FRANCK CHRISTOPHE SCHULDERS v. MESSODIE INTERNATIONAL LTD AND OTHERS

HCA 1334/2023

[2024] HKCFI 2454

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1334 OF 2023

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BETWEEN

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D E C I S I O N

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1.  The Plaintiff seeks default judgment against the Defendants, on the basis of the following pleaded case.

The Plaintiff’s pleaded case

2.  The Defendants were acting in concert and fraudulently.

3.  The Plaintiff was deceived by the 3rd Defendant into making two payments (“the Payments”):

3.1 on 22nd August 2017, a sum of €1,696,009 to the 1st Defendant’s HSBC account in Hong Kong (“the 1st Payment”);

3.2 on 9th August 2019, a sum of €400,000 to an account of one Financier Highgate SA, a Swiss company (not said to be one of the fraudsters) (“the 2nd Payment”).

4.  The Plaintiff had been persuaded to make these payments because of the 3rd Defendant’s representations that they would be invested in an oil well development in the Republic of Congo which would offer good returns.

5.  On about 11th September 2022, the Plaintiff discovered that the 3rd Defendant’s representations were false.

6.  The Plaintiff issued a writ in the present proceedings on 21st August 2023.

7.  In a phone call in early September 2023, the 2nd Defendant (a director and 50% shareholder of the 1st Defendant) told the Plaintiff that he (the 2nd Defendant) had only kept a “small” part of the Payments, and had wired the rest to the 3rd Defendant’s brother.

8.  The Plaintiff has also had communications with the 3rd Defendant, who told him that no part of the Payments had gone to him or his brother.

The present application

9.  By a summons of 23rd July 2024, the Plaintiff applied for default judgment under RHC O.19 r.7, seeking multiple alternative items of relief.

10.  In the Plaintiff’s skeleton submissions, the primary form of relief sought was a declaration that the 1st Defendant holds the Payments; alternatively any part of the sums retained or derived therefrom, on constructive trust for the Plaintiff.

11.  The 1st Defendant’s solicitors informed the court that they had no instructions in relation to the current application.

Claim for constructive trust

12.  Constructive trusts provide proprietary relief. A plaintiff who seeks a proprietary remedy must usually prove that the property to which he lays claim is still in the ownership of the defendant. See Milestone Electric Inc v. Meihoukang Trading Co Ltd [2020] HKCFI 2542 at [13] to [15].

13.  I do not agree that this is an appropriate case to make the declaration sought. On the Plaintiff’s pleaded case, it is not at all apparent that the Payments are held by the 1st Defendant.

13.1 It is not the Plaintiff’s pleaded case that the 1st Defendant retained the 1st Payment.

13.2 It is not the Plaintiff’s pleaded case that the 2nd Payment was made to the 1st Defendant in the first place. It was made to a third party.

13.3 Furthermore, it is the Plaintiff’s pleaded case that he was told by the 2nd Defendant that the Payments (less a “small” part) had been on-transferred to the 3rd Defendant’s brother (although he also pleads that was also told otherwise by the 3rd Defendant).

14.  Furthermore, I note that the Payments were made in 2017 and 2019, some seven and five years ago. No injunctive relief was sought. No attempts to identify the whereabouts of the Payments have been pleaded. There must be a serious doubt as to whether any part of the Payments is in the hands of the 1st Defendant.

Claim in unjust enrichment

15.  The Plaintiff’s skeleton seeks to pursue, in the alternative, a claim in unjust enrichment against the 1st Defendant. It seems to me that this claim may be well-founded in the circumstances of the case. Ironically, the relevant relief is not one of the numerous items pleaded in the Statement of Claim.

16.  As the Plaintiff is proceeding under O.19 r.7, and the court can only give judgment according to the pleadings, it is necessary for the Plaintiff to put its pleadings in order first before judgment can be given.

17.  I will grant a brief adjournment to the Plaintiff to consider appropriate amendments to its statement of claim and the appropriate way forward.