THOMAS COOK LTD. v. POPULAR LEADER HOLDINGS LTD.

HCCL30/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.30 OF 2001

------------------------

-----------------------

_______________________

J U D G M E N T

_______________________

The application

1. This is the plaintiff's application, by summons dated 3 September 2001, for summary judgment pursuant to RHC Order 14, together with continuation of a Mareva injunction presently in place against the defendant. The plaintiff's action herein is simply a claim for the return of money mistakenly transferred by the plaintiff to the defendant's Hong Kong bank account.

Factual background

2. This is a curious case. The factual background is contained in the affidavit evidence of Miss Sarah Frost, the Manager, Commercial Foreign Exchange, Sydney of the plaintiff, which is a company engaged in worldwide commercial forex trading.

3. In her 4th Affidavit, Miss Frost sets out the circumstances leading to the mistaken transfer on 22 May 2001 of the sum of US$100,000 to the defendant's Hang Seng Bank account in Kowloon. Simply put, there appears to have been an administrative error which was caused by reference to the recipient by number instead of by name, hence the error was not picked up at the interim confirmation stage and prior to the actual transmission of the monies.

4. The monies in question should have been sent from an Australian company, WTC Pty Ltd to WTC (China) Ltd, and not to the defendant, which I will call PLH.

5. When the error was realized, attempts to recall the payment mistakenly so made failed. On 25 May 2001, that is, three days later, the plaintiff received a copy of a fax sent by WTC Pty Ltd to Hang Seng Bank requesting the return of the US$100,000 so paid by mistake to the defendant's account. This fax reads, in part :

"The funds were never intended for this beneficiary nor have we any intentions of dealing with this account."

6. In her 4th Affidavit, Miss Frost describes (at paragraph 12) that the Bank of New York is the plaintiff's paying and receiving agent in transactions involving US dollars, and that when instructed by customers to purchase US dollars, the plaintiff makes the purchase through the Bank of New York using its own funds, and thereafter obtains payment of the relevant amount from its client, in this case WTC Pty Ltd. Miss Frost further states (at paragraph 20) that having realized its mistake and in order to fulfil its contractual obligations to WTC Pty Ltd, the plaintiff purchased a further US$100,000 on 29 May 2001, and directed the Bank of New York to pay it to WTC (China) Ltd in accordance with the terms of the original application.

7. There is no contrary evidence as to the source of these funds, and I accept that the plaintiff has locus to bring this action and that, as the result of the foregoing matters, the monies so transferred were the plaintiff's monies.

8. As the result of this unfortunate sequence of events, the plaintiff wishes to get this sum of money back, a sum which apparently still remains in the defendant's Hang Seng Bank account to which these monies mistakenly were remitted.

The defendant's case

9. I observe at the outset that the position of PLH in relation to these events has taken some time to emerge. Originally PLH, a Chinese company, was represented by Messrs F. Zimmern & Co., a solicitor of which firm appeared before this court on two occasions in July this year, on 16 July and 30 July, in order to obtain extensions of time to serve the defence. Instructions, it was said, then were in the course of being taken. On the latter occasion, that is, on 30 July, an 'unless' order was made to the effect that the defence was to be filed by 3 August, in the absence of which judgment would be permitted to be entered.

10. However, on 2 August 2001 the defendant obtained from the Master, apparently without the aid of an affidavit in support, an Order that a director, Mr Wong Cheng Hui, be permitted to represent the defendant in this litigation.

11. The defendant has caused seven affirmations of varying lengths to be filed. Mr Wong himself has duly appeared upon this application, and in addition to that which is contained in the affirmations, which I have read, Mr Wong also has taken the opportunity to tell the court precisely what occurred.

12. Shorn of detail, the basic factual position appears to be thus. Mr Wong accepts that indeed there was a mistaken payment, and that the US$100,000 that appeared in his account should not have been there. But, he says, he had had financial dealings with WTC in the past (wherein he had acted as lender), and now, since he found himself in temporary financial difficulty, he wished to borrow the money which, it seems, suddenly had landed on his doorstep.

13. Mr Wong was full and frank in his submissions, and did not try to disguise the sequence of events. He said that he had been requested on the telephone to return the money wrongly so transferred by a Mr Lin Hai of WTC, whom, he asserts, was representing WTC Australia, and who was the younger brother of one Lin Tong, the head of WTC Pty Ltd. No conclusion was reached on the telephone, and two or three days later a meeting was held on 28 May 2001 wherein, he says, it had been suggested either that he should repay WTC in RMB or that there should be a 'reward' (the word used in the affidavit is 'compensation') for the money to be returned. He says that he told Mr Lin that no reward was necessary, but nevertheless that it was eventually agreed that PLH could keep the money for a period against an IOU issued by Mr Wong personally.

14. In essence, therefore, the defendant's case is that this plaintiff has no entitlement to the money, which belongs to WTC Pty Ltd, and that the defendant should be permitted to retain it pursuant to the agreement with WTC entered into with Mr Lin Hai some six days after the mistaken transfer. Mr Wong added, in response to a question from the bench, that he knows nothing of WTC having been placed in funds by the plaintiff.

Decision

15. I am unable to discern any triable issue here sufficient to require this case to be sent to trial. In my view the plaintiff is entitled to summary judgment for the return of the US$100,000 as so claimed.

16. I say this for a number of reasons. First, and notwithstanding Mr Wong's protestations as to the owner of the money (which seems to be founded on the terminology in the Notice of Remittance and use of the phrase 'By order of WTC Pty Ltd'), the objective unchallenged evidence is that the funds mistakenly remitted were not those of WTC Pty Ltd, but belonged to the plaintiff. In my judgment it must follow that any agreement purportedly entered into between the defendant, via Mr Wong and Mr Lin Hai (who, at the least, appears to be part of the WTC organization) is nothing to the point, and cannot and does not affect the rights of the plaintiff.

17. Further, there is no doubt that the alleged agreement was reached after the event of the mistaken payment and with full knowledge thereof, so that in terms, for example, of money had and received, there seems to be no question of any potential defence based upon change of position.

18. Thirdly, in so far as the agreement with Lin Hai be of any relevance, there is no evidence whatever from WTC Pty Ltd regarding any such agreement, the only document before the court emanating from WTC Pty Ltd (that is, its fax of 25 May) being entirely consistent with the plaintiff's version of events. Whilst it seems possible that in a loose-knit structure of Chinese relationships, Lin Hai may have been thought to speak on behalf of WTC Pty Ltd, save for Mr Wong's assertion there is no objective evidence that in fact he did - indeed, he apparently produced a card bearing the legend 'WTC Enterprise', and Mr Wallace for the plaintiff further points out that a written request from Li Zhu of the defendant to Lin Hai of WTC Enterprise requesting that he testify as to the meeting in question went unanswered. So that even if the meeting bears upon the case (and I do not consider that it does or can bear upon the rights and obligations of the parties in these circumstances, although it may explain the stance taken todate by the defendant), evidence thereof appears only in terms of the defendant's own words. I am bound to observe, further, that the terms of the agreement as apparently so entered no doubt owed a good deal to who then actually was holding the money, and whether it would or could safely be returned. It seems to me, also, that if WTC indeed wishes to lend the defendant such monies, it remains entirely open for it to do so.

19. It follows from the foregoing, therefore, that I reject Mr Wong's submissions to this court, and I do not consider that this is a case which needs to go further. In my judgment, it is right that the plaintiff should have its remedy at the summary stage. I note in passing that it seems clear in the circumstances that no liability could or should arise on PLH in terms of the alleged 'agreement' with WTC Pty Ltd, given that no WTC monies have been 'lent' and, consequent on this court's decision, none 'borrowed'. I will hear the parties upon the form of the order and as to costs.

[Submissions from the parties]

20. I have now had the opportunity to hear from both parties. Mr Wallace has addressed me on the form of the order, on interest, and on costs. The only matter which, upon my invitation, that Mr Wong wanted to ventilate with the court (besides further stronger assertions that this decision is unfair) is that he wishes to further argue the question of a stay of execution of this court's order pending the defendant's appeal. I have declined his application for a stay of execution pending appeal, but I have decided to accord Mr Wong a window of opportunity of reasonable length in order for him to seek out a single judge of the Court of Appeal (after reference to the Clerk of the Lists) in order to enable PLH to apply for such an interim stay of execution.

21. Accordingly, my Order on this application is as follows :

(1) The plaintiff do have final judgment in this action against the defendant for the amount claimed in the Points of Claim, namely US$100,000, together with interest upon such principal sum at the rate of 8% from 25 May 2001 to 10 October 2001, and thereafter upon such principal sum at the judgment rate from time to time prevailing until payment;

(2) That the Mareva injunction herein granted by Sakhrani J on 1 June 2001, and continued by Order of Chu J on 8 June 2001 and by Stone J on 30 July 2001, be varied in the terms following :

(i) By the deletion of item 4 under the heading 'EXCEPTIONS TO THIS ORDER' and the replacement of that item with the following, namely, 'This Order does not prohibit the Defendant from paying to the Plaintiff any money it is ordered to pay to the Plaintiff by the court.'

(ii) Be further varied so as to read as follows under the heading 'DURATION OF THIS ORDER', namely, 'This Order shall remain in force until satisfaction of judgment or until further order of the court'.

(iii) The plaintiff is to have the costs of this action, including the costs of this application, such costs to be taxed if not agreed.

(iv) The defendant's application for a stay of execution be refused.

(v) The Orders hereinbefore specified shall come into effect at 6:00 p.m. on Tuesday, 16 October 2001 unless varied by Order of a higher court.

(vi) There be liberty to apply.