Read the full judgment text of CACV 172/2015 on BabelCite. This Court of Appeal judgment was delivered on 11 January 2016 before Lam VP, Yuen JA, Kwan JA.
Civil procedure – summary judgment – Order 14 r.1(2)(b) – fraud exception – interpretation – narrow meaning (Derry v Peek fraud) vs. wide/liberal meaning – Hong Kong courts bound to adopt wide meaning – cross-border email fraud – EUR487,000 transferred under false pretence of senior executive instruction – funds traced through Lithuanian account (Kosona) to Hong Kong accounts of 1st and 2nd defendants – defendants' defence of bona fide purchase in trading transaction involving three overseas suppliers – plaintiff alleging sham, fictitious suppliers, fake invoice and false London address – whether fraud exception engaged to bar summary judgment – whether claim must be based on an allegation of fraud in the Derry v Peek sense or whether any dishonest conduct suffices – Hong Kong: s.33A High Court Ordinance (Cap.4) removes civil jury trial for fraud, so narrow construction not required for consistency – wide meaning favoured in Skink Ltd (in liquidation) v Comtowell Ltd [1994] 2 HKLR 26 and Pacific Electric Wire & Cable Co Ltd v Harmutty Ltd [2009] 3 HKLRD 94 – bound by Pacific Wire – anomaly identified in Newton Chemical Ltd v Arsenis [1989] 1 WLR 1297 – principles: (1) court determines engagement of exception at time of hearing having regard to all materials; (2) question is whether action includes a claim for which allegation of fraud would have to be made to establish or maintain that claim; (3) substance not form; factual constituents of fraud suffice; (4) defence may require plaintiff in reply to allege fraud, engaging exception (A-1 Business Ltd v Chau Cham Wong Patrick [2009] 5 HKLRD 579); (5) wide meaning adopted – intentional or reckless dishonest act (or omission) done with the purpose of deceiving – applied to facts: plaintiff had to allege sham transaction, fake invoice and fictitious suppliers to defeat defendants' bona fide purchase defence – fraud exception engaged – appeal dismissed with costs to defendants – court recommends Rules Committees to review continued existence of fraud exception in modern litigation environment.
Legal issues: Interpretation of the fraud exception in O.14 r.1(2)(b) – narrow vs. wide meaning · Whether the fraud exception was engaged on the facts to bar summary judgment
Outcome: Appeal dismissed; the plaintiff is precluded from obtaining summary judgment because the fraud exception in O.14 r.1(2)(b) is engaged.
Cited by 1 case