliance upon the evidence of Mr Hung the 3rd defendant in the action, Mr Antonio Chan, Mr Kingsley Lai, and Mr William Kwok to establish this knowledge. None of these witnesses claim to have specifically discussed the question of the relationship of principal and agent with the appellant. Their evidence was to the effect that it was manifest from the conduct of the appellant that he must have had this knowledge.

15. What was particularly revealing was the practice of the appellant and also sometimes of his wife to attend at the offices of the respondent at all hours of the day and night and personally witness and take part in the placing of orders. Reference was made to the glass partition whereby the dealers were segregated from clients or accounts executives and the practice of getting quotations from dealers with a price spread and placing orders on the quotations given.

16. One of the matters which occasioned much concern to the appellant was the extent to which dealers would attempt to anticipate what any order might be and adjust the quotation to try and take advantage of this knowledge. This practice was referred to as reading the client.

17. Mr Leung in particular gave evidence concerning what amounted to a game of cat and mouse when the appellant would attempt to mislead the dealers as to his ultimate intentions by getting Mr Lai to seek the quotation and that he, Mr Leung, and the appellant delighted in the apparent annoyance of the dealers when they quoted prices which were contrary to the orders they anticipated the appellant would be placing.

18. All of this evidence indicated in the strongest terms that the appellant was fully aware of the fact that the respondent was acting as principal.

19. As against this evidence the appellant claimed that he had at all times been under the definite impression that the respondent had only been acting as his agent.

20. In his pleaded case a distinction was drawn between orders over ? million or US$2 million and orders under that amount. In the latter case the respondent would act as principal whereas in the former case they would act as agents.

21. His evidence in this respect was to some extent inconsistent with this. He claimed that it had been his understanding that the respondent would be acting as an agent in all cases. He said that so far as transactions under US$2 million were concerned he did not mind how the business was transacted.

22. Mr Ching placed particular reliance upon what was referred to as the white telephone conversation. There was evidence that the parties had been under the mistaken impression that conversations on this telephone were not recorded. A conversation was recorded between the appellant and Mr Hung when they had a discussion on how orders could be placed. Mr Hung did distinguish between orders over and under US$2 million and did say that if orders were placed under that amount they would almost certainly be read by the dealers. On one reading of this lengthy conversation it could be said that Mr Hung's evidence was inconsistent with the

          evidence of other witnesses for the respondent and supported the contention that orders over US$2 million would be dealt with in a different way. It is however necessary to bear in mind that this conversation took place on the 10th July very shortly after the events of the 9th and another interpretation of the conversation was that Mr Hung and the appellant were considering ways by which it might be possible for the appellant to resume trading at a reduced level. In any event Rogers J in considering the evidence as a whole was not persuaded by this one telephone conversation that the appellant's evidence concerning his knowledge of the respondent acting as a principal should be preferred to the respondent's evidence.

23. In very general terms this outlines the main evidence which was before Rogers J on this issue. On the basis of this evidence Rogers J rejected the evidence of the appellant's witnesses and accepted the evidence of the respondent's witnesses. It is also true to state that he gave fairly detailed reasons for coming to the conclusion he did.

24. Mr Ching made detailed submissions to us that for the reasons he gave it was inherently improbable that the appellant was aware that the respondent was acting as a principal.

25. Before commenting upon Mr Ching's submissions it may be helpful to consider the extent of which it is legitimate for us to interfere with findings of fact which have been made by a trial judge. Power V-P who delivered the judgment of the Court of Appeal in Carrian Holdings Limited (in liquidation) v. Crestflame Estate Limited and others (unreported) being CA 205 of 1993 said at p16:

26. With respect I agree entirely with this approach. I am satisfied that the appellant must convince us at this level if he is to succeed in this appeal.

27. One of the main criticisms of Mr Ching related to the unsatisfactory state of the pleadings we have earlier indicated. He argued that if the respondent itself was so uncertain of its role that it pleaded its case on the basis of their being agents until a late stage in the litigation it is difficult to see why Mr Leung would have advised the appellant when he did that the respondent was acting as a principal when accepting instructions relating to spot foreign exchange transactions.

28. This was a matter which was canvassed at length before Rogers J. He accepted that the position concerning the pleadings was less than satisfactory. He was however satisfied after hearing all of the evidence that the appellant was indeed aware of the fact the respondent was acting as a principal. Having regard to all of the evidence I do not think that it was improbable that the appellant had this knowledge.

29. The next criticism was levelled at the overall improbability of the appellant agreeing to trade with the respondent on such disadvantageous terms. In particular Mr Ching referred to the trading authorisation form which had been signed by the appellant on behalf of Pyrenee Limited as an example of the very one-sided nature of the arrangement between the parties.

          "TRADING AUTHORISATION

To: WOCOM COMMODITIES LIMITED Hong Kong.

The undersigned hereby authorises_______________as his agent and attorney-in-fact to buy and sell (including short sales) at any time and from time to time in his absolute discretion securities and securities options, foreign exchange contracts and or options, commodities, commodities futures and/or options on margin or otherwise for the undersigned's account and risk. The undersigned hereby agrees to indemnify and hold you harmless form all costs (including legal) due to losses indebtedness and liabilities arising from all and any such dealings effected by the said________________on behalf of the undersigned which shall bind the undersigned absolutely, the undersigned hereby expressly acknowledging the total absence of any actual or imputed connection or relationship whatsoever between you and the aforesaid agent in the implementation of all or any of the powers conferred hereby.

In all such purchases and sales you are authorised to follow the instructions of the aforesaid agent in every respect concerning the undersigned's account with you; and except as herein otherwise provided, he is authorised to act for the undersigned in the same manner and with the same force and effect as the undersigned might or could do with respect to such purchases and sales as well as with respect to all other things necessary or incidental thereto except that he is not authorised to withdraw any money, securities, or other property either in the name of the undersigned or otherwise.

The undersigned shall at all times maintain with you in such form as you may require, such margins or deposits of value satisfactory to you in excess of the amount of indebtedness or obligations to you of the undersigned and which amount may be greater than that required by the Rules of any Association, Exchange and/or relevant Clearing House or Market.

The undersigned hereby ratifies and confirms any and all transactions with you heretofore or hereafter made by the aforesaid agent on behalf of or for the account of the undersigned.

The undersigned further confirms that the aforesaid agent may appoint and remove at pleasure any substitute under him with the same or more limited powers for all or any of the purposes or matters conferred hereby and contained herein.

This authorisation and indemnity is in addition to and in no way limits or restricts any rights which you may have under any other agreement or agreements between you and the undersigned, and in particular under the General Agreement for Customer Accounts entered into with you by the undersigned.

This authorisation and indemnity is a continuing one and shall remain in full force and effect until and unless revoked upon the happening of any of the following events:-

Such revocation shall not affect any liability in any way resulting from transactions initiated prior to such revocation and in the event of any dispute as to whether or not any such revocation has properly been communicated to you your statement as to the date of the receipt (if any) of such revocation shall be final. This authorisation and indemnity shall inure to your benefit and that of your successors and assigns."

30. It was evident from these conditions that the appellant was reposing almost unlimited authority in Mr Leung an employee of the principal he was alleged to be dealing with. He would be required to ratify transactions which Mr Leung had entered into which may be grossly disadvantageous to him. No one in their right mind would enter into such a one-sided agreement.

31. This argument appears to overlook a number of the surrounding circumstances when the authority was given. The appellant was being permitted to open highly speculative positions without providing any security to the respondent. In such a situation it was clearly necessary for the respondent to protect itself in fairly comprehensive terms.

32. Rogers J accepted that it was an unusual situation. I think that he was also entitled to assume that it was by no means inconceivable that a person obtaining the advantages that the appellant did would agree to enter into business transactions with the respondent even though they would be acting as principals. It is perhaps relevant to observe that prior to the unfortunate speculations in July 1990 the appellant's account was at one time in credit for a very substantial sum.

33. It was certainly not "glaringly improbable" that a young man such as the appellant, would agree to enter into an agreement on the terms he did.

34. Another part of the evidence referred to by Mr Ching was the complaint made by the appellant in about the middle of 1989 concerning his trading activities. It would appear to be common ground that a complaint was made. According to the appellant he had been dissatisfied with the price which had been obtained when he had given instructions to the respondent to sell short on one occasion. He had found that the price he had been given was the most disadvantageous one for the whole of the day. He had suspected that the respondent had swallowed the price. That is it had acted as principal on the transaction. He had complained to Mr Leung who had passed the complaint on to Mr Antonio Chan. Mr Chan had seen him and discussed the matter with him and advised him of the difficulty of holding quotes open on a volatile market. Also he had succeeded in convincing the appellant that the transaction had been effected at the price stated.

35. Mr Ching submitted that this evidence was undoubtedly more consistent with the appellant trading with the respondent as an agent. Why otherwise would he be concerned if the respondent had swallowed a profit. The evidence taken as a whole fell short of necessarily establishing that any documents had been seen by the appellant indicating the involvement of any third party or principal. Also it was never suggested that either Mr Leung or Mr Antonio Chan had made any representations to the effect that any principal or third party had participated in the transaction.

36. Like the other matters I have referred to this evidence may on one interpretation have been favourable to the contentions being advanced by the appellant. However what is important to bear in mind is that there was also a plenitude of evidence the other way before Rogers J.

37. The simple fact of the matter was that after careful analysis Rogers J came to the conclusion that the evidence of the respondent's witnesses was much to be preferred to the evidence of the appellant's witnesses.

38. We cannot see any justification for interfering with the conclusions which were reached by Rogers J. Certainly adopting the criteria referred to by Power V-P in Carrian Holdings Ltd (in liquidation) v. Crestflame Estates and others the appellant falls far short of satisfying us that this appeal can succeed. I would be disposed to dismiss this appeal and make an order nisi that costs should follow the event.

Mortimer JA:

39. On 21st June 1994 Rogers J after a lengthy trial dismissed the plaintiff's (the appellant's) claim and awarded the 1st defendant (respondent) HK$28,117,211.02 on its counterclaim. The appellant's action was for losses incurred in spot foreign exchange trading with the respondent. The counterclaim was for money due and owing on the same contract. The 2nd and 3rd defendants (not parties to this appeal) were account executives for the respondent with whom the appellant dealt.

The Background

40. I am content to take the facts from the judgment. The respondent was a broker and dealer in commodities and foreign exchange. On the judge's finding, which is not challenged, it always acted as a principal in spot foreign exchange contracts.

41. After about 1985 the appellant dealt with the respondent through his family company. The dealings were in commodities. These included contracts in loco London Gold and loco Comex - in both of which the respondent acted as a principal - and a few dealings in foreign exchange. In September 1988 the appellant opened his own account with the respondent and thereafter until July 1990 he traded in commodities and foreign exchange.

42. From early 1990 until the events leading to this action, the respondent permitted the appellant to deal in foreign exchange contracts up to the value of US$40m or £40m without margin or collateral provided his losses were below US$2m. Any excess of this had to be settled within 36 hours.

43. The account was in the appellant's favour from the end of April until 26th June 1990 when it went into deficit. Two days later his settlement limit was reduced to US$1m. On 2nd July he sold two lots of £20m short. Sterling moved against him. Margin calls were made and after many phone calls, meetings, anxious discussions and indecision his positions were closed by the respondent at 3.45 pm 9th July 1990 with the loss later recovered by the respondent on its counterclaim.

The Issues at Trial

44. There were four main issues at trial:

45. The judge found all these issues against the appellant. In this appeal he challenges the finding that he knew that the respondent was acting as principal in these contracts in the sense that he had given his informed consent that it should act as a principal. The real issue is whether the appellant knew that his dealings with the respondent were principal to principal. The appellant was experienced in this field. If he knew that this was the nature of the dealing and continued to deal with the respondent thereafter the facts bear no interpretation other than that he had given "informed consent" for principal to principal trading.

The Issue on Appeal

46. There is one issue. Was the judge in error when he found that the appellant knew at all material times that the respondent was acting as a principal in the spot forex transactions?

47. This is a question of fact. The approach of this Court whether a judge's decision on fact is challenged is well-known. The case is reheard on the transcript. If convinced that the judge was wrong, it is the duty of the court to make its own finding. However, where the finding depends wholly or in part upon the credibility of witnesses, the judge has a great advantage over this Court and it will be necessary to demonstrate that the judge failed to make use of his special advantage because the witnesses's evidence is vitiated by glaring improbability, an objective fact, a conclusive document or the like. See Carrian Holdings Ltd v Crestflame Estates Ltd and others Civil Appeal No.205 of 1993 and the cases therein cited.

The Appellant's Submissions

48. Mr Ching Q.C., for the plaintiff, submits that we should not hesitate to reverse the judge on this issue. He submits that he is able to demonstrate that the judge's finding was wrong and that he failed to use, or that he misused, his advantage.

49. First, he contends that the judge allowed his mind to be clouded on this issue by the adverse view he took of the evidence given on the other issues by the plaintiff, his wife and his witness. This, he says, is demonstrated by the judge's extravagant language used in his assessment, for example, in evaluating the appellant at p.67P:

"It is an inevitable conclusion of the findings which I have already made that the Plaintiff has acted not only as a liar but as a knave in the most acerbic sense of that word. Having seen him at length in witness box, this is the conclusion to which I feel I must inevitably come."

50. Secondly, Mr Ching submits that the judge can demonstrably be shown to be in error by certain objective facts and documents and by the inherent probabilities. These, he submits, are conclusive of the judge's error.

51. The chief matters upon which he relied are briefly summarised:

(The plaintiff never saw or relied upon the external documents. I regard them as irrelevant and Mr Ching did not press his submission upon them. I make no further reference to them.)

52. Many passages in the transcript were put before the Court to illustrate these submissions. Some of the matters urged require further consideration.

The Inherent Probabilities

53. Lengthy and detailed submissions were made in an attempt to establish this point. It is important to identify its scope and effect. This does not go to challenging the judge's finding that the respondent was acting as a principal. This finding is not challenged. Mr Ching seeks to show that absent evidence to the contrary, the plaintiff's understanding must have been that the respondent was acting at all times as his agent in these transactions.

54. The judge rejected the appellant's evidence on this issue and it is rightly submitted that this rejection does not establish the contrary. However, the acceptance by the appellant on appeal that the respondent was acting as a principal coupled with the rejection by the judge of his evidence that he understood the respondent to be his agent considerably narrows the scope of the argument.

55. Much reliance was placed upon the nature of the dealing and in particular some of the anomalies which arose from the principal/principal relationship in which the respondent fixed the prices at which it was prepared to trade. Chief of these were:

56. A number of passages in the evidence were advanced to demonstrate the anomalies contended for.

The Internal Documents

57. The best that can be said of the internal documents is that they are unclear. The documents provided to the appellant by the respondent for the dealing in forex clearly provide that the respondent could act as either broker or dealer. They are not matters upon which the applicant can successfully rely.

58. The other document heavily relied upon by the appellant at trial was a memorandum referring to the "two point charge" from Antonio Chan - the respondent's senior dealer - and his evidence upon it. This did little to clarify the meaning of the memorandum relating to the two points charged for large deals and the reasons for the charge. The point made here and below is that this charge was an agent's commission and clearly indicated that the respondent acted as agent for deals over $2m. But in fact - as found by the judge - the document and the evidence were both unclear and do not demonstrate that the judge was in error.

The Pleadings

59. The respondent's concession in the original pleadings to the effect that it acted as agent which remained unamended until very late and confirmed by further and better particulars was a significant matter for the judge's consideration, particularly in his assessment of the respondent's witnesses's credibility. Much time was spent at trial investigating the history of the pleading and the reasons for the "errors". The applicant repeats here the submissions made to the judge.

60. A particular matter urged upon us relates to a meeting between the appellant and Antonio Chan and the 2nd defendant between May and July 1989 alleged in para 10(d)(iv) of the reply to have been held following a complaint by the appellant that the respondent was taking a secret profit (had "swallowed" the price) and his demand to see evidence that it was acting only as agent. But the appellant did not give evidence in accordance with the pleading. The point fell to the ground at trial and there is no more force in it now. If anything, documents which were produced to the appellant and which satisfied him at the time were more consistent with the respondent acting as principal than as agent.

The Submissions compared with the Judge's Reasoning

61. For my part, I can find no good reason for concluding that the judge allowed himself to become partial or allowed his assessment of this issue to be clouded by his adverse view of the appellant's case and evidence on the other issues. Undoubtedly he expressed himself in trenchant terms. There is no basis for concluding that the language he used was other than justified.

62. Similarly, I am not able to find any sound basis upon which to conclude that the judge failed to use his advantage of seeing and hearing the witnesses. The indications both in his judgment and less significantly in his interjections in the course of submissions are that he was concerned to assess the witnesses and their evidence with care. He was particularly circumspect in his approach to the potentially telling points on credibility made on the respondent's pleading. He concluded at p.74G that he did not

"consider that the manner which the pleadings were prepared by the defendants is indicative of the fact that the 1st defendant was indeed acting as agent".

63. He went on to consider the most significant point made upon the "unfortunate" state of the pleadings when he said:

"Rather what I have given careful consideration to is the fact that clearly the 1st Defendant did not convey to its own lawyers precisely the role which it was playing in relation to spot foreign currency. I have, therefore, carefully considered whether, if it had not conveyed that to its own lawyers, it had properly conveyed that to its clients."

64. He concluded that it had. The evidence he accepted was overwhelming. It can be summarised as follows:

65. The judge's last finding is important. He said:

"I couple this with the fact that it is apparent that Mr. Mak spent a great deal of his time in the Wocom offices. He, of course, was not allowed in the dealing room, but he was almost a permanent nightly fixture in the trading hall. Given the way in which dealing was accomplished in particular with the Account Executives obtaining quotes from the dealing room and the dealers in the dealing room shouting "out" when the price changed on the screens, I find it difficult to conceive how that form of trading could have been accomplished, had the 1st Defendant been acting as an agent and obtaining and passing on quotes from banks."

66. The basis can be briefly explained. If the respondent was acting as the appellant's agent, why should the dealing room be kept in the dark as to whether the appellant's bid was to buy or to sell? If the respondent was acting as agent, it would be necessary for it to know whether the appellant as principal was wanting to buy or to sell in order to make the best deal on his behalf.

67. Further, the concern about "reading" shared by the account executives and the appellant was consistent only with the respondent acting as principal. The concern was that the dealer would guess whether the order was to buy or to sell and would adjust the price in the respondent's favour accordingly. An adjustment of the price could only be achieved if the respondent was making the price. The judge heard a huge amount of evidence about the way in which the dealing was carried out at the respondent's premises and the length of time that the appellant spent there trading together with evidence of his experience in the field. I find myself of the same view as the judge. That it is

"difficult to conceive how that form of trading could have been accomplished had the 1st defendant been acting as an agent in obtaining and passing on quotes from the banks".

If this evidence had stood alone it would have required considerable explanation as to how the respondent had accomplished this method of trading as an agent. No such explanation was forthcoming either before the judge or before this Court.

68. All the matters relied upon by the appellant as demonstrating that the judge was in error were considered by him and rejected. Even on the potentially strong points such as the "white telephone" conversation in which the danger of being "read" for deals under $2m was mentioned, the two points charged for deals over $2m as a potential commission, and the difficulties faced by the respondent on its pleadings coupled with the so-called "inherent probabilities", the appellant does not succeed in demonstrating objectively that the judge was wrong in his assessment in any single discrete matter nor in his assessment taken in the round.

69. It was not incumbent upon the judge to deal with every aspect of the case before him but I am impressed by his reasoning. I am not persuaded even that on this evidence I might have found this issue in the plaintiff's favour. I am far from being persuaded that he was wrong to decide this issue as he did. I would dismiss the appeal without hesitation-

Nazareth V-P:

Introduction

70. Mr Charles Ching Q.C. for the appellant, Mr Mak, submitted that the decisive question in this appeal is whether the respondent, Wocom, was entitled to act as principal. He conceded that Wocom in fact acted as principal. But against the background of the parties' transactions, and the agreements and authorisations between them, which provided for Wocom to act as broker or dealer, Mr Ching submitted that Wocom should have first obtained Mr Mak's informed consent before acting as dealer, i.e. principal. He founded that submission upon the nature of the parties' relationship and of the transactions in question.

71. The judge, after recounting the conflicting versions of Mr Mak on the one hand, and that of Wocom's witnesses on the other, dealt with the matter in the following way at p.49N of his judgment:

"Having heard all the evidence, I am satisfied as to two matters. First, that [Wocom] at all times acted as principal in relation to spot foreign currency dealings and, secondly, that [Mr Mak] was well aware of this and went ahead and dealt with [Wocom] on that basis. In those circumstances, that is the end of [Mr Mak's]. case in this respect too."

And at p.55G he added:

"I accept what Mr Kwok says and indeed what Mr Antonio Chan and also what Mr Alan Hung and Mr Kingsley Lai also said about the Plaintiff's behaviour being consistent with knowledge that the 1st defendant was acting as principal in spot forex transactions."

Those are plainly findings of fact, and were accepted as such by counsel. The high threshold that an appellant has to cross to upset a finding of fact by a trial court is not in dispute in this appeal. Mr Ching himself pointed to the recent judgment of this Court in Carrian Holdings Ltd (in liquidation) v Crestflame Estates Ltd and Others, 1993, No. 205 Civil, unreported, from which Mayo JA has cited a particularly apposite passage, indicating the nature of what is required.

72. Mr Ching seeks to discharge that heavy onus by reliance primarily upon the following:

Improbability of a Principal-Principal Relationship, inherently and in the particular circumstances

73. As Mr Robert Tang Q.C. points out, it is common ground that in spot forex currency contracts for up to US$2m, Wocom traded with Mr Mak as principal to principal. Moreover, the indications are that it is common for spot forex currency contracts to be made between principals. Having regard to the competing submissions, which I do not find necessary to adumbrate, it does not seem to me inherently improbable that the relevant relationship was principal-principal. As to any improbability arising from the particular circumstances, again, I am not persuaded that such improbability does arise, a fortiori to any degree that would be significant. True, some of the features of the particular relationship including the terms of the Wocom proforma agreements and authorisations and how they were operated do seem, with reference to Mr Mak, prima facie to have been imprudent and somewhat in adverse in principle. But if that is what Wocom as a broker and dealer exposed to high risks required, and Mr Mak was prepared to go along, I cannot see why the relationship should be regarded as improbable.

Wocom s External and Internal Documents

74. Beginning first with the external documents, these are brochures, director's reports and annual reports. It is submitted that they proclaimed to the world Wocom's primary role as agent and indicate the probability of an agency relationship. Even if that is so, and it is disputed, I find little of assistance in this ground.

75. There is somewhat more in the 1st defendant's internal documents relied upon, primarily a memorandum of one Antonio Chan, Wocom's principal dealer and also a director. There are implications in phrases and a sentence used in the memorandum that suggest that Wocom was acting as an agent. However, the words involved were not those of Mr Chan but an English version prepared by his secretary of his original Chinese.

76. There was also a re-organisation letter sent by Wocom to Mr Mak dated 15th May 1990. Inter alia it stated that Wocom would continue to "act as your broker and dealer for all foreign exchange". I do not see that Mr Mak derives very much assistance from this document either.

Terms and Provisions of the Agreement

77. Mr Ching eloquently highlighted the imprudence and incongruity of some of the provisions of the agreement in relation to Mr Mak, as militating against a principal-principal relationship. However, I am bound to say that it does not seem to me that the conclusion from these was that Mr Mak would not have entered into such an agreement or that they rendered a principal-principal relationship significantly improbable. It would be surprising indeed if in contracts or agreements of the present potentially high-risk sort, did not lead brokers and dealers to insert protective clauses of all sorts in the relevant documentation.

Evidence as to the Conduct and Understanding of the Parties

(a) "Reading"

78. This referred to Wocom's dealing room staff anticipating or guessing Mr Mak's intention, i.e. whether to go long or short on a particular currency, and then quoting a higher price for what they guessed he would seek. It arose out of the reference in the "white telephone" conversation of the 3rd defendant below (Alan Hung) with Mr Mak when both thought it was not being tape recorded. "Reading", it was submitted, pointed strongly to an agency, rather than a principal-principal, relationship. I cannot say I am greatly impressed by the point; "reading" seems to me, to also be consistent with the contrary.

(b) Mr Maks Complaint that Wocom "swallowed the price"

79. It was pleaded in Mr Mak's Amended Reply that on one occasion he complained to Benjamin Leung (Wocom's account executive with whom he first dealt) that Wocom "swallowed the price" (i.e. made a secret profit) when he was billed the highest price of the day which apparently was reached only for a moment or two. Mr Leung arranged a meeting with Antonio Chan who produced a stack of transaction chits to Mr Mak "as proof of the fact that [Wocom] only acted as an agent in the transaction". It was contended on behalf of Mr Mak that the episode indicated an agency as opposed to principal-principal relationship. However, Mr Mak did not give evidence that such was the effect or purpose of the documents. The judge did not make any finding as to the episode. Nor was it pursued in cross-examination on behalf of Mr Mak. And different points were then sought to be made upon it before him. In all the circumstances and considerations I do not think Mr Mak can derive any significant assistance from this matter.

(c) Late Amendment of the Pleadings

80. Originally Wocom expressly pleaded in its defence that it acted as an agent. Very late in the day, and when the implications would have been at least clearer, the defence was amended and an averment that it acted as principal was substituted by Wocom. Plainly, on the face of the matter, this would seem to indicate that Wocom acted as agent or originally believed that it did. Equally, it does not shut out the possibility that the matter was simply a mistake that was overlooked, which following his consideration of the matter, commended itself to the judge. True, he seems erroneously to have thought the matter immaterial at the time as shown by the words "I have no doubt that this matter which was immaterial at the time had escaped the attention of all concerned" (at p.51M of the judgment). But that counts for little for it is now common ground that Wocom did act as principal. This matter, too, avails Mr Mak little.

Conclusion

81. Reverting then to the decisive question identified by Mr Ching, the judge reached his findings of fact in question, particularly that Mr Mak knew Wocom was acting as principal and yet went ahead and dealt with Wocom on that basis, primarily upon the credibility of the witnesses concerned, including Mr Mak. Therefore, on the basis of the dictum of Power V-P in the Crestflame Estates' case, there being no question of the judge having failed to use or having culpably misused his special advantage, or of there being any objective fact or conclusive document that shows that the judge's finding was wrong, one is left to consider whether there is any glaring improbability upon which the appellant could succeed. As indicated by what I have already said, I am satisfied that there is none.

82. It is rare indeed that all the evidence in any matter points one way; and it would be remarkable here where so much of the evidence, particularly that bearing directly upon the question in issue, is the evidence and versions of the several witnesses on both sides, and where so much of the other evidence is neutral or only obliquely bears upon that question. Likewise it is not surprising that Mr Ching was able to contend that so many matters pointed to an agency relationship. In that respect, it is only the more significant of those matters that I have referred to.

83. While some of the matters he relied upon are in the nature of objective facts and documentary evidence which do not involve the credibility of a witness, of themselves none so far as I can see vitiate the judge's finding nor the evidence he relied upon. But clearly they had to be taken into account by the judge; and from his judgment and observations and exchanges drawn to our attention, he clearly did so in reaching his findings and conclusions. In that regard and generally, I should mention that it was on behalf of Mr Mak sought to rely upon the judgment of Sir Derek Cons V-P in Hayton International Ltd v Massoni Treasures (Mandarin) Ltd, 1990, No.125, 23rd October 1990, unreported. But here, unlike that case, no material instance was drawn to our attention of the judge's failure properly to appreciate the value of any contradictory evidence comparable to the contemporary document in that case.

84. Far from finding any glaring improbability which might show that the judge's findings were wrong, I feel bound to say that it seems to me to be that he was right. However that may be, what matters is that the appellant is far from having discharged the heavy onus of showing that the judge's finding of fact was wrong. On the contrary, having regard to the transcripts of the telephone tapes and of the witness's evidence, the facts that Mr Mak is plainly an intelligent and alert person, well-educated in business matters, who virtually lived in Wocom's offices during trading hours, it seems to me that he could not have been unaware that Wocom was acting as principal in his spot forex transactions.

85. For the foregoing reasons, and the reasons given by my Lords, with which I agree, I would also dismiss the appeal, and order nisi that Wocom is to have the costs of the appeal.