A Practical Guide for Cybercrime Victims in Hong Kong – Obtain Police Freeze – Collect Evidence
- Anna Lau
- Jan 29, 2021
- 4 min read
Updated: 1 day ago
Author: Anna Lau, Litigation Partner
“It used to be the wealthier you were, the more immune you were to crime. Cybercrime has topped it the other way. ” - Neal O’Farrell
Many cyber fraud cases involve the victim being inducing to transfer funds whereby the recipient holds the respective funds on a constructive trust. Whilst many legal recourses may arise, the first practical step to take is, in fact, to report such crime to the police with a request for immediate police freeze against the accounts employed by cybercriminal.
Legal recourse is, after all, useless in the absence of secured assets for Court judgment to enforce against.
Where plaintiffs have a proprietary claim to preserve their assets, they seek a proprietary injunction. The threshold to seek a proprietary injunction is fairly lower than that of a Mareva injunction. Unlike in a Mareva injunction where the plaintiff is required to prove a real risk of dissipation of assets by the defendant (Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd [2017] HKEC 869), the plaintiff is only required to demonstrate that there is a serious issue to be tried on the merits.
Process to Seek a Proprietary Injunction
After a claim has been made by the plaintiff with no acknowledgement of service or defence filed by the defendant within the set time period, the plaintiff can then apply and obtain a default judgment.
In addition, the plaintiff can also seek declaratory relief to establish that the misappropriated funds are held on trust for the plaintiff and to keep the defendant’s other creditors from having access to the stolen funds.
A lot of cases have been granted declaratory relief despite it being an uncommon practice. In Skandinaviska Enskilda Banken SA v Hongkong Liling Trading Ltd, the court stated that where there is a genuine need for declaratory relief, practice will give way to the requirements of justice.
As a result, action taken in cyber fraud cases has been simplified by providing victims with proprietary rights to their stolen funds, offering a more effective mechanism to recover them.
Milestone Electric Inc v Meihoukang Trading Co Limited
The decision of Milestone Electric Inc v Meihoukang Trading Co Limited [2020] HKCFI 2542 restated the tracing principles required to obtain proprietary relief in cyber fraud cases.
Recorder Eugene Fung SC relied on Federal Republic of Brazil v Durant International Corpn [2016] AC 297 and reaffirmed that the plaintiff must establish that the assets claimed can be identified through the tracing process as representing the original trust property.
Court Decision
The court was not satisfied that the plaintiff could seek proprietary relief in regard to the US$850,000 claimed. Relying on Boscawen v Bajwa [1996] 1 WLR 328, the court stated the plaintiff must prove that the property was still owned by the defendant.
As over US$600,000 had already been withdrawn, the plaintiff could not assert proprietary rights over the entire sum.
The court further held that the remaining credit balance could not be claimed due to insufficient evidence, particularly as no disclosure order had been sought for the defendant’s bank statements.
Change in Legal Position
The judgment clarified how proprietary claims in email fraud cases should now be pursued. Victims are advised to claim proprietary interest over each separate transfer, or the remaining traceable portion, rather than the full aggregated sum.
Victims must provide documentary evidence proving that remaining funds are traceable from the original transfer. Recorder Eugene Fung SC emphasised that courts will scrutinise default judgment applications carefully when declaratory relief is sought.
Practitioners representing cybercrime victims must therefore obtain bank records to substantiate tracing claims.
Option Plans (Civil Litigation)
With the above in mind, victims should consider the advantages and disadvantages of securing a proprietary declaration when pursuing remedies from the Court.
Concluding Remarks
If you are a victim of cybercrime:
Step 1 Call the Police: Report the matter immediately to obtain a police freeze. Cybercriminals rarely retain stolen assets for long.
Step 2 Collect all relevant evidence: Early asset tracing helps identify ownership and enables freezing of funds at secondary recipients.
Step 3 Secure Judgment from the Courts: Victims must move expeditiously to recover assets via court judgments.
How Ravenscroft & Schmierer Can Help?
For cybercrime victims in Hong Kong, swift action is critical to preserving and recovering misappropriated assets. Ravenscroft & Schmierer advises on police reporting, injunction strategies, proprietary claims, and court proceedings arising from cyber fraud.
If you require guidance on securing asset freezes or pursuing recovery through the courts, contact us to discuss your circumstances and available options.
FAQ: Cybercrime Victims Hong Kong
What should cybercrime victims in Hong Kong do first?
Victims should report the matter to the police immediately to request a police freeze on the relevant accounts.
What is a proprietary injunction?
A proprietary injunction preserves assets claimed to be held on trust for the plaintiff.
Is a proprietary injunction easier to obtain than a Mareva injunction?
Yes. The threshold is lower, as there is no need to prove a real risk of dissipation.
Why is tracing evidence important?
Courts will only grant proprietary relief where misappropriated funds can be clearly identified and traced.
How can Ravenscroft & Schmierer assist cybercrime victims in Hong Kong?
Ravenscroft & Schmierer advises on police freeze applications, proprietary injunctions, civil recovery actions, and enforcement strategies.
Does Ravenscroft & Schmierer advise on asset tracing and bank disclosure?
Yes. We assist with tracing exercises and applications for bank disclosure to support proprietary claims.
This article was co-authored by Joshua Chua from ONC Lawyers
Disclaimer: Whilst every effort has been made to ensure the accuracy of this article it is general in nature and does not constitute legal advice of any kind. You should seek your own personal legal advice before taking legal action. We accept no liability whatsoever for loss arising out of the use or misuse of this article.
For specific advice about your situation, please contact:
Litigation Partner
+852 2388 3899
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