HO WING CHEONG AND OTHERS v. GRAHAM MARGOT AND ANOTHER

HO WING CHEONG AND OTHERS v. GRAHAM MARGOT AND ANOTHER

An executive director employed to manage a stockbroking house lacks implied authority to speculate with the firm's capital or pledge its credit beyond ordinary client‑facilitating acts; unauthorized speculative transactions by Margot gave rise to personal liability for the firm's losses where no express authority or clear ratification existed; the three‑year post‑employment restraint was unreasonable in duration and therefore unenforceable; claims against Norman Ng failed for lack of causal responsibility.

Citation
HO WING CHEONG AND OTHERS v. GRAHAM MARGOT AND ANOTHER
Parties
1st Plaintiff: HO WING CHEONG (trading as HONG LEONG SECURITIES); 2nd Plaintiff: HONG LEONG OVERSEAS (H.K.) LIMITED; 3rd Plaintiff (hca A5579): HONG LEONG SECURITIES LIMITED; 3rd Plaintiff (hca A5766): HONG KONG SECURITIES LIMITED; 1st Defendant: GRAHAM MARGOT; 2nd Defendant (hca A5579): B.I.S. CONSULTANTS LIMITED; 2nd Defendant (hca A5766): NORMAN NG
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
15 April 1987
Case Number
HCA5766/1986
Procedural Posture
Employment and Commercial Litigation (unauthorized Trading, Breach of Contract, Restraint of Trade, Inducement) / Judgment Delivered (15 April 1987)
Outcome
Judgment mixed: plaintiffs succeeded on specific claims for unauthorized speculative losses against Graham Margot and in recovery of certain misapplied sums from Margot/B.I.S.; plaintiffs failed on enforcement of the 3‑year restrictive covenant and on claims against Norman Ng; some client‑transactions held genuine...
Legal Topics
Restrictive Covenant, Unauthorized Trading/in‑house Dealing, Breach of Fiduciary Duty, Ratification, Enticing Employees
Source Language
EN
Employment Law Contract Law Company/commercial Law Tort (inducing Breach of Contract) Restrictive Covenant Unauthorized Trading/in‑house Dealing Breach of Fiduciary Duty Ratification +1 more

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Parties

HO WING CHEONG (trading as HONG LEONG SECURITIES)

1st Plaintiff

HONG LEONG OVERSEAS (H.K.) LIMITED

2nd Plaintiff

HONG LEONG SECURITIES LIMITED

3rd Plaintiff (hca A5579)

HONG KONG SECURITIES LIMITED

3rd Plaintiff (hca A5766)

GRAHAM MARGOT

1st Defendant

B.I.S. CONSULTANTS LIMITED

2nd Defendant (hca A5579)

NORMAN NG

2nd Defendant (hca A5766)

Procedural Posture

Employment and Commercial Litigation (unauthorized Trading, Breach of Contract, Restraint of Trade, Inducement) / Judgment Delivered (15 April 1987)

Legal Issues

  1. 1 Whether an Executive Director had implied authority to speculate with the firm's capital or pledge its credit
  2. 2 Whether defendants are personally liable for losses from unauthorized transactions
  3. 3 Whether a three‑year post‑employment restrictive covenant was reasonable and enforceable

Ratio Decidendi

An executive director employed to manage a stockbroking house lacks implied authority to speculate with the firm's capital or pledge its credit beyond ordinary client‑facilitating acts; unauthorized speculative transactions by Margot gave rise to personal liability for the firm's losses where no express authority or clear ratification existed; the three‑year post‑employment restraint was unreasonable in duration and therefore unenforceable; claims against Norman Ng failed for lack of causal responsibility.

Court Disposition

Judgment mixed: plaintiffs succeeded on specific claims for unauthorized speculative losses against Graham Margot and in recovery of certain misapplied sums from Margot/B.I.S.; plaintiffs failed on enforcement of the 3‑year restrictive covenant and on claims against Norman Ng; some client‑transactions held genuine...

Orders

  • Defendant Graham Margot to account for and pay losses from unauthorized SNL (Hang Seng Index Futures) transactions and related unauthorized share dealing (specified in judgment).
  • Plaintiffs entitled to recover losses from 'no name' in‑house positions (amounts particularised in draft minutes) less amounts properly attributable to other causes (eg Merrill Lynch closing loss).