R. STAHL INC. (A COMPANY INCORPORATED IN THE UNITED STATES OF AMERICA) v. AJ DEVELOPMENT LTD

HCA 1412/2019

[2026] HKCFI 3469

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1412 OF 2019

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J U D G M E N T

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The Dispute in a Nutshell

1.  This case adds a twist to the now familiar fact pattern of email fraud.

2.  The Plaintiff was and is a company in the US, and a subsidiary of a company in Germany. It was defrauded by persons pretending to be the management and an attorney of its parent company into transferring a sum of US$662,970 (“Sum”) to an account (“Account”) at the Standard Chartered Bank (Hong Kong) Limited (“Bank”) on 26 July 2019.

3.  The Defendant was and is the named holder of the Account.

4.  After the Sum was transferred into the Account, two sums of US$100,000 and US$110,000 were transferred out to two other accounts at the Bank held by an individual and a company (“Third Parities”) on 29 July 2019.

5.  The Plaintiff obtained an injunction order freezing an amount of US$452,935.97 still in the Account on 3 August 2019.

6.  The Plaintiff has recovered US84,978.74 and US$66,000 from the Third Parties.

7.  The Plaintiff claims against the Defendant for the Sum, giving credit for the recovery it has already achieved from the Third Parties. Put in another way, it claims the amount remaining in the Account, plus around US$60,000 more.

8.  The Defendant mounts a simple defence. It says that it has not authorised the Bank to open the Account and has no knowledge of any of the activities therein.

9.  In the circumstances, one may have thought the money still in the Account could be quickly returned to the Plaintiff. However, the Bank required the consent of the Defendant as the named accountholder. The Defendant refused to give it on the basis and its case that it was not a true accountholder.

10.  The Plaintiff applied for summary judgment and judgment on admissions. DHCJ Hall-Jones granted judgment on admissions as to the money in the Account, but not the additional sum of around US$60,000.

11.  The Court of Appeal reversed the judge’s decision. Strictly speaking, the Defendant’s admission was that the money did not belong to it, not that it was holding any money belonging to the Plaintiff. Indeed, the Defendant’s case that it was not the true accountholder logically meant it was not holding anything in the Account, whether for the Plaintiff or for anyone. Moreover, as the Court of Appeal noted, the Defendant had not admitted that the money belonged to the Plaintiff or that the Plaintiff had been defrauded.

12.  Thus, the dispute had to proceed to trial.

The Defence in More Detail

13.  At trial, the Defendant called three witnesses: (1) its sole legal shareholder and director, Ms Zhong Aigong (“Ms Zhong”); (2) a friend of Ms Zhong, Mr Ho Tac Khoanh (“Mr Ho”); and (3) an accountant Mr Chan Cheuk Wai Jack (“Mr Chan”).

14.  Ms Zhong’s evidence is essentially as follows.

(a)  She was and is an experienced property manager.

(b)  Some time in 2018, she wanted to form a company. Mr Ho introduced her to Mr Chan and his accounting firm (“Inno”), which then helped to establish the Defendant. Mr Chan/Inno further agreed to assist the Defendant in opening an account at the Bank, for which services Inno charged HK$14,000.

(c)  On 22 December 2018, Mr Chan through Mr Ho informed her that application papers had been submitted to the Bank and a meeting would be set up for her to visit the Bank’s Kwun Tong branch to proceed with the procedures.

(d)  On 23 December 2018, she and Mr Ho visited the bank branch and met with a staff named Ivan Chan. Various documents were signed, with certain entries left blank. Ivan Chan said he would fill them in later. But on at least one document she filled in her telephone number and Mr Ho’s email address.

(e)  After 3 weeks, she started to enquire with Mr Chan about any progress and Mr Chan replied the Bank had yet to approve the application. After 8 weeks, in around February 2019, when Mr Chan gave the same reply, she became impatient, told him that there was no need to continue, and asked for a refund for the HK$14,000 fees.

(f)  She made no further inquiries of Mr Chan as to whether, when, and how he informed the Bank of the Defendant’s decision to discontinue its application.

(g)  She cannot say why the Bank would know or accept Mr Chan or Inno as representing the Defendant.

(h)  On 1 March 2019, Inno refunded the HK$14,000 fees to her personal account.

(i)  In August 2019, Inno informed her to collect some documents addressed to the Defendant. The documents were for these proceedings. It was then that she learnt about the Account in the Defendant’s name.

(j)  On 18 August 2019, she and Mr Ho went to the Bank’s nearby Kowloon City branch to ask a staff who handled her personal account, and with whom she was familiar, about the Account. Following the bank staff’s suggestion, she called the Police to make a report.

(k)  On 22 August 2019, she called the Bank and was able to speak to Ivan Chan, who told her that the Account was in fact opened on 28 February 2019.

(l)  Since then, she has reviewed the account opening documents which the Bank had on record. Certain entries are inaccurate and/or have been changed. Some signatures purportedly of hers are forgeries. The Defendant’s correspondence address and email address had been altered. She says this must have been in order to enable some other people fraudulently to open and to operate the Account. This logically would mean, and she does allege, that the Bank’s staff, likely Ivan Chan, acted as the “inside person” in the fraud.

15.  At the start of trial, in response to a question by the Court, the Defendant disclosed three statements which Ms Zhong made to the Police on 12 September 2019, 12 March 2021, and 7 November 2023.

16.  The version of events in those statements is largely the same as Ms Zhong’s evidence to this Court. There are, however, at least three significant discrepancies.

(a)  In the statements to the Police, Ms Zhong said that, in around February 2019, Mr Chan said the bank account “could not be opened” (開唔到) therefore she asked for a refund, rather than that Mr Chan said the bank had yet to open the account, so she became impatient etc.

(b)  In the statements, Ms Zhong said that, on 18 August 2019, she went up to a random staff in the Bank’s Kowloon City branch, rather than that she went to that branch to see a bank staff with whom she was familiar.

(c)  In the statements, Ms Zhong did not say that she made a report to the Police on 18 August 2019.

17.  Mr Ho says he is an experienced businessman. His evidence mostly tracks Ms Zhong’s evidence, except that he initially avoided in his witness statement any mention of events on 18 and 22 August 2019.

18.  Both Ms Zhong and Mr Ho were somewhat equivocal about the purpose, intended business, ownership, and control of the Defendant. They tried to distance Mr Ho from the Defendant and to downplay his role and involvement, but have had to make some minimum acknowledgement. One gets a district impression that there is likely a back story. But, absent frankness, one would never know what that may be and the Court cannot take it into account.

19.  Mr Chan’s evidence focuses on the account opening process. In his witness statement, he said he dealt with Ivan Chan. As to the events on and after 13 December 2018, he said:

“5. On the afternoon of 13.12.2018, I received a phone call from [Ms] Zhong, saying that she had finished the account opening matters with [the Bank] and she thanked me for the arrangement. A few weeks later, [Ms] Zhong called me and followed up on whether the account has been opened. I then followed up with the matters with [the Bank’s] staff Ivan Chan, and was informed that the account was not yet opened. I then informed [Ms] Zhong of the same.

6. After a few weeks, in February 2019, the account was still not opened and [Ms] Zhong informed me she did not wait to proceed with the application any further. I then told [the Bank] that [the Defendant] did not want to proceed with the account opening application …”

20.  Under cross examination, Mr Chan gave a rather different and in any event baffling version of events.

(a)  He said he had no direct dealings with Ivan Chan. He liaised through a “middle person”. He could not recall the person’s name.

(b)  This included the time he followed up on whether the account had been opened. Specifically, he did not actually follow up “with [the Bank’s] staff Ivan Chan”. He followed up with a person whom he could not now recall, he believed that person followed up with Ivan Chan and relayed back to him that “the account was not yet opened”.

(c)  He said Ms Zhong knew about this “middle person”.

(d)  He said he did not deal with Ms Zhong; he dealt with Mr Ho.

(e)  Upon being told by Mr Ho that the Defendant did not want to proceed with the application, he called the Bank to discontinue the process.

(i)  He just called the Bank and not anyone specific.

(ii)  He did not write down the name of the person he spoke to and could not now recall his/her name.

(iii)  He did not make any record of the call.

(iv)  He asked the person whether there was any need to sign anything but was told no.

(v)  He did not know whether or how the Bank knew him to represent and be authorized to represent the Defendant.

(vi)  He did not report back to Mr Ho or Ms Zhong that he had informed the Bank to discontinue the process.

21.  I should note two matters. First, there is no evidence, nor is it the Defendant’s case, that Mr Chan/Inno represented or had the authority to represent the Defendant in its application to the Bank. Second, neither Ms Zhong nor Mr Ho referred to any “middle person” in their evidence.

The Parties’ Agreed Issue

22.  The parties submitted an agreed Revised List of Issues dated 25 September 2025. In short, they submit that this case turns on a single issue, viz., “Whether [the Bank] had the Defendant’s authority, actual or ostensible, to receive [the Sum] on the Defendant’s behalf.”

23.  As set out above, the Defendant’s case on lack of authority is that it had discontinued its application to open an account and therefore the Account was never its account. The Defendant’s case is not, e.g., that the Account was validly opened for it, but that some other person usurped the operations of the Account from it.

Determination of the Issue

24.  I reject the Defendant’s case. This is for many reasons.

25.  First, it is inherently unlikely (indeed, very unlikely) that bank staff would fraudulently open an account, especially in the elaborate ways as the Defendant alleges.

26.  Second, it is also inherently unlikely (indeed, inconceivable) that three persons all experienced in business matters would discontinue an application to open a bank account in the casual way that they did.

27.  Third, in particular, Mr Chan’s story of how he informed the Bank of the Defendant’s discontinuation of its application is not capable of belief. Hence, there is no evidence showing the Defendant successfully and properly communicate to the Bank any discontinuation. This suffices for findings of fact, which I do make, that the Bank had authority from the Defendant to open the Account and (as it must follow) that it had authority to receive the Sum into the Account.

28.  Fourth, the discrepancies and changes in the defence evidence, as detailed earlier, are serious and render such evidence unreliable.

29.  Fifth, the Plaintiff has produced evidence from the Bank that, in accordance with established security protocols, when the Bank received instructions to change a client’s correspondence information, it would send an alert to the client’s telephone number. This means that Ms Zhong and the Defendant must have been aware of the changes which they now deny to know.

30.  Counsel for the Defendant argues that evidence of protocols on sending alerts, or even evidence that an alert was lined up to be sent, is not the same as evidence that the alert was actually sent. This is a logical truism, which misses the point. Counsel also argues that the evidence and records from the telephone company are incomplete. This is also true but also misses the point.

31.  The points is that the available evidence suffices to show, in all likelihood, the relevant alert was sent. I so find. It follows that I also find Ms Zhong and the Defendant to have been aware of the changes which they now deny to know.

32.  Sixth, Counsel for the Defendant contends that the Plaintiff should have called Ivan Chan. But the Plaintiff had no ability to procure Ivan Chan to give evidence on its behalf. Likewise for the Bank since, as it explained, Ivan Chan had left its employ. If anything, it is incumbent on the Defendant to call Ivan Chan, since it is the Defendant’s case that he was the key to understanding the case.

33.  Seventh, the Defendant places a lot of reliance on handwriting expert evidence for its contention that certain signatures of Ms Zhong are forgeries. The Plaintiff refers to its expert evidence to the opposite effect. Evidently, both sides’ experts are experts in their field. But their evidence necessarily rests on assumptions about whether Ms Zhong had more than one way of writing Chinese characters, whether she may have deliberately changed her handwriting, and whether she may have authorized someone to sign in her place. Ultimately, this case cannot turn on the handwriting of a few characters. The circumstances provide a much better guide to a determination of the agreed central issue.

34.  Eighth, Counsel for the Defendant makes much hay of a host of alleged blemishes in the account opening documents. With respect to Counsel’s interest in forensic points, they do not add up to much, certainly not enough for a conclusion (against the overall evidence) that the Bank or its staff helped some unknown person(s) usurp and operate the Account.

35.  For the avoidance of doubt, I also find the available evidence to prove the Plaintiff’s case.

Conclusion

36.  In conclusion, I find for the Plaintiff and grant judgment in its favour.

37.  Turning to costs, Counsel for the Plaintiff submitted that costs should be on a heightened scale. I well see the point that the Defendant had dragged this matter out. I also quite agree with Counsel that much of the cross examination of the Plaintiff’s witnesses were unnecessary.

38.  It is, however, within the Plaintiff’s right to not give consent to release of the amount still in the Account. Also, in the end, the trial did not take long, perhaps because this Court had to and did constantly nudged things forward. In the circumstances, I would not deviate from the usual scale for costs. I therefore order that costs of the trial and any previously reserved costs be to the Plaintiff on the usual scale, with (in case necessary) certificate for Counsel, to be taxed if not agreed.