HO LOK YI v. HA OLIVER AND ANOTHER

DCMP 479/2024

[2025] HKDC 838

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 479 OF 2024

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BETWEEN

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JUDGMENT

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A. Introduction

1.  This is the hearing of the originating summons dated 23 January 2024 as amended on 26 July 2024 and 5 February 2025 (the “O/S”).

2.  In short, the plaintiff’s case is that she was the victim of a cyber fraud. She was induced by a fraudster to pay sums totaled $600,000 into a bank account, of which $200,000 were subsequently transferred into a bank account in the name of the 1^st defendant held with the 2^nd defendant.

B. Absence of the defendants

3.  Notwithstanding the absence of the defendants, I am satisfied that the hearing should proceed pursuant to O 28 r 4 of the Rules of the District Court (Cap 336H) for the following reasons:

(1) Although the 1^st defendant had personally appeared in previous hearings of the O/S, he did not file any acknowledgment of service despite having been directed by the court to do so on as early as 4 February 2025;

(2) A service affirmation has been filed on behalf of the plaintiff showing that notice of the present hearing was served on the 1^st and 2^nd defendants;

(3) By letter dated 7 May 2025 from the 2^nd defendant’s solicitors, the 2^nd defendant indicated that it would not attend the present hearing unless directed by the court and that the 2^nd defendant would abide by any order made.

C. Analysis

4.  The plaintiff’s claim against the 1^st defendant is based on (i) constructive trust; and (ii) unjust enrichment.

C1. The general principles

5.  It is trite that equity imposes a constructive trust over stolen property received by a fraudulent recipient. The court may grant a declaration to confirm the existence of the trust which had arisen in the past, see: Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714-716; Star Therapeutics, Inc v Leabon Technology (HK) Limited and Another [2021] HKCFI 1715 at §16 per Deputy High Court Judge Le Pichon.

6.  To establish a claim of unjust enrichment, a plaintiff must show that (1) a defendant was enriched; (2) such enrichment was at the plaintiff's expense; (3) the enrichment was unjust, and (4) none of the defences to unjust enrichment (such as change of position) apply, see: Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, at §67 per Ribeiro PJ.

C2. Application to facts

7.  Based on the affirmation evidence of the plaintiff the contents of which are not disputed by the defendants, I am satisfied that:

(1) Whilst she was looking for work, the plaintiff got in contact with an individual purportedly named “Alex Chan” via WhatsApp after seeing a recruitment advertisement on social media in September 2022. The plaintiff was purportedly employed by a company (represented by Alex Chan) as a purchasing agent to handle remittances in return for a 10% commission of the amount handled;

(2) The plaintiff was also introduced by Alex Chan to another individual called “Kelvin Chu” who purported to be a lawyer;

(3) On 18 October 2022, Alex Chan contacted the plaintiff and instructed her to borrow money as the employer was encountering cashflow problem. In compliance with his instructions, the plaintiff opened an account with Fusion Bank on or around 27 October 2022 and obtained a personal loan in the sum of $600,000 on around 31 October 2022;

(4) On 1 November 2022, Alex Chan through WhatsApp instructed the plaintiff to transfer $600,000 to a bank account in the name of “Chiu Kam Wing Bevis” held with the 2^nd defendant (the “1^st Layer Account”). To assure the plaintiff of the legitimacy of the transaction, Alex Chan sent to the plaintiff a copy of a receipt (the “Purported Receipt”) purportedly issued by Kirkland & Ellis (“K&E”), a law firm;

(5) Under the pressure of Alex Chan and Kelvin Chu, the plaintiff transferred $500,000 and $100,000 to the 1^st Layer Account on 1 and 2 November 2022 respectively. Prior to these transfers, the 1^st Layer Account had a nil balance;

(6) Out of the $500,000 paid to the 1^st Layer Account on 1 November 2022, $200,000 were paid to an account in the name of the 1^st defendant held with the 2^nd defendant (the “D1’s Account”) on the same date;

(7) Subsequently, the plaintiff discovered that the Purported Receipt was not issued by K&E. Upon discovery of the scam, she made a report to the police on 24 November 2022.

8.  On account of the above, I am satisfied that a fraud was perpetrated on the plaintiff and the part of the proceeds of the fraud can be traced to the $200,000 paid to D1’s Account applying the “lowest intermediate balance” approach, see: Essilor Manufacturing (Thailand) Co., Ltd v G. Doulatram and Sons (HK) Limited and Others [2020] HKCFI 2489 at §§71-74 per Deputy High Court Judge Le Pichon.

9.  I am also satisfied that the claim of unjust enrichment has been made out:

(1) In the present case, even though there was no direct payment from the plaintiff to the 1^st defendant, as held by Deputy High Court Judge Reyes SC in Idemitsu Chemicals (Hong Kong) Co Ltd v Yanqing Ltd and Others [2024] HKCFI 1075 at §§28-31, there is no general rule against indirect enrichment but the court must take a pragmatic approach. On the facts, I am satisfied that the 1^st defendant was enriched to the extent of $200,000 at the expense of the plaintiff;

(2) Mistakes of fact can amount to an unjust factor, see: Goff & Jones, The Law on Unjust Enrichment (10^th Ed, 2022) at §9.01. Such mistake is clearly established in the circumstances of the case where the plaintiff was duped into making the $500,000 payment to the 1^st Layer Account as a result of the scam;

(3) No suggestion of any defence (e.g. change of position) has been advanced by the 1^st defendant who has failed to acknowledge service and did not file any evidence. In any event, I cannot see any basis in support of the same.

D. Relief

10.  At the hearing, Ms Lam for the plaintiff confirmed with me that the plaintiff would only seek a money judgment with a view to subsequently apply for a garnishee order as the means of enforcement. She also agreed with me that it was not necessary to seek declaratory relief in the circumstances and that there was no suggestion of any competing interests for the $200,000 in D1’s Account.

11.  Accordingly, I order that:

(1) the 1^st defendant to pay to the plaintiff a sum of $200,000; and

(2) there be pre-judgment interest at HSBC Prime Rate plus 1% on the said sum from 1 November 2022 up to the date of judgment, and thereafter at judgment rate.

E. Costs

12.  As agreed by the plaintiff, I order that the plaintiff do pay the 2^nd defendant’s costs on an indemnity basis. However, I am of the view that the sum of $65,391 claimed in the 2^nd defendant’s statement of costs is excessive. Adopting a broad brush approach and taking into account the 2^nd defendant’s limited involvement in these proceedings, I summarily assessed its costs at $10,000.

13.  I also order that the costs of and incidental to this action (including the costs payable by the plaintiff to the 2^nd defendant) be paid by the 1^st defendant to the plaintiff, to be taxed if not agreed. The plaintiff’s own costs are to be taxed in accordance with the Legal Aid Regulations.