Adam Michael Charles Sturt and Another v. Cosco Nova Enterprise Ltd and Others

DCCJ 5802/2025

[2026] HKDC 1165

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5802 OF 2025

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DECISION

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Introduction

1.By a Notice of Appeal dated 26 March 2026 (the “Notice of Appeal”), the 4^th Defendant (“D4”) sought to appeal against the Order of Master Eva Leung dated 13 March 2026 (the “13 March Order”), by which the Learned Master Leung (i) dismissed D4’s strike out application filed on 5 November 2025 (the “Strike Out Application”) save the striking-out of relief (2); and (ii) allowed the application of the 1^st Plaintiff (the only Plaintiff at the time)(“P1”) to join Hotondo Southcoast Pty Ltd as the 2^nd Plaintiff (“P2”, together with P1 the “Plaintiffs”) and to amend the Statement of Claim filed on 22 October 2025 (the “Original SOC”)(the “Joinder/Amendment Application”).

2.On 2 June 2026, D4 filed a Summons seeking to amend its Notice of appeal (“NOA Amendment Summons”). The Plaintiffs did not object to the NOA Amendment Summons.

3.On 9 June 2026, the NOA Amendment Summons and the appeal were heard.

4.At the hearing, D4 was represented by Counsel, Mr Lincoln Cheung (“Mr Cheung”) and Mr Samuelson TL Choi (“Mr Choi”). The Plaintiffs were represented by Counsel, Mr Toby Brown (“Mr Brown”).

5.I ordered in terms of the NOA Amendment Summons at the hearing and reserved my decision on the appeal. I now give my decision on the appeal.

Jurisdiction

6.It is well established that an appeal from master to judge in chambers is dealt with by way of an actual rehearing of the application which led to the order under appeal and the judge treats the matter as though it came before him/her for the first time. The judge would give the weight it deserves to the previous decision of the master but he was in no way bound by it. The judge in chambers is in no way fettered by the previous exercise of the master’s discretion: Bonita Co Ltd S A v Chark Yuk Ying Brenda trading as Brenda Chark & Co [2022] HKCFI 1221, §21.

7.I note that the Summons filed by P1 on 16 February 2026 in respect of the Joinder/Amendment Application refers to Order 15 rule 16, Order 20 rule 5 of the Rules of District Court (“RDC”) and the inherent jurisdiction of the Court in the margin notes of the Summons. Order 15 rule 16 is the rule that concerns declaratory judgment, which is not the relevant rule to consider for the purpose of the Joinder/Amendment Application.

8.The parties have nevertheless proceeded on the basis that Order 15 rule 6(2) of the RDC is the relevant rule to consider for the purpose of the application to join P2. D4 in its written submissions refers to the legal principles under Order 15 rule 6(2).

9.Unlike the Court of First Instance, the District Court does not possess inherent jurisdiction to hear any case (see Chan Chun Hei Ryan v Hang Seng Bank Ltd [2026] HKDC 91 at §21).

10.The erroneous reliance on Order 15 rule 16 of the RDC and inherent jurisdiction is treated as an irregularity and does not nullify the application. In the absence of any prejudice to D4, I shall under Order 2, rule 1 of the RDC correct the irregularity by treating the Joinder/Amendment Application as an application made under Order 15 rule 6(2) and Order 20 rule 5 of the RDC.

Background

11.P1 commenced these proceedings against 11 defendants. It is alleged that P1 fell victim to a fraud scheme under which he transferred, or caused to be transferred, a sum of AUD44,499.99 (equivalent to USD30,980) and a sum of AUD218,205.89 (equivalent to USD154,900) from P2’s bank account to HK Jinlixiang Trading Limited (“Jinlixiang”) and Jiuren Trading Co, Limited (“Jiuren”) on 29 September 2021 and 7 October 2021 respectively. The amount transferred was in the total sum of AUD262,705.88.

12.It is alleged that Jinlixiang transferred a sum of USD49,990 to the 3^rd Defendant and a sum of USD120,112 to D4. The money received by Jiuren is not relevant to the claim against D4.

13.The causes of action as pleaded by the Plaintiffs are unjust enrichment and constructive trust. The reliefs sought by the Plaintiffs include liquidated damages and declaratory reliefs.

Applicable Legal Principles: Joinder Application

14.Under Order 15 rule 6(2)(b) of the RDC, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application order any of the following persons to be added as a party, namely -

“(i) any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters may be effectually and completely determined and adjudicated upon; or

(ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

15.On whether a new party should be joined, “the test is whether there is a bona fide claim and a proper question to be tried as between the plaintiff and [the intended defendant] that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the present proceedings.” (per Master Marlene Ng (as she then was) in Pang Kwok Lam v Schneider Electric Asia Pacific Limited HCPI 90/2010).

Applicable Legal Principles: Amendment Application

16.The legal principles concerning amendment of pleadings have been set out in Natamon Protpakorn v Citibank [2009] 1 HKLRD 455 at §25:-

“25. It is well established that, generally speaking, all such amendments ought to be made ‘for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings’ (per Jenkins L.J. in G. L. Baker Ltd v Medway Building and Supplies Ltd [1958] 1 WLR 1216 at 1231); see also paragraph 20/8/6 of Hong Kong Civil Procedure 2008. Leave is readily granted to amend before the trial unless it can be demonstrated that the new claim based on the proposed amendment is bound to fail (see Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd [1992] 1 WLR 1025). While the Court is entitled to have regard to the merits of the case, it should only do so when the merits are readily apparent, and are so apparent as not to require prolonged investigation (see e.g. Kings Quality Homes Ltd v A. J. Paints Ltd [1997] 3 All ER 267).”

17.Order 18 rule 12A of the RDC states that:-

“A party may in any pleading make an allegation of fact which is inconsistent with another allegation of fact in the same pleading if —

(a) the party has reasonable grounds for so doing; and

(b) the allegations are made in the alternative.”

18.In Liu Hao Tsing Education Foundation Limited & Anor v Liu Tieh Ching Brandon [2023] HKCFI 1463, Hon Wilson Chan J explained the application of the equivalent provision under the Rules of High Court:

“15.  In Hui Yin Sang v Tsoi Ping Kwan [2010] 1 HKC 585, Au J (as he then was) at §25(10) described the objectives of Order 18, rule 12A in these terms:

“One of the objectives of this rule is to prevent a party from pleading inconsistent cases in relation to a matter which is plainly within his knowledge, so that there could be no justification for him to put forward inconsistent factual alternatives. The party also simply could not properly verify the pleading as he is now required to do.” (emphasis added)

In that case Au J concluded that no reasonable ground had been provided by the plaintiffs for advancing their inconsistent claims, when the relevant facts must be within their personal knowledge (§25(11)(b)).

16.  The Court of Appeal in Yiu Ka Fung Vincent v Info-Vantage Ltd, CACV 96/2014 (unrep, 3/07/2015) explained the principles at §§63 and 65:

“63. Cases may arise where the party has no personal knowledge of the facts, but has evidence pointing to alternative possibilities. The pleading and verification of such alternative pleas is permissible as long as there is a reasonable basis for doing so on the evidence available. In such circumstances, where a party puts forward a pleading with alternative and mutually inconsistent versions of the facts, because the facts as known to him admit of alternative interpretations, the pleading is permissible and verifiable on the basis that the party believes on the evidence available that the facts will ultimately correspond to one or other of the possibilities pleaded. However, if the matters pleaded are matters which are plainly within that party’s knowledge, so that he must know which of the inconsistent alternatives is the correct one, then the pleading of inconsistent alternative cases is not permissible.

…

65. In our view, there is a distinction between advancing mutually inconsistent allegations of fact and advancing alternative positions based on the same underlying facts. …” (emphasis added)

17.  A party will be required to explain why its proposed amendment is required if it seeks to amend a pleading by introducing allegations inconsistent with those previously verified: Hong Kong Civil Procedure 2023, Practice Note 20/13/1.

18.  In a similar vein, where a pleading has been verified in circumstances where it has been demonstrated that the verification should never have been made, the court should be very slow to permit any amendment to that pleading: Tong Kin Hing v Autron Mauritius Corp [2010] 1 HKLRD 77 at §20 (Rogers VP).”

Applicable Legal Principles: Striking Out

19.D4 relies on the ground of “no reasonable cause of action” under Order 18 rule 19(1)(a) of the RDC in seeking to strike out paragraphs 3(d), 4(b), 4(c), 34, 62 to 68 and prayers (1) to (12) of the Original SOC.

20.As set out in Hong Kong Civil Procedure 2026 Vol 1 §18/19/4:-

“It is only in plain and obvious cases that the court should exercise its summary powers to strike out the indorsement on any writ or any pleading under this rule… The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out. If the court does not think the matter to be clear beyond doubt or if it fails to be satisfied that there is no reasonable cause of action or that the proceedings are frivolous or vexatious, then, there should be no striking out…”

21.The applicant bears the burden to show a plain and obvious case in order to strike out the plaintiff’s claim: see Waddington Ltd v Chen Chun Hoo (2008) 11 HKCFAR 370; Melvin Waxman v Li Fei Yu (HCA 1972/2012, [2013] HKEC 1341).

22.The general principles concerning striking out of pleadings have been summarized by Recorder Manzoni SC in Polyline Development Ltd v Ching Lin Chuen & Ors [2021] HKCFI 483 at §10:

“(1) a strikeout application will only be successful in a plain and obvious case. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out.

(2) However, plain is not the same as simple, and obvious is not the same as short. If, on a careful reading of the statement of claim, however complicated, it can be seen that there is no cause of action or the claim will obviously not succeed, then it will be struck out despite the apparent complexity.

(3) There should be no trial upon affidavit and disputed facts should be taken in favour of the party sought to be struck out. Where the legal viability of a cause of action is sensitive to the facts, an order to strikeout should not be made. However, the court should remain vigilant to ensure that its processes are not abused by the prosecution of hopeless claims.

(4) The court should not decide difficult points of law in striking out proceedings.

(5) It is for the party seeking to strike out the pleading to demonstrate that the case is a plain and obvious one in which the other party’s claim is bound to fail. However, in the context of limitation, once a limitation defence is raised, the onus is on the plaintiff to prove that the cause of action relied upon accrued within the limitation period, even in a strike out application.”

23.It was also pointed out in §6 of Polyline Development Ltd that a strikeout application is normally considered by reference to the draft amended statement of claim. I shall refer to the Amended Statement of Claim as endorsed in the Amended Writ of Summons filed on 23 March 2026 as the “Amended SOC”.

Discussion

The Joinder/Amendment Application

24.The parties’ arguments in respect of the Joinder/Amendment Application are centred on the issue of the ownership of the funds transferred from P2’s account.

25.On behalf of D4, Mr Cheung submitted that two inconsistent factual matters have been impermissibly pleaded by the Plaintiffs. In the Original SOC, P1 pleaded that the loss of the funds was loss suffered by P1 personally. The amendments in paragraphs 13A and 17A of the Amended SOC now provides that the funds “belonged to [P1] as director’s drawings owed by [P2] to [P1]”, while simultaneously advancing an alternative case that the funds belong to P2.

26.P1’s primary case is that the investment being considered by P1 was his own investment and not an investment by P2. At the time, P1 was owed funds by P2 in the form of director’s drawings. The funds paid out from P2’s account was therefore owned by P1.

27.In the Strike Out Application, D4 argues that since the pleaded facts assert that the funds were transferred from P2’s account and there is no basis advanced to show that P1 held any proprietary interest in the funds, the bare assertion of personal loss by P1 is contradicted by case law, is legally unsustainable and P1 simply has no locus standi to maintain the claim against D4.

28.In light of the position taken by D4 in the Strike Out Application, P1 added P2 as an additional plaintiff to cover the possibility that D4 is ultimately found to be correct. Mr Brown submitted that P2 has been added for the simple reason that there are two but only two possible outcomes on ownership of the funds; they either belong to P1 or P2. There are therefore corresponding amendments in the Amended SOC to reflect the role and the claims by P2.

29.Whilst acknowledging that leave is generally granted for amendments, D4 relies on the principles in Liu Hao Tsing Education Foundation Limited and argues that the ownership of the funds is simple and objective fact within P1’s knowledge for the reason that P1 is the sole director of P2 who authorised the transfers and controlled P2’s affairs. It was said that P1 must know which of the two mutually exclusive alternatives is correct and cannot be allowed to advance mutually exclusive ownership cases.

30.D4 further argues that the difficulty of the Plaintiffs’ pleading of inconsistent alternative facts is compounded by the fact that P1 has verified two diametrically opposed cases on a matter he must know: the Original SOC pleaded that P1 is the sole director and shareholder of P2, then the Amended SOC pleaded that P1 is only the ultimate beneficial owner of 50% of P2.

31.I do not consider the amendments to the shareholder relationship between P1 and P2 to be a real issue. Mr Brown clarified that P1’s claim is not dependent on any of his rights qua shareholder of P2. This amendment in respect of how P1 holds shares in P2 is to correct a matter that is not a material fact in P1’s claim. The correction of this fact is allowed.

32.As Mr Brown correctly pointed out, D4 cannot maintain the position that the claim does not belong to P1 as a matter of law but at the same time argues that P1 must know whether the funds are owned by himself or P2 as a matter of fact. D4’s arguments at the very least suggest that the issue of the ownership of the funds involves a mixture of questions of law and facts. This is not a situation where it could be said that the matters pleaded are plainly within P1’s knowledge, so that he must know which of the inconsistent alternatives is the correct one.

33.The Plaintiffs’ position is that they are not pleading inconsistent facts. The sets of facts pleaded are that P1 is the sole director, P2 owed P1 director’s drawings and that P1 directed P2 to make the payment. The real question is what is the impact of this set of facts on the ownership of the funds.

34.Similar to the case of Yiu Ka Fung Vincent v Info-Vantage Ltd (CACV 96/2014, unrep, 3 July 2015), the Plaintiffs are seeking to plead two alternatives based on the facts as alleged and to advance a fall-back position in law, in the event that it is held, contrary to its primary contention, that the funds are owned by P2. I am of the view that there is nothing unreasonable in P1 advancing the alternatives, in particular in light of D4’s argument that the funds possibly belong to P2 instead of P1.

35.Turning to the proposed joinder of P2, D4 relied on the case of Ho Suk Mi v Kam Ying Court (II) [2016] 2 HKLRD 169 and Gurdas S Choithramani v Mayer Brown [2021] HKCFI 380 in support of the proposition that a joinder cannot be used to cure an action bought by a plaintiff who lacked standing at the outset; the Court will not permit joinder to retrofit a proper claimant into an action that was improperly constituted from inception.

36.In the above two cases, it was by operation of the statutes that the respective plaintiffs were prevented from bringing proceedings:

(1)  In Ho Suk Mi, the plaintiff was not a person failing within section 45(4) of the Building Management Ordinance (Cap 344) and therefore was not competent to commence proceedings in the Lands Tribunal.

(2)  In Gurdas, the claim of the plaintiff was struck out for the reason that the alleged causes of action accrued before or upon the plaintiff’s bankruptcy and accordingly, if such causes of action existed, they would have vested in the Official Receiver as the trustee in bankruptcy of the plaintiff.

37.In the present case, the question of P1’s locus is not as clear cut as that in Ho Suk Mi and Gurdas.

38.D4 contends that the Amended SOC does not plead any facts capable of showing that the funds belonged to P1. It merely asserts that the funds were “director’s drawings owed by the 2^nd Plaintiff to the 1^st Plaintiff”, without pleading any transaction by which P1 transferred money to P2, any director’s loan, or any circumstances giving rise to a debt.

39.The specific transaction that gives rise to the director’s drawings is an internal matter between P1 and P2. If further details are required in this respect, it can be dealt with by way of requests for particulars. I am of the view that it cannot be established on the face of the Amended SOC that P1 has no locus.

40.In the circumstances where D4 has asserted that the funds may belong to P2 and P1 is not entitled to claim that he has personally suffered a loss, I am satisfied that P2’s presence before the Court is necessary to ensure that all matters may be effectually and completely determined and adjudicated upon. It is appropriate to join P2 as a party.

41.For the reasons set out above, I allow the Joinder/Amendment Application.

The Strike Out Application

42.A substantive part of D4’s Strike Out Application is again based on the complaint in respect of P1’s locus standi. I am of the view that it cannot be said that P1’s claim is bound to fail on the issue of locus standi and the relevant paragraphs should be struck out on that basis.

43.Mr Cheung further submitted that even if locus were put on one side, the Plaintiffs have no reasonable cause of action against D4. This requires analysis of the unjust enrichment claim and constructive trust claim as pleaded in the Amended SOC.

44.In respect of the unjust enrichment claim, D4 argues that P1’s claim against D4 depends on establishing that the sum of USD120,112 received by D4 from Jinlixiang on 6 October 2021 is traceable to the USD30,980 paid by P2 to Jinlixiang on 29 September 2021.

45.The Amended SOC states that “The money received by the Jinlixiang Account and traceable from P2’s Account were transferred to other third-party accounts, including D3’s Account and D4’s Account”.

46.The Amended SOC however does not plead further details in respect of the factual connection between the payment of USD30,980 from P2 to Jinlixiang and the subsequent payment of USD120,112 from Jinlixiang to D4. It is D4’s position that the Plaintiffs need to plead (i) the balance of Jinlixiang’s account immediately before receipt of USD 30,980 on 29 September 2021, (ii) all intervening credits and debts between 29 September and 6 October 2021; and (iii) the factual basis upon which the Court is invited to conclude that the specific funds paid to D4 represented the same money.

47.Mr Cheung argues at §11 of his reply submissions that in the Strike Out Application, the burden is not for D4 to show that it is impossible for any funds to remain with D4, instead its burden is to demonstrate that the Plaintiffs have pleaded no material facts showing that any part of the USD30,980 ever reached D4.

48.In this respect, Mr Cheung refers to Order 18 rule 12 of the RDC and Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663. Mr Cheung submitted that pleadings must contain all material facts relied upon and must define the issues for trial. It is further argued that a pleading that fails to set out the material facts necessary to constitute a cause of action is liable to be struck out under Order 18 rule 19(1)(a).

49.Order 18, rule 12 provides that every pleading must contain the necessary particulars of any claim, defence or other matter pleaded. In Kwok Chin Wing, the plaintiff’s claim was dismissed because the plaintiff relied on his testimony given in cross-examination in support his assertion that a group of companies accepted joint and several liability in respect of the loans the plaintiff made. The plaintiff in that case however failed to plead a case based on joint and several liability. It was against this background that Ma CJ explained at §21:-

“It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues … It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced.”

50.The above principles are undoubtedly correct and important. I however do not see how these principles could have affected the matters that D4 needs to establish in the Strike Out Application. The present application is brought on the ground that there is “no reasonable cause of action” and D4’s burden remains that it has to establish that “the claim is obviously unsustainable, the pleadings unarguably bad and it must be impossible” (see Hong Kong Civil Procedure 2026 Vol 1 §18/9/4).

51.The Plaintiffs’ position is that there is no requirement to plead every step of the tracing. In the Amended SOC, it is pleaded that the funds belong to P1 or alternatively belong to P2 and the traceable proceeds of those arrived in D4’s account; the Amended SOC gave the particulars of the payments from the account of Jinlixiang to the second layer accounts and the particulars of the payment from P2’s account to the account of Jinlixiang. Those are all the facts the Plaintiffs are required to plead.

52.D4 placed significant reliance on the case Milestones Electric Inc v Meihoukang Trading Co Ltd [2020] HKCFI 2542, in particular §14 and §15:

“14. Constructive trusts provide proprietary relief. To obtain proprietary relief in relation to the US$850,000 transferred to the defendant or assets derived from it, the plaintiff must establish that the assets claimed can be identified by the tracing process as representing the original trust property. In Federal Republic of Brazil v Durant International Corpn [2016] AC 297, Lord Toulson at §17 said:

“The doctrine of tracing involves rules by which to determine whether one form of property interest is properly to be regarded as substituted for another. It is therefore necessary to begin with the original property interest and study what has become of it. If it has ceased to exist, it cannot metamorphose into a later property interest. Ex nihilo nihil fit: nothing comes from nothing.”

15. …

(1) It is well-established that a plaintiff who seeks a proprietary remedy must usually prove that the property to which he lays claim is still in the ownership of the defendant (Boscawen v Bajwa [1996] 1 WLR 328 at 334H (Millett LJ)).

53.In Milestones Electric Inc, the plaintiff pleaded a claim in unjust enrichment against the defendant and relied on mistake and absence of consideration as the grounds for restitution. Recorder Fung SC (as he then was) granted default judgment for the monetary relief sought. The plaintiff also sought a declaration that the defendant holds a sum of money on constructive or resulting trust for the plaintiff. Recorder Fung SC (as he then was) declined to make such declaration. This case involved assessing the default judgment application on the face of the plaintiff’s pleading. There was however no strike out application.

54.The statements cited from Milestones Electric Inc by D4 require the plaintiff to “establish” or “prove” the elements of the tracing claim. In a default judgment application, the elements of the tracing claim can only be proved on the basis of the pleading and in the case of Milestones the facts pleaded fail to establish or prove the elements of the tracing claim. That is not the same as saying that a claim that failed to plead those elements should be struck out. I do not consider the tracing claim in the Amended SOC to be so lacking in detail or material facts that renders the tracing claim impossible.

55.It is also D4’s complaint that the pleaded facts did not engage any of the tracing rules. D4 argues that punitive presumption rule is not applicable since there is no allegation by the Plaintiffs that Jinlixiang was a wrongdoer; the Plaintiffs are therefore limited to the first-in-first out rule.

56.The Plaintiffs do not agree that they are limited to the first-in-first out rule. Mr Brown submits that such rule is only a starting presumption; depending on the facts that can be established at the trial the punitive presumption rule may still be applicable.

57.For the purpose of considering the Strike Out Application, it is not necessary for me to determine which tracing rule is applicable. Even if D4 is correct that only the first-in-first out rule is applicable in the present case, the tracing claim as currently pleaded in Amended SOC is not impossible.

58.I am of the view that whether the funds can be traced to D4 is a matter of evidence based on the determination of the appropriate tracing rules to be applied and the analysis of the relevant bank accounts. It is not plain and obvious that the funds cannot be traced to D4 and therefore, the unjust enrichment claim should not be struck out.

59.In relation to the unjust enrichment claim, there is also an issue in respect of liquidated damages of AUD262,705.88 claimed by the Plaintiffs in relief (1) of the prayers of relief. Mr Brown accepted at the hearing that D4 can only be unjustly enriched by the sum it received, which is not the full amount of AUD262,705.88. I accept that relief (1) has set out an incorrect quantum given that D4 cannot be liable for the full amount of AUD262,705.88. Having reached the conclusion that the unjust enrichment claim is not impossible, I do not consider it appropriate to strike out relief (1) for the reason that the quantum is wrong.

60.In respect of the constructive trust claim, the controversy is in whether the Plaintiffs have sufficiently pleaded the knowledge element of this cause of action. The Amended SOC asserts at §65 that D4 had the requisite knowledge “from no later than service of these proceedings”. D4 argues that a constructive trust does not arise unless the recipient’s conscience is affected “at the time of receipt”.

61.D4 refers to Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 and Remx Ltd v LAE Technologies Hong Kong Ltd [2024] HKCFI 572 in support of its position that the recipient of the funds must have knowledge at the time the funds were received, and it does not assist if the knowledge was acquired later. In my view, these cases are not the authorities determining the timing at which a defendant has to acquire the requisite knowledge.

62.I agree with the Plaintiffs that the correct legal position is that set out in Galindo v Tan Zhirong [2026] HKCFI 1616; in the context of considering a claim of knowing receipt, Madam Justice Queeny Au‑Yeung stated at §31:

“31. Knowledge does not have to be acquired at the time of receipt, it can be acquired subsequently eg, from being served with the injunction order, the statement of claim the summons for judgment and affidavits: Guaranty Bank and Trust Co v Zzzik Inc Ltd (HCA 1139/2016, 18/07/2016) at §§33-36, DHCJ Cooney SC.”

63.In respect of D4’s complaint that the Amended SOC has not particularised the knowledge that D4 had, the Plaintiffs’ response is that it is all the knowledge in the Original SOC that was served on D4.

64.In the circumstances, I am of the view that the constructive trust claim is not impossible and therefore, it should not be struck out.

65.Lastly, D4 also asks that all the relief sought by the Plaintiffs  be struck out. It is noted that the relief of “unliquidated damages to be assessed” in relief (2) of the Original SOC was struck out by the 13 March Order and would remain so struck out.

66.Given the analysis above, the prayers for relief should not be struck out in the circumstances where the substantive claims have not been struck out. The Struck Out Application is dismissed.

Conclusion

67.For the reasons given above, D4’s appeal is dismissed.

68.Costs should follow the event, and I make a costs order nisi that the costs of this appeal be paid by D4 to the Plaintiffs with certificate for counsel, such costs to be taxed if not agreed.

Mr Toby Brown, instructed by Payne Velasco, for the 1^st and 2^nd Plaintiffs.

Mr Lincoln Cheung and Mr Samuelson Choi, instructed by TK Tsui & Co, for the 4^th Defendant.