ITO TECHNOLOGY (HK) CO., LTD v. HONG KONG HING WO TRADING LTD

DCCJ 432/2019

[2019] HKDC 157

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 432 OF 2019

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DECISION

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1.  On 25 January 2019, the plaintiff obtained an ex parte Mareva injunction against the defendant (“the injunction”). On 28 January 2019, the plaintiff filed 2 summonses, seeking (1) an order to continue the injunction until a further order made by this court (“the 1^st summons”); and (2) an order requiring the relevant bank (“the Bank”) to disclose documents in the possession, custody and power of the Bank relating to the defendant’s account (“the Account”, which is the account having directly received the funds transferred from the plaintiff), and the defendant’s other accounts with the Bank (“the Other Accounts”) (“the 2^nd summons”).

2.  Having read the evidence on service produced by the plaintiff, I am satisfied that the documents in these proceedings have been duly served on the defendant.

The facts

3.  The plaintiff claims that it is a victim of a fraud.  Details are as follows.

4.  The plaintiff is a company registered in Hong Kong, doing business with manufacturers of parts making up mobile phones and mobile phone retailers.  Between 1 November 2018 and 12 December 2018, a chain of events took place that misled the plaintiff’s employee Ms Huang Hanying (“Huang”) transferring a sum of USD177,731.23 on 13 December 2018 and another sum of USD67,939.20 on 28 December 2018 (the total sum of which being USD245,670.43) (the “Transfers”) to the Account.

5.  Huang was misled by emails (“the emails”) purportedly from a Karen Chan, who is a representative of Compass Technology Company Limited (“Compass”).  By those emails, the plaintiff was requested to pay USD245,670.43 to the Account, which was claimed to be the new bank account used by Compass.  Ms Huang acceded to those requests.

6.  On 10 January 2019, the plaintiff discovered that the emails were not from the real Karen Chan.  Karen Chan has never sent the emails to the plaintiff.  The plaintiff then realized that it had been misled to make payments to the Account.

7.  On 11 January 2019, the plaintiff reported the matter to the police.  On 22 January 2019, the police wrote to the plaintiff and informed the plaintiff that there was approximately USD110,000 in the Account.  The police would continue to investigate into the matter.

8.  The plaintiff has no business dealings with the defendant at any time. 

Analysis

9.  In order to obtain a Mareva injunction, the plaintiff has to show^[1]:-

(1)  that it has a good arguable case on a substantive claim over which the court has jurisdiction;

(2)  there are assets within the jurisdiction;

(3)  the balance of convenience is in favour of granting the injunction; and

(4)  there is a real risk of dissipation of assets, or removal of assets from the jurisdiction, which would render the plaintiff’s judgment of no effect.

10.  Based upon the evidence before me, I am satisfied that the plaintiff has shown a good arguable case against the defendant on the ground of unjust enrichment. The defendant has been enriched by the Transfers.  The defendant has provided no consideration in exchange for the sums transferred to the Account.  The Transfers were procured by some emails purportedly from Karen Chan of Compass. However, in fact those emails are not from Karen Chan.  Prima facie, the emails are bogus emails used to mislead the plaintiff to transfer sums to the Account.  There is evidence in support of the unjust element.

11.  There is money in the Account.  Obviously there are assets in Hong Kong^[2] which can be frozen by an injunction granted by this court.

12.  The circumstances leading to the Transfers and the Hong Kong Police’s investigation are evidence showing that the money now left in the Account may well be procured by some unlawful activities, and the defendant may have taken part in these activities.  In these circumstances, if no injunction is granted, there would be a real risk that the judgment obtained by the plaintiff would go unsatisfied by reason of the disposal by the defendant of their assets.

13.  In my view, there is a real risk of dissipation of assets if the injunction sought is not granted.  At the same time, there is no evidence showing that the defendant would suffer any irreparable damage if the injunction is granted.  The balance of convenience is in favour of granting the injunction.

14.  I would continue the injunction.  At the same time, I would add an exception to the order, ie the order would not prohibit the defendant from spending not more than HKD50,000 on legal advice and representation.

15.  Turning to the disclosure order sought by the plaintiff in the 2^nd summons.  In their letter to the plaintiff’s solicitors dated 29 January 2019, the Bank stated that they had no objection to the 2^nd summons but requested for more than 28 days to comply with the disclosure order.  I would allow the Bank to have 28 days to comply with the disclosure order.

Disposition

16.  On the 1^st summons, I order in terms of paragraph 1 of that summons, with the amendment indicated in paragraph 14 above.  Costs of that summons, including costs of the ex parte application on 25 January 2019, be the plaintiff’s costs in the cause, to be taxed if not agreed. 

17.  On the 2^nd summons, I order in terms of paragraph 1 of that summons, with the amendment indicated in paragraph 15 above.  Costs incurred by the Bank as a result of the 2^nd summons be paid by the plaintiff to the Bank.  Those costs shall form part of the plaintiff’s costs in these proceedings.

18.  I thank the plaintiff’s solicitors for the assistance rendered to the court.