HYPERTEC SYSTEMS INC. v. YIFIM LTD AND ANOTHER

HYPERTEC SYSTEMS INC. v. YIFIM LTD AND ANOTHER

The court accepted that on the pleaded and proved facts a constructive trust arose by operation of law over the sums transferred by fraud and that those sums were traced to specified balances in the defendants' Hong Kong bank accounts; section 52(1)(e) of the Trustee Ordinance applies to such constructive trusts and authorises vesting of the right to sue for and recover the thing in action in the plaintiff where it is expedient and necessary to enable recovery; service on the defendants at their registered offices was valid; accordingly default judgment with declaratory relief and monetary judgment was entered and vesting orders were granted for the traced balances, with costs directions.

Citation
[2022] HKCFI 482
Parties
Plaintiff / Applicant: Hypertec Systems Inc.; 1st Defendant / 1st Respondent: Yifim Limited; 2nd Defendant / 2nd Respondent: Wing Wah Infrastructure Investment Limited; 3rd Respondent (bank): OCBC Wing Hang Bank Limited; 4th Respondent (bank): Bank of Communications (Hong Kong) Limited
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
18 February 2022
Case Number
HCA1308/2021
Procedural Posture
Civil Action for Recovery of Money Obtained by Email Fraud; Miscellaneous Proceedings for Vesting Orders Under Trustee Ordinance / Default Judgment and Vesting Order Hearing; Judgment and Vesting Orders Granted (reasons Delivered)
Outcome
Default judgment entered for the plaintiff against the 1st and 2nd defendants with declaratory relief and monetary judgment; vesting orders under s52 Trustee Ordinance granted in favour of the plaintiff in respect of the traced bank balances; costs orders made
Legal Topics
Constructive Trust, Vesting Order (s52 Trustee Ordinance), Tracing, Unjust Enrichment, Service of Process, Proprietary Injunction (mareva), Default Judgment, Conspiracy (tort)
Source Language
EN
Trusts Equity Civil Procedure Banking Commercial Fraud Company Law Constructive Trust Vesting Order (s52 Trustee Ordinance) +6 more

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Parties

Hypertec Systems Inc.

Plaintiff / Applicant

Yifim Limited

1st Defendant / 1st Respondent

Wing Wah Infrastructure Investment Limited

2nd Defendant / 2nd Respondent

OCBC Wing Hang Bank Limited

3rd Respondent (bank)

Bank of Communications (Hong Kong) Limited

4th Respondent (bank)

Procedural Posture

Civil Action for Recovery of Money Obtained by Email Fraud; Miscellaneous Proceedings for Vesting Orders Under Trustee Ordinance / Default Judgment and Vesting Order Hearing; Judgment and Vesting Orders Granted (reasons Delivered)

Legal Issues

  1. 1 Whether service on the defendants at their registered office was valid
  2. 2 Whether a constructive trust arises by operation of law when fraudulently obtained funds are received by recipients
  3. 3 Whether section 52(1)(e) of the Trustee Ordinance empowers the court to make vesting orders in respect of rights to sue for money held in bank accounts following fraud

Ratio Decidendi

The court accepted that on the pleaded and proved facts a constructive trust arose by operation of law over the sums transferred by fraud and that those sums were traced to specified balances in the defendants' Hong Kong bank accounts; section 52(1)(e) of the Trustee Ordinance applies to such constructive trusts and authorises vesting of the right to sue for and recover the thing in action in the plaintiff where it is expedient and necessary to enable recovery; service on the defendants at their registered offices was valid; accordingly default judgment with declaratory relief and monetary judgment was entered and vesting orders were granted for the traced balances, with costs directions.

Court Disposition

Default judgment entered for the plaintiff against the 1st and 2nd defendants with declaratory relief and monetary judgment; vesting orders under s52 Trustee Ordinance granted in favour of the plaintiff in respect of the traced bank balances; costs orders made

Orders

  • Default judgment entered for plaintiff against Yifim Limited (1st defendant) and Wing Wah Infrastructure Investment Limited (2nd defendant) with declaratory relief that the sums received are held on constructive trust for the plaintiff and monetary judgment for the sums lost by the plaintiff (damages for the fraud)...
  • Vesting order under section 52(1)(e) Trustee Ordinance vesting in the plaintiff the right to sue for and recover the balances traced in the defendants' bank accounts: US$449,264.79 in the 1st defendant's OCBC account and US$249,892.30 in the 2nd defendant's Bank of Communications (Hong Kong) account