K. K. M. Securities Ltd v. Lau Chi Man
Read the full judgment text of DCCJ 9451/2001 on BabelCite. This District Court judgment.
1. The Plaintiff is and was at all material times registered with the Securities and Future Commissions (“SFC”) as a securities dealer and a member of The Stock Exchange of Hong Kong (“the Stock Exchange”). It is and was at all material times carrying on the business of a securities dealer.
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DCCJ9451/2001 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 9451 OF 2001 __________ BETWEEN
__________ Coram: Deputy District Judge W. K. Kwok in Court Dates of Hearing: 22nd, 23rd, 26th, 27th, 28th & 29th September 2005, 15th & 22nd October 2005, and 12th November 2005. Date of Handing Down of Judgment: 29th March 2006. _______________ JUDGMENT _______________ The Background 1.The Plaintiff is and was at all material times registered with the Securities and Future Commissions (“SFC”) as a securities dealer and a member of The Stock Exchange of Hong Kong (“the Stock Exchange”). It is and was at all material times carrying on the business of a securities dealer. 2.Mr. Bernard Wong Mo Kit (“PW9”) is and was at all material times one of the directors and account executives of the Plaintiff. 3.It is common ground that the Defendant had through PW9 opened a cash securities trading account with the Plaintiff in September 2001. By trading through a cash securities trading account, the Defendant had to settle payment for any particular share transaction within two clear days of the transaction. This is termed as the “T+2 settlement rule”. The number of the Defendant’s trading account was 3455. 4.It is also common ground that the Defendant had executed a Securities Dealing Agreement (Cash Transactions) in favour of the Plaintiff for opening his securities trading account (“the Agreement”). Although the Agreement was dated 26th September 2000, the parties are in dispute as to when and under what circumstances he signed the Agreement. The Agreement 5.While the Defendant has stated in the course of his evidence that he had not read the Agreement carefully before he signed, he agrees that he was bound by the terms and conditions contained therein for all share transactions duly authorized by him, including the following clauses. 6.Clause 3.1 provided that the Defendant requested the Plaintiff to act as his agent in effecting securities transactions. 7.Clause 3.3 provided that on all securities transactions, the Defendant would pay to the Plaintiff commissions and charges, as notified to him, as well as applicable levies imposed by the Stock Exchange, and all applicable stamp duties, and that the Plaintiff might deduct such commissions, charges, levies and duties from the Defendant’s account. 8.Clause 3.4 provided that unless otherwise agreed, in respect of each securities transaction, unless the Plaintiff was already holding cash or securities on behalf of the Defendant to settle the transaction, the Defendant would pay to the Plaintiff cleared funds or deliver to the Plaintiff securities in deliverable form, or otherwise ensure that the Plaintiff had received such funds or securities by such time as the Plaintiff had notified him in relation to that transaction; and if the Defendant failed to do so, the Plaintiff might, in case of a purchase transaction, sell the purchased securities, and in the case of a sale transaction, borrow and/or purchase securities in order to settle the transaction. 9.Clause 3.5 provided that the Defendant would be responsible to the Plaintiff for any losses and expenses resulting from his settlement failures. 10.Clause 3.6 provided that the Defendant agreed to pay interest on all overdue balances at such rates and on such other terms as the Plaintiff had notified him from time to time. 11.Clause 7.1 provided that all securities held for the Defendant’s account should be subject to a general lien in favour of the Plaintiff, for the performance of his obligation to the Plaintiff arising in respect of dealing in securities for him. The Plaintiff’s Claim 12.It is the Plaintiff’s case that the Defendant had instructed the Plaintiff to act as his agent in securities trading between 26th September 2000 and 9th November 2000, and that the Defendant has settled all amounts due to the Plaintiff except the sum of $996,298.82 being the total sum of the settlement amounts (including share price, commissions, stamp duties, levies and other expenses) for the following 4 purchase transactions (“the Disputed Transactions”): -
13.In addition, the Plaintiff says that the Defendant is also liable to pay interest under Clause 3.6 for the two lots of I-Cable shares for the total sum of $3,074.80, making a total of $999,373.62. 14.The Plaintiff further says that since the Defendant has refused to pay any sum due for the Disputed Transactions, it was entitled to and did sell the related Town Health and I-Cable shares pursuant to Clause 3.4, and realized a sum of $714,750.80.
15.Besides, the Plaintiff also reduces the Defendant’s liability by $7,820.05 being cash held in the Defendant’s account. The Plaintiff therefore claims against the Defendant for the balance of $276,802.82. The Defence Case 16.The Defendant says that it had only instructed the Plaintiff to act as his agent in 3 securities trading transactions that took place on 26th and 27th September 2000. His case is that he had not engaged in any other securities trading through the Plaintiff after 28th September 2000 including the Disputed Transactions. It is his contention that PW9 had used his account in the Plaintiff to conduct unauthorized securities trading, and/or PW9 had manipulated his account to make this false claim against him. The Evidence for the Plaintiff 17.Madam Au Yeung Tung Yiu (PW1) was at the material times a dealer’s representative and one of the authorized signatories of the Plaintiff. She testifies that it was in the morning of 26th September 2000 before the stock market opened for trading when she verified and signed the account opening documents (i.e. Account Opening Information, Risk Disclosure Statement (GEM), and the Agreement) submitted to her by PW9 for opening the Defendant’s cash securities trading account. She states that although the Agreement was undated as it had no pre-set space for writing the date, the other two documents were dated 26th September 2000 and that she would not have signed to confirm her verification if she had not been supplied with all three documents at the same time. PW1 further states that it was the strictest policy of the Plaintiff that an account executive was not allowed to accept orders from a new client before completion of the verification process. 18.Mr. Yen Kin Man Edmond (PW2) has worked in the Plaintiff as a settlement clerk since November 1995. He gives evidence on his daily work on the preparation of contract notes for securities transactions executed by account executives at the end of securities trading each day. He describes how he input information provided by account executives on each securities transaction into the Plaintiff’s computer and how the “matching” process is carried out with the information contained in the Stock Exchange. He also gives evidence that there cannot be any amendment to the contract notes and the information contained in the computers. 19.Mr. Raymond Wong (PW3) is the managing director of ACOS Computer System which provides computer system to about 60 brokerage houses in Hong Kong and is responsible for constant updating of their computers in order to fulfill the requirements set by SFC and the Stock Exchange. He describes how the Plaintiff’s computer system will perform matching between the information in its database with the database of the Stock Exchange. He says that after a successful matching, the computer will automatically calculate the brokerage fees, stamp duty, transaction levy, and automatically generates contract notes and assign to them unique invoice numbers for each of the transactions. He points out that once an invoice number is automatically assigned by the ABMS System, it will represent the transaction and cannot be changed. He stresses that since the database of the Stock Exchange is a mirror opposite of the Plaintiff’s database of each day’s transaction, there is no chance that a transaction can be fabricated unless one is able to create a corresponding transaction in the Stock Exchange database. He also says that even if amendment can be made, that can only be confined to the account name or number but not the other details of the transaction. His evidence also shows that any amendment to contract notes can only be done on the day of the transaction or the next stock market trading day because all transaction details of one stock trading day has to be backed up and restored to the Plaintiff’s permanent back-up system before 4 p.m. of the next stock market trading day. 20.PW3 also gives evidence on how an error had occurred during the updating of the Plaintiff’s compute system in June 2002 that caused a mistaken on the outstanding amount owed by the Defendant to the Plaintiff in the monthly statements sent to the Defendant between July 2002 and November 2004. These statements stated that there was a nil balance. 21.Mr. Yim Chi Wai (PW4) has been a dealer’s representative of the Plaintiff since November 1995. He testifies that upon the instruction of Mr. Wong Kai Ming, one of the Plaintiff’s directors, he had mailed two letters of demand to the Defendant on 2nd January 2001 and 1st March 2001. 22.Madam Wong Chiu Hung Bik Betsy (PW5) is the Chairman of the Board of Directors of the Plaintiff in semi-retirement. PW9 is her son. She testifies that she received two phone calls from the Defendant on 14th May 2001 when she was at home with her husband Mr. Wong Kai Ming (PW7). She does not recall the exact time of the first call but it was after work. She says that she does not know the Defendant but he identified himself by giving his name in the first call, saying that he had bought shares from PW9, and asked if he could discuss with her. She just told the caller that she knew little about the matter which had been handed to solicitor. 23.PW5 further testifies that shortly after the first call the Defendant called again. In this telephone conversation, the Defendant asked her whether it was possible for the case to be settled out of court, but PW5 just said that there was nothing further she wanted to say, and asked the Defendant to talk to her office or her solicitor. 24.Doctor Li Chi Kwong (PW6) is an Associate Professor of the Polytechnic University. He is an expert witness called by the Plaintiff. He testifies that after he had examined the voicemail messages recorded in an audiotape produced by the Defendant, he finds strong evidence that suggests that the tape had been heavily edited, and that there is insufficient evidence to conclude that the speakers of those messages had ever uttered the words as they are presently arranged on the tape. 25.Mr. Wong Kai Ming (PW7) is a director of the Plaintiff and the father of PW9. He testifies that he has drafted and signed two letters of demand, dated 2nd January 2001 and 1st March 2001 respectively to the Defendant. He instructed PW4 to mail out the letters. He was present with PW5 when the Defendant made the two calls to her on 14th May 2002. 26.Madam Wong Yun Ha (PW8) is a dealer representative of the Plaintiff. She testifies that she had made two phone calls to the Defendant on 28th February 2001. In the first call, she reminded the Defendant that his account was seriously in arrears since November 2000 for the amount of $276,802.82. The Defendant asked her what shares she was referring, and gave him the information relating to the shares of the Disputed Transactions. The Defendant then promised that he would speak directly to his account executive (i.e. PW9). PW8 says that the Defendant had not complained that those shares transactions had been carried out without his authority. Shortly after, she made the second call. She asked the Defendant when exactly he would settle the outstanding amount, and the Defendant’s reply was he wanted to speak to PW9 regarding this matter. The Defendant was again did not complain that the shares transactions were done without his authority. PW8 also gives evidence of a disturbance created by the Defendant in the Plaintiff’s office on 14th May 2001 when the police and security guard of the building had to be summonsed. 27.PW8 was also responsible for printing monthly statements of the Plaintiff’s clients. She says that there are over 1,000 monthly statements to be sent out each month, and that it is impossible for her to check each statement before sending them out. She testifies that it was in December 2004 she was alerted by PW9 to the erroneous balance shown in the monthly statements sent to the Defendant between July 2002 and November 2004. 28.Mr. Bernard Wong Mo Kit (PW9) was at the material times a director of the Plaintiff, and was also the account executive responsible for the trading in the Defendant’s account on behalf of the Defendant. He testifies that it was on 26th September 2000 when he opened an account for the Defendant for him to engage in securities trading in the Plaintiff, and that all account opening documents including the Agreement, the Account Opening Information and the Risk Disclosure Statement were completed and signed in a café close to the Plaintiff’s office in Central. He says that the Defendant started placing order that morning for trading in shares. 29.PW9 further testifies that when he received an order from the Defendant, he would write down all the details including the stock code or the name of the shares, the quantity as well as the unit price, and he would also mark down the time under the column of “order time” in a blotter sheet. Once he had executed the Defendant’s order, he would mark down the “execution time” on the blotter sheet, and after he had confirmed with the Defendant execution of the order, he would mark down the “confirmation time” in the blotter sheet. He says that if the transaction was done at the market price, he could have received the order, executed it and confirmed the transaction in the same telephone conversation with the Defendant. These were what he calls “at market” orders. 30.PW9 says that the Defendant had traded in his Account from 26th September 2000 onwards until 9th November 2000. In respect of the Disputed Transactions, he refers to the blotter sheets for 25th and 26th October 2000 and 8th and 9th November 2000 in which he had recorded the stock code, unit price, order time, execution time and confirmation time in respect of each of these purchase orders. He says that the Defendant placed all these orders via the telephone, and that he immediately executed these orders on the computer and confirmed the execution in the same telephone conversation with the Defendant. He had signed on each of the blotter sheets to confirm he had personally received and handled the orders. He says that he handed over the blotter sheets to the settlement department of the Plaintiff, and the staff there would key in all details in the blotter sheet into the computer which would make cross-reference to the computer of the Stock Exchange to perform “matching”. Once matching was successful, the relevant contract notes were printed out, and the original copy of the contract notes were mailed out on the same day of the transaction to the Defendant as instructed. The relevant contract notes and monthly statements have all been produced in evidence. 31.PW9 testifies that the Defendant has failed to settle these Disputed Transactions despite his numerous requests and demands. Between 13th and 28th November 2000, he had sold the shares of the Disputed Transactions to recover a portion of the outstanding balance due. He says that before each sale, he had informed the Defendant of the intended sale by phone in accordance with the industry practice. Thereafter he continued asking the Defendant to settle the outstanding balance. 32.PW9 says he had notified his father (PW7) of the Defendant’s delinquent account. His father sent out demand letters to the Defendant in January and March 2001. He had also instructed PW8 on 28th February 2001 to telephone the Defendant and demand him to repay. On or about 3rd May 2001, he had a meeting with the Defendant in a café to discuss about the repayment. However, during the meeting, the Defendant told him that he had no intention of repaying and even alleged that it would not be easy for PW9 to prove that he had authorized the Disputed Transactions. The Defendant also threatened to file report to the police and complain to SFC against him, and concoct a special relationship story against PW9 if he chose to take legal action against him. On 11th May 2001, PW9 demanded the Defendant to pay, or else he would start legal action. On 14th May 2001, the Defendant went to the Plaintiff’s office and created a disturbance. 33.The Defendant testifies that he was a marketing officer in the employ of China Light & Power Co., Ltd. at the material times responsible for marketing communication. His working hours were between 8:45 a.m. and 5:30 p.m. He says his work did not require him to stay out of his office and therefore he could not have seen PW9 in the morning of 26th September 2000 as testified to by PW1 to sign the account opening documents. 34.The Defendant further says that in the morning of 26th September 2000 PW9 phoned him and recommended some shares for him to buy. PW9 further said he could help him trade in shares before he opened an account with the Plaintiff. Defendant did not immediately agree but after doing some searches that were in fact a consultation with his colleague, he placed an order for securities transaction with PW9. He placed further orders on 27th September 2000. He says that he only signed the account opening documents on 28th September 2000 at night inside his home in Tai Po. He is adamant that he has not engaged in any securities trading from 28th September 2000 onwards including the Disputed Transactions. 35.The Defendant denies that he had ever asked PW9 to send him contract notes, cheques or monthly statements by mail. He says he only started receiving monthly statement in respect of his account from June 2001. He denies receiving any demand letters from the Plaintiff. He denies that he had made any phone call to PW5, or spoken to PW8 over the phone. He says he attended the Plaintiff’s office only to get back his account opening documents, and it was he who called the police. He denies creating a disturbance there. Issue 36.The only issue in this case is whether the Disputed Transactions were authorized by the Defendant and carried out by the Plaintiff in accordance with the Defendant’s instructions. Admissibility of the Audio Tape produced by the Defendant 37.The Defendant seeks to produce at the trial herein an audio cassette-tape (“the Tape”) that allegedly contains an audio recording of 11 voicemail messages left in the central voice recording system of his workplace, i.e. China Light & Power Co., Ltd., between 11th and 14th May 2000. He says that if a call to his workplace by phone is not answered, it will be forwarded to the central voice recording system of his workplace. He points out that these voicemail messages included 9 messages left by PW9 between 11th and 13th May 2000 and one message left by a Miss Wong of the Plaintiff on 14th May 2000. The Defendant is relying upon this audiotape recording to destroy or discredit the evidence of PW9, and to show that the Plaintiff’s claim against him is completely false. 38.By a notice of non-admission of authenticity dated 18th April 2002, the Plaintiff does not admit the authenticity of the Tape and puts the Defendant to strict proof. The Defendant therefore has the burden to prove on a balance of probabilities that the Tape was genuine and authentic before it can be admitted into evidence: Order 27 rule 4 Rules of the District Court. In challenging the admissibility of the Tape, the Plaintiff has called an expert Doctor Li (PW6) to show that the Tape was not genuine or authentic. 39.At the trial herein, Miss Leung asked me to rule on the admissibility of the Tape right at the time when the Defendant seeks to produce it into evidence. Having heard from the parties, I accept the Tape and its contents into evidence de bene esse, and inform the parties with reasons that I shall rule on its admissibility at the conclusion of the evidence and final submissions. 40.In reliance upon the evidence given by PW6, the Plaintiff seeks to exclude the Tape on the ground that the Tape could not have been produced by the method described by the Defendant, and that the audio recording contained in the tape was not original or authentic. I do not seek to list out the credential and qualification of PW6. Suffices for me to say that I find PW6 an expert witness who is qualified to give expert evidence on the authenticity of a tape recording. 41.The Defendant testifies that the central voice recording system of his workplace was a digital recorder system. On the production of the Tape, he says that the Tape was made with the help of his colleague Mr. Ching, the Chief Investigator of the Legal Department of China Light & Power Co., Ltd. On the method used to produce the Tape, the Defendant had stated, through his ex-solicitor Messrs. Au-Yeung, Cheng, Ho & Tin (“AYCHT”) in a letter dated 22nd August 2002, that the method was,
42.In his evidence in Court, the Defendant amends what had been stated in AYCHT to say that Mr. Ching had disconnected the “handset” instead of the “receiver” of the telephone. He also says that he had partly taken part in the recording of the voicemail messages in that he personally keyed in his telephone extension number and his passwords to gain access to the central voice recording system of his company. He maintains that he was present when Mr. Ching was recording the voicemail messages into the Tape, and that he witnessed the whole process. He states that Mr. Ching had only pressed the buttons of the cassette recorder twice, the first time being Mr. Ching pressing the “record” button to start the recording, and the second time being Mr Ching pressing the “stop” button to stop the recorder after the audio recordings of the voicemail messages had been completed. His evidence is that there was no fabrication, tampering or editing of the voicemail messages in the production of the audio recording in the Tape. 43.In his first supplemental witness statement, the Defendant describes the Tape was produced in the following way:
44.PW6 testifies that it was “totally impossible” to produce the Tape in the manner as described in the letter of AYCHT because there is no receiver to be disconnected from a telephone, and there is not any plug or anything that can connect a cable to the telephone. Even if the Defendant amends his evidence to substitute the word “receiver” in AYCHT’s letter to “handset”, PW6 is still of the opinion that it was impossible to produce the Tape in the alleged manner because if one removes the handset from the telephone, one cannot connect the cable to the telephone. PW6 however agrees that it is possible to produce the Tape in the manner described in the Defendant’s first supplemental witness statement. He says it is because according to that method, the maker of the Tape was accessing the central voice recording system directly, and given the right hardware support, the Tape could be produced. 45.Having considered the evidence, although the Defendant bears the burden of proof and he has failed to call Mr. Ching who was directly involved in the production of the Tape, I am not prepared to exclude the Tape on the production point. Although there are material differences between the method described in AYCHT’s letter and that in the Defendant first supplemental witness statement, such difference might well due to the choice of words and use of language, bearing in mind that the letter was written in English by the Defendant’s ex-solicitor who was not present during the production of the Tape. 46.PW6 however testifies that the recording in the Tape was not genuine or authentic. He testifies that there were many unnatural sounds within the recording of the Tape, including multiple unnatural sounds within the same segment of recordings. He further says that there were “dropout signals” and “signature start/stop or pause sound”. The dropout signals were pauses in signals that were caused by the lag time between the motor of a cassette recorder and the electronic signals used in the recording. The signature start/stop or pause sound refers to the magnitude of the sound of the mechanical switch. PW6 says that the presence of these unnatural signature sounds and the dropout signals were evidence of tampering and editing. On a scale of 1 to 10, he says that the chance of tampering and editing is 6, or the possibility is more than 50% that the recording in the Tape had been tampered. He says that the fact that the recordings were not continuous and the original source was digital suggested that there were many ways for the recording to be edited, tampered and even fabricated. The presence of the unnatural signature sounds before the announcement of “End of Message” suggested that the segment of recordings might have been planted into the voicemail system or the Tape had been fabricated to sound like a series of recordings from the voicemail system. 47.In determining the admissibility of the Tape, the fact of the matter is the Defendant has not called any expert to testify on the authenticity of the Tape. It is clear that the Defendant had been given legal advice by his ex-solicitor that expert evidence in this regard was necessary. In fact, according to the Defendant’s evidence under cross-examination, the Tape had been sent to two experts for examination. Though no formal report had been prepared, he had been given some information about the examination in an email. However, he adduces no expert evidence, and has not disclosed the email. In saying so, I am not drawing adverse inference against him for his failure to adduce expert evidence, but the net result is that PW6’s evidence has been left contradicted by any expert evidence. In his evidence, the Defendant has admitted that he does not have the knowledge or the basis to agree or disagree with the evidence given by PW6. 48.In his final submissions, the Defendant seeks to exclude and/or discredit the evidence of PW6 on the ground that there is inconsistency in his evidence. He says that PW6 has stated in evidence that when he started to prepare his expert report, he knew that the tape he had received is a faithful copy of the recording, but his instructions were that he had to test the authenticity of the given audio cassette-tape recording with respect to “(a) the tape being an original tape and not a copy”. The Defendant questions if PW6 has already known that the tape he was provided was a copy, why was it necessary for him to prove that the tape was an original tape. I do not consider there is the alleged inconsistency. It is quite clear to me that PW6 has been asked to test whether the recording contained in the tape was original. The Defendant also argues that the Plaintiff has failed to prove that the tape given to PW6 was a faithful copy. There is however clear evidence that the Plaintiff’s ex-solicitor Hastings & Co. has asked the Defendant through his ex-solicitor to provide a copy of the Tape for examination by expert, and that PW6 has testified that Mr. Tony Wong of Hastings & Co. has given him the tape for examination. Under these circumstances, I have no reason to doubt that PW6 has not been given the same tape provided by the defence, or that the tape examined by PW6 is not a faithful copy unless the Defendant has provided an unfaithful one in the first place. In any event, the Defendant has made it clear at the trial that he was not saying that the tape examined by PW6 is not a faithful copy. 49.The Defendant also seeks to minimize the weight of PW6’s evidence on the ground the presence of the start/stop or pause signature could be caused by non-human factor. He says that PW6 has agreed in his cross-examination that the start/stop or pause signals could be caused by fluctuation on the telephone network if the caller used a mobile phone to make the call. In my view, the Defendant has misunderstood PW6’s evidence. PW6 agrees that if the caller is using a mobile phone, there may be unnatural features occurring because of interference and fluctuations, but he makes it clear that he will not categorize such fluctuations as dropout features or start/stop or pause signals. On the other hand, it is clear evidence from the Defendant that in the production of the Tape, the start/stop buttons had been pressed only a total of two times. This is totally inconsistent with the evidence given by PW6. 50.I have considered the evidence of PW6 carefully. I have no reason to doubt his expertise and honesty. I have no hesitation to accept his evidence. I find that the Defendant has failed to prove, on a balance of probabilities, that the recording in the Tape is authentic or genuine, and for this reason, it must be excluded from the evidence. Alternative basis for admissibility of the voicemail messages 51.The Defendant has filed a hearsay notice dated 13th May 2005 for admission of the transcript of the audiotape recording. The Plaintiff has filed a counter-notice dated 19th August 2005 objecting to its admissibility. 52.The Defendant has also filed his second supplemental witness statement dated 19th April 2005 in which he states that he had received 9 voicemail messages from PW9 between 11th and 13th May 2001, and another voicemail message from a lady staff of the Plaintiff on 14th May 2001. He sets out in this statement the contents of each of these voicemail messages. 53.Miss Leung objects to the admissibility of these two pieces of evidence. She submits that when the audiotape is ruled inadmissible, it follows that the transcripts of the audiotape recording must also be excluded. In my view, Miss Leung’s submission must be right. The transcript is only a reproduction of the recording from its audio form into a written form. When the audiotape is inadmissible, its transcript must be inadmissible. 54.In so far as the Defendant’s second supplemental witness statement is concerned, Miss Leung submits that the Defendant is trying to include the transcript of the audiotape recording into the evidence through the back door because the Defendant was simply the contents of the audiotape transcript into the witness statement word by word. She submits that bearing in mind that this statement is made by the Defendant 4 years after he had received the alleged voicemail messages, it is unbelievable that the Defendant could still manage to remember all the messages word by word. Miss Leung stresses that it is one thing to say that the Defendant can remember and recall from what he had heard from the alleged voicemail messages but it is quite another for him to rely upon the tape and the transcript that have been excluded. 55.I see the force of Miss Leung’s submissions. However, at this stage, what I have to consider is simply the question of admissibility rather than the weight of the evidence. No matter how the Defendant produces the second supplemental witness statement, he is purporting to give evidence on the fact that he had received the alleged voicemail messages from PW9 and from one lady staff of the Plaintiff, and that he seeks to testify on the contents of each of these messages. As to what weight is to be attached to his evidence, factors like whether he has independent memory of the contents of these voicemail messages may be relevant, but it is not a ground that can be relied upon now to exclude the second supplemental witness statement. The position is just the same as where the Defendant has not sought to produce the audiotape into evidence in the first place, but simply says, either in his oral or written testimony, that he can remember all these matters and purports to give evidence on them from his memory. In this situation, there is simply no basis to exclude his evidence. In the premises, I take into account the Defendant’s second supplemental witness statement as evidence in the determination of this case. Weight of the Defendant’s evidence on the voicemail messages 56.While still on the subject of the voicemail messages, it is more convenient for me to deal with the question of weight to be accorded to the Defendant’s evidence now. 57.In considering the question of weight, the very first question is of course whether the person who left the 9 voicemail messages was actually PW9. The Defendant says that the caller was PW9, no doubt based on his purported recognition or identification of PW9’s voice. On the other hand, PW9 denies that he was the maker of these voicemail messages, though he admits that the voice of the maker sounded a little bit like his. 58.The burden of proof lies upon the Defendant to establish, on a balance of probabilities, that the maker of these voicemail messages was in fact PW9. In my view, in determining this issue, this Court is not entitled to resort to the audiotape recording itself and attempt to decipher whether the voice of the person leaving the voicemail messages was that of PW9. It is because this Court has already ruled that the Tape to be inadmissible in evidence. Besides, even if this Court were entitled to listen to the audio recording in its deliberation, this Court will not have the expertise in voice recognition or identification to come to the view that the Defendant has succeeded in proving, on a balance of probabilities, that the voice was that of PW9. What this Court has in the evidence is simply the Defendant’s testimony, in oral and written forms, that the voice was that of PW9 who has however denied the allegation vehemently. In my view, this is a typical one man’s word against the other’s situation, and I find that the Defendant has failed to prove that on a balance of probabilities that the maker of the 9 voicemail messages was PW1. It must follow that no weight should be attached to this part of the evidence. 59.Secondly, even if the voicemail messages were in fact left by PW9, there is still the question what weight can be attached to them, especially whether they have the effect of damaging the evidence of PW9 and that of the Plaintiff’s other witnesses. The Defendant relies heavily upon Message 9 that he says he received from PW9 at 5:50 p.m. on 13th May 2001, in which PW9 had allegedly said,
60.According to this message, PW9 was telling the Defendant that as a company director, he was in a position to manipulate a petty account holder like the Defendant, and that he had the ability to create entries in the Defendant’s account in respect of their dates, transactions as well as profits and losses. PW9 further said in the same message, “when I discard you sometime in February, it maybe after that (“可能之後”) I deliberately make it this way, so that it is guaranteed that I can discard you.” 61.I do not intend to set out the Defendant’s evidence on the contents of the other voicemail messages, but there are two matters stand out sharply from these voicemail messages. First, the caller (whom the Defendant states to be PW9) was repeatedly demanding the Defendant to return to him “the four things”, and laid down the following Sunday (which on the evidence of the Defendant would be 13th May 2000) as the deadline for the return of articles, with the threat of using legal action against the Defendant to make him lose his job and ruin his life if he failed to comply with the demand. Second, the caller was saying that he was “discarding” the Defendant in February [“我2月幾“dump” 你既時候 …可以guarantee我可以“dump” 到你”]. It sounds like there was a special relationship between the two of them, and that the caller broke up that relationship by the caller leaving the Defendant. However, in my view, these two matters cannot be explained by the evidence of the Defendant, PW9 or both of them. 62.It had not been made explicit in any of the voicemail messages what “the four things” were, but the caller had described them in Message 6 that they had no money worth. However, judging from the contents of the alleged voicemail messages, if they were really left by PW9 and really represented the demand made by PW9, “the four things’ had to be something with little monetary value but of substantial importance to PW9, and the Defendant was well aware of their importance. 63.According to his witness statement dated 26th November 2001, the Defendant testifies that he received a phone call from PW9 about 5 p.m. on 11th May 2001, and that PW9 chased him for payment and demanded him to return the four things. The Defendant said that PW9’s demands were to his great surprise, and he asked PW9 why and how much he owed him, and what “the four things” were. PW9 then told him that the debt arose from securities trading. According to the Defendant’s evidence, he immediately denied to PW9 that he was indebted to him since he had not instructed any securities transaction. However, PW9 just hung up the phone. It is apparent that PW9 had not explained in that telephone conversation what “the four things” were, despite the Defendant had asked him to explain. 64.In his statement to the SFC as recorded in the notes of the meeting held on 11th July 2001, the Defendant had said that he “had no idea as to the 4 items refereed to in the voicemails, and further could not recall having borrowed or received anything” from PW9. In other words, the Defendant is saying that he has no idea at all of what PW9 was talking about when he repeatedly demanded for the return of “the four things”. 65.On the other hand, PW9 also states in evidence that he did not know what “the four things” were. The only possible reference to “the four things” by PW9 may be found in his first supplemental witness statement that prior to a meeting on 3rd May 2001, he had proposed to the Defendant to give to the Plaintiff, as a proposed repayment scheme, 3 cheques and a promissory note for repayment of the outstanding debt. However, clearly these four things could not be the subject matter of the caller’s demand. 66.In other words, on the evidence of both the Defendant and PW9, this Court has not the slightest idea of what “the four things” were. However, “the four things” were clearly the bone of contention. If the caller was demanding the Defendant to return something that the Defendant says he did not know what it was, it was either that the caller had made his demand against the wrong person, or that the Defendant has not been frank and honest enough in making full and complete disclosure to this Court. In either event, it is impossible for this Court to attach any weight to the voicemail messages left by PW9, even if he were held to be the caller. 67.On the relationship between the Defendant and PW9, there is a conflict in the evidence. According to the Defendant, he came to know PW9 in a gathering with friends in or about June 2000. PW9 introduced to him as a licensed security broker, and asked him if he was interested in securities investment. The Defendant replied that he was interested but he had very limited knowledge in this area. They exchanged their telephone numbers. According to the Defendant, PW9 spoke to him after the first meeting on a number of occasions over the phone and in gatherings when PW9 spoke to him about and persuaded him to engage in securities investment. Eventually, the Defendant acceded to PW9’s persuasion and engaged in securities trading on 26th and 27th September 2000 via telephone. They met on 28th September 2000 when the Defendant completed and signed the account opening documents. According to the Defendant, there was no further trading through the Plaintiff. They spoke over the phone and met on a number of occasions after September 2000. In his evidence in Court, up till May 2001, his relationship with PW9 was that of an “ordinary friend”, and there was no dispute between the two of them as far as he knew. 68.On the other hand, PW9 denies that he had ever met the Defendant before 26th September 2000. He said that he first came to know the Defendant in June 2000 through a random telephone chat-line. In the telephone conversation, PW9 said he had told the Defendant that he was a stockbroker with the Plaintiff, but he had no intention to befriend him. However, the Defendant was very keen to exchange contacts, and it was only upon the Defendant’s insistence that they had exchanged contacts in the end. He says that the Defendant had rung him several times, but PW9 told him that he was not interested to be friends with him. The Defendant however rang back time and again saying that he was interested in opening a securities trading account with the Plaintiff and wished that PW9 could be his account executive. PW9 says that it was only upon the Defendant’s insistence that he finally agreed to allow the Defendant to be a client of the Plaintiff in mid-September 2000. He stresses that his relationship with the Defendant was strictly one of a professional broker-client relationship. He says that he had only met the Defendant face to face on two occasions. The first occasion was on 26th September 2000 when he met the Defendant for completing and signing the account opening documents before trading in the account commenced. The second occasion was on 3rd May 2001 when they discussed about the repayment plan of the Defendant. 69.On the evidence of PW9 and the Defendant, this Court can draw no conclusion on their relationship other than that they were ordinary friends, coupled with a certain degree of business relationship between an account executive and a client of a cash securities trading account. From a business sense, there could not be any “discarding” by PW9 of the Defendant. On the contrary, it was up to the client (Defendant) to decide whether or not he should continue to patronize his stockbroker (PW9 or the Plaintiff). On the other hand, if PW9 and the Defendant were just “ordinary friends”, it was utterly meaningless for PW9 to say to the Defendant that he was “discarding” him. On the evidence of PW9 and the Defendant, there could not be the type of special relationship referred to in the 9 voice-mail messages that the Defendant alleged to be from PW9. In other words, it is either the caller had addressed his demands to the wrong person, or the Defendant has not revealed to this Court the exact relationship between him and PW9 fully and honestly. In any event, the Defendant’s evidence cannot enlighten this Court as to what PW9 had tried to achieve from him. Under such circumstances, this Court cannot attach any weight to the contents of the alleged voicemail messages. It is not for this Court to speculate on their precise relationship. 70.In addition, the caller in the alleged voicemails stated, in Message 9, that “when I discard you sometime in February, it maybe after that I deliberately make it this way, so that it is guaranteed that I can discard you.” This was a threat by the caller to create bogus transactions after the “discarding” in February 2001, and not a reference by him to manipulate earlier securities transaction. The issue under consideration is whether the Disputed Transactions in October and November 2000 were carried out with the Defendant’s authority and at his request. From this perspective, the voicemails, including Message 9, would still have no probative value even if they were found to be admissible. 71.Besides, there is clear evidence that PW9 could not have created bogus transactions in or after February 2001 so as to make them appear to be trading transactions in October and November 2000. The evidence adduced by the Plaintiff shows that an account executive (including PW9) will record his daily securities transactions on behalf of his clients onto a blotter sheet. After the end of trading each day, the account executive will deliver the blotter sheet to the settlement department of the Plaintiff, and the staff there will input all information on the blotter sheet into the Plaintiff’s computer, including the client’s name, account number, stock number/name of share, buying/selling price, number of shares, and the time of the transaction. The computer will then make cross-reference with the information contained in the computer of the Stock Exchange, and that it is only after a successful “matching” will the staff of the Plaintiff’s settlement department print out the contract notes in pre-printed forms with sequential serial numbering. The Plaintiff’s computer will allocate an invoice number to each contract note, giving details of the transaction. The invoice number is automatically assigned by the computer system in sequential order, and once this invoice number is assigned, it will represent the transaction and cannot be changed, and it is impossible for anyone to interject a new transaction into the existing transactions once the invoice number has been assigned. On occasions when a clerical error is made, the settlement staff has to ask PW9 for a key disk to perform amendment, but the amendment is only limited to changes in the account name or number as a result of the security restriction of the Plaintiff’s computer system. There cannot be any amendment in respect of the transaction date and time because the computer system in the Plaintiff cannot have amended or altered the information relating to the same transaction in the computer of the Stock Exchange. On occasion when the contract note is not printed in proper quality, the contract note may be re-printed again with a different serial number, but the invoice number assigned to the transaction remains unchanged, and the discarded copy will be chopped with a “cancelled” chop. This is a brief summary of the evidence given by various Plaintiff’s witnesses including PW3 Mr. Raymond Wong whom I find to be a completely independent witness. From their evidence, I accept and I find that no retrospective amendment can be made in or about February 2001 to the transactions already carried out in October and November 2000. 72.For these reasons, I am of the view that no weight can be attached to the Defendant’s evidence of the alleged voicemail messages left to him by PW9. Assessment of the evidence 73.The central issue to be decided is whether or not the Defendant had instructed PW9 to execute the Disputed Transactions on his behalf. The burden of proof lies upon the Plaintiff to prove on a balance of probabilities. PW9 says that the Defendant had given him oral instruction via the telephone, while the Defendant says he had not. Hence, this is question of fact that can only be resolved by assessing the credibility of witnesses and the veracity and reliability of their evidence. 74.Although the Defendant is acting in person, he has conducted his cross-examination of the Plaintiff’s witnesses with considerable skills and care. In his final submissions, he launches considerable attack against the credibility of the Plaintiff’s witnesses and the veracity of their evidence. His major attack is of course upon PW9. He has classified his submissions under 4 categories: -
(1) PW9's acts and conduct 75.First, the Defendant submits that while PW9 had claimed to be a director of the Plaintiff and usually would only open account for a client by referral, he had however opened account for the Defendant whom, according to PW9, he had never met before 26th September 2001, and their first meeting was not even in the Plaintiff’s office but in a nearby café. 76.I find little substance in this point. It is true that PW9 has stated in his second supplemental witness statement that he does not normally take on new clients without a referral. However, this is just what he says he will not normally do, but he never says he will never accept a client without a referral. It is also true that according to PW9’s evidence, this was his very first meeting with the Defendant, and that this meeting was apparently for the purpose of opening a securities trading account for the Defendant, and it did not take place in any place of business like the Plaintiff’s office, but in a café in the same building as the Plaintiff’s office. However, PW9 has explained in his evidence that it was the Defendant who had requested to change the venue from the Plaintiff’s office to the café, and that the account opening documents could be signed in any place. In any event, leaving aside the differences between their evidence on how they came to know each other and what interactions they had afterwards, it was common ground in their evidence that by the time when the Defendant was to open the trading account with the Plaintiff, he and PW9 were not strangers to one another, but they had known each other for about 3 months since June 2000, during which they had conversed with one another on a number of occasions. It is also the evidence of PW9 that through such conversations, he came to understand that the Defendant was very knowledgeable in securities trading. Under such circumstances, in my view, it is not so absurd or unreasonable for PW9 to enter into the Agreement with the Defendant and accept him as his new client even though there was no referral. 77.Second, the Defendant submits that PW9 had never explained the contents of any of the account opening documents to him. I do not think this submission is helpful to the Defendant’s case. There is no issue between the parties on the interpretation of the contractual provisions contained in the Agreement. The only issue is whether the Defendant had instructed PW9 to carry out the Disputed Transactions on her behalf. 78.Third, the Defendant submits that PW9 had on no less than two occasions told him that the Plaintiff had installed a voice recording system and that he could place orders for securities trading with the Plaintiff by telephone since what he was going to say would be recorded. However, the evidence supporting this submission comes entirely from the Defendant. PW9 does not admit that he had said so to the Defendant. I do not find this submission helpful to the determination of PW9’s credibility. In fact, I have difficulty in believing that PW9 would have made such a claim to the Defendant when it is crystal clear, upon the evidence of the Plaintiff’s witnesses whom I find to have no reason to lie on this point, that the Plaintiff only installed its voice recording system in September 2001 so as to comply with the requirements of SFC. I can hardly see the benefit that PW9 could have obtained by lying or misleading the Defendant on this point. After all, it is the Defendant’s case that PW9 was manipulating his account to engage in unauthorized trading without his consent or knowledge. If so, there was all the more reason for PW9 to tell the Defendant as little as possible on how the Plaintiff would record the Defendant’s trading orders, not to mention that he would not have deliberately mentioned the existence of a voice recording system when he knew full well that it did not exist. In my view, not only does this piece of evidence from the Defendant fail to damage the credibility of PW9, it has on the contrary cast doubt on the Defendant’s credibility. 79.Fourth, the Defendant complains that PW9 is inconsistent when he says in evidence that the Defendant had called his mobile phone number to place orders for securities transactions. The evidence of PW9 is that the Defendant did not call his office number but his mobile phone number to place order. He says that he had the practice of forwarding his mobile phone number to his office number whenever he was in his office. The Defendant claims that the evidence of PW9 is inconsistent because, according to him, PW9 had told him that he could place trading orders in the Plaintiff’s voice recording system. For reasons I have stated, I do not find that PW9 had told the Defendant there was such a voice recording system in the Plaintiff. It must follow that this submission of the Defendant is of no help to him. 80.Fifth, the Defendant submits that it is apparent from the three account opening documents that several items relating to the Defendant’s financial position, investment experience and investment objectives had not been completed, and that it was impossible for a responsible account executive to have these details left out. The Defendant also complains that PW9 had never asked him to provide supporting documents on his means. 81.A perusal of the Account Opening Information for the Defendant’s trading account show that no information had been filled into the three blank spaces left for details of the Defendant’s financial position, investment experience and investment objectives. PW9’s explanation is that those blank spaces were to be filled in by the Defendant and not by him. He says he had asked the Defendant to fill in those blanks but the Defendant declined on the ground of privacy. Besides, he says prior to opening the account he had already spoken to the Defendant and understood that the Defendant was the sole owner of his flat, and a marketing manager in the employ of China Light & Power, and that he believed him. In addition, after the Defendant had filled in the account opening documents, he asked the Defendant again to confirm his employment and financial situation. 82.On this particular point, I note that the SFC had sent a letter dated 5th July 2002 to PW9, after it had investigated into the Defendant’s complaint against the Plaintiff and PW9, to warn him of two procedural failings. One of them was that PW9 had allowed the Defendant to leave blank his investment and financial data on his account opening form as he had assumed that the Defendant knew how to trade in securities from his on-line chats with the Defendant. From the warning given by SFC, it is clear that PW9 is correct when he says that it was the Defendant who had failed to put in the relevant data, but it must be equally correct to say that he should not have allowed the omission to occur. Nevertheless, in my view, the fact that PW9 had failed to list out the Defendant’s data in these blank spaces did not necessarily indicate that PW9 had not made the required enquiries. The fact that the Defendant was the owner of a flat in Tai Po and his occupation were not matters in dispute. After all, it seems that these data were meant for the protection of the Plaintiff rather than the Defendant. It is because once the Plaintiff had accepted the Defendant as its client and allowed him to trade in securities through his account, the Plaintiff would have incurred financial liability to pay for the shares purchased for the Defendant on his behalf, and if the Defendant ultimately refused or was unable to pay, it was the Plaintiff who would suffer. I therefore do not see the failure to fill in, or the failure to ensure the Defendant to fill in, such data amounts to a ground to doubt the evidence of PW9. As Miss Leung rightly points out, whether or not PW9 is a responsible account executive here is beside the point. There is also no evidence that the SFC required securities dealers to ask their clients for written proof of their means, nor is there any evidence to show that was the normal practice of the Plaintiff and that PW9 had for unknown or inexplicable reason failed to follow that normal practice. 83.Six, the Defendant submits that PW9 as a responsible account executive should not have allowed him to continue trading in large sums of money after substantial outstanding debt had been incurred in his trading account after 25th October 2000 without first asking him for a written confirmation of his risk exposure and liabilities. 84.The evidence given by PW9 is that the Defendant asked him over the phone for a grace period (for a few days) to settle the payment, and PW9 said he granted the leniency to the Defendant. He also allowed the Defendant to continue with trading in the account because the Defendant asked to be allowed to trade in a few short term trade and promised to settle the account within very short time. PW9 agrees that he had no record of the Defendant’s request in writing because he had dealt with similar clients before and he also at that time believed the Defendant to be an honest person. Besides, he says that he felt that the defendant was trading in shares very well and that he considered him a very experienced stock trader. He also believed, from the Defendant’s style of transaction that involved about $300,000 worth of sales each day, that the Defendant should have the ability to settle payment because the Defendant was the owner of a residential property and was holding a managerial position of a large prominent company in Hong Kong. I have no reason to doubt PW9’s evidence. (2) Lack of Written Confirmation 85.The Defendant points out that PW9 had not asked him for written confirmation of his special instructions that the contract notes and cheques for payment of profit to him were to be sent to his Tai Po home by mail. He refers in particular to the evidence of PW1 who says that she had never heard of such special arrangement. The Defendant also submits that PW9 had not asked for his written confirmation that it was not necessary for PW9 to mail out cheques for the profits made for trading after 28th September 2000 but to apply the profits to pay off the losses. PW9’s reply is that the Plaintiff had no policy to ask its client to write down their requests or instructions in writing. 86.It is true that the normal practice of the Plaintiff is that its clients will attend its office in person to collect contract notes and cheques. However, PW9 says that it was the Defendant who asked him for this special service to mail out the contract notes and cheques on the ground that it was inconvenient for him to attend the Plaintiff’s office in Central during office hours since he worked in Kowloon and lived in the New Territories. I do not understand how PW9’s evidence on this special arrangement could have undermined the veracity of his evidence even if there was no written confirmation from the Defendant of his request. After all, it was a special service provided at the request of the Defendant. The evidence of PW1 does not cast doubt on the evidence of PW9. What she says is simply that she herself had not provided this kind of service to her clients. In my view, even if PW9 had used the Defendant’s account for unauthorized trading, it was not necessary for him to create a false story that the Defendant had asked him to mail the contract notes and cheques to him. He could just put all these documents in the safe of the Plaintiff and allege that the Defendant had failed to collect them. By doing so, PW9 could have the added advantage of using all the staff in his company to handle his bogus transactions in no different way from any other normal transaction. 87.The Defendant also submits that PW9 had not asked for his written confirmation that it was not necessary for PW9 to mail out cheques for the profits made for trading after 28th September 2000 but to apply the profits to pay off the losses. PW9’s reply was that the Plaintiff had no policy to ask its client to write down their request or instructions in writing. In my view, the absence of written confirmation is neither here nor there. At that point of time, even without a written confirmation, the Plaintiff was keeping cheques that would have otherwise mailed out to the Defendant. It was to the benefit of the Plaintiff to have the cheques, as the money could be used to discharge the debt owed by the Defendant. If the Defendant agreed to such an arrangement, there was no need to have written confirmation. If the Defendant subsequently reneged from his instruction, the Plaintiff would just provide a full account of the money so deducted to the Defendant. The interest of the Plaintiff would not be harmed by this arrangement even if it had not required the Defendant to record his instructions in writing. 88.The Defendant also queries why PW9 did not ask him to provide a written confirmation that he had requested for a grace period. He submits that if he had asked for a grace period, it would have been impossible for PW9, as a responsible account executive, not to ask him to provide a written confirmation on the date when he would settle the payment, whether interest would be charged, and whether he would be allowed to continue the securities trading. I do not think this point helps him. Whether or not PW9 is a responsible account executive, and whether or not he had discharged his duties properly towards the Plaintiff has no bearing on whether the Defendant had asked him for a grace period. Besides, in my view, what the Defendant had suggested to be put down in writing was not just a confirmation of a grace period but a written repayment agreement. In my view, the granting of a grace period was purely an indulgence given by the Plaintiff or PW9 to the Defendant. It was nothing contractual. It was not something that had to be reduced into writing. In my view, the fact that PW9 had not asked the Defendant for a written confirmation raises no suspicion about the veracity of his evidence. (3) Absurd and Abnormal Entries 89.First, the Defendant submits that there was a mysterious payment in of $3,548.10 into his trading account. He says that the Plaintiff has failed to prove that he had deposited this sum. He stresses that a transaction involving the Defendant or the Plaintiff had to be accompanied by a receipt or invoice and had to be clearly stated. 90.On this particular point, PW9’s evidence is that after the Defendant had engaged in the securities transaction on 28th September 2000, he had made a profit of $2,965.65, and a cheque for that amount had been issued for him, with the cheque dated 3rd October 2000 in accordance with the T+2 settlement rule because there was an intervening weekend and the National Day public holiday. PW9 says that the Defendant had initially instructed him to deposit this cheque into the Defendant’s bank account directly. However, on 29th September 2000, the Defendant suffered a loss of $3,548.10 in securities trading on that day. The Defendant then instructed PW9 to use the cheque of $2,965.65 to pay off part of the loss and he agreed to pay in the balance. The ledger report for the period 31st October 2000 shows that a sum of $3,548.10 had been paid in to settle the loss. However, the ledger report would not go into the specific details to show that in fact there were two separate payments to make up this sum of $3,548.10. In my view, PW9 has given a reasonable and plausible account of this entry into the Defendant’s trading account. Furthermore, the Plaintiff has already included all relevant contract notes and monthly statements in Bundle C. It therefore cannot be said that the Plaintiff has not properly documented the transactions. Hence, it appears to me that the so-called absurdity or abnormality caused by this sum of $3,548.10 did not actually exist. It is just a question of whether the evidence of PW9 or that of the Defendant should be preferred. 91.Second, the Defendant further submits that although there were numerous securities transactions involving large sums of money in his trading account since 28th September 2000, there was no transaction record showing whether profit or loss or profit had resulted in relation to each transaction. He submits that if there were profits, it would be necessary for the Plaintiff to issue cheques to him for deposit, and if there were losses, it would be necessary for the Defendant to settle in accordance with the T+2 settlement rule for each transaction. 92.In this regard, PW9 explains that he had been instructed by the Defendant to use the profit earned on 28th September 2000 to cover partially the loss incurred on 29th September 2000. That was a specific instruction from the Defendant to cover payment on that day only, but he adds that the Defendant had in October 2000, the exact time of which he cannot recall, further instructed him to keep the profits made out of the transactions carried out in October and early November 2000 and used them to pay off any losses that might sustain to the Defendant’s account. 93.In my view, the evidence shows that the Plaintiff and PW9 had failed to enforce the T+2 settlement rule strictly. However, it does follow that the other complaints of the Defendant are established. In the cash ledger reports for October and November 2000, there are many entries under the descriptions of ‘PAYOUT SETTLE INV. XXX” or ‘PAYIN SETTLE INV. XXX”, which were invoices with particular numbers that were issued for payment out of or into the Defendant’s trading account for settlement of the profits and loss of the account. These are undoubtedly the transaction records referred to by the Defendant, and I am sure that these records are in existence because they were just documents printed out automatically by the Plaintiff’s computer. Besides, the issue here is not whether there were such transactions as evidenced by the records, but whether these transactions were in fact carried out at the Defendant’s request and with his authority. Furthermore, I do not regard the Plaintiff and PW9’s failure to enforce the T+2 settlement rule against the Defendant strictly is evidence to show that there was improper manipulation of his trading account. First, the evidence of PW9 provides an explanation, namely, it was upon the Defendant’s request that the rule was not enforced. Second, the failure to enforce the T+2 settlement rule did not happen only to the Defendant’s trading account. According to the letter dated 5th July 2002 in which SFC gave a warning to the Plaintiff for its failure to strictly enforce the T+2 settlement rule, it was stated that “it was discovered during the course of the investigation that there were 319 instances of clients settling later than T+2 during the relatively short period of 26 September 2000 to 28 November 2000, 17% of whom settled later than T+6”. It is absolutely clear that these 319 instances were not confined to the Defendant’s trading account, but they were a phenomenon generally found in the other accounts of the Plaintiff’s clients. Bearing in mind that the Plaintiff is more or less a family business, the fact that it granted more indulgence to its clients was hardly surprising. After all, the failure to enforce the rule strictly meant only that the interest of the Plaintiff had been put in jeopardy, and not vice versa. As SFC pointed out in its letter to the Plaintiff, “such failures to settle on time could have had serious financial consequences for your company”. In my view, the failure to follow the T+2 settlement rule is hardly evidence of foul play here. 94.Third, the Defendant says that all transactions from 28th September 2000 onwards were “at market orders”, but according to his own witness statement and his evidence in Court, he did not place “at market” orders on 26th and 27th September 2000, but orders that required the account executive to call him back for confirmation. I think this submission helps little in the issue to be determined. According to PW9, usually experienced securities trader would place “at market” orders, but he found that the Defendant was such kind of trader. In my view, one just cannot ignore the fact that even on the Defendant’s own evidence, he purchased shares worth over $377,000 in the very next day of his trading, and within the same day, he managed to reap in a profit of over $7,000. 95.Fourth, the Defendant produces a copy of an air ticket in his name (Bundle C, page 63) to prove that he was not in Hong Kong between 9th and 14th October 2000 but he was in the USA (Los Angeles according to the destination stated in the air ticket). He questions PW9 as to why there were still trading activities in his account with the Plaintiff on 12th and 13th October 2000. He says that it was impossible for him to engage in the “at market” transactions as appearing in the blotter sheets for these two days because of the time difference between Hong Kong and USA (being a complete opposite of day and night) and the lack of the most updated market information with him. He said if he were to trade whilst overseas, he would have to make prior arrangement with PW9 to agree upon who was going to pay for the international telephone calls, and when the transactions would be settled since he would not be able to come back to Hong Kong in time to settle the transactions in compliance with the T+2 settlement rule. 96.PW9’s evidence is that the Defendant placed the orders with him via the telephone, and that telephone calls could be made from any part of the world. Besides, instantaneous stock quote could be accessed from anywhere in the world, and he could also provide the most updated price information to the Defendant if the Defendant had so asked over the phone. 97.If the information on the Defendant’s air ticket were correct, and I have no reason to believe that it was not, the Defendant would be in Los Angeles on 12th and 13th October 2000. Judicial notice can be taken that there is a time difference of 16 hours between Los Angeles and Hong Kong. According to the blotter sheet for the transactions on 12th October 2000, the transactions attributed to the Defendant were executed between 1529 hours and 1559 hours on 12th October 2000, which would be equivalent to Los Angeles time between 2329 hours and 2359 hours on 11th October 2000. The blotter sheet for 13th October 2000 shows that the transactions attributed to the Defendant were executed between 1011 hours and 1013 hours on 13th October 2000, equivalent to Los Angeles time 1811 hours and 1813 hours on 12th October 2000. It is therefore clear to me that even if the Defendant were in the States, the time of the day while he was there was not so late that he could not have transacted in securities trading. In any event, it is not unknown that people can engage in securities trading round the clock. As to the submission that the Defendant would have made prior arrangement with PW9 if he had to trade whilst overseas but he had not, I do not think it has much probative value in the issue to be determined. It is entirely up to the Defendant to decide whether he would notify PW9 of this trip away from Hong Kong. In my view, the fact that the Defendant was in the States on 12th and 13th October 2000 is not such a weighty piece of evidence that goes to show that PW9 was manipulating his account. 98.Fifth, the Defendant submits that the monthly statements issued by the Plaintiff in respect of his trading account for March 2001 and April 2001 did not show that he was indebted to the Plaintiff the sum of $276,802.82. In his evidence, PW9’s explains that because the Plaintiff’s fiscal year ended at the end of March, he being the account executive of the Defendant’s account had been asked by the Plaintiff to settle the outstanding sum on a temporarily basis in anticipation that such sum would be settled by the Defendant within a short period of time. He had therefore asked the Plaintiff’s accountant to transfer the money from his director’s account to settle the amount temporarily. 99.The Defendant says that PW9’s explanation is laughable and ridiculous. Unfortunately, I do not share his view. In any event, the monthly statements produced by the Plaintiff in respect of the Defendant’s account before March 2001 and after April 2001 all show that the Plaintiff is alleging that the Defendant is owing it the sum of $276,802.82. The evidence of PW7 also shows that letters dated 2nd January 2001 and 1st March 2001 had been sent to the Defendant demanding for repayment of this sum of money. It has never been the Defendant’s case that he had paid this sum. Under these circumstances, the fact that the monthly statements for March and April 2001 did not show this debt of $276,802.82 has no adverse effect on the Plaintiff’s case or upon the credibility of PW9. 100.Sixth, the Defendant also points out that the monthly statements issued by the Plaintiff for his account between August 2002 and November 2004 also failed to show this alleged debt of the Defendant. Likewise, I do not think it assists the Defendant’s case. PW3 has given evidence that the error was created while his company was upgrading the computer system of the Plaintiff in July 2002. I have no reason to doubt the credibility of PW3 who is a completely independent witness. The Defendant suggests that PW9, being the most senior person in the Plaintiff in charge of its computer system, was in a position to manipulate his account. If he had this power and also the intention to do so, he would not have created this kind of monthly statements to show that the Defendant had zero indebtedness. After all, the Plaintiff has already started this action as early as June 2001 against him. (4) Discrepancies between witness statements 101.The Defendant submits that one can see that there are hidden and fabricated stories in the three witness statements made by PW9 in November 2001, October 2004 and April 2005. He says that it was 4 years after PW9 had made his first statement he started to describe how he came to know the Defendant in his last statement. He says that it was only in April 2004 that PW9 started to speak about the four things, and PW9 said the four things were three cheques and one promissory note to be given by the Defendant. He says that PW9 only described the meeting on 3rd May 2001 by three paragraphs in his first statement, but he used 10 paragraphs in his second statement. The Defendant submits that PW9, as well as other witnesses for the Plaintiff, had made use of the time to make up evidence. 102.PW9 explains that he had given all details to his legal adviser in or before November 2001, and that it was a matter for his legal adviser to decide how much and what details of his instructions were to be included into his witness statements. I accept the explanation. The proceedings have taken some time. The Plaintiff has also changed its solicitors. It is not unknown that different legal adviser gives different advice on what is needed for a trial. The most important matter for this court to consider is whether there are such inconsistencies and/or inherent improbabilities in the evidence that discredits PW9. 103.Having considered carefully the Defendant’s submission, I do not find that the Defendant succeeds in discrediting PW9. On the contrary, I find that PW9’s evidence is supported by contemporaneous documents including the account opening documents, the contract notes, cheques, monthly statements and blotter sheets. I have also observed his demeanour carefully whilst he is giving evidence, I am satisfied that he is trying his best to tell the truth to this Court on all material issues. 104.Likewise, I have given careful consideration to the Defendant’s evidence. I also have plenty opportunities of observing his demeanour whilst he is testifying in Court. In doing so, I bear in mind that he is not a professional witness, and has been subjecting to skilful cross-examination by Miss Leung, Counsel for the Plaintiff. 105.In his evidence, the Defendant was adamant in saying that it was on 28th September 2000, and not 26th September 2000 as testified to by PW9, that he completed and signed the account opening documents. He says that PW9 had told him on 26th September 2000 that he could help him purchase shares before he opened a trading account with his company. The Defendant insists that after he had traded in 3 securities transactions through PW9 on 26th and 27th September 2000, PW9 phoned him on 28th September 2000 and told him that he had a cheque for him in respect of the profits that he had made. They then made an appointment and had dinner in Mongkok that night. After dinner, they went to the Defendant’s home in Tai Po where PW9 gave him the account opening documents to complete and sign. The Defendant further says that after he had signed the account opening documents, PW9 gave him two cheques for him to look at, took them away and told him that he would deposit the cheques into his bank account later. According to the Defendant, PW9 had said that the two cheques were for the paying to the Defendant the profits he had earned in previous transactions. 106.In my judgment, the testimony of the Defendant is problematic and full of unsatisfactory features. 107.First, since the Defendant accepts that he had been provided with contract notes for the three securities transactions authorized by him, leaving aside for the time being when and how these contract notes were given to him, it must follow that his trading account must have been created in the Plaintiff’s computer system on 26th September 2000. The reason is that if his account had not been created, the Plaintiff’s computer would simply be unable to perform the “matching” exercise with the database of the Stock Market and print out the contract notes for the transaction right on that day of 26th September 2000. It therefore follows that the Plaintiff’s staff must have been provided with sufficient personal data of the Defendant for creation of his trading account on that day. It is just illogical and improbable that the Plaintiff’s staff could have created a trading account for the Defendant on 26th September 2000 when, upon the Defendant’s evidence, he provided his personal data only two days later on 28th September 2000, not to mention further that he had said it was only after 9 p.m. of that day he filled in the particulars and signed on the account opening documents. 108.Second, the Defendant has stated to the SFC, during the meeting on 18th June 2001, that he “remembered having written down the date of 28th September 2000 beside his signatures on the originals of the documentation”. Under cross-examination, he agrees that the documents he alleged to have signed on 28th September 2000 were those at pages 2 to 4 of Bundle C. However, the date “28th September 2000” allegedly written by the Defendant himself cannot be found in any of these documents. On the contrary, the date “26th September 2000” was clearly written in the Account Opening Information and the Risk Disclosure Statement, and the absence of a date on the Agreement has been explained by PW1 on the ground that there was simply no space reserving for this purpose. The Defendant seeks to excuse himself by saying that he remembered wrongly during the SFC investigation. However, in my view, not only what the Defendant has alleged to SFC is not supported by the contemporaneous documents, it has also damaged his credibility because this untrue allegation gives rise to serious concern whether he had been deliberately untruthful so as to incriminate PW9 or the Plaintiff in his complaint against them for “fraud and misconduct behaviour”. 109.Third, the Defendant testifies during the initial part of his cross-examination that at the night of 28th September 2000, PW9 had given him two cheques for payment of the profits he had earned from the three securities transactions authorized by him. Miss Leung draws his attention to the two cheques appearing at pages 5 and 6 of Bundle C, and asks him whether these were the two cheques given to him by PW9 on that occasion. The Defendant confirms that the cheque (i.e. a machine-printed cheque dated 28th September 2000 payable to the Defendant for the amount of $4,505.70) at page 5 of Bundle C was given to him by PW9 that night, but the cheque (i.e. a handwritten cheque dated 29th September 2000 also payable to the Defendant for the amount of $7,083.60) at page 6 of Bundle C was not. He says that it was because both cheques given to him that night were machine-printed. It is at this point of time the Defendant first raises the allegation that at that night of 28th September 2000, PW9 gave him the two machine-printed cheques to look at, and that after he had shown him the cheques, PW9 took away the cheques and told him that he would deposit the cheques into his bank account. 110.In my view, the Defendant’s oral testimony in Court on this aspect under cross-examination is inconsistent with what he had previously said to the police and SFC. In his statement to the police on 16th May 2001, he said that PW9 had given him two cheques on the night of 28th September 2000. In the meeting with SFC investigators on 18th June 2001, he also said that the two cheques for the profits were given to him by PW9 in the evening of 28September 2000. In these prior statements, he had only said that PW9 had given him the two cheques, and in none of them had he ever said that PW9 had merely shown him the two cheques, or that PW9 had taken them away and promised to deposit them into his bank account afterwards. In fact, during the meeting with SFC on 11th July 2001, he was asked to explain the apparent contradiction with his previous contentions that PW9 had given him two cheques at the night of 28th September 2000. On that occasion, his response was merely that he could not remember exactly what had happened, and despite he had made an attempt to explain further, what he had stated was merely that PW9 might have deposited one of the cheques into his bank account on his behalf. Hence, on 11th July 2001 which was about 10 months after the event, he could not remember what had happened to the two cheques at the night of 28th September 2000, and yet at the trial herein which is more than 4 years after the event, he could have remembered that PW9 had merely shown him the two cheques and then taken them away, contrary to what he had stated in his prior statements to the authorities. In my view, the Defendant’s evidence is not credible. His evidence that PW9 had shown him the cheques and taken them away is nothing but a recent fabrication with a view to explaining why the other cheque at page 6 of Bundle C was a handwritten cheque. The Defendant must be aware that this handwritten cheque for the amount of $7,083.60 was the profit for his second day securities trading and that this cheque had been paid into his bank account as evidenced by the transaction receipt issued by Hongkong and Shanghai Banking Corporation at page 7 of Bundle C. If the Defendant maintains his evidence that PW9 had shown him two machine-printed cheques that night, he had to explain why this machine-printed cheque was not the one deposited into this bank account. 111.Fourth, there is the puzzling question why PW9 would have shown the Defendant two cheques that were clearly for the profits earned by the Defendant through his trading on 26th and 27th September 2000, but chose not to give them to him and took them away. After all, it is the Defendant’s evidence that when PW9 made the appointment to see him on that night of 28th September 2000, PW9 had said specifically that he had the cheque for the profits for him. There is simply no logical explanation, and the Defendant’s evidence is just inherently improbable. 112.Fifth, the Defendant’s allegation that PW9 had shown him the cheque at page 5 of Bundle C on the night of 28th September 2000 must be a lie. It is clear on the face of this cheque that it had been presented for payment, and that it had been deposited into an account bearing the number “030-5-207870”according to the writing at the back of the cheque. It is not disputed that this account belonged to the Defendant, and its history report appears at page 86 of Bundle C. According to this account history, a sum of $4,505.70 was paid, through the deposit of a cheque, into the Defendant’s account on 28th September 2000. From these factual data, the irresistible inference is that the cheque at page 5 of Bundle C was the cheque that was deposited into the Defendant’s account on 28th September 2000. As admitted by the Defendant under cross-examination, his bank would be closed by 5 p.m. on 28th September 2000. In other words, this cheque at page 5 of Bundle C must have been deposited into his account before 5 p.m. of 28th September 2000. In light of these incontrovertible facts, it is just impossible that the Defendant could have seen this cheque at his home in Tai Po sometime after 9 p.m. on 28th September 2000 when he says he had just signed the account opening documents. 113.The Defendant seeks to explain the irreconcilable discrepancy by saying that he supposed someone must have deposited another cheque of the same amount into his account on 28th September 2000, and PW9 showed him the cheque at page 5 of Bundle C that night, took it away and cancelled it afterwards. His further explanation was illogical. Not even he can provide an explanation as to why the Plaintiff would have to issue two cheques of the same amount, with one to be shown to him and the other to be deposited into his bank account. In any event, the evidence is not that another cheque of the same amount had been deposited into his bank account on 28th September 2000. The evidence is that this very same cheque that he alleges to have seen at the night of 28th September 2000 had in fact been so deposited not later than 5 p.m. of that day. In my view, the Defendant is just lying in his evidence, and has been trying to cover up one lie by another through making up evidence as he goes along. 114.Furthermore, if the Defendant only provided details of his bank account at sometime after 9 p.m. on 28th September 2003 by filling in the Account Opening Information, the Plaintiff would not be able to deposit a cheque for the 26th September trading profit into his bank account on that day. If the Defendant’s evidence about account opening were true, the Plaintiff simply would not have details of his bank to effect the payment in within that day. 115.Sixth, even if the Defendant’s evidence were true, there is also an inexplicable and absurd scenario that the Plaintiff would have issued a machine-printed cheque for the amount of $7,083.60, but chose to cancel it, replaced it by another handwritten cheque, and deposited that handwritten cheque into the Defendant’s savings account. There can be no doubt that the handwritten cheque at page 6 of Bundle C had been deposited into the same account of the Defendant as evidenced by the Account number written on the back of the cheque and the transaction receipt issued by the Hongkong and Shanghai Banking Corporation. Why the Plaintiff or PW9 had to do so is beyond apprehension if the Defendant were telling the truth. It is also inexplicable as to why the Plaintiff did not deposit the two cheques for the Defendant at the same time if it were true that PW9 had taken them away at the night of 28th September 2000 and said he would deposit them for the Defendant, but the cheques were in fact deposited one after the other on 28th and 29th September 2000 respectively. 116.There is also the discrepancy between his evidence in Court and his statement to police. In his statement to the police, he said that the two cheques were for the amount of $5,000 which, as the evidence shows, was clearly incorrect and could not have been the individual amount or the aggregate amount of both cheques that were allegedly shown to the Defendant that night. 117.In my view, the Defendant’s evidence on what had happened on 28th September 2000 is full of inherent improbabilities and illogicalities and it is not true. On the other hand, PW1’s evidence on this aspect is logical and credible. He says that the cheque at page 5 of Bundle C was printed automatically by the computer on 26th September 2000 after the Defendant had made a profit that day. The cheque was dated 28th September 2000 in accordance with the T+2 settlement rule. PW9 says that the cheque was mailed out on that very same day, i.e. 26th September 2000 to the Defendant. Such evidence is surely compatible with the scenario that the Defendant was in a position to receive the cheque on or before 28th September 2000 and bank in the cheque that day. As to the handwritten cheque at page 6 of Bundle C, PW9’s evidence is that it was prepared because the Plaintiff staff had forgotten to press the button of the computer to activate its special function to calculate and print out a cheque for the net amount earned by the Defendant during the second day of his trading. He says a cheque worth over $200,000 were printed out for selling of the shares but the Defendant should only get $7,083.60 being the difference between the buying and selling price, and after settlement of all required stamp duties, commissions and other expenses. PW9 testifies that after this cheque was issued, the Defendant had instructed him on 27th September 2000 that he should deposit the cheque into his bank account directly, and PW9 says he did ask his staff to deposit the cheque on 29th September 2000 which was the date of the cheque calculated in accordance with the T+2 settlement rule. After the cheque had been paid in, he informed the Defendant by phone. In my view, the evidence given by PW9 on this aspect is straightforward, logical and has a ring of truth. 118.There are also other aspects in the Defendant’s evidence that are inherently improbable and defy common sense. 119.The effect of the Defendant’s evidence is that PW9 had used his account to engage in unauthorized trading as early as on 28th September 2000. However, in my view, this is just incredible. According to the Defendant’s evidence, since he first met PW9 in June 2000, PW9 had on many occasions tried to persuade him to invest in securities trading. In other words, it must have taken him about 3 months’ time before PW9 succeeded in motivating him to engage in the securities trading on 26th September 2000. It is common ground that on the first day of his trading, the Defendant made a profit of $4,505.70. In light of the ease in making profit, it is in fact his own evidence that “because of the experience on 26th September 2000, [he] telephoned [PW9] the next day (i.e. 27th September 2000) and asked him whether there were any shares which worth to purchase”. Under cross-examination, he says that since he had just made a profit, it was just natural for him to become more interested in securities trading. The evidence of course shows not only that he had asked PW9 for advice but also he had actual trading on 27th September 2000 and made another profit of $7,083.60. Making a profit of more than $11,500 within two days could be nothing but attractive to anyone. Under these circumstances, there was simply no reason for PW9 to think or believe, as early as on 28th September 2000, that the Defendant would not have continued with his securities trading through his account. On the contrary, there must be every reason for him to think or believe that the Defendant would actively participate in the trade, as evidenced by his proactive approach to PW9 for advice and his continuous trading on 27th September 2000. 120.Under these circumstances, in my view, it just defies logic and common sense to say that PW9 would have used the Defendant’s account as early as on 28th September 2000 to engage in unauthorized trading. As rightly submitted by Miss Leung, anyone who makes use of his client’s account to engage in unauthorized securities trading would have chosen those dormant or inactive accounts. A securities dealer who engages in this kind of illicit activities will not wish his client to know of his unauthorized activity, but he cannot hide the illicit trading from his client if his client asks to be provided with the contract notes and/or monthly statements of his trading account, and it is more likely for a client who is engaged in active trading to ask for such statements, not to mention that the Plaintiff’s computer will automatically print out the contract notes and monthly statements, and it is the duty of the Plaintiff to supply them with the monthly statements every month. It is true that the Defendant has given evidence that after the three transactions on 26th and 27th September 2000, he decided not to engage in this kind of securities trading anymore because he found the trade just too risky. Assuming for the time being that what he says were true, he has admitted under cross-examination that he had never told PW9 that he intended to stop trading through his account with the Plaintiff on 28th September 2000 or at any time thereafter. So, how could PW9 have the ability to read his mind as early as on 28th September 2000 and choose to manipulate his account for unauthorized trading right on that day? I do not believe sheer luck on the part of PW9 or coincidence could have explained the matter. After all, PW9 needed not try his luck as early as on 28th September 2000 when he still had plenty of time to observe whether or not the Defendant would become an inactive and dormant client. 121.It is also difficult to believe that the Defendant would have decided to stop trading in securities on 28th September 2000. According to his own evidence, he has completed tertiary education. At the material times, he was holding the position of a marketing officer in a large public company, and was given the responsibility to negotiate with advertising contractors on behalf of the company. In other words, he is not and cannot be regarded as an ignorant person without sophisticated thinking, and he definitely does not give me that impression throughout the course of the trial. In addition, according to his own evidence, he was not a newcomer to investment, if not speculation. He admits that prior to engaging in securities trading through PW9, he had engaged in a number of other investments, including taxi licence and real property. Although the Defendant seeks to explain that he stopped trading in securities after 28th September 2000 because he realized the great risk involved in the trading, it is significant to note at one part of his cross-examination, when Miss Leung asks him whether he considered engaging in day trade of shares worth over $370,000 (which was the value of shares he purchased on 27th September 2000) risky, the Defendant in fact says that he will say, in terms of investment risk he had to face, it was the same as the risk as he had encountered in other investment. In other words, at least at some stage, he considered that the risk in securities trading just ordinary investment risk. It is therefore beyond my understanding that he would have stopped securities trading abruptly on 28th September 2000, especially when he had just made a handsome if not substantial profit of over $11,500 within 2 days, which was equivalent to one-third to one-half of his monthly salary (which he says was between $20,000 to $30,000 a month but he declines to give a precise figure). Under cross-examination, he says that it was after he had lunch with his colleague Michael Pang on 28th September 2000 when they had discussed matters relating to securities trading that he had made up his mind in the afternoon of that day to dissociate from securities trading. I just do not believe that there was such a sudden revelation or realization of the enormous risk associated with securities trading that he had to stop it there and then. 122.Furthermore, if the Defendant’s evidence were right that PW9 had used his account to engage in his unauthorized trading in as early as 28th September 2000, one would have asked what benefit it would have brought to PW9. By using the Defendant’s account to engage in unauthorized trading, PW9 would have no benefit whatsoever. First, all cheques for profits to be paid out would be marked payable to the Defendant, and not to PW9. Second, all money involved in buying and selling securities on behalf of the Defendant would have to be first borne by PW9 or the Plaintiff, i.e. his own family business. Unless the money can be recovered or extracted from the Defendant, it is just a waste of time and effort to engage in this kind of unauthorized trading on the part of PW9. However, was the Defendant good enough to be made this kind of scapegoat, both in term of his ability to raise challenge and resistance to groundless claim and in term of financial ability to meet the unwarranted and baseless payment? I just do not believe that PW9 would have engaged in this kind of activities. Why chose the Defendant to be the scapegoat? 123.Having considered the evidence of the Defendant, I have to say that I do not find him a witness of truth and I reject those parts of his evidence that are in variance with the evidence adduced by the Plaintiff. 124.I accept the evidence of PW9. I find his evidence to represent the truth. On the basis of the evidence of PW9 alone, it is sufficient for me to enter judgment against the Defendant. Nevertheless, there is further evidence from other witnesses called by the Plaintiff that supports its claim. 125.The Defendant criticizes the evidence of PW1 on the ground that she had stated in her witness statement about the nuisance or disturbance created by the Defendant, but she admitted in Court she did not actually see what the Defendant had done. I do not agree that this point will cast doubt on PW1’s credibility. It is not disputed that the Defendant attended the Plaintiff’s office on 14th May 2001 and that police had to be called, no matter it was PW9 or the Defendant who actually called the police. Hence, a scene involving the Defendant must have been created. I therefore do not consider PW1 lying. On the contrary, she is frank and honest enough to admit she did not actually see what happened, a gesture that I don’t think she will adopt if she is prepared to frame up the Defendant at this trial. Even if her witness statement was based on what her colleague told her about the incident on 14th May 2001, there is no rule to say that she is not allowed to do so. In a civil trial now, hearsay evidence is admissible. 126.I find PW1 to be an honest and truthful witness. I accept here evidence. Her evidence supports PW9’s testimony because it is her evidence that as early as in the morning of 26th September 2000, she had already verified the account opening documents, duly signed by the Defendant for opening his account. 127.In his final submissions, the Defendant has not attacked the evidence given by PW2, PW3 and PW4. I have considered their evidence. They are plainly honest and credible witnesses. I accept their evidence. 128.The Defendant says that PW8 could not have told the truth when she said she had made two phone calls to the Defendant to chase for payment. He says that PW9 was a director of the Plaintiff and was holding a much more important position with greater power than PW8. If he could not have succeeded in demanding him for payment, there was simply no reason for them to believe PW8 could have succeeded in getting the payment, and hence PW8 would not be asked to make phone calls to the Defendant. 129.I am not impressed by the argument. When PW9 did not succeed in pressing for payment, it was hardly surprising that he would ask some of his staff to make the demand. Whether this demand against the Defendant would be successful or not depended not on the power or position of the caller in the Plaintiff, but on the willingness and ability of the Defendant to pay. PW9’s instruction to PW8 to make those calls served the same function as written reminders. There is nothing inherently improbable or illogical. I find PW8 a witness of truth. I accept her evidence. 130.The importance of the evidence of PW2, PW3, PW4 and PW8 is that they show that blotter sheets, contract notes, cheques and monthly statements in respect of securities transactions handled by the Plaintiff’s account executives for their clients (including the Defendant) are contemporaneous documents that cannot be fabricated or altered afterwards, at least not after the close of the subsequent stock trading day. 131.Furthermore, it is significant to note that according to the evidence of these witnesses, the Plaintiff must have mailed out to the Defendant monthly statement of his account from September 2000 onwards. It is their evidence that the monthly statements are automatically printed by the computer, and that the Plaintiff’s staff has to ensure each month that the number of envelopes containing monthly statements to be mailed out correspond exactly with the number of monthly statements produced. It is clear that the mailing address of these monthly statements to the Defendant was his correct address in Tai Po, since it has been so admitted by him in evidence and he has also admitted receiving monthly statement at this address, although he says only from June 2001 onwards. On the evidence before me, I find that the Defendant had been supplied with monthly statements of his account ever since he had opened an account with the Plaintiff. For this reason, he must have known of the Disputed Transactions and he has never objected to his liability for these transactions before May 2001. The probable inference is that he did authorize these transactions. 132.In addition, the mailing of these monthly statements to the Defendant also supports the credibility of PW9. PW9 says in evidence that he is not responsible for mailing the monthly statements for his clients, and he does not even have a hand on it. I have no reason to disbelieve him on this particular point because it is common ground that between July 2002 and November 2004, all monthly statements sent to the Defendant showed a nil indebtedness balance. If PW9 had laid his hand on the statements, he would have discovered the mistake long ago, but the fact is he only discovered it when the Defendant makes this point in his witness statement. I accept PW9’s evidence that he did not handle the Defendant’s monthly statement at all material times. In my view, he would not have adopted this attitude if he were manipulating the Defendant’s account without the Defendant’s authority. If he wanted to keep the Defendant in the dark about these unauthorized trading, he got to find a way to prevent sending out of these statements to the Defendant, or else the Defendant would be, at least would possibly be, alerted to his illicit acts. The fact that he had done nothing provides another invaluable support that he had not engaged in unauthorized trading as suggested by the Defendant. 133.In respect of the evidence of PW5, the Defendant submits that her evidence about his telephone conversation on 14th May 2001 is not credible because he did not know at that time, and it was not possible for him to know that PW9 was her son, that the Defendant would not have made such calls as it would be inconsistent with his conduct on that day to ask for settlement of the Plaintiff’s claim, and that there are inconsistency in PW5’s statement. I have given his submissions due consideration. It is impossible for me to hold here that the Defendant would definitely have no knowledge of the relationship between PW5 and PW9, and I find it nothing strange for a person to deny a claim against him on the one hand but ask for settlement on the other. The alleged inconsistency in PW5’s statements focuses on whether PW7 her husband was present during the telephone conversations. I find these are minor points. Having observed PW5 and considered her evidence, I find her a witness of truth and accept her evidence. 134.PW5’s evidence of course goes to show that the Defendant has never denied his liability for the Disputed Transactions. 135.As far as PW7’s evidence is concerned, the Defendant’s criticism is that he could suddenly remember he was next to PW5 when he alleged that the Defendant had made the phone calls on 14th May 2001. For the same reason above, I do not think this point has substance. Having heard and seen PW7, I accept his evidence. His evidence shows that he had signed two demand letters to the Defendant. He asked PW4 to mail them out, and PW4 had duly followed his instruction. Under these circumstances, I find that the demand letters reached the Defendant by post, and the Defendant has failed to rebut his liabilities within reasonable time. His evidence damages the credibility of the Defendant, 136.Having considered all the evidence, I find either on the evidence of PW9 alone, or on PW9’s evidence together with the evidence of the other witnesses for the Plaintiff, that the Defendant opened his trading account on 26th September 2000 and signed all necessary documents on that day, and that he started trading in this account immediately throughout the material times. I find specifically that the Disputed Transactions were orders placed by the Defendant, and that PW9 had executed these orders at the request and with the authority of the Defendant. 137.There is no dispute that the Defendant never paid for these orders or their outstanding balance. It has not been raised that the prices at which the shares were re-sold did not represent the fair market price. In the premises, I find that the Defendant has no defence to the Plaintiff’s claim. Order 138.For reasons aforesaid, I make the following orders: -
Miss Joyce Leung, Counsel for the Plaintiff, instructed by Messrs. Chaine, Chow & Barbara Hung. The Defendant, acting in person |