HCA 1478/2017
[2021] HKCFI 191
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1478 OF 2017
________________________
BETWEEN
| | STANDARD CHARTERED BANK (HONG KONG) LIMITED | Plaintiff |
| | and | |
| | LAU LAI WENDY (劉勵) | 1st Defendant |
| | NIE HAI YAN ANNIE (聶海燕) | 2nd Defendant |
________________________
Before: Hon Anthony Chan J in Court
Date of Hearing: 11 and 15 January 2021
Date of Judgment: 1 February 2021
________________________
J U D G M E N T
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1. The Plaintiff is a well-known bank in Hong Kong (“SCB”). In this action, it claims to have suffered from theft by a former employee, the 1st Defendant (“Wendy”). The majority of the stolen funds had ended up in the bank accounts of the 2nd Defendant (“Annie”). SCB says that the two Defendants had acted jointly in perpetrating a fraudulent scheme on it.
2. Wendy had been convicted of 8 counts of fraud, and sentenced to 10 years of imprisonment. There is a 1-page homemade Defence from her, which does not really address SCB’s claim (the document advanced 1 point, namely, that the mortgage repayments over a landed property (likely to be jointly owned by Wendy and her husband) were made by Wendy and her husband jointly). Apart from filing the Defence, Wendy has not participated in these proceedings and is serving her sentence.
3. Mr Sussex SC, who appeared with Mr Ng for SCB, submitted that, pursuant to O 18, r 13 and O 27, r 3, SCB is entitled to a judgment on admission by reason of Wendy’s implied admission to SCB’s claim. In any event, the evidence before the court shows that Wendy is liable to SCB, said Mr Sussex.
4. The real contest in this trial is between SCB and Annie.
5. There was an unusual feature in this trial in that Annie did not give viva voce evidence at the trial after her application to give evidence via VCF, made very shortly before this trial began, was declined by the court (see Decision dated 5 January 2021). Further, despite SCB’s agreement (and the court’s consent) that the evidence of her 2 witnesses be given via VCF, they failed to do so[1]. However, on the 7 January 2021, with 1 working day before trial, Annie filed a Hearsay Notice in respect of the witness statements of herself and her 2 witnesses. The admissibility of the evidence as well their weight are in issue.
Background
6. There is a Statement of Agreed Facts and a List of Issues filed by SCB and Annie pursuant to the directions of the court. In the former, much of the material facts in this case can be found. The latter reflects that the parties are in agreement with most of the issues in this case.
7. The following facts are not in dispute unless otherwise stated. Wendy was first employed by SCB in 1988, and eventually became a senior branch services manager. She was summarily dismissed in June 2017 as a result of her conduct, which is the subject of these proceedings.
8. Annie was and is a customer of SCB, maintaining various HK dollar and US dollar savings and time deposit accounts with it. Annie is from the Mainland and is currently residing in Beijing. However, she had worked in Hong Kong and is a permanent resident of Hong Kong. Annie is well-educated and a sophisticated businessperson. She holds an MBA degree, and was, inter alia, an independent non-executive director of Sing Tao Holdings Ltd (previously a listed company until its delisting in 2020).
9. At the end of May 2017, as a result of another customer’s query about his bank balance, SCB conducted internal investigations (via its Shared Investigative Services (“SIS”)) into activities on customer accounts undertaken by Wendy. In the course of those investigations, SCB discovered details of certain unauthorised transactions and Wendy was interviewed by SIS.
10. Wendy admitted to theft, and told SIS that she had, amongst other things, misappropriated funds from Annie’s accounts. The misappropriations were discovered by Annie, and thereafter, Wendy was pressurized by Annie into making illegitimate payments to her. What Wendy had said to SIS is not disputed, but the truth of such statements is.
11. Although Wendy herself had obtained the benefit of some of the misappropriated funds, the vast majority went to Annie. The funds came from either SCB’s own suspense accounts or from other customer accounts.
12. SCB’s investigations showed that :
(1) Wendy had misappropriated a total of HK$1,920,000 from SCB (including from accounts of its customers) for her own benefit;
(2) Between 6 December 2000 and 4 June 2001, Wendy misappropriated a total of HK$210,000 from Annie’s HKD time deposit account (closed by October 2002) in 7 transactions (“HK$210,000 Misappropriation”);
(3) From 25 July 2011 to 5 August 2016, Wendy made various unauthorized and unlawful transfers (“Unlawful Transfers”) of SCB’s funds (comprising funds in SCB’s own suspense accounts and those of its customers) to and from Annie’s accounts. The net amount of misappropriated funds unlawfully transferred to and for the benefit of Annie totalled US$23,462,000 and HK$3,900,000.
13. Wendy explained to SIS that the Unlawful Transfers were made as a result of blackmail and coercion by Annie, upon the latter’s discovery of the HK$210,000 Misappropriation.
14. In particular, during the interviews with SIS, Wendy disclosed certain messages from her WeChat discussions with Annie and her agent, Mr Ge Yong (“Ge”), in the period February 2016 to August 2016. These messages constituted important evidence in this trial, given the absence of testimony from Annie and Ge.
15. A formal report was made to the police by SCB on 13 June 2017[2], and Wendy was arrested. She was later charged with 8 counts of fraud. She pleaded guilty to all counts and was sentenced to 10 years’ imprisonment on 13 June 2018.
16. The Unlawful Transfers were set out in the Statement of Agreed Facts as follows :
| No. | Date | Amount | Transfer from | Transfer to |
| 1 | 25 July 2011 | US$4,200,000 | Customer account “A” | Annie’s US$ Foreign Currency Account |
| 2 | 30 October 2013 | (US$1,600,000) | Annie’s Second US$ Time Deposit | Customer account “B” |
| 3 | 19 March 2014 | (US$3,800,000) | Annie’s US$ Account | Customer account “B” |
| 4 | 2 September 2014 | US$5,420,000 | Customer account “C” | Annie’s US$ Account |
| 5 | 20 October 2015 | US$92,000 | Customer account “D” | Annie’s US$ Account |
| 6 | 29 February 2016 | US$3,000,000 | Customer account “E” | Annie’s US$ Account |
| 7 | 5 April 2016 | US$6,150,000
(US$6,150,000) | The Bank’s suspense account
Annie’s US$ Account | Annie’s US$ Account
The Bank’s suspense account |
| 8 | 7 April 2016 | US$6,150,000 | The Bank’s suspense account | Annie’s US$ Account |
| 9 | 10 May 2016 | HK$3,900,000 | Customer account “F” | Annie’s HK$ Account |
| 11[3] | 15 July 2016 | US$5,000,138 | The Bank’s suspense account | Annie’s US$ Account |
| 12 | 5 August 2016 | US$4,999,862 | The Bank’s suspense account | Annie’s US$ Account |
17. On 11 May 2016, Annie remitted US$15,900,000 from her SCB USD Account to another account she held with HSBC.
SCB’s witnesses
18. SCB relies on the evidence of (1) Mr Chun Lun Ying, a Senior Investigations Manager of SIS, who dealt with the investigations of these matters; (2) Ms Cheung Chi Ming, a Senior Branch Operation & Service Manager, who gave evidence about the interest rates paid by SBC; (3) Ms Au Yee Hing, who was previously an employee of SCB and Wendy’s superior during July 2008 to January 2012. Her evidence dealt with the roles of Wendy in various positions, the interest rates paid by SCB and some letters relied upon by Annie; and (4) Mr Wong Wai Hin, the head of CEO office, who dealt with the issue of discretionary interest rates.
19. By agreement of Annie, and with the approval of the court, the witness statements of these witnesses were adduced as their evidence-in-chief without them being called to give evidence[4]. Mr Ho, who appeared for Annie with Ms So, had no cross-examination of SCB’s witnesses.
Issues
20. SCB’s case is that Annie and Wendy had conspired to fraudulently misappropriate sums of money from it, for the use and benefit of Annie. In addition, SCB claims against Annie on the basis of (i) unconscionable receipt; (ii) dishonest assistance; and (iii) unjust enrichment.
21. The primary issue here one of fact – whether Annie was in an unlawful joint venture with Wendy. Mr Ho had fairly, and quite rightly, accepted that if the factual issue is determined against Annie, the remainder of the causes of action must follow. The only reservation is that there may be a legal argument over unjust enrichment which may arise in the event that the court is not satisfied that Annie was a party to fraud.
22. There is a Counterclaim by Annie against SCB in respect of the HK$210,000 Misappropriation based on (i) breach of bank mandate and (ii) vicarious liability. The issue is largely one of legal argument.
Annie’s case[5]
23. Annie has been a customer of SCB since 1994. Annie’s case is that by around 1997 there was approximately HK$15 to 20 million in her SCB account(s).
24. Although, due to the passage of time, Annie has not been able to produce any documents (such as bank statements) which show that she maintained such amount with SCB, the available bank’s records are not exhaustive given that pre-September 1995 documents are no longer retained.
25. In 1997, when Annie had HK$15 to 20 million in her account(s) with SCB, she was asked to meet with Wendy at SCB’s Central Head Office. Wendy introduced herself as assistant to the relationship manager. Annie was asked about her plan for the use of the funds, to which she responded that she wanted to use the money to buy a residential property in Hong Kong.
26. In an attempt to stop Annie from withdrawing her money to invest in properties, Wendy offered a Special Interest Rate on Annie’s time deposits with the Bank of 20% p.a. This was said to be an exceptional arrangement for valued customers like Annie.
27. Attracted by the offer, Annie agreed to keep her money with SCB believing that she would enjoy the Special Interest Rate. According to Annie, she received a letter from SCB confirming this arrangement shortly after the meeting, but the letter had been lost.
28. Unbeknown to Annie, starting from 6 December 2000, Wendy began to misappropriate moneys from her HKD Time Deposit account. By June 2001, a total of HK$210,000 had been misappropriated from Annie.
29. Thereafter, on 3 occasions, further misappropriations were made from Annie’s accounts. These were transactions no. 2, 3 and 7 of the Unlawful Transfers (see para 16 above) where moneys were transferred out of Annie’s account.
30. Annie relies on 6 letters allegedly issued by SCB (“Letters”) in support of her case. The 1st Letter was dated 16 February 2011. It purportedly confirmed Annie’s bank account balances as follows :
(1) Fixed deposit balance, US$4,946,328.99;
(2) Current account balance, HK$ 2,530.20;
(3) Savings account balance, US$8,757.12.
31. Upon receipt of that Letter, Annie called Wendy and told her that there might be error in the calculation of the first balance. In response, Wendy said that she would need to check the calculation. Subsequently, Wendy agreed that the balance should be about US$5.9 million. After obtaining her boss’ agreement, Wendy sent to Annie the 2nd Letter with the revised Fixed deposit balance at US$5,946,328.99.
32. After receiving the 2nd Letter, Annie told Wendy that she remained dissatisfied with the returns compared with what she could get from investing in the property market. Despite Annie’s desire to withdraw her money, she was persuaded by Wendy to keep her money in the bank as a safer choice.
33. In around July 2011, with the help of a friend (Ms Yin, one of Annie’s intended witnesses) Annie discovered that the Fixed deposit balance (with the Special Interest Rate) should have been about US$7,160,000 to US$9,540,000 (based on a principal of HK$15 to 20 million over a period of 13.5 years (middle of 1997 to early 2011)). In a telephone conservation, Wendy agreed that the correct balance should be US$7 million.
34. Annie came to Hong Kong from Beijing to meet with Wendy in the Central Head Office of SCB, and informed Wendy she wanted to withdraw her money from SCB to invest in the property market.
35. However, in another attempt to stop Annie from doing so, Wendy offered Annie improved terms on her deposits with SCB, namely, doubling the Special Interest Rate to 40% and on compound basis (“Revised Special Interest Rate”). Such interest would partially compensate for the shortfall that Annie had suffered due to SCB’s erroneous interest calculation. These terms would be applied to the principal of around US$7 million. Relying on these revised terms, Annie was again persuaded to remain with SCB.
36. In about the middle of 2015, Annie again regretted having missed out on the buoyant property market and she was determined to put her money in property. She rang Wendy and informed her of her intention to withdraw all her money. However, Annie was told that due to SCB’s internal procedure it would take some time for the funds to be paid to her. Over time, Annie recognised that Wendy was using excuses to delay the payment. Annie became very frustrated by the situation.
37. In around December 2015, Wendy promised Annie that the Revised Special Interest Rate, calculated on compound basis, would be paid to her by February 2016.
38. Before payment was due, Wendy informed Annie that SCB could only pay US$3 million of the promised Interest. On 29 February 2016, a sum of US$3,000,000 was paid to Annie’s USD Account.
39. By a letter dated 2 March 2016, the 3rd Letter, it was purportedly confirmed that “on 31/03/2016 before 15:00pm of day (sic) will execute the right to credit the USD6,129,203.09 to [Annie’s bank account] for the account interest compensation accordingly”.
40. By a further letter dated 30 March 2016, the 4th Letter, SCB purportedly explained that “Due to the bank quarterly finance settlement restriction the execution will extend to 05 April 2016, We are confirmed and declared that on 05/04/2016 before 15:00pm of day (sic) will execute the right to credit the USD 6,129,203.09 plus USD17,025.56 to [Annie’s bank account] for the account interest compensation accordingly. No further change to be occurs.”
41. On 5 April 2016, a sum of US$6,150,000 was transferred to Annie’s USD Account. However, on 7 April 2016, Annie discovered that the sum of US$6,150,000 had been transferred away. After making enquiries with Wendy, who said that she would call her boss, the sum of US$6,150,000 was credited to Annie’s USD Account again that day.
42. By two letters both dated 29 June 2016, the 5th and 6th Letters, it was purportedly confirmed that “on 16/07/2016 and 30/07/2016 will execute the right to credit the separate of USD5M to [Annie’s bank account] for the account interest compensation accordingly”.
43. On 15 July 2016 and 5 August 2016 respectively, US$5,000,138 and US$4,999,862 were credited to Annie’s USD Account.
44. It was in 2017 when these proceedings were commenced that Annie discovered that Wendy had misappropriated moneys from her HKD Time Deposit account.
Assessment of Annie’s case
45. The basic facts of SCB’s case are uncontested, in particular, the transfer of SCB’s moneys (including moneys held in the accounts of its customers) to Annie. In respect of the misappropriations carried out by Wendy, SCB relies on the hearsay evidence of Wendy’s SIS statements (the weight of which is disputed by Annie). In addition, there are circumstantial evidence which may support SCB’s case and contradict that of Annie’s. Further, there are WeChat messages from Annie and Ge which may corroborate what was said by Wendy.
46. I bear in mind Mr Ho’s submission, based on trite principle, that serious allegations require more compelling evidence to establish, and that inferences of fraud must be properly grounded in the primary facts found (see Re H (Minors) [1996] AC 563, 586 and Nina Kung v Wong Ding Shin (2005) 8 HKCFAR 387, §185).
47. I begin the fact finding exercise by considering the inherent probabilities of Annie’s case. It is trite that inherent probabilities generally provide a reliable barometer on the truth. For the present purpose, I ignore, in favour of Annie, the fact that she had failed to make herself available for cross-examination before the court.
48. Mr Sussex described Annie’s case as completely defies belief. I agree.
49. Firstly, the central pillar of Annie’s case is the allegation of the Special Interest Rate and the subsequent upgrade to the Revised Special Interest Rate. Such interest rates bagger belief. Payment of deposit interest of 20% p.a., let alone 40% at compound rest, by a Hong Kong commercial bank is not something known to this court, and there is no evidence before the court suggesting that such interest was ever paid.
50. As stated in the Statement of Agreed Facts, SCB has not found any record that the Deposits Team (whose approval was required for unusual interest rates) having approved an interest rate of 20% or 40% for Annie’s accounts. Ms Au, whose evidence is not challenged, had never heard of SCB offering 20% or 40% on time deposits. Nor had she ever heard of compound interest paid on the same. Ms Au had worked for SCB for over 40 years (from 1997 to May 2018).
51. When the details in respect of Annie’s accounts are examined, it can be seen that: (a) there was no trace of a deposit of HK$15 to 20 million in 1997; and (b) the interest earned from her fixed deposit was nowhere close to 20% p.a.
52. SCB’s records and the Statement of Agreed Facts show that before July 1996, Annie had 2 accounts: (1) a Master Savings Account and (2) a USD SWAP Deposit Account. They were opened in around September 1994 and closed in July 1996. The latter account was closed earlier in November 1995 with its balance transferred to the former.
53. The bank statements from October 1995 to the time of closure show that the balance in those accounts was below HK$300,000. Indeed, after a withdrawal made in January 1996, the balance remained at a few hundred dollars until closure.
54. It can also be seen from the bank statements that the interest earned from fixed deposits was below 6% p.a. Interestingly, the mortgage interest of SCB was recorded at below 11% p.a.
55. Annie opened another Money Master Account with SCB in May 1997. The bank statements show that the balance in that account in 1997 did not exceed HK$200,000. Most of the funds apparently came from Annie’s salaries at HK$30,000 per month, which were increased from HK$20,000 per month from July 1997.
56. In December 1997, SCB’s mortgage interest stood at 11.25% p.a.
57. In the December 1998 and 1999 statements, the balance stood at respectively HK$37,531 and about HK$7.4 million.
58. In January 2000, Annie had about HK$8 million in her account. It was pointed out by Mr Sussex that, notwithstanding the application of the Special Interest Rate according to Annie, she was only earning 5.875% p.a. interest on her fixed deposit of HK$6.86 million.
59. There was then a gradual build-up of funds in Annie’s account. By May 2000, there was about HK$13.8 million in the account. Mr Sussex submitted that this flatly contradicts Annie’s case that there was HK$15 to 20 million in her account to which the Special Interest Rate applied.
60. The bank statements show that from the end of 2000 Annie’s accounts remained fairly static until July 2011 when the 1st of the Unlawful Transfers was deposited into her account.
61. According to the Statement of Agreed Facts, the available records of SCB showed that Annie’s first time deposit was opened in September 1998. She had a number of such deposits opened and closed until October 2002 when the balance was transferred to open USD time deposits, which were closed by September 2017. All the interest rates paid for such deposits had been set out in the document. The annualised interest paid for HKD and USD fixed deposits ranged receptively from 8.125% to 1.32% and 4.3% to 0.01%.
62. I note that after the payment of the 1st Unlawful Transfer into Annie’s account, she took out a 14-day time deposit of USD6.155 million at the interest rate of 0.02% p.a.
63. I do not believe that the suggestion that there might be other bank records which were no longer available due to the passage of time can provide a viable explanation for Annie’s case. Firstly, it is highly unlikely for a large sum of money to leave no paper trial, eg, one would have expected that the later bank statements would show that at least part of that substantial sum was carried forward.
64. Secondly, Annie stated in her witness statement that the HK$15 to 20 million came from her salaries, bonus(es), profits from property investment and, although she was not very sure, profits from investment in shares. As stated above, there was nothing near the kind of money in question until May 2000. Annie’s salaries in 1997 were relatively modest. There was no sign of any substantial injection of profits into her account.
65. SCB had gone to considerable length to rebut Annie’s case. Her property investments in Hong Kong were set out in the Statement of Agreed Facts. Annie had 3 such transactions. The first property was sold in December 1998 at a loss. The second one, sold in July 2001, was also a loss. The third resulted in a handsome profit, but it was sold in July 2006.
66. In addition to the above analysis, Annie’s story is so full of holes that it is not believable. For instance, the failure to come up with a more concrete figure on the amount she had to which the Special Interest Rate applied, as opposed to a range of HK$15 to 20 million, cannot be taken seriously. Equally, the allegation that the fixed deposit balance should be between USD7.16 to 9.54 million (see para 33 above) defies beliefs. The difference was over USD2 million. Why would Annie agree that it was only USD7 million?
67. I have no difficulty accepting Mr Sussex’s submission that these figures were concoctions advanced to justify the significant sums of money which were paid into Annie’s account.
68. As another example, the suggestion that SCB (one of the note issuing banks in Hong Kong) was unable to meet its payment obligations to Annie in a timely fashion cannot be accepted without solid proof (there is none), and could not be something which a normal customer would accept.
69. Further, the suggestion of compound interest is not a credible one. Apart from being too good to be true, Annie did not even explain at what rest such interest should be calculated.
70. For these reasons, I find Annie’s case inherently improbable.
WeChat messages
71. In summary, according to Wendy’s SIS statements it was Annie who pressurized her into making the Unlawful Transfers. The fraudulent activities began as a result of Annie’s discovery of the HK$210,000 Misappropriation.
72. After such discovery, Annie claimed that her account balance was significantly lower than it should have been. She claimed that Wendy had promised her a high interest rate on her account, and she accused Wendy of stealing from her. Annie threatened to expose Wendy to the Bank and/or the authorities, and also threatened to harm her family members.
73. In fact, Wendy had never promised any such high interest rates to Annie. However, fearing for her job, her safety and that of her family members, Wendy agreed to make the Unlawful Transfers for the benefit of Annie.
74. The WeChat messages between Wendy, Annie and Ge (it is Annie’s case that Ge was acting on her behalf) go a long way to corroborate Wendy’s SIS statements.
75. In those conversations, Wendy informed Annie and Ge that the Unlawful Transfers as requested would be contrary to SCB’s internal controls. Plainly, those transactions were improper. It is difficult to see what legitimate explanation there can be for insisting, on the part of Annie and Ge, on the payments. Further, Annie and Ge were clearly blackmailing and threatening Wendy to make illegitimate transfers to Annie. Evidently, Wendy was tired of the threats and explicitly accused them of blackmailing. However, she wanted to satisfy the last demand of Annie so as to put an end to their relationship. These messages require no elaboration, and I set out some of them below in their original language[6] (it should be noted that Wendy was apparently communicating with both Ge and Annie on the same day) :
Between Ge (“G”) and Wendy (“W”) on 30 July 2016
| W to G at 10:02: | 交易被hold住！内部監察小組發現並調查需要解釋！解釋接受交易可以繼續，解釋不被接受會全部違規事情爆發！這幾天不需要再聯絡我會跟你們聯絡！不需要再威脅敲詐勒索 這樣那樣解決到就走運！解決不到就一起掉進綱中去！ |
| In response to Ge’s suggestion to ask Annie to contact her, W to G at 10:07: | 不需要！二周内交報告交代一切！解釋接受大家走運！看看我們運氣吧！ |
| G to W at 10:30: | 我們已經準備好了全部的渣打銀行的帳單和信件，如果12:00前不到張，我們會直接講這些文件交給監察部門查驗，她已經都聯系好了準備好。聶小姐在要回自己的資金，她是想給你留條路，你不要我也管不了了。 |
| W’s replied: | 要知道你們也在敲詐中！她自己的資金不包括這個數目！你要是留下條路我走，那就二周後交易再繼續吧！
...
|
| W to G at 11:20: | 二周後再付完，一千萬元夠你們一生享受！將事件搞大你覺得銀行會怎樣處理你們手上的錢！冷靜吧我求生路你們求財！各有所需我會用方法解釋一切令到二周後能順利過帳！以後就各走各路吧
|
Between Annie (“A”) and Wendy on 30 July 2016
| W to A at 10:21: | 暫時不需要再多説！我會盡力保住自己和你！解釋接受交易繼續！不被接受就是盡頭了！ |
| A to W at 10:34: | WendyLau…你想咋樣？我全部的資料都準備給你了！到盡頭了是你不是我們、你今天無論怎樣都要把錢給我！！希望你自保自己你有辦法自保的！！你今天無論用什麽方法必須把錢給我一料百料！不然我失去生命也在所不惜受這麽多年的傷害！我一直相信你才落到今天的！！
按你寫的時間今天把錢付了、我們的事一筆勾銷！
|
| W to A at 10:41: | 今天肯定不行他們要求解釋！接受二週後才能再附！
... |
| A to W at 11:25: | wendyLau 事情真的夜長夢多、今天按你的信把錢給我都好辦、今五百萬對你來講我相信你已經準備了我已把你給與不給的路都做了準備 … 你做為銀行的專業人才怎樣都要講誠信、我氣頭上什麽事都有可能！
|
| W to A at 11:31: | Annie, 如果中途不是出現内部查帳就會順利！但是妳知道如果做到我爲什麽不做！我也很知道妳的品性！上次我也是遵守承諾付你錢了！希望我們最後的交易能在二周後順利完成以後就各不相關！ |
| A to W at 11:54: | Wend (sic) 你到今天才講今天不給錢你知到我對你怎樣做怎樣想嗎？我還會信你嗎？趕緊一點前給錢吧！！
你説的兩星期是完全不可以、你知到我等錢度日如年嗎？看着這些年的委屈傷害還能等嗎？你就把錢今天給！！
你對我帳戶這些年的所做所爲還不夠你盡全力把錢今天給嗎？ |
| A to W at 11:59: | ...
我已經把你定位了、你也不知道我的能力在哪！趕緊給我錢都好辦
... |
| W to A at 12:05: | 今日星期六不是工作天！一定要等內部完成查核才可以付！我求生路餘賬一定在15/08前會付妳！我知道妳能力強就麻煩妳給我最後機會吧！ |
76. It is very difficult to see what honest explanation there is in the face of these messages. I am in no doubt that the entitlement of high interest rate was concocted to disguise Annie’s demand for very substantial payments. It reflected a sophisticated as well as devious mind.
77. For completeness, Annie was plainly aware of Wendy’s wrongdoings in respect of her account (see A to W at 10:34 and 11:54). This flatly contradicts Annie’s case that she only knew in June 2017 when these proceedings were commenced (see para 11(2) of Annie’s Defence).
Other matters
78. In respect of Mr Ho’s submissions on inconsistencies in Wendy’s SIS statements in terms of, eg, the timing of events (see also paras 92 to 97 below). These inconsistencies are to be expected for someone having to recall events which took place some time ago and under the pressure of investigation. I do not believe that they detract from the weight of the evidence, especially in light of the WeChat messages from Annie and Ge.
79. Mr Ho submitted that the reference in Wendy’s SIS statement to Annie having HK$10 million in her fix-deposit account in 1997 supports Annie’s case[7] :
“Actually, I knew Mr. (sic) Nie since 1997 when she opened a HKD fix-deposit account with the Bank. I recalled the amount was about HKD 10M. One to two years later, upon her request, the HKD deposit was exchanged to USD deposit (about USD 1.3M). I told her that the Bank would offer her the best rate.”
80. I am unable to agree with Mr Ho. The bank statements show that Annie did not have HK$10 million in 1997. She only had that kind of money in February 2000. The record shows that she had a 1-month time deposit of HK$10 million from 14 February to 14 March 2000 at 5.125% p.a. On 16 October 2002, Annie’s HKD time deposit (growth to nearly HK$15 million) was converted to a USD1.924 million 1-month time deposit at 1.25% p.a.
81. In light of the bank records, it is highly likely that Wendy was referring to the situation of 2000 when Annie had HK$10 million. The reference to 1997 was the time when Wendy got to know Annie.
82. Despite the hearsay nature of Wendy’s SIS statements, I believe that they are certainly reliable in respect of Annie’s involvements, and deserve weight as a piece of evidence. I bear in mind Mr Ho’s submission that Wendy might have a motive to shift the blame away from herself. However, apart from the corroboration by the WeChat messages, a critical objective fact is that most of the stolen money had gone to Annie. This is compelling and further corroboration of what Wendy said.
83. In respect of transactions no. 2, 3 and 7 of the Unlawful Transfers, which went out of Annie’s account, the obvious inference is that they were done to make up for money unlawfully taken from other accounts. Hence, they were transferred out of Annie’s account to that of Customer B and SCB’s suspense account. Indeed, transaction no. 3 was so explained in Wendy’s 2nd SIS statement (see para 30(iii) of the Statement of Agreed Facts).
84. It should be noted that, after the transfer out of USD5.4 million to Customer B by way of transactions no. 2 and 4 in respectively October 2013 and March 2014, by transaction no. 5 in September 2014, the sum of USD5.42 million went back to Annie’s account from Customer C.
85. Finally, I am unable to accept the criticism that SCB should have applied for a Body Order to enable Wendy to give evidence in court. Annie could equally have applied for such an Order to secure the attendance of Wendy for cross-examination pursuant to s 48 of the Evidence Ordinance, Cap 8 and O 38, r 21.
The Letters
86. Despite the lack of challenge over the authenticity of the Letters, I have little doubt that they were produced by Wendy under pressure from Annie and/or Ge. In all probabilities, Annie demanded those Letters to cover her tracks (the 1st and 2nd Letters stated that they were furnished at Annie’s request).
87. Firstly, in respect of the persons who purportedly signed the 1st and the 2nd Letters (both dated February 2011), namely, Ms Miranda Lam and Mr Jackson Lee Tak Sing, SCB’s uncontested evidence is that Ms Au, who was the line manager for Wendy from July 2008 to January 2012: (a) had no recollection of anyone named Miranda Lam at the branch; and (b) there was a staff named Jackson Lee but his Chinese name was not Tak Sing, and he worked in a different department serving corporate customers.
88. Further, Ms Au never heard of the job title “Senior Branch Manager” purportedly attributed to both Miranda Lam and Jackson Lee in the Letters. Furthermore, the endorsement chops found in the Letters was once used for cheque purchases and had not been used for a very long period of time.
89. Secondly, all of the Letters were poorly written. The quality of the Letters was not consistent with those expected from a well-established international bank.
90. Thirdly, the 3rd to 6th Letters were signed by Wendy as a Senior Associate Director. She never held such position in SCB.
91. Fourthly, it can be seen from the WeChat exchanges between Ge and Wendy that one of the Letters was sent to former by the latter upon request on 30 March 2016 at 14:58. It was probably the 4th Letter which was dated 30 March 2016.
92. Finally, in respect of the 1st and 2nd Letters, the fact that Annie asked for a bank reference regarding her balances is baffling. I am unable to accept the submission that it was an assurance by Wendy about the balance of Annie’s funds. Normally, one sees that in the bank statements. Those Letters are more consistent with a request by Annie for something to cover her tracks.
93. Mr Ho made a point about the inconsistency in SCB’s case, based on Wendy’s SIS statement, that Annie’s threats began in 2014 but the 1st of the Unlawful Transfers was made in July 2011. I believe that it was a matter of faulty recollection on Wendy’s part.
94. The 1st and 2nd Letters were both dated 16 February 2011. Coupled with the fact that the 1st Unlawful Transfer was credited into Annie’s account on 25 July 2011, the probabilities are that the threats had started at around that time and before the 1st Unlawful Transfer took place.
95. This analysis is supported by the simple fact that there was no legitimate reason for Annie to have received a very large sum of money in July 2011 (USD4.2 million). The 2 Letters dated 16 February 2011 stated that there was US$4,946,328.99 or US$5,946,328.99 held by Annie in fixed deposit. Those figures were flatly contradicted by the bank statements in February and March 2011, showing that there was only US$1,946,328.99 deposited with interest at 0.01% p.a.
96. Annie’s explanation about the Letters is hopelessly vague (see paras 30-32 above). Why would she be entitled to an additional USD3 million (on the 1st Letter) and why would the deficiency in interest calculation be exactly USD1 million? These were significant sums of money paid by an international bank to its customer. There is no proper attempt by Annie to set out the calculations for the interest payments to which she is said to be entitled, nor why the interest payments were made without any pattern or regularity. Annie’s story holds no water.
97. It is consistent with the Wendy’s version of events, and likely to be true, that Annie blackmailed her into paying a substantial sum of money to keep quiet about the HK$210,000 Misappropriation. Most probably, Annie was dissatisfied with USD3 million and asked for more. Hence, the 2nd Letter and the 1st Unlawful Transfer of USD4.2 million.
98. Also, I am unable to accept the submission that the 1st Letter was produced by Wendy to assure Annie about the Special Interest Rate. Why was there not a certificate of fix-deposit which was usually issued by banks or a bank statement setting out the amount of deposit, the duration of the deposit and the interest payable? Why was the alleged fix-deposit not reflected in any of the bank statements issued to Annie? Why did Annie accept the alleged assurance when neither of the Letters stated the Special Interest Rate? There is no answer to these obvious questions.
Rejection of Annie’s case
99. For these reasons, I have no doubt in rejecting Annie’s case as unbelievable. I find that she was, at all material times, acting with dishonesty and was in an unlawful conspiracy with Wendy to defraud SCB for her own gain.
100. Out of deference to Mr Sussex and Mr Ng, I should say that there are many other valid criticisms of the Annie’s case which had been set out in their written submissions. With respect, it is unnecessary to deal with each and every point in these matters.
Annie’s Hearsay Notice
101. The starting point is that generally cases are to be proved by oral evidence and in open court: O 38, r 1. By virtue of O 38, r 2A(6): “Subject to paragraph (9), where the party serving a statement under this rule does not call the witness to whose evidence it relates, no other party may put the statement in evidence at the trial”. Pursuant to O 38, r 2A(7)(a), generally only where a witness is called, the court may direct that his statement shall stand as evidence-in-chief.
102. In para 15 of the PTR order, this court had made a direction which reflected the above rules: “… for the witnesses who will attend the trial for the purpose of cross-examination, their witness statements contained in the hearing bundles shall stand as their evidence-in-chief”.
103. In Lily Cheung v Cheung Wai Kwok [2014] 6 HKC 155, at §§55-56, it was held that: “Order 38, r 2A(6) is easy to understand. It is no excuse if the party does not call or ensure that the witness could be called at the trial. Nor is it excuse that the witness does not or refuses to testify for personal reasons”.
104. Whilst these rules are subject to the Evidence Ordinance, Cap 8 (“Ordinance”) (see O 38, r 2A(9)), SCB objects to any reliance on the hearsay statements in question, and contends that their exclusion would not be prejudicial to the interests of justice: s 47(1) of the Ordinance. SCB contends in the alternative that no weight should be placed on such hearsay evidence in accordance with the guidelines in s 49.
105. It was submitted by Mr Sussex that hearsay statements should not be adduced so as to deprive the other party of the right to cross-examination, and the hearsay evidence ought to be excluded: High Fashion Garments Co Ltd v Ng Siu Tong [2004] 1 HKLRD 928, at §§12-16; Cheung Wei Man Vivien v Centaline Property Agency Ltd [2004] 1 HKC 692, at §§10-12.
106. In the case of Annie’s 2 witnesses. I can see no reasonable ground for the admission of their statements. They were given the opportunity to give evidence via VCF. There is no evidence before the court to explain why they were blowing hot and cold. The excuse stated in correspondence is unacceptable. I exclude those statements as inadmissible. Such exclusion would not be prejudicial to the interests of justice.
107. Annie had chosen not to attend this trial to give evidence. This court had declined to accept her alleged health concern as genuine reason not to testify at this trial. There is thus no valid reason for Annie’s failure to testify at the trial[8]. Apart from the fact that admitting Annie’s statement would nullify the court’s direction that she should attend the trial for cross-examination, it also flies in the face of the court’s Decision not to accede to her application to give evidence via VCF. It is therefore wrong in principle to allow the admission of the statement.
108. In any case, Annie’s evidence has been considered and found to be unbelievable. No weight can be placed on her witness statement as hearsay evidence. For completeness, I agree with Mr Sussex that, on the question of weight, Annie’s statement is not contemporaneous, and no doubt was produced with the involvement of lawyers. These factors also militate against the weight of the evidence: see s 49 of the Ordinance.
109. I therefore decline to admit Annie’s statement, which I find to deserve no weight in any case. The exclusion of Annie’s statement would not be prejudicial to the interests of justice.
Conclusions on SCB’s claim
110. I agree that SCB is entitled to judgment on admissions against Wendy. I also agree that, on the evidence before the court (eg, Wendy’s admissions in her SIS statements), a clear case has been established that Wendy had stolen from SCB. I find each of the causes of action advanced by SCB proven against Wendy.
111. Given my finding of dishonesty against Annie, I am also satisfied that each of SCB’s causes of action has been proven against her. The legal issues concerning (a) the threshold of unconscionablility for knowing receipt (see Snell’s Equity, 34th edn, [30-071]) and (b) for unjust enrichment, Wendy’s apparent authority to bind SCB on the alleged offers of Special Interest Rate and Revised Special Interest Rate (see Criterion Properties plc v Stratford UK Properties LLC [2004] 1 WLR 1846, §4) do not arise for consideration because there is no factual basis for any dispute by Annie.
Counterclaim
112. Annie counterclaims against SCB in respect of the HK$210,000 Misappropriation on 2 bases.
113. First, she claims against SCB for breach of its mandate. By reason of the bank-customer relationship, SCB owed a duty to take care of funds in Annie’s bank accounts, and not debit her bank accounts without her knowledge, authority or consent. For instance, under Clause 8.1 of the Conditions for Accounts: “Unless otherwise agreed in writing by the Bank, the Bank shall act only in accordance with the instructions of the Customer. …”.
114. The 7 wrongful debits from Annie’s accounts which constituted the HK$210,000 Misappropriation are not in dispute, and Annie had suffered loss in the amount of the Misappropriation.
115. Second, Annie also claims against SCB based on the principle of vicarious liability. Wendy was SCB’s employee at all material times. It was held in Zhang Hong Li v DBS Bank (HK) Ltd[2018] HKCA 435 at §48, per P Cheung JA, that :
(1) An employer will be vicariously liable for the acts of its employees, whose knowledge will be imputed to him, applying the “close connection” test, namely, “whether the employee’s wrongdoing was so closely connected with his employment that it would be fair and just to hold his employer vicariously liable”;
(2) Similarly, a principal who creates an agency in which there is a risk of misconduct by the agent must expect to bear responsibility, where that risk eventuates, and loss is therefore caused by the agent to a third party.
116. I accept Mr Ho’s submission that Wendy’s wrongdoings in question were closely connected to her employment as SCB’s staff who liaised with Annie, one of its customers. Further or alternatively, SCB created an agency in which there was a risk of misconduct by Wendy, in that she was in a position to misappropriate from customers’ accounts (as she did). Given that the risk eventuated, this loss is recoverable against SCB as the principal.
117. I therefore uphold the Counterclaim against both SCB and Wendy.
Dispositions
118. In favour of SCB, I grant the relief sought in Annex I of Mr Sussex’s Closing Submissions under paras 1 to 3 and 5 to 7. In respect of interest on the damages and equitable compensation, I make an order nisi at the rate of prime plus 1% from the date of the writ until judgment and thereafter at judgment rate(s) until payment. Any variation application of the order nisi is to be made within 14 days from today.
119. SCB is to have the costs of the action against both Wendy and Annie. The injunction order dated 21 June 2017, with all the exceptions deleted, is to continue until further order.
120. Annie is entitled to judgment pursuant to the Counterclaim in the sum of HK$210,000 against Wendy and SCB. I make an order nisi for (a) interest on the judgment sum at prime plus 1% from the date of the Counterclaim until judgment and thereafter at judgment rate(s) until payment and (b) costs of the Counterclaim be to Annie with a certificate for 2 counsel. Wendy and SCB are jointly and severally liable for the foregoing relief. Any variation application of the order nisi is to be made within 14 days from today.
121. Last but not least, I am grateful to all counsel for their assistance.
| | (Anthony Chan) |
| | Judge of the Court of First Instance
High Court |
Mr Charles Sussex SC and Mr Tom Ng, instructed by Clifford Chance, for the Plaintiff
The 1st Defendant was not represented and did not appear.
Mr Martin Ho and Ms Natalie So, instructed by Oldham, Li & Nie, for the 2nd Defendant
Annex I
Between Ge (“G”) and Wendy (“W”) on 30 July 2016
|
| W to G at 10:02: | The transaction has been held up! The internal monitoring team has discovered and investigated it and require an explanation! If the explanation is accepted then the transaction can proceed, explanation not accepted then all non-complying incidents will be exposed! No need to contact me for the next few days, I will contact you! No need to threaten, extort or blackmail this and that – it will be lucky if this can be resolved! If this cannot be resolved, then will fall into the net (one wrong character) together! |
| In response to Ge’s suggestion to ask Annie to contact her, W to G at 10:07: | No need! Submission of report within two weeks to explain everything! If the explanation is accepted then we are lucky! Let’s try our luck! |
| G to W at 10:30: | We have got ready all statements and letters from SCB. If the money doesn’t arrive before 12 o’clock, we will give all of these documents to the regulatory department for their inspection and examination. She has already made contacts and is ready. Ms Nie just wants her money back, she does want to give you a way out, but if you don’t want it there is nothing I can do. |
| W’s replied: | You should know that you are also blackmailing! Her own funds do not cover this amount! If you leave a way out for me, then let’s continue with the transaction two weeks later!
... |
| W to G at 11:20: | Pay further in 2 weeks, 10 million is sufficient for you people to enjoy for a lifetime! If the matter is escalated how do you think the bank will handle the money you have! Calm down please I want a way out and you people want money! We have our respective needs, I will use my way to explain everything and make sure that the funds will be transferred smoothly in two weeks! We will go our separate ways from then on! |
Between Annie (“A”) and Wendy on 30 July 2016
|
| W to A at 10:21: | There is no need to say anything more for the time being! I will try my best to protect myself and you! If the explanation is accepted the transaction continues! If it is not accepted, then this is the end! |
| A to W at 10:34: | Wendy Lau … What do you want? I already have all the information ready for you! You are the one facing the end and not us, you must give me the money today no matter what! I hope you can protect yourself, you have your ways to protect yourself! You must give me the money today using whatever method possible once and for all! Otherwise I don’t care if I lose my life as I have been hurt for so many years! I am in the situation I am in today because I have trusted you all along!
Make the payment today according to the time you wrote, and we can write off what’s between us! |
| W to A at 10:41: | Definitely can’t make it today, they require an explanation! Accept then payment be made again after two weeks!
... |
| A to W at 11:25: | Wendy Lau a long delay in the matter really brings trouble, pay me today according to your letter and that would be good, I believe you already have the 5 million ready today and whether you pay or not pay me, I have prepared for both situations accordingly … you as a banking professional need to have integrity, everything is possible if my anger rises up to my head! |
| W to A at 11:31: | Annie, this would have been smooth if there was no internal audit in the middle of the process! But you know if it could have been done why I did not do it! I also know your character very well! I paid you last time as promised! I hope our final transaction can be completed smoothly in two weeks and we will have nothing to do with each other afterwards! |
| A to W at 11:54: | Wend (sic) you have only waited until today to tell me that you will not pay me – do you know how I think on your doing this? Do you think I will still trust you? Hurry up and pay me before 1 o’clock!
The two weeks you mentioned is not acceptable at all, do you know that in waiting for the money, time hangs heavy? How can I wait, looking at the grievances and damage over all these years? You pay today!!
Is it not worth you trying all your best to pay today after all that you have done to my account all these years? |
| A to W at 11:59: | ...
I have already located you, you don’t even know what I am capable of! Pay me as soon as possible and everything will be easier to handle.
... |
| W to A at 12:05: | Today is a Saturday and not a working day! The payment can only be made after the internal audit is completed! I just want a way out I will definitely pay you the remaining balance before 15/08! I know you are powerful just give me the last chance please! |
[1] There was no evidence explaining why they had refused to give evidence via the medium they had chosen. In a letter of Annie’s solicitors written to the court informing it of the situation, it was stated that the witnesses refused to testify “knowing that [Annie] would not be giving evidence herself”.
[2] There was an initial notification to the police on the previous day.
[3] To be consistent with the Re-Amended Statement of Claim dated 15 September 2020.
[4] They were all available and ready to give evidence.
[5] Based largely on her witness statement.
[6] The agreed transaction can be found in Annexure I attached to this judgment.
[7] Core Bundle/ tab 2/ p 19, §5
[8] Annie’s reason for not giving evidence is only known to herself. However, Mr Sussex’s suggestion that she does not want to run the risk of police investigation over these matters is not without substance given that: (a) Annie has not been investigated; (b) she has not set foot in Hong Kong since the uncovering of these matters; and (c) the evidence against her.