Ten Plus Ltd (in Liquidation) v. Donovan Miu Wah Mira (also known as Li Miu Wah Mira) and Others
Read the full judgment text of HCA 1573/2013 on BabelCite. This High Court CFI judgment was delivered on 21 December 2023.
1. This action is about diamond – diamonds sold undervalue, diamonds missing and diamonds sold but unpaid, allegedly.
Cited by 3 cases · Cites 6 cases
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HCA 1573/2013 [2023] HKCFI 3227 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1573 OF 2013 ____________________
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________________________ JUDGMENT ________________________ A. Introduction 1.This action is about diamond – diamonds sold undervalue, diamonds missing and diamonds sold but unpaid, allegedly. 2.Essentially, the Plaintiff’s claim is that the Defendants[1] conspired to defraud the company by arranging sales of a large number of the Plaintiff’s diamonds to D4 and/or D5 and/or D6 at prices substantially lower than the invoices recorded in the Plaintiff’s computer system and what were authorized by the Plaintiff. Forged invoices (at the substantially lower prices) were produced by D1-D3 and provided to D4-D6. Alternatively, the Plaintiff says that even if those forged invoices were not forged, D4-D6 did not fully pay those invoices. In addition, apart from the diamonds sold to D4-D6, there were diamonds removed from the Plaintiff’s safe (the “Safe”) and unaccounted for[2]. The Plaintiff asserts that it was D1-D3 who misappropriated those missing diamonds. 3.In terms of specific causes of action, the Plaintiff claims[3]:
4.A serious attack, namely perpetration of a scheme of fraud and stealing, was launched by the Plaintiff against the Defendants. The number of diamonds involved was large. The money involved was massive. The primary claims of the Plaintiff total US$20,206,435.23[4], which is more than HK$157 million. 5.Given the very serious nature of the accusation, this Court would expect cogent and compelling evidence to be produced to prove the commission of fraud and stealing by the respective Defendants. However, as shall be explained in detail below, the Plaintiff produced no direct evidence of the alleged wrongdoing against each Defendant. Having considered all the evidence presented to this Court, for the reasons detailed below, in my judgment, the Plaintiff has not been able to discharge its burden of proof. B. Background B(1) Dramatis Personae 6.The events took place around ten years ago. The major events occurred between 2008 and 2010. 7.Before it was wound up, the Plaintiff carried out the business of trading diamonds. It was beneficially owned by the New York based Olympic Diamond Corporation (“Olympic”). Mr Nissan Perla (“Perla”) was at all material times Olympic’s president and chief executive officer. Olympic funded the Plaintiff’s establishment in 2007, intending the Plaintiff to act as its distribution agent in Hong Kong and in Asia. According to Perla, over 90% of the Plaintiff’s diamonds were supplied by Olympic. 8.The Plaintiff was wound up in September 2010[5]. On 22 March 2011, Messrs Lui Lai Hang Kennic and Yuen Tsz Chun Frank (“Yuen”) were appointed as the Plaintiff’s joint and several liquidators[6] (the “Liquidators”). The Liquidators brought this action on behalf of the Plaintiff in August 2013. 9.Mira and Cheng were the Plaintiff’s former directors and employees. Since 1 March 2008, Mira was the Sales Manager of the Plaintiff. Mira avers that she was appointed as a nominee director from 8 April 2010 to 6 July 2010 at the request of Perla and at all material times acted in accordance with his instructions, during which she did not exercise any independent powers outside of directions of Perla. It is also Mira’s evidence that when conducting sales transactions, she would conduct negotiations with customers and consult Perla and seek his approval on the prices and terms. 10.Cheng was a director of the Plaintiff from 6 February 2009 to 12 May 2010 and was employed by the Plaintiff since 13 March 2008. Cheng avers that he was a nominee director of the Plaintiff and was responsible for book-keeping only and his job description was limited to treasury functions. According to the Plaintiff, Cheng was employed as an accounting staff of P and part of his responsibilities involved marking payment details on copies of Fantasy Invoices signed by customers after payment[7]. The Plaintiff did not explain why he was appointed as a director. There should be no dispute that he and Mira were not involved in any decision-making of the Plaintiff. From this perspective, indeed they were nominee directors, with Perla being their boss, although directors carry their duties as such, be they nominee directors or not. 11.Yan was the Plaintiff’s former employee. Yan was employed by the Plaintiff from 1 June 2009 to 7 July 2010 as an office assistant. She said in her evidence her responsibilities were to deal with internal office tasks, including issuing invoices and memoranda through the Fantasy System, compiling and issuing Daily Sales Reports, and recording diamonds entering and exiting the Safe[8]. 12.Mr Lai Wing On Charles (“Lai”) was , who was the 50% nominee shareholder of the Plaintiff. He was the Plaintiff’s director from February 2009. His work responsibilities included the delivery of the sales invoices and diamonds to customers, security of the diamonds during exhibitions and the collection of payment from customers. 13.Tse Chung Chi (“Tse”) was the finance manager of the Plaintiff from 21 December 2009 to 27 July 2010. He was responsible for preparing the books and accounts of the Plaintiff. He was known to and called by his colleagues by his English name as Dennis[9]. 14.Lau Yuk Hung Alberto (“Alberto”) was the junior sales representative of the Plaintiff. He was responsible for selling diamonds to customers. He occasionally handled delivery and collection of payment. 15.Alex Tang, his elder sister Winnie Tang and Maysun Jewellery (collectively the “Maysun Defendants”) were the Plaintiff's former customers. Winnie Tang is the sole shareholder of Maysun Jewellery. 16.Winnie Tang was also a director of Maysun Jewellery Factory Company Limited (“Maysun Factory”). The registered address of Maysun Factory was the same as Maysun Jewellery. Maysun Factory was dissolved by deregistration on 30 May 2003. 17.Yuen, Perla, Lai, Tse, Aberto and Zhang Jianyi, a salesperson of Olympic gave evidence for the Plaintiff, alongside with D1 (Mira), D2 (Cheng), D3 (Yan), D4 (Alex Tang), and D5 (Winnie Tang). The Plaintiff has also adduced the witness statement of Mina Deutsch, Finance Director of Olympic on the basis of a hearsay notice, which I shall deal with its admissibility in the latter part of this Judgment. Mr Wayne Chau, called by the Plaintiff, and Mr Ng Siu Keung, called by the Maysun Defendants, gave expert evidence on the valuation of the subject diamonds. I shall address the witness’s credibility when the discussion below of his/her evidence becomes necessary. B(2) The Plaintiff’s Modus Operandi and the Fantasy System 18.The Plaintiff’s case is that:
C. The Plaintiff’s case against Mira, Cheng and Yan 19.In gist, it is the Plaintiff’s case that after commencement of winding up, the Liquidators discovered irregularities where over 1200 pieces of diamonds were allegedly sold at an undervalue or removed under fictitious transactions or simply misappropriated pursuant to a fraudulent scheme. 20.For the biggest trunk of the claims, the Plaintiff avers that Mira, together with the assistance of Yan and Cheng, sold the diamonds in question to the Maysun Defendants without the Plaintiff’s approval and at gross undervalue. The Plaintiff further alleges Yan and Cheng, who were responsible for preparing and issuing Fantasy Invoices and Fantasy Memos, under the direction of Mira, took steps to conceal the unauthorized sales by creating false invoices and entering false entries into the Fantasy System. 21.The Plaintiff’s claims against Mira, Cheng and Yan were grouped under 5 Annexes to the Re-Amended Statement of Claim, which were revised and attached to the Plaintiff’s Closing Submissions:
C(1) Annex 1 Claim 22.Winnie Tang denied that she had received the Fantasy Invoices sent to her by the Provisional Liquidators and produced a set of invoices, receipts and bailment notes of the Plaintiff which according to he were sent to her by the Plaintiff in respect of the transactions she entered with the Plaintiff (“Maysun Invoices”)[21]. The Plaintiff claims that the Maysun Invoices were forged[22], and that Mira directed Cheng and/or Yan and he and/or she produced a large number of the false Maysun Invoices to the Maysun Defendants[23]. The sale prices in the Maysun Invoices (save with some exceptions) were substantially lower than those stated in the corresponding allegedly true Fantasy Invoices[24]. The relevant diamonds were then purportedly sold to the Maysun Defendants at the prices stated on the Maysun Invoices that were not authorized by Perla[25]. 23.The Liquidators’ team allegedly discovered that the computer provided to Yan by the Plaintiff contained a template for a sales invoice in the computer provided to Yan for her use. The template was created using Excel and was very similar to the Maysun Invoices. From that computer, allegedly 14 Excel files were found. They were invoices which the Plaintiff said to be suspicious (“Excel Invoices”). Mr Val Chow, counsel for the Plaintiff submits that these Excel Invoices are evidence of Yan’s involvement in the creation of the false invoices which include the Maysun Invoices. 24.As shown in the updated Annex 1 attached to the Plaintiff’s Closing Submissions, the Plaintiff found that 758[26] diamonds was sold “undervalue”, i.e. at a lower price stated in the Maysun Invoices compared to its corresponding Fantasy Invoices. C(2) Annex 2 Claim 25.The Plaintiff’s case[27] is that 97 diamonds were removed from the Safe. They were recorded in the Fantasy Invoices as having been sold to the Mason Defendants. However, these sales did not appear in the Maysun Invoices produced by Winnie Tang. The Plaintiff alleges that no payment was received in respect of sales of these diamonds. 26.The Plaintiff’s claim is that in light of the misconduct of Mira, Yan and Cheng and their roles as described in Annex 1 Claim, the 97 diamonds in Annex 2 were wrongly removed from the Safe by Mira, Yan and Cheng. C(3) Annex 4 Claim 27.The Plaintiff alleges[28] that 89 diamonds were sold to 19 customers (other than the Maysun Defendants) but were unpaid. The Plaintiff says that these sales were recorded in the Fantasy Invoices under the Fantasy System. Daily Sales Reports were sent by Yan to Olympic with copy to Mira and Cheng. 28.The Liquidators allege that upon enquiring with these customers, they discovered that these customers have never received the diamonds or never made any purchases as stated in the Fantasy Invoices. 29.The Plaintiff’s case is that the diamonds listed out in Annex 4 were removed by Mira, Yan and Cheng under the guise of the fictitious transactions represented by the relevant Fantasy Invoices. C(4) Annex 5 Claim 30.The Plaintiff’s original claim[29] under this head was that the Fantasy System (supposedly by way of issuance of the Fantasy Memo) recorded that 42 diamonds have been purportedly consigned to 12 customers other than the Maysun Defendants (“Annex 5 Customers”). These diamonds are not accounted for despite having been recorded as unsold and returned. 31.The Plaintiff has now[30] limited its claims to those Annex 5 Customers who stated (in response to the Liquidators’ enquiries) to the Liquidators that they have never received the diamonds or have returned them to the Plaintiff. The claim is now limited to 14 diamonds. 32.The Plaintiff’s case is that Mira, Cheng and Yan had wrongfully removed the Annex 5 diamonds from the company under the guise of fictitious consignment arrangements and without properly accounting for them. C(5) Annex 6 Claim 33.The Plaintiff claimed that the Liquidators’ team conducted a stocktaking of the diamonds in the Safe against the inventory recorded in the Fantasy System. They discovered that there are 193 diamonds which were recorded as being in the inventory of the Plaintiff as per the Fantasy System but which remain unaccounted for[31]. 34.The Plaintiff’s case is that since only Yan and Cheng had control over access to the Safe and Mira had frequent access to the Safe, in light of the circumstances and the other misconduct of Mira, Yan and Cheng, it can be inferred that they had wrongly misappropriated the diamonds listed in Annex 6 from the Safe. D. The Plaintiff’s Case against the Maysun Defendants 35.The Plaintiff claims against the Maysun Defendants for knowing receipt and dishonest assistance. The Plaintiff’s primary case[32] is that the Maysun Defendants purportedly purchased the diamonds from the Plaintiff, knowing that such purchases were the result of Mira, Cheng and Yan's breaches of duties, and in particular, that in respect of the Annex 1 transactions, Mira had no authority to agree to the sales at prices at undervalue, and that in respect of the Annex 2 transactions, Mira had no authority to sell the Annex 2 diamonds at nil consideration. 36.The Plaintiff claims, in alternative to the Annex 1 Claim and the Annex 2 Claim[33], that even if the Court is not satisfied that liability is established against D4 - D6 for (1) dishonest assistance, (2) knowing receipt or (3) conspiracy (see the following paragraph), on the basis of the Maysun Invoices, the payment advice tendered by the Maysun Defendants and the payment evidence tendered by the Maysun Defendants, in fact they have not fully settled all the Maysun Invoices. There is still an outstanding debt totalling US$2,353,009.20[34] owed by D4 – D6 to the Plaintiff under the Maysun Invoices (“Annex 3 Claim”). E. The Plaintiff’s claim of unlawful means conspiracy against all the Defendants 37.Overall, the Plaintiff claims against all the Defendants for unlawful means conspiracy[35]. 38.First, the Plaintiff says that the breaches of duties under complaint, i.e. falsification of company records, and misappropriation, by theft or through purported sales undervalue amount to the requisite unlawful means[36]. 39.Second, the Plaintiff says if the factual allegations against all the Defendants are established, it can be readily inferred from the Defendants’ actions that there was at least tacit agreement amongst all (or some) of them to engage in a conspiracy to harm the Plaintiff through the unauthorized Annex 1 and Annex 2 transactions[37]. 40.For completeness, I should mention that the Plaintiff also claims that Yan dishonestly assisted Mira and Cheng in breaching their duties owed to the Plaintiff. This claim against Yan, as Mr Chow rightly submitted, largely overlaps with the claim against her for breach of duties[38]. 41.Also for completeness, the Plaintiff abandoned its alternative claim of setting aside the transactions entered with the Maysun Defendants under section 60 of the Conveyancing and Property Ordinance and/or as unfair preference[39]. F. The Relevant Legal Principles 42.There is no dispute on the law applicable in this case. The Defendants did not challenge the legal principles as submitted by Mr Chow. F(1) Unlawful Means Conspiracy 43.Therefore, for the Plaintiff’s claim of unlawful means conspiracy against all the Defendants, it is sufficient for me to set out its elements, adopting Mr Chow’s formulation[40], which is in accordance with the Court of Appeal in Pido v Compass Technology Co Ltd [2010] 2 HKLRD 536 at §§14-17:
44.I also accept Mr Chow’s submission that breaches of fiduciary duties, dishonest assistance and knowing receipt have all been recognised as being capable of constituting the unlawful acts in element (3) above, as in see: She Tsu Yi v Tsui Ki Ting HCA1684/2004 & HCMP 3290/2004, 5 November 2007, unreported at §154 per Poon J (as CJHC then was). F(2) Dishonest Assistance 45.For dishonest assistance, in the context of the present case, there should be found a breach of fiduciary duties by a party other than the defendant, who then induced or assisted dishonestly that breach of fiduciary duties, resulting in loss to the plaintiff. I agree with Ms Ma On Ki, counsel for D4-D6[41] that the plaintiff must prove that the defendant assisted in the breach of trust or fiduciary duties with a dishonest state of mind. Such dishonesty on the part of the accessory has been described as the “touchstone”. 46.On dishonesty, I find it instructive to refer to the exposition recapitulated in Hui Cheung Fai v Daiwa Development Ltd HCA 1734/2009, 8 April 2014, unreported, per DHCJ Fung SC at §§131-134:
47.To satisfy the requirement of dishonest assistance by deliberately closing one’s eyes, or turning a blind eye, to others’ breach of fiduciary duties or even theft or misappropriation of diamonds as claimed by the Plaintiff in the present case, I respectfully follow Sakhrani J in De Kassel v Chu Vincent [2010] 2 HKLRD 937 at §§55-58, that the suspicion of such “blind-eye knowledge” must be firmly grounded and targeted on specific facts and not mere suspicion which may be no more than a vague feeling of unease. F(3) Knowing Receipt 48.In the context of the present case, I follow the classic exposition of Hoffman LJ in El Anjou v Dollar Holdings plc and another [1994] 2 All ER 685 at 700g:
49.The plaintiff must show to the court that the defendant’s knowledge must be such as to make it unconscionable to retain the benefit of the receipt, see BCCI (Overseas) Ltd v Akindele [2001] Ch 437, 455E-F. In this connection, Snell’s Equity, 34th ed. has a particularly clear illustration at §30-072:
F(4) Breach of Fiduciary and/or Employee’s Duties 50.Mira and Cheng were the Plaintiff’s directors, which carry ordinary duties as such. I adopt Mr Chow’s summary of such duties[42]:
51.As to employee’s duties, the principles relevant in the present context are succinctly explained by Au-Yeung J in Leader Screws Manufacturing Company Limited v Huang Shunkui [2021] HKCFI 141 at §§46-50 & 56:
52.I set out the issues that I should resolve[43]:
I shall describe below the above issues as Issue 1.1, Issue 1.2 … and so forth. 53.The Plaintiff’s answers to all the above issues are in the affirmative. The burden of proof rests squarely on it. H. Discussion – overall view 54.It is clear that the whole of the Plaintiff’s case is found the commission of fraud. Proof of dishonesty requires cogent and compelling evidence. In the present case, given a large number of diamonds were involved over a lengthy period of time, if there was a fraud, it had to be a premediated scheme, with more than one perpetrator[58]. However, what exactly the scheme is the Plaintiff could not describe or provide any clue or evidence. During his oral closing submissions, I asked Mr Chow for the particulars of the Plaintiff’s claim of unlawful means conspiracy: what the agreement was, who were the perpetrators and who were the accessories and the role that each of them played, what gain was derived by each of them and how much. The only answer that was given was that the starting point was fiduciary duties, and that the Court should look at what D1-D3 had done as director and/or employee and what was their state of mind. This can hardly be a helpful answer against D1, D2 and/or D3. 55.Mr Chow accepted that there was no direct evidence against the Defendants, but the Court could infer their wrongdoings from what he called overwhelming evidence. In my view, as can be seen from the discussion below, all evidence adduced by the Plaintiff are circumstantial. They are not capable of pinpointing what the Defendants or each or some of them had done. Viewing them together they do not carry weight sufficient enough to prove on balance of probability that the Defendants or each of them did what the Plaintiff claimed they did. 56.The main difficulty of the Plaintiff’s case lies with the Plaintiff’s own business modus operandi. The Fantasy System could be logged in by people (such as Perla and indeed all the Plaintiff’s employees[59]) other than Mira, Cheng and Yan. But the Plaintiff did not produce any login record of the Fantasy System. Likewise the computer that Yan used in the Plaintiff’s office (“Yan’s computer”) could be logged in by other employees of the Plaintiff apart from Yan[60]. As such, the Plaintiff’s invoices could be issued by persons other than Yan and Cheng. But the Plaintiff did not have and/or produce any record as to the identity of the staff who prepared an invoice. The Plaintiff did not have any record identifying the staff who was responsible for concluding the transaction listed in an invoice. The Plaintiff has pleaded the specific duties of Cheng and Yan as employees. But there was no employment contract/letter of Cheng, Yan or other staff (which set out their employment duties) produced, and there appeared to be some other staff whose duties overlapped with Yan’s or Cheng’s (such as Cheng’s vis-à-vis Yan’s, or Alberto’s vis-à-vis Cheng’s, or Tse’s vis-à-vis Cheng’s). The Plaintiff claimed that the price of every transaction must be approved by Perla before it could be concluded. But there was no record produced (e.g. a voucher signed by Perla) which signified his approval. The Plaintiff claimed that any diamond taken away from the Safe must be recorded in a Fantasy Memo. But the evidence shows Perla would remove a diamond from the Safe without a Fantasy Memo. The evidence also suggests that the Safe was often open during the office hours, with diamonds put on the table next to it in quite an exposed manner. 57.From the state of the evidence, I am driven to find that the Plaintiff, as a matter of fact, sat very loose in keeping its record, so loose that it is far off from capable of saying that the Plaintiff’s case is up to proof against the Defendants, not to mention that it is overwhelming. It is more of a conjecture. 58.For completeness, I should also mention that it appears strange to me that the Plaintiff did not produce any of its book records or accounts showing how each of the subject transactions under complained was recorded at the material times in its financial records. I. Annex 1 Claim I(1) Issue 1.1 – The Plaintiff’s case 59.The Plaintiff’s case is that Yan and/or Cheng, under the direction of Mira, produced a large number of homemade false invoices to the Maysun Defendants, i.e. the Maysun Invoices, where the sales prices were, save a number of exceptions, significantly lower than those stated in the invoices for the same diamonds as recorded in the Fantasy System, i.e. the Fantasy Invoices[61]. 60.To prove that Yan was the one who produced the false invoices, the Plaintiff raised the following matters:
61.Generally, Mr Chow submitted that given Yan’s close involvement in the sales and consignment process, it is extremely unlikely that she would have no knowledge of the existence of various irregularities in the Plaintiff’s transactions which are the subject of Annexes 1-2 and 4-6.[64] I(2) Issue 1.1 – MSN chat messages between Alberto & Yan 62.The MSN chat messages between Alberto and Yan are not cogent evidence in support of the Plaintiff’s case. These messages were off and on, piecemeal, unspecific, and vague. They were casual loose talk of gossiping nature. While the witness statement of Alberto has attempted to add colour or give substance to these chat messages, it rather exposed the unreliable nature of their contents. 63.First, the source of these chat messages is dubious. These chat messages were produced by Yuen, the Liquidator[65]. Yuen stated in his evidence[66] that it was a Verity Consulting Limited (“Verity”), an IT investigator engaged by Perla, who provided the records of the chat messages to Yuen’s team. Perla stated in his evidence[67] that Verity acquired the records from “the Plaintiff’s computer systems”. The description of “the Plaintiff’s computer systems” are obviously too vague for the Court to understand where the records were actually found. Verity did not provide any evidence to this Court. There is no explanation on how the records were acquired by Verity. On the other hand, Alberto also produced the chat messages’ records[68]. The records that Alberto produced were exactly the same as what Yuen produced. However, during cross-examination by Yan, Alberto said he did not offer the chat records to the Plaintiff, and it was the Plaintiff who found the records themselves. The process of how these records were discovered or retrieved is doubtful. 64.Second, the records produced were incomplete, and appearing to me to be selective. The records which were produced to this Court contain records between 4 January 2010 and 28 June 2010. However, the records for the period from 28 January to 7 April 2010 were missing. During cross-examination, Yan asked Alberto why the records skipped the period between January and April 2010. Alberto said he did not know why. Moreover, the records produced for the period from April to June 2010 are sporadic, with the record for May 2010 completely missing. This omissions cast serious doubt on the completeness of the records on the one hand and suggest a higher likelihood of selectiveness. In fact, when producing the chat records Alberto has mentioned that the records were incomplete. He stated in his witness statement[69] that “some” of his conversations and interactions with Yan were recorded in electronic form. Regrettably, he did not mention what conversations were recorded and what have not been recorded and why. 65.Third, the way that Alberto explained what he and Yan was talking about in the MSN chat records is misleading. In paragraph 19 of his witness statement, Alberto gave the following evidence:
66.Just looking at the above conversation quoted by Alberto, one would already have noticed that the conversation in fact comprises two sets of conversations. The first set took place between 13:15 and 13:19 on 13 January 2010. The second set took place between 18:34 and 18:35, which were a few hours after the first one. Alberto did not explain why the two sets of conversations were and should be read together. In paragraphs 20 and 21 of his witness statement, Alberto gave evidence that he was astonished that Mira sold a 4.08 carat diamond to a customer called Treasure at a 25% discount, and then suggested that Yan knew that this was below costs and that was why she said: “好過份之後唔知點嘔返出黎”. He did not explain what “206 d vs 2 -25 an” and “406 d vs -25” mean in the first place, and how did these relate to “she told the 4.08 d vs 2 -25 to treasure” he uttered a few hours later. 67.It is misleading when one noticed that there were actually other conversations interjected in between. The conversations in fact read as follows:
68.In these conversations, there was no mention of or references to issuance of false invoices. There was also no mention of or reference to as Maysun or Maysun Defendants. For the allegation that Mira “sold” (read as “told” in the record) a diamond to Treasure at a 25% discount, there was no mention that it was unauthorized or without Perla’s approval. Sale “at a discount” does not equate sold “at an undervalue”. 69.In paragraph 24 of his witness statement, Alberto put up another passage of conversation which combined two sets of conversations (10:38-10:39 and 17:49-17:51) of more than 7 hours apart: “ 26 January 2010
70.Again there were other conversations in between. 71.Fourth, all in all, the Plaintiff relies on isolated bits and sentences in the chat records, such as “癡綫”, “好過分之後唔知點嘔返出黎”, “亞姐佢成日改單”, “佢有邊個客唔改吖???”, “有事起上黎會比亞姐累死”, “…亞姐果日講唔想再係咁不過如果唔再咁做…之前果 d 點嘔出黎呀?”, “妙妙日日提心吊膽”, “攪到 alan 同 dennis 要幫佢講大話”to suggest that Yan knew about Mira’s fraudulent conduct. The contents of these chat records are unspecific and vague. There is nowhere in the records mentioning the names of Maysun or Maysun Defendants. There are references to “改單” (alteration of invoice) but nowhere can be found to suggest that fraud was involved. And of course alteration does not and cannot mean that false invoices were produced. There is nothing in the records which suggest that Yan was directed by Mira to prepare false invoices. 72.Fifth, lastly, the Plaintiff’s case was that Yan produced forged invoices under Mira’s direction. This does not sit well with the Plaintiff’s allegation that in these chat records Yan admitted and exposed the wrongdoings of herself and Mira. Yan said she did not recall she had these alleged chat conversations with Alberto. 73.For the above reasons, I find that the MSN Chat conversation records are not reliable evidence in support of the Plaintiff’s case. In any event, they are not evidence that is capable of implicating the commission of any of the fraudulent conducts that the Plaintiff complained of in this action. I find that the Plaintiff’s suggestions in connection with these records are misconceived. 74.Before I leave this topic of reliability of the MSN Chat conversation records, I wish to add my finding that Alberto’s evidence is not reliable, for the following reasons:
75.Therefore, the evidence that Alberto gave in support of the Plaintiff’s case is generally not believable. I(3) Issue 1.1 – The Excel Invoices 76.Second, I shall deal with the Excel Invoices allegedly found in Yan’s computer. 77.I find this piece of evidence unreliable, for the following reasons:
78.For the above reasons, in my judgment, the Plaintiff has failed to prove that Yan was the creator of the Excel Invoices. I(4) Issue 1.1 – References to Yan in Maysun Invoices 79.Third, as mentioned in paragraph 60(3) above, the Plaintiff relied on some references to Yan in the Maysun Invoices to say that hence Yan must have had knowledge of the Maysun Invoices. 80.The premise of this allegation, and indeed the fundamental premise of the Plaintiff’s case, is that the Maysun Invoices were false whereas the Fantasy Invoices were accurate. If the Plaintiff cannot prove that the Maysun Invoices are false invoices, references to Yan in those invoices, even if proved to exist, cannot support the drawing of any adverse inference against her. It is therefore appropriate to first discuss whether the Plaintiff has proved the falsity of the Maysun Invoices. I(5) Issue 1.1 – Falsity of the Maysun Invoices 81.The starting point of the Plaintiff’s claim in this respect is the accuracy of the Fantasy Invoices, as Mr Chow submitted:
82.The Plaintiff’s logic is simple, but it solely rests on the inviolability of the accuracy of the Fantasy Invoices. If on balance of probability, the Plaintiff cannot prove that the Fantasy Invoices are accurate, it will be hard for the Court to find that the alleged “deliberate and sustained fraudulent scheme” existed and that it was perpetrated by the Defendants[78]. 83.In my judgment, the Plaintiff has failed to prove that the Fantasy Invoices produced in this action were accurate, for the following reasons:
84.Overall, taking account of all the matters mentioned in the preceding paragraph, I do not accept that the Fantasy Invoices are accurate in their contents, particularly in relation to the price and the discount percentage stated thereon. I also do not accept the accuracy of the Daily Sales Report in their contents, particularly in relation to the price and the discount percentage stated thereon. 85.Since the Fantasy Invoices may not be accurate, as mentioned in paragraphs 80 and 81 above, the Maysun Invoices may not be inaccurate or false. In fortifying my conclusion that the Plaintiff has not been up to proof on the falsity of the Maysun Invoices, I accept Ms Ma’s submissions[86] that the dealings between the Plaintiff and D4-D6 were conducted in an rather open manner (see below). As such, it is more unlikely that these dealings were conducted fraudulently and dishonestly:
86.For the above reasons, I conclude that the Plaintiff has failed to discharge the burden to prove that the Maysun Invoices were false. As such, the references to Yan in the Maysun Invoices are neither here nor there. This allegation has become a red herring. 87.Lastly, the above evidence that the Plaintiff relied on is also the evidence used by the Plaintiff to assert that Yan was one of the perpetrators of the fraudulent scheme or had dishonestly assisted Mira and Cheng in the commission of the fraud[87]. Since I have rejected the above evidence, and there being no further evidence that the Plaintiff adduced to say Yan is a fraudster, or that she had knowingly done anything to render assistance to Mira and/or Cheng in carrying out the fraudulent scheme, the Plaintiff has failed in proving Yan’s participation in the fraudulent scheme as claimed by the Plaintiff. As shall be explained below, in my judgment, the Plaintiff has also failed to prove the existence of a fraudulent scheme at all. I(6) Issue 1.1 – Conclusion 88.On Issue 1.1, for the above reasons, I conclude and hold as follows:
I(7) Issue 1.2 – The Plaintiff’s case 89.The Plaintiff adduced no direct evidence against Cheng. More specifically for this issue, there is no evidence before this Court proving that it was Cheng who produced some or all of the Maysun Invoices. 90.What the Plaintiff attempted to do was to persuade this Court to draw inference from the following circumstances that Mr Chow submitted:
I(8) Issue 1.2 – Discussion 91.I reject the Plaintiff’s case against Cheng. I shall deal with the Plaintiff’s arguments raised in the preceding paragraph in sequence:
I(9) Issue 1.2 – Conclusion 92.For the reasons explained, in addition to my findings above, I find that the Plaintiff has failed to prove Cheng had participated in the fraudulent scheme as claimed by the Plaintiff, which included the creation of the false or forged Maysun Invoices. As such, there is no question of whether Cheng acted jointly with Yan and/or under the direction of Mira in committing the fraudulent conduct as claimed by the Plaintiff. I(10) Issue 1.3 – The Plaintiff’s case 93.The Plaintiff’s case against Mira is rather simplistic. What the Plaintiff effectively says is, Well, Mira was the director and the sales manager of the Plaintiff. She was responsible for dealing with D4-D6. Adopting the same logic of its claim against Yan and Cheng, the Plaintiff says it is inconceivable that, given the large volume of transactions between the Plaintiff and the Maysun Defendants at the material time, Mira had no knowledge about the existence of the Maysun Invoices and that there were significant differences in prices with the Fantasy Invoices as recorded in the Fantasy System[98]. 94.The Plaintiff relied on matters such as:
I(11) Issue 1.3 – Discussion 95.The matters mentioned in the preceding paragraph which the Plaintiff relies are not sufficient to prove its claims, for the following reasons, in line with or in addition to other findings I made above:
I(12) Issue 1.3 – Diamonds not sold undervalue 96.As mentioned in the preceding paragraph, and as pleaded in paragraph 42(16) of the Plaintiff’s Re-Amened Statement of Claim, the Plaintiff pleaded that the sale of diamonds was consistently and grossly at undervalue compared to comparable diamonds in the wholesale market. I shall therefore deal with in this section the question of whether the diamonds sold by the Plaintiff to the Maysun Defendants are grossly undervalued or not. 97.On the valuation of the wholesale price of those diamonds, the Maysun Defendants adduced the expert evidence of Mr Ng Siu Keung. I find at the outset that his evidence does not carry any significant weight because, as Mr Chow submitted[107], he did not comply with the requirements of the Code of Conduct for Expert Witnesses, by which he signed a declaration confirming his agreement to be bound:
98.The Plaintiff adduced the expert evidence of Mr Wayne Chau. I accept Ms Ma’s submissions that Mr Chau’s evidence is also not reliable, for the following reasons:
99.For the above reasons, given (1) my finding that there are no experts’ valuations adduced by the Plaintiff and D4-D6 which are reliable and (2) it is the Plaintiff who bears the burden of proving that the Annex 1 Diamonds are sold undervalue, I hold that the Plaintiff has failed to prove that the Annex 1 Diamonds were sold to the Maysun Defendants undervalue. I(13) Issue 1.3 – Conclusion 100.For the reasons explained above, I make the following findings:
101.In light of the findings made thus far, I should also add the finding that the Plaintiff has failed to prove Mira was a perpetrator of the fraudulent scheme as claimed by the Plaintiff, which included the creation of the false or forged Maysun Invoices. As such, no question of whether Mira acted jointly with Yan and/or Cheng in committing the fraudulent conduct as claimed by the Plaintiff arises. I(14) Issue 1.4 102.There is no dispute that the Maysun Defendants have been purchasing diamonds from the Plaintiff between about 2009 to 2010. Winnie Tang accepted that she bought about US$10 million worth of diamonds from the Plaintiff from March 2009 to June 2010 and that the Plaintiff was her biggest supplier during that period[113]. The Plaintiff placed great reliance on the use of Maysun Factory by Winnie Tang and Alex Tang as being the addressee of all the Fantasy Invoices and the Maysun Invoices, which was an entity which has been dissolved since 2003, claims that this is illustrative of the dishonest conduct of Alex Tang and Winnie Tang. 103.In my view, given my above findings that the Plaintiff has failed to prove (1) that the Fantasy Invoices were accurate, (2) that the Maysun Invoices were false or forged, and (3) that the Annex 1 Diamonds were sold by Mira undervalue to the Maysun Defendants and without authorization from Perla, it follows that the issue as framed, namely whether the Maysun Defendants purchased the Annex 1 Diamonds from the Plaintiff with the knowledge that the diamonds were sold at an undervalue and that Mira had no authority to sell those diamonds at such undervalued prices, does not arise. I(15) Annex 1 Claim - Conclusion 104.Accordingly, the Plaintiff’s Annex 1 Claim failed. J. Annex 2 Claim 105.The only suggestion of the Plaintiff’s claim under this head is that in light of the misconduct of Mira, Yan and Cheng and their roles responsible as described in the Annex 1 Claim, the Annex 2 Diamonds were wrongly removed from the Safe by Mira, Yan and Cheng. Again, it is inconceivable that such a large number of fictitious transactions involving substantial sums could have escaped their attention, especially when a large number of the Direct Sales Reports were compiled in respect of the Annex 2 sales and copied to Mira. 106.The Plaintiff relied on the matters raised against Mira, Cheng and Yan in the Annex 1 Claim, and asked the Court to draw inference against them also in the Annex 2 Claim. Since the Plaintiff has failed to prove the Annex 1 Claim, and it has not adduced any other supportive evidence, it must also fail in the Annex 2 Claim. 107.For completeness, I should deal with two matters. The first matter concerns taking away diamonds from the Safe. The evidence of Mira, Cheng and Yan was that the Safe was located in a room in the office where Tse, Cheng and Yan sat. During office hours, the room was not locked, everybody could get in and out, and the safe was kept open and the diamonds were placed beside Yan’s desk. This arrangement was confirmed by the evidence of Alberto. He said at paragraph 12(b) of his witness statement that Cheng took out the diamonds from the Safe every morning and put them on the desk beside Yan’s desk, so that Yan can pass on the diamonds to the sales representatives for sending to customers for inspection. Tse also accepted in court that he could see from the place where he sat in the room when any staff moved near the Safe. It appears that the arrangement was for the convenience of the sales representatives like Mira, Alberto and Celia Chan who needed to pick up diamonds from the Safe and send them to customers for inspection (and return thereafter) frequently. Perla was also in the office. Tse in his evidence accepted that Perla was in the office half the time. And Perla accepted during cross-examination that in urgent or special circumstances not all diamonds would be recorded in the Fantasy System, although he said when he took away a diamond he would photocopy the parcel paper or the Gemological Institute of America’s Certificate (i.e. the “GIA Certificate”) of the relevant diamonds and record on such photocopy the name of the sales staff by whom the diamonds were taken showing particulars of the diamond and give it to Cheng and Yan for record (but as such, there would be no issuance of Fantasy Memo recording the removal of the diamond(s) from the Safe). It was also Mira’s evidence that there were also instances when diamonds which were sent from Olympic were taken to customers for inspection directly before they were put into the Safe or recorded in the Fantasy System. Therefore, the Fantasy System did not accurately represent the operations of the Plaintiff, and its inventory the stock information of the Plaintiff’s diamonds. Against this backdrop, in my view, when diamonds got loss, it cannot be held against Cheng or Yan as if they were the thief who stole the diamonds. 108.The second matter is about the complete absence of CCTV records. Tse during cross-examination said there was CCTV installed in the room where the Safe and the diamonds were located but he understood it was out of order. Yuen, the Liquidator, said he knew there was CCTV but he did not know if there were records. According to Annex 2, 97 diamonds were missing, with Fantasy Invoices appeared in the Fantasy System but no Maysun Invoices produced by the Maysun Defendants. The dates of the Fantasy Invoices ranged from March 2009 to December 2009, a span of 9 months. It appears bizarre to me that no CCTV record was available for all these times, and that the CCTV was broken all these times, with no effort shown by the Plaintiff to repair it. Mr Chow’s submission in this regard is[114] that the Court should not draw an adverse inference against the Plaintiff for the lack of CCTV evidence and shipment evidence concerning the diamonds. This submission is in my view misconceived. The Plaintiff who asserts that Mira, Cheng and Yan were in effect responsible for misappropriating (or put it bluntly, stealing) the diamonds. The Plaintiff must be the party who bears the burden of proof. In assessing the evidence, the Court is entitled to take into all relevant matters, which include the absence of the CCTV record, in deciding whether the Plaintiff has discharged its burden. 109.I therefore hold that the Plaintiff has failed to prove that:
110.The Plaintiff’s Annex 2 Claim failed. K. Annex 4 Claim & Annex 5 Claim 111.Annex 4 Claim and Annex 5 Claim can be dealt with together. According to the Plaintiff[115], these two claims relate to sales or consignment recorded to various customers, other than the Maysun Defendants, for which the Liquidators subsequently found out from these customers[116] that the diamonds were not sold or consigned to these customers. The Plaintiff relies on the relevant Fantasy Invoices in the case of sales – Annex 4 or Fantasy Memos in the case of purported consignments – Annex 5, the Daily Sales Reports (for the Annex 4 Claim only), demand letters issued by the liquidators to the customers, responses from the customers to the liquidators' demand letters and some email communications or pleadings showing Mira's dealings with these customers[117]. The Plaintiff asks the Court to find that, as with other claims, and similar to their modus operandi in other claims, Mira, Yan and Cheng wrongfully misappropriated (a) the Annex 4 Diamonds under the guise of the fictitious transactions represented by the relevant Fantasy Invoices and (b) the Annex 5 Diamonds under the guise of the fictitious consignment arrangements and without properly accounting for them[118]. 112.As analysed above, the Plaintiff has failed to prove that the Fantasy Invoices were accurate. In respect of the Daily Sales Reports, the Plaintiff has also failed to prove their accuracy, or that the prices stated therein were authorised by Perla. And it cannot be proved that Cheng or Yan was the creator of the Fantasy Invoices. Further, the fact that Mira was the sales representative in dealing with those customers did not mean that Mira was more likely to be the person who wrongfully misappropriated the diamonds or created fake invoices. 113.The Plaintiff is fraught with similar problems in the Annex 4 Claim. Looking at Annex 4, there are 14 items with either (a) no Daily Sales Report issued for the sale or (b) the price stated on the Daily Sales Report was different from the Fantasy Invoices. As such, not only Mira, Cheng or Yan might have noticed the discrepancies or the anomalies, but Perla, Mina and Jacob Louie should also have noted the discrepancies or the anomalies. For example, in the Fantasy Invoice No. 21409, the diamond 102809X1, the price was stated to be USD18576. But in the Daily Sales Report, the price of the same diamond was stated to be USD9,771.30. While it was said in Annex 4 that the Customer’s response was set out in an email from Crown Jewellery on 13 July 2010, I cannot find any reference to the Fantasy Invoice No. 21409 in that email. In another page of the trial bundle I did find an invoice also numbered 21409 which did not contain the diamond 102809X1. The summary of findings in Annex 4 stated that there was no such stone in invoice no. 21409 (false invoice) received by the customer. That is the basis of the Plaintiff’s evidence claiming against Mira. My view is the Court cannot not find forgery, fraud and wrongful misappropriation based only on a very short summary by the Liquidators – with only a line of “findings”, together with a few loose pages in the trial bundle. The Court needs a more proper investigation. The Plaintiff has failed to adduce proper report on this incident from the Liquidators and evidence from Crown Jewellery before it could decide on such serious allegation from the Plaintiff. 114.Another example that can be raised to illustrate the Plaintiff’s failure to be up to proof on its serious allegations is a diamond No.DA700 which was stated on the Fantasy Invoice No. 20478 bearing the price of USD64,577.76. However, in the Daily Sales Report, the price was stipulated to be only USD20,436.00. Jacob Louie of Olympic acknowledged the report of this sale in his reply email. There appears to be no written response from the customer Tiara Jewellery. However, there appears in the trial bundle another invoice also numbered 20478 which the sale of the diamond No.DA700 disappeared from it. The Plaintiff said the Fantasy Invoice (with DA700 being sold) was false, and as such the other invoice (without DA700) was true. The Plaintiff seems on this occasion taking a reverse position as in the Maysun incident, where the Plaintiff said the Maysun Invoices were false and the Fantasy Invoice was true. Obviously, more investigation is necessary before the Court could make any determination. Therefore, in my judgment, the Plaintiff has not put sufficient evidence to enable the Court to make any finding of fraud and misappropriation against Mira, Cheng and Yan. 115.For the same reason, I find that the Plaintiff has also been not up to proof in respect of the Annex 5 Claim. 116.Accordingly, the Plaintiff failed in both Annex 4 Claim and Annex 5 Claim. L. Annex 6 Claim 117.Put it bluntly, the Plaintiff is accusing Mira, Cheng and Yan for theft – stealing 193 diamonds which have been missing from the Safe. 118.The Plaintiff relies on the same matters that it relies on above[119]:
119.These matters have been dealt with in the above. The Safe and the diamonds are accessible to people other than Mira, Yan and Cheng. There could be situations where diamonds were removed without a Fantasy Memo or recorded in the Fantasy System. And it is inexplicable why not a single record of CCTV was available throughout a long period of time. I do not find that the Plaintiff has been able to discharge its burden of proof. 120.Therefore, the Plaintiff failed in the Annex 6 Claim. 121.As the Plaintiff has failed to prove any breaches of duties by Mira and Cheng, there can be no dishonest assistance by Yan. As such, the answer to Issue 6.1 is in the negative. M. Annex 3 Claim 122.I accept Ms Ma’s submissions[120] that the Maysun Defendants have duly settled all the payments due under the Maysun Invoices, for the following reasons:
123.Therefore, the Plaintiff’s Annex 3 Claim fails. N. Conclusion & Disposal 124.For completeness, I admit the evidence of Ms Zhang Jianyi with the usual order of costs in the cause. Whilst her evidence, given through video-conferencing facility, is only marginally relevant and of limited probative value, I do not consider justified in the circumstance to exclude the evidence that the Plaintiff wished to adduce. 125.In conclusion, for the reasons above, I have found that the Plaintiff’s claims against the Defendants failed. I therefore order that judgment be entered against the Plaintiff in favour of the Defendants, that the Plaintiff’s action be dismissed. 126.On costs, I see no reason why the costs should not follow the event. I therefore make an order nisi that the costs of the action, including those reserved, be paid by the Plaintiff to the Defendants, to be taxed if not agreed. The costs order nisi shall become absolute after 14 days from this Judgment unless application is made for its variation. 127.Lastly, I thank Ms Chow and Ms Ma for their helpful assistance.
Mr Val Chow, instructed by Withers, for the Plaintiff 1st, 2nd and 3rd defendants, acting in person Mr Ma On Ki, instructed by Kenneth CC MAN & Co, for the 4th to 6th Defendants [1] In this Judgment, I shall describe the 1st Defendant as “D1” or “Mira”, the 2nd Defendant “D2” or “Cheng”, the 3rd Defendant “D3” or “Yan”, the 4th Defendant “D4” or “Alex Tang”, the 5th Defendant “D5” or “Winnie Tang”, and the 6th Defendant “D6” or “Maysun Jewellery”. When more than one defendant are referred to, I shall describe them as D1 & D2, Mira & Cheng, D1-D3, D4-D6 and so forth. When all the Defendants are referred to, I shall describe them collectively as the Defendants. [2] According to the Plaintiff, these diamonds were either removed for consignment to customers which turned out to be fictitious or sold with invoice records but again turned out to be fictitious, or simply disappeared. [3] Paragraph 40C of the Re-Amended Statement of Claim [4] As set out in the Plaintiff’s counsel’s closing submissions: US$20,206,435.23 = US$8,613,805.81 (para 82 under Annex 1 Claim against all the Defendants) + US$1,125,430.70 (para 84 under Annex 2 Claim against all the Defendants) + US$10,467,198.72 (para 90 under Annexes 4-6 Claims against D1-D3 only) [5] By the order of Master Hui of the Court of First Instance dated 29 September 2010, upon a petition presented by Olympic on 26 July 2010. [6] By the order of Master Hui dated 22March 2011. Earlier on 27 July 2010, after the winding-up petition had been filed, Messrs. Lui Lai Hang Kennic and Yuen Tsz Chun Frank had already been appointed as its joint and several provisional liquidators (the “Provisional Liquidators”). [7] Paragraph 5(3) of the Plaintiff’s Opening Submissions [8] Paragraph 11 of Yan’s witness statement [9] E.g. see Alberto’s reference to him as Dennis in paragraphs 9 and 26 of his witness statement [10] Paragraph 3 of the Re-Amended Statement of Claim, paragraph 8(a) of witness statement of Perla and paragraph 16(1) of the Plaintiff’s Opening Submissions [11] The Rapaport Price List is commonly accessed via Rapnet.comd. In negotiating a price of a diamond to be sold, dealers would often negotiate the price of a diamond by reference to a discount to the then Rapaport Price. [12] Paragraphs 3 and 4 of the Re-Amended Statement of Claim, paragraph 8 of witness statement of Perla and paragraph 16(1) of the Plaintiff’s Opening Submissions [13] Paragraph 16(3) of the Plaintiff’s Opening Submissions [14] Paragraphs 5-6 of the Re-Amended Statement of Claim and paragraph 8(f) of witness statement of Perla [15] Paragraph 7 of the Re-Amended Statement of Claim [16] Paragraph 8 of the Re-Amended Statement of Claim [17] Paragraph 9 of the Re-Amended Statement of Claim [18] Paragraph 12 of the Re-Amended Statement of Claim and paragraph 10(a) of witness statement of Perla [19] Paragraph 16(3) of the Plaintiff’s Opening Submissions [20] Paragraphs 12-13 of the Re-Amended Statement of Claim and paragraph 10(b) of witness statement of Perla [21] Paragraph 40 of the Re-Amended Statement of Claim [22] Paragraph 42(1) of the Re-Amended Statement of Claim [23] Paragraph 15(1) of the Opening Submissions of the Plaintiff [24] Paragraph 42(4) of the Re-Amended Statement of Claim [25] Paragraph 15(2) of the Opening Submissions of the Plaintiff [26] Originally in the Re-Amended Statement of Claim, 781 diamonds were listed out in Annex 1. As explained in paragraph 2(1)(ii)(a) of the Plaintiff’s Closing Submissions, 23 diamonds are now excluded from the Annex 1 Claim because there is no price difference between the Fantasy Invoice and the Maysun Invoice. Therefore, Annex 1 Claim is now made only in respect of 758 diamonds. [27] Paragraphs 27 and 28 of the Plaintiff’s Opening Submissions [28] Paragraphs 31–32 of the Plaintiff’s Opening Submissions [29] Paragraph 34-36 of the Plaintiff’s Closing Submissions [30] Paragraph 2(1)(ii)(b) of the Plaintiff’s Closing Submissions [31] Paragraphs 42-43 of Witness Statement of Yuen Tsz Chun and Annex 6 to the Plaintiff’s Re-Amended Statement of Claim [32] Paragraph 53 of the Plaintiff’s Opening Submissions [33] Paragraph 58 of the Plaintiff’s Opening Submissions and paragraph 87 of the Plaintiff’s Closing Submissions [34] Annex 3 to the Plaintiff’s Closing Submissions [35] Paragraph 61 and section E of the Plaintiff’s Opening Submissions [36] Paragraph 64 of the Plaintiff’s Opening Submissions [37] Paragraph 65 of the Plaintiff’s Opening Submissions [38] Paragraph 41 and section C2 of the Plaintiff’s Opening Submissions [39] Footnote 64 of the Plaintiff’s Opening Submissions. In that footnote, the Plaintiff reserves its right to seek proprietary remedies such as declaration of constructive trust and/or orders for account as pleaded. But this was neither pursued. [40] Paragraph 62-63 of the Plaintiff’s opening submissions. [41] paragraph 10(5) of D4-D6’s opening submissions. [42] Paragraph 10 of the Plaintiff’s Opening Submission, summarizing from Hong Kong Company Law, vol. 3 (2022). [305-350], [3204]-[3251], [3252-3254] [43] I largely follow the formulation by the Plaintiff’s counsel in the Plaintiff’s Opening Submissions, with my own modification. [44] Paragraph 15(1) of the Plaintiff’s Opening Submissions [45] ibid. [46] Paragraphs 15(1) & (2) of the Plaintiff’s Opening Submissions [47] Paragraphs 53(1) & 54 of the Plaintiff’s Opening Submissions [48] Paragraph 28 of the Plaintiff’s Opening Submission [49] Paragraphs 53(2) & 55 of the Plaintiff’s Opening Submissions [50] Paragraph 32 of the Plaintiff’s Opening Submissions [51] ibid. [52] Paragraph 36 of the Plaintiff’s Opening Submissions [53] ibid. [54] paragraph 39(2) of the Plaintiff’s Opening Submissions [55] paragraph 39(1) of the Plaintiff’s Opening Submissions [56] paragraph 45 of the Plaintiff’s Opening Submissions [57] paragraphs 58-60 of the Plaintiff’s Opening Submissions [58] The Plaintiff’s counsel submitted that “the fraud could not possibly be perpetrated by only one of Mira, Yan or Cheng, otherwise it would be exposed in the sales process and inventory process” (paragraph 11 of the Plaintiff’s Closing Submissions). [59] Paragraph 11 of Alberto’s witness statement [60] Paragraph 54 of Mira’s witness statement and Paragraph 33 of Yan’s witness statement. Yan gave evidence that her computer did not require any password for logging in. The Plaintiff did not produce any login record of Yan’s computer. [61] Paragraph 15(1) of the Plaintiff’s Opening Submissions [62] Paragraphs 13 and 31 of the Plaintiff’s Closing Submissions. As will be explained below, this submission is, in my view, over the top. [63] Paragraphs 37 – 40 of the Plaintiff’s Closing Submissions [64] Paragraph 30 of the Plaintiff’s Closing Submissions [65] Exhibit YTC-23 to Yuen’s witness statement [66] Paragraph 47 of Yuen’s witness statement [67] Paragraph 27(b) of witness statement of Perla [68] Exhibit YHL-1 to Alberto’s witness statement [69] Paragraph 19 of Alberto’s witness statement [70] This statement was produced by Yuen, the Liquidator as exhibit YTC-24 to Yuen’s witness statement. [71] Paragraph 27(a) of witness statement of Perla [72] Paragraph 25 of witness statement of Yuen [73] Paragraph 27(a) of witness statement of Perla and paragraph 25 of witness statement of Yuen [74] Paragraph 25 of witness statement of Yuen [75] Paragraph 36 of the Plaintiff’s Closing Submissions [76] Yan described it was his “team” who discovered the Excel Invoices. He did not identify members of his team and how many persons his team comprised. [77] Paragraph 19 of the Plaintiff’s Opening Submission [78] See also paragraph 21 above [79] According to the Plaintiff, over 1200 pieces of diamonds were allegedly misappropriated and/or sold undervalue under its alleged fraudulent scheme. [80] Paragraph 3(c) of witness statement of Mina Deutsch and exhibit MD-1 [81] Paragraph 11 of witness statement of Alberto. Although Alberto mentioned that only Yan and Cheng would “print out” Fantasy Invoices and Fantasy Memorandum using the Fantasy System, this does not exclude the risk or possibility that any employee of the Plaintiff could access the Fantasy System to alter the contents of the soft copy of the Fantasy Invoices. [82] Paragraph 9 of Alberto’s witness statement [83] Paragraph 18(4) above [84] See paragraph 17(2) above [85] Paragraph 10 of D4-D6’s Closing Submissions [86] Paragraph 37 of D4-D6’s Closing Submissions [87] Paragraph 3(2)(i) and Sectuib C3 of the Plaintiff’s Closing Submissions and paragraph Secion C2.1 of the Plaintiff’s Opening Submissions (in respect of the claim against Yan for dishonest assistance) [88] Paragraph 25(1) of the Plaintiff’s Opening Submissions [89] Paragraph 42 of the Plaintiff’s Closing Submissions [90] Paragraph 3(2)(ii) of the Plaintiff’s Closing Submissions [91] Paragraph 25(4) of the Plaintiff’s Opening Submissions, paragraphs 15(2) and 20 of D2’s Defence and paragraph 43(2) of the Plaintiff’s Closing Submissions [92] Paragraph 45 of the Plaintiff’s Closing Submissions [93] Paragraph 46 of the Plaintiff’s Closing Submissions [94] Paragraph 47(1) of the Plaintiff’s Closing Submissions [95] Paragraph 47(3) of the Plaintiff’s Closing Submissions. This is not a correct description of the MSN message. As quoted in paragraph 61 above, the message was “攪到 alan 同 dennis 要幫佢講大話”. In this message, not just Cheng (i.e. Alan) was alleged to be assisting in telling lies, Tse (i.e. Dennis), i.e. the Plaintiff’s accountant, was allowing assisting in telling lies. There was however no evidence in respect of Tse in this respect. [96] Paragraph 49 of the Plaintiff’s Closing Submissions [97] Paragraph 25(2) of the Plaintiff’s Opening Submissions [98] Paragraph 20 of the Plaintiff’s Opening Submissions [99] Paragraph 20 of the Plaintiff’s Opening Submissions [100] Paragraph 21 of the Plaintiff’s Opening Submissions [101] Paragraphs 13-14 of the Plaintiff’s Closing Submissions [102] Paragraphs 15-16 of the Plaintiff’s Closing Submissions [103] The handwriting marked on the Maysun Invoice No. 20329 dated 30 March 2009 [104] Paragraphs 25-26 of D4-D6’s Closing Submissions [105] As referred to by Ms Ma in paragraph 27 of D4-D6’s Closing Submissions [106] Paragraph 33(2)(ii) of the Plaintiff’s Reply Closing Submissions and paragraph 42(17) of the Re-Amended Statement of Claim [107] Paragraph 61 of the Plaintiff’s Closing Submissions [108] Paragraphs 17(a)(i) of D4-D6’s Closing Submissions [109] See Footnote 11 above [110] In paragraph 26 of the Plaintiff’s Reply Closing Submissions, Mr Chow explained that DIASQUA (HK) is one of the largest suppliers of diamonds in the global diamond industry, but in my view the fact that the information from all other largest suppliers is missing makes the data taken into account by Mr Chau incomplete, hence assessment defective, and the resultant valuation unreliable. It is not good enough for Mr Chow to say that it is based on these sources that Mr Chau applied his expertise and judgment to carry out the valuation of the diamonds. The incomplete source data have tainted the reliability of his exercise. [111] Paragraphs 39 of the Plaintiff’s Reply Closing Submissions [112] Paragraph 17(c)(vii) of D4-D6’s Closing Submissions [113] Paragraph 6(4) of the Plaintiff’s Opening Submissions [114] Section B5 of the Plaintiff’s Reply Closing Submissions [115] Paragraph 18 of the Plaintiff’s Closing Submissions [116] Seemingly, the Liquidators took what the customers asserted on its face without further verification. [117] In my view, proof that Mira had conducted or negotiation with or served those customers does not equate with proof of Mira, assisted by Yan, forging fake invoices or misappropriating diamonds out of these forged invoices. [118] Paragraphs 32 and 36 of the Plaintiff’s Opening Submissions [119] Paragraphs 26 of the Plaintiff’s Closing Submissions [120] Paragraphs 33-35 of D4-D6’s Closing Submissions [121] Table 2 prepared by Ms Ma and attached to the Explanatory Notes submitted by Ma to the Court dated 24 July 2023. The comments by Mr Chow on the table are at Footnote 1 of the Explanatory Note. [122] Item 3(ii) of Ms Ma’s Explanatory Notes |
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