CHAN LAP KIT t/a NGAN FUNG EXCHANGE CO also t/a RELIABLE RMB REMITTANCE CO AND ANOTHER v. YUSHUN TECHNOLOGY LTD

DCCJ 130/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 130 OF 2016

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

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

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

DECISION

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

Introduction

1.  This is the substantive hearing of the plaintiffs’ garnishee order nisi to show cause against HSBC (“the garnishee bank”) with which the defendant has maintained an integrated bank account (A/C# 817-731904-838) (“the Account”).  There were two credit balances of HK$504,224.21 and USD6.87 in the Account (“the debt in question”) at the time of service of the garnishee order nisi.  Neither the defendant nor the garnishee bank sent any representative to attend the hearing.

2.  Apart from the plaintiff’s present application, there is also before this court a summons taken out by BR CAT International Co Ltd (“the Intervener”) whereby it seeks to be joined as a party to these proceedings (“the Intervener’s Summons”) for the purpose of opposing the garnishee order nisi to be made absolute.  The Intervener also made substantive argument as supported by affidavit evidence for such objection.  In gist, it is the Intervener’s case that it has proprietary claim over the debt in question because the defendant holds the same as constructive trustee for it by reason of a default judgment granted to it against the defendant under HCA 1023 of 2014 (“HCA 1023”). This hearing is also the hearing of the Intervener’s claim pursuant to Order 49 rule 6(2) of the Rules of District Court (“RDC”) whereby this court is conferred with the power to summarily determine the questions at issue between the contesting claimants for the debt in question.    

The procedural history

3.  On 11 January 2016, the plaintiffs issued the Writ to recover a sum of HK$440,810.26 from the defendant basing on the cause of action of money had and received.  The defendant did not enter into appearance to defend.  On 23 February 2016, the plaintiffs entered default judgment against the defendant in this action (“the default judgment”) for the amount of HK$440,810.26 with interest and costs, and damages to be assessed.

4.  On 15 March 2016, Master Yip granted a garnishee order nisi in favour of the plaintiffs against the garnishee bank in respect of the debts due by the garnishee bank to the defendant (which cover the aforesaid credit balances standing in the Account) to be attached to answer the judgment sum and the interest accrued thereon as per the judgment[1] (“the garnishee order nisi”).

5.  On 30 March 2016, when the garnishee order nisi was served upon the garnishee bank, the defendant’s bank account(s) maintained with the garnishee bank was subject to a Mareva injunction (“the Injunction”) obtained by the Intervener against the defendant in HCA 1023 who are correspondingly the plaintiff and the 9^th defendant in that action.

6.  On 10 May 2016, with leave granted by Mr Justice Chung under HCA 1023, the Intervener obtained default judgment[2] against the 9^th defendant (i.e. the defendant here) with the restitution and/or an order to pay to the plaintiff (i.e. the Intervener here) in the sum of US$880,131 (or its Hong Kong dollar equivalent) together with some other incidental reliefs including an account and tracing enquiry as per para.8.1 of that judgment (“HCA 1023 judgment”).  Under para. 8.3 of the judgment, Mr Justice Chung also ordered the Injunction be varied to such extent to allow any sums payable under His Lordship’s Order be allowed to be paid out of the relevant bank accounts (including the Account) to the plaintiff in HCA 1023 (ie the Intervener here).  Though, Mr Ernest Ng, counsel representing the Intervener, confirmed with this court that no tracing enquiry has been made in that action, and therefore no sum has yet been ordered to be paid out of the Account pursuant to Mr Justice Chung’s order.

Grounds of opposition by the Intervener

7.  At the hearing, Mr Ng also clarified with this court that the proper procedural ground for his client to oppose the plaintiffs’ present application should be pursuant to Order 49 rule 6 of the Rules of District Court (Cap 336H Sub Leg) (“the RDC”).  Strictly speaking, it would be unnecessary to invoke Order 15 rule 6 for such purpose.   This is also the view and stance as taken by Mr. Ho on his client’s behalf.[3]

8.  Under Order 49 rule 6(1), when it comes to the court’s notice that some other person than the judgment debtor (ie the defendant here) claims to be entitled to the debt in question, such person may be ordered to attend the court and state the nature of his claim with particulars thereof.  This court is satisfied that by way of Mr. Registrar’s Order made on 16 June 2016[4], the Court has ordered the Intervener to attend this Court to state the nature of its claim with particulars and granted leave to it to file and serve its supporting affidavits for such purpose.

9.  Mr Chan Hiu Fung Nicholos, the handling solicitor of Messrs Squire Patton Boggs acting for the Intervener, have filed two affirmations setting out the background of their client’s case and nature of the Intervener’s interest in the debt in question.  Mr. Chan Lap Kit also filed his affirmation on 14 July 2016 to oppose the Intervener’s Summons.

The approach in making or refusing to make absolute the order nisi

10.  It was a matter within the discretion of the court whether or not to make absolute a garnishee order nisi.  No general principles were laid down upon which the discretion fell to be exercised.  The question was whether there was any reasonable ground why the order should not be made.  If no such ground is made out, the order nisi should be made absolute. (see Rooke & Anor v HV Construction Services Ltd [1998] 2 HKLRD 319 (CA), per Godfrey JA at pp 322J-323B)

The Intervener’s case

11.  It is not in dispute that the Intervener is a victim of some email fraud, whereby it was deceived by some fraudster to transmit funds of USD4,045,676 into bank accounts of two recipients[5] (“the 1^st level of recipients”).  On 28 April 2014, one of them in turn transferred the USD880,131 as received into the Account.

12.  Basically, it is the Intervener’s case that against the aforesaid background the defendant being the recipient of the USD880,131 knew of the subject fraud when the fraud proceeds was deposited into the Account.  In these circumstances, the Intervener had already had proprietary interests in the current total relationship balance (“the current TRB”) within the Account, ie also the debt in question as originated from the fraud proceeds, before the garnishee order nisi was served upon the garnishee bank.

The plaintiffs’ case

13.  On the other hand, it is the plaintiffs’ case that they carried on business of foreign exchange and remittance services at all material times.  On 30 April 2014, the plaintiffs arranged for a transfer of HK$1,465,337.26[6] into the Account.  However, the plaintiffs subsequently received instructions to stop the transfer because they were notified that the Account had been suspended.  The plaintiffs immediately proceeded to cancel the transfer but managed to do so to the extent of HK$1,024,527 only, leaving a net of HK$440,810.26 paid into the Account effectively.

14.  The plaintiffs contend that on the very same day when the US$880,131 was deposited into the Account, five substantial withdrawals were made in the respective sums of 31,736, 337,000, 180,000, 70,527, and 264,747, all in US currency.

15.  By the end of the banking day of 28 April 2014, there was only a mere USD1,105.06 left in the USD sub-account of the Account.  There were further USD transactions in the Account on 29 April 2014 and 30 April 2014.  By the end of the banking day of 30 April 2014, the USD balance was further reduced to USD6.86.

16.  Mr Martin Ho, counsel representing the plaintiff, submits that firstly, since the garnishee order nisi predated the HCA 1023 judgment, the former should rank in priority to the latter.  Secondly, there is in fact nothing in the Account for the Intervener to trace into because the fund of USD 880,131 have been ‘immediately’ withdrawn after it was deposited into the Account.  According to Mr. Ho’s submission, this is just akin to tracing into an overdrawn account which is an impermissible course to take.  It is common ground that the monies in the Account is a mixed fund for the purpose of tracing.

Whether the garnishee order nisi ranks in priority just because it predated the HCA 1023 judgment

17.  Mr Ho is correct to point out that the service of garnishee order nisi would create an equitable charge over the debt in question due to the judgment debtor. (see Hong Kong Civil Procedure 2017, Vol 1, para.49/3/3)  On the other hand, one should bear in mind that such service is also ‘to make the garnishee the custodier for the court of the whole fund attached’ pending the Court’s determination as to whether the order nisi should be made absolute. (see Lord Watson’s observation made in Rogers v Whiteley [1892] AC 118, at p 122 as applied by Hong Kong Court of Appeal in Astro Nusantara International Ltd BV v PT Ayunda Mitra [2012] 4 HKLRD 855 at para 24)  The creation of such equitable charge should therefore be understood thus.

18.  With respect, I however cannot accept Mr Ho’s submission that since the service of the garnishee order nisi predated the HCA 1023 judgment, it automatically follows that the plaintiffs’ interests in the debt in question would rank in priority to the Intervener’s.  Such submission would conveniently ignore the fact that by virtue of the entering into the default judgment under HCA 1023, the facts as pleaded in the Amended Statement of Claim in that action[7] on which the plaintiff’s claim is based are deemed to be admitted by the defaulting defendants in that case (including the defendant here).  Further, where the pleaded facts do not give rise to the relief sought, then unless the writ or statement of claim is amended, no judgment will be given. (see Lam Chi Fat v Liberty International Insurance [2002] 3 HKLRD 480, per Ma J (as His Lordship Chief Justice then was) at para 27)  In HCA 1023, the material facts for the cause of action of fraud as participated by the 1^st level of recipients as well as those in the second level including the 9^th defendant (ie the defendant here) are pleaded.  It is also pleaded that, among other things, the 1^st level as well as 2^nd level of recipients (including the 9^th defendant) had knowledge of the fraud being perpetuated upon the plaintiff (ie the Intervener here), and they held all the sums in question as constructive trustees for the plaintiff[8].

19.  In Westdeutsche Landesbank Girozentrade v Islington Lonson Borough Council [1996] AC 669, Lord Browne Wilkinson at p 716C-D said:-

“... Although it is difficult to find clear authority for the proposition, when property is obtained by fraud equity imposes constructive trust on the fraudulent recipient: the property recoverable and traceable in equity. Thus, an infant who has obtained property by fraud is bound in equity to restore it: Stocks v Wilson [1913] 2 K.B. 235, 244; R. Leslie Ltd. v Sheill [1914] 3 K.B. 607. Moneys stolen from a bank account can be traced in equity: Bankers Trust Co. v Shapira [1980] 1 W.L.R. 1274, 1282 C-E: see also McCormick v Grogan 918690 L.R. 4 H.L. 82, 97.”

20.  In Goff & Jones on The Law of Unjust Enrichment (9^th ed), the learned co-editors cited under note 114 to para 38-36 a line of English and Australian cases following Lord Browne Wilkinson’s dictum.  One of them being Papamichael v National Westminster Bank plc (No.2) [2003] 1 Lloyd’s Rep 341 where Judge Chambers QC reviewed some relevant authorities since the Westdeutsche case[9] and expounded the rationale for Lord Browne-Wilkinson’s dictum.  At para 214 he came to the view that:-

“... Equity imposes a constructive trust because (in the absence of a supervening barrier such as a contract) that is what justice requires where an asset has been obtained by fraud. The fraudster knows he has no right to the asset. He is in conscience bound to hold the asset for the transferor.”

21.  In relation to recipients who know of the fraud (in a situation where the claimant was simply swindled by making the transfer, i.e. without any intervening barriers as might be created by any contractual relationship between the claimant and the fraudster or the recipient), Judge Chambers QC at para 244 also had the following the say:-

“244 The drachmas were not transferred to Mr Paparounis. They were transferred to NatWest. They were not transferred to NatWest as a collecting bank but as a principal. Mrs Papamichael had no account with NatWest. But it was not the fraudulent conduct of NatWest that induced the transfer. It was the fraud of Mr Paparounis. So the initial question is what is the position where a third party, not then an accomplice, comes to hold property of which the transfer has been induced by the fraudulent conduct of someone else. By parity of reasoning with the position in respect of mistake, it seems to me that the position must depend upon knowledge. If the recipient knows of the fraud and has not previously acted in such a way as to preclude an equitable interest in the transferor, I do not see why the transferee should not hold the property on a constructive trust in favour of the transferor.” (emphasis added)

22.  Judge Chambers QC’s view as expressed in the above passage seems to be consistent with the principle that as far as the original owner is concerned, so long as he is being recogised by equity to have proprietary interest in the traceable fraud proceeds, such interest if not overreached by later disposition would generally bind all subsequent transferees of the property other than bona fide purchasers for value without notice. (see Goff & Jones, para.38-12)

23.  In my view, constructive trust would also appear to be the juridical basis as accepted by Mr. Justice Chung in granting the HCA 1023 Judgment against the 9^th defendant (i.e. the defendant here) in light of para.8.2 thereof which provides for the following terms:-

“8.2 A declaration that so much of the Trust Properties as the Court may assess and/or determine belong to the Plaintiff and that the same is held by each of the Defaulting Defendants on constructive trustee and accountable by each of the said Defaulting Defendants as the constructive trustees for the Plaintiff.” (emphasis added)

24.  And, the ‘Trust Properties’ as mentioned in the above declaration are being defined in the earlier para. 8.1 of the default Judgment as those traceable monies, properties or assets together with interest and/or profits earned thereon, as may be found by the Court under the account and tracing enquiry order provided thereunder.  Though, as said, the tracing enquiry has yet been carried out under HCA 1023 by the time of this hearing.

25.  In the light of the aforesaid, in the present garnishee proceedings, the decisive question here is not which order or judgment came into place first. It should rather be whether the Intervener can establish proprietary claim over the debt in question.  To answer this question properly, there are two limbs to be dealt with: first, whether the defendant has any proprietary interest in respect of the fund of USD 880,131 paid into the Account.  Second, if yes, whether the subject monies in the Account can be traced into by the rules of tracing as originated from the USD 880,131.  If both questions can be answered in the positive, this would in my view amount to a reasonable ground for this court to refuse making the garnishee order nisi absolute. 

26.  In principle, the property recoverable and traceable in equity would mean that the beneficiary can make use of the rules of following and tracing to identify property in the hands of the trustee or a subsequent recipient as representing his original property.  (See Goff & Jones, para 38-12) Viewing thus, the subject monies in the Account if recoverable and traceable would in the eyes of the equity not be regarded as the defendant’s property, but belong to the Intervener instead.   In that event, I see no convincing reason to differentiate such a case with a situation where the court will refuse to make absolute a garnishee order nisi when the money is due to the judgment debtor as a trustee for another.  (See Hong Kong Civil Procedure 2017, Vol 1, para 49/1/5; Roberts v Death (1881) 8 QBD 319.  See also, Fubon Bank (Hong Kong) Ltd v First Prime Group Ltd [2009] 4 HKLRD 283 per Saunder J at para.51)

27.  Given the above proper perspective, the first limb of the question (as identified in paragraph 25 above) should be answered in the affirmative.  This is because basing upon such implicit findings and holdings made by Mr. Justice Chung in HCA 1023 judgment in regard to the material facts as pleaded in the Amended Statement of Claim therein, the Intervener is able to assert proprietary interest in the fraud proceeds (i.e. the sum of USD 880,131) paid into the Account as held by the defendant.

28.  A judgment in default is a judicial decision and will, unless and until being set aside, conclude the matters decided by its operative and declaratory parts.  Further, although the plaintiffs here are not parties to HCA 1023, they (being judgment creditor) in the present garnishee proceedings, have to accept the facts created by the HCA 1023 judgment with respect to the funds in the Account and its account holder, ie the defendant here. (See Spencer Bower and Handley on Res Judicata (4^th ed), paras.2.22, 9.32).   Neither counsel have informed me that anybody has taken out any application to set aside the HCA 1023 judgment.

29.  At the hearing, there is no indication from Mr. Ho that his client would not accept the facts in the Amended Statement of Claim as implicitly found by Mr. Justice Chung to grant the reliefs against the defendant in HCA 1023 judgment.  He nonetheless seeks to argue that unless and until the ‘account and tracing enquiry’ is completed, there is no proprietary interest created in favour of the Intervener according to the terms of such judgment.  With respect, I think such submission has sidestepped the first limb of the question. And given the above analysis, I am of the view Mr. Justice Chung has implicitly held that the Intervener has proprietary interest in the fund of USD 880,131 as received by the defendant when it was deposited into the Account.  Otherwise, the declaration would not be granted by Mr. Justice Chung in such terms as quoted in paragraph 23 above.  In my view, when paras 8.1 and 8.2 of HCA 1023 judgment are read together[10], the declaratory part of the judgment does pronounce, among other things, to the following effect: the ‘Defaulting Defendants’ (including the defendant here) held those traceable monies, assets, properties with such interest and/or profits thereon (as the Court may assess and/or determine as belonging to the Plaintiff) on constructive trust in respect of the sums respectively received by such defendants.   In my respectful opinion, if His Lordship had not been of the view that the Defaulting Defendants had held the sums received by them on constructive trust for the Plaintiff, the Court would not declare that these defendants held their corresponding traceable monies, assets, properties on constructive trust for the Plaintiff.

30.  In any event, in my own judgment, the law does allow the Intervener to make proprietary claim over the fraud proceeds of the USD 880,131 when it was paid into the Account under the circumstances of this case.

31.  As for the second question, with respect, I do not accept Mr Ho’s submission that the current TRB or the debt in question cannot be traced into. Mr Ho relied on CY Foundation Group v Cheng Chee Tock [2012] 1 HKLRD 532 to support his proposition that, as a matter of law, it is impossible to trace into an overdrawn account.  Mr Ho tried to persuade the court that the USD sub-account should be treated like an overdrawn account when the USD880,131 was deposited into the same. 

32.  On the other hand, Mr Ng drew my attention to the more recent Privy Council’s decision in Federal Republic of Brazil v Durant International Corp [2016] AC 297.  A possible ramification of the Privy Council’s decision may suggest that the traditional rule against tracing into an overdrawn account would no longer be rigidly adhered to where there is a co-ordinated scheme (such as those as perpetuated by fraudsters in multi-layer money laundering exercise) showing close causal and transactional link between the incurring of a debt and the use of trust funds to discharge it by looking at the transaction overall.  This can presumably be demonstrated by proof or inference that the asset (previously acquired by a defendant by overdrawing on his account) was purchased in anticipation of it being paid for monies obtained from the claimant, and this might qualify as a legitimate reason to depart from the tracing rule. (See paras 13, 14, 33, 34, 38-41, 42 of the judgment; see also Goff and Jones, paras.7-35, 7-36, 7-37)

33.  With respect to the idea that one cannot trace through an overdrawn account, the co-editors in Goff and Jones also commented on Durant’s possible impact upon such idea at para.7-37 of the text:-

“... Notwithstanding the idea that one cannot trace “through” an overdrawn account, the criterion on which Durrant seems to be proceed might allow a sufficient connection to be identified between a credit to the defendant’s account, and either (i) an asset acquired via an earlier withdrawal, which gave rise to the overdraft, or (ii) an asset acquired via a subsequent withdrawal from the account.  In short, Durant supplies a principle that might enable a qualifying transactional connection to be identified on the demonstration of some overall design, such that the relevant withdrawal from the account, regardless of timing and state of balance at the relevant time, was ultimately to be funded by the monies obtained from the claimant.”

34.  In my view, this case however does not turn on Durant.  There is no or no sufficient evidence before me to suggest any feature of such co-ordinated scheme in Durant sense being present here.  I would respectfully agree to the reasoning and conclusion reached by Barma J (as His Lordship then was) in the decision of CY Foundation Group.  Yet CY Foundation Group is materially distinguishable from the present case in that the Account was not overdrawn at all material times but the one in CY Foundation Group was.

35.  By looking at the bank statement of the Account[11], before the deposit entry of US$880,131 was made on 28 April 2014, there was a net credit balance of USD 8.28 left in the USD sub-account at the end of the immediately preceding banking day of 23 April 2014 with USD transactions, and another net credit balance of HK$2,749,088.78 in the HKD sub-account at the end of the immediately preceding banking day of 26 April 2014 with HKD transactions[12]. By the end of the banking day of 28 April 2014, apart from the said net credit balance of USD 1,105.06 in the USD sub-account, there was another net credit balance of HK$1,929,710.25 left in the HKD sub-account.  In these circumstances, with respect to 28 April 2014, both before and after the fund of US$880,131 was deposited into the Account, it cannot fairly be regarded as overdrawn, be the USD sub-account considered alone or together with the HKD sub-account.

36.  It was only after the sum of USD 880,131 had been deposited into the Account, then the five substantial withdrawals (as pointed out in paragraph 14 above) were made from the same sub-account on the same day.   In these circumstances, the identity of the sum of USD 880,131 could not be treated as lost instantaneously at the moment when it was deposited into the Account or immediately thereafter (as in the case of paying into an overdrawn account which may immediately stop the tracing process from proceeding).  To the say the least, the evidence before me does not justify such a finding.

37.  Having said that, what should really matter is whether the lowest intermediate balance rule would be engaged to reduce the original fraud proceeds deposited into the Account to such an extent resulting in any intermediate balance lower than the current TRB.  In short, the tracing rule on the lowest intermediate balance would require that the claimant have only a right to claim the lowest intermediate balance in a mixed fund account (in between the date of misapplication of fund and the date of claim being brought).  The logic of such rule seems to be that the lowest intermediate balance would represent the largest amount that could possibly be said to have resulted from the claimant’s contribution to the mixed fund.  (See Roscoe v Winder [1915] 1 Ch 62; Campden Hill Ltd v Chakrani [2005] EWHC 911.)

38.  However, after surveying the Account by considering both the HKD sub-account and USD sub-account together, it is observed that the lowest intermediate balance rule is not engaged not only with respect to the status of the Account at the end of the banking day of 28 April 2014 for reasons as discussed above, but also with respect to any other subsequent entry dates as appeared in the bank statements.  Mr Ho also agreed to this if both sub-accounts within the Account are to be considered together.  

39.  By taking a fair and overall view of the nature and operation of the Account on the evidence before me, I agree with Mr Ng’s submission that the HKD sub-account and USD sub-account should be viewed together as one singe bank account for the purpose of this tracing exercise.  Among other things, it is observed that the Account is a dual currency business integrated account to facilitate the bank’s customer to carry out its banking transaction in different currencies conveniently within one single account.  The relationship between the defendant and the garnishee bank is defined by a single contractual relationship, and there is an average total relationship balance within the Account for each month as shown in every monthly bank statement.[13] Any payment in and out of the Account, whether in HKD or USD, would be transacted via its single bank account number.[14]  The net position of the Account for each month would premise its calculation on the aggregate sum of HKD and USD held in the Account.[15]

40.  Viewing thus, the fact that the Account is comprised of HKD and USD should not be seen as a segregation of debts, but instead, should be regarded as an internal division of a unified debt within the same Account as owed by the garnishee bank to the defendant for the purpose of the tracing exercise. 

41.  Mr Ho then seek to argue that considering the two sub-accounts together within this single account would be akin to viewing different independent bank accounts maintained by a customer with the same bank which Barma J refused to accede to such approach in CY Group Foundation though if acceded to would give identifiable surplus fund for the claimant in that case to trace into. With respect, I cannot accept such argument of Mr. Ho either.

42.  Each case must be decided on its own merits.  First, I have already explained above why there is only one single bank account here for the purpose of tracing and the aggregate credit balances for each entry date as appeared in the bank statements is one unified debt.  In this light, the salvage argument advanced by the claimant inviting the court to consider the overall position of the defendant’s multiple bank accounts in CY Foundation Group simply cannot come into place here.

43.  Second, looking from another angle, Mr Ho’s argument likewise cannot get off the ground because as pointed out above, the Account was not an overdrawn at all material times, be the USD sub-account considered alone or together with the HKD sub-account. 

44.  Third, Barma J rejected the argument of considering the overall position of the multiple bank accounts in that case because His Lordship was of the view that the question of tracing through an overdrawn account would also provide the answer to such argument.  In His Lordship’s view, the bank when receiving the money from the defendant paid into the overdrawn account was a bona fide purchaser without notice.  For, the bank would appear to have given value to the defendant by treating her liability to it as being reduced, and without notice of any possible impediment to the receipt of the money by her.  (See CY Group Foundation, paras 30, 35)  Nonetheless, such salient feature is totally absent in this case.

45.  Due to the above reasons, the second limb of the question (as identified in paragraph 25 above) should also be answered in the affirmative.  As such, I come to the conclusion that in these proceedings, the Intervener has succeeded in establishing its proprietary claim over the debt in question.  This would constitute a reasonable ground for this court to refuse to make absolute the garnishee order nisi.  My discretion is therefore exercised accordingly.

The implication of the Injunction as varied by Mr Justice Chung, etc.

46.  The matter does not stop here.  I need to deal with some other points as ventilated before this court or which I should otherwise mention.

47.  First, for completeness sake, I wish to point out that although the assets as frozen by the Injunction would cover the funds in the Account, I accept Mr Ho’s submission that the granting of the Injunction per se would not render the Intervener a secured creditor.  However, my aforesaid reasoning in refusing to make absolute the garnishee order nisi is not in any way dependent upon the Injunction.  Rather, the refusal is chiefly due to the Intervener having a proprietary claim over the debt in question.

48.  Second, Mr Ng invited this court to order the garnishee bank to pay the debt in question to the Intervener direct.  However, Mr Justice Chung already made a specific order under the HCA 1023 judgment to vary the Injunction affecting the payment out of the Account.[16] In the circumstances, deference must be made to Mr Justice Chung’s order.  Subject to that variation[17], the fund the Account remains to be frozen.  Thus, it would not be appropriate for this court to order the garnishee bank to pay the debt in question (which is caught by the Injunction and affected by Mr Justice Chung’s order) to the Intervener direct.  Any application for the payment of the currently frozen fund out of the Account should be made in the High Court pursuant to such directions as given under the HCA 1023 judgment instead.

49.  Third, in the course of his oral submission Mr. Ho raised the point for the first time at the hearing that his client can also assert proprietary interest in the sum of HK$440,810.26 which they have paid into the Account earlier.  This is because, as submitted by Mr. Ho, the plaintiffs have paid such money into the Account by mistake, and the plaintiffs can claim proprietary interests in such fund basing on the cause of action of unjust enrichment. 

50.  Such belated point would not affect my aforesaid decision for the following reasons.  This point was not canvassed in the plaintiffs’ skeleton submission at all.  Neither was mistake or unjust enrichment pleaded in the general endorsement of the Writ.  Basing on the matters deposed in the plaintiffs’ affirmations, I do not see how such case on mistake/unjust enrichment submitted at the eleventh hour can be properly made out by the plaintiffs to assert proprietary interests in the fund they paid into the Account either.  In particular, according to the plaintiffs’ own affidavit evidence, they transferred the original fund (as referred to in paragraph 13 above) into the Account pursuant to instructions given by another foreign exchange and remittance company.  It was only after such fund had been transferred, they then received further instruction from the same company that the fund should not be transferred as the Account had been suspended. 

51.  In my view, on the evidence before me, the plaintiffs did not appear to have made any mistake about the identity of the defendant or the Account into which the fund was required to be transferred.  There is no or no sufficient evidence before this court that the suspension of the Account was a matter of concern for the defendant when it deposited the original fund into the Account. That aside, the plaintiffs never deposed in their supporting affirmation that the defendant knew of any alleged mistake on their part either.  In light of the aforesaid, even assuming any mistake on the plaintiffs’ part can be discerned from their affidavit evidence purely for the sake of argument (which I do not agree), it is doubtful whether the plaintiffs in such circumstances and without more can effectively assert any proprietary claim in such fund in light of the observation made by Lord Browne-Wilkinson in Westdeutsche at p.714C-F of the report.  In these circumstances, I am not satisfied that the plaintiff can claim any proprietary interest in the original fund they deposited into the Account or in the debt in question.

Conclusion and Order

52.  In the premises, I order that the plaintiffs’ present application to make absolute the garnishee order nisi be dismissed and the garnishee order nisi be set aside. 

53.  Costs should normally follow the event, and there is no reason for this court to depart from such norm.  I therefore order the plaintiff to pay the costs of the Intervener in opposing the plaintiff’s present application, to be taxed if not agreed, with certificate for counsel save and except for such costs incurred by the Intervener in the preparation of its Summons filed on 4 May 2016 and its supporting affidavits in relation to its application made pursuant to Order 15 rule 6.  As pointed out at the outset, it is unnecessary for the Intervener to invoke that rule to oppose the plaintiffs’ present application.  It would be good enough to raise the objection by stating the nature of its claim with particulars pursuant to Order 49 rule 6.  It would not be just and fair to ask the plaintiffs to bear any costs unnecessarily incurred by the Intervener which is not owing to the plaintiffs’ fault.

54.  Lastly it remains for me to thank counsel on both sides for their helpful assistance.