BLACK MARBLE SECURITIES LTD v. RABIE, ABOU BAKR MAHMOUD AND ANOTHER

HCA 952/2020

[2025] HKCFI 5487

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 952 OF 2020

______________

(By Original Action)

(By Counterclaim)

______________

________________

J U D G M E N T

________________

A.  Introduction and Undisputed Background

1.  The following undisputed background to this action is mainly taken from the Agreed Facts and Chronology.

2.  Black Marble Securities Limited (“Black Marble”), is and was at all material times, a securities brokerage company incorporated in Hong Kong, licensed to carry on business in Type 1 regulated activities (dealing in securities).

3.  Rabie, Abou Bakr Mahmoud (“Rabie”), a Hong Kong resident (who does not read Chinese), is a practising doctor and professor of orthodontics.

4.  Lai Wing Fat (“Thomas”), was until 10 October 2017, a licensed representative of Black Marble conducting Type 1 regulated activities. He was the Vice President of Black Marble. A Broker Cooperation Agreement dated 17 March 2016 (“BCA”) was entered into between Black Marble and Thomas.

5.  On 29 April 2016, Rabie was first introduced to Thomas on WhatsApp through his friend Eric Lai (“Eric”) who is the brother of Thomas.

6.  On 2 July 2016, Rabie and Thomas first met in person on a boat trip dinner.

7.  On 4 July 2016, when Eric and Thomas attended Rabie’s clinic to receive slimming treatments, Thomas brought along and provided to Rabie account opening documents (which were all in Chinese) of Black Marble (“the Account Opening Documents”) to sign. These were signed and dated 5 July 2016.

8.  Rabie’s case is that Thomas did not translate or explain the Account Opening Documents before asking him to sign thereon. Thomas’ case is that he had twice offered to translate and explain the Account Opening Documents to Rabie but that was refused by Rabie.

9.  On 5 July 2016, Rabie’s cash account with Black Marble was opened for the purpose of trading in securities (“the Account”). Thomas was the account executive of the Account. At the time, Rabie also held another securities account with The Hongkong and Shanghai Banking Corporation Limited.

10.  On 6 July 2016, Black Marble emailed the details of the Account, as well as the login ID and password (“Login Details”) used to access the Account via Black Marble’s Internet Trading Platform (“the Platform”), to Rabie’s email address at bkrabie@gmail.com. Black Marble’s case is that the signed Account Opening Documents were also emailed to Rabie. On the other hand, Rabie’s case is that he did not receive the signed Account Opening Documents whether by email or otherwise.

11.  On 6 July 2016, Rabie credited HK$1M into the Account. On the same day, Thomas informed Rabie via WhatsApp that the Account has been opened and that the Login Details had been sent to Rabie’s email address. Thomas asked Rabie to try login and see if his money was in the Account already. He was also told by Thomas to change the password when he first login. Rabie later forwarded the email with the Login Details to Thomas who later informed Rabie that he had changed the password for the Account and provided Rabie with the new login details to access the Account.

12.  Thomas thereafter began to execute trades on Rabie’s behalf in the Account.

13.  On 8 August 2016, a further sum of HK$260,000 was credited into the Account by Rabie.

14.  Rabie and Thomas communicated via WhatsApp messaging including the giving instructions by Rabie to Thomas vis-à-vis the Account as well as authorization and/or execution of trades in the Account by Thomas.

15.  All orders in respect of the Account were executed between July 2016 and June 2017 via the Platform. There were in total 365 transactions, of which 57 were shares (15%) and 308 were warrants (84%). All of these were executed by Thomas who accessed the Account via the Platform.

16.  On 28 June 2017, Thomas informed Rabie by WhatsApp that Black Marble was in serious financial difficulties and was about to close down and that Rabie should liquidate all assets in the Account immediately.

17.  On 3 July 2017, Rabie withdrew the remaining HK$37,044.53 from the Account and ceased to maintain the Account with Black Marble.

18.  By letter dated 7 July 2017, Messrs ST Cheng (“STC”), solicitors acting on behalf of Rabie, wrote to Black Marble and Thomas demanding the recovery of loss and damages that Rabie had suffered due to Thomas’ execution of unauthorised trades in the Account.

19.  On 18 July 2017, Black Marble suspended Thomas’ powers and duties at Black Marble.

20.  On 24 July 2017, Black Marble reported Rabie’s complaint against Thomas to the Securities and Futures Commission (“SFC”).

21.  On 14 September 2017, Rabie lodged a complaint to the SFC against Thomas and Black Marble.

22.  On 10 October 2017, Black Marble notified Thomas of the termination of the BCA with effect from 10 October 2017.

23.  On 12 June 2020, Black Marble commenced the present proceedings against Rabie and Thomas.

24.  On 7 July 2020, SFC issued a Press Release and Statement of Disciplinary Action against Thomas banning him from re-entering the industry for 20 months for breaching the Code of Conduct for Persons Licensed by or Registered with SFC (“the Code of Conduct”).

25.  On 8 March 2021, SFC publicly reprimanded Black Marble and imposed a fine of HK$1.8M.

26.  On 31 March 2021, SFC issued a Press Release and Statement of Disciplinary Action against Black Marble, which publicly reprimanded Black Marble and imposed a fine of HK$1.8M on it for breaches of: (1) the Code of Conduct; and (2) the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the SFC (“the Guidelines”).

27.  On 7 June 2021, a bankruptcy order was made against Thomas and the Official Receiver’s Office was appointed as Thomas’ trustee in bankruptcy.

28.  On 21 June 2022, Master Matthew Leung ordered interlocutory default judgment on Rabie’s counterclaim be entered against Thomas with damages to be assessed and costs to Rabie to be taxed if not agreed.

29.  Leave was granted on 21 November 2023 for Black Marble to continue with its claim against Thomas.

30.  At the trial of this action:

(1)  Mr Wong and Mr Louie, counsel, appeared for Black Marble;

(2)  Mr Lau and Ms Lau, counsel, appeared for Rabie; and

(3)  Thomas did not appear.

B.  The Parties’ Respective Pleaded Case

31.  Black Marble’s case, in gist, is that Thomas and Rabie had entered into a secret arrangement whereby Rabie expressly and/or impliedly authorised Thomas to operate the Account and make investment decisions on behalf of Rabie without Black Marble’s prior knowledge and approval. Black Marble claims against Rabie and Thomas for damages for unlawful means conspiracy. Black Marble also claims against Thomas damages for breach of contract, in particular, breach of clause 8(1) of BCA which required Thomas to abide by the Code of Conduct.

32.  On the other hand, Rabie’s case is that the only arrangement entered into around early July 2016 was that Thomas (or other employees or agents of Black Marble) would only upon his express and specific prior instructions and/or approval execute trades on his behalf. Moreover, it was Rabie’s understanding under the Pre-Approved Trading Arrangement, his trade instructions would be executed via traditional means and not via the Platform. Apart from 18 transactions, from 8 July 2016, all other transactions were executed by Thomas without Rabie’s knowledge and/or approval (“Unauthorised Trades”). The trades that were on Rabie’s case unauthorized are not highlighted and the unauthorized trades that involved exchange-traded funds (“ETFs”) and/or warrants are highlighted in yellow (“Derivative Trades”) in the Schedule to Amended Defence and Counterclaim of the 1^st Defendant (“D1’s ADCC”).

33.  By counterclaim, Rabie claims against Black Marble and Thomas, for breach of their duties to him. He seeks a declaration that the Unauthorised Trades or the Derivatives Trades are not binding or enforceable against him; an order for the Account be reinstated to the position it would have been but for the Unauthorised Trades or alternatively, the Derivatives Trades, or alternatively, an award of damages and/or equitable compensation to be assessed.

34.  Thomas’ case is that all trades made on behalf of Rabie were done with Rabie’s authority whether obtained prospectively or retrospectively.

C.  The Issues

35.  The following were agreed as the issues requiring determination (“Agreed Issues”):

(1)  Whether there was a secret arrangement between Rabie and Thomas whereby Rabie expressly and/or impliedly delegated and/or given discretionary powers to Thomas to operate the Account and to make investment decisions on behalf of Rabie without Black Marble’s knowledge and approval (“the Discretionary Trading Arrangement”);

(2)  If the answer to (1) is affirmative, whether the constituent elements of a conspiracy claim are satisfied by the facts relating to the Discretionary Trading Arrangement;

(3)  Whether Rabie and Thomas entered into an arrangement in July 2016 whereby Thomas would only upon Rabie’s express and specific prior instructions and/or approval, execute trades on Rabie’s behalf (“Pre-Approved Trading Arrangement”);

(4)  Whether Thomas owed a duty of care to Rabie:

(a)  During the filling in of the Account Opening Documents; and/or

(b)  When advising Rabie and carrying out trades via the Account pursuant to the Pre-Approved Trading Arrangement or otherwise;

(5)  If so, whether Thomas breached any duties owed to Rabie by;

(a)  Failing to provide Rabie with the Account Opening Documents in Rabie’s preferred language i.e. English, and failing to explain the contents of the Chinese documents provided to Rabie;

(b)  Executing trades in breach of the Pre-Approved Trading Arrangement and/or other instructions given by Rabie (i.e. the Unauthorised Trades);

(c)  Receiving commission on Unauthorised Trades, i.e. being in conflict of interests;

(d)  Failing to keep Rabie reasonably informed as to the status of the Account; and

(e)  Failing to comply with his duties under the Code of Conduct;

(6)  If so, whether Black Marble is liable by:

(a)  Being vicariously liable for Thomas’ breach of duties, and/or

(b)  Thomas having acted as Black Marble’s agent;

(7)  Whether Black Marble owed Rabie a duty to supervise its staff (including Thomas), and whether there was any breach of such duty by Black Marble;

(8)  Whether as a result of any or all of the aforesaid breaches by Black Marble and/or Thomas, Rabie suffered any loss and damage; and

(9)  Whether Rabie’s own conduct has caused or contributed to any loss and damage suffered by him (if any).[1]

D.  Applicable Principles

D1.  Conspiracy

36.  For the applicable principles for the tort of unlawful means conspiracy, I found helpful Coleman J’s exposition in China Shanshui Cement Group Limited & Ors v Zhang Caikui & Ors [2025] HKCFI 1868 as follows:

“337. A useful starting position is to remember that economic torts need to be kept within carefully defined bounds so as not to trespass upon legitimate business activities. As it was put in JSC BTA Bank v Ablyazov (No 14) [2020] AC 727 at §6:

‘The successful pursuit of commercial self-interest necessarily entails the risk of damaging the commercial interests of others. Identifying the point at which it transgresses legitimate bounds is therefore a task of exceptional delicacy. The elements of the four established economic torts are carefully defined so as to avoid trespassing on legitimate business activities or imposing any wider liability than can be justified in principle.’

338. The elements of an unlawful means conspiracy are well-settled, and can be stated as follows. The plaintiff must plead and prove:

(1) An express/tacit agreement or understanding between the defendant and another or others (‘Element 1’).

(2) An intention to injure the plaintiff by unlawful means, whether or not the intention to injure is the predominant purpose (‘Element 2’).

(3) Unlawful acts carried out pursuant to the agreement or understanding and such intention (‘Element 3’).

(4) Resulting loss or damage to the plaintiff (‘Element 4’).

339. As to Element 1 – an express or tacit agreement or understanding:

(1) It is not necessary that every overt act is done by every conspirator, but the act must be done pursuant to the conspiracy or combination.

(2) Consent, that is agreement or adherence to the agreement, can be inferred if it is proved that the alleged conspirator knew what was going on.

(3) Thus, it is not necessary for the conspirators to join the conspiracy at the same time.

(4) But the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of.

(5) Indeed, it is meaningless to speak of an agreement or combination in the absence of a common understanding of the material facts being shared by all the alleged conspirators.

(6) A plea of conspiracy must include at least one overt act which is the act of all the alleged conspirators or, failing that, a number of overt acts which include at least one act on the part of each conspirator.

(7) In most cases, it will be necessary to scrutinise the acts relied upon in order to see what inferences can be drawn as to the existence or otherwise of the alleged conspiracy or combination. It will be the rare case in which there will be evidence of the agreement itself.

(8) Each alleged co-conspirator must have joined in the implementation of the plan, and the unlawful act performed must have some causative potency in the context of its implementation (rather than merely being incidental to it).

(9) In an alleged multi-party conspiracy, there must be analysis of the extent to which any particular defendant shared a common objective with the primary conspirators, and the extent to which the achievement of that objective was to the particular defendant’s knowledge to be achieved by unlawful means intended to injure the plaintiff.

340. As to Element 2 – intention to injure:

(1) Knowledge and intention are connected, because the element of intention to injure (and indeed acting in concert) cannot be inferred in the absence of the requisite knowledge.

(2) This is why there must be sufficient identity of object amongst the parties to a conspiracy or combination, even though the advantage to be derived from that same object may not be the same.

(3) Possession of a separate aim may be evidence that the person concerned has not participated in the conspiracy combination at all, at any rate if he acted throughout in ignorance of the true facts.

(4) The suggestion that the Court can adopt a test of ‘constructive intent’, derived from the fact that the defendant should have known the injury to the plaintiff would ensue, is contrary to the requirement for the unlawful means to be directed towards the plaintiff.

(5) Hence, it is not sufficient in seeking to meet the element of intention to show merely that there was knowledge to found an awareness of the likelihood of particular consequences.

(6) Rather, lesser states of mind, such as an appreciation that the course of conduct would inevitably harm the plaintiff, would not amount to an intention to injure.

(7) The unlawful acts in question must be the instrument by which the loss is inflicted.

(8) Unlawful acts will not be the instrument in this sense, if the unlawful acts are only incidental to, or collateral to, the loss.

(9) This is because the unlawful means must be the means by which the defendant intended the harm to the plaintiff, and the means by which the harm is intentionally inflicted.

…

342. As to the Element 3 – unlawful acts carried out pursuant to the agreement or understanding and such intention:

(1) Breaches of fiduciary duty, dishonest assistance and knowing receipt have all been recognised as being capable of amounting to ‘unlawful means’ for the purposes of the tort of conspiracy.

(2) However, other cases have held that breaches of fiduciary or statutory duty are not unlawful means capable of founding and actionable unlawful means conspiracy.

343. As to the Element 4 – resultant loss or damage:

(1) Damage is an essential element of the tort of conspiracy.

(2) As a starting point, the innocent party should be restored, in money terms, to the same position as he would have been if the wrong had not been committed.

(3) But, the plaintiff must prove actual pecuniary loss, and a claim to general damages to be assessed is insufficient.

(4) Further the plaintiff must plead and prove that the alleged loss or damage was caused by the acts constituting the tort of conspiracy.

(5) The function of the tort of unlawful conspiracy is to provide a remedy where the plaintiff is harmed through the instrumentality of the unlawful means, requiring proof that the unlawful means were not incidental but the means by which the defendant intended to harm the plaintiff.”

D2.  Vicarious liability

37.  As for the test of vicarious liability of employers, it was not disputed that the leading authority is Ming An Insurance Co (HK) Ltd v Ritz-Carlton Ltd (2002) 5 HKCFAR 569 which adopted a “close connection test”: see §§19 and 25 per Bokhary PJ. An employee is vicariously liable for an employee’s unauthorized tortious act if the employee’s tort was so closely connected with his employment that it would be fair and just to hold his employer vicariously liable.

D3.  Contributory negligence

38.  As for contributory negligence, “negligence” is used in the sense of careless conduct rather than in its sense of breach of duty. It connotes a failure by the claimant to use reasonable care for the safety of either itself or its property so that to some extent it becomes blameworthy as the “author of its own wrong”. See Charlesworth & Percy on Negligence, 16^th Edn, §4-03.

39.  In the apportionment of the claimant’s share in the responsibility for the damage, the court will have regard to the blameworthiness of each party as well as the relative importance of his acts in causing the damage. See ibid, §4-28.

D4.  Assessment of witnesses

40.  As for the assessment of witnesses, the principles are well-established and was also not disputed. They were helpfully set out by DHCJ H Au-Yeung (as he then was) in Hu Lan v David Golden [2023] HKCFI 873 at §36:

“When I consider the credibility of various witnesses who had given evidence in court, I shall take into the following matters into account:

(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4) The court should consider a witness’ motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5) It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie;

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

E.  The Witnesses and their evidence

E1.  Black Marble’s witness

41.  Black Marble only called one witness, Law Po Yi Mary (“Law”). At all material times, she was never employed by Black Marble though she was employed by the Lerado Group, the shareholder of Black Marble, as an administrative officer.

42.  Whilst at the material time she did not work at the office of Black Marble, her evidence was that her job included ordering water, arranging the air-conditioning cleaning schedule and other administrative matters in Black Marble’s office. Even though she assisted in locating and retrieving documents for the internal investigation after 2020, she confirmed that she was not involved in and did not read the internal investigation report of Black Marble.

43.  Although I find that she was an honest witness but clearly she had no personal knowledge of the dealings between Thomas and Rabie nor Black Marble’s operations at the material time. She frankly admitted that her witness statement was prepared by others and she agreed to them without any confirmation. In particular, she confirmed:

(1)  Even though in her witness statement[2] she stated that: “Throughout my time working, licensed persons of [Black Marble], including [Thomas], at all material times during the term of [BCA], received verbal reminders to read and be familiarised with the Manual and the Code of Conduct, as well as circulars (by way of email) on the updated requirements or practices in respect of the Manual and the Code of Conduct. Further, the Manual and the said circulars were at all material times accessible by [Black Marble]’s staff members (including [Thomas]) in [Black Marble]’s shared drive”, she admitted that she did not work in Black Marble’s office and did not receive any email from Black Marble nor had access to its computer or shared drive;

(2)  Even though she mentioned in her witness statement what had transpired in the internal investigation with Thomas, she did not participate in and did not even read the internal investigation report (which has not even been produced in these proceedings)[3];

(3)  Whilst she referred to the WhatsApp messages between Thomas and Rabie, she has no knowledge or cannot remember the contents of those messages[4]; and

(4)  Although in her supplemental witness statement she said that Black Marble incurred a total of HK$464,152 in legal fees relating to the SFC investigation[5], apart from looking at the bills issued by Messrs So, Lung and Associates (“SLA”), she had no knowledge about the work done by SLA and what happened between SLA and Black Marble.

44.  Although Law mentioned that those with direct knowledge of what happened at the relevant time had left Black Marble in around 2021-2022, she made no mention of any efforts to locate the two staff who did have the relevant knowledge (the Chief Financial Officer and Responsible Officer of Black Marble) to give evidence in this action.

45.  I agree with Mr Lau that Law’s evidence is not relevant nor helpful. In closing submissions, Mr Wong would appear to agree that he did not rely on Law’s evidence but relied on the WhatsApp messages between Rabie and Thomas, accepting that Black Marble had no positive evidence to add to the factual analysis. I also agree and would place greatest reliance on the contemporaneous document.

E2.  Rabie’s witnesses

46.  As for the witnesses called by Rabie, these were Rabie himself and his current personal assistant, Tiffany Madar (“Madar”).

47.  In respect of Rabie’s evidence, even though in cross-examination by Mr Wong, he sought to demonstrate that there were some inconsistency between his witness statement and his pleaded case, I did not find there were material discrepancies and it may be just a matter of details. Nonetheless, as demonstrated in my analysis below, part of Rabie’s evidence is contradicted by the contemporaneous documents and despite his attempt to give his ex post facto explanation of those documents, in particular his reading of the WhatsApp messages, given his obvious self-interest in these proceedings, I do not find his evidence reliable. I would place greater reliance on an objective reading of the contemporaneous documents.

48.  Madar’s witness statement was adduced as evidence in chief and there was no cross-examination by Mr Wong. Hence her evidence was unchallenged and I see no reason why her evidence should not be accepted in full. However, given that she was only Rabie’s personal assistant from 2019, I did not find her evidence of great assistance.

F.  My Factual Findings

49.  Mr Wong in closing submissions divided his analysis of the facts into 4 time periods. I believe that it would be convenient for me to make my finding of facts following those 4 time periods as Annex 2 to Mr Wong’s written closing submissions (“Annex 2”) quantified any loss suffered by Rabie in relation to each of those 4 periods based on different scenarios to be found by me, and such quantified losses were agreed to by Mr Lau.

F1.  Period 1: opening of the Account up to 11 October 2016 WhatsApp message

50.  It was Rabie’s unchallenged evidence that on 2 July 2016 evening, Rabie and Thomas met in person for the first time at a boat trip dinner. During that dinner: (a) Thomas said that he wanted to prove his company was the best for Rabie and that he would provide personalized and high quality service for his customers including Rabie and would monitor the Account for Rabie via WhatsApp messages; (b) Rabie told Thomas that if he opened an account with Thomas, every stock trade had to be authorised and approved by Rabie either through telephone calls or through WhatsApp messages; (c) Thomas introduced Rabie to the China Education share (stock code: 2371); (d) Rabie agreed to open an account with a view to trade in China Education and Galaxy Entertainment Group Ltd (stock code: 0027); and (e) Rabie planned to inject HK$1M as his son’s education funds. As his evidence was unchallenged, I find the foregoing as facts as to what took place on 2 July 2016.

51.  As to what happened on 4 July 2016, when Eric and Thomas visited Rabie’s clinic for medical slimming treatment, Rabie’s evidence was also not greatly challenged. I find as a fact that: (a) Thomas provided Rabie with the Account Opening Documents in Chinese and said that the English version was not available; (b) Thomas had explained that before executing any trades at Black Marble each order would be manually confirmed; and (c) Rabie told Thomas that he did not want any risk, would accept low returns and was not in a position to take risk given his age.

52.  During Mr Wong’s cross-examination, he challenged Rabie’s evidence that there was an express or unequivocal instruction telling Thomas that every trade had to be authorised by phone or WhatsApp as this was not pleaded in D1’s ADCC. Although it was not pleaded in the two sub-paragraphs to paragraph 13 concerning the meetings on 2 July 2016 and 4 July 2016[6], it was pleaded in paragraph 23 that in early July 2016 there was an arrangement whereby Thomas or other employees/agents of Black Marble would only upon Rabie’s express and specific prior instructions and/or approval execute trades on Rabie’s behalf[7]. I do not find there to be a material inconsistency between Rabie’s evidence and the pleadings to discredit his evidence in this regard.

53.  I would also not accept that there is any evidentiary basis for Thomas’ pleaded case that he had offered to explain the Account Opening Documents but Rabie refused. When this matter was put to Rabie in cross-examination, he has denied this.

54.  On 6 July 2016, the Account was opened as Thomas confirmed by WhatsApp to Rabie[8] and from the email sent by Black Marble to Rabie on 7 July 2016[9]. Thomas also informed Rabie on 6 July 2016 that he would receive an email which would ask him to change his password. He told Rabie: “If u want me to do trades for u then u will need to change it to a password which u can also let me know so whenever u want to place an order while busy u can tell me and I’ll do it for u or if not I can also give u a name of a guy in office which u can call him to do but he will be less flexible for ur purpose.” Rabie replied: “OK will do”.[10]

55.  On a proper and fair reading of what Thomas said to Rabie, it is quite clear that he was telling Rabie that he would access the Account in order to execute trades on behalf of Rabie. Although in cross-examination, Rabie maintained that he did not read those sentences that way and understood it only to mean that Thomas would access the Account to monitor and follow-up, I do not place great weight on his ex post facto explanation on his understanding of those messages. That said, I do accept that the purpose of providing Thomas with the password was not as clear as it could have been and could have caused confusion to Rabie given later Thomas did mention trades could be done by calling “wenger”[11] and after informing him of the password he and his team can “follow up from then on”, and that he is not supposed to help people do trades, only trades at the trading floor when the clients call in[12].

56.  On 7 July 2016, again Thomas asked Rabie if he managed to login the Account successfully. He offered to help him login for the first time and change the password for him. Rabie agreed. Thomas had said that after Rabie forwards the email with the Login Details and he changes the password for him, then he will start buying the China Education shares for Rabie[13]. I think at this point, it should have been clearer to Rabie that Thomas was saying that he would only be executing the trades for Rabie with the password and access to the Account.

57.  From 8 July 2016, Thomas started to purchase shares on Rabie’s behalf.

58.  On 8 July 2016, Thomas stated that he had purchased HK$1M of China Education shares with average price at 0.21942[14]. That could not have been the case as can be seen from the further messages.

59.  On 11 July 2016, Thomas stated that he bought a total of 2,268,000 of China Education at average price of 0.21947 and cash left in the Account is HK$500,863.69[15].

60.  On 12 July 2016, Thomas reported that he bought another 200k of China Education at 0.218[16].

61.  On 21 July 2016, Thomas reported that he bought 1M shares of China Education, some at 0.18 and some at 0.181[17]. At this point, he told Rabie that the total shares he owned in China Education was 3,468,000, bought at an average price of 0.20814 and there was HK$276,621.18 cash left[18].

62.  On 6 August 2016, Rabie asked how many shares in China Education he had in total and the average price. Thomas replied that he had 4.2M shares, average price of 0.20392 and there was HK$141,906.76 left in the Account.[19]

63.  All the China Education shares purchased on Rabie’s behalf, on Rabie’s case, were trades authorised by him.[20]

64.  Rabie then said he would top up HK$400,000 to the Account for the purchase of the Chinese securities shares which Thomas had mentioned on 5 August 2016. It is clear from the initial plan to set up the Account for purchasing China Education and Galaxy shares, Rabie was prepared to inject further sums for purchase of other shares recommended by Thomas.

65.  Rabie also accepts that the purchase (on 8 August 2016 and 9 August 2016) and sale (on 15 August 2016) of these Chinese securities shares: 12500 shares of (stock code: 06030); and 26500 shares of (stock code: 06881), were trades authorised by him.[21]

66.  On 6 August 2016, Thomas informed Rabie: “Actually there’s something else I have been doing for some of my frds. They are like u very busy most of the time and don’t have time to trade. So I helped a few of them to make trades for them and help them make money. In turn they share part of the profits to me at a certain level. Below is a new account which I have been handling, the person deposited 1m on 2016/7/20 and today value already 1.32m.”[22] Thomas shared two photos of a screenshot and stated: “Anyway just to let u know too, if one day u feel interested just lemme know.”[23] Rabie replied, “Ok great.”[24] Whilst Mr Wong in cross-examination suggested to Rabie his response was not to immediately reject it, Rabie said he also did not indicate any interest. I think this conversation is telling and would refute any secret arrangement as pleaded by Black Marble between Thomas and Rabie have been entered into at this time. If so, Thomas would not have to tell Rabie about this type of discretionary arrangement and ask if he was interested.

67.  On 16 August 2016, Thomas further suggested two other stocks (stock codes: 762 and 1088) to Rabie[25]. Again, the purchase and sale of the share of stock code: 762 on 16 August 2016 and 18 August 2016 respectively were authorised on Rabie’s case.[26] However, it should be noted that 52,000 shares of 762 was bought and subsequently sold before any prior approval by Rabie but was only subsequently ratified by Rabie. From that point onwards, there are clear instances of ratification of trades by Rabie after the event.

68.  On 19 August 2016, Thomas proposed: “I suggest u to buy 2823 or 2822. They are both a shares etf. I bought today already, u can consider buying next Monday when market opens.”[27] Rabie responded: “How soon can we sell”; and “Ok sound good”[28]. Thomas replied: “2823 now 10.7 target should be around 12. Should happen within one – two months. A shares been testing its 250 bull bear cross line.”[29] Rabie then replied: “Ok go ahead.”[30] It is evident from the messages that Rabie was comfortable with or willing to buy and sell shares with a short turn-around time.

69.  In cross-examination, Rabie said he did not know what “etf” were and therefore did not ask. Nonetheless, clearly he did approve their purchase (and later sale).

70.  On 22 August 2024, Thomas informed Rabie: “Hi doc just bought 15000 shares of 2822@11.76. 15000 shares of 2823@10.7, their derivative 600000 shares of 25184 @ 0.10217, 876000 shares of 26786 @ 0.0794”.[31] In cross-examination, Rabie’s evidence was that whilst Thomas had mentioned derivatives he did not know what they were and he focused only on the confirmation of buying 2822 and 2823. Even if that is the case, he was informed and raised no objection to being informed after the event. He simply replied “Ok good luck”.[32]

71.  When Thomas told him on 24 August 2016 that 2823 and 2822 were sold at a loss, he simply replied “Ok”[33].

72.  On 30 August 2016, Thomas suggested buying shares with stock code: 1211[34]. Rabie replied: “BYD Chinese cars?”.[35] In cross-examination, Rabie admitted that he would look up or google the stock codes mentioned by Thomas. It is Rabie’s case that the purchase but not the sale of this stock was authorized by him.[36] However, from the WhatsApp messages, when Thomas suggested selling 1211 to take profit first[37], Rabie replied “Go ahead.”[38] Although it appears from the following message that in fact it was sold before Rabie’s instruction: “OK I sold already at 56.1-56.15 for u earlier”[39] but by this time, it seems clear to me that Rabie must have implicitly agreed (notwithstanding their earlier arrangement there would be his prior approval before executing each trade) for this to be the new arrangement.

73.  On 9 September 2016, Thomas proposed two other stocks to Rabie: 2883 and 1057[40]. Rabie responded “Your decision Thomas. But why do you think oil share is a good one to buy.”[41] Again, it demonstrates that Rabie would look up the stock code to find out what shares were being recommended. Ultimately, 2883 was bought and sold at a profit on 9 September 2016 and 30 September 2016 respectively and were authorised trades on Rabie’s case[42]. Again, it can be seen that Rabie was comfortable with the quick turnaround sale of stock recommended by Thomas.

74.  On 30 September 2016, when Thomas proposed Rabie “try some warrants”[43], Rabie responded “No warrants buddy”[44]. Thomas replied, “Ok”.[45]

75.  On 30 September 2016, Thomas also proposed to buy 762[46] which Rabie gave the “go ahead”[47] and it was purchased on that day. On Rabie’s case, this purchase was authorised by him.[48]

76.  On 5 October 2016, Thomas sent a message to Rabie saying: “Hi doc my bro told me u are concer[sic] about 2371. Me too man so I asked my friend a week ago about it he said he has a lot more stocks than me and he said he will keep and wait and so me and my father will do the same for ours. But as for u u can decide whether u want to cut loss for that one if u want to and instead do something more liquidate like the ones I been helping u buy this while. It’s up to u bro.”[49]

77.  Rabie replied: “I am with you Bro, I was not concerned, just asking. But thus far you were correct on all. China oil field took off today. I will do whatever you do, stay until it takes off.”[50] In cross-examination, when put to him that he did not say don’t sell the China Education shares, Rabie disagreed. He explained that his message was that he would do what Thomas was doing which was to stay until the share took off. I would accept, at this point in time, the message was not to sell (stay) until it takes off.

78.  On 7 October 2016, Thomas proposed to sell 762 and Rabie agreed.[51] On Rabie’s case, this sale was authorised by him.[52]

79.  During this period, I find that all the trades in the Account were approved by Rabie.

F2.  Period 2: from 11 October 2016 message to before the dinner on 17 October 2016

80.  On 11 October 2016, Thomas asked: “Hi doc sometimes when I see good stock should I help u just buy or ask u first, cuz like this morning I wanted to help u buy back 762 @ 9.75 and would sold @ 9.95 already. Like this type of fast trade do u want me to do without ur authorisation or should I just ask u first, it’s up to u bro, just thought easy money wanted to help u make too hehe”.[53]

81.  Rabie responded: “Just do it, don’t ask me. Like now, I am in London and just woke up.”[54] In cross-examination, Rabie explained that he meant that Thomas did not have to ask him about the 762 stock but disagreed with the suggestion by Mr Wong it was intended to be free autonomy for Thomas to do trades for him. He said it would not make sense when only a few days earlier when Thomas has offered to do discretionary trading for him he did not accept the offer.

82.  It is not disputed that after this message, apart from discussion about the China Education shares, there were no other messages from Thomas suggesting trades or asking Rabie whether to buy or sell shares. This is consistent with there having been an agreement for Thomas to be given full discretion on what stocks to buy and to trade without prior authorization of Rabie. It is also consistent with Rabie’s message on 9 January 2017 when he only confronted Thomas about buying warrants against his clear instructions and said: “My instructions were clearly about you are free to make decision about stocks”.[55] I would accept Black Marble’s case and find that all trades in shares (save warrant trades) were authorised by Rabie given the agreement to give full discretion to Thomas.

83.  On 14 October 2016, Thomas asked Rabie what were his plans for China Education which had risen back a lot.[56] If there was, on Rabie’s case clear instruction not to sell China Education shares, Thomas would not have so asked Rabie nor would Rabie have asked Thomas what were his plans[57]. Thomas further mentioned that he was tempted to help Rabie sell back some first as long as there was profit but said he wanted to know what Rabie thinks first.[58] By not reiterating what Rabie now says was his instruction not to sell China Education, or responding to these message, he must have been taken to agree to going along with what Thomas proposed which was to sell some first and wait and see.[59] This overrides the previous instruction to not sell until China Educations “takes off”.

84.  It is also consistent with no protest being made in the WhatsApp messages about Thomas’ selling of the China Education shares which Thomas had informed Rabie over the phone on 5 January 2017 but only protesting about the buying of warrants.

85.  I find all trades during this period except warrant trades were authorised by Rabie.

F3.  Period 3: from the 17 October 2016 Dinner to 9 January 2017 message

86.  It was not disputed that there was a dinner in Wanchai on 17 October 2016 that was attended by Thomas, Rabie and his friend “Jack”.

87.  However, I agree with Mr Lau that there is simply no evidentiary basis for the suggestion put to Rabie in cross-examination that at that dinner: (1) Thomas boasted about how he made quick profits for Rabie from warrants trading; and (2) Thomas had brought up the suggestion of inviting Rabie to trade in warrants to make quick profits.[60] It is also inconsistent with Rabie’s firm instructions “no warrants buddy” on 30 September 2016. It is also not consistent with Rabie’s challenge to Thomas’ authority to buy warrants in January 2017.

88.  I do not accept Mr Wong’s submissions that the circumstances are more aligned to Thomas’ pleaded case (unsupported by any evidence from Thomas or the contemporaneous document) that at the dinner Rabie said he trusted Thomas’ judgment and did not specifically object to trading on warrants and derivatives[61]. The fact that Thomas had made profits for Rabie by trading warrants does not necessarily mean that it would have been raised at the dinner particular when on 30 September 2016 the clear instruction was not to trade in warrants. Whilst it was submitted that there was a change of investment style and risk appetite, trading in warrants is altogether a very different and much riskier type of investment. The fact that after that there had been a dramatic uptick in warrant trading does not demonstrate there had been agreement by Thomas when no trading (specifically that warrants were traded) were reported to Rabie thereafter.

89.  Mr Wong relied on the lack of immediate protest after Thomas told Rabie there had been warrant trading during a telephone call on 5 January 2017 until 9 January 2017. On 7 January 2017, Rabie asked: “Thomas you mentioned on our conversation that you had sold the China education shares to buy warrants. Please let me know 1. If we still have any education shares or you sold all the one million shares? 2. Which warrants we have now? I would like to monitor their progress.”[62] It was only on 9 January 2017 that Rabie expressed to Thomas: “Thomas I was very surprised and upset when I heard during our last conversation that you bought warrants against my clear written instructions of ‘no warrants for me’”[63]. However, I accept Rabie’s explanation that he was in total shock, required time to process the matter and to recheck his own records that he had authorised trading in warrants.[64]

90.  Overall, I do not accept Black Marble has proved on a balance of probabilities that Rabie had approved or agreed for Thomas to trade in warrants on his behalf at the dinner on 17 October 2016 or thereafter. I find that all warrants trade during this period were not authorised by Rabie.

F4.  Period 4: from the 9 January 2017 message to 28 June 2017

91.  On 9 January 2017, after Rabie expressed his upset with the purchase of warrants, he clearly stated to Thomas, “Let’s have that meeting before you buy anymore warrants.”[65]

92.  Thomas responded: “I am seriously sorry that I made u loss money. I start to buy the warrants after u told me to go ahead and do what I feel suitable even warrants. The market conditions went surprisingly bad last 2 months even when Dow keeps rise. I’ll stop buy warrant now if u want or stop do anything for ur account if that is ur request. I personally lost a lot of money the past 2 months as well. Everything I helped u buy I bought myself as well I can show u my account statements any time. I sincerely just want to help u make money as well my friend, there’s nothing to gain for me if make u loss. What can I only do right now is try to get back the money from u.”[66]

93.  Rabie responded: “Please show me the record that prove I gave instruction ‘even warrants’. My instructions were clearly about you are free to make decisions about stocks”[67]. Although Thomas sent 3 screen caps of their WhatsApp conversations[68], it is not disputed that they do not show any instructions to Thomas to go ahead and to do anything for the Account even warrants.

94.  Mr Wong submitted that Thomas was asking for Rabie’s confirmation that he should stop trading in warrants, and with no positive response (“a simple no”) Rabie should be taken as implicitly authorised Thomas’ plan to trade to gain back the money lost. With respect to Mr Wong, there can be no clearer instructions to stop trading in warrants. Besides, given the clear displeasure and huge loss suffered by Rabie, if there was any lack of clarity of instructions from Rabie, Thomas should have clarified with Rabie what he was to do or not to do.

95.  Although there were no further WhatsApp messages between Thomas and Rabie from after 9 January 2017 until 28 June 2017, Thomas continued to carry out trades in the Account during that period. Plainly, all the warrants trades were without authorization and contrary to Rabie’s instructions on 9 January 2017.

96.  On 28 July 2017, Thomas informed Rabie that Black Marble was on the verge of being closed down and that it is only wise to sell any stocks in the Account and that he would transfer what is left back to his personal bank account. Rabie asked how many stocks he still had and Thomas responded the worth value was HK$40k.[69]

G.  My Findings on the Agreed Issues

G1.  Issue (1): Whether there was a secret arrangement between Rabie and Thomas whereby Rabie expressly and/or implied delegated and/or given discretionary powers to Thomas to operate the Account and to make investment decisions on behalf of Rabie without Black Marble’s knowledge and approval

97.  As I have found above, from my analysis of the WhatsApp messages above, by around 11 October 2016, full discretion has been given to Thomas to operate the Account and make investment decisions on what stocks to buy and sell and at what price on behalf of Rabie.

98.  However, I am not satisfied that there is any evidence that such arrangement between Thomas and Rabie was to be kept secret and was not to be made known to Black Marble. It is clear from Rabie’s evidence, which was not challenged, that he regarded Thomas as Black Marble’s agent, being the Vice President of Black Marble and his account executive. There is also no evidence that Rabie knew the difference between opening a cash account and discretionary account with Black Marble and that the latter was not allowed by Black Marble.

99.  In view of the evidence before me, the secret arrangement as alleged by Black Marble is not proved on the balance of probabilities.

G2.  Issue (2): If the answer to (1) is affirmative, whether the constituent elements of a conspiracy claim are satisfied by the facts relating to the Discretionary Trading Arrangement

100.  As submitted by Mr Lau, there are a number of obstacles on its case of conspiracy by unlawful means even if there was the secret arrangement as alleged by Black Marble.

101.  As Mr Wong did not make any submissions in response to the points made against Black Marble in the opening submissions as well as in the closing submissions of Mr Lau, I take it that he accepted that those points are valid and the claim in conspiracy cannot be made out.

102.  I agree that for at least the following reasons the elements of a conspiracy claim cannot be satisfied on the facts of the present case:

(1)  Insofar as Black Marble relies on Thomas’ breach of BCA, where Rabie was not a party to the BCA, there being no evidence Rabie knew of the existence of BCA and the terms thereof, Rabie cannot be said to have procured a breach of contract and the element of unlawful means is not made out: see Clerk & Lindsell on Torts, 24^th Edn, §§23-31 , 23-32 and 23-119;

(2)  Rabie was never cross-examined or a case put to him about his intention or motives for joining the alleged conspiracy and that he intended to injure Black Marble; and

(3)  The alleged conspiracy could not have caused the loss now claimed by Black Marble (costs of internal investigation, costs of the SFC investigation and the SFC fine of HK$1.8M) when the systemic internal control problems was the cause of those costs and Black Marble could not have been harmed by or through the instrumentality of the unlawful means.

103.  The claim in conspiracy must fail.

G3.  Issue (3): Whether Rabie and Thomas entered into the Pre-Approved Trading Arrangement in July 2016

104.  Based on my finding of facts in Section F1 above, I am satisfied that Rabie and Thomas had on July 2016 entered into the Pre-Approved Trading Arrangement.

G4.  Issue (4): Whether Thomas owed a duty of care to Rabie: (a) during the filling in of the Account Opening Documents; and/or (b) when advising Rabie and carrying out trades via the Account pursuant to the Pre-Approved Trading Arrangement or otherwise.

105.  Mr Wong did not contest such duty of care was owed to Rabie. Plainly, as his account executive and given the Pre-Approved Trading Arrangement that I found that was entered into, Thomas clearly owed a duty of care of Rabie.

G5.  Issue (5): If so, whether Thomas breached any duties owed to Rabie.

106.  Mr Wong also did not contend that Thomas had not breached any duties owed to Rabie. Rather, his focus was what was the nature of the arrangement between Thomas and Rabie (by analyzing the WhatsApp messages) and whether any loss suffered by Rabie should be reduced by the alleged contributory negligence of Rabie.

107.  I accordingly find that Thomas breached the following duties owed to Rabie: (a) failing to provide Rabie with the Account Opening Documents in Rabie’s preferred language i.e. English, and/or failing to explain the contents of the Chinese documents provided to Rabie; (b) executing trades in breach of instructions given by Rabie (specifically, the instructions not to trade in warrants); (c) receiving commission on the trades which were unauthorised; (d) failing to keep Rabie reasonably informed as to the status of the Account; and (e) failing to comply with his duties under the Code of Conduct. These are consistent and supported by the findings by SFC against Thomas[70].

108.  Mr Lau submitted that even if this court finds against Rabie in that the Discretionary Trading Agreement had been entered into, then Thomas as fiduciary of Rabie, owed a duty to act in his best interest and should not have recommended warrants to Rabie. He relied on the case of ATA v American Express Ltd, Times, 26 June 1998 CA cited in Jackson & Powell on Professional Liability, 9^th Edn, §15-068.

109.  There was no challenge to Rabie’s evidence that his actual risk tolerance should be low and not as erroneously recorded by Thomas in the Account Opening Documents as medium. However, plainly trading in warrants was not appropriate to even medium risk tolerance and should not have been recommended to Rabie when the Account Opening Form had ticked “The Client has no knowledge of derivative products”.[71]

110.  Thus I would also accept that Thomas also acted in breach of fiduciary duties owed to Rabie in the recommendation and trading of warrants.

G6.  Issue (6): If so, whether Black Marble is liable by: (a) being vicariously liable for Thomas’ breach of duties and/or (b) Thomas having acted as Black Marble’s agent

111.  In Black Marble’s written opening submissions, it was stated Black Marble accepts that: (a) there was an employer-employee and/or agent-principal relationship between Black Marble; and (b) explaining the Account Opening Documents including the risk disclosure form to prospective clients such as Rabie fell within Thomas’ duties such that if the court finds a breach of duty committed by Thomas during the account opening process then Black Marble is vicariously liable. Rabie’s evidence that the Account Opening Documents wrongly recorded his instructions in respect of risk was “low” was unchallenged. Plainly, Black Marble is therefore vicariously liable for Thomas’ breach of duty in not recording accurately Rabie’s risk tolerance.

112.  However, I am of the view that Black Marble should also be vicariously liable beyond the account opening and vicarious liability should extend to the trades executed by Thomas in the Account until it was closed.

113.  Although Mr Wong submitted that Thomas was licensed for Type 1 regulated activities, and advising Rabie on what stocks to trade was not closely connected with the nature of Thomas’ job, clearly advising on securities is incidental to securities dealing business: see SFC, “Do you need a licence or registration?”[72].

114.  Furthermore, as pointed out by Mr Lau, in Black Marble’s submissions to SFC it was stated that: “It is expected that, as a common market practice, [Thomas] being the account executive of these clients and a holder of licence for Type 1 regulated activity, may from time to time provide market information/investment advice to his clients (which is wholly incidental to his securities dealing functions).”[73]

115.  Even though under Black Marble’s Manual[74] and internal circular[75] there was a reminder that as regards discretionary accounts, there was a duty to ensure the client signed a written authorization and obtain the management’s approval, before conducting trades in the account on a discretionary basis, this is not a restriction on Thomas conducting discretionary trading but merely the mode of carrying out his employment and does not prevent vicarious liability from arising: see Wong Wai Hing & Another v Hui Wei Lee [2001] 1 HKLRD 736 at 763B-I.

116.  I would find Black Marble vicariously liable for all of Thomas’ breach of duties to Rabie as the account executive in providing investment advice and executing warrant trades in relation to the Account.

G7.  Issue (7): Whether Black Marble owed Rabie a duty to supervise its staff (including Thomas) and whether there was any breach of such duty by Black Marble

117.  It has never been Black Marble’s case that no duty of care was owed to Rabie by it. It accepted that, as provided by the Code of Conduct, that there is an overarching duty on Black Marble to implement and maintain “internal control procedures and financial and operational capabilities which can be reasonably expected to protect its operations, it clients and other licensed or registered persons from financial loss arising from theft, fraud, and other dishonest acts, professionally misconducts or omissions”[76].

118.  Furthermore, it was stated in Black Marble’s opening submissions[77] that it does not dispute that it has breached its duties in the way identified by the SFC in the Decision Notice[78] and the Statement of Disciplinary Action[79]. SFC found that although Black Marble claimed trading activities were monitored by its account executives on a real-time basis and were further reviewed by its senior management / responsible officer in the form of a daily trading report circulated at the end of each trading day (“Daily Trading Report”), there were no policies nor procedures to explain or guide account executives and responsible officers on their responsibilities for monitoring trading activities. This led to some dealers and responsible officers not understanding the extent of their monitoring responsibilities. The post-trade monitoring by Black Marble’s senior management / responsible officers was also inadequate and ineffective as the Daily Trading Report was not circulated to them on a daily basis at the end of each trading day. There were also no records or reports to show that its senior management/ responsible officers had actually reviewed those Daily Trading Report that were circulated to them. SFC therefore found Black Marble’s failure to establish adequate internal control to monitor trading activities breached: (a) General Principle 2 of the Code of Conduct (which requires a licensed corporation to act with due skill, care and diligence, in the best interests of its clients and the integrity of the market); (b) paragraph 4.3 of the Code of Conduct (which requires a licensed/ registered person to have internal control procedures and financial and operational capabilities which can be reasonably expected to protects its operations, its clients and other licensed or registered persons from financial loss arising from theft, and other dishonest acts, professional misconduct or omissions); and (c) paragraph 12.1 of the Code of Conduct (which requires a licensed /registered person to comply with, and implement and maintain measures appropriate to ensure compliance with the laws, rules, regulations and codes administered or issued by the SFC).[80]

119.  Given that Black Marble accepts the findings by the SFC and no other evidence has been placed before me to the contrary, I would accept the findings of SFC. Plainly, Black Marble had failed to establish adequate internal control to monitor trading activities, to explain to or guide its account executives, senior management and responsible officers on their responsibilities on monitoring trading activities.

G8.  Issue (8): Whether as a result of any or all of the aforesaid breaches by Black Marble and/or Thomas, Rabie suffered any loss and damage

120.  Plainly, as a result of the unauthorised trading in warrants by Thomas in breach of his duties to Rabie, Rabie had suffered loss and damage as a result of those trading.

121.  Furthermore, as SFC found, Black Marble ought to have known from the Account Opening Documents that Rabie did not have experience in derivatives trading but it did not have any procedures in place to characterize and identify client accounts without derivative knowledge, such as a description or an alert, to warn dealers and relevant staff members to conduct further enquires should these accounts trade in derivatives.[81] I am also satisfied that Rabie had suffered loss and damage as a result of the breach of duty by Black Marble.

122.  As to the loss and damage suffered by Rabie, this is now agreed by counsel to be as set out in Annex 2. The net losses from warrant trading during Periods 2 to 3 were agreed to total HK$558,438.83 and for Period 4 to total HK$181,787.44.

G9.  Issue (9): Whether Rabie’s own conduct has caused or contributed to any loss and damage suffered by him

123.  Notwithstanding a number of matters were pleaded in support of the claim that Rabie had contributed or caused the loss suffered by him, in closing submissions, Mr Wong relied on the following matters: (a) Rabie’s receipt of the monthly and daily account statements in his email account; and (b) Rabie’s access to the Platform.

124.  However, as it was accepted (or at the very least not challenged) by Mr Wong that contributory negligence should not be used to reduce damages for a claim based on breach of fiduciary duty (see Clerk & Lindsell on Torts, §26-134 and Charlesworth & Percy on Negligence, §4-66), this issue does not arise for determination.

125.  In any event, I would be reluctant to find that Rabie was careless to such extent to reduce his claim for damages when: (1) there is no evidence that he was told or informed by Thomas or any staff from Black Marble that the monthly and daily statements would be sent to him by email; (2) it was not disputed that Rabie had not once logged onto the Platform; (3) it was not disputed that Rabie was not tech-savvy and was uncomfortable with going online, did not check his email regularly and would not read email unless specifically asked to; (4) I have found that the Pre-Approved Trading Arrangement was entered into, in particular Thomas promised to monitor the Account for Rabie by giving updates through WhatsApp; (5) Thomas did provide updates to Rabie by WhatsApp up to mid October 2016 which lulled him into a false sense of security; (6) there was no dispute that from November 2016 the statements from Black Marble no longer appeared in his inbox; and (7) Rabie was by no means a sophisticated and experienced investor having only bought two shares prior to the arrangement with Thomas.

126.  In the circumstances, I do not find Rabie careless as a result of his failure to check the trading in the Account via the Platform and/or going through his emails, and failing to take actions such as reporting to Black Marble when he regarded Thomas as agent of Black Marble (which was owned by Thomas’ family). In all, I find that Rabie reasonably reposed complete trust and confidence in Thomas as his investment advisor. See Charlesworth & Percy on Negligence, §4-64.

H.  Disposition and Orders

127.  Accordingly, I would make the following orders:

(1)  Save that judgment should be entered against Thomas for breach of contract with damages to be assessed, Black Marble’s claim should be dismissed;

(2)  Judgment should be entered against Black Marble on Rabie’s counterclaim; and

(3)  Black Marble should pay to Rabie: (a) damages in the sum of: (i) HK$740,226.27 being the net loss suffered from the unauthorized warrant trades by Thomas; and (ii) HK$60,000 being commission paid to Black Marble (adopting a broadbrush approach bearing in mind the proportion of unauthorized trade) with interests thereon; and (b) his costs of this action.

128.  As counsel did not make submissions on the rate of interest and time from when it should run, I make an order nisi that there should be interests at 1% above HSBC’s prime lending rate from the date of Rabie’s counterclaim to the date of Judgment and thereafter at judgment rate until payment in full.

129.  Costs should follow the event. I will make a costs order nisi that Black Marble and Thomas should pay Rabie’s costs of this action, with certificate for two counsel, to be taxed if not agreed. If no application to vary the above orders nisi is made within 14 days from the date of handing down of this Judgment, the costs order nisi and the interest order nisi shall become absolute.

130.  Lastly, I thank counsel for their assistance in this matter.