CHEN CHARLES CHONG WAH v. LEE SIU KEUNG AND OTHERS

HCA 267/2023

[2025] HKCFI 309

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 267 OF 2023

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J U D G M E N T

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Introduction

1.  This is an application by the Plaintiff (“P”) under Order 19, rule 7 of the Rules of High Court (“RHC”) and by way of a Summons dated 13 November 2024 (“Summons”) for default judgment against the 1^st Defendant (“D1”), 2^nd Defendant (“D2”), 5^th Defendant (“D5”) and 6 Defendant (“D6”) (collectively, “the Defendants”). A hearing was held on 10 December 2024 with the Defendants failing to appear and Judgment reserved. This is the Court’s Judgment.

P’s pleaded case

2.  P is an 82-year-old Australian resident who has no prior dealing with any of the Defendants. Induced by the fraudulent misrepresentations of a fraudster on the internet (“Fake Jennifer Lee”), on 22 June 2022, P transferred a total sum of AU$4,311 to D1’s Bank Account (as defined in the Statement of Claim (“SoC”) at §1a) as nominated by the Fake Jennifer Lee; and total sums of AU$300,000 (on 5 July 2022) and US$100,000 (on 7 July 2022) were transferred to D2’s Bank Account (as defined in SoC at §1b) as nominated by the Fake Jennifer Lee: see SoC at §§3-23.

3.  On 8 July 2022, P was further induced by the fraudulent representations of a fraudster (“Fake Wang Si”) to transfer a total sum of AU$153,000 to D2’s Bank Account as nominated by the Fake Wang Si: see SoC §§24-41.

4.  D1 and D2 had no prior dealing with P and they had no commercial justification nor any entitlement for receiving the defrauded funds. They held such funds on trust for P. They were also unjustly enriched at the expense of P as a result of the transfers and were liable to make restitution to P: see SoC §§22, 23, 35, 40 and 41.

5.  Despite that, D2 knowingly dealt with such funds by further transferring them (or part thereof) to D5 and D6. D5 and D6 were thus two of the indirect recipients of the traceable funds provided by P as a result of the frauds: see SoC §§17, 42-45.

6.  D5’s Bank Account and D6’s Bank Account (as defined in SoC at §42) were frozen by the Hong Kong Police Force. The balance stood at HK$400,000 and HK$113,000 respectively. The entirety of those funds had been transferred from D2’s Bank Account and were part of the funds defrauded from P. D5 and D6 held such funds which they had received from D2 on trust for P and they never had any entitlement to receive or retain the funds. They were unjustly enriched at the expense of P as a result of the transfers and were liable to make restitution to P: see SoC at §§42-45.

7.  Being a victim of fraud, P thus seeks judgment against the Defendants for the funds defrauded from him and received by them respectively.

Procedural history

8.  On 21 February 2023, P filed the Writ of Summons against the Defendants (“Writ”). On 3 March 2023, P obtained an Injunction Order against D1 (alongside the 3^rd Defendant and the 4^th Defendant against whom the action has been discontinued) in respect of US$4,311 transferred to D1’s Bank Account (“Injunction Order”). By an Order granted by ST Poon J dated 10 March 2023, the Injunction Order was extended and continued until the damages have been assessed and the judgments have been satisfied.

9.  According to the affirmation evidence filed by P, the service of the Writ on D1 and D2 was duly effected on 1 March 2023 and 15 March 2023 respectively. As for D5 and D6 (who were last known to reside in the Mainland), pursuant to an Order for service out of jurisdiction made by B Chu J dated 3 March 2023 regarding D5 and D6 (“Service Out Order”) or a substituted service Order made by Master Hui dated 28 March 2024 regarding D5 (“Substituted Service Out Order”), a copy of the Concurrent Writ of Summons was duly served on D5[1] on 7 May 2024 and on D6[2] on 31 March 2023 respectively. None of the Defendants has filed any acknowledgement of service.

10.  On 10 May 2024, P filed the SoC. The SoC was duly served on D1 and D2 respectively on 10 May 2024. For D5, the SoC was served on him out of jurisdiction by ordinary post on 22 May 2024. For D6, the SoC was served on him at two different addresses of D6 out of jurisdiction by ordinary post on 10 May 2024 and 24 May 2024 respectively. None of those ordinary posts of the SoC has ever been returned.

11.  None of the Defendants has filed any Defence.

12.  A copy of the Summons and the Notice of Intention to Enter Judgment against the Defendants were duly served on D1 and D2 by ordinary post on 18 November 2024. None of those posts has ever been returned.

13.  No attempt was made to serve a copy of the Summons and the Notice of Intention to Enter Judgment on D5 and D6. As D5 and D6 were in default as to acknowledgment of service, and personal service is not required as per the Service Out Order, P was content, and indeed entitled[3] in the circumstances of this case, to dispense with service and rely on Order 65 rule 9 of the RHC which provides:-

“No service required in certain cases (O. 65, r. 9)

Where by virtue of these rules any document is required to be served on any person but it is not required to be served personally or in accordance with Order 10, rule 1(2), and at the time when service is to be effected that person is in default as to acknowledgment of service or has no address for service, the document need not be served on that person unless the Court otherwise directs or any of these rules otherwise provides.”

14.  However, as to the service of the SoC, P now seeks retrospective leave for service out of jurisdiction by sending a copy of the SoC by ordinary post to D5 on 22 May 2024 and to D6 on 10 May 2024 and 24 May 2024 respectively (so as to confirm the validity of such service that was already effected on D5 and D6 and as outlined in §10 above). This is a matter that I will come back to in the latter part of this Judgment.

Legal principles on granting default judgment and declaratory reliefs

15.  It is trite that the Court’s power to grant a default judgment under Order 19 rule 7 of the RHC is discretionary and the Court has to consider the plaintiff’s case according to the pleadings. While the plaintiff must show a case for the order which he seeks to obtain, it is not necessary for him to prove his case by evidence.

16.  It is not the normal practice of the Court to make a declaration of rights without a trial. This is, however, not a rule of law, but only a rule of practice which should not be followed when the plaintiff has a genuine need for the declaratory relief and if justice would not be done in the event such relief were denied. The Court will scrutinize the application for default judgment carefully and will not hastily grant the relief sought. The declaratory relief to be granted should not be in terms wider than what the plaintiff is entitled to and what is necessary to do justice to him: Hong Kong Civil Procedure 2025, Vol. 1, at §19/7/20 (at p.587).

Discussion

17.  P seeks an order for repayment of the defrauded sums received by the Defendants respectively, based on, inter alia, restitution for unjust enrichment and mistake being the unjust factor. In Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, Ribeiro PJ stated (at §67):-

“67. A useful framework for approaching such claims which was adopted by both parties involves asking four questions:

(a) Was the defendant enriched?

(b) Was the enrichment at the plaintiff's expense?

(c) Was the enrichment unjust?

(d) Are any of the defences applicable?”

18.  In the present case, as pleaded in the SoC, each of the Defendants was clearly enriched at the expense of P and the enrichment was unjust given the fraud on P (and no defence has been filed or can be discerned from the facts alleged in the SoC). P’s case for reliefs is clearly made out and deemed established on his pleadings.

19.  P also seeks, inter alia, the relief of a declaration against each of the Defendants that the defrauded funds each received are held on trust for P. P prays in aid the authority of Spruce Australia Pty Ltd v New Senjia Trade Limited [2019] HKCFI 101 where DHCJ Yeung, SC (as he then was) held (at §16):-

“I have considered the contents of the Statement of Claim. The pleaded facts clearly support the plaintiff’s case that it is the victim of an email fraud, and that it has suffered loss in the amount of the Sum. Constructive trust also attaches - Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, per Lord Browne-Wilkinson at 716C - D, and 巨展皮具[4]at paragraph 27. The plaintiff appears entitled to relief based on its proprietary interest in the Sum. I bear in mind the fact that declaratory relief is being sought. I need to bear in mind the rules of practice set out above and decide how I should exercise my discretion. I take into account the fact that fraud is pleaded and deemed established. I take further into account the fact that nothing is known about the defendant, including whether it has any other creditors. The plaintiff has a genuine need for the Declarations sought, so as to avert any need for it to race against other creditors. The Declarations sought are also necessary for the plaintiff to hopefully get to the balance in [the bank account of the defendant] for full or partial satisfaction of the monetary judgment. In all the circumstances, I am satisfied that the facts of the present case are such that I should exercise my discretion in favour of granting the declaratory relief sought.”

20.  In my view, the above comments and observations are equally applicable to the facts of the present case. A similar declaration and ancillary reliefs as sought by P were also granted in Kuo Benjamin Yung Hsiang v Xu Meiyi [2022] 5 HKLRD 111: see §6.

21.  It is not the normal practice of the Court to make a declaration without a trial. However, this is a rule of practice and not a rule of law. The paramount duty of the court is to do the fullest justice to P to which he is entitled. I am satisfied that in the circumstances of the present case, in order to do full justice to P, the declarations and ancillary reliefs sought by P against each of the Defendants should be granted and they are not in terms wider than necessary.

Retrospective leave

22.  An issue has arisen because both the Service Out Order and the Substituted Service Out Order speak of giving leave to P to serve a “Concurrent Writ of Summons”. The procedural history shows that D5 and D6 who were last known to reside in the Mainland were, in accordance with the Service Out Order and/or the Substituted Service Out Order, duly served with a generally indorsed Writ and they failed to file any acknowledgement of service.

23.  It is not entirely clear whether, when the SoC was subsequently served on D5 and D6, separate leave for service out of the jurisdiction was required or whether the SoC should be treated as part of the Writ itself.

24.  The SoC was served on D5 out of jurisdiction by ordinary post on 22 May 2024, and on D6 on 10 May 2024 and 24 May 2024 respectively. None of those ordinary posts of the SoC has ever been returned. None of them has filed any Defence.

25.  Should leave to serve out of the jurisdiction be required, it can be granted retrospectively: see Daniel Isaac Henri Mimoun & Ors v Dragon Concept HK Limited & Ors [2020] HKCFI 2535 at §2, where, in similar circumstances, retrospective leave to serve the SoC out of the jurisdiction was granted. See also Anthony Wong v Jian Xiaofei [2022] HKCFI 2924 at §14-18.

26.  In the present case, it is the Court’s view that it is appropriate to grant retrospective leave for service out of the jurisdiction on D5 and D6 and such retrospective leave is to be granted.

Judgment

27.  For the above reasons, I grant the following orders:-

(1)  Judgment be entered for the Plaintiff against the 1^st Defendant for the following reliefs:-

a.  An order for payment of the sum of AU$4,311 (or its Hong Kong dollar equivalent) (“Sum to D1”) wrongfully claimed by, paid to and/or received by the 1^st Defendant and/or those acting on his/her behalf, in a payment from the Plaintiff;

b.  Interest on the Sum to D1 from 21 February 2023 to the date of this Judgment at 1% above prime rate and thereafter pursuant to section 49 of the High Court Ordinance (Cap 4) at judgment rate until payment in full;

c.  A declaration that the 1^st Defendant holds the Sum to D1 and/or his/her traceable proceeds or assets (if any, and if they are held by the 1^st Defendant) that the 1^st Defendant has respectively received on trust for the Plaintiff;

d.  An order for the delivery up or transfer of the Sum to D1 and/or his/her traceable proceeds or assets that the 1^st Defendant has received on trust for the Plaintiff;

e.  All necessary accounts and inquiries to enable the Plaintiff to trace and recover the Sum to D1 that the 1^st Defendant has received on trust for the Plaintiff; and

f.  An injunction restraining the 1^st Defendant, whether by himself/herself or by his/her servants or agents or others howsoever from disposing of or otherwise dealing with the Sum to D1 or his/her traceable proceeds otherwise than by delivery up or transfer to the Plaintiff.

(2)  Judgment be entered for the Plaintiff against the 2^nd Defendant for the following reliefs:-

a.  An order for payment of the sums of US$100,000 and AU$453,000 (or their Hong Kong dollar equivalent) (“Sums to D2”) wrongfully claimed by, paid to and/or received by the 2^nd Defendant and/or those acting on his/her behalf, in a payment from the Plaintiff;

b.  Interest on the Sums to D2 from 21 February 2023 to the date of this Judgment at 1% above prime rate and thereafter pursuant to section 49 of the High Court Ordinance (Cap 4) at judgment rate until payment in full;

c.  A declaration that the 2^nd Defendant holds the Sums to D2 and/or his/her traceable proceeds or assets (if any, and if they are held by the 2^nd Defendant) that the 2^nd Defendant has received on trust for the Plaintiff;

d.  An order for the delivery up or transfer of the Sums to D2 and/or his/her traceable proceeds or assets that the 2^nd Defendant has received on trust for the Plaintiff;

e.  All necessary accounts and inquiries to enable the Plaintiff to trace and recover the Sums to D2 that the 2^nd Defendant has received on trust for the Plaintiff; and

f.  An injunction restraining the 2^nd Defendant, whether by himself/herself or by his/her servants or agents or others howsoever from disposing of or otherwise dealing with the Sums to D2 or his/her traceable proceeds otherwise than by delivery up or transfer to the Plaintiff.

(3)  Judgment be entered for the Plaintiff against the 5^th Defendant for the following reliefs:-

a.  An order for payment of the sums of HK$400,000 (“Sum to D5”) wrongfully claimed by, paid to and/or received by the 5^th Defendant and/or those acting on his/her behalf;

b.  Interest on the Sum to D5 from 21 February 2023 to the date of this Judgment at 1% above prime rate and thereafter pursuant to section 49 of the High Court Ordinance (Cap 4) at judgment rate until payment in full;

c.  A declaration that the 5^th Defendant holds the Sum to D5 and/or his/her traceable proceeds or assets (if any, and if they are held by the 5^th Defendant) that the 5^th Defendant has received on trust for the Plaintiff;

d.  An order for the delivery up or transfer of the Sum to D5 and/or his/her traceable proceeds or assets that the 5^th Defendant has received on trust for the Plaintiff;

e.  All necessary accounts and inquiries to enable the Plaintiff to trace and recover the Sum to D5 that the 5^th Defendant has received on trust for the Plaintiff; and

f.  An injunction restraining the 5^th Defendant, whether by himself/herself or by his/her servants or agents or others howsoever from disposing of or otherwise dealing with the Sum to D5 or his/her traceable proceeds otherwise than by delivery up or transfer to the Plaintiff.

(4)  Judgment be entered for the Plaintiff against the 6^th Defendant for the following reliefs:-

a.  An order for payment of the sum of HK$113,000 (“Sum to D6”) wrongfully claimed by, paid to and/or received by the 6^th Defendant and/or those acting on his/her behalf;

b.  Interest on the Sum to D6 from 21 February 2023 to the date of this Judgment at 1% above prime rate and thereafter pursuant to section 49 of the High Court Ordinance (Cap 4) at judgment rate until payment in full;

c.  A declaration that the 6^th Defendant holds the Sum to D6 and/or his/her traceable proceeds or assets (if any, and if they are held by the 6^th Defendant) that the 6^th Defendant has received on trust for the Plaintiff;

d.  An order for the delivery up or transfer of the Sum to D6 and/or his/her traceable proceeds or assets that the 6^th Defendant has received on trust for the Plaintiff;

e.  All necessary accounts and inquiries to enable the Plaintiff to trace and recover the Sum to D6 that the 6^th Defendant has received on trust for the Plaintiff; and

f.  An injunction restraining the 6^th Defendant, whether by himself/herself or by his/her servants or agents or others howsoever from disposing of or otherwise dealing with the Sum to D6 or his/her traceable proceeds otherwise than by delivery up or transfer to the Plaintiff.

(5)  Retrospective leave to the Plaintiff to serve his Statement of Claim out of jurisdiction by sending the same by ordinary post to (i) the 5^th Defendant on 22 May 2024 at中國廣東省深圳市龍華區和平路190 錦繡御園10 楝2 單元18B and中國湖北省荊門市沙洋縣石橋鎮東風村77 號6 祖, and (ii) the 6^th Defendant on 10 May 2024 at 中國甘肅省天水市清水縣永清鎮李家塬103 號and on 24 May 2024 at中國廣東省深圳市龍崗區坂田街道中興路銘樂大廈小區A1106.

(6)  The costs of the action including the costs of and occasioned by the Summons filed herein on 13 November 2024 be to the Plaintiff, to be taxed if not agreed.