SIME DARBY HONG KONG FINANCE LTD v. FDK LTD AND ANOTHER

HCA 1916/2019

[2021] HKCFI 426

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1916 OF 2019

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JUDGMENT

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Introduction

1.  In the present case, the plaintiff (“P”) applies for, amongst other things, default judgment to be entered against the 1^st defendant herein (“D1”) as follows:

(1)  a sum of US$2.05 million or the Hong Kong dollar equivalent at the time of payment on 11 October 2019 (“the Sum”);

(2)  a declaration that D1 is liable to account to P for the Sum as a constructive trustee for P;

(3)  an order that D1 pays the Sum to P;

(4)  interest; and

(5)  costs, including the costs of this Application, to P.

2.  P’s summons was issued under Order 19 rule 7(1) of the Rules of the High Court (RHC) (“Order 19 Summons”).

3.  P’s Order 19 Summons was originally fixed for a 30 minute hearing on 25 January 2021, but due to the Covid-19 pandemic, the matter was directed to be dealt with on papers.

4.  Counsel Ms Charlotte OT Chan lodged written submissions on behalf of P.

5.  There were no submissions lodged by D1, nor did D1 appear at the originally fixed hearing on 25 January 2021.

Background

6.  P is a company incorporated in Hong Kong, which is wholly owned by Sime Darby Motor Group (HK) Limited (“SDMG”) and ultimately owned by a Malaysian publicly-listed company, Sime Darby Berhad (“SDB”).

7.  P is said to be a victim of an email fraud which occurred on 11 October 2019 (“Email Fraud”).  The Sum was transferred to D1’s bank account as a result of various emails and telephone calls from the alleged fraudster/s.

8.  D1 is a company incorporated in Hong Kong on 12 August 2019, ie just 60 days before the Email Fraud complained of.

9.  Before 11 October 2019, P was not aware of the existence of D1.  None of P, SDMG or SDB has ever had any commercial dealings with D1[1].

10.  The facts of the Email Fraud are set out in paragraphs 4 to 13 of the Statement of Claim[2], and summarised in paragraphs 7 and 8 of P’s Skeleton Submissions as follows:

“7.1   On 11 October 2019, Mr Raymond Lee, ie the managing director of SDMG, received a series of emails which were purportedly sent from Mr Jeffri Salim Davidson, ie the President and the CEO of SDB.

7.2   These emails bore Mr Davidson’s signature and email address. Mr Lee of SDMG thus mistakenly believed that the sender of these emails was Mr Davidson of SDB when in fact it was not the case.

7.3   Upon the instructions of the sender of the emails, Mr Lee liaised with an alleged legal counsel called “David Hirschman” to work on a confidential project for acquiring a Hong Kong company.

7.4   At a later time on the same day, a man who identified himself as the said “David Hirschman” in a telephone conversation informed Mr Lee that the deposit for the acquisition was US$2.05 million (ie the Sum) and required the Sum to be transferred to D1’s bank account.

7.5   In the mistaken belief that the instructions to remit money to D1 was properly authorised by SDB, Mr Lee of SDMG procured P to transfer the Sum to D1’s bank account on the same day.

7.6   After receipt of the Sum, D1 immediately made a series of transfers from its account to several third parties including D2 to D4 herein.

7.7   3 days later, ie on 14 October 2019, P was informed by Mr Davidson of SDB that there had never been any acquisition project as alleged and that he had never sent the emails as stated in paragraphs 7.1 to 7.1 above. P reported the email fraud to the police on the same day.

8.   The email fraud was thus discovered. The true identities of the sender of the emails and Mr Hirschman remain unknown.”

The present action

11.  Upon discovery of the above, P obtained an injunction against D1 on 18 October 2019 (“Injunction”) and the writ herein was issued on the same day (“Writ”).

12.  On 22 October 2019, the Writ was served on D1[3].

13.  On 25 October 2019, the Injunction was continued against D1 and P further obtained a banker’s book order in respect of D1’s bank account which led to the discovery of the disbursements of the Sum to, among other persons, the 2^nd to the 4^th defendants.

14.  On 12 November 2019, this Court granted an injunction against the 2^nd to the 4^th defendants, which was later continued on 22 November 2019 subject to certain variations.

15.  On 29 September 2020, the Statement of Claim was served on D1[4].

16.  Todate, D1 has failed to enter appearance.  No acknowledgement of service nor Defence has been filed or served by D1.

17.  On 2 December 2020, P took out the present Order 19 Summons which was served on D1 on 4 December 2020[5].

Service

18.  Having considered all the affirmations of service, I am satisfied that all the relevant documents, including the Writ, the Statement of Claim and the Order 19 Summons have been duly served on D1 at its registered office as last registered at the Companies Registry. 

Discussion 

19.  As pointed out by Ms Chan, (i) D1 was incorporated just 60 days before the Email Fraud and the reported address of D1’s sole shareholder and director is in Mainland China; (ii) D1 has not had any bona fide or substantial business in Hong Kong or elsewhere; (iii) D1 had immediately transferred a major part of the Sum to third parties including the 2^nd to 4^th defendants herein and this was consistent with an attempt to dissipate the Sum as soon as possible.

20.  Having considered the facts and the evidence filed on behalf of P, I am satisfied that the Sum was transferred by P to D1 as a result of a series of fraudulent emails and telephone calls, namely the Email Fraud.

21.  I accept Ms Chan’s submissions that further or alternatively, the elements of unjust enrichment are also established here.  There was no evidence that there had ever been any previous dealings between P and D1 and in the circumstances, D1 has unjustly enriched by the Sum.

22.  In light of all said above, I am satisfied that judgment should be entered against D1 for the Sum and that D1 should pay the Sum with interest to P.

23.  P has also sought a declaration for constructive trust in order to safeguard its proprietary rights, and for D1 to account to P for the Sum as constructive trustee.

24.  As I am satisfied that the Sum was obtained by D1 from P pursuant to the Email Fraud, D1 held the Sum as constructive trustee for P and P is entitled to trace the Sum.

Conclusion

25.  I thus grant to P an order as sought in the draft attached to Ms Chan’s Skeleton Submissions.  I further order D1 to pay P the costs of this action, including the costs of the Order 19 Summons, to be taxed if not agreed, with certificate for counsel.