HUI SHUI TONG v. NED CHANG AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. In this matter the plaintiff Hui Shui Tong sues Ned Chang, the 1st defendant; Falhendon Limited, the 2nd defendant and Dataprep (Hong Kong) Limited, the 3rd defendant. The plaintiff says that he was a Director of Dataprep (Hong Kong), the 3rd defendant, from 1982 to June 1984 and that the 1st defendant was the Managing Director of the 3rd defendant and also the President of the 2nd defendant. The plaintiff says that the 3rd defendant provided an American Express Card for his use which was in his name but was taken out by the 3rd defendant. He pleads that the practice was that he would use the card both for expenses related to his duties as a Director and for his personal expenses and that the indebtedness incurred by the use of the card would initially be debited to his director's account with the 3rd defendant and paid by the 3rd defendant subject to a balancing of that account whereby he would be made liable for the amount which related to his personal expenditure. He says that in February 1983 when he was in New York, 1st defendant informed him by telex that the 3rd defendant had cash flow problems and that there were insufficient funds to pay the moneys due to American Express under the aforesaid Card. It is not clear from the pleading, the extent, if any, to which he was indebted as regards personal expenditure at that time. However that may be, he pleads that in order to assist the company he sent US$45,000.00 to his bank account in New York which the 1st defendant then, acting under an authority which he had with regard to that bank account, transferred $42,500.00 to the 3rd defendant. The plaintiff pleads that he intended that this amount should be credited to his director's account and that the 1st defendant was well aware of this. He says that the 1st defendant caused the amount to be collected and paid over to the 3rd defendant but that it was never paid into his director's account. There is affidavit evidence which indicates that it was used in quite a different way.

2. The plaintiff now sues he 3rd defendant for conversion of that amount and alternatively for payment of the money upon the basis that it was money had and received by the 3rd defendant to the use of the plaintiff.  This matter comes before me as an appeal from the learned Registrar who struck out the conversion claim but permitted the claim for money had and received to proceed.

3. Mr. Donnelly who appears for the 3rd defendant asked that the decision of the Registrar be altered by striking out the claim for money had and received. What the plaintiff appears to be saying, it seems to me, is that, because the moneys were not paid into the account to which there were intended to go, he is entitled to have the whole of these moneys returned to him. The result if he succeeds will be that by framing his claim as an action for money had and received, he will have placed himself in a better position than that in which he would have been had the moneys been correctly dealt with by the 3rd defendant. This must be so for the moneys, if they had been correctly dealt with, would have been paid into his director's account, which was a running account, and would, eventually, have been dealt with as part of that account. Any amounts of personal expenditure charged on the American Express Card would have been debited against any credit which stood in that account. Such would have been the position had the amount been placed into the account as, according to him, it should have been. He seeks now, however, to bring an action for money had and received whereby he will recover the whole of the amount regardless of whether he has under the running account a full entitlement thereto. It is my view that the action for money had and received is wholly misconceived. Any such action must rest upon the basic allegation that the person holding the money is not entitled thereto. The action for moneys had and received is pursuable only in a situation where there has been an unjust enrichment. It can only succeed if it can be shown that the person holding the money has no entitlement to any part thereof. I do not intend to review the involved law governing actions for unjust enrichment. I cite only from Chitty on Contracts, 21st Edn. Vol. 1 at paragraph 942 where it stated:

"The principle of an unjust enrichment requires first that the defendant has been enriched by the receipt of a benefit. Secondly, that this enrichment is at the expense of the plaintiff and thirdly that the retention of the enrichment be unjust."

There must, au fond, have been an enrichment. I see no enrichment, in the sense in which that term is used in the above citation, in this particular case. The moneys were paid into a running account and were paid with full knowledge that they would never, as such, be returned to the plaintiff but would be swallowed up in the balancing of the account and would, if necessary, be wholly applied to the reduction of the plaintiff's personal indebtedness. It cannot further, in my view, be shown that there has been any unjust retention. Indeed it may well be, and there are no facts pleaded to disclose this one way or the other, that the 3rd defendant is entitled to retain the whole of the amount. Indeed Mr. Donnelly when addressing me pointed to certain facts in the affidavits which strongly suggest that this is so.

4. Whether or not the plaintiff might be entitled to succeed in an action against the 3rd defendant for moneys owing to him on the running account does not concern me. I am satisfied that there is no action open to him upon a claim for moneys had and received, that the pleadings disclose no reasonable course of action in this regard and that the Registrar was wrong in holding as he did. I am satisfied that his order should have been that paragraph 10 and paragraph 11 should be struck out. The relief sought in the prayer, therefore, cannot be granted and, as against the 3rd defendant, the prayer must also fall.