TO KIN WAH v. TUEN MUN DISTRICT OFFICER AND OTHERS

HCA3772/1980

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3772 OF 1980

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REASONS FOR JUDGMENT

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1. This is an appeal against the order of Master Poon dated 24 June 1998 refusing to make a garnishee order nisi against the Hong Kong and Shanghai Banking Corporation ("HSBC"), the garnishee herein, on the application of the 2nd named judgment creditor. The appeal was lodged on 29 June 1998. It came before Recorder Kwok SC, who adjourned it sine die with liberty to restore. After some difficulty in tracing the file, which had been closed, the matter comes before me. It is of course a rehearing, and there is evidence before me now which was not before the Master in 1998.

2. The judgment creditors in this case obtained judgment under Order 14 against the judgment debtor, the personal representative of Yau Nam Yuen deceased ("Yau") on 13 November 1980 for $1,480,000,000.00 plus interest. According to their Statement of Claim they had on 13 July 1968 obtained a judgment by consent against Yau in the sum of $1,000,000,000.00 in action no.403 of 1968. Yau had died on 3 September 1970. The 1st judgment creditor is now deceased. The 2nd judgment creditor ("Tung") says that there are funds in the hands of the garnishee held to the account of Yau which may be used to satisfy the whole or part of the judgment debt.

3. The basis for this belief is as follows. In 1967, Yau executed a power of attorney in favour of the two judgment creditors, appointing them to act jointly for him in connection with, inter alia, his current account with the HSBC. The account is not identified in the power of attorney. In 1968, the judgment creditors' solicitors sent the power of attorney to the HSBC for registration, and the HSBC returned it after having registered it, without making any comment as to the existence or otherwise of accounts in the name of Yau. The latter made a statutory declaration referring to a current account with the HSBC opened in 1946. By a memorandum dated 1 November 1967, Yau informed Tung that he had a substantial sum in an account with the HSBC which was opened in 1946. In 1970, Yau died in prison, without ever telling Tung that he had withdrawn funds or appointed a different attorney. Therefore Tung believes that the money is still in the hands of the HSBC.

4. Tung's affirmation and the affidavit of his solicitor were before the Master. Since then however, the story has taken on an almost fantastic aspect. There is an affirmation by one Masahiro Yoshida ("Yoshida") dated in September 2002. He says that he was an arms dealer, and met Yau in 1965 in Taiwan when Yau was in the same business. They became friends and Yau told him that he had been an accountant in Hong Kong during the 2nd World War, working for the Japanese occupying forces. When the Japanese surrendered, he had been told along with his colleagues Yip Ching Kong and Yip Shin Ling to take a quantity of bullion and foreign currencies, which had been looted by the Japanese, to a warehouse in order to prevent it from falling into the hands of the British or American forces. His Japanese superiors had then conveniently killed themselves.

5. Yau got out of Hong Kong but he came back in 1946, along with the two men surnamed Yip. They recovered the loot and deposited it with the HSBC. They were told that because of the large quantities, different currencies and need to assay the bullion, it would take time to issue receipts. They went back looking for the receipts from time to time, but ultimately the HSBC denied ever having received the deposit.

6. Yoshida also says that he had met Yip Ching Kong who told him that Yip Shin Ling had been murdered in China.

7. There is also an affirmation from one Alfredo S. Gloria, Sr. ("Gloria") dated 9 December 2002. He says that he was approached by his Japanese friend Yamano who had been asked to assist Tung, because he had himself been a high-level banker in the Philippines. He made inquiries and as a result had a meeting in Hong Kong, in January or February 1998, with two unnamed employees of the HSBC. These employees showed him bank microfiches which bore to be records of accounts held in the names of Yau and the two Yips, with very substantial sums in them. They had been marked as dormant long ago. There is also an affirmation by Yamano, who says that he was at this meeting, and confirms the truth of Gloria's evidence.

8. This story appears at first glance to be "such stuff as dreams are made on". Everything that Yoshida says he got from Yau is hearsay. There is some support, though not a great deal in the fact that the HSBC has never actually denied, in terms, that Yau had an account with it. Correspondence with Tung himself in 1994 shows that he was asked to give details by which the account could be identified, but ultimately produced the response that "the Bank can only take action if it receives an appropriate Court order and it is holding assets for the defendant in the case". Correspondence in 1998 produced the response that the records had been searched in the names of Yau and the two Yips, but nothing had been found. It was however believed that an account was probably maintained by Yau before 1998 and must have been closed or it would appear in the "unclaimed accounts" reports.

9. It must be said that the story of the deposit of a large amount of bullion in 1946, which the HSBC then claimed it had not received, seems unlikely. Mr Egan refers to the recent history of Swiss banks which effectively sat on deposits made by victims of the Jewish Holocaust in the 2nd World War, in support of the possibility of immoral behaviour by a bank. I do not say that a bank would never do such a thing. Banks are corporations. To quote the 18th century Lord Chancellor Thurlow, "Corporations have neither bodies to be punished, nor souls to be condemned, they therefore do as they like". But we are not just talking about the immorality of sitting on accepted deposits here. We are talking about the denial of having received a large deposit of bullion and the like. This would be very difficult to hide. It would be too obvious to too many people, both within and without the HSBC. It would be easy enough for a depositor treated in this way to invoke the law once the legal system was functioning again after the War but this was never done.

10. These are ex parte proceedings, and it may very well be that the HSBC will be able to produce cogent evidence that they do not and never did hold funds on account of Yau, when the matter comes up for consideration as to whether the order should be made absolute. However, at this stage, as it seems to me, I cannot simply disregard the affirmations of Gloria and Yamano. It is true that they raise all sorts of questions. Who were these bank employees? Why are they not named? Who are these deponents anyway? It is no doubt easy enough when the stakes are high, to procure someone in one jurisdiction to perjure himself in an affirmation which is to be used in another. But I cannot simply reject the affirmations out of hand. The question is whether the judgment creditor can show prima facie that the bank is holding funds which can be the subject of garnishee proceedings. It seems to me that on the basis of the affirmations of Gloria and Yamano, it must be accepted that there is prima facie evidence that the HSBC is holding or has held funds in the name of Yau.

11. There must therefore be a garnishee order nisi.

12. I will make an order under Order 15, rule 17 giving the conduct of the garnishee proceedings to the 2nd judgment creditor. The interests of the personal representatives of the 1st judgment creditor may be safeguarded by the advertising provision sought in the Notice of Appeal.

13. I will make the order suggested in the Notice of Appeal save that in para.(i) the words "also known as Yip Lin Shing also known as Yip Ching Kong", and the Chinese characters for those names will be deleted. Para.3 is also to be deleted. Costs reserved.