The Government of the Republic of China (Taiwan) v Ching Chi Ju Charles and another

Tan Lee Meng J:

[1] The plaintiff, the Government of the Republic of China (Taiwan), instituted the present proceedings to recover US$29.8m that it paid into a bank account in Singapore that was jointly operated by the 1 defendant, Mr Ching Chi Ju Charles (“Mr Ching”), and the 2 defendant, Mr Wu Shih-Tsai (“Mr Wu”). The plaintiff asserted that the money in question was to be utilised to fund projects in Papua New Guinea (“PNG”) if the latter established full diplomatic relations with Taiwan. However, when the plaintiff asked the defendants to return the US$29.8m after it became clear that diplomatic relations with PNG would not be established, the defendants did not return the said sum to the plaintiff. Hence, the plaintiff instituted the present proceedings against the defendants.

[2] As judgment was entered on 17 October 2008 against Mr Wu, who did not enter an appearance in these proceedings, the trial was only concerned with the plaintiff’s claim against Mr Ching, who contended that he did not have to return any money to the plaintiff because Mr Wu had withdrawn a little less than a third of the money in the account and the rest of the money in the account was intended to pay him for his services to Taiwan as a secret emissary to China and as an intermediary between the plaintiff and PNG.

[3] In 1996, the plaintiff attempted to but failed to establish diplomatic relations with PNG. In mid-2006, the plaintiff sought once again to establish full diplomatic relations with PNG (the “PNG project”).

[4] According to the plaintiff, its usual practice when trying to establish diplomatic relations with a country is to negotiate through intermediaries. It was not disputed that the plaintiff appointed Mr Ching and Mr Wu as its intermediaries in its discussions with PNG.

[5] On 12 August 2006, the following persons attended a meeting (the “12 August 2006 meeting”) with respect to the PNG project at the premises of the plaintiff’s Ministry of Foreign Affairs (“MOFA”):

[6] The plaintiff’s version of events is that at the 12 August 2006 meeting, the PNG representatives requested that US$30m be deposited into a bank account in Singapore in the joint names of Mr Ching and Mr Wu pending the establishment of full diplomatic relations. The plaintiff asserted that it reached an agreement with its intermediaries, Mr Ching and Mr Wu, on the following:

[8] On 10 October 2006, a delegation from PNG visited Taipei and wanted Mr Huang to sign a joint communiqué on the establishment of diplomatic relations. The proposed joint communiqué was worded as follows:

[9] Mr Huang refused to sign the proposed joint communiqué. He pointed out that although the words “establishment of full diplomatic relations” were used in the heading of the document, there was nothing therein which suggested that such ties were imminent. Instead, the focus of the communiqué was on economic ties between Taiwan and PNG. Mr Huang added that the fact that PNG’s then foreign minister, Sir Michael Somare (“Sir Michael”), who was also PNG’s prime minister at the material time, was not a part of the PNG delegation led him to doubt whether PNG had any intention to establish full diplomatic relations with Taiwan.

[10] On 13 October 2006, Mr Huang met Sir Michael. He said that as he formed the view that Sir Michael seemed to be interested in receiving economic aid from Taiwan and not in the establishment of diplomatic ties, he decided to stop the PNG project.

[11] The defendants were then asked to return the money in the OCBC account to the plaintiff. According to the plaintiff, in mid-October 2006, Mr Chang met Mr Ching, who told him that as the discussions on the PNG mission had not been completed, it was not time to return the money in the OCBC account to the plaintiff. Mr Chang said that when he reported Mr Ching’s response to Mr Huang, he was told that the PNG project had been abandoned and that Mr Ching should return the money. Mr Chang said that he met Mr Ching again in Taipei on 24 December 2006 to discuss the money in the OCBC account and that the latter replied that he would arrange for the return of the said money to the plaintiff after he had visited his daughter in China. Mr Chang said that after Mr Ching did not return the money, he went to Los Angeles seven times to meet Mr Ching but he failed to meet the latter. Mr Ching admitted that he met Mr Chang on 24 December 2006 but he claimed that it was merely a social occasion that had nothing to do with the OCBC account. Remarkably, he did not shed much light on why he could not be contacted by the plaintiffs for such a long period of time.

[12] On 18 April 2008, the plaintiff commenced the present proceedings against the defendants. On 25 April 2008, the High Court issued a Mareva injunction to prevent the defendants from disposing of their assets in Singapore up to the value of US$29.8m.

[13] It was common ground that the plaintiff paid US$29.8m into the OCBC account. In his AEIC, Mr Ching stated as follows at [7(c)]:

[14] Mr Huang, who was the plaintiff’s foreign minister between January 2006 to May 2008, said that the plaintiff had transferred US$29.8m to the OCBC account for the sole purpose of establishing diplomatic ties with PNG and that as the attempt to establish the said ties failed, the money should be returned to the plaintiff.

[15] In contrast, Mr Ching contended the plaintiff had put US$29.8m into the OCBC account for a number of purposes. To begin with, he claimed that US$10m in the OCBC account was intended to reward him for his work as Taiwan’s secret emissary for the improvement of relations with China. As for the remaining US$19.8m in the OCBC account, Mr Ching pleaded in his Defence at [3c] that, upon obtaining PNG’s agreement to establish an “official government-to-government relationship” with the plaintiff, Mr Wu was to receive “such of the US$19.8m that was spent in his efforts” while the rest of the money was to be given to him.

[16] Whether the plaintiff can recover the money in the OCBC account thus depends on why the plaintiff transferred the US$29.8m to the OCBC account.

[17] Mr Ching’s contention that US$10 million in the OCBC account belonged to him as it was intended to pay him for work done by him from 1995 to 2000 as Taiwan’s secret emissary to China will first be considered. He explained his role as Taiwan’s secret emissary to China in his AEIC at [5(a) to 5(b)]:

[18] Mr Ching even claimed in his AEIC at [5(p)] that it was “not immodest” for him to say that “much conflict, perhaps even rising to the level of a military confrontation between Taiwan and China” had been averted because of his role as Taiwan’s secret emissary to China.

[19] The problem with Mr Ching’s case is that he furnished no credible evidence to prove that he was Taiwan’s secret emissary or that China’s President Hu Jintao regarded him as the “sole window to Taiwan”. Furthermore, regardless of whether he was a secret emissary to China, he did not prove that any part of the money transferred by the plaintiff to the OCBC account was intended to pay him for his role as an emissary.

[20] The plaintiff submitted that Mr Ching’s defence, which made numerous references to past and present political figures in Taiwan and China, is sensational and inconsistent with his surreptitious conduct in avoiding its officers since December 2006. It pointed out that even its foreign minister at the material time, Mr Huang, is unaware of Mr Ching’s alleged role as Taiwan’s secret emissary to China. When cross-examined as to whether he had any evidence that President Hu Jintao regarded him as the “sole window” to Taiwan, Mr Ching said that this information had been passed to him by a Chinese official, Mr Zhang Huei. When questioned further, he rambled on without focusing on the question before he finally conceded that he had no evidence. The relevant part of the proceedings is as follows:

[21] Despite Mr Ching’s admission that he only had Mr Zhang Huei’s word and nothing else to show that President Hu Jintao regarded him as the “sole window” to Taiwan, his counsel contended in his closing submissions that Mr Ching had furnished to the court evidence of notes of meetings with top Chinese and Taiwan officials. This assertion had no foundation for apart from Mr Ching’s assertion that the documents are notes of the alleged top secret meetings, there was no other evidence that suggested that the documents in question are indeed the notes of Mr Ching’s meetings with top Chinese and Taiwan officials. In fact, Mr Ching conceded as follows when he was re-examined by his counsel:

[22] Apart from the fact that it was not proven that Mr Ching was Taiwan’s secret agent, it is noteworthy that Mr Ching’s own statements in his two AEICs with respect to who told him that he was entitled to keep US$10m for his role as secret agent for Taiwan did not advance his case.

[23] Until January 2010, Mr Ching’s position, as stated in his first AEIC filed on 18 November 2009, was that Mr Chang and Mr Lee had informed him that US$10m in the OCBC account was to, in his own words, compensate him for “the past ten years of toiling as the Taiwan president’s secret emissary” to China. He stated as follows in that AEIC at [7(c)]:

[24] Mr Chang testified that he was not even aware of Mr Ching’s role as a secret emissary. In his AEIC at [13], Mr Chang stated as follows:

[25] Mr Chang was adamant that he did not tell Mr Ching that US$10m was intended for his services as a secret emissary. When cross-examined, he stated as follows:

[26] Mr Lee also did not agree that any part of the US$30m was intended for Mr Ching’s alleged role as a secret emissary. He stated in his AEIC at [8] as follows:

[27] In his supplementary AEIC sworn on 7 January 2010, Mr Ching claimed for the first time that it was Mr Chiou I-Jen (“Mr Chiou”), the then Director of Taiwan’s National Security Council, who told him that he was entitled to US$10m for his work as Taiwan’s secret emissary to China and that this was confirmed by one Mr Ker Chen-Keng (“Mr Ker”), the then deputy director of Taiwan’s National Security Council and Vice-Minister of Defence. In his supplementary AEIC, he stated at 3(v) and (vi) as follows:

[28] The fresh revelations by Mr Ching in his supplementary AEIC are rather surprising. During the trial, his counsel, Mr Lawrence Lee, sought to portray Mr Chiou as a very powerful man with authority to pay Mr Ching US$10m for his work as a secret emissary. If this was indeed the case, Mr Ching, who had referred to his dealings with Mr Chiou and Mr Ker in his first AEIC, ought to have stated in that AEIC that it was Mr Chiou who had agreed to pay him US$10m for “the many things” that he did for the country. Instead, in that AEIC, Mr Ching had merely mentioned that Mr Chang and Mr Lee, whom he described as “underlings at the Foreign Ministry”, had told him to keep US$10m for himself.

[29] Mr Ching admitted that he had no written evidence and no witnesses to prove that Mr Chiou had authorized the diversion of US$10m, which was ostensibly intended for the PNG project, to Mr Ching’s own pocket. In the absence of proper evidence, the court cannot find that Mr Chiou, who is not in court to defend himself, had authorized the said diversion of government funds to Mr Ching.

[30] After taking all the circumstances into account, I hold that Mr Ching failed to prove that he is entitled to keep US$10m out of the US$29.8m in the OCBC account as a reward for his work as a secret emissary to China.

[31] As for the remaining US$19.8m in the OCBC account, Mr Ching asserted that there is nothing left in the said account to refund to the plaintiff because Mr Wu had spent US$8m to US$9m in furtherance of the project entrusted to him and the balance of the money was intended to compensate him for his work as an intermediary between Taiwan and PNG.

[32] Mr Ching did not furnish a consistent account of what the US$19.8m was intended for. In his AEIC, Mr Ching stated at [7c] that only US$9.8m was intended for payments to PNG’s representatives while US$10m was intended to compensate him and Mr Wu for their work as intermediaries in the PNG matter. However, according to his Defence (Amendment No 3), Mr Ching claimed that it was agreed between him and Mr Wu as follows:

[33] There is no evidence before the court that Mr Wu had spent any money in furtherance of the project entrusted to him. When re-examined by his own counsel, Mr Lawrence Lee, Mr Ching claimed that his lawyers had compiled a list to show the movement of money from the OCBC account but the alleged list was not produced in court. I thus find that it was not proven that Mr Wu had legitimately spent the amount in question in furtherance of the plaintiff’s aim to establish diplomatic ties with PNG or that any money in the OCBC account had been transferred to Mr Wu’s account.

[34] I now turn to Mr Ching’s assertions that the task undertaken by him was to enhance the bilateral relationship between Taiwan and PNG and not to assist in establishing full diplomatic ties between Taiwan and PNG and that he had earned around US$10m by fulfilling his task. He stated in his AEIC at [9]:

[35] The court is in no position to determine whether the sum of US$30m is a realistic amount to persuade PNG to establish diplomatic ties with the plaintiff. What needs to be noted is that Mr Ching’s assertion that his task was merely to enhance bilateral relations between Taiwan and PNG contradicts his own pleadings. For instance, in his Defence (Amendment No 3), he pleaded at [3b] that US$19.8m was to establish “an official government-to-government relationship between PNG and the Plaintiff and for the Defendants’ remuneration in acting as intermediaries” (emphasis added).

[36] Whether Mr Ching’s task was, as he claimed, to help the plaintiff establish official government-to-government relationship with PNG, or, as the plaintiff contends, to assist in the establishing of full diplomatic ties with PNG, I accept the plaintiff’s evidence that the US$29.8m in the OCBC account was part of the US$30m intended to fund projects in PNG after full diplomatic ties had been established with PNG and that no part of the money was intended to compensate either Mr Ching or Mr Wu. Mr Huang’s evidence on this point was corroborated by Mr Chang and Mr Lee.

[37] My findings thus far may be summarized as follows:

[38] In the light of my findings, the plaintiff is entitled to the US$29.8m that it deposited into the OCBC account. This right rests on principles of agency law. The plaintiff appointed Mr Ching and Mr Wu as its intermediaries for the PNG project. Mr Ching did not deny that he was the plaintiff’s intermediary for the said project. What he contended was that he was entitled to be paid for his services. As I have found that he had agreed to act as an intermediary without any payment for his services, he was a gratuitous agent. In regard to the recovery by a principal of money handed over by him to his agent, Bowstead and Reynolds on Agency, 18 ed, Sweet & Maxwell, 2006, explained the position at para 6-097 as follows:

[39] In the present case, when the plaintiff called off the PNG project and asked for the return of the US$29.8m, Mr Ching was obliged as a gratuitous agent to return the money. I thus hold that the plaintiff is entitled to judgment for the sum of US$29.8m. The plaintiff is also entitled to the interest that has accrued in the OCBC account or would have accrued had the entire sum of US$29.8m remained in the said account until the date of judgment.