Read the full judgment text of HCA 1053/2019 on BabelCite. This Court of First Instance judgment was delivered on 10 February 2021 before Deputy High Court Judge To.
Civil procedure – appeal from master's dismissal of summary judgment application – email fraud – unjust enrichment – restitution – bona fide purchaser for value – change of position – illegality under Mainland and Hong Kong law – amendment of pleadings – Order 14 RHC – whether amendment of statement of claim by deletion of fraud allegations should be allowed before appeal hearing – held amendment allowed as nothing new was added and unjust enrichment had already been pleaded – Order 20 r 8 RHC permits amendment of pleadings at any stage to determine the real question in controversy – plaintiff was victim of email fraud where imposter posing as its Mainland supplier Hepolilo induced transfers totalling USD1,858,742.64 to the 1st and 2nd Defendants – funds then traced to 2nd and 4th Defendants as first and second layer recipients – whether the 2nd and 4th Defendants are bona fide purchasers for value without notice – held no, the defence is not arguable and not capable of belief – evidence was flimsy hearsay from the Chens and defendants' customers with no documentary support for USD1.8 million of alleged currency matching transactions – whether currency matching arrangements are illegal under Mainland law – held yes, under Article 45 of the Regulations of the People's Republic of China on Foreign Exchange Administration as a 'double-knock-type' underground cross-border sale of CNY and purchase of USD – whether currency matching arrangements are illegal under Hong Kong law – Chens are caught by section 29 of Cap 615 as unlicensed money service operators but for the 2nd and 4th Defendants it is at least arguable they are not – whether change of position defence is available – held no, for want of evidence and because the change was brought about by unlawful sale and remittance of foreign exchange – whether the plaintiff's alleged tax avoidance/evasion constitutes a triable defence – held no, the suggested defence has no prospect of success as the plaintiff did not need to rely on any alleged illegality – whether the plaintiff is entitled to summary judgment based on unjust enrichment – held yes, applying the Shanghai Tongji test, the defendants were enriched at the plaintiff's expense by direct transfer and the enrichment was unjust as payments were made by mistake – appeal allowed and master's order set aside – summary judgment entered against the 2nd Defendant in respect of the Multi Wise Payments and against the 4th Defendant in respect of the Myphone/D4 Payments and the Multi Wise/D4 Payment – the 4th Defendant's liability for the Multi Wise/D4 Payment and the 2nd Defendant's liability for the Multi Wise Payments to the extent of US$4,370.75 are joint and several – costs order nisi that the 2nd and 4th Defendants pay the Plaintiff's costs of the appeal and costs before the master jointly and severally.
Legal issues: Whether amendment of statement of claim by deletion of fraud allegations should be allowed before appeal hearing · Whether the 2nd and 4th Defendants are bona fide purchasers for value without notice · Illegality of currency matching arrangements under Mainland law · Illegality of currency matching arrangements under Hong Kong law · Whether the change of position defence is available to the 2nd and 4th Defendants · Whether the plaintiff's alleged illegality constitutes a triable defence · Whether the plaintiff is entitled to summary judgment against the 2nd and 4th Defendants based on unjust enrichment
Outcome: Appeal allowed; master's order set aside; summary judgment entered against the 2nd Defendant for the Multi Wise Payments and against the 4th Defendant for the Myphone/D4 Payments and the Multi Wise/D4 Payment.
Cited by 26 cases · Cites 3 cases