CHAN SING CHUEN v. YUNG MEI CHUN

DCCJ 15756/2000

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 15756 OF 2000

(transferred from HCA No. 7213 of 2000)

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JUDGMENT

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1. The protagonists in this action are all professional people. The Plaintiff and the Defendant are both qualified Certified Public Accountants. The Defendant's husband, Mr. Cheung Moon Hoi Jeff ("the Husband") is a Chartered Builder. This case turns largely on the facts. The successful party at the end of the day is the one whose evidence is believed by the Court. I should point out at the outset that it gives no pleasure to the Court to have to make findings of fact against professional people, to find that his or her story given on oath is disbelieved on a balance of probabilities. The parties have decided to fight the case to the bitter end in a trial which lasted for 10 days. The sum in dispute is HK$135,000. In these circumstances, can there really be any real winners or victors at the end of the day? This is something which only the parties can answer for themselves.

Nature of the Plaintiff's claim

2. By this action, the Plaintiff seeks to recover from the Defendant the sum of HK$135,000 (and interest thereon). According to the Plaintiff, the said sum represents the balance of the amount due from the Defendant to the Plaintiff on completion of Hang Seng Index futures contracts ("HSI Contracts") trading made by the Defendant on the Plaintiff's behalf in March and April 1999.

3. The central issue between the parties boils down to one simple question: was it the Defendant or the Husband who had agreed in March 1999 to trade in HSI Contracts on the Plaintiff's behalf and who had then traded for the Plaintiff in March and April 1999? The Plaintiff contends throughout these proceedings that it was the Defendant, whereas the Defendant has (since her Amended Defence filed in June 2001) advanced the contrary contention that it was her husband.

4. Significantly, the Defendant has not put forward an alternative case that even if the Court finds the Defendant to be the Plaintiff's agent, she had carried out further trades on behalf of the Plaintiff since April 1999 which resulted in further losses thereby reducing the balance to a negative figure. As conceded by Miss Julia Lau (who acted for the Defendant at this trial) during her closing submissions, this would not be a finding which the Court could make on the pleadings.

5. Although the ultimate issue is simple, both sides raised and went into a large number of factual matters, details and side issues. Whilst they have all been taken into account by me, I do not find it necessary to mention or go into detail of all those matters in this Judgment. In the following paragraphs, I shall set out as briefly as possible the respective cases of the Plaintiff and the Defendant according to the evidence that was presented before me during the 10-day trial.

The Plaintiff's case

6. The Plaintiff came to know the Defendant in 1986 when they were both studying for the Professional Diploma in Accountancy at the then Hong Kong Polytechnic. They thereafter maintained periodic contacts.

7. During a dinner attended by the Plaintiff, the Defendant and their respective spouses in early March 1999, the Defendant told the Plaintiff of her experience in HSI Contracts trading and mentioned that she had not only traded HSI Contracts actively on her own (and had made easy money) but had also traded at her account on behalf of many others, whom she had earned handsome profits for. The Defendant further suggested to the Plaintiff that he could trade at any one time 2 HSI Contracts in her account.

8. At that time, the Defendant was working as a financial analyst at Goldman Sachs (Asia) L.L.C. ("Goldman Sachs"), and she impressed the Plaintiff as greatly experienced in HSI Contracts trading. Though the Plaintiff had never traded in HSI Contracts before and was not familiar with it at that time, he eventually agreed to her suggestion of her trading at her account on his behalf 2 HSI Contracts at any one time.

9. Thereafter, the Defendant and the Plaintiff maintained frequent contacts over the phone and she regularly gave the Plaintiff her views and advice on the local stock market. Based on her views and advice, the Plaintiff orally instructed her to sell 2 HSI Contracts on his behalf within a specific range. Under cross-examination, the Plaintiff testified that the instructions were given one or two days before 22nd March 1999 (22nd March 1999 was a Monday). The range given was around 11,080 to 10,980 points, which represented a 100-point range from the then current market level at the time when the instructions were given (about 11,000 points).

10. On or about 22nd March 1999, the Defendant phoned up the Plaintiff and told him that she had sold on his behalf 2 HSI Contracts within the range as instructed. Over the phone, the Defendant gave the Plaintiff the name of her broker, one Mica Mak, at Tai Fook Futures Limited ("Tai Fook"), the number of "her" trading account at Tai Fook and the number of Tai Fook's bank account at Hang Seng Bank. The Defendant asked the Plaintiff to deposit HK$150,000 into Tai Fook's bank account as the deposit for the 2 HSI Contracts sold.

11. On 23rd March 1999, the Plaintiff deposited a sum of HK$150,000 into Tai Fook's account at Hang Seng Bank and, at the Defendant's request, faxed a copy of the deposit slip (marked with the said broker's name, that it was a deposit to Jessie Yung's account, and "her" account number at Tai Fook) to Mica Mak as written confirmation of the same. Jessie Yung is the English name of the Defendant. This copy of the deposit slip was produced at trial marked Exhibit "P1A".

12. At the time, the Plaintiff had not noted down the specific level at which the 2 HSI Contracts were sold. It was all a matter of trust. The Defendant declined to send the Plaintiff "her" trading account statements on the excuse that they would disclose deals she made on behalf of others at "her" account.

13. Thereafter, the Plaintiff and the Defendant maintained their telephone contacts. They discussed about the stock market (it fell as they had hoped for) and the Plaintiff then orally instructed her to close his 2 HSI Contracts position in order to take profit.

14. On or about 24th March 1999, the Defendant phoned the Plaintiff and informed him that she had, as instructed, closed his position and made on his behalf a profit of HK$34,000 odd. The Plaintiff was happy to hear that and again did not see fit at that time to write down the details.

15. Thereafter, the Plaintiff again orally instructed the Defendant over the phone to sell another 2 HSI Contracts on his behalf within a specific 100-point range.

16. On or about 26th March 1999, the Defendant telephoned the Plaintiff to inform him that she had sold on his behalf 2 HSI Contracts as instructed.

17. However, the stock market did not fall as it was hoped for and it went up instead. Over the phone during the following 31/2 weeks, the Defendant twice asked the Plaintiff to increase the amount of his deposit with her in line with the market situation and he complied on both occasions.

18. On 7th April 1999, the Plaintiff deposited another sum of HK$70,000 into Tai Fook's account at Hang Seng Bank and faxed a copy of the relevant customer receipt (Exhibit "P2A") to Mica Mak as written confirmation of the same.

19. On 19th April 1999, the Plaintiff deposited another sum of HK$180,000 into Tai Fook's account at Hang Seng Bank and faxed a copy of the deposit slip (Exhibit "P3A") to Mica Mak as written confirmation of the same. According to the Plaintiff, this sum of HK$180,000 included a loan of HK$80,000 which the Defendant had asked for and which the Plaintiff had agreed to lend her interest free. According to the Plaintiff under cross-examination, he was told by the Defendant at the time that the balance in the sum of HK$100,000 was required as further margin to cover the then floating loss on the 2 HSI Contracts plus enough funds to cover a further rise of one to two hundred points.

20. On or about 19th or 20th April 1999, the Defendant phoned up the Plaintiff to say that she had sold 2 additional HSI Contracts on his behalf. As the Plaintiff had not given her any prior instructions for that, he refused to accept the same. In reply, the Defendant told the Plaintiff that she would handle those 2 HSI Contracts herself.

21. In view of the unfavourable market, the Plaintiff finally decided to cut his losses. He therefore telephoned the Defendant and instructed her to close his position on the 2 HSI Contracts which had been sold on 26th March 1999.

22. On or about 22nd April 1999, the Defendant informed the Plaintiff over the phone that she had managed to close his position as instructed. The Plaintiff was told over the phone that he had suffered a loss of around HK$200,000 on his second deal and his funds with her (excluding the HK$80,000 loan) had been reduced to an amount roughly equivalent to the initial margin required for trading in 2 HSI Contracts.

23. Over the phone, the Plaintiff asked that his money be repaid to him. The Defendant apologized to the Plaintiff for causing him such substantial losses and suggested that the Plaintiff should leave with her a sum representing initial margin for 2 HSI Contracts so that, if favourable market situation returned, she could, with his further instructions, recover his losses. The Plaintiff agreed to that over the phone and the Defendant said she would in due course repay him such sums (including his HK$80,000 loan to her) so as to leave her with funds enough to cover the initial margin for trading in 2 HSI Contracts.

24. Later, on 27th April 1999, the Defendant deposited the total sum of HK$81,684 into the Plaintiff's bank account maintained with the Standard Chartered Bank as repayment as she had promised.

25. Since late April 1999, the Plaintiff has not heard further from the Defendant on any opportunity for HSI Contracts trading and he has not given her any further instructions to make any further deals on his behalf.

26. A year later, starting from 31st May 2000, the Plaintiff communicated again on this subject matter with the Defendant by way of e-mails.

27. At the repeated requests of the Plaintiff, the Defendant sent him by post copy of 4 partly covered pages of Daily Statements issued by Tai Fook, which purported to show the details of the trades done on behalf of the Plaintiff. According to the Plaintiff, he then realised for the first time that the Defendant had in fact been trading in HSI Contracts through the Husband's account at Tai Fook in March and April 1999.

28. According to the highlighted entries on those 4 Daily Statements (which, according to the Plaintiff, had already been highlighted when he received them), a sum of HK$135,000 is due from the Defendant to the Plaintiff. The said sum of HK$135,000 is made up as follows: -

(1)	Total of the 3 deposits paid by the Plaintiff to the Defendant	HK$400,000
(2)	Add profit made on the 2 HSI Contracts sold on 22.03.99	+HK$34,500
(3)	Less loss incurred on the 2 HSI Contracts sold on 26.03.99	-HK$217,000
(4)	Less transaction costs	-HK$816
(5)	Less repayment by the Defendant on 27.04.99	-HK$81,684
(6)	Sum due from the Defendant to the Plaintiff	HK$135,000
		=========

The Defendant's case

29. Both the Defendant and the Husband gave evidence at trial. The Defendant testified that she worked as an equities analyst of Goldman Sachs during the period from January 1998 to August 2000 and her duty of work and speciality was to analyse individual stocks only, in particular "red chips" stocks. The anaylsis and/or trading of HSI Contracts were not her speciality. There were colleagues in other departments responsible for matters relating to HSI Contracts.

30. According to the Defendant, one of the well-known restrictions of her job was that the entire staff of Goldman Sachs was prohibited from trading in HSI Contracts. In breach of that restriction the Defendant would be penalized by disciplinary actions.

31. According to the Defendant, she never held any trading account at Tai Fook and never acted as the Plaintiff's agent to trade HSI Contracts on his behalf. In addition, she never borrowed nor received the alleged sum of HK$80,000 from the Plaintiff.

32. The Defendant agreed in evidence that she has known the Plaintiff since 1986 when they were both studying for the Professional Diploma in Accountancy at the then Hong Kong Polytechnic. The Plaintiff also knew the Husband at the Hong Kong Polytechnic, as at that time the Husband was also studying there, although on a different course.

33. After graduating from the Hong Kong Polytechnic in 1989, both the Plaintiff and the Defendant joined the firm of PricewaterhouseCoopers at the same time. They both worked in the Audit Department of the firm but in different groups. The Defendant left the firm in 1994. Between 1994 and 1998, the Defendant worked for Lehman Brothers Asia, the Union Bank of Switzerland and Credit Lyonnais Asia.

34. In February 1999, the Defendant invited the Plaintiff and his wife to attend her wedding banquet at the Regent Hotel. She knew that the Plaintiff did maintain contacts with her husband since then.

35. She knew they had maintained contacts because the Husband told her on 26th April 1999 that he had to return a sum of HK$81,684 to the Plaintiff, but he forgot to transfer enough money to his current account, so he asked the Defendant to write a cheque of HK$80,000 to the Plaintiff for him and he wrote another cheque of HK$1,684. The Husband then deposited both cheques into the bank account of the Plaintiff on the same day.

36. It was only at that juncture when the Defendant was informed by the Husband that the Plaintiff had indicated to the Husband that he was interested in HSI Contracts trading, and had asked the Husband to allow him to join into the Husband's HSI Contracts trading since March 1999. The Defendant was told by the Husband that all the trading would be entirely at the discretion of the Husband.

37. In May 2000, the Defendant suddenly received e-mails (through her e-mail address at work) from the Plaintiff regarding HSI Contracts trading. Since these e-mails were for the Husband, she forwarded them to the Husband's e-mail account and then deleted them all from her own account.

38. However, the Plaintiff continued to send e-mails to the Defendant's e-mail address at work. She had called the Plaintiff on his mobile phone to try to find out what was happening. The Plaintiff just hanged up the phone.

39. Since the Defendant's e-mail account at work was only for business purpose and the contents of the e-mails were not her business, the Defendant sent to the Plaintiff a final warning on the misappropriate use of her employer's properties on 27th June 2000.

40. The Defendant consulted the Husband concerning the allegations contained in the e-mails, and she was told that the Plaintiff indeed owed a debt to the Husband for the loss incurred in HSI Contracts trading done in partnership with the Husband. She understood that the Husband was going to initiate legal proceedings against the Plaintiff in due course. I pause here to note that up to the time of this trial, no legal proceedings has in fact been issued by the Husband against the Plaintiff.

41. The Husband gave evidence at trial in support of his wife's case. The Husband testified that he became acquainted with both the Plaintiff and the Defendant in about 1986, when he was studying Building Technology and Management at the Hong Kong Polytechnic.

42. Since graduation, the Husband has been working in the construction field. Because of his expertise in the construction field, he was often consulted by his friends for advice on interior decoration and was sometimes even asked to help doing some minor repairing chores in their flats or houses.

43. In the summer of 1998, the Plaintiff telephoned the Husband and requested him to help fixing a leaking bathtub at the Plaintiff's property at Kornhill. On that occasion, the Plaintiff and the Husband had a casual exchange on their experience in personal investments. The Husband told the Plaintiff that he had been trading HSI Contracts for some time. The Plaintiff showed interests in trading HSI Contracts.

44. In about March 1999, during a telephone conversation, the Plaintiff told the Husband that he was very interested in trading HSI Contracts and sought the Husband's advice on how to conduct the same. The Husband therefore referred his broker, Ms. Mica Mak of Tai Fook to the Plaintiff.

45. Shortly afterwards, the Plaintiff called the Husband again and told him that he had decided not to open any account with Tai Fook. The Plaintiff said that as he himself had no experience in such trading and was far away from the Hong Kong stock market, he preferred to rely on the Husband's expertise and to trade in the Husband's trading account.

46. The Husband was at first quite reluctant because of all the practical difficulties foreseeable such as getting instructions from the Plaintiff for buying and selling in an ever volatile market. But the Plaintiff insisted and reassured the Husband that as long as the Husband would do him a favour and inform him from time to time of the trading results, the Plaintiff would be happy to leave all the decisions to the Husband.

47. According to the Husband, he therefore orally agreed with the Plaintiff to trade HSI Contracts in the Husband's own trading account for and on behalf of the Plaintiff on the following terms: -

(1) The Plaintiff would be responsible for all the financial matters in relation and incidental to such trading of HSI Contracts ("the Said Trading") including paying all the financial charges for all transactions and meeting all the margin and/or deposit requirements for carrying out the transactions.

(2) The Husband would conduct the Said Trading for and on the Plaintiff's behalf on a friendly and gratuitous basis. All possible gains would be fully credited to the Plaintiff but the Plaintiff would also have to bear all possible losses incurred in the Said Trading.

(3) In view of the volatile nature of the stock market in Hong Kong and that the Plaintiff had little or no knowledge of the trading of HSI Contracts, the Husband would have the full and sole discretion and control of the Said Trading.

48. It was the Husband's evidence that, as agreed, he had the full and sole discretion to decide when to trade and the number of HSI Contracts to be traded. The Plaintiff had no say in the matter. Furthermore, on the terms of this alleged agreement as pleaded in the Re-Amended Defence, as stated in the Husband's Witness Statement and as put to the Plaintiff in cross-examination by Miss Julia Lau, the Husband could insist on the Plaintiff paying up margins for all contracts entered by the former and refusing the Plaintiff's request to stop loss. The Husband retracted this allegation during his evidence-in-chief, when he said that the Plaintiff could withdraw and refuse to pay up margins for loss-making HSI Contracts, the Plaintiff could leave the market at any time. I shall comment on this further at a later part of this Judgment.

49. The Husband went on to testify that pursuant to the alleged agreement, on about 22nd March 1999 he sold 2 HSI Contracts at 11,060 points for and on behalf of the Plaintiff. The Husband felt that the timing was right for the Plaintiff to enter the market. The Husband then phoned the Plaintiff and asked him to deposit HK$150,000 into the Husband's trading account (via the bank account maintained by Tai Fook at the Hang Seng Bank) to cover the margin requirements and/or floating loss for these 2 HSI Contracts. The Plaintiff made the deposit of HK$150,000 on 23rd March 1999 according to his instructions.

50. On about 24th March 1999, the Husband decided to close the 2 HSI Contracts at 10,715 points for and on behalf of the Plaintiff, thereby generating a profit of HK$34,500 before transaction fees. He duly informed the Plaintiff by phone.

51. On about 26th March 1999, the Husband sold 2 HSI Contracts at 10,765 points for and on behalf of the Plaintiff. The market closed at 10,760 points on that day.

52. The stock market went up on 30th March and 1st April 1999 and closed at 11,130 points. The Plaintiff suffered some floating loss.

53. During the Easter holidays from 2nd April to 6th April 1999, the US stock market and other foreign stock markets went up significantly. The Husband anticipated that the good performances of the foreign stock markets would have great impact on the Hong Kong stock market and would push up the Hang Seng Index Futures as high as 12,000 points when the trading resumed. The Husband therefore called the Plaintiff and asked him to make a further deposit of HK$70,000 to cover any possible floating losses.

54. On 7th April 1999, the Plaintiff made a deposit of HK$70,000 accordingly.

55. On about 16th April 1999, the Husband thought that it was the right time for the Plaintiff to make further investment into the Said Trading. He therefore sold another 2 HSI Contracts for and on behalf of the Plaintiff.

56. On about 17th April 1999, when the Husband called the Plaintiff and asked him to further deposit HK$180,000 to cover the margins for the aforesaid two new contracts and floating losses for the existing contracts, the Plaintiff felt uncomfortable to take up the new contracts as he might not be able to cover any further floating losses for 4 contracts. Since the Husband had the full and sole discretion and control of the Said Trading, the Plaintiff had the obligation to cover his margin requirements. It was therefore agreed that the Plaintiff should deposit HK$180,000 to cover the margins for the two new contracts and the floating losses for the existing two contracts. The Husband then took the two new contracts as his own. Upon closing of the two new contracts, he would refund the balance back to the Plaintiff.

57. The Husband had a telephone conversation again with the Plaintiff on 19th April 1999. After reviewing the situation in particular that the Plaintiff had refused to take up the two new contracts sold on 16th April 1999, the Plaintiff and the Husband agreed further that the Husband would still be the decision maker for the Said Trading but the Plaintiff's maximum exposure to the Said Trading would thereafter be limited to two contracts at any one time.

58. On the same day, the Plaintiff made his third deposit of HK$180,000.

59. On 22nd April 1999, after closing the 2 HSI Contracts sold on 26th March 1999, the Plaintiff had an accrued trading loss of HK$183,316. The Husband called the Plaintiff and informed him of the loss incurred. According to the Husband, the Plaintiff told him repeatedly that the Plaintiff faced great pressure from his family and suffered a lot for participating in the Said Trading. But the Plaintiff still hoped that the Husband could recover the loss for him. It was agreed that the Husband would carry on with the Said Trading for and on behalf of the Plaintiff.

60. Since the Plaintiff was willing to trade at the maximum of two contracts at any one time, the Husband agreed to keep only HK$135,000 of the Plaintiff's money in his trading account (being the initial margin for two HSI Contracts and HK$9,000 as a floating margin) and to return the balance of HK$81,684 to the Plaintiff.

61. On about 26th April 1999, when the Husband was having lunch with the Defendant, he suddenly remembered that he had promised to return HK$81,684 to the Plaintiff. As the Husband had forgotten to transfer enough money to his current account, he asked the Defendant to write a cheque for HK$80,000 payable to the Plaintiff.

62. On the same day, the Husband deposited the Defendant's cheque together with a cheque of HK$1,684 of his own into the Plaintiff's Standard Chartered Bank account.

63. On 27th April 1999, the Husband bought 2 HSI Contracts at 13,420 points for and on behalf of the Plaintiff.

64. On about 28th April 1999, the market went down and the Husband decided to close the two contracts at 13,050 points, thereby incurring a loss of HK$37,000 for and on behalf of the Plaintiff.

65. As a result, the balance of the Plaintiff's deposit with the Husband was reduced to HK$97,592, which was below the required initial margin of HK$126,000 for two HSI Contracts. The Husband called the Plaintiff on the same day and required the Plaintiff to make good the deposit. The Plaintiff said that he was unable to do so at that time due to pressure from his wife. The Plaintiff requested the Husband to treasure their long-term friendship and carry on with the Said Trading in his favour, hoping that at the end of the day the Husband would recover all the losses for him. The Husband agreed to continue to conduct the Said Trading for and on behalf of the Plaintiff.

66. On about 29th April 1999, the Husband decided to stop trading in his trading account with Tai Fook. Up to this point, the Plaintiff and the Husband had already incurred substantial losses for the period from March to April 1999. As the trading result thus far was not very satisfactory, the Husband decided to change to a new securities broker to continue his trading in HSI Contracts. The Husband decided to switch to Phillip Commodities (HK) Limited ("Phillip Commodities").

67. On 12th May 1999, the Husband opened a new account with Phillip Commodities and conducted the Said Trading in this new account ("the New Account"). As the Plaintiff's deposit was below the required initial margin for two HSI Contracts, the Husband decided to reduce the Plaintiff's exposure to one HSI Contract at any one time and informed the Plaintiff of the same. Further, it was agreed that all trading at the New Account would be done as a 50:50 partnership between the Plaintiff and the Husband.

68. There was a profit of about HK$10,000 for the Plaintiff in the first month of trading under the New Account. The Husband duly informed the Plaintiff of the profit but the Plaintiff was not very enthusiastic about the trading details and asked the Husband to call him only if there was any great news.

69. The market thereafter went against them. When the Plaintiff's deposit was virtually reduced to zero, the Husband called the Plaintiff and asked him to make further deposit in order for the Husband to carry on with the trading. The Plaintiff again refused to pay on the same ground of family pressure but still urged the Husband to continue the trading with a hope to recover the loss. The Husband agreed.

70. During the months from August to December 1999, the market continued to go against the Plaintiff and the Husband. As a result, further losses were incurred. The Plaintiff was duly informed from time to time about the losses but the Plaintiff still requested the Husband to carry on with the trading in the New Account.

71. By the end of December 1999, the Husband finally decided to close the New Account and stop further trading. The total trading loss in the New Account amounted to HK$657,526. The Husband reviewed the trading results on behalf of the Plaintiff and found that the Plaintiff owed him a total outstanding sum of HK$231,171. The Husband informed the Plaintiff of his decision to cease trading and demanded the Plaintiff to repay the sum of HK$231,171. The Plaintiff orally agreed to repay the Husband but has so far failed to do so. He did not hear from the Plaintiff until May 2000.

72. Unlike their usual mode of communication, the Plaintiff however did not telephone either the Husband or the Defendant but chose instead to send e-mails to the Defendant's e-mail address at her office.

73. The Defendant forwarded all the e-mails she received from the Plaintiff to the Husband's e-mail address at jmhcheung@ctimail.com.

74. The Husband personally answered most of the e-mails from the Plaintiff and the Defendant answered one or two while the Husband was either out of Hong Kong or was tied up with his work.

75. According to the Husband, all along he trusted the Plaintiff as an old friend and it never occurred to him that the Plaintiff would use the e-mails as evidence against the Defendant or himself. Therefore, the Husband deleted all the e-mails immediately after he had replied to the Plaintiff.

Findings of fact

76. This case turns on the facts. It is readily apparent that the story of the Plaintiff cannot possibly stand together with the story of the Defendant and her husband. The evidence from the protagonists adduced at trial is so diametrically opposite that there can really be no halfway house. The duty thus falls on the Court to determine the facts on a balance of probabilities.

Demeanour of Witnesses

77. I have had the advantage of receiving at first-hand the evidence of the Plaintiff, the Defendant and the Husband. In terms of demeanour, I have no hesitation in accepting the evidence of the Plaintiff. He was an impressive witness who in my view could be relied upon to tell the truth in the box in accordance with the best of his recollection of the events. I find him to be a frank witness who gave his evidence with composure and honesty. The Plaintiff did not appear to me at any stage to have embellished his evidence or to have attempted to tailor his evidence to suit his case.

78. My impression of the Plaintiff as a witness was in contrast to my impression of the Defendant and her husband. Whilst no doubt they have done much homework ahead of this trial, at the end of the day their evidence in court came across as rehearsed. I formed a distinct impression that they were witnesses who were prepared to tailor their evidence to suit the Defendant's case. One particularly striking example has been given in paragraph 48 above. The change in stance by the Husband was, in my view, probably to alleviate the inherent improbabilities of the agreement alleged by him as pointed out by me during the Plaintiff's cross-examination.

79. Having said that, I am mindful of the fact that demeanour of witnesses can be deceptive and is therefore to be approached with great care. My consideration of the demeanour of witnesses should be done in the context of such inherent probabilities as may exist in this case and the whole of the evidence that is before me.

Inherent Probabilities of the rival accounts

80. Having considered all the evidence in this case, I am of the view that the Plaintiff's account is much more inherently probable than the account of the Defendant.

81. In the present case, I consider the professional background of respectively the Defendant and the Husband to be of considerable importance. Whereas the Defendant had worked in three very renowned financial institutions before joining Goldman Sachs as an equities analyst, the Husband worked full-time in the construction field since graduation and had not worked at all in any financial institution.

82. The Defendant's position in Goldman Sachs obviously offered her easy, quick and pretty comprehensive access to reliable information regarding the stock markets both local and abroad. She must have been in a better position than her husband to have a constant hand on the pulse of the market.

83. Furthermore, unlike the Defendant, the Husband had not been a 3-year-long classmate or a 4-year-long colleague of the Plaintiff at respectively the Hong Kong Polytechnic and PricewaterhouseCoopers.

84. In these circumstances, I find it much more inherently probable that the Plaintiff would have asked the Defendant, and not the Husband, to trade for him in the notoriously volatile market of HSI Contracts, where a wrong decision may lead to financial ruin.

85. Furthermore, I fully agree with Mr. Lee Siu-Ho (who appeared for the Plaintiff at this trial) that it is most unlikely for the Plaintiff, a professional accountant, to have agreed to give a "full and sole discretion", effectively a "blank cheque" to the Husband to trade in an unlimited number of HSI Contracts on his behalf. This is simply unbelievable. The Plaintiff's evidence that he himself decided the range in which to trade and the number of contracts to be traded, after seeking advice from the Defendant, is in my view much more credible.

86. I can see no good reason for the Plaintiff to have approached first the Defendant, and not her husband, with his first e-mail on 31st May 2000, and finally to expend considerable legal costs in this action to go after the Defendant, except that it was indeed the Defendant who had agreed to trade for the Plaintiff.

87. I agree with Mr. Lee that there are various aspects of the Defendant's case which are inherently improbable.

88. I find it incredible that the Husband did not approach the Defendant at all for her advice on his alleged HSI Contracts trading. Had he traded at all, it is most unlikely that he did not ask the Defendant for a word of advice. This is all the more so after the Defendant had joined Goldman Sachs as an equities analyst.

89. It is equally incredible for the Defendant, initially as a girlfriend and later as a wife, not to care about the Husband's alleged trading in the volatile market of HSI Contracts. In her evidence, the Defendant claimed to have no particular reaction after learning that and did not worry at all. She claimed also not to have given the Husband any advice on HSI Contracts trading at all. The Defendant's evidence in this regard is, in my view, very hard to believe.

90. It is also incredible for the Husband not to have asked the Defendant for advice before allegedly agreeing to trade for the Plaintiff. After all, the Defendant was known to him to be a former classmate and colleague of the Plaintiff and any trading loss caused to the Plaintiff by the Husband might damage the friendship between the Defendant and the Plaintiff.

91. It is incredible that the Husband would agree to shoulder the potential loss (the market being then in the opposite direction) on the 2 new HSI Contracts sold in April 1999, which allegedly was traded for the Plaintiff in line with their alleged agreement but which the Plaintiff refused to honour. On his own evidence, the Husband assisted the Plaintiff on a friendly and gratuitous basis only.

92. Given that the Plaintiff had refused earlier to honour his obligation under their alleged agreement as aforesaid, and thereby causing a loss to the Husband as a result, it is most unlikely and incredible for the Husband to expend a considerable sum out of his own pocket to subsidize the Plaintiff's alleged trading in HSI Contracts at Phillip Commodities between June and December 1999. According to the table prepared by the Husband (Exhibit "D9A"), the Plaintiff's funds with the Husband had been reduced to an amount below the initial margin for one HSI Contract by mid-June 1999, and further reduced to a negative figure by late August 1999.

93. Finally, had it been the Husband who had traded for the Plaintiff, it is most unlikely and incredible that he did not insist on the Plaintiff repaying his share of the loss by December 1999 or demand a repayment date at all. It is noteworthy that up to the time of this trial, no legal proceedings has been issued by the Husband against the Plaintiff for the amount allegedly due (which is said to be substantially greater than the amount claimed by the Plaintiff in this action).

Documentary evidence adduced at trial

94. I find that the documentary evidence adduced at trial has amply supported my view on the inherent probabilities of the rival accounts.

The e-mails

95. The e-mails were produced at trial by the Plaintiff marked Exhibits "P4 (1) to (21)" (pages 167-201 and 203-213 of the Plaintiff's Bundle of Documents). According to the Plaintiff, the e-mails produced were the record of communication between the Plaintiff and the Defendant on the subject of HSI Contracts trading she made on the Plaintiff's behalf.

96. This is hotly disputed by the Defendant. According to the Defendant, except the 2 e-mails sent at respectively 14:01 hours (page 191 of the Plaintiff's Bundle) and 16:43 hours (page 193 of the Plaintiff's Bundle) on 12th June 2000 which were written by the Defendant, all the other e-mails sent from jmhcheung@ctimail.com were written by the Husband. The Defendant and her husband went as far as to allege that some of the e-mails had been altered to mislead the Court. The stance taken by Miss Julia Lau on behalf of the Defendant at trial was that either the e-mails should not be admitted as evidence, or that the Court should attach no weight to the e-mails.

97. At the end, I do not feel that it is necessary for me to make a finding on the authorship of the disputed e-mails. I am prepared to rely only on those e-mails admittedly written by the Defendant.

98. In the e-mail sent at 14:01 hours on 12th June 2000 ("the first e-mail"), the Defendant wrote as follows: -

" Francis,

I am sorry that I haven't sent you the confirmation yet as I need some time to dig out all the confirmations. I will mail them to you in the coming two weeks. Hope it is OK.

Jessie"

99. The Plaintiff's reply to the first e-mail (page 192 of the Plaintiff's Bundle) was sent at 14:16 hours on the same day, it went as follows: -

" a word of advice, HSF trading is not suitable for U, better to take longer rest.

Did U do the CFA examination? I have taken the Certified Information System Audit exam last year, now I am doing more IT related assignment, like Y2K and Internet Betting.

How's Jeff, still working with his old boss?

Send me what U have first in hard copy to HKJC, let's do it bit by bit. Thanks."

100. The Defendant replied at 16:43 on 12th June 2000 ("the second e-mail"): -

" Thanks for your advice. I am just busy with my reports. As promised, I will send you all the confirmations. Don't worry."

101. It was the evidence of the Defendant that she was at the Husband's office on 12th June 2000 by chance. They were both on leave that afternoon. After having lunch, the Husband had to return to his office "to pick up something". After returning to the office, the Husband had to attend an "urgent meeting". Because the Defendant had nothing to do at the Husband's office, he asked the Defendant to reply on his behalf an e-mail previously received from the Plaintiff.

102. Frankly, I find the Defendant's evidence in this regard most incredible. The first e-mail, which the Defendant allegedly wrote on her husband's behalf, was in reply to an e-mail from the Plaintiff dated 8th June 2000 (page 189 of the Plaintiff's Bundle) i.e. 4 days ago. There was really no urgency for the Husband to ask the Defendant to reply for him (to the extent of sparing precious time before an urgent meeting in turning on the computer, opening the e-mail software and giving instructions to the Defendant on what to say in the reply), on a matter which allegedly had nothing to do with the Defendant.

103. Again, it is surprising that the Husband could spare time leaving the urgent meeting, discovering the e-mail from the Plaintiff of 14:16 hours, and asking his wife to reply for him for a second time. The Husband could have waited after that urgent meeting to reply himself.

104. The first e-mail and the second e-mail admittedly issued by the Defendant were on their face written in the first person: "I am sorry that I haven't sent you the confirmation yet.... etc." Had the Defendant issued the e-mails on the Husband's behalf as alleged by her, she could have, and in my view would have, made that clear by just adding a few more words in the e-mails.

105. In my view, the contents of the first e-mail and the second e-mail are clearly consistent with and support the Plaintiff's case that the HSI Contracts dealing was between the Plaintiff and the Defendant. I do not accept that these two e-mails were written on behalf of the Husband.

The Deposit Forms

106. It was the Plaintiff's evidence that he had written the words "Mica Mak. Deposits to: Jessie Yung's a/c. A/c #: 12716-400" on a copy of the deposit slip (Exhibit "P1A") before faxing it over to Ms. Mica Mak at Tai Fook. This evidence, if accepted, would obviously go a long way to support the Plaintiff's case. As mentioned before, copy of the relevant deposit slips and customer receipt bearing the Plaintiff's hand-written words ("the Deposit Forms") have been produced at trial marked Exhibits "P1A", "P2A" and "P3A".

107. Miss Julia Lau submitted that no weight should be attached to the hand-written words appearing on the Deposit Forms. The reason being that there were discrepancies found in the copies supplied by the Plaintiff's solicitors on different occasions, details of which have been set out in the table which can be found at page 153 of the Pleadings Bundle.

108. I am not impressed by Miss Lau's submissions in this regard and I reject the same.

109. In the Plaintiff's List of Documents filed on 5th January 2001, the deposit form for 23rd March 1999 was described as "Hong Kong Dollar Account Deposit Form in respect of the deposit of the sum of HK$150,000.00....". The same format was used to describe the deposit form for 19th April 1999. The deposit form for 7th April 1999 was described as "Customer Receipt in respect of the deposit of the sum of HK$70,000.00....".

110. Somebody in the Plaintiff's solicitors firm might well have unintentionally and understandably taken the descriptions of the Deposit Forms in the Plaintiff's List at their face value and made photocopy of only the original deposit slips and customer receipt (produced at trial as Exhibits "P1", "P2" and "P3"), thus causing the confusion in question.

111. Ms. Lau Sim Yee, Shelyn, a trainee solicitor under the employ of the Defendant's solicitors gave evidence at trial on this issue. Ms. Shelyn Lau carried out an inspection of the Deposit Forms on 25th August 2001. According to her, the Deposit Forms and the deposit slips produced at trial were different from what was seen during her earlier inspection. For example, the original deposit slip for 23rd March 1999 (P1) was attached at the bottom of the A4 size paper underneath the original handwritten words (P1A), and not at the top of P1A. During the inspection, she had marked the position of the documents on her own copies with "post-it" notes.

112. With due respect to Ms. Shelyn Lau, her method of recording the position of documents by "post-it" notes can hardly be described as satisfactory or reliable. Moreover, it was the evidence of Ms. Shelyn Lau under cross-examination that during inspection, she had compared the Deposit Forms inspected against the copies from the trial bundle. She came to the conclusion that any photocopying of the 3 Deposit Forms she saw on inspection would be unnecessary because any photocopy would be the "same" as that in the trial bundle (one would be unable to differentiate between the original and the photocopy). This clearly supports the Plaintiff's case that P1 and P1A were upon inspection in their present format (with both the original and the copy deposit slip at the upper portion on top of each other).

113. I reject the Defendant's suggestion that the Plaintiff has made up evidence in the form of P1A, P2A and P3A. To make good such a serious allegation against the Plaintiff, I would have expected the Husband to try to ask Ms. Mica Mak to give evidence on behalf of the Defendant. Surprisingly, the Husband under cross-examination said that he did not see the need at all to contact Ms. Mak, the most direct person to give evidence on this (and other points) in favour of the defence.

114. All in all, I accept the Plaintiff's evidence regarding the Exhibits P1A, P2A and P3A.

Other documentary support for the Plaintiff's case

115. I do not wish to over burden this judgment by listing all the other documents adduced at trial which went in support of the Plaintiff's case. Suffice to point out the fact that it was the Defendant who drew the cheque for HK$80,000 on 26th April 1999, it was the Defendant who later "dug up" the Daily Statements at home and who had them posted to the Plaintiff in a Goldman Sachs envelope, all went in support of the Plaintiff's allegation against the Defendant that it was the Defendant, and not her husband, who had traded HSI Contracts on the Plaintiff's behalf.

The Husband's notebook

116. A notebook belonging to the Husband was produced at trial as Exhibit "D10". The existence of the notebook was only disclosed by the 4th Supplemental List of Documents of the Defendant, which was filed in court on 10th September 2002 (10 days before the start of this trial).

117. The significance of the notebook is that it contains what appears to be a detailed hand-written record of the HSI Contracts trading allegedly done on behalf of the Plaintiff. On the evidence of the Husband, the purpose of these notebook entries was to inform the Plaintiff after each trade and to refresh himself and the Plaintiff of these details at later times. The notebook was used by him in ordinary work and would be with him in the course of ordinary work.

118. I have given anxious consideration as to the weight which I should attach to the entries in the notebook. Obviously, if the Husband's evidence regarding the notebook were accepted, it would go a long way to support the Defendant's case.

119. At the end, I am satisfied that I should attach no weight at all to the notebook. I find it most surprising that such an allegedly important document was not disclosed until the eleventh hour. In order to excuse that, the Defendant sought to lay the blame on her former counsel. According to the Defendant, at a conference attended by both the Defendant and her husband, they mentioned to counsel the existence of the notebook. However, her former counsel advised that it was unnecessary for him to see the notebook and he did not ask the Defendant to produce the document. Frankly, I find this evidence wholly unconvincing and incredible. I reject the same.

120. The Husband's evidence that the Defendant's legal advisors had advised that handwritten documents were unimportant and need not be disclosed is equally incredible. I agree with Mr. Lee that any legal advisor would no doubt realize the importance of these highly material and relevant notebook entries made allegedly contemporaneously with the trading in question and the obvious need to make disclosure of the same for the purpose of trial.

121. There were further aspects of the Husband's evidence concerning the notebook which caused me to reject his story.

122. It was the Husband's evidence that he used the notebook between early 1999 and July 1999. It was also initially his evidence that he had no contact with the Defendant's solicitors, Messrs. Lee Chan Cheng, in 1999. However, when it was pointed out by me that the notebook contained the name Kenneth Poon (a solicitor working at Messrs. Lee Chan Cheng) and his telephone number, the Husband changed his story and said that his employer had engaged Messrs. Lee Chan Cheng to handle a court case in 1998, and he must have made a follow-up call to Mr. Poon in early 1999. When it was further pointed out to the Husband at a later stage that Mr. Kenneth Poon did not in fact begin to work at Messrs. Lee Chan Cheng until April 2000, he changed his story again and said that he might have entered the name of Mr. Poon in the notebook in March 2002.

123. Having carefully considered the demeanour of the witnesses, the inherent probabilities and improbabilities of the competing stories, as well as all the available evidence and surrounding circumstances, I have no hesitation in accepting the Plaintiff's case and rejecting the case of the Defendant.

124. I have carefully considered all the points made by Miss Julia Lau on behalf of the Defendant. Despite her valiant effort, the points put forward by Miss Lau were at the end of the day unable to dissuade me from making a finding that the Plaintiff's evidence should be accepted. For example, Miss Lau's criticism of the Plaintiff's inability to provide the exact basis upon which the margins were calculated was, to me, neither here nor there. Those figures, according to the Plaintiff, were provided by the Defendant and he trusted her. If anything, it showed that the Plaintiff has not embellished his evidence. I am satisfied that Miss Julia Lau's criticisms of the Plaintiff's evidence can be explained by lapses in memory or other innocent reasons, rather than the Plaintiff telling lies or giving an untruthful account. Miss Lau's criticisms do not detract from the fact that overall the Plaintiff's account is, in my judgment, much more inherently probable than the account of the Defendant.

Conclusion

125. I hold that the Defendant is liable to the Plaintiff in the amount as set out in paragraph 28 of this Judgment.

126. Accordingly, I order that there be judgment against the Defendant in favour of the Plaintiff for the sum of HK$135,000, together with interest thereon at the Judgment Rate (as varied from time to time) from 31st May 2000 to the date of this Judgment.

127. Further, I make an order nisi that the costs of this action (including all costs reserved by previous court orders) be paid by the Defendant to the Plaintiff, to be taxed on a party and party basis if not agreed, with a certificate for counsel for the trial.

128. Lastly, I would like to thank counsel for their helpful assistance.

Remarks: