Bedrock Manufacturing Europe Bv and Another v. Whalet Ltd

On 21 September 2026, Deputy High Court Judge Cooper KC handed down judgment in Bedrock Manufacturing Europe BV and Another v. Whalet Limited [2026] HKCFI 4942, dismissing the Plaintiffs' claims to recover €1,161,248.79 paid into the Defendant's account as the result of an elaborate CEO impersonation fraud. Mr Danny Tang (leading Mr Nicholas Hsu), instructed by Anthony Siu & Co., acted for the successful Defendant.

The Plaintiffs, two subsidiaries of US-based Bedrock Manufacturing Company, were tricked by fraudsters posing as the group's CEO and a McDermott Will & Emery lawyer into making three wire transfers between 21 and 24 March 2022 to fund a fictitious Hong Kong acquisition. The funds landed in a "virtual account" operated by Whalet, a Hong Kong-licensed Money Service Operator (MSO), on behalf of its mainland Chinese client Wenzhou. Whalet, which was not alleged to be complicit in the fraud, converted the euros into RMB and passed them on to two individuals in the PRC at Wenzhou's instruction. The fraudsters have not been identified.

The Plaintiffs advanced claims in unjust enrichment and constructive trust. Whalet relied on three defences: bona fide purchaser, change of position, and ministerial receipt.

The Court held that:

(1) The Plaintiffs paid under an operative mistake of fact. Their employees believed they were dealing with the genuine CEO and lawyer; doubts about internal authority did not amount to assuming the risk that the transaction itself was a sham (§§54-61).

(2) Whalet was entitled to rely on the change of position defence. Although the Plaintiffs identified several alleged breaches of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap 615) and related guidance, none was sufficiently grave to defeat good faith. The AMLO Guideline is not subsidiary legislation and non-compliance does not amount to illegality (§§77-78). The breaches were "relatively technical in nature" and did not constitute "commercially unacceptable conduct" (§§82-97).

(3) In the alternative, Whalet had a good defence of ministerial receipt. The Service Agreement with Wenzhou made Whalet its agent for collecting and paying funds, so it was never enriched at all (§§103-109).

(4) The constructive trust claim failed for the same reason: Whalet's conscience was not sufficiently affected, as it acted in good faith and without notice of the Plaintiffs' claim (§§118-120).

Why it matters:

For victims of push-payment fraud seeking to trace funds through Hong Kong MSOs, this decision confirms that the recipient's good faith at the time of payment is the decisive factor. Regulatory shortcomings in CDD or transaction monitoring, even where established, will rarely be enough to strip an innocent intermediary of the change of position defence. Practitioners advising fraud victims should focus their evidence-gathering on the recipient's actual knowledge at the time of receipt and onward transmission, rather than on technical regulatory non-compliance.