EDWARD ARTHUR BANNER AND ANOTHER v. GREAT UNION ELECTRONIC TECHNOLOGY LTD

HCA 514/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 514 OF 2013

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D E C I S I O N

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1.  In respect of the plaintiffs’ disclosure order against the Bank of China (Hong Kong) Limited (“BOC”) for the production of information and documents relating to the defendant’s bank documents maintained with the bank, BOC has adopted a neutral stance. Having considered the affidavits filed by the plaintiffs and the Mareva injunction order that was granted ex parte on 28 March 2013 and continued today, I am satisfied that the disclosure order ought to be made in favour of the plaintiff, save and subject to four matters:

(a) the plaintiff is now prepared to confirm that the relevant period for disclosure is from 1 January 2013 until the date of the service of the disclosure order;

(b) the plaintiff has no objection to BOC’s request for 28 days to provide the requested documents;

(c) the plaintiff is prepared to obtain copies of the requested documents without inspection at BOC; and

(d) the issue of costs which is the only remaining contentious matter.

2.  The plaintiff accepts that it has to bear BOC’s costs in compliance with the disclosure order which will have to be borne by the plaintiff in the first instance and which the plaintiff seeks to recover from the defendant as an item of disbursement in the event that they should succeed on the claim.

3.  BOC’s solicitors say that the bank is entitled to (a) the costs of the application, including the costs of compliance with the order on a full indemnity basis, to be taxed if not agreed, as well as (b) bank charges at the bank standard rate for copies of the documents to be provided.  They also ask for security for costs in the sum of $35,000 to be paid into court or to them as the bank’s solicitors, to be paid within two days from the order to be made.

4.  In the skeleton submissions, the parties’ respective solicitors have cited a number of authorities.  I have considered them but I do not think that I need to deal with them in detail.  Suffice to say that on the materials before me, BOC is an innocent party embroiled in this matter through no fault of their own and, likewise, the plaintiffs, on the affidavit evidence before me, also appear to be victims of internet fraud in which moneys were transferred from their own account through misrepresentation or mistake not of their own making.

5.  As I have just indicated, there are three sets of costs, ie (a) costs of the application and (b) costs of compliance (both which are legal costs), and (c) reasonable disbursements and charges for the BOC for complying with the order. The latter two sets of costs are future costs and the parties have agreed that they will have to be taxed or assessed. 

6.  Since the plaintiffs call upon BOC to assist, I have no doubt and the plaintiffs have conceded, they should bear the bank’s costs both of the application and for compliance with the disclosure order.  I agree that such costs should be on an indemnity basis as a reflection of an innocent party being put to the trouble of assisting the plaintiffs.

7.  As regards the issue of security for costs in the sum of $35,000, I am not persuaded that the sum proposed is a realistic reflection of the relevant costs as suggested by the bank’s solicitors.  Here, BOC has taken a neutral stance and it is a substantial banking corporation with an organised system for retrieval of information.  Hence, the cost of compliance should not be substantial, particularly in light of the plaintiffs’ sensible reduction of the scope of the disclosure and their agreement to forego inspection in favour of obtaining copies of the documents.

8.  In my view, sensible costs, even on an indemnity basis, should be less. That being the case and given that, on the materials before me, (a) the plaintiffs also appear to be innocent victims of the fraud themselves, (b) the amount of the costs is not likely to be substantial and (c) the plaintiffs have acted responsibly so far in prosecuting the action and dealing with the matter by lawyers, and further bearing in mind that there is a need to quickly attend to the disclosure of documents to pursue the tracing of the outstanding moneys, I am not persuaded, in the exercise of my discretion and having considered all the circumstances, to grant an order for security for costs.  I will now turn to the formal terms of the order.

(Discussion re terms of the order)

9.  In respect of the summons dated 9 April 2013 against Bank of China (Hong Kong) Limited, there be an order in terms of paragraphs 1 to 5 amended in the manner as I have indicated.  In respect of costs of the application and of compliance with the order to be made herein and reasonable charges and disbursements of compliance with the order, all such costs to be paid by the plaintiff to Bank of China (Hong Kong) Limited to be assessed on indemnity basis and also on gross sum basis by paper disposal before master.

10.  In relation to the summons dated 9 April 2013 against Hang Seng Bank Limited, there be an order in terms of paragraphs 1 to 5 amended in the manner as I have indicated. 

(Discussion re costs)

11.  Costs of the application and of compliance with the order to be made herein and reasonable charges and disbursements of compliance with the order be paid by the plaintiff to Hang Seng Bank Limited, all such costs on an indemnity basis, to be taxed if not agreed.