A.Hartrodt Nederland B.V. v. Wong Man Wing t/a Shing Chi Co

DCCJ 2027/2020

[2021] HKDC 1542

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2027 OF 2020

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Coram: His Honour Judge H. Au-Yeung (Paper Disposal)

Dates of Submissions: 20 September, 5 & 21 October 2021

Date of Decision: 8 December 2021

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DECISION

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THE APPLICATION

1.This is the plaintiff’s application for summary judgment made pursuant to a summons filed on 1 December 2020 (“the Summons”).

THE PLAINTIFF’S CASE

2.This is a typical cyber fraud case. 

3.The plaintiff alleged that on around 20 February 2020, Mr Hagendoorn, its financial director, received various emails from Mr Schalk, the managing director of a related German company.  It transpired subsequently that Mr Schalk’s email account had been hacked, and the said emails were not sent by Mr Schalk himself.  Not realising this at the time, Mr Hagendoorn communicated with the person who purported to be Mr Schalk (“the Bogus Mr Schalk”), who informed Mr Hagendoorn that the company was engaging in a partial buyout of a foreign company.

4.Subsequently, Mr Hagendoorn, under the mistaken belief, among other things, that the aforesaid emails were coming from Mr Schalk, made a payment of EUR242,613.26 (“the Sum”) from the plaintiff’s bank account with Bank of ABN AMRO to the defendant’s account with the Bank of China (Hong Kong) (“the defendant’s bank account”).

5.It is undisputed that the plaintiff had never had any dealings with the defendant and the plaintiff did not owe the defendant any money.

6.Therefore, the plaintiff claimed, among other things, that the defendant had been unjustly enriched in the Sum at the expense of the plaintiff.

PROCEDURAL BACKGROUND

7.Before I proceed further, it is necessary to set out the procedural background of the present case.

8.The Writ herein was issued on 18 May 2020.  The Statement of Claim was filed on the same day.

9.On 3 November 2020, the defendant filed a Defence, in which it was alleged that he had entered into a written joint venture agreement (“the JV Agreement”) with a Mr Lyu Yuliang (“Mr Lyu”), under which Mr Lyu agreed to provide him with an amount of US$1,000,000 as initial capital injection into a PRC company.  The defendant further alleged that Mr Lyu had orally agreed to pay him 2% of the capital injection as his remuneration.  It was also pleaded that, pursuant to the JV Agreement, Mr Lyu had transferred/deposited 3 sums of money into the defendant’s bank account as capital injections, namely:

(1)  USD326,496.50 (“the 1^st Payment”)

(2)  USD453,730.20 (“the 2^nd Payment”)

(3)  EUR242,613.26 (“the 3^rd Payment”)

10.Kaneda Aerospace LLC claimed that it was the victim of another cyber fraud and as a result it had transferred the 1^st Payment and the 2^nd Payment to the defendant.  On 17 December 2020, by consent, leave was granted for Kaneda Aerospace LLC to join the action herein as an intervener.  It was further ordered, among other things, that no judgment shall be granted to the plaintiff without the intervener being heard.  

11.As aforesaid, the Summons was filed on 1 December 2020.  Usual directions were then given by the learned Registrar Lui on 14 January 2021 for the plaintiff, the defendant and the intervener to file and serve affidavits for the purpose of the Summons. 

12.By consent of all parties, the Summons was ordered to be disposed of on papers.  Further directions were also given for the plaintiff, the defendant and intervener to lodge and serve their respective written submissions. 

13.Be that as it may, the intervener had neither filed any affidavit nor lodged any submissions as directed.

THE LEGAL PRINCIPLES

14.In Li Chuen Kwai v. Po Lam Construction Development Limited (HCA 2376/2013, unreported, 24 September 2014), it was held that:

“11. As far as the plaintiff’s claim is concerned:

(1) An application for summary judgment must be supported by an affidavit verifying the facts on which the claim is based [Order 14, rule 2(1), Rules of the High Court].

(2) The Statement of Claim must be good and complete in itself; any defect or omission in the Statement of Claim cannot be corrected or supplemented by the plaintiff’s affidavit. If the defect is one of substance, the application for summary judgment will be dismissed [see: Hong Kong Civil Procedure 2014 at Practice Note 14/1/5].

(3) This means that an Order 14 application has to proceed on the case as pleaded, and it is those facts (as pleaded) which have to be verified on affidavit.

(4) Where the assertions in the plaintiff’s affirmation constitute a material deviation from the plaintiff’s pleaded case, the plaintiff will have failed to verify his claim as pleaded, and summary judgment should not be granted [Lin Jan v Long Xiaobo, HCA 1516/2012 (Judgment dated 4/09/2013)].

(5) Equally, summary judgment will not be granted where the plaintiff’s affidavit evidence is materially different from and inherently inconsistent with his/her case in the Statement of Claim [see: Sin Yuk Hung v Sin Tung San, HCA 474/2013 (Judgment dated 18/12/2013)].

12.  As far as the defendant’s defence is concerned:

(1)  The defendant shoulders the burden to satisfy the court that he has a real or bona fide defence (ie that there are triable issues), or that there ought for some reason to be a trial of the plaintiff’s claim.

(2)  However, a complete defence need not be shown.  The defence set up need only show that there is a triable issue or question or that for some other reason there ought to be a trial; and leave to defend ought to be given unless there is clearly no defence in law and no possibility of a real defence on the question of fact.

(3)  Although the mere assertion in an affidavit does not, ipso facto, provide leave to defend, the court will not embark upon a mini‑trial of the action on paper and leave to defend will be granted unless the defence raised is so incredible or so contradicted by contemporaneous documents or circumstances that it becomes clear that the defence is a sham.

(4)  The test is not whether the defendant’s assertions are to be believed, rather it is whether those assertions are believable, ie capable of being believed.  If so, the defendant must have leave to defend.

(5)  Whether the defendant’s assertions are believable is a question that should be answered not by taking those assertions in isolation bur rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute.”

15.InJu Yan Di Embroidery Genesisy v Yau Wai Han [2015] 1 HKLRD 822, 827, Cheung JA held that:

“14. It is well-established that the burden on the defendant in a summary judgment application is to show that he has a credible defence and he must condescend to give particulars of his defence. However, this does not mean that once the plaintiff invokes the application and irrespective of the strength of his case, the defendant bears all the burden of showing that there are triable issues in the case. This is because the starting point in a summary judgment application is that it should only be invoked when there is no defence to the claim. This means that the plaintiff must in the first place demonstrate that the defendant has indeed no defence. This requirement is further recognised in the procedural rules which mandate the plaintiff to state his belief in the verifying affidavit that there is no defence to the claim. This requirement must be kept in proper perspective when assessment is made of the strength of the application, otherwise there is a danger that the attention will be focused solely on what the defendant has said without consideration at the same time of the basic premise of the plaintiff’s claim or its inherent strength and weakness…” (Emphasis added)

16.In Time Rich 08 Limited v DBE (HK) Limited & Others [2018] HKCA 404, it was held by the Court of Appeal that:

“…in deciding whether a plaintiff is entitled to summary judgment the relevant test is whether the defendant has raised credible triable issues. If there are, the matter should go to trial. If not, judgment should be entered against the defendants. In considering whether there are triable issues, the Court will not take the defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence but what the Court should not do is to conduct a mini-trial on complicated factual issues : Paul Y Management Ltd v Eternal Unity Development Ltd (CACV 16/2008)” (at paragraph 5.2) (emphasis added)

17.To raise a triable issue or arguable defence, the defendant cannot be sparing of the particulars of his defence, and then claim, as a result of his own parsimony in details. that there is an obscurity which must await trial for illumination.^[1]

18.In Korea Data Systems Co Ltd & Anor v Chiang Jay Tien & Anor [2001] 3 HKC 239, Deputy Judge Jeremy Poon (as the Chief Judge of the High Court then was) also had the following to say:

“On the evidence before me, it is simply a bare allegation by the defendants that the California judgment is not final and conclusive. The second defendant had failed in his third affirmation to condescend upon particulars why he considered it not final and inconclusive. The first defendant’s position is even worse: this ground never featured in his affirmation or draft defence at all. It was only advanced in Mr Leung’s submissions. None of them had adduced any evidence to contradict Mr Cameron’s opinion. As I understand Mr Chan and Mr Leung, they are not contending that Mr Cameron’s opinion is in any way wrong. In the circumstances, I am not satisfied that the defendants’ bare allegations had even begun to put in issue the question whether the California judgment is final and conclusive: see generally Hong Kong Civil Procedure 2001 para 14/4/4 at p 152.” (at 248F – H) (emphasis added)

19.The principles referred to above are trite. However, in the present case, there is a feature which is not often seen, in that while the defendant has filed a Defence, he has not filed any affidavit in opposition to the Summons. 

20.Order 14 rule 3(1) of the Rules of the District Court (Cap.336H, Laws of Hong Kong) (“RDC”) states that:

“Unless on the hearing of an application under rule 1 either the Court dismisses the application or the defendant satisfies the Court with respect to the claim, or the part of a claim, to which the application relates that there is an issue or question in dispute which ought to be tried or that there ought for some other reason to be a trial of that claim or part, the Court may give such judgment for the plaintiff against that defendant on that claim or part as may be just having regard to the nature of the remedy or relief claimed.”

21.Order 14 rule 4(1) of the RDC further provides that:

“A defendant may show cause against an application under rule 1 by affidavit or otherwise to the satisfaction of the Court.”

22.As a defendant is permitted to show cause by affidavit “or otherwise”, it appears that filing an affidavit is not a prerequisite in resisting an application for summary judgment successfully. Having said that, as a matter of logic, if even “the mere assertion in an affidavit does not, ipso facto, provide leave to defend”[2], it would be quite exceptional if the court would grant leave to defend on the basis of a line of defence which is made upon factual assertions which are not verified by any affidavit filed by the defendant.

23.In Chinakong Manufactory Limited v Uniden Hong Kong Limited [1993] 1 HKLR 28, Kaplan J expressed his views as follows:

“18. The startling omission from the short chronology which I have given above is the lack of any evidence whatsoever from the defendant. Four affirmations of the plaintiff have gone completely unanswered and the time scale given clearly shows that the defendant has had every opportunity to file evidence if so advised. Indeed Master Woolley’s order gave the defendant 21 days in which to do so.

O.14 r.3(1) provides:

‘Unless on the hearing of an application under Rule 1...the defendant satisfies the court ... that there is an issue or question in dispute which ought to be tried ... the court may give judgment for the plaintiff against that defendant...’

O.14 r.4(1) provides:

‘A defendant may show cause against an application under rule 1 by affidavit or otherwise to the satisfaction of the court.’

The relevant notes in The White Book appear at pp. 147-8 and state:

‘The defendant may show cause by ‘affidavit or otherwise.’ In practice the Masters will generally require an affidavit from the defendant before they will feel ‘satisfied’ that the defendant is entitled to leave to defend save in exceptional or obvious cases, e.g. in a small claim, a letter from the defendant acting in person living a long way from the Court raising a genuine issue may be sufficient. The use of the term ‘or otherwise’ is not intended to open wide the door for giving leave to a defendant who has no real defence; the primary obligation remains on the defendant to ‘satisfy’ the Court that there is a triable issue or question or that there ought to be a trial for some other reason.

Thus, the fact that he has served a defence may be sufficient to enable a defendant to get leave to defend, but not if it is a sham defence served at or soon after acknowledgment of service. See McLardy v. Slateum (1890) 24 Q.B.D. 504, where the plaintiff successfully applied for judgment under 0.14 one month after the defence was served.

‘A desire to investigate alleged obscurities and a hope that something will turn up on the investigation cannot, separately or together, amount to sufficient reason for refusing to, enter judgment for the plaintiff. You do not get leave to defend by putting forward a case that is all surmise and Micawberism’ (per Megarry V.-C. in The Lady Anne Tennant v. Associated Newspapers Group Ltd. [1979] F.S.R. 298).

Defendant’s affidavit – The defendant’s affidavit must ‘condescend upon particulars,’ and should, as far as possible, deal specifically with the plaintiff's claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on to support it. It should also state whether the defence goes to the whole or part of the claim, and in the latter case it should specify the part.

A mere general denial that the defendant is indebted will not suffice (Wallingford v. Mutual Society (1880) 5 App.Cas. 685, per Lord Blackburn, p. 704; Re General Rail Syndicate, Whiteley’s Case [1900] 1 Ch. 365, per Lindley M.R., p. 369; Anon. [1875] W.N. 249, per Quain J., p. 250) unless the grounds on which the defendant relies as showing that he is not indebted are stated (ibid.). If the affidavit commences with a statement that the defendant is not indebted to the plaintiff in the account claimed, or any part thereof, it should state why the defendant is not so indebted, and state the real nature of the defence relied on (Re General Rail Syndicate, above).’

19. In my experience both at the bar and on the bench, I have come across 3 methods by which defendants seek to show cause against an application under O.14 r.l.

20. The most common method is for the defendant to file an affidavit(s) deposing to the fact that there is a defence on the merits and setting out the matters which give rise to the defence.

21. A variation of the first method is, in addition to this narrative, to exhibit to the affidavit a draft defence which it is proposed to file.

22. The third method is simply to exhibit a defence and verify its truth and content by affidavit.

23. I cannot recollect an O.14 application where there has been no evidence whatsoever from the defendant. However, I can conceive of circumstances where it would not be necessary to file an affidavit but still be able to satisfy the court that leave to defend should be granted. There must be cases where the defendant can show on the face of the Statement of Claim itself that there is no cause of action against him. This could arise in a number of ways. The pleading may fail to set out the necessary ingredients of the cause of action. The plaintiff may plead an agreement terminable by notice but not plead that notice has been given. The plaintiff's cause of action may be unknown to law. The defendant may enjoy immunity from suit such as if a Judge or arbitrator were sued for negligent decision making. In these examples, the. defendant would not require an affidavit or for that matter a defence as the defect in the plaintiff’s case would be apparent from the face of the pleading. In cases where it is plain from the Statement of Claim that the cause of action is outside the limitation period all the defendant needs to do is to put in a defence taking the point. An affidavit would serve little purpose in the circumstances but from an abundance of caution may be put in. A further example is where the cause of action is not within the scope of O.14 such as an action for libel. One could, of course, think of many other examples, such as O.14 applications against the Crown.”

24.Kaplan J’s decision in Chinakong Manufactory Limited was followed by Kwan J (as Kwan VP then was) in Cheung Tai Hong Holdings (Technology) Limited v Cheng Yuk Kuen (also known as Cheng Yuk Kuen, David) (HCA 3166/2001, unreported, 6 March 2002):

“[…] I also accept the submission of Mr. Samuel Chan, who appeared on behalf of the plaintiff, that although a defendant may show cause against an application for summary judgment ‘by affidavit or otherwise’ under Order 14 rule 4(1), it is established practice that the defendant is required to file an affidavit before the court can be satisfied he has raised a triable issue, unless it is an unusual situation that he is able to raise a triable issue with reference to the plaintiff’s pleading and affirmation alone, without any need to put in evidence to substantiate any of his allegations (see Chinakong Manufactory Ltd. v. Uniden Hong Kong Ltd. [1993] 1 HKLR 28; Hong Kong Civil Procedure 2002, Vol. 1, para. 14/4/3).” (at paragraph 13)

25.I have not lost sight of the fact that the above are pre-CJR authorities, and pleadings were not required to be verified in those days.  The position since 2 April 2009 has been different, in that pleadings are now required to be verified by Statements of Truth, and “proceedings for contempt of court may be brought against a person if he makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth” (Order 41A rule 9(1) of the RDC).  Be that as it may, I do not think the function of an affidavit in opposition can in effect be replaced by a statement of truth as such, by reason of the followings:

(1)  As pointed out by the learned author of Hong Kong Civil Procedure 2022, vol. 1, at paragraph 41A/9/1 (page 1002), “unlike the penalty under s.40 of the Crimes Ordinance (Cap 200) for making a false affidavit, contempt proceedings under O.41A, r.9 do not provide for the maker of a false verification to face criminal prosecution”.  In other words, the consequence of swearing a false affidavit is different from giving a statement of truth without honest belief;

(2)  Factual assertions made in the pleadings, if unsupported by documents (which would have been exhibited to an affidavit in opposition should there be one), remain “mere assertions”.

THE DEFENDANT’S DEFENCE

26.In the present case, the defendant does not contend that the plaintiff’s claim is outside the ambit of Order 14 of the RDC, and it appears that there is no dispute that the plaintiff is prima facie entitled to judgment, for the defendant’s counsel accepted that “the plaintiff may well be right that there are elements of unjust enrichment in the present case by reason of the alleged fraud”[3].

27.Hence, the question here is whether the defendant can satisfy this court that there is any triable issue.

28.As mentioned above, the defendant pleaded that the Sum was received pursuant to the JV Agreement, and such a sum of money was part of the US$1,000,000 initial capital to be injected into a PRC company. 

29.It was further pleaded in the Defence that:

(1)  The original copy of the JV Agreement (with the signature of the defendant and Mr Lyu) has been seized by the Hong Kong Police Force (“HKPF”), and the defendant is only keeping in his possession an unexecuted copy thereof;

(2)  The defendant’s solicitors have written to the HKPF on 20 September 2020 and requested for a copy of the seized JV Agreement, however, no positive response has been received;

(3)  Mr Lyu, “via his employee(s), agent(s), authorised person(s) and/or beneficial owner(s) (legal person(s))”[4], sent certain screenshots to the defendant confirming that Mr Lyu had made such capital injections to the defendant;

(4)  The defendant had been acting in good faith in receiving the capital injections;

(5)  The defendant had no reasonable grounds to believe that the capital injections received by him represented the proceeds of any indictable offence;

(6)  The defendant had no relationship with any of the alleged culprits who participated in the fraudulent scheme;

(7)  It is unjust and inequitable for the defendant to return the 3^rd Payment (described as the “3^rd Capital Injection” in the Defence) to the plaintiff where the defendant was “genuine and innocent”[5].

30.Despite the pleaded case referred to above, it seems that Mr Lee’s main argument is on “change of position”.  He relied on Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, Commerzbank AG v Gareth Price-Jone [2003] EWCA Civ 1663 and Andrew Burrows, A Restatement of the English Law of Unjust Enrichment and argued in his written submissions that:

“4. The plaintiff’s claim is proprietary in nature and finds its cause under the doctrine of unjust enrichment.

[…]

8. However, not all cases falling under this category of claim are amenable to restitution. In particular,

8.1 where the defendant’s position has changed as a consequence of, or in anticipatory reliance on, obtaining the benefit; and

8.2 the change is such that the defendant would be worse off by making restitution than if the defendant had not obtained, or relied in anticipation on obtaining, the benefit, the defendant has a bona fide defence to a claim under unjust enrichment.

[...]

22. Even at this preliminary stage, there is at the very least a bona fide defence under the doctrine of change of position available to the defendant, by reason of the fact that its position has changed as a consequence of, and in anticipatory reliance on, the remittance.

23. Change of position is a fair defence in cases of proprietary claim where a plaintiff has a proprietary right to reclaim monies mistakenly paid into a defendant’s bank account and that is so even when the defendant has no right to keep the money as between the plaintiff and the defendant. This is the exact nature of change of position. In the present case, the defendant’s position has changed because:

(1) the defendant has received the monies in anticipatory reliance on the JV Agreement, believing that the remittance had come from Mr Lyu;

(2) non-pecuniary, as well as pecuniary, loss should count in determining whether the defendant is worse off and this is supported by the decision in Commerzbank AG v Gareth Price-Jones, above; and

(3) it is as yet unknown and certainly too early to determine without proper trial to see whether the defendant has in fact become worse off in both non-pecuniary and pecuniary contexts.

[…]

26. […] this is a case where a defendant entered into a bona fide contractual agreement for service and in consideration of that service, was promised a specified remuneration. He was informed of an incoming remittance and, in anticipation of that remittance, changed his position by relying on that remittance. Whether the defendant has become worse off either in pecuniary or non-pecuniary context is a question which ought to be determined at full trial and not a matter to be summarily determined at this stage.” (emphasis added)

31.In Commerzbank AG v Gareth Price-Jone [2003] EWCA Civ 1663, Mummery LJ explained the law on “change of position” in the following way:

“28. As the Bank mistakenly made an overpayment of 250,000 to Mr Price-Jones on 15 December 2000 it is entitled to restitution of that sum, unless Mr Price-Jones can establish that his position so changed that it is inequitable in all the circumstances to require him to make full restitution to the Bank.

29. In Lipkin Gorman v. Karpnale Ltd [1991] 2 AC Lord Goff said that

‘Where an innocent defendant’s position is so changed that he will suffer an injustice if called upon to repay or to repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution [at p.579f] …

At present I do not wish to state the principle any less broadly than this: the defence is available to a person whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution, or alternatively to make restitution in full.[at p.580f]’

30.     Lord Goff added that it was not appropriate to ‘attempt to identify all those actions in restitution to which change of position may be a defence’ and that ‘nothing should be said at this stage to inhibit the development of the defence on a case by case basis, in the usual way.’

32.His Lordship continued at paragraph 39:

“The second point is whether there was, on the findings of fact made by the Deputy Judge, any relevant disenrichment or change of position on the part of Mr Price-Jones. It was for him to establish that, in all the circumstances, it would be inequitable to require him to make restitution. The obvious cases occur where there has been a reduction in the assets of the recipient of the overpayment. In those cases he must prove that there has been a reduction of assets, although it is unnecessary for him to produce precise financial calculations quantifying the amount of the reduction. Lord Goff did not, however, restrict the scope of the defence to cases in which there has been a reduction of assets. The defence would also be available, in my view, in various employment situations in which the recipient has made a relevant change of position as a result of the mistaken payment to him: for example, by giving up his current job to lead a life of leisure in circumstances where it would be difficult to find another job, or by turning down a firm offer of a better paid job.” (emphasis added)

33.Applying the well-established requirements for granting leave to defend, the defendant has the burden to satisfy the court that there are triable issues concerning his defence of “change of position” (para.12(1) of Li Chuen Kwai (supra)), and he must condescend to give particulars of his alleged change in position (paragraph 14 of Ju Yan Di Embroidery Genesisy (supra)).

34.However, the defendant has totally failed to do that:

(1)  First of all, the only so-called “change of position” was that “he was informed of an incoming remittance and, in anticipation of that remittance, changed his position by relying on that remittance” (paragraph 26 of the defendant’s written submissions).  There are two problems here:

(i)  It is trite that counsel is not permitted to give evidence from the Bar Table.  Hence, there is no admissible evidence before the court that the defendant had been informed before the incoming remittance was made;

(ii)  In any event, putting aside the issue on admissibility, it is still a mystery as to what position had allegedly been changed on the part of the defendant.

(2)  Moreover, it is undoubtedly inadequate for the defendant to say, for the purpose of resisting an Order 14 application, that “it is as yet unknown and certainly too early to determine without proper trial to see whether the defendant has in fact become worse off”[6].  It is for him to put in evidence and support his allegation that he has become worse off.  

(3)  It goes without saying that the receipt of the Sum in itself does not amount to a “change of position” as such.

35.Mr Lee also submitted that the defendant has entered into a bona fide agreement for service (i.e. the JV Agreement) and in consideration of that service, was promised a specified remuneration (see paragraph 26 of his written submissions quoted above).  He did not go on to argue that the defendant was a bona fide purchaser without notice, but even if he were to do that, I would have rejected this argument, because there is no allegation that the plaintiff was an “employee(s), agent(s), authorised person(s) and/or beneficial owner(s) (legal person(s))” of Mr Lyu at all.  It cannot be disputed that the plaintiff did not pay the Sum to the defendant upon the instruction of Mr Lyu.

36.Additionally, I am of the view that the defendant’s assertion that there was a JV Agreement as alleged is incredible for the following reasons:

(1)  While the terms of the JV Agreement had been pleaded in the Defence, it remains a “mere assertion” that there was indeed such an agreement, because the defendant has not placed a copy of the written agreement before the court at all.  Even though the original executed copy thereof had been seized by the HKPF, there is nothing which stops the defendant from exhibiting the unexecuted copy thereof which he admitted that he is still keeping;

(2)  Although the defendant alleged that his solicitors had written to the HKPF and asked for a copy of the seized JV Agreement, such a letter was not produced herein;

(3)  The defendant’s case that the 1^st Payment, the 2^nd Payment and the 3^rd Payment were made pursuant to the JV Agreement is inherently improbable:  Out of the 3^rd Payment in the sum of EUR242,613.26, EUR242,600 was converted into US Dollars (USD261,044.88) on the same day when it was remitted into the defendant’s bank account.  Adding this sum to the amount of USD780,226.70 (the total of the 1^st Payment and the 2^nd Payment) would give a total of USD1,041,271.58.  It is nowhere near the alleged capital injection of USD1 million.  In this regard, I would not take into account the alleged remuneration of 2% because it is not the defendant’s case (as pleaded) that any part of the said 3 payments was paid towards such remuneration[7];

(4)  It was alleged by Mr Lee that screenshots of the remittances had been sent to the defendant as proof of such remittances. Leaving aside the admissibility of such a factual assertion (which is not supported by any affidavit evidence), such screenshots had not been produced herein.

37.In paragraphs 18 and 19 of his written submissions, Mr Lee attempted to explain why the defendant did not file any affidavit in opposition.  He stated that:

“18. The circumstances surrounding the difficulty in providing the relevant original (or a copy) of the documents have been laid out clearly in Defence, particularly in §§3 – 7, yet the plaintiff appears to ignore this fair point. In the circumstances, the defendant has not been able to provide relevant documentary evidence which has rendered a further affirmation unnecessary in terms of time and costs.

19. In any event, the provision of documentary evidence and relevant affirmations are matters for resolution before a full trial where all facts are prosecuted and questions of law considered.  It is not a function of O 14 application to skip through defendant’s fair points of defence merely because it has been unjustly enriched and plaintiff considers it convenient to ignore substantive defence in law.”

38.With greatest respect, Mr Lee’s arguments are totally misconceived.   If the defendant fails to put forward any triable issue at this stage, there is no reason why the plaintiff should not be granted judgment right away.

39.He also tried to lay the blame on the plaintiff:

“20. The plaintiff’s comment that the Defence does not condescend into particulars is similarly unfair. The circumstances surrounding the remittance, the detailed terms of the JV agreement, details of the capital injections in contractual performance have all been particularised in Defence, at §§10 – 15 and 18 – 19.

21. It is telling that the plaintiff to date has not requested further and better particulars despite the fact that it feels (and now submits) that the Defence lacks particulars.

[…]

27. There are particulars of clear representations made firstly of the JV Agreement, and secondly of dealings with the Hong Kong Police and attempts to retrieve at least a copy of that JV Agreement.  The terms of the JV Agreements appear at the very least to be of clear probative value, while screenshots of remittance were sent to the defendant as proof of such remittances.”

40.These submissions are rejected.  The defendant only has himself to blame for failing to condescend to particulars in an affidavit in opposition so as to show that his assertions are credible.

41.Having considered all the matters raised by the defendant, I hold the view that the defendant has no defence to the plaintiff’s claim.

42.While this court had ordered on 17 December 2020 that “no judgment shall be granted to the plaintiff without the intervener being heard”, judgment may be so entered herein because, as aforesaid, the intervener has already been afforded with a chance to make submissions.

ORDER

43.I therefore order that final judgment be entered against the defendant for:

(1)  A declaration that the defendant held the Sum deposited in the defendant’s bank account as constructive trustee for and on behalf of the plaintiff;

(2)  An order that the defendant do pay the Sum to the plaintiff;

(3)  Interest on the Sum from 20 February 2020 to the date hereof at the best lending rate of HSBC plus 1% and at judgment rate thereafter until full payment.

COSTS

44.I make a costs order nisi that:

(1)  the defendant shall bear the plaintiff’s costs of this action and of the Summons, including all costs reserved, with certificate for counsel, to be taxed if not agreed.

(2)  the intervener shall bear the plaintiff’s costs of the application for joinder (including all costs reserved), to be taxed if not agreed.

45.The above order nisi shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof.

Mr Stony Chan, instructed by Robin Bridge & John Liu, for the plaintiff

Mr Kevin Lee, instructed by T C Wong & Co, for the defendant

Squire Patton Boggs, for the Intervener, not made any submission