(A) Introduction
Whether the Court has jurisdiction to grant a vesting order in favour of victims of internet fraud and email fraud pursuant to Section 52 of the Trustee Ordinance (Cap. 29) (the “TO”) is the major issue vigorously contested in Hong Kong Courts.
Whether the Court has jurisdiction to grant a vesting order in favour of victims of internet fraud and email fraud pursuant to Section 52 of the Trustee Ordinance (Cap. 29) (the “TO”) is the major issue vigorously contested in Hong Kong Courts.
Historically, the Court’s attitude on this issue have varied. In 2025 (as at 26 September 2025), the Courts clarified this issue in three key cases:
(1) Amidas Hong Kong Limited v Che Si Limited (HCA 1406/2024 & HCMP 2754/2024, date of judgment: 25 March 2025) (“Amidas”) [1];
(2) Orion Engineered Carbons GmBH v Universall All Limited and others (HCA 1625/2024, HCMP 210/2025, date of judgment: 30 May 2025) (“Orion”) [2]; and
(3) Dana Wells v. Chan Yanfeng (DCCJ 1304/2023, date of judgment: 25 September 2025) (“Dana Wells”) [3].
The recent decision in Dana Wells reaffirms the limits of the Court’s jurisdiction established in Amidas, regarding constructive trusteeship arising from internet fraud and the distinction between different types of constructive trusts.
This article examines the above cases, demonstrating the Court’s strict approach to applications for vesting orders against defendants who received fraudulently obtained funds as constructive trustees.
(B) Amidas
Facts
The Plaintiff was a victim of an email fraud. On 7 March 2024, its Finance and Human Resources Manager received a fraudulent email that appeared to be from a supplier. it was deceived into transferring a sum of money to the Defendant’s account (the “Defendant’s Account”) at a bank (the “Bank”). The fraud was discovered later the same day when the Plaintiff's bank raised suspicions and the Plaintiff confirmed with the genuine supplier that no request to change bank details had been made.
This article examines the above cases, demonstrating the Court’s strict approach to applications for vesting orders against defendants who received fraudulently obtained funds as constructive trustees.
(B) Amidas
Facts
The Plaintiff was a victim of an email fraud. On 7 March 2024, its Finance and Human Resources Manager received a fraudulent email that appeared to be from a supplier. it was deceived into transferring a sum of money to the Defendant’s account (the “Defendant’s Account”) at a bank (the “Bank”). The fraud was discovered later the same day when the Plaintiff's bank raised suspicions and the Plaintiff confirmed with the genuine supplier that no request to change bank details had been made.
The Plaintiff then commenced proceedings and obtained a proprietary injunction against the Defendant's Account. Subsequently, the Plaintiff applied for a a vesting order under Section 52 of the TO against the Defendant and the Bank in separate proceedings.
Decision on the Vesting Order
The Court refused to grant the vesting order. In its reasoning, the Court addressed the conflicting authorities on the proper construction of Section 52(1)(e) of the TO and availability of vesting orders as a relief in similar email fraud cases. [4]
The key issue was whether a defendant declared a constructive trustee of fraudulently obtained funds qualifies as a “trustee” under the TO for the purpose of making a vesting order. The Court clarified that there are 2 categories of constructive trusts: [5]
(i) Category 1 (Institutional): Arises from the breach of a pre-existing duty is, or is treated by an analogy as, an action by a beneficiary for breach of trust. The trustee is considered a “true” trustee.
(ii) Category 2 (Remedial): Imposed by the Court as a remedy for wrongdoing (such as fraud). The defendant's trusteeship is purely remedial.
The Court found that the Defendant was a Category 2 (remedial) constructive trustee. It held that the definition of “trustee” in the TO, which is also adopted by the Limitation Ordinance (Cap. 347) (the “LO”), does not extend to Category 2 constructive trustees. The TO is concerned with the administration of “true trusts” whereas a remedial constructive trustee’s sole obligation is to restore the assets immediately. [6] As such, the Court held that Section 52(1)(e) of the TO was not engaged in this fraud case. [7]
The Court added that even if it is viable, a stand-alone vesting order against the garnishee bank is wrong as a matter of law as the Bank is not a trustee within the meaning of section 52(1)(e) of the TO. Its legal relationship with the Defendant is that of a debtor (Bank) to a creditor (Defendant), not a trustee. There was no allegation that the Bank itself held the funds on trust for the Plaintiff. [8]
Further, it was not expedient to apply for vesting order when the Plaintiff has adequate alternative remedies, including garnishee proceedings, which are a more cost-effective means of enforcement. [9]
(C) Orion
Facts
The Plaintiff was a victim of an internet fraud. Fraudsters impersonated the Plaintiff's Chief Financial Officer and deceived the Plaintiff into transferring substantial sums in multiple tranches to various bank accounts in Hong Kong held by the Defendants.
The Plaintiff then commenced proceedings and obtained a proprietary and Mareva injunction against the Defendants. Subsequently, in separate proceedings, the Plaintiff applied for a vesting order under Section 52 of the TO against the Defendants.
Decision on the Vesting Order
The Court refused to grant the vesting order on the following grounds: [10]
(1) The Court endorsed and adopted the reasoning set out in Amidas. It reinforced the principle that the definition of “trustee” in the TO, which applies equally to the LO, is confined to “true” or institutional constructive trustees (Category 1) and does not extend to remedial constructive trustees (Category 2).
(2) As the Defendants were Category 2 constructive trustees, the Court held that Section 52 of the TO was not engaged in this case.
(3) The Court also reminded the Plaintiff that the appropriate procedure for enforcement must be followed, echoing the observation in Amidas that applying for a vesting order is often more costly than the garnishee proceedings. [11]
(D) Dana Wells
Facts
The Plaintiff was a victim of an email fraud. The fraudster deceived the Plaintiff into believing she had been wrongly charged for a subscription and induced the Plaintiff to transfer a sum of money to a bank account in Hong Kong held by the Defendant.
The Plaintiff then commenced proceedings against the Defendant. Subsequently, the Plaintiff applied for a vesting order under Section 52(1)(e) and 52(5) of the TO.
Facts
The Plaintiff was a victim of an email fraud. The fraudster deceived the Plaintiff into believing she had been wrongly charged for a subscription and induced the Plaintiff to transfer a sum of money to a bank account in Hong Kong held by the Defendant.
The Plaintiff then commenced proceedings against the Defendant. Subsequently, the Plaintiff applied for a vesting order under Section 52(1)(e) and 52(5) of the TO.
Decision on the Vesting Order
The Court refused to grant the vesting order. In its reasoning, the Court acknowledged the previously unsettled state of the law on this issue, but found clear guidance in Amidas. [12]
The Court adopted the reasoning in Amidas, which set out the critical distinction between two categories of constructive trusts:
(i) Category 1 (Institutional): This encompasses defendants who have assumed trustee duties through a lawful transaction that is independent of and antecedent to the breach of trust, and which is not impeached by the plaintiff.
(ii) Category 2 (Remedial): This includes cases where the trust obligation arises directly from the unlawful transaction that is impeached by the plaintiff.
The Court held that the Defendant, as a recipient of fraudulently obtained funds, was a Category 2 (remedial) constructive trustee. As such, the definition of “trustee” in the TO does not extend to the Defendant, and the statutory power to make a vesting order under section 52(1)(e) was not engaged. [13]
(E) Key Takeaways
In conclusion, Amidas, Orion and Dana Wells provide clarity for victims of internet fraud and email fraud in Hong Kong. Amidas is the landmark judgment which established the foundational framework for distinguishing between categories of constructive trusts. Orion confirmed the principles in Amidas. Dana Wells affirmed and applied the framework to resolve the previously unsettled state of the law.
The above cases set out the following useful guidelines for asset recovery in internet fraud and email fraud cases:
The Court held that the Defendant, as a recipient of fraudulently obtained funds, was a Category 2 (remedial) constructive trustee. As such, the definition of “trustee” in the TO does not extend to the Defendant, and the statutory power to make a vesting order under section 52(1)(e) was not engaged. [13]
(E) Key Takeaways
In conclusion, Amidas, Orion and Dana Wells provide clarity for victims of internet fraud and email fraud in Hong Kong. Amidas is the landmark judgment which established the foundational framework for distinguishing between categories of constructive trusts. Orion confirmed the principles in Amidas. Dana Wells affirmed and applied the framework to resolve the previously unsettled state of the law.
The above cases set out the following useful guidelines for asset recovery in internet fraud and email fraud cases:
(1) The Critical Categorical Distinction: These cases reinforce the distinction between institutional and remedial constructive trusts:
(a) Category 1 (Institutional): Involves a defendant who assumed trustee duties through a pre-existing and lawful transaction.
(b) Category 2 (Remedial): Imposed by the Court as a remedy for the wrongdoing itself (e.g., receiving fraud proceeds).
(2) Vesting Orders are Unavailable for Email Fraud and Internet Fraud Cases: A recipient of fraudulently obtained funds is classified as a Category 2 (remedial) constructive trustee. This classification means the recipient does not qualify as a true “trustee” under the TO, and a vesting order under section 52 is therefore not an available remedy.
(3) Clear Path for Victims: Victims of internet fraud and email fraud cannot rely on vesting orders to recover funds directly from a bank account. Instead, the more cost-efficient enforcement path is through garnishee proceedings after obtaining a judgment.
[1] https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=167303
[2] https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=169478
[3] https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=172799
[4] Amidas, §38-39
[5] Ibid, §45-46
[6] Ibid, §50
[7] Ibid, §56
[8] Ibid, §59-60
[9] Ibid, §64-65[10] Orion, §19
[11] Ibid, §26
[12] Dana Wells, §33
[13] Ibid, §40
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