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HCA 1812/2022
[2026] HKCFI 1573
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1812 OF 2022
________________________
| BETWEEN |
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CARMON REESTRUTURA-ENGENHARIA E
SERVICOS TÉCNICOS ESPECIAIS(SU) LIMITADA |
Plaintiff |
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and |
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CARMON RESTRUTURA LIMITED |
1st Defendant |
| |
ANTONIO JOAO CATETE LOPES CUENDA |
2nd Defendant |
________________________
| Before: |
Deputy High Court Judge Andrew Li in Court |
| Dates of Hearing: |
26-30 January, 2-5 February and 2 March 2026 |
| Date of Judgment: |
27 March 2026 |
________________________
JUDGMENT
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A. INTRODUCTION
1. This is the trial of a claim brought by the plaintiff (“Carmon Angola” or “P”) against its former director and employee Antonio Joao Catete Lopes Cuenda, the 2nd defendant herein (“Cuenda”), who has allegedly misappropriated (i)shares in the 1st defendant (“Carmon HK”) which P alleges is a subsidiary of Carmon Angola that Cuenda had been tasked with holding as nominee during his time working for Carmon Angola as a matter of convenience; (ii)also over USD 22.5 millionin Carmon HK’s bank account which was dissipated from 19 to 30 December 2022.[1]
B. BACKGROUND
2. This trial has been preceded by several written decisions and orders made by the court. They included the decision dated 8 March 2024 by Deputy High Court Judge Le Pichon [2024] HKCFI 715 (“DHCJ Le Pichon Decision”) and the decision dated 23 May 2025 by Deputy High Court Judge MK Liu [2025] HKCFI 2163 (“DHCJ MK Liu Decision”).
3. In addition, the following orders have been granted by the court against Ds. They included the interlocutory injunction order by Recorder William Wong SC against D2 on 30 November 2022; the continuous injunction order by Fung J on 13 January 2023; the worldwide propriety injunction order against Ds by Peter Ng J on 19 January 2023; and leave for P to commence committal proceedings against Cuenda by Fung J on 5 September 2024.
B1. Parties
4. Carmon Angola is a company incorporated in the Republic of Angola, which carries on business in construction, civil engineering and public works in that country. It is ultimately beneficially owned by Ms Mayra Isungi Campos Costa (“Ms Costa”), who was previously married to the son of the President of Angola who in turn was someone involved in Angolan politics.
5. Cuenda is an Angolan citizen. He was employed as a “Director Geral” (Director General) pursuant to an employment agreement with Carmon Angola dated 1 July 2007 and further appointed as a gerente (director) of Carmon Angola on 31 June 2009. He resigned from both positions by his letter dated 9 August 2022.
B2. Collaboration with CR20 – the Memorandums of Cooperation
6. On 11 February and 17 October 2016, Carmon Angola entered into two Memorandums of Cooperation (“the MOCs”) with China Railway 20 Group Internacional Angola, Lda (“CR20”), an Angola company with Chinese shareholders who had access to lines of credit from the PRC government, ie a Chinese state enterprise: see Recital B of the MOCs.
7. It was stated in the MOCs that CR20 wanted to “establish a relation of partnership and cooperation with the Angolan company CARMONfor participation in, regarding of mutual selected projects, Public Tender… for the implementation of all works to be awarded (related to construction of access to the new Luanda International Airport…” [emphasis added]: see Recital C of the MOCs.
8. The parties also acknowledged that “CARMON is a company duly incorporated under the laws of Angola, with core business in construction and public works, with both technical and financial capacity to act as a local partner of CR20 in the development and execution of projects contemplated under the Public Tender from LCC” [emphasis added]: see Recital D of the MOCs.
9. Further, it has been provided that “The parties intend to cooperate, on an exclusive basis… in the study, design, planning, development and implementation of infrastructure projects as well as other business opportunities related the service provided and/or eventually checked in the framework of the partnership to be established between the parties” for such intended partnership [emphasis added]: see Recital E of the MOCs.
10. The two MOCs are in identical terms save for the participation share in the first MOC dated 11 February 2016 for the project was stated at 40% for Carmon Angola and 60% for CR20[2] and the participation share for the project under the second MOC dated 17 October 2016 would be the other way round, at 60% for Carmon Angola and 40% for CR20: see Clause 1(c) of the MOCs[3] .
11. Cuenda signed on each of the MOCs for and on behalf of Carmon Angola in his capacity as the Director General of the company.
12. In a letter dated 12 February 2016, Carmon Angola informed the President of Angola about the above cooperation with CR20. It was also expressly explained that Carmon Angola “sought, and succeeded, in establishing an equal partnershipwhere it will play an active role in the implementation of the projects” [emphasis added]. Again, the letter was signed by Cuenda for and on behalf of Carmon Angola.
13. At the material time, there was a shortage of foreign exchange reserves in Angola, impeding international transfers of foreign currency out of the jurisdiction as per Carmon Angola’s letter to the Ministry of Construction dated 5 May 2017 making reference to such issue. This letter was also signed by Cuenda on behalf of Carmon Angola.
14. CR20 had also indicated that Carmon Angola would have to provide bank accounts in China (including Hong Kong) as well as in Angola for payment of project fees, and that a significant proportion of the funds would be paid in USD. This was later recorded in various sub-contract agreements.
15. In light of the above requirements, a company was set up in Hong Kong, namely, Carmon Restrutura Limited (ie Carmon HK) on 1 December 2016, as a subsidiary of Carmon Angola, according to Carmon Angola’s case, to facilitate, inter alia, receipt of project fees. Carmon HK’s sole registered shareholder and director was Cuenda.It is Carmon Angola’s case that Cuenda at all material times acted only as a nomineefor it: see Statement of Claim (“SOC”) §9.
16. On 5 January 2017, the first Sub-contract Agreement (“the Sub-Contract”) was then entered into between CR20 and Carmon HK. Notably, under the Sub-Contract, Carmon HK as Sub-contractor was responsible for “all work during project implementation”, viz. for the execution of the two Master Contracts taking place in Angola for building of highways and the Luanda International Airports (Clauses 6.1-6.2). By Clause 8.2.5, parties agreed on CR20’s payment of project funds (with 80% in USD to the Hong Kong account, and 20% paid to “the Subcontractor’s Angola account”).
17. In other words, the Sub-Contract referred to and provided details concerning the collaboration envisioned in the MOCs in relation to the construction of the Luanda International Airport.
B3. The Consortium Agreement
18. Thereafter, Carmon Angola and Carmon HK entered into a Consortium Agreement dated 30 January 2017 (“the Consortium Agreement”), which provided, inter alia, the following important terms:-
(1) The two companies “although having their own legal personality and its own assets [sic], maintain among themselves an economic group relationship, since they are under the control of the same Direction, having a convergence of interests, which leads them to act in a regime of financial and commercial cooperation” [emphasis added] (5th Recital).
(2) The parties wished to “promote an integration of their capacities and experiences” and for that purpose incorporated a consortium under relevant Angolan law (Clause 1.1). Carmon Angola is identified as the leader of the consortium (Clause 1.7).
(3) Carmon HK can contract in its own name in relation to any engineering services “acting as an international platform of Carmon Angola” (Clause 1.3).
(4) Carmon HK may also “make payments of Carmon Angola invoices in any territory, on account and on behalf of the Carmon Angola…” within the scope of the Consortium, to “assume obligations for and on behalf [of] Carmon Angola by delegation…” and to “pay directly to the employees of Carmon Angola, the payments of their respective salaries, remunerations and any bonuses” (Clauses 1.4-1.6). See also Clause 3.1(c), whereby Carmon HK undertook to “conclude contracts in [its] own name, contracts to be executed by Carmon Angola, including making payments in any territory, on behalf and order of Carmon Angola”.
(5) “All technical and commercial decisions of the Consortium Agreement shall be taken by Carmon Angola” (Clause 3.2). Clause 5.1 also stated that “the global projection of Carmon Angola, on behalf [of] Carmon HK, which shall act as the authorized representative in the business agreed with partners/suppliers that have headquarters outside the Republic of Angola”.
(6) Despite provision of a share ratio at Clause 4.1(viz. 90% to Carmon Angola and 10% to Carmon HK), according to which parties shall distribute rights, obligations, risks, costs and expenses and profits or losses pursuant to Clause 4.2, Clause 5.4 further made clear that “(T)he payments that must be provided by Carmon HK shall have previous approval of the shareholders of Carmon Angola, under the presentation of a formal budget that might list all the transfers and payments requested by the Chief of the Consortium” [emphasis added].
19. The Annex to the Consortium Agreement further explained the structure of the consortium. In particular, the accounting/financial flow made clear as follows:-
(1) CR20 would pay Carmon HK after the latter issued invoices.
(2) Carmon HK would retain 10% of the funds received, and pay employees and suppliers. The other funds would be transmitted to Carmon Angola.
20. Subsequently, two further Sub-contract Agreements were entered into between CR20 and Carmon HK (collectively as “the Sub-Contracts”), with similar provisions to the first one dated 5 January 2017 referred to above.
21. In other words, the Sub-Contracts referred to and provided details concerning the collaboration envisioned in the MOCs in relation to the construction of the Luanda International Airport.
B4. Carmon HK’s role as a vehicle for Carmon Angola
22. Based on the above framework, P claims that the collaboration with CR20 progressed on the basis of the structure set out in the Sub-Contracts for several years without any issues, with Carmon Angola performing relevant construction works in Angola and CR20 making payments from time to time through Carmon HK (which would then further transfer funds to Carmon Angola pursuant to the Consortium Agreement inter se). CR20 would update Carmon Angola about project fees, in line with Carmon Angola’s role as the actual counterparty performing the relevant services entitled to payment.
23. Carmon Angola also claims that the overall structure was well known to third parties dealing with the parties at the time, including DBS Bank (Hong Kong) Limited (“DBS”), at which Carmon HK had opened its bank account in around March 2017 (“the Carmon HK Account”). Again, for several years, the operations between all parties went smoothly and without any problems.
B5. The CIGP Account
24. In 2022, in the course of Carmon Angola trying to open a bank account with Compagnie d’Investissements Et De Gestion Privee (Hong Kong) Limited (“CIGP”), Ms Adelina Marisa Dos Anjos Faria Martins (“Ms Martins”), the Director of Accounting and Finance at Carmon Angola liaised with Mr Christopher Hartung (“Mr Hartung”), a Swiss banker, about the preparation of a document to record/evidence the nominee arrangement between Carmon Angola and Carmon HK, in order to “explain why money [would be] coming from a HK company with Cuenda as owner to [Carmon Angola]”, at CIGP’s request.
B6. The Nominee Services Agreement (“the NSA”)
25. According to P, the NSA between Carmon Angola and Cuenda was signed by Ms Martins (on behalf of Carmon Angola) and Cuenda in or about May 2022. It was backdated to 16 November 2016. While it is not disputed by the parties that the NSA was prepared for the purpose of opening the account with CIGP in 2022 and was backdated to November 2016, the contents of that document are of vital importance because they defined and confirmed the relationship between Carmon Angola and Cuenda.
26. The NSA provided inter alia:-
(1) Cuenda (defined as “Director”) would act as nominee director by previous request of Carmon Angola (defined as “Real Owner”); and
(2) Cuenda declared and accepted that decisions are merely based on the wishes of Carmon Angola, and he confirmed that all instructions shall only come directly or indirectly from Carmon Angola without exceptions.
27. As seen in the WhatsApp messages between Ms Martins and Cuenda in May 2022, the NSA had been reviewed by Cuenda at the time. Mr Hartung and Ms Martins both gave evidence at trial confirming Cuenda had signed the NSA then, and that a copy of the executed NSA was provided to CIGP (resulting in the successful account opening thereafter). This was later confirmed in WhatsApp messages with Ms Costa, the ultimate majority shareholder of Carmon Angola, in June 2022 and early December 2022.
28. Despite Cuenda’s denial of the authenticity of the NSA, no expert evidence has been adduced by him to contradict the genuineness of his signature on this document. Further, it has also not been shown by him that he had never received the above WhatsApp message from Ms Martins. Again, significantly, despite having received the NSA and those WhatsApp messages in relation to them from Ms Martins and Mr Hartung, Cuenda had not disputed the contents prior to the proceedings were issued against him.
B7. Souring of relationship between Cuenda and Carmon Angola
29. Carmon Angola claims Cuenda was remunerated well for his services to the company. By a shareholders’ resolution of Carmon Angola dated 7 November 2019, it was resolved that USD 12 millionwould be paid to him as an award “for his performance in the position he occupies”, which was on top of his monthly remuneration.
30. Despite that, it is claimed by Carmon Angola that, it later transpired that Cuenda had been separately trying to misappropriate assets from Carmon Angola for his own benefit, through causing Carmon Angola to lease residences from a company known as Real Estate Business, Ltd (“REB”) for a total rent of some USD 420,000 between 2019 and 2022 – despite Carmon Angola having no need for such residences at all. REB was a company owned as to 70% by Cuenda, and 15% each by two of his children (who were minors, and presumably therefore his nominees)[4] .
31. There were also gradually rumours of Cuenda’s abuse of power around this time, which resulted in Ms Costa trying to appoint other managers to Carmon Angola as a form of additional checks and balances.
32. However, Cuenda did not react well to such proposal for appointing other managers to Carmon Angola. As a result, Cuenda’s relationship with Ms Costa deteriorated (as can be seen from a recorded conversation between them in around June 2022, during which inter alia Cuenda accused Ms Costa of “abusing” him after she suggested that a confidentiality agreement be signed, complaining that “In the normal circumstances of an institution…[he] would be a partner…And at no time did [he] ask for that, nor [was he] asking for it, nor [did he] need it”, but that he just needed respect and consideration.
33. As part of the attempt to effect a peaceful termination between the parties, in around August 2022, Ms Costa (together with a Portuguese lawyer) suggested that Cuenda sign, inter alia, a Deed of Assignment in respect of Carmon HK’s shares. The latter provided for, inter alia, payment of HKD 10,000 for all of Carmon HK’s shares upon transfer, with Cuenda also declaring that he would resign as director thereof.
34. On 6 August 2022, Ms Costa further emailed Cuenda, requesting that he execute a letter to DBS requesting for the signatory of the Carmon HK Account to be changed to Marisa.
35. However, ultimately, Cuenda did not execute the above documents. He merely resigned as “Director Geral” and director on 9 August 2022.
B8. Discovery of Cuenda’s fraudulent acts
36. On 14 November 2022, Ms Martins reached out to Cuenda to solicit his assistance to effect a transfer from the Carmon HK Account in the same way as done before over the past several years. Despite further messages on 21, 25 and 28 November 2022, Cuenda did not respond, contrary to the previous practice[5] .
37. On 7 December 2022, when Ms Martins tried to log onto the online banking platform to access the Carmon HK Account, she realised that the log-in details were no longer valid. She accordingly sent a screenshot of the log-in page to Cuenda by WhatsApp message – but again to no avail.
38. On 8 December 2022, Ms Martins reached out to DBS to request an account statement, but was informed that Cuenda’s consent was required as “authorizer” of Carmon HK[6] . On 14 December 2022, Ms Martins wrote back, reiterating Cuenda’s role as “nominee for Carmon Angola in Hong Kong”, and requested that DBS block the account as soon as possible.
39. Shortly after this exchange, on 19, 23 and 30 December 2022, a total of 9 transfers totalling USD 22,549,975were made from the Carmon HK Account to a number of Cuenda’s personal bank accounts[7] . Notably, prior to the first impugned transfer, as of 30 November 2022, the Carmon HK Account had a balance of USD 23,702,771.67, and there was no comparable previous history of Cuenda effecting similar transfers out of the Carmon HK Account to his personal account(s) at any time prior.
40. After the present action was commenced in December 2022, on 17 January 2023, Carmon Angola lodged a complaint with the Hong Kong police about the aforementioned misappropriations.
41. Thereafter, throughout 2023 and 2024, Carmon Angola allegedly uncovered further wrongdoings of Cuenda after investigation. In addition to the unauthorized lease contracts with REB mentioned above, he also appeared to have caused Carmon Angola to (i)enter into other transactions with companies he was interested in, and (ii)fund his and his family members’ personal trip expenses around the world. He further caused Carmon Angola to pay around USD 3.2 million to him for no identifiable reason in around 2018, and a further USD 212,623 in 2019 and 2022 as “security bonuses”, in addition to unilaterally increasing his salary without requisite approval: see Ms Costa’s witness statement (“WS”), §22. Carmon Angola has lodged a police complaint about these wrongdoings with the Angolan police[8] .
B9. Procedural history
42. On 30 December 2022, Carmon Angola applied for, and obtained, Mareva and proprietary injunctions against Carmon HK and Cuenda. This was continued by the Order of Fung J dated 13 January 2023 (in Ds’ absence).
43. On 19 January 2023, having discovered that Cuenda had in fact transferred the funds from the Carmon HK Account to his accounts located abroad (including to two bank accounts held with Emirates NBD Bank PJSC (“Emirates Bank”), Carmon Angola further applied for, and obtained, a worldwide Mareva injunction against Ds. The abovementioned injunction orders were continued by consent by Orders of Au-Yeung J dated 16 March 2023.
44. Ds filed their acknowledgement of service on 27 January 2023. On 8 June 2023, Ds took out a summons seeking to discharge the injunction orders and to dispute the jurisdiction of the Hong Kong Court, which was heard by DHCJ Le Pichon on 22 February 2024. Her written decision on this application was later handed down under the DHCJ Le Pichon Decision.
45. The learned judge had no difficulty dismissing the application, noting, inter alia, that “[Cuenda] did not adduce any evidence (other than his bald assertions) to substantiate the existence of the Arrangement[viz. that Carmon HK had been set up as an independent company vehicle by Cuenda]”: §§25-26. She also held that the forgery claim concerning the NSA “remains pure conjecture as [Cuenda had] not adduced any evidence in support”: §40.
46. The learned judge also pointed out that various provisions in the Consortium Agreement made clear “[Carmon Angola] had the ultimate say in all matters concerning the consortium and whose prior approval is required for payments to be made by [Carmon HK]. That arrangement shows that [Carmon HK] had to abide by [Carmon Angola’s] decisions. That does not support [Cuenda’s] claim to be the sole owner of [Carmon HK]” (§30).
47. The learned judge also described Carmon Angola’s characterisation of the WhatsApp messages between Ms Martins and Cuenda[9] as Cuenda being a conduit for payments to service providers as “more probable”, as compared to the defendants’ argument that Cuenda had to provide the security code for transactions in the Carmon HK Account (§§32-34).
48. After their unmeritorious stay application, Ds only filed the Defence on 21 March 2024 (around 14 months after the proceedings first commenced).
49. Subsequently, on 2 December 2024, Ds applied for security for costs against Carmon Angola, which was again dismissed by the court under the DHCJ MK Liu Decision. In that decision, the learned judge observed that:-
(1) There were strong merits in Carmon Angola’s case, as pointed out in the DHCJ Le Pichon Decision. Even putting aside the NSA, Carmon Angola’s case is “clearly supported by the provisions in the Consortium Agreement” (§§44-45).
(2) Carmon Angola had “clearly demonstrated that it has a high degree of probability of success at the trial” and that the defendants’ case is “inherently improbable”. On that basis, he refused to grant security (§48).
50. Further, on 5 September 2024, Carmon Angola had separately obtained leave to issue committal proceedings against Cuenda in respect of (i)false statements he had made in an affirmation purportedly giving disclosure about whereabouts of the subject funds; (ii)failure to comply with ancillary disclosure obligations; and (iii)breach of injunction orders by dissipating certain funds from bank accounts held with Emirates Bank. The crux of Carmon Angola’s complaint was as follows:-
(1) On 14 March 2023, Cuenda had filed an 1st Affidavit purportedly disclosing that around USD 899,000 had been transferred to an account with number ending 401 (the “401 Account”), and USD 17.4 million had been transferred to an account with number ending 402 (the “402 Account”), both held with Emirates Bank.
(2) It transpired that in fact, as of 14 March 2023, much less amountswere held in the 401 and 402 Accounts respectively. By end of July 2023, further amounts had been dissipated from the 401 and 402 Accounts, despite the injunction orders in place preventing such disposals:-
| |
Balance |
| |
14 March 2023 (per D2’s 1st Aff) |
14 March 2023 (actual position) |
End July 2023 |
401
A/C |
AED 3,300,000
(~USD 899,000) |
AED 1,058,415.14 |
AED 82,120,68 |
402
A/C |
USD 17,400,000 |
~USD 4,000,000 |
USD 848,046.08 |
(3) By Cuenda’s 5th Affidavit, he admitted that certain payments had indeed been made out of the Emirates Bank accounts, although he claimed it was not his intention to breach the same. He later deposed to having replenished some USD 7.24 million odd into the accounts. However, to date, no other updatehas been provided as to the balance.
51. On 29 November 2024, Cuenda had applied to set aside the leave granted to Carmon Angola for commencement of committal proceedings against him. This was also heard on the same occasion by DHCJ MK Liu as can be seen in the DHCJ MK Liu Decision which was also for security for costs. Cuenda’s application was also dismissed. The committal proceedings have been set down for a one-day hearing on 9 October 2026. Cuenda has indicated he would not give oral evidence in defence.
52. While I find DHCJ Le Pichon Decision and DHCJ MK Liu Decision extremely helpful, I remind myself that I must come to my own decision when determining the different issues in this case as I have the unique opportunity to examine all the documentary evidence and hearing the oral evidence of the witnesses called by the parties at the trial.
C. Ds’ Defence
53. Mr Toby Brown, appearing with Mr Jeremy Yau, counsel for Ds, in Ds’ Opening has summarised Ds’ case by referring to Ds’ Defence as follows.
C1. Setting up of Carmon HK
54. Cuenda was introduced to CR20 through his own personal contacts (§9) and conducted negotiations with CR20 in his personal capacity to explore possible business deals and ideas (§15).
55. Cuenda reached a consensus or agreement with CR20 on a business strategy and arrangement (“the Alleged Arrangement”), which included Cuenda setting up a corporate vehicle as a platform to attract business to Angolan companies, and responsible for sourcing and referring suitable local companies in Angola to execute the building and construction works for CR20 (§11).
56. Having reached a consensus or agreement with CR20 on the arrangement, Cuenda then introduced CR20 and the Alleged Arrangement to Carmon Angola (§14) as Carmon HK envisaged at the time for Carmon Angola to be the local company in Angola to execute the building and construction works for CR20 (§12).
57. Cuenda set up Carmon HK in Hong Kong as the corporate vehicle as envisaged under the Alleged Arrangement with CR20 (§16). It is denied that Cuenda held the shares in Carmon HK on express trust for Carmon Angola (§56). Carmon HK all along belonged legally and beneficially to Cuenda (§17).
C2. The Carmon HK Account
58. Insofar as the Carmon HK Account is concerned, Ds case is that Cuenda caused Carmon HK to open the account of his own volition (§25).
59. Ds deny that Carmon Angola had access to the Carmon HK Account at all times (§28). Cuenda was the only person with unrestricted access to the Carmon HK Account. Cuenda granted Ms Martins access to the Carmon HK Account via online banking out of convenience to arrange payments to Carmon Angola. Ms Martins had to seek Cuenda’s approval and obtain validation code from Cuenda whenever making payments out of the Carmon HK Account (§26).
60. Ds deny that monies in the Carmon HK Account were held on express trust for Carmon Angola as alleged or that Carmon HK was a trustee holding the monies in the Carmon HK Account for Carmon Angola (§§57 & 59).
C3. The Consortium Agreement and the Sub-Contracts
61. Ds agree that Carmon Angola and Carmon HK entered into the Consortium Agreement, and the Sub-Contracts were entered into subject to and in accordance with the Consortium Agreement (§§30, 39).
62. It is denied that Cuenda ever signed or entered into the NSA. Insofar as Carmon Angola relies on the NSA, Cuenda maintains that any signature or agreement purportedly from Cuenda was forged (§29).
C4. Project fees and expenses
63. Ds agree that the project fees paid by CR20 were shared by Carmon Angola and Carmon HK in the 90-10 ratio in accordance with the Consortium Agreement, and deny that the amount retained by Carmon HK in the Carmon HK Account was for the purpose of enabling payments of ongoing obligations of Carmon Angola (§40(c)).
C5. Resignation of Cuenda
64. Ds agree that Ms Costa and Cuenda met in Lisbon on 2 August 2022 and that Cuenda resigned on 9 August 2022 (§44).
65. Ds deny that Cuenda had any obligation to transfer the shareholding in Carmon HK to Carmon Angola as the shareholding belong legally and beneficially to Cuenda (§47).
66. It is agreed that D1 effected transfers totalling USD 22,549,975 from the Carmon HK Account to Cuenda’s accounts. Ds deny that such transfers required the authorisation or prior consent of Carmon Angola (§53).
C6. Ds deny P’s Claims
67. Ds deny that the shareholding in Carmon HK was held by Cuenda on express trust for Carmon Angola (§56). It is therefore denied that Carmon HK was liable to transfer the shareholding to Carmon Angola (§67) or that Carmon HK was in breach of trust in failing to do so (§66).
68. Ds deny that monies in the Carmon HK Account was held on express trust for Carmon Angola as alleged (§57). Ds therefore also deny that:-
(1) The transfer from the Carmon HK Account to Cuenda’s accounts constitute a breach of trust on the part of Carmon HK (§59);
(2) Cuenda knowingly received funds paid in breach of trust (§69), or that Cuenda dishonestly assisted with Carmon HK’s breach of trust (§70); and
(3) Cuenda was unjustly enriched at the expense of Carmon Angola (§72).
D. DISCUSSION
69. The principles on fact finding and assessment of credibility are well-established. In Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors(unrep., HCA 1734/2009, 8 April 2014), DHCJ Eugene Fung SC (as he then was) held at §§76-83 that, inter alia:-
(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility.
(2) In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events.
(3) In determining a witness’ credibility, importance should be attached to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.
(4) One should test witnesses’ veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities.
(5) Where allegations are serious, it should be borne in mind that the more serious the allegation sought to be proved is, the more cogent the evidence relied upon to support it must be.
70. I shall endevour to apply the above principles when assessing the credibility of the witnesses who gave evidence at the trial in this case.
D1. Main Issues to be Determined
71. I agree with P’s counsel Mr Norman Hui, appearing with Ms Natalie So, that this trial is principally about one factual question: was Cuenda acting as a nominee for Carmon Angola at all material times, or did he actually beneficially own Carmon HK.
72. In my view, the answers to the two issues identified by Ds’ counsel, namely, (i) whether the shareholding of Carmon HK was held on trust by Cuenda for Carmon Angola (as pleaded in §33 of the SOC); and (ii) whether the monies in the Carmon HK Account were held on trust by Carmon HK for Carmon Angola (as pleaded in §34 of the SOC) will follow the court’s finding on the nominee issue.
D2. Assessing the witnesses’ evidence
73. A total of 7 factual witnesses and 2 expert witnesses gave evidence at the trial.
74. I would briefly summarise their evidence and make some general comments regarding their credibility before going into the specific issues which the court needs to determine.
D2.1 PW1 – Nelson De Barros Soutinho Junior (“Mr Soutinho”)
75. Mr Soutinho is the Engineering Director of Carmon Angola. He was an employee of Carmon Angola. He now works for Carmon Angola in the capacity as a consultant from home in Portugal rather than in Angola.
76. In his witness statement, the contents of which he has adopted as part of his evidence, Mr Soutinho stated that since 2010, while carrying out construction work awarded by Angola National Roads Institute, Carmon Angola established a good business relationship with Nan Jing Chou Zon Group (“Nan Jing Group”), which was one of Carmon Angola’s sub-contractors in those construction projects. In his capacity as Carmon Angola’s employee, he became familiar with the Chinese shareholders of the Nan Jing Group by reason of his frequent contacts with them.
77. Through his work, he had by chance found out the possible funding opportunities from China for construction work in Angola. Although in his witness statement he stated that this happened in or around the second quarter of 2016, he later clarified in his evidence that what he meant to say was it happened during the second semester (ie second half) of 2016. It was also in the second semester of 2016 over his regular breakfast meetings with Cuenda that he had mentioned the above to him. It was Cuenda who had asked him to organize a meeting with the representatives of Nan Jing Group. It was during this initial meeting that the Nan Jing Group mentioned that they were aware of several Chinese companies with financing or credit lines from China which could enable opportunities for collaboration in construction work in Angola.
78. I find Mr Soutinho as an honest and reliable witness. Save from the fact that he might have confused the actual dates of the initial meeting between him, Cuenda and the representatives of Nan Jing Group and CR20, he was very clear and adamant that the introduction of CR20 through Nan Jing Group took place over a lunch meeting at a restaurant called Brasa 32. That meeting was arranged by Nan Jing Group through him. It was at that meeting that the representatives of Nan Jing Group had introduced the three senior management team members of CR20 to him and Cuenda. It was also the first time that he had met with the representatives of CR20. He was also very sure that it was the first time Cuenda had met the representatives of CR20. Mr Soutinho recalled that as a very useful and productive meeting. However, according to him, nothing was “defined” yet. While Cuenda might have written something down in his diary, nothing was agreed and nothing was recorded in writing between the parties at that initial meeting. According to him, they just talked.
79. As Mr Soutinho stated in his evidence, “the whole [of] Angola knew about [funding opportunities for construction works funded by China]” and “all the people in the building industry were] talking about the subject.” This seriously undermines Cuenda’s testimony of his supposed self-importance in his purported role in dealing with CR20.
80. After that meeting, he understood that Cuenda then reported the matter to the shareholders of Carmon Angola. They included the “visible” and “invisible” shareholders of the company.
81. Thereafter, he was not involved with the commercial side of the things as his work in Carmon Angola was more on the technical side. He did not have any contact with the shareholders thereafter.
82. While there is some confusion in Mr Soutinho’s evidence on the date when the parties first met, as Mr Hui has submitted, the crux of Mr Soutinho’s evidence is not about the dates but the circumstances of how Cuenda met the representatives of CR20. I agree with his submission.
83. I have scant doubt that the introduction of CR20 to Cuenda was made through the Nan Jing Group under the circumstances as stated by Mr Soutinho in his evidence. There is no doubt in my mind also that Cuenda met and dealt with CR20’s representatives in his capacity as the Director General (hence an employee) of Carmon Angola. It is inherently improbable in my view that he had done so in any alleged personal or independent capacity or had met the CR20 representatives though his own contact. Any of such suggestion in my opinion would go directly against the evidence of Mr Soutinho as well as incompatible with Cuenda’s role as the Director General and senior employee of Carmon Angola.
D2.2 PW2 – Ms Costa
84. Ms Costa was and is the ultimate majority shareholder of Carmon Angola. She was PW2 in the trial. After initially gave her evidence in Portuguese, she switched to English, a language she is fluent with.
85. I find Ms Costa as an impressive witness. She gave her evidence in a straightforward and articulated manner. She clearly is a very intelligent and learned individual. She is also a very successful businesswoman in her own right. Most of all, I find the evidence she gave as direct, honest and consistent with the whole sequence of events which took place between 2017 and 2022 amongst Carmon Angola, Carmon HK and Cuenda. They are also consistent with the contemporaneous documents which came into existence both before and after the setting up of Carmon HK in December 2016. I accept her evidence.
86. Ms Costa explained clearly in her evidence that, due to her ex-husband’s family close connection with politics in her own country (she was married to the son of the then President of Angola), she refrained herself from being directly involved with the daily operation of Carmon Angola. She was only involved with the strategical directions of the company and not on a day-to-day basis. She would get involved with getting contracts for the company, making connections for the company, etc. The shareholders of Carmon Angola, of which she was one of them, would mainly deal with the government where the directors “could not go sometimes”. The directors would be involved with the day-to-day running / operation of the company. There were meetings with government officials that only shareholders of Carmon Angola would attend and the directors were not involved with.
87. Ms Costa confirmed that she was not involved in the active management of Carmon Angola prior to 2022. She only got more involved in the daily operation of Carmon Angola from 2022 onwards, after the divorce with her former husband. Prior to that, she relied on a professional management/consultant company by the name of Multicorp -- Consultoria Empresarial Lda. (“Multicorp”) which provided legal, accounting and tax issues advice services. Multicorp also handled her other portfolio companies in Angola. She also relied on the experienced and trusted senior management team of Carmon Angola who had been in place prior to her acquisition of shares on the company. Amongst them was Cuenda who had been an employee with Carmon Angola since July 2007.
88. The trigger point which caused Ms Costa to get involved with the daily operation of Carmon Angola was that she had received the annual report from Multicorp in 2022 which showed a negative financial result for the previous year for the company. She knew that should not be the case. It also coincided with the end of her marriage with her former husband.
89. As far as Carmon Angola’s relationship with CR20 is concerned, Ms Costa confirmed that it was around 2016 and 2017 she was informed by the consultants at Multicorp that Carmon Angola was introduced by a Chinese supplier to CR20 about the potential opportunities for Carmon Angola to participate in the infrastructure projects funded by the Chinese credit line and undertaken by CR20.
90. It is apparent from her evidence that she had placed a lot of trust in Cuenda when she followed the advice from Multicorp to set up an account in Hong Kong for the purpose of receiving foreign currency (in this case US dollars) to make payments for the project and for the staff who were expatriates. She was relying on the advice of her lawyers and merely approved the documents which had been presented to her.
91. She was also advised by Multicorp that it would be easier to set up a bank account in Hong Kong if the corporate vehicle to be set up was not registered under her name or under any entity ultimately owned by her due to the fact that she was considered as a “politically exposed person”, given her close relationship with the then President of Angola. Under cross-examination, Ms Costa stated that like most of the advice given to her by the consultants at Multicorp, this advice was given to her orally. She was well aware that everything regarding opening a bank account in Hong Kong was done with the knowledge and advice of CR20. She candidly admitted that “CR20 know Asia and we do not”. Thus, what Carmon Angola did regarding the opening the Carmon HK Account was merely following what they had been advised.
92. Regarding the NSA which was prepared in May 2022 (but backdated to 16 November 2016), Ms Costa stated vividly that at the time when the Carmon HK Account was opened in 2017, Cuenda was well aware and had agreed that he was holding the shares in Carmon HK on trust for Carmon Angola. Ms Costa’s candid explanation was that “Mr Cuenda was our director, we trusted him at the time and yes he was appointed as the person to represent us in Hong Kong, to open the company and to set up the bank account.”
D2.3 PW3 – Ms Martins
93. Ms Martins was and is the Director of Accounting and Finance of Carmon Angola. She joined the company in October 2013 and has been overseeing and managing the financial operations of the company since then. Cuenda was her direct superior in Carmon Angola of whom she reported to. She also worked alongside Mr Soutinho who was the Engineering Director in charge of the project management of Carmon Angola’s infrastructure projects.
94. I find Ms Martins as an honest and reliable witness. She gave her evidence in English, eventhough she originally intended to give evidence in her native language which is Portuguese. None of us had any difficulty in understanding her as it was apparent that she was fluent in both languages. She gave her evidence in what I would describe as a direct and no-nonsense manner. She was firm and clear in all her answers under cross-examination. She was not shaken or swayed in any shape or form by Ds’ counsel’s questioning. She is clearly telling the truth. I have no hesitation in accepting her evidence.
95. Ms Martins has adopted the contents of her witness statement as her evidence at trial. In it, she explained in details of the events leading to the establishing of Carmon HK: see Ms Matins WS, §§6-13. She also explained in detail how Carmon HK was established. In essence, she says that in order to conclude the deal with CR20 in respect of the construction of the new Luanda International Airport project as soon as possible, in or around November 2016, shortly after the signing of the MOC in October 2016, Cuenda was advised by Multicorp to go to Hong Kong to set up a branch/subsidiary of Carmon Angola, and to open a bank account for such a branch/subsidiary, in line with the arrangements agreed between CR20 and Carmon Angola under the Sub-Contract. As Ms Martins explains in her witness statement, given the substantial amount of potential fees at stake, setting up the Hong Kong company and the bank account in Hong Kong was an extremely important step for Carmon Angola and its collaboration with CR20.
96. The reason why Cuenda was chosen and assigned with the task was also explained very clearly by Ms Martins in her witness statement. Cuenda had been employed by Carmon Angola for many years and had been a director of the company since 2014. He was experienced in representing Carmon Angola in negotiating commercial deals and developing business relationship with its business partners. Up until that time, he was seen as a very dependable and reliable senior member of staff. He had also handled a number of projects for Carmon Angola in the past without any incident. Therefore, Carmon Angola entrusted him with this important task. In fact, this matter has been repeated by Ms Martins many times during her evidence. She stressed the fact that Cuenda “was with the company since the beginning, he was a good employee and there was no reason to doubt him”. It is clear from Ms Martins’ answer that both her and her employer had placed a great deal of trust in Cuenda.
D2.4 PW4 – Mr Hartung
97. Mr Hartung is a banker based in Switzerland. He is a self-employed External Asset Manager with 20 years’ experience in the wealth management industry. He gave his evidence via video conferencing facilities (“VCF”) from Switzerland.
98. Mr Hartung is a totally independent witness in this case who gave his evidence in a most professional and articulated manner. Not only he remembered clearly how Cuenda had contacted him with a view to open a bank account with CIGP on behalf of Carmon Angola, he was able to recall clearly what Cuenda had told him about the nominee relationship between him and Carmon Angola. It was Cuenda who told him over the phone that the real beneficial owner of Carmon HK was Carmon Angola. It was based on those instructions and information Cuenda gave him that he passed on the information to CIGP for them to prepare a nominee agreement for their records. The NSA was prepared as a result of those information and instructions provided by Cuenda.
99. After the draft NSA was prepared, he sent the draft to Carmon Angola and Cuenda.
100. On 12 May 2022, Ms Martins contacted him via WhatsApp and asked him to correct a typo in the name of Cuenda on the document. He replied by WhatsApp that such correction had been made. He then passed on the corrected document to Cuenda for his execution via WhatsApp, which he did and sent back to him via WhatsApp. He has not retained a copy of the WhatsApp records in his phone due to the passage of time. However, on 17 May 2022, he sent the executed NSA to CIGP.
101. On 22 June 2022, Ms Martins sent him a WhatsApp message asking whether the NSA had been signed by Cuenda and he replied in the affirmative.
102. On 6 December 2022, Ms Costa sent him a WhatsApp message asking him to send her a copy of the NSA signed by Cuenda and he indicated that he would ask CIGP for a copy of it as he did not have a copy himself. He confirmed that thereafter he did provide a copy of the NSA to Ms Costa.
103. I have no reason to doubt any part of the evidence given by Mr Hartung and would accept them in their entirety.
D2.5 DW1 – Cuenda
104. Cuenda, who is DW1 in this case, is also Ds’ main witness.
105. He gave his evidence in English, a language he is fluent and comfortable with. He adopted his witness statement as evidence-in-chief and was cross-examined by P’s counsel Mr Hui for over 2 days.
106. Cuenda has put forward a very questionable defence which says that he is somehow the beneficial owner of Carmon HK and entitled to a 10% share in Carmon Angola’s earnings with a substantial business partner of his own employer, ie CR20 under the Alleged Arrangement. Such defence is contrary to the clear arrangements stated under the MOCs, the Sub-Contracts, the Consortium Agreement and the NSA, and is based on nothing but Cuenda’s bald assertions.In my view, this is a most far-fetched and unbelievable story which is totally devoid of merits and lacking in support by way of any objective evidence or documents. It was no more than pure conjunctures, based on his own subjective belief and feelings. It was full of bare allegations with no substance at all. Not only his case was inconsistent with the contemporaneous documents, it flies in the face of common sense. It further does not make any commercial sense at all. In short, his case is just inherently improbable.
107. Further, I find Cuenda as a thoroughly unreliable and dishonest witness. He was arrogant, self-conceited, evasive and argumentative when giving his evidence. Despite being confronted with some indisputable documentary evidence which shows up the falsity of his case, he would simply lie through his evidence.
108. I have no hesitation to reject his evidence.
D2.6 DW2 – Mr Patrick Law (“Mr Law”)
109. Mr Law was a former employee of DBS. He no longer works for DBS or for any banks by the time when he gave his evidence in court. In my view, his evidence is not of particular relevance to the key issues in the case as he admitted that he had only recalled meeting Cuenda in person once when the Carmon HK Account was opened. Although Mr Law alleged he had kept in touch with Cuenda via email, no such emails have been produced to confirm this. It is also not known what was discussed in those emails.
110. Mr Law stated that the bank account would be opened and information provided by the customer would be verified based on information obtained from public searches and documents provided by the customer. Thus, in the case of Carmon HK, if there was a beneficial shareholder of Carmon HK who was not a registered shareholder on the public records, his verification process would not have uncovered it. In other words, Mr Law would not have been able to know about Carmon Angola’s beneficial shareholding and/or any trust arrangement if this was not on public record.
111. He also was not aware of the contents of the emails from Ms Martins to his former colleague Mr Kenneth Charm at DBS in March 2021 when she explained the relationship between Carmon Angola and Carmon HK to him.
D2.7 DW3 – Mr Hanna Chebl (“Mr Chebl”)
112. In his evidence, Mr Chebl focused on his supposed role in connecting Cuenda with Mr David Wang. As it turned out, his evidence was not particularly helpful to Ds’ case. He confirmed that he had never participated in any discussions between Cuenda and CR20. In fact, his understanding of Cuenda’s business was only based on hearsay from Cuenda. He also did not know anything about Mr Wang’s business. Thus, I remain skeptical of what he said about how Mr Wang might have connected Cuenda to CR20. I also find it difficult to believe his evidence that Cuenda was the only person to have a good relationship with the directors of CR20 as stated in his witness statement.
113. Overall, I do not find Mr Chebl’s evidence particularly helpful.
D2.8 Expert evidence
114. Two experts were called by the parties to give evidence on Angolan law. Professor Sofia Vale (“Prof Vale”) was called by Carmon Angola as its expert and Mr Pedro Franco Romão (“Mr Romão”) was Ds’ expert. They both gave their evidence via VCF.
115. I shall deal with their evidence separately towards the end of this judgment.
D3. Ds’ Primary Submissions
116. In Ds’ Closing, Mr Brown submits that pursuant to the parties’ respective pleaded cases, the two main issues examined in this trial are:-
(1) Whether the shareholding of Carmon HK was held on express trust by Cuenda for Carmon Angola as pleaded under §33 of the SOC; and
(2) Whether the monies in the Carmon HK Account were held on express trust by Carmon HK for Carmon Angola as pleaded under §34 of the SOC.
117. Mr Brown further submits that the ultimate question remains whether P is able to prove the two express trusts as pleaded. Ds’ position is that Carmon Angola’s factual case, even if taken at its highest, in insufficient to establish the two express trusts and therefore Carmon Angola’s claims must fail.
D3.1 Relevant principles on Express Trust
118. The following legal principles on express trust have been cited by Mr Brown in Ds’ Closing. They are not seriously disputed by P’s counsel. It is in the application of them that Mr Hui contends with.
119. Ds submit whether there exists a trust is highly fact sensitive and depends on the nature of the trust alleged and the specific circumstances in which the trust arrangement allegedly arose or was created at the time.
120. A trust may arise through either the expression of the relevant parties’ intention or by operation of law. Constructive trusts and resulting trusts, for example, arise by operation of law, albeit in different situations and subject to different requirements. Express trusts, by contrast, are created by the actual intention of the relevant party or parties (depending on the nature and specifics of the express trust). The intention may be apparent from the express use of the word “trust” in the relevant instrument or gathered by inference from the party or parties’ words or conduct. See Snell’s Equity 35th Edn at §§21-018 to 21-021.
121. Ds further submit that the distinction between express trusts from resulting and constructive trusts is important, as the duties of an express trustee are typically more extensive than those of a resulting or constructive trustee. The office of express trustee is intentionally undertaken by the trustee. He should enjoy the range of administrative powers and duties defined by the general law that are incidents of his office, and should also be bound by fiduciary duties in exercising those primary powers. In contrast, the duties of a resulting or constructive trustee are minimal. He is often no more than a bare trustee so that his only duty is to convey the property as the beneficiary directs: see Snell’s Equity 35th Edn at §21-022.
122. In this case, Ds submit that P relies on express trusts only. There is no alternative plea or argument in the course of trial of a trust arising by operation of law, whether constructive trust or otherwise. Accordingly, this case should focus on express trusts only.
123. The legal requirement for the creation of express trusts is clear. Three certainties must be found: (1) certainty of words evincing an intention to create a trust, (2) certainty of subject matter, and (3) certainty of objects. See Bank of Communications Trustee Ltd v China Energy Reserve and Chemicals Group Overseas Co Ltd and Another (18/03/2022, HCA146/2020) [2022] HKCFI 795 per Au-Yeung J at §72.
124. In respect of the certainty of intention, Au-Yeung J said at §73 of Bank of Communications Trustee Ltd that:-
“[An express trust] clearly ought to be declared by means of express words, though it need not use words like “trust” or confidence. Equity has regard to the substance and not the form. There must simply be a sufficiently clear manifestation of an intention to create such a trust. The law requires that the donor should have evinced by acts which admit of no other interpretation, that he himself had ceased to be, and that some other person had become, the beneficial owner of the subject of the gift or transfer, and that such legal right to it, if any, as he retained was held by him in trust for the donee. See Thonmas and Hudson, The Law of Trusts, 2nd ed, at §2.03” (Emphasis in original)
125. Similarly, Sir James Bacon VC said the following in Heartley v Nicholson (1874-75) LR 19 Eq 233 at 242 (not copied), cited in Beijing Hantong Yuzhi Convention Centre Ltd v Lao Yuan Yi (11/05/2018, HCA1208/2010) [2018] HKCFI 1030 per Madam Recorder Linda Chan SC at §45:-
“It remains, therefore, only to be considered whether or not the testator did in his lifetime constitute himself such trustee. It is not necessary that the declaration of a trust should be in terms explicit. But what I take the law to require is, that the donor should have evinced by acts which admit of no other interpretation, that he himself had ceased to be, and that some other person had become, the beneficial owner of the subject of the gift or transfer, and that such legal right to it, if any, as he retained was held by him in trust for the donee.”
126. Notwithstanding that no particular form of expression is necessary for the creation of a trust, and the court should construe the substance and effect of the words used, Ds submit that the court cannot create a trust out of nothing, where no intention was expressed, or no words or conduct was used to create a trust: Bank of Communications Trustee Ltd, supra, per Au-Yeung J at §76.
127. The settlor’s intention must be clear on two main questions: (1) that he intended the trustee to owe legally enforceable duties rather than duties of a merely social or moral nature; (2) that if he intends to create a legal relationship, it was to involve trust duties as distinct from some kind of legal relationship, such as a simple relationship of debtor and creditor: see Snell’s Equity 35th Edn at §22-013.
128. A purported declaration of trust would fail if there is a failure of certainty. If the asset that is the subject matter of the trust is not identified clearly enough, then the purported declaration of trust is a nullity. If the asset is sufficiently identified but the settlor’s intention to create a trust over it is uncertain, then the person entitled to the asset holds it beneficially for himself and free of any trust. See Snell’s Equity 35th Edn at §22-025.
129. In addition to the above principles cited by Ds, I think it is important to bear in mind the following: “No particular form of expression is necessary for the creation of a trust, if, on the whole, it can be gathered that a trust was intended. It is unnecessary for the settlor to use the word “trust”; the court construes the substance and effect of the words used, against the background of any relevant surrounding circumstances. Indeed, the settlor need not even understand his words or conduct have created a trust if they have this effect on their proper legal consequence.” [emphasis added]: see Snell’s Equity 35th Edn at §22-013.
D3.2 Did Carmon Angola fail to meet the requirements?
130. Mr Brown submits that even if Carmon Angola’s factual case is to be believed and taking it to the highest, it has failed to meet the requirements for the creation of an express trust as stated in the authorities cited. In particular, he submits that Carmon Angola has failed to properly plead and particularise the express terms to satisfy the “three certainties” referred to above. He further submits that Carmon Angola has supplied no particulars on the express trust upon which the claim relies, apart from the simple assertion that §33 of the SOC that the shareholding was held on express trust by Cuenda for Carmon Angola. He says that nothing in §33 of the SOC supplies the necessary particulars. As P bears the burden of proof in this case, including the burden to properly plead and particularise the express trust, the claim must fail, disregard whether the court accepts Cuenda’s account of events or not: (See §§30 to 36 of Ds’ Closing).
131. With respect, I do not agree.
132. In my view, the express trust plea contained in §33 of the SOC was not done in a vacuum. They specifically referred to the factual background pleaded in §§6-10 of the SOC, as well as the terms and contents of the Consortium Agreement and the NSA, as matters which P says the express trust can be inferred from.
133. In relation to the express trust plea contained in §34 of the SOC, in addition to the above, P also referred to matters pleaded in §§6-12 and §§19-20 of the SOC as well as Carmon Angola’s email correspondence with DBS in March 2021 to make good of their plea that the express trust can be referred from those facts.
134. In other words, what P is saying is that while there is no one single document which says there was an express trust governing the relationship between Carmon Angola and Ds in this case, by looking at the “words and conduct” of the parties, in particular the “words” contained in important documents like the Consortium Agreement, the Sub-Contracts, the NSA and emails / WhatsApp communications between different parties and the “conduct” of Cuenda and other key witnesses to the case like Ms Costa, Ms Martins and Mr Hartung over the years, an express trust can be clearly inferred.
135. I agree.
136. In my judgment, the factual matters referred to in §33 and §34 of the SOC clearly spell out the subject to be held on trust, namely, the share and the monies; the instructions given to Cuenda at the material time; and the events leading up to the setting up of Carmon HK and the Carmon HK Bank Account. I agree with Mr Hui that the mere fact that no specific words like “express trust” were used to describe the relationship is immaterial as the parties’ intention(s) can be clearly ascertained from the “words and conduct” of those events and documents.
137. Hence, I do not agree with Ds’ submission that this matter can be resolved by simply saying that P has failed to prove its case by failing to supply the necessary particulars of the express trust pleaded in §§33 & 34 of the SOC. In my view, this case requires a close examination of the evidence given by the parties in order to determine whether an express trust in fact can be inferred by the “words and conduct” of the parties by looking at the various factual matters referred to during the trial.
E. “Words and Conduct” in support of the Express Trust
138. I shall now examine the evidence in relation to the different documents and events in order to determine whether the “words and conduct” of the parties supported the existence of an express trust as pleaded by P under the SOC, if so, whether Cuenda acted as the nominee / trustee under the trust.
E1. The Collaboration with CR20
139. Cuenda has given evidence regarding the circumstances in which he came to know CR20 and how he negotiated and entered into an arrangement with CR20 of his own volition and independently, before then bringing the business opportunity to P: see Cuenda’s WS, §§9-24.
140. It is clear that Cuenda tries to paint a picture of the alleged important role he played in bringing Carmon Angola and CR20 together in order to justify the subsequent events, including the allegation that he had set up Carmon HK and Carmon HK Account all for himself as his “private vehicle” and not for and on behalf of Carmon Angola.
141. In my judgment, the evidence Cuenda gave in this regard consisted of no more than bare assertions which are not supported by any contemporaneous documents. They are simply not capable of believing:-
(1) Cuenda claims that he was a “founder” of Carmon Angola and was so heavily involved in its affairs that he considered the company to be “[his] own creation” and the name “Carmon” belonged to him. This clearly cannot be true as he was never a partner or shareholder of Carmon Angola throughout the years when he worked for the company. In fact, in an emotional conversation between him and Ms Costa in June 2022, he accepted that “[A]t no time did I ask [to be a partner], nor am I asking for it, nor do I need it.”. Under cross-examination, Cuenda admitted that the ownership of the company was an “internal feeling” he had and that third parties outside Carmon Angola would not know about such a purported role.
(2) In §§11-13 of his witness statement, Cuenda claims that Carmon Angola was not doing well financially and was struggling in finding new businesses, therefore there was a need for them to find new business partners. However, in cross-examination, Cuenda accepted that Carmon Angola actually had many different projects throughout 2009 until 2016 which brought in significant revenue. When asked about the list of projects in table form showing 13 different contracts which Carmon Angola had entered into for a total value of over USD 1.27 billion, Cuenda was evasive and coming up with all sort of excuses trying to deny the obvious.
(3) Cuenda claims that his authority to set up Carmon HK as his own company and for his own benefit came from Mr Óscar Fernandes (“Fernandes”) and Mr António Carlos Perruci Loureiro Alves (“Perruci”). However, they were never called to be witnesses at the trial to support his claim. Perhaps more telling is the fact that until he gave evidence in the witness box, this was never a matter mentioned in the pleadings or his witness statement.
(4) There is also no documentary evidence produced by Cuenda of any communications between him and Fernandes or Perruci on the alleged understanding and/or future arrangements regarding Carmon HK. His claim that all his conversations about this matter took place “in the office, in lunch, in calls” simply cannot be true as one would expect at least there would be some sort of written communications like emails or text messages which would show such discussions or to confirm that he was at least “authorized” by these two shareholders to start a company in Hong Kong, let alone a company which shares the same name as the one he had been working for. There was none.
142. In respect of the relationship with CR20, Cuenda claims that he came to know Mr Chen Lei through his friend Mr David Wang in around January 2016 (who in turn had been close with his friend Mr Chebl). He then said the relationship developed “very quick…very intense”, and “even less than one month”, everything had been agreed for the Alleged Arrangement between him and CR20. Only after that did he then discuss the matter with Fernandes and Perruci.
143. I also do not accept his evidence on this matter for the following reasons.
144. First, as mentioned above, Mr Chebl’s evidence was not particularly helpful to Ds’ case as he confirmed that he had never participated in any discussions between Cuenda and CR20. His understanding of Cuenda’s business was only based on what Cuenda had told him. It is clear from his evidence that Cuenda was no more than a business acquittance to him more than a personal friend that he knew well. He did not know much about CR20 other than the fact that they were dealing with a project of railway construction. He only knew that Cuenda was the Director General of Carmon Angola and knew nothing about Carmon HK. He rightly said that it was none of his business to ask and it was not something he would care about. Thus, what he learned about the purported “good relationship” between Cuenda and the directors of CR20 at best was hearsay from Mr David Wang. He has no personal knowledge himself. Thus, in my view, Mr Chebl’s evidence does not help to establish the alleged close and exclusive relationship between Cuenda and CR20.
145. Second, I note that Cuenda has failed to call Mr Chen Lei to give evidence. While he alleged in his witness statement that he enjoyed a close relationship with Mr Chen, he said that he did not ask him to give evidence in the present proceedings because he did not want to involve Chen as he worked for a state company. I do not accept such lame excuse. Without any corroborating evidence from someone in CR20, what Cuenda alleged about that close relationship is no more than bare assertion and a self-serving statement.
146. Third, Cuenda produced some photographs purportedly showing that he had invited the representatives from CR 20 to his home for dinner. However, the photographs were undated. Cuenda claims that they were taken in 2018. But this does not help him to establish that the “intense relationship” between him and the representatives of CR20 which was supposed to have formed as early as in January 2016.
147. Fourth and perhaps most importantly, in my judgment, it does not make any commercial sense to me as to why a state enterprise like CR20 (which was trying to seek to identify local partners in Angola to tender for big public construction work projects in that country) was interested in partnering with someone like Cuenda who was already an employee and director of another company. As Cuenda himself accepted under cross-examination, Carmon Angola was a reputable and well-established company within Angola. It already had a number of large ongoing construction projects in Angola. It was well connected with the top politicians in the country. Thus, it simply does not make sense why a state enterprise like CR20 would choose to partner with Cuenda individually rather than with the company he was working for.
148. In this regard, I much prefer Mr Soutinho’s evidence as summarised in §§75-83 above.
149. In my judgment, there is simply no good reason why CR20 needs to have Cuenda or a “corporate vehicle” under his control to play a role in its business relationship between it and Carmon Angola.
150. Thus, I find the circumstances in which Cuenda first met with the representatives with CR20 were as those stated by Mr Soutinho in his evidence. Save for the fact that he might have confused with the date when they first met, I accept the rest of his evidence that Cuenda met the CR20 representatives through the Nan Jing Group through him. I reject Cuenda’s evidence on this matter.
E2. The Alleged Arrangement
151. Cuenda’s case is that he has reached an agreement with Mr Chen Lei of CR20 during their discussions in or around January 2016 for the Alleged Arrangement: see Defence, §11 and §54-57above.
152. In my judgment, the Alleged Arrangement is totally unbelievable for the following reasons.
153. First, the Alleged Arrangement is totally unsupported by any documentary evidence. For an important agreement which would potentially involve with huge sums of money – as Cuenda alleges that he and his company would be entitled to “introduction, facilitation and management fee” in respect of the large-scale public works projects – it is simply beyond belief that there is not a single piece of document to go to support the existence of it. One would have at least expected that there will be some electronic footprints like text messages or email records where the parties would mention such important agreement or arrangement. But Cuenda was not able to produce any.
154. Second, in my judgment, there is simply no good commercial reason why CR20 has to involve Cuenda in his personal capacity or any “individual and independent company vehicle” set up by him in order to carry out the construction projects with Carmon Angola at all. I further consider there is simply no reason why CR20 needed someone like Cuenda to assist its “positioning” in the market and/or to introduce/facilitate the relationship with Carmon Angola, especially when Carmon Angola was already a well-established company in its own right. Further, at all time, it has not been denied that Cuenda was working as an employee and Director General of Carmon Angola. In my view, it simply does not make any commercial sense why CR20 has to pay Cuenda or any of his “individual and independent company vehicle” a separate fee for something he was doing for his own employer for which he was well remunerated for already.
155. Third, as admitted by Cuenda under cross-examination, Carmon Angola would be conducting and executing the relevant construction projects in Angola and Carmon HK would not be involved in any of the execution. That being the case, there is in my view no good reason for Carmon HK to earn any “management fee” under the Alleged Arrangement. In my opinion, there was simply nothing for Carmon HK to “manage” on behalf of Carmon Angola in Hong Kong.
156. Fourth, Cuenda could not provide any good explanation of why, while he was still working as the Director General for Carmon Angola, all out of a sudden and without any particular reason, that in 2016, he would be interested to start up a separate company for his alleged “new business opportunities”. When viewed this against Clause 9 of his employment agreement, which provides that Cuenda as employee is “forbidden to .. provide services, or in any way, relate professionally with other entities without prior authorization from the Company”, it is in my judgment inherently improbable that Cuenda would blatantly disregard such an important term of his employment contract and set up a competing business in the same name of the company he was working for.
157. Fifth, I do not accept Cuenda’s purported explanation of why he would use the same name of the company he was working for to establish a company overseas to further his own business interests as stated in §§34-38 of his witness statement. Save from his own bare assertion, there is no evidence to support his allegation that the name ‘Carmon’ has actually come from him. Further, it makes no sense to me why he would use the same name as his employer’s company for an “individual and independent company vehicle” as alleged by him.
158. Sixth, Cuenda’s claim that he was authorised by 2 shareholders of Carmon Angola to use the same name for his company set up in Hong Kong is equally not believable. Under cross-examination, Cuenda mentioned for the first time that he had authorisation from Fernandes and Perruci to do so. This was never mentioned in his witness statement. What is most incredible is the fact that at the material time when Cuenda said he was authorised by Fernandes and Perruci, they were not even shareholders of Carmon Angola:-
(1) According to the company’s record disclosed in the case, as of 4 June 2015, Fernandes had transferred all his shares in Carmon Angola to a company known as Toronto Investimentos, Limitada (“Toronto”). Ms Costa was the owner behind Toronto, as well as the owner of the other 25% shareholder in Carmon Angola at the time through Bertoli – Partcipacoes e Investimentos, Limitada (“Bertoli”): see Incorporation History[10] and corporate chart.[11] In other words, as of June 2015, Fernandes and Perruci were no longer shareholders of Carmon Angola at all.
(2) Thus, it is simply not credible that by simply talking to these two individuals informally “in the office, in lunch, in calls” at a time when they were not even shareholders of Carmon Angola that it would somehow give Cuenda the authority to set up an offshore company which would only benefit him and not his employer.
159. In the aforestated premises, I find the Alleged Arrangement claimed by Cuenda is simply untrue. I will reject Ds’ defense insofar as it relies on the Alleged Arrangement in this case.
E3. The MOCs
160. I have already set out the material terms of the MOCs in §§6-10above. I do not propose to repeat them here.
161. In my view, the MOCs are two very important documents which defined the relationship between Carmon Angola and CR20. They are also important in the sense that they pre-dated the establishment of Carmon HK.
162. In my judgment, what is significant to note about the MOCs is that they have made no mention of any intermediary role that Cuenda or his “corporate vehicle” supposed to play in the construction works which CR20 was going to provide for Carmon Angola. Cuenda only signed the MOCs in his capacity as Director General on behalf of Carmon Angola.
163. Further, the relationship between Carmon Angola and CR20 are self-contained and well defined. What CR20 needed was a “local partner” in Angola to execute the works on their behalf in that country and Carmon Angola was chosen to be that partner. Recital E also expressly stated that the parties intended to cooperate on an “exclusive basis”, not only for the existing contracts but for “other business opportunities related the service provided” as well. Thus, I do not see any room for Ds to argue that why Cuenda or a “corporate vehicle” under his control and for his sole benefits are necessary under the framework of the MOCs.
164. Most importantly, if the Alleged Arrangement between CR20 and Cuenda is true, one would expect at least there will be a separate agreement between CR20 and Cuenda to verify this, given the fact that the person who signed the MOCs on behalf of CR20 was Mr Chen Lei himself. If no agreement, then at least some sort of correspondence like emails or text messages to support the existence of such arrangement. There was none.
165. I agree with P’s counsel that, critically, Ds have completely failed to address the substance of the MOCs in both of Ds’ Opening and Closing. In particular, Ds have failed to address how the materials terms of the MOCs (as stated in §§6-10 above) would tally with the Alleged Arrangement; the terms of the Consortium Agreement and the NSA according to Cuenda’s case. With respect, without addressing the substance of the MOCs, it makes Ds’ case sounds particularly hollow. In my view, the Alleged Arrangement and the interpretation of the Consortium Agreement and the NSA according to Ds’ case cannot be dealt with in isolation without first addressing with how they would fit into the terms of the MOCs.
166. Cuenda’s purported explanation at §28 of his witness statement does not help either. He claims that the MOCs had to be entered with Carmon Angola as a matter of Angola law, as foreign entities could not contract to perform works for public entities. Such explanation cannot be true as Carmon HK was a party to each of the Sub-Contracts that were later entered into specifically for the provision of the construction works in Angola. His further explanation under cross-examination that the arrangement is “reasonable” because “the job is running in Angola [and so] the company in the MOC should be the one in the location” is contrary to what he has stated in his witness statement. Either way, it still does not explain why both him and the “company vehicle” he was going to set up later, ie Carmon HK, did not feature in the MOCs or in any subsequent documents or correspondence between him and CR20.
167. In my judgment, the answer is simple. Both Cuenda and the “corporate vehicle” did not feature as an intermediary in the MOCs (or any subsequent documents between Cuenda and CR20) is because such Alleged Arrangement never existed.
E4. The Consortium Agreement
168. In my view, the material terms of the Consortium Agreement referred to in §§18 (1) to (6) above clearly demonstrates that Carmon HK was set up as a subsidiary of Carmon Angola and Cuenda was appointed as the nominee / trustee under the agreement.
169. For example, the terms expressly provide for Carmon Angola’s leadership role within the consortium (Clause 1.7); that Carmon Angola is responsible for making all technical and commercial decisions and approval of payments by Carmon HK (Clauses 3.2, 5.4); and Carmon HK was also expressly designated as being able to assume obligations for, and on behalf of, Carmon Angola (Clauses 1.4, 1.5).
170. In addition, Clause 6.2 specifies that Carmon Angola as head of the consortium “will be the one who issues the invoices by the global value and will receive the total amount” [emphasis added], though it will only report in its accounting a value that reflects the participation percentage. Further, that all payments by Carmon HK had to have “previous approval of the shareholders of Carmon Angola” (Clause 4.1).
171. On the other hand, the Consortium Agreement is entirely inconsistent with Cuenda’s case for Carmon Angola to have such power to direct Carmon HK’s activities, and to be entitled to the full amount received from CR20.
172. I agree with Mr Hui that it is corroborative of Carmon Angola’s pleaded case that Carmon HK is in fact a company which it beneficially owns (through Cuenda), set up as a “vehicle” or “international platform” for the Carmon group; and that it is beneficially entitled to the monies received through the Carmon HK Account from CR20, regardless of the corporate structures imposed between them. After all, one should also consider the circumstances surrounding the CR20 collaboration, viz.:-
(1) the need for Carmon Angola to be able to transfer and receive USD easily, in circumstances where there were difficulties with foreign currency exchange within Angola; and
(2) Ms Costa’s (and thus Carmon Angola’s) connections to Angolan politicians at the time, which gave rise to reasonable concerns that this could impede the opening of its bank account in Hong Kong directly.
173. Both these factors explain why Carmon HK had to be set up at the time (so the Carmon HK Account could be created for receipt and transmission of funds), and why Carmon Angola decided to place its trust in Cuenda to act as a nominee, to get around possible complications and delays.
174. Though Cuenda has sought to sidestep the Consortium Agreement by downplaying certain terms and emphasising others (e.g. the fact the companies are described as having separate legal personalities in the Recital), in my judgment, there is no real answer to the substance of the agreement and the provisions which place the decision-making responsibility with Carmon Angola. If it were true that Cuenda was the driving force behind the collaboration with CR20 under the Alleged Arrangement, one would have expected him (or Carmon HK) to have taken on the primary / leading (or at least a more significant) role within the consortium. Yet, none of the terms of the Consortium Agreement support such a case theory at all.
175. Mr Brown in D’s Closing tries to argue that the Consortium Agreement showcases that the relationship between Carmon Angola and Carmon HK is one of “marriage by choice” (ie a relationship in which separate entities voluntarily come together and each being at liberty to exit the relationship at any time), rather than one of “parent-subsidiary” (ie the relationship being paternalistic and prescriptive, with the subsidiary taking on an obedient role in a fixed relationship)[12] .
176. Mr Brown argues that Clause 1.7 which identifies Carmon Angola as the leader of the consortium in fact showcases the opposite. He argues that it goes without saying that Carmon Angola’s leadership role would be “inherent” in a parent-subsidiary relationship. Thus, a contractual clause stating that the parent company is to be the leader is entirely pointless and nonsensical as there is no need and does not make sense for a parent to enter into a legally binding contract with its subsidiary to spell out such obvious relationship. He argues that, rather because Carmon Angola and Carmon HK are separate and autonomous entities who have decided to come together on a voluntary basis and each (even if their contribution may not be equal) having an otherwise equal say that it is necessary to appoint a leader and for each member to agree (contractually) to that leader. He argues that it is in that context that Clause 1.7 would have any utility.
177. With respect, I find such argument rather absurd. I do not see how by spelling out clearly the respective relationship / role between the parties, ie Carmon Angola being the leader (and by implication Carmon HK must be the subordinate / subsidiary) in the Consortium Agreement, somehow it could carry the exact opposite meaning. In my judgment, the relationship between Carmon Angola and Carmon HK clearly was one of a “paternalistic and prescriptive, with the subsidiary taking on an obedient role in a fixed relationship” as opposed to one where Carmon HK was at liberty to do as it wished as submitted by Ds. Not only the material terms of the Consortium Agreement do not support Ds’ case on this, the “words and conduct” between the parties prior to the relationship between them turned sour simply do not support Ds’ arguments also.
178. What is important to note about the arrangement set out in the Consortium Agreement is that Carmon Angola was entitled to the total amount of monies received/receivable by the consortium, even if 10% of the funds received would be retained by Carmon HK to make payments – which had to be approved by Carmon Angola: see flow chart in Annex at [E2/43/551].
179. In §§53-54 of Ds’ Closing, Mr Brown also argues that under Clause 8 of the Consortium Agreement, it provides an “exit clause” where either Carmon Angola or Carmon Hong Kong is at liberty to terminate the Consortium Agreement, and hence it does not sit well with a parent and subsidiary relationship.
180. I agree with Mr Hui that this is nit-picking. It is neither here nor there that a standard termination provision is included in the Consortium Agreement, especially when Carmon Angola had relied on an external consultant (ie Multicorp) to assist with drafting the document. One can see a possibility whereby (for example) the parties decide that Carmon HK should no longer be used as effectively a “pass-through” vehicle for the project fees earned, hence the consortium and the provisions for profit-sharing as a matter of accounting record should come to an end. Clause 8.1 also made clear “the terms of contracts signed with third parties that are in force must be respected” – confirming the intended longevity of this arrangement vis-à-vis (inter alios) CR20.
181. Mr Brown in Ds’ Closing at §63 further submits that the 90/10 split simply does not reflect the relationship that Carmon Angola puts forward, namely that Carmon HK was a subsidiary and its purpose was to pay Carmon Angola overseas debts. Ds argue that if that were the case, there would be no need to contractually lock in a 90/10 split of the income. Carmon Angola could merely direct Carmon HK to pay such offshore expenses as there were and provide the balance to Carmon Angola. Mr Brown argues that the adjustment to the relative financial position of Carmon Angola and Carmon HK such that after all expenses were taken into account Carmon HK would still have 10% of the profits is entirely inconsistent with Carmon Angola’s case and only consistent with Carmon Angola and Carmon HK being “arm’s length parties who had agreed to share the profits from the project at 90/10 ratios”.
182. Cuenda in his witness statement has described the ratio as a “participation percentage”, and that the 10% was for Carmon HK’s role as its “introducer and facilitator/support function provider fee”. Under cross-examination, he stated that he did not refuse to make payment on Carmon Angola’s instructions because “We have an agreement with 10% and 90%.... All the payments that I have made, always we can balance after….”. During re-examination, he reiterated that “My 10% was mine, So that payment only 90% of Carmon Angola could pay [sic]”.
183. I do not accept Ds’ submissions above. Instead, I agree with Mr Hui that Ds’ argument that the 10% was Cuenda’s “participation percentage” should be rejected for the following reasons:-
(1) The reality for why 10% of fees received was to be retained by (and booked to) Carmon HK is well explained by Ms Martins at §26 of her witness statement[13] . In short, it was to “[satisfy] Carmon HK’s local costs and expenses (taxes, service providers, etc)”. As stated by Ms Martins in her witness statement, “(T)he amount of monies in the Carmon HK Account would fluctuate depending on the money received from CR20 and the payments that had to be made by Carmon HK at the direction of Carmon Angola from time to time.” Significantly, Ms Martins states that this mode of operation “went without difficulty and without controversy for years”, something Cuenda never disputed.
(2) This is also consistent with the Annex itself[14] which explains how Carmon HK would use the retained amounts to assist in paying expatriates and suppliers – but that “the cost of payments of salaries and suppliers is borne by Carmon ANG” [emphasis added]. That explains why the parties would bill each other to properly account for how costs were used as between the two entities: cf. Ds’ Closing §§50-51.
(3) Ms Martins also explained in her evidence when asked about this that the ratio was set up because “[they] could not open a company in Hong Kong that [held] the contracts with CR20 [where the money] pass[ed] through [to] Carmon Angola 100% without [the Hong Kong company] earning anything”; it was important to explain to the banks that Carmon HK would have some benefit within the arrangement (as opposed to a mere pass-through entity with no commercial value). In my view, this is understandable: there would be tax implications if significant monies were received in Hong Kong and then transferred away, giving rise to questions about whether any profit was earned by Carmon HK. It is thus unsurprising that the documents would provide for retention of some paper “entitlement” of Carmon HK within the consortium, to justify its role within the consortium.
(4) Ms Martins was also cross-examined on the Carmon Angola accounts.[15] After candidly accepting that (on this document) it did not show that Carmon Angola recognised Carmon HK’s 10% participation percentage as its income, she later explained in re-examination that this was a matter of accounting to provide for the 90-10 split stated in the Consortium Agreement. It did not indicate that Carmon Angola was not entitled to the full 100% of the proceeds received.
(5) In contrast, under cross-examination, Cuenda admitted that he never took from the Carmon HK Account for all of the years he worked for Carmon Angola. The only withdrawals occurred after his resignation in a series of quick and successive withdrawals, which led to the beginning of this action with Mareva injunction(s). Cuenda further accepted that such withdrawals were not “10%” but instead all of the funds in the Carmon HK Account, given his belief that he was entitled to whatever was in the Carmon HK Account due to an alleged agreement with Fernandes and Perruci. Yet, Cuenda also admitted he was unable to produce any independent record of the funds that had entered the Carmon HK Account to ascertain whether his withdrawals in fact comprised the alleged 10% owed to Carmon HK. I agree that such purported explanation is incredible; it makes clear that the 90/10 split was never meant to be indicate the parties’ independent entitlements as such (but rather an administrative accounting inter se).
184. In my judgment, there was simply no evidence to show that Cuenda was ever entitled to the 10% as his “participation percentage”. This has been clearly demonstrated by the fact that the 90/10 arrangement as described by Ms Martins in her evidence had been in operation for many years without any problem. Before Cuenda decided to cut off the payments demanded by Carmon Angola via Ms Martins in 2022, he had never transferred any monies from that account for his own use. While he claimed in his evidence that he had withdrawn “small amounts, doctors, fees like that” from Carmon HK Account, that is not supported by any documentary evidence.
185. In my view, the above “words and conduct” of the parties following the signing of the Consortium Agreement and before their falling out only go to support that the 10% retained by Carmon HK did not belong to Cuenda personally (or even Carmon HK, which was a mere “corporate vehicle” for receipt and payments). Whatever money there was in Carmon HK Account, whether it was 10% or otherwise, I find that he was merely holding them on trust for Carmon Angola as its trustee or nominee.
186. In this regard, I agree with Mr Hui that the real test of whether Cuenda is the beneficial owner or trustee of the monies in the Carmon HK Account is whether he can enjoy the use of the funds freely without the need to obtain the approval from or to answer to anyone. In my view, the following matters which were highlighted by Mr Hui in P’s Closing strongly suggest that Cuenda was not the real owner of Carmon HK (and hence any assets or monies in the Carmon HK Account) but was merely acting as a trustee / nominee:-
(1) Carmon HK could not and did not use the funds in the Carmon HK Account under the Consortium Agreement for the years when the account was being operated “without difficulty and without controversy for years” in the manner as described by Ms Martins in her evidence;
(2) Carmon Angola being the leader of the consortium who would make all the commercial decisions indicate that Cuenda, despite being the registered sole shareholder and direction of Carmon HK, was not free to control/ direct Carmon HK’s affairs as he wished. This points strongly against Cuenda being the “true owner” of Carmon HK as a company and supports the obvious existence of a trust over Carmon HK throughout. In my view, these are instances that “admit no other interpretation”: see Beijing Hantong Yuzhi Convention Centre Ltd v Lao Yuan Yi, supra at §45.
(3) As is well-established that a trustee needs not use the words “I declare myself as a trustee”, nor a written declaration of trust is required, the “words and conduct” (even without a trust instrument) of the trustee is far more important: see Paul v Constance [1997] 1 WLR 527, 532, per Scarman and Bridge LJJ, the way the monies in Carmon HK Account was being used as related by Ms Martins in her evidence can only point to the fact that Cuenda was merely holding them in his capacity as trustee.
E5. The Establishment of Carmon HK
187. In my judgment, the circumstances leading to the establishment of Carmon HK also suggest strongly that they were done due to the reasons provided by Carmon Angola’s witnesses rather than the Alleged Arrangement alleged by Cuenda.
188. First, it is common ground that in or around 2016 (when Carmon Angola entered the MOCs with CR20), there were difficulties with international transfers of foreign currency out of Angola. This matter was confirmed by Cuenda both in his witness statement and in his evidence. All three witnesses from Carmon Angola, viz. Ms Costa, Ms Martins and Mr Soutinho explained in their evidence why, due to the significant devaluation in the country and lack of foreign exchanges (especially in USD) at the time, which had even affected Carmon Angola’s ability to pay salaries to its employees, made setting up a company overseas necessary.
189. Second, one must not lose sight of the fact that the setting up of such an overseas company was something that CR20 had requested Carmon Angola to do under the MOCs and Sub-Contracts in order to facilitate the payments. In fact, it was CR20 who had helped Carmon Angola to find DBS as Carmon HK’s local banker. In my view, given the difficulties with the currency issue, it makes perfect sense why CR20 would ask Carmon Angola to set up an overseas company and to open an overseas account so that they can make payments in USD more easily. This is also consistent with Carmon Angola’s account as to why Carmon HK and its bank account had to be set up in the first place.
190. Third, in my judgment, the other main reason given by Carmon Angola of why it did not opt to incorporate a subsidiary directly or open a bank account in its own name outside of Angola was due to Ms Costa’s close connection with the President of Angola at the time is inherently credible.
191. Under cross-examination, it was put to Ms Martins that it was inconsistent for Carmon Angola to want to create distance between Carmon HK and Ms Costa, but at the same time designate Cuenda as a nominee shareholder/director (given his role as a director and trusted employee of Carmon Angola at the time, which would mean things were “traceable” back to Ms Costa).
192. I agree with Mr Hui that this is neither here nor there. Interposing Cuenda meant that on paper there was no linkage to Carmon Angola (and thus Ms Costa), as documents submitted to banks or other companies would not mention anyone other than Cuenda. The rationale for this is easily understood and logical. Ms Costa also explained that the issue about possible difficulties with Hong Kong banks was navigated with help from CR20, who was “the ones giving ideas. [Carmon Angola didn’t] know Asia; [CR20] know Asia [sic]. They gave advice [that] it should be done this way.”
193. In other words, Carmon Angola took precautions to avoid the issue of its beneficial shareholder (ie Ms Costa) in its dealings with third parties like DBS – which led to the structuring of the shareholding of Carmon HK as it did. At the same time, it is explicable that Carmon Angola would wish to designate a trusted person (ie Cuenda) to act as its nominee, rather than some unknown individual or entity.
194. Carmon HK was set up on 1 December 2016. Since its establishment, CR20 either liaised directly with Carmon Angola in respect of Carmon HK’s various administrative affairs (see their correspondence from March 2017 to May 2018) or with Cuenda but in his capacity as an employee or director of Carmon Angola.
195. On the other hand, there is no evidence that Cuenda was ever involved in any way in Carmon HK’s affairs, or that he made any payments for maintenance of Carmon HK. Instead, it was Carmon Angola that had been making all payments in relation to such maintenance. Cuenda admitted that Carmon Angola was the entity paying Carmon HK’s various outgoings, and sought to justify this as ultimately being set-off between Carmon HK and Carmon Angola at the end of the day.
196. But there is no evidence that any such accounting was really ever done between the parties, such that ultimately Carmon HK was independently responsible for those payments that Carmon Angola made to CR20 for works being carried out in Angola.
197. Given the above, I agree with Mr Hui that the evidence points squarely to Carmon Angola taking responsibility for Carmon HK’s affairs as the true owner. That is in contrast to Cuenda, who is unable to point to any example where he was personally responsible for Carmon HK’s costs or outgoings as an ultimate beneficial shareholder ought to have done.
E6. The operation of the Carmon HK Account
198. The operation of the Carmon HK Account was done through Cuenda, with whom Ms Martins (on behalf of Carmon Angola) would liaise whenever funds had to be paid to and from Carmon HK: see for example WhatsApp communications in August 2021, where Ms Martins would reach out to Cuenda so the pair could cooperate to effect transfers.
199. How the Carmon HK Account was being operated in practice can also be found in some of the email correspondence between the senior management of Carmon Angola (and not Carmon HK) and DBS prior to any dispute arose between the parties. All these emails were copied to Cuenda.
200. For example, on 26 January 2021, Ms Martins sent an email to Mr Kenneth Charm of DBS (with her Carmon Angola email address) “on behalf of [Cuenda]”, referring to a transfer from Carmon HK to Carmon Angola for USD 1 million, which had apparently not been received. It was later explained that:-
“As you know, Carmon [HK] has a consortium contract with Carmon [Angola], following that consortium Carmon [HK] has to pay Carmon Angola for the services that were performed here in Angola…”
201. By Ms Martins’ further email dated 8 March 2021 to Mr Kenneth Charm (which was also copied to Cuenda), it was noted, inter alia:-
(1) CR20 subcontracted Carmon HK “through the consortium with the company Carmon [Angola][to] perform part of the services contracted by the Angolan State…That is how [Carmon Angola] has carried out the work under its obligation in Angola, so that the partnership with CR20 has continued with great harmony” [emphasis added].
(2) Carmon HK “has the purpose of acting as a vehicle of the Carmon Group abroad, thus allowing the payment of suppliers, labor and other contracts of an international nature”. It has a relationship with Carmon Angola through a consortium contract, “through which the performance of [Carmon HK] was defined as the international platform of [Carmon Angola], and among its objects, is the sharing of obligations and benefits in common projects, especially those developed in Angola” [emphasis added].
(3) “All Cash flow received is concentrated by [Carmon HK] that has benefits on tax obligations due to the juridical function”, and the part “destinatedto the Angolan consortium is registered and accounted as debt of [Carmon HK] to [Carmon Angola]”. These payments are recorded in Carmon Angola’s accounts to reflect fund movements that have occurred: see for example [E2/49/638-642].
202. Ms Martins repeated similar descriptions about Carmon HK’s role in her email dated 6 May 2022 to DBS, reiterating Carmon HK’s role as “an international vehicle of Carmon Group”, “act[ing] as an international platform for Carmon Angola…”. It was Ms Martins who liaised with DBS in respect of the Carmon HK Account at these material times (as opposed to Cuenda).
203. Significantly, despite having received copies of the above emails, Cuenda had never disputed the contents nor contradicted anything said by Ms Martins to DBS, at least not prior to the issue of the present proceedings by Carmon Angola against him.
204. Mr Brown in Ds’ Closing submits that the email correspondence with DBS shows the opposite of the existence of a parent subsidiary relationship between Carmon Angola and Carmon HK. In particular, he submits that “the whole reason why the Carmon HK Account was opened in the name of [Carmon HK] and [Carmon HK] in turn being held in the name of [Cuenda] was because [Ms Costa] was a politically exposed person and they envisage difficulty opening a bank account in the name of an entity that was owed by [Ms Costa] (or by [Carmon Angola] because [Ms Costa] is a shareholder). [emphasis added]
205. With respect, that is not correct. As explained above, the above was not “the whole reason” why the Carmon HK Account was set up. It was one of the reasons, albeit an important reason. The other main reason being that it had been envisaged by both Carmon Angola and CR20 that due to the difficulties with the foreign exchange in Angola, an overseas company with an overseas account need to be opened for CR20 to pay Carmon Angola for the construction works they are going to do in Angola.
206. Further, by its letter dated 23 March 2017, Carmon Angola authorised CR20 to transfer RMB 100,300 for the purpose of completing Carmon HK’s account opening and for its miscellaneous expenses[16] .
207. In my view, the fact that it was Carmon Angola who paid for the setting up of Carmon HK rather than Cuenda himself is another strong indication that it was a subsidiary set up by the former according to the agreement reached with CR20. If it was Cuenda’s own “corporate vehicle” as alleged by him, one would expect that he was the person who paid for the setting up cost of Carmon HK Account rather than his employer Carmon Angola.
208. Moreover, in my view, one must not lose sight of the important role played by Ms Martins in the operation of the Carmon HK Account prior to any suggestion made by Cuenda that Carmon HK was his own company.
209. First, as Cuenda accepted under cross-examination, it was Ms Martins who contacted CR20 directly and took on an important role liaising with DBS in the running of the Carmon HK Account. Although Cuenda claimed that he had delegated details to her, no evidence has been produced by him to support this. Like most of his allegations, it remains a bare assertion. Significantly, I note that it was Ms Martins, not Cuenda or anybody else who supposedly working for him at the time (and as admitted by him under cross-examination there was no staff and he has no office in Hong Kong), was the person responsible for effecting transfers from the Carmon HK Account.
210. Second, besides being as employee of Carmon Angola (being its Director of Accounting and Finance), there is no evidence produced by Ds to show that she has any role within Carmon HK (independent of Carmon Angola) or that she has any independent relationship with Cuenda personally to act as his assistant or employee in any way. Thus, I find any tasks she has done in relation to the running of the Carmon HK Account was done for and on behalf of her employer Carmon Angola as the real owner of Carmon HK, including all the monies in the account.
211. Third, under cross-examination, Cuenda claimed that he delegated much of the work relating to Carmon HK to Ms Martins because he trusted her significantly. In my view, this cannot be true. It was never put to Ms Martins during cross-examination that she acted for Cuenda in respect of him as the alleged “owner” of Carmon HK. Such allegation is also inconsistent with her senior role as Director of Accounting and Finance in that is most unlikely that she would do anything against the interests of her own employer. In fact, Ms Martins has made it clear of her disapproval of Cuenda’s behaviour in her evidence by saying that he was “an employee of Carmon Angola” and had been “a good employee and there was no reason to doubt him” prior to the events when he started to block access of Carmon Angola to the Carmon HK Account. There is simply no evidence to suggest that Ms Martins’ authority to handle the monies in the Carmon HK Account has come from anybody else other than from her employer Carmon Angola itself.
212. Fourth, I find that the fund flows in relation to the Carmon HK Account are not consistent with Cuenda’s defence at all. Not only did Ms Martins (on behalf of Carmon Angola) over several years initiate transfers from the Carmon HK Account from time to time (as facilitated by Cuenda)[17] , which support Carmon Angola’s case that it had ultimate ownership and interest in the funds in the Carmon HK Account, and therefore had the right to control its use, but critically Cuenda never personally dealt with the funds in the Carmon HK Account before the subject transfers in December 2022 after the falling out between the parties. Again, if Cuenda was indeed entitled to the monies in the Carmon HK Account at all material times, it is at least odd that he never apparently dealt with the same for any amounts of monies until the relationship soured (by the end of 2022).
213. In the aforesaid circumstances, I find the operation of the Carmon HK Account unequivocally shows that Carmon Angola at all material time was the real owner of the account and all the monies in the account belonged to it rather than Cuenda or Carmon HK.
E7. The NSA
214. The NSA is a very important document in this case because if it can be established by Carmon Angola that the contents of this agreement are true, then it will demonstrate that Cuenda himself has candidly acknowledged that he was merely acting as a “nominee” of Carmon Angola and was under its direction at all material time. At the same time, Ds case must fail as it would go directly against Ds’ case that Carmon HK was his own “corporate vehicle’ which was set up for his own benefit in accordance with the Alleged Arrangement. It is therefore not surprising to find that Ds’ counsel has spent over 12 pages in Ds’ Closing to discuss this issue alone.
E7.1 Circumstances leading to the signing of the NSA
215. As mentioned in §§25-28 above, according to P’s case, the NSA was signed on or about 17 May 2022 in the course of Carmon Angola’s attempt to open a bank account with CIGP. It was backdated to 16 November 2016. It is not disputed that the NSA was created primary for the purpose of explaining to CIGP of the intended fund flows between Carmon Angola and Carmon HK: see WhatsApp message dated 20 June 2022 from Mr Hartung to Ms Costa at [E3/67/806].
216. Mr Hartung in his evidence stated that he had personally explained to Cuenda of the reason why CIGP needed the document, namely, “the goal was for the bank to understand the flow of assets from Carmon Angola, to Carmon HK; between Carmon Angola and Carmon HK. The [NSA] would allow them to understand the reasons of this flow.” The reason being that, contrary to what Ms Costa had assumed, there was no existing document at the time to show clearly the relationship between Carmon Angola and Cuenda / Carmon HK. Thus, CIGP needed such a document in order for Carmon Angola to open the account for Carmon HK.
E7.2 Ds’ criticisms on the NSA
217. Mr Brown in Ds’ Closing challenged Ms Costa’s evidence on this, suggesting that it was improbable that Multicorp had not prepared the requisite documentation earlier[18] .
218. I find Ds’ criticism is not justified and does not in any way diminish the value of this important document.
219. First, I do not think there is anything remarkable about Ms Costa when asked by CIGP to prove the relationship between Carmon Angola and Carmon HK, that she found out from Multicorp that they had forgotten to prepare the trust document. As Ms Costa explained under cross-examination, she relied heavily on Multicorp at the material time “to do everything” and that she “basically close[d] her eyes and trusted that they would do everything in order to preserve her [rights].” As she had worked with Multicorp for years and up until 2022 when she found out about their missing document, there was no reason for her to doubt their advice and work done on behalf of Carmon Angola. I do not find anything wrong with that.
220. Second, it is clear that it was Multicorp which had done a bad job in failing to prepare proper documentations like a trust deed or pre-signed share transfer documents to reflect the true relationship between Carmon Angola and Cuenda / Carmon HK. However, it was precisely due Multicorp’s failure that had led to the creation of the NSA. If Multicorp had done its job properly by say, for example, prepared a trust deed for the parties to sign, then this case perhaps did not have to go to trial at all. Unless Cuenda can prove that the NSA was a forged document or that the contents do not reflect the true relationship between him and Carmon Angola at all material time, otherwise focusing on the failure of Multicorp in my view is merely a red-herring.
221. Third, one must not lose sight of the fact that Cuenda had been a trusted member of the senior management team of Carmon Angola almost since its incorporation. The arrangements made under MOCs, the Consortium Agreement, the Sub-Contracts, the establishing of Carmon HK and the operation of the Carmon Hong Kong Account had worked seamlessly and without any problem for many years until Cuenda decided to block Carmon Angola access to the funds in the account. Prior to that, there was simply no reason to cause Ms Costa to doubt that all the documents as advised and prepared by Multicorp were working well to protect her and Carmon Angola’s interest. There was no reason until Mr Hartung raised the issue which caused Ms Costa to look into the matter.
222. Fourth, the criticism that Carmon Angola had failed to call any witnesses from Multicorp to give evidence is also not valid. Ms Costa has given a reasonable explanation that there was a breakdown in the relationship between Carmon Angola and Multicorp since she found out their deficiencies. She has terminated their service agreement. As such, it was not possible to procure their evidence. I accept that as a reasonable explanation.
223. Fifth, in my view, the focus should not be placed on the purpose of creating the NSA as it is clear that it was prepared and signed pursuant to the request of CIGP but on the actual contents of the NSA itself. The question to ask is whether the contents of the NSA support Carmon Angola’s case that a trust had been created back in November 2016 when Cuenda was asked to establish Carmon HK.
E7.3 Cuenda’s case on the NSA
224. In contrast to the alleged deficiencies of the NSA raised by Mr Brown in Ds’ Closing, I find Cuenda’s case on the NSA totally unbelievable and should be rejected.
225. Cuenda’s case is that he did not sign or enter into the NSA and that any signature or agreement purportedly from him was a forgery: see Defence §29.
226. In my judgment, Cuenda’s claim that he had never signed or entered into the NSA is clearly not true for the following reasons:-
(1) Ms Martins’ unequivocal evidence is that after she signed the NSA, she passed the original to Cuenda for his execution. Mr Hartung’s evidence is that he had received the signed document from Cuenda. Thus, the evidence reveals that the original signed copy was last seen with Cuenda himself. A bare denial from him to say that he had never signed the NSA simply is not good enough.
(2) Cuenda has never sought to contradict or challenge the WhatsApp messages on this topic. First, there are messages between him and Ms Martins which show that Cuenda himself had forwarded a PDF copy of the NSA to Ms Martins.[19] There are also messages between Ms Martins and Mr Hartung where Ms Martins pointed out a typo in the name of Cuenda in the draft copy of the NSA. Mr Hartung subsequently confirmed that the typo had been corrected[20] . Second, Mr Hartung has independently messaged Ms Costa in June and December 2022 respectively referring to the existence of a signed NSA which he had received.
227. Based on the above evidence, I find Cuenda had received and signed the NSA. I further find that the original signed copy of the NSA was with him.
228. Equally, I find Cuenda’s case that the NSA is a forgery is untrue for the following reasons.
229. First, having asserted that the signature on the NSA is a forgery, Cuenda has the burden of establishing that fact on a balance of probabilities: see Yuan Yuqin v Cheung Hiu Yan Fion[2020] HKCFI 1419 at §41 (per Recorder Houghton). No expert evidence has been adduced on the authenticity of the signature or the surrounding evidence of the NSA, including Ms Martins’ WhatsApp message to Cuenda in May 2022 attaching the draft NSA for review. In fact, Cuenda has not put forward any positive case on the forgery at all, including who, when and how it was done. Mr Brown’s purported explanation that Cuenda was merely saying that “he did not sign or enter into the NSA … [his] position is that he was not the one who signed it (with forgery being the necessary consequence, and [Cuenda’s] case does not go beyond that”[21] simply does not make sense. Either Cuenda was making an allegation of forgery or he was not. Defence, §29 has made it abundantly clear that he was. Therefore, it is for him to discharge the heavy burden of proof to show that the NSA was indeed a forgery. Cuenda has simply failed to produce any evidence to do so.
230. Second, Cuenda’s excuse that he could not ask any expert to examine the signature on the NSA because only a copy has been produced and the original is missing cannot be right. As I found above, the original signed copy of the NSA was last with him and therefore he must still have it. To turn round the table and say that he was somehow precluded from performing any examination on the original because P could only produce a copy of it sounds rather perverse to me. In my judgment, he could have asked an expert to examine a copy of the NSA if he wished to. Instead, he decided to do nothing to prove the serious allegation made against his former employer that it was a forgery. I find the real reason why he failed to do so is because he knew well that he had signed on the original copy of the NSA and it was not a forged document at all.
231. Therefore, in my judgment, his allegation that the NSA was a forgery must fail.
E7.4 Finding on Cuenda as a Nominee
232. Crucially, according to Mr Hartung’s evidence, the information contained in the NSA have come from Cuenda himself. While this may be a “standard form document” required by CIGP, the fact that Cuenda himself has acknowledged under the NSA that he was acting as a “nominee director” and that he “declares and accepts” that “decisions under the arrangement are merely based on the wishes of [Carmon Angola]” and that “all instructions shall only come directly and indirectly from Carmon Angola, without any type of exceptions” clearly shows that Cuenda knew very well right from the beginning of the arrangement back in November 2016 that he was merely acting in the capacity as a nominee / trustee and he was holding on trust of the shares and monies of Carmon HK on behalf of his employer. I find it was the case.
233. The NSA clearly states that Carmon Angola is the “real owner” of Carmon HK, and that Cuenda was obliged to act only on Carmon Angola’s instructions. In my judgment, despite the fact that the NSA was not called a trust deed or trust document and that it was prepared for a different purpose (and was backdated), the contents of it clearly point to one direction only, ie that there was an express trust at the time of establishing of Carmon HK in December 2016 that Cuenda was acting as a trustee holding on trust of the shares and monies of the company on behalf of his employer, ie Carmon Angola. I find that must be the case.
E8. The final showdown between Carmon Angola and Cuenda
234. In my view, the events surrounding the final breakdown of the relationship between Carmon Angola and Cuenda around the summer of 2022 also strongly in support of P’s case and against Ds’ case.
235. According to P’s case, in or around June 2022, after Ms Costa wished to appoint other managers to Carmon Angola in order to increase the checks-and-balances within the company following rumours of Cuenda’s abuses of power and wrongdoing, the relationship between them turned sour.
236. Although Cuenda has denied the reason for the deterioration in the relationship in his evidence, it is not disputed that the parties had a confrontation between them as evidenced by the transcript of a recording of that meeting.
237. I agree with Mr Hui that even on this occasion when Cuenda was seeking “respect and consideration” from Ms Costa, given his purported contributions to Carmon Angola, he admitted that he was not a partner of Carmon Angola nor was he seeking to be one. This is in stark contrast with his present case that he had his “private vehicle”, ie Carmon HK, to act as a partner working alongside Carmon Angola in the collaboration with CR20 under the Alleged Arrangement.
238. On 6 August 2022, Ms Costa sent an email attaching a draft letter addressed to DBS which would give Ms Martins exclusive control and access over the Carmon HK Account. Cuenda was requested to sign it. I agree with Mr Hui that the draft letter to DBS supports Carmon Angola’s case that there was a trust arrangement between the parties and Carmon Angola was the beneficial owner over the Carmon HK Account and its funds.
239. While Cuenda refused to sign the letter and a draft Deed of Assignment which Ms Costa also provided to him during the process of negotiations for his exit from Carmon Angola, there is no documentary evidence to suggest that Cuenda had ever mentioned to Ms Costa or anybody that Carmon HK was in fact his own company and all the monies in the Carmon HK Account belonged to him. One would have thought that at least he would put it somewhere in writing of this important claim of his. But there was none.
240. Further, while Cuenda in his evidence said that things “[didn’t] make sense”, and he was trying to get in touch with Fernandes and Perruci to understanding what was going on in regard to Ms Costa’s requests for him to transfer control of the Carmon HK Account or to transfer the Carmon HK shares at nominal value of HKD 10,000 to Carmon Angola, he has failed to produce any evidence like emails or WhatsApp records to show that he did. He also failed to produce any evidence of the fact that he had made protest to anyone in Carmon Angola, whether it was Ms Costa, Fernandes or Perruci, about what he must have considered as Carmon Angola’s wrongful attempts to try to rob him of his own company, ie Carmon HK.
241. While he claimed under cross-examination that “[they] lost the trust… there was a risk on [his] money … 10%, was almost 50 something million” and that he was prepared to involve lawyers because Ms Costa allegedly pretended not to understand or respect the Consortium Agreement, the fact remains Cuenda continued to assist Ms Martins with effecting transfers out of the Carmon HK Account after August 2022.
242. In my judgment, the above conduct of Cuenda is inconsistent with his claim that he was the beneficial owner of Carmon HK, including any monies in the Carmon HK Account. If it is true that Carmon HK actually was his own company, then there is no reason why he would continue to allow Ms Martins to continue to effect transfers of funds out of the Carmon HK Account after August 2022. Further, there is no reason why he would not change the log-in details to the Carmon HK Account once he ceased to be director/employee of Carmon Angola in early August 2022. Also, there is no reason why he did not immediately ask for a proper account of the funds in the Carmon HK Account to ascertain how much his 10% was worth.
243. It was only in December 2022 when Ms Martins found out that she was locked out of the Carmon HK Account – after Cuenda had failed to respond to her requests for assistance on a few occasions from 21 November 2022 onwards – that Carmon Angola realized that Cuenda had run away with the monies in the Carmon HK Account.
244. It was later discovered by Carmon Angola that nine separate transfers in the total sum of USD 22,549,975 were made from the Carmon HK Account on 19, 23 and 30 December 2022 respectively. The money all ended up in different personal accounts of Cuenda. He did not deny that they were all transferred to his accounts and for his personal benefit. His only explanation was that this was “[his] money”.
245. In my judgment, the events in June and August 2022 are consistent with Carmon Angola’s claim that Cuenda was holding Carmon HK on trust for his employer with all the monies in the Carmon HK Account.
F. Findings of the Court on the Main Issues
246. Based on the above analysis and factual findings, in particular the finding that Cuenda was at all material times acting as a nominee of Carmon Angola, I find P has clearly established that there was (i) a trust in respect of Carmon HK’s shares; and (ii) a trust in respect of the funds in the Carmon HK Account.
247. I accept the following submissions made by Mr Hui on behalf of Carmon Angola that these trusts came into being respectively since Carmon HK’s incorporation in December 2016 and when the Carmon HK Account was set up in or around March 2017:-
(1) By 1 December 2016 (when Carmon HK was incorporated), Cuenda had already liaised and agreed with Carmon Angola (acting through, inter alios, Multicorp’s representatives, who at the time reported to and were authorised by Ms Costa as the sole beneficial shareholder of the company) to act as a representative of Carmon Angola to open the company in Hong Kong and to set up its bank account. Although Ds try to take issue with Multicorp’s role in this, the reality is that Cuenda at all material time played an integral role in setting up the relationship with CR20 (even on his own case). He liaised and signed the MOCs and the Sub-Contracts. On those documents alone, he had knowledge of and plainly worked closely to put into effect the trust structures as suggested by CR20 and agreed to by Carmon Angola. It is therefore misplaced for Ds to repeatedly argue the lack of a specific “oral agreement” as such – when that is not a prerequisite for the court’s finding of a trust.
(2) When the subject matter of the trust, ie Carmon HK’s shares, finally came into being, the trust therefore became effective and existent.
(3) The NSA was later entered into in May 2022 (and backdated to 16 November 2016) precisely to evidence and spell out this agreement of nomineeship, where Cuenda agreed to (inter alia) act on the “Real Owner’s” instructions without exception.
(4) Further, at all material times since the decision to set up the foreign entity (Carmon HK) to have a bank account offshore to receive funds for Carmon Angola, there was already an understanding that Carmon HK would be holding those monies it received on trust for Carmon Angola, and that it was nothing more than a vehicle. That understanding existed at the outset, and the trust formally came into being when the Carmon HK Account was set up (such that the subject matter of the trust came into existence).
248. In contrast, I agree with P that Cuenda’s own “words and conduct” prior to his fallout with his former employer is not consistent with his claim that he was the real owner of Carmon HK, including its shares and monies in the Carmon HK Account:-
(1) The clear contents of the NSA (which I find he has signed and kept the original) show that he has acknowledged and agreed that he was acting as a nominee.
(2) At all material times, he acted on Carmon Angola’s instructions, including through Ms Martins in relation to the operations of the Carmon HK Account.
(3) He never used or withdrew any monies for his personal benefit from the Carmon HK Account until the impugned subject transfers in December 2022.
(4) He acquiesced and never objected to the descriptions of the relationship between Carmon Angola and Carmon HK in email correspondence over the years.
(5) Even when his employment relationship was terminated, he did not specifically object to or immediately point out the inaccuracy in Ms Costa’s request for him to transfer control of Carmon HK Account, nor did he promptly cut off Ms Martins’ access to the Carmon HK Account.
G. The Experts’ Evidence
249. In light of my findings above, the experts’ evidence which involves Angolan law will becomes academic as it only concerns an alternative plea of P for Cuenda’s breach of his duties as “gerente” (director) of Carmon Angola under Article 69 of Law No. 1/04 of 13 April 2004 (“the Angolan Companies Law’).
250. However, for the sake of completeness, I should deal with the experts’ evidence briefly below.
251. P claims that Cuenda has breached Article 69 which required him as director to act in Carmon Angola’s interests with the diligence of a prudent manager.
252. The parties’ Angolan law experts agreethat as a director, Cuenda owed the duty to act in Carmon Angola’s interest with the diligence of a prudent manager, and that such duty applies extra-territorially beyond Angola: see Joint Expert Report, Questions 1 and 2. It is significant to note that even the defendants’ expert Mr Romão opines at §(n) (on p. 16 of his report) as follows: “In this regard, according to the hypothesis presented, that Carmon Angola is the owner of Carmon [HK] and that [Cuenda] is in a mandate relationship acting as manager/administrator,and assumingthat a mandateis never presumed but is based on specific instruments, the answer wouldbeaffirmativeinthesensethat therehasbeenabreach of the duty embodied in Article 69 of the Commercial Companies Act” [emphasis added].
253. Mr Romão merely notes that transfers of funds are “management acts” which do not require the approval or consent of the shareholders, as directors have powers that can be exercised “with the necessary margin and freedom of discretion”: see pp. 18-19 of his report. But that fails to engage with whether the actions of failing to comply with Carmon Angola’s requests/instructions at the material time were contrary to Carmon Angola’s interests, and thus constituted a breach of a director’s duties. Considered in that light, it is plain that a diligent and prudent manager ought to act in accordance with the shareholders’ instructions, which would be the clearest manifestation of the company’s interests – and a failure to act per such instructions would constitute a breach as a matter of Angolan company law.
254. Having heard the experts’ evidence (via VCF), I agree with the following observations highlighted by Mr Hui in P’s Closing:-
(1) The experts actually agreed even on Question 3: assuming Cuenda held Carmon HK on behalf of Carmon Angola, his conduct had to “align with the company’s interest”. In fact, Mr Romão even went further when cross-examined to explain that “in the hypothesis that Carmon HK was a property of Carmon Angola… Cuenda, in his actions, [would be] limited. He’ll be limited on his powers of management…because Carmon Angola has given him some power, and he was limited by such power. In this meaning, …the acts that Cuenda would be practised should be reflected on the duty [to be] fair to Carmon Angola. Mr Cuenda would have to follow Carmon Angola’s directions [sic]” [emphasis added].
(2) In light of the aforesaid, misappropriating Carmon Angola’s assets (viz. both the Carmon HK shares and the subject funds) is contrary to the company’s interests and not what a prudent director would do. The failure to return Carmon HK’s shares despite requests[22] is therefore a clear case of breach: SOC, §§24, 40, 42.
(3) Insofar as the transfers of funds from the Carmon HK Account are concerned, although at first blush it appears that the experts are not aligned on the fourth question put to them,[23] in reality there is little difference:-
(i) Mr Romão’s main contention is that transfers of assets could be “normal management activity” within the discretion of directors. In that sense, bank transfers would be “within the directors’ autonomous powers under Art. 425 of [the Angolan Companies Law], not requiring prior shareholder consent per se”: see §(iii) in Disagreement column of Joint Expert Report.
(ii) However, he also fairly accepted that this was not an absolute proposition. When asked whether a transfer of 100% of a company’s assets away would still be “normal”, he accepted it would not be. He also agreed that the transfers of money would have to be for the benefit of the company in order to be proper.
(iii) In light of the above, for Cuenda to transfer away USD 22,549,975 (which was over 95% of the Carmon HK Account balance as of 30 November 2022) for his personal use is plainly not in the interests of Carmon Angola and wholly abnormal – and thus beyond the scope of “normal management activity” or “autonomous powers”.
255. In any event, where there is real divergence between the experts (which appears minimal, if at all), I consider Prof Vale’s opinion should be preferred. In my view, her evidence is well-reasoned and supported by authority. She gave clear explanations of her stance when cross-examined. In contrast, Mr Romão’s evidence was sometimes difficult to follow and he appeared evasive at times. For example, when it was put to him that a director transferring away a company’s money without a business reason for his personal benefit would be a breach of duty, he refused to answer. See also Conflict of Laws in Hong Kong(4th ed.) at §2.078.
256. Ds take a technical pleading point (not previously raised in D’s Opening or elsewhere) that Carmon Angola has pleaded only Article 69 of the Angolan Companies Law, and not Article 77: see Ds’ Closing, pp.45-46, §§148-150. Article 77 states that “Unless they can prove that they acted without fault, managers or directors are liable to the company for any damage caused to it by acts or omissions in breach of their legal or contractual duties”: see fn 14 of Prof Vale’s opinion; p. 13 of Mr Romão’s report.I agree with Mr Hui that this goes nowhere: what has to be pleaded is the foreign law, viz. the content of the foreign legal obligation said to be engaged and breached. That is distinguished from matters of procedure (governed by the law of the forum), such as how a claim is to be brought within Hong Kong. Article 77 merely sets out the procedure for a company to claim for damage caused. I agree that the substance of the legal rule lies in Article 69, which sets out the contents of the duties owed:see Conflict of Laws in Hong Kong (supra) at §§2.069, 2.068-2.071.
257. Ds also argue there is an issue of standing to sue. They appear to suggest there is some principle against reflective loss, and that loss suffered by a subsidiary should be pursued by it (and not its parent company). However, I agree with Mr Hui that:-
(1) This has never been pleaded. It is not open to Ds to take issue with this only in closing.
(2) In any event Prof Vale has explained that both the parent and the subsidiary would have independent rights to sue in such a situation. On the assumption Angolan law applies,there is no contradictory evidence as a matter of Angolan law on this topic.
(3) Still further, on the facts of this case, the funds misappropriated from the Carmon HK Account are the assets of Carmon Angola. This is not a situation where Carmon HK as a subsidiary has suffered loss in its own right. The funds that Cuenda transferred away belonged to Carmon Angola at all times – making it the only appropriate claimant to advance the proprietary claim seeking return of the money.
H. Reliefs sought by P
258. A number of reliefs has been sought by Carmon Angola under the SOC.
H1. Carmon Angola’s proprietary claims
259. P sought the declarations under §35 of the SOC to confirm that Carmon Angola is in fact the beneficial owner of both the Carmon HK shares registered in Cuenda’s name; as well as the monies held in the Carmon HK Account (in particular in relation to the USD 22.5 million odd which has been transferred away by Cuenda from the Carmon HK Account in December 2022).
260. P claims that Cuenda is obliged to return the shares in Carmon HK to Carmon Angola as pleaded under §45 and prayer (6) of the SOC, given the fact that he is no more than a bare trustee and nominee: see Hanbury & Martin: Modern Equity(23rd ed.) at §2-037 and Shenzhen Cau Technology Co Ltd v China Merchants Kin Swiss Transportation Co Ltd(unrep., HCMP 333/2014, 16 July 2014) at §23 (per Godfrey Lam J (as he then was).
H2. Claims against Carmon HK
261. In addition, insofar as the misappropriated Carmon HK Account funds are concerned:-
(1) P claims that in transferring away USD 22.5 million odd out of the Carmon HK Account to Cuenda’s personal accounts (under the control of Cuenda), P claims that Carmon HK acted in breach of trust vis-à-vis Carmon Angola, as it would have not dealt with the relevant trust property in accordance with Carmon Angola’s instructions.
(2) It would accordingly be liable to make good the misappropriated amount, to “restore the financial position of the trust fund to what it would have been if the trustee had not been guilty of wilful default”: see SOC, §§36-38; Libertarian Investments Ltd v Hall (2013) 16 HKCFAR 681 at §89 (per Ribeiro PJ).
H3. Claims against Cuenda
262. In causing or procuring Carmon HK to effect the impugned transfers (given his role as Carmon HK’s sole director at the time, and thus his control over the same), P claims that Cuenda has dishonestly assisted such breach of trust and is liable to make equitable compensation for the loss suffered by Carmon Angola (viz. the amount of USD 22,550,355.31, which is the amount transferred out of the Carmon HK Account plus bank charges): SOC, §§50-51; see Hanbury (supra) at §§25-017 to 25-024.
263. Further or alternatively, P claims that Cuenda is also liable for knowing receipt of the USD 22,549,975.00 (being monies transferred to him personally from the Carmon HK Account), given that he has beneficially received such assets traceable as representing Carmon Angola’s assets in circumstances where he knew full well the trust arrangement in place: SOC, §§48-49; see Hanbury (supra) at §25-005. Given Carmon Angola’s proprietary interest in the subject funds, P says that it is entitled to maintain a proprietary claim over the same and to demand return from Cuenda: see Sime Winner Holdings Ltd v Tan Wan Hong (unrep., HCA 793/2005, 17 April 2009)
264. Carmon Angola also pleaded various personal claims against Cuenda for breach of contract and breach of directors’ duties under §§39-46 of the SOC, which included -
(1) The failure to comply with Carmon Angola’s requests and instructions to inter alia return Carmon HK’s shares thereto, and to cause transfers from the Carmon HK Account to himself personally without Carmon Angola’s knowledge or consent, is a blatant breach of the NSA: see SOC, §39.
(2) Cuenda has further breached his duties as “gerente” (director) of Carmon Angola under Article 69 of Law No. 1/04 of 13 April 2004 as discussed under Experts’ Evidence above.
265. P also claims that Cuenda has acted in breach of both contractual duties and his duties as a director of Carmon Angola, and that this would form a separate bases for awarding damages against Cuenda in respect of the loss suffered.
266. Alternatively, P says Cuenda be liable for damages in the amount of USD 23,702,881.67, which is the balance of the Carmon HK Account as of 30 November 2022:-
(1) The amount in the Carmon HK Account is representative of the loss suffered by Carmon Angola as a result of Cuenda’s wrongful refusal to return the ownership and control of Carmon HK back to the proper owner of Carmon Angola. But for such refusal, Carmon Angola would be entitled to the USD 23.7 million odd held through Carmon HK. In the absence of any other evidence as to the value of Carmon HK as a company, P invites the court to take such bank balance as the loss suffered by Carmon Angola (assuming no return of the shares or monies are secured).
(2) P also states clearly that there should not be any double recovery. In other words, as a matter of enforcement of any judgment obtained, Carmon Angola will not be able to recover morethan USD 23.7 million and the shares of Carmon HK (whether by way of its proprietary claim, its claims for equitable compensation, or its personal claims against Cuenda), even if there are separate and cumulative findings of liability.
267. In my judgment, the above reliefs sought by Carmon Angola are all reasonable and legitimate. They are well supported by the authorities cited by P’s counsel. Given my findings on the factual issues above, I am prepared to grant the reliefs sought by Carmon Angola pleaded under the SOC.
I. CONCLUSION
268. Based on my findings as set out in the preceeding paragraphs, I order judgment be entered against Carmon HK and Cuenda in this case.
269. I would grant the following reliefs based on the requests made by Carmon Angola as set out in the prayer of the SOC:-
(A) As against Carmon HK:-
(1) An order that the Carmon HK do pay to Carmon Angola the monies held in the Carmon HK Account in the sum of USD 23,702,771.67, being the balance of the account as of 30 November 2022;
(2) All necessary accounts and inquiries to enable Carmon Angola to trace and recover all sums, income, profits, assets, properties and interest and/or their traceable substitutes referred to in (9) below.
(B) As against Cuenda:-
(3) An order that Cuenda do pay to Carmon Angola the misappropriated sum of USD 22,550,355.31 (made up of (i) USD 22,549,975.00 of monies transferred to Cuenda personally plus (ii) USD 380.31 bank charges) and such sums, income, profits, assets, properties and interest and/or their traceable substitutes thereof as referred to in (10) below;
(4) All necessary accounts and inquiries to enable Carmon Angola to trace and recover all sums, income, profits, assets, properties and interest and/or their traceable substitutes referred to in (10) below;
(5) Alternative to (3) and (4) above, an order for payment of USD 22,549,975.00, being the monies transferred to Cuenda personally from Carmon HK Account;
(6) An order that Cuenda do transfer the entire issued shareholding of Carmon HK to Carmon Angola (or its nominee) forthwith;
(7) Damages for breach of contract in the sum of USD 22,550,355.31;
(C) As against both Carmon HK and Cuenda:-
(8) A declaration that the Carmon Angola is the sole beneficial owner of the monies held in the Carmon HKAccount;
(9) A declaration that Carmon HK holds on trust for Carmon Angola the monies held in the Carmon HK Account, and is liable to account for such monies, and all sums, incomes, profits, assets, properties and interest and/or their traceable substitutes now and previously in its possession acquired directly or indirectly with the monies held in the Carmon HK Account or any part thereof;
(10) A declaration that Cuenda holds on trust for the Carmon Angola the sum of USD 22,549,975.00 transferred thereto by Carmon HK on divers dates from 19 to 30 December 2022 (“the Received Amount”), and is liable to account for such Received Amount, and all sums, incomes, profits, assets, properties and interest and/or their traceable substitutes now and previously in its possession acquired directly or indirectly with the Received Amount or any part thereof, as pleaded in SOC at §49;
(11) A declaration that the Carmon Angola is the sole beneficial owner of the entire issued shareholding of Carmon HK;
(12) A declaration that Cuenda holds on trust for Carmon Angola the entire issued shareholding of the Carmon HK, and is liable to account for such monies, and all sums, incomes, profits, assets, properties and interest and/or their traceable substitutes of the entire issued shareholding of Carmon HK;
(13) Further or alternatively, equitable compensation in the sum of USD 22,549,975.00; and
(14) All consequential orders and/or directions for tracing, following and/or accounts.
270. Further to the above reliefs, Carmon Angola also seeks the continuation of the two Orders of Au-Yeung J dated 16 March 2023 where she had ordered that the injunctions orders against Ds do remain in force until final judgment. Mr Hui asks the court to continue the injunction orders for a period of 1 year from judgment so it will have sufficient time to proceed with the usual execution mechanisms against D1. A similar period was ordered by Keith Yeung J in Moral Luck Finance Ltd v Law Kin Keung [2018] HKCFI 1795 at §10.
271. Mr Hui cited the recent decision of Wynn Resorts (Macau) S.A. Chan Yat Man [2025] HKCFI 6280 at §12 per DHCJ Ng Jern-Fei, KC, who explained that continuation of Mareva orders after judgment “coheres with the policy underlying the grant of Mareva orders generally” (to protect against dissipation of assets to frustrate a plaintiff from enjoying the fruits of its judgment).
272. I agree with Mr Hui’s submission and would grant the continuation of the two injunctions orders made by Au-Yeung J for a period of one year.
273. On top of the above reliefs granted to Carmon Angola, it is also entitled to interest on the misappropriated sum of USD 22,550,355.31 or the alternative sum of USD 23,702,881.67, being the balance of the Carmon HK Account before the misappropriation. I will allow interest at 1% over prime rate from 19 December 2022 up to the date of judgment and thereafter at judgment rate until payment.
274. Costs will follow the event. Carmon Angola having succeeded in its claim against both Carmon HK and Cuenda is entitled to the costs of the action. Given the appalling conduct of Cuenda throughout this litigation and the highly questionable defence put forward by Ds in this case which has unnecessarily caused this full-blown trial, I consider that costs should be awarded on an indemnity basis, such costs to be taxed if not agreed, with certificate for 2 counsel. I will make the above costs order on a nisi basis. Any party who wishes to vary the same should apply by summons within 14 days after the handing down of this judgment. The matter will be dealt with by way of paper disposal.
275. Lastly, it remains for me to thank counsel on both sides for their very helpful assistance.
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(Andrew SY Li)
Deputy High Court Judge |
Mr Norman Hui and Ms Natalie So instructed by CMS Hong Kong LLP for the Plaintiff
Mr Toby Brown and Mr Jeremy Yau instructed by Gall for the 1st and 2nd Defendants
[1] Carmon HK and Cuenda will be collectively referred to as “Ds”
[2] See 1st MOC at [E1/32/430]
[3] See 2nd MOC at [E2/34/466]
[4] See REB’s Articles at [E1/29/361].
[5] SeeWhatsAppmessagesat [E4/87/928; E4/88/930]
[6] See emails at [E4/91/939-940]
[7] As can be seen at the relevant bank statement at [E3/66/802]
[8] [E5/104/1318-1332]
[9] at [E/55/688-690]
[10] [E6/132/1579]
[11] [E6/131/1576]
[12] See D’s Closing at §§58-59
[13] B/12/119
[14] E2/43/550
[15] E6/138/1596
[16] [E2/44/555]
[17] [E3/55/688-690]
[18] See §§88-97 of Ds’ Closing
[19] [E3/64/760-761]
[20] [E3/63/759]
[21] See §66 of Ds’ Closing
[22] See the draft Deed of Assignment [E6/136/1591-1593] which Cuenda did not execute
[23] Joint Expert Report [C/21/238-242]
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