Excellence Raise Overseas Limited, Jolly Admire Limited, High Express Holdings Limited v. Anz Commodity Trading Pty Ltd
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FACV No. 5 of 2026 [2026] HKCFA 32 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION FINAL APPEAL NO. 5 OF 2026 (CIVIL) (ON APPEAL FROM CACV NO. 48 OF 2023) ___________________________ BETWEEN
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_____________________________ J U D G M E N T _____________________________ Chief Justice Cheung: 1.I have had the advantage of reading in draft the judgment of Mr Justice Keane NPJ. I agree that the appeal should be allowed, there having been no effective rescission by order of the court. 2.Assuming that ANZ’s purported rescission of the ANZ-MCM contracts had been effective (which it was not), only the conscience of the appellants, and not that of MCM, would need to be affected for ANZ to succeed. Put another way, ANZ would need to establish a constructive trusteeship on the part of the appellants, but not on the part of MCM. Accordingly, the fact that MCM no longer held the purchase monies it had received from ANZ in its accounts at the time of the rescission is neither here nor there. An effective rescission would revest the equitable title to the monies in ANZ. The person actually holding the traceable monies, provided that he or she is not a bona fide purchaser for value without notice, would hold those monies as a constructive trustee once his or her conscience is affected by knowledge of the factors entitling ANZ to rescind. 3.However, since there was no effective rescission by ANZ, for the very full reasons given in Mr Justice Keane NPJ’s judgment, ANZ’s claim that the monies held by the appellants are subject to a constructive trust must fail. 4.As for Lord Browne-Wilkinson’s example of the stolen bag of coins in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 715-716, referred to in Mr Justice Keane NPJ’s judgment, I would merely add that the example is not without controversy. It is unnecessary to explore those controversies in the present appeal and I express no view upon them. 5.Subject to the foregoing, I agree that the appeal should be allowed for the reasons given by Mr Justice Keane NPJ in his judgment. Mr Justice Ribeiro PJ: 6.I agree with the judgment of Mr Justice Keane NPJ. Mr Justice Fok PJ: 7.I agree with the judgment of Mr Justice Keane NPJ. Mr Justice Lam PJ: 8.I have the advantage of reading the judgment of Mr Justice Keane NPJ in draft and I agree that for the reasons he gives the appeal should be allowed. I would add a few points by way of supplementary observations. I shall adopt the nomenclatures set out in His Lordship’s judgment. 9.In the lower courts, ANZ’s main claim against the JC Camp was advanced on the basis that the fraud of CH, MW and their associates gave rise to ANZ’s right to restitution which in turn supported ANZ’s proprietary right against the JC Camp by way of a constructive trust. At the leave application before the Appeal Committee, questions were raised regarding the jurisprudential difficulties caused by the interposition of MCM (who was not privy to the fraud) between ANZ and the fraud of CH, MW and their associates. Hence Question 1 was formulated when leave was granted. 10.Instead of meeting such a challenge, ANZ advances before us a different case and contends that its cause of action is based on innocent misrepresentation by MCM. This change of tack on the part of ANZ has recalibrated the focus of this appeal to the distinction between rescission at common law (available for a claim based on fraudulent misrepresentation or fraud, but not for a claim based on innocent misrepresentation) and rescission in equity. ANZ contends that there should not be any distinction between the common law and equity and the revesting of the interest in the purchase prices previously paid by ANZ to MCM took place as soon as ANZ intimated an unequivocal decision to rescind. For the reasons given by Mr Justice Keane NPJ, I reject that submission. Rescission in equity has to be effected by an order of the court. 11.It is also important to recognise that the claim of ANZ, as argued before us, is based on the law of property and tracing. ANZ does not advance any claim against the JC Camp based on knowing receipt constructive trust. Nor does Mr Sussex SC[1] advance before us any argument based on the law of unjust enrichment. As highlighted by Lord Millett in Foskett v McKeown [2001] 1 AC 102 at p.127E to G,
12.ANZ submits that by virtue of rescission and the revesting of title in respect of the purchase monies, it could trace, or more accurately follow, the same into the hands of the JC Camp because their predecessors were the fraudsters and they were mere volunteers. In this connection, it is pertinent to bear in mind Lord Millett’s clear explanation of the nature of tracing in Foskett v McKeown at p.127B to C,
And at p.128D,
13.Thus, even assuming ANZ’s argument on tracing and following were sound, it would still need to establish its title to the monies by rescission. Such a claim is sometimes called a rescission trust. Lord Millett explored in a trio of cases the proprietary consequences of rescission: Lonrho plc v Fayed (No 2) [2]; El Ajou v Dollar Land Holdings plc[3]; and Bristol and West Building Society v Mothew[4]. In Mothew, His Lordship set out the relevant jurisprudential analysis as follows,
14.After alluding to his earlier view that on rescission the equitable title might revest retrospectively to support the representee’s equitable tracing claim in El Ajou v Dollar Land Holdings plc, His Lordship set out the general position in Mothew,
15.Rimer J reviewed these authorities as well as others[7] in Shalson v Russo[8]and came to the following view on the proprietary effect of rescission,
16.Applying these principles to the present case, as between MCM and the fraudsters (viz CH, MW and their associates), it was open to MCM to rescind its contracts with them at common law (based on the fraud practised on it) and to advance proprietary claims for the monies paid to them. MCM could also follow the monies into the hands of the JC Camp and assert its superior title since the latter were only volunteers. 17.However, ANZ was not in the same position as MCM because the contracts between ANZ and MCM were not vitiated by fraud. ANZ now seeks rescission on the sole basis of innocent misrepresentation. It has to rely on equitable rescission and its operation depends on an order from the court. Further, as Mr Justice Keane NPJ explained, such jurisdiction could only be invoked in proceedings involving MCM. There is no right on the part of ANZ to rescind the contracts between MCM and CH or MW. In Gross v Lewis Hillman Ltd[10], Cross LJ (as he then was) said the following in respect of rescission in the context of back-to-back transactions,
18.According to the judgment given by Justice Calver in the English proceedings brought by MCM, MCM rescinded its contracts with CH and MW on 1 June 2017[12]. MCM obtained the declaratory relief of constructive trust in respect of the traceable proceeds of the purchase monies it paid to CH and MW which were held by the defendants in the English proceedings[13]. Such relief was granted on the equitable proprietary claims stemmed from such rescission[14]. Prima facie, at the time when it sought such relief, MCM did not consider that the title to such proceeds had been revested to ANZ. The JC Camp were not parties to the English proceedings and we do not know why MCM did not trace or follow its monies to those held by them. But there is no reason to suggest that MCM proceeded on the basis that there was a “partial” revesting (assuming that is conceptually viable, which I doubt) of title to the monies paid by ANZ to it insofar as they were in the hands of the JC Camp. 19.It was also revealed in the English proceedings that MCM and ANZ reached a settlement agreement on 7 February 2017[15] and that settlement agreement had undergone various amendments and restatements. The last version mentioned in the English proceedings was the one made on 31 March 2022[16]. Justice Calver and the English Court of Appeal took different views on the effect of the settlement agreement. As Mr Justice Keane NPJ noted, ANZ did not give discovery of the settlement agreement and its amendments and restatements in the Hong Kong proceedings and we are ignorant of their full terms and effects. The JC Camp did not have any opportunity to consider the impact of the settlement agreement on ANZ’s case on the rescission of its purchase contracts with MCM. The details of the dealings between ANZ and MCM after the discovery of the fraud were not fully explored in the Hong Kong proceedings. It is therefore not appropriate for this Court to speculate what such impact could have been. All I would say is that such dealings may affect the court’s decision in choosing between ordering rescission and awarding damages in lieu pursuant to Section 3(2) of the Misrepresentation Ordinance (Cap. 284). This further illustrates the inadequacy of the present claim of ANZ without joining MCM as a party to the Hong Kong proceedings. 20.On the safeguard of the interest of a party in the same position as ANZ, assuming that MCM were joined as a party to the action, I agree with Mr Justice Keane NPJ that its interest could be protected by a Mareva injunction. Mr Sussex submitted that an ordinary Mareva injunction may not give as much protection as a proprietary Mareva injunction. Though there are cases where the courts drew a distinction between these two kinds of injunction, in an application by a defendant to vary a Mareva injunction for payment of legal expenses or ordinary business expenses, I do not see any reason why the court cannot take account of the potential proprietary nature of a plaintiff’s claim based on equitable rescission and assess the relative merits of the parties’ cases for or against variation accordingly. Mr Justice Keane NPJ: Introduction 21.The Respondent to the appeal to this Court (“ANZ”) contends that the Appellants received a number of payments of ANZ’s money, and that upon being notified of that fact, the Appellants became obliged to return that money. ANZ says that this is a simple matter of common sense. In the Courts below, and in this Court, the arguments of the parties ranged over complex issues of law relating to fraud, unjust enrichment, trusts, and property in order to determine whether ANZ is entitled to the money in the Appellants’ bank accounts. Ultimately, the determination of this appeal depends on the operation of sophisticated principles of property law and equity rather than simple common sense. 22.ANZ was the ultimate purchaser in a chain of back-to-back contracts for the sale and purchase of quantities of metal. It paid its vendor, the penultimate purchaser in the chain (“MCM”), the contract price of the goods and took constructive delivery of them. Upon discovery that the vendors at the bottom of the chain had no title to the metal in question, and had fraudulently misrepresented their title to the metal, ANZ sued for the recovery of money it paid. It did not seek repayment from its vendor MCM, but from the parties lower down the chain of contracts and from the Appellants who were not party to the chain of contracts at all. Relevantly for this appeal, ANZ claimed that the Appellants, having received payments from the fraudsters, held the moneys received as constructive trustees for ANZ. In the Court of First Instance (“CFI”) and in the Court of Appeal (“CA”), this claim was upheld. 23.A curious feature of this case is that MCM, the vendor to ANZ and the immediate victim of the fraudulent scheme, is not a party to these proceedings. It is apparent that ANZ and MCM have reached a settlement as between themselves; but the Court is not aware of the full terms of that settlement. It would appear that MCM pursued its own claim against the fraudsters in proceedings in England; but MCM did not assert against the Appellants here in Hong Kong the proprietary claim now asserted by ANZ. While ANZ has not sought to recover from MCM the moneys paid to it, there does not seem to be any reason to suppose that such a claim would not have been successful, or that ANZ would not have recovered in full the moneys it paid to MCM. 24.Another curious aspect of this case is that if ANZ’s argument that it is entitled to the moneys paid to the Appellants is correct, then by the same process of reasoning that ANZ deploys here, MCM would also be entitled to the moneys credited to the bank accounts of the Appellants. That may seem a distinctly odd outcome as a matter of common sense. In addition, if the Appellants were to meet the CA judgment in the Respondent’s favour, they would remain exposed to the claim(s) by MCM because MCM is not a party to these proceedings. That would be distinctly unjust to the Appellants, and, potentially at least, to their creditors. In this latter regard, the effect of a proprietary remedy of the kind upheld in the Courts below in this case is to remove from the pool assets otherwise available to meet the just claims of unsecured creditors should their debtor be insolvent. That result is not likely to seem like common sense to those unsecured creditors. 25.These introductory observations do not resolve, or even chart a path to the resolution of, the issues on appeal. They do, however, show that it is by no means a matter of common sense to say that the Appellants received ANZ’s money, and should, therefore, be ordered to return it. The difficulties that attend ANZ’s case cannot be concealed by invoking an impressionistic common-sense approach. A more sophisticated analysis is required. A summary of the course of proceedings below and of the questions presented to this Court is necessary to facilitate that analysis. The Parties 26.ANZ is ANZ Commodity Trading Pty Ltd. It is a wholly-owned subsidiary of Australia & New Zealand Banking Group Limited. Its business includes the provision of financial services in relation to commodities trading. 27.MCM is ED&F Man Capital Markets Limited, a company incorporated in England and Wales engaged in the financial brokerage business. It is a ring dealing member of the London Metal Exchange. 28.The 2nd Defendant Come Harvest Holdings Limited (“CH”) and the 3rd Defendant Mega Wealth International Trading Limited (“MW”) are companies incorporated in Hong Kong. They were the principal perpetrators of the fraudulent scheme which gave rise to these proceedings. 29.The 1st Defendant Excellence Raise Overseas Limited (“ERO”) is a company incorporated in the British Virgin Islands. Its sole shareholder is one Chui James Jie (“JC”), who until 26 October 2018 was also its sole director. ERO is a corporate vehicle used to facilitate JC’s business and his international investments and acquisitions, and to transfer fundings to target companies. 30.The 9th Defendant Jolly Admire Limited (“JA”) was incorporated in the British Virgin Islands. It was an investment holding company with no active trading business. JC was the president and de facto controller of JA. 31.The 10th Defendant High Express Holdings Limited (“HE”) was a Hong Kong incorporated company. JC was the president and de facto controller of HE. 32.ERO, JA and HE are the Appellants in this Court. In these reasons, they are referred to collectively as such, or as the “JC Camp”. The Contracts 33.Pursuant to a Master Commodities Purchase Agreement (“Master Agreement”) dated 8 December 2015, ANZ and MCM entered into 31 individual purchase contracts (“Purchase Contracts”). Under the Master Agreement:
34.84 apparently authentic and genuine original warehouse receipts were issued by Pacorini Metals Asia (Pte) Ltd (“PMA”) (subsequently renamed Access World Logistics (Singapore) Pte Ltd). 83 of these receipts were to the order of Straits (Singapore) Pte Ltd (“Straits”) and endorsed to CH or MW. They were, in turn, endorsed to MCM and ultimately by MCM to ANZ. One of these receipts was to the order of Genesis Resources Inc (“Genesis”). ANZ paid the purchase price to MCM under each of the Purchase Contracts in the belief that the warehouse receipts endorsed to it by MCM were authentic. 35.Each warehouse receipt, accompanied by a corresponding original letter issued by PMA (“PMA Letters”) and addressed to ANZ, was received by MCM from CH or MW. The PMA Letters confirmed that, upon receiving the original warehouse receipt, PMA would release the subject goods to the holder of the original warehouse receipt without further written instructions from the order party (i.e. Straits and Genesis). 36.The Master Agreement provided relevantly that:
37.It is to be noted that under the Master Agreement ANZ and MCM dealt with each other at arms-length. There is no suggestion that MCM owed fiduciary obligations to ANZ, or that their rights and obligations were otherwise than as expressed in the Master Agreement. The Master Agreement did not contain any provision for an escrow or like rights in ANZ in respect of the purchase price once it was paid over to MCM. There was no provision for the earmarking of any part of the moneys paid by ANZ to MCM in the books of MCM, whether by way of security to ANZ for MCM’s performance of obligations, including those under the indemnities in Clause 11, or otherwise. 38.Back-to-back with the Purchase Contracts, MCM purchased from CH and MW the same quantities of nickel. In this regard:
The Fraudulent Transactions 39.In January 2017, MCM informed ANZ that it would not exercise its option to repurchase any of the nickel under the Purchase Contracts. This was because of concerns over the authenticity of some of the corresponding warehouse receipts, and over the ability of CH and MW to repurchase the nickel from MCM. 40.After investigation, ANZ discovered, and it was so found at trial, that all 83 warehouse receipts to the order of Straits were forged and so transferred no title to, or constructive possession of, the nickel to ANZ. 41.On discovery of the forgery, and with MCM’s assistance and cooperation, ANZ took steps to identify the whereabouts of the sum of US$293,625,392.59 first paid by ANZ to MCM, then by MCM to CH and MW (“Funds”). Some of the Funds were identified as having flowed to the Appellants and other defendants. Relevantly:
The Proceedings by ANZ and MCM 42.In May 2017, ANZ brought the present proceedings against ERO as an ultimate recipient of the Funds. CH and MW were originally joined in the proceedings by ERO as third parties. The CFI approved ANZ’s application to join them as defendants on 11 September 2018[17]. JA and HE were later joined as defendants. ANZ asserted a proprietary claim against the Appellants, seeking recovery of the Funds received by them on the basis of unjust enrichment and/or constructive trust. 43.Of the defendants to ANZ’s action, only the Appellants and two of the other defendants appeared at trial. CH and MW had been legally represented up to 18 June 2019, but no step was taken by them in the action after that date[18]. 44.At trial, ANZ did not maintain its claim for declaratory proprietary relief against CH and MW. It appears that the defendants had already dissipated, in large part, the Funds received[19]. 45.In June 2020, MCM’s manager, Mr. Dyke, made a witness statement for ANZ. He subsequently gave evidence at trial in support of ANZ’s case. MCM was aware of Mr. Dyke giving evidence in support of ANZ’s claim, and had generally assisted ANZ in the present proceedings[20]. 46.In December 2017, MCM commenced proceedings in the United Kingdom against CH and MW, claiming deceit, fraudulent misrepresentation and rescission whilst making other subsidiary and alternative claims[21]. As will be seen, MCM’s proceedings in the United Kingdom were heard and determined before judgment was given by the CFI in this case. The CFI Proceedings 47.On 20 January 2023, Mimmie Chan J (the “Trial Judge”) delivered judgment in favour of ANZ. The claims of conspiracy against CH, MW and an associated defendant were upheld. On those claims, damages of US$293,625,392.59 with interest were awarded against those defendants. As against the Appellants, the Trial Judge made orders for restitution of the ERO Sum, the JA Sum, and the HE Sum. Her Ladyship declared that these three Sums are held by the Appellants as constructive trustees for ANZ, and ordered the necessary account by them[22]. 48.The Trial Judge identified the following as relevant issues for determination between ANZ and the JC Camp:
49.The Trial Judge concluded that:
50.In relation to the proprietary remedy sought by ANZ against the Appellants, the Trial Judge proceeded on the assumption that to decide the question whether ANZ had equitable rights to the Funds enforceable by way of a constructive trust, it was necessary to hold that the Purchase Contracts between ANZ and MCM had been rescinded by ANZ[27]. In this regard, the Appellants complained that ANZ had not pleaded the rescission of the Purchase Contracts, and that because those contracts had yet to be rescinded, no constructive trust could arise. The Trial Judge found as a fact that MCM and all the defendants in the proceedings knew and understood from the actions taken by ANZ up to and including the bringing of proceedings that ANZ was rescinding the Purchase Contracts. At the very least, ANZ’s joinder of CH and MW in these proceedings must have made the defendants so aware[28]. The Trial Judge said:
51.It would appear that the Trial Judge considered 11 September 2018, being the date which ANZ filed the Amended Writ and Amended Statement of Claim to join CH and MW as defendants[30], as the latest point in time at which ANZ expressed its intention to rescind. The evidence adduced by ANZ did not permit a more precise finding as to the date of ANZ’s rescission. 52.At trial, the Appellants had argued that in MCM’s action in the United Kingdom, the Courts there had concluded that the Funds paid out by MCM were held by CH and MW on constructive trust for MCM, not ANZ. The Trial Judge ruled that this concern was irrelevant. The Trial Judge considered that whether or not MCM resists ANZ’s claim to the money paid out and recovered from CH and MW, and whether MCM acknowledges that it holds the Funds as a constructive trustee for ANZ, are matters between MCM and ANZ, which cannot assist the Appellants in resisting ANZ’s claims against them[31]. The CA Proceedings 53.Relevant to the present appeal to this Court, the Appellants appealed to the CA on the following grounds:
54.On the issue of rescission, Kwan VP, delivering the judgment of the CA, concluded that the Trial Judge was entitled to find that ANZ had rescinded the Purchase Contracts, and that MCM, as well as the Appellants, were aware and understood, at the very latest by ANZ’s joinder of CH and MW in the present proceedings, that the actions taken by ANZ effectively rescinded the Purchase Contracts[33]. 55.Kwan VP noted that ANZ also argued that rescission of the Purchase Contracts was not necessary because those contracts were themselves void as instruments of fraud, and hence no title to the purchase moneys passed to MCM. In this regard, ANZ relied upon the reasoning of Carnwath LJ (as his Lordship then was) in Halley v Law Society [2003] WTLR 845. Kwan VP regarded this point as furnishing additional support for the Trial Judge’s conclusion[34]. 56.In this regard, Kwan VP held that the back-to-back contracts were instruments of fraud being part of an elaborate mechanism to obtain money by false pretences. The CA was entitled to disregard the apparent effect of transactions which are fictitious and nothing more than a vehicle for fraud. Accordingly, rescission was not required to establish ANZ’s case for proprietary relief against the Appellants[35]. 57.On the issues of tracing and ANZ’s proprietary claim by way of constructive trust, the CA held that:
58.The CA concluded that the Trial Judge had correctly held that the ERO Sum, JA Sum, and HE Sum were held by the Appellants respectively subject to a constructive trust in favour of ANZ. The Questions for This Court 59.On 13 February 2026, this Court granted leave to appeal on the following questions[38]:
The Case For ANZ 60.In this Court, ANZ does not seek to support the judgments of the Courts below on the basis that ANZ was the victim of the fraud perpetrated by CH and MW. That is understandable. MCM was the immediate victim of the fraud. To the extent that ANZ relied upon MCM’s representation to ANZ that the warehouse receipts were authentic, that representation was clearly not fraudulent on the part of MCM. In addition, the conclusion that the Appellants were unjustly enriched by ANZ’s loss cannot of itself sustain a proprietary remedy against the moneys in the Appellants’ bank accounts. As Lord Millett said in Foskett v McKeown [2001] 1 AC 102 at 127, a claimant to such a right “succeeds if at all by virtue of his own title, not to reverse unjust enrichment. Property rights are determined by fixed rules and settled principles. They are not discretionary. They do not depend upon ideas of what is ‘fair, just and reasonable’.” 61.The focus of the argument presented for ANZ in this Court reflects its acknowledgement that establishing a personal entitlement to recover unjust enrichment from the Appellants is not sufficient to establish a proprietary right to the money found in the Appellants’ bank accounts. Indeed, ANZ disclaims any personal entitlement against the Appellants. It is accepted that if ANZ is to establish that the money credited to the Appellants’ bank accounts is recoverable by way of constructive trust, that can only be because the money paid by ANZ to MCM became subject to an equitable interest in favour of ANZ, which then passed from MCM to the fraudsters and thence to the Appellants’ bank accounts. 62.In this Court, ANZ contends that its claim to a proprietary remedy can be reduced to a simple A-B-C-D chain as follows:
63.As a matter of fact, ANZ made no payment to the fraudsters, much less to the Appellants. It was MCM that paid money to the fraudsters, and the fraudsters who made payments to the Appellants. ANZ paid its money to MCM in settlement of its Purchase Contracts with MCM, presumably on the basis that the condition precedent in clause 3.2 of the Master Agreement was satisfied. On the face of things, those purchase moneys became the unencumbered property of MCM to deal with as it wished free of any obligation to ANZ: Re Goldcorp Exchange Limited [1995] 1 AC 74 at 102; and Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 708-709. 64.The equitable interest asserted by ANZ is said to arise in one of a number of ways. The first possibility is that it arose upon ANZ’s rescission of the Purchase Contracts between itself and MCM. ANZ does not seek to dispute that rescission of contract is available only to one contracting party against another, not against other parties in the chain. In Gross v Lewis Hillman Ltd [1970] 1 Ch 445 at 460, Cross LJ (as he then was), with whom Harman and Widgery LJJ agreed, said:
The position so explained is a fortiori here, where as between ANZ and MCM there was no fraudulent misrepresentation. Any misrepresentation by MCM as to the authenticity of the warehouse receipts was entirely innocent. 65.The second possibility for which ANZ contends is that ANZ’s equitable interest arose upon payment to MCM in circumstances where the Purchase Contracts were themselves void of legal effect. In this regard, ANZ relies upon the reasoning of Carnwath LJ in Halley v Law Society [2003] WTLR 845 at 859. Equity would not, so it is said, recognise the transfer of any interest in the purchase price under instruments of fraud which were void. On that view, equitable title to the moneys paid never left ANZ. 66.The third possibility for which ANZ argued is that because, under clause 3.2(2) of the Master Agreement, ANZ was entitled to withhold payment of the purchase price from MCM until genuine warehouse receipts were provided, no title to the purchase moneys paid by ANZ passed to MCM. 67.These possibilities may now be considered in turn. Rescission 68.ANZ argues that upon rescission of the Purchase Contracts with MCM, title to the purchase moneys revested in ANZ. The Appellants object that no order for rescission of the Purchase Contracts between ANZ and MCM has been made, and indeed that no such order could be made in the absence of MCM as a party. ANZ responds that its rescission of the Purchase Contracts, which it had entered into due to MCM’s innocent misrepresentation, was complete by reason of its election to rescind without the need for an order of the court. Accordingly, the first issue to be addressed in relation to the rescission of the Purchase Contracts is whether the election to rescind found to have occurred by the Courts below was effective, or whether an order of the court rescinding the Purchase Contracts was necessary. Self-help or Court Order? 69.Under this heading, ANZ contends that it rescinded the Purchase Contracts with MCM by its own election; and in consequence of that rescission an equitable interest in the money paid by ANZ to MCM revested in ANZ. Alternatively, it is said that ANZ’s equity to rescind attaches to the money paid so that MCM, the fraudsters, and thence the Appellants down the chain of payments, take subject to it. On this theory, once ANZ rescinded the Purchase Contracts with MCM, the equity to rescind “crystallised” into an equitable interest capable of binding the Appellants. Because the Appellants could not show that they had given consideration for the payments they received, they took them subject to ANZ’s equitable interest. 70.The argument for ANZ on this issue begins with some references to statements in the leading cases, particularly those in Abram Steamship v Westville [1923] AC 773 and Alati v Kruger (1955) 94 CLR 216. It may be accepted that the statements taken from these cases accurately describe the mechanism by which the right to rescind a contract at common law may be effected. As will be seen, the difficulty with ANZ’s reliance on these statements in this case lies in the assumption that when those statements describe the mechanism whereby rescission may be effected at common law, they were also intending to comprehend a class of cases where the right to rescind was not recognised by the common law at all. As will be seen, that assumption is unsound. 71.Both equity and the common law long ago recognised that an innocent party may elect to rescind a contract induced by fraudulent misrepresentation: fraud unravels all. Since Redgrave v Hurd (1881) 20 Ch D 1, it has been settled that a court of equity may rescind a contract induced by innocent misrepresentation. It is to be noted that in that case, which is the “fons et origo” of the right to rescind for innocent misrepresentation, the mechanism whereby that right was given effect was an order of the court: (1881) 20 Ch D 1 at 22. 72.It is common ground that an election to rescind for fraud would not be effective if the innocent party was “not then in a position to return to the appellant in specie that which he had received under the contract, in the same plight as that in which he had received it”: Alati v Kruger (1955) 94 CLR 216 at 223. Where, however, the jurisdiction of equity is invoked, relief could be granted by the court “even though precise restitutio in integrum is not possible, if the situation is such that, by the exercise of its powers, including the power to take accounts of profits and to direct inquiries as to allowances proper to be made for deterioration, it can do what is practically just between the parties, and by so doing restore them substantially to the status quo”: Alati v Kruger (1955) 94 CLR 216 at 223-224. 73.For that proposition, Dixon CJ, Webb, Kitto and Taylor JJ cited, among other cases, Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278, 1279 and Spence v Crawford [1939] 3 All ER 271. In these decisions, it is apparent that the right to rescind for breach of fiduciary duty in the first case, and the right to rescind for fraudulent misrepresentation in the second, were both given effect by order of the court of equity: see Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218 at 1278, 1279; and Spence v Crawford [1939] 3 All ER 271 at 288, 289. 74.In Alati v Kruger, the joint judgment went on to say in a passage on which ANZ places particular reliance:
For that proposition, which is expressly concerned solely with fraud, their Honours cited Reese River Silver Mining Co v Smith (1869) LR 4 HL 64 at 73. That was also a case of rescission for fraud. 75.The joint judgment in Alati v Kruger then went on with this aspect of discussion, saying:
76.This passage deserves close attention. A revesting of “the equitable title” to property is said to occur if a court of equity would treat as effectual that which was not “effectual” at common law. It is, and can only be, the decree of the court of equity that effects the revesting of the equitable title in the transferor. And so, the joint judgment in Alati v Kruger went on to speak of “the class of cases in which a defrauded purchaser is regarded by a court exercising equitable jurisdiction as entitled to rescind the purchase and obtain a decree, on proper terms, declaring and giving effect to the rescission as an avoidance of the transaction from the beginning”: see (1955) 94 CLR 216 at 225. 77.To recapitulate, in Alati v Kruger the Court was dealing with a claim of fraudulent misrepresentation. Relief was available at common law at the election of the innocent party provided that restitution in integrum was made. Equity, in its ancillary jurisdiction, would supplement the remedies available at law in order to do justice where strict restitution in integrum could not be made. Nothing in the passages cited from Alati v Kruger suggests a departure from the orthodox view that rescission is not available at common law for innocent misrepresentation; and nothing in Alati v Kruger suggests that the right to rescission for innocent misrepresentation is enforceable otherwise than by the decree and orders of a court of equity. Most importantly for the present case, it is the decision of the court of equity to treat rescission as effectual that revests the equitable title in property in the transferor. 78.It was argued for ANZ that in Abram Steamship Co Ltd v Westville Shipping Co Ltd [1923] AC 773, the election of the innocent party was accepted by the House of Lords as the effective mechanism by which a contract may be rescinded in all cases of rescission for misrepresentation, whether fraudulent or not. That argument is not compelling. The statements relied on from Abram Steamship do not say that a party to a contract is entitled, by its own election, to rescind a contract on the ground of innocent misrepresentation. Abram Steamship was a Scottish case where the ground of rescission relied on by the innocent party was not innocent representation by the other party, but “fraud or essential error of a material kind”: see [1923] AC 773 at 781. Lord Atkinson, having said that the expression of the innocent party’s “election, if justified by the facts, terminates the contract”, went on to say that that party’s duty of making restitution in integrum must be discharged “before the rescission is, in effect, accomplished”. Importantly, for present purposes, his Lordship then said that if the other party questions the innocent party’s right to rescind “thus obliging the latter to bring an action at law to enforce the right he has secured for himself by his election, and the latter gets a verdict, it is an entire mistake to suppose that it is this verdict which itself terminates the contract and restores the antecedent status”: see [1923] AC 773 at 781. 79.Lord Atkinson was speaking expressly of an action at law, not proceedings in equity. The latter proceedings are concluded by decree or order whereas the former class of cases were concluded by verdict. As Professor Swadling has noted, the word “equity” appears nowhere in Lord Atkinson’s speech: see Swadling, “Rescission – The Role of the Court” in English and Al-Sibaie, Issues in the Law of Rescission (1st edn, OUP 2026) at 86. It might also be said that in none of their Lordships’ speeches in Abram Steamship was there any mention of “innocent misrepresentation” either. After Abram Steamship, a claim for rescission based on innocent misrepresentation remained a claim unknown to the common law; and the enforcement of such a claim remained the exclusive preserve of equity. 80.In support of ANZ’s argument that an order of the court is unnecessary to effect rescission in equity, it also relied upon decisions that were not cases of fraud, being Re Glubb [1900] 1 Ch 354; Bainbridge v Bainbridge [2016] WTLR 943; and Bristol and West Building Society v Mothew [1998] Ch 1. In relation to these authorities, it is to be noted that Re Glubb was not a decision about rescission of contract. Rather, it concerned the affirmation of the right of the donor to recover a gift transferred under innocent misrepresentation upon discovery of the mistake. Importantly, there is no suggestion in the reasons for decision that an order of the court was not necessary to give effect to the equity in the donor to set aside the gift. 81.Bainbridge v Bainbridge is distinctly against ANZ’s argument. It is clear from the reasons at [2016] WTLR 943 at [6] that it was “necessary for the court to be satisfied that the relief sought was justified” in order to set aside the transfer impugned by the claimant. The learned judge’s express reference to the decision of Norris J in Wright v National Westminster Bank PLC [2014] EWHC 3158 (Ch) at [10] makes it clear that in equity a transaction cannot be rescinded by the acts of the parties. Even where there is agreement between the parties, the judgment of the court is necessary. 82.Bristol and West Building Society v Mothew affords no clear support to, and is actually a source of trouble for, ANZ’s argument. In that case, the Court of Appeal did not decide that an order for rescission was unnecessary to effect rescission of a contract for innocent misrepresentation. Millett LJ (as he then was) said that there could be no revesting of title until the right of rescission was exercised; but he did not discuss whether that right could be exercised without an order of the court: see [1998] Ch 1 at 22-23. Moreover, Millett LJ made the following observations which are distinctly adverse to ANZ’s case in another respect. His Lordship said:
83.Millett LJ went on to refer to observations of Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 705, citing his judgment at [1998] Ch 1 at 23:
84.In accordance with these observations by Millett LJ, any equitable interest in ANZ, arising from the revesting of the equitable title in ANZ which is sufficient to support the imposition of a constructive trusteeship on MCM and its transferees, could not arise before MCM was fixed with the knowledge of the factors on which ANZ was entitled to the revested equitable title to the moneys. As appear from the passages cited above from Alati v Kruger (1955) 94 CLR 216 at 224-225, that rescission and the consequent revesting of equitable title and any necessary ancillary orders could be effected only by the decree of the court of equity. 85.It may be accepted, as a general proposition, that upon rescission for fraudulent misrepresentation, property transferred revests in the innocent party. But on the authorities on which ANZ relies, that revesting is of the legal title: see Load v Green (1846) 15 M&W 216 at 221; and Car & Universal Finance Co Ltd v Caldwell [1965] 1 QB 525. That revested legal title can be traced only according to the rules of the common law. So where money is paid into an account already containing money of the recipient, it cannot be traced at law into payments out of the account: see Lipkin Gorman (a firm) v Karpnale [1991] 2 AC 548 at 572; Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 102-103. Tracing money flowing into an account already containing money of the recipient is only permitted by equitable doctrine. It is this equitable interest that may be enforced by an equitable charge or declaration of a constructive trust in respect of moneys in a mixed account. A revested legal title to the money does not suffice for this purpose. A distinct equitable claim in respect of the asset would arise only where a court of equity acting in its ancillary jurisdiction would make orders based on the court’s conclusion that it would be unconscionable for the recipient to keep the money or deal with it as its own: Vandervell v IRC [1967] 2 AC 291 at 311, 317; and Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 706. 86.To insist upon a basis in equitable doctrine that recognises an equitable interest vesting in ANZ in respect of money paid to MCM is not to make a fetish of the historically separate development of legal rules and equitable doctrines. Rather, it is to observe that the legal title in money is lost when money is mixed in the bank account of the payee, and that upon a “revesting” of legal title the money paid cannot be recognised as the payer’s property or its substitute: Re Goldcorp Exchange Ltd [1995] 1 AC 74 at 102-103. The more flexible approach of equity is able to treat the payee as dealing with money in its hands that is effectively held on trust for the payer. In such case, as Lord Parker of Waddington explained in Sinclair v Brougham [1914] AC 398 at 441-442:
87.The extent of the equitable interest of either party to a sale in respect of property transferred by one to another, or to the money paid by the purchaser, is commensurate with the orders a court of equity would make to ensure that justice is done to each party. To speak of the “revesting of equitable title” in the property transferred or money paid is a useful shorthand to encapsulate the effect of the orders that may be made to give effect to the personal rights and obligations of both parties to the contract. Apart from the effect of a declaration of trust or the orders in personam of a court of equity, there is no “equitable title” that subsists separately from the legal title to an asset. The legal title to an asset comprehends the full beneficial ownership of the asset; the concept of equitable title to the asset encompasses both the inroads made upon that ownership by orders of a court of equity in favour of the party seeking relief, and the enforceability of those rights in respect of property against a third-party recipient who is not a bona fide purchaser for value without notice of that party’s rights. 88.In the present case, MCM was never a fiduciary of ANZ. In the absence of a decree of a court of equity setting aside the Purchase Contracts between ANZ and MCM, and the consequent declaration of ANZ’s entitlement to the money, there would be no basis for a court of equity to impose a charge on MCM’s bank accounts for the same, or to declare MCM a constructive trustee for ANZ. In addition, it was only if it could be shown that MCM was fixed with knowledge of the factors that required MCM to return to ANZ the moneys received from it, that ANZ could have MCM held liable as a constructive trustee for its benefit: see the passage from Bristol and West Building Society v Mothew [1998] Ch 1 at 23 cited above. 89.Where innocent misrepresentation is the sole ground on which a party seeks rescission of a contract, the question of whether relief should be granted, and if so, the terms on which it would be just and equitable to be granted is necessarily a matter for the court. That seems only fair. The defendant is, ex hypothesi, entirely innocent, yet it is to be deprived of its contractual rights against its will. We are not dealing with a situation where fraud unravels all: see HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] 1 All ER (Comm) 349 at 358 and 383 (at [15] and [125] respectively). The exercise of the jurisdiction of a court of equity to make an order for rescission requires the court to make value judgments as to the seriousness and causative effect of the misrepresentation, as well as to related issues of unconscionability and the just and equitable ordering in light of the consequences that impact the parties: see Wright v National Westminster Bank [2014] EWHC 3158 (Ch). Importantly, as in this case, the rights of third parties to the impugned contract may be affected by an order for rescission: Oakes v Turquand (1867) LR 2 HL 325. 90.In Hopcraft v Close Brothers Ltd [2025] 3 WLR 423 at 448 (at [77]), Lord Reed PSC, Lord Hodge DPSC, Lord Lloyd-Jones, Lord Briggs and Lord Hamblen JJSC said:
This appears to be the latest word on the issue from the Supreme Court of the United Kingdom. It is fatal to ANZ’s argument under this heading. The statement of the Supreme Court in Hopcraft accords with the leading text on rescission: see O’Sullivan, Elliott and Zakrzewski, The Law of Rescission (3rd edn, OUP 2023) at [11.59] – [11.112]. It also accords with Heydon, Leeming and Turner, Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th edn, LexisNexis 2015) [25-095] – [25-110]. The Misrepresentation Ordinance (Cap. 284) 91.ANZ sought to argue that s 3(2) of the Misrepresentation Ordinance (Cap. 284) assumes that rescission may have occurred by the election of the innocent party. In this regard, s 3(2) provides relevantly:
92.ANZ argues that this is the language of election. ANZ notes that the statute refers to the representee as being “entitled… to rescind,” not merely entitled to ask the court to rescind (emphasis added in ANZ’s submission). ANZ says that the statute distinguishes between the case of a contract which the plaintiff claims “ought to be rescinded” and the case of a claim that the contract “has been rescinded”. These submissions misunderstand the purpose and effect of the statutory provision. 93.The evident purpose of s 3(2) is to add to the court’s powers a discretion to award damages in lieu of ordering rescission. This statutory addition to the court’s powers was necessary precisely because a court of equity could not award damages: see Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218 at 1278. Now, by reason of s 3(2), whether rescission or damages should be granted is a matter for the court on whatever basis the plaintiff puts its claim. The important point here is that s 3(2) allows the court to order the payment of damages in lieu of rescission even where the plaintiff claims to have rescinded the contract. This addition to the court’s powers to do justice is necessarily predicated upon the assumption that the claim to have rescinded the contract was not itself effective to rescind the contract. If it were otherwise, a party would be able to pre-empt the exercise of the power expressly conferred on the court by the statute. Freezing Orders 94.For ANZ it was argued that great inconvenience, and possible injustice, would ensue if it were to be held that rescission for innocent misrepresentation could be effected only by order of the court. In particular, it was said that money paid over under a contract amenable to rescission for innocent misrepresentation could be dissipated beyond the reach of the payer if rescission could not be effected until the making of an order of the court. That contention is not compelling. 95.Since 1975 and the decision of the English Court of Appeal in Mareva Compania Naviera SA v International Bulk Carriers SA [1975] 2 Lloyd’s Rep 509, the courts have granted injunctions on applications made without notice to prevent a defendant from dissipating moneys standing to the credit of a bank to ensure that the orders of the court ultimately made to vindicate the rights of the parties are not rendered nugatory. In granting interlocutory injunctive relief, the courts will take into account the possible proprietary consequences of prospective final orders for rescission, and will make appropriate orders to ensure that the ultimate proprietary relief will not be deprived of practical effect in the meantime. It may fairly be said that freezing orders are likely to provide more effective protection for a party seeking to recover money than upholding the theory of rescission by self-help whether for fraudulent or innocent misrepresentation. 96.In summary to this point, I conclude that an order for rescission is required as the first step to making good ANZ’s case for holding the Appellants liable as constructive trustees of the moneys paid to MCM by ANZ under its Purchase Contracts. That conclusion means that the case for ANZ based on rescission must fail because no such order was made or sought by ANZ. Indeed, a decree for rescission of the Purchase Contracts could not have been sought in the absence of MCM as a party to the proceedings. The Missing Party 97.It should not be thought that the absence of an order of the court for rescission of the Purchase Contracts between ANZ and MCM is a theoretical quibble about mere formalities. In Wright v National Westminster Bank [2014] EWHC 3158 (Ch) at [10], Norris J, speaking of the jurisdiction of a court of equity to make an order for rescission of a transaction, made the point that “value judgments as to seriousness, causative effect and unconscionability. These are matters for the judgment of the court and not for the judgment of the parties”. This is so, even if the parties agreed to ignore the contract. 98.In the present case, the absence of MCM as a party to the proceedings meant that the questions of whether the Purchase Contracts between ANZ and MCM should be rescinded, and, if so, on what terms and with what consequences for the parties down the chain of contracts including the Appellants, were not addressed at all. If MCM had been joined as a defendant to ANZ’s claims to recover the moneys paid by it, a number of issues may have come into focus. The most obvious of such issues is the question as to who, as between ANZ and MCM, should be entitled to a proprietary remedy against the Appellants. It cannot seriously be suggested that the Appellants could be required to repay the moneys received by them to both ANZ and MCM. So, on what basis would the court decide the question of priority as between them? 99.If the CFI had been presented with a claim by ANZ to recover the moneys paid by it under the Purchase Contracts from MCM, and this claim had been contested by MCM, the outcome may well have been an order for the repayment of the full amount by MCM. It is difficult to see that MCM had any defence to such a claim. An order to the effect might have been made on the basis that the money was payable under the indemnity provisions in Clause 11 of the Master Agreement, or under s 3(2) of the Misrepresentation Ordinance (Cap. 284). No other order would have been necessary to do justice between ANZ and MCM. If an order for monetary compensation would have sufficed to restore ANZ to its previous position, there would have been no occasion for an equitable remedy, whether by way of rescission or otherwise. That would have left MCM with a proprietary claim against the Appellants, and would have avoided the impossibility of two proprietary orders against the Appellants. 100.The passage of time between the payment by ANZ to MCM and the claim by ANZ against MCM might also have given rise to other issues that a court asked to order rescission for innocent misrepresentation might have been expected to grapple with in working out what relief should be ordered and the terms on which relief might be granted. In this regard, some observations of Lord Browne-Wilkinson, on which ANZ relied in its argument before this Court, might be turned against it. In Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 715-716. Lord Browne-Wilkinson said:
101.If one were to embrace Lord Browne-Wilkinson’s analogy of the “bag of coins”, one might say that the contents of ANZ’s “bag of coins” had disappeared entirely from MCM’s control and into the accounts of the Appellants before ANZ was found to have rescinded the Purchase Contracts. If MCM had been a party to these proceedings, it might be thought significant that the Trial Judge found that the Appellants had received all their payments by 8 November 2016; and that ANZ indicated its determination to rescind the Purchase Contracts with MCM by 11 September 2018. The point is that, even if MCM were joined as a party, no claim by ANZ that equity should ensure the recovery of its “bag of coins” could have arisen until almost two years after they had passed from MCM’s legal ownership and control and into the accounts of the Appellants. During that time MCM was unaffected by the knowledge that ANZ had, if at all, asserted any claim to the return of that money. To say the least, there could have been a question as to whether a court asked to order the rescission of the Purchase Contracts would have been disposed to impose liability on MCM as a constructive trustee for ANZ in these circumstances. 102.I mention these matters not to speculate impermissibly on the outcome of hypothetical cases, but to make two points. First, it cannot be said that the absence of MCM as a party to these proceedings or the want of a decree for rescission as between ANZ and MCM is a matter of mere formality. Secondly, the difficulties which would have confronted ANZ’s case against MCM had it been joined as a party highlight the artificiality of ANZ’s case against the Appellants based on rescission for innocent misrepresentation. Having said that, I turn now to consider the second basis on which ANZ puts its argument in this Court. Halley v Law Society 103.In Halley v Law Society [2003] WTLR 845, Halley claimed to be entitled to money held in trust by the Law Society. The money represented commissions paid to Halley pursuant to investment contracts whereby the payees were to be introduced to major investment opportunities. In reality, the investment opportunities were worthless. At first instance, it was held that property in the money had passed from the investors and had not revested in them because there had been no rescission of their investment contracts. On appeal, Carnwath LJ held that no beneficial interest in the payments by the investors passed to Halley because the contracts were themselves “instrument of fraud, and nothing else” so that there was nothing to rescind: see [2003] WTLR 845 at [47]-[48]. The other members of the Court of Appeal, Mummery and Hale LJJ gave other reasons for upholding the appeal, including that Halley held the investors’ funds on trust pending performance of his obligations under the contract, which did not occur; and further that Halley’s claim was defeated by illegality: see [2003] WTLR 845 at [96]-[105]. 104.In principle, every contract procured by fraud is voidable by the innocent party; but it is not a nullity altogether devoid of legal effect. Until it is avoided, it operates to create rights and duties between the parties. The dicta of Carnwath LJ on which ANZ relies suggest that a contract voidable for fraud can be ignored as a source of rights and duties while it stands. That is contrary to principle. 105.The dicta of Carnwath LJ were referred to in the recent English cases of Global Currency Exchange Network Ltd v Osage 1 Ltd [2019] EWHC 1375 (Comm); [2019] 1 WLR 5865 and D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch); [2025] 1 WLR 821. While his Lordship’s dicta were not referred to with disapproval, neither were they applied to support the actual decision in either case. A note in the Cambridge Law Journal provides substantial reasons why his Lordship’s dicta should not be regarded as supporting the proposition that rescission of a contract induced by fraud is unnecessary to give rise to an equitable interest in the property transferred: see H.W. Tang, “Proprietary Relief without Rescission” [2004] 63 CLJ 30. It is, however, unnecessary to reach a concluded view about the orthodoxy of his Lordship’s approach. 106.The short answer to ANZ’s argument here is that in the present case, neither party to the agreements between ANZ and MCM intended that their contracts should not operate according to their terms. Neither party was seeking to defraud the other. The contracts between them were effective according to their terms until they were rescinded. There is no scope in this case for the application of the dicta of Carnwath LJ. Absence of Contractual Obligation 107.Under the Master Agreement, ANZ was entitled to withhold payment of the purchase price under the Purchase Contracts until it was satisfied with the warehouse receipts that were provided. ANZ says that it paid the price under each of the Purchase Contracts without obligation to do so because the warehouse receipts were not authentic. The fact is though that ANZ chose not to exercise that entitlement. Rather it chose to pay the purchase price to MCM in settlement of each of Purchase Contracts. That payment was voluntary, and made unconditionally, albeit it is now said to have been induced by MCM’s innocent misrepresentation. Subject to ANZ’s rights to rescind the Purchase Contracts, the consequence of settlement of the Purchase Contracts was that on payment, MCM received the purchase price unconditionally and unencumbered. It was entitled to deal with the money paid to it as it saw fit. 108.Given that failure of a condition precedent must be pleaded otherwise its fulfilment is implied: Order 18 Rule 7(4) of the Rules of the High Court (Cap. 4A) and Bond Air Services v Hill [1955] 2 QB 417 at 427, and that non-fulfilment of the condition precedent was not pleaded by ANZ, it may be doubted whether this contention is open to ANZ at all. In any event, however, as I have said, it is without substance. Conclusion 109.In this Court, ANZ did not press the case that ANZ was the victim of a fraudulent scheme with identifiable proceeds of which found their way into the bank accounts of the Appellants. ANZ’s case in this Court was that moneys to which it was entitled in equity passed from MCM to the fraudsters to the Appellants. The reformulation of ANZ’s case as it was presented to this Court means that the reasons for the decision of the appeal cannot conveniently be framed in terms of the Questions which leave to appeal was granted. 110.The first basis on which ANZ presented its case in this Court depended upon the proposition that the Purchase Contracts between ANZ and MCM had been rescinded without an order of the court. That proposition must be rejected. Rescission for innocent misrepresentation is effected by an order of the court. No such order was made: indeed, no such order was sought in the proceedings by ANZ, to which MCM was not even a party. That being so, there was no basis for the court to hold MCM bound in conscience to account to ANZ for the moneys paid to it under the Purchase Contracts. Nor could any dealings by MCM with the funds paid to it, which it was entitled to deal with as its own, have been unconscionable before MCM was fixed with knowledge of ANZ’s claim. By the time MCM could have been fixed with that knowledge, the Appellants had been in receipt of the moneys claimed by ANZ for many months according to the Trial Judge’s findings of fact. The case presented in this Court for ANZ based on innocent misrepresentation and the revesting of equitable title to the money it paid to MCM is distinctly artificial. The artificiality of ANZ’s claim can most readily be seen in the hypothetical circumstance that if MCM had been joined as a party, an order for monetary compensation would, in all likelihood, have rendered equitable relief to ANZ unnecessary. Equitable relief would have been refused on the basis that ANZ’s remedies against MCM at common law would have been sufficient to restore its loss. 111.As to the second basis on which ANZ put forward its claim, the exception to the need for rescission for fraud propounded by Carnwath LJ in Halley v Law Society [2003] WTLR 845 has no application to a contract where both parties are innocent. 112.As to the third basis on which ANZ put forward its claim, ANZ voluntarily paid MCM the price payable under the Purchase Contracts so that, subject to ANZ’s right to rescind for innocent misrepresentation, MCM received those payments unconditionally and unencumbered by any obligation owed to ANZ. 113.Accordingly, the appeal should be allowed and the judgment against the Appellants set aside. ANZ should pay the costs of the Appellants in this Court and in the courts below. Chief Justice Cheung: 114.Accordingly, the Court unanimously allows the appeal and makes an order nisi that the respondent pay the appellants the costs of the appeal. If any party seeks to vary the order nisi, written submissions shall be filed and served within 14 days of the date of this judgment. Any written submissions in response shall be filed and served within 14 days thereafter. The Court will determine the question of costs on the papers.
Mr Victor Joffe SC, Mr Kenny Lin and Mr Jason Kung, instructed by Myra Li & Co, for the 1st, 9th and 10th Defendants (Appellants) Mr Charles Sussex SC, Mr Derek JY Chan and Mr Cyrus Chua, instructed by Holman Fenwick Willan, for the Plaintiff (Respondent) [1] Appearing with Mr Chan and Mr Chua for ANZ. [2] [1992] 1 WLR 1, a decision of Millett J. [3] [1993] 3 All ER 717, another decision of Millett J. [4] [1998] Ch 1, a decision of Millett LJ. [5] [1998] Ch 1 at p.22 G to H. [6] [1998] Ch 1 at p.23C. [7] Including Banque Belge Pour L’Etranger v Hambrouck [1921] 1 KB 321 and In re Goldcorp Exchange Ltd [1995] 1 AC 74. [8] [2005] Ch 281. [9] [2005] Ch 281 at [126]. See also National Crime Agency v Robb [2015] Ch 520 at [43] and [44]. [10] [1970] Ch 445. [11] [1970] Ch 445 at p.460F. [12] E D & F Man Capital Markets Ltd v Come Harvest Holdings Ltd [2022] EWHC 229 (Comm) at [60]. [13] [2022] EWHC 229 (Comm) at [724]. [14] [2022] EWHC 229 (Comm) at [643]. [15] [2022] EWHC 229 (Comm) at [554]. [16] E D & F Man Capital Markets Ltd v Come Harvest Holdings Ltd [2022] EWCA Civ 1704 at [25]. [17] [2023] HKCFI 179 (referred to as “CFI Judgment” below) at [192] and [2025] HKCA 701 (referred to as “CA Substantive Judgment” below) at [28]. [18] CA Substantive Judgment at [33]. [19] CFI Judgment at [196]. [20] CFI Judgment at [193]. [21] CFI Judgment at [193]. [22] CFI Judgment at [235]-[238]. [23] CFI Judgment at [36]-[37]. [24] CFI Judgment at [183]. [25] CFI Judgment at [178]. [26] CFI Judgment at [183], [184] & [195] and CA Substantive Judgment at [43]. [27] CFI Judgment at [194] [28] CFI Judgment at [194] and CA Substantive Judgment [44]. [29] CFI Judgment at [194]. [30] CFI Judgment at [192]. [31] CFI Judgment at [196]. [32] CA Substantive Judgment at [48]-[53]. [33] CA Substantive Judgment at [96]. [34] CA Substantive Judgment at [102]. [35] CA Substantive Judgment at [102]-[105]. [36] CA Substantive Judgment at [43]. [37] CA Substantive Judgment at [127]. [38] [2026] HKCFA 9 at [1]-[2]. |
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