EVER-LONG SECURITIES CO LTD v. WONG SIO PO

CACV 99/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 99 OF 2003

(ON APPEAL FROM HCA NO. 625 OF 2001)

________________________

J U D G M E N T

________________________

Hon Cheung JA :

The appeal

1. This is an appeal against the judgment of Jackson J who dismissed the plaintiff's claim against the defendant for the sum of $648,973.15. The dismissal was pursuant to a submission of no case to answer by the defendant upon the conclusion of the evidence of the plaintiff.

The claim

2. The plaintiff was engaged in the business of a stock broker. Its case against the defendant was a simple one. It alleged that the defendant had signed an agreement with the plaintiff for the purpose of trading in securities. The trading was carried out by way of a margin account. Trading was duly carried out pursuant to the instructions of the defendant. As a result of the drop in the value of the securities purchased on behalf of the defendant, the plaintiff requested the defendant to put up securities. The defendant was unable to do so. As a result, the plaintiff had to dispose of the securities, resulting in a loss of $1,333,047.73. The defendant was only able to repay $700,000, leaving a balance of $633,047.73 unpaid. The plaintiff claimed this amount together with interest at $13,237.12 from the defendant.

3. The only exceptional feature in this case is that the plaintiff had never met the defendant until after the loss had been incurred.

Mr. Tam's evidence

4. The evidence for the plaintiff was given by Mr. Tam Cheuk Hong ("Mr. Tam"), the dealing manager of the plaintiff. He was in charge of this particular account.

5. His evidence revealed that on 27 November 2000 he had a meeting with Mr. Pang Man Kin ("Mr. Pang") and Mr. Yeung Ming Kwong ("Mr. Yeung"). Mr. Tam knew Mr. Pang. The purpose of the meeting was for Mr. Pang to introduce Mr. Tam to Mr. Yeung who wished to open a margin account with the plaintiff.

6. At this meeting Mr. Tam informed Mr. Yeung that he had to deposit securities as the collateral for the purpose of operating the margin account. It was a brief meeting. Mr. Tam was given the name card of Mr. Yeung whose company was known as Jiu Feng International Company Limited ("Jiu Feng"). On the next day someone from Jiu Feng came to the plaintiff to pick up the account opening documents.

7. On 30 November 2000 the account opening documents were delivered back to Mr. Tam. He noticed that the account holder was not Mr. Yeung but the defendant. Mr. Tam called up Mr. Pang and received confirmation that it was the defendant who would open the account.

8. As Mr. Tam had also noticed that the defendant had not signed on certain documents and that he had not provided his residential address. He telephoned Mr. Pang again who directed him to contact a person called Rita Chan. Mr. Tam had a conversation with her and on 1 December 2000 he received the completed account opening documents. Together with the documents were the proof of the residential address of the defendant; the share certificates of 20 million shares of a company called Wah Lee Resources Holdings Limited ("Wah Lee"). The bought and sold notes of these shares which were delivered together with the shares revealed that the vendor was Liuzhow Wuling Holdings Limited. The purchaser was the defendant. An instrument of transfer and the bought and sold notes showed that stamp duty for the transactions had been paid.

9. After receiving these documents, Mr. Tam carried out transactions in this account. The instructions to trade were given to him by Mr. Pang.

10. The plaintiff had granted the defendant a credit facility of $2 million for the operation of this account. The transactions carried out by the plaintiff were all in respect of the purchase and sale of the shares in Wah Lee. On two occasions namely, on the 7 December and 9 December 2000, Mr. Pang, at the request of Mr. Tam, had paid in further deposits in the sum of $200,000 and $300,000 respectively to maintain the margin level of this account.

11. On 12 December 2000 because of the drop in the price of the securities, Mr. Tam called Mr. Pang for further deposits or alternatively to sell the shares.

12. On 13 December 2000 there was a further substantial drop in the value of the shares, Mr. Pang however was unable to deposit further money to the account. The plaintiff decided to sell all the shares. Mr. Pang was kept informed during the disposal.

13. Subsequently, Mr. Pang paid $700,000 to the plaintiff. Mr. Pang informed Mr. Tam that he would discuss with Mr. Yeung and the account holder as to how the outstanding money would be repaid to the plaintiff.

14. On 16 December 2000 Mr. Tam contacted the defendant for the first time. Mr. Tam introduced himself and asked the defendant whether he had received the transaction statements the plaintiff had sent to him every day. The defendant replied yes but said he knew nothing. Then he asked how much was owing on the account and promised that he would follow up the matter.

15. There were subsequent contacts between Mr. Tam and the defendant. But the defendant kept on saying that he knew nothing. When Mr. Tam asked him whether he had received the statements, the defendant replied yes.

16. At the same time Mr. Tam was also contacting Mr. Pang. Mr. Pang proposed to settle the balance by three instalments. Three cheques for these sums were later given by Mr. Yeung to Mr. Tam. The payee of these cheques, however, was Mr. Tam personally and not the plaintiff.

17. At the time when these cheques were given to Mr. Tam, Mr. Yeung informed Mr. Tam that he would pay him cash in exchange for the cheques at the time of the maturity of these cheques. Mr. Tam gave the cheques to the plaintiff but the cheques were dishonored on presentation.

18. Mr. Tam had also informed the defendant about the above repayment arrangement.

19. After the cheques were dishonored, Mr. Tam met the defendant for the first time on 14 March 2001. In the meeting the defendant claimed that he knew nothing but when he was asked whether he had received the statements, he replied yes. The defendant then offered to settle the matter by paying half of the amount due to the plaintiff. Mr. Tam informed him that the decision had to be made by the plaintiff.

20. The defendant's response was that "both sides should be responsible". He further stated that when the account was opened, he did not see Mr. Tam at all. He also talked about the Securities and Futures Commission ("the SFC"). Mr. Tam explained that his understanding was that the defendant knew when the account was opened one of the formalities was that he had to deal with him face to face.

21. The plaintiff rejected the 50% offer of the defendant who then offered to repay 60% of the amount due. The plaintiff also rejected this offer. Mr. Tam informed the defendant that the matter had to be resolved by litigation.

Documents signed by the defendant

22. The documents signed by the defendant were

(1) Margin client's Agreement ("the Agreement");

(2) Growth Enterprise Market (GEM) Risk Disclosure Statement of Margin Account;

(3) Authorization letter;

(4) Account opening information;

(5) Financial data sheet;

(6) Client information statement (personal).

The defendant's pleaded case

23. In the Amended Defence, the defendant admitted that he had signed the Agreement and the accompanying documents. He claimed that he signed the documents at the request of his brother-in-law, Chan Kai Fung, who asked him to do his friend a favour and to open a stock trading account. Mr. Chan told the defendant that he would not be responsible for the liabilities incurred in the account.

24. Subsequently the defendant received the documents and he signed on the positions as indicated on the documents. He claimed that the signed documents were undated. The agreement was not witnessed and the declaration (presumably he was referring to the declaration in the risk disclosure statement by the registered person to the client) was not signed by any registered person.

25. The defendant denied that he was liable to the plaintiff. Many lines of defence were raised in the Amended Defence, some of which were duplications and variations of the same theme.

26. The defences can be summarised as follows :

(1)	The Agreement was not legally binding.
(2)	The Agreement was a sham. It came into being to escape the regulatory requirements.
(3)	The Agreement was void for illegality. The defendant pleaded that the plaintiff did not meet and see him in person. He did not explain the risk of margin trading to him. The purpose for opening such an account was to evade the regulations of the United Stock Exchange of Hong Kong and the SFC. The plaintiff was in breach of the rules set out in the Code of Conduct for Persons Registered with the SFC ("the Code").
(4)	The defendant did not have any intention to create legal relationship with the plaintiff.
(5)	The plaintiff had failed to exercise due care and diligence towards the defendant in the operation of the account.
(6)	The Agreement does not have any legal effect. By taking the action against the defendant, the plaintiff was unjustly enriching itself.
(7)	The defendant was never asked to give nor had he given any instruction to the plaintiff to execute any of the transactions. He had not made any deposit payments to the plaintiff.
(8)	The plaintiff being an investment dealer was fully aware of the 10% disclosure threshold as stipulated in sections 4 and 6 of the Disclosure of Interest Ordinance, Cap 396. The plaintiff had only one objective to achieve in these purported transactions, namely, to shield behind the shadow of the defendant. The defendant alleged that only one type of share was traded on this account, namely, the Wah Lee shares which was a listed company. Over 50 million shares were traded in this account which amounted to more than 2% of the total paid-up share of Wah Lee.
(9)	The defendant further claimed that the plaintiff had caused damage to him by acting recklessly or negligently.

No case to answer

27. Although there is no express rule in the Rules of the High Court it is well established that in civil proceedings a defendant may make a submission of no case to answer at the conclusion of the plaintiff's case.

28. Such a submission can be made either if no case has been established in law or the evidence led is so unsatisfactory or unreliable that the court should hold that the burden has not been discharged, but the defendant must elect not to give evidence before he can make a submission of no case to answer (see Hong Kong Civil Practice 2002, Volume 1, paragraph 35/7/12).

29. The first basis of such a submission is concerned with whether "accepting the plaintiff's case at its face value" (per Ormerod L.J. in Storey v. Storey [1960] 3 WLR 653 at 656) there is a sustainable cause of action in law.

30. The second basis is concerned with the quality of the evidence.

31. The issue at a submission of no case to answer is whether the plaintiff has established a prima facie case for the defendant to meet. The test in deciding whether there is a prima facie case is to see if there is evidence which, if uncontradicted, would justify men of ordinary reason and fairness in affirming the proposition which the proponent is bound to maintain, having regard to the degree of proof demanded by the law with regard to that particular issue : Cross and Tapper on Evidence 9th Ed. page 171-172.

Overview

32. It is important to identify some important features of this case. First of all, although the defendant did not meet Mr. Tam of the plaintiff before the Agreement was made and only met him at a much later stage after the loss had incurred, and also some parts of the documents he had signed were left blank, he had clearly admitted in the Amended Defence that he had signed the Agreement together with the related documents for the purpose of the margin account.

33. Daily statement of the transactions was sent to the defendant to his residential address. It is the case of the plaintiff that the defendant had admitted to Mr. Tam that he had received these statements.

34. The defendant had never denied in the pleadings that he was not the transferee identified in the instrument of transfer and in the bought and sold notes of the 20,000,000 Wah Lee shares.

35. Despite the fact that the defendant had not paid the margin deposits subsequent to the signing of the Agreement, the plaintiff's evidence showed that the defendant had offered to settle the claim by the payment of a lesser sum.

In order to succeed

36. To succeed on the submission of no case to answer, the defendant has to demonstrate that either, the plaintiff's evidence is so unsatisfactory that it cannot even begin to show that there was a contract in existence between the parties and the defendant had not given instructions to trade. This is the second basis of the rule on submission of no case to answer. Alternatively, even if there is a contract in existence, the plaintiff cannot sustain a cause of action against him because the contract was somehow vitiated by other grounds. In other words there is no sustainable cause of action. This is the first basis of the rule on no case to answer.

Contract in existence

37. Given the admissions by the defendant, I am of the view that the plaintiff had established a prima facie case that it had entered into a contract with the defendant. It is not disputed that under the terms of the Agreement the plaintiff is entitled to seek the recovery of the money from the defendant.

38. There was no allegation of duress or non est factum by the defendant. If he chose to sign on a contractual document, then, clearly, the prima facie intention was that he would intend a legal relationship to be created by reason of the documents. The onus is on the defendant to establish that he did not intend to be legally bound. Chitty on Contracts 28th Edition Vol. 1 para. 2-146 stated that

“ In the case of ordinary commercial transactions it is not normally necessary to prove that the parties to an express contract in fact intended to create legal relations. The onus of proving that there was no such intention "is on the party who asserts that no legal effect is intended, and the onus is a heavy one."

There is no evidence on the plaintiff's part which would lend support to the defendant's contention.

39. It was submitted before the judge that while the defendant had indeed applied to open a margin account with the plaintiff, there was no evidence of any response to the application. In other words it was suggested that there was no acceptance of the offer by the defendant.

40. In my view the transactions carried out by the plaintiff pursuant to the instructions of Mr. Pang were the best indications that the plaintiff had accepted the request by the defendant to open a margin account and a binding legal relationship had been created between the parties.

Instructions to the plaintiff

41. The defendant contended that he had not personally given instructions to the plaintiff to carry out the transactions. Given the fact that it was Mr. Pang who had discussed with Mr. Tam about opening a margin account and the subsequent receipt of the signed documents by the defendant, the plaintiff obviously could treat the instructions on trade as having been given by the defendant through Mr. Pang.

42. Further, given the fact that the daily transaction statements were sent to the defendant, if the defendant was genuinely concerned about transactions being carried out without his authorisation he ought to have raised this with the plaintiff upon receipt of the statements.

43. What is more important in this case is that if the defendant was prepared to lend his name to the Agreement, then obviously one inference is that he knew that transactions would be carried out pursuant to the Agreement or at the very least he would not bother whether the transactions would be carried out. This is in fact confirmed by the defendant's own pleaded case that he noticed the Agreement he had signed was a margin account agreement and he was told by his brother-in-law that his friend who needed someone to open the account "would be responsible for everything". This together with the evidence adduced by the plaintiff indicated that there was a prima facie case that the transactions were carried out with the authority of the defendant.

44. Hence under the second limb of the rule relating to submission of no case to answer, there clearly is sufficient evidence that a contract between the parties had come into existence and the defendant had given instructions through Mr. Pang to carry out the transactions.

Hearsay evidence

45. There was arguments on what the defendant told Mr. Tam in relation to the receipt of the statement in their meetings subsequent to the liquidation of the shares was hearsay evidence and therefore inadmissible.

46. The short point to this is that the action was commenced on 8 February 2001 and the relevant provisions are those introduced by the Evidence (Amendment) Ordinance (No. 2 of 1999) now Part IV of the Evidence Ordinance. Hearsay evidence, is only excluded if, among other things, the court is satisfied, having regard to the circumstances of the case, that the exclusion of the evidence is not prejudicial to the interests of justice : section 47 of the Evidence Ordinance. Section 49 sets out the factors to be considered in the deliberation. In this case the maker of the hearsay evidence was the defendant himself. There really was nothing prejudicial for Mr. Tam to refer to the conversation he had with the defendant. Besides the judge was not invited to consider section 47 of the Evidence Ordinance.

Illegality

47. I will now deal with the first limb of the submission of no case to answer which is based on the specific defences raised in the pleading. The first is illegality. The principle is clearly that the court will not lend any assistance to enforce an illegal contract where that illegality has plainly appeared in the evidence (Scott v. Brown Doering McNab & Co. [1892] 2 Q.B. 724) and the court is bound to take a point of illegality of its own motion if such evidence is apparent. (Snell v. Unity Finance Co. Ltd. [1964] 2 Q.B. 203)

48. The defendant had by the Further and Better Particulars of the Amended Defence identified the Code to be the regulation that the plaintiff was allegedly in breach.

49. The explanatory notes to the Code stated that the SFC would be guided by the Code in considering whether a registered person satisfies the requirement that it is fit and proper to remain registered. If the Commission has information which suggested that a registered person is not a fit and proper person to remain registered, he may initiate an enquiry under section 56(1) or section 121S of the Securities Ordinance (Cap. 333) or section 36(1) of the Commodities Trading Ordinance (Cap. 250). There is no dispute that the plaintiff was a registered person.

50. Section 56(1) deals with the powers of the SFC in relation to misconduct of a registered person and the penalties that it may impose on such a person. Section 121S deals with the powers of the SFC in relation to the misconduct of a registered financier and the penalties that it may impose. Section 36(1) of the Commodities Trading Ordinance again confers power on the SFC to conduct enquiries concerning the conduct of a registered person engaged in commodities trading and the penalties to be imposed in case of misconduct by such a person.

51. The explanatory notes further stated that the Code does not have the force of law and should not be interpreted in a way that would override the provision of any law.

52. The Code consists of two parts. The first deals with general principles and the second deals with the specific code of conducts for a registered person.

53. In relation to the general principles a registered person has to conduct the business with honesty and fairness (General Principles GP1). He must also act with diligence (GP2). He must have the resources and procedures needed for the proper performance of the business (GP3). He must also seek from his clients information about his financial situation, investment experience and investment objectives (GP4). He must make adequate disclosure of relevant material information in his dealing with the clients (GP5). He must comply with all regulatory requirements so as to promote the best interests of the clients and integrity of the market (GP7). He must ensure that the client's assets are promptly and properly accounted for and adequately safeguarded (GP8). The senior management of a registered person should bear primary responsibility for ensuring the maintenance of the appropriate standards of conduct (GP9).

54. The second part of the Code deals with the specific requirements in relation to these general principles.

55. In respect of the provision dealing with information about clients, it provides that the registered person should take all reasonable steps to establish the true and full identity of his client. It then explains what the registered dealer should do in order to ascertain the true identity of the client if the account was opened by the client other than in a face to face situation. If the account opening documents were not signed in front of a representative of the registered agent, the sighting of related identity documents should be certified by an appropriate person such as a lawyer or accountant or alternatively, the identity can be verified by, among other things, the client's identity document such as an identity card.

56. In this case, the plaintiff had received a photocopy of the identity card of the defendant, commercial documents such as the stamped instrument of transfer and the bought and sold notes also contained signatures of the defendant.

57. The defendant had not demonstrated that there is any provision which will render the contract void or illegal if the contract was not signed by the client in front of the registered dealer.

58. The defendant complained that the plaintiff had not explained the risk involved with margin trading and the plaintiff had not signed on the declaration the risk disclosure statement. That may be so but again the failure to do so would not render the contract void or illegal. The breach of the Code was not pursued by Mr. McCoy S.C., counsel for the defendant.

Collateral requirement

59. On the appeal the defendant relied on Part XA of the Securities Ordinance (Cap. 333) which the parties agreed was the ordinance governing the conduct of the plaintiff at the relevant time. The governing ordinance now is the Securities and Futures Ordinance (Cap. 571).

60. Part XA applies to a business of securities margin financing carried on in Hong Kong in so far as the business relates to securities listed on a stock exchange (whether located in Hong Kong or elsewhere). Division 2 of Part XA requires the registration of a person carrying on a business of securities margin financing. Section 121Z in Division 3 of Part XA requires a registered financier to provide statements of transactions and monthly statements to his client in respect of, among other things, a deposit of securities collateral or money by or behalf of the client. The statements should contain, among other things, the following :

(1)	Details of financial accommodation provided to the client including the nature, limit and expiry date of the accommodation;
(2)	The quantity of each description of securities collateral held for the account of the client at the beginning of that day.
(3)	The quantity, market value, margin value, margin ratio and margin value of each description of securities collateral held for that account at the end of that day.
(4)	The quantity of each description of securities collateral deposited to or withdrawn from that account during that day.
(5)	All disposals initiated by the financier of securities collateral held for that account during that day and what happened to the proceeds of those disposals.
(6)	A breakdown of the income credited, and the interest and other charges debited, to that account on that day.

61. It is not disputed that the statements provided by the plaintiff (both transaction and monthly) did not contain the statutory requirements.

62. However section 121B of Part XA clearly provides that that part does not apply to any of the activities listed in Schedule 4 of the Securities Ordinance. Among the activities listed in Schedule 4 is the "The provision of financial accommodation by a registered or exempted dealer in order to facilitate acquisitions or holdings of securities by the dealer for the dealer's client."

63. In this case the plaintiff granted credit facilities to the defendant so that the defendant may carry out transactions on the margin account. This must be "to facilitate the acquisition of securities" by the plaintiff for the defendant within the terms of the Schedule 4. Hence the requirement of Part XA will not apply and the failure to comply with the statutory information in the statements could not form the basis of a challenge on illegality.

64. Part XA also deals with the disposal of securities collateral by registered financiers. The disposal can only be made with, among other things, the written authority of the client (section 121AB). Again for the same reason I have stated earlier Part XA is not applicable to this case.

Breach of duty, recklessness, negligence

65. As to the allegations of breach of duty, recklessness or negligence in the operation of an account, the defendant has not pleaded any set off or counterclaim against the plaintiff. The burden is on the defendant to support these allegations. What he had relied on is that the 20 million shares deposited with the plaintiff as collateral would only enable the defendant to have a credit facility of $400,000 to $800,000 since the normal practice of the plaintiff was to allow the client to have a credit of 10% to 20% of the market value of the collateral.

66. In this case, the plaintiff had granted a credit facility of $2 million to the defendant. This by itself, however, would not render the plaintiff's claim unsustainable.

67. The evidence of Mr. Tam was that the value of the collateral deposited was $4 million. To him the defendant had used $4 million to purchase the shares and he had no suspicion on the financial position of the defendant. While the transactions that were carried out had from time to time exceeded the $2 million credit, (on occasions $4 million to $5 million worth of shares were purchased) the plaintiff had also called for further payments from Mr. Pang to maintain the margin level. Again, this fact would not render the cause of action of the plaintiff unsustainable within the ambit of the first limb of the rule.

Risky nature of the shares

68. In the cross-examination of Mr. Tam, it was suggested to him that in 1999/2000 shares in Wah Lee were suspended for quite a long time because of the winding up proceedings. It was denied by Mr. Tam. Mr. McCoy referred in his written submission to four judgments concerning the winding up of Wah Lee. The Court is concerned with the evidence adduced at the trial. The test is to take the plaintiff's case at its face value to assess whether there is a case to answer. If Mr. Tam's evidence is taken at its face value how can it be said that there is no substainable cause of action?

69. It was suggested that the Wah Lee shares were highly risky. Again, this was denied by Mr. Tam.

70. It was suggested that since 50 million of Wah Lee shares were traded through the defendant's account which amounted to more than 2% of the total paid up shares of Wah Lee within a short span of about two weeks, the plaintiff should have made enquiries about this. The Amended Defence referred to the Securities (Disclosure of Interests) Ordinance, Cap. 396. This ordinance requires a person who has acquired a certain percentage of the shares of a listed company to give notice to that listed company and the Hong Kong Stock Exchange of his interest.

71. Mr. Tam's response was that the plaintiff was concerned with the situation under which the orders was placed. He did not personally calculate the percentage. In my view, if the defendant wished to rely on this defence then he had to call evidence on this issue. On the evidence before the court I fail to see how these matters would render the contract or transactions invalid.

Fraud

72. At the trial it was submitted that the purported trading of the Wah Lee shares in the defendant's account was unenforceable as being in breach of public policy or being illegal as they constituted activities prohibited by sections 135 and 136 of the Securities Ordinance, Cap. 333.

73. Section 135 provided that a person shall not intentionally create or cause a misleading appearance of active trading in any securities on the Stock Exchange or a false market in respect of any securities on the Stock Exchange. Section 136 provided that a person shall not in connection with any transaction with any other person involved in the purchase, sale or exchange of securities employ any device, schemes or artifice to defraud the other person or engage in any act, practice, or course of business which operates as a fraud or deception, or is likely to operate as a fraud or deception of that other person.

74. These two provisions had not been pleaded in the Amended Defence. If the defendant intends to rely on fraud then he must plead these expressly. It has never been the pleaded case of the defendant that the plaintiff had engaged in fraudulent activities.

75. In any event, the burden of establishing fraud lies with the defendant. The defendant simply cannot show that based on the plaintiff's own evidence a fraud by the plaintiff has been established and hence it is bound to fail in its claim.

Judgment against the defendant

76. In my view the defendant has not demonstrated that the plaintiff does not have a sustainable cause of action. On the contrary the evidence of the plaintiff clearly established a prima facie case that a contract existed between the plaintiff and the defendant, the plaintiff carried out the contract according to the instructions of the defendant who had in breach of the contract failed to reimburse the plaintiff the loss sustained in the operation of the account.

77. There was no merit in the defendant's submission of no case to answer. He had chosen not to give evidence. Based on the evidence of the plaintiff, on a balance of probabilities, the plaintiff has proved its case, judgment ought to have been given in favour of the plaintiff.

Re-trial

78. The defendant asked for a re-trial. Reliance was placed on Portland Managements Ltd. v. Harts and others [1977] 1 Q.B. 306 in which Scarman L.J. held that the practice that a new trial will not be ordered if the defendant had elected not to give evidence is not a rule of law but a discretionary rule. The rule can be departed if the circumstances are sufficiently unusual. In that case the defendant made a submission of no case based on the indication of the trial judge who had given an erroneous view of the law.

79. There are no unusual circumstances in this trial. The submission was made by counsel without any prompting by the judge. Counsel obviously had considered this approach and had informed the judge the likelihood of taking this course during the cross-examination of the plaintiff.

80. During the course of the opening of the plaintiff's counsel, the judge had raised matters such as the plaintiff not having had a face to face meeting with the defendant. He had also expressed some tentative views on the conduct of both of the parties. He invited the parties to negotiate and time was given to the parties. This was done before the plaintiff called the evidence. I do not regard this as within the same category of case as Portland where the firm views of the judge on certain points of law obviously prompted the no case submission. Here the judge was simply making some preliminary observations and his invitation to negotiate was part of his management of the case which he was entitled to exercise.

Conclusion

81. No re-trial is justified. Accordingly, I will allow the appeal and set aside the order of the judge. I will give judgment for the plaintiff in the sum of $648,973.15. There shall be interest on this sum at judgment rate from the date of the service of the writ until payment. The plaintiff is further entitled to the costs of this appeal and the action.

Hon Sakhrani J :

82. I agree.

Hon Barma J :

83. I agree with the judgment of Cheung J.A. and with the orders which he proposes.