MAK KA HING v. PANG MING CHUNG

HCA 12653/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 12653 OF 1999

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J U D G M E N T

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1. This is a claim to recover moneys allegedly advanced by the plaintiff to the defendant together with interest from the date of advance at an agreed rate. Payment of the moneys is not disputed but the defence is that they were fees paid for services rendered, for which no reimbursement is due.

2. Mr A Wong represented the plaintiff and Mr R Whitehead SC leading Mr C Chan the defendant.

Background

3. The defendant is married to Gui Xiu Zhen (Madam Gui). Until recently she was a business woman of some influence and standing in Shanghai. Now she has fallen from grace, dramatically. Having been tried and convicted of fraud on a grand scale, she is serving a prison sentence of 9 years' imprisonment. But in or about 1992 she was the managing director and a major shareholder of a company called Shanghai Just-Huahai Metal Products Co. Limited (Just-Huahai). At or about this time Just-Huahai and three other corporations formed a joint venture company called Shanghai Hua Tian Property Developments Co. Limited (Hua Tian) for the purpose of undertaking a property development project in Shanghai. At the time the shareholding of Hua Tian was divided as follows:-

Just-Huahai (incorporated in Shanghai)	25%
State Properties Limited (incorporated in Hong Kong)	35%
China Shanghai City Changnin Municipal Construction and Development Corporation	30%
China Shanghai City Changnin District Property	10%

4. These last two companies are state owned companies in the PRC.

5. Hua Tian purchased a plot of land near the Hung Chiao Development District in order to construct on the land a commercial development to be called the Shanghai Plaza.

6. The plaintiff is a nephew of Dr Stanley Ho (Dr Ho), the well-known casino magnate and owner and operator of Sociadade De Turismo E. Diversoes De Macau S.A.R.L. (STDM) in Macau. He works for STDM, but is also a sometime business partner of a former Hong Kong solicitor called Thomas Yeung (Mr Yeung) who resigned from practice in 1990 to concentrate on his business activities.

7. In or about 1992/1993 the plaintiff and Mr Yeung came to meet Madam Gui for the purpose of exploring investment opportunities in Shanghai, for themselves and Dr Ho. The upshot of that was that in two steps they were to invest in Hua Tian and thus the proposed Shanghai Plaza project. The first step was that in February 1993 the shareholding in State Properties Limited (State Properties) was assigned to corporate entities owned and controlled by Dr Ho on the one hand and Mr Yeung and the plaintiff jointly on the other, Dr Ho taking the lions' share. The second was that in December 1993 the two state owned corporations sold their 40% shareholding in Hua Tian, as to half to Just-Huahai and half to a company called Brightime Limited (Brightime) which company was owned equally by the plaintiff and Mr Yeung.

8. Meanwhile in September 1993 there took place the transactions which have given rise to these proceedings. On 19, 20 and 21 September three cheques came to be drawn on the Seng Hang Bank Limited of Macau by SDTM in favour of the defendant. They were respectively for HK$3.8 million, $4.3 million and $6.8 million - in total $14.9 million. The cheques were banked in the defendant's account with the Hong Kong Bank. It is the plaintiff's case that shortly before the event the defendant approached him for a loan of $14.9 million. He agreed to lend him the money on terms which were that the total would be repaid on or by 30 September 1997 together with interest at 1% per month from the date of the advance. The agreement was not reduced to writing. He paid the money to STDM and the cheques totalling $14.9 million represented the advance. The defendant did not make payment on or by due date, by which time the plaintiff had lost contact with the defendant. The plaintiff instructed his solicitors to make formal demand in July 1999; when that was not answered the writ in these proceedings followed a month later.

9. It is pertinent to reproduce clauses 1 and 2 of the statement of claim as follows:-

"Statement of Claim

1. In or about September 1993, the Plaintiff agreed to lend to the Defendant the sum of HK$14,900,000.00 ("the Loan") which the Defendant agreed to repay by the 30th September 1997 together with interest.

Particulars

The said agreement was made orally between the Plaintiff and the Defendant in or about September 1993 at Hong Kong.

2. It was an express term of the said agreement that the Defendant would pay interest on the Loan at the rate of 1% percent per month as and from the day of advance of the Loan until repayment."

10. The prayer in the claim calculated interest on a compound basis, so that as at 30 June 1999 the total amount claimed had risen to more than $29.70 million. Judgment was entered by default in September 1999 but that was set aside when it was established that there had not been service.

11. The defendant's pleaded case is that there was no request by him for a loan nor, thus, a resultant advance. Mr Yeung and the plaintiff were, in their participation in the Shanghai Plaza project, representing Dr Ho. The money paid to the defendant in September 1993 was an unsolicited reward for the roles played by the defendant and Madam Gui in introducing them to the project.

12. In his reply the plaintiff denied that defence.

13. Before dealing with this material dispute of fact it is necessary to complete the history.

14. The original plan was that Phase One of the Shanghai Plaza would be finished by 1997 at which point Hua Tian would be listed on the Hong Kong Stock Exchange. By 1996 it was 90% complete with many of the units pre-sold and pre-rented. At this time the plaintiff and Mr Yeung sold their shares in Brightime to companies owned by Dr Ho. But the scheduled listing was delayed and then indefinitely put off when Hua Tian's auditors found some accounting irregularities and the unexplained disappearance of funds. Madam Gui was implicated and there was an investigation. This led to her arrest. She was charged with fraud and theft. After trial which concluded in February 2001 she was convicted and it is because of this that she is now serving her sentence.

The Issues

15. Has the plaintiff proved, on a balance of probabilities, that the moneys paid to the defendant in September was an advance made by him, repayable to him? If so, what were the terms? Was the interest compound or simple?

16. I come to review the evidence from which to derive findings of fact, and from them the answer to these questions.

The Evidence

17. The plaintiff was called first. He said that his primary source of income derives from his employment with STDM but that he is also involved in real estate. In this latter field he has engaged in many projects in partnership with Mr Yeung; many in the PRC. He has faith in Mr Yeung's knowledge and expertise in real estate on the Mainland, and tends to leave the negotiations and detail to him. So it was that when asked about how and why and in what particular way the parties came to invest in the Shanghai project he was somewhat vague in his response. He said the leading protagonist for the PRC side was Madam Gui. Mr Yeung met her in 1992 and introduced her to himself and Dr Ho the following year. It was she who encouraged their participation in what was to become the Shanghai Plaza project, the opening being that the then shareholder of State Properties, Daniel Chiu (son of the famous Deacon Chiu) was unable or unwilling to contribute the necessary capital for the project to move forward. The plaintiff said they met on a number of occasions before a deal was struck. During the course of this period, in the summer of 1993, he met the defendant for the first time, socially. But he played no part. He was not, he believed, part of Madam Gui's business empire. He was introduced as an artist. As far as he knew Dr Ho did not meet him, or otherwise have any contact. When asked how the shares in State Properties were bought and for what price he was vague in response; inviting the questions on detail to be put to Mr Yeung who played his usual role of negotiating for the parties. When pressed he said he thought that Dr Ho had taken the major portion leaving about 5% for Mr Yeung and himself jointly. He could not say what was paid, or how much he paid. The deal included Mr Yeung and himself taking office in Hua Tian. Mr Yeung was appointed General Manager and in him was vested day to day operation; he, the plaintiff, became Chairman of Directors. He was called in when major decision making required Board approval. Madam Gui was Managing Director.

18. And so to the events giving rise to this action. The plaintiff says he was telephoned. It was in or about September 1993. The caller was the defendant. It was 2 or 3 months after they had first met, since when there had been one or two further meetings. He did not know him well, but of course knew he was Madam Gui's husband. The defendant told him that he was in need of $14.9 million. He told him austerity measures recently in place on the Mainland made it difficult to borrow there. He asked the plaintiff if he would be prepared to lend him the money, at 1% per month calculated with monthly rests, repayable in September 1997, that is in four years' time. The plaintiff responded that he could, and did. He did not ask for any security. He did not ask the defendant why he wanted to borrow $14.9 million, nor what he wanted the money for, nor what his assets were or whether he would be good for repayment in 1997. He required nothing in writing. Asked why, he said STDM lent money to customers regularly on trust. He was prepared to lend his money to the defendant on the same basis. Further, he had complete faith in Madam Gui whom he knew as a prominent, well-respected, highly influential business woman in Shanghai; and she was, after all, a business partner in the Shanghai Plaza. Furthermore the date for repayment was to coincide with the listing of what he was satisfied was to be a very, very profitable investment that would yield to the participants huge amounts of money; far more than the advance plus interest then due. As to the quantum of interest he said that at the time the prime rate was about 8.5% per annum. In his experience banks were then lending at 3-4% per annum above prime. He regarded the rate offered at 1% per month to be comparable. He understood that the term 'with monthly rests' signified a compound rate.

19. I interpose here an excerpt from the plaintiff's solicitors' replies to the defendant's solicitors' request for further and better particulars of the statement of claim. To the request: 'Please state...whether it is alleged that the said interest was compound or simple interest', the response on his behalf was: 'the said interest was simple interest with monthly rests'.

20. I revert back to the plaintiff's account. The parties having agreed the terms, the defendant again telephoned and requested that the advance be drawn on STDM's account in Macau and that it be by three cheques dated consecutively 19, 20 and 21 September, without specifying the amount of each cheque. He understood the defendant wanted cheques drawn on a Macanese Bank to speed up clearance, in Macau. He did not query why he required three cheques or why they had to be dated sequentially or why the amount of each was not specified. But he agreed to this course. He called upon the assistance of his mother, whom I shall call Madam Ho. She is Dr Ho's sister and an executive director of STDM. First he put his cheque account with Chase Manhattan Bank in funds. He cannot now remember the source, believing it may have been a savings account. Next he drew two cheques totalling $15 million made payable to Madam Ho which he gave to her to pay into STDM's account. He cannot recall why he did not write one cheque. He rounded the amount up to $15 million because he intended to take $100,000.00 in cash for himself.

21. (I pause again in his narrative to mention that he attempted to produce the two returned cheques by contacting the bank for certified copies. But the response (which was produced) was that that was not possible, for the microfilm had been destroyed. What he had retained were the cheque stubs and he produced those. He also produced a bank record showing a deposit in excess of $15 million into his account and a debit of $15 million on the relevant date).

22. The plaintiff's mother drew the three cheques and withdrew $100,000.00 in cash and gave the cheques and cash to him. He gave the cheques to the defendant. Then the defendant asked if he could lend him a further $100,000.00 in cash which, coincidentally, he had also drawn. He obliged. In due course the defendant reimbursed the $100,000.00. But that was the only repayment he made.

23. The Shanghai Plaza project proceeded; the next step was the disposition by the state owned corporations of their interests. In 1993 the PRC economy whilst booming was also the victim of galloping inflation. The austerity measures the defendant had referred to prevented them from proceeding further, and they were thus obliged to bail out of Hua Tian. Again he was vague as to detail, save that Brightime was wholly owned by himself and Mr Yeung and thus they were the purchasers and financed the purchase.

24. In 1996 with the project by now well advanced they sold their interest to Dr Ho; he believed at a total of $400 million. Then it was the due diligence report conducted by the auditors as a prelude to the listing revealed the irregularities that were eventually to lead to Madam Gui's downfall. That effectively put paid to the listing. Large sums of money were lost as a result of her investment; the major victim was her partner in the venture of Dr Ho. Following her trial her interest in Just-Huahai vested in the Public Security Bureau (PSB). The PSB offered its interest in Hua Tian to Dr Ho which he accepted, at an agreed price. The accounts were in disarray; after a further passage of time he, the plaintiff, and Mr Yeung came to dispose of their remaining interests and resigned from office.

25. He said that this exercise took up all his available time and that was why it was not until July 1999, nearly two years after the due date, that he began to pursue the defendant for repayment.

26. It was put to him that his account of a loan repayable on terms was a fabrication; that the $14.9 million was by way of a commission or consultancy fee paid by Dr Ho to the defendant for services rendered by the defendant and Madam Gui on his behalf in connection with the Shanghai Plaza project. He denied that. He repeated that Dr Ho had not even met the defendant. He said he had not heard of any such fee; his uncle had given him no instruction about paying this.

27. Next came Mr Yeung. He said that he had engaged in business transactions with the plaintiff since 1980, always on a 50/50 basis. These included ventures on the Mainland which preceded the Shanghai Plaza. He met Madam Gui in 1992 and the defendant a year later when she introduced him as her husband, artist. It was Madam Gui who suggested investment in the Shanghai Plaza, because Mr Chiu the beneficial owner of the shares in State Properties was unwilling or unable to continue. It was he, Yeung, who studied the proposal for and on behalf of Dr Ho, the plaintiff and himself, and who negotiated with Mr Chiu's solicitors before a deal was concluded. At this stage the project's sole asset was the undeveloped land. The agreed price paid to Mr Chiu was US$20,000.00 which represented a fair price, not a bargain price, having regard to the land's worth and set-up costs. Dr Ho put up the whole purchase price and took a beneficial interest amounting to 6/7th of the share capital of State Properties. The remainder he gave to Mr Yeung and the plaintiff. Thus their respective interests in Hua Tian were 30% and 5%. He and the plaintiff took office as aforesaid. This was in February 1993.

28. In his capacity as General Manager he began to plan the development. But then came the austerity measures and the subsequent sale by the state owned companies of their interests. Again it was he, Yeung, who negotiated for and on behalf of the purchasers. He dealt with a representative of the District Government, a Mr Fung. The consideration Brightime was to pay included a premium to the vendors as well as taking over the capital investment in Hua Tian. The cost to Brightime came to a bit over US$10.5 million and was funded by Brightime's beneficial owners; namely, himself and the plaintiff equally. Again it was no bargain. They paid no less than what the shares were worth; if anything a bit more.

29. Thereafter the project came to be developed with input from the investors adding value. When Brightime sold its stake to Mr Ho as a prelude to the listing it did so for $400 million. Then the due diligence revealed the problems which threw the project into confusion as the parties tried to trace missing funds. The upshot was Madam Gui's arrest, charge, trial and conviction, but not before she sought to implicate Mr Yeung as I shall return to.

30. By 2001 Dr Ho had acquired Just-Huahai's interest in Hua Tian. Not only was the upheaval caused by Madam Gui's embezzling to be sorted out, there were accounting issues to resolve as between Dr Ho and the plaintiff and himself as well. That settlement included not just the transfer to Dr Ho of the 5% share represented by their shares in State Properties but also a substantial reimbursement of the price he had paid for the Brightime interest.

31. Taken back to the events in 1993 and the purchase into Hua Tian he said the defendant was not present during the course of discussions and negotiations and took no part. In any event he had no capacity to do so. In the sale and purchase of the State Properties' shares he did not tender advice, or act as agent. Similarly, he played no part in the transfer of the interests of the state owned companies which was to follow.

32. The deals struck were not bargains. Certainly there were no savings, no favours, no service that warranted payment of an unsolicited gratuity.

33. During the time he was in office as Managing Director his primary role was to report to Dr Ho. Thus anything Dr Ho wanted to implement would be done through him. It was not Dr Ho's style to conduct his affairs without telling him. He was not aware of any commission or consultancy fee paid to the defendant in September 1993 for Madam Gui and himself. Had it been so he is certain he would have known.

34. He did not come to hear about the transfer of cheques which gave rise to this litigation from the plaintiff until after the event. He was not present when that took place. He was not consulted or told of it beforehand. The plaintiff told him it was an advance, made at the request of the defendant.

35. Then he was taken to a fax produced by the defence and invited to comment. The text is in Chinese characters written by hand. It was, on the face of it, from him to Madam Gui. I reproduce the English translation:-

"23 September 1993 12:47	852-8770437 p.01
To: General Manager Kwei
From: Yeung Hoi Kam	23rd September 1993

The consultancy fee for transfer of shares in State Properties Limited in the sum of HK$14,900,000.00 has been paid to Pang Ming Chung."

36. He was also referred to another fax, also produced by the defence, also with its text in Chinese written by hand. Again I reproduce the English translation:-

"7 May 1993 17:23	852 28770437 P.01
To: Director Gui

After receipt of the money from AH TAI company, if Huahai company did not use [the name] temporarily, [the money] can be used for Huatian. They will send somebody to have a look of the movable houses, Director Gui please arrange for the same.

Yeung Hoi Kam"

37. He accepted that the fax number in the first fax was that of his Hong Kong office at the time in question. He conceded that it appeared to be written in his hand, as was the second fax, which was signed in his name. Both were addressed to Madam Gui and of course the first on the face of it confirmed payment of a consultancy fee to the defendant of $14.9 million. But those faxes are forgeries for the following reasons:-

(a) he was not in Hong Kong on 23 September. He was in Shanghai, as his travel permit verified;

(b) he produced his telephone account for the day in question which revealed no fax had been sent on that day to Shanghai or elsewhere;

(c) the second fax, dated in May 1993, depicted the fax number beginning with the digit '2' when, as the telephone bill revealed, that was a Hong Kong-wide adjustment to all telephone and fax numbers that was yet to occur.

38. And he was no stranger to this practice. When Madam Gui came to be investigated under suspicion of embezzlement she produced photocopies of faxes purportedly sent by Mr Yeung which instructed her to carry out the illicit activity. That implicated him also, until he was able to satisfy the authorities as to his innocence by producing his own copies of the offending documents to show that the originals had been doctored by cutting, pasting and photocopying to produce forgeries. This methodology was found proven in the course of Madam Gui's trial, and he was cleared from suspicion.

39. Mr Yeung was asked if in his knowledge and experience Madam Gui would not be permitted to accept a commission by virtue of her station. He said to suggest that was nonsense. Madam Gui was a private entrepreneur, working for herself, not the state. In that capacity there was no restriction on her being paid and receiving a commission direct.

40. I come next to the defendant. He described himself as an artist, not in regular employment and, within the family, in charge of child rearing and domestic affairs. However it was he who located the land which was to become the Shanghai Plaza. It was offered for sale at a good price. It was he who suggested to his wife that she should buy it, for development. And so Hua Tian came into being and it purchased the land. Then it was that the plaintiff and Mr Yeung came on the scene, at the same time that Mr Chiu wanted to quit the investment. He said during the course of discussions his wife and, to a lesser extent he, gave advice concerning their entry into Hua Tian. The advice was that the more straightforward method was to acquire in Hong Kong Chiu's shares in State Properties. When that proved to be successful his wife told him that the Hong Kong side wanted to express their gratitude by paying a reward. But she said that because of her position she could not accept it; hence the payment would be made to him alone. And so it came to pass; the cheques the subject of this action were paid to him for that purpose.

41. It all happened shortly after he was given a one way visa to Hong Kong and he came here to complete the paper formalities. Mr Yeung contacted him and invited him to Macau. On 20 September he, the plaintiff and Mr Yeung had a meal. It was after that that he was handed the cheques. He had been told earlier by his wife that there was a payment to be made but he did not know how much until he read their face value. He returned to Hong Kong and, accompanied by Mr Yeung, deposited the money into a HSBC bank account in his name. He denied this was a loan sought by him from the plaintiff on terms he had offered. He denied the cheques were given him by the plaintiff, not Mr Yeung, and that he was also lent $100,000.00 in cash which he subsequently returned. He said he had no need of funds; but if he did he could have approached his wife. He had no idea and did not accept that austerity measures in China might make borrowing difficult. He denied that he had to borrow to raise funds to buy a place to live in Hong Kong.

42. The remaining witness would have been Madam Gui. But of course she was not free to attend court. Instead Mr Whitehead invited me to accept as her evidence an affidavit she had sworn. Mr Wong did not oppose this course, subject to the weight that I should attach to her account. She began it by referring to the early history of the project and the interest first expressed in investing shown by the plaintiff and Mr Yeung. I repeat verbatim what she said of this:-

"......Mr Yeung and the Plaintiff said that they were very interested in the Shanghai Plaza Development because the site was good as it was very near to the Hung Chiao Development District and that the land price was relatively low. Mr Yeung and the Plaintiff further said that the real investor who provided the money was the uncle of the Plaintiff Dr Stanley Ho. Accordingly they said that I need not worry about financial resources. To show their eagerness in taking part in the Shanghai Plaza Development and as an incentive to me for assisting them to participate in the project, Mr Yeung and the Plaintiff further said that if they could successfully take part in the project, Dr Stanley Ho would pay a reward to my husband and I to thank us. I told Mr Yeung and the Plaintiff that because of my position in the joint venture company, I could not accept the reward. However Mr Yeung and the Plaintiff insisted on making a monetary reward if they would successfully take part in the project and they said that if I could not accept the consultancy fee, they would pay the same to my husband.

. . . . . . . . . . .

11. Hua Tian was formally set up on 2nd August 1993. Mr Yeung came to Shanghai to attend the formal opening. Mr Yeung told me that Dr Stanley Ho was very pleased to have the opportunity to take part in the Shanghai Plaza Development. Mr Yeung said that they were very grateful to the efforts of my husband and I in assisting them to enter into the joint venture. He further said that if not for our assistance, they would not be able to take part in the Shanghai Plaza Development. Mr Yeung said that Dr Stanley Ho would pay the promised consultancy fee to my husband. Mr Yeung further said that both he and the Plaintiff had received rewards from Dr Stanley Ho for their efforts in the Shanghai Plaza Development. The total rewards for Mr Yeung, the Plaintiff and my husband would amount to a total of HK$45,000,000.00 and each would receive HK$15,000,000.00."

43. She went on to say that the cheques her husband were handed in Macau in September 1993 was the commission in question. She denied it was a loan. She expressed herself to have been well-off in those days and well able to provide the funds from her own resources if they were needed; but they were not.

44. Before leaving her evidence I reproduce below the English translation of a letter purportedly sent by Just-Huahai to the defendant, just prior to his receipt of the cheques:-

"SHANGHAI JUST-HUAHAI METAL PRODUCTS CO. LTD.

Mr Pang Ming Chung:

We would express our gratitude to you for all the consultation and mediation work carried out by you in relation to the joint venture between our company and Yeung Hoi Kan and Mak Ka Hing. Work on stage I of the "Shanghai Plaza" project (which was first proposed by you) is due to commence immediately. Transfer of land use right, removal and incidental municipal services work have been completed. Also the transfer of half of the 40% shareholding by "上海市長宁城市建設綜合開發總公司" to Mak Ka Hing's Brightime Limited is proceeding smoothly. It is expected that there will be a very good profit return from the 130,000 square meters of property to be developed in stage I of the project. All three parties are interested in participating in stage II to stage V of the project.

	Best regards !
	Shanghai Just-Huahai Metal
	Products Co. Ltd. (Chop)
	10th September 1993"

45. That being the evidence, I now come to record how I dealt with it; in particular, the disputes of fact.

Findings of Fact

46. I have no difficulty in rejecting the defendant's account as a fabrication whose express purpose is to escape liability for moneys due. It is quite apparent for a number of reasons that the sum paid to him was not a commission, reward, consultancy fee or other emolument for services rendered and to be rendered by himself and his wife. The more obvious reasons include the following:-

(a) he played no material part in the setting up of the joint venture; he did not have the capacity or experience or expertise to advise Dr Ho direct or via his colleagues as to their entry; on his own admission his role was not in business but in domesticity;

(b) Madam Gui played no part save that she was in control of Dr Ho's joint venture partner. She provided no service that warranted a personal reward. The terms and circumstances of Dr Ho's acquisition of a share in the project and of Brightime's subsequent participation were no more than commercially prudent, with no particular, unusual or special advantage sought after or provided;

(c) were it that she should have been entitled to be recognised by way of a reward there was nothing to prevent it being paid, openly and directly, to her;

(d) were Dr Ho to have been minded to reward Madam Gui and/or the defendant Mr Yeung, as his Major Domo, would have been told of it as I find; as I find, he was not;

(e) the fax of 23 September 1993 from Mr Yeung to Madam Gui evidencing payment of a commission was quite patently a forgery, for reasons given by Mr Yeung;

(f) the letter directed by Just-Huahai to the defendant of 10 September 1993 was a rather obvious and transparent attempt to bolster the defendant's role to encourage the belief that it was a meaningful one and warranted a reward. It was of course self-serving. It is also misleading and, in the circumstances, carries no credibility.

47. Having in this way dismissed the defendant's account I turn to that of the plaintiff. The fact that I have found the defendant to have given a false account does not of itself prove the claim. The following questions remain to be answered: if the payment made and received was not a reward, what was it for? Was it, in effect, the plaintiff's money? If it was an advance, what were the terms?

48. The chain of evidence that the plaintiff sought to provide to corroborate his own account that the money was his was not complete by reason of the unfortunate destruction of his bank's records. And he chose not to call his mother, on the grounds of age. Yet I am satisfied from the documents that were available coupled with his own words that he did draw cheques of $15 million and that those cheques were used to meet the cost of the three drawn on STDM which found their way to the defendant. There was a singular lack of prudence exhibited by the plaintiff in putting at risk a very large amount of money. Notwithstanding, I am satisfied the cheques did represent an advance; it could not have been otherwise, given my rejection of the defendant's account. I am also satisfied it was for four years, at 1% per month.

49. But was that interest simple or compound? The plaintiff's own evidence was ambivalent on this issue. The wording of the statement of claim and the answer proferred to the request for better particulars are telling. I know of no rule of commercial practice that states 'with monthly rests' means the rate should be compounded. In the circumstances, I find the rate to be simple.

The Outcome

50. Based on my findings of fact and resolution of the issues, the plaintiff's claim succeeds, save that the interest on the principal sum of $14.9 million shall be calculated at the simple interest rate of 1% per month from the respective dates of the three cheques to the date of this judgment and thereafter at judgment rate. Costs, nisi at first instance, are to the plaintiff, taxed if not agreed.

Remarks: