EDWARD WONG & CO LTD v. KE SHEN CO LTD

DCCJ 1945/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1945 OF 2015

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REASONS FOR DECISION

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1.  The plaintiff issued a summons under Order 13, rule 6 and Order 19, rule 7 of the Rules of the District Court (Cap 336H) for default judgment, following the defendant’s failure to give notice of intention to defend and file a defence. After hearing Mr Lee, solicitor for the plaintiff, I granted the reliefs sought. These are my reasons.

The background

2.  The pleaded facts, which are taken as proved in an application for default judgment, can be very simply stated.  Both the plaintiff and the defendant are companies registered in Hong Kong.  The plaintiff is a trader of leather products.  Rasel Leather Complex (“Rasel”) was a supplier to the plaintiff.  Through a chain of emails that were passed off as emails originating from Rasel and a forged payment authorisation, the defendant managed to cause the plaintiff to transfer US$37,004, a sum due to Rasel, to the defendant’s bank account with the Hang Seng Bank.  The defendant was a complete stranger to the plaintiff and there did not exist any reason why the plaintiff should pay it any sum of money.  After finding out what had happened, the plaintiff commenced the present action against the defendant for recovery of the amount that the defendant had wrongfully obtained from it.  One of the reliefs sought is a declaration that the money in the Hang Seng Bank account is held by the defendant on constructive trust for the plaintiff.

Service of the writ and statement of claim

3.  A writ indorsed with a statement of claim was issued and served on 5 May 2015.  According to the relevant affirmation of service, the writ and the statement of claim were left at the defendant’s registered office.  There was no response from the defendant.

4.  I am satisfied that the writ and the statement of claim have been properly served.

Declaration and default judgment

5.  It is not the normal practice of the court to make a declaration without a trial, particular where dishonesty is alleged (Hong Kong Civil Procedure 2015, para 19/7/20).  However, as explained by Lam J (as he then was) in Lai Wai Kuen v Wong Shau Kwong, unreported, HCA  3424/2003, this is only a rule of practice.  If the party has a genuine need for a declaratory relief, it is open to the court to grant such relief.  In Lai Wai Kuen, the plaintiff claimed that she and her predecessor had been in adverse possession of certain land in Tsuen Wan.  The defendant, whom the plaintiff and her predecessor had lost contact since a few years after 1949, was nowhere to be found.  Service of the writ was effected by way of substituted service.  There being no acknowledgement as to service, the plaintiff sought final judgment under Order 19, rule 7.  The relief sought was a declaration that she and her predecessor had acquired an indefeasible possessory title to the land.  Based on the pleaded case, the learned judge granted the declaration sought.

6.  Lai Wai Kuen has been followed in quite a number of cases: such as Law Yuk Cheung v Loa Ku Tai, unreported, DCCJ 4/2012 9 January 2014); Tsang Cho Kiu v Lam Tsat Fuk, unreported, HCMP  1077/2013 (10 December 2013); City University of Hong Kong v Hans Richard Mahncke, unreported, HCA 935/2014 (30 July 2015); Lee Kwok Leung v Li Foa Shang, unreported, unreported, DCCJ 2165/2014 (10 April 2015).

7.  Based on the facts pleaded in the statement of claim, I am satisfied that the plaintiff has made out its case against the defendant.  As the declaration sought will serve to identify the plaintiff as the owner of the money and is likely to facilitate the recovery process, I consider that this is a proper case to depart from the rule of practice and exercise my discretion in favour of the plaintiff.

8.  The orders that I made after the hearing on 5 August 2015 are as follows:-

It is ordered and declared that:-

(1) The sum of US$37,024.71 standing to the credit of the defendant in its account with the Hang Seng Bank (account no 390604155883) is held by the defendant on constructive trust for the plaintiff;

(2) The defendant whether through itself its officers servants or agents be restrained from using, disposing of, transferring or otherwise dealing with the said sum of US$37,024.71 (except for the purpose of returning the same to the plaintiff);

(3) The said sum of US$37,024.71 (or its Hong Kong dollars equivalent) be returned to the plaintiff;

(4) There be interlocutory judgment against the defendant for damages (if any) to be assessed;

(5) There be interest on the said sum of US$37,024.71 from 14 January 2015 to the date of this order at HSBC prime rate and at judgment rate thereafter; and

(6) Costs of this action be to the plaintiff.

9.  I thank Mr Lee for his assistance.