CHIU JUI JUNG v. LEGEND DYNAMIC SOLUTION LTD

DCMP 2861/2019

[2019] HKDC 1701

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2861 OF 2019

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DECISION

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The plaintiff’s claim

1.  The plaintiff is a resident in Taiwan.  It is the plaintiff’s case that he fell victim to a fraudulent scheme and was induced into paying various sums to fraudsters.  One of the payments amounted to US$30,000 which was remitted into the bank account of the defendant with Bank of Communications (Hong Kong) Limited (the “Defendant’s Account”) on 30 April 2018.  It is this sum that the court is concerned with in this application.

2.  In mid-March 2018, the plaintiff became acquainted with someone by the name of 鐘曉月(the “Fraudster”) through Facebook and began having frequent conversations with her on Line, the messaging application.  In April 2018, the Fraudster convinced the plaintiff to set up an online gold investment account on a website operated by a company named Gold Glory.  From April to May 2018, the plaintiff was induced into remitting various sums of money to Gold Glory for the purported purpose of investment in gold trading.  The plaintiff gave the Fraudster the password to access the online transaction account with Gold Glory and both of them would operate the online account from time to time.  From April to June 2018, the plaintiff was led to believe that he was making a profit in the venture.

3.  On 11 June 2018, the plaintiff paid a visit to Gold Glory’s purported address in Lippo Centre in Hong Kong and found that there was no such address and there was no such company.  On 14 June 2018, the plaintiff requested to withdraw his money with Gold Glory via online instructions but was told that it would take 3 working days to process the request.  A day later, the plaintiff could no longer log onto the website of Gold Glory and could not operate the online account.  At the same time the Fraudster told the plaintiff that she was operating the online account and had lost most of his money. The plaintiff made a report to the Hong Kong Police on 16 June 2018.  From 20 June 2018 onwards, the plaintiff had been unable to access the online account and the website of Gold Glory. The Fraudster had since 5 July 2018 been uncontactable.

4.  By an Originating Summons issued on 21 August 2019, the plaintiff seeks the following relief:-

(1)     a declaration that the defendant is liable to account to the plaintiff for the sum of US$30,000 together with interest;

(2)     a declaration that the US$30,000 or any part thereof in the Defendant’s Account was held by the defendant as constructive trustee for the plaintiff;

(3)     an order pursuant to section 52(1)(e) of the Trustee Ordinance (Cap 29) vesting the defendant’s right to recover US$30,000 from the Bank of Communications (Hong Kong) Limited to forthwith release and return the said US$30,000 to the plaintiff.

Service

5.  During the first hearing before me on 25 October 2019, I expressed my concern that as the plaintiff was seeking declaratory relief in the absence of the defendant, the court ought to be satisfied that the plaintiff had tried their best in bringing the proceedings to the attention of the defendant, despite having served on the defendant’s registered office in accordance with the rules.  In particular, I challenged the basis of  the service agent’s belief that the documents would have come to the attention and knowledge of the defendant, given that the most updated registered address as obtained from the companies registry records was in 2017, two years ago.

6.  I thus adjourned the Originating Summons for a month so that further attempts on service and investigations could be made.

7.  It is impossible nor practicable to set out exhaustively what steps are considered sufficient to satisfy the service requirements where a defendant is absent, as each case differs on their own facts.  In the present case, I am satisfied that the plaintiff has on this occasion, at the resumed hearing, shown that the documents had come to the attention and knowledge of the defendant, but it had no intention of defending the present action for the following reasons:-

(1)     On 4 November 2019, the plaintiff issued a letter (with documents enclosed) to the sole director of the defendant (as shown in the records of the Companies Registry), informing him of the upcoming hearing of the Originating Summons. The documents were returned by the courier as the address as shown in the records of the Companies Registry was incomplete.

(2)     The plaintiff’s solicitors attended the registered office of the defendant and found that the entrance had the name plate of “Galactic Business (Hong Kong) Co Limited, Hong Kong Galactic Business Consulting Co Limited and Hang Hing Da Int’l Business (HK) Co, Limited”.  The name of the defendant was not found at the entrance of the registered address.  When the plaintiff’s solicitors rang the bell, there was no reply.  A letter informing the defendant of the adjourned hearing of the Originating Summons was thus posted at the entrance.

(3)     There were no unclaimed items on the floor outside the registered office address nor in the letterbox of the defendant.  The plaintiff’s solicitors thus believed that all the documents previously served had been taken.

(4)     The plaintiff’s solicitors made enquiries with the management on the Ground Floor and was told that the registered office was occupied by a Shenzhen company and someone would collect letters once every week or so.  However, the management had never heard of the defendant.

(5)     The plaintiff had since then served the relevant documents on Supreme Hong Kong Registration Limited, the company secretary of the defendant as shown in the 2017 Annual Return.  The reason why he had not served on the latest company secretary as indicated on the 2018 Annual Return was because it had already resigned in November 2019.  No reply was received from Supreme Hong Kong Registration Limited.

(6)     An updated company search revealed that the Companies Registry had indicated that it was considering to strike-off the defendant from the Companies Registry.

(7)     On 18 November 2019, the plaintiff’s solicitors sent further letters to the director of the defendant, the registered office and to the company secretary informing them of the date of the restored hearing.  On 29 November 2019, the plaintiff’s solicitors attended the address of the registered office and found there were no unclaimed documents at the entrance or the mailbox.  The letters to the director and company secretary of the defendant were not returned as unclaimed or undelivered.  They were thus of the view that the documents had been received.

Summary disposal

8.  Having been satisfied as to service, I turn to the legal basis of the plaintiff’s application.

9.  The court has the power under Order 32 rule 5(1) (made applicable to the hearing of an originating summons by Order 28 rule 1) to proceed at its first hearing or any resumed hearing in the absence of a party thereto if, having regard to the nature of the application, it thinks it expedient to do so.  As noted above, I am satisfied that notice of the time appointed for this adjourned hearing was duly served on the defendant.

10.  The court may summarily dispose of an Originating Summons if the defendant’s liability is established and there are no triable issues[1]. The court may grant declaratory relief without a trial where the plaintiff has a genuine need for declaratory relief which the court can properly grant on the merits of the case[2].

11.  The plaintiff’s prima facie case has been borne out by the documentary evidence exhibited to his affirmation.  I accept the plaintiff had been defrauded as alleged.  Where property is obtained by fraud, equity imposes a constructive trust on the fraudulent recipient so that the property is recoverable and traceable in equity[3].

12.  I am satisfied that the plaintiff has a genuine need for the declaratory relief that the defendant is liable to account to the plaintiff for the sum of US$30,000 together with interest; and that US$30,000 or any part thereof in the defendant’s Account was held by the defendant as constructive trustee for the plaintiff.  The plaintiff is entitled to a proprietary claim to the US$30,000. Without the declaration of a constructive trust, the plaintiff may eventually lose out to other creditors of the defendant[4].

13.  I am however not convinced that the plaintiff is entitled to an order pursuant to section 52(1)(e) of the Trustee Ordinance (Cap 29) vesting the defendant’s right to recover US$30,000 from the Bank of Communications (Hong Kong) Limited to forthwith release and return the said US$30,000 to the plaintiff.

14.  The Bank of Communications (Hong Kong) Limited was not a party to these proceedings and in its letter it had not indicated what was its position.  I share Deputy High Court Judge Paul Lam SC’s concerns in the case of International Automotive Components Group sro v Xuke Trading Ltd & Anor[5], on whether s 52 of the Trustee Ordinance may be invoked to compel a bank to release funds in a bank account in these circumstances.  I am of the view that the plaintiff ought to recover the US$30,000 via garnishee proceedings, following the procedure prescribed by Order 49 r 2.

Orders

15.  In the premises, I make the following orders:-

(1) a declaration that the defendant is liable to account to the plaintiff for the sum of US$30,000 together with interest.

(2) a declaration that the US$30,000 or any part thereof in the defendant’s Account was held by the defendant as constructive trustee for the plaintiff.

(3) The defendant shall pay and return the said US$30,000 (together with interest accrued thereon) to the plaintiff forthwith.

(4) The defendant is to pay the plaintiff’s costs of these proceedings, to be taxed if not agreed.