FUNG YIM v. CHINA INDUSTRIAL SECURITIES INTERNATIONAL BROKERAGE LTD

HCA 944/2021

[2023] HKCFI 957

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 944 OF 2021

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BETWEEN

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DECISION

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1.  The defendant (“D”) is a Hong Kong company licensed under the Securities and Futures Ordinance (Cap. 571) to carry out Type 1 and Type 4 regulated activities.

2.  In around June 2017, the plaintiff (“P”) opened an account with D through Mr Tam (“Tam”) who was a licensed representative of P. P signed various account opening documents including a client agreement (“Client Agreement”). On 23 June 2017, P opened a security margin account with D (“Account”).

3.  P brought this action by a Writ issued on 18 June 2021. In the Statement of Claim, P claimed that D acted in breach of certain implied terms of the Client Agreement and the tortious duty of care to exercise reasonable degree of care, skill and diligence in the administration and management of the Account. In short, P complained that there were unauthorised trading in the Account. P claims a declaration that P does not owe D an alleged debt of HK$21,840,411.01 (“Alleged Debt”) which was stated to be due and owing from P to D in a letter from D’s solicitors dated 19 April 2021. Further and/or alternatively, P claimed for damages to be assessed arising out of D’s breach of duties. No particulars however have been given in relation to D’s loss and damage.

4.  In the Defence, D pleaded that since the opening of the Account, P had been actively using the Account to conduct transactions. It was P who had full control of the Account and P had full knowledge and notice through all the daily statements, contract notes, margin call notices and monthly statements. Accordingly, the allegation of unauthorized trading was denied. D further alleged that P has been in breach of the Client Agreement. Since at least 3 July 2017, D had demanded P to satisfy exceeded margin requirement. D failed to respond to the various margin calls which constituted an event of default under Clause 15 of the Client Agreement. Consequently, a formal demand was made under the aforementioned letter dated 19 April 2021. D then counterclaimed against P for a sum of HK$17,521,522.02 which was an outstanding indebtedness under the Account as at 7 September 2021 together with default interest[1] accrued on a day-to-day basis and compounded monthly from 8 September 2021 until full payment.

5.  There are two Summonses before this Court for determination. Both Summonses were issued by D:-

(1) An “O.14 Summons” basing on D’s counterclaim against P for the outstanding indebtedness of HK$17,521,522.02 with default interest; and

(2) A “Strike Out Summons” whereby D applies to strike out P’s mirror claim for a declaration of no liability and/or damages.

6.  Mr Maurellet SC for D submitted that the Writ and the Statement of Claim (“SOC”) is curious in that they are pre-emptive in nature. Instead of waiting to be sued by D on the outstanding indebtedness in the Account and then defending, P took a pre-emptive step of issuing the Writ, making himself a plaintiff and seeking a declaration of no liability. Mr Maurellet SC invited this Court to first consider the O.14 Summons because if the Court finds that D’s assertions of unauthorized trading in the SOC are unbelievable, then this Court should allow the O.14 Summons and then the Striking Out Summons is by mirror image unanswerable.

7.  Mr Hui for P did not dispute that the O.14 Summons and the Striking Out Summons are mirror-applications. Whilst noting that they involve different legal tests, Mr Hui agreed that the quintessential issue is whether P’s case is bona fide and believable in the light of the evidence before this Court. If it is believable, then both summonses should be dismissed. Accordingly, I will accede to Mr Maurellet SC’s suggested approach.

8.  There is no dispute on the applicable legal principles which have recently been succinctly set out by Ng J. in Guanghua SS Holdings Limited v. Lim Yew Cheng [2022] HKCFI 1052 at §13. Three points are of particular relevance:

(1) in deciding whether there is a fair or reasonable probability of [the defendant] having a real or bona fide defence, the Court does not isolate each factual issue and consider whether it is possible that [the defendant’s] story on that issue is credible. Rather, the Court must look at the whole situation.

(2) in assessing the credibility of [the defendant’s] factual case, while the Court will not embark upon a mini-trial on affidavit evidence, the Court is not obliged to suspend its critical faculties and assume that [the defendant’s] evidence is accurate.

(3) if [the defendant’s] evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that [the defendant] has a real or bona fide defence.

9.  Mr Maurellet SC submitted that P’s case, when properly understood, involves allegations of multiple forgeries. For that purpose, he referred me to the decision of Anthony Chan J. in China Construction Bank (Asia) Corporation Ltd. v. Zhang Kangyang [2022] HKCFI 2135 where his Lordship said:

“40. Further, even in summary judgment applications, an allegation of forgery ‘is a serious allegation which the defendant will bear the burden of proving by cogent and compelling evidence since it is trite that the more serious the allegation, the less likely it is that the event occurred’ (see Billion Wealth v. Strategic Media, unrep, HCMP2586/2009, 3 May 2020), [40], per Fok J (as he then was)).

41. On the evidence before the court, I am unable to accept that Zhang has shown a believable defence of forgery. His evidence, assessed against the undisputed background circumstances, is contrary to inherent probabilities and common sense, and his explanations on various evidential fragilities ring hollow.”

Defendant’s Arguments

10.  Mr Maurellet SC began by referring to several material assertions in P’s case:-

(1) In SOC §6, it is pleaded that “Since the Account was opened with D, P has never deposited any money or securities into the Account. Further, P has never conducted any trades and/or transactions with the Account and/or instructed D to execute any trades and/or transactions for him”; and

(2) In SOC §8, it is pleaded that “If there were any transactions conducted with the Account since its opening, P was not aware of, has no knowledge of, and did not authorize any of those transactions”.

(3) In the Defence to Counterclaim (“DCC”) §11, it is pleaded that:-

i. Around the time when P opened the Account with D (i.e. 23 June 2017), D provided P with the log-in ID and password for logging into D’s internet platform.

ii. Shortly after receiving the log-in ID and password, P used such information to log into D’s internet platform once. P did not execute any transactions. This is the only occasion in which P had logged into D’s internet platform.

iii. Other than that occasion, P never logged into D’s internet platform thereafter.

iv. P specifically denied that he had conducted any transactions via telephone and D’s internet platform.

(4) On 18 April 2018, a “Change of Particulars Form” was allegedly executed by P to change his information with D (“Disputed Change of Particulars Form”). A fake email address and a fake mobile number of P were provided in this form to replace P’s real email address and mobile number. P asserts that his signature on the form was forged. P was not in Hong Kong between 25 March 2018 and 29 April 2018[2] and could not have executed the form in Hong Kong.

11.  Mr Maurellet SC submitted that P’s assertions above are refuted by indisputable documents of various sorts. They show that P had operated the Margin Account by:-

(1) personally instructed transactions to be carried out;

(2) depositing his funds into the Account;

(3) depositing his shares into it; and

(4) withdrawing shares from the Account for himself.

12.  The Court is referred to the following pieces of contemporaneous documentary evidence:-

(1) The Account was opened on 23 June 2017 as shown in the Account Opening Form[3];

(2) On 27 June 2017, P submitted a “Change of Particulars Form”[4] linking the Account with P’s personal bank account at HSBC (a/c no. 102-7XXXXXXX3);

(3) On 29 June 2017, P transferred HK$1.5 million from the above HSBC a/c to the Account[5]. An email from HSBC confirmed that this sum was transferred from P to D and credited to the Account[6]. This flatly contradicts SOC §6. Upon seeing the documents, P switched his case to say[7] that Mr. Tam of D requested him to deposit funds for account opening purpose and that he had forgotten about it. Mr Maurellet SC submitted that this simply cannot be right. The Account was already opened by 23 June 2017. According to D’s Log-in Records[8], P first logged into the Account on 23 June 2017. Up to 3 July 2017, there were already a number of log-ins to the Account. These records again flatly contradict DCC §11. More importantly, parts of the HK$1.5 million were used in the purchase of securities on 3 July 2017 as further detailed below. It is simply inconceivable that such a sizable amount of money could simply have escaped P’s memory throughout the years. It is no more than a convenient but incredulous excuse to try wriggling out of the contradiction;

(4) The “Transaction Reports” adduced by D[9], which is an automatically-generated document being part of the computer records of D, shows that there were 3 securities trading transactions conducted in the Account through D’s internet platform on 3 July 2017. The “Transaction Reports” are consistent with the “Log-in Records” which show a number of log-ins to the Account on 3 July 2017. These transactions took place through the internet platform well before the Disputed Change of Particulars Form dated 18 April 2018. P had admitted that shortly after the Account was opened, he did log into D’s internet platform once[10]. The Log-in Records show that the first log-in was on 23 June 2017. Mr. Maurellet SC submitted that it is inherently improbable that P did not set his own password on this occasion, otherwise what was the purpose of logging in? In any event, P did not say he did not set his own password on this occasion. Therefore, the existence of these 3 transactions and the numerous log-ins flatly contradicts SOC §§6 and 8 and DCC §11. P could provide no plausible explanation;

(5) Between 3 July 2017 and 3 April 2018, there were 44 internet transactions in the Account as shown in the Transaction Reports. All these transactions pre-dated and could not have been affected by the Disputed Change of Particulars Form dated 18 April 2018. Mr Maurellet SC submitted that these were transactions that must have been conducted by P and to his knowledge. These contemporaneous records thus clearly contradict SOC §§6 and 8 and DCC §11;

(6) On 21 Dec 2017, P transferred shares he kept with Enlighten Securities Limited (“ESL”) to the Account to act as collateral. The monthly statement issued by ESL to P in respect of his account[11] shows that P had 10,168,000 shares of Putian Communications Group Limited (“Putian”). A CCASS Stock Withdrawal Receipt issued by Hong Kong Exchange Limited dated 21 Dec 2017 then shows that ESL withdrew shares certificates of these 10,168,000 Putian Shares from HKEX[12]. These shares were then deposited into the Account as evidenced by D’s “Product In/Out Report”[13] which is part of D’s computer records. According to ESL’s monthly statement, these Putian shares had a market value of over HK$12.7 million;

(7) Then on 22 Dec 2017, P further transferred shares from another account he kept at Sun Hung Kai Investment Services (“SHKIS”) to the Account as collateral. These were shares in FDG Kinetic Limited, Putian and Genes Tech Group Holdings Co. Limited. This transfer is evidenced by a Securities Settlement Instruction/Investor Settlement Instruction Form bearing P’s signature as the “Client’s Signature”[14]. In relation to the aforesaid two deposits of shares in the Account, P made a bare assertion that he had no knowledge of and did not authorize the transfer/withdrawal of the Putian shares[15]. Mr Maurellet SC submitted that P’s explanation is rather incredible. Firstly, he does not dispute the fact that the 10,168,000 Putian shares was originally held in his account with ESL. Secondly, he does not suggest that this ESL account was not controlled by himself at the material time. Thirdly, he does not suggest that ESL had in any way acted wrongfully. Fourthly, he provides no explanation as to why the disappearance of such a valuable asset from his ESL account could have escaped his attention and thus action throughout the years. Fifthly, P’s allegation of “no knowledge and/or authorization” only relates to the Putian shares. P does not suggest that the transfers of the FDG Kinetic shares and the Genes Tech shares to the Account were also without his knowledge or authorization. Sixthly, P does not suggest that his signature on the “Securities Settlement Instruction/Investor Settlement Instruction Form” was forged. Seventhly, P’s allegation of “no knowledge and/or authorization” is further contradicted by the fact that subsequently on 16 March 2018, P signed a “Physical Script Withdrawal Form” to withdraw 5 million shares of Putian from the Account[16]. Mr Maurellet SC thus submitted that these contemporaneous documents flatly contradict SOC §§6 and 8;

(8) Mr Maurellet SC further referred to 5 transactions carried out by P in the Account which were recorded in voice logs[17] showing that these transactions were confirmed by P over phone. These 5 telephone transactions were conducted between 5 Jan 2018 and 20 April 2018. They were also recorded in the Transaction Report[18]. Voice Log Nos. 1, 2,4 and 5 were between P and Mr Tam. Voice Log No. 3 was between P and Mr Cyris Cheung. All 5 phone calls were made to P’s mobile number as stated in the Account Opening Form. P’s explanation for these phone calls is:-

“I have listened to these voice logs. I recall that prior to the calls on 5 January 2018 and 8 March 2018, Mr Tam had called me first and told me that he needed my help to answer some questions via a recorded phone call as part of the Defendant’s review of the Account. He then briefed me on the questions he would ask me and the answers that I should give at the recorded call. I followed what Mr. Tam requested me to do so at the Calls. I recall that Mr. Tam specifically asked me to correct the number of shares as expressed by Mr Tam at the recorded phone call. With the benefit of hindsight, it is now clear to me that Mr Tam tricked me to provide acknowledgment of trades which I did not.”

Mr Maurellet SC submitted that P’s purported explanation is plainly incredible. Firstly, the contents of these conversations clearly related to specific securities trading transactions conducted at the instructions of P which Mr. Tam or Mr. Cheung were reporting back to P on their progress. They can hardly be understood as “to answer some questions via a recorded phone call as part of the Defendant’s review of the Account”. In Voice Log No.1, Mr Tam was reporting to P about 2 transactions[19] conducted for P on 3 Jan 2018 which P expressly confirmed. It was simple reporting by Mr. Tam and no question was asked of P. Voice Log No. 2 was actually a phone call to reconfirm the information already reported in Voice Log No. 1. In other words, P confirmed the fact of his instructions twice. Again, Mr. Tam asked no question for P to answer. In Voice Log No.3, Mr Cheung called P simply to report that P’s earlier instructions had been successfully executed. P was again not asked any question at all. As for Voice Log No. 4, Mr. Tam asked P whether he wished to do a “Manual Transaction” for Stock No. 1720 (i.e. Putian). P confirmed his intention and then Mr. Tam asked whether P wished to transact at HK$2.20 per share for 1.28 million shares. P again confirmed. It is quite clear that P would have informed Mr. Tam of his intention in an earlier phone call and this later phone call was made to effect a tape recording of P’s instructions. Then the 4th Voice Log was simply a call from Mr. Tam to report that he had successfully conducted the “M transaction”[20] for P. No question was asked of P. Secondly, P is a private investor with university level education and over 10 years of experience in trading stocks. It is utterly unreasonable for P to agree to do what Mr Tam purportedly requested. It is all the more unimaginable that P would repeatedly understand those conversations as relating to “a review of his account” or a “help rendered to Mr Tam”. It must have been clear to P that the conversations related to the buying and selling of specific stocks and were pertaining to the usual practice of recording a client’s instruction on tape. Thirdly, these conversations not only contradict SOC §§6 and 8, they also contradict P’s 1^st Affirmation §16[21] saying that after the opening of the Account, and having considered the prevailing investment environment, he eventually decided not to use the Account for conducting any securities trade after it was opened. Fourthly, these conversations repeatedly referred to P instructing D to sell certain number of Putian shares. They thus also contradicted P’s earlier allegation that he has no knowledge of his Putian shares having been transferred from ESL and SHKIS to the Account.

(9) P’s case involves allegations or implications that all documents produced by D in these proceedings bearing P’s signatures were forged. Such a stance also implicitly involves serious allegation of forgery or fraud pertaining to independent parties such as ESL and SHKIS lest that no such transfers of securities could have been effected. P has failed to condescend on particulars in respect of such serious allegations other than relying on his bare assertions.

(10) In respect of P’s allegation that his signature on the Disputed Change of Particulars Form was forged, Mr Maurellet SC submitted firstly that such a dispute cannot explain the pre-18 April 2018 transactions in the Account. Secondly, as of 18 April 2018, the Account was already in huge deficit[22]. Thirdly, the Disputed Change of Particular Form did not change the password for logging into the Internet Platform. It can be seen from the Transaction Reports that P first set his password on 23 Jun 2017. The Log-in Records[23] show that P repeatedly logged into the Internet Platform until his first change of password on 11 Aug 2017[24]. During this period, the Transaction Reports[25] show that P had already conducted 18 trading transactions using the Internet Platform. Between 11 Aug 2017 and 19 Oct 2017 (which is the second change of password by P[26]), the Transaction Reports show that P conducted 7 more trading transactions using the Internet Platform. P continued to trade on numerous occasions using his last changed password until 23 July 2018. As explained by D[27] (which is not disputed), the Disputed Change of Particulars Form did not affect the internet password of the P at all. These records are entirely consistent with the Log-in Records showing that P frequently logged into the Account using the Internet Platform[28]. Fourthly, therefore, Mr Maurellet SC submitted that it is inconceivable (assuming someone had forged the Disputed Change of Particular Form and stolen the use of the Account since 18 April 2018) that P would not have discovered the alleged fraud for the next 3 years until 19 April 2021 as P so alleged. Fifthly, in any event, since the opening of the Account and up to 18 April 2018, daily and monthly statements were sent to the Admitted Email (which was the email address of P, namely “RXXXX_ FXXXXXX8@126.com” as stated in the Account Opening Form). None of these emails had been returned or bounced back[29]. These statements clearly show that transactions were carried out. In fact, they show that since 3 July 2017, there were already margin calls on the Account[30]. Furthermore, despite the Disputed Change of Particulars Form, one margin call email and one forced liquidation email were still sent to P’s Admitted Email on 15 May 2018[31]. Mr Maurellet SC submitted that P’s bare assertion of not having received these numerous emails sent to the Admitted Email is simply incredible.

(11) In P’s affirmation[32], he put forward his “belief” that there was a large scale scheme to conduct unauthorized trading in securities margin accounts opened with D. He said he learnt from three other customers (Mr Zhong, Mr Huang and Mr Cao) that they were also served by Mr Tam and they also suffered unauthorized trading in their respective accounts. Mr. Maurellet SC submitted that P wholly failed to condescend on particulars despite the seriousness of such an allegation. None of these other customers had put in affirmations. P adduced no evidence, other than his bare assertion of hearsay, to substantiate such a serious allegation. Mr Maurellet SC submitted that P’s defence involves grave accusations against not just Mr Tam, but also Mr Cyris Cheung, ESL and SHKIS who would be complicit to the alleged fraud. There is however no gain to them and this Court is reminded of the dictum of Anthony Chan J in China Construction Bank at [53]:

“Against these background facts, Zhang advanced a vague allegation that ‘it appears that some staff member(s) involved in the [Project] who had dealings with [the Bank] might have forged my signature to sign on behalf of [Great Matrix] and myself in order to assist with [the Refinancing]. The allegation begs the question why the staff member(s) would have committed a serious crime when there is no suggestion that h/they had anything to gain. Self-evidently, the unparticularized allegation carries little conviction or credibility.”

Mr Maurellet SC further pointed out that Mr Zhong, Mr Huang and Mr Cao are 3 of 9 investors whose liabilities under their respective accounts were covered by a personal guarantee executed by P.  This led to yet another allegation of forgery of P’s signature on the personal guarantee. Mr Maurellet SC thus invited this Court to exercise extreme scepticism towards such wholly unparticularized allegation of massive fraud.

(12) P also relies on his Travel Records to demonstrate that there were instances when the Log-in Records show that the respective IP addresses were located in Hong Kong but he was personally in the Mainland. Mr. Maurellet SC submitted that such argument provides no answer to D’s reliance on the following contractual clauses:-

i. pursuant to Clause 4.2 of the STA Client Agreement[33], D is entitled to rely upon and act in accordance with instructions given through any means to D.

ii. more specifically in relation to instructions given via the Internet Platform, Clause 2.4 of the ES Agreement[34] provides that “The Client shall be responsible for the confidentiality and use of his Login ID and Password. Upon the correct input of the code for the Client’s account, [D] is authorized (but not obligated) to act in its absolute discretion on any Instruction it has received from the relevant Client without any liability to verify the validity and/or authenticity of such Instruction.”.

iii. Clause 13.2 of the STA Client Agreement[35] provides that “The Client has the duty to examine carefully the Transaction confirmations, the account statements and the monthly statements, and to notify [D] in writing of any error or inconsistency therein within 5 business days …Furthermore, in the absence of manifest errors, the Transaction Confirmations, the account statements and the monthly statements shall be conclusive…”.

Plaintiff’s arguments

13.  Mr Hui submitted that there are unusual and suspicious aspects relevant to the defence of unauthorized use of the Account. His submissions can be summarized as follows:-

(1) There is evidence that P’s signature on the Disputed Change of Particulars Form[36] was forged. The said form bore the date “18 April 2018” but the Immigration records show that P was not in Hong Kong between 25 March and 29 April 2018. According to Kwok’s affirmation[37], he seemed to suggest that the form was physically handled. The form showed that it was handled on 23 April 2018. Forgery is an issue that should be investigated. Both the Account Opening form and the Change of Particulars Form required monthly statements and notices to be delivered to the respective email addresses. Accordingly, when the faked email address and mobile number were provided under the forged Change of Particulars Form, it meant that P would not receive monthly statements and notices. The closeness in time between the submission of the Disputed Change of Particulars Form and the designated commencement date of the new 2FA verification mechanism indicates that the culprit wanted to change the email address and mobile number so as to get around the 2FA restrictions. Furthermore, P can point to two other instances where a similar format of fake email address was adopted in relation to two other clients of D[38].

(2) As for the Log-in Records, there was one instance where the IP Address was in mainland whilst P was in Hong Kong[39]. This related to log-ins conducted on 4 June 2018. Mr Hui said that his client can demonstrate more of such anomaly and can undertake to file affirmation to that effect.

(3) As for the Voice Logs, the Court has to assess whether P’s version of event is utterly incredible. The Transaction Records show 18 “Terminal Transactions”, i.e. transactions conducted over phone. D has not explained why only 5 Voice Logs were retained by D[40].

(4) As for the depositing of HK$1.5 million into the Account, P said he did not recall it. It is thus merely a credibility issue.

(5) As for the daily statements, D has not exhibited all daily statements. For those that have been exhibited, there was no covering email. As for the Margin Calls, all but one was sent to the faked email address.

(6) There is serious unexplained delay in enforcing the margin requirements. From 3 July 2017 onwards, according to D’s documents, the Account already well exceeded its margin requirements. D only started sending Margin Call Notices by email since 7 May 2018[41], which was after the 18 April 2018 Disputed Change of Particulars and hence sent to the fake email address. Thus for over one year with the Account seriously in deficit, P was not called upon by email to put up extra margin. If that was done, such notices would have been received through P’s admitted email address and would have come to his attention. There is no explanation offered by D despite D’s own company policy[42]. Furthermore, D’s email records[43] and Transaction Records[44] show that the Account was allowed to be traded despite P’s repeated failure to respond to the successive margin call notices. This was in serious breach of SFC code on the part of Mr Tam[45]. The unexplained delay and allowance to trade despite serious margin deficit in breach of company policy and SFC code are probative of P’s case that Mr Tam or someone in D’s company had been using the Account to carry out unauthorized trading and hiding them from the customer.

(7) P has thus shown sufficient grounds for investigation. Those instances where P’s version has been shown to be false by documents relied on by D merely give rise to credibility issues.

Discussions

14.  I agree with Mr Maurellet SC that the Disputed Change of Particulars Form cannot explain all the transactions and provision of monthly statements and notices which took place prior to 18 April 2018. Coincidentially, despite the Disputed Change of Particulars Form, D was able to locate 2 emails dated 15 May 2018 which were sent to P’s admitted email address. In the first email, P was demanded to settle the margin call amount of HK$12,222,151.94. In the second email, P was notified that as a result of his failure to settle the margin call, D had exercised its rights to conduct a forced sale of certain stocks in the Account. P has provided no response whatsoever to these pieces of contemporaneous evidence. Mr Maurellet SC pointed out that D raised this serious allegation of forgery for the first time after D had taken out the Order 14 application[46]. Moreover, the form itself did not suggest that P physically appended his signature in Hong Kong or that the form was physically handled by P whilst in Hong Kong. Lastly, in relation to the two instances where the same format of fake email address were allegedly adopted, it is important to bear in mind that Ms Zhong and Mr Huang were two of the 9 persons who had maintained accounts with D and for whose liabilities P had executed a guarantee[47]. P’s wife Madam Xia was also one of the 9 persons for whom P stood as guarantor. It is quite obvious that all these persons must have been associated with P[48]. In the end, P again resorted to making bare allegations that the said guarantee was also a forgery and there was a massive fraud involving these other clients of D. I do not find force in Mr Hui’s submission. P has failed to condescend to particulars on such serious allegations and these alleged victims have not provided affidavit evidence to support P.

15.  As for the Log-in records, P is solely responsible for keeping and maintaining his internet password. When P dealt with this point in his affirmation[49], he did not suggest that he had never allowed any person to use his identity and password to log into D’s internet platform. In fact, his wife Madam Xia Shan also maintained an account with D[50]. It is perfectly possible that P could have allowed his assistant or his wife to access the Account using his identity and password. Although there is no evidence one way or the other, this inherent plausibility reflects the lack of weight in Mr Hui’s argument. After all, the burden is on P to condescend to particulars and I find the invitation of Mr Hui[51] unattractive. I accept the submissions of Mr Maurellet SC as set out in paragraph 12(4) and (5) above.

16.  As for the 5 Voice Logs produced in evidence, I agree with the analysis of Mr Maurellet SC as set out in paragraph 12(8) above. In my view, the fact that D has provided no explanation as to why only 5 Voice Logs were retained is neither-here-nor-there. The important point is that the 5 Voice Logs adduced amply demonstrate the utter incredulity of P’s version of facts. P’s case is that he had no knowledge of and had not authorized any trading transactions in the Account. One can expect that the more Voice Logs D can adduced, the more they can demonstrate fallacies in P’s case. I do not see anything sinister in D failing to retain all but the 5 Voice Logs in relation to the Terminal Transactions.

17.  As for the depositing of HK$1.5 million into the Account and P’s purported explanation. I again agree with the analysis of Mr Maurellet SC as set out in paragraph 12(3) above. I find P’s purported explanation utterly incredible. Similarly, I agree with Mr Maurellet SC that the transfer of shares into the Account as set out in paragraph 12(6) and (7) clearly demonstrate the incredibility of P’s pleaded case.

18.  As for the daily statements, Mr Maurellet SC accepted that the covering emails have not been exhibited and that not each and every statement has been adduced. He submitted however that it is a trivial point so long as the Court can conclude that P has lied on the various points identified in paragraph 12 above. I agree with Mr Maurellet SC. It is further of interest to note that D had adduced the daily statement of 18 April 2018[52]. In this statement, the Account Balance was HK$9,420,906.00 in deficit and the Margin requirement was HK$7,443,383.29. This statement must have been sent by email to P’s admitted email address because the Disputed Change of Particulars Form shows that though dated 18 April 2018, it was only processed on 23 April 2018.

19.  With respect to Mr Hui, I cannot accept his submission that those instances where P’s version has been shown to be false by documents merely give rise to credibility issues. As shown in paragraph 12 above, those contemporaneous documents adduced by D clearly contradict the pleaded case of P. They are not contradictions on peripheral issues. They constitute contradictions with the foundation of P’s case. As observed by Ng J in Guanghua SS Holdings Limited v. Lim Yew Cheng, where it is shown that a defendant’s evidence is incredible in any material respect, it cannot be said that there is a fair or reasonable probability that he has a real or bona fide defence.

20.  In the end, I come really close to granting judgment in favour of D. However, there is just one disturbing feature that remains. It is Mr Hui’s submission on the unexplained delay in enforcing the margin requirement elaborated in paragraph 13(6) above. Mr Maurellet SC frankly admitted that D has not provided explanation in its affidavit evidence. He however submitted that the lack of action on D’s part does not impact on the credibility of P’s own case which has been proven false in several material respects. He submitted that the lack of action on D’s part is not probative of P’s case which is one of “no knowledge, no authorization”. There is considerable force in this submission. However, I cannot just brush aside this point as though it is utterly irrelevant. Cases involving unauthorized use of client’s account in trading are frequently accompanied by acts of concealment. Furthermore, there is some force in Mr. Hui’s rhetorical question: “Why is there no affidavit from Mr Tam who is such an important witness and who is apparently still having contact with D?”.

21.  Having considered all the helpful submissions from both sides, although I have come very close to granting judgment in favour of D, I eventually conclude that it is a proper case to grant leave to defend albeit only on stringent conditions. Based on all the evidence presented, the defence put forward by P can best be classified as shadowy. Taking a broad brush approach, I am of the view that P should only be granted leave to defend on the condition that he should pay into court a sum of HK$15 million.

Disposition

22.  In respect of the O.14 Summons, I grant leave to the Plaintiff to defend the Counterclaim on the condition that he shall pay into Court a sum of HK$15,000,000.00 within 30 days from the date hereof failing which the Defendant shall be entitled to enter judgment as per paragraph 1 of the O.14 Summons and the Defendant shall also be entitled to enter judgment as per paragraph 1 of the Striking-out Summons.

23.  On the issue of costs, I will make the following orders nisi which shall become absolute if no application for variation is made within 14 days from the date hereof:-

(1) if the Plaintiff fails to comply with the condition, the Defendant shall be entitled to costs of the action which shall include costs of the two Summonses and the hearing before me with certificate for two counsel, to be taxed (if not agreed) on party-and-party basis.

(2) If the Plaintiff duly complies with the condition, then costs of the two Summonses shall be costs in the cause with certificate for two counsel.