In a telling example of friendship not forming a sound basis for financial dealings, a retired pharmacist who lost $1.75 million when a neighbour and fellow golf club member inadvertently delivered him into the arms of a Cambodian fraudster has won his money back at the Court of Appeal.
The pharmacist lost his life savings after entering into a Cambodian land venture at the behest of his next-door neighbour and ‘very good friend’, a general medical practitioner of good standing. The doctor’s assurances of generous returns on his investment turned out to be hollow when the deal collapsed.
The Cambodian intermediary in the deal was subsequently sentenced to lengthy imprisonment in his homeland for fraud and other crimes. Various investors had lost a total of almost US$8 million in the scam. Although the doctor had no knowledge of the fraud, a judge ruled that he had lied to his friend in order to induce him to invest in the risk-laden scheme. He directed rescission of the agreement and ordered the doctor to repay the pharmacist every penny he had lost, plus interest.
Challenging that decision, the doctor’s lawyers pointed out that he was ‘a senior medical practitioner of some standing with a hitherto unblemished reputation’. The judge’s finding of fraud was a disaster for him. In an ‘outright attack’ on the judge’s decision, they argued that the judge had fundamentally misunderstood parts of the evidence and given inadequate reasons for his damning conclusions.
However, the pharmacist’s legal team insisted that the doctor had, over a two-year period, persistently failed to answer his friend’s questions about the scheme ‘with anything but half-truths or out-and-out lies’. The doctor, it was submitted, ‘could be dishonest when it suited him’ and the judge’s conclusions were amply justified.
Dismissing the GP’s appeal, the Court analysed each of the pleaded allegations in detail before ruling that the judge had been entitled to find that the doctor – who had been described as ‘a dishonest witness’ – had misrepresented the truth to his friend in a number of important respects.
In his original decision, the judge found that the doctor had told lies ‘with the aim of making the investments seem safe, when they were far from safe’. He had offered the pharmacist the opportunity to join others in buying more than 400 Cambodian hectares, the plan being to re-sell the plot to a hotel chain at a handsome profit.
The doctor insisted that he had done nothing wrong and had offered no guarantees that the scheme would be successful. He said that he had also invested heavily in the venture and was as much a victim as his friend. However, the judge found that the doctor had known that his friend was ‘totally reliant on him’ and that he had breached his duty of disclosure ‘at every turn’.