TANG YUAN YI v. TOKYO INTERNATIONAL INVESTMENT LTD

HCA 2078/2018

[2020] HKCFI 1133

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2078 OF 2018

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DECISION

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INTRODUCTION

1.  This is the Plaintiff’s application for summary judgment against the Defendant for a sum of US$160,000 transferred by the Plaintiff to the Defendant’s bank account. 

PLAINTIFF’S CLAIM

2.  According to the Statement of Claim, the Plaintiff transferred this sum to the Defendant’s account in reliance on fraud practised upon him by a person randomly met via a messenger app called “LINE”, being part of a bogus and fraudulent investment scam.  More specifically, in or around early March 2017, that person, a Ms Hui, persuaded the Plaintiff to open an online investment account and make investment in various products via that account.  Persuaded, the Plaintiff remitted, inter alia, the subject sum of US$60,000 and US$100,000 on 3 and 16 May 2017 respectively to the Defendant’s bank account.  In August 2017, the police informed the Plaintiff that he had in fact been subject to a bogus and fraudulent investment scam, and that the sum of US$160,000 was frozen in the Defendant’s bank account. 

3.  The Plaintiff commenced the present action on 5 September 2017 for the sum on unjust enrichment (including money had and received) and/or knowing receipt and/or constructive trust imposed upon the Defendant.  In the Statement of Claim, as particulars for the Plaintiff’s cause of action of constructive trust, the Plaintiff pleads: -

“18. In the premises, the Defendant has been holding the Funds in the Defendant’s Account together with all the interest accrued thereon trust for the Plaintiff.

Particulars

i. The Plaintiff has remitted to the Defendant and the Defendant has been holding the Funds in the Defendant’s Account since 16 May 2017. The Plaintiff never did business nor has ever had any business dealing with the Defendant, at any time or at all.

ii. Except for the fraud, as part of the bogus and fraudulent investment scam, there was no reason for the Defendant to receive the Funds from the Plaintiff.

iii. As the Defendant’s Account has been frozen, the Defendant knew or ought to have known that the Funds received by the Defendant were or represented property obtained by fraud.

iv. Further or alternatively, it was unconscionable for the Defendant to retain the benefit on the receipt of the Funds.”

4.  The Defendant’s defence is a mere non-admission to this paragraph. 

FRAUD EXCEPTION

5.  It is immediately clear at the very least, by paragraph 18(iii), the Plaintiff is in essence saying that the Defendant knew or ought to have known that the money was paid into his account as a result of some fraud, and the Defendant still retains the same despite the Defendant’s such knowledge – this amounts to an allegation of fraud. 

6.  Ms Euchine Ng, counsel for the Plaintiff (who is not the pleader of the Statement of Claim), contends that the Plaintiff has to rely only on unjust enrichment, which has been held, for example, in Universal Capital Bank v Hongkong Heya Co Ltd [2016] 2 HKLRD 757 and Ferrari North America, Inc v Changhon International Energy Co Ltd [2018] HKCFI 1603, not containing any allegation of fraud and thus summary judgment was made.  In those cases, it does not appear to me that such a plea as paragraph 18(iii) of the Statement of Claim was made.  In the course of the submissions, Ms Ng applied to me for amending the Statement of Claim by deleting paragraph 18(iii).  Having heard submissions from the Defendant’s counsel Mr Jackson Poon, who fairly submitted that the only real prejudice was about costs, given that the amendment was a deletion of a serious allegation against the Defendant and in any event the Defendant only made a mere non-admission in the Defence, I allowed the amendment.  Mr Poon also fairly accepted that there would not be any consequential amendment to the Defence. 

7.  With that amendment, I am satisfied that the present application is not excluded by the fraud exception. 

ARGUABLE DEFENCE AND/OR TRIABLE ISSUE?

8.  The Plaintiff has on the face of it established his claim for the purpose of Order 14 application. The question is whether the Defendant has raised any arguable defence and/or triable issue.  I bear in mind the trite principle that in opposing an Order 14 application, the Defendant should condescend upon particulars in terms of evidence to support its defence, and the Defendant cannot leave some relevant forensic loopholes which he should be in a position to fill up but for no good reason he does not, and then ask the Court to give leave to defend because the loopholes are a matter for trial. 

9.  First, as I mentioned above, the Defendant’s pleaded defence is a mere non-admission.  However, in its affirmation filed in opposition to the present application, it puts forward a positive case – that in or about April 2017, one village clansman named Liu Yang Guang (“Liu”) asked Kwok Ping Ching (“Kwok”) a director of the 1^st Defendant if he could use Kwok’s account to receive some monies for him, alleging that the monies would be received for his company (Xiamen Yong Zhong Manufacture & Trade Co Ltd)’s business transactions and assuring Kwok that the business transactions were genuine.  The evidence goes further, that Liu shows Kwok two sales contract dated 1 April 2017, two invoices for the contracts, and two corresponding bills of lading.  Kwok or the Defendant then provided the bank account to Liu for receiving monies. 

10.  I pause here to note that: -

(1)     There is no evidence as to how Kwok or the Defendant came to know Liu.  There is no evidence as to the degree of trust posed by Kwok of the Defendant in Liu. 

(2)     While the Defendant has provided the particulars of contact of Mr Liu, Mr Liu has not even signed any statement in support of the Defendant’s evidence, let alone any sworn affirmation.  There is no evidence as to why Mr Liu was not asked to assist the Defendant in the present application. 

(3)     While the sales contracts were for US$646,380 and US$380,000, the sums actually received by the Defendant were the very sums in question, US$60,000 and US$100,000 respectively. There is no explanation from the Defendant as to the discrepancies.  No even any evidence as to what he thought about the discrepancies. 

11.  According to the Defendant’s evidence, the monies were then transferred to Liu. 

(1)     In relation to the US$59,973.63 (with administrative charge deducted from the US$60,000), the Defendant’s evidence is that it was transferred in a bigger sum of US$128,124 to Xiamen Yong Manufacture Trade Company Limited, a transfer evidenced by a notice from the bank.  There is however no explanation as to why there was this bigger sum. 

(2)     In relation to the US$99,973.14 (with administrative charge deducted from the US$100,000), the Defendant said it had been returned on or about 18 May 2017 in China.  There is no evidence of the transfer adduced, the reason given by the Defendant being that he did not deliberately keep the transfer advice because he had no knowledge about the scam. 

12.  In my judgment, the manner the Defendant raises its defence has made it unbelievable.  First, the Defence is a mere non-admission.  Second, in the evidence, the defence that it helped Liu to receive monies is contradicted by the Defendant’s own evidence that the figures in the two sales contract do not match at all.  Third, as pointed out above, there are quite a number of loopholes which the Defendant should be in a position to fill up but has not, for example, evidence in relation to Liu, in relation to why he was not asked to give a statement let alone an affirmation, in relation to the discrepancies, and in relation to the bigger sum in the transfer to Liu’s company. 

CONCLUSION

13.  In the circumstances, I am not satisfied that the Defendant has discharged its burden to raise any arguable defence and triable issue.  The Plaintiff is entitled to summary judgment.  I shall hear submissions on the terms of the order and costs.