FAN YIN WA v. LEUNG MEI YEE

DCMP 2181/2023

[2023] HKDC 1577

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2181 OF 2023

--------------------------------

--------------------------------

--------------------------------

--------------------------

DECISION

--------------------------

Introduction

1.  This is the hearing of:-

(1)  an application by the Plaintiff (“P”) for leave to amend the Originating Summons dated 17 May 2023 (“the Originating Summons”); and

(2)  the Originating Summons.

2.  P claims she is a victim of an online fraud. For the background, I refer to my decision in [2023] HKDC 831 (“Decision”) where I previously granted P’s application against a bank for Norwich Pharmacal relief in respect of the transfers of HK$80,000.00 and HK$100,000.00 by P to the bank account of the Defendant (“D”) maintained with that bank (“D’s Bank Account”) as a result of the alleged fraud.

3.  By the Originating Summons, P seeks:-

(1)  A declaration that the funds more particularly described in the Schedule (“the Funds”) are held on trust by D as constructive trustee for P;

(2)  D do pay the Funds to P forthwith;

(3)  Pre-judgment interest of 1% plus prime rate on the Funds up to the date of judgment, and thereafter at judgment rate until payment;

(4)  Costs of and incidental to this action be to P; and

(5)  P’s own costs be taxed in accordance with the Legal Aid Regulations.

4.  By the application to amend the Originating Summons, P seeks to amend the Schedule which provides inter alia the date of transfer of the sum of HK$100,000.00 to D’s Bank Account (“date of the transfer”) on 4 May 2022 to 3 May 2022. The explanation for P’s mistake as to the date of the transfer has been given in P’s 2^nd Affirmation.

5.  D is absent from today’s hearing. This court is empowered by O 32, r 5(1) of the Rules of the District Court, Cap 336H (“RDC”), made applicable to the hearing of an originating summons by O 28, r 1 of RDC, to proceed with a summons at its first or any resumed hearing in the absence of a party thereto, if having regard to the nature of the application, it thinks it expedient to do so.

6.  Under O 32, r 5(2) of RDC, the court may be required to be satisfied that the summons, or as the case may be, notice of the time appointed for the resumed hearing was duly served on that party.

7.  I am satisfied from P’s affirmations of service that D was duly served the Originating Summons and the Notice of Appointment to Hear Originating Summons. The Notice of Appointment contains the order sought which includes the corrected date of the transfer.

8.  Despite being served with the Originating Summons, D has not filed any acknowledgment of service within the time limited for doing so or at all. As mentioned, notice of today’s hearing was given but D does not attend. Therefore, it seems to me that D has no intention to contest or participate in these proceedings and there is no point in adjourning the hearing of the Originating Summons. In the circumstances, I consider it expedient to proceed with today’s hearing in the absence of D.

Discussion

9.  Order 28, r 4(1) of RDC allows the court to make such order in favour of the plaintiff as the nature of the case requires if the liability of the defendant to the plaintiff in respect of any claim made by the plaintiff is established. This rule allows the action to be disposed of summarily where the court is satisfied that there are no triable issues: see Hong Kong Civil Procedure 2023, Vol 1, §29/4/2.

10.  P’s account of the events leading up to the transfer of the Funds to D’s Bank Account as affirmed by P in her supporting Affirmations and the documents exhibited thereto has not been contested due to D’s non-appearance. I see no reason not to accept P’s case of fraud. See also Decision, §24.

11.  Where fraud has been perpetuated, equity imposes a constructive trust on the fraudulent recipient of the stolen property which is recoverable and traceable in equity: see Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 714G and 716C-D applied in Star Therapeutics, Inc v Leabon Technology (HK) Limited and Anor [2021] HKCFI 1715, §16.

12.  P seeks a declaration that the Funds are held by D as constructive trustee for P. As stated in Hong Kong Civil Procedure 2023, Vol 1, §15/16/2, the rule of the court that a declaration will not be granted when giving judgment by consent or in default without a trial is a rule of practice and not of law and will give way to the paramount duty of the court to do the fullest justice to the plaintiff to which he is entitled. In exercising it discretion, the court will consider whether any useful purpose would be served by granting declaratory relief: see ibid.

13.  In the present case, as I stated in Decision §24, I am satisfied from the documents that P has been defrauded and the Funds were transferred from P to D’s Bank Account. However, it appears from P’s 2^nd Affirmation which exhibited the bank statements of D’s Bank Account, disclosed pursuant to the Norwich Pharmacal relief I granted, that the Funds together with many other deposits by various other persons have all been withdrawn and D’s Bank Account was closed on 29 September 2022.

14.  If a claimant seeks a proprietary remedy, it will be necessary to show that the recipient has retained property in which the claimant can identify his or her proprietary interest (whereas if a personal remedy is sought it is enough that the defendant received the property, without needing to show that it was retained): see JSP International SRO v Alacrity Ltd [2022] HKCFI 977, §§31-33 and Milestone Electric, Inc v Meihoukang Trading Co Ltd [2020] HKCFI 2542, §§14-15.

15.  Accordingly, I will not grant the declaration sought but only judgment against D for the amount of HK$180,000.00 together with interests at the rates claimed. Whilst I am not satisfied that P has a claim in constructive trust, plainly P has a valid claim that D was enriched by the Funds at P’s expense and that the enrichment was unjust, adopting the framework in determining the validity of a claim in unjust enrichment per Ribeiro PJ in Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, §67 (i.e., (1) Was the defendant enriched? (2) Was the enrichment at the plaintiff's expense? (3) Was the enrichment unjust? and (4) Are any of the defences applicable?). D not having taken part in these proceedings there obviously are no applicable defences.

16.  I am also satisfied that I should grant leave to amend the Originating Summons and it is just and expedient to dispense with service of the Amended Originating Summons and P’s 2^nd Affirmation.

Disposition and orders

17.  I will therefore make an order in terms of the draft order submitted to me in respect of the amendment summons and order in terms of paragraphs 2 to 5 of the draft order in respect of the Amended Originating Summons save paragraphs 2 and 3 the words “the Funds” are replaced with “HK$180,000.00”.

18.  I thank Mr Ng for his assistance.