EAA SECURITIES LTD v. SO TAI FAI AND ANOTHER

EAA SECURITIES LTD v. SO TAI FAI AND ANOTHER

EAA's primary contractual claim for the margin debit is dismissed because the bulk of trading was found to be unauthorized and EAA cannot rely on deemed authorization where its employee knew trades were unauthorized; EAA's alternative claims for return of Cheque Proceeds against Anita and Henry fail (Henry lacked requisite knowledge for knowing receipt and EAA failed to prove loss attributable to Anita that EAA can recover without accounting for commission); Henry's counterclaim succeeds for loss of the portfolio measured at the date of breach (August 2000) in the sum of HKD 3,286,511, with interest awarded at simple 5% p.a. from 11 October 2003 for six years (HKD 985,953) giving total...

Citation
EAA SECURITIES LTD v. SO TAI FAI AND ANOTHER
Parties
Plaintiff: EAA Securities Limited; Defendant Administratrix of the Estate of Fattydad Henry (2nd Defendant / Administratrix): FATTYDAD ALICE PUI YAN; 1st Defendant / Third Party: SO TAI FAI
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
15 June 2017
Case Number
HCA2520/2009
Procedural Posture
Civil Action Securities/margin Account Dispute With Counterclaims and Third Party Claim / Judgment (court of First Instance)
Outcome
Primary claim dismissed; alternative claims against Anita and Henry dismissed; Henry's (Estate's) counterclaim allowed in damages; Anita's counterclaims dismissed; third party claim dismissed; costs order nisi as detailed.
Legal Topics
Unauthorized Trading, Fiduciary Duty and Breach, Knowing Receipt, Account and Tracing, Limitation Defense, Damages Assessment, Third Party Indemnity, Constructive/actual Knowledge
Source Language
EN
Securities Law Contract Law Equity and Trusts Limitation Law Regulatory Enforcement Unauthorized Trading Fiduciary Duty and Breach Knowing Receipt +5 more

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Parties

EAA Securities Limited

Plaintiff

FATTYDAD ALICE PUI YAN

Defendant Administratrix of the Estate of Fattydad Henry (2nd Defendant / Administratrix)

SO TAI FAI

1st Defendant / Third Party

Procedural Posture

Civil Action Securities/margin Account Dispute With Counterclaims and Third Party Claim / Judgment (court of First Instance)

Legal Issues

  1. 1 Whether the trading on the Cash and Margin Accounts was authorized by the account holder (Henry) or by deemed/actual authority of Anita
  2. 2 Whether EAA can recover the debit balance as primary claim under account terms
  3. 3 Whether EAA can recover Cheque Proceeds ($4,029,335.82) from Anita or Henry for breach of fiduciary duty/knowing receipt

Ratio Decidendi

EAA's primary contractual claim for the margin debit is dismissed because the bulk of trading was found to be unauthorized and EAA cannot rely on deemed authorization where its employee knew trades were unauthorized; EAA's alternative claims for return of Cheque Proceeds against Anita and Henry fail (Henry lacked requisite knowledge for knowing receipt and EAA failed to prove loss attributable to Anita that EAA can recover without accounting for commission); Henry's counterclaim succeeds for loss of the portfolio measured at the date of breach (August 2000) in the sum of HKD 3,286,511, with interest awarded at simple 5% p.a. from 11 October 2003 for six years (HKD 985,953) giving total...

Court Disposition

Primary claim dismissed; alternative claims against Anita and Henry dismissed; Henry's (Estate's) counterclaim allowed in damages; Anita's counterclaims dismissed; third party claim dismissed; costs order nisi as detailed.

Orders

  • Judgment for the 2nd Defendant (Estate) on counterclaim in favor of the Estate in damages of HKD 3,286,511
  • Pre-judgment interest awarded at simple rate 5% per annum from 11 October 2003 for six years in amount HKD 985,953