Wang v Fund Management Ltd [2008] TOLawRp 20; [2008] Tonga LR 90 (29 April 2008)

IN THE LAND COURT OF TONGA
Land Court, Nuku'alofa

LA 03/2006

Wang

v

Fund Management Ltd anor

Ford CJ; Land Assessor George Blake
4, 12-14, 25-27 February, 3-6 March 2008; 29 April 2008

Civil law – claim of fraud – insufficient evidence – claim failed

In June 1993 Dr Wang had acquired a 50 year lease over a 5920 m² area of land in the middle of the commercial centre of Nuku'alofa. The leasehold interest in the property had an estimated value of $1.18 million. A mortgage was taken out with the ANZ Bank. Dr Wang defaulted in his payments under the mortgage and the ANZ Bank, as mortgagee in possession and pursuant to orders from the Land Court, re-leased the property to the defendants. Dr Wang claimed that his signature on four of the documents relating to the agreements to re-lease and the court orders were forgeries and he sought a declaration that they, therefore, be declared nullities. He also sought damages in the total sum of USD $1.5 million and an order returning the whole of the leasehold land to himself.

Held:

1. The standard of proof in any civil litigation was on the balance of probabilities and that remained so even where the matter to be proved involved criminal conduct or fraud. However, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what was sought to prove. Clear or cogent or strict proof was necessary were so serious a matter as fraud was to be found. The rationale for such requirement reflected a conventional perception that members of society did not ordinarily engage in fraudulent or criminal conduct and the court should not lightly make such a finding.

2. The court did not find Dr Wang a convincing or credible witness and it rejected the evidence of the only corroborative witness called on his behalf. No handwriting expert was called to support the plaintiff's contention of fraud. The plaintiff failed in his claim and the defendants were awarded costs to be agreed or taxed.

Cases considered:

Bannister v Walton (1993) 30 NSWLR 699

Cowley v Tourists Services Ha'apai Ltd and Fund Management Ltd [2001] Tonga LR 183

Jeans v Cleary [2006] NSWSC 647

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66

Statute considered:

Evidence Act (Cap 15)

Counsel for the plaintiff : Mr Edwards
Counsel for the defendants : Mr Niu

Judgment

Introduction

[1] Counsel sensibly agreed that the trial would be confined to liability and, if necessary, a further fixture could be made to deal with issues of quantum.

[2] The plaintiff, who resides in Singapore, is a naturalised Tongan citizen. His surname is also spelt "Wong" and that name appears frequently in many of the documents relating to this case. He told the court that he held a doctorate in economics from the University of Singapore which he attended between 1969 and 1972. I will refer to him in this judgment either as Dr Wang or simply as "the plaintiff". Dr Wang told the court that he is in the telecommunications business and he has manufacturing businesses in China and Singapore. He also operates hotel businesses in Indonesia and Beijing and he owns the new Royal Tonga International Hotel at Fua'amotu.

[2] The background to the case is complicated and other proceedings relating to the land which is the subject matter of the action have already been heard and disposed of in this court and in the Court of Appeal (see: Cowley v Tourists Services Ha'apai Ltd and Fund Management Ltd [2001] Tonga LR 183. The land in question (known as "Finefekai") comprises of an area of 5920 m² or 1a 1r 34p in the middle of the commercial centre of Nuku'alofa. On the northern half of the property now stands the Fund Management office complex. On the southern half of the property stood the Star CinemaTheatre complex and shopping complex which was totally destroyed in the riots of 16 November 2006. There was evidence that the value of the leasehold land is now $1.18 million Pa'anga.

[3] Under a deed of lease dated 15 June 1993 the whole of the land in question had been leased by his late Majesty King Taufa'ahau Tupou IV, with the prior consent of Cabinet, to the plaintiff Dr Wang for a term of 50 years expiring on 14 June 2043. In the present case, Dr Wang argued, in effect, that that should still be the position and he should still be the lessee of the whole block of land but he claims to have been deprived of his "exclusive property interests in the entire Finefekai land" by two court orders which were obtained by a conspiracy of fraud and false representations on the part of the defendants. The statement of claim comprises of two seperate causes of action, each relating to the respective court orders just referred to. The plaintiff claims relief in the form of damages in the total sum of USD $1,500,000, a declaration that the relevant court judgment is a nullity and effectively the return to himself of the whole of the Finefekai leasehold land together with costs.

[4] Chronologically, the first court order the plaintiff claims was obtained by fraud is an order of Acting Chief Justice Lewis made in the Supreme court on 24 February 1998 in Action No. C 432/98. This order forms the basis for the plaintiff's second cause of action but I shall deal with it first because chronologically it was first in time and, as the allegations in each cause of action are similar, my decision in relation to the validity of the order made by Lewis ACJ. will inevitably also be largely determinative of the plaintiff's other cause of action.

Cause of action relating to proceeding C 432/98

[5] The court file records that the parties to this proceeding were the ANZ Bank as Mortgagee in Possession (applicant); Dr Wang as Mortgagor; Fund Management Ltd as First Respondent and Tourists Services Ha'apai Ltd as Second Respondent. This proceeding was not the normal type of case that comes before the court. In fact, it was quite an exceptional proceeding. The file was opened and closed on the same day, namely, 24 February 1998.

[6] It appears that what happened was that on 24 February 1998 counsel for the ANZ Bank, Mr John Appleby, attended before Justice Lewis in his Chambers along with other counsel and presented an application to the Judge to make certain orders by consent the terms of which were embodied in a draft order attached to the application. There were four affidavits filed in support of the application. The most substantial affidavit was made by Mr Gary Ayre, Manager of the ANZ Bank in Nuku'alofa. He explained the background to the litigation and I will endeavour to summarise his evidence in that affidavit.

[7] Mr Ayre deposed that on 28 May 1997 the bank made a loan to Dr Wang secured by way of mortgage over his lease of the Finefekai land. On 9 July 1997 Dr Wang requested a partial discharge of the mortgage to enable him to sell off half of his leasehold land at Finefekai to Fund Management Ltd. The partial discharge was duly granted. The ANZ Bank actually advanced funds to Fund Management Ltd under a mortgage to enable the company to make the purchase from Dr Wang. Problems were encountered, however, which I need not go into in having the Finefekai lease subdivided into two leases and as at the date Mr Ayre swore his affidavit, namely 24 February 1998, although the Bank had advanced the funds to Fund Management Ltd under its mortgage, neither the lease to Fund Management Ltd or the bank's mortgage had been registered. The bank was obviously concerned about the situation.

[8] Mr Ayre explained that on 12 November 1997 the bank had served a Notice of Default on Dr Wang under his mortgage and on 26 November 1997, having received no money to remedy the default, the bank had taken possession of Dr Wang's leasehold interest in the property. Mr Ayre then related how Dr Wang had entered into an Agreement to Re-Lease dated 9 February 1998 which provided for the sale of the remaining half of his Finefekai leasehold land to Tourists Services Ha'apai Ltd, a subsidiary of Fund Management Ltd. The ANZ Bank was lending further money to Fund Management Ltd to enable Tourists Services Ha'apai Ltd to complete that purchase.

[9] The Agreement to Re-Lease dated 9 February 1998 provided that in consideration of the sum of USD $110,000, Dr Wang would surrender his interest in the lease to enable a new lease to be issued for one half of the land to Tourists Services Ha'apai Ltd. The settlement date under the agreement of 9 February 1998, by which time Dr Wang was expected to have had the Ministry of Lands subdivide the Finefekai land into two halves with a new lease in respect of one half issued to Tourists Services Ha'apai Ltd and a new lease of the other half issued to Fund Management Ltd, was stated to be 28 February 1998. Mr Ayre further explained that the proceeds of the sale to Tourists Services Ha'apai Ltd would be sufficient to clear Dr Wang's total indebtedness with the ANZ Bank which at that stage stood at USD $108,507.42 or TOP $144, 047.12.

[10] An unusual feature of the case is that the written agreements to sell the leasehold interests to Fund Management Ltd and Tourists Services Ha'apai Ltd both contained an incorrect sale price. The 27 June 1997 agreement to sell the lease of half the interest in Finefekai to Fund Management Ltd showed a sale price of USD $120,000 whereas the actual price paid by Fund Management Ltd was USD $340,000. The other agreement dated 9 February 1998 to sell the lease of the remaing half of the land to Tourist Services Ha'apai Ltd showed a sale price of USD $110,000 whereas the actual price paid by the company was USD $225,000. The evidence from the defendants' witnesses, which I accept, established that the lower figures in each case were shown in the written agreement at the specific request of Dr Wang. The reasoning behind the insertion of the lower sale price in the deeds was not apparent from the evidence.

[11] It was against that background that the ANZ Bank sought the consent order from Acting Chief Justice Lewis. The orders directed the Minister of Lands to effect a subdivision of the whole of the Finefekai land by dividing the leasehold into two halves and having two new subleases issued in the names of Fund Management Ltd and Tourists Services Ha'apai Ltd respectively. The order further directed the Minister of Lands to register the new subleases and the mortgages over each in favour of the ANZ Bank forthwith.

[12] In addition to the affidavit filed by Mr Ayre, affidavits in support of the ANZ Bank's application in C 432/98 were also filed by Mr Alistaire Hutchison, director of Fund Management Ltd; George Nakao, director of Tourists Services Ha'apai Ltd and by Dr Wang. The three deponents all swore that they consented to the court making the orders sought by the ANZ Bank. All the supporting affidavits were sworn on the same day, namely, 23 February 1998. In his affidavit Dr Wang acknowledged that he had defaulted in repayment of his loan obligations to the ANZ Bank and that the bank had taken possession of his leasehold interest in the Finefekai land as "mortgagee in possession". He confirmed that he had entered into the Agreement to Re-Lease dated 9 February 1998 under which he would sell the remaining half of his leasehold interest to Tourists Services Ha'apai Ltd and he authorised the bank to use the proceeds of that sale to settle his indebtedness with the bank and any surplus funds were to be returned to himself. He concluded: "I consent to the orders being sought by the Applicant".

[13] In the present proceeding, Dr Wang alleges that the consent order in proceeding C 432/98 was obtained by fraudulent misrepresentation. The principal allegations he makes in this regard are: (1) that he was unaware and did not have any notice of that court action either on or before 24 February 1998 and (2) he did not enter into or authorize any person on his behalf to enter into the Agreement to Re-Lease dated 9 February 1998 and his purported signature on the said agreement was a forgery. Although the amended statement of claim runs to 81 paragraphs and is complex and detailed the plaintiff does not specifically allege anywhere in his pleading that the affidavit in his name referred to in the previous paragraph consenting to the orders sought by the ANZ Bank was a forgery. He was, however, asked about the affidavit dated 23 February 1998 in his examination in chief to which he responded that it was not his signature, he did not sign it and he did not become aware of the existence of the affidavit in question until June 2005. Those are all serious allegations. In both the Agreement to Re-Lease dated 9 February 1998 and the affidavit of 23 February 1998 the signature for Dr Wang was witnessed by, Lopeti Foliaki, who was at the time a local law practitioner and Commissioner for Oaths.

[14] In his amended statement of claim filed on 11 February 2008 the plaintiff raises for the first time other allegations in relation to the 9 February 1998 Agreement to Re-Lease perhaps the most significant of which is the fact that it was purportedly signed between Dr Wang and Tourists Services Ha'apai Ltd but Tourists Services Ha'apai Ltd was not incorporated until 20 February 1998. Another allegation is that instead of a company seal in the name of Tourists Services Ha'apai Ltd, a stamp with the word "CONFIDENTIAL" had been used and the persons who purported to sign the agreement as directors of Tourists Services Ha'apai Ltd were not, in fact, directors. He also raised some other new matters. In an affidavit sworn on 6 February 2008, counsel for the plaintiff explains that the proposed amendments to the pleadings do not add any new cause of action but simply provide better particulars of the allegations of fraud. Counsel for the defendants accepted that the company was not incorporated until 20 February 1998 but he submitted that the agreement of 9 February 1998 was ratified by the company on 23 February 1998, after its incorporation. In his closing submissions Mr Niu also responded to the other late allegations raised by the plaintiff. I accept defence counsel's submissions in this regard. In determining the causes of action based on fraud, I see no need to go outside the plaintiff's principal allegations of fraud which are those directed at the documentation containing the alleged forged signature of the plaintiff.

[15] On 23 February 1998 two other agreements were signed up which the plaintiff's case relies heavily upon. Dr Wang alleges that his signatures on both agreements are forgeries. Neither agreement appears to have been referred to Acting Chief Justice Lewis in proceeding C 432/98 but they were produced and relied upon by the Land Court in the subsequent proceeding which forms the basis of the plaintiff's other cause of action, namely, proceeding No. L 11/2002.

Cause of action relating to proceeding No. L 11/2002

[16] The first of the agreements dated 23 February 1998 is the agreement which Mr Niu correctly stated ratified the 9 February 1998 Agreement to Re-Lease. It is in identical terms but by that date Tourists Services Ha'apai Ltd had been incorporated. The use of the "confidential" stamp was explained as an interim measure because of the delay experienced in obtaining a proper company seal. Its use had been properly authorised by resolution.

[17] The second agreement dated 23 February 1998 was entitled an "Agreement of Guarantee". Ostensibly it was made between Fund Management Ltd and Tourists Services Ha'apai Ltd (referred to as "the Companies") on the one hand and Dr Wang (referred to as "the Guarantor") on the other. In the preamble to the agreement Dr Wang acknowledged that he had not been able to provide the companies with the new leases for the term and at the rental agreed upon by 28 February 1998 and that as a result of his breach of contract the companies had suffered loss by way of liquidated damages. For their part, the companies granted Dr Wang a two-year extension of time up until 27 February 2000 in which to obtain the necessary consents or confirmation but if he was unable to comply with those requirements within the time period stated then he was liable to the companies for liquidated damages in the sum of USD $225,000. In the final part of the agreement it was also acknowledged that the companies had placed a caveat over the site of what is now Dr Wang's Royal Tonga International Hotel at Fua'amotu.

[18] As already noted, Dr Wang denied any knowledge of these two agreements and the central allegation in his fraud cause of action is that his signature on both documents was a forgery.

[19] Proceeding L 11/2002 is a claim by Fund Management Ltd and Tourists Services Ha'apai Ltd against Dr Wang commenced by writ and statement of claim dated 18 September 2002. In the statement of claim the plaintiff companies recite the complicated background to the case up to the time of the signing of the Agreement of Guarantee dated 23 February 1998 which gave Dr Wang a two-year extension of time in which to provide each of the plaintiffs with a lease of half the Finefekai land for a term and at the rental agreed upon. The statement of claim alleged that Dr Wang had failed to provide the necessary leases by 27 February 2000 and that he had further failed to pay the agreed sum of liquidated damages. By way of relief, therefore, the plaintiffs sought liquidated damages in the sum of USD $225,000 together with interest on that sum from 28 February 1998.

[20] On 20 September 2002 the plaintiff's in action L 11/2002 made an ex parte application to the court for an order for substituted service of the writ and statement of claim. In support of the application, an affidavit was filed by Vaha'i Foliaki a law practitioner then employed in Mr Niu's Law office (Mr Foliaki is now a magistrate). In his affidavit, Mr Foliaki deposed that neither himself nor the plaintiffs had been able to ascertain Dr Wang's whereabouts for service of the proceedings. He further deposed that he knew that a lawyer, namely Mr Lopeti Foliaki, had been acting as counsel in Tonga for Dr Wang in different court cases but Lopeti Foliaki had left Tonga for the USA and he (the deponent) did not know when he would be back in the Kingdom. An order for substituted service was duly made requiring the plaintiffs to give formal notice of the proceedings in both the English and Tongan languages in the Tonga Chronicle newspaper. That order was duly complied with but it attracted no response from Dr Wang.

[21] After a formal proof hearing on 13 February 2003 the Land Court entered judgment for the plaintiffs against Dr Wang in the sum of USD $225,000 together with interest thereon at 15% from 28 February 1998 until payment. The thrust of the plaintiff's cause of action in the present case alleging that the formal proof judgment in proceeding 11/2002 was obtained through fraud was the allegation that at the formal proof hearing on 13 February 2003 the plaintiffs had produced to the Land Court in evidence "three forged agreements", namely the Agreement to Re-Lease dated 9 February 1998, its replica dated 23 February 1998 and the Agreement of Guarantee dated 23 February 1998. Those are the same agreements that have already been analysed in this judgment.

[22] Subsequently, after again giving formal notice in the Tonga Chronicle newspaper, the plaintiffs in proceeding LA11/2002 began taking steps to enforce their judgment. They obtained a writ of distress against Dr Wang under which the Chief Bailiff seized a Mercedes-Benz motor vehicle and steps were taken to sell by way of tender Dr Wang's leasehold interest in his land at Fua'amotu. It was sometime after those developments that Dr Wang appears to have began seeking legal advice. In cross-examination he admitted instructing Mr William Edwards to act for him in about June 2004. On 20 July 2004 the court received a notice of change of solicitor confirming that Ms Helu would now be appearing on behalf of Dr Wang "in place of Mr Lopeti Foliaki & Mr Appleby former members of the Tongan Law Society." In August 2004 Mr Charl Hirschfeld, barrister from Auckland, took over acting for Dr Wang and in February 2006 he issued the present proceedings. In April 2007 Mr Hirschfeld sought and was granted leave to withdraw and Mr Clive Edwards took over acting as counsel.

Evidence for the plaintiff

[23] Essentially the case revolves around Dr Wang's purported signature on four documents which he claims are forgeries. To the extent that the court relied on those documents in the two sets of proceedings referred to, the plaintiff alleges that the resulting Consent Order and formal proof Judgment were obtained through fraud and he accordingly seeks a declaration that they be declared nullities. He also seeks an order rescinding the writ of distress issued on 12 May 2004.

[24] The four documents which Dr Wang alleges are fraudulent are:

(I) the Agreement to Re-Lease dated 9 February 1998

(II) the Agreement to Re-Lease dated 23 February 1998

(III) the Agreement of Guarantee dated 23 February 3, 1998, and

(IV) the affidavit in the name of Dr Wang sworn on 23 February 1998 and filed in support of the ANZ bank's application for consent orders.

[25] Dr Wang was in the witness box for two days. He is now 56 years of age and is clearly unwell. On a number of occasions, particularly during cross-examination, his evidence was interrupted while he took his prescribed medication. His re-examination was not completed because of concerns about his health and his anxiety to return to Singapore. In the end special leave was granted allowing him to leave and catch an early morning flight home without having completed the final part of his evidence.

[26] Dr Wang told the court that he had paid His Majesty, the late King Taufa'ahau IV, USD$500,000 for a 50 year lease of the whole of the Finefekai property and that he intended to develop a large shopping and office complex on the site. At the same time he was in the process of building an international hotel on a site he had acquired a lease over close to the airport at Fua'amotu. He said that during a visit to Tonga in the middle of 1997 he was introduced by a Mr Lopeti Foliaki, a local law practitioner whom he had known for some time, to a Mr Alistaire Hutchison of Fund Management Ltd and to Trevor Stevenson, a local lawyer who acted for Fund Management Ltd. The meeting took place at the International Dateline Hotel.

[27] It was not clear from Dr Wang's evidence what the motivation was or how the negotiations proceeded. Dr Wang indicated that there may have been more than the one meeting. In any event the meetings resulted in the drawing up and signing of an Agreement to Re-lease dated 27 June 1997. The recitals included an acknowledgement that Dr Wang held the leasehold estate of the land in question and Fund Management was desirous of subleasing part of that land. The agreement provided that, subject to the consent of Cabinet, the land would be split into two and, in consideration of the sum of USD $120,000, a new sublease would be issued for the northern half in the name of Fund Management Ltd and a sublease of the southern half would be issued in the name of Dr Wang.

[28] Dr Wang did not dispute that he duly signed that agreement dated 27 June 1997. His signature was witnessed by Mr Stevenson. The common seal of Fund Management Ltd was affixed in the presence of Mr Stevenson and Mr Hutchison who describe themselves as Directors and Robina Nakao who was described as Secretary. Dr Wang told the court that he recalled attending the office of the Minister of Land to try and hasten the production of the original lease to allow for the new subleases to be drawn up. Dr Wang said in evidence that he did not have a lawyer at that stage and he told Mr Stevenson he did not have a lawyer but Mr Stevenson simply replied, "Don't worry. I will protect you. I will be your lawyer." He said that shortly after 27 June 1997 he returned to Singapore but before he left Mr Stevenson said to him that he "would do the rest."

[29] Although he could not be specific as to the date, Dr Wang said that towards the end of 1997 he underwent major bypass surgery in Singapore. He said that he did not return to the Kingdom of Tonga until September 1998 when, at the request of the Tongan police, he gave evidence in a deposition hearing in a case against the late Noble, Hon Fakafanua. That, then, was the thrust of the plaintiff's evidence. He had not been in Tonga in February 1998 when the four documents in question were drawn up and signed and his signature on each of the respect of documents was a forgery. As he put it, " In February 1998 I was in Singapore in my house taking medication every day." He said that he did not become aware of the existence of the four documents and the relevant court orders until June 2005.

[30] In his examination in chief Dr Wang had produced his current passport which had been issued on 22 July 2005. In cross-examination he was asked whether he could produce his previous passport to show that he was not in Tonga in February 1998. Dr Wang first said that he had returned it to the Foreign Affairs Department in Tonga but when he was challenged on that statement he said that he had given it to the Minister of Police. When Mr Niu then asked him which Minister of Police he had given it to, the witness responded that he had given it to the police. At that point the court adjourned for the day and Dr Wang was invited to make inquiries as to the whereabouts of his old passport. When the court resumed the following morning he was asked by counsel whether he had had any luck in trying to find his old passport but he simply responded, "no".

[31] Dr Wang was also closely questioned in cross-examination about the timing of the major bypass surgery he said he had undergone in Singapore at the end of 1997 and it was put to him that his operation had taken place in September 1998, not 1997. Dr Wang strongly denied that proposition. Mr Niu then referred him to a letter dated 2 September 1998 which he (Dr Wang) had faxed to the Deputy Police Commander in Tonga seeking the postponement, for health reasons, of the preliminary inquiry he was required to attend in connection with the case against Hon Fakafanua which is referred to earlier in this judgment. Dr Wang had enclosed with his letter a letter from his doctor dated 1 September 1998 which read:

"1 September 1998

To whom it may concern.

Dear Sir

Mrs H. C. Wang is in Singapore with her husband who has had heart bypass surgery. He needs to stay on in Singapore for two weeks for medical treatment. His wife needs to be with Dr Sam Wang to look after him.

Yours sincerely

Dr Charles Toh"

It was put to Dr Wang that it was clear from that letter that the operation had taken place in 1998, not 1997. Dr Wang responded, "he was not the operating doctor. He is our family doctor."

[32] The most forceful challenge Dr Wang faced in cross-examination related to his assertion that he had not been in Tonga in February 1998 and the signatures on the documents in question were forgeries. Mr Niu very fairly put it to the witness that the principal witnesses for the defendants, namely, Mr Alistaire Hutchison, Mr Trevor Stevenson, Mr Gary Ayre, George Nakao and Robina Nakao would all give evidence and say that he was with them in Tonga when the documents were signed on 23 February 1998. Dr Wang responded that he believed that they were all part of the conspiracy of fraud against him. When asked specifically what he would say about Robina Nakao's evidence that she was one of the people in the office with him in February 1998 when the documents were signed, he responded, "I say nothing."

[33] In a painstaking way Mr Niu then proceeded to invite Dr Wang to compare the signatures in the four documents in question with other signatures that Dr Wang accepted were his own. More than once he responded that the signatures looked similar but he did not sign the documents in question. He said that he had four different signatures including a Chinese signature. He described one of the of four as the signature he used solely for money matters.

[34] The second witness for the plaintiff was Mr Lopeti Foliaki who now resides in California in the USA. He said that he had practised as a law practitioner in Tonga between 1995 and 2002. Mr Foliaki told the court that he had first met Dr Wang in 1987 at a trade show in San Francisco and they have remained friends ever since. At the time of their initial meeting Mr Foliaki was Consul-General for the Government of Tonga. The witness said that when he came to Tonga in 1995 he began working for the law firm of Stevenson, Nelson & Mitchell. Mr Stevenson was based in Samoa and visited Tonga from time to time. Mr Nelson was based in Samoa and Mr Mitchell in the Cook Islands. Mr Foliaki said that he became a partner in the firm in 1996 and the name was then changed to Stevenson, Nelson, Mitchell & Foliaki he confirmed that the firm represented Fund Management Ltd.

[35] Mr Foliaki recalled the meeting at the Dateline Hotel in June 1997 when he introduced Dr Wang to Mr Alistaire Hutchison and Robina Nakao. He said that he had been asked by Mr Stevenson to make the introduction but he could not recall seeing Dr Wang again after making the introduction in the hotel. In examination in chief he was asked by Mr Edwards whether he was acting for Dr Wang at the time and he replied: "No, I was just a friend. I did not represent him."

[36] Mr Foliaki was then asked about the four documents alleged to be forgeries because in three of them he had signed as a witness to Dr Wang's signature. The fourth document, namely, the Agreement of Guarantee dated 23 February 1998 had been witnessed by Mr Stevenson. Mr Foliaki replied that he had been given a bundle of documents by Mr Stevenson which had been tabbed for signing and Mr Stevenson had shown him the Agreement of Guarantee and said, "I witnessed Dr Wang's signature on this document. Could you do the rest." Mr Foliaki said that he had people with him in his room but Mr Stevenson asked him if he could witness the documents straight away because there were people waiting for them. Mr Foliaki said that he noticed that there were people in Mr Stevenson's office at the time so he just went ahead and signed. Afterwards he took the bundle of documents to Mr Stevenson's office and gave them to him. He confirmed also that the Agreement to Re-Lease dated 9 February 1998 was one of the documents he had witnessed on 23 February.

[37] Mr Foliaki said that he did not see Dr Wang on the day in question. He was asked in examination in chief whether he had inquired as to where Dr Wang was and he replied: "No, Stevenson wanted the documents signed straight away because people were waiting and I had clients in my office I had to see."

[38] In cross-examination it was put to Mr Foliaki that he had done an unlawful thing in witnessing Dr Wang's signature if he had not seen him sign the documents. Mr Foliaki said that he did not expect the documents to be put to the court. He said that what he did, "troubled me then and it troubles me now." Mr Foliaki was later recalled in relation to a particular aspect of the evidence and again he confirmed that he had never been instructed by Dr Wang in respect of any matter relating to Fund Management Ltd and he had not seen Dr Wang in February 1998. In his cross-examination on that occasion, he was asked whether he had been at court when Justice Lewis dealt with the consent order application. Mr Foliaki said, "I was not there." He said, "the last time I saw Dr Wang was in 1997 and I did not see him again until April/May 1998."

Evidence for the defendants

[39] One of the first witnesses for the defendants was David Corbett who in February 1998 was working as a law practitioner for Stevenson, Nelson, Mitchell & Foliaki. He recalled Dr Wang. He said that he used to come to the office and see Robert (Lopeti) Foliaki. He recalled the occasion of the signing of all the documents in February 1998. He said that he was not directly involved but Mr Stevenson had asked him to accompany him to the ANZ Bank and the documents were signed in the conference room at the main branch of the bank. The people he recalled who were present at the signing were Gary Ayre, Robert Foliaki, Dr Wang, Trevor Stevenson, Alistaire Hutchison and himself. Later he recalled that John Appleby was also present as the lawyer acting for the ANZ Bank. Mr Corbett recalled that Mr Foliaki had his Commissioner for Oaths stamp pad with him. He was asked in examination in chief: "And did you see anybody sign any documents?" His response was: "I'm sure Dr Wang signed the documents, Robert and Gary Ayre and Trevor."

[40] The next witness called by Mr Niu was 52-year-old John Appleby who is now a barrister & solicitor in Auckland but between 1993 and 1999 he practised as a sole practitioner in Tonga and one of his clients was the ANZ Bank. He described how Dr Wang had defaulted in his loan repayments and the bank had taken possession as mortgagee of his interest in the Finefekai property. Mr Appleby explained the various agreements that were subsequently negotiated to enable the leasehold property to be subdivided into two with one half being leased to Fund Management Ltd and the other to Tourists Services Ha'apai Ltd. From the proceeds of sale Dr Wang would be able to pay off his ANZ mortgage in full. Mr Appleby explained that in acting for the bank he was the driving force behind the various transactions but Mr Foliaki was acting for Dr Wang and Mr Stevenson was acting for the two companies.

[41] In reference to the signing of the various documentation on 23 February 1998, Mr Appleby said that from memory they were all together in a room at the bank because there were a large number of documents to be signed. He named those present as Mr Stevenson, Dr Wang, Mr Ayre, Mr Corbett, Robert Foliaki and himself Mr Appleby volunteered the comment that he and the bank manager, Mr Ayre, had a policy of not meeting with Dr Wang alone because they did not trust him.

[42] Mr Appleby recalled taking all the documents to court for filing after they had been signed and he said that Mr Stevenson and Mr Foliaki went along to the court with him and they returned the following day to pick up the sealed order. The witness said that he would not have taken the documents to court unless Dr Wang had consented to the transaction because the whole object of the exercise was to complete what was effectively a mortgagee sale with Dr Wang's consent. He said that he, Mr Stevenson and Mr Foliaki had all appeared before Acting Chief Justice Lewis in support of the consent order application and Mr Foliaki was acting for Dr Wang throughout.

[43] The next witness for the defence was Mr Trevor Stevenson. In his opening, Mr Edwards had accused him of being the mastermind behind the fraudulent conspiracy. He said that he acted for Fund Management Ltd and Tourists Services Ha'apai Ltd in the whole transaction as well as acting for Dr Wang. Dr Wang, Mr Edwards claimed, did not receive any independent legal advice. In a similar vein, Dr Wang in his evidence accused Mr Stevenson of being the main fraudster.

[44] Mr Stevenson was in the witness box for more than 2 1/2 days and he was cross-examined at length. He explained how, at the relevant time, he was based in his law practice in Samoa but he would visit Tonga on legal business whenever there was a need. He described the complicated arrangement his law firm had with Mr Foliaki. He described his firm as having "an association" with Mr Foliaki but he denied that Mr Foliaki was ever a partner in the firm. He indicated that at one stage the firm had invited Mr Foliaki to become a partner but before that happened they learned that he had been disbarred in Hawaii and so the partnership arrangement was never formalised. He said that Mr Foliaki had his own clients in the Tonga office and his own accounting system. In cross-examination, Mr Stevenson accepted Mr Edward's proposition that by allowing Mr Foliaki to have his name on the letterhead, the firm was holding him out as a partner. For his part, Mr Foliaki denied that he had ever been disbarred and he claimed that he was, in fact, a partner.

[45] Apart from the confusing evidence referred to in the previous paragraph relating to Mr Foliaki's status, Mr Stevenson gave a clear account to the court of the various transactions leading up to the signing of the alleged fraudulent documents. Mr Stevenson said that he acted only for Fund Management Ltd and Tourists Services Ha'apai Ltd and it was Mr Foliaki who had acted throughout for Dr Wang and given him his legal advice. He claimed that Dr Wang was "definitely there signing documents on the 23rd of February" along with Mr Foliaki. In reference to the numerous documents signed on 23 February and the application to Justice Lewis for the consent orders, Mr Stevenson told the court that he (for the two companies); Mr Robert Foliaki (for Dr Wang) and Mr Appleby (for the ANZ Bank) all worked together on the different documents and they were typed up in his office. He then told how he along with Mr Foliaki and Mr Appleby had attended Acting Chief Justice Lewis in Chambers when the consent orders were made.

[46] Mr Niu then called Mr Ayre, the former manager of the ANZ Bank in Tonga. He told the court about the problems he had encountered in relation to Dr Wang's default under the bank's mortgage. He said that Dr Wang had been "well in arrears" with his mortgage payments. Expanding on that comment in cross-examination, Mr Ayre said:

"We had given him ample opportunity to clear his arrears with the bank and he declined to do so." Mr Ayre explained how the rescue package had been put together and submitted to Acting Chief Justice Lewis for consent orders. He described Dr Wang as a very difficult person to contact because of his travel commitments but he said that Dr Wang was present on 23 February when all the documents were signed. In cross-examination he acknowledged that, after 10 years, he couldn't specifically recall seeing Dr Wang sign.

[47] The final three witnesses called on behalf of the defence were Mr Alistaire Hutchison from Auckland who is a shareholder and the Chairman of Fund Management Ltd. He also holds other directorships and is a very experienced businessman. George Nakao, who is also a director of a number of companies including Fund Management Ltd and Tourists Services Ha'apai Ltd and Robina Nakao, the Chief Executive Officer of Fund Management Ltd. There is no need for me to traverse the evidence given by these witnesses. Suffice it to say that they were all involved in varying degrees in the negotiations and transactions which culminated in the preparation and production to the court of the documentation in question. They were all adamant that Mr Robert Foliaki had been acting for Dr Wang throughout those negotiations and that he and Dr Wang had been present at the signing on 23 February 1998. When it was put to Mr Hutchison that Dr Wang had given evidence saying that he was not present that day, the witness responded, "I find that an extraordinary statement. I saw him here." Mr Hutchison was the principal negotiator for the two companies. He described Dr Wang as, "not an easy person to deal with" and later "quite an extraordinary person to deal with."

The law

[48] As in any civil action, the plaintiff bears the onus of proof on the balance of probabilities but, given the gravity of the allegations of alleged forgery, the law requires that the court should be comfortably satisfied on the balance of probabilities before such a finding is made: Bannister v Walton (1993) 30 NSWLR 699, 711. As noted in the recent decision of the Supreme Court of New South Wales in Jeans v Cleary [2006] NSWSC 647, the balance of probabilities standard of proof is: "qualified having regard to the gravity of the questions to be determined. The test has been said to be whether the issue has been proved to the reasonable satisfaction of the court, such satisfaction not being produced by inexact proofs, indefinite testimony, or indirect inferences."

[49] In Jeans v Cleary the court noted that the rationale for this approach had been explained in the High Court decision of Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66:

"The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involved criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary " where so serious a matter as fraud is to be found". Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that the court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct."

Conclusions

[50] The only corroborative evidence for the plaintiff was that given by his long-time friend and former law practitioner, Lopeti (Robert) Foliaki. The thrust of Mr Foliaki's evidence before the court was that he had introduced Dr Wang to the Fund Management Ltd people and their solicitor, Mr Stevenson, in June 1997 but he had had no further involvement whatsoever in relation to the various transactions between Dr Wang and Fund Management Ltd / Tourists Services Ha'apai Ltd. Mr Foliaki said that on 23 February 1998 he had been asked by Mr Stevenson to witness Dr Wang's signature on various documents but he had not actually seen Dr Wang sign the documents nor had he seen Dr Wang in Tonga around that date. His evidence was that the last time he saw Dr Wang was in 1997 and then he did not see him again until April/May 1998. He strongly denied ever having acted for Dr Wang in connection with any aspect of the transactions in question.

[51] After the completion of the trial and in preparation for this judgment, I had occasion to peruse the court records relating to the earlier cases referred to in evidence, in particular proceeding No.C 432/98, and noted that in his Bench Book entry for 24 February 1998, Acting Chief Justice Lewis had recorded the names of counsel present for the consent order application as:

"Appleby ANZ

Stevenson Fund Management & Tourist Ha'apai Services with Corbett

Foliaki Practitioner for Mtgor Wong."

[52] A copy of the entry in the Judge's Bench Book was circulated to counsel and they were given the opportunity to file any further submissions. Both responded positively. Mr Edwards filed with his submission an affidavit from Lopeti Foliaki which I set out in full:

"I, Lopeti Foliaki of Ma'ufanga but now of 208 Sierra Vista Ave, Mountain View, California, United States of America, retired swear:

1. I have received and read the Court Order dated 21st April 2008 and would like to explain the position.

2. On the morning of the 24 April 1998 Mr Trevor Stevenson approached me in my office and indicated that there was a chamber's meeting regarding Fund Management Ltd and Dr Wang's case before Judge Lewis that morning at 9 a.m. and that he would appear for the two companies but I should appear for Dr Wang. He said that he had spoken to Dr Wang that night and Dr Wang agreed that I should appear on his behalf.

3. I asked Mr Stevenson whether Dr Wang confirmed his approval that I would represent him in writing and Stevenson said that he would obtain the confirmation of my representation by fax and Dr Wang would bring the original with him when he came to Tonga within two or three weeks.

4. I then asked Mr Stevenson what the chamber's meeting was about and he indicated that the ANZ bank was mortgagee in possession regarding that Finefekai property and Dr Wang had agreed to sell his lease to Fund Management and Tourists Services Ha'apai Ltd the funds from which his debt to the bank would be settled.

5. I never saw or received any subsequent confirmation of approval for me to represent Dr Wang at the chambers hearing.

SWORN etc."

[53] I find that affidavit sworn by Mr Foliaki an extraordinary document. Within only a few weeks of giving evidence denying any involvement whatsoever in the transactions, apart from his admission of falsely witnessing Dr Wang's signature, Mr Foliaki, without any explanation, suddenly appears to have had this dramatic recall of memory to the detailed extent deposed to in his affidavit. I reject his affidavit as a tissue of lies. I have no doubt that Lopeti Foliaki did, in fact, act for Dr Wang in connection with the transactions exactly as the defendants' witnesses had claimed. Mr Foliaki's oral evidence on oath to the contrary, therefore, was false and I have no hesitation in rejecting his version of events. His recent sworn affidavit simply exacerbates his deceitfulness. He is a disgrace to the legal profession. It is fortunate, perhaps, that he no longer practices law within the Kingdom.

[54] One of the features of the plaintiff's case was Dr Wang's complete failure to produce any reliable evidence to confirm his two principal assertions that: (1) he had had his bypass surgery at the end of 1997 and (2) he was not in Tonga in February 1998. The letter from Dr Charles Toh dated 1 September 1998 referred to in paragraph [31] above can only mean that as at the date the letter was written Dr Wang was recovering from heart bypass surgery he had undergone only recently - not 12 months beforehand. In his accompanying letter to the Police Commander in Tonga dated 2 September 1998, Dr Wang said: "I confirm our conversation on 25 August 1998 . . . Please note that at that point of time I had already visited my doctor because of a heart problem that I was experiencing." All this was happening in 1998, not 1997. Dr Wang dismissed Dr Toh's letter with the comment that he was only the family doctor and not the operating surgeon. Dr Toh is described on his letterhead, however, as "Consultant Cardiologist".

[55] Again, I found Dr Wang's evidence relating to his claim that he was not in Tonga in February 1998 totally unconvincing. When he was asked in cross-examination what he had done with his passport for the relevant period he replied, in the course of a convoluted answer, that he had given it to the "Minister of Police". Mr Niu asked, "which Minister of Police?" At that point Dr Wang looked quickly at his counsel obviously (from his demeanour) realising that he, Mr Clive Edwards, had been Minister of Police at the relevant time and changed his answer to, "I gave it to the police" but he was not able to identify who in the police force he had given his passport to.

[56] Dr Wang did not call any handwriting expert to support his contention that the crucial signatures were not his. Nor did he seek to call any other witness to express an opinion on the handwriting in question as he would have been entitled to do pursuant to section 26 of the Evidence Act (Cap 15). I have compared the alleged fraudulent signatures with Dr Wang's genuine signature which appears on numerous other documents that were before the court and I have no doubt that all of the signatures were, in fact, Dr Wang's. His admittedly genuine signature in the letter dated 2 September 1998 to the Tonga Police Commander, for example, is virtually identical to the alleged fraudulent signatures.

[57] Last, but by no means in the least, is my overall assessment of the credibility of the various witnesses. I regret that I did not find Dr Wang a convincing or credible witness. It was obvious throughout his evidence and his cross examination in particular that he was under an intense strain and that manifested itself through angry and emotive outbursts as well as numerous short stoppages in his evidence in which he called for water and took his prescribed medication. I cannot avoid the conclusion, however, that Dr Wang brought all this emotional pressure upon himself by persisting with a case which he knew only full well was a complete fabrication and sham. On the other hand, without exception, all of the defendants' witnesses conducted themselves with decorum and professionalism and were in every respect both credible and convincing. If Mr Niu was a poker player he could justifiably have likened his team of witnesses in this case to "a full house".

[58] The plaintiff has failed in his claim. The defendants are entitled to costs to be agreed or taxed.