Hong Kong, 6 September 2024: BC&C’s expertise in dealing with fraud recovery claims has been further underlined recently in a High Court judgment in favour of our client, a US-incorporated company that fell victim to an elaborate trading scam.

Our client (the “Plaintiff”) paid some US$8.3 million for the shipping of fertilisers from a Russian supplier, of which around US$2.1 million was transferred in three payments to the bank account of a Hong Kong registered company (the second defendant, “D2”). It was then discovered that the agreement was fraudulent and that transportation documents had been forged, hence the shipments never arrived. The US firm immediately reported the deception to the police.

The legal team, led by our Partner Arthur Chan and Associate Jasmine Kwong, assisted the Plaintiff in commencing legal action against D2. Our firm successfully applied for an interim injunction to restrain D2 from removing the funds from Hong Kong. Riding the wave of this initial success, we assisted the Plaintiff to apply for summary judgment under O.14 of the Rules of the High Court to recover the funds and obtain a declaration that the funds were held in trust for the Plaintiff.

D2 resisted this application and attempted to rely on the bona fide (ie genuine) purchaser defence, claiming that the funds had come from a payment agent in Mainland China as a result of business conducted with a Filipino customer. However, Deputy High Court Judge Phoebe Man, in her judgment (which can be found here), reinforces a crucial legal principle for the reliance on the bona fide defence: the normal rule of nemo dat (ie no one can give what they do not have) applies and there is no scope for relying on the bona fide purchaser defence when he or she is direct recipient of the enrichment from the Plaintiff (who has good title) under this specific set of facts, even if D2’s beliefs were credible.

The judge further stated that even if the defence were applicable, D2’s claim was unbelievable and lacked good faith. Consequently, she ordered D2 to repay the US$2.1 million with interest and awarded costs to our client.

Says Arthur Chan, who specialises in criminal litigation and cyber fraud recovery claim: “Deciding whether to apply for a summary judgment requires meticulous planning and consideration due to the high threshold required for the application to succeed. We are pleased that we were able to secure a satisfactory outcome for our client.”

BC&C instructed counsel Adrian Kwan of Temple Chambers for the case.