BANCO DE CHILE v. YONG MING TAI TECHNOLOGY TRADE CO LTD AND OTHERS

HCA 2624/2018

[2019] HKCFI 1233

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2624 OF 2018

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DECISION

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1.  This is an application by Banco de Chile (“the plaintiff”) by summons for (1) default judgment against Hongtao Trade Co (“D3”) and (2) variation of the Mareva and proprietary injunction obtained ex parte on 6 November 2018 (“the injunction order”) and continued by an order dated 16 November 2018 (“the continuation order”) such that the injunction order applies up to US$146,873.31 only (“the variation application”).

Background facts

2.  The application stems from a cyber-attack carried out on 23 May 2018 causing funds of approximately US$2 million belonging to the plaintiff to be paid to Boruida Trading Co Limited (“Boruida”) being a first level recipient of the funds.  The plaintiff had no business relationship with Boruida.

3.  On the following day, Boruida transferred US$299,529 being a second level payment (“the Funds”) to D3.  The plaintiff became aware of this transfer on 9 August 2018 after commencing proceedings against Boruida and obtaining a bankers’ books order in respect of its account.  The plaintiff also had no business relationship with D3.

4.  Subsequently, the plaintiff obtained the injunction order against, inter alia, D3 on whom the injunction order and writ were served.  The injunction order was continued on 16 November when the plaintiff obtained a bankers’ books order against Hang Seng Bank (“HSB”) being the recipient bank of the second level payment to D3.  The books revealed that D3 held two accounts with HSB (“the 1^st account” and “the 2^nd account”).

5.  HSB has confirmed that the 1^st account is an integrated account, the 2^nd account being a USD sub-‌account under the 1^st account.

6.  An amended writ was filed on 11 February 2019 updating inter alia registered address details of D3 which was served the following day.

7.  On 27 February 2019, the plaintiff received a notice served on behalf of Maccaferri Inc (“Maccaferri”) (also a victim of a cyber-fraud) of a final judgment in the sum of US$405,000 and a garnishee order absolute against D3 it had obtained in HCA 1954/2018.

8.  About four weeks later, on 22 March 2019, the plaintiff and Maccaferri agreed to a pari passu division of the Funds.

Default judgment

9.  Since D3 has not filed an acknowledgement of service thus failing to give notice of its intention to defend, the plaintiff took out the summons for final judgment and served the same on D3 on 12 April 2019.

10.  In those circumstances, the plaintiff is clearly entitled to enter final judgment against D3 and I so order.

Variation of the injunction order

11.  As the plaintiff maintains a proprietary claim in respect of the Funds remaining in the 1^st account, the Funds cannot be garnisheed by Maccaferri since they do not constitute a debt legally owned to D3 and remain subject to the proprietary injunction.  It is evident that the Funds are insufficient to meet the claims of both the plaintiff and Maccaferri.  The shortfall is approximately US$357,534.40.

12.  The agreement between the plaintiff and Maccaferri have reached (which is to avoid further court applications and associated costs) is clearly sensible and should be given effect.  Accordingly, the variation sought is granted.

13.  I make an order in terms of the summons.