ORION ENGINEERED CARBONS GMBH v. UNIVERSAL ALL LTD AND OTHERS

HCA 1625/2024
HCMP 210/2025
(Heard Together)

[2025] HKCFI 2370

HCA 1625/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1625 OF 2024

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BETWEEN

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AND

HCMP 210/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 210 OF 2025

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BETWEEN

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(Heard Together)

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DECISION

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1.  There are 2 actions before me: HCA 1625/2024 (“HCA 1625”) and HCMP 210/2025 (“HCMP 210”).

HCA 1625

2.  The plaintiff (“P”) is a German company. It is a subsidiary of a company listed on the New York Stock Exchange. Its case is that it is the victim of an elaborate identity fraud. Fraudsters impersonated its Chief Financial Officer and deceived it into remitting a total of EUR21,374,900 and USD31,035,683 in multiple tranches to various bank accounts held separately by the 1^st to 16^th and 18^th defendants named in HCA 1625 (“D1” to “D16” and “D18”, collectively the “Remaining HCA Ds”)[1]. Upon discovery of the fraud, reports were made to the law enforcement agencies in a number of jurisdictions, including the police in Hong Kong. On 16 August 2024, P commenced HCA 1625. On that same day, P obtained a proprietary and Mareva Injunction against D1-17[2]. On 28 August 2024, having added D18, P obtained further a proprietary and Mareva Injunction against D18.

3.  A Statement of Claim has been filed. P claims against each of the Remaining HCA Ds, principally and in so far as still being pursued:

(a) Restitution and/or damages of the sums which their accounts opened variably with 7 banks (the “7 Banks”) respectively received (“D1 Sum” to “D18 Sum”, and collectively “D Sums” as appropriate) together with time value of the same;

(b) A declaration that each of the D1 Sum to D18 Sum (or part thereof) belonged to P at the time of receipt; and

(c) An account and tracing enquiry, together with related directions.

4.  No acknowledgement of service has been received.

5.  By summons of 19 March 2025 (the “Default Judgment Summons”), P seeks default judgment against the Remaining HCA Ds.

6.  I am satisfied that all requisite processes and documents have been validly served upon the Remaining HCA Ds.

7.  I have considered the Statement of Claim. P appears entitled to the judgment being sought.

8.  On the facts of the case, and on the authorities cited to me, I have no difficulty granting the Declarations being sought. I also have no difficulty conducting the account and tracing enquiry on the strength of the pleadings and evidence before me.

9.  I grant P judgment against the Remaining HCA Ds in terms of the §1 of Draft Order A which Mr Ernest Ng, counsel for P, has placed before me (the “Default Judgment”). I also vary the terms of the injunctions, in terms of §§2 and 3 of the same draft order, to create an exception for the purpose of satisfying the Default Judgment.

10.  I grant P costs of the action, in terms of §4 of that same draft order. P is granted 14 days to lodge its statement of costs.

Enforcement applications

11.  The Originating Summons in HCMP 210 was issued on 11 February 2025. The defendants are 16 of the 17 Remaining HCA Ds (D6 not sued) and the 7 Banks. P seeks thereby a vesting order against each of those defendants in respect of the sums which P has in HCA 1625 obtained default judgment.

12.  Today is the first appointment hearing of the same.

13.  Before this court are also P’s applications for Garnishee Orders nisi in respect of all those D Sums under HCA 1625. P has obtained leave from a master to have those applications heard immediately after the Default Judgment Summons, and together with the first appointment hearing of HCMP 210.

14.  P is in effect seeking to enforce the Default Judgment immediately.

The vesting order

15.  The vesting order is sought under section 52 of the Trustee Ordinance Cap 29 (“TO”).

16.  There are conflicting decisions in the Court of First Instance and District Court levels as to whether section 52 of the TO applies to a situation like the present one:

(a) Holding not are notably:

(i) Amidas Hong Kong Limited v Che Si Limited [2025] HKCFI 1128, per Queeny Au-Yeung J;

(ii) Tokic DOO v Hongkong Shui Fat Trading Ltd [2020] 4 HKLRD 189, per DHCJ Douglas Lam SC; and

(iii) 800 Columbia Project Co LLC v Chengfang Trade Ltd [2020] 3 HKLRD 674, per Recorder Eugene Fung SC;

(b) Holding yes are notably:

(i) Concrete Waterproofing Manufacturing Pty Ltd v Changxuan Co Ltd [2020] 4 HKLRD 166, per HHJ Phoebe Man; and

(ii) Wismettac Asian Foods Inc v United Top Properties Ltd [2020] 3 HKLRD 732, per DHCJ Paul Lam SC.

17.  Of the above 5 cases, Amidas is the latest one. Therein, Queeny Au-Yeung J considered the 4 other cases (§§36 to 44). Her Ladyship further considered the meaning of “trustee” in the context of the Limitation Ordinance, and in that regard considered Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400 and Hui Chun Ping v Hui Kau Mo (both before the Court of Appeal [2024] 2 HKLRD 178 and the Court of Final Appeal (2024) 27 HKCFAR 634). Her Ladyship noted the classic division between “institutional” and “remedial” constructive trusts, or “category 1” and “category 2” constructive trusts. Mr Ng also appeared for the plaintiff in Amidas. He invited Her Ladyship to adopt the reasoning in Wismettac and Concrete Waterproofing. In the end, and for the reasons set out in §§52 to 56, Queeny Au-Yeung J declined to do so. She found that section 52(1)(e) of the TO is not engaged in fraud cases like the one before her (which is similar to the present one) which involve remedial or “category 2” constructive trustees.

18.  Mr Ng is seeking to re-argue the point before this Court. He invites this Court not to follow or apply Amidas.

19.  For the following reasons, I find that section 52 of the TO is not engaged:

(a) I have considered the authorities cited to me. I share Queeny Au-Yeung J’s view that the reasoning in Tokic and 800 Columbia on the issue of vesting orders more compelling. I also respectfully agree with Her Ladyship’s analysis in §§53 to 56 of her Decision in Amidas;

(b) I find that the above conclusion is clearly supported by the following observations by Kwan VP in Hui Chun Ping, that:

82. Section 2(1) of the Limitation Ordinance provides that “trust” and “trustee” have “the same meanings respectively as in the Trustee Ordinance”. Just like the English statutes, the definition provision in the Limitation Ordinance is to be determined by reference to the definition in the Trustee Ordinance, which is also modelled on the English Act. The Trustee Ordinance is concerned with the administration of true trusts, unlike the situation of a constructive trustee required to account in the exercise of equity’s remedial jurisdiction whose sole obligation of any practical significance is to restore the assets immediately. His possession is at all times wrongful and adverse to the rights of the claimant, nor does he have the powers and duties of a trustee with regard to investment and management. Most of the provisions in the Trustee Ordinance do not apply to him appropriately. He does not come within a “trustee” as provided in section 20(1) of the Limitation Ordinance which is determined by reference to the Trustee Ordinance. The meaning and language of “trustee” in the Trustee Ordinance do not extend to constructive trustees whose liability to account arose from the misapplication itself.

(c) Hui Chun Ping is subsequent to the 4 other cases and those Courts did not have the benefit of it;

(d) In the course of the hearing Mr Ng refers me to the Court of Final Appeal decision in Hui Chun Ping. I have considered it. It does not in my view alter Kwan VP’s observations on the scope of the TO;

(e) Mr Ng refers me to an article by Lusina Ho entitled “When Email Fraud Meets Vesting Orders” (2021) 137 LQR 24. But that predates Hui Chun Ping;

(f) Mr Ng submits that resort to classification of constructive trusts is strictly unnecessary. Whilst that may be strictly unnecessary, the understanding and analysis of the nature and classification of constructive trusts clearly assist in the interpretation of section 52 of the TO;

(g) Mr Ng submits that Hui Chun Ping should be limited “only to discussion for the purpose of limitation”. I do not agree. Whilst the issues in that case concerned the Limitation Ordinance, the observations by Kwan VP on the nature of TO have general application. One notes in particular that the words “trust” and “trustee” are defined in the Limitation Ordinance as having “the same meanings respectively as in the Trustee Ordinance”;

(h) Mr Ng points to certain policy considerations in support of his submissions. I have considered them. They do not in my view upset the construction discussed above.

20.  I refuse P’s application for vesting orders.

21.  Costs of HCMP 210, including costs of the 7 Banks on indemnity basis, are to be borne by P, to be summarily assessed if not agreed.

Garnishee Orders nisi

22.  P’s application is supported by the 6^th affidavit of Brianne Leung dated 31 March 2025. It was filed on 1 April 2025, on a date clearly before the existence of the Default Judgment.

23.  The plaintiff in Amidas attempted to do the same. Queeny Au-Yeung J held that such an attempted expedited procedure did not meet the requirements set down in Order 49 rule 2. I respectfully agree.

24.  In the course of the hearing, Mr Ng referred me to 2 passages in the White Book. But those passages concern unascertained judgment, or where the amount of the debt is not stated in the affidavit in support. None of them affects the requirement of there having been a judgment in the first place.

25.  I refuse P’s application for Garnishee Orders nisi as being made pre-maturely. This refusal is however without prejudice to any renewed application by P for the same.

Concluding remarks

26.  This Court’s views and conclusions on P’s attempts to effect enforcement at this stage do not mean that the Default Judgment cannot be enforced. This Court understands that P may want to expedite enforcement. But the appropriate procedure would have to be followed. This Court further respectively echoes Queeny Au-Yeung J’s observations expressed in §63 of Amidas, that it is actually more costly to apply for a vesting order than to apply for a garnishee order.