YUEN & PARTNERS v. DBS BANK (HONG KONG) LTD

HCMP 1609/2020

[2020] HKCFI 2815

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1609 OF 2020

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J U D G M E N T

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1.  By originating summons dated 29 September 2020, the plaintiff, which is a firm of solicitors practising in Hong Kong, seeks the following orders against the defendant, which is a corporation carrying on banking business in Hong Kong. The order sought was as follows:

“(1)   An order requiring the Defendant to forthwith disclose documents depicting all withdrawals, amount, date and recipient bank account/beneficiary and/or beneficiary from July 2017 to June 2018 of the following accounts:

(a)     Multi-Currency Savings Account No. 0580020655 in the name of Chow Ting Hei also known as Chow Shuk Mei; and

(b)     205100491075 in the joint names of Ms Chow Ting Hei also known as Chow Shuk Mei and Mr Chae Man Tock.

(“the Subject Accounts”)

(2)   In the alternative, an order requiring the Defendant to forthwith disclose documents depicting all withdrawals, amount, date and recipient bank account/beneficiary and/or beneficiary of the Subject Accounts during the period between February 2018 until May 2018; and

(3)   Costs of this application to be provided for.”

2.  Despite the fact that section 41 of the High Court Ordinance[1] is mentioned in the originating summons, Mr Pang, counsel for the plaintiff, confirms to me at the hearing that this is an application made under the Norwich Pharmacal principles and not under section 41. 

3.  The plaintiff formerly acted for Promo International Limited (“Promo”) against the holders of the subject accounts in a High Court action.  The background can be gleaned from the affirmation of Mr Hau Chi-kit on behalf of the plaintiff as follows:

“5.     In respect to the reasons for the Plaintiff’s application herein, the same relates to the High Court Action No. 1337/2020 (“Action”) [sic] commenced by Promo International Limited (“Promo”) against CMT and CSM for loss and damages arising out a fraud perpetrated by CMT and CSM against Promo.  I confirm that at the material times I had conduct of the action.

 6.     The Plaintiff started representing Promo in the Action sometime in around January 2012 and was able to successfully obtain Judgment in favour of Promo after trial as it can be seen from the relevant judgment handed down by the Honourable Madam Justice B Chu dated 28^th February 2018 (‘the Judgment’).  There is now produced and shown to me marked ‘HCK-1’ the said Judgment. 

 7.     In respect to the factual background of the Action, I crave leave to refer to paragraphs 6 to 23 of the Judgment as the learned Judge has helpfully summarised the relevant factual background therein.

 8.     In a gist, despite Promo being successful in the Judgment, Promo is now claiming against the Plaintiff alleging that the Plaintiff has been negligent when representing Promo in the action in particular vis-à-vis certain funds that were held by CMT and CSM in the Accounts and in particular in the Subject Accounts.  The Plaintiff has denied all such allegations.”

4.  In gist, it appears that the balances in the subject accounts that were subject to an injunction granted by To J in the previous action had apparently been depleted significantly.  That injunction was granted until trial.  So it would appear that the depletion happened after the trial which took place between 1 August 2017 and 1 September 2017. 

5.  On 28 February 2018, the trial judge, B Chu J, handed down a judgment in Promo’s favour.  Another injunction was granted on 27 April 2018 by B Chu J on that day and continued by Deputy High Court Judge Keith Yeung SC (as he then was) later.  So it appears that there was a “gap” between 1 September 2017 and 27 April 2018 when the subject accounts were not covered by any injunction. 

6.  Promo is now suing the plaintiff in a fresh action.  At paragraph 29 of Mr Hau’s affirmation, he said:

“According to the Indorsement of Claim, Promo is alleging that the Accounts were depleted during the period between date of Judgment and the aforesaid Order of the Honourable Madam Justice B Chu dated 27^th April 2018.”

7.  In the fresh action, it appears that Promo is blaming the plaintiff for the depletion of the accounts, and according to paragraph 18 of the skeleton of Mr Pang:

“In gist, Promo alleges that P failed to obtain an injunction during the period between the trial of the Action and the Post-Trial Injunction, i.e. the period between 1/9/2017 and 27/4/2018 (‘the Relevant Period’), and that the reason for the lack of funds in the Subject Accounts was that Chow and Chae must have siphoned off the funds in the Subject Accounts during this period.”

8.  As I said, this application is made under the Norwich Pharmacal jurisprudence. 

9.  In his helpful skeleton, Mr Pang submitted:

“25.     The most unusual feature in the present Application is that P is not strictly alleging wrongdoing against any specific party, whether Chow/Chae nor Promo.  As such, strictly speaking, P has no locus standi against such parties.

 26.     Instead, the discovery sought merely allows it to formulate a proper defence in the action between Promo and P.

 27.     However, for the same reason, it means that P cannot properly substantiate its defence until it is able to get its hands on the documents sought.”

10.  As Ma J (as he then was) said A v B[2]:

“10.    Where innocent parties are caught up or have become involved in the tortious or wrongful activities of others, thus facilitating the perpetration (or continuation) of such activities, justice may require (and therefore the court may order) that such innocent persons come under a duty to assist the victim of the tort or wrongful activities, by the provision of full information even though such innocent persons cannot be shown to incur any personal liability at that stage.  The foundation of the court’s jurisdiction here is its equitable jurisdiction... 

  11.    The jurisdiction is a wide one.  It is not restricted, as was at one time thought, to the disclosure of the names of wrongdoers only...

  12.;    Though founded ultimately on notions of justice, nevertheless, it is important to emphasise the extraordinary nature of this relief because it is not a usual order and is not one that a court would lightly grant in the absence of powerful factors.  I emphasise the following characteristics of this type of order:

(1)   It is made against an innocent party whose only involvement is to become mixed up in the tortious or wrongful activities of others.  There is, at that stage, no evidence of any wrongdoing on the part of the innocent party. 

(2)   Instead, whatever wrongdoing there is, exists only on the part of a person or persons against whom no relief may be sought at that stage and indeed against whom there is probably insufficient evidence to found an action.  In other words, this person or these persons will most probably not be before the court and would not be able to answer what are often very serious allegations made against them. 

(3)   Usually, there will, moreover, exist a legal relationship between the innocent person against whom a discovery order is sought and the alleged wrongdoer and this relationship may involve strict duties to be observed on the innocent party’s part... 

(4)   The court, accordingly, in applications for Norwich Pharmacal relief must, in its discretion, balance the competing interests of the victim of the alleged wrongdoing and an innocent party caught up in the wrongdoing. 

  13.    Given these characteristics as I have outlined, such orders are therefore not lightly made as I have said.  In my view; it is essential for the court to bear the following in mind before a Norwich Pharmacal order is made:

(1)   There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place... All the more so when the alleged wrongdoer is not and will not likely be before the court. 

(2)   It must also be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff...

(3)   The discovery sought must not be unduly wide. There is no entitlement to general discovery ... This is not to say that discovery orders cannot be wide; what is important is that the discovery, whether wide or narrow, is necessary.”

That judgment by Ma J was, of course, followed in many subsequent cases including recently by Chow J in Leung Yiu Ting v MTR Corporation Limited[3]. 

11.  In my judgment, alleged wrongdoing or possible wrongdoing by someone is the essence of a Norwich Pharmacal application and order.  The plaintiff in such an application seeks the information on the alleged or possible wrongdoing from a third party innocently mixed up in the wrongdoing (and not being a mere witness).  And, of course, where the third party is not only an innocent party mixed up in wrongdoing but has actually involved in the wrongdoing, the position is a fortiori.  But the essence is that the applicant for the Norwich Pharmacal order is seeking information so that it may or will pursue the wrongdoer to enforce his legal rights. 

12.  As Mr Pang very frankly and very fairly accepts, this is a rather unusual application for a Norwich Pharmacal order because, as Mr Pang himself again very fairly and frankly accepts at paragraph 25 of his skeleton which I quoted above, the plaintiff is not strictly alleging wrongdoing against any specific party, whether Chow, Chae nor Promo.  Rather, it is saying that it is possible that the depletion of funds did not involve any wrongdoing.  There may well be innocent explanations for the depletion and actually it is seeking evidence to support that. That is, it is seeking evidence of no wrongdoing, which will vindicate it in the fresh action, and not as a victim of any such alleged or possible wrongdoing (which the applicant has some basis for believing may have occurred) which the applicant is seeking to sue upon with the assistance of the information sought. 

13.  I note that the Norwich Pharmacal jurisdiction or jurisprudence is supposed to be flexible and is developing all the time (see, for example, Ashworth Hospital Authority v MGN Limited[4]; Rugby Football Union v Consolidated Information Services Limited (formerly Viagogo Limited)[5]; and Leung Yiu Ting[6]). 

14.  On the other hand, the cases including A v B which I quoted above have cautioned that a Norwich Pharmacal order is a relief of extraordinary nature and is not one to be made lightly. 

15.  This case is, as I said, unusual, and in my judgment it goes beyond the basis and rationale of a Norwich Pharmacal order.  In essence, the plaintiff’s case is that the disclosure should be ordered in the interest of justice and it will save time and costs in the current action between Promo and the plaintiff because depending on what will be disclosed by the defendant bank, if I were to order disclosure, the plaintiff may well accept liability or at least issues may be significantly reduced or limited in the current action.  Otherwise, he said the plaintiff would have to prepare the defence to Promo’s action “blind”. 

16.  But, however, if this is correct, that would mean that where there is any dispute between two parties, X and Y, X can obtain discovery from any third party when the information or document sought is relevant to any issue between X and Y.  That third party, of course, can be an innocent party or a fortiori a wrongdoer of some sort himself.  But if that third party has relevant information or documents to be disclosed on the existing issue between X and Y (where there must be some sort of wrongdoing being alleged between them), it would not be difficult in most of these cases to say that the third party was caught up or involved in the wrongdoing (although, of course, this is not invariably the case because if the third party is a mere witness, then the Norwich Pharmacal principle does not apply). 

17.  Ultimately, then the question becomes one of whether it is in the interest of justice to order disclosure from a third party in a dispute between X and Y.  That would be opening the floodgates of third-party discovery where the main, if not the only, consideration would be the interest of justice and saving times and costs.  I have no doubt that these are important and relevant considerations but they cannot be the sole considerations which, in my judgment, is what Mr Pang’s submission boils down to.   

18.  For the reasons above, I do not believe that this is a case where a disclosure order under the Norwich Pharmacal principles should be made despite the very helpful and eloquent submissions made by Mr Pang in support of the plaintiff’s application.  In particular, while he said that there was in fact an element of wrongdoing here but, of course, the wrongdoing he refers to is the allegation of wrongdoing by Promo against the plaintiff which, as I say, would always exist in some way between two parties when third-party discovery is being sought, and I do not believe that this is a kind of wrongdoing which is relevant to a Norwich Pharmacal application. 

19.  For these reasons, I dismiss the application with an order nisi that there be no order as to costs, and I thank Mr Pang for his very helpful submissions.