Intercontinental Housing Development Limited v. Quek Teck Huat and Others

Case No.CACV 37/1986

Court

Court of Appeal

Date—

Judge—

Case Document

100%Judiciary

CACV000037/1986

IN THE COURT OF APPEAL

	1986, No. 37
	(Civil)

BETWEEN

	INTERCONTINENTAL HOUSING DEVELOPMENT LIMITED	Plaintiff (Respondent)
	and
	QUEK TECK HUAT	1st Defendant
	CHEW KAM MENG	2nd Defendant
	YONG POH CHOO, DOREEN	3rd Defendant
	LOW CHANG HIAN	4th Defendant (Appellant)
	THE KA WAH BANK LIMITED	5th Defendant
	WANFONG NOMINEES LIMITED	6th Defendant
	DIXON LIMITED	7th Defendant

______

Coram: Roberts, C.J. and Fuad, J.A.

Dates of Hearing: 10th and 11th July 1986

Date of Judgment: 11th July 1986

___________

JUDGMENT

___________

Fuad, J.A.:

Background

1. On 17 March 1986, Rhind J. refused an application by the 4th Defendant in this action, Mr. Low Chang Hian, for the Points of Claim to be struck out and the action dismissed as against him on the ground that the Points of Claim did not disclose a reasonable cause of action under R.S.C. O.18, r.19(1)(a). The judge ordered Mr. Low to pay the Plaintiff's costs on an indemnity basis. Mr. Low now appeals.

The Points of Claim

2. The Points of Claim set out the parties involved and their capacities.

3. The Plaintiff, Intercontinental Housing Development Corporation ("IHL") is a public company incorporated in Hong Kong.

4. Among their directors at the material time was the 1st Defendant, Mr. Quek Teck Huat and the 2nd Defendant, Mr. Chew Kam Meng. Mr. Chew ceased to be a director on 19 September 1985.

5. The 3rd Defendant, Madam Yong Poh Cnoo, was a director, until 23 September 1985, of Dixon Limited ("Dixon"), the 7th Defendant, one of IHL's subsidiary companies.

6. The 4th Defendant (the Appellant), Mr. Low, is a director and executive Vice-President of the Ka Wah Bank, the 5th Defendant.

7. The 6th Defendant is Wanfong Nominees Limited.

8. By their points of Claim, IHL aver that until 17 August 1985 they were controlled by Territorial Development Limited ("Territorial") who were in turn controlled by Mr. Quek (D1), and that on 18 July 1985, an agreement was entered into under which Territorial agreed to sell a controlling interest in IHL to the Join Park Limited Group of companies ("Join Park") for $232,540,000. This Group of companies is controlled by a Mr. Ch'ng Poh.

9. The sale and purchase of Territorial's shares in IHL was completed on 17 August 1985 and Mr. Ch'ng was appointed a director and the Chief Executive of IHL on 28 August 1985.

10. It is said that, at the date of the execution of the agreement, IHL were owed $89,158,071 by one of their associated companies, and that they were the owners of certain quoted securities then managed by a Malaysian firm of stockbrokers owned by Mr. Low (the Appellant).

11. One of the terms of the July 1985 agreement was that, upon completion, Territorial was required to deliver to IHL a bankers' draft for $89,158,071 (plus interest) as well the proceeds of the sale of their quoted securities.

12. The pleading continues by stating that when the sale of Territorial's shares in IHL was completed on 17 August 1985, IHL received three cashier orders adding up to $127,617,747.88 (representing the debt owed to IHL and the proceeds of the sale of their quoted securities). These cashier orders had been issued by the Ka Wah Bank (D5) in favour of IHL and on the same day were paid into the account they maintained with that Bank.

13. It is then pleaded that the following occurred, also on 17 August 1985:

	(i)	Mr. Quek (D1) and Mr. Chew (D2), purporting to act on behalf of IHL, drew eight cheques, all made out to "cash or bearer", totalling $127,617,747.88 from IHL's account with the Ka Wah Bank;
	(ii)	these cheques were paid into Dixon's account with the same bank;
	(iii)	Madam Yong (D3), purportedly on behalf of Dixon, drew eight cheques to the same total sum out of Dixon's account with the same bank. These cheques were also made out to "cash or bearer".

I would mention here that the particulars given of the two sets of eight cheques show that in each set, six are for the same sums, while two are for different amounts.

14. It is averred that the sum represented by these cheques was the property of IHL, and that it was paid over to Wanfong.

15. The Points of Claim go on to say that neither Mr. Quek (D1) nor Mr. Chew (D2) had authority to draw IHL's cheques, and if they did, they had drawn them not bona fide and in IHL's best interest. In consequence of their wrongful acts, IHL had suffered loss and damage in that since 17 August 1985 they had been deprived of the use of the $127,617,747.88 (from now on I will refer to that sum as "the missing money").

Specific allegations against the Appellant

16. The first averment that can be said directly to concern the Appellant is to be found in paragraph 14 where it is said that he had combined and conspired with Mr. Quek (D1), Mr. Chew (D2) and Madam Yong (D3) to deprive IHL of the missing money, but how it is alleged that the Appellant was a party to the conspiracy is left to the next paragraph (15).

17. The particulars given in paragraph 14 repeat the averments about the lack of authority or bona fides of Mr. Quek (D1) and Mr. Chew (D2), and add that Madam Yong (D3) did not have the authority of Dixon (D7) to draw their cheques, or that she drew them not bona fide and in Dixon's best interest; it was unusual and out of the ordinary course of business to make such cheques payable to "cash or bearer"; Dixon's cheque stubs had on them the word "Investment", and Dixon had not used, or authorised the use of, the missing money for this purpose; when Mr. Ch'ng had discovered the withdrawal of the missing money, Mr. Quek and Madam Yong had been uncooperative and evasive in responding to his enquiries; and that neither Mr. Quek, Mr. Chew or Madam Yong had been able to explain why each set of eight cheques was drawn or to account for the missing money.

18. In paragraph 15, we find no less than 21 sub-paragraphs setting out the conduct alleged against the Appellant to show his participation in the conspiracy. To do justice to the arguments addressed to us by Mr. Ching, for the Appellant, and by Mr. Bokhary, for IHL, it is necessary to read the whole of this paragraph:

"15.	The Plaintiff says that the 4th Defendant is a party to the said conspiracy and the best particulars the Plaintiff is now able to give are as follows:-
	(a)	The 4th Defendant held himself out to Mr. Ch'ng Poh as the boss of the 5th Defendant in that one Mr. Othman of Paper Products Malaysia Limited had in May or June 1985 introduced the 4th Defendant to Mr. Ch'ng Poh as the boss of the 5th Defendant and had thereafter in the presence of the 4th Defendant repeatedly referred to the 4th Defendant as the boss of the 5th Defendant; and the 4th Defendant did not deny that he was the boss of the 5th Defendant.
	(b)	When in about June 1985 a verbal deal was struck between Mr. Ch'ng Poh and Mr. Othman in respect of the purchase of the shares of and in paper products Malaysia Limited by Mr. Ch'ng Poh, the 4th Defendant encouraged Mr. Ch'ng Poh to buy the shares of the Plaintiff and not the shares of Paper Products Malaysia Limited.
	(c)	The 4th Defendant represented to Mr. Ch'ng Poh that the 1st Defendant was under some pressure from the 5th Defendant to clear off certain indebtedness and also needed cash to pay estate duty to the Singapore government on the estate of his father, mother and brother so that it was an opportune time to acquire the 1st Defendant's interest in the Plaintiff at a price more favourable than Mr. Ch'ng Poh was prepared to pay for the shares of Paper Products Malaysia Limited.
	(d)	The 4th Defendant further represented to Mr. Ch'ng Poh that the 5th Defendant would be happy to offer more favourable terms to finance the purchase of the shares of the Plaintiff than the shares of Paper Products Malaysia Limited.
	(e)	The 4th Defendant showed to Mr. Ch'ng Poh some unaudited accounts of the Plaintiff with a view to impressing Mr. Ch'ng Poh about the financial soundness of the Plaintiff.
	(f)	As the negotiations proceeded, the 4th Defendant kept producing accounts of the Plaintiff which were different from the accounts produced by him before. Every time Mr. Ch'ng Poh had a query about the accounts, the 4th Defendant was able to provide an answer without reference to anybody else.
	(g)	Mr. Ch'ng Poh was unable to meet the 1st Defendant during the negotiations. The 4th Defendant represented to Mr. Ch'ng Poh that the 1st Defendant lived in London. Mr. Ch'ng Poh has since discovered that the said representation was untrue.
	(h)	The 4th Defendant always spoke with great confidence and assurance, and he was decisive in agreeing terms on behalf of the vendor. The 4th Defendant appeared to be well familiar with the affairs of the Plaintiff far more so than a mere middle-man.
	(i)	Despite the representations and assurance of the 4th Defendant, Mr. Ch'ng Poh was not prepared to conclude the deal as some of his queries about the arising out of the different accounts had not been answered to his satisfaction. The 4th Defendant then agreed, without reference to anybody else, that Mr. Ch'ng Poh could retain HK$123,540,000.00 of the purchase money pending the verification of the anomalies in the accounts.
	(j)	The 4th Defendant further agreed, again without reference to anyone else, that both the vendor (which would still hold about 8% of the shares in the plaintiff after the sale), the 6th Defendant and one Vestell Limited (which together held a total of 29% of the shares in the Plaintiff) would give undertakings not to accept the general offer to be given to the minority shareholders as required by the Take-over Code.
	(k)	In the circumstances, throughout the negotiations the 4th Defendant played a very active role which went beyond his capacity as an intermediary and as a banker.
	(l)	The 4th Defendant was very close to both the 1st, 2nd and 3rd Defendants. They were business associates and close friends.
	(m)	The 4th Defendant as a senior banker of the 5th Defendant who was in charge of the take-over of the Plaintiff by the Join Park Limited group of companies knew or must have known the payment by the 5th Defendant of the plaintiff's 8 cheques and the 7th Defendant's 8 cheques on 17 August 1985.
	(n)	From September 1985 to the commencement of these proceedings when the Plaintiff through Mr. Ch'ng Poh was investigating into the disappearance of the said sum of HK$127,617,747.88, the 4th Defendant appeared to be aware of the whole matter. He did not account for the disappearance of the said sum of HK$127,617,747.88 but suggested to Mr. Ch'ng Poh that the Plaintiff could set off the said sum of HK$127,617,747.88 against the retention money kept by Join Park Limited.
	(o)	On 20th December 1985 the 4th Defendant warned Mr. Ch'ng Poh that if he were to put the 1st, 2nd, 3rd and 4th Defendants into trouble he would not be able to prevent one Mr. Santosa Amidjojo (who was a former director of the Plaintiff and a director of Territorial Development Limited) to cause bodily harm to Mr. Ch'ng Poh.
	(p)	In the morning of 4th January 1986, the 4th Defendant repeatedly called Mr. Ch'ng Poh by telephone leaving urgent messages requesting Mr. Ch'ng Poh to call back.
	(q)	Mr. Ch'ng Poh did call back and later met the 4th Defendant at the Mandarin Hotel, Hong Kong; and the meeting took about 2 hours.
	(r)	During the said meeting the 4th Defendant suggested to Mr. Ch'ng Poh that they could make money together by the 5th Defendant's selling properties (which were charged to the 5th Defendant by others) at below market price and Mr. Ch'ng Poh could then sell the same to the Plaintiff at market price; and the profits made by Mr. Ch'ng Poh could be used to set off the sum of HK$127,617,747.88 and the retention of HK$123,540,000.00.
	(s)	The 4th Defendant further suggested that he could arrange the 1st Defendant or some other party to buy back the shares of and in the Plaintiff.
	(t)	The 4th Defendant further suggested to procure the 5th Defendant to reduce the interest rate on the loans to the Plaintiff and to Mr. Ch'ng Poh personally.
	(u)	The 4th Defendant offered the above advantages to Mr. Ch'ng Poh with a view to inducing Mr. Ch'ng Poh not to take action on behalf of the Plaintiff regarding the said sum of HK$127,617,747.88 The 4th Defendant said that he would call Mr. Ch'ng Poh the next day to have a more detail discussion on his proposals. The 4th Defendant further said that he could be contacted at the offices of the 3rd Defendant between 11:00 a.m. and 1:00 p.m. the next day."

19. The next paragraph of the Points of Claim (16) avers that in consequence of the wrongful acts of Mr. Quek (D1), Mr. Chew (D2) and Madam Yong (D3) and the Appellant, IHL had suffered loss and damage, in that they had been deprived of the use and enjoyment of the missing money since 17 August 1985.

20. The final paragraph contains allegations against the Ka Wah Bank (D5) of breach of their mandate and negligence.

The reliefs claimed

21. The prayer for relief contains the following claims against the Appellant:

(a)	together with Mr. Quek (D1), Mr. Chew (D2) and Madam Yong (D3) -
	(i)	damages for conspiracy to defraud IHL of the missing money,
	(ii)	damages for conversion of the missing money;
(b)	together with all the other Defendants -
	(i)	an enquiry as to what has become of the missing money,
	(ii)	all necessary and appropriate directions and inquiries;
	(iii)	interest, etc.

The judgment in Chambers

22. The learned judge found it a very clear case. The important part of his judgment, it seems to me, is the passage which begins on page 12 of the Appeal record:

"No one could pretend that the points of claim are a model pleading. They are loaded down with immaterial averments (e.g. para. 14(g) and 15(g)), recite reams of evidence (para.15(n) - (u)), and are beset by confusing passages (e.g. para.15(n) and (r) where the pleader has got mixed up about who could set off what against whom). That said, however, it is difficult to see how there can be any real doubt on the part of the 4th defendant and his advisers as to the cause of action pleaded against him. How the 4th defendant could be in the slightest doubt that at least a conspiracy to defraud the plaintiff of $127,617,747.88 has been pleaded against him, I cannot imagine. I feel I am labouring the obvious, but in case the 4th defendant really cannot discern the conspiracy to defraud pleaded against him I will spell it out for him. It is alleged that he was acting in cahoots with his three friends, the 1st, 2nd and 3rd defendants, when he lured Join Park Limited, represented by Mr. Ch'ng Poh, into buying the plaintiff rather than a different company. Once Mr. Ch'ng Poh had fallen into the trap set for him by the 4th defendant of Join Park Limited buying the plaintiff, the 1st, 2nd and 3rd defendants then proceeded to 'milk' the plaintiff of its assets to the extent of $127,617,747.88. Mr. Ch'ng Poh was first of all 'set up' by the 4th defendant, and then the 2nd, 3rd and 4th defendants proceeded to strip the company he had just purchased. Instead of getting shares in a company which had its assets intact, Join Park Limited finished up after completion with shares in a company relieved of $127,617,747.88 of its assets. The allegation is that the 1st, 2nd, 3rd and 4th defendants together carried out that enterprise which resulted in the plaintiff losing $127,617,747.88 of its assets."

23. The judge discussed the authorities cited to him and was satisfied that a sufficient plea of fraud had been stated in the Points of Claim. He stressed that it was essential to look at the "whole tableau" and said that if the whole tableau of facts was consistent with a fraudulent conspiracy, and provided the Plaintiff, by his pleading, explicitly asserted it to be a fraudulent conspiracy, then a reasonable cause of action had been disclosed.

24. There is no complaint about the judge's general approach to the task which faced him in deciding the application. After a hearing, lasting two days in February this year, he gave a reserved judgment on 17 March and it is apparent that he dealt with the matter with anxious care. If the appeal is to succeed, it can only do so if this Court is compelled to hold, on its own analysis of the Points of Claim, that they are incontestably bad so that no reasonable cause of action has been disclosed against the Appellant.

25. We have been reminded (and it is, perhaps, as well that we should be so reminded from time to time) of a number of authorities that emphasize that it is only in plain and obvious cases that it is proper for the Court to exercise this salutary jurisdiction. It has been said in many cases that it is otherwise wrong to drive a plaintiff from the judgment seat without giving him the opportunity of having his case tried on its merits. On the other hand, justice also demands that a defendant is not put to trouble, anxiety and expense by the necessity of defending litigation that is bound to fail.

The competing submissions

26. Mr. Ching took us through every paragraph of the Points of Claim and Mr. Bokhary did the same, and so we are all very familiar with the contents of the pleading. Mr. Ching made the point at the outset that, where fraud is involved, the Rules of Court makes special provision for pleadings, and the duty to satisfy the provisions of 0.18, r. 12(1)(a) is not satisfied by simply alleging conspiracy to defraud and conversion.

27. Mr. Ching contended that there was nothing in the pleading which particularized any cause of action against the Appellant - all that there was, was a series of assertions which, in his words, "masqueraded as particulars" which, even if proved, did not show a cause of action against him.

28. The first group of particulars specifically directed against the Appellant (sub-paragraphs (a) to (k) of paragraph 15), as we have seen, covered the negotiations stage of the agreement under which Territorial's interest in IHL was to be bought. About these, Mr. Ching suggested that one would have to read the averments with a determination to find something sinister in them to maintain that they could possibly lay a foundation for an allegation of fraud. He emphasised that the material facts alleged were capable of an innocent interpretation. I will return to this point presently because, in my judgment, this is, perhaps, the most crucial point in the appeal that is before us.

29. As regards sub-paragraph (m) (where it is alleged that the Appellant held a senior position in the Ka Wah Bank and was in charge of the take-over, and therefore "knew or must have known" that the cheques drawn by Mr. Chew (D2) and Madam Yong (D3) had been paid out by the Bank) Mr. Ching contended that even if this could be proved, it did not show that he was a party to any conspiracy, because there was no allegation that he knew (a) that the cheques had been wrongly drawn, (b) that the persons who drew them were not authorised to do so, or (c) that his Bank had no mandate to honour the cheques. There was no suggestion, Mr. Ching submitted, that the Appellant had anything whatever to do with the removal of the money or that it was fraudulent in anyway. Mr. Ching made the point that this was the only sub-paragraph which linked up with the averments made against Mr. Quek (D1), Mr. Chew (D2) and Madam Yong (D3) in paragraph 14.

30. As to what happened after the money was found to be missing (sub-paragraphs (n) to (u) - which the judge regarded as containing mere evidence, implying that they should not have been pleaded at all) Mr. Ching suggested that the actions of the Appellant might have been perfectly innocent if he were trying to find a way out of the problems that had arisen when the loss was discovered, and that they could not be regarded as acts done in furtherance of a conspiracy which had already been completed.

31. Mr. Bokhary, in his forceful arguments, while acknowledging that the Points of Claim could, perhaps, have been improved upon, argued that a perfectly adequate cause of action had been pleaded. He asked us to have in mind the following stark facts averred: that the Appellant was a director and executive Vice-President of the Ka Wah Bank; that this was the bank (a) in charge of the take-over by Join Park of Territorial's interest in IHL, (b) which issued the three cashier orders making up the total sum later found missing and (c) through which the $127m. passed, in and out of the respective accounts of Dixon and IHL, all on the same day.

32. Mr. Bokhary also asked us to note that the Appellant was said to be a business associate and close friend of Mr. Quek (D1), Mr. Chew (D2) and Madam Yong (D3) and (Mr. Bokhary will forgive me for the difficulty I have in understanding the next point made) that the Appellant was the proprietor of the Malaysian stock-broking firm which had managed IHL's quoted securities sold for the sum of $36m. which made up part of the total sum missing.

33. Mr. Bokhary went on to contend that the averments clearly indicated that the Appellant had steered Join Park away from the deal they were contemplating towards another which eventually led to the $127m. being paid over to IHL, a sum which later disappeared. The active part he took in the negotiations was also stressed, in urging that it was more favourable to buy the IHL shares rather than those of the company originally proposed. Mr. Bokhary also submitted that the pleading showed that after the negotiations had started, the Appellant had not faded into the background; on the contrary he had played a very active role by producing accounts to allay Mr. Ch'ng's concern about the financial state of IHL.

34. Mr. Bokhary also drew attention to the pleaded conduct of the Appellant after the $127m. had disappeared. Mr. Bokhary suggested that the allegations indicated that the Appellant had made a number of improper and dishonest suggestions tantamount to offering bribes and, on one occasion, that he had uttered a threat to Mr. Ch'ng.

35. Mr. Bokhary submitted that there was ample material upon which it could be averred that the Appellant had taken part in a fraudulent conspiracy. The material was all set out in the Plaintiff's pleading and the Appellant could not possibly doubt what case he had to meet.

Conclusions

36. I have read and re-read the Points of Claim and, with very great respect to the judge, who took a different view, in my judgment, Mr. Ching's submissions are well founded. I will only refer to two of the authorities that were cited to us because I do not think that there is any controversy between Counsel as to the law and practice when a Court is considering whether an action based on fraud should be struck out under 0.18, r.19(1)(a).

37. The first case is Davy v. Garrett (1878) 7 Ch. D. 473. I will read a passage from page 489 of the judgment of Thesiger L.J.:

".....I attach no blame to the pleader in the present case, I have come here too lately to have lost the recollection of the difficulty of framing pleadings satisfactorily. But though counsel may have done their best, and shewn their skill in the preparation of statements of claim, it is not the less the duty of the Court to shew its skill in preventing Defendants from being embarrassed in their defences.

There is another still stronger objection to this statement of claim. The plaintiffs say that fraud is intended to be alleged, yet it contains no charge of fraud. In the Common Law Courts no rule was more clearly settled than that fraud must be distinctly alleged and as distinctly proved, and that it was not allowable to leave fraud to be inferred from the facts. It is said that a different rule prevailed in the Court of Chancery. I think that this cannot be correct. It may not be necessary in all cases to use the word 'fraud' - indeed in one of the most ordinary cases it is not necessary. An allegation that the Defendant made to the Plaintiff representations on which he intended the Plaintiff to act, which representations were untrue, and known to the Defendant to be untrue, is sufficient. The word 'fraud' is not used, but two expressions are used pointing at the state of mind of the Defendant - that he intended the representations to be acted upon, and that he knew them to be untrue. It appears to me that a Plaintiff is bound to show distinctly that he means to allege fraud. In the present case facts are alleged from which fraud might be inferred, but they are consistent with innocence. They were innocent acts in themselves, and it is not to be presumed that they were done with a fraudulent intention."

38. I will also cite a short passage from the judgment of Lord Watson in Lawrance v. Norreys (1898) 15 App. Cas. 210, at page 221:

"In my opinion, a plaintiff who desires to avail himself of the provisions of sect. 26 is not released from the ordinary rule of pleading applicable to cases of fraud, which was thus expressed by Earl Selborne in Wallingford v. Mutual Society, 5 App. Cas.697: 'General allegations, however strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any Court ought to take notice.' It is not a sufficient compliance with the rule to state facts and circumstances which merely imply that the defendant, or some one for whose action he is responsible, did commit a fraud of some kind. There must be a probable, if not necessary, connection between the fraud averred and the injurious consequences which the plaintiff attributes to it; and if that connection is not sufficiently apparent from the particulars stated, it cannot be supplied by general averments. Facts and circumstances must in that case be set forth, and in every genuine claim are capable of being stated, leading to a reasonable inference that the fraud and the injuries complained of stood to each other in the relation of cause and effect."

39. I will venture to state the essence of the matter, as I see it, in one sentence: if the facts indicate fraud, it is not necessary to allege a fraudulent intention, but the use of the word "fraud" cannot be said to aver fraud if the material facts pleaded would not themselves establish it.

40. I illustrate what I mean by a brief reference to some of the sub-paragraphs in paragraph 15. Sub-paragraph (a) does not suggest why there was anything sinister in the Appellant accepting that he was "the boss" of the Ka Wah Bank. Sub-paragraph (b) (where it is said that he encouraged Mr. Ch'ng to buy the Plaintiff's shares) does not suggest in any way that the encouragement was motivated by some ulterior purpose. Sub-paragraph (c) does not suggest that it was not true that IHL was being pressed the Bank. Sub-paragraph (d) cannot be said to be an averment that suggests participation in a conspiracy, because it must be an every day occurrence that a banker tells his customer that, given certain circumstances, more favourable terms might be offered by his bank. The matter of the Appellant showing IHL's accounts to Mr. Ch'ng (sub-paragraphs (e) and (f)) takes the case no further unless it is suggested, that by doing what he did, the Appellant was trying to mislead Mr. Ch'ng. It cannot, surely, be taken against a person (sub-paragraph (h)) that he speaks with confidence and assurance about a deal he is helping to negotiate.

41. I will go no further into the particulars, except to say about sub-paragraphs(a) to (k), that advice and assistance given bona fide to Mr. Ch'ng could hardly be regarded as overt acts in furtherance of conspiracy. That all this was done in furtherance of the conspiracy, it seems to me, is left to innuendo which can have no place in a pleading that alleges fraud.

42. In respect of the conduct alleged against the Appellant after the loss of the money had been discovered, this might be evidence that would assist a plaintiff in establishing participation in a conspiracy at a trial, but I do not think that allegations of that kind can save a pleading which does not sufficiently plead overt acts which would justify a Court (if they were proved) in finding that the Appellant had taken part in a conspiracy to defraud IHL of their money.

43. In my judgment, the pleading was wholly deficient in satisfying the applicable rules and practice. If the facts as averred were proved, the action as against the Appellant would be bound to fail.

Proposed order on appeal

44. I would allow the appeal for I do not think that this is a pleading which can be saved by a reasonable amendment. I would strike out the Points of Claim as against the Appellant and would dismiss the action against him.

45. Since we have heard argument on costs, I propose that the Appellant should have his costs in the court below, as well as the costs of this appeal, both to be taxed on the ordinary party and party basis. I see no justification for a different basis for the award of costs in the High Court or in this Court.

Roberts, C.J.:

46. I agree. I think, with respect to him, that the judge was over-influenced by the fact that fraud was specifically alleged against the 4th Defendant in paragraph 14 of the Points of Claim and also in the prayer at the end. The authorities make it quite clear that a bare allegation of fraud is totally insufficient and that it is necessary for a plaintiff to plead, by way of particulars, sufficient facts as would lead to a reasonable inference of fraud.

47. I see no difficulty myself in reading together paragraphs 14 and 15 of the Points of Claim, although the wording of those two paragraphs can, perhaps, be criticized. I have no doubt that, on a sensible reading of them together, the allegations in paragraph 15 can be properly said to be the particulars alleged against the 4th Defendant in relation to his participation in the alleged conspiracy.

48. I agree with the judge's criticisms so far as they relate to paragraph 15, which is the crucial paragraph. This contained evidence which must be discounted in deciding whether or not there are sufficient particulars of fraud. And the rest of this paragraph either alleges actions which, on any reading, are innocent or acts which are consistent with innocence. In judging whether or not a sufficient case has been pleaded, I think some weight has to be given to the absence of references to the facts set out there, as being in furtherance of the conspiracy or as having been done with a fraudulent intent.

49. I do not think that the Points of Claim allege against the 4th Defendant acts which, if established, would amount to a prima facie case against that Defendant of participation in the general conspiracy which is alleged in the pleadings. As I think it has been conceded, if the allegation of conspiracy falls, so must the claims against this Defendant in conversion, and in damages for the fraud alleged to have been committed by him as the servant or agent of the 5th Defendant.

50. I also, therefore, would allow the appeal, strike out those parts of the Points of Claim which referred to the 4th Defendant and dismiss the action against him. I would award costs on the same basis as that suggested by my brother Fuad J.A..

Representation:

Charles Ching, Q.C. and Ronny Wong (Lovell, White and King) for the Appellant (D4).

Kemal Bokhary, Q.C. and Michael Wong (Cheung, Yeung & Co.) for the Respondent (Plaintiff).