Read the full judgment text of HCA 149/2020 on BabelCite. This Court of First Instance judgment was delivered on 24 June 2020 before Mr Recorder Eugene Fung SC.
Civil procedure – default judgment – email fraud – constructive trust – restitution – declaratory relief – vesting orders – Trustee Ordinance (Cap 29) s.52 – whether defendants in email fraud are constructive trustees of dissipated funds – plaintiff is Washington company formed for Seattle construction project – between 14 and 28 January 2020 fraudsters using bogus email addresses deceived plaintiff's bank into transferring US$5,697,724.42 to defendants in HCA 149/2020 – funds rapidly dissipated to defendants in HCA 153/2020 and HCA 156/2020 – proprietary and Mareva injunctions obtained against all defendants and disclosure orders against Bank of China (Hong Kong) Limited – no defendants filed acknowledgement of service or defence – plaintiff issued three summonses for default judgment and vesting orders – whether default judgments for monetary and declaratory relief should be granted – court followed Westdeutsche Bank v Islington LBC [1996] AC 669 over Shalson v Russo [2005] Ch 281 and held that money obtained by fraud gives rise to constructive trust in Hong Kong – court adopted approach of prior Hong Kong default judgment authorities Michael Chen Kang Huang v Peter Lit Ma [2009] 6 HKC 191, Mesirow Financial v Best Link Industrial (HCMP 1846/2015) and 巨展皮具香港有限公司 v 上海兄弟海運有限公司 (HCA 2731/2016) – court held plaintiff had genuine need for declarations to assert proprietary priority and trace funds – default judgments granted for monetary restitutionary claims and for declarations that defendants hold sums on constructive trust for plaintiff – whether vesting orders may be made under s.52(1)(e) of Trustee Ordinance on declaration of constructive trust – court held that s.52(1)(e) is not engaged – sections 45 to 55 of Trustee Ordinance envisage vesting orders upon a change in trusteeship – a constructive trustee by court declaration is not an 'appointed' trustee within s.52(1) – following Williams v Central Bank of Nigeria [2014] AC 1189 constructive trustees are not truly appointed – legal title to choses in action against Bank remained with defendants after declarations – court respectfully declined to follow Guaranty Bank v Zzzik Inc Ltd (HCA 1139/2016), Minimax GmbH v Gopom Products Ltd [2019] HKDC 760, Comtel Solutions v Yi Li Trade (HK) Co Ltd [2019] HKCFI 2047 and Tai Ching Ling v Cai Guo Chuan [2019] HKCFI 2251 – vesting orders refused – plaintiff can enforce judgments by garnishee proceedings under RHC O. 49 – costs to plaintiff to be taxed if not agreed.
Legal issues: Grant of default judgments for monetary and declaratory reliefs in email fraud claims · Whether vesting orders may be made under s.52(1)(e) of the Trustee Ordinance on a declaration of constructive trust
Outcome: Default judgments granted in favour of the plaintiff against all defendants in HCA 149/2020, HCA 153/2020 and HCA 156/2020 for monetary and declaratory reliefs. Vesting orders under section 52(1)(e) of the Trustee Ordinance refused.
Cited by 18 cases · Cites 7 cases