DEZUN TRADE COMPANY LTD v. SEHAI TRADING LTD

HCA 2228/2025

[2026] HKCFI 2201

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2228 OF 2025

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D E C I S I O N

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Introduction and Background

1.  By Summons filed on 3 December 2025 (“the Summons”), the Plaintiff (“P”) seeks an interlocutory proprietary injunction and Mareva injunction against the Defendant (“D”).

2.  According to the Affirmation filed in support of the Summons (“Supporting Affirmation”), P is a victim of cyber-fraud which led to the transfer of the sum of USD 600,000 (“the Sum”) from P’s account maintained with Dah Sing Bank Limited (“P’s Account”) to D’s account maintained with Bank of Communications (Hong Kong) Limited (“D’s Account”) on 24 March 2025, believing it was the designated account to receive the Sum in respect of the purchase by P of paper goods from a German company (“IPH”) which P had previously dealt with. The fraud was discovered on 27 March 2025 when P was informed that IPH had not received the Sum and the matter was reported to the Hong Kong Police (“the Police”) on 29 March 2025. The Police informed P inter alia that D’s Account has been frozen and the Sum remains in D’s Account. That remains the position as at 23 August 2025.

3.  According to an affirmation of service filed on behalf of P, the Summons and Supporting Affirmation, Amended Writ of Summons and other documents were served on 5 December 2025 by inserting them into the letterbox for D’s registered office.

4.  Today, Mr Lau, counsel, appeared for P and D has not appeared.

Discussion and Disposition

5.  The legal principles governing proprietary injunction are well-established and not disputed. For the grant of a proprietary injunction, there are three requirements: (1) there is a serious issue to be tried on the merits; (2) that the balance of convenience lies in favour of the injunction; and (3) it is just and convenient to grant the injunction. The threshold of “serious issue to be tried” is not a very steep hurdle but if the opposing party seeks to show that there is no serious issue to be tried, the threshold is high as it would be necessary to demonstrate that the claim should be struck out. Furthermore, it is not necessary to show any risk of dissipation of assets although if such risk is demonstrated, it may be an additional factor in favour of the grant of injunction. Nor is it necessary to show that damages would not be an adequate remedy. However, it remains necessary to demonstrate that the balance of convenience favours the granting of the injunction, and that it would be just and convenient to do so. It would not be granted if a monetary award would be adequate remedy for the plaintiff. In particular, where the proprietary claim of the plaintiff is not to any specific real or personal property but to money, the plaintiff can be adequately compensated by a monetary award, unless there is evidence which calls into question the ability of the defendant to meet the award, so that a proprietary injunction is not necessary or justified. See e.g. Predicine Holdings Ltd v Bianchi (Hong Kong) Limited & Ors [2021] HKCFI 123 per Coleman J at §§69-73 and DBS Bank (Hong Kong) Limited v Tian Wen Quan (unrep), HCA 3228/2016, 12 October 2017 per Anthony Chan J (as he then was) at §§11-18.

6.  In Zhang Yan & Ors v ASA Bullion Limited [2019] HKCFI 179 Recorder Eugene Fung SC (as he then was) at §11(3) and (4), held that a proprietary injunction must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff. Furthermore, in order to justify the grant of a proprietary injunction, the plaintiff should ordinarily adduce some reasonable evidence of the existence of the specific asset (or its traceable proceeds) and that the same is being held by or under the control of the defendant. Where the asset forming the subject matter of the proprietary claim has been dissipated and can no longer be traced, a proprietary injunction cannot ordinarily be granted.

7.  As for the principles applicable to the grant of Mareva injunction, these are also well-established. The applicant has to show that: (1) there is a good arguable case on the merits; (2) there are assets within the jurisdiction; (3) the balance of convenience is in favour of granting an injunction; (4) there is a risk of dissipation of those assets so as to render any judgment which the plaintiff may obtain nugatory; and (5) he must comply with a strict duty of full and frank disclosure. See Zhang Yan at §17 and Hong Kong Civil Procedure 2026, Vol.1, §29/1/65.

8.  Applying the above principles to the facts of the present case, I am satisfied from the uncontested evidence before me that there is a serious issue to be tried and/or P has a good arguable case based on constructive trust and unjust enrichment:

(1)  It is now accepted that equity imposes a constructive trust on the fraudulent recipient when the property is obtained by fraud so that the money is recoverable and traceable in equity. The defrauded claimant will still have a tracing claim even if the recipient was not party to the fraud, so long as his state of knowledge is such as to make it unconscionable for him to retain the money: see e.g. Guaranty Bank and Trust Company v Zzzik Inc Limited (unrep) HCA 1139/2016, 18 July 2016, §§27-33 per DHCJ Cooney SC; and

(2)  For a claim based on unjust enrichment, money paid under a mistake of fact is prima facie recoverable provided that the payer did not intend the payee to have the money, in any event, the money was not paid for good consideration and the payee has not in good faith changed his position: see ibid, §27.

9.  From the evidence filed by P, there is a good arguable case that P has been defrauded to make payments to D’s Account which it otherwise would not have. According to the Police, D’s Account was frozen by them and two directors/shareholders of D have been arrested and charged for taking part in the fraud. According to the Police, the Sum remains in D’s Account such that there is reasonable evidence of the existence of P’s assets or its traceable proceeds and it remains held by D or under D’s control. P has a good arguable case on constructive trust to the sums in D’s Account. I am satisfied that there is also a good arguable case based on unjust enrichment.

10.  The balance of convenience lies in favour of a proprietary injunction where on the one hand, there is no information as to D’s ability to pay P’s monetary claim but on the other hand, P is willing to give an undertaking as to damages should the injunction be found to be wrongly granted.

11.  I am also of the view that the requirements for the grant of a Mareva injunction are also satisfied. P has a good arguable case on the substantive claim, there are assets within the jurisdiction, the balance of convenience lies in favour of the grant and given the alleged fraudulent involvement of D, there is a clear risk of dissipation. Even though D’s Account is currently “frozen” by the Police, the issuance of Letters of No Consent to banks by the Police is temporary, reviewed each month and of finite duration: see Tam Sze Leung & Ors v Commissioner of Police [2023] HKCA 537 at §71 and Stephen Anthony Sokyka v Hang Zu Trading Co Limited [2023] HKDC 957 per DDJ David Chan at §16.

12.  Accordingly, I will make an order in terms of the Draft Order submitted.