Sukit Pachimsawat and Another v. The Hongkong and Shanghai Banking Corporation

HCA000410/1978

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: Bewley, J.

Date of Judgment: 26th November, 1980

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JUDGMENT

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1. This is an action for money due: a great deal of money in fact. The plaintiffs claim US$2,329,005 plus interest from the defendant bank, which, they say, transferred certain deposits without authority to the Bank of America. The latter has been made the subject of third party proceedings, which will be heard hereafter.

2. The plaintiffs are a Thai couple, who live and carry on business in Bangkok. They are people of substance. 2nd plaintiff's father, who died in August this year, was chairman of a company with a multiplicity of interests in Thailand and reputed assets of HK$1,000,000,000. His name was Sukosol and 2nd plaintiff still, more often than not, signs documents in her maiden name.

3. Both plaintiffs have had a university education in the U.S.A. 1st plaintiff has some difficulty in expressing himself in English, but 2nd plaintiff has almost complete command of the language. He was formerly an economics adviser to the Thai government and is now a director of the Kamol Sukosol Co. She is the financial director.

4. They decided, in August, 1975, to put money on deposit in Hong Kong. They were not familiar with the Hong Kong banking scene, but they knew that the defendant was the biggest bank in Hong Kong and were impressed that it issued its own banknotes. They also knew that the Bank of America was the largest bank in the world. They placed relatively small sums on deposit for one year, with the defendant (US$5,000), at its main branch in Queen's Road, and with the Bank of America (HK$2,000), in St. George's Building, in the Central district of Hong Kong. Their intention was to see which bank gave the best service and offered the best rates of interest and exchange.

5. By May, 1976, they had decided that the defendant was a more attractive proposition than the Bank of America, an official of which admitted that they could not compete, as a small overseas branch, with the rates that the defendant could offer. The plaintiffs closed their account with the Bank of America and from then on, according to them, dealt exclusively with the defendant.

6. Reverting to 8th - 9th August, 1975, when the deposit account with the defendant was opened, the plaintiffs signed certain documents, namely a specimen signature card in respect of a current account, which the plaintiffs opened at the same time, and a mandate (B8) in respect of the deposit account. 2nd plaintiff signed the card in duplicate in her maiden name, Kamalee Sukosol. Both plaintiffs in fact signed the duplicate card 3 times - that being the Thai practice - and, when told that only one was needed, crossed out the last 2 signatures.

7. The mandate (B8) is a document dealing with the technicalities of a joint account. The plaintiffs were required to sign this form in 2 different places. This time they signed twice in each place, but crossed out the extra signatures when told they were unnecessary. 2nd plaintiff does not now remember signing this form, but there is no doubt that she did.

8. All 3 forms signed by the plaintiffs were retained by the defendant. The person with whom the plaintiffs dealt on this first occasion was a Mr. Collaco.

9. We move on now to 3rd May, 1976, when the next deposit with the defendant was made. The $5,000 initial deposit had not yet matured, but it was uplifted and merged with a new and much larger deposit. The total sum amounted to US$193,184.90. This transaction was effected by a Mr. Da Silva, who, at her request, gave 2nd plaintiff his card, on which she wrote the date (B16). Again the plaintiffs were required to sign a joint account mandate form (B13). On this occasion 2nd plaintiff signed her married name.

10. The plaintiffs were by now happy in their choice of bank and they came to Hong Kong again in August, 1976, intending to make another deposit. This time they saw Mr. Charles Dargie, on whose card (B17) 2nd plaintiff also noted the date, 12th August. Mr. Da Silva was again present. Mr. Dargie asked 2nd plaintiff if she had signed a mandate form. She said yes, but Mr. Dargie said there was no harm in signing another one.

11. While 1st plaintiff was filling in this form (B19A), 2nd plaintiff asked for a copy (P9), which she completed in the same manner as her husband. She did not sign this copy, but took it away to read at her leisure. She was impressed with the apparent importance attached to this document. She then signed the mandate form that had been completed and signed by 1st plaintiff (B19A). Finally, securities to the value of US$288,652.99 were deposited.

12. On 23rd September, 1976, 1st plaintiff came alone to Hong Kong and a fourth deposit of US$439,346.74 was made. On either this occasion, or during the previous visit, Mr. Dargie was informed that the plaintiffs no longer wanted mail from the bank to go to Thailand and he was given a correspondence address in Hong Kong. This was c/o Mr. Yung Siu-fai, Ming Loong Trading Co., Ltd., 27 Lock Road, 6/F, Kowloon. Mr. Yung was a jeweller and the son-in-law of an old Thai family friend, named Hui, who lived in Bangkok.

13. The last 2 deposits were made by the plaintiffs together on 22nd October, 1976 and 2nd May, 1977 and were US$607,791.56 and US$662,280.01 respectively. The next day, 3rd May, the first and second deposits matured and were renewed, with the earned interest, totalling US$206,405.99. The plaintiffs returned to Bangkok and, on 7th July, left on a visit to Europe, where they say they remained until 31st July.

14. Meanwhile, on 16th June, a letter was received by the defendant purporting to have been written by the 2nd plaintiff (D1)(I). This is in the form of a request for an up-to-date statement of account to be sent to an address in Austin Avenue, Kowloon. The letter is signed in 2nd plaintiff's maiden name. The defendant complied with the request on 24th June (D3).

15. At about this time - 22nd June to be precise - a current account in the name of the 2nd plaintiff was opened at the Bank of America, Peninsula Branch, Kowloon. The application form is in 2nd plaintiff's married name, but the penultimate 'a' in the signature is missing (L). A requisition for a cheque book for this account was signed the same day, also in 2nd plaintiff's married name, similarly misspelt (D2)(N).

16. Then, on 4th July, the defendant received another letter, signed 'Kamalee Sukosol' and headed by the same Austin Road address as the letter of 16th June. This letter requested the defendant to transfer the deposit made on 2nd May (US$662,280.10) and the deposit, which had been renewed on 3rd May (US$206,405.99), to the recently opened current account at the Bank of America, Peninsula Branch (D4)(J). The letter purports to have been sent by registered airmail.

17. This was acted upon and the transfer was effected by a cashier order for HK$4,040,116.77 from the defendant to the Bank of America, Peninsula Branch. It was sent with a covering letter dated 7th July (D5). At the foot of this letter is typed 'cc Mrs. Kamalee Pachimsawat'. There follows the hand-written words "to c/o Mr. Yung Siu Fai". Counsel informs the Court that these words were added, after the letter had been posted, by a member of the bank's staff, who was not concerned with the sending of the letter.

18. However, an affidavit dated 7th November, 1980, from a Mr. Crook, who succeeded Mr. Dargie as officer in charge of the International Deposits Department (I.D.D.), who wrote the letter and who is now living in New York, states that he gave instructions that this letter be sent c/o Mr. Yung at Lock Road, which was the plaintiffs' registered address.

19. It will be recalled that 7th July was the day on which the plaintiffs left Bangkok for Europe. In the course of the next 3 weeks - which they were apparently still in Europe - the Peninsula Branch current account was drawn upon to the extent of HK$3,900,257.06, by means of 4 cheques dated 11th, 16th, 22nd and 25th July respectively, all signed 'Kamalee Pachimswat' (E10-13).

20. On 3rd August an individual US$ savings account was opened at the Peninsula Branch of the Bank of America in the name of Kamalee Pachimsawat (D5A). The Austin Avenue address was given and the holder was described as a merchant, born in Thailand, with passport No. 44038. The same day the sum of HK$23,291 was paid into this savings account by means of a cheque drawn on the Peninsula Branch, current account, and signed 'Kamalee Pachimswat'. (D6).

21. On 6th August a letter was written to the defendant from the Austin Avenue address, signed 'Kamalee Sukosol' and purporting to have been sent by registered airmail from Bangkok (D7)(K). It is an aggressive letter, in which complaint is made about the defendant's breach of confidence in sending the advice of the first transfer to the Lock Road address, instead of to Austin Avenue, as requested in the letter of 16th June. It concludes with an instruction to transfer the balance in the account to the Bank of America, Peninsula Branch, for the credit of US$ savings account No. 62, in the name of Mrs. Kamalee Pachimsawat, and an injunction that the advice this time should go to the Austin Avenue address. There is a note at the bottom, which states that a copy of the first advice is enclosed. In his affidavit Mr. Crook confirms that a copy of his own letter of 7th July, which was sent to Lock Road, was enclosed. There is also evidence from a girl, Daisy Chan, who was a typist in the department at the time, to the effect that something was enclosed, but she cannot remember what it was. Stapling holes are visible in one corner of the letter.

22. The defendant complied with this request through its Mongkok office and confirmed the transaction by letter addressed to Austin Avenue on 12th August, with which the advice was enclosed (D8). The sum transferred was US$1,355,545.98. This letter was apparently copied to 1st plaintiff, but the address to which the copy was sent is not disclosed. The writer, who is Mr. Crook, points out that the previous advice was sent to Lock Road, because this was the plaintiffs' registered address.

23. The scene now shifts to the Bank of America. On 17th August a notice of withdrawal, signed Kamalee Pachimswat', instructed the bank to debit savings account No. 62 with US$1,075,537.63 in cash. (D11)

24. The same day a similar notice of withdrawal instructed the bank to debit the balance of the savings account and credit Mrs. Pachimsawat's current account at that branch. (D12). This was done and the circle was completed when the current account was cleared by a cheque dated 22nd August and signed 'Kamalee Pachimswat' for HK$1,343,107. (D13).

25. The plaintiffs had arrived back in Thailand on 1st August, but due to pressure of work, they did not come again to Hong Kong until 2nd November. They intended to make a further substantial deposit with the defendant. Instead of going straight to their hotel, as usual, they went from the airport to 27, Lock Road, to collect their mail. 2nd plaintiff wanted to see that the deposits had been rolled over and that all was in order.

26. To her surprise there were only one or two advices - there should have been more - but she thought it must be a clerical error and did not mention it to her husband.

27. Next morning 2nd plaintiff telephoned the defendant and made enquiries about the missing advices. To her horror she was informed that her account had been closed.

28. Before going to the bank she consulted her friends, including Mr. Michael Ma, who looked after her financial affairs in Hong Kong. She was advised to see a Mrs. Zichy in Citibank, who in turn arranged for her to see Mr. Mosley, a director of the defendant bank.

29. When the plaintiffs arrived at the defendant's premises, they saw Mr. Mosley straightaway. The officers concerned were summoned, the papers wee looked at and it became apparent that, following the correspondence referred to above, the money had, in fact, been uplifted. It is the plaintiffs' case that Mrs. Pachimsawat never at any time wrote to the defendant, or gave any such instructions and that she had never had an account with the Peninsula Branch of the Bank of America.

30. In the course of the next few days the plaintiffs saw their solicitors and were interviewed by the police. In particular, 2nd plaintiff gave the police 48 specimen signatures (U), which were analysed by the Chief Government Chemist, Mr.Edgley. His conclusion (C93A) is that the signatures on the letters of 16th June (D1)(I), 4th July (D4)(J) and 6th August (D7)(K) were not written by the same person that wrote the signatures in exhibits A, B, C, F, H, T and U. There is no dispute that the latter were all written by 2nd plaintiff.

31. Mr. Edgley points out that the genuine signatures vary widely, whereas the 3 questioned signatures at I, J and K show a close resemblance to each other. He also finds what is indeed obvious to a layman's eye, namely that they bear a striking resemblance to the signature on the third mandate form signed by 2nd plaintiff (B19A)(F). This opinion is confirmed by the other 2 handwriting experts in the case, Mr. Radley and Mr. Renshaw.

32. Mr. Edgley also considered the possibility of auto-forgery, or, as he prefers to call it, 'disclaimed signature': that is to say, an attempt to write one's signature in such a way that it will be thought to have been written by someone else. It was - but is no longer - the defence case that the I, J and K signatures were auto-forgeries by 2nd plaintiff. One of the reasons why Mr. Edgley excludes this possibility is that there has been delicate retouching that, in his opinion, is intended to make the signatures look genuine.

33. Mr. Edgley also makes a finding that the 9 Bank of America signatures were not written by the person that signed the 2nd and 3rd mandates of 3rd May (B13) and 12th August, 1976 (B19A) and the 48 specimen signatures (U), all of which, of course, were written by 2nd plaintiff. He found 16 consistent differences between them, 11 of which are set out in Appendix A to this judgment.

34. In the case of the Pachimsawat signatures there is, according to Mr. Edgley, an obvious attempt to make them resemble the genuine signatures pictorially, but not to make a copy, as in the case of the Sukosol signatures. As they were written in the presence of bank employees, there was no opportunity to retrace, uplift, etc.

35. In summary, Mr. Edgley concludes that the forger of the letters to the defendant has closely copied 3rd mandate (B19A)(F), and that 2nd plaintiff did not sign (in any sense of the word) any of the Bank of America (Peninsula Branch) forms.

36. The same conclusions were reached by Mr. R.W. Radley, a forensic and handwriting examiner from Reading. He examined the Sukosol signatures in January and the Pachimsawat signatures in March this year. He used the facilities provided by Mr. Edgley at the government chemist's laboratory, but he was not privy to Mr. Edgley's findings. They reached the same conclusions independently.

37. Regarding the 3 questioned Sukosol signatures (I, J and K), Mr. Radley told the Court that they were simulated forgeries of one master signature, which was F (the bank mandate of 12th August, 1976). The 3 were not directly superimposable - this is apparent to the naked eye - but they closely correspond. For this reason, the fact that they were written over a lengthy period of time is a suspicious feature.

38. Technically, Mr. Radley has great admiration for the skill of the forger. It is only under the microscope that retouching, penlifts and pauses become apparent and reveal the signatures as drawings, not natural signatures. It is not necessary to set out the detailed reasons why Mr. Radley is satisfied that these signatures are forgeries and that they were not written by Mrs. Pachimsawat, since this is common ground between all 3 experts in the case.

39. In Mr. Radley's opinion the forger had the signature at F before him on each occasion, or at least a copy. He thinks it more likely that a copy was used, because the K in F starts with a small loop in the first upstroke of the K, which can only be seen in the original and does not occur in I, J and K.

40. In cross-examination Mr. Radley conceded that there was more of a slope in F and the genuine signatures in the book of photographs (P13) than in I, J and K: also that the 1 in Kamalee was slightly shorter and the o's in Sukosol to have more space in the middle in I, J and K than in the genuine signatures. He also agreed that the gap between the names was smaller in I, J and K than in F. He did not agree, however, that it followed that the forger was not using F as a model. It was suggested to him that, if this were the case, the forger would have done a better job. But Mr. Radley pointed out that the prints in P13 are enlarged and that, so far as the gaps were concerned, the forger's error amounted to a half millimetre. It will be seen that the forger has reproduced the starting point of the S in Sukosol precisely in line with F, but has neglected to make the same gap.

41. So far as the 9 questioned Pachimsawat signatures are concerned, Mr. Radley compared these with the 48 specimens provided by Mrs. Pachimsawat (U) and with signatures D (B13) and E (B26A) in the book, which were known genuine signatures, dated 3rd May and 12th August, 1976, respectively. The close correlation of all the questioned signatures, which had been signed over a 2 month period, and the consistency of the differences with the known writings, led him to the conclusion that they had not been executed by Mrs. Pachimsawat.

42. Unlike the Sukosol signatures, he found these 9 to be signatures in the normal sense, rather than drawings, but they were attempts to produce pictorial representations of the genuine signatures. However, he was able to point to a large number of features, which indicated, in his opinion, that these are natural writings, but of Someone other than 2nd plaintiff. To assist the Court he has used 2 sheets of paper, I containing the 4 control signatures, lettered D, E, N(1) and N(2) and the other, 5 of the 9 disputed signatures, lettered L, M, N(1), N(2) and 0 and has given each point of significance a number. Of 26 points, Mr. Radley considers 19 are of major importance and these may be found at Appendix B.

43. Mr. Radley stresses that, in considering their individual characteristics, it is the number and nature of the differences, coupled with the period of time over which the signatures were written, that are important. Disguise is rarely consistent over a period of time, particularly when it is complex and fluently written.

44. Mr. Radley does not believe it would have been possible for Mrs. Pachimsawat, even with practice, to have written her name with fluency under the eyes of a bank official on so many occasions, when it was necessary to incorporate all these variations, which were so contrary to her natural handwriting habits.

45. He admits that, taken in isolation, there are indications of auto-forgery, but says that, when discrepancies in 9 different types of feature occur - letter design, joining strokes, ratio, slope, spelling, punctuation, alignment, the position of the dot and the t-bar - auto-forgery is positively excluded.

46. In the course of his cross-examination, he was shown the originals of 26 cheques, signed by 2nd plaintiff in the course of business in 1976-77 in the name Pachimsawat, upon which the defence relies, and which he had an opportunity of examining only the day before. He was asked to comment on the points of similarity between these and the Bank of America signatures.

47. Mr. Radley conceded that these similarities existed e.g. dislocations of the base line in C6, C7, C28 and C34, but said they were of no significance, as he based his opinion on the manifold differences, which would, he maintained, be impossible to reproduce so often, in such a long name, over such a long period. In the attempted disguise of a long signature, the last few letters are likely to be natural, but one might expect a disguised feature right at the end, such as the prominent and artifical t. He admits there is no known signature with this K and this t.

48. The similarities he explains as being accidental, in the sense that certain features frequently coincide in the writings of different people. He quotes Osborne on Questioned Documents: "Likeness occurs in all things that are not utterly unlike."

49. Most of the differences, Mr. Radley considers, are not the result of disguise, but the natural pen habits of the forger. The more inconspicuous the detail, particularly over a period of time, the less likely it is to be disguised. Subtle changes are usually the consequence of major deliberate changes such as slope.

A layman cannot be taught how to do a good forgery. Even with practice, he would only be able to achieve a pictorial copy sufficient to deceive the naked eye. Fine points like link-ups would be beyond him.

50. The defence called its own handwriting expert, Mr. David Renshaw, formerly a forensic document examiner at the Home Office and now in private practice in Cardiff. He agrees with Mr. Radley and Mr. Edgley that I, J and K were not the genuine signatures of 2nd plaintiff and that they are extremely good free hand copies of one of the genuine signatures, probably a copy of F.

51. So far as the Bank of America signatures are concerned, Mr. Renshaw, on the same material as Mr. Radley, agrees that they were not written by the person who wrote I, J and K, but concludes that they were written by Mrs. Pachimsawat.

52. Mr. Renshaw made several general observations. (1) Each letter is not totally independent. In other words, one tends to make a d or a g in the same way that one makes an a. Therefore, one should not point to these letters as 3 separate similarities. Likewise, each person tends to make a loop, whether above or below the line, in the same way. This is not a feature of the particular g, y, h etc.: it is a feature of the writer's loops. (2) The formation of a letter can be affected and modified by its position in a word, or in relation to other letters. (3) The numerical analysis of handwriting, sometimes used by Mr. Radley, is a dubious method. This is because it is so variable that it is difficult, for example, to get a standard base line or other point of reference. This becomes a subjective matter and to use it as a basis for arithmetical calculation of slope etc. is meaningless. The human eye is still the best document examiner. (4) A change of slope is one of the simplest and commonest methods of disguise. It can cause severe distortion of both letters and linkages, which it is dangerous to under-estimate. (5) The books on the subject that were quoted from by Mr. Radley are comprehensive works of reference, but should not be regarded as standing orders for document examiners.

53. Turning his attention to I, J and K, Mr. Renshaw agreed with Mr. Radley that it was more probable that a copy of F, or similar signature, was used by the forger. Had an original been in front of him, a person of his expertise would not be likely to have omitted the initial loop to the leg of the first K, which is hidden in the photo-copies of the known signatures, but, under a magnifying glass, is quite clear in the originals. In the light of this evidence, it is difficult to see the point of Mr. Faulkner's cross-examination of Mr. Radley suggesting reasons why F was not used as a model.

54. Mr. Renshaw also agrees with Mr. Radley that the questioned Bank of America signatures are not copies, in the sense that I, J and K are copies. There is no known genuine signature that exhibits all the characteristics to be found in the questioned signatures, e.g. the grotesque final t.

55. Mr. Renshaw found this aspect of the comparison extremely difficult, but, after much consideration, he came to the view that the questioned signatures were disguised versions of Mrs. Pachimsawat's signature written by 2nd plaintiff herself.

56. Like the other 2 experts he gave many detailed reasons for his conclusion, which are in Appendix C. He was not prepared to concede, when the observation was made by the Court that, while Mr. Radley had tended to point out the differences between the questioned and the genuine signatures, much of his evidence tended to indicate the similarities between them. This was, however, how it seemed to me at the time and, for that matter, still does.

57. Mr. Renshaw concluded his evidence in chief with some general remarks concerning line position and dislocation. He noted that, where one existed, as in D, E and F, Mrs. Pachimsawat has a tendency to write above the line. Even allowing for the fact that the questioned signatures start below the line, the bulk of them are above the line.

58. Dislocation is a feature of the Bank of America signatures. 'Kamalee' has been written at such an angle that, in order not to run into printed matter above, the second name has been started at a lower level. This effect is also seen in several of the specimen signatures e.g. C28 and C34, but not in R2, which is an endorsement on a cheque.

59. In cross-examination Mr. Renshaw conceded that the questioned signatures possessed a considerable degree of fluency, except in the case of the Ka and the terminal t, but said they were not as fluent as the genuine signatures.

60. For him the difficulty lay in establishing the normal pattern of Mrs. Pachimsawat's writing, on account of the various ways in which she formed her letters. Having found both differences and similarities between the genuine and the questioned signatures, he also experienced difficulty in assessing their relative significance. He asked himself, however, why the similarities should be there, if the signatures were not her own. Mr. Renshaw would not accept that the micro-features were natural. He pointed to the combination of angles and curves, which he says is not a normal way of writing. Taken in conjunction with this, the number of similarities was too great to be fortuitous, or to occur coincidentally in the writing of a third party. In addition, there was the hesitancy in the final t and a striking degree of angle and dislocation of the 2 names. These factors, taken together, convinced him that the signatures were written by Mrs. Pachimsawat in a disguised hand.

61. As to the consistent differences observed by Mr. Radley, he maintains that there are none that is incapable of a reasonable explanation. The dissimilarities, to prove different authorship, must be shown to be a natural feature of the writing - fundamental to the structure - and says that those found here amount to either variations in the writer's own writing, or consistent dissimilarities introduced as a disguise. A reasonable explanation for their existence thus is found.

62. Finally, Mr. Renshaw was asked about the ratio of the letters, with reference to the passage in Harrison's 'Suspect documents':

"the relation between the heights of the short letters and the long is an important characteristic of a handwriting, as it tends to remain unaltered, whether the writing be large or small, fast or slow and normal or disguised."

This was Mr. Radley's point (25). Mr. Renshaw's conclusion was that there was no variation in the ratio in the 2 sets of signatures.

63. The Court has to deal with a difficult question of fact. It is not just HK$10,000,000 that is at stake, but the good name of the plaintiffs, who are important people in their own country, and the reputation of the biggest bank in Hong Kong. It is, therefore, a weighty matter.

64. There is no doubt that there was a plot to defraud the defendant. There are 3 possibilities. Firstly, that the plot was contrived by one or more members of the defendant's staff, who, with the help of others, have forged 2nd plaintiff's signature and stolen the money. Secondly, that the plaintiffs themselves are guilty of conspiracy to defraud and carried out the conspiracy with the help of an expert forger and perhaps also with the help of a member of the I.D.D. staff. Thirdly, that someone outside the bank, who knew a great deal about the plaintiffs and their affairs, has perpetrated the fraud without the knowledge of the plaintiffs.

65. The latter theory, though superficially attractive, is really a non-starter and has been canvassed only briefly by Mr. Swaine in his final address. 2nd plaintiff is adamant that no one - not even Mr. Hui, who was a close family friend and who arranged an introducer for their current account with the defendant, nor the Ma brothers, who looked after their money in Hong Kong on a short-term basis - knew that they maintained a deposit account with the defendant. Because of exchange control in Thailand, it was not the sort of thing they were likely to broadcast. If the plaintiffs are innocent of fraud, they have no reason to lie about this. This being the position, there was no basis for the letter of 16th June, 1977, which set the fraud in motion (I). Also the writer of this letter knew which signature operated the account and that one signature was enough. Only the plaintiffs and the defendant knew this.

66. Secondly, it would be impossible for a 3rd party to copy 2nd plaintiff's signature so exactly, as in I, J & K, even were they in possession of another of 2nd plaintiff's signatures, unless it was that particular mandate form, which was in the possession of the defendant (B19A), or an almost exact copy.

67. Thirdly, while the plaintiffs' friends might have known about their trip to Europe in July, 1977, they could not be sure that the plaintiffs would not come to Hong Kong in August, or at least communicate with the defendant in some way. The pattern of the plaintiffs' visits the previous year had been May, August, September and October. A repeat was at least a possibility, yet this would have spelt disaster for the plot. The plaintiffs returned to Bangkok from Europe on 1st August and the last withdrawal was not until 22nd August. This was a very big risk to take. There was a risk, not only that the plaintiffs would withdraw the remaining balance, but that a trap would be set by the banks and the police. For these reasons a plot by outsiders, acting alone, can be eliminated from consideration.

68. 2nd plaintiff says she is positive that the villain is a member of the defendant bank's staff. She is able to point to the third mandate (B19A), from which the signatures on the letters were copied, and say that no one outside the bank had access to the document. So far as we know, this is absolutely true and a valid point.

69. The defendant's staff in the I.D.D. had access to all the information necessary to set up the fraud. Thai accomplices would have been necessary to carry out the Bank of America end of the scheme, but that need not have presented much of a problem.

70. There are, however, several objections to this theory. The third point made above in connection with the first theory also applies vis a vis the defendant. Even if the insider and his accomplices knew about the plaintiffs' European holiday, they did not know that they would not come to Hong Kong between 1st - 22nd August. It would have been a considerable risk.

71. Moreover, if the bank staff was involved, there would have been no risk at all in completing the various transactions over a much shorter period. On the face of it, the transactions were regular. No one would, at first, have been suspicious. There was, therefore, no point in prolonging matters. When the fraud was eventually discovered, the defendant would have accepted the evidence of the signatures and maintained, either that the transactions were genuine, or put up the defence that is now before the Court. Nevertheless, it was a desperately chancy exercise. So few bank personnel could have been involved that they must have attracted suspicion, in due course, whether the fraud was completed in a matter of days or weeks. It was an inescapable fact that they were in possession of a copy of the forged signature.

72. There is also the question of the phraseology and standard of English used in the letters, particularly the vitriolic epistle of 6th August, 1977 (D7)(K). The plaintiffs' account was being handled by Portuguese and English staff. They are educated people and would not naturally use such poor syntax. There is, in addition, confusion between singular and plural, particularly in the auxiliary verbs, as well as errors of tense and spelling. It is, of course, possible that all this is deliberate, but I should think it is quite a difficult thing to do. It is interesting that the word "rumor" is spelt in the American style. This is the only word in the letter that has an alternative spelling. Against that, is the fact that the dates are in the English style. All in all, however, it seems unlikely that this letter was written by anyone employed by the defendant.

73. What then of the plaintiffs? An immediate objection to the suggestion that they are guilty of fraud lies in their own wealth and status. 2nd plaintiff has inherited an immense fortune. They are, no doubt, highly placed in Bangkok society. They have many important and influential friends. Would they really - even for the sake of so much money - perpetrate a fraud on this scale, knowing full well that the defendant would not concede without a fight, that they would have to face the trauma of rigorous and prolonged forensic enquiry and, at the end, if they should lose, that they should have to face the stigma and obloquy of being branded frauds. It seems unlikely.

74. If the signature on the third mandate (B19A) (F) was the model for the 3 Sukosol signatures at I, J and K, the plaintiffs could not be involved, unless they had an insider accomplice, because this document never left the bank. But if a copy of this signature was ever made, that is a different story.

75. Finally, Mrs. Pachimsawat's passport shows that she was in Italy on the date when one of the withdrawals from the Bank of America was made and could not have been in Hong Kong that day.

76. In this tangled skein of facts, I have to decide, on the balance of probabilities, where the truth lies. The burden of proof is on the defendant. The plaintiffs demand the return of their money. The defendant alleges they have committed a fraud and refuses to give it back. This is, in effect, the affirmative allegation that the defendant must prove. The defendant has succeeded in proving forgery of the letters to the defendant and the documents by means of which the money was withdrawn from the Bank of America. The plaintiffs admit this, but say they are not responsible. The defendant must prove their complicity.

77. I mentioned 3 possibilities, but there is in fact, a fourth. Even if the plaintiffs are guilty of fraud, the money may have been withdrawn from the Bank of America by someone other than Mrs. Pachimsawat. This would be contrary to the opinion of the defendant's handwriting expert, Mr. Renshaw, and to the defendant's case as pleaded. Mr. Swaine submits that, if it is proved, or rather if the defendant fails to prove that it was Mrs. Pachimsawat that signed the Bank of America documents, the defendant must fail, since it would not have proved its case as stated in the pleadings.

78. Mr. Mills-owens replies that his client is the innocent victim and is, therefore, not in a position to know exactly how the swindle was carried out. It is sufficient if he can show that the plaintiffs were party to a fraudulent scheme to obtain the money. In these circumstances the plaintiffs cannot compel the defendant to pay out a second time.

79. I am sure this is right. The plaintiffs were either wholly involved in the fraud, or they are wholly innocent. There is no halfway house. If the forged letters to the defendant were written with their knowledge and consent, they must have been party to the withdrawal of the money from the Bank of America. Mrs. Pachimsawat's physical presence at the latter is irrelevant. The fact that Mr. Renshaw may be wrong does not entitle the plaintiffs to benefit from their fraud, just because this is the case that the defendant has set out to prove. As Mr. Swaine himself said in opening: "If we are in fraud, we cannot recover."

80. In this connection, I note that the plaintiffs - except so far as one matter is concerned - have absolutely no reason to lie. They come here ostensibly with nothing to hide, except breach of Thai exchange control regulations. They have a very strong motive in concealing any matter that might get them into trouble with the Thai authorities. It was noticeable that their evidence became rather blurred whenever the source of the funds was mentioned. I discount this. It has really nothing to do with the issue with which I am now concerned.

81. But, so far as everything else is concerned, any deliberate lie by either plaintiff immediately assumes considerable significance. They say they have done nothing wrong and have lost their money through the perfidy of the defendant's staff. If they are innocent, one would expect them, not only to tell the same story, so far as their memories allow, but to be at pains to reveal all they know about their dealings with the banks.

82. The expert witnesses from England and Wales are patently men of ability and probity in the field of suspect handwriting. Their dedication to their craft is not in question. These remarks apply also to Mr. Edgley, whose assistance is always welcome in these courts, although he would probably concede that his training and experience in matters of forgery are not quite on a par with those of the others.

83. Each man made his points - both general and specific - clearly and firmly. Each was, in his own way, equally convincing. Their logical processes at the time seemed inexorable. Yet one side or the other must be wrong. They concede that their art is a subjective business and that, in the end, it all comes down to a matter of opinion. Were it otherwise, the computer would by now have put them out of business.

84. Each of the 3 had his thesis whittled down in cross-examination to a limited extent, but no effective breach was made, in spite of lengthy and percipient questioning by counsel, who of course were fully briefed by their own expert. Mr. Radley was more fluent than Mr. Renshaw in exposition and speech, but there was nothing between them with a pencil in hand. Obviously each of the 3 men was convinced he was right.

85. It is extremely difficult for a layman in these circumstances to decide who is correct in the proper analysis of handwriting so naturally varied as that of Mrs. Pachimsawat. The result, I fear, is that I find it impossible to choose between them. They cancel each other out.

86. There is no other evidence linking Mrs. Pachimsawat to the Peninsula Branch of the Bank of America. On the contrary, her passport shows, prima facie, that she was not involved in this aspect of the case. It is not for her to prove that the chaps in her passport are genuine.

87. The key to the mystery lies, I think, at 27, Lock Road. The possibility that Mr. Yung - and therefore Mr. Hui - was in league with the defendant's staff must be considered, but it is thoroughly unlikely. It was the plaintiffs' idea that they should have a correspondence address in Hong Kong. Quite apart from the fact that Hui was a trusted family friend, it would be too much of an unhappy coincidence if he is a guilty party.

88. This being so, it is also most unlikely that any mail went astray after reaching Lock Road. In my judgment, the exploitation of this address by the villains - whoever they are - was a blind. It was a clever false trail, laid in order to cast suspicion on the innocent party. If the defendant's staff are the culprits, they would not have sent the advice to Lock Road on 7th July. There was no point in doing so and it would have been asking for trouble. By mentioning falsely in the letter to the defendant on 6th August (D7) that the advice had gone to Lock Road, they made it look as though the plaintiffs ought to have known what was happening. As Mr. Swaine points out, there is no proof that the letters tell the truth.

89. On the other hand, if the plaintiffs are guilty, the advice must have been sent to Lock Road, in error and contrary to instructions. When it reached the plaintiffs, in due course, they were then in a position to write the letter of 6th August and return the advice to the bank. This would, firstly, stop the defendant sending any more mail to Lock Road and, more importantly, make it look as though there was an unauthorized leak at that address and that the plaintiffs had not received the advice.

90. The plaintiffs' evidence concerning the change of address is unsatisfactory. For a start, there was no necessity for a correspondence address in Hong Kong. Their instructions to the defendant, concerning mail in connection with their current account (ExD1), was that it be kept in the bank's mail collection centre. There was no reason why the same instructions should not have been given in respect of the deposit account.

91. The plaintiffs had a good reason - exchange control regulations - not to want correspondence relating to their deposits going to Thailand. It is surprising, in fact, that they ever used their Bangkok address. But to choose Lock Road as a correspondence address did not make sense. Not only was it giving trouble to Mr. Yung, it was putting themselves to the bother of going to Lock Road each trip, when it would have been much simpler and more secure to have given the bank's mail collection centre as their address. Apparently, on 2nd November, they even visited Lock Road before driving to their hotel.

92. 2nd plaintiff gave lack of trust in the officers of the I.D.D. as her reason for not using the bank as their correspondence address. She said it would have been different had she known the manager. This is ridiculous. Firstly, the mail would not have been kept in the I.D.D.: it would have been held in a different part of the bank altogether. Secondly, there was no risk. The only mail that she was going to receive were the confirmation advice slips from Vila. Being already in possession of 3 different receipts in respect of each deposit (C10, C14, C15), she had nothing to fear from the machinations of anyone in the I.D.D. In fact, in cross-examination, she admitted that, having received 3 types of receipt in respect of each deposit, the final one was not important.

93. Alternatively, if 2nd plaintiff attached importance to the last receipt (C16), it did not make sense to permit the envelopes to be handled by members of Mr. Yung's staff, who were unknown to her.

94. There is confusion as to when the registered address was changed. 2nd plaintiff says she told Mr. Dargie on 12th August, 1976, in the presence of her husband, that she wanted to make the change because of political trouble in Thailand. She showed him Mr. Yung's card and offered to give him his telephone number. Yet when she was shown the instruction form that she signed on that date (B26A), she had to admit that it bore the Bangkok address, written by her husband. She then said she must have told Mr. Dargie on the next occasion. That is impossible, because the next occasion was 23rd September, when 1st plaintiff came alone. Her final explanation was that, in spite of the change of registered address on 12th August, 1st plaintiff must nevertheless have put down the old address and she must have failed to notice it when she signed. If this is true, it is very unlike Mrs. Pachimsawat, particularly since she signed almost directly below the address. 1st plaintiff has told the Court that she does not sign a document unless she knows what it is about.

95. 1st plaintiff also got himself tied up in this matter. He first said the registered address was changed by him on his September visit. This accords with the September deposit instruction form (B30A), which, for the first time, bears the Lock Road address. But he also maintained that September was the first occasion on which he collected mail from Lock Road. If the address was changed only that month, this cannot be true. He was shown the August deposit form (B26A) and said they had discussed the matter with Mr. Dargie, but he did not think they had made up their minds. However, in re-examination he said it was his wife, not he, who had given Mr. Dargie instructions about the change.

96. Incidentally, it is surprising that 1st plaintiff remembers so little about the visit to Lock Road, when he collected mail for the first time. He cannot recall whether Mr. Yung handed it to him, or whether it was a member of his staff.

97. All this evidence is most unsatisfactory. No proper explanation for having a correspondence address at Lock Road has been given.

98. I revert now to the defendant's letter of 7th July (D5), in which the advice is purportedly copied to Mrs. Pachimsawat. The only evidence that this was actually sent to Lock Road is contained in the affidavit by Mr. Crook. The latter is referring to an affair that took place over 3 years ago and he has not been cross-examined. Both these factors reduce the weight to be attached to this evidence. He has no doubt been able to refresh his memory from the papers and he was present in Mr. Mosley's office when the fraud came to light. He has, therefore, good reason to remember this exchange of letters.

99. He has even better reason to remember his reply to the letter of 6th August, since, before writing it, he sought legal advice in connection with the allegations against the bank. In his reply (D8) he explains that the advice was sent to the registered address. This was Lock Road. On balance, assuming for the moment that Mr. Crook is not involved, it seems probable that the advice was indeed sent to Lock Road. Someone at Lock Road, therefore, had access to the plaintiff's mail. Mr. Yung knew that only Mr. and Mrs. Pachimsawat were authorized to collect it. The inference is that either the plaintiffs received the letter of 7th July (D5), or there was an unauthorized leak.

100. The next matters of importance are the forged Sukosol signatures (I, J and K). They are almost exact copies of that on the 3rd mandate (B19A). If they were not a little smaller and less slanted, a layman might, at first glance, call them facsimiles. I cannot help thinking that, if the defendant's staff alone were involved, they would not be so thoughtless as to effect such precise reproductions. They knew that they held the original of the document in question and that, so far as they knew, there were no copies; the finger would consequently be pointed at them. The initial K is an uncommon version of the Sukosol signature. It is surprising that the forger did not use the more common form, in which the final leg descends from the upstroke rather than the downstroke.

101. I also bear in mind the evidence of Mr. Radley and Mr. Renshaw that I, J and K were probably copied from a copy of F, not the original. The defendant had the original: the only other people who might have had a copy were the plaintiffs. The experts agree that the forger was trying to reproduce the signature as closely as possible. They detected a 'striving for perfection'. If it were someone in the bank, it is more likely that he would have used the original, rather than have made a copy and then attempted to reproduce the copy. It is, of course, possible that, for security reasons, he might have made a copy to take home, but I doubt if there was much risk in taking the original away in the evenings.

102. On the other hand, if the plaintiffs are guilty, it makes sense for the forger to have copied a particular signature with a slightly different K, which was known to be in the possession of the defendant and to have used it in the letters I, J and K. This would inevitably cast suspicion on the bank staff. If 2nd plaintiff did not have an opportunity of tracing her signature on 12th August, 1976, or of making and removing a copy of the signed form, or at least the signature, it certainly made the job of forging this particular signature that much more difficult. But I bear in mind that there is no reason why 2nd plaintiff should not, on a previous occasion, have asked for a blank copy of a mandate form and have signed it with that particular signature before going to the bank on 12th August. 1st plaintiff describes his wife as inter alia, "Brilliant, intelligent, self-possessed". She is, assuredly, a woman of many parts. Alternatively, it is possible that the plaintiffs had an accomplice in the I.D.D., which would have facilitated the abstraction of the mandate form.

103. There is also the matter of coincidence. Two important coincidences loom large in this case. Firstly, of all the many documents signed by the plaintiffs, the only one of which a copy was taken is the mandate of 12th August, 1976. 2nd plaintiff has given a reasonable explanation for her action - the fact that Mr. Dargie seemed to attach importance to this document - but it remains a coincidence. Counsel for the defendant submits that this was all part of the plan and that, by producing a copy of the crucial form, she is making it clear that there was no reason for her to have taken a copy of the form that was actually signed.

104. I am rather puzzled as to the plaintiffs' behaviour in connection with these mandate forms (B18 & B19A). It seems that 1st plaintiff completed the form that was actually signed (B19A). This was unusual. According to 2nd plaintiff, her husband usually took a back seat when she was around. Nor do I understand why she bothered to copy down the entries on the form while they were being written by Mr. Pachimsawat. She admits that it was what was printed on the document that interested her. It was a complete waste of time actually to fill it in. It would have made much better sense to have asked for a photocopy of the original. This would have provided the additional advantage of security and obviated the need to fill up the bottom of the page to prevent other persons signing, as she says she did. Nor does her behaviour accord with 1st plaintiff's evidence that she always knows that she is signing. This was the third mandate she had signed.

105. The other coincidence is the fact that the plaintiffs went to Europe on 7th July, 1977. It was the first time they had been to Europe on holiday together. This was after all the preliminary frauds - the letters of 16th June and 4th July, together with the opening of the Bank of America accounts - had been carried out. According to their passport, they were away while the first 4 withdrawals from the Bank of America current account were made and this, undoubtedly - at first blush - casts an aura of innocence upon the plaintiffs. But they were back in Asia when the savings account was opened and the final transfers and withdrawals were made.

106. The plaintiffs' main difficulty, which I have adumbrated above, is that any enquiry from them would have exposed the fraud. The defence, very reasonably, points out that an August visit should have been expected by the bank staff at the I.D.D. They might conceivably have known that the plaintiffs were at the Open at Turnberry, but not that they were so busy on their return that they had no time to come to Hong Kong. I am firmly of the opinion that, if the bank staff alone were involved, although they might have spread their operations over several weeks, they would not have delayed until 4th week in August before making the last withdrawal.

107. The plaintiffs' behaviour on their first arrival in Hong Kong is scarcely consistent with their stated motives. They are not the innocents abroad that they pretend to be. They are both highly sophisticated people in the world of economics and finance. I would have expected more thorough enquiries, both in August, 1975 and in May, 1976, as to available rates of interest and exchange. There are so many leading banks in Hong Kong that the plaintiffs cannot have been seriously worried about security. Rates are competitive, however, and I would have expected a great deal more shopping around to have been done.

108. The plaintiffs even had a contact at the Chartered Bank with Mr. Brown. 2nd plaintiff seemed to dismiss this as only a branch, but I cannot see why this is a disadvantage. It is an important bank, with head-quarters in London. Mr. Pachimsawat thought that, if they had used the Chartered Bank, they might not have been able to keep their investment secret. Yet in November, 1977, this was the bank that was chosen for a HK$3,000,000 deposit. This was unconvincing evidence.

109. I am also suspicious of the fact that the plaintiffs gave different reasons for not making further enquiries from banks. 1st plaintiff said they had no time in August, 1975. This is nonsense. They had time to go to Macau. 2nd plaintiff said it was not necessary: the defendant and the Bank of America were the best. How did she know that on such short acquaintance?

110. Mr. Pachimsawat says the extent of their joint investment was never discussed, only that he expressed a preference for buying land or shares. This is not what Mrs. Pachimsawat says. Her evidence is that they came to agreement one month before the first large deposit. Obviously the investment of such an enormous sum was discussed in detail between them.

111. The plaintiffs admit that they were in control of substantial funds in 1975. They were contemplating a large investment in Hong Kong, and the August, 1975, visit was to get the feel of the banks. In this context a US$5,000 deposit was niggardly in the extreme. 1st plaintiff admits that US$50,000 would have been a not unreasonable figure. As to the Bank of America deposit, not only was it paltry, but the plaintiffs do not even agree as to why it was made.

112. This latter account was actually opened by 1st plaintiff. He says the purpose was to get the feel of the bank, not to find out their rates, nor to provide spending money in the future. Mrs. Pachimsawat, however, says this account was not opened in order to ascertain the procedures: there were no procedures. The $2,000 had been deposited because it was surplus to their requirements on that trip and would be on tap for future shopping expeditions. It would save her the embarrassment of borrowing from friends. As to this, it was their first day in Hong Kong and I do not understand how Mrs. Pachimsawat could have known that she would not need this money before they left. I do not imagine $2,000 lasts very long when Mrs. Pachimsawat goes shopping. Secondly, she specifically told Mr. Lee in cross-examination that she did not plan in advance how much she was going to spend shopping and that she used to borrow from friends, which she did not find embarrassing. On 2nd plaintiff's evidence, this money would have been more conveniently placed in their current account with the defendant, or was it another false trail?

113. For all 2nd plaintiff's charm and polish I do not believe that her story is true. Generally speaking, she gave her evidence with assurance, not to say panache. Her mastery of the facts was complete. Only occasionally, during a long ordeal in the witness box, did her composure and quick wit fail her. Once she broke down in tears and this was not, I am sure, orchestrated for the benefit of the Court. I give this due weight.

114. Against this, there was something about her attitude, which did not become a woman that had been cheated of $10 million. As pointed out by defence counsel, a feeling of outrage was missing from her demeanour. She seemed to be challenging the Court to prove her wrong. There was also a great deal of repetitious matter in her testimony.

115. Mr. Pachimsawat was as bad a witness as his wife was a good one. Not only did he contradict her on a numner of matters, as we have seen, but he was also guilty of prevarication, repetition and plain stupidity.

116. I make allowance for the fact that his English is moderate. Yet he was educated in Singapore, Australia and the U.S.A. and he has a pretty good vocabulary. He refused the offer of an interpreter. I think, not only did he understand a great deal more than he pretended to understand, but that the is also much more astute than he and his wife would have the Court believe. He possesses an M.A. degree in Economics. He was an adviser to the Thai government. His late father-in-law, who was clearly no fool, thought he had sufficient ability to be a director of the company. This is hardly the portrait of a man, who having married an heiress, really considers interest rates to be a trivial matter.

117. The impression is sought to be given that he is slow-thinking man, whose only interests are golf and food. Yet one finds him again and again taking part in the deposit-making process, for example filling in mandate forms and deposit instructions, opening the Bank of America account. I do not accept Mr. Swaine's submission that, because his evidence-in-chief was brief, he did not expect to be so long in the witness box for cross-examination and this is why he was an unimpressive witness.

118. Both plaintiffs were at their best when they were describing something which we know actually happened; for example, the scene in Mr. Mosley's room, or the telephone call to the bank on the morning of 3rd November.

119. I cannot conceive how they could be in such apparent difficulty when describing other events, which, if they are untainted with fraud, should form part of a simple, logical, narrative. I conclude that their story is untrue. They have no reason to lie to the Court, unless they have attempted to defraud the defendant. For all these reasons, I find that their claim fails. There will be judgment for the defendant with costs.

120. The 3rd party claim is dismissed with costs, which should be borne by the defendant.

Representation:

J. Swaine, Q.C. & A. Liao (Yeung & Ko) for plaintiffs.

R. Mills-Owens, Q.C. & R. Faulkner (J.S.M.) for defendant.

M. Lee, Q.C. & A. Li (Lo & Lo) for ord party.

Appendix A

Appendix B

Appendix C