Merrill Lynch International Bank Ltd. v. Kevin James Wallace

HCA006800/1997

1997 No. A6800

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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Coram: The Hon. Mr. Justice Barnett in Chambers

Date Hearing: 5, 6 and 7 August 1997

Date Delivery of Judgment: 8 August 1997

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J U D G M E N T

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1. The Plaintiff in this case is a Singapore company. It is involved amongst other things in private investment banking. The Defendant, Mr. Wallace, was previously employed by the Plaintiff as a financial consultant whose task was to provide a link between the Plaintiff's private clients and other branches of the Plaintiff's bank. So, for example, the client would be enabled to buy or sell shares or to get investment advice.

2. The Defendant was subject to the Plaintiff's internal regulations, regulations which include amongst others: a prohibition on managing clients' discretionary accounts without the Plaintiff's authority; a restriction on the Defendant's authority to propose the purchase or sale of equities, to equities approved by the Plaintiff's Research Department or the Defendant's superiors; and a prohibition on introducing other independent advisors to the Plaintiff's clients.

3. Between March and April this year, the Defendant's superiors discovered a number of clients, who were responsibility of the Defendant, who had acquired shares in a company called Country Heights whose shares were not approved by the Plaintiff. When taxed about this, the Defendant explained that he had arranged the purchase of the shares through an outside intermediary. Because the Defendant had previously been both reminded of and warned about breaches of the Plaintiff's regulations, he was told he would have to leave the Plaintiff's employment. He was, however, permitted to resign on 30th April. After that day, the Defendant remained with the Plaintiff for some time in order to help with the handover of clients to other consultants working for the Plaintiff. While this exercise was going on, a number of the Defendant's former clients claimed that the Defendant had carried out unauthorised trades resulting in losses to them; that he had sent them false or misleading statements of account; that he had drawn down loans without authority and in one case had forged a signature. Provisionally, the Plaintiff's losses were quantified at some US$26 million.

4. At this point, the Defendant dropped out of sight. The Plaintiff was unable to contact him in order to get some explanation or clarification of what had occurred. That, essentially, is the background to this case as it was presented to me on 25th June. There has been some variation since to that background but nothing which in my judgment is material.

5. On 24th June the Plaintiff commenced proceedings in Singapore seeking damages or an indemnity for breach of contract and breach of fiduciary duty on the part of the Defendant. The Plaintiff obtained worldwide mareva relief. The Plaintiff also undertook not to commence proceedings elsewhere without leave of the Singapore Court. The following day, 25th June, the Defendant by now having been located in Hong Kong or at least tracked to Hong Kong, counsel for the Plaintiff appeared before me seeking again worldwide mareva relief, disclosure by the Defendant of his assets forthwith and an injunction under S.21L of Cap.4 restraining the Defendant from leaving Hong Kong in order to secure compliance with the order for disclosure. The proposed action in Hong Kong was to be identical to the action in Singapore. There being an apparently powerful case presented by the Plaintiff, I had no hesitation in granting the relief sought notwithstanding the draconian nature of the provision for disclosure. The mareva relief was limited to US$15 million. The undertaking which had been given to the Singapore Court was not on that occasion disclosed to me.

6. The next day, 26th June, the Plaintiff applied to me for and obtained a prohibition order under S.21B Cap.4, the sole purpose of this order being again to ensure compliance with the order which I had made for disclosure by the Defendant of his assets. On the same day in Singapore, the Plaintiff obtained leave to bring in Hong Kong proceedings. Apparently the Singapore Court indicated leave would have been granted if it had been sought earlier.

7. Next day, 27th June, Rogers J. continued the mareva order. Meanwhile, the Plaintiff was experiencing difficulty in serving the Defendant. Ultimately, the relevant documents were simply left in the Defendant's hotel room. But by 27th June, these documents or the proceedings had come to the notice of the Defendant because solicitors, acting on his behalf, faxed the Plaintiff's solicitors saying that they was instructed to accept service and asking for copies of all documents in both actions. The documents relating to the Singapore action were later returned to the Plaintiff's solicitors with an indication that the solicitors were not instructed to accept service in relation to that action.

8. On the same day, that is 27th June, approximately HK$7 million was transferred from the National Australian Bank, where the Defendant maintained a joint account with his wife, to the account of the Defendant's wife's father in Hong Kong. The bulk of that money was subsequently handed over to the Defendant's wife in cash.

9. On 3rd July, the Defendant issued various summonses seeking amongst other things: an extension of time for the disclosure which had been ordered against him; discharge of the injunction and of the prohibition order; setting aside of the writ or at least its service; and discharge of the mareva injunction. The application to set aside was amended on the first day of the hearing before me to include an application that the Plaintiff's action be dismissed. On 4th July, Rogers J. extended time for the Defendant to make disclosure of his assets to a period of seven days after the hearing of the application to discharge the mareva injunction. That judge dismissed the Defendant's application to discharge the injunction and prohibition order. That aspect of these proceedings is now under appeal. Rogers J. also adjourned the applications to set aside the writ and to discharge the mareva injunction. Of those adjourned applications, I am now seised.

10. In the meantime, the Plaintiff had apparently complained about the Defendant's activities to the police in Singapore. It seems that this came to the attention of the Hong Kong Police who, presumably after investigation, of their own motion arrested the Defendant on 7th July. Approximately HK$900,000.00 in cash in various currencies was seized from the Defendant upon his arrest. On 9th July, the Plaintiff made an attempt to serve the Defendant personally at the police station where he was then being interviewed. The Defendant escaped from the police station without interception by the Plaintiff's agent. Later that day, however, he arranged to accept service.

11. On 16th July, the Defendant was charged with handling the money which had been sent from Australia as being the proceeds of an indictable offence, which charge was pursuant to S.25 of the Organized and Serious Crimes Ordinance Cap.455. On 22nd July, Rogers J. granted an order for the Plaintiff to inspect the account of the Defendant's wife's father, a Mr. Yin.

12. I deal first with the Defendant's application to set aside the writ or its service or to dismiss the action. It is not in dispute that, first, it may be vexatious to commence identical proceedings in two jurisdictions, and second, even if it was legitimate to commence two sets of proceedings, a plaintiff who instituted those proceedings will in most cases have to elect at some stage where he will continue proceedings to judgment. The point at which that election will occur, or if necessary be compelled by the court, is when it would be oppressive to a defendant for both sets of proceedings to remain on foot. It is here that the real dispute between the parties arises.

13. For the Defendant, Mr. Kat argued, but I think only faintly by the end of the day, that it was vexatious of the Plaintiff to commence parallel proceedings having regard to the fact that Singapore is by common consent much the more appropriate forum for these proceedings, and the fact that the only reason for the proceedings was to obtain oppressive mareva relief, not to seek judgment. In connection with this point, Mr. Kat sought to rely upon the principle to be found in the Siskina [1979] A.C. p.210. I do not think that case helps. The objection in that case was that that plaintiff was not seeking any substantive relief in England. It was held that he was not, in the circumstances, entitled to interim relief. Here, the Plaintiff has a substantive claim properly brought in this jurisdiction. As later authority, such as Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd. [1993] A.C. 334 made clear, interim relief will be granted in such cases in appropriate circumstances, regardless of whether final judgment will be pronounced in that or another court.

14. A useful exposition of the law is to be found in an English case,Kuwait Oil Tanker Co. & Ors v. Abdul Fattah Sulaiman Khalad Al Bader & Ors. That was a decision of the English Court of Appeal given on 27th November 1995, apparently unreported. In the transcript of that case, at p.26, Hobhouse L.J. talked about vexatious and oppressive proceedings where proceedings had been commenced and pursued in two different jurisdictions:

"The Plaintiffs have a legitimate interest in continuing their action here against Mr Qabazard. It is desirable that he should be included in these proceedings and bound by their outcome. It is the claim here which is being used to support the world-wide mareva which is an important and legitimate part of the armoury of the Plaintiffs whereby they are seeking to recover the very large sums of which they have been, on their case, defrauded by Mr Qabazard and others. There is no convention for the mutual enforcement of judgments between Kuwait and this country and in practical terms the Plaintiffs will have to rely upon a judgment in this country to establish the liability (which they allege) of Mr Qabazard and support execution against assets to be found here or to be traced in countries which recognise judgments of English courts. The Plaintiffs will require a Kuwait judgment to support their claim against any assets of Mr Qabazard in, or funds to be traced to, Kuwait.

It is unfortunately a feature of modern commercial litigation that proceedings in a number of countries may be necessary in order to enable the proceeds of fraud or other misfeasance to be recovered. It is onerous to a defendant that he should have to defend himself, if he chooses to do so, in a number of jurisdictions. But this may be an inevitable consequence of permitting proper remedies to plaintiffs who can show, as can these Plaintiffs, a strong case that they have been defrauded. Multiplicity of proceedings is prima facie vexatious but is not necessarily so and it is a matter for the discretion of the Court whether it should put the plaintiff on terms and if so what terms.

In Societe Aerospatiale v Lee Kui Jak [1987] AC 871 the Privy Council revisited Spiliada in the context of injunctions to restrain foreign proceedings. The opinion of the Judicial Committee delivered by Lord Goff discussed the authorities. At p.893-4, he said:

'In Peruvian Guano Co v. Bockwoldt (1883) 23 Ch.D 225, 230, Jessel MR gave two examples of vexatious proceedings. One, which he called pure vexation, occurs when the proceedings are so utterly absurd that they cannot possibly succeed. Another occurs when the plaintiff, not intending to annoy or harass the defendant, but thinking he could get some fanciful advantage, sues him in two courts at the same time under the same jurisdiction. He went on to say that similar, although not perhaps the same, considerations apply in a case where the actions are brought, one in a foreign country and one in this country. Referring to McHenry v. Lewis 22 Ch.D. 397, he summed up the position as follows: that it is not vexatious to bring an action in each country where there are substantial reasons of benefit to the plaintiff. Now, it is easy to see why in many cases this is so, as indeed the 19th century cases show. For example, there may be assets available for execution in a foreign country, or another party may only be amenable to the jurisdiction of the courts of the foreign country. Indeed, it has been stressed that there is no presumption that a multiplicity of proceedings is vexatious (see e.g. McHenry v. Lewis 22 Ch.D. 397, 400 per Jessel MR) and that proceedings are not to be regarded as vexatious merely because they are brought in an inconvenient place: see Hyman v Helm (1883) 24 Ch.D. 531,537, per Brett MR.'

The complaint of Mr Qabazard with which we are concerned on this point is that it is vexatious and oppressive that he should have to face civil proceedings at the suit of the Plaintiffs both in this country and in Kuwait. I consider that the Plaintiffs have a legitimate interest in pursuing civil claims in both jurisdictions and that Mr Qabazard has not shown that he is being oppressed by reason of the fact that civil proceedings against him are pending in Kuwait."

15. Many of the considerations in that passage apply to the case before me. It is quite clear that the Plaintiff had and has a legitimate interest in commencing the action here. It was in Hong Kong that the Defendant was found after he had plainly, as Mr. Thomas put it, "gone to ground in Singapore." It is in Hong Kong that the Defendant now says he intends to settle, the Hong Kong court therefore has jurisdiction over the Defendant and is the court through which the Plaintiff can obtain enforcement of any orders or judgments personally against the Defendant.

16. Mr. Kat's major submission, it seems to me, is that it is now oppressive for the Plaintiff to continue the proceedings in Hong Kong and that these proceedings should be set aside or dismissed. If I am not prepared to countenance that relief, said Mr. Kat, then although there is no formal application to stay the proceedings here, I should so order in exercise of my inherent jurisdiction to prevent an abuse of this court's process.

17. Mr. Kat relied heavily on the case Australian Commercial Research and Development Ltd. v. ANZ McCaughan Merchant Bank Ltd. [1989] 3 All ER p.65. In those proceedings, the plaintiff had commenced proceedings both in Australia and in England, and applied to the English Court to stay the proceedings there. The Vice-Chancellor, Sir Nicolas Browne-Wilkinson, at p.69 dealt with the issue which he had to decide, that is to say it was not a simple case of applying the rules of forum conveniens but considering where one of two sets parallel proceedings should take place. At p.70, he went on to quote from the passage in Dicey and Morris, Conflict of Laws, dealing with lis alibi pendens. The final sentence of that passage reads: "The court would put plaintiff to his election, and stay the English proceedings or enjoin to the foreign proceedings." After that quotation, the Vice-Chancellor said:

"In my judgment that reflects the position, save that in my view it is not a question simply of a plaintiff applying for a stay of its own action: the action must go. Counsel for the plaintiff, though he did not concede that it was necessary, did apply for leave to discontinue the action if, as in my view is the case, it was necessary."

Ultimately the Vice-Chancellor went on to discontinue the plaintiff's action but stayed a counterclaim which had been brought in England by the defendant.

18. In spite of Mr. Kat's submission about that passage, in my view the Vice-Chancellor was not laying down a rule of universal application. There was nothing in the argument before him nor was there any authority before him to justify it, that is to say that, where there are parallel proceedings, one of them must be discontinued or dismissed. There is no suggestion that that is the position in any other authority and none in the Kuwait case, either in the passage to which I have referred or in the judgment of Hobhouse L.J. generally. On the contrary, later authorities such as the Channel Tunnel case, and the House of Spring Gardens v. Waite [1984] FSR p.277, a decision which was heavily criticised by Mr. Kat but which in my view is more in accord with the other authorities on this topic, make it plain that it is legitimate for interlocutory relief to be granted and maintained even though the court granting that relief may not be the one to enter final judgment. Therefore, it appears to me a stay of one set of proceedings not dismissal is the appropriate relief. In my view, the Vice-Chancellor's decision was clearly a decision on the particular facts of that case. Clearly there may be cases where the facts call for dismissal or discontinuance as opposed to a stay.

19. The question then is whether the Plaintiff should now be forced to go to Singapore. The obvious forum is Singapore as the Plaintiff conceded. Mr. Kat argued that the Plaintiff should be forced to go there because first, the Plaintiff has effectively elected to go there by obtaining a number of orders in Singapore including an order for the Defendant to appear for cross-examination on his affidavit by which he made disclosure there and an order for the appointment of receivers; and by indicating that it will proceed to judgment by default in Singapore. Second, said Mr. Kat, the Defendant has submitted to the jurisdiction of Singapore by amongst another things complying with the order for disclosure and by making an application to extend time for the filing of his defence. Third, the Defendant is prepared to undertake to go to and submit to the jurisdiction of Singapore. Fourth, only the action of the Plaintiff prevents the Defendant from going there.

20. Through Mr. Michael Thomas, S.C., the Plaintiff accepts the factual situation, but Mr. Thomas said that it is premature for the Plaintiff to elect or to be forced to elect at this stage. He submitted that election is appropriate only when it is clear that there is no risk to the Plaintiff of being left to obtain no more than a default judgment rather than a judgment on the merits with all the disadvantages in international enforcement that a default judgment brings with it.

21. I do not accept that proposition. The correct approach, I am satisfied, is to consider whether allowing both sets of proceedings to continue is oppressive to the Defendant, an oppression not outweighed by any legitimate interest the Plaintiff might have in having both proceedings continue. Into that consideration will come the Plaintiff's concerns about the risk of proceedings in Singapore, but those concerns will be a factor not a test.

22. The appropriate forum for a trial is a powerful factor but not necessarily decisive in an application of this nature. While I acknowledge the cases dealing with forum applications, they do not help me in the resolution of this application. Different considerations apply in such cases. Nor do order I gain any assistance from cases such as Baidani v. Baidani [1987] 2 FLR p.463 which involved considerations of leave to serve out of the jurisdiction under Ord. 11. In such cases, it is necessary for a hopeful plaintiff to show both that the court has jurisdiction and that it is appropriate proceedings should be brought there.

23. It is also important that neither set of proceedings has as yet gone to sleep. The Plaintiff is active in both and I might put it perhaps that it is proactive in Singapore and reactive in Hong Kong thus against demonstrating a predeliction for Singapore. In this case, the fact that there are two parallel proceedings is compounded by the criminal case in which the Defendant is now on bail but not allowed to leave Hong Kong.

24. Mr. Thomas contended that the Defendant has not yet submitted to the jurisdiction of the Singapore Court and that the real point at which that would occur is when the Defendant files a defence and joins issue on the merits. I observe that I have before me no evidence of Singapore law. According to Hong Kong law, it would appear that the Defendant has by now probably submitted to Singapore's jurisdiction. But the Plaintiff's fears that the Defendant may take no further part there, leaving the Plaintiff with the problems of a default judgment, are understandable and a factor I can legitimately consider.

25. An important consideration in any forum dispute is the location of the Defendant. The Defendant, as I have already said, is in Hong Kong intending to settle here. If he wishes to go to Singapore to defend the proceedings there then, as the Plaintiff says, the remedy is in his own hands. He can make in Hong Kong the disclosure which the Plaintiff seeks whereupon the injunction and prohibition order will automatically go. Whilst it is true that bail conditions prevent the Defendant leaving Hong Kong at present, it is not impossible that some arrangement could be made with the prosecuting authorities.

26. The Plaintiff acknowledges that the Defendant is prepared to undertake to go to Singapore and submit to its jurisdiction. The Plaintiff, however, understandably views such an undertaking with some suspicion and fears that the Defendant may simply disappear again. The Plaintiff has little confidence, with good reason, in the Defendant's reliability. There are at least three reasons for this. First, as I have already explained, once the complaints from the Plaintiff's clients began to emerge the Defendant went to ground in Singapore and was only located after some time and with some difficulty in Hong Kong. Second, there is evidence that the Defendant destroyed documents while he was supposed to be helping with the handover of the Plaintiff's clients. Third, in relation to the transfer of $7 million on 27th June, the Defendant denies any knowledge of the transfer or giving any authority for it, and attributes responsibility to his wife. Such an explanation, I am afraid, would strain anyone's credulity and certainly strained mine, particularly when it is considered that immediately upon arrival in Hong Kong, the money was immediately disbursed by Mr. Yin to his daughter. Mr. Yin appeared before Rogers J.. As far as I can see, he appeared totally mystified about the whole affair.

27. Taking all these matters into account, I am of the view that the Plaintiff is still justified in continuing both proceedings. I am not persuaded that they have yet become oppressive to the Defendant. There is no reason therefore either to set aside the action or service of the writ, to dismiss it or to stay the proceedings.

28. I turn then to the Defendant's application to discharge the mareva injunction. The attack is put in two ways. First, it is said that the Plaintiff has no good arguable case. Second, that the Plaintiff was guilty of material non-disclosure such that the injunction should be discharged. Turning first to the submission that there is no good arguable case, Mr. Kat submitted that no good arguable case having been shown, the mareva relief should be discharged and there should go with it the injunction and the prohibition order. Mr. Kat mounted no separate attack on the injunction and the prohibition order, nor could he because these are matters under appeal. Nor did he pursue his argument that the Defendant should not be compelled to make disclosure because of possible self-incrimination. He contented himself with relying upon discharge of the mareva injunction.

29. The Defendant's contribution to the material before me is very limited. He denies the allegation of forgery and generally denies the Plaintiff's claims on the basis that he is being made a scapegoat for the clients' losses so as to enable the Plaintiff to make settlement with the clients, as indeed the Plaintiff has done and is doing, and to keep the Plaintiff's insurers happy.

30. I make two observations. First, the allegation of forgery originally put forward by the Plaintiff has now been withdrawn. It was made in error although another such allegation now appears to be emerging. Second, Mr. Thomas criticised the Defendant for not laying out his lines of defence which must be peculiarly known to him. I do not accept that criticism. In the case Behbehani & Ors. v. Salem & Ors [1989] 1WLR p. 723. Woolf L.J. as he then was, said at p.735:

"Mr. Brodie substantially criticised the defendants for the fact that in their affidavit evidence, they have not dealt satisfactorily with the allegations of fraud which are made against them. In regard to that criticism (and I am not here referring to the defence to which different considerations might apply, but I draw attention to the fact that the defence was not before the judge) I can well understand that in a case of this sort, where the plaintiffs had undoubtedly a strong prima facie case the defendants should take the view that they are not going to deal with the merits of the plaintiffs' claim on interlocutory matter of this sort. If they deal with the merits of the Plaintiffs' claim, it may well not assist the court, because there would still be the position that there is a strong prima facie case. Quite clearly as the proceedings are before us, the situation is one where the action is being contested. There are with regard to certain of the transactions undoubtedly matters which will require considerable investigation. The judge referred to the fact that the claim may be inflated. There is the position that in relation to the Spanish proceedings, there is a remarkable contrast between those proceedings and the English proceedings as they are framed at present. There may be an innocent explanation for that, there may not be. But that is a matter which, like many other matters, is to be investigated before the court at the trial."

31. I do know if this reference was some Freudian slip on the part of Mr. Kat but what Woolf L.J. had to say there seems to me aptly to sum up the position in the case before me. It would not be appropriate for me to go into matters in any detail. Suffice it to say, that the Plaintiff has a number of clients complaining that the Defendant mismanaged their accounts and caused them loss. Details have been given of ten such cases, though there are other claims by other clients. In some cases, it is said, clients were given false reports by the Defendant of the true status of their accounts. That is compounded by the fact that, once the complaints began to emerge in May, the Defendant disappeared and all the Plaintiff's attempts to contact him for an explanation failed.

32. Mr. Kat carried out a close analysis of the Plaintiff's material, as he was entitled to do. He complained that the scope of the Defendant's duties is not clear but in any event there is evidence that there was some flexibility in the application of the Plaintiff's regulations; that there is evidence that the Defendant may have had some degree of authority from some of the clients and that recent correspondence from the Plaintiff to the Defendant indicates that the Plaintiff has doubts about some of the clients' claims. It is true that I had some trouble getting the grips with the precise duties of the Defendant, but I believe they are now sufficiently clear.

33. In my judgment, all these matters complained of by Mr. Kat are matters for investigation at trial. At core, the Plaintiff has a not inconsiderable case against the Defendant.

34. I come to the second limb of Mr. Kat's attack that is to say material non-disclosure. Mr. Kat complained of four specific matters. First, he said that the Plaintiff failed to disclose the part played by the Country Heights shares in relation to the Defendant's resignation and did not explain their materiality to the claims made against the Defendant. Whether or not the Defendant was told to go or whether he resigned voluntarily is interesting historically and may play some part at trial in terms of creditability but it would have been entirely irrelevant to my considerations in granting relief.

35. I accept that the position of these shares, which had been credited to some of the clients' accounts, is not as clear as it might be. But the Plaintiff's case is that they were acquired by the Defendant and distributed to clients without authority, that they have been deducted from these accounts, and that the Plaintiff is liable for any shortfall as a consequence. It is true that Mr. Thomas has said from the Bar that there is a dispute as to ownership of the shares which give resolved in the Plaintiff's favour might well mean a reduction in the claim against the Defendant.

36. I am conscious of the importance of full disclosure. I was reminded of this by the passages to which Mr. Kat took me in Steven Gee's work Mareva Injunctions and Anton Piller Relief, between p.99-103. But I do not believe that the Country Heights shares give a seriously different flavour to the case. Nor do I find, having regard to the values involved in this case, that an explanation about the shares would have influenced the quantum of the mareva.

37. Mr. Kat's second complaint is that the Plaintiff failed to disclose its doubts as to the veracity of some of the client's claims, doubts which are evidenced by the two letters recently sent to the Defendant following grant of mareva relief. In my judgment, however, those letters do not show that the Plaintiff is suspicious of any of the client's claims. Rather the letters show an understandable desire that the Defendant should provide an explanation if there is one.

38. Third, Mr. Kat said that the Plaintiff did not, as it should have done, draw to my attention evidence that the Plaintiff's internal regulations are flexible. This complaint is based on para.11 in the third affirmation of Mr. Raymondo Yu. Mr. Yu was the principal deponent for the Defendant and it was his first affidavit which supported the application for the mareva injunction. For my part, I am quite unable to construe that paragraph in the same way as Mr. Kat. In my view, the paragraph makes clear that breaches of regulations were not tolerated and at least resulted in reminders if not more severe penalties.

39. The final specific complaint of material non-disclosure is not so much a complaint about non-disclosure as a complaint about an error, and an important error, on the part of the Plaintiff. That is to say, the withdrawal of the allegation of forgery which was made to me on 25 June. The withdrawal of such a serious allegation must be a cause for concern. It has been explained as an error which had been eliminated from a similar affidavit used in Singapore but which was overlooked in the preparation of the affidavit for use in Hong Kong. That, of course, is very careless and might, in an appropriate case, be fatal to the relief granted to the Plaintiff.

40. In the context of this case, however, where there are multiple allegations of false statements and accounts, of the unauthorised drawdown of loans and now of a new indication of forgery, this is not a factor which would compel me to discharge the mareva injunction.

41. Finally, Mr Kat urged upon me, in general terms, the importance of a Plaintiff disclosing all material so that the court has the full story and can see matters which a Defendant might reasonably raise or seek to rely on. He complained that there are no documents to demonstrate clearly the terms under which the Defendant was employed and the precise scope of his duties. He complained that there has not been produced any mandate from a client which might show what authority, if any, the Defendant had to deal with their accounts. And he complained that there are no documents to show how the Country Heights shares are being dealt with.

42. The crux of the matter, however, is that the Plaintiff had an apparently cut and dried case of a dishonest employee who had manipulated clients' accounts to the detriment of both the clients and the Plaintiff. The Plaintiff was faced with claims from these clients. Given the Defendant's absence and silence, it is difficult to see what defence or lines of defence the Plaintiff could reasonably have anticipated. I am not persuaded that the Plaintiff has been selective in the information or documentation it has provided or that it has failed to produce relevant material. In my judgment, this is an illustration of the practice disapproved of by Macdougall J in Citibank v. Express Ship Management Services (1987) HKLR 1184.

43. For the reasons which I have given, therefore, I dismiss all the Defendant's applications. It seems to me that the Plaintiff should have its costs and I make an order nisi, the appropriate time for which will be 30 days in this case, that the Plaintiff is to have its costs including all the costs so far reserved.

44. Apart from the Defendant's applications, I also have before me an outstanding summons by the Plaintiff for substituted service of the orders requiring disclosure which, being endorsed with a penal notice, would otherwise have required personal service. That summons was issued on 3 July, up to which date all attempts to serve the Defendant, even by arrangement through his solicitors, had failed. The summons was therefore justified. I make no order on the summons, as it is no longer necessary, but I am satisfied that the Plaintiff should have the costs of the summons and the affidavit in support and I so order.

(After further argument)

45. I certify this hearing and the hearings on 26 June and 4 July as fit for 2 counsel.

Representation:

Mr. Michael Thomas, S.C. & Mr. Stewart Wong instructed by Linklaters and Paines for Plaintiff.

Mr. Nigel Kat instructed by Hampton Winter & Glynn for Defendant.