SEYMOUR ENTERPRISES LTD v. LEAD CREATION INTERNATIONAL LTD

DCCJ 602/2017

[2019] HKDC 1684

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 602 OF 2017

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JUDGMENT

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THE PLAINTIFF’S CLAIM

1.  The plaintiff is a limited company incorporated in Hong Kong, and is the holding company holding 94.6% of Airchal SAS (“Airchal”), a limited company incorporated in France.

2.  The plaintiff’s case is that it was defrauded into causing two sums of money, namely €45,000 and €51,500 (the “Two Sums”) to be deposited into the defendant’s bank account in HSBC (the “defendant’s Account”).  The plaintiff thus claims against the defendant for the restitution of the Two Sums.

3.  In September 2014, the plaintiff signed an agreement with a company by the name of Capital Finance Investment Limited (“CFIL”) in which CFIL would invest €10 million in the plaintiff in return of 20% shareholding in the plaintiff as collateral.  A director of CFIL by the name of Griffiths told the plaintiff’s director, Mr De Poorter, that the plaintiff would need to pay capital gains tax to Her Majesty’s Revenue & Customs (“HMRC”) for the investment. The plaintiff was a non-resident, and should be exempt from the tax.  Nevertheless, Griffiths told Mr De Poorter that the plaintiff would need to pay the capital gains tax first and CFIL would refund the tax upon the filing of its tax return.  By a letter dated 13 October 2014, Griffiths personally guaranteed to Mr De Poorter the refund of the capital gains tax.

4.  A person purporting to be Marc Moses of HSBC, an executive director of HSBC Holdings plc emailed Mr De Poorter on 1 October 2014 and told him that HSBC would supervise the transfer of the €10 million investment and that the plaintiff should pay the tax to HSBC UK’s tax collection and processing representatives, Morris & Associates Accountants Limited (“MAAL”).

5.  Mr De Poorter was later contacted by someone purporting to be Anthony Morris of MAAL and was informed that the tax payable was £17,750. 

6.  Airchal and the plaintiff had entered into an intercompany loan agreement in 2013 whereby Airchal and the plaintiff had agreed to provide a credit facility available to each other.  As at 14 August 2013, the plaintiff had lent Airchal €130,000.  As Airchal was indebted to the plaintiff, the plaintiff had instructed Airchal to pay the tax payments on its behalf and such payment would be set-off against Airchals’ indebtedness.

7.  The sum of £17,750 together with charges were deposited into a NatWest bank account in the UK (the “NatWest Account”) by Airchal, at the instruction of, and for and on behalf of the plaintiff.  

8.  Mr De Poorter was then subsequently told by Anthony Morris by email dated 9 September 2014 that HMRC had calculated the wrong amount and that the plaintiff needed to make further tax payments.  A letter purportedly issued by HMRC was also attached to convince Mr De Poorter of the genuiness of the request.  In the meantime, Mr De Poorter had the assurance of two confirmation letters dated 11 October 2014 sent by MAAL and MAAL would refund the whole amount of tax paid plus administrative fee.  On 14 October 2014, Anthony Morris informed Mr De Poorter that the NatWest Account was blocked and all outstanding tax would need to be paid into the account of their “sister company”, which turned out to be the defendant’s Account.

9.  As a result, Mr De Poorter instructed Airchal to transfer €45,000 into the defendant’s Account on 13 October 2014.  Mr De Poorter asked for another guarantee from Anthony Morris to return the tax paid if not processed.  On 14 October 2014, Mr De Poorter was told that previous tax payments had been rejected by NatWest and the sums would be returned to them in due course, but in the meantime, the plaintiff had to re-pay those amounts into the defendant’s Account.  Airchal thus made another transfer of €51,500 on 17 October 2014 into the defendant’s Account on behalf of the plaintiff.  These are the Two Sums we are currently concerned with.

10.  By November 2014, the plaintiff had not received the investment.  Mr De Poorter began to harbour doubts about the genuineness of the tax payment and wrote to the real HMRC, which confirmed that the previous letter received by the plaintiff was fake.  Anthony Morris reassured him that the reply from HMRC was only a standard reply.  Airchal then wrote to the real MAAL on 18 November 2014 and received a reply from a Paul Morris of the real MAAL, informing him that the plaintiff had been scammed and that the real MAAL had not been dealing with the plaintiff.  Airchal wrote to HSBC by letter dated 15 January 2015 and was also told that the plaintiff had been scammed; the real Marc Morris of HSBC had not written to Mr De Poorter at all.

11.  It then became clear to the plaintiff that it had fallen as a victim of a scam.  Police reports were then filed in Hong Kong and the present action was commenced in the hope of getting back the Two Sums.

12.  Mr De Poorter gave oral evidence for the plaintiff.  I find Mr De Poorter to be a consistent, straightforward and honest witness.  I accept his testimony.  Based on the strength of the contemporaneous documents and the oral evidence of Mr De Poorter, I find that the plaintiff was a victim of a fraud practiced on it as set out above and as described in the Re-Re-Re-Amended Statement of Claim.  I also reject any suggestion that the plaintiff was somehow part of the fraud.

13.  The plaintiff’s claim is based upon unjust enrichment.  Parties agree to the relevant principles as set out in the Court of Final Appeal case of Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd[1]. The questions to be asked are:-

(1) Was the defendant enriched?

(2) Was the enrichment at the expense of the plaintiff?

(3) Was the enrichment unjust?

(4) Are any of the defences applicable?

DEFENCE

14.  The defendant put the plaintiff to strict proof of its case.  However, there is no dispute to the fact that the Two Sums were deposited into the defendant’s Account and that the defendant was unjustly enriched. 

15.  Essentially, the defence was two-fold:-

(1) the enrichment was not made at the expense of the plaintiff and the plaintiff’s claim falls foul of the rule against the no reflective loss principle; and

(2) bona fide change of position.

NO RELFECTIVE LOSS PRINCIPLE

16.  It needs to be stated at the outset that the no reflective loss principle defence was only first raised on 6 December 2019, the Friday before the commencement of the trial on the following Monday, 9 December 2019.  It came in the form of a striking out summons taken out by the defendant, to be heard on the first day of the trial.  At the beginning of the trial, Mr Kee, counsel for the defendant, took it as a matter of course that the court was to disregard the lateness and hear the summons.  There was no affirmation in support of the summons, no apology was tendered and no explanation was given to the court for the delay in taking out such application.  

17.  Mr Kee asserted that if the court were to decide the summons to strike-out in the defendant’s favour, court time could be saved as the trial need not go ahead.  However, he did not mention that  huge amount of costs had already been incurred in the preparation of witness statements as well as other preparations for the trial.  Mr Kee further submitted that if the summons were decided in his favour, the defendant should not suffer any adverse costs consequences as it would have won.

18.  A striking out summons should always be taken out promptly and as a rule before the pleadings are closed. Where a statement of claim is being attacked, the application to strike out may in a proper case be made before the defence is filed[2]. The Re-Re-Re-Amended Statement of Claim (before the multiple amendments) was first filed in April 2016.  It was already clear at that time what were the main allegations and basis of the plaintiff’s claim.  “[T]he duty must lie … on a party not to put in, and persist on the basis of, a pleading which offends O.18, r.19. (Consequently), the recipient of an offending pleading cannot be under a greater duty to enforce the rule before the commencement of the trial[3].” The defendant ought to have taken out the application to strike-out at the earliest opportunity.

19.  Despite the delay and the lack of explanation for such delay, ultimately I agreed to hear the summons as the plaintiff had agreed that the court should hear it.

20.  In summary, the defendant’s argument was that the loss claimed by the plaintiff was Airchal’s loss and thus, Airchal should have been the plaintiff and the plaintiff’s claim thus falls foul of the no reflective loss principle. However, as seen from the claim, the plaintiff has clearly pleaded that it was a loss suffered by the plaintiff and that Airchal was only paying the sum for and on behalf of the plaintiff.  No challenge had been mounted during cross-examination on the genuineness of the intercompany Loan Agreement between Airchal and the plaintiff.  The evidence also supports the plaintiff’s case that the loss was suffered by it, and not Airchal:-

(1) The International Transfer Request Form from CFIL cited the plaintiff as a beneficiary, proving that CFIL did purport to promise to make the investment in the plaintiff, and that the plaintiff was the target of the fraud.

(2) Although the invoice from the fake MAAL for payment was issued to Airchal and not the plaintiff, Mr De Poorter explained, and I accept the explanation, that it was done because Airchal could only make an overseas remittance without documents, so the invoice had to be made out to Airchal if Airchal were to remit the funds.

21.  The Court of Appeal had confirmed that late applications for strike out (ie at the commencement of the trial) should only be acceded to in the clearest circumstances, eg where the particulars are lacking and the allegations clearly unsustainable[4].

22.  At the end of oral submissions, I did not consider the merits of the application to be so clear that the trial could be disposed of.  I thus ordered the trial to proceed and my decision on the application to strike out the claim to be dealt with in this judgment.

23.  As analysed above, I find the application to be misconceived as the plaintiff is not suing as a shareholder or creditor of Airchal, but as a victim of a fraud itself.  The facts of the present case are clearly different from that in Landune International Ltd v Cheung Chung Leung Richard[5] and Johnson v Gore Wood & Co (No.1)[6].  I thus dismiss the summons dated 6 December 2019, with costs of and occasioned by the summons to the plaintiff in any event, with certificate for counsel.

24.  Consequently, I find that the defendant had been unjustly enriched at the expense of the plaintiff.  The next question is whether the defence of bona fide change of position is available to the defendant.

BONA FIDE CHANGE OF POSITION

The law

25.  There is no dispute on the legal principles in relation to the defence of bona fide change of position.  Parties agree to the principles as set out in Lipkin Gorman v Karpnale Ltd[7] and Globenet Droid Ltd v Hong Kong Hang Lung Electric Co (a firm)[8].  The defence of bona fide change of position was available to a person whose position had so changed that it would be inequitable in all the circumstances to require him to make restitution.  Where the payee had grounds for believing that the payment to him might have been made unjustly in that it might be infringing the rights of another, but could not be sure, good faith might dictate that an enquiry be made of the payer, the nature and extent of which would depend on the circumstances. 

26.  In relation to the degree of knowledge that would forfeit the defence and what is “good faith”, the Court of Appeal in the case of Niru Battery Manufacturing Co v Milestone Trading Ltd[9] approved[10] the trial judge’s statement that:-

“I do not think that it is desirable to attempt to define the limits of good faith; it is a broad concept, the definition of which, in so far as it is capable of definition at all, will have to be worked out through the cases. In my view it is capable of embracing a failure to act in a commercially acceptable way and sharp practice of a kind that falls short of outright dishonesty as well as dishonesty itself. The factors which will determine whether it is inequitable to allow the claimant to obtain restitution in a case of mistaken payment will vary from case to case, but where the payee has voluntarily parted with the money much is likely to depend on the circumstances in which he did so and the extent of his knowledge about how the payment came to be made. Where he knows that the payment he has received was made by mistake, the position is quite straightforward: he must return it. This applies as much to a banker who receives a payment for the account of his customer as to any other person: see, for example, the comment of Lord Mersey in Kerrison v Glyn Mills Currie & Co (1912) 81 LJKB 465, 472. Greater difficulty may arise, however, in cases where the payee has grounds for believing that the payment may have been made by mistake, but cannot be sure. In such cases good faith may well dictate that an inquiry be made of the payer. The nature and extent of the inquiry called for will, of course, depend on the circumstances of the case, but I do not think that a person who has, or thinks he has, good reason to believe that the payment was made by mistake will often be found to have acted in good faith if he pays the money away without first making inquiries of the person from whom he received it.” (emphasis added)

27.  It is thus clear that examples of lack of good faith include failures to act in a commercially acceptable way or sharp practice of a kind that falls short of outright dishonesty.  Bad faith or dishonesty is not required to defeat the defence.  Where the payee has grounds for believing that the payment to him may have been made by mistake, but cannot be sure, good faith may dictate that an inquiry be made of the payer.

The defendant’s case on bona fide change of position

28.  The defendant says that it is a company carrying on the business of trade in textiles and fabrics with a related company in Nigeria, Nicholas International Textile Company Limited (“NITCL”).  NITCL was responsible for marketing and selling textiles and fabrics in Nigeria.  When the sales were not carried out in cash, the defendant would receive payments for and on behalf of NITCL from its customers using the defendant’s Account.  In summary, the defendant says that the Two Sums had been paid out to a customer called Habu in good faith.  Habu claimed to have overpaid NITCL by way of remittance and demanded NITCL to refund the overpayment in cash in Nigerian currency Naira (N).  The defendant’s staff, namely Mr Tommy Luo, at the instruction of NITCL and the defendant acceded to the request and paid Habu.  The defendant says that despite the fact that the Two Sums were deposited into the Defendant’s Account, the defendant was not put on enquiry.

Transaction with Habu

29.  Mr Tommy Luo (“Mr Luo”) gave evidence for the defendant and said that he had worked with NITCL for 3 years in Nigeria.  He was responsible for the marketing and sales in NITCL.  Ms Wendy Weng (“Ms Weng”) also gave evidence for the defendant.  She had worked for NITCL for 2 years in Nigeria and was the ex-manager and the person in charge of NITCL during that time.  It is noted that both Mr Luo and Ms Weng were employees of NITCL, not the defendant.  No employee or representative of the defendant gave oral evidence.

30.  Ms Weng said the defendant’s monthly turnover in cloth trading was in the region of millions in US dollars.  Every month there would be bales of cloth being shipped from Zhejiang to Nigeria for sale.

31.  It was Mr Luo’s evidence that he was the person who drafted the order agreement dated 13 October 2014 between Habu and NITCL (the “Agreement”).  Mr Luo said that usually Ms Weng would have been the person in charge of drafting the order agreement.  However, during the period between 28 September 2014 to 23 October 2014, Ms Weng was away from Nigeria for wedding preparations. Before she left, Ms Weng had already finalized all the details of the transaction between NITCL and Habu.  After Ms Weng left, Mr Luo took over to follow-up.

The agreement

32.  The Agreement was a one-page document dated 13 October 2019 with a total of 7 clauses in it.  The clauses are set out hereinbelow:-

(1) ORDER FOR PRINTING WAX

(2) PRICE AND QUANTITY

(236BALE*600Y*$1.22/YARD)

(3) THE DEPOSIT MONEY MUST REACH $17,923 (10%) OF THE TOTAL MONEY $172,752

(4) WHEN THE GOODS REACH KANO CUSTOMER MUST PAY ALLL THE REMAINING BALANCE OF THE ORDER TOTAL MONEY $154,829.

(5) COMPANY WILL ONLY ALLOW CUSTOMER 30 DAYS TO PAY THE REMIANING BALANCE BEFORE THE GOODS ARE RELEASED TO CUSTOMER.

(6) IF CUSTOMER DO NOT PAY ACCORDING TO THE ORDER POLICY, COMPANY HAS THE RIGHT TO SELL THE GOODS TO OTHER CUSTOMERS AT KANO.

(7) FURTHERMORE, IF (6) HAPPEN, COMPANY CAN REMOVE ALL DEPOSIT THE CUSTOMER PAID AND DO NOT REFUND.

Underneath the 7 clauses, Habu, Mr Luo and a “Guarantor” by the name of Muhammad Sani signed.

33.  Mr Luo says that on 13 October 2014 (the date the Agreement was entered into), Habu had paid N2,998,500 (equivalent of US$17,923) in cash as deposit for the order, and had remitted on 30 October 2014 a further US$150,000 into the defendant’s Account, leaving a remainder of US$4,829 purchase price unpaid.

34.  In the meantime, Ms Weng said she left Nigeria for China on 28 September 2014 to prepare for her wedding and was in Bali from 16-23 October 2014 for wedding photos.  She said she was contacted by Habu on WhatsApp in October 2014 about his remittance of the remainder of the purchase price.  She received an email from a “Saminu” from the email address of saminutaambu@yahoo.com dated 14 October 2014 claiming that a remittance of US$950,974 had been made by Habu. Ms Weng checked the defendant’s Account but did not find such remittance.  She then emailed the statement of the defendant’s Account (in US$ dollar) to this Saminu to show him that no such remittance had been made.

35.  Between 16-23 October 2014, Ms Weng said Habu kept messaging her via WhatsApp in relation to remittances having been made into the defendant’s Account.  As the finance department staff could not see the remittance, Ms Weng only asked Habu to wait until such remittance shows up in the defendant’s Account.

36.  On 21 October 2014, Ms Weng received another email from Saminu, claiming that  both the €45,000 and €51,500 were already in the defendant’s Account. However, Ms Weng said she did not check that email during her time in Bali.

37.  On 6 November 2014, Habu went to the office of NITCL and claimed that he had overpaid NITCL by remittance and demanded a refund.  Mr Luo checked the US$ account and did not find any over-payment, and refused to offer a refund. However, Habu insisted he had overpaid and went to the office of NITCL again on 7 November 2014 with the Nigerian police.  Mr Luo was also taken and detained by the Nigerian Police for a day.  It was then that Mr Luo was told the overpayment was in two sums of €45,000 and €51,500.  He then printed out the defendant’s US$ account and Euro account and on 8 November 2014 handed it over to the Nigerian police.

38.  On 10 November 2014 Habu went to the office of NITCL and demanded the delivery of the goods he ordered under the Agreement.  Mr Luo said he refused to release the goods as there was still an outstanding amount of US$4,829 unpaid.  Habu then paid N1,995,000 in cash (equivalent of US$4,829) to NITCL and Mr Luo arranged for delivery of the goods on the same day to Habu.

39.  On 14 November 2014, Habu went again to the office of NITCL to resolve the issue of the overpayment.  At first, Mr Luo, at the instruction of a Mr Yang, the general manger and the person in charge of NITCL asked Mr Luo to return the remittance to the original remitter (Airchal).  However, Habu refused, claiming that it would confuse the accounting between him and his agent.  Mr Yang then agreed to return the equivalent of the Two Sums in Naira in cash (N20,580,000) to Habu.  Mr Yang then transferred the Two Sums from the defendant’s Account (in euro) into the defendant’s Account (in US$) at the equivalent of US$119,590.59, and US$119,590.59 was transferred from the defendant’s Account (in US$) into NITCL’s account to off-set the cash payment made by NITCL to Habu in Naira.

40.  Mr Luo said he did not think there was a problem with the repayment as the Nigerian police had witnessed it.

ANALYSIS – MR LUO’S EVIDENCE: TRANSACTION BETWEEN HABU AND NITCL

41.  I have no hesitation in finding on a balance of probabilities that the defendant’s version of a transaction between Habu and NITCL as told by Mr Luo and Ms Weng is unbelievable and untrue:-

(1) Mr Luo, despite claiming to have worked in NITCL in Nigeria for 3 years, was unable to tell the court the address of NITCL in Nigeria.  He could only say it was located in a market in Kano.  When I asked for the street name, Mr Luo was unable to say and claimed that they seldom went out as it was a dangerous city.  However, he admitted that he lived away from the office of NITCL and had to commute daily.  I find it unbelievable that he could not even recall the street name if he had indeed worked there for 3 years.  I further asked what the telephone number of NITCL in Nigeria was.  Mr Luo was unable to answer, saying it had been too long ago.  I then asked what was the telephone country code of Nigeria.  Mr Luo was also unable to answer.

(2) The Agreement was a one-page document with only 7 clauses in it.  No specification of cloth was mentioned in the Agreement.  Mr Luo said that NITCL traded cloths in various styles, colours and patterns.  Mr Luo and Ms Weng both said that the monthly turnover of NITCL amounted to millions in US dollars.  It is unbelievable that for a company of such scale they would not even specify the specification of the goods ordered in an order agreement.

(3) No company chop was affixed on the Agreement.  On the face of it, the Agreement was only signed by Mr Luo as the company manager, there was no mention that he was signing for and on behalf of NITCL.

(4) As the person responsible for drawing up the Agreement, Mr Luo was unable to explain who was the “Guarantor” who signed under the Agreement.  At first, he said the Guarantor was the one who dealt with the government authorities.  Later, he said the Guarantor was the person who ensured the safety of the employees of NITCL so that they would not be arrested and extradited out of Nigeria.  When this court pointed out that there was no correlation between carrying out the terms of an order agreement and being arrested, Mr Luo changed his answer to say that the Guarantor was an employee of NITCL and acted as a witness to the order agreement.  When this court further pointed out to him that his explanation was different from what he said in his witness statement (namely, the Guarantor was to guarantee the compliance of the customer), Mr Luo was unable to explain why a completely different explanation was given.  It was clear that he had no idea what was the role of the Guarantor.

(5) Mr Luo also could not provide any satisfactory explanation on why he put down “address” underneath the Guarantor’s signature and yet it was left blank. He first said he could not remember and he was not clear.  Then he said at the time the Guarantor felt it was not important and thus he forgot to write it down.  It is unbelievable that a contract amounting to US$172,752 would be so badly drafted and executed with unexplained blanks.

(6) Mr Luo then said that for every order agreement, the format would be different and there was no standard form.  Yet he admitted that he had not received any precedents from Ms Weng and that he had only drawn up not more than 3 of these order agreements.  Mr Luo could not explain why he could say that every order agreement was different.

(7) Mr Luo said that Ms Weng went through the clauses in the Agreement with him via whatsapp or phone.  However, if Ms Weng was the person who dealt with such order agreements previously, she could have just given him a precedent to follow, instead of asking him to draft one from scratch.  Mr Luo agreed that it was strange and could not provide any explanation to why Ms Weng did not do so. 

(8) Mr Luo claimed that Habu remitted US$150,000 deposit into the defendant’s Account on 30 October 2014.  The receipt to Habu for this payment was dated 30 October 2014.  At first, Mr Luo denied that the receipt had been backdated. However, it was his oral testimony that he only issued a receipt to Habu after he had checked that the sum had been deposited on 6 November 2014.  So either Mr Luo lied about having issued the receipt on 6 November 2014, or that he had back-dated the receipt for the US$150,000.  Mr Luo is not a reliable witness.

(9) Mr Luo claimed that on 10 November 2014, Habu paid in cash the remainder of the purchase price for the release and delivery of the goods.  However, at that time Habu was already claiming that he had overpaid NITCL a substantial amount. There seemed little reason why Habu would pay even more to the defendant.  I reject Mr Luo’s explanation that Habu did so as he was anxious to obtain the goods.  Habu could have just asked Mr Luo to offset the outstanding payment of US$4,829 from the alleged overpayments.

(10) Furthermore, when Habu paid N1,995,000 (equivalent of US$4,829) as the remainder of the purchase price, the exchange rate adopted was abnormally high at US$1 : N413. This rate is to be compared with the rate of N2,998,500 (deposit paid by Habu in cash on 13 October 2014) to US$17,923, which is US$1 : N167.  In a month’s time, the exchange rate seemed to have changed from US$1: N167 to US$1 : N413. 10 days later, on 20 November 2014, the exchange rate adopted when Mr Luo paid over the N20,580,000 cash (equivalent of US$119,950) came out to be US$1 : N172.  When asked why there was such a drastic change of the exchange rate in the month between October and November 2014, Mr Luo said it was possible that the exchange rate could change from day to day drastically.  However, this was contradictory to what he said at the beginning of his evidence, that before 2013, it never exceeded US$1 to N180. Mr Luo’s evidence in this regard is unreliable and I reject it.  The historical exchange rate also did not suggest there was any major change in the exchange rate during that period.  I find that the amount of N1,995,000 should at that time be equivalent to around  US$11,946 (at US$1 : N167) and thus could not have represented the remainder of the purchase price (which was US$4,829).

(11) Mr Luo’s evidence was that he refunded the amount sought by Habu in cash.  That amounts to N20,580,000, which, even in the highest denomination of N1,000 note, amount to 20,000 bank notes.  Mr Luo admitted at cross-examination that it was dangerous for such large amount of cash to change hands.  No satisfactory explanation was given as to why the payment could not have been done by bank transfer to Habu, where a record could be found for the transfer.

(12) Mr Luo’s memory was unreliable.  In his witness statements, there were about three instances where he said he carried N20,580,000 in cash to Habu in the presence of the police at the Nigerian Police Headquarters.  However, on the witness stand, he repeatedly said that the refund was done in a cash room, which was near the bank and nowhere near a police station.  This was completely different to the version in the witness statements.  Mr Luo could not provide an explanation as to why he said repeatedly in the witness statements that the cash was handed over to Habu in the police headquarters.  I find it unbelievable that Mr Luo would forget about where an incident involving the handing over of nearly US$120,000 in cash took place, if indeed it did happen.

(13) Throughout the course of his oral testimony, Mr Luo changed his evidence as it suited his story.  He was unreliable and his evidence is inherently improbable.  I have no hesitation in rejecting Mr Luo’s  evidence.

ANALYSIS – MS WENG’S EVIDENCE

42.  In relation to the allegation of Habu having overpaid the defendant, Ms Weng’s evidence was that despite the emails from Saminu, it did not occur to her that the Two Sums remitted were in Euros and that is why she did not check the euro account of the defendant’s Account in Euro.  I find the explanation unreasonable, if not unbelievable.

43.  First of all, the references to euro were clear: the email dated 14 October 2014 from Saminu had the heading: “Fwd: Important Info. For Alh Abu Zakiru from kano €45,000 which is already in Ur account $65000”.  The body of the email also referred to the attachment of €45,000.  The attachment to the email is the international transfer detail issued from Societe Generale Bank showing a transfer was made in favour of the defendant in the sum of €45,000. At first Ms Weng said she did not know what the document was.  When this court asked her if it was her evidence that she had never seen a remittance slip in her two years of working in international trading, she said she did not understand the document as it was in French and did not pay attention to it.  I find Ms Weng to be evasive and dishonest when giving evidence in this regard. The attachment, although in French, clearly had the name of the defendant in English written on it and the sum of €45,000 was also mentioned.  If Ms Weng had read it, as she should have, she should have been aware that it concerned payment of a Euro sum into the defendant’s account.

44.  It has to be remembered that when this email was received, it was Ms Weng’s evidence that she had already received WhatsApp messages from Habu urging her to check for remittances.  It is unbelievable that under these circumstances Ms Weng could have overlooked the heading, the body as well as the attachment of the email.  I find Ms Weng to be dishonest on this issue and reject her explanation.

45.  Even if Ms Weng did overlook the 14 October 2014 email from Saminu, there was a further email dated 21 October 2019, also from Saminu, with the heading: “From Abu zakiru kano also I have already send the telex confirmation of the first payment of €45,000 Euro and the second one of €51,500.  So the total amount is 96,500 Euro Fwd: SWIFT Info”.  The body of the email referred to an attachment of telex confirmation of €51,500 being in the defendant’s Account.  Again, an attachment of an international transfer detail issued from Societe Generale Bank showed a transfer was made in favour of the defendant in the sum of €51,500 on 20 October 2019. 

46.  Ms Weng claimed that she did not read this email as she was in Bali and only read it upon her return to China on 24 October 2019.  Ms Weng said she did have email access in Bali but she chose not to check it  when she was on vacation.  I find Ms Weng’s action to be unreasonable: Ms Deng was the person in charge of NITCL in Nigeria.  She was the person in direct contact with Habu.  She was given remote access of her work email by NITCL.  Clearly she was expected to tend to NITCL matters when necessary, even when she was on leave. Instead, despite her evidence that she had been urged by Habu on WhatsApp repeatedly to check the remittance between 16-23 October 2019, she failed to do so.  If this was indeed what Ms Weng did, I find it to be unreasonable commercial conduct on her part. 

47.  Furthermore, HSBC had confirmed by letter dated 26 November 2018 that in general, if an inward telegraphic transfer was credited into a customer’s account, a payment advice would be issued to the customer.  Depending on the delivery method the customer had chosen, HSBC would mail a paper advice to a customer’s correspondence address on the next business day, or send an eAdvice to the customer’s Business Internet Banking or designated email address on the next calendar day.  No challenge was made to this letter.  There is thus prima facie evidence that the defendant (be it through the Finance Department, or other staff of the defendant) should have received such notice of the remittance of the Two Sums into its Account one business day after the remittance was received.  There was no satisfactory explanation to rebut this evidence and to prove that the defendant had in fact failed to receive such advice from HSBC.

48.  As a result, I find that Ms Weng and the defendant should have found out about the euro remittances into the defendant’s Account latest by 21 October 2014.

49.  It was Ms Weng’s evidence that she did not know Saminu.  Yet she admitted that she had responded to Saminu’s email and sent over the defendant’s US$ account statement to him.  Ms Weng’s explanation was that she believed Saminu to be an employee, agent or customer of Habu and it was normal practice for NITCL to respond directly such agent/customer.  Sometimes, Ms Weng said, NITCL would even accept payment from unknown persons purporting to settle the contract sum.  I do not accept this explanation.  In her reply email to Saminu on 14 October 2014, Ms Weng did not ask Saminu who he was nor did she address it to “Dear Sirs” or with no address.  Instead, she wrote: “ALH, How are you. Here is the statement, pls check it.”  We have no evidence on what ALH stands for, but clearly, Ms Weng knew the person using that email address, whether it was Habu or Saminu or someone else. 

50.  Further, it is inconceivable for a company with turnover as big as NITCL to just accept payment from any party.  Nowadays with anti-money laundering measures in place, such conduct would often be subject to investigations and enquiries by banks.  Moreover, an account statement is important information to a company, yet Ms Weng claimed that she would freely send it to someone whom she had never met nor spoken to before. 

51.  Applying the principles of good faith to the facts herein, I find that Ms Weng, Mr Luo as well as Mr Yang of NITCL or of the defendant had failed to act in a commercially acceptable way.  In the present case, if they had genuinely believed the payment was made by the remitter by mistake, good faith would dictate them to make an inquiry to the payer, in this case, Airchal.  Mr Luo clearly said he and Mr Yang did have doubts, but instead of making inquiries with Airchal, they simply made the payment to Habu recklessly, if not deliberately.

52.  Consequently, the defence of change of position is lost to the defendant.

CONCLUSION

53.  I find that the defendant was unjustly enriched at the expense of the plaintiff, and the defendant has no defence available to it.  Consequently, the plaintiff is entitled to a claim against the defendant for €96,500 with interest and costs.

ORDERS

54.  (1) The defendant do pay the plaintiff €96,500 with interest thereon in accordance with ss.49 and 50 of the District Court Ordinance (Cap 336).

(2) The defendant do pay the plaintiff’s costs of the action, including the costs of and occasioned by the defendant’s summons dated 6 December 2019, to be taxed if not agreed, with certificate for counsel.  Unless the parties make an application to vary the above costs order nisi within 14 days from the date of this order, it will be made absolute after the expiry of the said 14 days.