Yung Ka Tim, Timothy v. Cheung Yin Ha, Selina
|
HCA001585/1993 HCA1585/93 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO.1585 OF 1993 --------------------
-------------------- Coram : Hon Sears, J. in Court Dates of hearing : 11, 12 January 1999 Date of judgment : 12 January 1999 ---------------------- J U D G M E N T ---------------------- 1. This is another action which unfortunately comes to the Court dealing with the matter of transactions. In this case, the Defendant was working for the Manufacturers Hanover Trust Company Bank ("the Bank"). She knew the Plaintiff and they have had various financial dealings in the past. In early 1991, the Defendant became the Vice-president of the Private Sector Banking Section. The Bank had got a new product which was called the currency options trading account. This was said by the Bank to be low risk, but it was common at that time, in my experience, the variety of financial plans basically were gambling against currencies, generally involving the US dollar. When the US dollar was strong, it was trading well against other currencies and people who would be buying or selling the other currencies against the dollar and profits could be obtained. However, when the US dollar fell, people who were gambling against other currencies would make losses. 2. Unfortunately, many people never bothered to read the banking documents that were always sent to them for signature in so far as their potential loss is concerned. If you buy stocks and shares, your loss can be limited because you can sell the shares quite quickly and take the loss. With these open-ended currency transactions, particularly with gearing, or leveraging as it is called, the loss can be very substantial. I described it as open-ended. In a few hours or indeed minutes, someone who thought that they would only lose a few thousand dollars can find themselves losing millions and this is what this case is about. 3. The Plaintiff was clearly persuaded by the Defendant to enter into this type of banking arrangement. I make no criticism, that is her job, that is what financial advisers do all the time in Hong Kong. They go round persuading people to enter into strange financial arrangements and when they make money no one complains. It is only when losses occur that problems arise. The Plaintiff said that he had US$140,000 and that was really what he wanted to be the limit of his loss. The arrangement clearly was between himself and the Bank. Things went well, the US$140,000 increased and it is not necessary to say the precise amount but he seems to have made several hundred thousand US dollars. So far so good. The Plaintiff thought that the Defendant no doubt was marvellous and the Defendant thought the Plaintiff was a very good client to have. 4. Unfortunately, in 1992, the dollar weakened and the Defendant was still making transactions. Before, she had had to get him to sign the appropriate form but he had said that as she was making money, he did not mind her having a freer hand. But what she did, when the market started to go against her, in my judgment, she carried out three or may be less, but probably three, unauthorised transactions. She kept the paper work and got very frightened and really did not know what to do. She had persuaded, no doubt herself as well as the Plaintiff, that this was a low risk product. It seems to me, looking at it, even with my limited financial experience, to be a high risk matter. It is a great pity that the Plaintiff got involved in it. 5. The Plaintiff was telephoned by a senior person of the Bank and they met for a drink, thinking he was going to be congratulated on making a few hundred thousand US dollars. But what happened was that he was told he had to deposit about $14 million the next day. I am sure it must have come as a terrible shock to him. What had happened was the Defendant had opened these positions. In my judgment, she was clearly at fault. Although people take risks, it seems to me that her method of dealing was clearly faulty, whether it amounted to criminal, it is not necessary to say. The Bank wanted the Plaintiff to pay up $14 million. He disputed this and said that these three transactions were unauthorised and that he had deposited $140,000 with a limit of that as a loss. 6. The Bank no doubt was very upset at what Selina Cheung was doing and they had a number of meetings. The Plaintiff had a friend, a qualified solicitor but not actually practising, called Bonnie Wong, who has come here from Singapore and given evidence. I found her a very good witness. She was trying to help both parties to sort the problem out, the problem being that the Plaintiff did not want to have to pay up $14 million, he was a friend of Selina Cheung and he did not want her to lose her job but the Bank was pressing because the positions were still unclosed and the losses could have become considerable. So there was a compromise reached between the Bank and himself - the Bank recognising that the product they got their employees to sell to the public was really a high risk and this was a good client of theirs, so they agreed to take what he had got in his account, which was just over a million US dollars which were various bonds and deposits. He owed, according to the Bank record, US$2.6 million and the Bank said if they took the US $1 million, they would settle it. They obviously recognised that their employee had let them down, and that if he sued them for his losses, or they sued and he counterclaimed, this lady would have to be drawn into the litigation. It seems to me, quite frankly, that the Plaintiff had a good defence to the Bank's claim. On the other hand, as he said to me and I accept, that he did not want really to get involved in litigation which would no doubt drag on, as this case has dragged on. Selina Cheung was begging him to settle with the Bank. She was worried as there was talk about Commercial Crime Bureau being brought into it, she no doubt was worried about either getting prosecuted or sued. She said, and I accept, (which was recorded in the transcript which I have admitted in evidence) that at some meetings she said that she would pay up. She obviously felt herself liable for this loss and in my judgment she was. 7. Although he had made some profits, the Plaintiff worked out that he would have $2.5 million or thereabout loss in Hong Kong money, and he said that he would take $2 million from her. She begged him to sign an agreement with the Bank so that all these matters could be covered up as indeed they were. At the end of the letter from the Bank it indicates that it was an express term of the agreement between the Plaintiff and the Bank that both parties keep the contents of this letter confidential and do not disclose it. The Bank obviously was very troubled that this product which they had caused their staff to market in Hong Kong was a disaster and no doubt it would look bad for them. 8. Selina Cheung wanted to keep her job and not get into trouble. What happened was that Bonnie Wong drafted an agreement dated 10th July, but in fact it was entered into on the 11th, whereby that if Mr Yung agreed to accept the proposal of Manufacturers' Bank to settle all matters and agreed not to take any further action, she would pay him $2 million, and she signed it. She now says that she was misled, I do not think she was at all. She was obviously upset. I think she was very frightened at what she had done. 9. In my judgment what she had done was to cause a friend and client to lose a substantial amount of money. She feared being prosecuted by the police or losing a job. I find the Plaintiff an impressive witness, in fact a very good witness who is obviously telling the truth when he said she pleaded with him to sign an agreement so that everything could be covered up. I think that was exactly what did happen. She signed the agreement, in my judgment, freely. I do not believe her when she said that she did not know what she was doing, she obviously did. It is a great pity that she has wasted an enormous amount of money on disputing this claim. The writ was issued in 1993, this case has dragged on and whilst it has taken so long, it has involved a large amount of money no doubt to the Plaintiff on legal fees, and to the Defendant who has now got rid of her solicitors and counsel and is doing the case in person. It is a great pity she has wasted all this money and caused the Plaintiff to waste money on litigation. If she had kept to her promise, paid up the money, it would have all been over, or indeed if she had gone along and asked for a bit more time, I am sure Mr Yung would have given her more time to pay. 10. I do not accept her evidence. I think she knew exactly what she was doing, she willingly signed the document. I questioned at one time whether the consideration was sufficient, in my judgment it was. It was in fact a double consideration. I accept that she wanted him to settle with the Bank and he agreed to do that. He also agreed not to take any further action against her, which I think he would have been justified in doing as well. She promised to pay $2 million and she has not paid it. It is a great pity that people do not stand by their words. She has wasted an enormous amount of money on this case. I do not know what it has cost, but it must have been quite considerable. 11. There was also a claim for another HK$900,000 that was lent for the purchase of some shares. The parties have very sensibly agreed that the claim of the Plaintiff is not being proceeded with. The counterclaim, that is the profit on the shares is not being proceeded with and the Defendant has undertaken to sign a release in so far as any beneficial ownership on those shares are concerned. 12. It is a great pity that the Defendant did not put forward some sensible proposal for this case. As I said it has gone on for nearly six years. We pride ourselves to get rid of very big cases here, much more difficult than this case, in about two years. At any rate, the end result is that I believe Miss Bonnie Wong when she says that the Defendant willingly signed this document, she read it and she said there is no need for her to sign, the Plaintiff knows she will pay. In my judgment what she was doing was acknowledging what she had earlier promised, namely, to pay him $2 million, but she has decided to try to get out of that. I do not believe her evidence, I do not think she was telling the Court the truth. Therefore, there will be judgment for the Plaintiff to the $2 million with costs, to be taxed if not agreed.
Representation: Mr Maurice Chan, inst'd by M/s King & Co., for the Plaintiff Defendant in person - present
|