Nikkei America, Inc. And Another v Jialong Trade Ltd And Others

CourtHigh Court (Hong Kong)
Judgement NumberHCA1914/2019
Subject MatterCivil Action
HCA1914/2019 NIKKEI AMERICA, INC. AND ANOTHER v. JIALONG TRADE LTD AND OTHERS

HCA 1914/2019

[2020] HKCFI 957

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1914 OF 2019

____________

BETWEEN
NIKKEI AMERICA, INC. 1st Plaintiff
NIKKEI AMERICA HOLDINGS, INC. 2nd Plaintiff
and
JIALONG TRADE LIMITED
1st Defendant
EURAMERIC TRADING CO., LIMITED
(歐亞麥貿易有限公司)
2nd Defendant
HK XINGWANGDA TRADING LIMITED
(香港興旺達貿易有限公司)
3rd Defendant
HUAFA TRADING CO., LIMITED
(華髮貿易有限公司)
4th Defendant
TONGXINJIA TRADING CO., LIMITED
(通鑫嘉貿易有限公司)
5th Defendant

____________

Before: Deputy High Court Judge Whitehead SC in Chambers
Date of the Plaintiffs’ Written Submissions: 29 April 2020
Date of Judgment: 3 June 2020

_______________

J U D G M E N T

_______________

The Application

1. By summons dated 16 March 2020 (the “Summons”), the 1st and 2nd plaintiffs in summary seek the following:‑

(1) Liberty to enter judgment against the 1st to 5th defendants in default of service of defences in this action for:

(a) A declaration that the plaintiffs are entitled in equity and/ or law to trace the various sums (the “Payments”) remitted to the defendants’ accounts (the “Accounts”) on various dates and/ or the proceeds thereof and/ or any assets upon which the Payments or any part of them have been expended into the hands of the defendants;

(b) A declaration that the defendants hold the Payments, including the credit balance in the Accounts, and all proceeds and fruits thereof, including all assets acquired thereby, on trust for the plaintiffs;

(c) An order that the defendants transfer forthwith to the plaintiffs the traceable proceeds of the Payments, including the credit balance in the Accounts, and/ or any assets upon which the Payments or any part thereof have been expended;

(d) Repayment of the Payments;

(e) Damages for conspiracy to injure (the plaintiffs no longer pursue this claim);

(f) Interest; and

(g) Costs of this action including the costs of this application.

(2) The injunction granted by Barnes J on 17 October 2019 and continued by DHCJ Leung on 25 October 2019 (“the Injunction Order”) be varied to:‑

(a) Allow for the transfer of the credit balance in the Accounts to the plaintiffs;

(b) To permit the plaintiffs to obtain Garnishee Orders for the execution of the judgment so granted and to permit any garnishee to make payment to the plaintiffs pursuant to any such Garnishee Order; and

(c) The Injunction Order as varied as aforesaid be continued post judgment in aid of execution.

2. The Court has directed that this matter should be determined on the papers.

Circumstances giving rise to the plaintiffs’ claim to the Funds

3. The Court is asked to give judgment based on the pleadings alone (Order 19 Rule 7 of the Rules of the High Court). The Statement of Claim, inter alia, discloses the following.

4. The 1st plaintiff is a wholly-owned subsidiary of the 2nd plaintiff which is a wholly-owned subsidiary of a Japanese corporation, Nikkei Inc.

5. Between 23 and 26 September 2019, Mr Tokunao Miyazawa, the Vice President of the 1st plaintiff, received calls from an imposter purporting to be Mr Naotoshi Okada, the President and CEO of Nikkei Inc. During the call on 23 September 2019, the imposter told Mr Miyazawa that:-

(1) Nikkei Inc was in the course of finalizing a confidential acquisition (the “Transaction”) which required funds from the 1st plaintiff for the Transaction;

(2) The payment instructions for the Transaction would be provided by an attorney;

(3) The email address of the attorney was contact@gbseu.com.

6. Upon the instruction of the imposter, Mr Miyazawa sent an email to the attorney’s email address. The attorney responded to Mr Miyazawa’s email and pretended to be Mr Daniel G Berick from the Merger and Acquisitions department of a US law firm, Squire Patton Boggs.

7. The attorney also provided to Mr Miyazawa, by email, a copy of a Power of Attorney dated 23 September 2019 purportedly issued by Nikkei Inc and signed by Mr Okada, stating that Mr Miyazawa was given the authority to authorise the payment.

8. The attorney subsequently emailed Mr Miyazawa the payment instructions for a payment in the sum of US$1,578,000 to account No 57411464016 at Standard Chartered Bank (Hong Kong) Limited (“SCB”) held by the 1st defendant.

9. The request was compiled with by a wire payment out of the 1st plaintiff’s account.

10. Between 24 to 26 September 2019, Mr Miyazawa received calls from the imposter again. During the calls, the imposter told Mr Miyazawa that:‑

(1) Nikkei Inc required additional funds for the Transaction; and

(2) The relevant payment instructions would be provided by the attorney by email.

(the “24 September Instructions”, “25 September Instructions” and “26 September Instructions” respectively)

11. As such, Mr Miyazawa made the following transfers:‑

Recipient’s Bank Account No. Recipient Bank Payer Recipient Amount (US$)

Upon 24 September Instructions
1 57411464016 SCB The 1st plaintiff The 1st defendant 2,993,000
2 57411476286 SCB The 1st plaintiff The 2nd defendant 2,694,000
3 0000147960875 China Constructions Bank (Asia) Corporation Limited (“CCB”) The 1st plaintiff The 3rd defendant 2,977,000
4 744138711601 China Citic Bank International Limited (“CITIC”) The 1st plaintiff The 4th defendant 1,989,000
5 747088862838 The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) The 1st plaintiff The 5th defendant 1,995,000
6 57411464016 SCB The 1st plaintiff The 1st defendant 2,952,000

Upon 25 September Instructions
7 747088862838 HSBC The 2nd plaintiff The 5th defendant 1,695,000
8 747088862838 HSBC The 1st plaintiff The 5th defendant 1,791,000
9 57411464016
...

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