Reassessing options for cyber fraud recovery in Hong Kong

Victims of cyber fraud have been using vesting orders – a means of direct recovery for victims of fraud – to recover stolen funds from fraudsters and subsequent recipients. Often applied concurrently with a default judgment, a vesting order is thought to be a convenient alternative to garnishee proceedings.

In the past year, the courts’ jurisdiction to grant vesting orders in cyber fraud cases has been reassessed. There are now conflicting first-instance judgments on this issue coming out of the high court and the district court, resulting from divergent interpretations of the Trustee Ordinance (Cap. 29) – with some high court rulings dismissing the application of vesting orders in a cyber fraud context. But the debate remains dynamic at both levels of the courts.

Key takeaways

Decisions have diverged and so the legal debate surrounding vesting orders is far from settled. As the court remarked in a recent judgment, the significant degree of uncertainty presented by the existing first instance cases would very much benefit from appellate guidance.

Before the legal uncertainties are resolved by a higher court, victims should reassess their options when pursuing a recovery in cyber fraud cases. As things stand, garnishee proceedings are likely to provide more certainty to victims enforcing judgments against the fraudsters.

Fraudsters rely and operate on the law of large numbers, which makes it likely that fraudulent proceeds of different victims may end up in the same bank account. To prevail against potential competing victims in the race for money and to maximise recovery, efficient enforcement is key. It is therefore vital for victims to choose the right route of enforcement to avoid delays in the process (such as having a vesting order application dismissed).