ROLLING HILLS TRADING, INC. v. PREMIER TRADING DEVELOP LTD

DCCJ 4517/2018

[2018] HKDC 1614

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4517 OF 2018

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

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

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

DECISION

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

1.  By a summons filed on 17 December 2018, the plaintiff seeks a default judgment against the defendant. Having considered the evidence as to service adduced by the plaintiff, I am satisfied that the documents in these proceedings have been duly served on the defendant.

2.  It is trite that in an application for a default judgment, only the matters pleaded in the statement of claim would be considered and no evidence on merits is admissible^[1].

3.  If the default judgment being sought involves a declaration, it is not the normal practice of the court to make a declaration without a trial. However, this is only a rule of practice and should not be followed when the plaintiff had a genuine need for a declaratory relief and justice would not be done if such relief were denied.[2]

4.  The plaintiff’s pleaded case as set out in the statement of claim is as follows:-

(1)   The plaintiff is a company limited incorporated in Nebraska in the US.

(2)   The defendant is a company limited incorporated in Hong Kong.

(3)   On 11 April 2018 (US Central time zone), the plaintiff received an email from the representative of its supplier in China (“the supplier’s representative”) requesting payment in the sum of US$90,702.60 for orders made by the plaintiff.

(4)   On 15 April 2018, the plaintiff received an email seemingly from the supplier’s representative (“the 1^st email”), in which it was stated that the supplier’s bank account had a problem and could not receive USD payments.  The plaintiff was requested not to make the payment of US$90,702.60 to the supplier’s bank account.

(5)   On 16 April 2018, the plaintiff received another email also seemingly from the supplier’s representative (“the 2^nd email”).  The plaintiff was requested by that email to pay the sum of US$90,702.60 to an account held by the defendant in a bank in Hong Kong (“the account”).  Mistakenly believing that the 1^st email and the 2^nd email were from the supplier’s representative, the plaintiff transferred US$90,702.60 (“the sum”) to the account (“the transfer”) and sent the bank confirmation to the supplier’s representative.  Several hours later, the plaintiff received an email from the supplier’s representative asking the plaintiff to stop and to call back the payment.

(6)   On 17 April 2018, the plaintiff tried to recall the transfer but in vain.

(7)   Subsequently, the plaintiff came to realize that the 1^st email and the 2^nd email were in fact not from the supplier’s representative.

(8)   On 2 May 2018, the plaintiff reported the matter to the police in the US and to the Hong Kong Police.  On 21 June 2018, the Hong Kong Police informed the plaintiff that the account was frozen with fund of US$251,110.60 therein.

(9)   The plaintiff has never had any dealing with the defendant and there is no legitimate reason for the defendant to receive the sum from the plaintiff. As the account has been frozen, the defendant knew or ought to have known that the sum received by the defendant was or represented property obtained by fraud.  In these circumstances, it was unconscionable for the defendant to retain and to keep the sum and the interest accrued thereon (“the Fund”).

(10)   The plaintiff claims that the defendant has been unjustly enriched as a result of the transfer and is holding the Fund on trust for the plaintiff, and the defendant shall forthwith return the Fund to the plaintiff.

5.  The plaintiff is seeking a declaration that the Fund are being held by the defendant on trust for the plaintiff, and an order that the same be forthwith released and returned to the plaintiff[3].

6.  Having considered the matters pleaded in the statement of claim, in my judgment, the plaintiff is entitled to have judgment by relying upon those matters.  According to the plaintiff’s case as pleaded, the Fund is the plaintiff’s property and does not belong to the defendant.  It would be necessary to grant the declaration sought by the plaintiff to make this clear. I would also order that the Fund be forthwith released from the account and returned to the plaintiff.  Costs of these proceedings should be to the plaintiff and be summarily assessed at HK$20,000.00.

7.  I give judgment to the plaintiff and make the aforesaid declaration and order.

8.  I thank the plaintiff’s solicitors for the assistance provided to this court.