THE JEWISH FEDERATION OF GREATER WASHINGTON, INC. v. AIWO TRADING CO., LTD AND ANOTHER

HCA 2110/2020

[2021] HKCFI 1381

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2110 OF 2020

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BETWEEN

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D E C I S I O N

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1.  There is before me a summons taken out by the Jewish Federation of Greater Washington Inc (the “Plaintiff”) for leave to be granted to it so as to:

“Use the information and/or documents obtained pursuant to the order made by Madam Recorder Tam, SC, on 19 January 2021 (the section 21 documents) for the purposes of enforcing its rights and/or commencing any legal proceedings or complaint in Hong Kong or elsewhere, including but not limited to mainland China and Taiwan which are ancillary and/or connected to the proceedings and whether civil or criminal.”

2.  And paragraph 2:

“To the extent stated in paragraph 1 above, the plaintiff be released from its implied undertaking not to disclose the section 21 documents to any person not a party to the proceedings.”

3.  Briefly stated, the Plaintiff is and was at all material times a charitable organisation based in the Washington District of Columbia area in the United States of America.  The 1st defendant is a limited company incorporated in Hong Kong and at all material time maintained a bank account with the Bank of China (Hong Kong) Limited (the “BOC”).  The 2nd defendant is also a limited company incorporated in Hong Kong and at all material times maintained and maintains a bank account with the BOC.

4.  The Plaintiff is the victim of an email fraud and by reason of the same is claiming against the defendants for almost US$2 million, being the sum transferred from the Plaintiff’s bank account to the 1st defendant’s account on or around 19 June 2020 pursuant to the said fraud, which sum was subsequently transferred to the 2nd defendant’s account.  Upon discovering the fraud, the Plaintiff attempted to stop the transfer of the misappropriated sums to the 1st defendant account but this was unsuccessful.  Accordingly, the misappropriated sum was credited to the 1st defendant account.  

5.  On or around 8 August 2020, the Plaintiff reported the fraud to the Hong Kong Police by filing an online police report.  On or around 11 December 2020, the police further indicated to the Plaintiff’s legal advisers that the sum had been transferred from the 1st defendant’s account to the 2nd defendant’s account.  Prior to the transfer of the misappropriated sums, the Plaintiff did not know and did not have any dealings with any of the defendants, nor was there any proper nor legitimate reason for the plaintiff to pay and for the defendants to receive the misappropriated sums.  

6.  It is on that basis then the plaintiff applied pursuant to section 21 of the Evidence Ordinance for bankers’ records of the defendants.  And it is for the reason that Madam Recorder Tam, SC, granted the bankers order on 19 January 2021.  The defendants did not defend these proceedings and judgment was obtained in default against them on 16 February 2021. 

7.  As explained at the outset of these reasons, the Plaintiff now seeks a release from its undertakings.  The applicable principles pertaining to an application such as the present have been dealt with in a number of judgments, including that of Chu J in Anite Telecoms Ltd v World Best Cargo-Link Co Ltd, Unicredit Bank Austria AG v Dragon Wise Trading Ltd [2013] 2 HKLRD 169 and Re NDT (BVI) Trading Ltd [2009] 5 HKLRD 615.  The following principles can be extracted in summary from those authorities:

(1) Where release from the undertaking is sought, it is for the person obtaining the documents to demonstrate cogent and persuasive reasons why it should be released.

(2) Each case turn on its own facts and no general principles can be formulated beyond stating that the court will not release or modify the implied undertaking, save in special circumstances and where the release or modification will not occasion injustice to the person giving discovery.

(3) While the discretion is at large and unfettered, a number of factors have been identified as militating in favour or against the exercise of such a discretion.  The following factors can also be considered in that exercise:

(a) Whether the proposed collateral use is in court proceedings or outside litigation.  If it is for use outside litigation, it is not the court’s function to release for that purpose. 

(b) And insofar as the collateral use is in aid of satellite proceedings in this jurisdiction, if these are criminal proceedings, the court must take into account the possibility of the application being a method of bypassing the privilege against self-incrimination: and

(c) Insofar as the documents are to be used in proceedings abroad, if the satellite proceedings are criminal, the court in this jurisdiction should be weary of doing anything in this country which may subject the disclosing party to an unfair disadvantage in those proceedings.

(4) On the other hand, the court will bear in mind that in the absence of any other factors argued to constitute some injustice, the public interest and investigation or prosecution of serious fraud should take precedence over the general concern of the court’s controlled collateral use of compulsorily disclosed documents.

(5) The implied undertaking would be relaxed where a strong case of fraud had been demonstrated to be committed on the plaintiff and that the public interest in the combat of serious and extraterritorial fraud should take precedence over the general concern of court’s controlled collateral use of bankers documents disclosed under compulsion of court orders.”

Conclusion

8.  Applying the aforesaid principles to the facts of this case, I have no difficulty in making an order in term of the Plaintiff summons so as to release it from its implied undertaking.