YEUNG SIU YUNG v. FAN PUI WAN, MARGARET AND OTHERS

HCA 1211/2018

[2025] HKCFI 2525

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1211 OF 2018

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BETWEEN

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J U D G M E N T

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INTRODUCTION

1.  Madam Yeung Siu Yung’s (“P”) was a victim of an elaborated and sustained fraud scheme perpetuated by the defendants (“Ds”).

2.  She brought this claim against Ds principally for their conspiracy to defraud and injure her by unlawful means.

3.  P was a vulnerable retired divorcee of around 70 years old who, in reliance of fraudulent misrepresentation and/or deceit perpetrated by Ds, made numerous remittances of a total sum of HK$71,867,411.35 to various parties between July 2014 and October 2017 for purported investments and returns which turned out to be bogus.

4.  P also claims against the 1^st defendant Margaret Fan Pui Wan (范佩韻) (“D1”) for breach of fiduciary duty, and against the 3^rd, 4^th, 5^th, 6^th and 7^th defendants (“D3”, “D4”, “D5”, “D6” and “D7” respectively) for unjust enrichment.

5.  It is clear that D1 was the mastermind behind the whole fraudulent scheme with the assistance from D2 who was her husband; D3 who was her personal assistant; and D8 who was her former lover. D4, D6 and D7 were D1’s corporate vehicles to effect receipt and dissipation of the fraud proceeds.

6.  As can be seen from this judgment, what Ds did to P was wicked, despicable and callous.

7.  By the time of the trial, only D3 was willing to face the music and appeared at the hearing. D1 who was legally represented until one week before the trial filed a notice to act in person on 5 November 2024. She simply disappeared and never turned up at the trial. D2 and D8 also never appeared and had vanished long time ago.

8.  A criminal trial arising out of the same fraudulent scheme perpetuated against P took place in the High Court under HCCC 142/2023 before a judge and jury in February 2025. Both D1 and D3, together with another person, were the defendants in the criminal case. D1 had absconded and did not appear at the criminal trial. The trial judge issued an arrest warrant against her and her bail money was confiscated by the Court.

9.  At the end of the criminal trial, D3 was convicted of offences relating to money laundering and was sentenced to 20 months of imprisonment.

10.  D3 who was not legally represented in the present proceedings gave evidence. As did P and her daughter Ms Wong Nga Ching Cindy (“Ms Wong”). They were the only witnesses who testified at the trial.

11.  P’s case has been very carefully summarized and analyzed by Mr Mike Yeung, P’s counsel in this case, in both P’s opening and closing submissions. Where appropriate, I shall respectfully adopt the contents of those submissions in this judgment.

12.  Further, given the fact that the evidence presented by P in this case, including the contents of P and Ms Wong’s witness statements which they have adopted as evidence-in-chief when they gave evidence, are not challenged by D3, I shall accept them as proven in this case. Unless otherwise stated, I would also disregard any documentary evidence, witness statements or written submissions filed or lodged by D1, D2 or D8 prior to the trial in this case as they have not turned up in Court to try to prove their case.

BACKGROUND

Procedural History

13.  P commenced the present proceedings in May 2018 and obtained interlocutory injunction against Ds. P now seeks recovery from Ds, jointly and severally, of a total sum of HK$66,013,631.35[1], having taken into account setoff of a total sum of HK$5,853,780 which P has so far received from D4[2].

14.  P has obtained default judgments against D5, D6, D7 and D8. However, as Mr Yeung has submitted, these could hardly be any recourse or comfort to P because:

(a) The sole shareholder and director of D5, being D8, has fled and disappeared.

(b) D6, a BVI company whose directing mind at all material times was D1, had zero bank account balance in as early as December 2015.

(c) D7, a Hong Kong company whose directing mind at all material times was D1, had an account balance of US$8.15 as at the end of February 2018.

(d) D8 has fled and disappeared, and in any event his bank account had a balance of less than HK$50,000 as at July 2018.

15.  The trial therefore only concerned D1 to D4. Both the notice of trial and the PTR dated 1 March 2023 had been served on them.

16.  D4 was at all material times a Hong Kong company whose sole director and 96% shareholder was D1, but was unrepresented after the following sequence of events:-

(a) D4 and D1 were initially represented by the same legal team. Defence of D1 and D4 was filed on 20 December 2019.

(b) D4 had been struck off the Companies Register on 31 January 2020 and dissolved on the publication of relevant notice.

(c) P discovered D4’s striking-off in around March 2020. She proceeded to apply to restore D4 in May 2020 with a view to continuing to obtain judgment against D4 and trace the monies through D4’s accounts. D1 knew and opposed to the restoration application. P obtained judgment and D4 was ordered to be restored on 23 December 2020.

(d) The then legal team for D1 and D4 ceased to act for D1 and D4 on 5 August 2021 and 17 September 2021 respectively. D1’s later legal team filed notice to act for (only) D1 on 25 January 2022. Nothing suggests that D1 has resigned as the sole director of D4. There is no application for leave for D4 to be represented by D1. D4 is not represented.

17.  By the time of the trial, D1, D2 and D3 were all acting in person. However, they had all along been legally represented at different stages of the proceedings:-

(a) In D1’s case, as mentioned, up to the week before the commencement of the trial when she filed a notice to act in person.

(b) D2 had been legally represented and his defence was filed by his legal representative on 11 September 2018. He ceased to be legally represented and began to act in person as from 1 September 2021.

(c) D3 similarly had been legally represented and his defence was filed by his legal representative on 11 January 2019. He ceased to be legally represented and began to act in person as from 8 January 2024.

18.  D2, who participated in the action and had proper notice of the PTR and trial date, was absent at the PTR on 24 July 2024. In his absence, Hon Ng J ordered that the trial do proceed as scheduled (“the PTR Order”).

19.  P confirms that the trial bundles have been served on D1 to D4 in accordance with §3 of the PTR Order. P sent her version of the dramatis personae (in both Chinese and English), chronology of events and list of issues to D1, D2, D3 and D4 for agreement but have not heard from any of them. P therefore filed and served her version in accordance with §4 of the PTR Order.

Factual Background

20.  P was at the material times a lonely and gullible lady of around 70 years old. She was retired and divorced and living alone in Hong Kong. She was born and only educated up to Form 5 in Mainland China. Her English was only up to elementary level and therefore had limited English capability. Neither did she have any knowledge of any investment product in the financial or capital market. P’s limited English capability was in fact corroborated by D2 who had met with P on a couple of occasions.

21.  D1 was a lady who appeared to P to be in her thirties or forties at the time when they first met in 2014[3]. It was only discovered by P much later that D1 in fact was a repeated offender of dishonesty-related crimes. She was convicted of “using false instrument” in 2009 and was at the material time in around 2016 subject to another prosecution of “fraud/using copies of false instrument”.

22.  According to P, she met D1 when she presented herself as an experienced figure in the financial services industry in May 2014 who offered P assistance in making investments. D1 quickly won over P’s trust to the level of the capacity of a fiduciary, and they soon developed a close relationship to the extent that D1 would call P “godmother” (契媽). To this end, D3 confirmed that he “was aware that [D1] addressed to [P] as “godmother” (契媽)’’.

23.  D2 was D1’s husband. According to P, she first met D2 in around late 2016/early 2017, and her understanding from D1 at that meeting was that D2 already knew much about P’s background and the purported investments emerging from D1. In fact, when D2 was arrested by police in around December 2017 for the fraud reported by P, he admitted under caution that he knew D1 had purported dealings with P.

24.  D3 was the secretary and/or personal assistant of D1, and was the company secretary of D4 and D7. He was one of the persons arrested by the police in around December 2017 for the fraud reported by P. Under caution, he admitted he knew that D1 introduced investment plans to P and that D1 would use P’s proceeds to pay for D1’s legal fees, personal monthly insurance and repayment to debtors.

25.  D4 was at all material times a Hong Kong company controlled and directed by D1. On top of D4, D1 was also the directing mind of D6 and D7. D4, D6 and D7 were recipients of many of the remittances made by P in reliance of the fraudulent misrepresentation and/or deceit.

DISCUSSION

P’s Case

26.  In essence, P’s case is that:

(a) D1 made, and procured her co-conspirators to make, false representations on bogus transactions to defraud P since around May 2014.

(b) At the early stage, D1 did the bulk of the false representations.

(c) In around August 2017, D1 was convicted of “fraud/using copies of false instrument” and imprisoned, yet the fraud did not stop there. D1, D2 and D3 on one or more occasions falsely represented to P that she was sick and hospitalised so as to continue to defraud P. D2 and D3 also repeated the false representations that had been made by D1 to P to try and keep P in the dark from the fraud. Further, D2 and D3 took over D1’s role to knowingly make false representations on bogus transactions to defraud P.

(d) When D3 was arrested, he admitted under caution that he had delivered letter from D1 to P and had helped D1 to control D4’s bank account while D1 was serving custodial sentence.

(e) In reliance of the fraudulent misrepresentation and/or deceit, P remitted a total sum of HK$71,969,689.35 to various parties between July 2014 and October 2017. Of such sum, approximately HK$67.8 million went to D4, D6 and D7.

(f) D2 and D3 both received various sums of monies from at least D4.

(g) Hence, D1 to D4 were beneficiaries of the conspiracy.

27.  Based on the documents produced by P at trial (which was helpfully summarised in table form by Mr Yeung in his opening), it can be seen that P made the following remittances/payments:

Item	Date of payment/ remittance	Recipient/ Beneficiary	Amount	Supporting document
1.	2014.07.30	Dragon Force Travel Limited (a travel agent) (HSBC account no. 400-1726822-001)	HK$81,671	Transaction advice [9/123/2103]
2.	2014.07.30	D5 (HSBC account no. 817-354343-838) (“D5 HSBC Account”)	US$20,000	Remittance application form [2/42/428]
3.	2014.07.31 – 2014.08.07	Rosewood London Hotel (by credit card payment)	GBP9,862.28 (equivalent to around HK$128,209.64 at a rate of GBP1 = HK$13 as at 11 August 2014)	Rosewood invoice [9/126/2108-2116]
4.	2014.08.08	D4 (BOC account no. 012-676-1-021842-9) (“D4 BOC Account”)	HK$388,000 (equivalent to US$50,000)	Cheque deposit slip [2/43/429-431]; bank statement [8/115/1850]
5.	2014.08.09	Bliss Group Limited (account no. 642-047518-838A)	US$27,000	Handwritten record [9/123/2103]
6.	2014.09.01	D4 (D4 BOC Account)	HK$388,000 (equivalent to US$50,000)	Cheque deposit slip [2/44/432-434]; bank statement [8/115/1851]
7.	2014.09.15	D6 (HSBC account no. 048-895973-001) (“D6 HSBC Account”)	US$1,000,000	TT transfer form [2/47/440]
8.	2014.10.27	D6 (D6 HSBC Account)	US$1,000,000	TT transfer form and withdrawal form [2/45, 49/435, 442]
9.	2015.01.26	D4 (BOC fx account no. 012-676-9-216-309-5) (“D4 BOC FX Account”)	US$1,500,000	Cashier order purchase form [2/50/443]; bank statement [8/115/1930]
10.	2015.05.06	D4 (D4 BOC FX Account)	US$1,500,000	Cashier order [2/51/444]; bank statement [8/115/1932]
11.	2015.10.07	D4	HK$12,779	Cashier order [2/52/445]
12.	2015.10.07	D4 (D4 FX BOC Account)	US$840,770.02	Cashier order [2/53/446] ; bank statement [8/115/1933]
13.	2016.01.18	D5 (D5 HSBC Account)	US$212,188	Withdrawal form [2/54/447]; bank statement [3/86/683]
14.	2016.04.28	D7 (BOC Account no. 012-676-219040-0) (“D7 BOC Account”)	US$500,000	Cashier order purchase form [2/55, 57/448, 450]
15.	2016.11.23	D4 (D4 BOC FX Account)	US$500,000	Cashier order [2/58/451]; bank statement [8/115/1939]
16.	2016.12.16	D5 (D5 HSBC Account)	US$60,000	Bank statement [3/86/719]
17.	2016.12.16	D4 (D4 BOC FX Account)	US$340,000	Cashier order [2/59, 60/452, 453]; bank statement [8/115/1941]
18.	2017.03.15	D4 (D4 BOC FX Account)	US$300,000	Transaction record [8/115/1942]; bank statement [8/115/1942]
19.	2017.04.26	HKSAR	HK$500,000	Cashier order [2/61/454] (cancelled by HKSAR later: see SOC §71 [1/2/35])
20.	2017.04.26	Messrs. ST Cheng	HK$600,000	Cashier order [2/62/455]
21.	2017.06.12	D4 (D4 BOC FX Account)	US$300,000	Cashier order purchase form [2/63, 64/456, 457]; bank statement [8/115/1943]
22.	2017.06.29	D4 (D4 BOC FX Account)	US$400,000	Cashier order purchase form [2/65/458]; bank statement [8/115/1944]
23.	2017.08.01	D4 (D4 BOC Account)	HK$1,000,000	Cashier order purchase form [2/66/459]; bank statement [8/115/1825]
24.	2017.08.01	Messrs. ST Cheng	HK$500,000	Cashier order [2/67/460]
25.	2017.08.21	D4 (D4 BOC Account)	HK$1,300,000	Cashier order [2/68/461]; bank statement [8/115/1826]
26.	2017.10.07	D4 (D4 BOC Account)	HK$500,000	Cashier order [2/69/463]; bank statement [8/115/1828]
27.	2017.10.07	Messrs. ST Cheng	HK$150,000	Cashier order [2/70/462]

28.  Mr Yeung has further summarised from the above to show in the table below the remittances/payments made by the recipients/beneficiaries:

Recipient/ Beneficiary		Total Amount Received from P
Ds -
D4	D4 BOC Account	HK$3,576,000	HK$3,588,779 & US$5,680,770.02
	Unknown account	HK$12,779
	D4 BOC FX Account	US$5,680,770.02
D5 - D5 HSBC Account		US$292,188
D6 – D6 HSBC Account		US$2,000,000
D7 – D7 BOC Account		US$500,000
Other parties -
Dragon Force Travel Limited (a travel agent) (HSBC account no. 400-1726822-001)		HK$81,671
Rosewood London Hotel		GBP9,862.28 (equivalent to around HK$128,209.64 at a rate of GBP1 = HK$13 as at 11 August 2014)
Bliss Group Limited (account no. 642-047518-838A)		US$27,000
Messrs. ST Cheng		HK$1,250,000

29.  Given D2’s admission under caution upon arrest that D1 would use P’s proceeds to pay for D1’s legal fees[4] and in view of the fact that D1’s criminal trial of “fraud/using copies of false instrument” was conducted in January to May 2017[5], it is quite clear that the payments/remittances to Messrs ST Cheng represented D1’s legal costs arising from her criminal case.

30.  As Mr Yeung has set out in the opening, the payments/remittances were made on the back of the following (mis)representations as pleaded in the statement of claim (“SOC”):

Date of payment/ remittance induced	Amount of payment/ remittance	(Mis)representations inducing the payment/ remittance	Date of representation
2014.07.30	HK$81,671 to Dragon Force Travel Limited[6]	D1’s investment background (“the Investment Background Representation”)[7] Existence of an investment product “Private Placement Program” (“the PPP Representation”)[8] D1’s single parent family background (“the Family Background Representation”)[9] D5 and D8 being Hong Kong law firm and solicitor (“the HK Solicitor Representation”)[10] Invitation to P to participate in the “Private Placement Program” in UK (“the Substituted UK PPP Representation”)[11]	2014.05 2014.05 2014.06 2014.07 2014.07
2014.07.30	US$20,000 to D5[12]
2014.07.31 – 2014.08.07	GBP9,862.28 to Rosewood London Hotel[13]
2014.08.08	HK$388,000 (equivalent to US$50,000) to D4[14]	The Investment Background Representation The PPP Representation The Family Background Representation The HK Solicitor Representation The Substituted UK PPP Representation Existence of opportunity to invest in European projects (“the European Projects Investment Opportunity Representation”)[15] D4 being a “trader” participating in a number of investments (“the D4 Trader Representation”)[16]	2014.05 2014.05 2014.06 2014.07 2014.07 2014.07/08 2014.07/08
2014.08.09	US$27,000 to Bliss Group Limited[17]
2014.09.01	HK$388,000 (equivalent to US$50,000) to D4[18]
2014.09.15	US$1,000,000 to D6[19]	The Investment Background Representation The Family Background Representation The HK Solicitor Representation Existence of opportunity to invest in another product (“the JV Investment Opportunity Representation”)[20] D1 having opened a joint account with P (“the Joint Account Representation”)[21] D1 having deposited US$25m into the joint account (“the Deposit and Transfer Representation”)[22] D6 being a “trader” participating in the investment (“the D6 Trader Representation”)[23]	2014.05 2014.06 2014.07 2014.09 2014.10 2014.10 2014.10
2014.10.27	US$1,000,000 to D6[24]
2015.01.26	US$1,500,000 to D4[25]	The Investment Background Representation The Family Background Representation Existence of opportunity to make another investment of US$1.5m in which D4 was a foreign “trader” (“the Further Investment Representation”)[26]	2014.05 2014.06 2015.01
2015.05.06	US$1,500,000 to D4[27]	The Investment Background Representation The Family Background Representation D4 being a participant in the “Private Placement Program” (“the D4 PPP Trader Representation”)[28]	2014.05 2014.06 2015.05
2015.10.07	HK$12,779 to D4[29]	The Investment Background Representation The Family Background Representation The HK Solicitor Representation Investment return of “private placement program” being ready soon (“the PPP Investment Return Representation”)[30] The alleged joint account having a balance of US$129,748,993 as at 7 October 2015 (“the PPP Investment Return Account Balance Representation”)[31] The need to round off the balance in the alleged joint account for investment return purposes (“the PPP Investment Return Round Off Balance Representation”)[32]	2014.05 2014.06 2014.07 2015.10 2015.10 2015.10
2015.10.07	US$840,770.02 to D4[33]
2016.01.18	US$212,188 to D5[34]
2016.04.28	US$500,000 to D7[35]	The Investment Background Representation The Family Background Representation The PPP Investment Return Representation The need to have a joint bank account at Bank of China in D7’s name with a balance of US$500,000 for investment return purposes (the “PPP Investment Return BOC Account Opening Requirement Representation”)[36]	2014.05 2014.06 2015.10 2016.02
2016.11.23	US$500,000 to D4[37]	The Investment Background Representation The Family Background Representation The PPP Investment Return Representation The PPP Investment Return Account Balance Representation The PPP Investment Return Round Off Balance Representation The need to pay tax and handle money laundering clearance for investment return purposes (“the PPP Investment Return 1st Tax and Other Payment Requirement Representation”)[38] HKMA-mandated need to pay tax of US$500,000 (the “PPP Investment Return 2nd Tax and Other Payment Requirement Representation”)[39]	2014.05 2014.06 2015.10 2015.10 2015.10 2016.04 2017 (early)
2016.12.16	US$60,000 to D5[40]
2016.12.16	US$340,000 to D4[41]
2017.03.15	US$300,000 to D4[42]	The Investment Background Representation The Family Background Representation The PPP Investment Return Representation The PPP Investment Return Account Balance Representation The PPP Investment Return Round Off Balance Representation The PPP Investment Return 1st Tax and Other Payment Requirement Representation The PPP Investment Return 2nd Tax and Other Payment Requirement Representation HKMA- and Government-mandated need to pay further tax and other payments (“the PPP Investment Return 3rd Tax and Other Payment Requirement Representation”)[43]	2014.05 2014.06 2015.10 2015.10 2015.10 2016.04 2017 (early) 2017.03
2017.04.26	HK$500,000 to HKSAR[44]
2017.04.26	HK$600,000 to Messrs ST Cheng[45]
2017.06.12	US$300,000 to D4[46]
2017.06.29	US$400,000 to D4[47]
2017.08.01	HK$1,000,000 to D4[48]
2017.08.01	HK$500,000 to Messrs ST Cheng[49]
2017.08.21	HK$1,300,000 to D4[50]	The Investment Background Representation The PPP Representation The Family Background Representation The HK Solicitor Representation The Substituted UK PPP Representation The European Projects Investment Opportunity Representation The D4 Trader Representation The D4 PPP Trader Representation The JV Investment Opportunity Representation The Joint Account Representation The Deposit and Transfer Representation The D6 Trader Representation The Further Investment Representation The PPP Investment Return Representation The PPP Investment Return Account Balance Representation The PPP Investment Return Round Off Balance Representation The PPP Investment Return BOC Account Opening Requirement Representation The PPP Investment Return 1st Tax and Other Payment Requirement Representation The PPP Investment Return 2nd Tax and Other Payment Requirement Representation The PPP Investment Return 3rd Tax and Other Payment Requirement Representation HKMA-mandated need to pay further tax and other payments (the “PPP Investment Return Further HKMA Payment Requirement Representation”)[51] D1 being sick and hospitalised in UK (“the D1 UK Stay Representation”)[52] The need to create a trust (“the Trust Requirement Representation”)[53]	2014.05 2014.05 2014.06 2014.07 2014.07 2014.07/08 2014.07/08 2015.05 2014.09 2014.10 2014.10 2014.10 2015.01 2015.10 2015.10 2015.10 2016.02 2016.04 2017 (early) 2017.03 2017.08 2017.08 2017.09
2017.10.07	HK$500,000 to D4[54]
2017.10.07	HK$150,000 to Messrs. ST Cheng[55]

31.  P does not dispute that, during the course of the fraud, a total sum of HK$5,853,780 was paid by D4 to her[56]. P accepts that the quantum of her claim shall be deducted by such sum.

32.  P in the action therefore primarily claims damages and compensation of HK$66,115,909.35 (being HK$71,969,689.35 – HK$5,853,780)[57] against all Ds for unlawful means conspiracy, and further or in the alternative:

(a) claims against D1 for breach of fiduciary duty owed by her as fiduciary to P; and

(b) claims against each of D3 to D7 for unjust enrichment.

33.  In the present proceedings, D1 and D4 are effectively running bare denial defence. All they put forward is that P knew what she was entering into, that there was no misrepresentation, and that P’s loss is simply the result of investment losses[58].

34.  D2’s defence is that he had no knowledge of the dealings between P and D1, as he only met P twice, and that he was not involved in the making of any representations to P[59].

35.  D3 similarly claims that he was not involved in the making of any representations to P in relation to any purported investments[60].

LEGAL PRINCIPLES AND ISSUES TO BE DECIDED

Legal Principles

36.  The legal principles on unlawful means conspiracy and fraudulent misrepresentation/tort of deceit are trite and have been helpfully summarized by Mr Yeung and of which I agree and would adopt. They are as follows:

(a) For unlawful means conspiracy: Xie Li Xin v Law Ka Yan & Others[2022] HKCFI 1591 at §191; JSC BTA Bank v Ablyazov & Anor (No 14) [2020] AC 727 at §10; She Tsu Yi v Tsui Ki Ting & Others [2007] HKCFI 1130 at §154:

(i) There must be an agreement or understanding between 2 or more people. It is not necessary for the conspirators to all to join the conspiracy at the same time, but the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of.

(ii) Conspiracy is actionable where there is absence of just-cause or excuse for the conduct.

(iii) There must be an intention to injure the plaintiff by unlawful means, irrespective of whether such intention is the predominant purpose. The intention can be inferred if it can be shown that the act is done deliberately and with knowledge of the consequences.

(iv) Unlawful acts are carried out pursuant to the agreement or understanding. The unlawful means could be criminal conduct or a separate actionable tort such as tort of deceit. Breach of fiduciary duties, dishonest assistance and knowing receipt are all recognised as being capable of constituting unlawful acts.

(v) The unlawful acts resulted in loss or damage to the plaintiff.

(b) For fraudulent misrepresentation/tort of deceit: Xie Li Xin at §§183-185:

(i) There must be a representation of fact made by words or conduct.

(ii) The representation must be made with knowledge that it is or may be false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true.

(iii) The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which include the claimant, in the manner which resulted in damage to him.

(iv) It must be proved that the claimant has acted upon the false statement.

(v) It must be proved that the claimant suffered damage by so doing.

(vi) Representations are not limited to express words. The court has to consider whether a reasonable person would have understood from the words used in the context in which they were used. In determining what, if any, implied representation has been made, the court has to perform a similar task, except that it has to consider what a reasonable person would have inferred was being implicitly represented by the representor’s words and conduct in their context.

(vii) A representation as to belief or intention can also be a statement of fact. If the representor did not in fact harbour such a belief or intention, that statement would be false.

37.  Insofar as unjust enrichment is concerned, the legal principles are similarly trite: Shanghai Tongji Science & Technology Industrial Company Limited v Casil Clearing Limited (2004) 7 HKCFAR 79; [2004] HKCFA 21 at §67. Four questions have to be answered:

(a) Was the defendant enriched?

(b) Was the enrichment at the plaintiff’s expense?

(c) Was the enrichment unjust?

(d) Are any of the defence applicable?

38.  On fiduciary duties, the categories of fiduciary relationship are infinitely varied and the duties of the fiduciary vary with the circumstances which generate the relationship. A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The undertaking can be implied in the circumstances, particularly where someone has taken on a role in which fiduciary duties are appropriate. Fiduciary duties are obligations imposed by law as a reaction to particular circumstances of responsibility assumed by one person in respect of the conduct or affairs of another. The concept encaptures a situation where one person is in a relationship which gives rise to a legitimate expectation, which equity will recognise, that the fiduciary will not utilise his or her position in such a way which is adverse to the interest of the principal. The expectation is assessed objectively, and so it is not necessary for the principal subjectively to harbour the expectation. Nor is it relevant whether the person who is alleged to be a fiduciary subjectively considered himself or herself to be undertaking fiduciary duties: Snell’s Equity 34^th edn §7-005.

Issues to be Decided

39.  In light of the above legal principles, and considering that payments/remittances made by P are well proven, I agree with Mr Yeung that the core issues need to be resolved by the Court in this case boil down to the following:

(a) Whether the representations were made?

(b) If so,

(i) Who made the representations?

(ii) Were the representations untrue/fraudulent at the time when they were made?

(iii) Were the representations made to induce P to make payments/remittances?

(iv) Whether P made the payments/remittances in reliance of the representations, and how much did P pay/remit?

(v) Was there an agreement on the part of D1, D2, D3 and D4 to be part of the conspiracy to defraud/injure P?

(vi) How much did each of D1 to D4 receive from the payments/remittances made by P, and whether there was any valid justification for such receipt?

40.  In considering these questions, Mr Yeung invited the Court to place particular emphasis on the documentary evidence[61] and the photos showing meetings between P and D3/D2[62] in this case. I agree with that approach.

FINDINGS OF THE COURT

Evidence at trial reinforces the respective roles played by Ds

41.  As said, P and her daughter Ms Wong gave evidence at trial, whereas D3 gave evidence to support his defence.

42.  D3 did not cross-examine P and Ms Wong as he said he had nothing to ask them. Thus, I will treat their evidence as unchallenged and will accept them in full: see Xie Li Xin at §8.

43.  I agree with Mr Yeung’s submissions that the evidence transpired at the trial further reinforces the roles of Ds in the scam.

44.  The following are some of the matters highlighted by Mr Yeung in his closing submissions in relation to the different roles played by various Ds of which I accept:

(a) D1 was the mastermind. Very soon after they met, D1 quickly realised that P was an old lonely retired divorcee with low self-esteem who craved for family love and attention and care. D1 then built upon the significant trust that P reposed in D1 when they first met in around May 2014, largely due to D1’s misrepresentation on her personal as well as career background, to claim that she had been brought up in a single-parent family without a mother. This elevated the relationship to one of godmother/goddaughter (契媽/契女) in around June/July 2014. P was therefore at all material times gullible and inferior to D1 and heavily influenced by D1. This set the scene for the scam.

(b) D1 being a repeated offender of dishonesty-related crimes was subject to another prosecution of “fraud/using copies of false instrument” under ESCC 2138/2016 in around 2016, and was convicted and imprisoned in August 2017[63]. She served her custodial sentence until May 2018[64]. Quite outrageously, in February 2018 when she was still in prison, D1 sent a letter to P by post (“the D1 Feb 2018 Letter”) to yet again attempt to cover the fraud with a view to continuing it.

(c) D2, D3 and D8 all played a significant role in the fraud. Each of D2, D3 and D8 met with P at some stage to reinforce what D1 said to P. D3, with D2’s assistance, more particularly took over D1’s role after she was convicted and imprisoned to try and induce P to make further payments from August 2017 to November 2017. Of importance was the efforts of D2 and D3 to keep P in the dark from D1’s imprisonment by misrepresenting to P that D1 was sick and hospitalised, which D3 admitted. D3 also helped D1 pass 3 letters addressed to P containing misrepresentations (“the D1 Aug 2017 Letter”, “the D1 Father Sept 2017 Letter”, and “the D1 Nov 2017 Letter” respectively, and together with the D1 Feb 2018 Letter (“the D1 Letters”), to P. It is inherently improbable that D2 and D3 had no knowledge or did not agree to take part in the scam. Their respective defences are plainly untenable.

(d) The D1 letters[65], as elaborated further below, emphatically manifest the scam and corroborate P’s case.

(e) D4, D6 and D7 were D1’s corporate vehicles[66] to effect receipt and dissipation of fraud proceeds. Pertinently, D3 was the company secretary of D4 and D7[67], and he admitted to have power to conduct electronic transfer from D4’s bank accounts and to issue cheques of D4 pre-signed by D1[68]. As set out in P’s opening submissions, a total of approximately HK$67.8 million of the fraud proceeds went to D4, D6 and D7. With the receipt of proceeds in mind, whilst D1/D4 claim that P’s loss is the result of investment losses and that they had nothing to do with these investments, such defence is wrecked completely.

(f) D5 was D8’s corporate vehicles[69].

45.  In his closing submissions, Mr Yeung confirms that P will not pursue the grounds of breach of fiduciary duty and unjust enrichment in this case. Therefore, there is no need for this Court to make any findings based on those causes of action.

Ds’ fraudulent scheme as supported by the D1’s Letters

46.  I accept the following submissions made by Mr Yeung that P’s case is corroborated by the D1 Letters:

(a) The D1 Feb 2018 Letter, which was written when D1 was in prison, sought P’s visit of D1 at Lo Wu Correctional Institution as a last-ditch attempt to cover up the scam. The more relevant parts of the letter read as follows:

「契媽，

我只要求你，契媽來探我， 我的號碼是403136， 范佩韻，到羅湖懲教所。

你自己想清楚，我從2014年認識你。。。。

。。。。。

我只想我們拿回自己本金和利潤（我們的投資），請致電陳律師。」

(b) I accept on the evidence that the D1 Feb 2018 Letter was written by D1 and there exists no room for any argument that it was not in D1’s handwriting.

(c) The D1 Aug Letter[70], which was dated 18 August 2017 just after D1 was convicted under under ESCC 2138/2016 and sentenced to imprisonment on 17 August 2016, sought to conceal D1’s imprisonment and to justify D1’s sudden disappearance so as to scam P further. A comparison of the handwriting between this letter and the D1 Feb 2018 Letter, in particular the word “契媽” at the beginning of both, would show that they were written by the same person, ie D1.

(d) The D1 Father Sept Letter (typewritten and printed), which was passed to P on around 13 September 2017, sought to reinforce D1’s sickness and hospitalisation and the need for further payments for P’s investment returns. Mr Yeung has highlighted the more relevant parts of that letter as set out below:

「楊小姐，

妳好，妳是我女兒的契媽，我也是妳契女的父親。。。我現在居住在英國倫敦。。。。

另外，還有我很多謝妳的配合，在我們大家投資的項目，當然我沒有想過，妳之前有用過地下錢莊（匯款）到內地賣房地產，所以我們要盡快解決此事情，我也接了電話也立刻配合金管的做法，所以我們那邊也要立即配合妳，今天9月12日立即叫我在英國開個信託。。。因此信託是保障我們收錢的最後步驟，我也願意配合，我要提醒你如果金管要你這樣做必須配合。。。。

。。。

我女兒，因為她的病，割除了一遍子宮，需要時間休息，所以請你配合金管的做法，記住信託的錢和妳的物業也可以放在此信託，保障妳的女兒下一代，金管叫我開星展希望妳也是。

再談：信託最少3,000,000港元最多現金加樓宇1,000,000,000港元

。。。

契女的父親」

(e) The bottom of the D1 Father Sept Letter bears D1’s handwriting, which reads: “Danny. 星期一 交給楊小姐 親手”. Again, there cannot be any dispute that these are D1’s handwriting, especially when one compares the word “星期’”with those in the D1 Nov 2017 Letter[71].

(f) The D1 Nov Letter[72], which was passed to P on around 6 November 2017, sought to regain P’s trust amid D1’s disappearance and to echo the need for a trust set up for P’s investment returns. She was in prison at that time and lied to P that she was in the UK trying to recuperate from a serious illness and major operation. Mr Yeung recites below the more relevant parts of that letter in his closing submissions:

「契媽，

我現在身在英國，最重要是我做完子宮癌的手術之後有要立即飛回英國，我嘗試用英國電話致電你，無人接聽，在英國的時候，約10月中，記得約10月20，但這也不大重要，因為鄭生也有找你（在香港）。

我主要在英國，兩個原因：是我手術要再做多一個療程，另外，我爸爸想我處理他的公司業務。原本，約11月初返港，因為首先你那邊，原來還未處理好（最後信託的事）。。。

我11月1至15號，會入英國George Hospital做療程。。。

。。。。

4. 我返香港，看你的配合，與trader星展銀行的配合，金管。

5. 另外，我知道，你同鄭生說要見到我，才有動作，契媽，請你相信我，我是急於病和家人的生意，才會這樣做，飛去英國，我自小媽不在，你是我的母親一樣，怎會不希望你探我病（之前）我以為自己無咁嚴重。

6.我叫我老公見你，是因為他也知道，我在英國，所以他證明到我的病和忙中的事。

。。。。

9. 所以請你堅持，不要亂想事，我也掛念你，想我一路怎樣支持你，和我和你，也加入我家族（匯豐的戶口，也不擔心）所以

10.另外，我也準備好，我們所簽好的文件待清楚知道我們總收本金+利潤。

。。。。

13.我相信，金管會致電你，不可延遲，說應該你只欠250萬港元放回星展做信託

。。。。。

契女上」

(g) A comparison of the handwriting between the D1 Nov 2017 Letter and the D1 Feb 2018 Letter, in particular the word “契媽” at the beginning of both[73], would show that they were written by the same person, ie D1.

47.  I find all D1 Letters were written with the sole purpose of deceiving P and gaining her trust so that D1 and her associates, including D2, D3 and D4 could cream as much money out of P as possible. In this regard, I find D1 is a heartless and cold-blooded individual who has no morals at all.

D3’s Evidence

48.  As said, D3 was the only defendant who appeared at the trial and gave evidence. I find his evidence wholly incredible and I have no hesitation to reject all of them.

49.  I agree with Mr Yeung that, in deciding whether to accept a witness’ account, importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic or events. The Court should consider the consistency of the witness evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ own oral testimony and his/her witness statement. In cases of fraud, the Court should always test the veracity of witness’ evidence by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and pay particular regard to their motives and to the overall probabilities: see Hui Cheung Fai & Another v Daiwa Development Ltd& Others [2014] HKCFI 650 at §§77-80.

50.  Factors which may affect the evaluation of a witness’s evidence include evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, disclosure and evidence shortcomings, self-contradiction, internal inconsistency, shifting case, new evidence, and selective disclosure: see Cheung Hon Kin v Chubb Life Insurance Company Ltd[2024] HKCFI 1313 at §82.

D3’s evidence wholly unbelievable and defies logic

51.  I find D3 is a shameless liar, who likes D1, has little or no morals at all. He would do anything to assist D1 and other Ds to deceive P. His only motive is to try to assist D1 and others to scam as much money out of P as possible.

52.  The following are some of the matters which he was caught out lying as highlighted by Mr Yeung in his closing submissions.

53.  D3 confirmed during cross-examination that he provided assistance to D4, D7 and Covermagazine HK Limited (“Covermagazine”) which were all D1’s corporate vehicles, and that the business nature of D4 and Covermagazine was as stated in the relevant bank account opening forms[74]. He also confirmed he was the company secretary of these entities. When he was asked to confirm that these entities did not provide investment and asset management services, he audaciously said D4 had. But when he was intimidated that provision of investment asset management services required SFC licence, D3 said he did not know whether D4 had relevant licence even though (1) he was the company secretary; (2) he never signed any documents relating to SFC licence application; and (3) he never heard from D1 about any SFC licence application.

54.  I find D3’s evidence, as summarized by Mr Yeung in his closing submissions below, wholly incredible and not worthy of believing:

(a) D3 said he collected two cashier orders of US$1.5 million each from P and deposited into D4’s account, one in January 2015 and another one in May 2015, against the backdrop that (1) fees receivables by D1’s corporate vehicles for their provision of services for any single project never amounted to tens of millions Hong Kong dollars; (2) D3 knew P was the person who in reliance of D1’s representation purported to subscribe to a private placement program provided by HSBC and hence there was no ground for remittance to D4; and (3) remittance of such magnitude to D4 was rare. It was pointed out to D3 during cross-examination that any reasonable and honest person in D3’s situation (ie being asked to collect and deposit US$3 million from the same person within a matter of 4 months) would have been alerted and voiced out concerns. D3’s answer was that he did not know what the payments were for and P could have been paying for other projects, while accepting that he did not even make any enquiry on such receipts. As neither D4, D7 or Covermagazine sold nor issued any investment projects or products and hence there was no ground for any of these entities to receive monies of over tens of millions from P. I find D3’s answer totally incredible.

(b) D3 maintained that he was merely providing secretarial support to D1, D4, D7 and Covermagazine, and confirmed that he had no duty to perform anything that was illegal or unreasonable. He said in around mid-May 2014 he knew that P was to take part in a private placement program provided by HSBC. He further said his English level was low and did not understand those documents purportedly relating to the private placement program in which P would participate. When D3 was cross-examined on the declaration made by P and him dated 29 July 2014[75] (“the Jul 2014 Declaration”), where D3 declared before the Commissioner for Oaths at the Central and Western District Office of the Home Affairs Department that he had truly, distinctly and audibly interpreted the contents of various attached English documents purporting to relate to the private placement program[76], D3 said he did not in fact do the interpretation to P. D3 accepted that the Home Affair Office staff had explained to him the duty to interpret the attached documents to P for the purpose of the declaration, and that the failure to interpret was inconsistent with what he had been told by the Home Affair Office staff. It was pointed to D3 that what he had done was tantamount to making a false declaration and was beyond his job duty. D3 invoked the privilege against self-incrimination on the question of whether he made false declaration, and refused to give an answer. He then maintained that he only took P to sign documents and considered it to be part of his job duty, and that he did not understand the English declaration statement, seemingly overlooking the fact that the duty to interpret had already been explained to him. He later said he did not know the severity of the declaration, and in the end confirmed he had no answer. I agree with Mr Yeung that D3’s answers clearly make no sense. I find D3 already knew a fraud was set up against P right from the beginning, and that D3 not only agreed to take part in it, but was an active participant in it.

(c) While D3 accepted that he did lie to P to conceal D1’s imprisonment since August 2017, he asserted that it was a “white lie” (「善意的大話」) because it was not desirable to make P worry about D1. When he was further cross-examined, he admitted that he knew D1 was imprisoned due to using false instrument and was a dishonest person with integrity issue. D3 accepted that he was entitled to reject or refuse to make the lie to P but he chose to do it. Further, it is not in dispute that, after making the lie to P, D3 collected a cashier order of HK$1.3 million from P and deposited into D4’s bank account on 21 August 2017. I find D3’s assertion of a “white lie” clearly does not sit well with the objective evidence. As Mr Yeung submits, it is hopelessly improbable. Indeed, when the D1 Nov 2017 Letter was put to D3, which he said he had passed to P on 6 November 2017, D3 agreed that the letter sought more payment from P and there was intention to scam P (「唔係善意，係有心想呃佢」). I do not find anything “kind” about D3’s lies at all.

(d) Given the objective evidence and in any event D3’s acceptance that the D1 Nov 2017 Letter was intended to scam P, it was absurd for D3 to maintain that he only felt something wrong in December 2017 when he was arrested by the police. I reject any of such suggestions from D3.

(e) When the D1 Father Sept 2017 Letter was put to D3, he admitted to have seen its content and passed it to P on around 13 September 2017. The plain fact is that this letter represented to P the need to set up and put money into a trust of a minimum asset of HK$3 million for purported investment returns[77]. When questions were posed to D3, he said he saw no issue with the letter, even though (1) he had never seen the father, (2) he had never asked D1 whether father existed; and (3) he on 21 August 2017 just deposited into D4’s account a sum of HK$1.3 million paid by P following making the lie to P to conceal D1’s imprisonment. It is pertinent to note that D3 on 7 October 2017 also collected a cashier order of HK$500,000 from P and deposited such sum into D4’s bank account[78], and that the D1 Nov 2017 Letter further sought HK$2.5 million payment from P for set up of trust. D3 further maintained that he did not know what these payments from P were for, but he never made any enquiries. D3’s reply begs more questions than answer. Quite simply, no sensible honest person would have found no issue with the D1 Father Sept 2018 Letter as D3 did.

(f) D3 also resorted to blaming legal advisers for his evidence shortcomings.

(g) D3’s case as set out in his witness statement is that he was instructed by D1 via her solicitor Mr Frankie Ho to lie to P for the purpose of masking D1’s imprisonment. When D3 was asked during cross-examination why Mr Frankie Ho was not called to give evidence in support of his case, he said he was not advised by anyone to do so, laying blame on his then legal advisor who aided him to prepare his witness statement for the evidence shortcoming.

(h) Similarly, when D3 during cross-examination was asked why there was no evidence in his witness statement on his receipt from D4 of HK$200,000 on 10 October 2017 (shortly after his deposit into D4’s bank account of a cashier order of HK$500,000 by P on 7 October 2017 following D3’s passing of the D1 Father Sept 2017 Letter to P)[79], D3 said he had mentioned to his then legal advisor but he failed to pay attention to why the explanation was not in the witness statement.

55.  Given the above, I have no difficulty in finding D3 as an utterly untruthful and dishonest witness. In my judgment, he is at much responsible as D1, D2 and D8 in perpetuating the fraudulent scheme against P. Without his active participation, the fraud would not have succeeded in my view.

Core Issues to be Decided

56.  As submitted by Mr Yeung in his opening submissions, given that there can be little dispute on the payments/remittances made by P, the core issues to be decided by the Court would include:

(a) whether the payments/remittances were made in reliance of the misrepresentations;

(b) who made the misrepresentations; and

(c) whether there was an agreement on the part of D1, D2, D3 and D4 to be part of the conspiracy to defraud/injure P.

The Misrepresentations and Payments

57.  I find the following facts as stated in P’s evidence, which were principally contained in her witness statement (“P WS”), as proved as they are not challenged by any of Ds, including D3 who was present at the trial.

58.  As Mr Yeung has analysed, the scam began in around May 2014 and ran until October 2017[80], and can be broadly divided into 3 stages, viz (i) the initial stage; (ii) the second stage; and (iii) the final stage. At the initial stage, Ds began with misrepresentations to win over P’s trust, followed by misrepresentations in connection with the existence of a private placement program (“the 1^st PPP”)[81]. I accept that these (mis)representations were created as powerful weapons, individual and collective, to lure future payments from P at subsequent stages. Soon after, at the second stage, they started to scam P’s monies through those misrepresentations in connection with the 1^st PPP and also other misrepresentations on further investments and 1^st PPP-related matters progressively made[82]. Later on, at the final stage, they scammed more monies from P mainly under the pretext of investment returns[83].

(i) The Initial Stage

59.  At initial stage up till around end of July 2014, P signed the following documents and made the following payments/remittances –

Date of signing/ payment/ remittance	Document signed	Counterparty/ Recipient/ Beneficiary	Amount of payment/remittance
2014.05.16	Documents purportedly relating to 1st PPP[84]	various parties	n/a
2014.05.23	The May 2014 Declaration and the documents attached, purportedly relating to the 1st PPP[85]	D1 and others	n/a
2014.07.29 (around)	Documents purportedly relating to UK-processed 1st PPP	various parties	n/a
2014.07.29	The July 2014 Declaration and the documents attached, purportedly relating to revised/updated version of the 1st PPP[86]	D3	n/a
2014.07.30	n/a	Dragon Force Travel Limited (a travel agent) (HSBC account no. 400-1726822-001)[87]	HK$81,671
2014.07.30	n/a	D5 (HSBC account no. 817-354343-838) (“D5 HSBC Account”)[88]	US$20,000
2014.07.31 – 2014.08.07	n/a	Rosewood London Hotel (by credit card payment)[89]	GBP9,862.28 (equivalent to around HK$128,209.64 at a rate of GBP1 = HK$13 as at 11 August 2014)

60.  Based on P’s account, I find the following facts happened at the beginning of their relationship. P and D1 met in around mid-May 2014. D1 quickly introduced herself to P as a former HSBC senior official who maintained good connections, influence and network in HSBC (“the D1 Background Representation”). Traces of this HSBC-background representation could be seen in:

(a) the 「楊少蓉上盤程序」 shown to P in around mid-May 2014[90] (“the 1^st PPP Procedures”) which sets out the procedures for participating in the 1^st PPP, purportedly a time-deposit alike scheme provided by HSBC -

(i) §1(a) of the 1^st PPP Procedures reads: 「表格內，可接受英國護照申請。表格內必須附上楊小姐英國護照和最新恆生銀行正本最新的一張恆生銀行水單，證明楊小姐的美元（活期）戶口最小美元1千萬。」

(ii) §1(c) of the 1^st PPP Procedures reads: 「5月16日，楊小姐要簽妥各人的利潤分成表，同意分配事項。楊小姐必須給予一個收利潤的銀行戶口資料。楊小姐每天的利潤是按她水單的本金，每日可得百分之十。」

(iii) §4 of the 1^st PPP Procedures reads: 「之後平台公司會出一份合同給予楊小姐簽妥關於此投資項目。」

(iv) §5 of the 1^st PPP Procedures reads: 「楊小姐簽妥合約後，平台公司會在簽合約前預早告知楊小姐是否要將她的資金從恆生銀行移去香港匯豐銀行。。。。」

(v) §7 of the 1^st PPP Procedures reads: 「楊小姐收利率。。。。」

(vi) §8 of the 1^st PPP Procedures reads: 「經紀人（范小姐Margaret）會與楊小姐處理信託律師行的事項，絕對安全，有香港法律效用。」

(b) the letter dated 30 July 2014 under the letterhead of Messrs ST Cheng & Co. (“STC”) signed by D1 purportedly in the presence of a Hong Kong solicitor (“the STC Declaration”)[91], sets out the invitation by HSBC London to P for participation in a project plan utilising the US$11 million in her Hong Kong HSBC USD account:

(i) The second line of the STC Declaration reads: 「倫敦匯豐銀行邀請楊女士去投資一個項目計劃。」

(ii) The third line of the STC Declaration reads: 「YEUNG SIU YUNG以香港匯豐銀行美元戶口（USD11,000,000）做一個投資項目。此項目必須到英國匯豐銀行和當地上盤平台公司簽署合同。。。。」

61.  Unsurprisingly, given P’s background, the D1 Background Representation swiftly developed into a fiduciary relationship whereby P being at the inferior and vulnerable end was heavily dependent on and influenced by D1 (“the Fiduciary Relationship”)[92].

62.  At around the same time, D1 acted quickly to take advantage of P’s rather inferior background and scarce financial knowledge to falsely represent to P on the existence of a time-deposit alike scheme provided by HSBC, ie the 1^st PPP (“the 1^st PPP Representation”). As submitted by Mr Yeung, the 1^st PPP Procedures, which was shown by D1 and D3 to P[93], is the best proof of the 1^st PPP Representation having been made. According to paragraphs 1(a), 1(c), 4, 5, and 7 of the 1^st PPP Procedures, P would earn interest of 10% per day on the amount of deposit in P’s USD current account in Hang Seng Bank, provided that such amount had a minimum of US$10 million and that she might have to move such amount to a HSBC account. I agree with Mr Yeung that this to the eyes of someone like P must have worked like a time deposit. D3 in his evidence admitted that he had played a part in preparing the know-your-customer form referred to in the 1^st PPP Procedures and that he understood the contents therein and handed them for P’s signing. Thus, both D1 and D3 made the 1^st PPP Representation to P. Thereafter, taking advantage of P’s limited English capability, a number of documents alleging to relate to participation in the 1^st PPP (“the 1^st PPP Documents Representation”) were presented by D1 to P for signing (“the 1^st PPP Documents”).

63.  In the circumstances, I find the 1^st PPP Documents and the May 2014 Declaration serve as cogent proof of the 1^st PPP Documents Representation having been made.

64.  P therefore decided to participate in the 1^st PPP, in reliance of the D1 Background Representation, the Fiduciary Relationship and/or the 1^st PPP Representation. P also acceded to D1’s request to make the May 2014 Declaration. Given her limited English capability, it was clear that P signed the 1^st PPP Documents on 16 May 2014 and signed the May 2014 Declaration on 23 May 2014, in reliance of the D1 Background Representation, the Fiduciary Relationship, the 1^st PPP Representation and/or the 1^st PPP Documents Representation[94]. I so find that was the case.

65.  After the fraud was revealed, police advised P that the 1^st PPP never existed[95]. The inevitable inference to make is that all the documents purportedly relating to the 1^st PPP were false instruments. Thus, I find the 1^st PPP Representation and the 1^st PPP Documents Representation were false when they were made by D1 and D3, and knowingly so.

66.  Further, crime investigation report revealed that D1 was a repeated offender of dishonesty-related crimes. She was convicted of using false instrument in 2009 under ESCC5549/2008, and was convicted of fraud/using copies of false instruments and imprisoned in August 2017 under ESCC2138/2016[96]. This indicated that D1, being a person with serious integrity issue since she was in her thirties[97], could hardly have been a former HSBC senior official. In fact, it was also discovered that D1 had her SFC licence removed from the Register of Licensed Person in 2008, which tallied with D1 being subjected to prosecution on dishonesty-related crime in 2008[98]. In any event, D1 fails to adduce any evidence to show that she was a former HSBC senior official. It is therefore open to the Court to draw adverse inference from D1’s failure to adduce contradictory evidence: see Xie Li Xin at §10. I so draw such inference against her.

67.  Based on the above evidence, I make the finding that D1 Background Representation was false when it was made by D1, and knowingly so.

68.  Insofar as D3 argues to have been silent when he handed documents containing the 1^st PPP Representation to P for signing, P submits that a person who allows a false statement by a third person to the representee to go uncorrected may also make a misrepresentation: see Koo Ming Kown v The Baptist Convention of Hong Kong and others[2024] HKCFI 2869 §117(h). To this end, P submits and I accept that D3 already knew the presence of a fraud against P in May 2014 for the following reasons:

(a) D3 said he met D1 in around mid-2012 when he worked as a publisher assistant in a company called Wealth Bloomberg, which according to D1’s BOC bank account opening form dated 15 June 2012 was a company owned by D1[99].

(b) D1 claimed in her BOC bank account opening form that the business nature of Wealth Bloomberg was “finance & publisher”[100].

(c) Having worked closely with D1 at a “finance publisher”, D3 must have touched upon financial knowledge. Indeed, D3 during cross-examination accepted that it was not right if P were to subscribe to the 1^st PPP provided by HSBC but she made payment to D4. In other words, D3 was aware that the issuer of an investment product was the recipient of investment proceeds and the counterpart of the investor, and that there must have been documents from such issuer.

(d) D3 said he knew that the 1^st PPP was provided by HSBC, and that the documents he had a hand in preparing and handed to P for signing related to the HSBC-provided 1^st PPP. He knew P was purportedly subscribing to the HSBC-provided 1^st PPP. He nevertheless knew that none of the documents handed over to P was HSBC-issued documents or bears HSBC logo. In fact, these documents were all typed up by D3 and/or his colleagues based on templates provided by D1. For someone in his early forties having touched upon financial knowledge, D3 must have sensed something unusual and would have made enquiries.

(e) In any event, D3 with his background in the context must have appreciated that a time deposit giving interest of 10% per day could not have existed.

(f) As such, in around mid-May 2014, D3 must have known that the 1^st PPP as set out in the 1^st PPP Procedures and the corresponding know-your-customer form referred therein (which D3 had a hand in preparing) could not have existed.

(g) D3 however chose to turn a blind eye and proceeded to hand the documents containing the 1^st PPP Representation to P for signing and made the 1^st PPP Representation to P (or at the very least, remained silent and let it go uncorrected when the 1^st PPP Representation was made even though he knew that it was false). I agree with Mr Yeung that blind-eye knowledge, involving a deliberate decision not to inquire into matters, approximates to knowledge: Peter GeoffreyDe Krassel v Vincent Julia Chu aka Zhu Liang [2010] HKCFI 217 §§55-58.

69.  Based on the above evidence, I find that D3 had knowingly made the above representation.

70.  At this juncture, ie in around May/June 2014, P was only asked to make transfer of her monies to her own bank account, and she did[101]. Mr Yeung submits that this was the first step of a premeditated scheme to induce payments and remittances. And Ds did not wait long before they embarked on causing loss to P to their benefit, which began in around July 2014. I agree with his submissions.

71.  Before that, through more frequent meet-ups and chats, P became emotionally attached to D1 and conveyed her background to D1 in more details. Realising P’s crave for daughter’s love and attention and care, D1 was quick to claim that she grew up in a single-parent family without a mother (“the Family Background Representation”), which raised the relationship further to one of 「契媽/契女」 to consolidate P’s trust on and proneness to D1’s assertions[102]. The Family Background Representation was cogently supported by D1’s own statement in the D1 Nov 2017 Letter, where she said at §5 on page 2[103] 「另外，我知道，你同鄭生說要見到我，才有動作，契媽，請你相信我，我是急於病和家人的生意，才會這樣做，飛去英國，我自小媽不在，你是我的母親一樣，怎會不希望你探我病（之前）我以為自己無咁嚴重。」 (P’s emphasis)

72.  As I found above, there is no doubt that the D1 Nov 2017 Letter was written by D1.

73.  Mr Yeung further submits that the Family Background Representation was false when it was made by D1, and knowingly so. D1’s mother was present and stood as D1’s surety when D1 was brought before the criminal court on 19 May 2018 for mention of the charge of fraud arising from P’s report of the present case to authority[104]. I would draw adverse inference from D1’s failure to adduce any evidence to show that she grew up in a single-parent family without a mother: see Xie Li Xinat §10. It was clearly a lie in order to gain sympathy and trust from P.

74.  Next came the signing of the July 2014 Declaration. P was told by D1 in around July 2014 that the 1^st PPP she had applied was disapproved by HSBC’s Hong Kong branches and that the whole process had to be processed again with HSBC’s UK branches. D1 represented to P that further documents alleging them to relate to the UK-processed 1^st PPP (“the Revised 1^st PPP Documents”)[105] would have to be signed (“the Resigning 1^st PPP Documents Representation”)[106], and presented these documents to P for signing. P was also asked to make the July 2014 Declaration[107]. Given P’s limited English capability, I find it was clear that she signed the Revised 1^st PPP Documents and the July 2014 Declaration on 29 July 2014 in reliance of the Resigning 1^st PPP Documents Representation[108].

75.  In my view, the July 2014 Declaration serves as proof of the Resigning 1^st PPP Documents Representation. As the 1^st PPP never existed[109], the Revised 1^st PPP Documents must be false instruments. I therefore find that the Revised 1^st PPP Representation and the Resigning 1^st PPP Documents Representation were false when they were made by D1 and D3, and knowingly so.

76.  I agree with Mr Yeung’s observation that it is important to note that it was D3 who took P to Central and Western District Office of the Home Affairs Department on 29 July 2014 to make the July 2014 Declaration and who declared to have interpreted the contents of the documents attached thereto to P[110]. Therefore, he must have made the Resigning 1^st PPP Documents Representation to P. P’s case is that D3 on the same occasion also repeated to P the D1 Background Representation, the Family Background Representation, and the 1^st PPP Representation to reassure P and win her trust[111]. As I found earlier, D3’s assertion that he only took P to sign documents as part of his job is utterly inconceivable and should be rejected. I find that D3 already knew a fraud was set up against P, and that he agreed to take part in it.

77.  Starting from 30 July 2014, Ds relied on misrepresentations, made and/or to be made, to induce P to make payments and remittances. On 30 July 2014, D1 represented to P that P was invited to participate in the 1^st PPP via HSBC UK branches on certain conditions (“the Substituted UK 1^st PPP Representation”). The conditions included the need to travel to the UK to sign documents and to meet with third parties, and the need to pay for costs of the UK trip and legal fees. D1 further represented to P that there existed Hong Kong solicitors being D5 and D8 in the matter to protect P’s interest (“the HK Solicitors Representation”).

78.  The Substituted UK 1^st PPP Representation and the HK Solicitors Representation are supported by the STC Declaration signed by D1[112] and a name card bearing information of D5 and D8[113] which were presented to P on 30 July 2014[114]. Mr Yeung has highlighted the relevant parts of the STC Declaration below to show up the falsity of the document:

(a) The second line of the STC Declaration reads: 「倫敦匯豐銀行邀請楊女士去投資一個項目計劃。」

(b) The third line of the STC Declaration reads: 「YEUNG SIU YUNG以香港匯豐銀行美元戶口（USD11,000,000）做一個投資項目。此項目必須到英國匯豐銀行和當地上盤平台公司簽署合同。另外此合同內容將以英文起草作準，我們以專業簽約律師Frank Caruso 去親身保障楊小姐以下權益。」

(c) The 9^th line of the STC Declaration reads: 「此外，當楊小姐抵達英國將與范小姐（Margaret Fan）及Frank Caruso共同入住在英國的指定酒店，參與此項目的會議

（包括與上盤平台公司、匯豐倫敦負責此項目的執行人員會面等等），此會議楊小姐將會完成此投資計畫，包括簽約。收取利潤的程序將會與范小姐此前提及的一樣。

最後楊小姐必須先支付以下費用

Frank Caruso律師費（他每小時收費USD5000，最少費用USD20000。Invoice將於今天發給楊小姐

Frank Caruso商務機位費用

匯豐倫敦銀行指定的酒店，位置，必須為商務房間，食費，車費等。」

79.  In reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the 1^st PPP Representation, the HK Solicitors Representation and/or the Substituted UK 1^st PPP Representation, P made the travel to London and incurred the following costs and payments:

(a) Payment of HK$81,671 to Dragon Force Travel Limited on 30 July 2014 for traveling expenses[115];

(b) Payment of US$20,000 to D5 on 30 July 2014 purportedly for legal fees[116]; and

(c) Payment of GBP9,862.28 (equivalent to around HK$128,209.64 at a rate of GBP1 = HK$13 as at 11 August 2014) to Rosewood London Hotel for accommodation and other expenses arising from two rooms from 31 July 2014 to 7 August 2014[117].

80.  In my judgment, it cannot be disputed that one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the 1^st PPP Representation, the HK Solicitors Representation and/or the Substituted UK 1^st PPP Representation was made to induce P’s payments in the preceding paragraph, which represented the luxury leisure tourism in London of D1 and D8[118].

81.  P submits and I accept that the UK 1^st PPP Representation and the HK Solicitors Representation were false when they were made by D1, and knowingly so. First, the 1^st PPP never existed[119], so there also never existed any UK-processed 1^st PPP. Second, the STC Declaration was a forged document[120]. Third, D5 was never a law firm in Hong Kong and D8 was never a qualified solicitor in Hong Kong[121]. Again, adverse inference from D1’s failure to adduce any evidence to show that the veracity of the STC Declaration, the existence of the 1^st PPP via HSBC UK branches or the qualification of D5 and D8 can be made and I so make them against D1, D5 & D8: see Xie Li Xin at §10.

82.  Based on the above evidence and analysis, up till around end of July 2014, I find the following misrepresentations were made to P:

Item	Misrepresentations	Date of representation
1.	The D1 Background Representation	2014.05
2.	The 1st PPP Representation	2014.05
3.	1st PPP Documents Representation (inducing signing of documents only)	2014.05
4.	The Family Background Representation	2014.06
5.	The Resigning 1st PPP Documents Representation (inducing signing of documents only)	2014.07
6.	The Substituted UK 1st PPP Representation	2014.07
7.	The HK Solicitors Representation	2014.07

83.  I also accept the amounts as shown in the following table prepared by Mr Yeung which sets out the payments/remittances/action induced by the relevant misrepresentations up to the end of July 2014:

Date of payment/ remittance induced	Amount of payment/ remittance	Document signed	Relevant misrepresentations	Date of misrepresentation
2014.05.16	n/a	1st PPP Documents	The D1 Background Representation The 1st PPP Representation The 1st PPP Documents Representation	2014.05 2014.05 2014.05
2014.05.23	n/a	May 2014 Declaration	The D1 Background Representation The 1st PPP Representation The 1st PPP Documents Representation	2014.05 2014.05 2014.05
2014.07.29 (around)	n/a	The Revised 1st PPP Documents	The Resigning 1st PPP Documents Representation	2014.07
2014.07.29	n/a	July 2014 Declaration	The Resigning 1st PPP Documents Representation	2014.07
2014.07.30	HK$81,671 to Dragon Force Travel Limited	n/a	The D1 Background Representation The 1st PPP Representation The Family Background Representation The Substituted UK 1st PPP Representation The HK Solicitors Representation	2014.05 2014.05 2014.06 2014.07 2014.07
2014.07.30	US$20,000 to D5	n/a
2014.07.31 – 2014.08.07	GBP9,862.28 to Rosewood London Hotel	n/a

(ii) The Second Stage

84.  Before moving on to the 2^nd stage of the fraudulent scheme perpetuated by the various Ds against P, I echo with Mr Yeung’s submissions that “a representation once made is likely to have continuing effect. So if made for the purpose of an intended transaction it will continue until the transaction is completed or abandoned or the representation ceases to be operative on the mind of the representee … Third, if at a time when it is continuing the representor discovers that the representation was false when made or has become false since he should correct it…”: Koo Ming Kown, supra at §117(i). To this end, I accept that all the misrepresentations made at the initial stage, and any misrepresentations made at other stages in connection with the 1^st PPP, were intended to have continuing effect.

85.  The documentary evidence produced by P shows that, from the end of July 2014 up to around mid-2015, P signed the following documents and made the following payments/remittances:

Item	Date of signing/ payment/ remittance	Document signed	Counterparty/ Recipient/ Beneficiary	Amount of payment/remittance
1.	2014.08.08	n/a	D4 (BOC account no. 012-676-1-021842-9) (“D4 BOC Account”)[122]	HK$388,000 (equivalent to US$50,000)
2.	2014.08.09	n/a	Bliss Group Limited (account no. 642-047518-838A)[123]	US$27,000
3.	2014.09.01	n/a	D4 (D4 BOC Account)[124]	HK$388,000 (equivalent to US$50,000)
4.	2014.09.12 – 2014.09.15	n/a	Rosewood London Hotel (by credit card payment)[125]	GBP7,526.50 (equivalent to around HK$94,081.25 at a rate of GBP1 = HK$12.5 as at 15 September 2014)
5.	2014.09.15	Joint Venture Investment Agreement[126]	D6 (HSBC account no. 048-895973-001) (“D6 HSBC Account”)[127]	US$1,000,000
6.	2014.09.15 (around)	Confidentiality agreement relating to hotel development investment	unknown	n/a
7.	2014.10.27	Joint Venture Investment Agreement[128]	D6 (D6 HSBC Account)[129]	US$1,000,000
8.	2014.10.27	Telegraphic transfer form[130]	D6	n/a
9.	2015.01.26	n/a	D4 (BOC fx account no. 012-676-9-216-309-5) (“D4 BOC FX Account”)[131]	US$1,500,000
10.	2015.05.06	n/a	D4 (D4 BOC FX Account)[132]	US$1,500,000

86.  During the stay in London in August 2014, D1 and D8 represented to P (“the European Projects Investments Representation”) that there existed opportunities to make investments in big projects in Europe (“the European Projects”). D1 also represented to P that D4 was a trader in the European Projects (“the D4 Trader Representation”). On this basis, Ds sought P’s payments of US$100,000 to D4 plus purported legal fees of US$27,000[133]. P was also asked to attend meetings with “traders” for the European Projects in London between 12 and 15 September 2014[134].

87.  I find the making of the European Projects Investments Representation was supported by P’s payments of HK$388,000 to D4 on 8 August 2014 (equivalent to US$50,000) on 8 August 2014, US$27,000 to Bliss Group Limited on 9 August 2014 and HK$388,000 (equivalent to US$50,000) to D4 on 1 September 2014, as well as P’s return to stay at London Rosewood Hotel from 12 to 15 September 2014 incurring GBP7,526.50[135]. I further find that there is virtually no justification for receipt by D4 and Bliss Group Limited of these sums, nor is there any for P’s further stay at Rosewood London Hotel. D1’s case appears that she had no knowledge about the European Projects[136]. I agree with Mr Yeung that, in the absence of contradictory evidence, the answer must be, as put forward by P, that the European Projects Investments Representation and/or the D4 Trader Representation, individually or together with the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the HK Solicitors Representation, were made to induce these 3 payments by P.

88.  There is no dispute or it is indisputable that D4 was D1’s corporate vehicles.

89.  The documentary evidence also reveals that, after D4’s receipt of the two sums of HK$388,000 each, purportedly for the European Projects, there were progressive dissipation:

(a) Before the deposit of HK$388,000 on 8 August 2014, the D4 BOC Account had a balance of HK$9,826.70[137].

(b) In the 20 days between 8 August 2014 and 28 August 2014, various sums were debited/withdrawn from the D4 BOC Account, leaving a balance of HK$26,672 on 28 August 2014[138].

(c) Notably, one of the withdrawals was a sum of HK$129,600 to D5 on 14 August 2014[139], which cannot be a transfer for investment in the European Projects. In the absence of contradictory evidence, I find the debits/withdrawals during this period must be dissipation of P’s fraud proceeds.

(d) Similarly, after the deposit of HK$388,000 into the D4 BOC Account on 1 September 2014, there were various withdrawals from the D4 BOC Account in the next 10 days, leaving a balance of HK$1,228.90 on 11 September 2014[140].

(e) Amongst these withdrawals, two were to D5, one of HK$331,795 on 4 September 2014[141] and one of HK$155,220 on 10 September 2014[142]. Again, I find these cannot be transfers for investments in the European Projects. I am entitled to and so draw adverse inference from D1’s failure to adduce contradictory evidence, and to hold that these debits/withdrawals during this period were dissipation of fraud proceeds.

90.  P submits and I so find that the payment of US$27,000 to Bliss Group Limited must be D1’s personal expenses, as the police revealed in their brief facts in the parallel criminal case that D3 admitted under caution upon arrest that he knew “[D1] would use [P]’s monies to pay for her legal fees, personal monthly insurance and to repay some of her debtors”[143].

91.  In my judgment, there is no justification for these withdrawals, transfers and payments. In light of the obvious dissipation of P’s monies, it is clear that there never existed the European Projects. I find the European Projects Investments Representation and the D4 Trader Representation were false when they were made by D1, and knowingly so.

92.  During P’s stay in London in September 2014, D1 represented to P (“the JV Investment Representation”) that there existed another investment (“JV Investment”)[144], and induced P to make payment of US$2 million. D1 passed to P two joint venture investment agreements (“the JVA”)[145]. D1 asked that payment for the JV Investment be made to some foreign traders, and gave P a telegraphic transfer form in which information of D6 as the recipient and the transfer was all pre-filled by D1[146] for P’s signing[147].

93.  I agree that the JVA is solid proof of the JV Investment Representation having been made.

94.  D1 also represented to P (“the Hotel Development Investment Representation”) that there existed hotel development investments (“the Hotel Investments”)[148]. P was given a proposal purportedly relating to the Hotel Investments (“the Proposal”) and asked to sign a confidentiality agreement[149]. The Proposal serves as proof of the Hotel Development Investment Representation having been made.

95.  In reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation and/or the JV Investment Representation, P made payment of US$1 million to D6 on 15 September 2014[150]. I agree with Mr Yeung that there cannot be any question that the JV Investment Representation, individually or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the HK Solicitors Representation, was made to induce P’s payment to D6 on 15 September 2014.

96.  Further, in reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation and/or the Hotel Development Investment Representation, P signed a confidentiality agreement[151]. I also agree with P’s submissions that there cannot be any question that the Hotel Development Investment Representation, individually or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the HK Solicitors Representation, was made to induce P’s signing of a confidentiality agreement and to set the scene for making further misrepresentation.

97.  P returned to Hong Kong on around 26 or 27 September 2014[152]. On around 27 October 2014, D1 represented to P that:

(a) a joint account with P at HSBC with account no. 500-712094-910C (“the Alleged Joint Account”) had been opened (“the Joint Account Representation”)[153].

(b) she had deposited a sum of US$25 million into the Alleged Joint Account and would transfer such sum from the Alleged Joint Account to D6 (“the Deposit and Transfer Representation”)[154].

(c) D6 was a trader participating in the JV Investment (“the D6 Trader Representation”)[155].

98.  Traces of the Joint Account Representation having been made can be seen from -

(a) The Proposal in Chinese where at paragraph 1[156] reads:

「1 楊小姐與范小姐合作往來戶口：Clever Brilliant Ltd。

楊小姐和范小姐是有聯名戶口：HSBC A/C#500-712094-910C

合作擁有（1億3千6百一十萬美元）」

(b) The JVA where paragraphs (a) and (b) of the recital on the first page[157] read: “(a) [D1] has in its possession and/or under its control funds in the amount of $125 million in the account number 500-712094-910 in HSBC in Hong Kong. And (b) [P] has in its possession and/or under its control funds in the amount of $11 million in the account number 828-046300-833 in HSBC in Hong Kong.”

(c) The fact that $125 million and $11 million add up to $136 million, therefore, it is not difficult to imagine D1 would point to the figures in the recital of the JVA and also to the Proposal in Chinese to reinforce the Joint Account Representation.

(d) The telegraphic transfer form purporting to transfer a sum of US$25 million from the Alleged Joint Account to D6, shown by D1 to P for signing on around 27 October 2014 (“the Alleged Joint Account TT Form”)[158]. Apart from P’s signing, it was all D1’s handwriting on this form[159].

99.  As Mr Yeung submits, the making of the Deposit and Transfer Representation and the D6 Trader Representation are sufficiently reflected by the Alleged Joint Account TT Form.

100.  I find as a fact that it was in reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation, the JV Investment Representation, the Joint Account Representation, the Deposit and Transfer Representation, and/or the D6 Trader Representation, P made payment of US$1 million to D6 on 27 October 2014[160].

101.  Further, in my judgment, there cannot be any question that the JV Investment Representation, the Joint Account Representation, the Deposit and Transfer Representation, and/or the D6 Trader Representation, individually or collectively or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the HK Solicitors Representation, were made to induce P’s payment to D6 and P’s signing of the Alleged Joint Account TT Form on 27 October 2014.

102.  It can hardly be disputed that D6 was D1’s corporate vehicles. Apart from the fact that D1 was one of the bank signatories of the D6 HSBC Account[161] and the cheques were all co-signed by D1[162], monies paid by P to D6 were transferred to associates and also to D4 for further dissipation, including to D1 and D2:

(a) On 15 September 2014, US$1 million from P was credited as HK$7,738,000 to D6[163].

(b) On 17 September 2014, there was a payment of HK$5.5 million by cheque from D6 to D4[164], after which:

(i) On 17 September 2014, there was a transfer of HK$250,000 from the D4 BOC Account to D1’s BOC account no. 012-926-1-020929-1 (“D1 BOC Account”)[165].

(ii) On 26 September 2014, there was a transfer of HK$100,000 from the D4 BOC Account to the D1 BOC Account[166].

(iii) On 19 September 2014, there were transfers of 5 tranches of HK$600,000 each from the D4 BOC Account to D4’s BOC current account no. 012-676-0-009589-2 (“D4 BOC Current Account”)[167].

(iv) On 19 September 2014, there was a transfer of HK$1,000,000 from the D4 BOC Current Account to D2’s HSBC account no. 043-368182-833 (“D2 Account”)[168].

(c) There was a payment of HK$1.5 million by cheque from D6 to Ng Kwan Ho on 17 September 2014[169]. Ng Kwan Ho, as advised by police, was one of the bank signatories of D6[170].

(d) There was a payment of HK$730,000 million by cheque from D6 to Leung Wai Hon on 22 September 2014[171]. It is not clear whether this Leung Wai Hon is the same person as the Leung Wai Ho whom police advised was one of the bank signatories of D6[172].

(e) On 28 October 2014, US$1 million from P was credited as HK$7,743,200 to D6[173].

(f) On 29 October 2014, there was a payment of HK$5.4 million by cheque from D6 to D4[174], after which:

(i) On 29 October 2014, there was a transfer of HK$45,000 from the D4 BOC Account to the D1 BOC Account[175].

(ii) On 30 October 2014, there was a transfer of HK$100,000 from the D4 BOC Account to the D1 BOC Account[176].

(iii) On 31 October 2014, there were transfers of HK$600,000 and HK$183,000 from the D4 BOC Account to the D4 BOC Current Account[177].

(iv) There was a payment of HK$650,210 by cheque from D4 BOC Current Account to D5 on 31 October 2014[178].

(v) On 4 November 2014, there was transfer of HK$400,000 from the D4 BOC Account to the D4 BOC Current Account[179].

(vi) There was a transfer of HK$100,000 from D4 BOC Current Account to the D2 Account on 4 November 2014[180].

(g) There was a payment of HK$1,340,000 by cheque from D6 to Ng Kwan Ho on 29 October 2014[181].

(h) There was a payment of HK$1.5 million by cheque from D6 to Ng Kwan Ho on 17 September 2014[182].

103.  In my view, there is no justification for any of these withdrawals or transfers. The payments to D6 cannot be investment proceeds. D2’s receipt of proceeds from D4 is a clear pointer of D2’s knowledge of and agreement to become part of the scam, as D1’s case is that she and D2 were financially independent[183]. P submits and I accept that, relying on D2’s silence in receiving fraud proceeds with reference to the principles laid down in Koo Ming Kown, supra §117(h) and Peter GeoffreyDe Krassel §§55-58, D2 already knew a fraud was set up against P right from the beginning, and in any event by this stage, and that D2 agreed to take part in it. By letting the false statements made to P go uncorrected, D2 also made the misrepresentations too. Again, I would draw adverse inference from the failure of D1 and D2 to adduce contradictory evidence, and to hold that D2 was a co-conspirator and these debits/withdrawals during this period were dissipation of fraud proceeds.

104.  In light of the obvious dissipation of P’s monies, I find there never existed the JV Investment or the Hotel Investments. Neither did the Alleged Joint Account ever exist. The JVA, the Proposal and the Alleged Joint Account TT Form were all false instruments. I further find that the JV Investment Representation, the Hotel Development Investment Representation, the Joint Account Representation, the Deposit and Transfer Representation and the D6 Trader Representation were false when they were made by D1, and knowingly so.

105.  On or around 26 January 2015, D1 represented to P (“the Further Investment Representation”) that there existed yet further investment in which D4 was a trader that would yield profits of approximately US$300,000 in around 3 months’ time (“the Further Investment”)[184].

106.  The making of the Further Investment Representation is supported by (a) two cheques of HK$6,975,000 each post-dated 8 & 10 April 2015 issued by D4 (signed by D1 on its behalf) to P (“the Two Post-Dated Cheques”)[185]; and (b) the accompanying receipt acknowledgement setting out how the two cheques related to an investment between P and D1[186]. The total sum under the Two Post-Dated Cheque (HK$13,590,000, equivalent to US$1,800,000 taking an exchange rate of around HK$7.55:US$1) represented precisely the purported principal of US$1,500,000 plus profits of approximately US$300,000 under the Further Investment.

107.  I find as a fact that it was in reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the Further Investment Representation, P made payment of US$1.5 million to D4 on 26 January 2015[187]. I further find there cannot be any question that the Further Investment Representation, individually or together with one or more of the D1 Background Representation, the Fiduciary Relationship and the Family Background Representation, was made to induce P’s payment to D4 on 26 January 2015.

108.  The Two Post-Dated Cheques were never cleared as P was told in around April 2015 that P could only present these cheques for clearance upon D1’s further notice and no such notice had ever been given by D1[188].

109.  I note the fact that it was D3 who had collected the cashier order of US$1.5 million and deposited it into D4 BOC FX Account[189]. Thus, I find D3 certainly was not an innocent employee of D1 who was merely acting on the instruction of his employer, ie D1. I find he was a willing and active participant in the fraud.

110.  Based on the documentary evidence discovered by the parties, I further find that during the following few months until April 2015, there were progressive dissipation of P’s monies by Ds:

(a) Before deposit of US$1.5 million from P on 26 January 2015, D4 BOC FX Account had a balance of US$0.28[190].

(b) There was an exchange of US$60,000 into Hong Kong dollars to D4 BOC Account on 28 January 2015[191].

(c) There was an exchange of US$50,000 into Hong Kong dollars to D4 BOC Account on 2 February 2015[192].

(d) There was a transfer of HK$370,000 from D4 BOC Account to D2 Account on 3 February 2015[193].

(e) There was a transfer of HK$100,000 from D4 BOC Account to D1 BOC Account on 3 February 2015[194].

111.  In my judgment, there is no justification for any of these withdrawals or transfers. The payment to D4 on 26 January 2015 cannot be investment proceeds. Again, I am entitled to and would draw adverse inference from D1’s failure to adduce contradictory evidence, and to hold that these debits/withdrawals during this periods were dissipation of fraud proceeds.

112.  In light of the obvious dissipation of P’s monies, in my view, there never existed the Further Investment. The Two Post-Dated Cheques could never be cleared, and together with the accompanying acknowledgement were false instruments. The Further Investment Representation was false when it was made by D1, and knowingly so.

113.  In around May 2015, D1 represented to P that there was the need to remit US$1.5 million to D4 which was a trader and participant in the 1^st PPP for extra returns (“the D4 1^st PPP Trader Representation”)[195]. P was therefore asked to pay another sum of US$1.5 million to D4 and to sign a letter, which has been pre-signed by D1, to purportedly give effect to transfer of funds to D4 and acknowledge restriction on movement of funds in P’s account (“the Restriction Letter”)[196].

114.  As Mr Yeung submits, the making of the D4 1^st PPP Trader Representation is manifestly reflected by the Restriction Letter, which reads:

(a) at §1:「給予戶口：828-04600-833 [P’s HSBC Account] 動用美元150萬to Clever Brilliant Limited.」;

(b) at §4: 「任何動用戶口款項，一定要給予trader知道，否則立刻停止上盤」

115.  I find as a fact that, in reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the 1^st PPP Representation, and/or the D4 1^st PPP Trader Representation, P made payment of US$1.5 million to D4 and signed the Restriction Letter on 6 May 2015[197].

116.  I further find there cannot be any question that the D4 1^st PPP Trader Representation, individually or collectively or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the 1^st PPP Representation, were made to induce P’s payment to D4 and P’s signing of the Restriction Letter on 6 May 2015.

117.  As is apparent from the above, D4 in truth was D1’s corporate vehicles. D3 again was the one who collected the cashier order of US$1.5 million and deposited it into D4 BOC FX Account[198]. Further, for the next few months until October 2015, there were progressive dissipation of P’s monies:

(a) Before deposit of US$1.5 million from P on 6 May 2015, D4 BOC FX Account had a balance of US$70,008.59[199].

(b) There was an exchange of US$50,000 into Hong Kong dollars to D4 BOC Account on 8 May 2015[200].

(c) There was a transfer of HK$250,000 from the D4 BOC Account to the D4 BOC Current Account on 8 May 2015[201].

(d) There was a transfer of HK$150,000 from D4 BOC Current Account to D2 Account on 8 May 2015[202].

(e) There was a transfer of HK$130,000 from D4 BOC Account to D1 BOC Account on 11 May 2015[203].

(f) There was another exchange of US$50,000 into Hong Kong dollars to D4 BOC Account on 12 May 2015[204].

(g) There was a transfer of HK$40,000 from D4 BOC Account to D1 BOC Account on 12 May 2015[205].

(h) There was a transfer of HK$40,000 from D4 BOC Account to D1 BOC Account on 20 May 2015[206].

(i) There was a transfer of HK$25,000 from D4 BOC Current Account to D2 Account on 20 May 2015[207].

(j) There was a transfer of HK$80,000 from D4 BOC Current Account to D2 Account on 22 May 2015[208].

(k) There was a transfer of HK$100,000 from D4 BOC Account to D1 BOC Account on 27 May 2015[209].

(l) There was a transfer of HK$250,000 from D4 BOC Account to D1 BOC Account on 10 June 2015[210].

(m) There was a transfer of HK$100,000 from D4 BOC Account to D1 BOC Account on 12 June 2015[211].

118.  In my view, there is no justification for any of these withdrawals or transfers. The payment to D4 on 6 May 2015 cannot be investment proceeds. Again, I am entitled to and would draw adverse inference from D1’s failure to adduce contradictory evidence, and to hold that these debits/withdrawals during this periods were dissipation of fraud proceeds.

119.  As advised by police, the 1^st PPP never existed[212]. As a result, there never existed the need for further payment to D4 for extra returns under the 1^st PPP. The Restriction Letter was false instrument. This is underpinned by the obvious dissipation of P’s monies. I find D4 1^st PPP Trader Representation was false when it was made by D1, and knowingly so.

120.  Again, D3 was the one who collected both of the cashier orders, of a total sum of US$3 million (equivalent to over HK$23 million), from P in January and May 2015.

121.  Mr Yeung submits that any reasonable and honest person in D3’s shoes would have been at least raised enquiries and that D3’s conduct in happily depositing sums of such magnitude into an account of D1’s corporate vehicles is a clear indicator of his knowledge of the fraud and his agreement to become part of it.

122.  I entirely agree with his submissions.

123.  In my judgment, D3’s silence and turning a blind eye to what quite obviously was a scam at the very least constituted knowledge and agreement to become part of the representor in those misrepresentations inducing these two payments. In my view, D3 must have known a fraud was perpetrated against P at this point and must have embraced it. I so find it was the case.

124.  As summed up by Mr Yeung in P’s Closing Submissions, from around end of July up till around mid-2015, I find the following misrepresentations were made to P:

Item	Misrepresentations	Date of representation
8.	European Projects Investments Representation	2014.08
9.	D4 Trader Representation	2014.08
10.	JV Investment Representation	2014.09
11.	Hotel Development Investment Representation (inducing signing of documents only)	2014.09
12.	Joint Account Representation	2014.10
13.	Deposit and Transfer Representation	2014.10
14.	D6 Trader Representation	2014.10
15.	Further Investment Representation	2015.01
16.	D4 1st PPP Trader Representation	2015.05

125.  P also produces the following table which sets out the payments/remittances/action induced by the relevant misrepresentations from end of July 2014 up to mid-2015:

Date of payment/ remittance induced	Amount of payment/ remittance	Document signed	Relevant misrepresentations	Date of misrepresentation
2014.08.08	HK$388,000 (equivalent to US$50,000) to D4	n/a	The D1 Background Representation The Family Background Representation The HK Solicitors Representation The D4 Trader Representation The European Projects Investment Representation	2014.05 2014.06 2014.07 2014.07/08 2014.07/08
2014.08.09	US$27,000 to Bliss Group Limited	n/a
2014.09.01	HK$388,000 (equivalent to US$50,000) to D4	n/a
2014.09.15	US$1,000,000 to D6	JVA	The D1 Background Representation The Family Background Representation The HK Solicitors Representation The JV Investment Representation	2014.05 2014.06 2014.07 2014.09
2014.09 (around)	n/a	Confidentiality agreement	The D1 Background Representation The Family Background Representation The HK Solicitors Representation The Hotel Development Investment Representation	2014.05 2014.06 2014.07 2014.09
2014.10.27	US$1,000,000 to D6	JVA The Alleged Joint Account TT Form	The D1 Background Representation The Family Background Representation The HK Solicitors Representation The JV Investment Representation The Joint Account Representation The Deposit and Transfer Representation The D6 Trader Representation	2014.05 2014.06 2014.07 2014.09 2014.10 2014.10 2014.10
2015.01.26	US$1,500,000 to D4	n/a	The D1 Background Representation The Family Background Representation The Further Investment Representation	2014.05 2014.06 2015.01
2015.05.06	US$1,500,000 to D4	Restriction Letter	The D1 Background Representation The Family Background Representation The 1st PPP Representation The D4 1st PPP Trader Representation	2014.05 2014.06 2014.05 2015.05

(iii) The Final Stage

126.  At the final stage, P was mainly induced to make numerous payments and take other actions under the pretext of returns on the 1^st PPP. From mid-2015 up to October 2017, P signed the following documents and made the following payments/remittances:

Item	Date of signing/ payment/ remittance	Document signed	Counterparty/ Recipient/ Beneficiary	Amount of payment/remittance
1.	2015.10.07	A 1st purported HKMA letter	D4[213]	HK$12,779
2.	2015.10.07	A 1st purported HKMA letter	D4 (D4 FX BOC Account)[214]	US$840,770.02
3.	2016.01.18	n/a	D5 (D5 HSBC Account)[215]	US$212,188
4.	2016.04.28	n/a	D7 (BOC Account no. 012-676-219040-0) (“D7 BOC Account”)[216]	US$500,000
5.	2016.11.23	A 2nd purported HKMA letter	D4 (D4 BOC FX Account)[217]	US$500,000
6.	2016.12.16	n/a	D5 (D5 HSBC Account)[218]	US$60,000
7.	2016.12.16	n/a	D4 (D4 BOC FX Account)[219]	US$340,000
8.	2017.03.15	A 3rd purported HKMA letter	D4 (D4 BOC FX Account)[220]	US$300,000
9.	2017.04.20 (around)	A purported JFIU letter	n/a	n/a
10.	2017.04.25	n/a	HKSAR[221]	HK$500,000
11.	2017.04.25	n/a	STC[222]	HK$600,000
12.	2017.06.12	n/a	D4 (D4 BOC FX Account)[223]	US$300,000
13.	2017.06.29	n/a	D4 (D4 BOC FX Account)[224]	US$400,000
14.	2017.08.01	n/a	D4 (D4 BOC Account)[225]	HK$1,000,000
15.	2017.08.01	n/a	STC[226]	HK$500,000
16.	2017.08.21	n/a	D4 (D4 BOC Account)[227]	HK$1,300,000
17.	2017.10.07	n/a	D4 (D4 BOC Account)[228]	HK$500,000
18.	2017.10.07	n/a	STC[229]	HK$150,000

127.  On around 7 October 2015, D1 represented to P that collection or receipt of investment returns arising from the 1^st PPP would be ready soon (“the 1^st PPP Investment Return Representation”). For this purpose, D1 further represented that the balance in the Alleged Joint Account had to be a round-off figure of HK$40,000,000 for easier reporting (“the 1^st PPP Investment Return Round Off Balance Representation”) and that the Alleged Joint Account had a credit balance of US$129,748,993 (“the 1^st PPP Investment Return Account Balance Representation”). On this basis, P was asked to pay HK$6,580,547 as the cut-off figure in the round-off exercise, and HK$12,779 as a sum to facilitate receipt of return[230].

128.  The making of the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, and the 1^st PPP Investment Return Account Balance Representation were reflected in a letter purportedly issued by HKMA dated 7 October 2015 and shown to P by D1 (“the 1^st Purported HKMA Letter”)[231]. This letter, which was signed by D1, reads:

(a) At the top: 「預備收PPP利潤，戶口（在必需是整數港幣HK$40,000,000方便報備，此餘數HK$6,580,547.00必需匯款到聯名戶口 Fan Pui Wan Margaret and Ms. Yeung Siu Yung account， 此調動，也證明 Yeung Siu Yung 戶口是有美元11,000,000 Millions，而Fan Pui Wan Margaret 戶口也証明美元136Millions。」

(b) At §1: 「。。。。。。 在2015年10月7日HK$6,580,547.00 (equivalent to USD848,993.00)調動到 （Clever Brilliant Limited）。」

(c) At §4: 「以上兩個戶口，不得移動任何資金，在任何情況下，必要與trader聯絡，否則會影響上盤中的運作。」

129.  In reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, and/or the 1^st PPP Investment Return Account Balance Representation, P made payments of US$840,770.02 (equivalent to around HK$6,580,547 at the then exchange rate) and HK$12,779 to D4, and countersigned on the 1^st Purported HKMA Letter, on 7 October 2015[232].

130.  Since D4 was D1’s corporate vehicles and the 1^st PPP never really existed, I find there was no justification for D4 to receive these sums.

131.  In the circumstances, I find as a fact that there cannot be any question that the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, and/or the 1^st PPP Investment Return Account Balance Representation, individually or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the HK Solicitors Representation, was made to induce P’s payments to D4 on 7 October 2015.

132.  Again, there were progressive dissipation of P’s US$840,770.02 after the deposit to the D4 BOC FX Account on 7 October 2015:

(a) There was an exchange of US$70,000 into Hong Kong dollars to D4 BOC Account on 14 October 2015[233].

(b) There were two exchanges of US$60,000 each into Hong Kong dollars to D4 BOC Account on 15 October 2015[234].

(c) There were numerous withdrawals from the D4 BOC Account from 14 October 2015, leaving a balance of HK$9,096.02 by 26 October 2015[235].

(d) There were also numerous withdrawals, on top of the said exchanges to the D4 BOC Account, from the D4 BOC FX Account up till January 2016, leaving a balance of US$90,781.93 by 28 January 2016[236].

133.  Again, I find that there is no justification for any of these withdrawals or transfers. The payments to D4 on 7 October 2015 were scam. P has invited the Court to draw adverse inference from D1’s failure to adduce contradictory evidence, and to hold that these debits/withdrawals during these periods were dissipation of fraud proceeds. I would be happy to do so as I find there was no other reasons for those withdrawals and transfers.

134.  As advised by police, the 1^st PPP never existed[237]. The necessary inference to make must be that there never existed any investment return. Nor was there any need for further payment to D4, whether for round-off for investment return or any other purposes. The 1^st Purported HKMA Letter was a false instrument. There was also the obvious dissipation of P’s monies. In the circumstances, I find the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, and/or the 1^st PPP Investment Return Account Balance Representation were false when they were made by D1, and knowingly so.

135.  On or around 26 February 2016, D1 represented to P that, for the purpose of investment return on the 1^st PPP, there was the need to have a joint account in the name of D7 at BOC with a balance of US$500,000 (“the 1^st PPP Investment Return BOC Account Opening Requirement Representation”)[238]. For this reason, P was asked to make a transfer of US$500,000 to the D7 BOC Account.

136.  At this point of time, as explained by her in P WS, P began to feel anxious about getting her monies back, but she was asked to be patient by D1. In the meantime, P’s bank account in Mainland China was frozen, which she later found out in about August 2016 was attributable to her procurement of currency exchange to remit around RMB700,000 to her Mainland China account for property purchase[239]. D1 exploited P’s concern to conjure up money laundering issue to make P worry on one hand and gave P much-needed care and comfort on the other. This unfortunately convinced P that D1 continued to be a much-trusted person to be listened to and relied on[240].

137.  In reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the 1^st PPP Investment Return Representation, and/or the 1^st PPP Investment Return BOC Account Opening Requirement Representation, P made further payment of US$500,000 to D7 on around 28 April 2016[241].

138.  D3 has confirmed that D7 was D1’s corporate vehicles with no business operation[242]. As I have found above, the 1^st PPP never existed[243], and that there thus never existed any investment return. In the premises, there could not have been any need for having a joint account with minimum balance as represented by D1. In other words, there is no justification for D7’s receipt of monies from P. I agree with Mr Yeung that the payment to D7 by itself evidences the 1^st PPP Investment Return BOC Account Opening Requirement Representation having been made.

139.  Further, in the absence of contradictory evidence, the answer must be, as put forward by P, that the 1^st PPP Investment Return BOC Account Opening Requirement Representation, individually or together with the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation and/or the 1^st PPP Investment Return Representation were made to induce this payment of US$500,000 by P to D7.

140.  Extraordinarily, the balance of the D7 BOC Account had only US$8 left in 2018[244]. There is no evidence on whereabouts of the monies, and D1 has not offered anything which could vindicate D7’s receipt. Plainly, as Mr Yeung submits, P’s monies had been dissipated. Again, I have no hesitation to draw adverse inference from D1’s failure to adduce contradictory evidence, and to hold that the disappearance of P’s US$500,000 deposited into the D7 BOC Account were dissipation of fraud proceeds.

141.  It is beyond any shadow of doubt and I so find that the 1^st PPP Investment Return BOC Account Opening Requirement Representation was false when it was made by D1, and knowingly so.

142.  D1’s deceitfulness has no bounds. As pointed out by Mr Yeung, taking advantage of a conjured up money laundering issue upon P’s frozen account in Mainland China, D1 in around April 2016 represented to P that there was the need to make tax payment and money laundering clearance payment in order to facilitate the receipt of investment return on the 1^st PPP and that she had already made payment of HK$5 million and HK$1 million (“the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation”)[245].

143.  The D1 Nov 2017 Letter sheds light on D1’s trick to cite money laundering issue to get P into making payments[246], evidencing the making of the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation.

144.  In November 2016, D1 represented to P that she was meeting with a HKMA officer and that there was the need to pay US$500,000 for tax arising from investment return on the 1^st PPP (“the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation”)[247].

145.  Traces of the making of the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation can be seen from two documents purportedly issued by HKMA dated 23 November 2016 and shown to P by D1 (“the 2^nd Purported HKMA Letter”)[248]. One of these documents was addressed to D1[249] and the other one to P[250]. Both were signed by someone whom D1 alleged to be a HKMA officer. The one addressed to P reads:

「To: Yeung Siu Yung

….

貨幣應收稅

Referring to the decree made in this cause on trade and credit information department from HSBC London/Hong Kong. Ms. Yeung Siu Yung should be received from the trader at the total amount of $20,000,000.00 usd in 2017.

And the other total amount of 10,000,000.00 usd in 2018. And

Yeung Siu Yung starts to receive the money in January 2017 by proportional. She has had to Fill in the taxation form : Money landing tax of the profit tax. Pay the money landing tax of $500,000 usd by 25 November 2016.

It is hereby certified that the said decree was on the 23/November/2016, under the officer of the Mr. Michael Oei, Hong Kong Monetary Authority.」

146.  In reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, the 1^st PPP Investment Return Account Balance Representation, the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and/or the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation, I find P made payment of US$500,000 to D4 and countersigned on the 2^nd Purported HKMA Letter on 23 November 2016[251].

147.  D3 collected the cashier order of US$500,000 and deposited it into the D4 BOC FX Account[252]. Mr Yeung submits that any reasonable and honest person in D3’s shoes would have been at least raised enquiries. He further submits that D3’s silence and turning a blind eye to what quite obviously was a scam at the very least constituted knowledge and agreement to become part of the representor in those misrepresentations inducing this payment. D3 must have known a fraud was perpetrated against P at this point and must have embraced it. I entirely agree with his submissions.

148.  Further, D1 later sought further payment from P citing that it was needed for facilitating receipt of investment return on the 1^st PPP[253], effectively repeating the representations made so far.

149.  I further find as a fact that, in reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, the 1^st PPP Investment Return Account Balance Representation, the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and/or the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation, P made payments of US$60,000 to D8 and US$340,000 to D4 on 16 December 2016[254].

150.  Again, I find that the 1^st PPP never existed and that D4 was D1’s corporate vehicles. The 2^nd Purported HKMA Letter was false instrument. There was no justification for D4 to receive the sum. In the circumstances, in my judgment, there cannot be any question that the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and/or the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation, individually or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, and/or the 1^st PPP Investment Return Account Balance Representation, was made to induce P’s payments on 23 November & 16 December 2016.

151.  The documentary evidence shows that there were yet again dissipation of P’s monies right after the deposits to the D4 BOC FX Account on 23 November[255] and 16 December 2016[256]:

(a) The balance of D4 BOC FX Account before the deposit of US$500,000 on 24 November 2016 was US$72.9[257].

(b) There were frequent withdrawals from 24 November 2016 to 16 December 2016, leaving a balance of only US$130,072.72 by 16 December 2016. As submitted, the 1^st PPP never existed and that D4 was D1’s corporate vehicles. There was no such need for payment for investment return. I find these withdrawals must have been dissipation of P’s monies.

(c) After deposit of US$340,000 to D4 BOC FX Account on 16 December 2016, there was an exchange of US$60,000 into Hong Kong dollars to D4 BOC Current Account on 19 December 2016[258], subsequent to which there were two tranches of payments of HK$100,000 each from the D4 BOC Current Account to D1 BOC Account[259].

(d) In any event, as I found above, the 1^st PPP never existed and that D4 was D1’s corporate vehicles. There was no such need for payment for investment return. All withdrawals exhausting the deposits of US$500,000 and US$340,000 from P must have been dissipation of P’s monies.

152.  Once again I would draw adverse inference from D1’s failure to adduce contradictory evidence, and to hold that these debits/withdrawals during this periods were dissipation of fraud proceeds.

153.  I also find P’s payments on 23 November & 16 December 2016 to D4 and D8 were a scam.

154.  Accordingly, the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and/or the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation were false when they were made by D1, and knowingly so.

155.  In around March and April 2017, D1 represented to P that HKMA required further payment of US$300,000 for tax arising from investment return on the 1^st PPP and that the Hong Kong Government required payment of HK$1,100,000 for money laundering clearance (“the 1^st PPP Investment Return 3^rd Tax and Other Payment Requirement Representation”, together with the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation, collectively, the “1^st PPP Investment Return Tax and Other Payment Requirement Representation”)[260].

156.  As Mr Yeung has submitted and I accept that the making of the 1^st PPP Investment Return 3^rd Tax and Other Payment Requirement Representation is cogently supported by:

(a) a document purportedly issued by HKMA dated 15 March 2017 pre-signed by D1 (“the 3^rd Purported HKMA Letter”)[261], which reads:

“FAN PUI WAN MARGARET AND YEUNG SIU YUNG IS UNDERSTAND, PAY THE TAXATION TO RECEIVE THE TRADE OF THE FUND FROM THE TRADER, IN 2017 TILL AUGUST, THE TRADER WILL DISTRIBUTE HK$129,000,100.73

YOU HAVE ENTITLE TO PAY THE LANDING TAX OF THE MONEY AS FOLLOWINGS:

1)…….

2) YEUNG SIU YUNG, ENTITLE TO PAY THE TAXATION: (IN TOTAL)

USD800,000.00

(PAID USD500,000.00 ON NOVEMBER 2016 ONLY)…”

(b) a document purportedly issued by the Joint Financial Intelligence Unit of the Hong Kong Police Force dated 20 April 2017 (“the Purported JFIU Letter”)[262], which reads:

“Dear Yeung Siu Yung,

…..

We have to understanding of the laws on money laundering. Due to the past activity. You had been used the illegal dealers whose transferred the money from Hong Kong to China, and due to the fact, your several accounts had been freeze.

……

Please issue a “Bankdraft” to the payable on the

1) The Government of the Hong Kong Special Administrative Region

The Total Amount of HK Currency $500,000.00

2) The assigned Hong Kong Solicitor company, which is handling this case:

“S.T. Cheng & Co., Solicitors”

The Total Amount of HK Currency $600,000.00

Please act your transactions by latest 26/April/2017…..”

(c) the D1 Nov 2017 Letter which reads at §2 on p.2: 「另外，主要其實是幫你清洗之前地下錢舖用的匯款公司，才會這樣，我和家人也沒有怪，大家也堅持，所以請你在現在考驗我和你的信任的時候，不要放棄。」

157.  I find as a fact that, in reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, the 1^st PPP Investment Return Account Balance Representation, and/or the 1^st PPP Investment Return Tax and Other Payment Requirement Representation, P took the following actions:

(a) made payment of US$300,000 to D4 on 15 March 2017[263].

(b) countersigned on the 3^rd Purported HKMA Letter on 15 March 2017[264].

(c) countersigned on the Purported JFIU Letter on around 20 April 2017[265].

(d) made payment of HK$500,000 to Hong Kong Government on 25 April 2017[266].

(e) made payment of HK$600,000 to STC on 25 April 2017[267].

158.  As said, the 1^st PPP never existed and that D4 was D1’s corporate vehicles. Therefore, I find the 3^rd Purported HKMA Letter and the Purported JFIU Letter were false instruments. There was no justification for D4 to receive the sum of US$300,000 from P. Neither was there any justification for payment by P to Hong Kong Government and STC. In truth, as the police revealed[268]:

(a) The sum of HK$500,000 which P was asked to pay to the Hong Kong Government in April 2017 was a fine and/or compensation order against D1.

(b) The sum of HK$600,000 to STC was D1’s legal costs in her then criminal proceedings.

(c) D3 admitted under caution upon arrest that D1 would use P’s monies to pay her legal fees.

159.  In my view and as submitted by Mr Yeung, it is clear that the 1^st PPP Investment Return 3^rd Tax and Other Payment Requirement Representation, individually or together with one or more of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the HK Solicitors Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, the 1^st PPP Investment Return Account Balance Representation, the 1^st PPP Investment Return 1^st Tax and Other Payment Requirement Representation and/or the 1^st PPP Investment Return 2^nd Tax and Other Payment Requirement Representation, were made to induce P’s payments in March and April 2017.

160.  The scam was further corroborated by distinct dissipation of P’s monies:

(a) After the payment of US$300,000 to D4 BOC FX Account on 16 March 2017, there was an exchange of US$16,490 into HK$127,858.81 to D4 BOC Account on 16 March 2017[269].

(b) There was then a transfer from D4 BOC Account to D1 BOC Account on 16 March 2017[270].

161.  I therefore find that the 1^st PPP Investment Return 3^rd Tax and Other Payment Requirement Representation was false when it was made by D1, and knowingly so.

162.  D1 in around June and July 2017 sought further payment from P citing that it was needed for facilitating receipt of investment return on the 1^st PPP[271], effectively repeating the representations made so far.

163.  In reliance of the D1 Background Representation, the Fiduciary Relationship, the Family Background Representation, the 1^st PPP Investment Return Representation, the 1^st PPP Investment Return Round Off Balance Representation, the 1^st PPP Investment Return Account Balance Representation, and/or the 1^st PPP Investment Return Tax and Other Payment Requirement Representation, P made:

(a) payments to D4 of US$300,000 on 12 June 2017[272].

(b) payments to D4 of US$400,000 on 29 June 2017[273].

(c) payment to D4 of HK$1,000,000 on 1 August 2017[274].

(d) payment to STC of HK$500,000 on 1 August 2017[275].

164.  As the police revealed[276], the sum of HK$500,000 to STC was D1’s legal costs in her then criminal proceedings. There was no justification for D4 to receive the various sums from P. They were all scams.

165.  P submits that all these representations were made to induce P’s payments in June and August 2017, and that all these representations were false when they were made, and knowingly so. I so find they were the case.

166.  When D1 was convicted and imprisoned in August 2017 under ESCC 2138/2016 [277] , there was the concerted effort of D1 and D3 to conceal D1’s imprisonment by representing to P in August 2017 that D1 was sick and hospitalised in the UK (“the UK Stay Representation”)[278] with a view to continuing with the scam. This is evidenced by D3’s own admission of making the lie to P[279]. D2, being the husband of D1, must have known that D1 was imprisoned, yet he assisted D3 in the meeting with P on 7 November 2017 to conceal D1’s imprisonment[280], lest is the almost undeniable fact that D2 all along had been recipient of fraud proceeds. I agree with Mr Yeung that, by this stage in around August 2017 at the latest, D2 and D3 must have knowledge of and agreed to become part of the scam.

167.  I also find the UK Stay Representation was reinforced by D3’s delivery of the D1 Aug 2017 Letter to P. On the same occasion, to try and win over P’s trust, apart from repeating all the representations that had been made by D1 to P, D3 also represented to P that there was the need for further payment of HK$1,300,000 for money laundering clearance (“the 1^st PPP Investment Return Further HKMA Payment Representation”)[281].

168.  In reliance of one or more of the UK Stay Representation, the 1^st PPP Investment Return Further HKMA Payment Representation and/or any other representations previously made to her, P made payment of HK$1,300,000 to D4 on 21 August 2017[282]. Again, the 1^st PPP never existed and there was never any investment return. Plainly, Ds had to make these representations to induce P’s payment of HK$1,300,000. D3 collected the cashier order of HK$1,300,000 and deposited it into D4’s account[283], which he admitted to have control of electronic transfer[284].

169.  In around September 2017, D3 represented to P that there existed the need to create a trust holding assets of at least HK$3 million for money laundering clearance (“the “Trust Requirement Representation”)[285]. The making of this representation was supported by the D1 Father Sept 2017 Letter, which D3 admitted to have known the contents and have passed to P[286].

170.  In reliance of one or more of the Trust Requirement Representation, the UK Stay Representation, the 1^st PPP Investment Return Further HKMA Payment Representation and/or any other representations previously made to her, P under D3’s instruction made payment of HK$500,000 to D4 and HK$150,000 to STC on 7 October 2017[287]. D3 collected the cashier orders of these payments and deposited them into D4’s account[288]. Obviously, the said representations were made to induce P’s payments on 7 October 2017.

171.  As the police revealed[289], the sum of HK$150,000 to STC was D1’s legal costs in her then criminal proceedings.

172.  There can hardly be any dispute that D3 was the person who made the representations to P and sought payment from her from August 2017. It is inherently improbable that someone else sought payment from P and that D3 was merely a person who collected payment without any enquiry in the circumstances, particularly so in view of (1) the admitted lie to conceal D1’s imprisonment which as submitted in paragraph 15(g) hereinabove could not have been a “white lie” as he argued; and (2) D3’s admission of knowing D1’s conviction of dishonesty-related crime and her consequential integrity issue. If there were any truth in such contention, then the Court would have expected D3 to call that someone to give evidence to support his case.

173.  What is more striking is that D3 reaped more reward when he became more active in the scam since August 2017:

(a) After depositing HK$1,300,000 into D4’s account on 21 August 2017[290], D3 received –

(i) HK$20,000 from D4 on 25 August 2017[291].

(ii) HK$10,000 from D4 on 1 September 2017[292].

(iii) HK$10,000 from D4 on 18 September 2017[293].

(iv) HK$29,000 from D4 on 1 November 2017[294].

(v) HK$8,000 from D4 on 17 November 2017[295].

(vi) HK$12,000 from D4 on 28 November 2017[296].

(vii) HK$29,000 from D4 on 28 November 2017[297].

(viii) HK$30,000 from D4 on 30 November 2017[298].

(ix) HK$20,000 from D4 on 13 December 2017[299].

(b) After depositing HK$500,000 into D4 BOC Account on 9 October 2017[300]:

(i) There was a transfer of HK$400,000 from the D4 BOC Account to the D4 BOC Current Account on 10 October 2017[301].

(ii) D3 then received a sum of HK$200,000 from the D4 BOC Current Account on 10 October 2017[302].

174.  I also find that D3’s explanation on his receipt of HK$200,000 from D4 on 10 October 2017 was a pack of lies. He asserted that the sum was for forwarding to D2 to bring it for D1’s bail application on the day, and when the application failed, the sum was deposited back into D2’s account[303]. The D1’s criminal litigation search report shows that D1 did not have any bail application pending appeal on 10 October 2017. In any event, even if there was any need to give D2 monies from D4, it begs the question of why D3 did not conduct electronic transfer to D2 directly since D3 had power to do it.

175.  D3’s explanation on his receipt of other sums from D4 between August and December 2017, as set out in his witness statement §27, is equally meritless. During cross-examination, when it was pointed to D3 that D1’s corporate vehicles could not have had any business operations after D1’s imprisonment in August 2017, D3 claimed that two staff of Covermagazine with salary of around HK$15,000/HK$16,000 each continued to generate income. I find this cannot be true for the following reasons:

(a) D3 confirmed that he received salary on a regular basis from Covermagazine during the period from around May 2014 to, coincidentally, end of July 2017[304].

(b) Such salary, ranging from initially HK$25,000 to HK$29,000 in July 2017, already covered all his performance for D1, D4, D7 and Covermagazine[305].

(c) Taking D3’s case that his duty was confined to mere secretarial support, then it is inherently improbable that his salary would be higher than those who generated income for the company.

(d) Further, even assuming D3’s statement about Covermagazine’s continuous business operations to be true, it begs the question of why, since August 2017, D3 suddenly ceased to get salary from Covermagazine but instead from D4 as he alleged. In any event, no regular payment resembling 4 months’ salary could be discerned from D3’s receipt of sums from D4 between August and December 2017.

(e) To the extent D3 claims that Covermagazine for whatever reason became unable to pay salary to him since August 2017, then by the same token Covermagazine would not have been able to pay salary to the two income-generating staff. On this basis, one would expect D3 to pay them from D4’s bank account. However, no record of regular payments of HK$15,000 or HK$16,000 between August and December 2017 can be found from the bank statements of D4 BOC Account and D4 BOC Current Account[306]. Based on D3’s explanation set out in his witness statement §27, which claims that the sums transferred from D4 to D3 included “a cash payment of HK$30,000 to a staff member for his salary”, there could not have been any salary payment via D3 to the two Covermagazine income-generating staff.

(f) D3 asserted that the staff member entitling to the cash payment of HK$30,000 was the driver, but, as the sum was for 4-month period and D3 also argued that the sums transferred from D4 to him included his 4 months’ salary (HK$29,000 x 4 = HK$116,000), D3 was unable to explain how a driver in Hong Kong would get a monthly salary of less than HK$8,000.

(g) P invites the Court to draw adverse inference from the failure of D3 to adduce contradictory evidence, which he is expected to provide to justify his receipt of sums from D4 (ie not reward for his role as a co-conspirator): see Xie Li Xin at §10. I so draw such adverse inference against him.

(h) All in all, I find D3’s assertion is fictitious.

176.  P submits that all sums received by D3 from D4 represented rewards for his role as a co-conspirator. I agree and so find that was the case.

177.  D3 in November 2017 attempted to get P into making further payments of HK$2.5 million as the remaining amount payable under the Trust Requirement Representation (as evidenced by the D1 Nov 2017 Letter §13 on p.3[307] which reads: 「13.我相信，金管會致電你，不可延遲，說應該你只欠250萬港元放回星展做信託。」 But P finally woke up and reported the matter to police[308].

178.  One or more of the UK Stay Representation, the 1^st PPP Investment Return Further HKMA Payment Representation and/or any other representations previously made to P was made to induce P’s payment in August 2017.

179.  One or more of the Trust Requirement Representation, the UK Stay Representation, the 1^st PPP Investment Return Further HKMA Payment Representation and/or any other representations previously made to P was made to induce P’s payments in October 2017.

180.  All these representations were false when they were made by D1 and/or D3, and knowingly so.

181.  In summary, in the final stage from around mid-2015 to October 2017, I find the following misrepresentations were made to P –

Item	Misrepresentations	Date of representation
17.	1st PPP Investment Return Representation	2015.10
18.	1st PPP Investment Return Round Off Balance Representation	2015.10
19.	1st PPP Investment Return Account Balance Return Representation	2015.10
20.	1st PPP Investment Return BOC Account Opening Requirement Representation	2016.02
21.	1st PPP Investment Return 1st Tax and Other Payment Requirement Representation	2016.04
22.	1st PPP Investment Return 2nd Tax and Other Payment Requirement Representation	2016.11
23.	1st PPP Investment Return 3rd Tax and Other Payment Requirement Representation	2017.03
24.	The UK Stay Representation	2017.08
25.	1st PPP Investment Return Further HKMA Requirement Representation	2017.08
26.	Trust Requirement Representation	2017.09

182.  Mr Yeung also produced the following table which sets out the payments/remittances/action induced by the relevant misrepresentations from mid-2015 to October 2017 of which I accept and find as what actually took place during that period:

Date of payment/ remittance induced	Amount of payment/ remittance	Document signed	Relevant misrepresentations	Date of misrepresentation
2015.10.07	HK$12,779 to D4	The 1st Purported HKMA Letter	The D1 Background Representation The Family Background Representation The HK Solicitors Representation 1st PPP Investment Return Representation 1st PPP Investment Return Account Balance Return Representation 1st PPP Investment Return Round Off Balance Representation	2014.05 2014.06 2014.07 2015.10 2015.10 2015.10
2015.10.07	US$840,770.02 to D4	The 1st Purported HKMA Letter
2016.01.18	US$212,188 to D5	n/a
2016.04.28	US$500,000 to D7	n/a	The D1 Background Representation The Family Background Representation 1st PPP Investment Return Representation 1st PPP Investment Return BOC Account Opening Requirement Representation	2014.05 2014.06 2014.07 2016.02
2016.11.23	US$500,000 to D4	The 2nd Purported HKMA Letter	The D1 Background Representation The Family Background Representation The HK Solicitor Representation 1st PPP Investment Return Representation 1st PPP Investment Return Account Balance Return Representation 1st PPP Investment Return Round Off Balance Representation 1st PPP Investment Return 1st Tax and Other Payment Requirement Representation 1st PPP Investment Return 2nd Tax and Other Payment Requirement Representation	2014.05 2014.06 2014.07 2015.10 2015.10 2015.10 2016.04 2016.11
2016.12.16	US$60,000 to D5	n/a
2016.12.16	US$340,000 to D4	n/a
2017.03.15	US$300,000 to D4	The 3rd Purported HKMA Letter	The D1 Background Representation The Family Background Representation 1st PPP Investment Return Representation 1st PPP Investment Return Account Balance Return Representation 1st PPP Investment Return Round Off Balance Representation 1st PPP Investment Return Tax and Other Payment Requirement Representation	2014.05 2014.06 2015.10 2015.10 2015.10 2016.04/ 2016.11/ 2017.03
2017.04.20 (around)	n/a	The Purported JFIU Letter
2017.04.25	HK$500,000 to HKSAR	n/a
2017.04.25	HK$600,000 to STC	n/a
2017.06.12	US$300,000 to D4	n/a
2017.06.29	US$400,000 to D4	n/a
2017.08.01	HK$1,000,000 to D4	n/a
2017.08.01	HK$500,000 to STC	n/a
2017.08.21	HK$1,300,000 to D4	n/a	The UK Stay Representation The 1st PPP Investment Return Further HKMA Payment Representation All other misrepresentations previously made to P	2017.08 2017.08 Various dates
2017.10.07	HK$500,000 to D4	n/a	The Trust Requirement Representation The UK Stay Representation The 1st PPP Investment Return Further HKMA Payment Representation All other misrepresentations previously made to P	2017.09 2017.08 2017.08 Various dates
2017.10.07	HK$150,000 to STC	n/a

THE UNLAWFUL MEANS CONSPIRACY CLAIM

183.  Mr Yeung submits that, for unlawful means conspiracy, the following matters have to be established (See Xie Li Xin at §191; JSC BTA Bank v Ablyazov & Anor (No 14) [2020] AC 727 at §10; She Tsu Yi v Tsui Ki Ting & Others [2007] HKCFI 1130 §154):

(a) There must be an agreement or understanding between 2 or more people. It is not necessary for the conspirators to all to join the conspiracy at the same time, but the parties to it must be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they were acting in concert at the time of the acts complained of.

(b) Conspiracy is actionable where there is absence of just-cause or excuse for the conduct.

(c) There must be an intention to injure the plaintiff by unlawful means, irrespective of whether such intention is the predominant purpose. The intention can be inferred if it can be shown that the act is done deliberately and with knowledge of the consequences.

(d) Unlawful acts are carried out pursuant to the agreement or understanding. The unlawful means could be criminal conduct or a separate actionable tort such as tort of deceit. Breach of fiduciary duties, dishonest assistance and knowing receipt are all recognised as being capable of constituting unlawful acts.

(e) The unlawful acts resulted in loss or damage to the plaintiff.

184.  Likewise, for fraudulent misrepresentation / the tort of deceit, Mr Yeung submits that the following have to be proved according to Xie Li Xin at §§183-185:

(a) There must be a representation of fact made by words or conduct.

(b) The representation must be made with knowledge that it is or may be false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true.

(c) The representation must be made with the intention that it should be acted upon by the claimant, or by a class of persons which include the claimant, in the manner which resulted in damage to him.

(d) It must be proved that the claimant has acted upon the false statement.

(e) It must be proved that the claimant suffered damage by so doing.

(f) Representations are not limited to express words. The court has to consider whether a reasonable person would have understood from the words used in the context in which they were used. In determining what, if any, implied representation has been made, the court has to perform a similar task, except that it has to consider what a reasonable person would have inferred was being implicitly represented by the representor’s words and conduct in their context.

(g) A representation as to belief or intention can also be a statement of fact. If the representor did not in fact harbour such a belief or intention, that statement would be false.

185.  In addition to the above, Mr Yeung further submits that, insofar as agreement or adherence to the agreement to the conspiracy is concerned, consent can be inferred if it is proved that the conspirator knew what was going on and the intention to participate in the furtherance of the criminal purpose is also established by his failure to stop the unlawful activity: see Pak Win Investment Ltd (In Compulsory Liquidation) v Chung Yuet Sheung, Lorrain& Others [2012] HKCFI 126 §15.

186.  Mr Yeung refers me to the 3 tables in §§83, 125, 182 above and submits that P’s case of making payments/remittances/transfers to various parties as well as signing documents in reliance of relevant misrepresentations as indicated in those tables has been cogently made out.

187.  I agree with him.

188.  I further agree with Mr Yeung that all of the representations were false and made fraudulently:

(a) The 1^st PPP never existed. It was obviously engineered by Ds. As a result, all the representations relating to the 1^st PPP or its investment return must be false.

(b) Neither was any other investments or bank account information represented to P genuine. They were also fabricated by Ds.

(c) It has been shown that D4, D6 and D7 were D1’s corporate vehicles. Any representation relating to these entities’ “trader” roles must be false.

(d) Even the representation relating to D1’s career and family background were false.

(e) The representation on the capacity of D5 and D8 has also been shown to be false.

189.  Although D1 did the bulk of the misrepresentations at the early stage, D3, who knew the presence of a fraud against P right from the beginning but chose to remain silent and let the false statement go uncorrected, is deemed to have made the misrepresentations too. In any event, D3 took over D1’s role since D1’s imprisonment in August 2017 and did explicitly make misrepresentations to P to induce further payments/transfers/remittances. D2 similarly knew the fraud against P, at least from the time when he received any fraud proceeds from D1 or D4. He therefore is deemed to have made misrepresentations to P when he remained silent and let the false statement go uncorrected.

190.  I further agree with Mr Yeung that the scam in the present case is so obvious that there is virtually no room to argue that the misrepresentations were not intended to induce P to make payments or take other actions to her injury. It is beyond any shadow of doubt that P made payments/transfers/remittances of a total sum of HK$71,867,411.35. I fail to see how there could be argument that such payments transfers/transfers/remittances, of which approximately HK$67.8 million went to D1’s corporate vehicles, were made independent of these misrepresentations.

191.  By virtue of their assistance in making (actively or passively) one or more of the misrepresentations and/or their receipt of fraud proceeds, I find D2 and D3 must have agreed to become part of the conspiracy.

192.  Insofar as D4 is concerned, a company, being a separate legal person, can conspire with its directors; and the knowledge of the company may be found in a director who has management or control for the transaction or act in question: see Apple Inc & Anor v Proview International Holdings Limited& Others [2011] HKCFI 1375 at §32. As D1 was at material times the directing mind of D4, D1’s action is attributed to D4 such that D4 must have been a part of the conspiracy. Further, D4 was clearly the vehicle to receive and dissipate fraud proceeds, D4 thus must have agreed to be part of the conspiracy.

193.  For the foregoing reasons, I find all of the elements of unlawful means conspiracy, with the unlawful means being fraudulent misrepresentations/tort of deceit committed by Ds, have clearly been satisfied.

DISPOSITION AND ORDER

194.  In the aforestated premises, I find D1 to D4 jointly and severally liable and order them to pay to P a total sum of HK$66,013,631.35 (being HK$71,867,411.35 - HK$5,853,780), together with interest thereon at judgment rate from 24 May 2018 until date of judgment and thereafter at judgment rate.

195.  P also seeks an injunction restraining each of D1 to D4 from disposing any of his/her/its assets up to the value of HK$66,013,631.35 until full and final payment of the compensation as per prayer 1(e) of the SOC (effectively continuation of the injunction order made on 23 May 2018 and extended on 1 June 2018, until full and final payment of the compensation). P submits that a Mareva injunction and the usual execution mechanism can work in tandem: China Citic Bank Corporation Limited (Quanzhou Branch) v Li Kwai Chun & Others[2018] HKCFI 1800 §§26-32. Given the extremely low commercial morality on the part of D1 to D4, this is precisely the type of case where a post-judgment injunction is required.

196.  On costs, P invites the Court to apply Xie Li Xin at §§217-220 and order indemnity costs in favour of P. I agree that worse than the defendants in Xie Li Xin, D1 to D4 had continued to run wholly incredible defence and, in the case of D1, D2 and D4, failed to attend the trial. None of D1 to D4 complied with the PTR order to complete the pre-trial matters, such as filing of opening submissions. D3’s testimony at trial was appalling and contradictory. It was clear to all of them that they had no defence from the start. They did all that they could to drag on the trial to the extent possible, delaying P’s recovery and instead subjecting P to more injury and suffering to the maximum. In my view, all of them wasted considerable time and costs.

197.  I have no hesitation to order costs against D1 to D4 on an indemnity basis, such costs to be taxed if not agreed.

198.  Last but not the least, I wish to thank P’s counsel Mr Yeung for his very able assistance in this case, particularly in preparing the very detailed opening and closing submissions which have clearly set out the issues and analysed the evidence in a most logical and meticulous manner. They have hugely assisted the Court in preparing this judgment for which I am very grateful.

Mr Mike Yeung, instructed by Chan Ching Man & Co, for the plaintiff

The 3^rd defendant appeared in person

The 1^st, 2^nd and 4^th defendants was not represented and did not appear

HCA 1211/2018

[2022] HKCFI 847

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1211 OF 2018

____________

____________

______________

DECISION

______________

1.  This is the 2^nd application by Cheng Tak Hei Danny (“D3”) by summons dated 24 August 2021 for variation of the expenses allowance exception to the Mareva order based on intervening change of circumstances since his 1^st application. The variation sought concerns additional legal expenses for the present action and the related criminal proceedings. At the conclusion of the hearing the Decision was reserved which I now give.

Background

2.  Yeung Siu Yung (“P”) claims to be the victim of a conspiracy to defraud by unlawful means in the form of fraudulent misrepresentation and/or deceit by the defendants being Fan Pui Wan Margaret (“D1”), D2 (D1’s husband), D3 (D1’s secretary), D8 (D1’s extra-marital lover), D4, D6 and D7 (being companies owned and controlled by D1) and D5 a company owned by D8. D3 is also the company secretary of D4 and D7. D2-D8 are hereafter collectively referred to as “the defendants”.

3.  D1, the mastermind behind the conspiracy, met and befriended P in mid-2014 offering assistance to P in making investments. It is P’s case that D1 exploited that relationship to conduct a fraudulent scheme. Each of D2, D3 and D8 met with P at some stage to reinforce what D1 had said to P and the corporate entities that D1 controlled (namely D4, D6 and D7) were used to effect the conspiracy.

4.  D3 took over D1’s role in trying to induce P to make further payments between August and November 2017. D3 knew that D1 was then serving a sentence in Hong Kong in another criminal case but told P that D1 was sick and hospitalised in the UK. During this time D3 also helped D1 operate the bank account held by D4 as well as passing 3 letters containing misrepresentations to P.

5.  P brought this action in May 2018, claiming against the defendants jointly and severally for, inter alia, a total sum of $66,115,909.35 plus damages.

6.  P reported the matter to the police in early November 2017. The defendants were arrested in mid-December 2017. Under caution, D3 admitted having delivered a letter to P for D1 (whom he knew was serving a custodial sentence) in August 2017. He also admitted that he knew D1 would use P’s monies to pay her legal fees and to repay some of her debtors.

7.  D1 was charged under ESCC 1210/2018 (“D1 ESCC”) whereas D2 and D3 were charged under ESCC 2379/2019 (“the criminal proceedings”).

8.  D3 denies any knowledge of the fraudulent scheme. He runs a defence of bare denial and claims that as D1’s employee, he had merely carried out D1’s instructions.

9.  P obtained a Mareva order on 23 May 2018 against all defendants restraining the disposal of assets up to a value of $63,854,669.46[1].

10.  On 27 November 2019, D3 obtained an Angel Bell order varying the expenses allowance exception to the Mareva order, increasing the living expenses of D3 from $2000 per week to $38,000 per month and costs on legal advice and representation in the civil case from $100,000 to $450,000 up to the 1^st pre-trial review hearing.

11.  D3 disclosed the following assets worth over $50,000: (a) sale proceeds of just over HK$4.1 million (“the sale proceeds”) representing his 50% share in a property in Des Voeux Road West (“the DVRW property”) co‑owned with his brother Cheng Tak Fat since 2010 and sold in July 2018; and (b) another property also co-owned with his brother since 1995 at Queen’s Road West (“the QRW property”). The QRW property has been the matrimonial home of his brother since that date.

12.  The sale proceeds as well as D3’s half share in the QRW property are subject to the Mareva order.

Legal principles

13.  It is common ground that the principles enunciated by Lord Bingham in Fourie v Le Roux [2007] 1 WLR 320 at §2 and by Lord Donaldson MR in Derby & Co Limited v Weldon (Nos 3 & 4) [1989] 2 WLR 412 at 76E-F apply. In summary, a Mareva injunction is designed to prevent a defendant dissipating his assets with the intention or effect of frustrating enforcement of a prospective judgment. Its purpose is not to place the plaintiff in the position of a secured creditor nor to impede the defendant in any way in defending himself against the claim.

14.  In determining whether the funds should be released, the tests to be applied differ to some extent depending on whether P’s claim is proprietary or non-proprietary. For the former, a more stringent test is applied[2]. Each case involves a two-step process.

15.  The 2 tests are explained and set out in the Hong Kong Life InsuranceLtd v Fung Siu Cheung Michael [2014] HKCFI 292 at §§32-34. Whichever test the court is to apply, stage 1 in the 2 tests is not that different, it being incumbent on the applicant to show that he does not have any other assets available to meet the payments and that the main difference between the 2 tests is in stage 2[3].

16.  It is common ground that as regards the sale proceeds of the DVRW property, the claim is non-proprietary. To satisfy stage 2 of the non‑proprietary claim, the applicant has to show that the purpose of the application is not an attempt to dissipate the assets to frustrate the execution of judgment by the plaintiff.

This application

17.  D3 took out the present summons on 24 August 2021 (“the Summons”) for a 2^nd Angel Bell order to vary the Mareva order and seeks additional legal costs based on a change of circumstances since the 1^st Angel Bell order in that (a) criminal charges have been laid against him in the criminal proceedings; and (b) P has disclosed her documents in the civil case of approximately 1800 pages and the police have served the committal bundles including unused materials of approximately 7700 pages (“the police documents”).

18.  D3 has been advised that given the nature of the charges the criminal proceedings and D1 ESCC would be consolidated and committed to the High Court for trial with jury. D3 denies those charges and will maintain a not guilty plea.

19.  The original return date for the committal hearing was vacated due to Covid-19 and, prior to the date of the Summons it was adjourned a number of times as D2, also a defendant in the criminal proceedings, is abroad and has yet to return to Hong Kong.

20.  There have been no fewer than 6 adjournments since the date of the Summons as D2 is still abroad, the adjourned committal hearing is scheduled to take place on 18 July 2022. Should that actually take place, it is anticipated that the trial dates are likely to be some 18 months after committal.

21.  D3 seeks (a) a total sum of $2,745,500 on legal advice and representation for the criminal proceedings; and (b) an additional $580,000 for the civil case to the 1^st PTR.

(a) Costs for the criminal proceedings

22.  D3’s application for approximately $2.75 million is based on an estimated bill of costs in respect of a trial of 28 days. The basis for the time estimate does not appear in the hearing bundles although at the hearing Mr Danny Fung, counsel for D3, informed the court that that was the advice from (unidentified) counsel advising D3 on the criminal case.

23.  While D3’s solicitors’ bill of costs in that sum is undated, the fee quotations obtained from counsel were obtained 9 months before the Summons and before receipt of the index of the committal bundles disclosing the volume of documents.

24.  As earlier noted, the criminal proceedings have not even reached the committal stage. Should the committal hearing take place as scheduled in mid-July, the trial dates are unlikely to be earlier than December 2023. Given past history and the current Covid-19 situation, further adjournments cannot be ruled out in which case the trial dates are likely to be even later, sometime into 2024.

25.  Mr Danny Fung sought to justify the release of funds now on the basis that if the application has to be renewed, it would take a year before that application would be heard.

26.  That estimate is hardly borne out by the fact that less than 7 months have elapsed since the Summons was taken out for this hearing. In so far as additional time has to be factored in for future appointments because of GAP that is currently in place, that would similarly have a knock-on effect on potential trial dates.

27.  In D3’s 5^th affirmation dated 24 January 2022, D3 made reference (at §10) to the option he has to elect for a preliminary inquiry before a magistrate for the purpose of ensuring that the severity of the offence and the adequacy of evidence warrant the transfer of the case to the High Court.

28.  Until then, D3’s stance (throughout the 27 months since criminal charges were first laid against him in mid-October 2019) has been and remains that he will maintain a not guilty plea and defend against those charges in the High Court jury trial.

29.  At the hearing, Mr Fung was asked to clarify his client’s position as to whether D3 was seeking costs for legal advice so that he could make an informed election. Mr Fung made it clear to the court more than once that D3 was not asking for such costs. Rather, D3 is asking for the estimated costs for the preparation of and the jury trial itself to be released from the sale proceeds.

30.  It would appear that a person (presumably) from D3’s legal team hazarded a guess at the length of the trial prior to obtaining fee quotations from counsel in November 2020. At that time the police documents had not been served on D3. Counsel’s fees as well as solicitors’ costs are based on the 28-day estimate which, seemingly, would have been plucked out of thin air.

31.  It is worth mentioning that D3’s solicitors’ costs are calculated on the basis of 8 hours in court per day (plus a 1-hour conference with client) when, typically, court sittings are but 5 hours a day. That the cost estimates are artificially inflated and unreliable are self-evident.

32.  In the present case, it is unnecessary to dwell on those matters as I am firmly of the view that this application for costs of the criminal proceedings is premature.

33.  In any event, should it transpire that the delay in obtaining a hearing date for a renewed application would prejudice D3’s preparation of his defence, there is always the option for D3 to make an urgent application if warranted by the circumstances.

34.  Accordingly, the application for costs for the criminal proceedings is dismissed.

(b) Additional costs for the civil case

35.  The exception to the Mareva order provided for $100,000 for legal costs. That amount was increased to $450,000 by the 1^st Angel Bell order to cover costs up to the 1^st PTR. That was based on evidence in support of that application showing expected costs of $325,000 up to the 1^st PTR. On the assumption that the initial $100,000 has already been expended, there is a small sum of $25,000 remaining available for costs.

36.  Mr Fung submitted that as D3 is now in possession of the police documents they are relevant to the civil proceedings. In addition, P1 has disclosed 1800 pages of documents in her list. It would take Mr Fung’s instructing solicitor 100 hours (at $5800 per hour) to review the documents disclosed since the 1^st Angel Bell order running to some 9500 pages. Hence D3’s application for an additional $580,000 for the civil case.

37.  I confess to having difficulty following Mr Fung’s submissions and line of reasoning regarding the relevance of the police documents in the civil case. As I understand it, the drift of his submission runs as follows: while it is true that D3 denies the allegations made against him, he has his own view of events and could have perceived them in a different light; that D3 was mistakenly and innocently used by other defendants/schemers and that D3 needed more information to find out what exactly happened in order to prepare his defence.

38.  It was submitted that the criminal proceedings and the civil case concern the same subject matter. However, as the police have more resources than P to discover materials, the unused materials in particular will need to be read by those instructing him.

39.  While I accept that the criminal proceedings and the civil case overlap, it does not follow that the issues arising in each are the same. D3 has not identified particular issues in the civil case and the nature and substance of the police documents relevant to those issues. Pausing here, it is not for the court to decipher the issues and work out the relevance of the police documents. The burden lies firmly on the applicant.

40.  Part G of the committal bundle contains the list of unused materials and comprises 490 entries under 3 subheadings: (1) items 1-55 are items seized within D4’s office; (2) items 56-181 are items seized within a mini storage facility used by D4; and (3) items 182-490 are police documentary exhibits.

41.  A quick perusal of subheading (3) items include approximately 60 search warrants, personal items consisting of inter alia high-end brand name handbags (40 plus), watches, various mobile phones, computers, notebooks, Sim cards, USBs, numerous bank documents etc. It is beyond my comprehension that the items described can have any relevance to the civil case. I doubt if anyone from D3’s legal team had even bothered to peruse the items contained in Part G.

42.  If what is relevant has not been described above, it behoves D3 (and not the court) to identify and explain what they are and in what way they are material to the civil case.

43.  I am not at all satisfied that the police documents are relevant to the civil case and in so far as the application for additional costs in the civil case is based on the need for D3’s solicitors to spend time to review the police documents, it falls to be rejected.

44.  P1 has disclosed approximately 1800 pages of documents for the civil case. They comprise 5 main categories of documents: (i) company, land and motor vehicle search records, the search result of the SFC’s register of licensed persons against D1 and agreements and declarations and investment proposals/ notes; (ii) correspondence; (iii) bank statements/bank records/bank correspondence; (iv) documents/information on D1’s criminal cases; and (v) a handful of miscellaneous items such as flight details, hotel invoices and news reports.

45.  The bulk of P’s documents come under category (iii). They relate to cheques, bank transfers, remittances, cashier’s orders in favour of the accounts of D3, D4 and D7, bank statements the accounts of the various defendants including D3, D4 and D7, account opening forms relating, inter alia, to D3.

46.  Frankly, a substantial part of the documents are documents that D3 would have seen or have had in his possession in his role as D1’s employee and company secretary of D4 and D7. Those are hardly documents that require perusal by his legal representatives. In my view no more than a handful would require their perusal.

47.  Stage 1 of the non-proprietary test requires D3 to show that other than the sale proceeds and his half share in the QRW property, he has no other assets.

48.  Mr Mike Yeung, counsel for P, submitted that D3 has failed to show by sufficient evidence that he has no other assets available to meet his legal fees.

49.  D3’s evidence at the time of the 1^st Angel Bell order showed that he required $60,000 per month to support his wife and 2 teenage children. He remains unemployed. Any shortfall between his expenditure and the monthly living expenses of $38,000 is apparently met from loans/largesse from his mother and brother and borrowings from financial institutions.

50.  Mr Yeung made the point that D3 is obviously able to borrow from his mother and brother who have not made any repayment demands for past borrowings and are plainly open to further requests for financial assistance.

51.  Whilst the evidence shows that D3’s mother and brother appear to be an inexhaustible source for borrowings, I do not consider that the fact that D3 is able to borrow from family can transform such borrowings into assets that D3 owns. By borrowing he incurs a debt whether or not the lender demands repayment.

52.  That said, there are aspects of the evidence that cast doubt on D3’s veracity and reliability. For example, in accounting for the sale proceeds, D3 explained that they represented his 50% share in the DVRW property and that completion took place in August 2018. He disclosed the payment of a removal fee of over $2.2 million to his brother at the time[4].

53.  However, in his 4^th affirmation dated 24 August 2021, when explaining that the QRW property was a gift from his grandmother to him and his brother in 1995, D3 stated (at §33) that since that date the QRW property has been the matrimonial home of his brother and his wife. The 2 versions are diametrically opposed and both cannot be true.

54.  That aside, another troubling aspect is that D3’s 2^nd, 3^rd, 4^th and 5^th affirmations respectively dated 30 April 2019, 17 July 2019, 24 August 2021 and 24 January 2022 as well as his brother’s affirmation dated 30 April 2019 made in support of D3’s 1^st Angel Bell application all give the DVRW property address as the deponent’s address. That is a rum state of affairs indeed and cries out for an explanation. At the very least, it shows a very callous attitude on D3’s part as regards the accuracy of matters stated in his affirmations.

55.  Further, notwithstanding Mr Fung’s sardonic remarks, that P should have obtained Norwich Pharmacal relief for bankers’ books in relation to D3’s bank accounts is hardly surprising. In fact, as of June 2018, D3 and his brother held a joint account with the Bank of China.

56.  D3’s explanation is that the Mareva order only required D3 to state assets in excess of $50,000 in value. He asserted that the balance in the account was below that threshold at that date and exhibited a statement for that bank account dated 30 March 2019 in support.

57.  D3 sought to deflect criticism by accusing P of creating a fuss over that bank account and mischaracterising it as a failure to make disclosure of assets. He submitted that since the account is frozen, D3 has no access to it in any event.

58.  In my view, D3’s response is misguided, what is material information being D3’s assets when he made his 1^st affirmation on 19 June 2018 and on the date of this application. The $50,000 threshold is irrelevant for the present application. The fact that his account is frozen does not mean that no payments could have been made into it.

59.  The absence of an up-to-date statement or to exhibit a stale statement lends support to P’s submission that such intentional withholding of relevant evidence renders applicable the following passage in Hong Kong Civil Procedure 2022 at §29/1/79:

“The court is entitled to have a ‘very healthy scepticism’ in respect of assertions made by the defendant, and where the defendant has previously put forward evidence of questionable credibility, the court should take a ‘very cautious view’ of the defendant’s evidence in support of varying the order (Anokh Singh Pannu v Alantic Ltd, unrep., HCA 1696/2010, [2012] HKEC 669).”

60.  Taking into consideration the matters set out in §§51-58 above, I take the view that it is appropriate to do so in the present case. That, coupled with the limited matters that require perusal (see §§44-46 above), I am not satisfied that any further variation is required to be made to release additional funds for the civil action.

Order

61.  For the reasons stated above, D3’s application for a 2^nd Angel Bell order is dismissed.

62.  There is to be an order nisi of costs in favour of P, such costs to be with certificate for counsel and to be summarily assessed. P is directed to lodge her bill of costs within 7 days of this Decision, D3 to lodge his objections within 14 days thereafter and P to lodge a reply (if any) within 7 days thereafter.

63.  The summary assessment will be disposed of in Chambers.

HCA 1211/2018

[2019] HKCFI 2460

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1211 OF 2018

________________

________________

___________

DECISION

___________

1.  By a Summons dated 19 July 2019, the 1^st and 4^th Defendants (collectively “the Defendants”) apply for leave to appeal against my decision handed down on 5 July 2019 (the “Decision”) dismissing their appeal against the Order of Master Phoebe Man dated 5 March 2019 refusing their application for a stay of the proceedings herein on the ground of the potential adverse effects on the parallel criminal proceedings arising from the same set of facts. Further, the Defendants apply for a stay of execution under the Summons.

2.  Mr Roy Chui, for the Defendants, served a written submission dated 11 September 2019.  Thereafter, Miss Katy Chung, for the Plaintiff, lodged her submission dated 12 September 2019.  Probably, due to the intervening public holiday, Mr Chui only managed to serve a supplemental submission less than an hour before the hearing on 16 September 2019.

3.  Miss Chung did not take any issue as to the lateness of the Mr Chui’s supplemental submission and dealt with it the best she could. However, it does not detract from the fact there is no reason why the numerous arguments canvassed in the supplemental submission (citing various Australian authorities) should not be included in Mr Chui’s first written submission. 

BACKGROUND FACTS

4.  The backgrounds facts are sufficiently set out in paragraphs 2 to 19 of the Decision.  There is hardly any need to repeat the same here.

5.  In essence, the Plaintiff’s case against the Defendants is that she was introduced to the 1^st Defendant in May 2014 and since then she was enticed by various misrepresentations of the 1^st Defendant to incur expenses and monies (totalling the equivalent of HK$71,969,689.35) on various investment vehicles or opportunities, which never materialized.

6.  Of the money invested, only three sums (totalling the equivalent of HK$5,853,780) were returned to her between 7 May 2015 and 7 June 2016.  On a rough-and-ready approach, the Plaintiff’s claim is about HK$66.12 million (ie HK$71,969,689.35 − HK$5,853,780) on the grounds of (1) breach of fiduciary duty; (2) deceit; (3) fraudulent misrepresentation; and/or (4) unjust enrichment as pleaded in paras 85 and 86 of the Statement of Claim (referred to in paragraph 14 of the Decision).

LEGAL PRINCIPLES

7.  It is not disputed that the leave application herein concerns an intended interlocutory appeal and the burden is on the Defendants to show “reasonable prospect of success”, which means more than fanciful, without having to be probable (see section 14AA of the High Court Ordinance (Cap 4) and Le Pichon JA in SMSE v KL [2009] 4 HKLRD 125 (at para 17).

8.  It is also trite that the leave application herein is not a de novo hearing of the previous appeal, which has cumulated in the Decision.

9.  Further, the Decision concerned an exercise of discretion by a judge and an appeal therefrom would only be entertained if it is shown that the discretion was exercised (1) under a mistake of law; (2) under misapprehension of facts; (3) by taking into account irrelevant matters; (4) outside the generous ambit of reasonable disagreement; or where the Decision is plainly wrong (Hong Kong Civil Procedure 2019 §59/0/54 and Woo JA (as he then was) in Ho Siu Pui v Yue Sheng Finance Ltd [2003] 1 HKC 621 (at 628D) referring to Nazareth JA (as he then was) in Greenwood Ltd v Pearl River Container Transportation CACV 27/1994 (unreported, 25 May 1994) applying The Abidin Daver [1984] 1 AC 398 at 420A – C).

10.  There is also no dispute between the parties as to the guiding principles as to exercise of discretion by the court to stay a civil action in the face of a parallel criminal proceedings arising from the same factual matrix. It is emphasized that the “right of silence” (sometimes described as the “right to silence”) as such does not apply in civil cases.

11.  Importantly, Mr Chui, for the Defendants, acknowledges there is no right to a stay of the civil proceedings and the burden is on the Defendants to show that “it is just and convenient that the plaintiff’s ordinary rights of having his claim processed and heard and decided should be interfered with” (see Jefferson Ltd v Bhetcha [1979] 1 WLR 898 as discussed in paras 21 to 22 of the Decision).

12.  In other words, it is incumbent upon the Defendants seeking a stay of the civil action to adduce “cogent evidence” (see Poon J (as he then was) in Wharf Ltd v Lau Yuen How [2008] 6 HKC 333 (at para 28) to show that “there is a real risk that the continuation of the [civil action] would cause serious prejudice to the criminal trial” otherwise the court needs not proceed to the balance of justice in the second stage of the test propounded in Jefferson Ltd (supra) (see also Patrick Li J in A v Securitiesand Futures Commission [2015] 1 HKLRD 47, at paras 67 and 93).

LEAVE TO APPEAL

13.  Against the foregoing background, Mr Chui advances three grounds of appeal in support of the leave application of the Defendants.

Ground (1) — Misapprehension of facts

14.  This ground is covered by paragraphs 11 to 15 of Mr Chui’s first submission and paragraphs 4 to 6 of his supplemental submission. With due respect, the arguments therein are not exactly coherent and no misapprehension of facts has been identified. In any case, the arguments may be summarized as follows:

(a)  In the 1^st Defendant’s affirmation (at para 5), she admitted that she had “no other commercial dealing with the Plaintiff other than those pleaded in the Statement of Claim”.

(b)  As such, it is argued that the 1^st Defendant has deprived herself of various other defences originally available to her in the criminal proceedings, such as that there has previously been ongoing business relationship between the Plaintiff and herself, and that things have all along been working out, that the Plaintiff only made these allegations because she wanted to recoup from these failed investments;

(c)  The Plaintiff has been “fishing” by pleading a catalogue of causes of action (see paragraph 6 hereinabove).

(d)  While Jefferson Ltd (supra) is good law, there is a limit as to the details the Court should expect from the Defendants. In handicapping the defences available to her in the criminal proceedings, the Defendants have done more than a “bare assertion” (see para 38 of the Decision).

(e)  The court ought to have followed the approach of the High Court of Australia in Commissioner of the Australian Federal Police v Zhao (2015) 255 CLR 46 (discussed in paras 30 to 33 of the Decision).

(f)  There is no requirement that a stay would only be granted where the defendant’s property is at stake (for example, forfeiture by the police in the case of Zhao) as borne out by the recent decision of Registrar Clayton JR of the Supreme Court of Victoria in Stocks v Johns [2019] VSC 584 (unreported, 28 August 2019) applying Zhao.

15.  Importantly, Mr Chui does not seek to dispute the observation of Reyes J in Asia Energy Logistics Group Ltd v Chat Tat Chee HCA 870/2009 (unreported, 5 August 2010) that it is incumbent upon the defendant applying for a stay to “sketch out any details of alleged prejudice” (see para 38 of Decision).

16.  Further, there is a difference between putting in a defence and being compelled to answer interrogatories or make discovery of documents. In V v C [2001] EWCA Civ 1509 (not referred to by the parties), Waller LJ said:

“ 37. In considering whether the defendant was being constrained from putting forward a defence in the civil proceedings, the following would be material considerations. First, as Megaw LJ [in Jefferson Ltd] put it, there is no right to silence in the context of civil proceedings. Of the six rights to silence analyzed by Lord Mustill [in R v Director of Serious Fraud Office [1993] AC 1], what I would understand Megaw LJ to be referring to are the following. First that in a civil trial there is no immunity against adverse comment or adverse inference from a failure to provide answers before the trial or to give evidence at the trial. I say that because in a civil trial a defendant does not have to put in a defence or give evidence, but, if he does not, the court can draw an inference because in a civil trial it is not his ‘right’ not to do so. MegawLJ also supports the distinction which in my view exists between putting in a defence in relation to which there is no right to invoke the privilege against self-incrimination and adefendant being interrogated or being compelled to produce documents in relation to which the privilege against self-incrimination can be invoked. This is important in the summary judgment context because if the claimant can establish his claim without interrogatories or disclosure then a privilege against self- incrimination is not in fact relevant.” (emphasis added)

17.  As to paragraph 14(a) to (d) above, in so far it is so argued, I do not see how the 1^st Defendant by merely admitting in her 1^st affirmation that she had no other dealings with the Plaintiff apart from that pleaded in the Statement of Claim should be regarded as having (a) sufficiently sketched out details of alleged prejudice; and (b) deprived herself of the various defences, which would otherwise be available to her in the criminal proceedings. 

18.  It is extraordinary that upon enquiry, Mr Chui said he did not have instructions so that he was unable to confirm whether the defences set out in paragraph 14(b) above, if defences they be at all, are real or hypothetical.

19.  Further, the assertion that the Plaintiff is “fishing” for a cause of action is not borne out by any evidence, still less cogent evidence. Suffice to say that if the Plaintiff succeeds in establishing the facts alleged in the Statement of Claim, she may well succeed in one or more of the causes of action (as pleaded in paragraph 86 of the Statement of Claim).

20.  As to paragraph 14(e) and (f), Mr Chui acknowledges that Zhao is just an instance of how the court exercised its discretion to stay the forfeiture proceedings (as discussed in paragraphs 30 to 32 of the Decision). The expression in paragraph 35 of the Decision that the case of Zhao is distinguishable is no more than pointing out that each case must be decided on its own facts. 

21.  Nowhere in the Decision is it suggested that as a condition or criteria for the court to grant a stay of the civil action, there has to be defendant’s property at stake.

22.  Likewise, the decision of Stocks v Johns (supra) by Registrar Clayton is just another instance of how the discretion was exercised. It involved a personal injury claim against the defendant driver, who had been convicted, after trial by a jury before the county court, of “recklessly causing serious injury in circumstances of gross violence” in which she did not give evidence and in respect of which an appeal was pending.  The decision of the learned Registrar does not create any rule of law and in any event not binding.

Ground (2) — Failure to consider prejudice and exercise discretion

23.  This ground is covered by paragraphs 16 to 28 of Mr Chui’s first submission and paragraphs 7 to 18 of his supplemental submission. The arguments thereunder are wide-ranging but may be summarized as follows:

(a)  The right to silence is a constitutional right conferred by Article 8 of the Basic Law.

(b)  The delay in the application for stay should not be attributed to the Defendants.

(c)  The 1^st Defendant’s previous conviction for an offence involving dishonesty is irrelevant or should not be taken into account since it arose from different facts.

(d)  The 1^st Defendant should be presumed to be innocent until proven guilty in respect of the current offence of “obtaining property by deception” under section 17 of the Theft Ordinance (Cap 210) for which she has been charged (ESCC 1210/2018).

(e)  There is substantial overlap between the facts of civil action and the elements of the offence of “obtaining property by deception”.

(f)  The tendering of any meaningful defence in the civil action would invariably involve “substantial arguments and explanation” as asserted in paragraph 29 of the 1^st affirmation of the 1^st Defendant.   

(g)  Even the identification of contemporaneous documents (as suggested in paragraphs 29(b), 40 and 41 of the Decision) in sketching out the details of the potential prejudice would invariably infringe the 1^st Defendant’s right to remain silence.

(h)  The Defendant would be forced to prematurely disclose her defence in the criminal proceedings, bearing in mind that she had “already handicapped herself in making those admission in her 1^st affirmation”.

(i)  The Plaintiff was already protected by a Mareva injunction notwithstanding that no assets have been located to answer the injunction.  In any case, there is no evidence of dissipation of assets.

(j)  To allow the civil action to proceed would give an unfair advantage to the Plaintiff as a witness in the criminal prosecution and there would be a risk that she might be coached.  

(k)  The civil proceeding would provide opportunity for a “dressed rehearsal” for the criminal proceedings.

(l)  To allow the civil claim to proceed would render the intended appeal, even if successful, a nugatory.

24.  As to paragraph 23(a) hereinabove, the reference to Article 8 of the Basic Law is probably a misnomer.  The “right of silence” is enshrined in Article 11(2)(g) of the Bill of Rights and Article 14(3)(g) of the International Covenant on Civil and Political Rights (as entrenched by Article 39 of the Basic Law).

25.  However, it does not add anything to the analysis.  Bokhary J (as he then was) in Prime Computer (Hong Kong) Ltd v Frank Sham Tak Leung & Ors [1992] 1 HKLR 115 said:

“ [10]  On behalf of the 1st defendant, his counsel has placed reliance on the Bill of Rights.  He has done so in connection with the presumption of innocence in favour of the 1st defendant and his right of silence.  In my judgment, it is quite unnecessary for the 1st defendant to rely on the Bill of Rights.  The presumption of his innocence is there rooted in the Common Law; and so is his right of silence.  There is no statutory or other inroad attempted against either of those rights, which are fundamental rights of his, just as the plaintiff’s right of access to the courts is a fundamental right of its.  So there is no need for him to rely on the Bill of Rights or anything else in their defence.  If any such inroad were attempted, no doubt the Bill of Rights would have to be looked at to see what protection it affords against the same.  The decision of the Court of Appeal in England in Jefferson Ltd v. Bhetcha (supra) and that of our Court of Appeal in Petroliam Nasional Berhad v. Tan Soon-gin (supra) make no inroad into anyone’s fundamental rights.  They recognize the rights on both sides; and they provide guidance as to how such rival rights are to be balanced so as to achieve a just result.  They are consistent with the Bill of Rights.”

26.  As to paragraph 23(b) hereinabove, there is simply no reference to delay on the part of the Defendants in the Decision. 

27.  As to paragraph 23(c) to (d) hereinabove, the previous conviction of the 1^st Defendant, which is not disputed, was only referred to in paragraph 16 of the Decision by way of background.  Likewise, the fact that 1^st Defendant having been charged is part of the relevant facts or else there would have been no need for the stay application.  Nowhere in the Decision suggests that the discretion was exercised on the assumption that she was guilty as charged.

28.  As to paragraph 23(e) to (g) hereinabove, it is emphasized that the overlapping of the facts in the civil action and the criminal proceedings is a matter of degree and does not automatically justify a stay of the civil action. 

29.  Mr Chui rightly accepted that 1^st affirmation of the 1^st Defendant was defective in that it only sought to make an assertion (at paragraph 29 thereof) that the “substantial argument and explanation” required to plead a defence would substantially prejudice her right to silence in the criminal proceedings.

30.  In a last-ditch effort to salvage the defects, Mr Chui made a belated attempt to identify the commonalities between the civil case and the elements of the criminal charge in paragraphs 9 to 12 of the supplemental submission.  However, that is to draw a comparison in a vacuum and it does not add anything.

31.  Just because there are overlaps or potential overlaps between the facts alleged in the Statement of Claim and the elements of the criminal charge of “obtaining property by deception” does not discharge the Defendants’ burden to adduce cogent evidence to show “real risk” of substantial prejudice in the criminal trial. 

32.  The Statement of Claim covers a catalogue of events over a period of one to two years.  Matters such as whether the Defendants in fact received the various payments allegedly made by the Plaintiff would be neutral to and independent of the allegations of fraud or deception.  These are matters, which would in any event be borne out by documents such as bank statements or records of transfer available to the Plaintiff in any case.

33.  Bearing in mind that there is no “right of silence” as such in civil action, it is difficult to see how the Defendants could be prejudiced by sketching out the details in a defence, which presumably would contain, if anything, exculpatory materials.   

34.  Putting the Defendants’ case at its highest, even if it is assumed that the substantial overlap between the issues in the civil case and that of the criminal proceedings would give rise to a real risk of prejudice, it is not determinative of the stay application since the court will still have to balance it against the other factors and the right of the Plaintiff.

35.  Mr Chui prayed in aid the case of McLachlan v Browne (No9) [2019] NSWSC 10 (17 January 2019) wherein McCallum J ordered a stay of two defamation actions in respect of which a four-week trial before a jury was due to commence on 4 February 2019. 

36.  The case arose from certain publications of sexual misconduct allegedly perpetrated by the plaintiff in the defamation actions, which were also subject matter of certain criminal charges against the plaintiff before the Magistrates’ Court on 8 February 2019 (ie four days from the commencement of the civil trial).  The parties agreed that the charges were likely to be proceeded with in due course by way of indictment before a jury.

37.  In the main, McCallum J’s decision in ordering a stay of the civil actions stemmed from her concerns as to the possible effects on the two separate juries in the civil proceedings and the criminal proceedings respectively.  The learned judge explained as follows:

“ 37. Further considerations raised by the defendants were the jury issues, to which I have already referred to some extent. I have already indicated my acceptance that it will be some distance until any criminal trial and that, in accordance with the principle stated in Kanaan, it may be assumed that a jury could be directed in terms that would protect Mr McLachlan against publicity surrounding the civil trial. However, there are a number of considerations which must be taken to qualify any comfort derived from that principle.

38. First, as submitted by Mr Littlemore, there is an exact overlap between the criminal allegations and the issues raised in the particulars to the truth defences in these proceedings. It follows that, if a stay is not granted, the civil action will in effect be a ‘dress rehearsal’ for the criminal trial, as it was put by Mr Littlemore. It would follow that the cross‐examination of Mr McLachlan in the defamation proceedings is likely to become a feature of his cross‐examination in the criminal proceedings. In saying so, I make the assumption, as submitted by Mr Littlemore, that he is likely to make a choice to give evidence in both proceedings or else be unsuccessful in the relevant proceeding in which he chooses not to give evidence. The prospect of the cross‐examination in the criminal trial being informed by statements made by MrMcLachlan in the civil trial is the very jeopardy protected by the privilege against self‐incrimination.

39. Separately, accepting the principles in Kanaan, this is not merely a case of pre‐trial publicity concerning the events the subject of the criminal trial. Two juries will be called upon in separate forums to decide the same questions of fact. In my view, it would be very difficult for the jury in the criminal trial to put out of its mind the verdict reached by the jury in the civil trial. If the allegations made in the truth defences are found by the civil jury to be proved, that would obviously be prejudicial to Mr McLachlan in his defence of the criminal charges. If they are found not to be proved, that would be prejudicial at least in some way to the interests of the Crown in those criminal proceedings. Whatever direction might be given in the criminal proceedings, I think it would be difficult for the jury not to have regard at some level to those factors.

40. … It follows that, in order to mount a reply to the truth defences in the defamation action, Mr McLachlan would have to choose either not to give evidence, from which it would likely follow that he would lose the action; to give evidence and claim the privilege against self‐incrimination, which would entail obvious prejudice to the strength of his case; or to waive the privilege. I note that, contrary to a submission made by the defendants, I would not understand Mr McLachlan to have waived his right to silence already by statements he has made in public. In the investigation and prosecution of the criminal matters, he has plainly exercised his right to silence, refusing to participate in an interview with police.

41. Mr McLachlan’s position may accordingly be likened to that posited by the Court in Lee at para [12]. He is on the horns of a dilemma. If the stay is not granted he will either have to conduct the defamation action with one hand tied behind his back, and likely lose, or waive his privilege against self‐incrimination. That reflects the real dilemma the Court found in Lee at [41] to exist in that case.” (emphasis added)

38.  However, each case must be assessed on its own facts.  In the present case, the civil case will be tried before a judge without a jury.  As for the criminal case, the venue of trial is not yet known.  In the absence of proper identification as to nature of the prejudice, I remain unconvinced that the Defendants would be prejudiced by pleading a defence.

39.  As to paragraph 23(h) hereinabove, I do not see how the 1^st Defendant can be said to have “handicapped” herself by filing an affirmation herein (see paragraphs 17 to 18 hereinabove).

40.  As to paragraph 23(i) hereinabove, it is emphasized that the Mareva injunction has not resulted in the identification or preservation of any asset of the Defendants. If anything, that is all the more reason to allow the Plaintiff to proceed with her claim so that any judgment obtained can be executed in a timeous fashion. 

41.  For the sake of completeness, there has been no appeal against the granting of the Mareva injunction, which must have been premised on the risks of dissipation having been established (cf paragraph 22 of Mr Chui’s first submission). 

42.  Mr Chui also submits that the Plaintiff could have proceeded by way of an application for summary judgment under Order 14 or judgment in default of pleading under Order 19 (see paragraph 15 of supplemental submission).

43.  Quite apart from the fact that summary judgment is not available in a case of fraud (see Order 14, rule 1(2)(b) of the Rules of the High Court), even if the Plaintiff were to proceed to obtain interlocutory judgment, the Defendants would bear the same burden to adduce cogent evidence to show “real prejudice” in the criminal proceedings in order to avoid having judgment entered against them (see Megaw LJ in Jefferson Ltd at 905A and Waller LJ in V v C (supra)).

44.  As to paragraph 23(j) to (l) hereinabove, the Plaintiff has fully pleaded her case in the Statement of Claim.  She has also given various statements to the police and a detailed account of her dealings with the Defendant in her affirmation.  Therefore, the risk of the Plaintiff “tailor-making” her evidence is minimized.  Again, there is a lacking of cogent evidence to support such allegation (see Poon J in Wharf Ltd (supra)at para 25).

Ground (3) — The conclusion of no infringement of the right of silence‌ was “outside the generous ambit within which a reasonable disagreement is possible”

45.  This ground is covered in paragraphs 29 to 32 of the first written submission lodged by Mr Chui. 

46.  The principle as to the exercise of discretion by the Court canvassed by Mr Chui is not in dispute (see paragraph 9 above).  In support of this ground Mr Chui seeks to rely the same arguments canvassed under Ground (1) and Ground (2) and add that the effects of adverse publicity (as set out in paragraph 43 of the Decision) has been underestimated.

47.  For the reasons set out hereinabove, I find that Ground (3) does not add anything to the analysis.

DISPOSAL

48.  In summary, I do not find any merit in any of Grounds (1) to (3) whether collectively or individually. No reasonable prospect of the intended appeal has been shown.  There is no valid ground to grant a stay of execution either.

49.  Accordingly, the Summons is dismissed with costs to the Plaintiff, which is summarily assessed at HK$65,000.

Ms Katy Chung, instructed by Chan Ching Man & Co, for the plaintiff

Mr Roy Chui, instructed by Wong Poon Chan Law & Co, for the 1^st and 4^th defendants