dccj1726_11 constellation note

8/22/2019 DCCJ1726_11 Constellation Note

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DCCJ 1726/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGIONCIVIL ACTION NO. 1726 OF 2011

BETWEEN

SHUM KIN YEE Plaintiff

and

DBS BANK HONG KONG LIMITED Defendant

Before: His Hon Judge Leung in court

Date of Hearing: 3; 4; 7 December 2012

Date of Judgment: 31 July 2013

J U D G M E N T

1. The worldwide financial crisis following the collapse ofLehman Brothers in the United States in 2008 needs no introduction. The

plaintiff (Shum) was an investor who suffered from its aftermath. He

now claims for the loss of his investment in a financial product known as

Series 74 Hong Kong Dollar Callable Credit-Linked Note (the Note)

against the defendant (DBSHK). The complaint is essentially mis-

selling of the Note to him by DBSHK in Hong Kong in May 2007.


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2. Shum reads and writes English; and most of the documentswere in English. To facilitate Shum, the trial was conducted in both

languages with the medium in court predominantly Chinese.

THE NOTE

3. In early 2007, Constellation Investment Limited (CIL)issued various series of credit-linked notes including Series 74, ie the Note.

DBS Bank Ltd in Singapore (DBS) was the arranger. The Note, amongst

other series, was described as structured retail note and distributed through

various retail banks in Hong Kong to the public at the material time.

DBSHK was one of those distributing banks.

4. The Note, among other series, was credit-linked to a basket of8 reference entities, which were rated AAA class by the 3 major rating

agencies, namely, Standard & Poor, Moodys and Fitch, as at the time of

the distribution, ie April 2007. In the order of their credit ratings, theyconsisted of:

(1) Goldman Sachs;(2) Merrill Lynch;(3) Morgan Stanley;(4) Lehman Brothers;(5) Bear Stearns Companies Inc;(6) Sun Hung Kai Properties;(7) Coca-Cola Enterprises Inc; and(8) Hutchison Whampoa Limited.

5. Essentially the investors in the Note, for the projected return,took the risk that none of the reference entities would suffer what was

known as a credit event. A credit event included:


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(1) the bankruptcy or insolvency of the reference entity;(2) failure of the reference entity to meet its payment orguarantee obligation;

(3) or restructuring as a result of deterioration ofcreditworthiness or financial condition.

The notes were secured by collateral and swap agreements that enabled the

issuer to meet its payment obligation under the notes.

6. The maturity date of the Note was expected to be 23 May 2012.A potential return of 5.2% per annum in the first 4 years and 6% per annum

in the subsequent 1 year was projected. If no credit event or early

redemption event or event of default occurred, the Note would be

redeemable at 100% principal amount on the maturity date. If a credit

event occurred to a reference entity, the redemption value would be

substantially less than the principal amount.

SHUM

7. Shum had been a customer of the DBSHK branch at MetroPlaza at Tseung Kwan O (the Branch) before the transaction involving

the Note. On 12 December 2005, Shum opened a packaged account there.

In his application form for opening the account, he revealed that he was

born in 1963 and a university graduate. In court, he confirmed that he has

acquired the qualification of certified public accountant. He was then

working as a full-time senior financial manager for EXCEL HK Ltd.

8. On 24 July 2006, Shum visited the Branch and completed anInvestment Profiling Questionnaire (IPQ) with the assistance of


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relationship manager Ms But (But). The IPQ gave the following profile

of Shum as an investor:

(1) He had 6-10 years of experience in investment products,including shares and investment funds.

(2) Recognising higher gain involved greater risk, heexpected to take medium to high risk (15-24% of maximum

annual capital loss at one point of time).

(3) In terms of investment objective on a scale of A to E,ranging from aggressive capital gain to regular steady return,

he chose B.

(4) His attitude towards investment risks was that he was acautious investor who could assume some risks to enhance

potential returns of his investment.

(5) On a scale of A to E, ranging from high to no volatility,return and risk, he would be prepared to accept above average

volatility, return and risk over a 10-year investment horizon.

9. Shum was thus profiled as a growth type of investor with amedium to high risk tolerance. By signing the IPQ, Shum declared his

acceptance such profiling based on his own judgment.

10. At the time when he went to the Branch on 5 May 2007, hewas working as the financial controller of DHL Logistics, which, according

to him in court, was the same group that he had been working for as before.

SUBSCRIPTION TO THE NOTE

11. In court, he explained that he visited the Branch on 5 May2007, after having seen the advertisement in respect of the distribution of


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the series of notes. There is dispute as to whether he also met with But on

that occasion; but it is common ground that he did meet another

relationship manager at the Branch, Ms Choy (Choy).

12. At the trial, both But and Choy gave evidence for DBSHK.By then, Choy was no longer an employee of DBSHK.

13. Back to 5 May 2007, Choy completed an investment ProductsConsolidated Application Form (the Application Form) and a Callable

Credit-linked Notes Order Form (the Order Form) with Shum on that

occasion. It was by these forms Shum contracted to subscribe for the Note.

The principal amount of the Notes, and thus the application amount, was

HK$690,000. Shum signed both documents before leaving the Branch.

The forms were printed in Chinese (but the corresponding English versions

were produced as well for the purpose of the trial).

THE COMMENCEMENT OF ACTION

14. The bankruptcy of Lehman Brothers in September 2008constituted a credit event to this reference entity of the Note. This, as

mentioned, triggered the early redemption of the Note and at nil value.

Since then, Shum had made enquiries and eventually complaint to DBSHK

as well as various authorities about the loss of his investment.

15. In 2011, Shum commenced the present action.16. In his statement of claim, Shum contends that Choyrepresented that the Note was low risk. It will be seen below that this was

in line with DBSHKs categorisation of the risk level of such investment,

namely low to medium risk. He also set out his understanding of the


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advertisement brochure, which is understood to be referring to the sales

pamphlet (the Pamphlet) and the issue prospectus (the Issue

Prospectus). Shum claims damages representing the sum of HK$690,000

that he invested on the following grounds:

(1) DBSHK failed to make accurate and not misleadingrepresentations. This sounds like misrepresentation (though

alleged in a negative way) and non-disclosure.

(2) DBSHK did not make formal assessment before sellingthe Note to him, in view of the upper loss that he was willing

to take (15-24%) according to the IPQ done by him more than

a year before.

17. In defence, DBSHK contends that it was both But and Choywho served Shum at the Branch on the material day. It was But who

explained to him the features of the Note with reference to the terms of

both the Pamphlet and the Issue Prospectus. Despite Buts suggestion thathe should consider diversifying his investment into other products, Shum

decided to invest in the Note. Choy then took him through the contents of

the Application Form and the Order Form before he signed them to confirm

his order.

18. DBSHK contends that the relationship between the bank andShum was at all material times governed by the terms of the documents

signed by Shum and the Investment Products Consolidated Terms and

Conditions (the Consolidated Terms).

19. DBSHK also raises the issue of causation. It contends that itwas not the alleged misrepresentation or the subscription of the Note, but


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the adverse market conditions prevailing around the time of the collapse of

Lehman Brothers in September 2008, that caused Shums loss.

20.

DBSHK also contends that the collapse of Lehman Brothersand the resultant substantial fall in the value of the Note were not

reasonably foreseeable at the time when Shum subscribed to the Note.

Therefore the loss of Shum is too remoteness to be recoverable in any event.

21. Shum has since filed his reply and from time to timedocuments either for the purpose of reiterating his case or in support of his

contentions. New points were made as well. By the time of closing

submission, he has expanded his contentions to become that what happened

to him was no different from a set up or fraud by DBSHK.

22. As far as one discern, Shum has the following majorcomplaints:

(1)

He understood that the occurrence of a credit event to areference entity would not result in substantial loss because the

risk would have spread over the 8 entities. The loss should

therefore be limited to 1/8 of the principal.

(2) On this basis, he blames DBSHK (and Choy) for failingto make accurate representation of the nature of the Note and

risk. He also criticises the promotional materials, mainly the

Pamphlet and the Issue Prospectus, for being confusing,

misleading or contradictory.

(3) He criticises the grading of the risk of the investment inthe Note given by DBSHK. Further the risks associated with

Bear Stearns and the so-called sub-prime risks should have

been disclosed to him.


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(4) He believes that CIL, DBS and DBSHK were in conflictof interest, and that they gained from investors losses in the

investments.

(5) DBSHK has been in breach of sections 107 and 108 ofthe Securities and Futures Ordinance Cap 571 (SFO) as well

as the Code of Conduct.

23. Whilst the court may still try to deal with the points raised byShum as far as they were argued, I indicated when the trial began that the

bottom line must be that the parties are primarily bound by their pleaded

cases.

WHAT HAPPENED ON 5 MAY 2007

24. Shum is adamant that he met only Choy at the Branch on 5May 2007. But and Choy said to the contrary. According to them, Choy

indeed greeted Shum when he came armed with an advertisement of the

series of note issued by CIL. Shum wanted to enquire about investing in

them. Upon that, Choy retrieved from the record Shums IPQ mentioned

above. It was still within 1 year of the IPQ (dated 24 July 2006). As

mentioned, Shums investor profile belonged to the growth type who is

ready to tolerate medium to high risk.

25. Choy commenced her employment with DBSHK early thatyear; and had never met Shum before. In court, she explained that she was

actually about to leave the job and was therefore concerned about the

continuity in handling Shums account. She therefore asked for But, who

was both more senior and Shums former relationship manager, to assist in

handling Shums case together. But agreed to do so.


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26. There is dispute as to whether a programme memorandum(the Programme Memorandum) of the issue of the notes was provided

to Shum on the occasion. But it is common ground that Shum wasprovided with the Pamphlet and the Issue Prospectus.

27. According to But and Choy, in the course of explaining theNote, But took Shum through the Pamphlet and the Issue Prospectus. The

following features and risks printed on the documents were highlighted in

the conversation:

(1) The Note was not principal protected.(2) The Note was credit linked to a basket of referenceentities.

(3) Interest would be paid regularly.(4) If there was no credit event or early redemption or eventof default, the redemption value of the Note on the maturity

date would be 100% of the principal amount.

(5) A credit event included bankruptcy of any one of thereference entities.

(6) If a credit event occurred to any one of the referenceentities, the credit event redemption amount would likely be

substantially less than the principal amount.

28. According to But, she explained to Shum that in case of acredit event such as bankruptcy of a reference entity, he could lose the

principal amount of his investment. The exact amount of the loss could

only be ascertained after the event.

29. But also provided for Shums consideration information aboutother investment products which were not credit linked notes, namely, AB


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Global High Yield Portfolio USD and AB American Income Portfolio USD.

Both were open-ended funds. However Shum was not interested in these

proposed alternatives.

30. But invited Shum to study the Pamphlet and the IssueProspectus before deciding to subscribe to the Note, which Shum did on his

own. According to Shum, he was conscious of turning his attention to the

sections on risks, warning and important notices in the Pamphlet and the

Issue Prospectus (which are set out below). In court, he confirmed that that

must have taken 10 minutes or more.

31. According to But and Choy, Shum explained that hisoccupation or business required him to stay at the Mainland most time of

the week; and he had time in Hong Kong only during weekend. That Shum

was then required to work in the Mainland most time of the week is not in

dispute. Nor is the fact that 5 May 2007 was a Saturday. So there and then,

Shum decided to place order for the Note.

32. There is no dispute that it was Choy who handled thedocumentation, i.e., the Application Form and the Order Form, with Shum.

According to her, she took Shum through the various parts of the

Application Form. In accordance with the information provided by Shum,

Choy filled in the form. Choy then turned to the Order Form. In court,

Shum agreed that the relevant boxes in the Order Form were ticked and he

understood their contents.

TERMS OF THE DOCUMENTS

The Pamphlet


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33. Both the Chinese and English versions of the Pamphlet wereproduced at the trial.

34. Specifically the Pamphlet explained the nature of the referenceobligation of a reference entity, which was a subordinated obligation, and:

upon a credit event, a reference entitys subordinate obligation islikely to have a value which is substantially less than its senior andunsubordinated obligations, and therefore any credit event redemptionamount is likely to be less than what would have been if the reference

obligation was a senior and unsubordinated obligation.

Therefore, the Pamphlet further provided the ratings of the reference

obligations of the first 5 reference entities by the 3 rating agencies

mentioned above (which, due to their nature, were lower than the ratings

given to the entities themselves).

35. Besides a summary of the main terms of the Note (asmentioned above), the Pamphlet contained, in bold print, the following

notice:

Risk Factors/Important NoticeThis is a summary only of some of the principal features of the Notes.The Notes are not principal protected. Investments involve risks. Youmay lose all or part of your investment. You must carefully read theIssue Prospectus dated 18 April 2007 before deciding whether ornot to invest in the Notes, and study in detail matters and risks set out inthe Programme Memorandum and the Issue Prospectus, in particular the

sections headed How can I buy some Notes and InvestmentRisk You should ensure you understand the nature of all the risks

before investing in the Notes. Structured products such as the Notes arenot suitable for inexperienced investors. If you are uncertain about thesuitability of the Notes for your personal circumstances, you shouldconsult your professional advisers. Ask any of the distributors for a copy

of our prospectus

The Issue Prospectus


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36. The Pamphlet, in relation to the credit event, also referred thereader to refer to the Issue Prospectus for details. The Issue Prospectus

began with the following important notice:

If you are in any doubt about any of the contents of this issue prospectus,you should obtain independent professional advice.We cannot give you investment advice; you must decide for yourself,after taking professional advice if appropriate, whether our Notes meet

your investment needs.

37. Besides setting out the main terms (at pp.3-4) as summarisedby But (as mentioned above), the Issue Prospectus set out (at pp.8-10) in

detail the following main features of the Note in a question-and-answer

format:

(1) What does credit-linked mean?(2) How is the credit redemption amount calculated? Whenis it paid?

(3) What are credit events?(4) When will the Notes be repaid? What is the call option?(5) Are the Notes principal protected?(6) Who decides if there is a credit event? Who makesdecisions under the Notes?

(7) How do I know if there is a credit event?(8) Who should buy the Notes? Are they suitable foreveryone?

38. Particularly, the answer to question (5) above was as follows:Our Notes are not principal protected: if a credit event happens to anyone of the 8 reference entities before the maturity date, you will lose part,

and possibly all, of your investment.

39. The answer to question (8) above was as follows:


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Our Notes are not suitable for everyone. You should make sure youunderstand how our Notes work and that an investment in our Notes isappropriate for you in light of your own individual financial position andinvestment objectives before deciding whether or not to invest.

Our Notes are only suitable for investors who are: confident that none of the 8 named reference entities will be affected

by a credit event (that is, Bankruptcy, Failure to Pay orRestructuring, which include events such as a major borrowingdefault, bankruptcy or adverse debt restructuring) between the issuedate and the maturity date of our Notes and who are able to take therisk that they may lose their investment if one of these events doeshappen;

The Application Form

40. Shum signed the Chinese version of the Application Form. Ofthe form, the boxes next to Sections A, B, C, D and E of the Risk

Disclosure Statements were ticked, indicating his understanding and

acceptance of the risks of trading in different types of financial products.

Section D concerned structured investment deposit.

41. By signing the Application Form, Shum acknowledged andgave the following Customer Declaration and Undertaking:

// /

/

/

/

42. According to the English version of the form, it meant:I/We have been provided with the Risk Disclosure Statements in alanguage I/we understand and have been asked to read the Risk

Disclosure Statements, ask questions and take independent professionaladvice if I/we have any doubts the contents of these Statements. In


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particular, the Bank is not advising me/us or giving me/us any assuranceor guarantee regarding any expected outcome of the Order. I/Weconfirm that I/we have fully understood the risks in respect of my/ourinvestment.

43. Shum also expressly acknowledged that he had received theChinese version of the Investment Products Consolidated Terms and

Conditions (which will be referred to below); and that he received and

accepted the relevant risks by signing the Risk Disclosure Statements &

Customer Declaration and Undertaking of the Application Form.

The Order Form

44. The Order Form contained a Risk Disclosure Statement. Eachparagraph of the statement was ticked, signifying Shums understanding

and acceptance of the same. They read as follows:

/

/

/

/_/

()/

a) /b) //

c) / (/)


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/

/

/

71-72 7 73-74 5

45. The equivalent parts of the English version of the Order Formread as follows:

I/We understand and accept the Notes are NOT principal protectedand are subject to the following key investment risks: Credit Event of anyof the Reference Entities, Credit risk of the Issuer and SwapCounterparty; Collateral risk; and Market risk. One or more of thesecould lead to my/our losing part, and possibly all of my/our investment.

I/We understand and accept the Notes are linked to the credit of theReference Entities on a first-to-default basis. This means that if any ofthe Reference Entities suffers a Credit Event, the value of the Notes islikely to drop substantially. This drop is usually much more than fall invalue of the defaulted Reference Entity.

I/We fully understand these Notes may continue for a tenor of up to __years and I/we have NO right of early termination (or other earlyrepayment). Having carefully considered:

(a)My/our likely financial needs over that tenor;(b)My/our investment portfolio to ensure that these Notes will fit toform a balance portfolio according to my/our investment objectivesand

(c)The other sources of finance I/we will have available (which I/weconsider will be adequate for my/our needs during that tenor)

I/we acknowledge this tenor is acceptable and appropriate for me/us andthat I/we wish to invest even though this tenor may be longer than myour preferred investment period shown on my/our Investment ProfileQuestionnaire (or other record) previously made with the Bank.**Note if you have any questions or wish to discuss the tenor or other

aspects, please do so with the Bank staff or your professional advisorbefore proceeding.


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I/We understand that the Notes are designed to be held to maturity. ForSeries 71-72 Notes, this is 7 years; For Series 73-74, this is 5 years.

The above is a brief highlight list only. It is not a complete explanation

of all the risks you face if you invest in the Notes. Potential investorsshould read, understand and agree to the Terms & Conditions on theIssue Prospectus, Programme Memorandum and Base DisclosureDocument and should consult their own professional advisers before

investing in the Notes.

Investment Products Consolidated Terms and Conditions

46.

The Investment Products Consolidated Terms and Conditions(the Consolidated Terms) referred to in both the Application Form and

the Order Form above contained, among others, the following provisions:

6. Not your investment adviser6.1. Any information provided is for reference only and no relianceshould be placed on any conversations that take place with DBS

personnel. In respect of any transaction with the Customer, DBS is notacting as an adviser or in a fiduciary capacity to the Customer. DBS hasnot given any representation, guarantee or other assurance as to the

outcome of any investment. Customers should seek their own investmentadvice from a suitably qualified adviser.

6.2 The Customer represents to DBS that as of the date of giving anyrelevant instruction and entering into any Transaction, that:(a) he/she is fully capable of assessing the merits of and

understanding (where needed, with or through independentprofessional advice), and fully understands and accepts, the terms,conditions and risks of the resulting transaction and he/she alsofully understands and is capable of assuming and assumes, therisks of the Transactions;-

(b) he/she is acting on his/her own account and has reviewedcarefully his/her specific financial needs and investmentobjectives, and has made his/her own independent decisions toenter into the Transaction and as to the legality, suitability andappropriateness of the Transaction based upon his/her own

judgment and upon advice from such advisers as he/she isdeemed necessary;

(c) he/she is not relying on any communication (written or oral) ofDBS as investment advice or as a recommendation to enter intothe Transaction. The Customer understands that information and

explanations provided by DBS incuding in relation to the termsand conditions of the Transaction, shall not be considered as


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investment advice or a recommendation to enter into theTransaction; and

(d) No communication (written or oral) received from DBS shall bedeemed to be an assurance representation or guarantee as to theexpected results of the Transaction.

7. Customer representations

7.1 The Customer makes the following representations to DBS(which representations will be deemed to be repeated by the Customereach time a Transaction is entered into):(a) The Customer has read, understood and accepted in full the

provisions in these terms and conditions and the risk disclosurestatements on the relevant account application form/Order Forms asdistributed by DBS;(g) the Customer is fully aware of the risks involved in investing in

the Investment Product and has read, understood and accepted therelevant risk disclosure statements;

9. Limitations on DBSs liability9.6 Notwithstanding that the Customer may have informed DBS ofany investment objectives of the Customer, the Customer shall be solelyresponsible for:(a)making the Customers own independent investigation and appraisal

of the Investment Products with which the Customer intends to deal;and

(b)making the Customers own independent decision in dealing with theInvestment Products.

The Customer shall be solely responsible for such Instructions whichshall be deemed to be given on his own judgment and at his sole riskwhether or not DBS has given to the Customer any advice,recommendation, commentaries, financial information or data.

RELATIONSHIP BETWEEN DBSHK AND SHUM

47. As mentioned, DBSHK contends that the terms of the abovedocuments governed its relationship with Shum in respect of his investment

in the Note.


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48. Ellingers Modern Banking Law (5th ed) (at p.160) has this tosay about the reluctance of the bank to assume a duty in relation to the

customers dealings in risky and speculative financial products:

the courts understandable reluctance to impose a contractual orcommon law duty of care on banks is not limited to the provision ofordinary banking services or products. A similar tendency is discerniblein relation to banking products that are particularly risky, sophisticated,unusual, and is discernible in circumstances where a bank provides itscustomer with financing that he uses for speculative dealings or to enterrisky transactions (such as currency futures or commodities), and thecustomer subsequently complains that its losses result from the banks

failure to warn him of a particular risk or particular market condition.

49. Recently, in Kwok Wai Hung Selina v HSBC, HCCL 7/2010(21 June 2012), the plaintiff claimed against the defendant bank for loss in

trading in forward accumulator contracts. The plaintiff contended that the

bank owed her, among others, the following duties:

(1) to advise her;(2) to provide accurate and fair information in relation toher account;

(3) to inform and warn her of risks in relation to her account;(4) not to sell financial products to her that were unsuitablefor her known risk appetite, investment objective and net

worth.

50. Reyes J (as he then was) rejected such contention (withreference to the facts and terms of the contractual documents in that case,

which bear similarity to those in the present one):

102. The Account Opening Booklet made it clear by the RiskDisclosure Statement that the account being opened by Ms Kwok was anexecution-only account. It was an execution-only account in the sensethat HSBC was not to be regarded as offering investment advice of anynature in connection with the account.

103. While HSBC might make recommendations from time to time, itwas ultimately (the Statement stressed) for a client to assess whether a


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particular transaction was suitable in light of that clients financialcondition, risk tolerance and investment experience. The Statementexpressly warned that the investment risks associated with a financial

product might be substantial and, if in any doubt about whether a productwas suitable, the client should seek independent third party advice.

105. Second, it is also en elementary principle of contract law that onecannot imply obligations which are contrary to the express terms of anagreement.

106. Thus, the alleged duty to advise would be contrary to what theRisk Disclosure Statement expressly says. HSBC might state a houseview on a proposed investment from time to time, but the client shouldnot regard that as advice. The client must make up his or her own mindin light of his or her own personal circumstances.

109. As for risks, the Statement disclosed the risks involved in variousfinancial transactions in some detail and urged Ms Kwok to seekindependent advice if she was in any way uncertain of her position orwhat to do.111. Further, the evidence suggests that Ms Chau did explain the termsof ELN, FAs and Fabers to Ms Kwok

51. Likewise, the Pamphlet and the Issue Prospectus made clearthat DBSHK did not assume the duty to provide any investment advice;

and any communication with the customer should not be construed as

advice or recommendation. If in doubt, the customer was advised to seek

professional advice. The repetitive provisions should leave one with no

doubt that the relationship between DBSHK and Shum was not one of

investment adviser and investor.

52. In his submission, Shum questioned who in practice wouldactually get to read the terms of such documents before committing by

appending his or her signature to them.

53. As matter of law, the terms of the Pamphlet, the IssueProspectus and the Consolidated Terms were binding, whether he had read

them or all parts of them before signing: seeMing Shiu Chung v Ming Shiu


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Sum (2006) HKCFAR 334 (at 84, per Ribeiro PJ); and whether DBSHK

had read and explain them to him: see Kincheng Bank v Kao Yu Kuei [1986]

HKC 212.

54. As a matter of fact, as mentioned, Shum admitted during thetrial that he did read the Pamphlet and part of the Issue Prospectus before

proceeding to complete the Application Form. He might have spent 10

minutes or so; and presumably not read the entirety of the documents.

However he was conscious of focusing his attention on the sections on the

risk factor and important notice. He also agreed that he read the part of the

Issue Prospectus containing the warning that he was advised to obtain

independent professional advice.

55. In court, Shum argued that it was not realistic or reasonable toexpect a potential investor to obtain independent professional advice for an

investment of insignificant amount. As I pointed out during the trial, it

could only be a matter for the customer, not the bank, to decide if the

investment was significant enough for him or her to warrant the obtaining

of independent investment advice. The law does not differentiate situations

by reference to the amount of investment involved in affording the bank

with or depriving the bank of the right to rely on the contractual disclaimer

of duty or liability as investment advisor.

56. Importantly it is not suggested that Shum was prevented fromtaking his time. In court, he mentioned that he actually lived quite near to

the Branch. It was his considered decision to proceed with the order on the

very day because of his own circumstances and convenience.

57. Shum referred to the case ofMorgan Chase Bank v SpringwellNavigation Corp [2010] 2 CLC 705. In that case, the English Court of


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Appeal considered, among others, the doctrine of contractual estoppel.

Aitkens LJ (at 748-749) had this to say in principle:

143 if A and B enter into a contract then, unless there is someprinciple of law or statute to the contrary, they are entitled to agree whatthey like. Unless Lowe v Lombank[[1960] 1 WLR 196] is authority tothe contrary, there is no legal principal that states that parties cannotagree to assume that a certain state of affairs in the case at the time thecontract is concluded or has been so in the past, even if that is not thecase, so that the contract is made upon the basis that the present or pastfacts are as stated and agreed by the parties

144. So, in principle and always depending on the precise constructionof contractual wording, I would say that A and B can agree that A hadmade no pre-contract representations to B about the quality or nature of a

financial instrument that A is selling to B. Should it make any differencethat both A and B know at and before making the contract, that A did, infact, make representations, so that the statement that A had not iscontrary to what each side knows is the case? Apart from the remarks ofDiplock J inLowe v Lombanks, Mr Brindle did not show us any case thatmight support the proposition that parties cannot agree that X is the caseeven if both know that is not so, I am unaware of any legal principle tothat effectLike Moore-Bick LJ in Peekay 162 I see commercialutility in such clauses being enforceable, so that parties know precisely

the basis on which they are entering into their contractual relationship.

58. In the case of Peekay that Aitkens LJ adopted, the NewZealand Court of Appeal held (at 56) there was no reason in principle why

parties to a contract should not agree that a certain state of affairs should

form the basis for the transactions, whether it be the case or not. In the

context of investment, Moore-Bick J had this say (at 60):

The purpose of the Risk Disclosure Statement was both to draw to theattention of the investor the need for caution when investing in emergingmarkets and to make it clear that ANZ was only willing to enter into acontract with him on the assumption that he had satisfied himself that thetransaction was suitable for him. By confirming that he had read andunderstood the statement and returning it with his instructions to makethe investment Mr Pawani offered to enter into an contract with ANZ on

behalf of Peekay on those terms and that offer was accepted by the bankwhen it implemented his instructions. As a result it was part of thecontract between them that Peekay was aware of the nature of theinvestment it was seeking to purchase and had satisfied that it wassuitable for its needs. In those circumstances, and since it is not

suggested that the bank misrepresented to Mr Pawani the effect of thedocuments, I do not think that it is open to Peekay to say that it did not


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understand the nature of the transaction described in the FTCs; and if thatis so, it cannot assert that it was induced to enter into the contract by amisunderstanding of the nature of the investment derived from what Mrs

Balasubramaniam had said about the product some days earlier.

59. Aitkens LJ concluded (at 155) that Lowe v Lombankwas notan authority contrary to the above analysis.

60. In his submission, Shum submitted that if the terms of thedocuments were unreasonable, as he found them to be, he should not be

bound by them. As to that, Aitkens LJ had this to say:

177. To my mind, once it is accepted that there is a separatedoctrine of contractual estoppel then there is no room for a requirementthat the party which wishes to rely on that estoppels must demonstratethat it would be unconscionable for the other party to resile from theconventional state of affairs that the parties have assumed. The reasonwhy that is a requirement in a case of estoppel by convention is

precisely because there is no contract between the parties. Thereforesome other mechanism has to come into play to make the non-contractualconvention enforceable.

178. Mr Brindle relied on the statement of Peter Gibson J inHamel-Smith v Pycroft and Jetsave 197 that the ability to rely on an estoppel byconvention is governed by considerations of justice and equity.Therefore, before an estoppel by convention can be enforced it isnecessary to demonstrate that it would be unjust and unconscionable forone of the parties (against whom it is sought to enforce the convention) toresile from itBut, in my view, it is irrelevant to the doctrine of

contractual estoppel for the reasons that I have given.

61. Short of misrepresentation, which would have vitiated thecontract anyway, the application of the doctrine of contractual estoppel as a

result of the parties agreement to be bound by a certain state of affairs is

not qualified by whether it is thought to be just or conscionable.

62. Mr Ho SC submitted that the case of Springwell actuallysupports the position of DBSHK in reliance of the terms of the contractual


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documents; and that this is consistent with the reasoning in Kwok Wai Hing

Selina (also referred to by Shum above). I agree.

63.

On the above basis, I proceed to consider the various majorcomplaints by Shum.

MISREPRESENTATION AND NON-DISCLOSURE

64. Shum complains that he was misled into believing that if oneof the reference entities was affected by a credit event, the loss would be

spread over the 8 reference entities and thus limited to 1/8 of the principal

amount of his investment. He complains that Choy did not explain that if a

credit event occurred to any of the reference entities, the credit redemption

value of the Note could in fact be substantially less than the principal

amount. He argued that in that case, DBSHK should not have graded the

risk of the investment in the Note as low to medium.

65. Mr Ho, appearing with Mr Dawes, for DBSHK provided asummary of the law on misrepresentation in the context of investment

claims given by Clark J in Raiffeisen Zentralbank Osterreich AG v The

Royal Bank of Scotland [2011] 1 Lloyds Rep 123. It is helpful to

reproduce part of that:

(1) The claimant must show that the defendant made to it astatement which amounts to a representation, that is to say a

statement of fact upon which it is entitled to rely. The

characteristic of the representee is important. (at 8)

(2) In the case of an express statement, the court has toconsider what a reasonable person would have understood

from the words used in the context in which they were used.


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The answer to that question may depend on the nature and

content of the statement, the context in which it was made, the

characteristics of the maker and of the person to whom it was

made, and the relationship between them. (at 82)

(3) Where the representations alleged are said to be implicitin what was expressly said (or implied statement), 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 representors words and conduct

in their context. (at 83)

(4) Silence by itself cannot found a claim inmisrepresentation (fraudulent or otherwise). But an express

statement may impliedly represent something. A possible

implication of a statement may be that what has been expressly

stated is complete, ie covers everything material or relevant on

a particular matter such that something which has not beenreferred to does not exist. It is, however, necessary to

distinguish between what a document does not say and what it

impliedly represents. (at 84)

(5) The essential question is whether in all thecircumstances it has been impliedly represented by the

representor that there exists some state of facts different from

the truth. In evaluating the effect of what was said a helpful

test is whether a reasonable representee would naturally

assume that the true state of facts did not exist and that, had it

existed, he would in all the circumstances necessarily have

been informed of it. It is also necessary to pay heed to the fact

that because of the broad measure of damages currently


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available where there is room for an exercise of judgment, a

misrepresentation should not be too easily found. (at 85)

(6) It is also necessary for the statement relied on to havethe character of a statement upon which the representee was

intended, and was entitled, to rely. In some cases the

statement in question may have been accompanied by other

statements by way of qualification or explanation which would

indicate to a reasonable person that the putative representor

was not assuming a responsibility for the accuracy or

completeness of the statement or was saying that no reliance

can be placed upon it. Thus the representor may qualify what

might otherwise have been an outright statement of fact by

saying that it is only a statement of belief, that it may not be

accurate, that he has not verified its accuracy or completeness,

or that it is not to be relied on. (at 86)

(7)

The claimant must show that he in fact understood thestatement in the sense which the Court ascribes to it and that,

having that understanding, he relied on it. This may be of

particular significance in the case of implied statements. (at

87)

(8) The authorities suggest that a claimant who seeks toclaim damages for misrepresentation must show that the

representation in question played a real and substantial part in

inducing him to enter into the contract in question, but it is not

necessary for him to prove that the representation was the sole

inducement to his decision or that it played a decisive part. (at

153)


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(9) The representation must play a causative part ininducing the contract and that involves but for causation. (at

162)

(10) But for causation means that unless the alleged cause(X) had come about, the alleged result (Y) would not have

occurred. In the present context that means showing that,

unless the representee had had the representation made to him,

he would not have contracted or would not have done so on

the same terms. (at 172)

(11) A misrepresentation is not an effective cause if therepresentee would have gone ahead even if it had not been

made. (at 173)

66. In line with the above, the following elements, in my view, arecrucial to the question of whether the alleged misrepresentation is

actionable:(1) the misrepresentation must be that of fact;(2) the reliance on the misrepresentation, which has to beassessed objectively with reference to the understanding of a

reasonable person and the characteristics of the representee;

(3) the terms of the documents that govern the relationshipbetween the parties; and

(4) causation between the misrepresentation and the loss.

Effect of the credit event

67. That the Note was not principal protected was madeabundantly clear on the face of the Pamphlet. Shum agreed in court that he

could read that the Note was not principal protected. He also understood


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that credit event, such as bankruptcy and inability of the reference entity to

pay, could affect the principal of his investment.

68. As summarised in the Pamphlet and explained in detail in theIssue prospectus, the redemption value was essentially the nominal value of

the Notes less the notional amount of loss on the reference obligation, less

any depreciation of the market value of the collateral andless the costs and

expenses associated with the termination of the swap arrangement in

respect of the Note. The recital of these elements of the calculation in his

statement of claim reflects that Shum should also understand how the

redemption value might end up being, if a credit event occurred.

69. There is no way Shum could reasonably develop the belief thatthe risk of loss would be 1/8 of the principal amount of his investment, if

credit event occurred to one of the reference entities.

70. Shum claims that he thought his money would be used toinvest into the bonds of the reference entities; and specifically referred to

the description of the series of notes as , literally meaning bond, in

the Chinese version of the Pamphlet. In my judgment, whether or not the

Chinese description was accurate, it had to be secondary to the actual

explanation of the nature of the Note and the associated investment risk in

the documents. That included the explanation of the nature of the reference

obligations of the reference entities in the Pamphlet and the Issue

Prospectus.

71. Ms Chong Hey (Chong), then Senior Vice-President ofDBSHK in charge of Consumer Investment & Insurance Products

Consumer Banking, gave evidence and explained the nature and risk of the


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investment in the Note. The explanation accorded with the terms of the

Issue Prospectus.

72.

Shum then tries to find fault in what he considers to bedifferences in the description of the effect of a credit event on the value of

the investment in different parts of the same document as well as between

different documents:

(1) In the summary of the main terms in the Pamphlet, itwas said that

(or in English the credit redemption amount will likely besubstantially less than the principal amount of the Notes.

(2) In the section on risk factor/important notice, it was saidthat (or in English you

may lose all or part of your investment).

(3) In the Issue Prospectus, it was stated that you will losepart, and possibly all, of your investment.(4) In the Order Form, it was stated that / (or in English one or more of these

[credit events] could lead to my/our losing part, and possibly

all of my/our investment).

73. In my judgment, this is a non-point. The so-called differences,upon reasonable reading, are immaterial. The effect could only be the

same, which was also in line with what was explained to him at the Branch

on 5 May 2007. In any event, whichever way the documents were read, his

alleged understanding that the loss would be limited to 1/8 of the principal

if a credit event occurred to one reference entity is not borne out.


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74. In the circumstances, the misunderstanding on the part ofShum, if existing at all, could not possibly be attributable to the Pamphlet,

Issue Prospectus or the contractual documents, to the extent he understood

them upon reading or should have understood had he read them. The

explanations in those documents obviously contradict such alleged

misunderstanding on the part of Shum.

75. Nor is there suggestion that such alleged misunderstandingwas attributable to any misrepresentation by But or Choy. In any event, I

see no reason why and how the staff of DBSHK would venture to provide

explanation which was not only non-existent in but also contradicted by the

terms of the documents. Further if the explanations in the documents did

not contain falsity known to But or Choy, there is no issue of whether the

staff became under the duty of disclosure, as non-disclosure would amount

to misrepresentation.

76. Shum seeks assistance from Natamon Protpakorn v CitibankNA [2009] 1 HKLRD 455 in relation to his complaint that DBSHK had

failed to disclose the underlying nature and risk of the financial product

whether by document or its staff. Apart from the fact that it started as a

decision to strike out, the allegations by the plaintiff in that case differed

from the present one. Without going into the details, I need say that after

trial, the plaintiffs claim in that case was eventually dismissed (largely on

the facts) earlier this month (judgment handed down on 5 July 2013).

77. Misrepresentation, be it positive or by way of non-disclosure,of the nature and risk of the investment in the Note when Shum placed the

order in May 2007 is not made out.

Grading of the risk level


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78. Shum complains that if the occurrence of a credit event to oneof the reference entities could cost him total loss of the principal of his

investment, it would be wrong for DBSHK to grade the risk level of theinvestment in the Note as low to medium. He was allegedly misled by such

grading into believing that the Note fit his investment objective.

79. Shum argues that the risk level of the Note rated by DBSHKwas different from that of the other series of the product. The grading was

also different from that by other banks. He pointed out that even DBSHK

found it necessary to revise its rating of the Note to high risk subsequently.

80. Chong explained that DBSHK has its own methodology toascribe risk ratings to investment products distributed by her bank. It had

its own criteria and considered a matrix of relevant factors. In the case of

the Note, the credit ratings of the reference entities and reference

obligations, the likelihood of a credit event, the quality of the collaterals,

the geographical spread, the asset allocation and the strength of the issuer

as well as the swap counterparty were amongst those taken into

consideration in the assessment. In her statement, Chong gave a detailed

account of the process of grading of risk of the investment in the Note.

81. I indicated during the hearing that as far as Shum intended tocompare the grading of risks by different banks, the court could not be

expected to do so without evidence of how the other banks came to their

respective assessments and expert evidence. Shum bears the burden of

adducing such evidence in support. There is none.

82. Reference to the revision of the assessment by DBSHK doesnot assist Shum either. The reason is that the circumstances surrounding


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the Note have indeed developed and changed substantially since the

financial crisis in 2008. The evidence shows that the grading of the risk

level of investment in the financial products was subject to annual review.

According to Chong, the adverse market conditions since the fall of

Lehman Brothers indeed called for the revision.

83. Shum also seeks to rely on , or the committee

report of the Legislative Council on matters arising out of Lehman Brothers

related mini-bond and structural financial products published in June 2012(specifically 5.13; 5.21). However, the terms of reference of the

committee (1.9 of the report) suggests that the enquiry was not bank or

case specific. The report goes on (at 1.10) to make clear that the primary

principle of the enquiry was that it did not target specific case, company or

individual. Nor did it mean to assist individual investor to pursue civil

claim. The evidential value of the report (the paragraphs relied on included)for the resolution of the present dispute is doubtful.

84. More importantly, and I said so in court, whilst the risk levelof the investment was graded to facilitate the potential investors

consideration, that the investment was not principal protected and that the

risk of loss of the principal, if a credit event occurred, was equally made

known. In other words, the grading of the risk level was but one way of

disclosure.

85. That brings me to say that in view of the nature of the gradingof risk level of the Note, I doubt if the same amounted to representation of

fact instead of statement of opinion. As statement of opinion, what matters

is whether it was formed as reasonable and honest belief at the relevanttime. According to Chong, that was indeed the case, taking into account,


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among other things, the then credit ratings of the reference entities. But

even assuming that the grading is proved to be wrong, it would not have

been falsity of factual statement, which is a pre-requisite for actionable

misrepresentation (as mentioned above).

Bear Stearns

86. Relevant to the issue of disclosure of risk in investing in theNote, Shum argues, is the problem associated with Bear Stearns Companies

Inc (Bear Stearns). As at the time when it was one of the reference

entities of the Note, Leyman Brothers was given A rating. So was Bear

Stearns. That the discovery of the problems associated with Bear Stearns

was no news in the latter half of 2008 and certainly now. Like many others,

Shum now questions the reliability of such ratings then.

87. As mentioned above, those were the ratings given by the then3 major rating agencies of the world. DBSHK could only be one of the

many in the financial world then to make reference to such ratings. The

Pamphlet informed the potential investors of the ratings given to the 8

reference entities as at 11 April 2007 by the 3 agencies respectively. The

pamphlet also informed the customers of the ratings given to the reference

obligations (which were basically lower than the ratings given to the

entities) of each of the first 5 reference entities, Bear Stearns included, by

the 3 agencies respectively.

88. Before DBSHK should be critical about such ratings, there hadto be reason for doubting the integrity of the ratings of these entities, and I

stress, at the relevant time. I see no evidence of ground for reasonable

suspicion of the integrity of the ratings when Shum placed his order for the

Note in May 2007.


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89. Shum seeks to rely on the extracts of certain overseasnewspaper articles. In court, he suggested that such evidence would be

relatively more independent that the evidence of witnesses. As far as therule of evidence is concerned, such argument is clearly bad.

90. Copies of notices sent by DBSHK to investors, includingShum, in 2008 were produced. According to the notices, DBSHK became

aware of the potential problems associated with Bear Stearns in March

2008. By its notice dated 19 March 2008, DBSHK explained the problems,

which I need not set out in details for the present purpose, following an

announcement made by the management of Bear Stearns on 14 March 2008.

Any suggestion, if at all, that DBSHK knew but withheld such information

from Shum is not made out. More importantly, there is no evidence of the

basis for suggesting that Bear Stearns had credit problem at the relevant

time; and that DBSHK knew or should have known about that.

91. Shums reference to Bear Stearns is linked with the issue ofthe sub-prime risks. One should lose sight of the fact that the credit event

triggering the redemption of the Note was the bankruptcy of Lehman

Brothers. This was explained in details by DBSHKs letter and the set of

Frequently-Asked-Questions to the investors, including Shum, dated 27

October 2008.

92. The issue of sub-prima risks would be relevant only if it hadcausal link to the credit event. But according to Shum, he could only

suspect that it was Lehman Brothers engagement in high risk investments

that caused its collapse. There might have been subsequent enquiries and

investigation in this respect. But the court must refrain from judging the

case with reference to materials or information other than properly adduced


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evidence. There is a lack of properly adduced evidence of the causal link

between the issue of sub-prime risks and the bankruptcy of Lehman

Brothers and thus the credit event leading to the early redemption of the

Note.

93. Shum refers to a report of the disciplinary proceedings in 2004against one Towry Law (Asia) HK Limited for failings in relation to certain

hedge funds managed by third parties (which were subsequently suspended

from trading). The primary responsibility for the collapse of the funds

were said to lie not with Towry Law. Nevertheless Towry Law was

charged with failure to conduct insufficient due diligence into the funds

before recommending them to clients; sold the funds to clients whose

investment objectives and risk tolerance did not always match with the risk

profiles of the funds; failed to conduct proper enquiries into circumstances

surrounding the funds which indicated problems with the funds; and failed

to advise clients when it became clear that the funds had problems. Towry

Law eventually agreed to make ex-gratia payments to affected investors on

a without admission of liability basis.

94. Putting aside the proper evidential value to be attached to thisdocument, I read the rest of it to understand that it related to the role and

duty of investment adviser, which is different from the role of DBSHK in

the present case. The terms governing the relationship between Towry

Law and its clients are nowhere to be known. In the circumstances, it is

simply irrelevant.

95. Misrepresentation or non-disclosure of the risk of investmentin the Note, whether when Shum placed his order in May 2007 or

afterwards, is not made out.


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Alleged conflict of interest

96. The various parties involved in the issue and the sale of theNote were identified above. Shum criticised that these parties were in aposition of conflict of interest as they were in the same group. He went

further to suggest that as a result, DBSHK (or its associate in the group)

managed to gain out of his loss.

97. Mr Ho SC submits that Shum failed to establish by evidencewhat exactly the conflict was; if there was a conflict, that it was concealed

or not disclosed; and how the alleged conflict resulted in his loss. In my

judgment, even the pleading in this respect is inadequate for proper

understanding. The attempt to argue that they, eg CIL, DBS and DBSHK,

were nothing but same group will be total disregard of the separate

corporate reality.

98.

Shum argues that the occurrence of a credit event effectivelyafforded DBS the opportunity to gain from the loss of the investors,

allegedly by becoming able to keep the collaterals at nil price. Mr Ho

submits that the argument was flawed. The secured nature and recourse

under the Note were explained in detail in the Frequently-Asked-Questions

in the Issue Prospectus (mentioned above), which was also referred to in

Chongs explanation in her statement. As the swap counterparty, it has

hedged its position by assuming similar risk through the credit default swap

between it and the other market participations. It was the other market

participants that were parties with whom the credit risk assumed by the

investors were hedged. DBS did not gain by reason of the occurrence of

credit event. I agree with Mr Ho. There is also no evidence that DBS did

gain in the manner alleged by Shum.


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99. The case of Wing Hang Bank Ltd v Kwok Lai Sum [2009] 4HKLRD 93 that Shum referred to is hardly on the point.

Conclusion

100. Considering all the evidence, I find the witnesses for DBSHKto be straightforward; but cannot say the same about Shum. His evidence,

when tested with the other evidence, oral and documentary, impressed me

as being highly subjective. Mr Ho SC submits that Shums evidence was

sometimes convoluted and based on speculations. I share that observation.

I accept the evidence of DBSHKs witnesses. Insofar as there is conflict

between the evidence of Shum and that of the witnesses for DBSHK, I

prefer the latter.

101. Bearing in mind the personal background of Shum, I find thealleged misrepresentation, be it express, implied or by way of non-

disclosure, as alleged is not proved. Nor is the reliance, reasonablyassessed. I share Mr Ho SCs observation that the entire backbone of the

claim is founded on Shums subjective understanding, and to the extent that

it was misunderstanding as alleged, of the nature, terms and risk of his

investment in the Note.

102. I also find that as a matter of fact, it was not the allegedmisrepresentation or the subscription of the Note at the relevant time, but

the adverse market conditions prevailing around the time of the collapse of

Lehman Brothers in September 2008, that caused Shums loss. The

collapse of Lehman Brothers and the resultant substantial fall in the value

of the Note caught a lot of people by surprise. It is not proved to have been

reasonably foreseeable at the time when Shum subscribed to the Note.


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103. DBSHK can also resort to the principle of contractual estoppelmentioned above. But in view of the above findings of fact, this may not

be strictly necessary.

OTHER POINTS

Allegedly told to hold onto the Note

104. Shum also complains that his loss was partly caused by theadvice to hold onto the Note until maturity and not to sell it during his

enquiries with DBSHK in the light of the problems associated with Bear

Stearns. However he could not identify the person whom he was allegedly

so advised.

105. I hesitate to attach weight to such accusation, when DBSHKwas deprived of the opportunity to locate the staff said to be responsible,

whom Shum could not identify, to rebut the allegation. Further, it is

unknown whether as a matter of fact, Shum would have disposed of the

Note and that the same would have been taken up by others in the market

so as to save him from the loss.

DBSHKs settlement with investors

106. It is common ground that DBSHK has come to settlement withsome investors in the credit-linked notes issued by CIL. Shum refers to the

announcement, apparently by the Securities and Futures Commission

(SFC) in July 2010, of the settlement agreement.

107. To begin with, that was among the documents shortlyproduced by Shum before trial. For that, Mr Ho complained that his client


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had no real chance of responding especially when the same was not

specifically put during cross examination of his clients witnesses. The

objection was noted.

108. In any event, the announcement at least explained that this wasa settlement between DBSHK with those low to medium risk investors. As

mentioned, Shum belonged to the growth type of investor profile having

a medium to high tolerance of investment risks at the relevant time. Why

Shum was excluded from the settlement may seem obvious. More

importantly, the announcement made clear that the settlement was reached

without admission of liability on the part of DBSHK.

109. I would not underestimate the significance of such settlement,from which Shum could not benefit, on the development of his grievance.

Leaving aside the question of whether or not his grievance is justified in his

circumstances, I do not see how this assists him in establishing his claim.

The SFO

110. Shum relies on section 107 of the SFO, which makes it acriminal offence to fraudulently or recklessness induce others to invest

money. Let alone the element of fraudulent or reckless misrepresentation

in the offence, which, if alleged, would need to be proved beyond

reasonable doubt, the section simply does not found a civil cause of action

for damages.

111. The same could be said about the Code, which was publishedby the Securities and Futures Commission pursuant to section 399 of the

SFO. Section 399(6) of the SFO provides that:


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A failure on the part of any person to comply with the provisions set outin any code or guideline published under this section that apply to himshall not by itself render him liable to any judicial or other proceedings,

but in any proceedings under this Ordinance before any court the code orguideline shall be admissible in evidence, and if any provision set out in

the code or guideline appears to be court to be relevant to any questionarising in the proceedings it shall be taken into account in determining

that question.

Likewise, the Code (at 1.5) says the same about the effect of breach.

112. The relevant section seems to be section 108, which providesfor a statutory cause of action, parallel to the common law, for damages for

pecuniary loss that the representee has sustained as a result of the reliance

on the misrepresentation (made fraudulent, recklessly or negligently) by the

representor inducing former to enter into contract to invest in, among

others, securities.

113. In view of the above findings of fact, the section could not beinvoked.

For the avoidance of doubt

114. The manner in which Shum put forward his contentions hascaused his opponent and this court to try to group and summarise his major

complaints for better disposal. Points here and there in the documents he

has submitted that are not specifically addressed here are indeed noted inthe deliberation of the court. Only that they do not serve to affect the

outcome of the case.

ORDER

115. The claim is dismissed. Following this event, I make a nisiorder that Shum shall pay DBSHKs costs of this action, including any


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costs reserved. Costs shall be taxed, if not agreed, with certificate for 2

counsel. In the absence of application within 14 days to vary, the nisi costs

order shall become absolute.

(Simon Leung)District Judge

The plaintiff, in person

Mr Ambrose HO, SC and Mr Victor DAWES instructed by Messrs DLAPiper Hong Kong for the defendant

dccj1726_11 constellation note

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