Read the full judgment text of HCA1945/2014 on BabelCite. This Court of First Instance judgment was delivered on 23 June 2020 before Ng J.
Civil law – trust law – agency – whether funds in agent's personal bank account held on trust for principal – restitution – unjust enrichment – oral agreement – burden of proof – credibility of witnesses – contemporaneous documents – inconsistency in pleadings – tracing trust property against volunteer – Mareva injunction – costs. The plaintiffs, Music Holdings Property HK Ltd and Coolaudio International Ltd, both beneficially owned by Mr Ulrich Behringer, claimed that the defendant Ms Ooi Lean Choo (also known as Alsie Lau), a former employee of the Music Group, held funds in two of her personal HSBC bank accounts on trust for them. The No 1 Account received rental income from the May Road Property owned by Music Holdings, and the No 2 Account received Coolaudio's online sales revenue. Ms Lau, who had acted as the plaintiffs' agent, contended that Mr Behringer had orally agreed to pay her monthly service fees of HK$5,000 and HK$10,000 respectively for the use of the two accounts, and counterclaimed for accumulated fees exceeding HK$1 million. After her employment was terminated on 15 August 2014, on 30 September 2014 Ms Lau transferred approximately HK$2,283,989.90 and RMB235,245.24 to Larry Brendon Management Ltd, the first defendant in HCA2304. Issue 1 and Issue 2 – whether the funds in Ms Lau's two accounts were held on trust. Applying the principles in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 and Angove's Pty Ltd v Bailey [2016] UKSC 47, the court held that the funds were at all times held by Ms Lau on trust for the plaintiffs, as she was not at liberty to treat the funds as her own, the accounts were used solely for receiving the plaintiffs' money, and no mixing occurred. The court also held, applying the four-question unjust enrichment test in Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, that the plaintiffs had an alternative restitutionary claim. Issue 3 – whether there were oral agreements for service fees. The court rejected Ms Lau's testimony, finding her recollection inconsistent across her pleadings in 2014, 2015 and 2017, unsupported by any contemporaneous document despite regular email communication between the parties, and implausible given her failure to claim the fees in her 17 August 2014 email listing amounts owed (in which she did mention the RMB200,000 PRC reimbursement). Applying the credibility test in The World Food Fair Ltd v Hong Kong Island Development Ltd (2006) 9 HKCFAR 735, the court held that Ms Lau had not discharged her burden of proving the oral agreements on a balance of probabilities; her set-off failed and counterclaim was dismissed. Issue 4 – cause of action against Larry Brendon. Applying proposition (iv) in Westdeutsche Landesbank and Foskett v McKeown [2001] 1 AC 102, the court held that as a mere volunteer holding the funds for Ms Lau, who had no beneficial entitlement, Larry Brendon was bound by the plaintiffs' continuing proprietary interest in the trust property and its traceable proceeds, and a declaration was granted. Disposition – judgment for Music Holdings against Ms Lau for HK$360,000 and for Coolaudio against Ms Lau for HK$3,584,719.09, with interest at prime plus 1% from the date of the Writ to Judgment and thereafter at Judgment rate; Ms Lau's counterclaim dismissed; declaration granted that the plaintiffs were entitled to trace the unauthorised transfers against Larry Brendon. Costs orders nisi were made in favour of the plaintiffs in both actions, with certificates for counsel. The sums standing in Court were to be paid out to the plaintiffs in satisfaction of the judgment sums and partial satisfaction of interest upon expiry of 28 days after handing down.
Legal issues: Whether Ms Lau held funds in her HSBC No 1 Account on trust for Music Holdings, or alternatively whether Music Holdings has a restitutionary claim · Whether Ms Lau held funds in her HSBC No 2 Account on trust for Coolaudio, or alternatively whether Coolaudio has a restitutionary claim · Whether oral agreements existed for monthly service fees of HK$5,000 (No 1 Account) and HK$10,000 (No 2 Account) payable by the Plaintiffs to Ms Lau · Whether the Plaintiffs can trace the unauthorised transfers and establish a cause of action against Larry Brendon
Outcome: Judgment for the plaintiffs in both HCA1945 and HCA2304. Ms Lau's counterclaim against the plaintiffs is dismissed. A declaration is granted that the plaintiffs are entitled to trace the unauthorised transfers against Larry Brendon.
Cited by 24 cases · Cites 1 case