EVERGRAND ENERGY (HK) LTD v. HUA DA IMPORT AND EXPORT CO LTD AND ANOTHER

DCMP 2885/2020

[2021] HKDC 261

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2885 OF 2020

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JUDGMENT

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1.  By the original summons filed on 8 September 2020, the plaintiff seeks a declaratory relief against the 1st defendant in respect of US$37,320.  Having read the affirmation of Mr Wong Chi Ming, the sole director and general manager of the plaintiff dated 8 September 2020 and the supporting documents, I am satisfied that this is an appropriate case to proceed under Order 28 rule 4 of the Rules of District Court which provides the court with jurisdiction to decide the matter summarily and an order can be made to dispose of the entire proceedings in the absence of defendants.  In this case, the defendant is absent. 

2.  Having read the affirmation of service by Lee Pui Ching Melody dated 3 December 2020, I am satisfied that effective valid service on the defendant of the relevant court documents in due compliance with the requirements of service had been made.  I am satisfied that there have been valid service on the defendant on both the originating summons and the notice of appointment to hear the originating summons. 

3.  The defendant, though having been served with the originating summons and the affirmation in support, has failed to file any acknowledgement of service within the time limit for so doing under Order 12 rule 5 and 9, or at all. 

4.  Under Order 28 rule 4(1) allows the court to make such an order in the favour of the plaintiff as the nature of the case may require.  I have considered the issues before me and I find it appropriate to dispose of the action by originating summons summarily where there are no triable issue and I see no triable issue in this case. 

5.  The material facts of the plaintiff’s case is set out in Mr Wong Chi-ming’s affirmation.  Essentially, Mr Wong is a victim of a fraud scheme.  Under the deception of fraudulent e‑mail, the plaintiff had release funds in the accounts of the 1st defendant on 26 July 2018.  Payment was made on 27 July 2018.  The plaintiff was in the belief that the fund was to fulfil his contractual obligations with a vendor. However, the vendor had informed the plaintiff that no funds had been received and the plaintiff subsequently found out that the e‑mail was a fraudulent e‑mail account and the account was also an account not under the vendors.  The holder of the bank account has been joined as the 1st defendant and the bank has been joined as the 2nd defendant. 

6.  By a letter dated 31 December 2020, the 2nd defendant is prepared to adopt a neutral stance in the plaintiff’s application for judgment against the 1st defendant in respect of these applications.  I am satisfied, having considered the authorities, that a declaratory relief is appropriate in these cyber fraud cases and on the pleadings a case of unjust enrichment.  I have considered the case Concrete Waterproofing Manufacturing Pty. Limited v Changxuan Company Limited [2020] 5 HKC 137. 

7.  In respect of a declaratory relief, the plaintiff would also have to satisfy the court that there is a genuine need for such a relief.  I have considered the case Mesirow Financial Administrative Corporation v Best Link Industrial Company Limited, HCMP 1846/2015 by Recorder Lisa K Y Wong, SC (as she then was), in which it deals with a case where property was obtained by fraud, equity imposes a constructive trust on fraudulent recipients so that property is recoverable and traceable in equity. At paragraph 35, it states:-

“As stated in Hong Kong Civil Procedure 2016, Volume 1, at paragraph 15/16/2, the rule that the court will not make a declaration by consent or in default without a trial is a rule of practice and not of law. It is not inflexible. The paramount duty of the court is to do the fullest justice to the plaintiff to which he is entitled. The practice will thus give way where the plaintiff has a genuine need for declaratory relief which the court can properly grant on the merits of the case.”

8.  The learned Recorder refered to the case Lai Wai Kuen v Wong Shau Kwong [2004] 4 HKC 528 per Lam J at paragraph 6. 

9.  At paragraph 38:-

“So the only question left was whether the plaintiff showed a genuine need for such relief. I believe it did. The right asserted by the plaintiff was one of title to property. The funds were in equity the plaintiff’s money. A mere order against the defendant for the return of the sum that it had deprived the plaintiff of, without more, would have put the plaintiff in the position of an unsecured judgment creditor of the defendant. Such an order would not per se have given the plaintiff any prior or specific right over the funds. Very little was known about the defendant. In particular, it was not known if the defendant had any such creditors and, if so, whether it had sufficient assets (other than the funds in the account standing to its name) to satisfy its debts and liabilities to those other creditors. It would have been grossly unfair and potentially prejudicial to the plaintiff if it had had to race against other creditors of the defendant for the funds in execution of monetary judgment. A declaration by the court that the funds were held on trust for the plaintiff was necessary to earmark the funds as the plaintiff’s property and put the same out of the reach of other creditors of the defendant.”

10.  The plaintiff in this case is in a similar position as the plaintiff in the Mesirow Financial Administrative Corporation case and I find that the plaintiff does have the genuine need for such a declaratory relief. 

11.  I hereby make the following order:-

(1)  Judgment be entered against the defendants for the sum of US$37,320. 

(2)  A declaration that the 1st defendant is liable to the account to the plaintiff for the sum of US$37,320 as constructive trustees. 

(3)  A declaration that the sums of US$37,320 remaining in the bank account of the 1st defendant held at the 2nd defendant under account number 478/000268691 are funds held on constructive trust by the 2nd defendant for the plaintiff. 

(4)  The 1st defendant do within 7 days from date of service of the order execute such documents as may be reasonably required to instruct the 2nd defendant to release and return to the plaintiff the sum of US$37,320 which is declared to be held by the 1st defendant as constructive trustee, failing which the plaintiff be at liberty to apply for an order under section 38A of the District Court Ordinance, Cap 336, to recover the sum of US$37,320. 

(5)  The 1st defendant do pay the plaintiff’s cost of and incidental to these proceedings to be taxed if not agreed. 

12.  I thank Ms Ip for her succinct submission.