EXCELLENCE RAISE OVERSEAS LIMITED, JOLLY ADMIRE LIMITED, HIGH EXPRESS HOLDINGS LIMITED v. ANZ COMMODITY TRADING PTY LTD

FAMV No 174 of 2025

[2026] HKCFA 9

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 174 OF 2025 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM

CACV NO 48 OF 2023)

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DETERMINATION

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Chief Justice Cheung:

1.  The judgment against the 1^st, 9^th and 10^th defendants (the applicants for leave to appeal), affirmed on appeal by the Court of Appeal, declares that the three defendants hold the funds and other assets in three bank accounts as constructive trustees for the plaintiff, respectively.  There are several possible ways of understanding the legal bases on which the trial court so held, and neither the pleadings nor the judgments below are entirely free from ambiguity in that regard.  Regardless, the declarations of constructive trust raise questions of great general or public importance that merit the grant of leave to appeal.  We accordingly grant leave of our own motion.  These questions, grouped together as Question 1, are:

(1)     Where two innocent parties enter into a contract induced by the fraudsters’ fraudulent misrepresentations, under which one party pays money to the other, and that money is then transferred to the fraudsters pursuant to purported
back-to-back contracts forming part of the fraudulent scheme and ultimately ends up with volunteers unconnected to the fraud, does the law – whether of deceit, property, unjust enrichment, or otherwise – recognise or impose a constructive trust in favour of the original payer over the money at any stage of its passage – including its ultimate receipt by the volunteers – such that it must be returned to the original payer?  If so, who (if anyone) are the constructive trustees?  If a constructive trust arises, is it institutional or remedial?  Is rescission of the contract between the original payer and the counterparty for fraud necessary for the return of the money and/or for the recognition or imposition of a constructive trust?  If rescission is required, does the timing of rescission affect whether the money can be recovered or a constructive trust recognised or imposed?

2.  In addition, two of the three questions relied on by the defendants to seek leave to appeal also meet the requisite threshold of importance, and leave to appeal is granted in respect of those two questions (despite some possible overlap with Question 1):

(2)     In order to effect rescission of a contract for fraud at common law, whether an innocent party is required to communicate his/her intention to rescind the contract with the counterparty; or it is sufficient for the innocent party to give a clear indication of rescission to third parties?

(3)     In a set of back-to-back contracts for sale and purchase of commodities, where the parties to the head contract are innocent and unaware of any fraud committed by the sub-contracting parties, whether, and if so, under what circumstances, the exception of Halley v Law Society [2003] WTLR 845 is applicable to the head contract so that it can be regarded as an instrument of fraud, such that rescission of the head contract is not required?

3.  The remaining question concerns established principles of pleading and does not merit the grant of leave.

4.  The appeal will be listed for hearing on 2 September 2026.