SIA YEE SUN v. MAX GOLDEN INDUSTRIAL LTD

DCCJ 2762/2020

[2024] HKDC 1040

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2762 OF 2020

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JUDGMENT

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A.  INTRODUCTION

1.  This is the trial of the Plaintiff’s action which was commenced in December 2020.

2.  The Defendant has not been represented since Master ordered on 25 October 2022 that its previous solicitors were to cease acting for it upon compliance with O 67, r 6(1) of The Rules of the District Court (Cap 366H). It did not file any witness statement and was absent at trial.

3.  It was therefore for the Plaintiff to prove her case at trial. As explained in China Citic Bank International Limited v Cheuk Shuk Hing & Ors [2022] HKCFI 3646, where a trial is not attended by one of the parties, there is still an obligation of fair presentation on the plaintiff to identify points of factual or legal note that may be of benefit to the defendant, and points which the defendant had taken before it decided to play no further part in the action, or might have taken had it decided to defend the proceedings (§6, per Mr Recorder Manzoni SC).

B.  THE PLAINTIFF’S CASE

4.  According to the Plaintiff, she received a call on 18 May 2020 from one Ms Cheung Suet Ying (“Cheung”). Cheung told the Plaintiff she was an employee of Standard Chartered Bank (“SCB”), and asked if the Plaintiff was interested in applying for a loan.

5.  After the Plaintiff showed interest, Cheung told her SCB was willing to lend HK$2 million to her provided that she would open an investment account with one IG International Limited (“IG”) and deposit HK$200,000 therein as security. The Plaintiff said she had no problem with the arrangement.

6.  The Plaintiff was further provided with a name card by Cheung bearing SCB’s name.

7.  Then, upon a request by WhatsApp on 19 May 2020 from one Mr Ma Ho Sun (“Ma”), who claimed to be an employee of IG, the Plaintiff attended Flat A, 3/F, Chuan Yuan Factory Building, 342-344 Kwun Tong Road (“Kwun Tong Address”) on 20 May 2020 to deal with account opening procedures. The Kwan Tong Address was a shared office space with the nameplate of IG.

8.  During the meeting, the Plaintiff was asked by a man who identified himself as Ma to sign various documents, including a purported agreement in Chinese between the Plaintiff and IG for provision of a report on the financial standing of the Plaintiff, pursuant to which the Plaintiff were to pay HK$200,000 to IG and the same would be returned in full to her on or before 26 May 2020.

9.  Ma gave the Plaintiff the number of an account with Dah Sing Bank (“1^st Account”) as well as the number of a checking account (“2^nd Account”), both in the Defendant’s name, and asked the Plaintiff to deposit HK$200,000.

10.  In the afternoon on 20 May 2020, the Plaintiff deposited HK$100,000 into the 1^st Account and drew a cheque for HK$100,000 in favour of the 2^nd Account. The Plaintiff then communicated on WhatsApp with Ma, who confirmed receipt of the fund. The Plaintiff also received a WeChat message from Cheung, who informed the Plaintiff that verification for the loan application had been done and SCB would contact the Plaintiff to complete the procedure in a recorded phone call scheduled at 5:30pm on 21 May 2020.

11.  On 21 May 2020, Ma sent a WhatsApp message to the Plaintiff to say that her case was in progress. However, up till 6pm on the same day, the Plaintiff received no phone call from SCB. She sent a WeChat message to Cheung to follow up on the matter, and was told the scheduled phone call had been postponed to the morning on the next day.

12.  The Plaintiff found the matter suspicious and contacted SCB for verification. She was then told that Cheung was not an employee of SCB. She discovered she had been defrauded and reported the matter to the police.

13.  The Plaintiff relies on the following causes of action against the Defendant:

(1)  Unlawful means conspiracy: The Defendant and IG were parties to an unlawful means conspiracy by engaging in the acts above via Cheung and Ma, which induced the Plaintiff to part with HK$200,000;

(2)  Fraud: The Defendant obtained the HK$200,000 by fraud and holds the same on constructive trust for the Plaintiff;

(3)  Unjust enrichment: The Plaintiff paid the HK$200,000 to the Defendant under the mistake that she was paying IG for the purpose of obtaining a loan from SCB.

C.  THE DEFENDANT’S CASE

14.  In the Amended Defence, the Defendant denies any connection with IG, Cheung, Ma or any fraudulent scheme. It is the Defendant’s case that:

(1)  On 18 May 2020, one Jonathan Lee (“Lee”) received a call from his friend Rebecca Lo (“Lo”) who asked if he had RMB181,600 in cash as Lo was in urgent need of renminbi for personal matter. To assure Lee, Lo offered to make a deposit of HK$200,000 (equivalent to RMB181,600) in advance. Lee was however unable to help as he did not retain such amount of renminbi. Lee offered to seek a favour on Lo’s behalf from one Lok Siu Wai (“Lok”), the director of the Defendant;

(2)  However, Lok/the Defendant did not have sufficient renminbi either. Out of urgency and given the assurance from Lo, Lok agreed to seek help from his close friend known as Chung Siu Tang (“Chung”), who maintained a personal bank account in China, to arrange for transfer of RMB181,600 on a friendly and gratuitous basis. Lok undertook to repay Chung HK$200,000 in cash after he received the deposit of the same amount as arranged by Lo;

(3)  On 20 May 2020, Lok was informed by Lo that a sum of HK$100,000 in cash had been deposited into the Defendant’s bank account (i.e. the 1^st Account referred to above);

(4)  With the confidence that Lo would deposit another HK$100,000, Lok answered to Lo’s request and instructed Chung to cause a transfer of RMB180,000 to a China Construction Bank account under the name of one Wong Man Chun (“Wong”), and RMB1,600 to a China CITIC Bank account under the name of one Yip Ming Chu (“Yip”);

(5)  Shortly thereafter on the same day, Lok was informed by Lo that another sum of HK$100,000 had also been paid by cheque to the Defendant’s bank account (i.e. the 2^nd Account referred to above);

(6)  Having confirmed receipt of HK$200,000 at the Defendant’s bank accounts, Lok subsequently repaid Chung a sum of HK$200,000 (equivalent to RMB181,600) in cash on 21 May 2020 in settlement of the transfers effected from Chung’s account to Wong’s and Yip’s respective accounts;

(7)  On 22 May 2020, it came to Lok’s surprise that the Defendant’s bank accounts were suddenly frozen by the bank without prior notice. Upon enquiry, the bank only explained that the status of the Defendant’s bank accounts was under review. Lok attempted to seek further explanation from the bank and unfreeze the accounts but to no avail;

(8)  On 27 May 2020, the Defendant received a demand letter from the Plaintiff’s solicitors to recover the sum of HK$200,000.

15.  The Defendant claims it genuinely and honestly believed that the HK$200,000 was deposited into the Defendant’s bank accounts to settle the Defendant’s payment of the sum of RMB181,600 advanced on behalf of the Plaintiff as requested by Lo.

16.  As a defence to the Plaintiff’s case on unjust enrichment, the Defendant claims it had changed its position by paying Chung HK$200,000 which he would not have done but for the receipt of the fund.

17.  In reply, the Plaintiff claims she does not know Lee, Lo, Lok, Chung, Wong or Yip, or the alleged monetary exchanges between the Defendant and any of them. She also says she was demanding for repayment on 27 May 2020 from Ma and/or Cheung.

D.  LEGAL PRINCIPLES

18.  The Plaintiff refers to Zhang Yan & Ors v Asa Bullion Limited [2019] HKCFI 179 at §22(2) for a summary of the matters incumbent upon a plaintiff to prove on a claim for conspiracy to injure by unlawful means:

(1)  the nature of the agreement;

(2)  the unlawful means alleged;

(3)  each unlawful act relied upon as causing loss;

(4)  the fact that each act was carried out pursuant to the conspiracy; and

(5)  the relevant state of mind of the putative conspirator.

19.  Because of the very nature of a conspiracy there will be a strong element of concealment by the conspirators and therefore inferences are usually made: Kuwait Oil Tanker SAK v Al Bader [2000] 2 All ER (Comm) 271 at 312-315. As observed by Ng J in Sunni International Limited (in liq) v Kao Wai Ho Francis & Ors [2023] HKCFI 2882, in the nature of things, only the alleged conspirators would be in a position to know exactly when, where and how the alleged conspiratorial agreement was entered into. As far as the victim of the conspiracy is concerned, normally this is a matter of inference from the pleaded primary facts ie the overt acts (§64).

20.  As to the Plaintiff’s case that equity imposes a constructive trust on the recipient of fund that was obtained by fraud, she relies on the summary of principles in Guaranty Bank and Trust Company v Zzzik Inc Limited (HCA 1139/2016, 18 July 2016) at §§28 to 32.

21.  On unjust enrichment, the Plaintiff submits that money paid under a mistake of fact is prima facie recoverable provided that the payer did not intend the payee to have the money in any event, the money was not paid for good consideration and the payee has not in good faith changed his position: Guaranty Bank (supra) at §27.

22.  As regards the change of position defence, the Court of Appeal explained in Kaefer A G v Winfield Marine Services Co Ltd [2022] HKCA 807 at §53, citing Goff & Jones: The Law of Unjust Enrichment (9^th ed) at §27-32, that:

“The onus of pleading and proving the change of position defence is on the defendant, who must put it forward “fairly and squarely” in his statement of case so that “its factual merits could be explored at the trial”; he must also adduce evidence and give disclosure in support of the defence … the defendant must prove, at least on a “but for” basis, that his change of position was causally linked with his enrichment.”

E.  ANALYSIS OF THE EVIDENCE

23.  The Plaintiff’s case is based on evidence in her witness statement, which is unchallenged by the Defendant. It is also corroborated by the documents she has produced. Although the Plaintiff does not appear to have produced (or at least has not included into the trial bundle) the WhatsApp and WeChat exchanges she claims to have with Cheung and Ma, her case is consistent with the following documents before the Court:

(1)  an agreement in Chinese with the Plaintiff’s signature and a purported company chop of IG, which provided that IG had received HK$200,000 from the Plaintiff and would refund the same to her in full on or before 26 May 2020;

(2)  deposit slip showing the Plaintiff’s deposit of HK$100,000 on 20 May 2020 into the 1^st Account;

(3)  deposit slip showing the Plaintiff’s cheque deposit of HK$100,000 on 20 May 2020 into the 2^nd Account, and photos of her cheque;

(4)  a letter purportedly from IG to its customer dated 20 May 2020 with account details of the 1^st Account and 2^nd Account;

(5)  a receipt dated 20 May 2020 of HK$200,000 with the Plaintiff’s signature and a purported company chop of IG;

(6)  a name card of Cheung purportedly bearing SCB’s name and logo; and

(7)  a name card of Ma purportedly as “客戶主管” of IG.

24.  The Defendant’s case, on the other hand, is not supported by any witness testimony. The Defendant’s List of Documents contains what appear to be (1) a message dialogue between Lee and Lo; and (2) transfer records of RMB180,000 to Wong and RMB1,600 to Yip.

25.  The above evidence is plainly insufficient to demonstrate the alleged arrangements purportedly involving Lee, Lo, Lok, Chung, Wong and Yip. The message dialogue at most shows Lo had an urgent matter to find Lee, and that details of the Defendant’s accounts were sent to Lo. The transfer records only show that renminbi was transferred to Wong and Yip. There is nothing to evidence Lok’s alleged payment of HK$200,000 to Chung on 21 May 2020 in purported settlement of the transfers to Wong and Yip – an act on which the Defendant relies for its change of position defence. There is also no explanation why the payment of this relatively large sum was made in cash. No record is produced as to its source (eg whether it was withdrawn from the Defendant’s accounts). Nor is there any acknowledgement of receipt by Chung.

26.  On the state of the evidence, the Court is prepared to and do infer a conspiracy among IG and the Defendant (acting respectively via Cheung, Ma and Lok) to defraud the Plaintiff. The Defendant, whose account details were provided by IG to the Plaintiff for her deposit of the fund, was a key part of the scheme. The Court is also satisfied that the Plaintiff has proved her case on fraud and alternatively unjust enrichment on a balance of probabilities. The Defendant’s defences are not established for want of evidence.

F.  DISPOSITION AND COSTS

27.  By reason of the above, I enter judgment against the Defendant in favour of the Plaintiff for the following reliefs:

(1)  It is declared that the Defendant holds HK$200,000 (“Sum”) or its traceable proceeds as constructive trustee for the Plaintiff;

(2)  The Defendant do pay the Sum or its traceable proceeds to the Plaintiff;

(3)  Interest on the Sum be paid by the Defendant from 20 May 2020 at prime rate plus 1% to the date of judgment and thereafter at judgment rate until full payment;

(4)  The Defendant do pay the Plaintiff’s costs of this action, with certificate for counsel, to be taxed if not agreed.