XCHRX Phillip Securities (HK) Ltd. v. Ng Wai Ying Christina

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 16083 OF 2000

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J U D G M E N T

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1. This is an application for summary judgment by the plaintiff against the defendant for a sum of $487,401.27, being the outstanding amount in a cash trading account maintained by the defendant with the plaintiff, a stockbroker. The plaintiff also applies to strike out the counter-claim maintained by the defendant for the return of a sum of $520,000 which she has deposited into the account and which she says she has never made use of for the purpose of trading in shares.

2. The plaintiff's case is that at the time when the account was opened, the defendant expressly and orally authorised her husband, a Mr Yan, to operate the account on her behalf and thereafter, the account was indeed so operated by Mr Yan purportedly on behalf of his wife pursuant to the wife's oral authorisation. The plaintiff relies on an affirmation made by the stockbroker in question, a Miss Linda Usman, who said that such oral authorisation was indeed given. The defendant denies this. She says no such oral authorisation had been given. Had the matter stopped there, one would have thought that there is clearly a dispute of fact as to what actually happened on the very day when the account was opened.

3. The plaintiff in this application through counsel argued that apart from the oral assertion of Miss Usman on oath, the case of the plaintiff was evidenced also by the fact that after the completion of each transaction, the relevant documents, namely the bought and sold notes and the daily statements, were immediately posted to the residential address of the defendant. Moreover, monthly statements were also sent in the same manner and therefore the defendant must have been aware of all these transactions done by her husband on her behalf and this would tend to confirm that there had been such oral authorisation given at the time when the account was opened.

4. The plaintiff, also through counsel, argued that soon after the opening of the account, a fairly substantial sum of $520,000 had been paid into the account. Quite clearly, the payment was intended to facilitate trading in the account. If the defendant's story was right, then she could not explain why she would have wanted to pay over half a million dollars into her account with the money sitting there throughout the material times.

5. The defendant in her affirmation in opposition to this application, said she never received those bought and sold notes, daily statements and monthly statements. In this regard, I note that apart from an affirmation from a Mr Lee of the plaintiff saying that in the normal course of events the documents must have been posted to the defendant, there was no direct evidence of the posting of those statements. I also note that the alleged agent of the defendant, i.e. Mr Yan, was and I believe still is, the husband of the defendant residing together with the defendant at all material times, so the possibility of the mails from the plaintiff having been intercepted by the defendant's husband who resided together with the defendant cannot be ruled out at this stage.

6. Moreover, if the defendant was right in her story, i.e. that there was never such oral authorisation being given, that would be something to the knowledge of the stockbrokers, i.e. Miss Usman and her husband, Mr Raymond Chan, who according to the evidence together with his wife operated the defendant's account on her behalf. One possibility, and I put it no higher than that, would be that the stockbrokers throughout knew that the husband, i.e. Mr Yan, had no authority to operate the account of the defendant on behalf of the defendant but nonetheless, for whatever reason, agreed to go along with Mr Yan; and under that possibility it would be possible that the documents intended for the receipt by the defendant were not sent to the defendant at all. One could not rule out that possibility either.

7. Mr Jim, counsel for the defendant, also in his submission pointed out to me certain features in this case which called for some investigation. Amongst others, he pointed out to me that the alleged oral authorisation was not evidenced by anything in writing, not even a simple remark on the account opening form or agreement between the parties. The transactions in question well exceeded the exposure limit of $400,000 set by the plaintiff on this account, this not being a margin trading account. In some instances, the indebtedness run up in the account was in excess of $2.5 million and Mr Jim on behalf of the defendant questioned whether this is a proper case for an Order 14 application at all.

8. I must say that the central dispute in the present case is a dispute of fact, i.e. whether the defendant had authorised her husband, Mr Yan, to operate the account on her behalf. The matters pointed out to me by the plaintiff through counsel were matters tending to support the plaintiff's case, but they were no more than that. They were simply circumstantial evidence suggesting a certain answer but there were equally other matters which would tend to suggest quite a different answer. I must remind myself that I am not conducting a trial of the issues today, I am just here hearing an Order 14 application, performing a sort of screening test.

9. Certainly, in this type of application, the defendant has a threshold burden to show an arguable case. But for all the reasons I have pointed out above and all the features peculiar to the present case, in my judgment, it is at the very least arguable as to whether on the day when the account was opened the defendant had authorised Mr Yan to operate the account on her behalf.

10. Having reached such a conclusion, in my judgment there is no way I can give summary judgment in favour of the plaintiff and for the same reason, I cannot possibly strike out the counter-claim at this stage. Given the conclusion I have reached, I have refrained from going into or discussing the details of the issues and matters raised in this case in any greater detail.

11. The present application for summary judgment was taken out on 4 June this year, almost one year after the filing of a home-made sort of defence and counter-claim prepared by the defendant without legal representation. This was taken out after the summons for directions and I believe the discovery of documents; and although the defence and counter-claim was a home-made one, it did contain particulars to the effect that the defendant denied ever having authorised her husband to operate the account on her behalf. In other words, the gist of the defence which succeeded before me today at this summary judgment application stage was apparent from the defence in as early as July last year.

12. So for all these reasons, I am of the view that this application should be dismissed instead of the defendant being given leave to defend. So I order that the application for summary judgment be dismissed and for the same reasons I have already given, the application for strike out of the counter-claim be dismissed.

(Submissions on costs)

13. Having heard counsel's submission on the question of costs, in my judgment the defendant must have the costs of these applications. The only question is whether costs should be paid forthwith or whether costs should be ordered to be payable in any event. This is really a question of practical considerations. Speaking about the position of the listing of cases for trial in this court, I would say that normally a case can be listed for trial fairly soon in this court, so there is not going to be any difference in terms of time if I order costs to be payable in any event instead of costs payable forthwith. I also take into account that given the ability of this court to list the matter for trial expeditiously, there is not any good reason for having a side show about taxation of the costs of these applications in the meantime.

14. So in the exercise of my discretion, I order that the plaintiff pay the defendant the costs of these applications together with a certificate for counsel in any event.