CHONG KWOK TUNG v. LIU CHONG HING BANK LTD. and Another

1992, No.A7285

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. The writ in this action was issued on 23 October 1992 against Liu Chong Hing Bank Ltd. ("the Bank"). It was amended on 22 December 1992 when Au Wai Fong was joined as the 2nd Defendant. In 1993, the Plaintiff decided to proceed against Mr Au first. By Order dated 30 July 1993, the action against the Bank was stayed. The Plaintiff has three months from the date of the final determination of his claim against Mr Au (whom I shall refer to as "the Defendant") to notify the Bank of his intention to proceed with his claim against the Bank.

2. The Plaintiff's claim arises out of a sum of money which he deposited with the Bank on 4 July 1989. At all material times, the Defendant was an employee of the Bank. He is related to the Plaintiff, being the younger brother of the husband of the Plaintiff's paternal aunt. The Plaintiff's claim is based on conversion, fraudulent misrepresentation and money had and received.

Chronology of events

3. The Plaintiff came to Hong Kong from China in 1964. Two years later, he immigrated to the Netherlands where he has been living ever since. In about 1970, he started a restaurant business there. Every two or three years, he would visit his relatives in Hong Kong as well as his mother who lives in southern China. In the late 1980s, the Plaintiff maintained several accounts with the Bank of China, including deposit accounts. The Plaintiff returned to Hong Kong in June 1989. Because of the 4 June events in China and the subsequent bank run on the Bank of China in Singapore, the Plaintiff was anxious to transfer his funds from the Bank of China to a different financial institution.

4. During his stay in Hong Kong in June/July 1989, the Plaintiff met with the Defendant on three occasions, culminating in various transactions with the Bank on 4 July 1989, including the opening of various accounts and the signing of various documents including authorisation letters in favour of the Defendant. What transpired at these meetings is of crucial importance. The evidence of the parties regarding these meetings are set out below.

The North Point/Shatin meeting

5. It is common ground that sometime in June 1989, the parties met at a herbal tea shop in North Point. The Plaintiff's evidence is that at the time as a result of the June 4 incident, he was very concerned about keeping his money at the Bank of China and because he knew that the Defendant was working at the Bank, he thought he would find out more about the Bank from the Defendant. He had first met the Defendant back in 1970 and they had been in the same school in China although the Defendant was several years his senior. At the North Point meeting, he told the Defendant that he wanted to know about investment possibilities and whether the Hong Kong dollar was safe. They also talked about foreign currencies. The Plaintiff said that at that point, he had not reached any decision and did not disclose the amount that he had for investment. The Defendant told the Plaintiff that the Bank was a stable bank and would be a good choice. He also said that he got on well with the manager of the Tsz Wan Shan Branch Ip Fu Kwok. After the meeting in North Point, the parties proceeded to Shatin for a family dinner.

6. The Defendant's account of the meeting in North Point is not materially different. He said that they met at 6 p.m. and that the Plaintiff's brother-in-law was also present. Although the discussion at the herbal tea shop only lasted about half an hour, the discussion continued as the parties travelled to Shatin. The Defendant said that he told the Plaintiff on the way to Shatin that as an employee of the Bank, the Defendant was entitled to an additional 1% interest on deposits. Initially in cross-examination, the Defendant had maintained that he reached an agreement with the Plaintiff whereby the Plaintiff allowed him to invest the Plaintiff's money in any way the Defendant thought fit. He later retracted this answer.

The meeting at Tsui Fook Lau ("the TFL meeting")

7. At the TFL meeting which was the second meeting between the Plaintiff and the Defendant, the Defendant introduced the Plaintiff to Mr Ip, the manager of the Branch where the Defendant worked. At this lunch meeting, Mr Ip told the Plaintiff that the Bank was part of the Mitsubishi Bank and that he therefore need have no worries and as the Defendant was working in the Bank, he was in a good position to inform the Plaintiff of any changes. According to the Plaintiff, he was advised to invest in foreign currencies because of stability and the high interest rate available. The "investment" the Plaintiff had in mind and which was discussed was limited to fixed deposits : margin trading and other high risk activities were never on the agenda. There was general discussion on the situation in Hong Kong but the main subject of conversation was the buying and selling of foreign currencies.

8. The Defendant's evidence is that an investment plan for the Plaintiff was formulated at the TFL meeting. Initially some foreign currency would be purchased and then Mr Ip and the Defendant would see what other investment plans could be arranged. The Plaintiff was asked by Mr Ip to consider using the Defendant's name in order to obtain the additional 1% interest for deposits. As for other forms of investment, Mr Ip said that the Defendant could look into them and could carry them out for the Plaintiff. According to the Defendant, this plan came about in response to the Plaintiff's question to Mr Ip and the Defendant as to what they would do if they were given a sum of money to invest.

4 July 1989 meeting

9. The Plaintiff went to the Tsz Wan Shan Branch of the Bank at about 2 p.m. The Plaintiff could not remember the length of the gap between the TFL meeting and 4 July. According to the Defendant, it was about a week in the course of which the Defendant received a telephone call from the Plaintiff saying that he had $1 million to invest.

10. At some point during that afternoon, there was a meeting in the manager's office between the Plaintiff, the Defendant and Mr Ip at which the Plaintiff opened a Hong Kong dollar savings account. He deposited into that account cash of $36,000 as well as a cashier order in the sum of $1,050,000 which he had withdrawn from the Bank of China.

11. The Plaintiff's evidence is that he had also decided to purchase two foreign currencies, namely $100,000 and a little over $72,000 of Canadian and Australian currency respectively totalling approximately the amount deposited into his Hong Kong dollar savings account. These fixed foreign currency deposits were for a period of one month. In addition to these accounts, the Plaintiff also opened a US dollar account and a pound sterling account, each with nominal amounts. These foreign currency accounts were opened on the advice of Mr Ip because he told the Plaintiff that when a certain currency was falling he, Mr Ip, could switch them into another currency so that there would be no great loss. However this would require authorisation from the Plaintiff. Mr Ip apparently told the Plaintiff that this procedure was to safeguard the interests of the Bank's customers and the purpose of the authorisation was to make it convenient for the Bank to switch the Plaintiff's monies between his accounts when the Plaintiff was absent from Hong Kong. Previously, the Plaintiff had deposit accounts at the Bank of China. These accounts could only be operated upon receipt of written instructions from the Plaintiff which took time because he was living abroad. The Plaintiff agreed to Mr Ip's proposal.

12. The Plaintiff said that he was given a pile of documents to sign in relation to the opening of the various accounts. The documents signed by the Plaintiff included two pro forma authorisations in favour of the Defendant as follows :

"To sign all cheques, drafts and correspondence on behalf of the company in respect of our current account with your Bank."

Those pro forma authorisations were given in respect of the Plaintiff's Hong Kong dollar savings account (No. 5A-20-17418-2) as well as in relation to an account (No.5A-20608-9) bearing the customer number appearing on the foreign currency fixed deposit certificates purchased by the Plaintiff on 4 July 1989. The Plaintiff's evidence is that he signed these authorisations to facilitate the switching of monies between his various accounts while he was absent from Hong Kong. It is to be noted that the wording of the pro forma authorisations was wholly inapposite : first, the accounts in question were not "current" accounts - one was a foreign currency fixed deposit account and the other was a savings account; second, neither of the accounts was that of a "company". Such niceties did not appear to be of concern to the Bank.

13. In addition to the pro forma authorisations, the Plaintiff signed two specimen signature cards relating to the same two accounts. His evidence is that at the time he signed the cards, he was told to append his signature in the specimen signature box designated (1) and also in the "Signing Instructions" section at the bottom of the form. He said there were no other signatures on the card at the time and that the Defendant never appended his signature to that card in the Plaintiff's presence. The cards that are in evidence contain the Defendant's signature in the specimen signature box designated (2). His signature also appears alongside the Plaintiff's signature in the "Signing Instructions" section at the bottom of the card. In addition, there is a stamp in Chinese to the effect that either one of the two signatures would be effective.

14. There is a conflict of evidence concerning the signing of these cards. The Defendants' version is that on Mr Ip's recommendation, the cashier order and the cash were deposited into the Hong Kong dollar savings account. The Plaintiff then purchased Australian dollars and Canadian dollars which were placed in a foreign currency deposit account. The Plaintiff also opened a pound sterling and US dollar deposit account, this being part of the investment plan that had been formulated for the Plaintiff to enable him to remit monies for depositing into his accounts for investment purposes. The Plaintiff had to sign two specimen signature cards for each account. One was for verification and reference by the supervisor of the deposit department and the other was for the computer department for microfilm purposes. Those arrangements were handled by the clerk of the deposit department who, after processing, submitted them to the supervisor for initialling to indicate approval. This is then confirmed by the manager. When the formalities for opening an account were completed, the relevant documents were handed to the teller to enter into the computer and the relevant passbook(s) would then be printed out. A photocopy was given to the Plaintiff while the passbooks and the certificates were left with the Defendant.

15. The Defendant's evidence was that after these account opening formalities had been completed, there was a discussion in the manager's office between Mr Ip, the Plaintiff and the Defendant. It was pointed out to the Plaintiff that his deposits could not be moved round without his signature and that once he returned to Holland, this would be a problem. It was therefore suggested that the Plaintiff execute the authorisations. Mr Ip said that as the Defendant was the Plaintiff's relative, the Plaintiff should give the authorisation to the Defendant who could then move the money on the Plaintiff's behalf. It was in those circumstances that the Plaintiff executed the authorisations in the Defendant's favour. The Defendant's signature as well as the stamp in Chinese to the effect that either of the two signatures shall be valid were added to the specimen signature cards in the Plaintiff's presence at that juncture.

16. The main difference between the two versions is as to the circumstances in which the Defendant came to append his signatures on these specimen signature cards, and in particular, whether the Plaintiff agreed to it. However the Defendant's authority to sign cheques was part and parcel of the pro forma authorisations. On the evidence, the Plaintiff agreed to confer the authorisations to facilitate the switching of funds between his accounts. The Defendant's specimen signature was plainly necessary for that purpose. I reject the suggestion that the Defendant's signature as well as the Chinese stamp were added to the specimen signature cards in a surreptitious manner or that the Plaintiff did not know or intend that the Defendant should have this power although the purpose for which it could be exercised was circumscribed.

Dealings with the Plaintiff's accounts by the Defendant

17. As early as mid to late July 1989, the Defendant pledged the Plaintiff's Canadian dollar fixed deposit to secure an overdraft line of HK$0.5 million for the Defendant's current account with the Bank. This was approved by Mr Ip and the head office. Under the Bank's policy, an overdraft line of up to 90% was available for Hong Kong dollar fixed deposit accounts. The credit ceiling for foreign currency deposits was 80%.

18. When the foreign currency fixed deposits matured on 4 August 1989, the Defendant converted those foreign currencies into Hong Kong dollars and deposited them into the Plaintiff's savings account before withdrawing the same amount and depositing it into a new Hong Kong dollar deposit account which the Defendant caused to be opened under his own name. The Defendant does not now claim to be the beneficial owner of that account. The Defendant explained that by so doing, he was able to earn an extra percent of interest for the Plaintiff. However, this deposit account served to secure an overdraft line for the Defendant's current account of up to 90% of the amount in the deposit account. The branch manager Mr Ip was instrumental in the opening of the current and deposit accounts for the Defendant as well as securing the overdraft line. For reasons not readily apparent, the Defendant had no less than 3 successive fixed deposit accounts. As from November 1989, the Defendant lent various sums of money to five borrowers, all of whom were customers of the Bank but whose facilities had been exhausted. They were asked by Mr Ip to approach the Defendant for loans. At least part of the monies loaned by the Defendant was used by the borrowers to repay some if not all of their indebtedness to the Bank.

19. The Defendant explained that loans were made to the five borrowers at varying times for varying periods. The interest charged was 2% more than what was obtainable by him on a fixed deposit account. If for any reason the borrower defaulted on his repayment, then the interest payable would be increased by the amount of interest that would be payable on the overdraft on his current account. So if the interest rate on fixed deposits was 8%, the loan would be made at the rate of 10% interest if payment was made promptly and punctually. In the event of default, the borrower would have to pay interest of 19%, being the aggregate of what would have been payable had there been no default plus the overdraft interest of 9%. Upon obtaining the loan, the borrower would issue a cheque in favour of the Defendant. Most of these cheques are undated but there are a number that were post-dated. In some cases, these post-dated cheques were subsequently altered to delete the date on the understanding that the cheques would be presented when the borrower had sufficient funds to repay. From the copy cheques in evidence, it is evident that defaults occurred as early as December 1989.

20. As at May 1991, outstanding advances had been made by the Defendant as follows :

	HK$
Lau Chun Fat/Sam Fat Transport Co. Wong Yuk Po/Kai Mei Shoes Co. Wong Hung Tak/Sam Cheong Motors Chow Chun Kit/Kolyen Industrial Ltd. Lo Sai Woo/Sze Kai Express Co.	40,000 25,000 485,750 370,000   223,900 1,144,650

The Plaintiff's monies in the Defendant's deposit account were applied by the Bank in exercise of its powers as pledgee to cover this overdraft.

21. Despite the Defendant's explanation of terms governing the unsecured loans made by him, it is not reflected in the only memorandum produced by him evidencing the terms of a loan of $320,000 made to Kolyen Industrial Ltd. (exh.D1). The interest rate is not specified, much less the higher rate in the event of default. Moreover, when taxed about the complicated calculations such loans would involved, the Defendant altered his evidence and said that he would sometimes take a broad approach in charging interest. Suffice to say that his explanation was verging on the incomprehensible. In any event, he had never rendered any accounts of these loans to the Plaintiff. Although the Defendant asserted that he did keep detailed accounts, these are not available : they were "lost" once the criminal proceedings commenced.

Correspondence between the parties

5 August 1989

22. By letter dated 5 August 1989, the Defendant informed the Plaintiff that due to fluctuations in foreign currencies, and in order to avoid any loss of capital, the foreign currency deposits had been converted into Hong Kong dollars on maturity. The Defendant also opined that the best thing to do was to receive interest. The Plaintiff was informed that the money was placed in a Hong Kong dollar fixed deposit account. The Defendant sought the Plaintiff's permission to withdraw several tens of thousand dollars to invest in the stock market.

23. There are some notes written in the Plaintiff's hand on the aerogramme received from the Defendant. The Plaintiff's evidence is that this was a draft of a letter that he sent in response. In that letter, he reminded the Defendant that the Defendant should seek the Plaintiff's prior permission before making any changes or transfers. The Plaintiff also stated "We have verbally agreed that you cannot make any change without my permission." Believing that the Canadian dollar account had not been converted into Hong Kong dollars, the Plaintiff gave instructions for that deposit to be rolled over until further notice. The Plaintiff also enquired as to the capital and interest of the deposit account and gave instructions to the effect that the deposit should be placed for one month and rolled over until further notice.

23 September (1989)

24. The Defendant wrote to inform the Plaintiff that his money had been deposited for another month in accordance with his instructions. An interest statement as well as a photocopy of the passbook was enclosed. The passbook bore the Plaintiff's name. Its number was 329032. The interest statement (exh.P2) also showed the Plaintiff's name. The principal amount and length of deposit corresponded to what the Plaintiff was expecting. The deposit was for the period of 30 days from 21 September 1989. The curious feature of the interest statement which escaped the Plaintiff's notice was that although it was enclosed in the 23 September letter, it was dated 21 October 1989. The person signing on behalf of the Bank was none other than the Defendant. As will become apparent, the deposit account number 329032 is not an account in the Plaintiff's name. Rather, the account is in the Defendant's name. Both the copy of the passbook and the interest statement sent to the Plaintiff were not genuine Bank documents. Apart from the account name, the information shown is correct.

November (1989)

25. This is a letter dated "November" from the Defendant to the Plaintiff. Although the letter did not state the year, it referred to the Plaintiff's recent trip to North America. This must have been sent by the Defendant in November 1989 since the Plaintiff's trip took place in October of that year. The Defendant told the Plaintiff that interest was accumulating on the deposit account and enclosed with the letter an interest rate notice showing that a principal amount of $1.126 million had been deposited for one month from 21 October 1989. The interest statement (exh.P3) signed by the Defendant again named the Plaintiff as the account holder.

22 January (1991)

26. The year this letter was written was not specified. Although the Defendant submitted that the letter was sent in January of 1990, it cannot be correct because the interest statement enclosed (exh.P4) related to a deposit for the period from 24 September 1990 to 24 November 1990. This interest statement was also signed by the Defendant but using a different style of signature. He admitted that he had two different signatures used for different purposes. In this letter, the Defendant asked if the Plaintiff was interested in taking up a share of an investment in a karaoke lounge in China.

Undated letter (1991)

27. This letter was sent to the Plaintiff after the Plaintiff's wife had returned to Hong Kong in May 1991 and found that the money in what they believed to have been the Plaintiff's savings account was in fact a savings account in the Defendant's name and that most of the money had disappeared. The relevant part of the letter reads as follows :

"... As you opened the accounts in the first instance, witnessed by Manager Ip, the funds could be handled by me at any time ... and as Manager Ip has given loans without careful consideration to a number of customers of the Bank as cash turnover, I was indebted to the Bank and was so urged for making repayments or else I would have to bear legal liability. Also I was misled by Ip's words and used your money to cover the debt, so that the customers would pay interest higher than the Bank rate. ... I am terribly sorry for what had done to you. Now the only thing is that I beg you to give me time and let me collect from the customers the whole amount, capital and interest inclusive, and then I'll pay in your account with the Bank of China. Now, under such circumstances, I hope you would not pursue the Bank about this matter, because the incident in fact had nothing to do with the Bank. Its you only who trusted me and Manager Ip. ...

Present suggestion of solution method :

(1) Give me time to collect (the debt) ...

(2) Make a report to police. Possibly I may be jailed, but the money cannot be collected. We both benefit nothing. ..."

Criminal Proceedings

28. The Plaintiff returned to Hong Kong once these dealings came to light. As he was unable to obtain satisfaction from the Bank, he reported the matter to the police and eventually the Defendant was charged with one count of theft and three counts of false accounting in respect of the three interest statements. The Defendant was acquitted of all four charges on 22 December 1992. This of course does not preclude from trying these proceedings where the civil standard of proof applies : see Hunter v. Chief Constable [1982] AC 529 at 542H-543C.

Subsequent events

29. The Defendant remained an employee of the Bank notwithstanding the criminal charges. He retired a few days prior to the trial of this action although had he so worked, he could have worked for a few more years. He received his pension of over $300,000 but all of it has been used in repaying outstanding debts. It would appear that he has little left of his own monies to meet any judgment that may be rendered in these proceedings.

30. At the conclusion of this trial, the Defendant paid the Plaintiff the sum of $110,000 representing the balance left in the savings account after the Bank had exercised its rights as pledgee.

The issues

31. The Defendant does not dispute that the monies placed in his Hong Kong dollar deposit account belonged to the Plaintiff. His defence is that he was authorised by the Plaintiff to deal with the Plaintiff's monies as the Defendant thought fit by way of investment. It is his contention that there was an investment agreement between him and the Plaintiff under which the Defendant was given total and unfettered authority to deal with the Plaintiff's funds that had been deposited into the Bank and that his dealings with the monies, (i.e. to secure an overdraft line so that loans could be made out of his current account to the 5 borrowers as described above) was a method of "investing" because of the higher rate of interest that could be earned. The central issue is whether there was an agreement as alleged by the Defendant.

The investment agreement

32. It is not the Defendant's case that the pro forma authorisations were given other than pursuant to the alleged investment agreement. As to the agreement itself, the Defendant's evidence initially was that it was made at his first meeting with the Plaintiff. That was subsequently changed to the TFL meeting. The Defendant's account of what was discussed at the first meeting as well as the TFL meeting was general and unspecific. When asked to recall so far as possible the words used which gave rise to the alleged agreement, the Defendant was unable to do so. He repeated the generalities about "investment". Nothing in his account could conceivably constitute any agreement by the Plaintiff that the Defendant could have unfettered powers to deal with the money the Plaintiff was proposing to deposit with the Bank. The most telling evidence against the existence of such an alleged agreement is to be found in the letters written by the Defendant to the Plaintiff between August 1989 and June 1991. The Defendant sought the Plaintiff's permission to invest in the stock market, in a karaoke lounge, and generally about the Plaintiff's investment ideas and reassured the Plaintiff that the Plaintiff's instructions had been carried out, e.g. to renew the deposit on a monthly basis. All this is inconsistent with the Plaintiff having granted any carte blanche to the Defendant to invest. By all accounts, the Plaintiff was a conservative investor. He did not know the Defendant that well although they were related and there had been no prior financial dealings with the Defendant. In the circumstances, it is inherently improbable that the Plaintiff would have entered into an investment arrangement with the Defendant that gave the Defendant unfettered powers to invest without so much as having to render regular accounts to the Plaintiff.

33. So far as the pro forma authorisations are concerned, I accept the Plaintiff's explanation that these were given with a view only to facilitating the switching of funds between his various accounts with the Bank. So to a limited extent, he did confer on the Defendant an element of discretion. However the Defendant's dealings far exceeded any authority conferred by the Plaintiff.

34. I reject the Defendant's evidence that he informed the Plaintiff about some of the loans made. I find that the Plaintiff remained ignorant of the Defendant's dealings and believed that his money was safe in a fixed deposit account in his name at the Bank rather than having been pledged to enable the Defendant to make high-risk unsecured loans until the whole matter came to light when his wife was unable to make the intended withdrawal on her return to Hong Kong in May 1991.

The Plaintiff's causes of action

Conversion/Money had and received

35. On 4 August 1989, the foreign currency fixed deposit certificates for the Plaintiff's Canadian and Australian dollars matured. These were converted into Hong Kong dollars and placed in his Hong Kong dollar savings account. On the same day, the Defendant withdrew the amount of $1,085,946 which was the exact amount deposited earlier that day from the Plaintiff's Hong Kong dollar savings account into a savings account opened in the name of the Defendant which was pledged to secure an overdraft line for his current account. I find that the Plaintiff did not authorise the withdrawal and redeposit in an account in the name of the Defendant and, in any event, the Plaintiff did not authorise the pledging of the account.

36. It is the Plaintiff's contention that this constituted conversion. However, no action lies for conversion in respect of dealings with money once it has passed into currency. See Clerk & Lindsell on Torts, 17th Ed. at 13-44. Rather, the claim that lies is for money had and received. On that basis, the Plaintiff is entitled to recover from the Defendant the sum of $1,085,946.

Deceit

37. It is the Plaintiff's case that the Defendant having wrongfully dealt with the Plaintiff's monies by depositing them in an account in the Defendant's name then made fraudulent representations to the Plaintiff designed to conceal from him the Defendant's dealings with those monies.

38. As noted above, the authority conferred on the Defendant was limited in scope and did not extend beyond switching the Plaintiff's monies between his various accounts with the Bank. I find that there was no agreement on the part of the Plaintiff that an account be opened in the Defendant's name in order to earn the extra 1% of interest. The Defendant's evidence on this goes no further than the Plaintiff being asked by Mr Ip to consider opening an account in the name of the Defendant in order to earn the extra 1% of interest. The Plaintiff never agreed to it. The Plaintiff never authorised the Defendant to open an account in the Defendant's name into which the Plaintiff's money should be deposited. Equally, the pledging of the Plaintiff's monies to secure an overdraft line on the Defendant's current account was also unauthorised.

39. The four letters written to the Plaintiff between August 1989 and January 1991 coupled with the copy of the passbook and interest statements all showing the Plaintiff as the account holder were clear representations of fact that the proceeds from the foreign currencies had been deposited into a savings account in the name of the Plaintiff with the Bank and that it was accumulating interest as shown in the statements. That was untrue in two respects : first, the money was not in an account in the Plaintiff's name; secondly, the monies were subject to a pledge in favour of the Bank to secure an overdraft facility for the Defendant's current account which was being used for high-risk unsecured loans.

40. Were the representations made fraudulently?

41. So far as the standard of proof required, it is the civil standard that is applicable : see Hornal v. Neuberger Products Limited [1957] 1 QB 247. However, a high degree of probability will be required to satisfy the civil standard. As stated in the speech of Lord Nicholls in Re H and Others (Minors) [1996] 1 All ER 1 at 16H-I :

"When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. ... Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.

Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. ..."

Lord Nicholls then went on to cite with approval Ungoed-Thomas J.'s judgment in Re Dellow's Will Trust [1964] 1 WLR 451 at 455 :

"The more serious the allegation, the more cogent is the evidence required to overcome the unlikelihood of what is alleged and thus to prove it."

42. The copy of the passbook as well as the interest statements sent to the Plaintiff cannot be explained except that they were intended to mislead and deceive the Plaintiff. They were created by blanking out the Defendant's name and inserting in its place the Plaintiff's name. If as is the Defendant's case, he was authorised by the Plaintiff to open a deposit account in his (the Defendant's) name in order to earn the extra interest, then there would have been no need to make these alterations. The Defendant attempted to explain away this difficulty by saying that he was asked to do so by the Plaintiff who was about to embark on a visit to North America as some proof of his worth to show to business contacts. As the trip took place in October 1989, this cannot explain why the second and third interest statements came into existence, quite apart from the difficulty the basic premise involves, namely, that the statement could be proof of the Plaintiff's worth. It is also to be noted that the Defendant did not provide the Plaintiff with copies of the passbook other than the inside cover and an entry relating to the period 21 October 1989 to 21 November 1989. There was good reason since the real passbook would have revealed the stamp showing the pledging of the deposit to secure general banking facilities.

43. In all the circumstances, I am satisfied that the representations were false and were intended to conceal from the Plaintiff the unauthorised dealings with his monies and to mislead him into thinking that they were safe.

Quantum

44. In an action for deceit, consequential loss is recoverable. The appropriate measure of damages in this case is to be assessed. I direct that the assessment be made in accordance with the following principles : the principal sum of HK$1,085,946 placed in a Hong Kong dollar savings account with the Bank on a monthly basis as from 4 August 1989 and rolled over at the end of each month until the date of judgment less the sum of HK$110,000 paid to the Plaintiff on 17 March 1997. Interest is payable on the sum so assessed at the judgment rate from the date of judgment until payment.

45. I make an order nisi as to costs in favour of the Plaintiff.