Excellence Raise Overseas Limited, Jolly Admire Limited, High Express Holdings Limited v. Anz Commodity Trading Pty Ltd

On 13 October 2026, the Court of Final Appeal (Chief Justice Cheung, Ribeiro PJ, Fok PJ, Lam PJ and Keane NPJ) allowed the appeal in _ANZ Commodity Trading Pty Ltd v Excellence Raise Overseas Limited_ [2026] HKCFA 32, setting aside the Court of Appeal judgment that had upheld constructive trust declarations against three companies in the "JC Camp". Mr Victor Joffe SC, instructed by Myra Li & Co, acted for the successful appellants.

The dispute arose from a chain of back-to-back nickel purchase contracts. ANZ paid its vendor MCM (ED&F Man Capital Markets) US$293.6 million for nickel represented by warehouse receipts that turned out to be forged. MCM had back-to-back contracts with the fraudsters CH and MW, who passed some of the funds down to companies controlled by one JC. ANZ did not sue MCM (with whom it had settled) but instead claimed that the JC Camp held the traceable funds as constructive trustees for ANZ. The CFI (Mimmie Chan J) and the CA (Kwan VP) upheld the claim, finding that ANZ had effectively rescinded its contracts with MCM by its conduct, including the joinder of CH and MW as defendants.

The Court held that:

(1) Rescission for innocent misrepresentation is effected only by an order of the court, not by the party's self-help election. The common law right of rescission by election applies only to fraudulent misrepresentation; equitable rescission for innocent misrepresentation is a discretionary remedy granted at trial (§§69-90).

(2) No order for rescission of the ANZ-MCM contracts was made or sought, and could not have been sought in MCM's absence. Without such an order, there was no basis for treating MCM as a constructive trustee, and a fortiori none for imposing constructive trusteeship on the downstream recipients (§§88, 110).

(3) The _Halley v Law Society_ exception (where a contract procured by fraud is treated as a nullity) has no application where both contracting parties are innocent (§§103-106, 111).

(4) ANZ voluntarily paid MCM under the Purchase Contracts without exercising its contractual right to withhold payment pending receipt of satisfactory warehouse receipts. MCM therefore received the purchase price unconditionally and unencumbered (§§107, 112).

The appeal was allowed with costs; the judgment against the appellants was set aside.

For practitioners: a claimant seeking to recover money paid under a contract induced by innocent misrepresentation must join the counterparty and obtain a court order for rescission before asserting any proprietary claim against downstream recipients. Freezing (Mareva) relief remains available to preserve assets pending trial. The decision also confirms that the _Halley v Law Society_ "instrument of fraud" doctrine does not extend to contracts where both parties are innocent.