HK case law sheds light on phishing scams

In an era in which cybercrime targeting Web servers, mobile and the internet of things (IoT) devices is so rampant, enterprises and individuals are dealing with phishing email messages, websites, and phone calls on a daily basis. This article discusses how the Hong Kong courts approach contested proceedings arising from “CEO email scams”, in which fraudsters impersonate senior executives of companies to send emails and trick staff to transfer funds to them, and what is the most efficient way to recover the lost funds.

THE ‘FRAUD’ EXCEPTION

When a victim of “CEO email scams” seeks relief from a Hong Kong court, this is often because the lost funds have been transferred to a Hong Kong bank account. For those victims who successfully freeze the lost funds, by way of a police freezing order or a mareva injunction, commencing legal proceedings against the account holder in Hong Kong is the most natural way of retrieving the lost funds. Typically, the account holder would not respond to the proceedings and a default judgment will be obtained against it.

In some cases, these account holders come forward and contest the proceedings by alleging that they are entitled to retain the funds in the account. In such an event, the victim, who apparently is eager to obtain a favourable judgment without going through a full trial (and thereby incurring more legal costs), will face a conundrum of the inapplicability of obtaining summary judgment under order 14 of the Rules of the High Court (cap 4A).

Gloria Leung is a senior associate at King & Wood Mallesons in Hong Kong