IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 5783 OF 2000
Coram: Deputy High Court Judge To in Court
Date of Hearing: 1 April 2003
Date of Judgment: 1 April 2003
J U D G M E N T
1. This is an action by the Plaintiff, a company incorporated under the Companies Ordinance, Cap 32, against the Defendant for money appropriated by the Defendant.
2. The Defendant was a director and company secretary of the Plaintiff company. He had the management of the Plaintiff company, includingobtaining purchase orders from clients, placing orders with suppliers and manufacturers, arranging delivery of goods and collectionof payment from clients. Between November 1998 and June 1999, the Plaintiff, through a middleman, Jo Al Inc., entered into varioussale and purchase agreements of garments with a customer in the United States, known as Bennini Inc. As the Plaintiff had not receivedpayment from Bennini Inc in respect of some of its purchase orders, the Plaintiff made inquiries from Daisy Kuo of Bennini Inc. Itwas thus discovered that the Defendant appropriated the following payments made by Bennini Inc to the Plaintiff.
3. On 19 July 1999, the Defendant, without the authority of the Plaintiff, wrote to Bennini Inc directing it to pay part of the purchaseprice of garments in the sum of US$120,000 (equivalent to HK$933,600) into his personal account with the Standard Chartered Bank.Accordingly, on the same day, Bennini Inc made the payment into the Defendant’s account and informed the Defendant by letter thatthe payment was in settlement of certain specified invoices and in partial settlement of invoice numbers TI-99-0044 and TI-99-0053A.Despite that the Defendant did not pay over the money to the Plaintiff.
4. On 16 July 1999, the Defendant, without the authority of the Plaintiff, directed Bennini Inc by fax to pay a sum of US$20,000 (equivalentto HK$155,600) owed by Bennini Inc to the Plaintiff into the account of Ng Mau King, an ex-employee of the Plaintiff who worked underthe Defendant, with the Hongkong and Shanghai Banking Corporation Limited. On 13 August 1999, Bennini Inc made the payment into thesaid account by wire transfer, but the Defendant did not account for the said sum to the Plaintiff.
5. As the Defendant’s bank statement shows, on or about 11 August 1999, the Defendant received a sum of HK$154,812.15 from Jo Al Inc.The Defendant admitted in his affirmation that the sum was a payment from Bennini Inc.
6. Again, between 4 November 1999 and 5 May 2000, the Defendant, without the authority of the Plaintiff, directed Bennini Inc to payseven cheques, totalling US$21,000 (equivalent to HK$163,380) due from Bennini Inc to the Plaintiff to Chao Fung Wah, who is theDefendant’s sister-in-law. These payments were never accounted for by the Defendant.
7. It is not disputed that the above sums had been received by the Defendant from Bennini Inc. The Defendant’s defence is that the moneywas applied, with the knowledge of the Plaintiff, to settle the Plaintiff’s debt due to its supplier, Hong Kong Rich Bong GarmentCompany (“Rich Bong”). Three receipts purporting to be Rich Bong’s acknowledgment of receipts of payment in the total sum of HK$1,405,824.10were included in the trial bundle. The authenticity of those receipts is disputed by the Plaintiff and I give no weight to thosereceipts.
8. The Plaintiff denied it had entered into any contract for supply of goods with Rich Bong and that the goods supplied to the Plaintiffallegedly by Rich Bong were in fact supplied by Flash Enterprises. As the airway bills and bills of lading in respect of the goodsshow, the shipper was not Rich Bong but Flash Enterprises. I have no doubt that the defence was not a bona fide one. In any event,the Defendant failed to attend court and give evidence in support of his defence.
9. In his witness statement prepared for this action, the Defendant alleged that the money paid to Ng Mau King and Chao Fung Wah wererepayments of loans borrowed by him on behalf of Bennini Inc. This is not pleaded in the defence and is inconsistent with the documentsfrom Bennini Inc stating that the payments were to the Plaintiff. In any event, there is no evidence from the Defendant in supportof his allegation.
10. Having heard the Plaintiff’s witness, I accept his evidence. On the totality of the evidence, I find that there is no substance inthe Defendant’s defence. In conclusion, I am satisfied that the Plaintiff has proved its case that the Defendant has misappropriatedthe sum of $1,407,392.15 from the Plaintiff. Accordingly, I enter judgment in favour of the Plaintiff in the amount of $1,407,392.15as claimed with interest at judgment rate from the date of writ until payment and costs. The costs are to be taxed if not agreed.The money in the sum of HK$212,936.32 being stakeheld by Messrs Lam & Lau be released to the Plaintiff in satisfaction of thejudgment debt.
Ms Doris To, instructed by Messrs Or, Ng & Chan, for the Plaintiff
Defendant, in person, absent