DICONEX (F.E.) LTD. v. CHOU CHER SHIN

1995, No.A6474

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is a claim by the Plaintiff, a trading company carrying on business in Hong Kong, against the Defendant, a former employee, relating to a sum of money that was credited to the Defendant's account with the Plaintiff. The amount involved is US $54,985 or HK $429,000.

2. A defence and counter-claim was filed by the Defendant who did not appear at the hearing. Her solicitors had informed her of the hearing last Friday, 6 December. A conference was scheduled to take place yesterday with counsel and, in fact, the Defendant's solicitors had instructed counsel on behalf of the Defendant.

3. To cut a long story short, the Defendant appears to have "vanished". She did not attend the conference that had been scheduled. Moreover, there is an investigation by the police relating to the transactions in question and she had to report to the police yesterday morning. She did not do so and her solicitors have not been able to contact her at all. In these circumstances, her solicitors have filed a summons seeking to be discharged from this case.

4. The Plaintiff proceeded to prove its case and, as the Defendant has not appeared, there is no one here to prove the counter-claim nor to defend the Plaintiff's action.

5. The claim arises in the following way. The Defendant was first employed by the Plaintiff in about 1992. Her responsibilities included that of keeping the Plaintiff's accounts. The Plaintiff also had business interests in China and by 1994 the Defendant was travelling on a frequent basis to China on the Plaintiff's behalf.

6. In May 1994 the Plaintiff engaged an accounts clerk by the name of Mak Yuen-man, Helen. She was supervised by the Defendant. Ms Mak commenced employment on 9 May 1994 and in the course of updating the Plaintiff's books she came across a remittance advice showing that the sum in question had been remitted into the Plaintiff's bank account on 30 April 1994. The sum was paid by a company under the name of Choi Hing Lee Seed Company Limited. Based on the remittance advice, a journal voucher was prepared to record the receipt of the sum.

7. It was Ms Mak's evidence that towards the end of June she spoke to the Defendant about the remittance advice and the journal voucher that she had prepared and sought instructions as to what entries ought to be made in the company's books. It was at that point in time that Ms Mak was instructed by the Defendant that the sum of money should be credited to the Defendant's account with the Plaintiff as it really belonged to the Defendant. She had allegedly caused a PRC entity to remit that sum to her via the Plaintiff's bank account. The Defendant was, of course, Ms Mak's supervisor.

8. Ms Mak was aware that the Defendant had a current account with the Plaintiff and there were many transactions shown under that account so she had no reason to disbelieve the Defendant. The journal voucher was accordingly amended. The Defendant's account number with the Plaintiff, namely, number 14088, was inserted under the account number column of the journal voucher and the abbreviation AR (standing for accounts receivable) was crossed off. The intention had been to insert the initials of the Defendant under the Account Holder Name column, but by an inadvertent error, two of the initials were inversed. There is no doubt, however, that the entry purported to show that that amount was to be credited to the Defendant's account with the Plaintiff. Entries were made in the Plaintiff's computerized ledger based on the information contained in the journal voucher as amended.

9. The Defendant left the Plaintiff's employ at the end of 1994. Prior to leaving she was paid an amount (which is admitted) based on the Plaintiff's ledgers and calculated on the basis that the sum of HK$429,000 belonged to the Defendant.

10. The Plaintiff's case is simply this. This amount of money did not belong to the Defendant. She had provided no consideration for it and, in fact, it represented payment for goods that had been sold by the Plaintiff to a PRC company known as Guangdong Province Seeds Import and Export Company.

11. Mr Chan Yau-choi gave evidence on behalf of the Plaintiff to the effect that in early 1995 he was retained by the Plaintiff and instructed to carry out an audit with specific reference to the Defendant's account with the Plaintiff. Mr Chan said that he came across this credit entry of $429,000 in favour of the Defendant in the Plaintiff's ledger which was a computer printout. He tracked down the source document which is the bank advice credit showing payment upon the instructions of Choi Hing Lee Seed Company Limited and he discussed this credit entry with the directors of the Plaintiff.

12. Mr Tai, a director of the company, explained to Mr Chan that the money did not belong to the Defendant and showed Mr Chan supporting documents evidencing a sale of goods to Guangdong Province Seeds Import and Export Company for an amount identical to that shown credited to the Defendant and also documents to show that the goods in question had previously been purchased by the Plaintiff for resale to this PRC company. Choi Hing Lee is a Hong Kong company that has business relations with the PRC company and the payment in question was made on behalf of the PRC company.

13. Mr Chan, who is a certified public accountant, expressed himself satisfied with the supporting documentation that he had been shown at the time. Although much of this documentation is not before me today, there is sufficient evidence for me to come to the conclusion that the Plaintiff has shown that the sum of HK $429,000 credited to the Defendant's account in fact was not money that belonged to the Defendant. Rather it was money that belonged to the Plaintiff.

14. As mentioned above, the Defendant has not appeared. Based on the evidence before me, I will give judgment in favour of the Plaintiff in the sum of $429,000 with interest at the judgment rate applicable from time to time. I award interest from 4 July 1995 until payment. The Plaintiff is also entitled to the costs of this action and I make an order nisi as to costs. The counter-claim is dismissed with costs in favour of the Plaintiff.

15. I order that the amount paid into court by the Defendant in the sum of $429,000 with interest (if any) be released and paid out to the Plaintiff forthwith. The interest element of the amount paid into court should be paid out to the Plaintiff on account of the amount of interest payable under the order.