HO LOK YI v. HA OLIVER AND ANOTHER

DCMP 479/2024

[2025] HKDC 838

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 479 OF 2024

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BETWEEN

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JUDGMENT

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A. Introduction

1.  This is the hearing of the originating summons dated 23 January 2024 as amended on 26 July 2024 and 5 February 2025 (the “O/S”).

2.  In short, the plaintiff’s case is that she was the victim of a cyber fraud. She was induced by a fraudster to pay sums totaled $600,000 into a bank account, of which $200,000 were subsequently transferred into a bank account in the name of the 1^st defendant held with the 2^nd defendant.

B. Absence of the defendants

3.  Notwithstanding the absence of the defendants, I am satisfied that the hearing should proceed pursuant to O 28 r 4 of the Rules of the District Court (Cap 336H) for the following reasons:

(1) Although the 1^st defendant had personally appeared in previous hearings of the O/S, he did not file any acknowledgment of service despite having been directed by the court to do so on as early as 4 February 2025;

(2) A service affirmation has been filed on behalf of the plaintiff showing that notice of the present hearing was served on the 1^st and 2^nd defendants;

(3) By letter dated 7 May 2025 from the 2^nd defendant’s solicitors, the 2^nd defendant indicated that it would not attend the present hearing unless directed by the court and that the 2^nd defendant would abide by any order made.

C. Analysis

4.  The plaintiff’s claim against the 1^st defendant is based on (i) constructive trust; and (ii) unjust enrichment.

C1. The general principles

5.  It is trite that equity imposes a constructive trust over stolen property received by a fraudulent recipient. The court may grant a declaration to confirm the existence of the trust which had arisen in the past, see: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714-716; Star Therapeutics, Inc v Leabon Technology (HK) Limited and Another[2021] HKCFI 1715 at §16 per Deputy High Court Judge Le Pichon.

6.  To establish a claim of unjust enrichment, a plaintiff must show that (1) a defendant was enriched; (2) such enrichment was at the plaintiff's expense; (3) the enrichment was unjust, and (4) none of the defences to unjust enrichment (such as change of position) apply, see: Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, at §67 per Ribeiro PJ.

C2. Application to facts

7.  Based on the affirmation evidence of the plaintiff the contents of which are not disputed by the defendants, I am satisfied that:

(1) Whilst she was looking for work, the plaintiff got in contact with an individual purportedly named “Alex Chan” via WhatsApp after seeing a recruitment advertisement on social media in September 2022. The plaintiff was purportedly employed by a company (represented by Alex Chan) as a purchasing agent to handle remittances in return for a 10% commission of the amount handled;

(2) The plaintiff was also introduced by Alex Chan to another individual called “Kelvin Chu” who purported to be a lawyer;

(3) On 18 October 2022, Alex Chan contacted the plaintiff and instructed her to borrow money as the employer was encountering cashflow problem. In compliance with his instructions, the plaintiff opened an account with Fusion Bank on or around 27 October 2022 and obtained a personal loan in the sum of $600,000 on around 31 October 2022;

(4) On 1 November 2022, Alex Chan through WhatsApp instructed the plaintiff to transfer $600,000 to a bank account in the name of “Chiu Kam Wing Bevis” held with the 2^nd defendant (the “1^st Layer Account”). To assure the plaintiff of the legitimacy of the transaction, Alex Chan sent to the plaintiff a copy of a receipt (the “Purported Receipt”) purportedly issued by Kirkland & Ellis (“K&E”), a law firm;

(5) Under the pressure of Alex Chan and Kelvin Chu, the plaintiff transferred $500,000 and $100,000 to the 1^st Layer Account on 1 and 2 November 2022 respectively. Prior to these transfers, the 1^st Layer Account had a nil balance;

(6) Out of the $500,000 paid to the 1^st Layer Account on 1 November 2022, $200,000 were paid to an account in the name of the 1^st defendant held with the 2^nd defendant (the “D1’s Account”) on the same date;

(7) Subsequently, the plaintiff discovered that the Purported Receipt was not issued by K&E. Upon discovery of the scam, she made a report to the police on 24 November 2022.

8.  On account of the above, I am satisfied that a fraud was perpetrated on the plaintiff and the part of the proceeds of the fraud can be traced to the $200,000 paid to D1’s Account applying the “lowest intermediate balance” approach, see: Essilor Manufacturing (Thailand) Co., Ltd v G. Doulatram and Sons (HK) Limited and Others[2020] HKCFI 2489 at §§71-74 per Deputy High Court Judge Le Pichon.

9.  I am also satisfied that the claim of unjust enrichment has been made out:

(1) In the present case, even though there was no direct payment from the plaintiff to the 1^st defendant, as held by Deputy High Court Judge Reyes SC in Idemitsu Chemicals (Hong Kong) Co Ltd v Yanqing Ltd and Others[2024] HKCFI 1075 at §§28-31, there is no general rule against indirect enrichment but the court must take a pragmatic approach. On the facts, I am satisfied that the 1^st defendant was enriched to the extent of $200,000 at the expense of the plaintiff;

(2) Mistakes of fact can amount to an unjust factor, see: Goff & Jones, The Law on Unjust Enrichment (10^th Ed, 2022) at §9.01. Such mistake is clearly established in the circumstances of the case where the plaintiff was duped into making the $500,000 payment to the 1^st Layer Account as a result of the scam;

(3) No suggestion of any defence (e.g. change of position) has been advanced by the 1^st defendant who has failed to acknowledge service and did not file any evidence. In any event, I cannot see any basis in support of the same.

D. Relief

10.  At the hearing, Ms Lam for the plaintiff confirmed with me that the plaintiff would only seek a money judgment with a view to subsequently apply for a garnishee order as the means of enforcement. She also agreed with me that it was not necessary to seek declaratory relief in the circumstances and that there was no suggestion of any competing interests for the $200,000 in D1’s Account.

11.  Accordingly, I order that:

(1) the 1^st defendant to pay to the plaintiff a sum of $200,000; and

(2) there be pre-judgment interest at HSBC Prime Rate plus 1% on the said sum from 1 November 2022 up to the date of judgment, and thereafter at judgment rate.

E. Costs

12.  As agreed by the plaintiff, I order that the plaintiff do pay the 2^nd defendant’s costs on an indemnity basis. However, I am of the view that the sum of $65,391 claimed in the 2^nd defendant’s statement of costs is excessive. Adopting a broad brush approach and taking into account the 2^nd defendant’s limited involvement in these proceedings, I summarily assessed its costs at $10,000.

13.  I also order that the costs of and incidental to this action (including the costs payable by the plaintiff to the 2^nd defendant) be paid by the 1^st defendant to the plaintiff, to be taxed if not agreed. The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.

Ms Lam Hoi U, instructed by Kwok, Ng & Chan, assigned by the Director of Legal Aid, for the applicant

The 1^st defendant was not represented and did not appear

The 2^nd defendant, represented by Gall, absent

DCMP 479/2024

[2024] HKDC 1882

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 479 OF 2024

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DECISION

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Introduction and Background Facts

1.  I have before me an application by the Plaintiff (“P”) by Summons dated 3 October 2024 (“the Summons”) against the 2^nd Defendant (“the Bank”) for disclosure of the documents set out in the Summons pursuant to s 21 of the Evidence Ordinance, Cap 8 (“EO”) and the court’s inherent jurisdiction.

2.  In this action, P has claimed that she was a victim of an online fraud and was defrauded to transfer a total of HK$600,000 to the account of “Chiu Kam Wing Bevis” (“Mr Chiu”) maintained with the Bank (“the 1^st Tier Account”) on 1 and 2 November 2022.

3.  Later, when she did not receive repayment of her monies and she googled the name “Chiu Kam Wing Bevis” and found out that that person was involved in fraud cases, did P realize that she was a victim of a fraud.  She reported the matter to the Hong Kong Police (“the Police”) on 24 November 2022.

4.  The Police subsequently told P that a sum of HK$200,000 was transferred from the 1^st Tier Account to the 1^st Defendant’s account maintained with the Bank (“D1’s Account”).  D1’s Account has been frozen by the Police.

5.  P has sought and obtained disclosure orders against the Bank previously pursuant to an Order of Deputy District Judge Joseph Vaughan dated 28 March 2024 and an Order of Deputy District Judge N Hui dated 20 August 2024 in respect of D1’s Account and the 1^st Tier Account respectively.  However, the bank statements disclosed pursuant to those Orders did not show the identities of the transferors and transferees in respect the withdrawals and deposits therein.

6.  P now seeks an order for disclosure against the Bank of: (a) the identities of the transferee(s) and/or transferor(s); (b) the bank account number(s)/FPS account number(s) and bank name(s) of each of the transferee(s) and/or transferor(s); (c) the amount(s) and date(s) of the transfer(s) in respect of: (1) each of the withdrawals and deposits between 1 November 2022 and 30 November 2022 in the 1^st Tier Account; and (2) each of the deposits on 1 November 2022 in D1’s Account.

7.  The Bank was served the Summons but has indicated by letter dated 22 October 2024 that it adopts a neutral stance with regard to the Summons save it seeks costs on an indemnity basis and wishes to be excused from attending today’s hearing.  The Bank has not appeared today.

8.  Mr Ha (ie D1) and Mr Chiu were served the Summons by P and they have appeared, unrepresented, today.  Service on the account holders is not a statutory requirement and the court can make an order under s 21 without summoning the bank or any other party: see s 21(2) of EO and Aisan Corporation of America & Anor v Unknown Bank Account Holder(s) with DBS Bank (Hong Kong) Limited[2023] HKCFI 567 at §12. Whilst their attendance today were not strictly speaking necessary, I did give an opportunity for them to make any submissions in respect of the Summons.

Applicable principles

9.  The applicable principles governing an order under s 21 of EO are well-established.  Although it has been said that a s 21 order is justified where the plaintiff seeks to trace funds which in equity belong to him and of which there was strong evidence that he has been fraudulently deprived, there are 3 limits:

(1)  First, the plaintiff must demonstrate a real prospect that the information may lead to the location or preservation of assets to which he is making a proprietary claim;

(2)  Secondly, the documents sought to be disclosed must be identified with some specificity as would be expected of a subpoena; and

(3)  Thirdly, the court needs to balance the potential advantage against the detriment to the person against whom the order is sought, not merely in terms of costs but by way of invasion of privacy and requiring breach of obligations of confidence to others.

See CTO (HK) Ltd v Li Man Chiu & Others [2002] 2 HKLRD 875, §§12-13.

Analysis and Orders

10.  Applying the above legal principles to the facts of the present case, I am satisfied the orders sought should be granted.

11.  In this action, P has claimed against D1 for payment of HK$200,000 on the basis of constructive trust or alternatively, unjust enrichment

12.  There is strong documentary evidence that P has been fraudulently deprived of her monies of which HK$200,000 were transferred to D1’s Account.

13.  I am also satisfied of that the information sought would likely reap substantial and worthwhile benefit to enable P to preserve, locate and/or recover monies to which she has made a proprietary claim against D1.

14.  The discovery sought is specifically defined and not unduly wide.  I have also taken into account the neutral stance adopted by the Bank who have not suggested any difficulty in complying with the orders sought.

15.  Having balanced the competing interests of the victim and the innocent party (the Bank) caught up in the wrongdoing, the previous court orders for disclosure already made, and mindful that the power to order disclosure should be exercised with great caution, I make an order in terms of the Draft Order submitted to me save the order as to costs as amended by me.