Yu Quan Li and Another v. Suen Kin Wing

HCA 1671/2018

[2025] HKCFI 3204

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1671 OF 2018

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JUDGMENT

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1.This is the trial of the Plaintiffs’ claims against the Defendant for fraud and misappropriation of their money.

2.I regret to say that the trial is a waste of costs and the court’s precious resources because, firstly, the Defendant had been convicted of criminal offences related to the matters complained of by the Plaintiffs, and for which purpose he had admitted to the facts set out in a “Summary of Facts for Plea”. Those admitted facts leave no room to doubt that he had defrauded the Plaintiffs of substantial sums of money.

3.Secondly, in breach of the Order of this court the Defendant had failed to file a supplemental witness statement. Consequently, he is debarred from giving evidence at the trial.

4.A copy of the Summary of Facts is attached to this Judgment as Annexure I. It can be seen from the admitted facts that the Plaintiffs, who were (and are) husband and wife, had a joint bank account maintained with UBS AG (“UBS” and “UBS Account”). The Defendant was the “Client Advisor” of the UBS Account.

5.Following discussion between the 1^st Plaintiff and the Defendant in October 2016, and in order to exchange RMB for USD or HKD, between 22 November 2016 and 2 February 2018 and the Plaintiffs caused to be made 37 bank transfers of funds totalling RMB132,400,000 into various Mainland accounts designated by the Defendant. Thereafter, as discussed (and no doubt agreed between the 1^st Plaintiff and the Defendant), the Defendant arranged for the money to be remitted to Hong Kong (in USD or HKD) and deposited into a bank account held by his cousin, Ms Chi Xingxin (“Chi” and “Chi’s Account”). The money should then be transferred to the UBS Account as discussed (and agreed).

6.In truth, there was no transfer from Chi’s Account to the UBS Account. In order to hide his tracks, the Defendant provided to the 1^st Plaintiff via WeChat messages photographic images showing “Application for Transfer” of amounts of USD or HKD (equivalent to the RMB transferred by the Plaintiffs) from Chi’s Account to the UBS Account, as well as bank statements of the USB Account showing that the monies were deposited into the UBS Account in good time. Both the Applications for Transfer and bank statements provided to the 1^st Plaintiff by the Defendant were fraudulent.

7.The Defendant’s fraud was discovered after a change of the Client Advisor for the UBS Account, and he was arrested by the police following report of the matter by UBS.

8.The Plaintiffs’ money has been kept by the Defendant and was apparently used by him to purchase a number of properties in the UK as well as 2 properties in the Mainland. He also owned 6 motor vehicles, 3 of which were exotic sports cars. Clearly, the Defendant was living beyond his means. It is more likely than not that his lavish lifestyle was financed with the Plaintiffs’ money.

9.No money has been repaid to the Plaintiffs by the Defendant. To the contrary, a worldwide Mareva injunction against him granted by the court on 18 July 2018 was breached by the Defendant by (a) assigning his interests in 27 apartments in London to a BVI company on 27 July 2018; and (b) willfully and repeatedly failing to disclose his assets to the Plaintiffs. These breaches resulted in contempt proceedings against the Defendant. He was found guilty and sentenced to 6 months of imprisonment on each of the 2 counts of contempt to run concurrently (see Re Suen Kin Wing (Committal for Contempt) [2023] 5 HKLRD 98 and Yu Quan Li v Suen Kin Wing [2024] HKCFI 109).

10.Arising out of these matters, the Defendant was charged with one count of fraud, one count of theft and two counts of dealing with property known or believed to represent proceeds of indictable offence. In HCCC 77/2021, after certain “plea bargaining”, the Defendant pleaded guilty to two counts of dealing with property known or believed to represent proceeds of indictable offences, and admitted the Summary of Facts (see HKSAR v Suen Kin-wing [2024] HKCFI 1805). On 21 June 2024, the Defendant was sentenced to a total of 10 years’ imprisonment.

11.The facts admitted by the Defendant should be given full weight by this court (see Wong Tak Yue v Kung Kwok Wai (No 2) (1997-1998) 1 HKCFAR 55 at 69B-C).

12.The Plaintiffs bring this action against the Defendant for recovery of the misappropriated sums relying on a number of causes of action, including the tort of deceit and unjust enrichment, or alternatively an account of profits or damages.

13.The Defendant’s pleaded defence consists primarily of bare denials and non-admissions. His witness statement does not advance the matter any further. No positive case or real defence had been set out. Indeed, para 16 of the witness statement stated that: “However, in due course, I will make an application to court and if leave be granted, those information will be pertinent to my defence and I will provide a supplemental witness statement then”. It appears that “those information” was a reference to “certain sensitive information” which the Defendant was not at liberty to disclose without the leave of the court. These matters explain why the Defendant was directed to file a supplemental witness statement.

14.Plainly, the facts admitted are sufficient to make out a case of fraud practised by the Defendant on the Plaintiffs. However, it must be said that the Plaintiffs’ case is also amply supported by a wealth of documentary evidence, which had been subjected to the meticulous analysis of Mr Wong, who appeared for the Plaintiffs with Ms Yip.

15.For instance, with one exception each of the transfer of funds in the Mainland caused by the Plaintiffs can be traced to the instructions given by the Defendant via WeChat messages. Further, the transfers of funds made by the Plaintiffs in the Mainland were followed by deposits made to Chi’s Account in USD or HKD. It appears that the exercise was carried out with the service of money exchange company / companies in Hong Kong engaged by the Defendant. Instead of forwarding the money deposited to Chi’s Account to the UBS Account, the Defendant created fraudulent Applications of Transfer and bank statements to create a false picture that he had carried out what was agreed with the 1^st Plaintiff to cover his tracks.

16.Furthermore, when the Defendant was confronted by the 1^st Plaintiff about his wrongdoings, he admitted during a recorded WeChat phone conversation that he had used HK$130 million of the Plaintiffs’ money to purchase stocks (about HK$40 million), real properties in London (about HK$50 million) and to make investments (about HK$40 million). He apologised for what he did. It should also be said that at the time of his arrest the Defendant was found to be in possession of the ATM card for Chi’s Account. He clearly was in control of that account.

17.In short, the Plaintiffs’ case against the Defendant is overwhelming.

18.In his final submissions, the Defendant said that the Plaintiffs had made use of him to launder money and to evade foreign exchange control in the Mainland. He recalled reading a newspaper report that the 1^st Plaintiff was running a prostitution ring in Nanjing. He was arrested in 2019 and should be serving a prison term in the Mainland, which explained why he was unable to attend the trial. The 1^st Plaintiff’s illicit activities were referred to by Mr Justice Johnny Chan in the Defendant’s criminal proceedings.

19.I agree with Mr Wong that in the absence of any pleaded defence based on illegality, it is not a matter relevant for this court’s consideration unless the evidence before it shows that the matter is ex facie illegal (see Igal Dafni v CMA CGM SA [2013] 2 HKLRD 73, [31]-[34]). Whilst the matter concerning the exchange of the Plaintiffs’ funds in RMB into USD or HKD raises suspicion over breach of Mainland foreign exchange control, I cannot say that it is ex facie illegal, especially when there is no expert evidence on Mainland law on this issue.

20.Further, in light of the recent Court of Appeal decision in Wong Chi Hung v Lo Wing Pun [2005] 2 HKLRD 882, there is certainly scope for argument whether what the Defendant had failed to do, namely, payment in Hong Kong of USD or HKD into the UBS Account would have been illegal (see [27]-[32] (obiter)).

21.As regards the alleged illegal activities of the 1^st Plaintiff, I also agree with Mr Wong that the view take by Johnny Chan J that the 1^st Plaintiff’s money was “very likely originated from organised, illegal prostitution[1]” is not admissible before this court, which is under a duty to make its own independent findings of fact (see Capital Century Textile Co Ltd v Li Dianxiao [2018] HKCFI 729, [23], [26]-[28]).

22.Finally, according to Wong Chi Hung, breach of Mainland laws on money exchanges would not bar the Plaintiffs’ claim based on unjust enrichment (see summary in headnote (2)-(4)).

23.For these reasons, I uphold the Plaintiffs’ claims based on tort of deceit and unjust enrichment against the Defendant (it is unnecessary to consider the remainder of the causes of action), and the Plaintiffs are entitled to judgment against the Defendant.

24.In respect of the judgment sum, although the Plaintiffs are claiming HK$130 million[2], it appears from para 8 of the Summary of Facts and paras 40 and 44 of the Plaintiffs’ opening submissions that the Defendant had misappropriated approximately HK$125 million of the Plaintiffs’ money. Accordingly, I find that that is the sum of money belonging to the Plaintiffs which has been misappropriated by the Defendant.

25.However, the Plaintiffs accept that they should account for the settlement sum of HK$6 million which they had received from UBS in relation to these matters and to prevent double recovery. The balance is HK$119 million. I give judgment to the Plaintiffs against the Defendant in the sum of HK$119,000,000.

26.As for interest, I accept the Plaintiffs’ submission that they are entitled to interest on the full HK$125,000,000 for the period from 2 February 2018 (date of last transfer of funds in the Mainland) until 5 June 2024 at the rate of 1% over prime rates.

27.For the period from 6 June 2024 (date of settlement with UBS) to date of judgment, to reflect the Plaintiffs’ receipt of the sum of HK$6,000,000, pre-judgment interest should be awarded on the sum of HK$119,000,000 at the rate of 1% over prime rates.

28.The Plaintiffs are also entitled to post-judgment interest on the sum of HK$119,000,000 at judgment rates, from the date of judgment until payment in full.

29.I make an interest award in favour of the Plaintiffs against the Defendant accordingly.

30.I shall decide on costs after hearing the parties.

31.I am grateful to counsel for their assistance.

Mr Howard Wong and Ms Regina Yip, instructed by Hui Doe & Sum Law Firm LLP, for 1^st and 2^nd Plaintiffs

The defendant appeared in person