LEI YUKANG v. LIN YOUJUN

DCCJ 966/2020

[2023] HKDC 568

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 966 OF 2020

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DECISION

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Introduction

1.  This is a constructive trust claim, based on a typical allegation of telephone fraud.

2.  In his Statement of Claim (“SoC”), the plaintiff (“P”) alleged that due to a fraudulent misrepresentation, made to him over the phone on 21 December 2018, to the effect that he had become the suspect in a money laundering criminal investigation in Mainland China, he transferred USD 61,500 (ie, around HKD 479,700) to the defendant (“D”).

3.  P wanted his money back. P issued the Writ in this action on 17 March 2020, ie, over 3 years ago, against D, and no one else, alleging constructive trust. There were orders for substituted service, which P had complied with. D never filed any acknowledgement of service.

The Summons

4.  There is before me an Order 19 Summons (“the Summons”), curiously only taken out by P on 20 January 2023 (ie, almost 3 years after his issuance of the Writ in this action), asking for, inter alia, a declaration, and the following order: -

“An order for the immediate release and return of the Funds from the Account… held by the Defendant, Lin Youjun, at the Bank of China (Hong Kong) Limited, to the Plaintiff.”

5.  By a 2-page skeleton lodged by Mr K P Lam, Solicitor for P, on 26 April 2023, I was asked to grant the above order forthwith.

My View

6.  Having read all the documents in the hearing bundle, I noticed there was no suggestion, in any way or form, that the bank in question had been duly notified of the order which P had asked me to make. The bank was never made a party to this action, and there was no letter from the bank indicating their position in this matter. Whilst there was an allegation in §13 of the SoC that on 26 February 2019, Mr K P Lam, Solicitor for P, had written a letter to the bank, and the bank had replied, that was over 4 years ago, and the correspondence had never been placed in the hearing bundle.

7.  I therefore went through the court file to see whether I could locate copies of the alleged correspondence. There was an exhibit, marked “LY-6”, filed into court on 13 April 2020 for an unrelated reason, where one could in turn see a letter from Bank of China (Hong Kong) Limited to Mr K P Lam, Solicitor for P, dated 27 February 2019 (“the 27 February 2019 Letter”), the material parts of which read as follows: -

“Relying on the representations made in your said letter, we have put in place a temporary measure to prevent the disposal from the Account of funds up to the Amount above. Save that the whole of the Amount still remains in the Account, we can disclose no further details of the Account without the Account Holder’s consent or a Hong Kong court order. Please note that this is only a temporary measure. We give no assurance of any credit balance in the Account or that this temporary measure will last for any duration. We may at our absolute discretion lift the measure at any time without further notice. We will give our full cooperation when we receive instructions from Hong Kong enforcement authorities and will comply with a Hong Kong Court order that is binding on the Bank. We reserve all rights for claims to damages for any liability, loss or reasonable expenses arising from our reliance on your representations regarding this matter.” (Emphasis added)

8.  For completeness, I should add that there was a separate letter from the bank, dated 11 April 2019 (ie, over 4 years ago), in which the bank refused to assist P in serving documents on D. I could find no further letter from the bank in the court file.

9.  I found that unusual.

10.  According to what I have read, P was fully aware D had been out of this jurisdiction, in Mainland China, staying unresponsive, since 17 March 2020, when P issued the Writ. It is now May 2023. I would have thought P would expect D to remain wholly unresponsive going forward, so that the so-called “immediate release and return” demanded by P would have to be effected by the bank itself, without D’s participation in any way or form. That being the case, and in light of the contents of the 27 February 2019 Letter, I would have thought P would be quite keen to be in constant communication with the bank, and to seek the bank’s views on the order I was asked to make.

11.  At the start of the oral hearing for the Summons earlier today, I specifically asked Mr K P Lam, Solicitor for P, whether P was trying to get D, or the bank, to transfer the funds in questions back to him, and if the answer is the bank, why I should make such an order today, when the bank was never a party, and there was no updated indication, in any way or form, from the bank, that it would consent to such an order being made, or take a neutral stance in this matter.

12.  According to Mr K P Lam, Solicitor for P, he wanted the bank (instead of D) to be effecting the transfer. He acknowledged he had never served the Summons on the bank, or otherwise sought the bank’s comment on the order he asked me to make, but suggested to me that that would not be a problem at all, because I could make the order first, let him serve the order on the bank, and leave it to the bank to decide whether to come to me to have it set aside.

13.  In support of his argument, Mr K P Lam, Solicitor for P, drew my attention to the decision of Madam Recorder Lisa K Y Wong SC (as Her Ladyship then was) in Mesirow Financial Administration Corporation v Best Link Industrial Co, Limited (HCMP 1846/2015, 25 January 2016), where one could see that Her Ladyship made an order for “the immediate release and return” of the funds in question, apparently without receiving evidence from the bank, or joining the bank as a party. Mr Lam suggested to me that the facts of our present case are very similar to the facts in that case, so that I should also do something similar in our present case.

14.  With the greatest respect, I disagree with Mr Lam on this point. In Mesirow, the money transfer took place on 8 June 2015. The originating summons was promptly issued on 30 July 2015. The hearing of that matter took place on 10 September 2015. With the hearing being so close in time to the key events, Her Ladyship was in that case entitled to assume nothing substantial should have changed in the meantime. In our present case, over 4 years have elapsed since the bank issued the 27 February 2019 Letter to Mr Lam. I cannot simply assume nothing substantial happened during this period.

15.  If I may borrow the very wise words of DHCJ Jonathan Chang SC in Kuo Benjamin Yung Hsiang v Xu Meiyi [2022] 5 HKLRD 111 [2022] HKCFI 3007 (at §18): -

“… Even though the plaintiff is the victim of a fraud, the Court must adopt a principled and disciplined approach and act within permissible legal boundaries in deciding the appropriate orders to be made, especially in the absence of the defendant…”

16.  I have further considered whether I should grant a declaration today. In some scenarios, perhaps those similar to the scenario in Concrete Waterproofing Manufacturing Pty Ltd v Changxuan [2020] 4 HKLRD 166 [2020] HKDC 547 (at §16 per HHJ Phoebe Man), that could be the correct thing to do. Declaratory reliefs may affect issues of priority when there are other creditors, and issues of priority could be important. In other scenarios, such as the one in Top One International (China) Property Group Co Ltd v Top One Property Group Ltd [2011] 1 HKLRD 606 (at §78 to §85 per Fok J), granting declarations without a trial could be inappropriate.

17.  I also asked Mr K P Lam, Solicitor for P, whether I should be granting any declaration today and if so, the reasons. He drew my attention to Mesirow and said I should. For the same reasons as above, I have some reservations whether I should do so today, not knowing whether anything substantial had happened during the last 4 years.

18.  In the circumstances, I would adjourn the Summons sine die, with liberty to restore it before any Judge of the District Court for a 2-hour hearing, and with costs reserved. Adding some consequential directions at the suggestion of Mr K P Lam, Solicitor for P, the order which I do make today is: -

(1)  The Summons be adjourned sine die, with liberty to restore it before any Judge of the District Court for a 2-hour hearing;

(2)  Leave be granted to P to file an affirmation in support of the Summons before 4pm on Tuesday 1 August 2023, should P wish to do so;

(3)  P’s Solicitors do draw up, file and serve this order;

(4)  Leave be granted to P to serve this order, the said affirmation in support, if any, and all future documents for the hearing to be restored, on D, at the addresses set out in the Order of Master Dominic Pun dated 14 February 2023, by way of substituted service, via Ordinary Post, with such service being deemed effective; and

(5)  Costs be reserved.

19.  I do encourage Mr K P Lam, and of course P himself, to make further inquiries, and to place the result of such inquiries before the court in a proper manner.

20.  Practitioners are reminded of what was said by DHCJ Herbert Au-Yeung in JTM324 Strategic Advisors, Inc v Permex Co Ltd [2023] 1 HKLRD 1437 [2023] HKCFI 403 (at §18). A court of law is not a rubber-stamp. All parties to all civil actions and their legal representatives should assist the court by making all necessary inquiries, and placing all relevant materials before the court, in a timely and helpful manner. In all telephone fraud and email fraud cases in particular, legal practitioners need to be able to look at their cases from the court’s perspective and address all concerns which the court may have.

21.  I do thank Mr K P Lam for his very able assistance.