WONG LEUNG WING t/a EXPRESS PRINTING AND STATIONERY SUPPLIES v. AMERICAN EXPRESS INTERNATIONAL INC

1989, No. A6504

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an action by the plaintiff against the defendant for damages for breach of contract. Liability is disputed by the defendant on the grounds that the contract was tainted with illegality and is therefore unenforceable being contrary to public policy. The defendant has also filed a counterclaim.

BACKGROUND

2. The plaintiff Mr Wong Leung Wing was the sole proprietor of the Express Printing and Stationery Supplies from 1983 until 1991 when the business ceased. From 1983 until 1988 the plaintiff carried out a number of printing contracts for the defendant in Hong Kong.

3. The defendant produces a cancellation bulletin every two weeks for all service establishments who accept the American Express card in Hong Kong, Asia, Australia and New Zealand which sets out the account numbers of cardholders to whom further credit was not to be extended except with the authorisation of the defendant.

4. On the 15th August 1985, the plaintiff entered into a contract for one year with the defendant to print cancellation bulletins. The contract was renewed on the 15th May 1986 for two years and again for a further period of two years on the 15th November 1988, expiring on the 31st December 1990. The contracts provided for termination by either party upon six months' written notice in advance.

5. When the contract with the plaintiff was renewed in November 1988, Mr Fellman, a Vice-President of the defendant, was responsible for obtaining quotations for the printing of the cancellation bulletins. Mr Antony Fung was employed by the defendant as a manager under Mr Fellman. Mr Fung liaised with Mr Wong in connection with the requirements of the defendant for the printing of the cancellation bulletins. On the 22nd August 1988 Mr Wong wrote to the defendant with regard to a renewal of the contract and requested a revision of the previous pricing arrangement on the grounds of an increase in mailing costs and additional handling charges. It was upon the advice and recommendation of Mr Fung that the contract was renewed on the 15th November 1988. However, it is alleged by the defendant that the grounds for the increase were spurious and were made as a result of a collusive agreement between Mr Wong and Mr Fung.

6. Mr Fung left the employ of the defendant in March 1989.

7. On the 24th July, 1989, Messrs Fred Kan & Co., solicitors, wrote a letter to the defendant on behalf of Mr Fung informing them that Mr Wong had assigned all his rights under the contract with the defendant to Mr Fung. The letter reads as follows -

"Dear Sirs,

Re: Wong Leung Wing trading as Express Printing & Stationery supplies("Express Printing" )

    We act for Mr Fung Shiu Ping. By an assignment ("Assignment") dated 12th day of June, 1989 and made between Mr Wong Leung Wing and our client dated 12th day of June, 1989, the said Wong Leung Wing has assigned all his benefits under a contract ("Contract") in relation to American Express APA Cancellation Bulletin made between the said Wong Leung Wing and your company.

    The Assignment was entered into to secure the performance by the said Wong Leung Wing of his obligations under a Promissory Note dated 9th day of June, 1989. We enclose a certified true copy of the Assignment and the Promissory Note for your reference. The said Wong Leung Wing has defaulted under the said Promissory Note in that the first 2 cheques issued by the said Wong Leung Wing in payment of the 2 instalments under the said Promissory Note have not been honoured. We enclose certified true copies of the said 2 cheques and the related Unpaid Item Memo for your reference.

    Under Clause 4 of the Assignment, our client is entitled to exercise his right under the Assignment and we enclose the signed form of notice by said Wong Leung Wing. You are hereby requested to make all future payment of moneys due to the said Wong Leung Wing under the Contract to, our client.

	Yours faithfully,
	Sd.(Fred Kan & Co.)"

8. This letter obviously came as a surprise to the defendant with the result that Mr Fellman asked Mr Wong to come to see him in order to give an explanation. Six meetings subsequently took place at the end of July and August 1989 between Mr Wong and Mr Fellman, together with other representatives of the defendant including Mr Tooms, Mr Lorigan and Mr Larkworthy. Miss Olivia Fong acted as interpreter at four of the meetings while Mr Yuen interpreted at the last meeting. At the other meeting, Mr Wong made a statement to Mr Michael Lai, a security officer of the defendant who speaks Cantonese so that no interpreter was required. At the meetings Mr Wong admitted that he had signed the assignment and promissory note referred to in the letter from Messrs Fred Kan & Co. but claimed that the documents related to the purchase of paper from Mr Fung. However, the evidence for the defendant was to the effect that Mr Wong admitted paying bribes to Mr Fung in order to obtain the contract with the defendant for printing the cancellation bulletins.

9. At a meeting with Mr Lai on the 4th August 1989, Mr Wong made a written statement in which he stated that he had known Mr Fung since early 1986 and had lent money to him which had been repaid. However, Mr Wong declined to continue with his statement as he said that he wanted to obtain legal advice.

10. At the final meeting with the defendant on the 15th August 1989, Mr Fellman handed a letter to Mr Wong, the relevant parts of which read as follows

        "Dear Mr Wong Leung Wing,

Ref: American Express APA Cancellation Bulletin Contract Dated November 15, 1988

At the start of today's meeting with you on August 15, 1989, I am giving you this letter, and mailing you another copy to your office.

This letter is to advise you of my deep concern and disappointment over the serious issues that have arisen relating to the abovementioned contract between your firm and American Express International, Inc.

........

........

Finally, and equally if not more serious is your statement that the costs of the existing contract dated November 15, 1988 were increased by approximately 10-15% so that you could make payments of HK$25,000 every two (2) weeks to our former American Express employee, Antony Fung, who handled the administrative liaison duties between your company and American Express? This was unknown to myself and all other American Express officials until the receipt recently of an attorney's letter stating that you had defaulted on a promissory note to our ex-employee, Antony Fung, and that you had pledged the APA Cancellation Bulletin contract as collateral. Your recent statements that this promissory note was to continue paying the promised HK$25,000 to Antony Fung every two (2) weeks is highly shocking and construed by myself as participating in a fraudulent practice."

Our efforts to work with you and to try to determine if you have been an innocent victim of our ex-employee have been fruitless since you have failed to keep you promises to assist us and you have not provided the documentation to prove that you were misled.

Based on all of the above (and other questionable issues), I will expect your reply by Thursday, August 17, 1989 as to your contract failures to date and your failure to assist American Express in determining the possible wrong doings of one of our employees.

At this point in time I must advise you that I am considering cancelling the APA Cancellation Bulletin contract and recommending the cancellation of all other business relationships that you might have with American Express.

Sincerely,	Delivery of this letter witnessed by:
Sd. D R Fellman	_________________________
Division Vice President	James R Tooms Operations
Operations
Travel Related Services	_________________________
Asia/Pacific/Australia	Simon Yuen
c.c. Mr Wong Leung Wing"

11. Mr Wong's solicitors, Messrs Kwan & Kwan, replied to the defendant on the 17th August 1989. In particular the following paragraph of that letter is significant and reads:-

"Not to be repetitive, we wish to reiterate that our client is very happy and willing to co-operate with the American Express International Inc Bank. However, our client will elect to adopt his legal right to remain silent on this issue at this stage. We are of the opinion that Mr Wong is entitled to sufficient protection before he volunteers to give evidence (oral or documentary) to assist the AE. Corporation. We appreciate that you also understand our client to be a victim of Mr Antony Fung's unprofessional conduct."

12. The defendant reported the matter to the ICAC by a letter dated the 16th August 1989. Investigations have been carried out by the ICAC but to date, no charge has been preferred against Mr Wong although the investigations are still continuing.

13. The defendant terminated the contract with the plaintiff on the 13th September 1989.

PLEADINGS

14. By the amended statement of claim, the plaintiff  alleged that the repudiation of the contract was accepted on the 25th October 1989 and claims sums due for work done and damages for loss of profit, wasted materials, severance pay for factory workers and claims by contractors for loss of business as a result of the breach of contract and in the alternative, under an oral contract made in 1987. A claim on the grounds of quantum meruit was added at the hearing for the printing and mailing of three issues of the defendant's cancellation bulletins.

15. It is agreed that the plaintiff is entitled to judgment for the sums claimed in paragraphs 12, 17 and 22 of the statement of claim for materials printed which amount to $85,804. It is also accepted that the plaintiff is entitled to recover a reasonable amount for bulletins that he has printed and which have been accepted by the defendant but for which the defendant has not paid. The plaintiff also concedes that if it is held that the cancellation bulletins were inflated by the plaintiff to fund the bribes that he was paying or agreed to pay to Mr Fung, the defendant is entitled to recover from the plaintiff the losses it has suffered as a result of the fraud by reason of the overpayment in respect of the tainted contract. A summary of overpayments was submitted and it was agreed that a sum of $79,343 is due to the plaintiff.

16. By the defence, it is alleged that the contract with the plaintiff is unenforceable by reason of illegality and that it is contrary to public policy to enforce the agreement as a result of financial advantages offered to Mr Fung as an employee of the defendant by favouring the plaintiff in its business dealings with the defendant which constitutes an offence under s 9(2) of the Prevention of Bribery Ordinance, Cap 201. The defence claims that the advantages were paid as an inducement or reward for Mr Fung's assistance or influence in placing the orders for printing services with the plaintiff and the advantages were paid without the knowledge or authority of the defendant. With regard to the alternative plea in respect of the oral contract, it is pleaded by the defendant that any oral contract was collateral to the agreement of the 15th November 1988 and is similarly tainted with illegality. The defendant's counterclaim is limited to a claim for the excess paid by the defendant amounting to 10% based upon an admission made by Mr Wong to Mr Lai. The counterclaim for damages for loss of bargain has been abandoned.

ISSUE TO BE DECIDED

17. The only issue for determination in this case is whether Mr Wong inflated the contract with the defendant for the cancellation bulletins as a result of a collusive agreement with Mr Fung to obtain the contract that enabled him to pay bribes to Mr Fung. Whether or not the bribes were paid is immaterial. The onus of proof lies upon the defendant which must be established to a high degree on the balance of probabilities.

EVIDENCE OF THE PLAINTIFF

18. Mr Wong was the only witness for the plaintiff. He referred to a number of factors that were responsible for the increase in the costs for printing the cancellation bulletins that he requested for the renewal of the contract in November 1988. These mainly related to mailing charges, but also included labour costs, water, electricity, transportation and fuel charges.

Mr Wong claimed that after Mr Fung left the defendant's employment in March 1989, he had one business transaction with him on the 12th June 1989 for the purchase of bible paper for printing the cancellation bulletins for the defendant. He said that he purchased the paper from Mr Fung because it was cheaper by $10 per ream than purchasing from other firms. However, in cross-examination, when his attention was drawn to the proceedings instituted against him by Mr Fung claiming monies due under the promissory note, he said that the price offered by Mr Fung was not particularly cheap and that he was not able to gain any business advantage by buying the paper from him.

19. After entering into the contract with Mr Fung for the purchase of paper, Mr Wong states that he was asked by Mr Fung to sign a written contract for his protection. Accordingly, at the instigation of Mr Fung, he went with him on the 9th June 1989 to Messrs Fred Kan & Co. where he saw one of the partners Mr Wu. He claims that at this meeting it was mentioned to Mr Wu that the contract was for the purchase of paper, but that Mr Wu may not have heard. Mr Wong went on to say that he did not appreciate the contents of the promissory note as he does not understand English. He also said that he misunderstood any explanation that was given by Mr Wu one of the reasons that he gave was because he and Mr Fung were talking at the same time as Mr Wu Nevertheless, although he said that the promissory note was for the purchase of paper, he knew that Mr Fung could look to the defendant for payment if he defaulted. Mr Wong agreed that he signed the promissory note and saw Mr Wu again on the 12th June 1989 to execute the assignment and notice of authorisation. Mr Fung did not attend this appointment. Mr Wong asserted that Mr Wu merely informed him that the document was the same as the promissory note and had the same effect. Mr Wong also drew two cheques each for $55,000 which were subsequently dishonoured due to Mr Fung's failure to deliver the paper in accordance with the contract.

20. Mr Fung's solicitors then wrote to the defendant on the 24th July 1989 to which I have referred, enclosing the notice of authorisation of the assignment of the contract signed by Mr Wong. As a result of the receipt of this letter, Mr Wong agrees that he attended six meetings with representatives of the defendant.

21. At the first meeting on the 27th July 1989, Mr Wong explained to Mr Fellman that the transaction to which the promissory note and assignment related was for the purchase of paper and he produced an application for a letter of credit which had been made by Yieldfield Company Limited which company he said was operated by Mr Fung. He went on to explain that the two cheques were dishonoured because Mr Fung had not delivered the paper which he had contracted to supply.

22. At the other meetings, Mr Wong maintained his denial that he had paid bribes to Mr.Fung, but agreed that he had written out certain figures detailing how the amounts for the production of the cancellation bulletins were allocated. These figures were written out at the request of Mr Tooms at the meeting on the 3rd August 1989. Mr Wong admits that the figures are in his handwriting but not the annotations. This document reads as follows : -

"	8/3/89
	Per meeting with
	Mr Wong/J Tooms
	O. Fong
	This is Printer's
	writing/explanation

(1)		(2)
220000	contract	220000
170000	cost to	170000
	print/mail
50000	profit	50000
25000	-to A Fung	25000
25000	net to	25000
	printer
220000
50000		160000
	170000
	- 25000
	145000

These figures were subsequently confirmed to Mr Fellman by Mr Wong at the meeting on the 7th August 1989. At this meeting, a document was typed on behalf of the defendant which confirmed the details of the figures written by Mr Wong. The document was produced for signature by Mr Wong, but he refused to sign. This document reads as follows : -

"August 7 1989

Mr D R Fellman
American Express Int'1 Inc.
Level 40 I Pacific Place
88 Queensway
Hong Kong

I confirmed that the attached handwritten statistics are my own writing and that they explain approximately what happens to the money I receive from American Express every two (2) weeks:

	HK$220,000.00	each invoice
(-)	HK$170,000.00	cost to produce/mail bulletins
	HK$ 50,000.00	approximate profit
(-)	HK$ 25,000.00	[paid to Antony Fung as
		[requested for his role in
		[obtaining the 1989-1990
	______________	[contract
	HK$ 25,000.00

The payments to Antony Fung have been made since September 1988 and are an ongoing obligation.

Signed _______________________

Witnessed by __________________

Witnessed by __________________"

Mr Wong received a'cheque at this meeting for $170,000 for the cost of the 15th issue of the cancellation bulletin. The balance of $50,000 was withheld by the defendant pending their investigation.

23. Between the meetings with Mr Tooms on the 3rd August 1989 and Mr Fellman on the 7th August 1989, Mr Wong saw Mr Lai for the purpose of making a statement on the 4th August 1989. At this meeting, he mentioned that Mr Fung lent him money from time to time but that repayments were always made on time. However, although he testified that he informed Mr Lai that he had entered into a contract to purchase paper from Mr Fung, no reference is made to this fact in the statement although it was read over and signed. Mr Wong said that at this meeting he was asked by Mr Lai if he would co-operate with the defendant by making a statement that Mr Fung had accepted bribes. Mr Wong however maintained his denial. There was discussion at this meeting concerning Mr Wong's wish to obtain an immunity from prosecution in order that his business relationship with the defendant could continue on condition that he co-operated with the defendant so that the defendant could proceed against Mr Fung.

24. At the final meeting on the 15th August 1989 when Mr Fellman handed_.the letter to Mr Wong to which I have referred, Mr Wong informed Mr Fellman that he was unable to sign as he had been informed that it would be equivalent to an admission of bribes and that he had only paid for paper. Mr Wong mentioned that Mr Fellman had said that an immunity could be obtained if he was prepared to'testify against Mr Fung.

25. Evidence was also given by Mr Wong with reference to the price of paper by reference to a number of invoices in order to justify the figures that he had put forward.

26. Mr Wong conceded that he had never been to a solicitor's firm before for the purpose of signing a contract for the purchase of paper.

27. Mr Fung instituted proceedings against Mr Wong on the 17th August 1989 under the promissory note dated the 9th June 1989 for recovery of the sum of $1,022,000. In that action, Mr Wong filed an affirmation in 0.14 proceedings brought by Mr Fung in which he stated that he had negotiations with Mr Fung for the contracts with the defendant to print materials. However, Mr Wong said that the contract with regard to printing materials could be distinguished from the agreements to print the cancellation bulletins. Mr Fung filed an affirmation dated the 12th December 1989 in which he alleged that he had lent money to Mr Wong for the purpose of investment for certain ventures in which he claims that Mr Wong invited him to join as a silent partner arid that he lent sums amounting to about $822,000. He states that Mr Wong gave to him post dated cash cheques to cover all outstanding sumo in respect of the monies advanced and produced a copy from the copy of a post dated cheque for $822,000 that he received from Mr Wong in March 1989. He went on to say that Mr Wong at the end of 1988 entered into the contract with the defendant to supply printing materials and that in about February 1989, Mr Wong represented to him that he expected the contract to bring him sufficient revenue to repay the money he owed, but that he would require further financial assistance in order to perform his obligations under the contract. Accordingly, Mr Wong requested Mr Fung to open a letter of credit in the name of his company Yieldfield Limited for the purchase of paper in order to perform the contract with the defendant as he did not have funds for this purpose so Mr Fung agreed to this request to enable him to repay the outstanding debts owed to him. Mr Wong denied the allegations that money was lent to him by Mr Fung for the reasons set out and claimed that the sum of $822,000 was paid for all the paper to be supplied until completion of his contract with the defendant, together with the sum of $220,000. He went on to say that the 37 post dated cheques in respect of the paper were torn up by Mr Fung after the cheque for $822,000 had been drawn. He handed the cheques to Mr Fung in March and April before the paper had actually been sold upon the request of Mr Fung for he had already ordered the paper and wanted Mr Wong to give him a guarantee so that he would be paid. Nevertheless, Mr Wong requested Mr Fung not to cash the cheques until the delivery of the paper.

DEFENDANT'S EVIDENCE

28. The defendant called three witnesses at the trial, Mr Wu, the solicitor who prepared the promissory note and assignment, Miss Olivia Fong who acted as the defendant's interpreter and Mr Michael Lai who took a statement from Mr Wong on the 4th August 1989. Statements of Mr Fellman, Mr Tooms and Mr Larkworthy were admitted pursuant to hearsay notices under s.47 of the Evidence ordinance as the witnesses are now overseas.

EVIDENCE OF MR WU

29. Mr Wu gave evidence that he prepared on the instructions of Mr Fung the promissory note of the 9th June 1989 signed by Mr Wong and the assignment of the 12th June 1989 made between Mr Wong and Mr Fung and that he witnessed their signatures. He confirmed that he interpreted the contents and explained the documents to Mr Wong and that Mr Wong nodded his head to the effect that he understood. He was satisfied that Mr Wong understood the contents of the promissory note. Mr Wu denied Mr Wong's allegations that he was unable to hear his explanation because Mr Fung and Mr Wong were talking at the same time. The assignment was not ready for signature on the 9th June 1989 as Mr Wu had not seen the contract between the plaintiff and the defendant. After he received the contract, he prepared the assignment which was signed by Mr Wong on the 12th June 1989 on which occasion Mr Fung did not attend. Mr Wu said that Mr Wong was very concerned about the notice of assignment being given to the defendant after he explained that if any default occurred, notice of default would be given to the defendant. Mr Wu denied Mr Wong's allegation that as he understood what the document was about, all that he had to do was to sign. He also denied that either document had anything to do with the purchase of paper.

30. Mr Wong wrote out 37 cheques corresponding with the repayment schedule in the promissory note which were handed to Mr Fung for which a receipt was given by Mr Wong.

EVIDENCE OF MR MICHAEL LAI

31. Mr Lai said he was present at the meeting on the 1st August 1989 when Mr Wong informed Mr Fellman that he had acted stupidly in signing the promissory note as he could not read English.

32. He said that at the meeting on the 4th August 1989 Mr Wong informed him that Mr Fung had asked him for some advantages in relation to the cancellation bulletins. Mr Wong further said that following a question about the increase in price of the cancellation bulletins, he intended to make an increase of 10%. Mr Fung then suggested that he could make a 20% increase which meant an extra 10% could be added to the contract and to this suggestion Mr Wong agreed. Mr Wong went on to say that he would pay Mr Fung $25,000 every two weeks and that up to the 1st August 1989 he had paid approximately $100,000 to Mr Fung.

33. Mr Lai said that Mr Wong made no reference at the meeting to any contract with Mr Fung for the sale and purchase of paper. Mr Lai also said that Mr Wong discussed with him the question of an immunity but emphasised that Mr Wong made no reference to not having paid any black money to Mr Fung. Mr Lai confirmed that he took a statement from Mr Wong but that after Mr Wong spoke to his lawyer and having received certain advice, refused to continue.

EVIDENCE OF MISS OLIVIA FONG

34. Miss Fong confirmed that she acted as interpreter at the four meetings on the 27th July, 1st, 3rd and 7th August 1989 when Mr Wong attended the defendant's office and saw various representatives of the defendant.

35. She said that at the meeting on the 27th July 1989 when Mr Wong was asked for an explanation, he stated that the promissory note and assignment related to a contract for the supply of paper and that the documents were to provide security for Mr Fung.

36. At the beginning of the meeting on the 1st August 1989, Miss Fong said that Mr Wong admitted that $25,000 was paid to Mr Fung as a favour for helping him to obtain the contract with the defendant. However, she asserted that no reference was made by Mr Wong to a paper contract at this meeting.

37. Miss Fong confirmed that at the meeting on the 3rd August 1989 in the presence of Mr Tooms, Mr Wong wrote down on a piece of paper details of the costs for printing the cancellation bulletins and explained that $25,000 was paid to Mr Fung and $25,000 was the profit for his firm.

38. On the 7th August 1989, Mr Wong attended a meeting at which Mr Fellman and Mr Lorigan, another representative of the defendant, were present when Mr Wong collected the cheque for $170,000. Mr Wong agreed that the typed statement relating to the costs to which I have referred, which was produced at the meeting, was correct, but that he was unable to sign until he had consulted his lawyer.

EVIDENCE OF MR FELLMAN

39. At the meeting on the 27th July 1989, Mr Fellman stated that Mr Wong informed him that he had been contacted by Mr Fung prior to his departure from the defendant enquiring if they could do business together for the purpose of supplying paper for the production of the cancellation bulletins. Mr Wong explained that the promissory note was entered into because of Mr Fung's concern that he would stop making payments.

40. At the meeting on the lst August 1989, Mr Wong said that Mr Fung had approached him and recommended that he should indicate to the defendant that he required an (unnecessary) increase in the price of his services with the understanding that Mr Fung would make sure that the application was approved. Mr Fung said the additional increase in cost to the defendant would enable Mr Wong to have sufficient funds to pay him $25,000 for every the cancellation bulletin. In return Mr Wong said Mr Fung assured him that the cancellation bulletin would not be given to other local printers. Mr Wong asserted that Mr Fung was to receive $25,000 every two weeks under the contract until it expired on the 31st December 1990. During the meeting, Mr Wong said he was extremely silly to sign the promissory note as he did not understand the contents and it was also written in English.

41. Mr Fellman also said that Mr wong indicated that he did not have a genuine debt to Mr Fung but had agreed to pay illicit commission for the approval of the contract covered by the inflated quotations contained in the application for the new contract. He also admitted that the promissory note had not been drawn in connection with the paper supplied, but because Mr Fung did not trust him to pay the illicit commission. He agreed to make a detailed statement to Mr Michael Lai of the defendant's Security Section

42. Mr Fellman said he attended a further meeting on the 4th August 1989 with Mr Tooms and Miss Fong when Mr Wong wrote out in his handwriting details of the profit and costs including the illicit payment to Mr Fung. The purpose of the calculation was to enable the defendant to arrive at the correct figure to pay Mr Wong for the costs associated with the continued production and mailing of the bulletin, but no extra. It was agreed by Mr Wong that the illicit payment to Mr Fung and the excess profit by the unnecessary increase would be deducted from the usual payment and Mr Wong would only receive the exact costs of production of the necessary fortnightly bulletin, which amounted to $170,000.

43. On the 7th August 1989, Mr Fellman attended another meeting with Mr Wong with Mr Larkworthy and Miss Fong. Mr Fellman asked Mr Wong if he would be prepared to sign a statement as to how the money was distributed for every issue when he was paid by the defendant. Although Mr Wong admitted that the statement was correct, he said that he would not sign anything as he had been stupid before and now wished to consult his lawyer. Mr Fellman remembered that Mr Wong was very scared about the ICAC and being involved with bribes. The cheque of $170,000 was handed over to Mr Wong for which he signed a receipt.

44. At the final meeting on the 15th August 1989, Mr Yuen acted as interpreter when Mr Fellman handed the letter to Mr Wong, the relevant contents of which have already been set out earlier in this judgment. At the meeting, Mr Fellman alleged that Mr Wong said he was prepared to lie to an ICAC investigator or to anyone else rather than face a jail sentence. Mr Wong said he was not worried about any statements or admissions that he made to any of the defendant's officials since they were not members of the police or the ICAC. Mr Wong denied these allegations.

EVIDENCE OF MR J R  TOOMS

45. Mr Tooms attended the meeting on the 3rd August 1989 with Miss Fong when Mr Wong stated that he required to be paid $220,000. Mr Tooms said he did not need all the money as he believed that he was paying money to Mr Fung and enquired how much he needed for the printing costs. As the position was not clear, Mr Wong wrote down, at the request of Mr Tooms, the figures on a piece of paper. He said the sum of $25,000 was paid to Mr Fung and $25,000 was his own profit

EVIDENCE OF MR LARKWORTHY

46. Mr Larkworthy confirmed that he was present at the meeting on the 7th August 1989 with Mr Fellman and Miss Fong when Mr Wong wrote down the figures for the contract costs.

CONCLUSIONS

47. The only issue for determination as I have said is whether Mr Wong inflated the price of the contract as a result of a collusive agreement with Mr Fung to obtain the contract and thereby enable him to pay bribes to Mr Fung. Whether the bribes were paid is immaterial. The burden of proof as the conduct complained of amounts to fraud is upon the defendant to a high standard on a balance of probabilities. It is therefore necessary to consider the credibility of the witnesses.

48. Mr Wong is an intelligent man who carried on the plaintiff's business of printing and stationery supplies from 1983 until the business ceased at the beginning of 1991. He had business dealings with the defendant from 1985 until 1989 and it is clear that the defendant was his principal customer and from which he derived most of his income. His case throughout has been that the promissory note and assignment related to a contract for the purchase of bible paper from Mr Fung in order that he could print the cancellation bulletins for the defendant. He claims that he did not appreciate the effect of the documents because he does not understand . English and that the solicitor Mr Wu failed to explain the documents to him.

49. Mr Wong was in the witness box for a period of 18 hours over six days, during which time he gave long rambling answers, much of it repetitious, in which he maintained his denial of paying bribes to Mr Fung throughout. He was the only witness on behalf of the plaintiff for neither Mr Fung nor his own solicitor Mr Kwan were called to give evidence Mr Wong, during his evidence, attempted to reconcile the costs of the paper contract with Mr Fung with the amounts set out in the promissory note and produced a large number of invoices setting out the cost per ream of paper. However, he was unable. to reconcile the figures and also experienced embarrassment when he was cross-examined as to cheques that had been given to Mr Fung in March and April 1989 before the contract for the sale of paper was entered into in June 1989. His attempt to justify the increase in price for the contract on account of mailing charges was not true for they were charged separately whilst no evidence was produced in support of the claim made for such charges as transportation, labour and electricity.

50. Miss Lau, counsel on behalf of the plaintiff, cross-examined each of the defendant's witnesses and drew attention to some discrepancies while she referred to some inconsistencies in the evidence of the three witnesses whose evidence was admitted under the hearsay notices. There are some inconsistencies, but they were all of a minor nature. However, upon the important issue whether there was a contract for the sale of paper, the only reference, according to the evidence of Mr Fellman and Miss Fong was at the first meeting with Mr Wong on the 27th July 1989.

Miss Lau commented that the defendant's witnesses, although they had an honest belief that bribes had been paid, were at the end of the day confused in this assessment. She submitted that it was extraordinary that Mr Fung would send a promissory note and assignment to the defendant if he had been receiving bribes. Miss Lau therefore submitted that the increase made by the plaintiff was genuinely based upon inflation and other factors. However, truth is often stranger than fiction.

51. Although Mr Wong claimed throughout that at all the meetings held with the defendant's representatives he had a contract for the sale of paper with Mr Fung, the evidence for the defendant was that he had been paying bribes to Mr Fung. Mr Wu also testified that no reference was made at any time to a contract for the sale of paper and that he did not hear any reference to it.

52. Having observed Mr Wong and heard his evidence over a long period of time, I am in no doubt that he was not a truthful witness. His evidence at times changed from day to day as his memory of what he had said earlier faded away. Mr Wong's testimony at times was reduced to the absurd when he contended that it was necessary for a solicitor to draw up a contract for the sale of paper when it had never been drawn up in this manner before and to the fact that he and Mr Fung were talking at the same time when Mr Wu was explaining the contents of the promissory note.

53. It is clear that Mr Wong, after the defendant had become aware of the promissory note and assignment, found himself in a catch 22 situation for on the one hand he desperately wanted to retain the contract which was his main source of income, but in order to retain it, he was required to co-operate with the defendant by signing a statement admitting that he had been involved in paying bribes. Having made oral admissions, he decided not to make a written statement upon legal advice. As a result, his evidence in the trial concentrated upon his allegation, that there was a contract for the purchase of paper from Mr Fung. This evidence however amounted to a tissue of lies. If, indeed, Mr Wong had been telling the truth, there would have been no reason for him to pray in aid an immunity from prosecution and the right to silence for he would have had nothing to hide. Mr Wong was a most unimpressive witness who was prepared to tell one lie after another. In my experience on the bench, I have not come across a more dishonest witness.

54. On the other hand, I am quite satisfied that Mr Wu told the truth as did Miss Fong and Mr Lai. None of these witnesses could have any conceiveable reason for concocting a false story against Mr Wong. The evidence of Mr Fellman, Mr Tooms and Mr Larkworthy necessarily depended upon the interpretation that was provided by Miss Fong whose evidence I accept.

55. I am quite satisfied upon the evidence and find that bribes were paid by Mr Wong to Mr Fung which justified the defendant in terminating the contract.

56. I will hear the parties as to costs and the orders that should be made.