CMOC Sales & Marketing Ltd v Person Unknown & Ors

Factual and Procedural Background

This opinion concerns a fraud litigation initiated by Company A, an English company managed by its sister company based in the United States. In October 2017, Company A discovered it was the victim of a business email compromise fraud by which unknown perpetrators hacked into the email account of one of its directors and authorised signatories. The fraudsters sent fraudulent payment instructions to Company A's bank in London, resulting in the unlawful transfer of approximately US$6.91 million and 1.27 million in another currency from Company A's accounts via twenty separate transactions.

The fraud was uncovered between 12 and 13 October 2017, leading to urgent legal action including a world-wide freezing order against persons unknown, who were subsequently identified as the collective first defendant. The litigation involves numerous defendants, including named individuals and companies, with some defendants settling prior to trial and many others not engaging in the proceedings. The case has involved multiple pre-trial hearings, extensive disclosure orders against banks in various jurisdictions, and innovative service methods such as Facebook Messenger and WhatsApp.

The defendants largely failed to participate by filing defences or evidence, and the court proceeded to hear the case on the basis of the evidence presented by Company A. The evidence includes affidavits and witness statements from Company A's employees and financial analysts, detailing the fraud and tracing the flow of stolen funds through multiple international accounts and entities.

Legal Issues Presented

1. Whether the stolen monies are subject to a proprietary claim by virtue of a constructive trust impressed on the funds.
2. Whether the participation defendants are liable for dishonest assistance in the breach of trust.
3. Whether the participation defendants are liable for unlawful means conspiracy (UMC) in relation to the fraud.
4. Whether the receiving defendants are liable for knowing receipt of trust monies.
5. Whether the receiving defendants are liable in unjust enrichment for monies received indirectly from the fraud.
6. The appropriate relief, including interest and costs, to be awarded to Company A.
7. The extent and validity of the court’s jurisdiction to grant a world-wide freezing order against persons unknown.
8. The permissibility and appropriateness of alternative service methods in international fraud litigation.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the factual basis of the fraud, supported by detailed evidence including affidavits and witness statements from Company A's personnel. The court accepted that the stolen monies were impressed with a constructive trust, enabling tracing of funds through multiple international accounts. The court applied the lowest intermediate balance rule to determine the traceable proceeds in mixed bank accounts.

The court categorized defendants into perpetrators, participation defendants with knowledge of the fraud, and participation defendants with knowledge of a fraud, analyzing liability accordingly. It found that perpetrators, defined as those who orchestrated and executed the hacking and fraudulent payment instructions, were liable for dishonest assistance and unlawful means conspiracy. Participation defendants who received funds directly or controlled entities that did were also found liable on similar grounds, with inferences drawn from their conduct, lack of defence, and the nature of the transactions.

The court emphasized that knowledge sufficient for liability did not require detailed awareness of the trust or victim's identity, only that the defendants knew they were participating in a dishonest scheme or conspiracy. The court also addressed knowing receipt claims, concluding that all receiving defendants held the trust proceeds unconscionably and were liable to restore the funds.

Regarding unjust enrichment, the court found difficulties in claiming against multiple levels of recipients simultaneously without election, as it would be inconsistent to pursue both direct and indirect recipients for the same funds. The court allowed an election to be made post-judgment to limit unjust enrichment claims to direct recipients (Level 1 payees).

The court awarded interest consistent with recent Supreme Court authority, granting compound interest on proprietary and knowing receipt claims and simple interest on unlawful means conspiracy claims. Costs were awarded on an indemnity basis due to defendants' non-engagement, and certain foreign mitigation costs were recognized as recoverable damages subject to reasonableness assessment.

The court affirmed its jurisdiction to grant a world-wide freezing order against persons unknown, relying on established precedents for injunctions against unknown defendants and extending the principle to freezing injunctions in fraud cases. The court also approved innovative service methods, including Facebook Messenger, WhatsApp, and access to a secure data room, as appropriate in the circumstances of international fraud litigation.

Holding and Implications

The court's final decision is IN FAVOUR OF COMPANY A on all substantive claims except unjust enrichment, which succeeds only against Level 1 payees upon election.

The defendants are held liable for the full amount of the fraud loss, including damages for dishonest assistance, unlawful means conspiracy, knowing receipt, and proprietary claims. Interest and costs are awarded accordingly, with costs on an indemnity basis due to defendants' failure to engage.

The court confirmed the validity and utility of world-wide freezing orders against persons unknown in modern fraud cases and endorsed alternative service methods suited to complex international litigation.

No new legal principles were overturned, but the judgment extends and clarifies the application of existing doctrines, particularly regarding freezing orders against unknown defendants and the management of multi-jurisdictional fraud claims. The decision underscores the court's readiness to adapt procedural mechanisms to contemporary challenges posed by cyber-fraud and international financial crime.