Managing A Fraudulent Loan Account

Galleria (Hong Kong) Ltd vs DBS Bank Ltd (Hong Kong Branch) [2021] HKCA 611    

The HK Court of Appeal ("Court of Appeal") decided on an action brought by a liquidator against a bank on three fraud related causes of action in relation to banking facilities granted to a borrower. The Court discussed the mental elements required on the part of the wrongdoer, eventually finding that the bank's actions did not amount to fraudulent conduct.

Facts

Galleria (HK) Ltd ("GHK"), was financed by borrowings from DBS Bank Ltd, Hong Kong Branch ("Bank") and other banks. Over the course of 2004 – 2009, GHK's directors used falsified bills of lading ("B/Ls") to continually obtain loan facilities and other lines of credit from the Bank and other banks. In 2006, the Bank inquired on the validity of some B/Ls with the International Maritime Bureau of the International Chamber of Commerce ("ICC-IMB") as part of a routine check, and was notified that some of the B/Ls