The Maitri Trust v. Hong Fei Sheng (HK) Trading Co Ltd and Others

HCA 1984/2019

[2020] HKCFI 2764

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1984 OF 2019

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BETWEEN

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Before: Deputy High Court Judge Dawes SC in Chambers

Date of Hearing: 3 August 2020

Date of Judgment: 30 October 2020

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JUDGMENT

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Introduction

1.This is yet another case of email fraud which has come before the courts of Hong Kong.  The facts may be shortly stated:

(1) P is a limited liability company registered in Scotland with charitable status.  It operates an account with SG Kleinwort Hambros Bank Ltd (the “Maitri Account”).

(2) On 30 September 2019, P was induced by a fraudulent email into authorising a transfer of US$887,144 from the Maitri Account into a bank account held by D1 (the “Hong Fei Sheng Account”) (the “Fraudulent Scheme”).

(3) On 2 October 2019:

(a) two transfers of US$127,450 and US$127,455 respectively were made from the Hong Fei Sheng Account to a bank account held by D4 (the “Ka Lai Account”).

(b) a transfer of US$182,323.84 (the “Sum”) was then made from the Ka Lai Account into D2’s bank account held with Hang Seng Bank (the “HSB Account”).

(c) D2 then transferred the sum of US$142,000 from the HSB Account to its account with Shanghai Commercial Bank (the “SCB Account”) (the “SCB Transfer”).

2.It is common ground that P and D2 do not know each other and have never had any dealings (whether business, commercial or otherwise) prior to these proceedings.  Instead, D2’s factual case is as follows:

(1) D2 was incorporated in 2007 and began operating as a food trading company in 2008.  It assists clients in sourcing meat products from overseas by importing these products into Hong Kong and delivering the same to its clients.

(2) From time to time, D2’s Mainland clients face difficulties obtaining sufficient foreign currency to meet payments, and therefore effect payments to D2 via various mechanisms including third party set-offs.

(3) D2 came to receive the Sum as a result of two orders of frozen meat placed by a Mr Nam Wong (“Mr Wong”) on 2 October 2019 (the “Meat Orders”):

(i) Order WCH-114 was an order for a container of frozen beef shank in the sum of US$91,270.18.  Pursuant to this order, D2 placed an order for the frozen beef shank with Wing Cheung Hong, a frozen meat supplier in the sum of US$89,966.32, and made payment of this sum to Wing Cheung Hong on the same day.

(ii) Order WCH-115 was for a further container of frozen beef shank in the sum of US$91,062.60.  D2 placed an order with Wing Cheung Hong for the frozen beef shank in the sum of US$89,761.71 on the same day.  Pursuant to this order, D2 made payments of US$50,000 and US$39,761.71 to Wing Cheung Hong on 3 and 4 October 2019 respectively.

(4) On 2 October 2019, D2 received the Sum from D4 on behalf of Mr Wong.  This payment was effected pursuant to an Authorisation Letter signed by Mr Wong dated 1 October 2019 (the “Ka Lai Authorisation Letter”), in which Mr Wong personally authorised D4 to arrange for payment of the relevant funds to D2 on his behalf, and “confirmed that the funds come from business funds and that there is no money laundering activity involved”.  According to D2, D4 was a debtor of Mr Wong’s and Mr Wong would ask Ka Lai to settle payments on his behalf from time to time.

3.By a Writ of Summons dated 30 October 2019, P brought a personal claim for unjust enrichment and a proprietary claim against D2 in respect of the Sum and/or its traceable proceeds.  On the same date, Coleman J granted an ex parte injunction against D1–D3 restraining each of them from disposing or dealing with its assets to the value of US$887,144.00, and specifically, any money in, inter alia, the Hong Fei Sheng Account and the HSB Account (the “Injunction”).

4.The Injunction was continued by order of DHCJ Sherrington on 15 November 2019, and was on 17 December 2019 varied by an order of Coleman J (with the consent of the parties) so to reduce the sum injuncted against D2 from US$887,144.00 to US$182,323.84.

5.P obtained default judgment against D1 and D3–D6 on 16 July 2020.

6.There are two main applications before the Court:

(1) P’s Summons dated 31 October 2019 to continue the Injunction against D2 (as varied);

(2) D2’s Summons dated 12 November 2019 for an order that the Injunction be set aside and discharged, and alternatively for variation of the Injunction and fortification;

7.By a Summons dated 28 July 2020, D2 sought to make various amendments to its Summons dated 12 November 2019 to “put the house in order”, by setting out the various alternative positions open to the Court should it decide that the Injunction be varied.  Mr Hughes sensibly did not press any objection to this (admittedly late) application for amendment, and consequently I granted an order in terms.

8.I also made an order in terms of D2’s Summons dated 29 July 2020 to adduce the 4^th Affirmation of Ku Ka Chung to address issues which were said to be raised for the first time in P’s skeleton argument for the present hearing.  I did so having formed the view that the matters addressed therein were clearly relevant to the issues at hand (and the points taken by P in relation to the SCB Account in their submissions), albeit not without some reluctance given the lateness of this application.

9.A final matter which ought to be noted is that on 28 July 2020, solicitors for D2 wrote to solicitors for P informing them of D2’s intention to effect payment into Court of the Sum of US$182,323.84 in the HSB Account covered by the Injunction, pending determination of its application to set aside the Injunction.  As it transpired, this offer was subsequently withdrawn, and that no payment into Court was ever effected.  As a result, I directed that the parties proceed with substantive argument.

Applicable legal principles

10.The relevant principles in relation to the grant of proprietary injunctions are not in dispute.  As summarized by Recorder Eugene Fung SC in Zhang Yan v ASA Bullion Ltd [2019] HKCFI 179 HCA1555/2018 (unrep, 23 Jan 2019) at §11:

(1) The Court has jurisdiction to grant a proprietary injunction restraining the disposal of that property where a plaintiff asserts title to property or seeks to trace property which belongs to him.

(2) Following the American Cyanamid principles, a Plaintiff must demonstrate that: (a) there is a serious issue to be tried on the merits; (b) the balance of convenience is in favour of granting an injunction and (c) it is just and convenient to grant the injunction.  It is not necessary to show any risk of dissipation of assets.

(3) A proprietary injunction must relate to a specific asset held by or under the control of the defendant, or its traceable proceeds, in respect of which a proprietary claim is raised by the plaintiff.

(4) In order to justify the grant of a proprietary injunction, the plaintiff should ordinarily adduce some reasonable evidence of the existence of the specific asset (or its traceable proceeds) and that the same is being held by or under the control of the defendant.  Where the asset forming the subject matter of the proprietary claim has been dissipated and can no longer be traced, a proprietary injunction cannot ordinarily be granted.

11.As far as Mareva injunctions are concerned, it is trite that P must show that (a) there is a good arguable case on the substantive claim, (b) there are assets within the jurisdiction, (c) there is a real risk of dissipation of assets which would render the plaintiff’s judgment of no effect, and (d) the balance of convenience is in favour of the grant of an injunction: Zhang Yan §17.

Serious issue to be tried – proprietary injunction

12.D2 resists P’s proprietary claim on the basis that it was a bona fide purchaser for value without notice of the Sum, and that in any event, the Sum has been dissipated and is no longer traceable.  I will deal with each argument in turn.

13.I bear in mind that P need only show its claim is not “frivolous or vexatious” in demonstrating a serious issue to be tried, and that D2 has a heavy burden of showing that there is no serious issue to be tried, since to succeed it will have to show that the claim ought to be struck out: Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd HCA3023/2016 (unrep, 2 May 2017) at §39.

14.Of course, I am also mindful that the Court cannot resolve difficult questions of law or conflicts of evidence at this stage on the basis of affidavit evidence, but that in determining whether there is a serious issue to be tried, the Court is entitled to have regard to the strength of the parties’ competing factual claims based on the totality of the evidence: Zimmer Sweden AB v KPN Hong Kong Limited HCA2264/2013 (unrep, 2 May 2014) at §86.

15.Mr Chiu, who appeared on behalf of D2, submitted that D2 received the Sum pursuant to well-documented Meat Orders, in its ordinary course of trading.  It acted at all times in good faith and gave consideration for the receipt of the Sum (in the form of the frozen beef shank).  Furthermore, D2 did not at any time have actual knowledge of the Fraudulent Scheme, and in light of its longstanding trading practice of receiving payments from Mainland Chinese clients via third parties, there was nothing in the transaction which put D2 on inquiry about receiving money from D4.

16.Mr Hughes, who appeared on behalf of P, submitted in response that:

(1) Firstly, D2’s factual case is highly suspicious: it is curious that all the WeChat messages, email messages and invoices produced are dated 2 October 2019 – the same day that D2 received the Sum.  The invoices produced contain various inconsistencies and are incomplete: for example, they do not set out Mr Wong’s full name, address, and contact details and simply refer to him as “Ah Nam” (阿楠).  Finally, D2’s assertion that Mr Wong had a business relationship with D4 is plainly incredible when all the evidence shows that D4 was merely a vehicle for fraud, and it is noteworthy that D2 has not adduced any evidence from Mr Wong to corroborate its story.  

(2) Secondly, D2 was clearly aware of the suspicious source of the Sum: after all, it demanded that Mr Wong sign the Authorisation Letter.  Alternatively, D2 should have been put on inquiry when receiving sums from Mainland Chinese clients via third parties, especially since D2 was at the time already a defendant in another email fraud case (HCA1781/2019) and subject to an injunction granted by Anthea Pang J dated 26 September 2019.  

(3) Thirdly, the bona fide purchaser defence does not arise in the context of tripartite arrangements where a complete stranger pays money to a party who has separately entered into a commercial contract with a third party for supply of goods, as there is no consideration flowing between the recipient of the funds and the stranger providing the windfall: Laerdal Medical Limited v Hong Kong Haocheng International Trade Limited HCA2193/2016 (unrep, 21 June 2017) at §25.

(4) Finally, D2 cannot rely on the defence in any event, since it breached PRC exchange controls in receiving the funds through the underground banking system.

17.I consider that Mr Hughes is putting his case too high when he casts grave aspersions on the truthfulness of D2’s factual case.  For example, I do not think there is anything inherently improbable in the fact that D2’s dealings with Mr Wong all occurred on the same day as his receipt of the Sum, and P has not shown how this is somehow inconsistent with the ordinary workings of the frozen meat import/export trade.  Nor am I troubled by the fact that the price which D2 quoted to Mr Wong (and paid by Mr Wong to D2) differs from that which Wing Cheung Hong quoted to D2 - D2’s explanation that the difference represents its profit costs is eminently reasonable.  The fact that D2’s invoices are lacking in detail is similarly not inexplicable when one “it is just a humble family trading business with a couple [of] employees earning a modest living”.

18.I am also unable to accept P’s bald assertion of illegality in the present case.  As Mr Chiu points out, P has not adduced any evidence of PRC exchange control laws (which must be proved as a matter of fact) in the present proceedings.  This alone distinguishes the present case from, inter alia, DBS Bank (Hong Kong) Limited v Pan Jing HCA3299/2016 (unrep, 24 January 2020), in which DHCJ Blair rejected a defence of bona fide purchaser on grounds of illegality. Not only did that case concern a different factual pattern, namely an admitted foreign exchange transaction from USD to RMB, there was adduced by the parties expert evidence on which the judge could properly conclude that the transactions were in breach of PRC law.  For these reasons, it is unnecessary for me to traverse the difficult terrain of the law of illegality and I refrain from expressing any further views on this issue.

19.Nonetheless, in my view there is clearly at least a serious issue to be tried as to whether D2 had actual knowledge of or was at least put on inquiry as to the illegitimate source of the funds:

(1) It is relevant that D2 was made a defendant to another email fraud case relating to payments by its clients via third parties only one week prior to the receipt of the Sum.  Based on this, it is at least arguable that a reasonable person in D2’s position would have made inquiries when receiving sums from its clients via unknown third parties from that point onwards.  The fact that D2 did not have any information specifically in respect of D4 which raised suspicions is in my view not entirely on point.

(2) Additionally, that D2 should have been on inquiry is evident from the fact that it itself requested that Mr Wong sign the Authorisation Letter, specifically confirming that the third party payment was from clean sources.  As Mr Hughes points out, it is also curious that the Authorisation Letter is dated 1 October 2019 when D2’s own affidavit evidence is that the two Orders were only placed on 2 October 2019.

20.I am also prepared to accept that there is a serious issue to be tried as to whether the supply of frozen beef shank to Mr Wong was in law capable of constituting consideration for the payment received from D4.  

21.As a result, I do not think that D2 is able to negate the existence of a serious issue to be tried relying on the bona fide purchaser defence.

22.However, D2 is on firmer footing when he says that P is now substantially unable to trace the proceeds of the Fraudulent Scheme.

23.There is no dispute that P’s right to trace the proceeds of the Fraudulent Sums in the HSB and SCB Accounts is limited to the lowest intermediate balance between 2 October 2019 and the date on which those accounts were frozen: James Roscoe (Bolton) v Winder [1915] 1 Ch 62.

24.It is also important to bear in mind that P does not allege that D2 was a party to the Fraudulent Scheme.  As a result, P’s submission that it is “entitled to elect between the rule in Clayton’s Case [sic][1] and the Hallett rule (whichever is the most beneficial) in conducting the tracing exercise” is incorrect insofar as D2’s dealings with the Sum are concerned: see Snell’s Equity (34^th ed) §30-057.

25.Considering first the HSB Account, the bank account balance was reduced to US$13,710.14 on 4 October 2019.  Therefore, any proprietary claim by P in respect of the funds in the HSB Account is necessarily limited to that amount (a proposition which Mr Hughes accepted at the hearing).  For completeness, I record that the HSB Account was in fact overdrawn at some point during the day on 8 October 2019, but I decline to adopt this as the lowest intermediate balance for purpose of determining whether there is a serious issue to be tried, as it has been suggested that it is the balance at the end of the day that is relevant for tracing purposes: Lewin on Trusts §44-071.

26.As for the SCB Account, Mr Hughes submitted that it is clearly able to trace at least US$142,000 of its funds into the SCB Account by virtue of the transfer from the HSB Account to the SCB Account on 2 October 2019.  In response, Mr Chiu relied on D2’s evidence that the sums were used to settle payments with SCB in respect of certain documentary collection arrangements.

27.In my view, however, it is unnecessary for me to reach a firm view on the arguments above in view of the fact that the lowest intermediate balance in the SCB Account between 2 October 2019 and 30 Oct 2019 was US$1,956.18.  At the hearing, Mr Hughes submitted that he was not in a position to make any concessions in relation to the SCB Account, given that D2’s bank statement for October 2019 was only filed at the last minute.  However, I do not think there is any basis for questioning the veracity of the figures listed in the bank statements at least based on the evidence before me.  As a result, any proprietary claim by P in respect of the funds in the SCB Account is limited to the sum of US$1,956.18.

28.P has not identified any other potentially traceable proceeds of the Fraudulent Scheme in D2’s hands save for the funds in the HSB Account and the SCB Account. For these reasons, I am of the view that there is a serious issue to be tried in respect of P’s proprietary claim but only up to the sum of US$13,710.14 in the HSB Account and US$1,956.18 in the SCB Account.  

Balance of convenience

29.Having concluded that there is a serious issue to be tried in respect of P’s proprietary claim in the sums stated above, I am of the view that the balance of convenience is in favour of the continued preservation of these sums pending trial.

Good arguable case – Mareva injunction

30.Mr Hughes submitted, and I agree, that P has a good arguable case for a personal claim for unjust enrichment based on mistake. I do not accept Mr Chiu’s submissions that D2’s enrichment was not “at the expense of” P, and that it had a good defence of change of position, for the following reasons:

(1) The necessary connection between a plaintiff and a defendant in a claim for unjust enrichment was explained by Lord Reed JSC (as he then was) in Investment Trust Companies (in Liquidation)  v Revenue and Customs Commissioners [2017] UKSC 29.  In summary, a defendant will be enriched “at the expense of” a plaintiff where there has been a direct transfer of value between the parties, but “there are, however, situations in which the parties have not dealt directly with each other … but in which the defendant has nevertheless received a benefit from the claimant, and the claimant has incurred a loss through the provision of that benefit”: §46-47.  Relevantly:

“There are also situations where the defendant receives property from a third party into which the claimant can trace an interest. Since the property is, in law, the equivalent of the claimant’s property, the defendant is therefore treated as if he had received the claimant’s property.”

(2) Since P’s case squarely raises the allegation the Sum is traceable from the proceeds of the Fraudulent Scheme (and D2 did not seriously seek to argue otherwise), there is in my view a good arguable case that D2 received the Sum “at the expense of” P.

(3) As for the defence of change of position, the difficulty for D2 lies in the fact that the defence of change of position is unavailable to a recipient who acts in bad faith: Goff and Jones (9^th ed) §27-40.  While the authorities are not entirely settled on this point, it has been suggested that good faith may well dictate that the recipient make reasonable enquiries where they have grounds for believing that there is a right to restitution: Goff and Jones §27-43.  For substantially the same reasons as those in §19(2) above, I consider there is a good arguable case as to whether D2 acted in good faith in changing its position following its receipt of the Sum.

Real risk of dissipation

31.Mr Hughes relied on the following facts in support of his submission that there was a real risk that D2 would dissipate its assets:

(1) The highly suspicious nature of D2’s dealings with Mr Wong and D4 (as explained above);

(2) D2 was required to provide ancillary disclosure of all its assets worth in excess of $50,000 within 7 days of the date of service of the Injunction, ie. by 6 November 2019, but only purported to do so after this was pointed out to them at the return date hearing on 15 November 2019.

(3) When D2 finally purported to comply with its ancillary disclosure obligation via Ku’s 2^nd Affirmation dated 4 December 2019, it conspicuously failed to disclose the existence of the SCB Account, which held significantly more than HK$50,000 as at the date of the Injunction and throughout October and November, only had a balance of HK$11,602.01 by the time of its belated disclosure.

(4) At the return date hearing itself, D2 “led the Court up the garden path” by failing to disclose that it was already subject to an injunction granted by Anthea Pang J in the separate email fraud proceedings.  D2 also disingenuously claimed that the continuation of the Injunction would likely mean that it is forced to cease business, a prediction that has by the passage of time been proven to be demonstrably false.

32.As explained above, I do not think it possible to draw any inferences of impropriety from the manner in which D2 dealt with Mr Wong. I am also unable to see how D2 can be faulted for not volunteering the fact of the pre-existing injunction against it - Mr Hughes’ suggestion to the contrary is tantamount to the imposition of a duty of full and frank disclosure on D2.

33.Nor in my view should one read too much into the fact that D2’s allegedly over-pessimistic predictions failed to materialise.  The mere fact that D2 has not ceased business despite the Injunction certainly cannot itself ground the serious accusation that D2 misled the Court when asserting that it was facing an existential threat at the return date hearing in November 2019.  As a matter of common sense, the freezing of an active bank account of an actively trading company obviously has a substantially impact its ability to trade.  One must also bear in mind that, at the time, the sum enjoined against D2 was the substantially higher sum of US$887,144.00.

34.The allegations of non-compliance with the ancillary disclosure order are more serious.  At the hearing, Mr Chiu fairly conceded that D2 cannot be said to have fully complied with its disclosure obligation, but submitted that I should place less weight on these failings on the basis that having already disclosed assets in excess of any possible judgment sum by way of Ku 2^nd, D2’s non-compliance did not frustrate the purpose for which the ancillary order was sought, namely to identify assets capable of satisfying judgment.

35.In my view this submission misses the point.  The fact of the matter is that D2 has breached the ancillary disclosure order, and Mr Hughes is entirely justified in criticising the manner in which D2 has conducted these proceedings.

36.However, these matters are only relevant if and to the extent that they reveal a real risk of dissipation of assets by D2.  In this regard, one bears in mind the principles recently summarised by Coleman J in Universal Entertainment Corporation v Kazuo Okada [2020] HKCFI 1406 HCA2236/2019 (unrep, 17 Jul 2020) at §37, which I gratefully adopt in full but will not repeat here so not to lengthen this judgment.

37.The key takeaway from those principles for present purposes is that the blanket allegations of “low commercial morality” or dishonesty are of little value unless they point to the conclusion that assets might be dissipated rendering the defendant judgment-proof.  As a result, P must show that D2 provided a belated and incomplete picture of its financial position for the purpose of dissipating its assets in the interim if it wishes to make out a case of real risk of dissipation on these facts.

38.In my view, D2’s breaches of its ancillary disclosure obligations, while deplorable, were clearly not of such a character.

39.It is true that if D2 had complied with the ancillary disclosure order on 6 November 2019, it would have had no excuse for failing to disclose the SCB Account (given the balance of that account at the time).  It is also true that over the course of November and December, the balance of the SCB Account fell from HK$335,754,30 on 31 October 2019 to HK$11,602.01 by 4 December 2019.  However, when one scrutinises the bank statements for the SCB Account, it is readily apparent that those funds were spent in the ordinary course of business: in November, for example, there were 75 individual withdrawals on divers dates totalling HK$392,135.08 from the HKD Checking Account and 6 deposits totalling $278.993.00 into the same account.  Similarly, there were 24 withdrawals from the USD Checking Account and 15 deposits (including a deposit of USD$122,500 on 7 November 2019).  There is no reason why D2 should resort to such a large number of transactions if it genuinely wished to put the funds in the SCB Account out of P’s reach.  Furthermore, as demonstrated by the other bank statements produced in evidence, the frequency and pattern of these transactions is entirely consistent with those of previous months (ie. prior to the Injunction).  

40.One must also consider these allegations of wrongful dissipation against the fact that D2 is an active trading company with a genuine and established business, and owns two properties at New Tech Plaza worth a total of HK$15,330,000.  

41.At the hearing, it was pointed out that these properties are subject to all monies mortgages in favour of HSBC of presently unknown value.  However, from the timing of their entries into the Land Register, it is quite clear that these were acquisition mortgages.  And while there is no evidence before the Court as to the present equity value of these properties, I consider that the fact of ownership itself reinforces D2’s case that it is a genuine commercial operation and points against the possibility that D2 might dissipate its assets to frustrate a judgment against it.

42.For the above reasons, I am not satisfied that P has demonstrated a real risk of dissipation of assets on part of D2.  I decline to order the continuation of Mareva relief (whether top-up or otherwise) against D2.

Material non-disclosure

43.Finally, Mr Chiu submitted that the Injunction should in any event be discharged for in light of various material non-disclosures by P at the ex parte stage:

(1) P failed to make proper inquiries with regards to the nature of D2’s business in making its ex parte application.  Had it done so, it would have discovered that D2 was an active trading company with substantial operations and landed properties, material facts pointing against a risk of dissipation which should have been made known to Coleman J at the time of the application.  

(2) P wrongfully sought an injunction in the sum of US$887,144 against D2 when on P’s own case D2 was not a party to the fraud but merely a recipient of roughly US$182,000.

44.The first allegation falls away in light of my decision not to order the continuation of any Mareva relief against D2.

45.I am more troubled by the second allegation.  As is clear from a reading of P’s ex parte skeleton, P did not specifically highlight the fact that it was seeking an injunction in the full sum of US$887,144 against each of D1–D3 notwithstanding the preliminary information it had which only showed that: (i) there was a balance of US$337,176 in (D1’s) Hong Fei Sheng Account, (ii) there was one transfer of US$182,000 into D2’s HSB Account (via an account now known to be the Ka Lai Account), and (iii) there was one transfer of US$72,000 into D3’s bank account with Standard Chartered Bank.  I see the force in Mr Chiu’s argument that this was material information which should have been specifically drawn to the attention of the judge.

46.However, it is well-established that it is not for every omission that an injunction will be discharged; the Court has a discretion to continue the order notwithstanding proof of material non-disclosure: see Velanel Global Communication Inc v Chinacomm Ltd HCA1978/2011 (unrep, 26 Oct 2012) at §26(7) (Queeny Au-Yeung J).

47.I am of the clear view that this case is a prime example of where the discretion should be exercised in favour of continuing the injunction.  I am satisfied that the non-disclosure on the facts was not a culpable omission.  Victims of email fraud will rarely have anything more than limited visibility into the precise flow of funds from the payee bank account at the interlocutory stage.  All that P had at the time was information which BOC “informally” provided to P’s bankers, SG Kleinwort.  It did not know how much was transferred into the Ka Lai Account, who owned the Ka Lai Account, and whether there were any other transfers from the Hong Fei Sheng Account into the bank accounts controlled by D2.  Nor could P be reasonably expected to have known the same.  

48.For these reasons, P was also justified in seeking an injunction in the full sum of US$887,144 against each of D1–D3 at the ex parte stage.  It is further relevant that P promptly rectified the situation by agreeing to vary the amount injuncted against D2 upon ascertaining that D2 only received the Sum from the traceable proceeds of the Fraudulent Scheme.  The balance of convenience is also strongly in favour of continuing the Injunction.

49.Accordingly, I decline to exercise my discretion to discharge the Injunction for any material non-disclosure on the facts.

Fortification

50.I shall only mention D2’s application for fortification in the sum of HK$600,000 in passing, as Mr Chiu did not press this matter at the hearing before me.  It suffices to say that P is a registered charity in Scotland with over £33,000,000 in assets, and only around £2,500,000 to £3,000,000 in annual expenditure.  In light of this, and insofar as it is necessary for me to decide this matter, I decline to order any fortification from P.  

Conclusion

51.In conclusion, I order that the Injunction be continued until trial or further order of the court, but only to the extent of US$13,710.14 held in the HSB Account and US$1,956.18 held in the SCB Account.

52.Given that both parties were only partially successful in relation to the Injunction, I make an order nisi that there be no order as to costs.

Mr Sebastian Hughes, instructed by Deacons, for the Plaintiff

Mr Vincent Chiu, instructed by Haldanes, for the 2^nd Defendant