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Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd And Others

Judgment Cited authorities 5 Cited in Precedent Map Related
Vincent
Judgment Date02 May 2017
Subject MatterCivil Action
Judgement NumberHCA3023/2016
CourtHigh Court (Hong Kong)
HCA3023/2016 PACIFIC RAINBOW INTERNATIONAL INC v. SHENZHEN WOLVERINE TECH LTD AND OTHERS

HCA 3023/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3023 OF 2016

________________________

BETWEEN
PACIFIC RAINBOW INTERNATIONAL INC Plaintiff
and
SHENZHEN WOLVERINE TECH LTD 1st Defendant
LAU LAI YEE RILEY, trading as EAST WINNER INTERNATIONAL COMPANY 2nd Defendant
NETRADING COMPANY LIMITED 3rd Defendant
CHAN SHUN KEI, BILLY (陳信岐) 4th Defendant

________________________

Before: Deputy High Court Judge Douglas Lam SC in Chambers

Date of Hearing: 16 March 2017

Date of Decision: 2 May 2017

________________________

DECISION

________________________


A. Procedural Background

1. On 18 November 2016, prior to the issue of the writ in this action, the plaintiff applied for and obtained ex parte from Zervos J:

(1) As against the 1st defendant (a) a proprietary injunction restraining it from inter alia disposing of or dealing with the sum of US$1,443,000[1] (the “said Sum”) which had been paid into its bank account with Hang Seng Bank Limited (“D1’s HSB Account”) from the plaintiff’s bank account with Bank of America Merrill Lynch on or about 10 November 2016 and/or the proceeds of the same; and (b) a Mareva injunction restraining it from inter alia disposing of or dealing with its assets in Hong Kong up to the value of the said Sum, together with a disclosure order on the location and value of its assets (“D1 ex parte order”).

(2) As against HSB, a Norwich Pharmacal order for the disclosure of inter alia information and supporting documents concerning the movements of sums in and out of D1’s HSB Account in the period from 10 November 2016 to the date of service of the order (the “1st HSB discovery order”).

2. The writ was issued 3 days later on 21 November 2016, with the 1st defendant named as the sole defendant. On 25 November 2016, being the return date of the D1 ex parte order and in default of appearance by the 1st defendant, Anthony Chan J continued the order with minor amendments until trial or further order.

3. On 8 December 2016, the plaintiff applied for and obtained ex parte from DHCJ Kent Yee:

(1) Leave to amend the writ by adding the 2nd, 3rd and 4th defendants.

(2) As against the 2nd defendant, (a) a proprietary injunction restraining it from inter alia disposing of or dealing with the sum of HK$9,176,063 paid into his bank account with Bank of East Asia Limited (“D2’s BEA Account”) from D1’s HSB Account on or about 15 November 2016, and/or its proceeds; and (b) a Mareva injunction restraining him from inter alia disposing of or dealing with its assets in Hong Kong up to the value of the said Sum, together with a disclosure order on the location and value of his assets (“D2 ex parte order”).

(3) As against the 3rd defendant, (a) a proprietaryinjunction restraining it from inter alia disposing of or dealing with the sum of HK$2,000,000 paid into its bank account with HSB (“D3’s HSB Account”) from D1’s HSB Account on or about 15 November 2016, and/or its proceeds; and (b) a Mareva injunction restraining him from inter alia disposing of ordealing with its assets in Hong Kong up to the value of the said Sum, together with a disclosure order on the location and value of its assets (“D3 ex parte order”).

(4) As against the 4th defendant, a Mareva injunction restraining him from inter alia disposing of or dealing with its assets in Hong Kong up to the value of the said Sum, together with a disclosure order on the location and value of its assets (“D4 ex parte order”).

(5) As against BEA, a Norwich Pharmacal order for the disclosure of inter alia information and supporting documents concerning the movements of sums in and out of D2’s BEA Account in the period from 15 November 2016 to the date of service of the order (the “BEA discovery order”).

(6) As against HSB, a Norwich Pharmacal order for the disclosure of inter alia information and supporting documents concerning the movements of sums in and out of D3’s HSB Account in the period from 15 November 2016 to the date of service of the order (the “2nd HSB discovery order”).

4. On 16 December 2016, being the return date of the D2, D3 and D4 ex parte orders, the 2nd defendant indicated that he would oppose the continuation of the D2 ex parte order. The 3rd and 4th defendants did not appear. DHCJ Kent Yee adjourned the plaintiff’s return date summons and ordered the continuation of the ex parte orders pending the determination of the summons or further order, but subject to a variation that inter alia the 2nd defendant be allowed to spend (1) HK$5,000 per week towards ordinary living expenses and HK$10,000 per week towards his ordinary and proper business expenses for a 12-week period; and (2) HK$150,000 on legal advice and representation. The judge also gave directions for the filing of evidence by plaintiff and the 2nd defendant.

5. The plaintiff’s adjourned summons came before me on 16 March 2017. I was informed by Mr Kerby Lau, counsel for the plaintiff, that the 3rd and 4th defendants have since filed acknowledgements of service and have consented to the continuation of the D3 and D4 ex parte orders. After hearing the parties, I reserved my decision and continued the D2 ex parte order until further order.

B. Factual Background

6. The plaintiff, a company incorporated in California, USA, is an importer and wholesaler of raw materials in the food and other industries, and has had a trading relationship with a company known as Xiamen Kingdomway Limited (“KDW”), a supplier of raw materials, since 2010.

7. The 1st and 3rd defendants are Hong Kong incorporated companies. The 2nd defendant has been registered as a sole proprietorship under the Business Registration Ordinance (Cap 310) (“BRO”) since 5 August 2015. The 4th defendant is and was at all material times the sole director and shareholder of the 3rd defendant.

8. The root of these proceedings is what appears to have been an email fraud perpetrated on the plaintiff.

9. On 22 March 2016, the plaintiff placed an order with KDW for materials for a sum of US$1,480,000. On or about 8 November 2016, the plaintiff received an email purportedly from one Belinda Han, the general manager of KDW’s international trade department, asking if the plaintiff could make early payment for the goods to assist with KDW’s cash flow issues, in return for a 2.5% discount from the original price.

10. The plaintiff agreed, and on 10 November 2016, the plaintiff received a further email purportedly from Ms Han directing payment to be made to the 1st defendant, which was said to be a subsidiary of KDW. The email attached a payment authorisation and revised invoice instructing payment to be made to D1’s HSB Account. On the belief that the emails were genuine, on 15 November 2016, the plaintiff remitted the said Sum into D1’s HSB Account.

11. On 16 November 2016, the plaintiff sent to Ms Han an email with the bank confirmation slip showing the remittance, whereupon it was discovered that neither Ms Han nor anyone at KDW had sent the emails on 8 and 10 November 2016 and had never authorised payment into D1’s HSB Account. In fact, KDW had no business transactions or dealings with the 1st defendant.

12. From the information obtained pursuant to the 1st and 2nd HSB discovery orders and the BEA discovery order, it can be seen to some extent what happened to the said Sum.

13. Insofar as D1’s HSB Account was concerned:

(1) Prior to 15 November 2016, there was an equivalent of several thousand Hong Kong dollars (in various currencies) in the account.

(2) After the said Sum was transferred into the US dollar account of D1’s HSB Account on 15 November 2016 (a Tuesday), the bulk of it was immediately converted and deposited into the Hong Kong dollar account of D1’s HSB Account.

(3) On the same day, the following transfers were made out of D1’s HSB Account:

Time: Recipient: Amount (HKD)
3:02 pm D2’s BEA Account HKD 4,358,400
3:14 pm D3’s HSB Account HKD 2,000,000
3:36 pm D2’s BEA Account HKD 4,807,663
Total: HKD 11,166,063

(4) The remaining balance in the account at the end of 15 November 2017 was back to several thousand Hong Kong dollars (in various currencies).

14. Insofar as D2’s BEA Account is concerned:

(1) Prior to receipt of HK$4,358,385 and HK$4,807,648 (after deduction of presumably bank charges of HK$15 for each transfer) totalling HK$9,176,033 on 15 November 2016, there was an equivalent of around HK$74,400 in D2’s BEA Account (in various currencies). It should be mentioned that the HK$9,176,033 was deposited into the Hong Kong dollar savings sub-account in D2’s BEA Account (and unless otherwise stated, references to D2’s BEA Account below are references to the Hong Kong dollar savings sub-account).

(2) On 17 November 2016, the 2nd defendant made the following transfers out of D2’s BEA Account:

Time: Recipient: Amount (HKD)
2:32 pm Liu Haishen HKD 2,000,000
2:34 pm D3’s HSB Account HKD 2,580,000
2:35 pm Gain Net Trading Co Ltd (“GNT”) HKD 2,000,000
2:35 pm Wang Qin Fa HKD 288,000
2:36 pm Treasure Praise Ltd HKD 400,000
Total: HKD 7,268,000

(3) On 21 November 2016 (a Monday), being the first weekday after the plaintiff obtained the D1 ex parte Order, the sum of HK$1,671,560 was converted into CAD 290,000 and transferred into the Canadian dollar savings sub-account in D2’s BEA Account, which had a pre-existing balance of CAD 12,011. The sum of CAD 300,000 was then remitted overseas to an account held by the...

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