ASSOCIATED CENTRAL AFRICA LTD v. HONG KONG CHITIAN TRADING CO., LTD

DCCJ 6703/2019

[2020] HKDC 314

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 6703 OF 2019

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J U D G M E N T

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1.  The plaintiff is a company incorporated in the Republic of Mauritius.

2.  It commenced this action by Writ issued on 12 December 2019 to recover the sum of US$178,296 it has been defrauded.  On the same date, it obtained a Mareva Injunction against the defendant freezing the disposal of its assets up to the said sum.  On 20 December 2019, the injunction was continued upon, among others, the defendant’s failure to appear to contest.  On 30 December 2019, the plaintiff filed the Statement of Claim.

3.  I am satisfied on the evidence before me that the Writ and the Statement of Claim herein have been duly served on the defendant by leaving them at its registered office respectively on 17 December 2019 and 30 December 2019.

4.  The defendant has to date defaulted in giving notice of intention to defend and filing of the defence.

5.  The plaintiff now applies by summons dated 12 March 2020 under O 19 r 7 of the Rules of the District Court for the entry of default judgment, which includes as one of the relief sought a declaration that the said sum is held by the defendant on constructive trust for the plaintiff.

6.  Upon the plaintiff’s application and the defendant’s total lack of response, and all communications having been duly and timely served by the plaintiff to the defendant at its registered address, this court proceeds to dispose of this application on paper.

7.  The general principles applicable are trite and need only to be briefly stated.  In such an application, the court cannot receive any evidence, but must give judgment according to the Statement of Claim alone, which must show right to the relief sought.  Even when the right is shown, the court still retains its discretionary power whether to give judgment or to extend a party’s time to file defence when it is just to do so.  Also, as a rule of practice, but not of law, the court will not make a declaration in default without a trial.  This rule however is not inflexible.

8.  The salient facts pleaded in the Statement of Claim are essentially these:-

(a)  The plaintiff trades and exports tobacco globally.

(b)  One of its suppliers was CIF Holdings Ltd (“CIF Holdings”).  Mr Louis Liu was the person in CIF Holdings with whom the plaintiff usually dealt and whose email address was “tobaccolouis@163.com”.

(c)  On 15 October 2019, someone unknown hacked into the said email address of Louis Liu and sent an email purportedly from him to the plaintiff requesting it to make payment of US$178,296 to CIF Holdings’ purported subsidiary, namely the defendant, by paying into the defendant’s bank account no. 012-567-2-008386-8 maintained with Bank of China (Hong Kong ) Limited.

(d)  In the same email was enclosed a purported “Letter of Authorization” dated 15 August 2019 and two commercial invoices dated 15 October 2019 purportedly issued by CIF Holdings.

(e)  Deceived thereby and on 21 October 2019, the plaintiff instructed its banker SBM Bank (Mauritius) to transfer the said amount to the defendant’s said bank account.

(f)  The said email, “Letter of Authorization” and commercial invoices were fraudulent and not from CIF Holdings.

(g)  The plaintiff does not know of, nor has any dealing whatsoever with, the defendant prior to the above event.

9.  I am satisfied that the matters pleaded entitled the plaintiff to the relief I am about to give.

10.  As for the declaration sought, it is now established that the practice of not granting a declaration in default should not be followed where the plaintiff has a genuine need for declaratory relief and justice would not be done if such relief were denied (§19/7/20 Hong Kong Civil Procedure 2020).

11.  It is trite that where property is obtained by fraud, equity would impose a constructive trust so that the property is recoverable and traceable in equity.  If only a money judgment and not a declaration is given, the defendant would have been denied the advantage of recoverability and traceability that equity has long see fit to put in place.  I am satisfied in this case that the declaration sought ought justly be given in default.

Disposal

12.  In the premises, I enter judgment against the defendant in terms of the draft enclosed with the plaintiff’s written submissions.