Read the full judgment text of HCA 2459/2017 on BabelCite. This Court of First Instance judgment was delivered on 7 January 2021 before Mr Recorder Eugene Fung SC.
Unjust enrichment – mistake – email fraud – restitution – bona fide purchase for value without notice – change of position – constructive trust – tracing – personal remedy granted, constructive trust refused – P, a BVI company in the mobile gaming business controlled by Mr Kerry Pak, was the victim of an email fraud in which Ms Jenny Chiu, the Group's Corporate Secretary, was deceived into transferring HK$3,120,000 to D4's bank account on 3 February 2016 – First issue: whether the payment was made by mistake and/or in the absence of consideration – Held: payment was made by mistake because Ms Chiu mistakenly believed the instruction came from Mr Pak, who had in fact given no such instruction; failure of consideration not relied upon as P had never anticipated any performance by D4 – Second issue: whether D4 was a bona fide seller for value without notice – Held: no, the defence failed because valuable consideration for the defence must be given under a valid contract, and Mr Leo had no authority to act for P so no contract existed; the defence is in any event typically a three-party exception to nemo dat quod non habet inapplicable in a two-party direct-recipient situation – Third issue: change of position – Held: no, because no diamonds were delivered to P in the absence of a valid contract, and the court was not satisfied on the evidence that the alleged supplier payments to Aura and Amigo related to the diamonds purportedly delivered to Mr Leo – Fourth issue: reliefs – Held: P entitled to personal restitutionary remedy of HK$3,120,000, but refused a declaration of constructive trust over the remaining balance of HK$559,545 in D4's frozen account because the funds had become mixed and untraceable, and D4 was never shown to have been actually aware of P's mistake so as to have its conscience affected – Costs order nisi against D4, without certificate for two counsel.
Legal issues: Payment by mistake and failure of consideration in unjust enrichment · Bona fide purchase for value without notice as defence to unjust enrichment · Change of position as defence to unjust enrichment · Entitlement to personal and proprietary restitutionary remedies
Outcome: P's claim in unjust enrichment succeeds against D4. P is entitled to a personal restitutionary remedy of HK$3,120,000 against D4, but is refused a declaration that the remaining balance in D4's account is held on constructive trust for P.
Cited by 10 cases · Cites 7 cases