Chan Man Yam v. Lung Tsz Hin
Read the full judgment text of DCCJ 5095/2020 on BabelCite. This District Court judgment was delivered on 27 August 2021.
1. This is the plaintiff’s application for summary judgment in respect of a sum of $650,000 which was allegedly transferred from her bank account to the defendant’s bank account without her knowledge or consent.
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DCCJ 5095/2020 [2021] HKDC 941 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 5095 OF 2020 --------------------
-------------------- Before: Deputy District Judge Zabrina Lau in Chambers (open to the public) Date of Hearing: 27 May 2021 Date of Judgment: 27 August 2021 -------------------- JUDGMENT -------------------- 1.This is the plaintiff’s application for summary judgment in respect of a sum of $650,000 which was allegedly transferred from her bank account to the defendant’s bank account without her knowledge or consent. The plaintiff’s case 2.On or around 20 October 2019, the plaintiff received a telephone call from an unknown person purporting to be a law enforcement officer of Mainland China (the “Caller”), who represented that the plaintiff’s personal and bank account details had been stolen and misused in Mainland China. The plaintiff was further told that a large amount of money of unknown origin had been deposited into her bank account in Mainland China. The Caller proposed to meet with the plaintiff at a hotel on 21 October 2019 to discuss the matter. 3.On 21 October 2019, the plaintiff went to the hotel as told but when she arrived, she received another call from the Caller and she was told that given her personal and bank account details were compromised, she had to immediately open a new bank account with Bank of China (Hong Kong) Limited (“BOC”). 4.The plaintiff was worried that she was involved in some illegal activity and thus followed the instructions of the Caller to open a bank account with BOC (the “BOC Account”) on the same day. 5.Also on 21 October 2019, the plaintiff deposited $40,000 into the BOC Account. The Caller called her again and told her to deposit a further $620,000 into the BOC Account the next day. 6.On 22 October 2019, the plaintiff deposited $650,000 into the BOC Account. Thereafter, she received another call from the Caller who gave her a weblink and asked her to fill in her internet banking details and password for the BOC Account on the website. The plaintiff did so accordingly. 7.Later that same day, the plaintiff was told by her colleagues that she might have fallen victim to a scam, and so she checked the BOC Account balance. She discovered that at around 11:31am on 22 October 2019, a sum of $650,000 (the “Sum”) had been transferred from her BOC Account to another bank account (the “1st Receiving Account”) belonging to a XU Minghua (“Xu”) without her knowledge or consent. 8.The plaintiff further discovered that the at about 11:41am on 22 October 2019, the Sum was transferred from the 1st Receiving Account to another account with BOC belonging to the defendant (the “defendant’s Account”). There was no other banking transactions of the 1st Receiving Account between 11:31am and 11:41am on that day. 9.The plaintiff reported the matter to the Police for investigation. On 20 January 2020, the Police informed the plaintiff’s solicitors that they had arrested the defendant and the Sum had been frozen in the defendant’s Account. 10.By a Writ of Summons dated 22 September 2020, the plaintiff sought a declaration that the defendant holds the Sum on constructive trust for the plaintiff and an order for the payment back of the Sum based on unjust enrichment. The defendant’s defence 11.The defendant denies that he was the Caller and claims that he does not have any knowledge of the matters that allegedly took place between the plaintiff and the Caller. 12.The defendant also denies having received any sum (whether the Sum or otherwise) of money from the plaintiff’s BOC Account. 13.In respect of the sum of $650,000, the defendant avers that it was deposited into the defendant’s Account on 22 October 2019 upon receiving a message from a client called 黃春燕(“Huang”) in the Mainland at around 11:44am on 22 October 2019. 14.The defendant avers that he is the bona fide owner of the sum of $650,000 for valuable consideration and without notice of the pleaded by the plaintiff and he relies on the following particulars:-
15.The defendant counterclaims, amongst other things, a declaration that he is the beneficial owner of the sum of $650,000 and an order that the entire credit balance being frozen in the defendant’s Account be released to the defendant or Chan on his behalf. Relevant legal principles 16.The parties are not in dispute as to the principles relevant to an application for summary judgment. In gist:-
17.In respect of unjust enrichment, it is also well-established that the issue can be approached by asking the following four questions:-
18.A victim of fraud would prima facie have a claim in money had and received and may assert a proprietary claim against a recipient insofar as the fraudulently obtained funds are traceable into his hands, unless the recipient can establish that he is a bona fide purchaser for value without notice: Ferrari North America, Inc v Changhon International Energy Co., Limited & Others [2018] HKCFI 1063 at §12 per Wong J. 19.Further, even though the underlying reason for the commencement of proceedings was a fraud perpetrated by some unknown fraudster(s), in the context of an application for summary judgment, the plaintiff would not be caught by the so-called “fraud exception” under RHC O14 r 1(2)(b) so long as the plaintiff’s claim against the particular defendant is not based on an allegation of fraud: Ferrari North America (supra) §§13-15. In the present case, the plaintiff is not alleging any kind of fraud by the defendant and her claim against the defendant is solely based on unjust enrichment. Unjust enrichment? 20.The plaintiff has produced the bank statements of her BOC Account, as well as the Financial History Transaction Lists of the 1st Receiving Account and the defendant’s Account. It is clear from these documents that after the Sum was transferred from the plaintiff’s BOC Account to the 1st Receiving Account at 11:31am on 22 October 2019, it was then quickly transferred from the 1st Receiving Account to the defendant’s Account at 11:41am. The 1st Receiving Account had no other significant transactions or balance before or after the Sum was transferred in and out of the account. In particular, the 1st Receiving Account only had an account balance of $47.83 before and after the transfers in and out of the Sum. I am satisfied that the sum of $650,000 received by the defendant’s Account is the same as the Sum that originated from the plaintiff’s BOC Account, and the defendant was enriched by the Sum at the expense of the plaintiff. 21.It is common ground between the parties that the plaintiff had never had any dealing with the defendant that would justify the payment of the Sum to the defendant. The defendant’s enrichment is prima facie unjust. 22.The remaining question is whether the defendant is entitled to rely on any applicable defence to resist the plaintiff’s claim for restitution. Credible defence? 23.The defendant claims that he is a bona fide purchaser for valuable consideration of the Sum without notice of any fraud on the plaintiff. 24.Mr Dickson Chan, counsel for the plaintiff, submits that the defendant’s defence should be dismissed at the outset, as it does not amount to an arguable defence in law. I accept Mr Chan’s submissions. 25.The defendant’s defence is essentially that the Sum was received in the course of Chan’s money exchange business and Chan provided the consideration by remitting an equivalent amount in RMB to a third party at the instruction of his client. In other words, even on the defendant’s case, the consideration was neither provided by the defendant nor given at his instruction. 26.An essential element of the defence of bona fide purchaser for value is that the defendant has given valuable consideration for the property in question: TTI Global Resources Hong Kong Limited v Hongkong Myphone Technology Co Ltd & Others [2021] HKCFI 306 at §22. The defendant would therefore need to have provided some consideration for the receipt of the Sum. Since on the defendant’s case the alleged consideration was provided by Chan, it is difficult to see how the defendant can rely on the defence when the Sum was transferred to defendant’s Account under his sole name and yet the defendant did not provide any or any valuable consideration. 27.In any event, even if somehow the defendant was able to rely on Chan’s alleged consideration in his defence, the defendant’s case contains significant inconsistencies and appears to be inherently incredible in several material respects. His evidence has also failed to condescend on particulars, and it raises a lot more doubts than answers to the plaintiff’s claim.
28.In light of the foregoing matters, it is abundantly clear that the defendant’s case contains numerous loopholes and inconsistencies which render his defence inherently improbable and practically moonshine. It ought to be rejected. The observations made by Master Gary CC Lam in Tang Yuan Yi v Tokyo International Investment Limited, unreported, HCA 2078/2018, 5 June 2020; [2020] HKCFI 1133 at §8 are entirely apposite:-
29.In this case, there is no dispute that the defendant received the Sum as second layer recipient. The Sum belonged to the plaintiff. There is also no dispute that the plaintiff has no dealings with the defendant. On the evidence adduced by the defendant, I am not satisfied that he has raised a credible defence of bona fide purchaser for value without notice. Summary judgment should be entered in favour of the plaintiff. 30.In his written submissions, Mr Dickson Chan has also raised arguments that the defendant is not a bona fide purchaser for value because the alleged two remittances to Lin were tainted with illegality in three ways:-
31.Since I have already concluded that the defendant’s case is inherently incredible and internally contradictory in many material respects, it is strictly speaking unnecessary for me to consider the illegality or otherwise of the remittances. It suffices to say that, on the basis of the evidence before me, the relevant transfers and remittances do appear to resemble an underground banking system or “currency matching arrangement” which has been held to be illegal in a number of cases such as DBS Bank (Hong Kong) (supra). The effect of such illegality, if found to exist, is that the court will not enforce an exchange contract which is contrary to exchange controls under the governing law and a defendant cannot be considered to have provided value if the money was transferred pursuant to an illegal transaction. 32.The plaintiff has not adduced any expert evidence on the specific PRC law that is said to have been breached. Mr Dickson Chan relies on s59(2) of the Evidence Ordinance, Cap 8 which provides that a judgment of the High Court reported in citable form is admissible as evidence of any point of foreign law as to which a finding or decision is made in that judgment. He argues that the court’s finding of illegality of the underground banking systems under the PRC laws in decisions such as DBS Bank (Hong Kong) (supra) and TTI Global Resources (supra), which are all High Court decisions, is therefore admissible for the purpose of this application. 33.I do not think s 59(2) is sufficient to assist the plaintiff. S 59(3) of the Evidence Ordinance stipulates that except with the leave of the court, a party to any civil proceedings shall not be permitted to adduce any such finding or decision as is mentioned in subsection (2) by virtue of that subsection unless he has in accordance with rules given to every other party to the proceedings notice that he intends to do so. No notice has been given to the defendant that the plaintiff intended to adduce those High Court decisions as evidence of foreign law for the purpose of this application, and the plaintiff did not apply for leave of the court to be dispensed with this requirement. 34.As regards the alleged breaches of the AMLO, I do not think there is enough evidence before me to make a finding one way or the other whether the defendant and/or Chan had acted in breach of particular provisions. In any event, it is unnecessary for me to do so in light of my conclusion that the defendant does not have a bona fide defence to the plaintiff’s claim. Disposition 35.The plaintiff’s application for summary judgment is allowed. 36.Final and interlocutory judgment be entered in favour of the plaintiff against the defendant for:-
Mr Dickson Chan, instructed by Johnny K K Leung & Co, for the plaintiff Mr Paul Kwong, of Paul Kwong & Co, for the defendant | ||||||||||||||||
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