Keiron Peter Arch Rochester v. Glory Sky Precious Metals Ltd

HCA 395/2019

[2025] HKCFI 885

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 395 OF 2019

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J U D G M E N T

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Contents

A.  INTRODUCTION

B.  THE PARTIES’ RESPECTIVE CASES

B.1   P’s Case

B.2   D’ Case

C.   THE ISSUES

D.   THE EVIDENCE

D1   The principles

D2   P

C2.1   P’s evidence

C2.2   My view on P’s evidence

D3   Hui

D3.1 Hui’s evidence

D3.2   My view on Hui’s evidence

D4   Chan

D4.1   Chan’s evidence

D4.2   My view on Chan’s evidence

E.  DISCUSSION

E1   No prima facie case established by P

E1.1  No prima facie case shown in P’s pleaded case on the “Contract” as alleged by P

E1.2  No prima facie case shown by the evidence on the “Contract” as alleged by P

E1.3..No prima facie case on breach of duties

E1.4  No prima facie case on misrepresentations

E1.5  No prima facie case on Scam and restitution

E2   No adverse inference against D

E3   No deemed admissions by D

E4   Conclusion

F.  DISPOSITION

A.    INTRODUCTION

1.In this case, the Plaintiff (“P”) claims against the Defendant (“D”) for the losses suffered by him in the two trading accounts maintained with D.  The following are the background facts agreed by the parties[1]:

(1)  On or around 29 December 2016, P signed an online application form (“the Application Form”) to open an account with D (“the 1^st Account”) and signed a letter of authorisation (“the LA”) authorising Ms Jan Choi (“Jan”) to be P’s representative for the purchase and sale, or otherwise for dealing in metals on behalf of P in respect of the 1^st Account.

(2)  P forwarded the login details and password to Jan for the purposes of enabling Jan to conduct gold derivatives’ trading on P’s behalf.

(3)  On or around 22 January 2017, P opened a second account with D (“the 2^nd Account”).

(4)  On or around 23 January 2017, a sum of US$641,025.64 was transferred from the 1^st Account to the 2^nd Account (collectively, “the Trading Accounts”) upon P submitting a withdrawal form.

(5)  During the period from 30 December 2016 to 7 February 2017, P transferred an aggregate sum of US$1,294,518.10 in 8 tranches (“the Funds”) to D’s bank account for the purposes of trading.

(6)  P received documents described as account statements from D in relation to the Trading Accounts.

(7)  P’s funds were ultimately lost.

2.The ultimate issue to be determined in this case is whether D should be liable to P for his losses.  In this trial, Mr Toby Brown represents P, and Mr Adrian Lee represents D.

3.To state the obvious, each case is unique.  The outcome of this case is dictated by the parties’ respective pleadings, the evidence before the Court, and the application of the relevant legal principles to the facts as found by the Court.  What is said in this judgment only applies to the dispute between P and D as defined by the pleadings in this case.  The findings made in this judgment should not be regarded as comments on any other disputes involving P and/or D.

B.    THE PARTIES’ RESPECTIVE CASES

B1.  P’s Case

4.In the Amended Statement of Claim (“ASOC”), P gave a summary of his case at [3]:

“In summary, [D] is liable for breach of contract and/or misrepresentation, or alternatively, for breach of common law duty of care owed to [P], or alternatively, for breach of fiduciary duties owed to [P], or alternatively, for money had and received on the basis that it perpetrated an investment scam on [P].”

5.The claim based upon breach of contract as pleaded by P in the ASOC is as follows:

“6. … during the introductory WeChat conversations between [P] and [Jan], Jan (acting on behalf of [D]) made the following representations to P regarding [D]’s ability to make significant profits for its clients through gold derivatives’ trading:

(1) [D] was experienced in gold derivatives’ trading and could take advantage of the gold prices and provide low-risk and high-returns for its clients; and

(2) The risk of losses would always be minimised by [D]’s analysts / consultants who were highly skilled and experienced in (a) accurately predicting the trends in gold prices; and (b) conducting trades to maximise profits and minimise risks for [D]’s clients.

……

8. On 29 December 2016, [P] attended [D]’s offices for the purpose of exploring the option of opening a trading account with [D], where he met with [Jan] and another representative of [D] who introduced himself as Steve.

9. During the said meeting, Jan and Steve (both acting on behalf of [D]) repeated the representations stated in paragraph 6 above. In reliance of and induced by the said representations, [P] decided to open a trading account with [D].

10. [In the meeting held on 29 December 2016], at the request of [Jan] and Steve (both acting on behalf of [D]), [P] signed [D]’s online application form to open an account with [D] for gold derivatives’ trading and executed a letter of authorisation authorizing [Jan] inter alia to be P’s representative for the purchase and sale, or otherwise for dealing in metals on behalf of [P] in accordance with the terms and conditions purportedly prescribed for [P]’s trading account … with [D] (the “1^st Account”)

11. During the said meeting, [Jan] (acting on behalf of [D]) further informed [P] about an annual trading event held by [D] in January every year called the Semi Fund System Scheme (the “SFS Scheme”) which she stated was open for participation only to [D]’s and its parent company’s executives, and further represented to [P] that the SFS Scheme required a minimum investment of USD1,000,000 and was guaranteed to make double returns with low investment risk, having never made a loss in the past 10 years.

12. On 30 December 2016, [P] received emails from [D]’s client service department confirming the opening of the 1^st Account and providing inter alia details of the 1^st Account, [D]’s trading website, [D]’s bank account … to be used for cash deposits, and the password for operating the online trading account. [P] forwarded these details to [Jan] for the purposes of enabling her to conduct gold derivatives' trading on his behalf.

13. In view of paragraphs 8 to 12 above, [P] and [D] had an agreement whereby:

(1) [P] would open an account with [D] for gold derivatives’ trading;

(2) The management of funds and trading activities in [P]’s trading account(s) with [D] would be managed personally by [Jan]; and

(3) Through the trading activities conducted by [D], and particularly through the investment in the SFS Scheme, [P] would be able to achieve high returns on his investment with low risk,

(hereinafter referred to as the “Contract”).

14. Over the next few days, [Jan] continued to make representations to [P] regarding the high returns and low risks offered by the SFS Scheme. [P] was assured by [Jan] that his investment would double in value in 2 weeks’ time if he invested in the SFS Scheme.

……

32. By virtue of the Supply of Services (Implied Terms) Ordinance (Cap. 457), it was an implied term of the Contract that [D] would carry out its services with reasonable care and skill, specifically that [D] would:

(1) exercise reasonable skill and care in the formulation of trading strategies and execution of trades;

(2) take reasonable steps to minimise trading losses;

(3) competently, fully and accurately advise [P] as to the nature, mechanism, and risks associated with gold trading;

(4) provide regular and timely advice to [P] as to (a) the current status of the investment; (b) relevant market information; and (c) [D]’s trading strategy and trading patterns;

(5) take reasonable steps to ensure that [P] understood the advice given to him; and

(6) for the purposes of sub-paragraphs (1) to (5) above, exercise reasonable skill and care in supervising and monitoring the activities of its employees and agents (including but not limited to [Jan]).

33. In breach of the Contract: -

Particulars

(1) [D] failed to exercise reasonable skill and care in the formulation of trading strategies and execution of trades and conducted trading in a negligent and/or reckless manner;

(2) [D] failed to take reasonable steps to minimise trading losses, including but not limited to the failure to use 'stop limits' which would have automatically realised trades when the gold price moved a specific amount thereby capping the potential loss suffered by [P];

(3) [D] failed to competently, fully and accurately advise [P] as to the nature, mechanism, and risks associated with gold trading. Despite increasing losses and the risky nature of gold trading, both of which were known to [D], [D] (through [Jan]) wrongfully assured [P] that his investment would be profitable and induced [P] to increase his investment purportedly to invest in the SFS Scheme;

(4) [D] failed to provide regular and timely advice to [P] as to (a) the current status of the investment; (b) relevant market information; and (c) [D] 's trading strategy and trading patterns. There was no explanation or advice provided to [P] as to the pattern of trading activities executed by [D];

(5) [D] failed to take reasonable steps to ensure that [P] understood the advice given to him;

(6) [D] failed to exercise reasonable skill and care in supervising and monitoring the activities of its employees and agents (including but not limited to [Jan]); and

(7) [D] failed to inform [P] that several representatives (other than [Jan]) had conducted unauthorised trades in the 1^st Account and/or the 2^nd Account.” (Emphasis added)

6.P’s claim based upon misrepresentations as pleaded in the ASOC is as follows:

“35. … [P] entered into the Contract induced by and acting in reliance upon the representations that:

(1) [D], its servants and agents, were experienced in gold derivatives' trading and could take advantage of the gold prices and provide low-risk and high returns for its clients;

(2) The risk of losses would always be minimised by [D]’s analysts / consultants who were highly skilled and experienced in (a) accurately predicting the trends in gold prices; and (b) conducting trade to maximise profits and minimize risks for [D]’s clients;

(3) Investment in the SFS Scheme was guaranteed to earn double returns in 2 weeks' time with low investment risk;

(4) Through the investment in the 2^nd Account, [P] would be able to recover all the losses in respect of the 1^st Account and achieve a higher return on the funds in the 2^nd Account; and

(5) The purported profits would be re-invested by [D] each day for trading purposes to recover losses until the implementation of the SFS Scheme,

(collectively, the “Representations”).

36. Each of the Representations was false in that: -

(1) [D], its servants and agents (including [Jan]), did not possess any special expertise to conduct gold derivatives' trading to make significant profits or to minimise risks associated with the trading;

(2) [D] failed to minimise the risk of losses for [P] and [D]’s analysts / consultants were not skilled and experienced in (a) accurately predicting the trends in gold prices; and (b) conducting trade to maximise profits and minimise risks;

(3) [P]’s Investment in the SFS Scheme did not earn a double return, whether in 2 weeks' time or at all;

(4) [P] did not recover his losses in respect of the 1^st Account through the investment in the 2^nd Account; and

(5) [P] did not achieve a higher return on the funds invested in the 2^nd Account and [P] did not recover any of his losses under the 1^st Account and the 2^nd Account.

37. Such Representations were made by the representatives of [D] (including [Jan]) (acting on its behalf) fraudulently, in that, they knew the Representations were false as it well knew that gold derivatives' trading was an inherently risky investment and that [D], its servants and/or its agents, did not possess any special expertise in gold derivatives' trading, and that it would not be able to provide low-risk and high returns to its clients, as claimed in the Representations. Alternatively, [D] was reckless and did not care whether the Representations were true or false.

38. Further or alternatively, if (contrary to [P]’s) that each or any of the Representations was not made falsely, [P] will rely upon the provisions of section 3 of the Misrepresentation Ordinance (Cap. 284) as entitling him to the relief claimed.”

7.For ease of reference, the Representations pleaded in ASOC [35] are referred to as Representations 1 to 5 in this judgment.  Since Representations 3 to 5 are related to the SFS Scheme, Representations 3 to 5 would be called as the SFS Representations.

8.Regarding breach of common law duty and care, P’s pleaded case in the ASOC is as follows:

“40. Alternatively, by reasons of the matters pleaded in paragraphs 5 to 25 above, [D] held itself out as being a competent investment adviser and manager and accordingly owed a duty of care to [P] and/or assumed responsibility to [P] at common law upon terms identical to those particularised at paragraph 32 above.

41. By reasons of the matters as particularised in paragraph 36 above, [D] acted in breach of its duty of care to [P].”

9.As to breach of fiduciary duties, P’s case as pleaded in the ASOC is as follows:

“43. Alternatively, by reasons of matters pleaded in paragraphs 5 to 25 above, [D] owed the following duties to [P] as a fiduciary and/or trustee:

(1) a duty to act in good faith and in the best interests of [P];

(2) a duty not to act as to place itself in a position in which its personal interest did or might conflict with the interests of [P];

(3) a duty not to use its position as fiduciary/trustee to make any profit without the consent of [P];

(4) a duty to exercise discretionary powers with due care and in the interest of [P];

(5) a duty to take reasonable steps to minimise losses through standard trading practices; and

(6) a duty to maintain effective controls to minimise client losses from trading by gold trading consultants.

44. By reasons of matters pleaded in paragraph 5 to 30 above, [D] has acted in breach of its fiduciary duties as pleaded hereinabove.”

10.P’s claim based upon money had and received, unjust enrichment and/or restitution as pleaded in the ASOC is as follows:

“46. Alternatively, [D] was at all material times a corporate vehicle used for perpetrating the Scam, including the handling and/or channelling and/or keeping the Funds.

47. At all material times, there was no lawful and/or legitimate reason or entitlement whatsoever for [D] to receive and retain any part of the Funds, whether as a result of the Scam or otherwisw, and [D] was unjustly enriched by the receipt of and retention of the Funds, in which [P] retains a proprietary interest.

48. [P] has suffered loss and damage in the sum of USD1,294,518.10 and [D] is liable to account and/or make restitution for the said sum of USD1,294,518.10.

49. Further, or in the alternative, [P] was at all material times and still is entitled to trace and recover:

(1) the Funds or any part thereof which had come into the hands of [D]; and

(2) any profits and/or income and/or assets and/or interests derived by [D] from the Funds or any part thereof which had been paid over or transferred to [D].”

11.Regarding the Scam, it is pleaded at [29] of the ASOC that:

“In or around May 2018, [P] was contacted by a former employee of [D] who informed [P] about an investigation by the Hong Kong police (the “Police”) relating to a conspiracy to defraud case against [D] and [D]’s involvement in a gold derivatives' trading scam, whereby several victims had been lured by [D] into fraudulent precious metal transactions which resulted in victims eventually losing all their capital as a result of significant investment losses (the “Scam”). The former employee further informed [P] that [D] had no SFS Scheme and that the trades were not conducted on the open market but were only placed on [D]’s internal system, with the collective funds then being traded on the open gold derivatives market. The former employee also provided [P] with a hotline number set up by the Police to complain about the Scam.”

12.During P’s opening, I asked Mr Brown to clarify the Scam in P’s case. In response, Mr Brown referred me to [10] of P’s Further and Better Particulars dated 15 January 2021 (“P’s FBP Jan 2021”)[2], in which P pleaded:

“…… It is [P]’s case that no gold trades in the open market as was intended were actually carried out for his trading accounts. Given the information received from the ex-employees, [P] believes that his money may have just been pooled with money from other victims of [D], either to trade collectively or simply to pay out directly to [D]’s executives.” (Emphasis added)

So this is the Scam as pleaded in P’s case.  There is no conspiracy pleaded against D.  It has not been pleaded that D has conspired with others to defraud P.

13.In his opening submissions, Mr Brown for P placed emphasis on the Scam. P claims that he is a victim of an investment scam.  Mr Brown submitted that the Scam was executed on D’s behalf primarily by Jan, and she played the key role of the romantic interest and purportedly executed the “trades” on the Trading Accounts.  It is P’s primary case that no legitimate gold trading ever took place.  P claims that there is no evidence of trading save for D’s internally produced trading records that show nonsensical trading that inexplicably leads to the loss of the entire investment in a very short period of time.

14.P claims that as a result of the Scam, he lost the vast majority of his monies by early February 2017.  P became aware of the fraud when Lisa, an ex-broker of D, anonymously contacted P in around May 2018, informing P that Jan lied to him.  Lisa told P that Jan had been married and she had used the money obtained by defrauding P to buy an apartment in Tuen Mun with her husband.  Lisa further told P that D was not a regular company, and D’s clients were actually gambling with D.

15.P has given evidence to support his case in the trial.

B2. D’s Case

16.D’s case is that P entrusted his entire investment and operation of the 1^st Account and the 2^nd Account (including the passwords) to Jan, who repeatedly asked P not to contact D’s Customer Service Department. The arrangement between P and Jan is a private investment arrangement (“Private Investment Arrangement”), to which D is not a party.  P later suffered substantial loss in the trades executed by P and/or Jan via the 1^st Account and the 2^nd Account.  There is no ground upon which P may seek to recover his loss from D.

17.D says that P’s claim is untenable in law and on the facts.

(1)  Written contractual documents (ie the Application Form and the Terms and Conditions referred to in that form) clearly show that D provided trading facilities only (ie “execution only” service).  D was not under any contractual duties to provide any investment advice to P (ie no “Advisory Contract” between P and D), let alone guaranteeing any investment returns to P.

(2)  The Private Investment Arrangement was entirely between P and Jan.  D is not a party to the Private Investment Arrangement or any scam that was allegedly perpetuated by Jan on P.

18.D is also relying upon some indemnity and exclusion clauses in the LA and in the Terms and Conditions (“the Indemnity and Exclusion Clauses).  In the Re-Re-Amended Defecne (“RRAD”), it is pleaded:

“16.     Under paragraph 4 of the [LA], [P] agreed “to indemnify and hold [D] harmless from, and to pay [D] forthwith upon demand of, any and all losses in connection with the Account, or arising from the debit balance due thereon.”

……

22.   [D] further avers that the use, or indeed misuse, of the User ID and password was governed by the Terms and Conditions.  In this regard, the following paragraphs of the Terms and Conditions which are in Chinese, are relevant to this Re-Re-Amended Defence.

‘……

20. The Client acknowledges and agrees that he shall be wholly and solely responsible for all instructions entered through the Web Facility using the Access Codes (whether authorized by him or not, and whether or not the instructions were entered by the Company or any of its officers or employees at the Client's express request).  Neither the Company nor any of its officers, employees or agents shall incur any liability for the handling, mishandling or loss of any instruction.  The Client shall indemnify the Company upon demand against any loss, damage, costs, disbursements and liabilities that the Company may incur or suffer as result of any instructions entered through the Web Facility.

……

37.  The Client agrees to defend, indemnify and hold the Company, its officers, employees and agents harmless from and against any and all claims, losses, liability, costs and expenses arising out of or in connection with the Client's use of the Service, including but not limited to his violation of this Agreement.  This obligation will survive the termination of this Agreement.

……’”

19.D has called two witnesses to give evidence in the trial, namely (a) Ms Hui Siu Ying, also known as Alice Hui (“Hui”), who was employed as “company secretary” by another company in the Glory Sky Group, but would also serve D at the material times; and (b) Mr Chan Siu Wing (“Chan”), who was employed by another company in the Glory Sky Group but worked in the dealing room of D (“the Dealing Room”) at the material times.

C.   THE ISSUES

20.It is well established that the issues in a trial are defined by pleadings, not by evidence.  One cannot slip in an unpleaded issue by saying that there is evidence on the issue.  As said by Ma CJ in Kwok Chin Wing v 21 Holdings Ltd^[3]:-

“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues:- Wing Hang Bank Limited v Crystal Jet International Limited [2005] 2 HKLRD 795, 799 [6(1)]. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Limited v Crystal Jet International Limited:-

‘(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It will simply not do for unpleaded issues to be “slipped in” when evidence is being given in the hope that the other side is not sufficiently alert to object.’

22. …… one does not sift through the evidence adduced in a trial in the hope that something was said that can conceivably found a cause of action. Issues, I would reiterate, must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings.” (Emphasis added)

21.The purpose of pleadings is to define the real issues in dispute and to ensure that the litigation is conducted in a fair way.  It is pertinent to note what has been said by Yuen JA in Chan Kong v Chan Li Chai Medical Factory (Hong Kong) Ltd^[4]:

“15. …… It is well established that pleadings need to be clear - because pleadings are the foundations on which the rest of the action stand. The reason why parties to litigation must ensure that the real issues in dispute are defined in advance in the pleadings is so that there is an unambiguous framework for the many interlocutory steps that follow in an action, such as discovery of documents, interrogatories and witness statements, as well as for the conduct of the trial itself. A statement of claim should make it clear to the reader what the plaintiff's cause of action is, and it should set out the material facts which provide the basis for him to pursue that cause of action. It is not adequate for a plaintiff just to set out his story extensively and then to allege a number of breaches of rights for which he claims relief. Put another way, it should not be left to the reader to guess how the dots should be connected.

16. The more complex the facts and the more complicated the claim, the more important it is for the pleader to get it right. That is because the more obtuse the pleading, the more capacity there is for genuine misunderstanding or specious opportunism. And the more blind alleys are left in a pleading, the more expensive and time-consuming the litigation will be.” (Emphasis added)

22.Further, in Sinoearn International Ltd v Hyundai-CCECC Joint Venture^[5], Ribeiro PJ said:

“30. …… A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken. ……

……

34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.” (Emphasis added)

23.Mr Brown, relying upon Wan Yung Hing v Forever Grand Industrial Ltd[6], submitted that pleadings are not a game of words.  The Court should consider whether the issues have been sufficiently identified by considering the entirety of the pleadings, and the crucial question is whether the other side was taken by surprise by an unpleaded issue.  Mr Brown submitted that this proposition is amply highlighted by the Court of Appeal in Ng Po Yu v Lam Kai On[7]. In that case, one of the grounds relied upon by the defendant in support of the appeal was that unjust enrichment was unpleaded, and no unjust factor was identified in the Amended Statement of Claim.  The Court of Appeal observed that although the pleading was far from being satisfactory, the necessary facts had been pleaded.  The Court of Appeal observed that there was no surprise to the other side.  In that case, Chu JA (as she then was) said:

“52 …… although unjust enrichment is not expressly referred to in the pleading, having regard to the parties' Opening and closing submissions as well as the exchanges between counsel and the Judge at the trial, it cannot be said that the defendant was taken by surprise or that there was no opportunity for the defendant to meet the claim……

…

59.      Taking an overall view of the case, despite the unsatisfactory pleading and that unjust enrichment was not expressly pleaded, the Judge had right at the beginning drawn the parties' attention to a claim of reimbursement on unjust enrichment ground, and the defendant was aware of the issues involved.  It is also evident from the transcript that defendant's counsel had endeavoured to address the claim and the issues involved in his closing submission.  Although he had complained there was no proper pleading of unjust enrichment, he had not sought an adjournment or leave to amend the defence (such as to raise a defence of limitation).”

24.In my view, there is no new rule concerning pleadings laid down in Wan Yung Hing or in the Ng Po Yu case.

(1)  In the Wan Yung Hing case, DHCJ H Au-Yeung (as he then was) in fact disallowed a new unpleaded issue raised by the defendant in its opening submissions.  In that case, his lordship said:

“46. In my view, the test for sufficiency of pleadings is whether the issue(s) which the defendant now attempts to raise has/have been identified adequately by the pleadings. If the issue(s) has/have not been so identified, the other side would be caught by surprise at the trial (just like the plaintiff in the present case), and, as a matter of fairness, the Court should not allow this to happen. Indeed, it has been held by the Court of Appeal in Kaefer A.G. v Winfield Marine Services Co., Ltd [2022] HKCA 807 (at [32]) that a party is not at liberty to run any defence based on the pleaded facts; otherwise, the other side and the court would be taken by surprise, which would go against the purpose of the rules of pleadings.”

(2)  In the Ng Po Yu case, as submitted by Mr Lee, the Court of Appeal did not in any way relax the rules concerning pleadings.  The Court of Appeal simply observed that pleadings assumed a less significant role in respect of that particular issue since it has been clarified during the trial at the beginning.

(3)  What have been said in these two cases are clearly in line with the Court of Final Appeal’s decision in Kwok Chin Wing at [22], ie issues must be properly pleaded unless for some reason the pleadings have assumed a less significant role in the proceedings.

(4)  Unless there is a legitimate reason, it cannot be said that an unpleaded issue is nevertheless an issue in the trial, just because there is some evidence on the matter.  It is trite that issues in a trial are defined by the pleadings, not by the evidence.

25.In the circumstances of this case, I do not see any legitimate reason why I should depart from the pleadings in identifying the issues to be resolved in the trial.  The issues must be those raised in the pleadings.  Any unpleaded issue should not be regarded as an issue in the trial.

26.At the final submissions stage, Mr Brown has clarified the following:

(1)  As to the alleged breach of duties, this is a claim under the purview of breach of the “Contract”, and all the alleged duties arose as a result of the “Contract”.

(2)  As to the claim based upon the misrepresentations, P would only rely upon Representations 1 and 2.  P would not rely upon the SFS Representations, as these representations were made after P entering into the “Contract” with D, and hence P was not induced by the SFS Representations to enter into the “Contract”.

(3)  As to the claim based upon money had and received, unjust enrichment and/or restitution, the basis of which is the Scam.

(4)  The “ex-employees” as pleaded in [10] of P’s FBP Jan 2021 is referring to one person only, ie Lisa.

27.Having considered the parties’ respective pleadings and submissions, in my view, the real issued (“the Issues”) to be resolved in the trial are as follows:

(1)  the existence or the non-existence of the “Contract” as pleaded in P’s case;

(2)  P’s claim based upon Representations 1 and 2; and

(3)  the Scam as pleaded in P’s case; and

(4)  Whether D is liable to pay any damages to P in light of the existence of the Indemnity and Exclusion Clauses.

D.  THE EVIDENCE

D1.  The principles

28.As to evaluation of factual evidence given by witnesses, the principles are trite.  See Hui Cheung Fai and another v Daiwa Development Limited^[8], in which DHCJ Eugene Fung SC said:

“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce) ……

78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).

79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.

80.  I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).”

29.Similarly, in Lee Fu Wing v Yau Po Ting Paul^[9], DHCJ Au (as he then was) said:

“53. In assessing the credibility of a party’s case on a particular issue, I accept the submissions of [counsel] that the Court should take into considerations the following: -

(1) Whether the party’s case is inherently plausible or implausible.

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility.

(4) The demeanour of the witnesses.”

30.While there is a long passage of time between the material events and the trial, contemporaneous documentation is of particular importance.  In Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corp Ltd ^[10], Stock JA (as he then was) said:

“…… Comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete; but where the passage of time between events and trial is as long as it was in the present case, and where there is such a host of contemporaneous documentation, as there was in this case, the documentation must, I would have thought, assume a special importance. ……

I would venture to suggest that the truth, in so far as one is able to reach it or, as is sometimes the case, to reach a version of it that is more likely to be correct than not, can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities (though bearing in mind that there may be occasions where the truth may run against that particular grain) having regard to all the facts that are known. This is particularly so in a case such as the present, where events have taken place so long before trial and where there exists a mountain of contemporaneous documentation that can be used to point the way. This is not to say that the documentation should have been treated as if it stood on its own, not to be explained, contradicted or supported by oral testimony. It is however to say that in this case the approach adopted to assessment of the facts placed far too much emphasis on character impression and too little upon what was suggested by the documentation and by the inherent probabilities in their historical context. That documentation, as well as conflicts within the evidence, inherent probabilities, and a study of how matters were originally pleaded and asserted in witness statements – these are the factors which in a trial such as this, so long removed from the time of the events in question, were likely to be of particular use in assessing the facts ……” (Emphasis added)

31.The Court would approach the self-serving statements made by a witness with circumspection, but would give considerable weight to the statements made by him which are against his interest.  See Wong Tak Yue v Kung Kwok Wai & Another (No 2)^[11]:

Per Li CJ^[12]:

“Where the occupier has made self-serving statements as to what was his intention, whether during the period of occupation or when challenged in legal proceedings, the courts should approach them with some scepticism. The courts would scrutinize the circumstances in which they were made and would give them such weight if any as they may deserve. Conversely, where the occupier has made statements as to what was his intention and such statements are against his interest, the courts would usually accord to them considerable weight.” (Emphasis added)

Per Litton PJ^[13]:

“Here, the appellant has come nowhere near establishing adverse possession. He unequivocally declared that at all times he was ready willing and able to pay rent to the owners, and did not do so only because no one came along on behalf of the landlords to collect rent. Whether his acts and declarations in the course of the 1980 court proceedings amounted to an acknowledgment of the owners’ title in terms of s.23(1), or fell short of that, the fact remains that he had no intention to exclude the owners.” (Emphasis added)

Per Ching PJ^[14]:

“I need only add that there can be no better evidence of the intention of an occupier of land than his express declaration against his own interest.” (Emphasis added)

The aforesaid principle is not limited to adverse possession cases but has a general application.  See 章晶歷 v 吳聯模 and Another^[15].

32.As to drawing an adverse inference against a party on the basis of absence of a particular witness that party, the principles pointed out by the Court of Appeal in Tjang Siu Thu v Profield Construction Engineering Ltd[16] would have to be borne in mind.  In that case, McWalters JA (giving  the reasons for judgment of the Court) said:

“27. [Counsel] relies on the English Court of Appeal decision in Wisniewski v Central Manchester Health Authority [1998] PIQR 324. At p 340 Lord Justice Brooke said he derived the following principles from his examination of the case law:

‘(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

(2) If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

(4) If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.’

……

29. For an illustration of these principles [counsel] refers us to the decision of Mr Justice Norris in Mark Forstater Productions Ltd v Python (Monty) Pictures Ltd [2013] EWHC 1873. Prior to quoting the Wisniewski principles Mr Justice Norris said:

‘Of itself, the failure by a defendant to call a witness cannot prove a claimant’s case. The claimant must establish a prima facie case, capable of being displaced: if that is done then it is a matter of inference (not a matter of legal presumption) that the absence of the evidence is to be accounted for by the fact that if adduced it would not have been strong enough to displace the prima facie case.’

……

31. In Pacific Electric Wire & Cable Co Ltd v Texan Management Ltd [2013] HKCU 2163, CACV 90, 91, 93, 94, 95 and 96/2012, unreported, 17 September 2013 this court referred to the Wisniewski principles. At paragraph 107 the court quoted a commentary on the principles by Lord Sumption in Prest v Petrodel Resources Ltd [2013] UKSC 34 at para 44 where he said:

‘There must be a reasonable basis for some hypothesis in the evidence or the inherent probabilities, before a court can draw useful inferences from a party’s failure to rebut it.’

33. The following propositions can be derived from the case law:

(i) the Wisniewski principles do not constitute a presumption; consequently, the mere failure of a party to call a witness does not automatically confer an evidential benefit on the opposing party;

(ii) the Wisniewski principles concern the drawing of inferences and whether any inference is drawn will depend upon the quality of the primary facts on which the inference is based; this is necessarily a fact sensitive matter and will vary from case to case;

(iii) the primary facts must allow of the inference to be drawn in the sense that the inference logically flows from those facts;

(iv) in the circumstances of the case the judge must be persuaded that it is appropriate to draw the inference; and

(v) one circumstance where it will not be appropriate to draw the inference is where there is an explanation for the party’s failure to call the witness.

……

36. Thus, the Master was faced with a bare assertion made by an unreliable witness supported by explanations which were inherently incredible and contradicted by the plaintiff’s own conduct. These are all circumstances relevant to whether any adverse inference should be drawn against the defendant. [Counsel] seeks to make use of the Wisniewski principles to transform an unbelievable witness making an unbelievable claim into a proven claim. The Wisniewski principles were never intended to be used in this way.” (Emphasis added)

33.The drawing of adverse inference is not something to be lightly made. In Serious Fraud Office v Litigation Capital Ltd[17], Foxton J observed:

“45. The principles relating to the drawing of adverse inferences against a party from its failure to call a witness were recently reviewed by Cockerill J in Magdeev v Tsvetkov [2020] EWHC 887 (Comm), [149-154].  The Judge deprecated the increasing frequency with which adverse inference arguments were being deployed, noting that it was a principle “which is likely to genuinely arise in relatively small numbers of cases, and even within those cases, the number of times when it will be appropriate to exercise the discretion is likely to be smaller still”.  I respectfully agree with those observations.  The tendency to elevate any missing witness from the role of second gravedigger to the missing prince is scarcely conducive to cost-effective litigation, and it is necessary to remember that there are many reasons why a particular witness might not be called other than a desire to keep unhelpful evidence from the court.” (Emphasis added)

34.As submitted by Mr Lee, the party (“Party A”) asking the Court to draw an adverse inference against the other party (“Party B”) must satisfy two necessary conditions.

(1)  First, Party A must have adduced evidence of sufficient cogency to raise a prima facie case.  In cases where the plaintiff alleges a case of fraud, he must have adduced sufficient evidence probative of fraud before a prima facie case has to be met by the defendant.  This is made clear by Ribeiro PJ in Nina Kung v Wong Din Shin[18], in which the learned judge said:

“367. Adverse inferences can only be drawn from a failure to testify in such a context where there is a need to meet an established prima facie case. …

369. It follows that no question of drawing adverse inferences arises unless the respondent adduces evidence of a sufficient cogency to raise a prima facie case of forgery and of the implied conspiracy. Only then would the appellant need to refute that case and only then could the court be invited to draw adverse inferences from the absence of oral testimony from the appellant. But if the respondent does not cross the relevant evidential threshold, her omission to testify, as Cockburn CJ noted, “amounts to nothing”. And her omission to testify does not, as Gilliard J pointed out, help the respondent to fill any gaps in his forgery and conspiracy case.

370. The importance attached by Yam J and the majority in the Court of Appeal to the omission to testify is plainly linked to the fundamentally flawed approach of requiring the appellant to “dispel suspicious circumstances”. On that approach, many unanswered questions, characterised as undispelled suspicious circumstances, are bound to remain where the appellant has not gone into the witness-box to dispel them. However, whether or not the appellant testified in the witness-box, many questions identified as “suspicious” by the respondent would necessarily have remained unanswered. How could she have been expected to explain, for example, why there were two different writers for Documents A, B and C? Or the idiosyncratic language in Documents B and C? The absence of answers to questions such as these merely reflects the impossible demands of the erroneous burden. It provides no basis for criticising the appellant.” (Emphasis added)

(2) Second, Party B must be given an opportunity to proffer an explanation before the Court would draw an adverse inference. In Li Man Chi v Or Chun Kit[19], Chu JA (as she then was) said:

“24. In any event, there is no proper basis on which the court can be asked to draw an adverse inference. In Wisniewski v. Central Manchester Health Authority, Brooke LJ summarized the relevant principles as follows (at 340):

……

(4)    If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn.  If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”

25. In the present case, the defendant has not adduced any evidence on the issue in question.  The necessary condition for the court to draw adverse inference is therefore not present.  Further, the defendant has neither sought discovery from the plaintiff of her employment contract with Kei Oi Nursery, nor cross-examined the plaintiff as to why the employment contract was not produced and/or why no one from Kei Oi Nursery was called to give evidence on the terms of employment.  There was no opportunity for the plaintiff to proffer an explanation.  The court is simply not in a position to decide whether an adverse inference could be drawn against the plaintiff.  It is also unfair to invite the court to draw an adverse inference on the assumption that the plaintiff has no satisfactory explanation for the absence of witness or evidence.  It is even more unfair to mount this argument for the first time on appeal.” (Emphasis added)

35.In my view, the principles as set out in the aforesaid paragraph also apply to drawing an adverse inference against a party on the basis of absence of a particular document from that party.

36.An allegation of serious misconduct must be proved by evidence of a commensurate cogency.  In Nina Kung v Wong Din Shin[20], Ribeiro PJ said:

“182. The majority in the House of Lords in Re H & Others (Minors) (Sexual Abuse: Standard of Proof ) [1996] AC 563 held that the civil standard requiring proof on a balance of probabilities continues to apply where, in civil proceedings, an allegation is made of criminal (or similarly serious) misconduct, but explained that such standard is to be applied flexibly, factoring in the inherently greater improbability of serious misconduct as compared with lesser forms of misconduct, and therefore requiring the person bearing the burden of proving the allegation to prove it with evidence of a commensurate cogency.

……

184. …. in a case like the present, the Re H & Others (Minors) (Sexual Abuse: Standard of Proof ) [1996] AC 563 principle is applicable by analogy, operating not as defining a standard of proof, but imposing a standard of cogency which must be satisfied before evidence is considered sufficient to raise a case (here of forgery and of an associated conspiracy) for consideration by the court. When weighing up and assessing the probabilities in relation to the evidence adduced by the respondent as evidence of forgery, the court must bear in mind the seriousness of the misconduct alleged, recognizing that it carries an inherent degree of improbability.” (Emphasis added)

37.An inference of serious criminal misconduct cannot be drawn from mere conjecture nor on a mere balance of probabilities.  An inference of this kind can only be drawn as a matter of inference from proved facts.  In Ming Shiu Chung & Others v Ming Shiu Sum[21], Ribeiro PJ said:

“45. … As Sir Anthony Mason NPJ pointed out in HKSAR v Lee Ming Tee & Securities and Futures Commission (Third Party) (2003) 6 HKCFAR 336 at §72, inferences of fraud or serious misconduct are "… not to be reached by conjecture nor … on a mere balance of probabilities." They are "to be plainly established as a matter of inference from proved facts".

……

79. As was there pointed out, Dixon CJ stressed in Jones v Dunkel & Another (1958-59) 101 CLR 298 at p.305, that a court is not entitled to:

… choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied. (at p.305)” (Emphasis added)

38.P is trying to rely upon some adverse reports concerning D in the media as evidence in support of his case.  With respect, such media reports cannot be proper evidence in support of P’s claim in this Court.  As said by Godfrey J (as he then was) in Jademan (Holdings) Limited v Francis Leung Pak To[22]:

“[the deponent of one of the affirmations before the Court] makes reference to a number of newspaper reports concerning the matters with which the court is now concerned. I must protest at this. The court is not in the least concerned with what newspaper reporters say about events at which they claim to have been present. Whether at a trial or an interlocutory hearing, such material should find no place whatever. The exhibition of newspaper cuttings is not evidence. It is not of the slightest assistance to the court. I pay no attention to these reports.” (Emphasis added)

39.P is also trying to rely upon the fact that there has been police investigation against D as evidence in support of his case.  However, there is no evidence showing the details of the investigation, and whether the investigation against D in 2018 is still continuing.  More importantly, there is no evidence showing that anyone in D or associated with D has been convicted of any criminal offence as a result of the investigation.  Mere investigation does not mean that the person(s) being investigated is/are guilty of anything. The investigation itself cannot form an evidential foundation in support of any allegation in P’s case.

40.With the aforesaid in mind, I now turn to the evidence.  In the subsections below, I would discuss the evidence given by each witness.  I would first summarize the evidence given by that witness, and then I would give my view on the evidence of that witness.

D2.  P

D2.1 P’s evidence

41.P was born in Newcastle, Australia in 1972.  He obtained a Bachelor Degree from the University of Newcastle.  Later, he obtained a MBA Degree from the University of Western Sydney.  He has been working as a Logistics General Manager in a mining company in Newcastle Australia for many years.

42.P said that prior to being introduced to D, he had no experience in investing in precious metals, or of leveraged or margin trading.  His investment experience was limited to holding some shares in a few different companies publicly traded on the Australian Stock Exchange, and he traded infrequently.  P regarded himself as a conservative investor and he did not like to risk his hard-earned money.

43.On or around 15 August 2016, he contacted and befriended Jan through WeChat.  At that time, he was interested in discussing a potential investment in gold with Jan in the WeChat perform, as Jan’s account in WeChat showing numerous posts concerning her success in working as a gold investment consultant.  When P was having WeChat discussions with Jan, P was in Australia.

44.P had discussions with Jan through social media, and P said that Jan would use 4 different accounts, namely (1) Jan’s 1^st WeChat Account; (2) Jan’s 2^nd WeChat Account; (3) Jan’s Official WhatsApp Account; and (4) Jan’s Private WhatsApp Account.  The text messages in these accounts are part of the material contemporaneous documentary evidence in this case.

45.In 2016, P also came to know with Ms Lai Kai Hei Morgan (“Morgan”).  P began chatting with Morgan, a broker of D, in around February 2016.  Morgan referred to D as “our company”.  P chose to invest with Jan instead of Morgan eventually because Morgan would not be available when P travelled to Hong Kong in late December 2016.

46.On or around 21 December 2016, P organised a visit to Hong Kong to meet his friends and make further inquiries about gold trading.  For this purpose, he contacted some investment consultants in Hong Kong, including Jan.  P arrived Hong Kong on 27 December 2016.  On 29 December 2016, P told Jan via WeChat that P wanted to set up a trading account with D.

47.According to P, he only met Jan in person twice, ie on 29 and 30 December 2016 respectively.  Regarding these two meetings, there is no written record.  Accordingly, P would need to prove the matters in these two meetings by relying on his oral evidence.

48.Regarding the meeting on 29 December 2016 (“the 29 Dec 2016 Meeting”), P said the following in his evidence:

(1)  On 29 December 2016, P attended D’s office (“D’s Office”) at AIA Tower, 183 Electric Road, North Point, Hong Kong.  P met Jan and a person called Steve[23] in the foyer of the main building.  Jan introduced Steve as her assistant.  Jan and Steve then took P to D’s Office via an elevator.  Jan used an access card to gain access to D’s Office.  P was led into a room by Jan and Steve, and Jan told P that the room was her office.  Jan, Steve and P had a meeting inside that room.

(2)  Jan and Steve assured P of D’s ability to make significant profits for its clients through gold trading.  When P asked about the risk, both Jan and Steve told P that the risk would be minimised by D’s large team of analysts who were highly skilled and experienced in accurately predicting the trends in gold prices and conducting trades to maximize profits and minimise risk for the clients.  P said that relying on their assurances, he agreed to open a trading account with D.

(3)  At the request of Jan, P signed the Application Form to open an account with D for trading, and P executed the LA authorizing Jan to be P’s representative for dealing with the 1^st Account.  Before signing the Application Form, P noted a declaration on the form, and the effect of that declaration was that P had fully read and understood the Terms and Conditions (including but not limited to the Client Account Agreement and Risk Statement and Disclaimers) of D’s Client Account Agreement (“the Terms and Conditions”).  He asked Jan and Steve around three times if he could see the Terms and Conditions.  Their response was that executing the LA was the only requirement and there were no other terms and conditions for the account.  There was no other document apart from the Application Form and the LA.  P signed the LA at the request of Jan, who told P that it was D’s standard requirement for the LA to be signed by an account holder in favour of a representative of D, as only D’s representatives had access to D’s analysts’ data and advice required to operate the trading account and to achieve high profits with low risk.  Neither Jan nor Steve explained to P the contents of the Application Form or the LA.  Jan simply showed P where he had to sign, which P did after reading, and then P provided them with P’s passport and/or my driving licence (P could not recall which) for photocopying to satisfy their “know your client” requirements.  P was not provided with a copy of the Terms and Conditions.  P only saw the Terms and Conditions for the first time when D disclosed the same in these proceedings in around February 2020.  P was provided with a copy of the Application Form and a copy of the LA signed by him.

(4)  During the meeting, Jan informed P that D held an annual trading event/ scheme called the SFS Scheme in January every year, but it was open for participation only to D’s and its parent company’s executives and family, and that the SFS Scheme required a minimum investment of USD 1 million and was guaranteed to make double returns with low investment risk, having never made a loss in the past 10 years.

(5)  In the meeting, Jan handed her business card to P, which was identical to the copy that she had shared on WeChat.  Her position in D as shown on the business card is “Assistant Vice President – Marketing”.

49.After the 29 Dec 2016 Meeting, Jan sent P a message from Jan’s Official WhatsApp Account and requested P to communicate with her using that phone number, as her WeChat account often experienced internet problems.  She further told P that P should expect a call from D’s Customer Service Department regarding the trading account details shortly.  P and Jan decided to meet the following day for a casual chat over breakfast.

50.On 30 December 2016, during the breakfast meeting (“the 30 Dec 2016 Meeting”) at a restaurant around the corner from D’s Office, P and Jan discussed various things, including investment-related matters and personal matters, namely:

(1)  Jan was doing very well in D and her goal was to be a Vice President in 2 years.  Success in D came through bringing in the largest accounts, and the more money that she brought into the company the faster she would become Vice President.

(2)  The SFS Scheme was how D’s executives earned more money.  She was allowed to participate in the SFS Scheme but only with a small amount of money because the participation was closely guarded by the executives due to its guaranteed profits.

(3)  Jan was authorised to trade for a small number of priority members, and P was currently at the low end of the account size with his initial investment.  Jan also told P that her clients often bought her gifts (including jewellery) to thank her for the profits she had made.

(4)  Jan also talked about her family, ie her father, mother and brother.  She had been working so hard to achieve her goals that she had not had time for a partner for a long time.

After the 30 Dec 2016 Meeting, P has an impression that Jan liked him, was a high performer in D and that his investment was not only safe with D but that it would be highly profitable.

51.At a later time on the same day, P received emails from D’s Customer Service Department confirming the opening of the 1^st Account and providing details of the 1^st Account, D’s trading website, D’s bank account to be used for cash deposits, and the password for operating the 1^st Account.

(1)  By an email from Janbi Fan of D to P on 30 December 2016 at 2:41 pm, D informed P, inter alia, the number of the 1^st Account, the online trading platform, the dealing phone number, and the client service phone number.

(2)  By an email from Janbi Fan of D to P on 30 December 2016 at 2:42 pm, D informed P the password of the 1^st Account.  In this email, Janbi Fan on behalf of D said:

“Please keep [the password] in strict confidence!

Please feel free to contact me at [the phone number of D’s Customer Service Department] if you have any enquiries.”

At the request of Jan, P forwarded these details to her for the purposes of enabling her to conduct trading on P’s behalf, so that P would become a priority member of D.

52.On 30 December 2016, P started to inject fund into the 1^st Account. On 4 Jan 2017, Jan started to do trading in the 1^st Account.  Jan continued to promote the SFS Scheme to P.  P told Jan that he would need to withdraw money from his other investments in order to inject more money.  By 4 January 2017, P had injected USD419,955.63 into the 1^st Account.

53.On or around 6 January 2017, upon receipt of a statement emailed by D in respect of trading conducted on 5 January 2017, P became aware that he had suffered a loss in the sum of USD12,250 from trading in the 1^st Account. He raised this with Jan.  Jan said that the losses were minimal and would be made up through the SFS Scheme, which was going to be delayed.  P told Jan that he would need to withdraw funds from the 1^st Account at the end of January 2017 in order to purchase a house in Australia.  However, Jan told P that P would need to keep the funds in the 1^st Account until the SFS Scheme became operative, otherwise P would not gain the benefits of the SFS Scheme.

54.On 10 January 2017, Jan told P that she had spoken with her manager and told him that P was her fiancée, so that if P increased the investment to over HKD10 million, P would have the opportunity of becoming a top-50 priority member of D and Jan would be promoted as the Vice President of D.  Jan continued to highlight to P the low risks and high returns offered by the SFS Scheme, assuring P that if P invested HKD10 million, his investment would triple by mid-February.  With Jan’s assurances, P further injected USD381,608.64 to the 1st Account for the purposes of trading in the SFS Scheme, which was supposed to start on 13 January 2017.

55.On 21 January 2017, P asked Jan whether the desired target pertaining to the SFS Scheme could be met by mid-February, and Jan assured P that it was under control.  On 22 January 2017, Jan asked P to transfer approximately half of the funds in the 1^st Account to another trading account in D (“the 2^nd Account”), the features of which would give P priority and even greater returns from the SFS Scheme.  Relying on Jan’s assurance that this account would be managed by the internal team handling the SFS Scheme, P signed and sent Jan a withdrawal form and transferred a sum of USD641,025.64 from the 1^st Account to the 2^nd Account on or around 23 January 2017.

56.On or around 23 January 2017, Jan asked P not to contact her on Jan’s Official WhatsApp Account.  Jan messaged P from Jan’s Private WhatsApp Account and asked P to use the latter for all matters relating to the 2^nd Account. Jan also requested P to ignore all calls and messages from Jan’s Official WhatsApp Account so that the 1^st Account’s Customer Service Department would not know about the segregation of P’s two trading accounts.  P had a number of voice conversations with Jan on that day.  Jan told P that D’s  team handling the 1^st Account did not know about the SFS Scheme and that they would not be pleased if the funds were withdrawn from the 1^st Account. Jan was adamant that if D’s Customer Service Department in respect of the 1^st Account called, P should ignore them, which P did.  Jan said that the 2^nd Account would be handled by a department within D only meant for executives and this department would call P to confirm the transfer.  Jan was very clear in her instructions that this was the only way to access the internal SFS Scheme and the team handing the 1^st Account could not know about this.  P had been told so much about the profitability of the SFS Scheme by Jan, so P followed her directions.

57.On 24 January 2017, P received emails from D’s Customer Service Department confirming the opening of the 2^nd Account and providing details of the 2^nd Account, including the password for operating the 2^nd Account.

58.On or around 25 January 2017, upon receipt of a statement emailed by D, P became aware that a number of open trades had been placed using the funds in the 1^st Account, which had led to an aggregate market loss in the sum of USD222,160.  By 27 January 2017, P’s losses amounted to USD524,400.  Jan continued to insist that P would need to deposit additional HKD1 million in order to make any profits or to be able to withdraw his existing funds.

59.On or around 2 February 2017, P was informed by Jan that both the 1st Account and the 2^nd Account were in distress and further trading would be automatically stopped unless P deposited additional funds. Accordingly, on or around 7 February 2017, in order to allow trading to continue, P injected USD74,375.64 into the 2^nd Account.

60.On or around 8 and 9 February 2017, upon receipt of account statements emailed by D, P became suspicious about D’s trading activities.  Despite the injection of further funds, there had been significant losses in the 1^st Account and the 2^nd Account.  However, Jan continued to insist that the SFS Scheme, which was finally going to launch soon, would help recovering all the losses.  P told Jan that he would withdraw the funds if the SFS Scheme did not take off by the end of the week, as Jan had told P that P would not be able to withdraw once the SFS Scheme had started.

61.On or around 16 February 2017, P again discovered that he had suffered significant losses.  P asked Jan to speak to her bosses at D for a solution as P imagined this would have been the largest trading loss in the history of D over a span of only 6 weeks.  Jan told P that she would take it up with her boss at a company meeting scheduled for later that day.

62.In the next few days, Jan admitted that her trading on P’s accounts had increased the risk because she had not been using “stop limits” which would have automatically realised trades when the gold price moved a specific amount thereby capping the potential loss.  Her boss was unhappy with her trading and would take over the trading in respect of the 2^nd Account if P deposited additional funds.

63.P was of the view that the trading pattern in his accounts was not making any sense, with either hardly any trades being executed, or they were being executed in a manner contradictory to market trends.

64.Despite having set up a new USD bank account with P’s bank in Australia in order that any withdrawals from his trading accounts with D could be actioned more expediently, and despite repeated requests to Jan to update D’s records to reflect P’s new USD bank account, no confirmation from Jan regarding D’s records being updated was forthcoming.

65.By 25 February 2017, P was left with approximately USD7,000 in his trading accounts.  P was told that his account had suffered further losses as it had insufficient funds to make profits, and the only way to recover these losses was by depositing more funds.  Jan again tried to assure P that the SFS Scheme would be active from March to June 2017, and based on the trends in the gold market and historic success of the SFS Scheme, P would certainly recover all of his losses.  On or around 26 February 2017, when enquiring with Jan regarding D’s  senior management’s response to P’s losses, Jan told P that she had already informed her boss and the losses were attributable to the market conditions, rather than D’s ability to trade.  Jan warned P against reporting the matter to D’s Customer Service Department, saying that she would lose her career if P did, and also that their personal relationship would be over.

66.On 22 March 2017, Jan told P that his trading account had “busted” and that P had lost all the remaining funds in his account.  P was of the view that Jan was referring to the 1^st Account, not the 2^nd Account. P tried to seek a clarification about the losses as he had not carried out any trades on the 1^st Account, but P did not receive any response from Jan.

67.By the end of March 2017, Jan started ignoring P’s messages on Jan’s Private WhatsApp Account.

68.In late March 2017, Morgan contacted P and try to persuade P to move over to Morgan’s team for further investment.  Morgan also asked P to recommend his friends and family members to invest with Morgan’s team.

69.In or around early April 2017, P started getting messages from D’s representatives/agents asking P to invest further monies into D.  As the usernames for the chat accounts such as Jiangchoi and Jjchoibb, appeared to be associated with Jan, P discussed this with Jan on Jan’s Official WhatsApp Account, and Jan told P that these chat accounts belonged to D.

70.In late April 2017, P read some stories on the internet and comments from people who said they had lost their investments with D.  P mentioned this to Jan and suggested she should leave D and join another company.  Later in May 2017, P started asking Jan for information about her boss and whether D would refund the investments to him, whether she knew it was a setup, whether she was nice to him only to lure him into investing with D.  Jan evaded P’s questions and never provided any information.

71.In July 2017, P discovered that some transactions were performed by D on the 2^nd Account.  P thought that those transactions were unauthorized.  P contacted Jan about this issue, and Jan told P that she had left D.  P then contacted D’s Customer Service Department.  P was informed by D’s Customer Service Department by email that the trades had been triggered by the system due to insufficient margin funds in P’s account.  The replies to P were given by Hui.  Under cross-examination, P accepted that these transactions are not unauthorised.

72.In or around August 2017, P was contacted via WeChat by a person called Stephanie, who said that she represented D and was contacting P to explain the improper trading on P’s accounts at the behest of D.  She shared a copy of her business card with P.  According to the information on that business card, her full name was “Stephanie C.C. Hung”, and her position in D was “Assistant Vice President – Marketing”.  Stephanie told P that P would have to invest further funds with D in order to earn back his losses within a year and that Jan had been fired for “bad trading” in respect of her clients’ trading accounts whereby her clients had lost approximately HKD 30 million.

73.To P’s best knowledge, the Trading Accounts with D have been inactive since August 2017.

74.On 30 May 2018, P was contacted via WhatsApp by a person who introduced herself as Lisa, and she said that she was a former employee of D. Lisa told P the following:

(1)  She had seen P’s files and knew the way Jan had lied to P.

(2)  D was not a regular company and P should have done more research before trusting Jan.

(3)  She knew that P had lost HK$10 million by transactions in the Trading Accounts.

(4)  D did not have any SFS Scheme and that the trades were not conducted on the open market but were only placed on D’s internal system, with the collective funds then being traded on the open gold market.

(5)  D’s system was like gambling with the company you are investing in.  All P’s losses would belong to the company.  Then the amount of money would be shared by Jan and the company.  Maybe Jan would get 70% and company would get 30%.

(6)  There had been an investigation by the Hong Kong police relating to a conspiracy to defraud case against D and its involvement in a gold trading scam, whereby several victims had been lured by D into fraudulent precious metal transactions which resulted in victims eventually losing all their capital as a result of significant investment losses.  A hotline number had been set up by the police to receive complaints about the scam.

(7)  Lisa also told P the full Chinese name and the full English name of Jan.  Jan was married and she had used P’s money to buy an apartment with her husband in the Tuen Mun district of Hong Kong.

75.In mid-June 2018, P reached out to Jan on Jan’s 2^nd WeChat Account and confronted her.  Jan was evasive initially, denied taking any monies, and soon stopped responding to P’s messages.

76.On or around 17 July 2018, P contacted the Hong Kong police and filed a complaint against D in the hope of recovering his lost funds and assisting the police with their investigation into the scam.  The police informed P on or around the same day that they were investigating a “conspiracy to defraud” case against D.

77.The fraud was widely reported in the media.

78.Since learning of the fraud, P has located former employees and/or agents of D who worked for D at the time P was scammed, and through them, gained information about the culture and trading practices of D.  Although these former employees/agents are not willing to testify against D, these former employees/agents have informed P that:

(1)  As employees/agents of D, their performance was based on maximising the total investment into D, and not profits earned for the client.  Managers were focused on the total invested funds and agents were rewarded for this accordingly.  Managers were not concerned when investors’ funds were lost, and agents were advised not to be concerned with this either.

(2)  It was common knowledge that in 2017, a number of agents had their agreements terminated or were arrested by the Hong Kong police due to fraudulent trading practices.  The agents and employees were asked by the managers not to discuss this with anyone outside of D and warned that they would be reprimanded if they were found to have discussed it.

D2.2 My view on P’s evidence

79.I am of the view that P’s evidence on the exchanges between him on the one hand and Jan and Steve on the other hand concerning the Terms and Conditions in the 29 December 2016 Meeting is inherently improbable, and I refuse to accept his evidence on this point.

(1)  The Application Form contains the following declaration:

“Client’s Declaration:

The Client declares that the Terms and Conditions (including but not limited to Client Account Agreement and Risk Statement and Disclaimer) of Client Account Agreement of [D] have been read and fully understood.

……”(Emphasis added)

(2) By reading the Application Form, plainly this is not a document containing terms and conditions governing the contractual relationship between P and D. There is nothing in the Application Form defining the details of the service provided by D to P, and there is nothing in the Application Form setting out the respective rights and obligations of P and D under the contract between them.

(3) The LA is simply a document by which P has authorised Jan to be his authorised person to operate his account. The true meaning of the LA is to deem everything done by Jan concerning P’s account as P’s act, and P would be fully responsible for what Jan has done. The LA is not a document containing terms defining the service provided by D to P, and the respective rights and obligations of P and D under the contract between them. Further, in the LA, it is stated:

“1. I/We, the undersigned, hereby request and authorize the following person (“Authorized Person”) as my/our representative and attorney-in-fact for purchase and sales or otherwise dealing in metals whether on margin or otherwise on behalf of the Account in accordance with such terms and conditions which you may from time to time prescribed for the Account, and at my/our own risk.” (Emphasis added)

It is explicitly stated in the LA that there are some terms and conditions for the account under P’s name. Plainly, the terms and conditions would be in another document.

(4) Applying common and commercial sense, both the Application Form and the LA would not be documents containing the Terms and Conditions mentioned in the “Client’s Declaration” as stated in the Application Form. P, being a person with a MBA Degree and having experience in the business world for many years, would have no difficulty in appreciating this point.

(5) P claimed that before signing the Application Form, he had asked Jan and Steve three times if he could see the Terms and Conditions. Jan and Steve replied that there were no terms and conditions. P simply accepted this answer and signed the Application Form. No follow-up action was taken by P. In my judgment, what P said is inherently improbable and cannot be true.

(a) As said in the above, it would be quite obvious to P that the Application Form and the LA would not be the documents containing the Terms and Conditions. The Terms and Conditions would be in another document.

(b) P said that he had asked Jan and Steve three times for providing him the Terms and Conditions. P certainly realised the importance of the Terms and Conditions. However, it is most unnatural and indeed inherently improbable that when Jan and Steve told P that there were no terms and conditions, P accepted this answer without any reservation.

(c) In fact, in [10] of the ASOC (which has been verified by a Statement of Truth signed by P), it is pleaded that in the 29 Dec 2016 Meeting, at the request of Jan and Steve (both acting on behalf of D), P signed [the Application Form] and [the LA] “in accordance with the terms and conditions purportedly prescribed for [P]’s trading account … with D”. This plea contradicts P’s evidence. Had P been told that there were no terms and conditions for his trading account in the 29 Dec 2016 Meeting, this plea should not appear in the ASOC.

(d) The text messages produced by P do not show any request for the Terms and Conditions by P. Further, P also admitted that he had never contacted D’s Customer Service Department to try to obtain a copy of the Terms and Conditions.

(e) In my judgment, given P’s background, and given that P in fact realised the importance of the Terms and Conditions, it is inherently improbable that P would agree to sign the Application Form and make the declaration contained therein before having a chance to read the Terms and Conditions.

80.The discussion concerning the Terms and Conditions in the 29 Dec 2016 Meeting is an important episode in P’s evidence and an important part in P’s case.  I am of the view that P’s evidence on this important point is untrue. In the circumstances, I do not regard P as a reliable witness.  Save and except those parts supported by contemporaneous documentary evidence, and save and except the admissions made by P which are against his interest, I do not accept P’s evidence.

81.Mr Lee submitted that given the long lapse of time, P’s recollection of the material events is nebulous at best, and his evidence cannot be regarded as reliable.  Mr Lee has identified the following as examples showing that P’s recollection is unreliable:

(1)  Under cross-examination, initially, P said that he only discussed with Jan that “she would trade in gold” and nothing else.  However, the text messages exchanged between P and Jan showed inter alia that (a) P asked Jan to invest P’s money in the same way that Jan would invest her own; (b) they agreed on the size of the sum that should be invested; and (c) P monitored the daily statement and discussed with Jan about missing a profit of HK$60,000 the previous day; and (d) they discussed the price at which the trades should be executed.

(2)  As to the alleged representation made by Jan raised in the [14] of the ASOC that P’s investment in the SFS Scheme would make double returns in 2 weeks, under cross-examination, P initially said that he was sure that Jan never told him how long it would take to make double returns.  Later, after being shown contemporaneous documents and his pleaded case, P said that he could not remember the discussion between him and Jan over the timeframe of the returns.

(3)  P could not recall the details of the 29 Dec 2016 Meeting.  He could not recall whether Jan made the representation about double returns in 2 weeks in that meeting.  He also could not remember whether details on the Application Form were filled in in front of him.

82.Mr Lee further submitted that P cannot be a reliable witness, for he has a tendency to form subjective views which are not based upon objective facts. Mr Lee has drawn my attention to the following episodes in P’s evidence:

(1)  At [65] of his witness statement, P said he believed that Jan was “placing trades on an open international gold trading market”.  However, under cross-examination, P admitted that he had never been told by anyone that the trades placed via D would be placed on an open international gold trading market.  There is no basis for such an alleged belief.

(2)  At [55(3)] of his witness statement, P said that Lisa informed him that “[D] did not have any SFS Scheme and that the trades were not conducted on the open market but were only placed on [D]’s internal system, with the collective funds then being traded on the open gold market”.  In cross-examination, P was referred to the text messages exchanged between him and Lisa, and P finally admitted that Lisa never so informed P and never confirmed P’s subjective belief.

(3)  P repeatedly said that he was unable to withdraw money from his Trading Accounts.  However, the evidence shows that D had never refused P’s withdrawal of any of his funds in the Trading Accounts. 

(a)  P was allowed to withdraw US$641,025.64 from the 1^st Account, and the sum was then deposited into the 2^nd Account in accordance with P’s instructions.

(b)  Apart from the above instance, P had never attempted to withdraw sums from the Trading Accounts.  P was only told by Jan not to withdraw the funds from the Trading Accounts.  However, there is not a single instance in that D refused to proceed P’s application for withdrawing fund from the 1^st Account or the 2^nd Account.

83.I agree with Mr Lee.  Those points made by Mr Lee are further reasons in support of my conclusion as stated in [80] above.

84.Mr Lee has also drawn my attention to various admissions made by P in his evidence.  I agree that the admissions indeed has been made by P when he was giving evidence in the witness box, and these admissions would have an impact on P’s own case.  I would take these admissions into account in assessing merits of the parties’ respective cases.  The admissions made by P include the following:

(1)  P signed the Application Form and the LA.  Apart from these, P did not sign any documents with D, and P did not agree to any other contract with D.

(2)  P wanted his investments to be handled by Jan personally and placed his trust in Jan in respect of the operation of the Trading Accounts.  Jan could not gain access to his Trading Accounts without his login details and passwords.  P himself gave Jan the password of the 1^st Account so that Jan could trade on P’s behalf in the 1^st Account.  Subsequently, P also gave Jan the password of the 2^nd Account.  By giving these passwords to Jan, P wanted Jan to trade on his behalf in the Trading Accounts.  P was able to change the passwords of the Trading Accounts as long as no one else was logged into the accounts.  He in fact did so in relation to the 2^nd Account on 25 January 2017 and gave the new password to Jan.  Jan traded in the Trading Accounts until around 2 to 3 days before 28 February 2017.  All of the trades in the Trading Accounts from March to April 2017 were placed by P himself.

(3)  Jan marketed the SFS Scheme to him as an investment with very high returns with minimal to no risk.  P did not in fact believe that it would guarantee double returns.  Jan told P that the SFS Scheme was open for participation only for D’s and its parent company’s “executives and family”.  It is P’s understanding throughout that it is so limited.  P was never an executive or a family member of executives in the Glory Sky Group.  Jan had to lie to D that P was Jan’s fiancée, in order for P to be so included in the SFS Scheme.  P then opened the 2^nd Account and transferred money into the 2^nd Account in order to benefit from the SFS Scheme.  Jan told P to keep it as a secret from everyone, including D’s Customer Service Department.  P agreed to act with Jan and not to let D’s Customer Service Department know about this arrangement.

(4)  P himself conducted all the trades in the Trading Accounts in March and April 2017 (apart from the trades that are auto-executed).  He was able to execute trade orders through the online platform provided by D to buy and sell spot gold.  When he was operating in the online platform of his Trading Accounts, P would know in real time the price in which he closed the trade and whether a profit or loss is made in respect of that trade.  P was also able to tell whether the trades as recorded in the daily Account Statements delivered to him were inaccurate, and would have raised any such issues to D.  P did monitor the trades via the daily Account Statements.  Apart from the emails in July 2017 (which concerned auto execution of trades due to insufficient margin), P has not sent other emails questioning any of the trades or the Account Statements sent to him by D. In relation to the trades automatically executed due to insufficient margin, P accepts that these are not unauthorised trades.

(5)  The only source of information which led him to question whether the trades in his Trading Accounts were genuine was Lisa.  Under cross-examination and after reading the text messages exchanged between him and Lisa, P accepted that Lisa did not in fact tell him that the trades were not genuine or confirm P’s query as to whether the trades were not made on the “open market” or that the funds would be collectively invested.  P further admitted that he had no other evidence to support his query about whether the trading in the Trading Accounts actually took place.  At the end, P said that he did not know whether trades in the Trading Accounts actually took place.

85.Regarding the business card given by Jan to P, as rightly submitted by Mr Lee, there is no evidence showing that the business card was issued or approved by D.

86.As to the hearsay evidence from Lisa, I refuse to attach weight to that evidence.

(1)  Mr Brown submitted that Lisa must be someone within D, for (a) she had P’s contact details; (b) she had access to P’s file kept in D; (c) she knew that P suffered a loss of HK$10 million; (d) she knew the relationship between Jan and P, as well as Jan’s full name; and (e) she was able to confirm that the SFS Scheme did not exist.

(2)  Be that as it may, the fact remains that Lisa’s identity (including whether “Lisa” is his or her true name) is unknown.  The source of information of Lisa is also unknown. Further, Lisa has not given any live evidence in this trial and has not been subjected to cross-examination.

(3)  In my view, in the circumstances as stated in the above, it would not be prudent and safe to attach weight to the hearsay evidence from Lisa.

D3. Hui

D3.1 Hui’s evidence

87.Hui is also known as Alice Hui.  Hui was the company secretary in Nerico Brothers Limited (“Nerico”).  She was in that position in that company from 13 April 2007 to around August 2022.  Previously, Nerico was known as Glory Sky Global Markets Limited.  The name of the company was changed to Nerico in around 2019.  Nerico is a company within the Glory Sky Group.  To her knowledge, all the companies in the Glory Sky Group were owned by Mr Yeung Ping Kwan (“Yeung”).  When she worked in Glory Sky Global Markets Limited, she mainly served Glory Sky Global Markets Limited and D.

88.At the material times, D had around 600 to 800 agents and several thousand client accounts.  The Dealing Room was in Room 0109 on 42/F of AIA Tower.  D would provide promotional materials which show what products and services would be provided by D.  The promotional materials stated, inter alia, (a) what is spot gold and spot gold contract; (b) the number of ounces of gold involved in each contract; (c) the trading hours of D’s online platform in the internet; (d) how to calculate the profit and loss in the client’s accounts; (e) an introduction to D’s online platform for trading; (f) client may use a demonstrative platform to do sample trades.

89.At the material times, D did not provide clients with any investment advice, and D did not have any gold trading analysts.

90.D was subject to a police raid in 2018 and D ceased its operations thereafter.  As a result, the contents of the Glory Sky Group about the business of D were removed.  D also relocated its office to another address, and the promotional materials were not taken to the new office.  The police had taken some documents from D.  Hui herself was not interviewed by the police, and the management of D has not been subject to any criminal prosecution.

91.Spot gold and spot gold contract are one and the same.  Spot gold contract is to be distinguished from physical gold (or bullion).

92.In D’s online platform, the counterparty to the client’s trades would generally be D.  Different clients may be buying and selling at the same time through D as the middleman, which may result in matched trading.  The Account Statements are issued to show that D recognised these trades, and the statement would prove that the trades were done through D.

93.The transactions on D’s online platform in the Trading Accounts are margin trades.  The client would have to pay 2% of the contract sum to open a position.  In other words, the client would have no need to pay the full amount in order to purchase a spot gold contract.  The 2% for the opening of a position would be kept in the client’s account in the meantime, allowing the client to open the position as long as he has 2% of the sum in the account.  If an overnight transaction is involved, D would charge 2.2% interest if client has a “long/buy position” and 0.75% if client has a “short/sell” position. Each contract represents 100 ounces of gold.  The client would be able to take physical delivery of gold, but he or she would have to make full payment for the leveraged margin first, and would also need to pay the premium for the delivery of physical gold.

94.Jan was an agent (also known as account executive) of D, but her agency agreement was terminated by D at around the end of 2017.  Jan was not an investment consultant employed by D.  It is not the job or duty of any agent to make investment decisions for the clients, and D has not requested or authorised any agents to do so for clients.

95.Hui does not know whether Jan applied for a business card from D, or whether D provided a business card to Jan.

96.Normally, a person may either come to D’s Office in person to make an account opening application or to do so online.  A person may come to D’s Office to fill in an account opening application form, or to do an online application in the office.  According to D’s record, P’s account opening procedures were handled by a self-employed agent (“broker”) “Choi Ka Chun”, also known as “Choi Ka Chun Jan”.  Jan was not an employee of D.  D has not made any MPF contributions for Jan, and Jan was not a member of D’s MPF schemes.  Jan was not an investment consultant of any sort of D.

97.The record concerning Jan which Hui was able to see when Hui was preparing her witness statement dated 5 May 2020 is an Excel spreadsheet (“the 1^st Spreadsheet”).  Hui was unable to see the file containing documents concerning Jan.  That file might have been taken away by the police when the police searched D’s Office on 11 July 2018.

98.Hui mentioned that D had another Excel spreadsheet (“the 2^nd Spreadsheet”), in which the information of the clients would be recorded.  The name of each client, the account number of that client, and the agent responsible for the account opening of that client would be shown on that spreadsheet.  If a client requested to have a second account, there would be a tick on the side, and the reason why the client wished to open an additional account would be stated.

99.Hui’s duties included assisting with the recruitment and management of the self-employed agents entrusted by D.  The agents would, on behalf of D, conduct marketing, introduce D’s business to those who are interested in investing in spot gold, and assist them with account opening procedures, and if necessary, provide assistance to the clients who encountered problems while using D’s online platform.  D requested the agents to use the promotion materials provided by D.  Those promotion materials were also available on the website of the Glory Sky Group.  However, those promotion materials were not taken away when D relocated its office, and the information concerning trading in precious metals were all removed from Glory Sky Group’s website shortly after the police raid in 2018.

100.D’s online platform provided demonstration as to how to trade spot gold.  Anyone interested could log into a simulated account, to conduct simulated trading of spot gold contracts without paying any deposit.

101.D received P’s application form on 29 December 2016 and approved the Application Form on 30 December 2016.  The information on the Application Form indicated that P’s nationality is Australia.  P claimed that he was a General Manager, with income of around USD100,000 to USD500,000 per year.  The Application Form was signed by P. 

102.Under normal circumstances, the Terms and Conditions would be provided to the client when an account opening application is made, and would be provided to the client again upon the client’s request.

103.Apart from the Application Form, at the same time, D also received the LA signed by P.  The person authorised by P in the LA is Jan, who also signed the LA.  The LA was accepted by D.

104.The normal account opening procedures are as follows: Upon receiving an application, D would first verify the personal particulars and identify whether all the necessary documents are provided.  If the information is accurate and correct, the applicant would be contacted by telephone to ascertain his identity.  The applicant would be asked whether he understands the risks entailed in trading precious metals (usually spot gold).  This is to ensure that the applicant clearly understands the risks before an account is opened. According to D’s records, this was also how P’s application was processed. After the account is opened, the client would be notified of his account number and user ID via email.  D’s client service hotline and trading phone number would also be provided to the client via the same email.  These telephone numbers operate 24 hours a day.  There would be another email to the client, notifying the client the account password.  There would be a reminder in this email, reminding the client to keep the password safe and not to disclose the same to any third party.  The wording used in the email is “Kindly keep it in strict confidence!”  A copy of the approved account opening documents would also be emailed to the client for his retention.

105.A client who opens his account online would first be required to fill in information such as personal particulars, status of employment, financial status, investment experience, etc, after which he would see the Terms and Conditions. The Terms and Conditions would be shown on the screen.  After reading the Terms and Conditions, he would need to tick the box indicating that he has carefully read the Terms and Conditions.  Thereafter, he would see a completed application form.  He would need to print out the application form and, if everything thereon is correct, sign the application form.  Then the client would need to submit the signed application form to D for the account opening.

106.Hui confirmed that the version of the Terms and Conditions produced by D in this trial was the version applicable at the material times, for there had not been amendment to the Terms and Conditions after 2013.

107.The Terms and Conditions contain the following:

(1)  Clause 1(a)

““Agreement” means the written agreement between the Client and [D] regarding the opening, maintenance and operation of the Account(s) as amended from time to time, including but not limited to the Account Opening Form, Appendix to Account Opening Form for Joint Account Holders (if applicable), Client Information Statement, Precious Metals Account Terms and Conditions, applicable Risk Disclosure Statement and Disclaimer and any authority given by the Client to [D] with respect to the Accounts.”

(2)  Clause 13(b)

“The Client acknowledges that [D] may take the opposite position to the Client’s order, whether on [D]’s own account or on behalf of other Clients.”

(3)  Clause 29

“Where an instruction is received through the Web Facility from the Client,

(a) [D] shall execute such instruction at the price quoted in the Web Facility at the exact point in time that such instruction is received by [D]; or

(b) where the Client has specified a price, [D] shall execute such instruction immediately once the price quoted in the Web Facility has reached or passed the specified price, and the execution price will be the price quoted in the Web Facility at that exact point in time, which may not be identical to or may be worse than the specified price.”

(4)  Clause 35

“The Client understands that [D] does not guarantee the timeliness, sequence, accuracy, continuity, promptness or completeness of the information in the Web Facility and no recommendation or endorsement from [D]shall be inferred from the information provided therein.”

(5)  Risk Disclosure Statement and Disclaimer annexed to the Terms and Conditions

“This brief statement does not disclose all of the risks and other significant aspects of trading in metals. In light of the risks, you should undertake such transactions only if you understand the nature of contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. Trading in metals is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, financial resources, objectives and other relevant circumstances.

1. Risk of Margin Trading

The risk of loss in financing a transaction by deposit of collateral is significant. You may sustain losses in excess of your cash and nay other assets deposited as collateral with the licensed or registered person. Market conditions may make it impossible to execute contingent orders, such as “stop-loss” or “stop-limit” orders. You may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits and interest payments are not made within the prescribed time, your collateral may be liquidated without your consent. Moreover, you will remain liable for any resulting deficit in your account and interest charged on your account. You should therefore carefully consider whether such a financial arrangement is suitable in light of your own financial position and investment objectives.

……”

108.If a client wishes to authorise someone else to give trading instructions on his behalf, the client must sign a written authorisation.  The client would be fully responsible for any trading conducted by the authorised person.

109.If at any time, P had any queries about the services or products provided by D, or any requests to examine or be provided with the Terms and Conditions, P could make a phone call or email D, or visit D’s Office in person.

110.According to D’s records, there were transactions in P’s accounts relating to the trading of spot gold between January 2017 and July 2017.  P had made profits and losses in the process.

111.In respect of these transactions, P has never made any complaints to D.

112.At around the end of January 2017, the broker Jan, on behalf of P, indicated to D that P wished to set up another investment account.  According to D’s records, the reason provided at the time was that P wished to have another account to do investments with a different strategy.  Very often, there would be clients taking this course or have this kind of mind set.  D approved this application and allowed P to have one more investment account and did not notice anything suspicious in the process.

113.As stated in the Application Form, P requested that the account opening confirmation documents and invoices should be sent to him through emails.  D issued the relevant transaction information of the accounts to P by email on a daily and monthly basis.

114.D has never launched the SFS Scheme as alleged by P in his evidence. Hui has never heard of this name and does not know what it is.

115.If a client wishes to make a withdrawal of fund from his account, he may submit his withdrawal application in person, by fax or by email, or he may make an online withdrawal application through the online platform.  The cut-off time is 12:00 noon every day.  A withdrawal application received before that time would be processed in the afternoon on the same day, and the fund would be released and transferred to the client’s designated account.  According to D’s records, P has never made any withdrawal application.

116.Under cross-examination, Hui was asked whether there is any difference between trading in “spot gold” and trading in “spot gold contracts”. Hui answered that to her knowledge, trading in “spot gold” is actually trading in “spot gold contracts”.   On D’s online platform, what was being traded was “spot gold contracts”.  Hui was also asked whether a client could withdraw physical gold from D.  Hui said that if a client really wants to withdraw physical gold, he could do that, but he would need to pay the full payment for the leverage margin, and he would need to pay the premium for that day because there would be a premium for the delivery of physical gold.  The clients trading on D’s online platform was doing trading for investment purposes.  It was very rare to have a request for delivery of physical gold.

            D3.2  My view on Hui’s evidence

117.In my view, Hui is a forthcoming witness with nothing to hide.  Her evidence is clear and cogent.  Save and except a few instances of hearsay evidence, the veracity of her evidence cannot be doubted.

118.Mr Brown submitted that Hui’s evidence has no value because Hui just simply repeated what Yeung or D’s solicitors told her, and Hui’s evidence or much of it is hearsay.  Mr Brown submitted the unreliability of Hui’s evidence is shown by the following:

(1)  Hui said that Jan was not D’s employee by reference to D’s MPF records.  However, Hui herself in fact had not checked D’s MPF records.

(2)  Hui said that for the purpose of this case, D conducted an internal investigation and found that all the transactions in P’s accounts were spot gold contracts.  However, Hui in fact had no participation in the internal investigation.  She was only told by Yeung the outcome of the investigation.  She did not know the details of the investigation.

(3)  In her witness statement, Hui said that P had failed to produce the statements provided by him to the police.  Hui said that this was what D’s solicitors told her.  However, P has in fact produced his police statements.

119.With respect, I am unable to agree that Hui’s evidence has no value.  Hui in fact has given detailed evidence on the transactions on D’s online platform and the role of D’s agents.  She herself has personal knowledge of all these matters.  Hui also had direct communication with P through emails regarding P’s enquiry concerning insufficient margin amount in the 2^nd Account in July 2017.  Her evidence on all these matters are relevant to the issues in this case.  As to the specific examples mentioned by Mr Brown in his submissions:

(1)  Whether Jan was D’s employee would not be a matter of importance in this case.  In her evidence, Hui has confirmed that Jan was D’s agent, and Hui knew Jan personally.

(2)  The internal investigation mentioned by Hui in her evidence also would not be a matter of importance in this case.  Hui has said that from the Statements of the Trading Accounts, she could confirm that P was trading in spot gold contracts. Further, in P’s evidence, P confirmed that all the transactions in the Trading Accounts were done by Jan or by himself.  P also accepted that in fact there has not been any unauthorised transaction in the Trading Accounts.

(3)  Hui made a mistake as to whether P had produced his police statements in this case. However, this mistake would not affect the veracity of her evidence as a whole.

120.Mr Brown also submitted that Hui is an evasive witness, and he referred me to the following episode in Hui’s evidence concerning Jan’s agency agreement:

“Q: And did you at any stage try and have a look at Ms Choi's agency agreement?

A. Any stage, meaning?

Q At any stage prior to your - since - any stage in these proceedings, since the proceedings have commenced?

A. In fact, all the agency agreements had been taken away by the police upon their search on 11 July 2018. Thereafter, no one had access to these agreements.

Q. And there was no copies kept of any of the documents taken by the police?

A. No

……

Q. And so it's not the case that Ms Choi's agency agreement has been lost?

A. It could not be found, so I did not know whether it had gone missing or it had been taken away. Anyway, it could not be found.

Q. But you just told me that all of the agency agreements were taken by the police on 11 July 2018, is that correct or incorrect?

A. As far as I knew, that was the case.

Q. And is it the case that the entire file for Ms Choi has gone, or just the agency agreement?

A. The entire file was gone.”

121.In his final submissions, Mr Brown submitted that having accepted all the original agency agreements were with the police, the obvious answer to the question of whether Jan’s agency agreement was lost should be “No”.  Mr Brown submitted that Jan tried not to give that direct answer, for that answer would contradict what Yeung had said in the affirmation made by him on 6 February 2020 (an affirmation made by Yeung on behalf of D to oppose P’s application for specific discovery (“the Discovery Affirmation”))[24]. Hui’s answer that she did not know whether it was missing or taken away by the police was a direct contradiction to her statement that the police took away all the agency agreements.

122.I am unable to accept Mr Brown’s point.  The point now made by Mr Brown has not been put to Hui during cross-examination, and Hui has not been given an opportunity to respond and to explain.  That would not be fair to Hui.  In my judgment, Mr Brown is not entitled to take that point in the final submissions.

123.Further or alternatively, there is no force in Mr Brown’s point.  Regarding Jan’s agency agreement, Hui’s answer is “[i]t could not be found, so I did not know whether it had gone missing or it had been taken away.  Anyway, it could not be found.”  I have no difficulty in understanding Hui’s evidence.  Hui did not know whether Jan’s agency agreement had already been lost before the police search in July 2018.  On 11 July 2018, all the agency agreements in D’s Office at that time were taken away by the police.  Hui did not know whether Jan’s agency agreement was lost prior to the police raid, or Jan’s agency agreement was taken away by the police during the raid.  There is no basis to say that Jan was evasive in giving evidence concerning Jan’s agency agreement.

124.Mr Brown further submitted that Hui is evasive on questions concerning the business cards.  Originally, Hui confirmed that the business cards were approved and provided by D.  There was no suggestion from Hui that Jan’s business card had been obtained by any means other than going through the usual process.  Logically, that would mean that Jan’s business card was approved and provided by D.  However, when being asked specifically about Jan’s business card, Hui backtracked and said that she did not know whether Jan’s business card was approved and provided by D, because Hui was not the staff member in charge of the business cards matter.

125.I am unable to accept Mr Brown’s submissions.  Hui’s evidence on the business cards is as follows:

“Q. And would all of the agents have a Glory Sky business card?

A. I’m not sure.

Q. And so you wouldn’t know whether the -- well, for the agents -- do you know that some of the agents have business cards like Jan Choi’s card?

A. As far as I know, some agents had business cards.

Q. And for the agents that you are aware of who have business cards, do they use this same Glory Sky format that we have here?

A. They look similar, but I’m not sure about the exact company names on the cards.

Q. And if an agent wants a business card, are those provided then to them by Glory Sky?

A. If an agent wants a business card, I think the agent would have to apply to the company for the company to approve.

Q. And then if that is approved, then the company would provide them for them.

A. Yes, that’s as far as I know.

Q. And so for example Jan Choi’s card, you would believe that she would have had to apply to the company to have this card issued and printed by them.

A.  I’m not sure about that.”

126.Hui in fact mentioned the following in her evidence:

(1)  She was not sure whether all D’s agents would have business cards.  She only knew that some of D’s agents had business cards.

(2)  If an agent wanted to have his or her business cards, the agent would need to make an application to D and would need D’s approval.

(3)  She did not know whether Jan had made an application to D for having her own business cards, and whether the application (if made) was approved by D.

127.In my view, Hui’s evidence on the business cards is logical, and no valid criticism against her evidence can be made out.

128.In my view, Hui is an honest and reliable witness.  In relation to the matters on which she has personal knowledge, I accept her evidence and attach weight to her evidence.

D4. Chan

D4.1 Chan’s evidence

129.At the material times, Chan was employed by Glory Sky Global Capital Limited (a member of the Glory Sky Group), but worked in the Dealing Room.  His duties included answering phone calls from D’s clients, and handling enquiries concerning trading from D’s clients.  Under cross-examination, Chan said that at the time of his witness statement, ie 20 September 2022, he had already left Glory Sky Global Capital Limited.

130.According to Chan, spot gold trading services do not have a designated exchange, and are generally traded over-the-counter and with margins containing elements of leverage.  The purchase and sale prices offered by different spot gold companies are set with reference to the international gold prices, which are about the same.  Before making a transaction, the buyer or seller can clearly see price quotes and their fluctuations and changes without any ambiguity.  However, similar to the purchase and sale of gold prices in shops selling gold, there would be differences in the price quotes provided by different companies.

131.Although a company (not D) in the Glory Sky Group is a registered member of the Chinese Gold and Silver Exchange in Hong Kong and can conduct gold trading transactions, the over-the counter spot gold trading business operated by D has no direct relation with the Chinese Gold and Silver Exchange, and does not need to apply for or hold any licence.

132.A client who wants to trade spot gold at D’s online platform would need to open an account with D and obtain the relevant account number and online transaction password before he can do trading at D’s online platform.  For each transaction, there would be an administrative fee or trading commission, unless these fees are waived.  Further, interests would be accrued for margin trades that are not closed and remain effective overnight.

133.D would not provide any advice on investment and trading.  Clients must make their own investment decisions.  D also would not manage or operate accounts on behalf of clients.  All clients of D could withdraw their profits at will.

134.After opening an account, the client would need to put a deposit into the account.  After completing a transaction, if profit is recorded, the balance in the account would increase.  If a loss is recorded, the balance in the account would drop.  If the balance drops to a certain level, the client would be required to top up the account.  This reminder is commonly known as a margin call.  If the client fails to top up the account in a timely manner as requested, his position would be forced closed or forced liquidated.  After closing his position, the profit or loss recorded would become real, and would become actual profit or loss.  In other words, before the position is closed, only potential profit or loss is recorded in the account, and that potential profit or loss would not be locked until the position is closed.

135.The trading of spot gold contracts is generally carried out in the form of margin.  The client does not need to pay the total value to buy a spot gold contract, but only a small portion.  Accordingly, the client can make a large investment with a small amount of capital.  In other words, there can be a high leverage ratio.  The risk involved would also be greater, for the client would earn more or lose more because of the operation of the leverage.

136.D has appointed agents (commonly known as brokers) to carry out market promotion to those who are interested in investing in spot gold, introducing D’s business to potential clients, and assisting them in account opening.  They would also assist clients with problems encountered when using the online platform whenever necessary.

137.D has never launched or provided any plan called the SFS Scheme as alleged by P.  The alleged SFS Scheme or any related product has never appeared or been mentioned on D’s online platform.  Chan has never heard of the term “SFS Scheme”.

138.D often hedges with third-party dealers for the risks arising from clients’ trading, so as to manage the associated risks or potential risks faced by D.  Chan absolutely disagrees with any allegations against D that its services or related trading arrangements were or appeared to be informal or improper.  D did not deceive or defraud P.

D4.2  My view on Chan’s evidence

139.Mr Brown submitted that the question with Chan’s evidence is the relevance, utility and completeness of his evidence.  Mr Brown did not challenge the veracity of Chan’s evidence.

140.Mr Brown submitted that Chan has no first-hand knowledge of any relevant matter to be determined in these proceedings, and Chan’s evidence is at best general and largely meaningless statements about gold trading and D.  Mr Brown submitted that Chan:

(1)  never worked for D;

(2)  was not involved in any of the transactions in the Trading Accounts;

(3)  was not a party to any of the correspondence or discussions between P and D’s representatives;

(4)  played no role in the formation of the contract between P and D;

(5)  did not have access to any of D’s documents or records when preparing his witness statement;

(6)  did not review any of the transactions in the Trading Accounts;

(7)  did not know how the payment process for transactions operated;

(8)  did not review any documents prior to giving his witness statement or attending trial; and

(9)  gave no evidence that was specific to P, save to confirm that P was a client of D, and his belief that D did not deceive or defraud P.

141.Mr Brown further submitted that all that Chan could contribute is the following:

(1)  that there is a difference between trading in physical gold and trading in “spot gold contracts”;

(2)  any trades done by D would be in “spot gold contracts” as distinct from physical gold; and

(3)  that D is the undisclosed counterparty to every trade on the D’s online platform. 

142.Mr Brown argued that D’s pleaded case has been contradicted by Chan’s evidence, for it is pleaded by D in the RRAD at [2] that D’s Product is “simply buying and selling gold” and “where buyers and sellers trade directly with each other”.

143.With respect, I am unable to accept Mr Brown’s submissions.

144.RRAD [2] is as follows:

“2.   Save and except it is admitted that at all material times, [D] was a company incorporated in Hong Kong with limited liability and carrying on the business of providing a trading platform and brokerage services for customers to trade in “spot gold” (the “Product”), by placing orders for buying/ selling of the Product the using the trading platform provided by [D], no admission is made to the paragraph 2 of the Statement of Claim in this action.  Common features of trading the Product are that “spot gold trading is simply buying or selling gold at the live price. There are no market makers or brokers in spot gold trading.  The spot gold market is an online platform where buyers and sellers trade directly with each other.””

145.Further, in RRAD [8], it is stated:

“8. … it is admitted that [D] had a client in the name of [P] … who opened a trading account with [D] on or about 29^th December 2016 with account number … for the purposes of trading in the Product by way of buy/sell orders (contracts) for the Product. ……” (Emphasis added)

146.Reading RRAD as a whole, D’s pleaded case is that D’s business is providing an online platform and brokerage services for clients to trade in “spot gold”, and trading in “spot gold” is carried out in the form of buying and selling spot gold contracts.  There is no contradiction between Chan’s evidence and D’s pleaded case.

147.Further, in the Statement of Agreed Facts, it is stated:

“5. P forwarded the login details and password to [Jan] for the purposes of enabling [Jan] to conduct gold derivatives’ trading on P’s behalf.” (Emphasis added)

148.Mr Brown tried to argue that P in fact intended to buy and sell physical gold in the Trading Accounts.  However, this submission is not supported by the evidence.  There is no reliable evidence showing that P intended to buy and sell physical gold in the Trading Accounts.  On the contrary, in the Statement of Agreed Facts, P admitted that he forwarded the login details and the password of the 1^st Account to Jan to enable her to conduct gold derivatives’ trading.

149.Chan has given clear evidence on the operation of D’s online platform and the nature of D’s business.  These matters are relevant to the issues to be resolved in this trial.  In my view, the points made by Mr Brown in his submissions would not undermine the value of Chan’s evidence.

150.I regard Chan as an honest and reliable witness.  His evidence is clear and cogent.  I accept Chan’s evidence and attach weight to his evidence.

E.    DISCUSSION

E1.  No prima facie case established by P

E1.1  No prima facie case shown in P’s pleaded case on the “Contract” as alleged by P

151.The “Contract” relied upon by P is pleaded in [13] of the ASOC. It has not been pleaded that the “Contract” is a contract under seal. It has also not been pleaded what is the consideration from P in support of the “Contract”.

152.It is trite that if the agreement relied upon by the plaintiff is not under seal, the plaintiff must plead the consideration in support of the agreement.  In Liu Hon Wong and Others v Liu Chee Kwan and Another[25], I said:

“114. It is trite that except in the case of negotiable instruments, consideration in support of a binding agreement (which is not under seal) must be pleaded.

Hong Kong Civil Procedure 2023, Volume 1, §18/12/4:

‘…… If the agreement is not under seal, the consideration also must be pleaded. ……’

Hong Kong Civil Procedure 2023, Volume 1, §18/12/8

‘Consideration - If this is for any agreement not under seal, it is a material fact and must be pleaded, except in the case of negotiable instruments, where it is presumed. ……’

In Huen Wai Kei v Choy Kwong Wa Christopher (No 2)^[26], Kwan JA (as she then was) said:

‘60. Order 18 r.7(1) of the Rules of the High Court (Cap.4A, Sub.Leg.) stipulates that every pleading must contain a statement in a summary form of the material facts on which the party pleading relies for his claim or defence. Hong Kong Civil Procedure 2014, Vol.1, para.18/12/7 reads as follows: “(6) Consideration - If this is for any agreement not under seal, it is a material fact and must be pleaded, except in the case of negotiable instruments, where it is presumed.” No authority was cited in the commentary for this proposition, but Mr Chain was able to refer us to Clarke v Gray (1805) 6 East 564, which was mentioned in an old edition of Bullen & Leake & Jacob's Precedents of Pleadings (13th ed, 1990) p.269, and the relevant passage is as follows: “The consideration necessary to the validity of a simple contract must in general be shown upon the statement of claim (Myddleton v Lord Kenyon (1794) 2 Ves Jr 391, 408; Clarke v Gray (1805) 6 East 564). But consideration need not be pleaded for agreements under seal, bills of exchange, promissory notes and cheques.”

61. The Security & Set-Off Agreement, which was made orally, was not an agreement under seal. In Clarke v Gray at 568, Lord Ellenborough CJ had this to say about an agreement not under seal:

‘It is no more necessary to state every part of an agreement not under seal, each part making a distinct contract, than it is of an agreement under seal: it is sufficient in either case to state so much of each as constitutes that contract, the breach of which is complained of, prescribes the duty to be performed, and the time, manner, and other circumstances of its performance: with this difference only, that in the case of an agreement, not under seal, the consideration must be stated, and no part of the entire consideration for any promise contained in the agreement can be omitted.’

62. Mr Bell submitted this old authority should be treated with circumspection as the law on consideration has developed since. We are inclined to think the passage quoted above on the pleading of consideration remains good law. Consideration for the Security & Set-Off Agreement is a material fact and should have been pleaded by the plaintiffs. This was not done in para.8 of the consolidated statement of claim, which has been set out in full in the earlier part of this judgment.’ (Emphasis added)

In Kwok Chin Wing^[27], Ma CJ said:

‘19. …... an agreement to establish a case on the basis of joint and several liability must — like any other agreement — be properly pleaded: when and how the agreement was made, its material terms, the consideration therefor, breach, the sum due thereunder, and where appropriate, damages.’” (Emphasis added)

153.Having considered the ASOC and Mr Brown’s submissions carefully, I do not see any consideration from P has been pleaded in support of the “Contract” in [13] of the ASOC.  It has not been pleaded that as a result of the agreement mentioned in [13] of the ASOC, P has conferred any benefit on D or D’s nominee, or P has suffered any detriment.  That being the case, P’s claim based upon that “Contract” must fail.

154.Without prejudice to the conclusion above, I would set out further or alternative reasons why P’s contractual claim cannot succeed in the paragraphs below.

E1.2   No prima facie case shown by the evidence on the “Contract” as alleged by P

155.As a result of my findings that P is an unreliable witness, and based upon P’s admissions that the only documents signed by him are the Application Form and the LA, there is no evidential basis in support of the “Contract” as alleged by P.  The only contract between P and D would be the contract as shown in the Application Form, governed by the Terms and Conditions.  Pursuant to the contract, D was only providing an online trading platform and brokerage services to P.  The Terms and Conditions have been expressly referred to in the Client’s Declaration in the Application Form signed by P.  P must be bound by the Terms and Conditions.  There is no recognized legal basis pleaded in P’s case, upon which P could say that he is not bound by the Terms and Conditions.[28] Further, in the light of the LA, and based upon P’s admission as set out in [84(2)] above, it is clear that Jan and only Jan was authorised by P to trade in the Trading Accounts.

E1.3 No prima facie case on breach of duties

156.The “Contract” as alleged by P has never been in existence.  It cannot be said that D had breached a contract which did not exist at any time.

157.As said in the above, Mr Brown has confirmed that the claim based upon breach of duties is premised upon the “Contract” as pleaded in P’s case. I have ruled that there is no such contract.  As a result, it cannot be said that D has breached the alleged duties.

E1.4   No prima facie case on misrepresentations

158.Regarding the claim based upon Representations 1 and 2, P’s case is that Representations 1 and 2 were made by Jan to him in the introductory Wechat conversations, and were repeated in the 29 Dec 2016 Meeting.[29] The evidence on these two representations is in P’s witness statement [12] and [13].

(1)  As to Representation 1, P claimed that the representation was made by Jan in the Wechat exchanges between him and Jan on 16 August 2016.  However, under cross-examination, Mr Lee pointed out to P that in the text messages cited by P, Jan did not say anything about the experience of D and its agents, and there was nothing about “take advantage of the gold prices and provide low-risk and high returns for its clients”.  P admitted this.

(2)  As to Representation 2, P claimed that the representation was made by Jan in the Wechat exchanges between him and Jan on 18 August 2016.  Under cross-examination, Mr Lee pointed out to P that in those text messages, Jan did not say that the risk of losses would “always be minimized” by D’s analysts, and Jan did not say that the analysts had the skill and experience in “accurately predicting trends and maximizing profits and minimizing risks”. P admitted these.   Further, in the text messages relied upon by P, Jan in fact expressly mentioned that the investment would involve unpredictable risk of sudden events affecting gold price, and if they bought in the wrong position, the client would lose money.

(3)  In my judgment, Jan did not make Representations 1 and 2 in the Wechat messages referred to by P.

(4)  What has not been said before could not be repeated in the 29 Dec 2016 Meeting.

(5)  As to P’s reliance on what Jan had said in the 29 Dec 2016 Meeting, I have found that P is an unreliable witness.  That being the case, there is no reliable evidence showing what has been said by whom in that meeting.

159.By reason of the aforesaid, there is no prima facie case on the alleged Representations 1 and/or 2.

160.That being the case, whether Jan had the authority to make the alleged Representations 1 and/or 2 on behalf of D to P is not a matter which would affect the outcome of this case.

E1.5   No prima facie case on Scam and restitution

161.The Scam as pleaded in P’s case is that there was no gold trade in the open market as was intended actually carried out in the Trading Accounts.  On the Scam, P admitted that the only source of information which led him to query the genuineness of the transactions in the Trading Accounts was from Lisa.  As stated in the above, I am of the view that it would not be prudent and safe to attach weight to the hearsay evidence from Lisa.

162.Further, under cross-examination, Mr Lee drew P’s attention to the text messages exchanged between him and Lisa, in which Lisa told him the following:

(1)  “[D] … is not a regular company.”

(2)  “because [D]’s investing system is like gambling with the company you are investing in.  All your losses belongs to the company.  Then the amount of money would be Jan and the company.  Maybe Jan earn 70% and company would be 30%.”

(3)  “It is because your account is opened in [D] and gambling with the company.”

(4)  “Investment only about risk and profit.”

(5)  “Ha, you have to remember is that investment need strategy.  There are no one can affect the market.  If you decided to do investment.  You have to afford the risk before doing so.”

Mr Lee put to P, that in fact Lisa did not tell P that the transactions in the Trading Accounts were not genuine, or confirm P’s query as to whether the transactions were made on the “open market” or that the funds would be collectively invested.  P agreed.  In my view, Mr Lee’s interpretation of the relevant text messages is fair and correct, and P has rightly agreed to the same.  In my view, the information from Lisa cannot support the Scam alleged in P’s pleaded case.

163.For the sake of discussion, even if any weight is given to what Lisa said in those text messages, “gambling with the company” is consistent with Clause 13(b) of the Terms and Conditions, ie, D may take the opposite position to P’s order, whether on D’s own account or on behalf of other clients.  On any view, what Lisa said does not support the Scam now being put forward by P in his pleaded case.

164.Under cross-examination, P further admitted that he had no other evidence to support his query about whether the transactions in the Trading Accounts actually took place.  When Mr Lee put to P that the transactions in the Trading Accounts actually took place, P’s answer is “I don’t know.”

165.By reason of the aforesaid, in my judgment, P has failed to adduce cogent evidence to prove a prima facie case of the alleged Scam.

166.At the final submissions stage, Mr Brown drew my attention to two letters from the police.

(1)  Letter dated 13 August 2018 from the police to P (“the 1^st Letter”), in which the police said:

“Re [D]

I write to ascertain your intention to take civil action to recover your investment loss with the captioned company.

This is a case of 'Conspiracy to defraud' where 170 victims were reportedly lured to make payment of about HK$100 million in total to bank accounts of two bullion companies for allegedly Loco London Gold investment. As at today, the Commercial Crime Bureau had arrested a total of 49 persons who were found in connection with this case. The number of victim surfaced and amount of loss are increasing upon the appeal for information from the public in July 2018.

Victims may apply for a civil injunction against the moneys in question in order to save costs and it is advised that it can be proceeded by way of a representative action. However, it should be noted that the moneys left in the suspicious accounts are insufficient to meet the potential civil claims by all victims in full.

If there is no civil claim on the moneys in question after a reasonable period of time, the Government of HKSAR may apply and confiscate the same under the Hong Kong Laws. Upon successful application, the fund will be ordered by court to be confiscated to the Government whereas the victims cannot have a share on it.

As one of the victims, I would appreciate if you would indicate to us whether you intend to commence civil proceedings to recover your investment or not. After which, the Government will apply and confiscate the money as mentioned above without further notice.

……” (Emphasis added)

(2) Letter dated 30 January 2019 from the Police to “whom it may concern” (“the 2^nd Letter”), in which the Police said:

“Re [D]

……

It came to our attention that one of the victims in this case had successfully obtained a 'Granishee Order Absoulate' against bank accounts of one of the suspect companies for compensation.

……” (Emphasis added)

Mr Brown submitted that by reason of the matters stated in these two letters from the police, P has shown a prima facie case on the Scam.

167.With respect, I am unable to agree with Mr Brown.  In my view, the 1^st Letter and/or the 2^nd Letter cannot constitute evidence of sufficient cogency to show a prima facie case on the Scam pleaded by P in this case, ie no gold trades in the open market as was intended were actually carried out for his Trading Accounts.

(1)  In the 1^st Letter, it is said that P is one of the victims, who were “lured to make payment to bank accounts of two bullion companies for allegedly Loco London Gold investment”.  The 1^st Letter can reasonably be understood as meaning that P and other victims had been lured by some persons (who conspired together) to invest with D by some unlawful means.  There is no confirmation in the 1^st Letter that the transactions as recorded in the Trading Accounts are not genuine.

(2)  In the 2^nd Letter, it is unclear whether the Garnishee Order Absolute mentioned in that letter is against the bank accounts of D.

(3)  Further, under cross-examination, P admitted that apart from Lisa’s messages, he did not have any other evidence in support of his query whether the transactions in the Trading Accounts actually took place.

(4)  In view of all the above, it cannot be said that by the 1^st Letter and/or the 2^nd Letter, P has shown a prima facie case on the Scam as pleaded by him in [10] of P’s FBP Jan 2021, and repeated in [10] of P’s FBP Dec 2021.

168.Mr Brown also submitted that there are errors in the account statements issued by D.  Mr Brown relied upon two mismatched figures in the Monthly Statement of the 1^st Account for January 2017.  During cross-examination, Mr Brown asked Chan questions concerning these two mismatched figures.  Chan said that these two figures should be the same, and Chan did not know why these two figures were different.  Mr Brown submitted that if the account statements are purely computer-generated reports of actual trades, it would not be possible for these account statements containing errors. According to Mr Brown, in the absence of any good explanation from D, one can assume that the account statements are not what D purports to be.

169.I am unable to accept Mr Brown’s submissions.  In all the account statements in this case, Mr Brown could only identify one error.  In fact, at the end of each statement, it is stipulated that “if you believe your statement is not correct, you must contact us within two (2) days”.  D has never claimed that there is absolutely no error in any account statement.  In my view, the presence of one error in all the account statements in this case cannot be said as evidence in support of the Scam alleged by P in his pleaded case.

170.In my judgment, P has not shown a prima facie case on the Scam.  While there is no prima facie case on the Scam, it is plain that P’s case based upon restitution cannot stand, for there is no prima facie case that D has been unjustly enriched by the money deposited by P into D.  The increase in the assets of D due to P’s deposits would immediately matched by a balancing liability, and P could withdraw money from the Trading Accounts at any time.  Mr Lee has helpfully referred me to Goff & Jones, The Law of Unjust Enrichment(10^th Ed), in which the learned authors observed at §§4-060 – 4-061:

“…… in Test Claimants in the FII Group Litigation v HMRC, where the Supreme Court accepted HMRC’s submission that as a matter of principle a defendant which is paid money may not be enriched if it incurs “liabilities … as a consequence of the receipt of the money.”…

Although this interpretation of the statute meant that HMRC lost on this point, the court accepted the general proposition that a defendant is not enriched to the extent that his receipt of a benefit causes him to incur a liability.  Lord Reed and Lord Hodge also identified a situation that they held to fall within the scope of this rule, exemplified by Jeremy D.  Stone Consultants Ltd v National Westminster Bank Plc.  The defendant bank in that case received a mistaken payment from the claimant, credited this to its customer’s account, and later paid money out of the account on its customer’s instructions.  Sales J said that even if the bank had not paid the money over, it would still have escaped liability to the claimants because:

‘when the claimants paid sums to NatWest [the bank] for the account of SEWL [the customer], NatWest received those sums and added them to its stock of assets as monies to which it was beneficially entitled. However, the increase in its assets was matched by an immediate balancing liability, in the form of the debt which NatWest owed SEWL reflected in the increase in SEWL’s bank balance as a result of the payments. This is how the relationship between bank and customer works. … Therefore, in my judgment, NatWest was not enriched by the payments made by the claimants into SEWL’s bank accounts … The claimants’ proper unjust enrichment claim is against SEWL, whose assets were increased upon the making of the payments to its bank accounts by the increases in its balances on those accounts (representing the debt owed to it by NatWest).’” (Emphasis added)

E2.  No adverse inference against D

171.Mr Brown submitted that adverse inferences should be drawn against D due to the absence of various witnesses and documents from D.  With respect, I refuse to accept these submissions.  As stated in the above, P has failed to adduce evidence of sufficient cogency to prove his pleaded case at the prima facie level.  Accordingly, it would not be permissible to draw any adverse inference against D by reason of absence of any witness or any document from D.

172.Without prejudice to the above, P’s submissions concerning adverse inferences against D should also be rejected by reasons as stated below.

173.Mr Brown invited me to draw adverse inferences against D by reason of the absence of Yeung and Jan as witnesses in this trial.  I refuse to accede to this request.  During the cross-examination of D’s witnesses (ie Hui and Chan), the witnesses had not been asked why Yeung and Jan did not give evidence for D in the trial.  Without giving an opportunity to D’s witnesses to offer an explanation on the absence of Yeung and Jan as witnesses in the trial, it would not be permissible for P to ask the Court to draw adverse inference against D by reason of the absence of these witnesses in the trial.

174.Mr Brown submitted that it would not be necessary for him to ask Hui and Chan to explain the absence of Yeung and Jan as witnesses in this trial, for both Hui and Chan had never been the direct employees of D, and both of them have already left the Glory Sky Group at the time of the trial.  They would not be able to know the reason why Yeung and Jan are not called by D as witnesses in this trial.

175.With respect, I am unable to agree.  As a matter of fact, both Hui and Chan appeared in the trial as D’s witnesses.  This must be an arrangement made by D’s management.  That means both Hui and Chan would have maintained communication with D’s management.  Before asking Hui and Chan whether they know the reason why Yeung and Jan are not witnesses in the trial, one cannot say that they would not be able to provide a meaningful answer on the question.

176.Further, as submitted by Mr Lee, if P is of the view that Yeung and/or Jan are important witnesses in this case, P himself in fact can compel them to give evidence in the trial by issuing the necessary subpoena(s).  As observed by Linda Chan J in Liao Zhiqiang and Others v Cheung Sin Ling Vicki and Others[30]:

“75. As regards the drawing of adverse inferences from the absence of a witness, the following principles stated in Phipson on Evidence, 20th ed., §45-35 are relevant:

‘The court may be entitled to draw adverse inferences from the absence of a witness who was available to and might have been called by a party. However, the court does not usually do so, not least because there may be all sorts of reasons why a particular witness is not called and one usually cannot be confident to infer what the witness would actually have said. Further, in general it is for a party to choose which witness he wishes to call and there is no property in a witness, and in the case of a witness in the jurisdiction the opposing party can seek to compel a witness’s attendance by means of a witness summons.

It is in a comparatively small number of cases that it would be appropriate to draw an adverse inference, but where it is sought to do so, the party inviting the court to exercise such a discretion must:

Set out clearly (a) the point on which the inference is sought and identifying the inference sought; (b) the reason why it is said that the missing witness would have material evidence to give on that issue; (c) why it is said that the party seeking to have the inference drawn has himself adduced relevant evidence on that issue; and (d) why the party seeking the inference could not himself be expected to call or witness summons the witness.

Explain why such inference is justified on the basis of other evidence that is before the court.

It is then open to the other party to resist such an inference by giving a good reason why the witness is absent or silent. If he is able to do so, then no inference should be drawn. If there is some credible explanation given, even if not wholly satisfactory, the potentially detrimental effect of his absence or silence may be reduced or nullified.’” (Emphasis added)

177.There is no explanation from P as to why he himself did not try to get Yeung and/or Jan as witnesses in the trial.  That being the case, it is impermissible for P to ask this Court to draw adverse inferences against D by reason of the absence of Yeung and/or Jan as witnesses in the trial.

178.Mr Brown submitted that adverse inferences against D should be drawn by reason of D’s failure to produce the following documents:

(1)  D’s tax returns, audited accounts, financial records, management account, books and records (“D’s Financial Documents”)

(2)  Screenshot of D’s online platform

(3)  Bank statements revealing how D dealt with deposits from P, so the Court could see, for example, whether some of P’s funds were transferred to Jan as her reward for the Scam

(4)  Any contracts showing that D had its own employees or agents

(5)  Jan’s agency agreement and documents showing the commission structure

(6)  Documents concerning the termination of Jan’s agency agreement (“Termination Documents”)

(7)  Documents showing the commission payments to Jan (“Commission Documents”)

(8)  D’s handbooks and internal guidelines

(9)  Documents showing the communication between D and the police

(10)  1^st Spreadsheet and 2^nd Spreadsheet (“Spreadsheets”) mentioned by Hui in her evidence

(11)  Request signed by P for the 2^nd Account

(12)  MPF Records concerning Jan

179.With respect, I am unable to accept Mr Brown’s submissions.  In Hui’s evidence (which is accepted by this Court), Hui explained that a lot of D’s documents had either been seized by the police or lost due to the relocation of D’s office.  There is no suggestion that D could obtain the documents or have copies of the documents from the police.  None of D’s witnesses were asked whether D had tried to seek to recover the documents or to obtain copies of the documents from the police.  In the circumstances, it would not be appropriate to draw adverse inferences against D because of the absence of some documents from D in the trial.

180.As to the specific documents mentioned by Mr Brown in his submissions:

(1)  D’s Financial Documents

(a)   As submitted by Mr Lee, it is difficult to see how these documents would be relevant to (i) the existence or the non-existence of the Advisory Contract, (ii) the existence or the non-existence of Representations 1 and 2; and/or (iii) the Scam as pleaded in P’s case, ie whether the trades in the Trading Accounts in fact occurred.

(b)  While relevance is not established, no adverse inference can be drawn against D by reason of absence of these documents from D.

(2)  Screenshot of D’s online platform

(a)   There is no reason why this would be a relevant document.  P himself, in his evidence, admitted that he himself traded on D’s online platform in March and April 2017.  There is no allegation in P’s pleaded case that D’s online platform has not been in existence at any time.

(b)  Mr Brown submitted that the screenshot of D’s online platform may show that D in fact did provide advisory service.  With respect, this is a mere speculation without the support of any evidence.  P, in his evidence, has never said that there was such information on D’s online platform at any time.

(3)  Bank Statements

I agree with Mr Lee that the Bank Statements would not be relevant to the issues in this case.  The Bank Statements could not show (a) the existence or the non-existence of the Advisory Contract, (b) the existence or the non-existence of Representations 1 and 2; and/or (c) whether the trades in the Trading Accounts in fact occurred.

(4)  Any contracts showing that D had its own employees or agents

These documents would not be relevant to the Issues in this case.

(5)  Jan’s agency agreement and documents showing the commission structure, Termination Documents, Commission Documents, and MPF Records concerning Jan

(a)   My understanding of Mr Brown’s submissions is that, according to P, these documents would be relevant to the authority point, ie whether Jan had the authority to make the Representations on behalf of D to P.

(b)  By reason of the matter set out in [84(3)] above, P must know that Jan did not have the authority to make the SFS Representations on behalf of D to him.

(c)   Further, in any event, as explained in [156]-[158] above, since P has failed to make out a prima facie case on his claim based upon Representations 1 and 2, the authority point in fact is neither here nor there.

(6)  D’s handbooks and internal guidelines

(a)   Hui has given evidence and said that there was no such compliance handbooks and internal guidelines in D.  Hui said that there were some “circulars” reminding how agents should perform their tasks.

(b)  Chan mentioned that D had some “regulations”, but those regulations concerned D’s provision of the log-in details and passwords to clients by email.

(c)   It is difficult to see how the circulars and regulations would be relevant to the issues in this case.

(7)  Documents showing the communication between D and the police

(a)   P has never sought discovery of these documents.  No question concerning these documents was put to D’s witnesses during cross-examination.  In the circumstances, it would not be permissible for P to ask this Court to draw adverse inference against D by reason of the absence of these documents from D.

(b)  In any event, it has not been shown how these documents would be relevant to the Issues in this case.

(8)  Spreadsheets

(a)   None of D’s witnesses has been cross-examined on why the Spreadsheets had not been produced by D.  Accordingly, it would not be permissible for P to ask the Court to draw any adverse inference against D by reason of the absence of the Spreadsheets in the trial.

(b)  P is trying to say that the Spreadsheets are relevant, for the production of the same would allow P to call various persons as witnesses.  As submitted by Mr Lee, this is not a point which P is entitled to take.  P has not explained why any person recorded in the Spreadsheets would be able to give evidence relevant to the issues in this case.  Further, P has not offered an opportunity to D to explain why the witness is absent in the trial.

(c)   Without prejudice to the above, I am also in agreement with Mr Lee that:

(i)    Regarding “Steve”, and “Lisa”, save and except the English names, no other personal particular of these persons has been given by P.  It remains unknown whether “Steve” and Lisa” are just nicknames.  The true identities of these persons are unknown to D.

(ii)   In relation to “Lisa”, the evidence shows that P had messaged her.  There is no explanation from P as to why he did not try to contact Lisa and invite her to be a witness in this case.

(iii)  Regarding “Morgan” and “Stephanie”, it is difficult to see how their evidence would be relevant to the issues in this case.  In particular, as shown in the text messages, Morgan told P that D is “just a platform”, “[you] can invest on your own”, and “I can also invest [on] behalf of people”. Unlike Jan, Morgan did not ask P not to contact D’s Customer Service Department.  On the contrary, Morgan advised P to contact D’s Customer Service Department, and they would help P in withdrawing money from his account.  There is no basis to say that Morgan’s evidence may help P’s case.

(9)  Request signed by P for the 2^nd Account

(a)   It is an indisputable fact that P did open the 2^nd Account.  The absence of a request signed by P for the 2^nd Account is neither here nor there.

(b)  Further, none of D’s witnesses was asked for an explanation for the absence of this document. In the circumstances, no adverse inference against D should be drawn.

181.For the reasons above, I am unable to accept Mr Brown’s submissions, and I decline to draw any adverse inference against D as suggested by Mr Brown.

E3. No deemed admissions by D

182.Mr Brown submitted that by the operation of the rules of pleadings, D has admitted various aspects of P’s case.  With respect, for the reasons submitted by Mr Lee, I am unable to accept Mr Brown’s submissions.

183.Mr Brown’s submissions are based upon Order 18 rule 13, which provides:

“(1) Subject to paragraph (6), an allegation of fact made by a party in his pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue under rule 14 operates as a non-admission of it.

(2) Subject to paragraph (5), a traverse may be made either by a denial or by a statement of non-admission and either expressly or by necessary implication.

(3) Every allegation of fact made in a statement of claim or counterclaim which the party on whom it is served does not intend to admit must be specifically traversed by him in his defence or defence to counterclaim, as the case may be; and a general denial of such allegations, or a general statement of non-admission of them, is not a sufficient traverse of them.

……

(5) Where an allegation made in a statement of claim or counterclaim is traversed by a denial, the party who denies the allegation shall in his defence or defence to counterclaim—

(a) state his reasons for doing so; and

(b) if he intends to put forward a different version of events from that given by the claimant, state his own version.

(6) A party who—

(a) fails to deal with an allegation; but

(b) has set out in his defence or defence to counterclaim the nature of his case in relation to the issue to which that allegation is relevant, is to be taken to require that allegation to be proved.”

184.Mr Brown submitted that:

(1)  In P’s Jan 2021 FBP at [10], P has made clear (as further and better particulars of the Amended Statement of Claim (“ASOC”) [46] – [49]) “it is [P]’s case that no gold trades in the open market as was intended were actually carried out for his trading accounts”.

(2)  D’s pleaded response to ASOC [46] – [49] is set out in the Defence [40], which is as follows:

“Paragraphs 46, 47, 48 and 49 of the Amended Statement of Claim in this action are denied. Particularly there is no proper factual or legal basis for making the allegation for money had and received/unjust enrichment /restitution and the claim for damages or equitable compensations therefore. The said allegation and the claim are liable to be struck out. In any event the Plaintiff is put to strict proof thereof.”

(3)  D does not state its reason for the denial.  This is an impermissible bare denial under Order 18 rule 13 of the Rules of the High Court.  The second and third sentences add nothing to the bare denial.  The “putting P to strict poof” plea is impermissibly inconsistent with the denial and should be ignored.

(4)  The only other paragraph in the RRAD that deals with this allegation is [33], which then provides another bare denial where D “specifically denies any allegation of “scam” either as pleaded or at all”.

(5)  No positive case is put forward in answer, and D has provided no reasons for the denial.  Order 18 rule 13(6) does not apply, as nowhere has D pleaded the nature of his case on the issue of whether the transactions on P’s accounts are genuine or not.

(6)  Accordingly, by the operation of Order 18 rule 13(1), the alleged Scam is deemed admitted by D.

185.For the reasons set out below, I am unable to accept these submissions.

186.In the RRAD, it is pleaded that:

“2.     Save and except it is admitted that at all material times, [D] was a company incorporated in Hong Kong with limited liability and carrying on the business of providing a trading platform and brokerage services for customers to trade in “spot gold” (the “Product”), by placing orders for buying/ selling of the Product the using the trading platform provided by [D], no admission is made to the paragraph 2 of the Statement of Claim in this action.  Common features of trading the Product are that “spot gold trading is simply buying or selling gold at the live price.  There are no market makers or brokers in spot gold trading.  The spot gold market is an online platform where buyers and sellers trade directly with each other”.

……

8.  … it is admitted that [D] had a client in the name of [P] … who opened a trading account with [D] on or about 29^th December 2016 … (“the Account”) for the purposes of trading in the Product by way of placing buy/ sell orders (contract s) for the Product. …

……

27.  It is averred that [P] knew or ought to have known every single transaction carried out under the Account immediately upon it was carried out, as, inter alia, [P] could logon the Account with the said User ID and password and gain access to full details of all transactions carried out under the Account, at all material times.

28. It is also averred that monthly statement in respect of the Account was issued to [P] at the end of each month by email via the email address provided by [P] to [D] in the [the Application Form] which had full details of all transactions carried out under the Account in that month.  Further, it is averred that daily statement in respect of the Account would also be issued to [P] at the end of each trading day by email via the email address provided by [P] to [D] in [the Application Form] which had full details of all transactions carried out under the Account on that day if [P] did not choose not to receive the daily statement.

29.  … it is admitted that [the 2^nd Account] was opened in the name of [P] …

……

41.  By reason of the matters as a foresaid, the alleged loss and damage or any part thereof, was, for reasons appearing in the above, trading loss for which [P] was wholly liable.” (Emphasis added)

187.Reading the RRAD as a whole, D has put forward a positive case that all the loss and damage suffered by P is trading loss for which P should be wholly liable.  D is actually saying that the transactions in the Trading Accounts are genuine transactions, and P should be responsible for the loss suffered as a result of these transactions.  In my judgment, Order 18 rule 13(6) is applicable.  There is no basis for P to say that D should be deemed to have admitted the Scam alleged by P by the operation of Order 18 rule 13.

188.Further or alternatively, as submitted by Mr Lee, P has not provided positive particulars concerning the Scam in the Statement of Claim, apart from referring to police investigation into several alleged victims who lost money with D and conversations with a former employee.  P only provided particulars of the Scam in P’s FBP Jan 2021.  P has never amended his Statement of Claim to incorporate the particulars on the Scam allegation.  It is well-established that a defendant need not and ought not plead to such particulars.[31] In the circumstances, it cannot be said that the Scam has been admitted by D on pleadings.

E4.  Conclusion

189.For the reasons as set out in the above, in my judgment, P has failed to prove his case.  Since the burden of proof is on P, on this ground alone, P’s claim should be dismissed. 

190.For the sake of completeness, I would also state that based upon the evidence accepted by the Court, I find that D’s case is proved.

191.My answers to the Issues as set out in [27] above are as follows:

(1)  The “Contract” as pleaded in P’s case has never been in existence.

(2)  P’s case based upon Representations 1 and 2 is not proved.

(3)  P’s case based upon the Scam is not proved.

(4)  As a result of the conclusion on the aforesaid issues, there is no need to consider damages and the Indemnity and Exclusion Clauses relied upon by D.

F.   DISPOSITION

192.As a result of my ruling as set out in the above, P’s claim must be dismissed.  I dismiss P’s claim.

193.Costs should follow the event.  There be a costs order nisi that costs of these proceedings, including costs reserved, be to D, to be taxed if not agreed.  Unless an application by summons seeking a variation of the costs order nisi is made within 14 days after the handing down of this judgment, the costs order nisi shall become absolute without a further order.

194.Lastly, it remains for me to thank both Mr Brown and Mr Lee for the helpful and able assistance provided to the Court.

Mr Toby Brown, instructed by Gall, for the Plaintiff

Mr Adrian Lee, instructed by Ching & Co., for the Defendant