CHINA NATIONAL GOLD GROUP HONG KONG LTD v. THE HONGKONG AND SHANGHAI BANKING LTD

CACV 862/2025, [2025] HKCA 1068

On Appeal From [2025] HKCFI 4682

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 862 OF 2025

(ON APPEAL FROM HCMP NO 1175 OF 2025)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon G Lam JA (giving the Reasons for Judgment of the Court):

1.  This is the plaintiff’s (“CNG”) appeal against the dismissal of its originating summons for a Norwich Pharmacal order for disclosure against the defendant bank (“HSBC”). HSBC took a neutral stance both below and in the appeal. At the hearing we allowed the appeal, made the order sought by CNG, and made no order on the costs of the appeal. These are our reasons.

2.  The factual background summarised below is taken from the affirmation evidence filed on behalf of CNG, and should not be taken in any way as findings of the court. We emphasise that that evidence has not been tested, and the court has not heard from any opposing party or any of the persons against whom allegations of wrongdoing have been made.

3.  CNG is a company incorporated in Hong Kong and a wholly-owned subsidiary of China National Gold Group Co Ltd, a Chinese state-owned enterprise. In 2010, CNG was introduced to an opportunity to invest in a polymetallic mining and processing project in the Republic of Congo (called the “Soremi Project”, as the operating entity in Congo is a company called Soremi SA). Following negotiations, CNG decided to invest and, on 18 December 2013, entered into a share purchase agreement to purchase 65% of the equity interest in Soremi Investments Ltd (“SIL”), the holding company of Soremi SA, from Global Mining LP and Gerald Metals LLC (which will together be called the “Gerald Parties”). In March 2014, CNG and the Gerald Parties entered into a shareholders’ agreement in relation to SIL.

4.  Disputes subsequently arose between the parties. In November 2020, the Gerald Parties commenced arbitration proceedings in Hong Kong against CNG, alleging breaches of the share purchase agreement and shareholders’ agreement, and claiming an order requiring CNG to transfer its shares in SIL back to the Gerald Parties and damages. CNG lost in the arbitration. The arbitral tribunal issued four partial awards against CNG between February 2023 and August 2024.

5.  The dispute has also given rise to court proceedings in Hong Kong (where CNG seeks, so far without success, to impugn the arbitral awards and the Gerald Parties seek to enforce them); in the BVI (where SIL is incorporated and where the Gerald Parties have sought to enforce the awards and to obtain ancillary court orders); and in Congo (where there are legal proceedings relating to the funds in Soremi SA’s accounts). In September 2024, the BVI court appointed interim receivers over SIL.

6.  Meanwhile, CNG says that, after being first tipped off by an informant in late April 2024, it has conducted investigation and obtained evidence that one Mr Tong, its own lead representative in negotiating with the Gerald Parties prior to CNG’s investment in the Soremi Project, had received bribes from the Gerald Parties. CNG alleges that the bribes were disguised as consultancy fees for a Chinese company (“Beijing Kehong”) owned by one Mr Cai, and were paid into the bank account held by a related company (“Kehong Investment”) with HSBC in Hong Kong.

7.  Kehong Investment is a company incorporated in the United Kingdom on 1 November 2013, wholly owned by Mr Cai. The accounts it filed with the companies registry there were prepared on the basis it was a dormant company and showed no trading activity or any change in its asset position over the years.

8.  For its case of bribery, CNG relies on inter alia the following allegations or matters and evidence:

(1)  Whilst acting as CNG’s lead negotiator, Mr Tong was secretly and improperly involved in negotiating the terms of a consultancy agreement, which was entered into between SIL and Beijing Kehong in around May 2013. Mr Tong also reviewed and commented on subsequent amendments of that agreement (with SIL being replaced by Gerald Metals SA, a Swiss affiliate of one of the Gerald Parties) and payment demand letters sent by Beijing Kehong to the Gerald Parties. For this allegation, CNG relies on certain emails said to have been retrieved from Mr Tong’s inbox.

(2)  Mr Cai in fact provided no genuine consultancy services to the Gerald Parties. For this allegation, CNG relies on an affirmation by one Mr Zhao, who was formerly an executive of and signed the consultancy agreement on behalf of the Gerald Parties. Mr Zhao stated that Mr Cai had not provided any consultancy services to the Gerald Parties and that Mr Zhao’s own understanding was that Mr Tong would receive reward through a consultancy agreement for exercising his influence to bring about CNG’s investment in the Soremi Project.

(3)  CNG alleges that the remuneration structure under the consultancy agreement gave an incentive for Mr Cai and Mr Tong to structure the consideration for the acquisition in such a way that maximised the purchase price paid by CNG and also created a continuing financial incentive that aligned Mr Tong’s financial interests with those of the Gerald Parties, with the result that Mr Tong remained “in their pocket” even during the arbitration proceedings in which Mr Tong was CNG’s key witness.

(4)  CNG has adduced a bank confirmation notice showing that on 21 April 2014, Gerald Holdings LLC paid USD1.5 million to the HSBC account of Kehong Investment in Hong Kong. CNG says this was the first tranche of the consultancy fee as referred to in the amendment agreement of the consultancy agreement. Two invoices for further tranches of consultancy fees in the amounts of USD250,000 (6 April 2015) and USD250,000 (17 April 2015) were issued by Beijing Kehong to Gerald Metals SA, both specifying Kehong Investment’s HSBC account in Hong Kong as the receiving account. Another invoice for USD750,000 was issued and dated 27 March 2017, naming an account of Kehong Investment with the Bank of East Asia (Beijing Branch) as the receiving account.

(5)  There is a notice dated 13 May 2025 issued by a local branch of the National Supervisory Commission – the Chinese Government’s anti-graft agency – stating that Mr Tong will be detained on suspicion of bribery from 16 May 2025. CNG says it has seen a notice (but without being able to obtain a copy) showing that Mr Cai is similarly detained.

9.  In April 2025, CNG issued applications for stay of the orders made by the Hong Kong court granting the Gerald Parties leave to enforce the arbitral awards. In June 2025, CNG applied to amend these applications on the basis that it would be commencing a claim to set aside the awards based on evidence of bribery. These stay applications have been fixed to be heard before Mimmie Chan J, the judge in charge of the Construction and Arbitration List, on 7-8 January 2026.

10.  Further, on 23 July 2025, CNG commenced a fresh arbitration to set aside the previous awards on the grounds that they were procured by bribery and fraud. In response, the Gerald Parties have issued proceedings in the Court of First Instance for an injunction to restrain CNG from pursuing that arbitration. The application for this anti-arbitration injunction has been fixed to be heard together with CNG’s stay applications.

11.  CNG issued the originating summons below on 15 July 2025. Prior to the hearing, CNG had entered into correspondence with HSBC who gave certain comments on the order sought but otherwise took a neutral stance. The draft order which had taken into account HSBC’s comments was placed before the judge. It would require HSBC to produce copies of documents from 1 November 2013 to the date of the order, being in particular: (1) documents evidencing payments into and out of the accounts of Kehong Investment held with HSBC, in particular transfers of money by Gerald Metals SA or SIL into the accounts; (2) documents evidencing the source and destination of all payments into and out of the accounts; (3) account opening forms and mandates; (4) documents and personal information relating to the persons authorised to operate and give instructions in relation to the accounts; (5) bank statements of the accounts; (6) cheques drawn on the accounts; (7) documents relating to funds paid into the account and the source of the funds; and (8) documents including debit vouchers, transfer applications, order and internal memoranda evidencing instructions to withdraw or transfer funds or recording or authorising payments from the accounts.

12.  Kehong Investment, the account holder, was notified of CNG’s application and sent the papers, but did not take any part in the proceedings or give any response. The Gerald Parties, who were also provided with the papers, indicated that they did not oppose the application but wished to be provided with any documents furnished by HSBC.

13.  At the end of the hearing below, the judge dismissed CNG’s originating summons. (She also dismissed SIL’s summons for joinder in those proceedings as an additional defendant.) At that time the judge was under the misapprehension, which was reinforced by CNG’s then counsel, that there was no direct evidence any alleged bribe was actually paid into Kehong Investment’s account with HSBC. This was clarified in post-hearing correspondence in which the judge was referred to the evidence that USD1.5 million had been paid into Kehong Investment’s account with HSBC on 21 April 2014. The judge re-considered her decision in the light of that and was satisfied that the bank had been caught up or mixed up in the alleged wrongdoing.

14.  The judge nevertheless maintained her decision to dismiss the originating summons. Her Reasons for Decision were handed down on 8 October 2025 (“Decision”).[1] The judge stated that she was not satisfied that the order sought was “necessary and proportionate” in the circumstances where CNG, with the evidence it already had, was able to bring the stay applications and commence the new arbitration. The judge referred to CNG’s claims in the evidence and submissions about the strength of its case of bribery, and said she had real reservations whether Norwich Pharmacal relief should be ordered to dot the i’s and cross the t’s. The judge also took the view that the order sought was “unduly wide and unnecessary” in relation to the types of information sought and the duration covered.

15.  It is unnecessary in these reasons to recite the principles governing applications for Norwich Pharmacal relief. They have been discussed in cases such as A Co v B Co [2002] 3 HKLRD 111 (Ma J), Leung Yiu Ting v MTR Corp Ltd [2020] 5 HKC 550 (Chow J), and A1 v R1 [2021] HKCFI 650 (Coleman J). One point, however, merits some explanation. In her Reasons (at §19) the judge stated that Norwich Pharmacal orders are “extraordinary” in nature, following A Co v B Co at §12. It has also been said that the jurisdiction or the remedy is “exceptional” (see A1 v R1 at §51; Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2033 at §57). This is of course correct, though bearing in mind that it is exceptional but also flexible. The reason it is referred to as exceptional or extraordinary is explained by Ma J in A Co v B Co at §12 by reference to the characteristics of this type of order, including the fact that it is made against an innocent party purely on the ground that he has become mixed up in the wrongful activities of others. But, as observed in Stanford Asset Holdings Ltd v AfrAsia Bank Ltd [2023] UKPC 35 at §38, it does not follow from the fact that the jurisdiction itself is in this sense exceptional that it will only exceptionally be appropriate or proportionate to grant relief in a case where the conditions for the exercise of the power are satisfied.

16.  As explained below, we accept the submissions of Mr William Wong SC and Mr Lai Chun Ho (both of whom did not appear below) that the appeal should be allowed and an order in the terms sought should be granted. There are essentially three points.

17.  First, the judge seems to have focused exclusively on whether CNG needed further information for its forthcoming applications to stay enforcement of the arbitral awards and its new arbitration. Counsel submit that the purpose of the application against HSBC is wider in that CNG is also entitled to seek the court’s assistance in identifying whether there are further wrongdoers involved, whether there may be further unknown bribes, the precise recipients and destination of known and unknown bribes, so that tracing or other claims may be asserted against the relevant third parties. The judge does not seem to have taken this into account.

18.  It is fair to point out that these further purposes were not given much emphasis in CNG’s evidence or submissions before the judge. They are nevertheless undeniably part of the object of the exercise. Thus the originating summons sought information on the destinations and recipients of money or assets representing the “traceable proceeds” of sums transferred out of the HSBC account. The supporting affirmation also referred to CNG’s interest in ascertaining the “onward transfers” and recipients of the funds and “other wrongdoers”.

19.  Although the money paid into the HSBC account was not initially CNG’s own money, as the principal, CNG would have a proprietary claim in constructive trust to such money which, on CNG’s case, was paid as bribes intended for its agent Mr Tong. This is supported by the decision of the Privy Council in Attorney General of Hong Kong v Reid [1994] 1 AC 324 which, albeit an appeal from New Zealand, has generally been accepted in Hong Kong as representing the law in this jurisdiction: see Secretary for Justice v Hon Kam Wing [2003] 1 HKLRD 524, §10. Although Hon Kam Wing was effectively overruled by the Court of Appeal and the Court of Final Appeal in Hui Chun Ping v Hui Kau Mo [2024] 2 HKLRD 178 and (2024) 27 HKCFAR 634 in relation to the point whether the principal’s claim is subject to a limitation period, both courts proceeded on the basis that there was a constructive trust over such secret profits, the argument being whether it was a “Category 1” or “Category 2” trust.[2] Ascertaining the whereabouts of money to which CNG may have a tracing claim is well established to be within the scope of Norwich Pharmacal relief: see A Co v B Co, §§11 & 27(4).

20.  Secondly, it seems to us that the judge took too narrow a view in dismissing the application essentially on the ground that CNG was only seeking to “dot the i’s and cross the t’s” in its applications to stay enforcement of the arbitral awards and its new arbitration claim. As Ma J said in A Co v B Co, §27(2), the fact that the plaintiff may have sufficient information to commence proceedings is not by itself a bar to Norwich Pharmacal relief. The discovery must be shown to be necessary, but this does not mean the plaintiff has to show it is the remedy of last resort. The essential purpose of the jurisdiction, characterised by its flexibility, is to do justice, and the court in the exercise of its discretion is entitled to have regard to all the circumstances prevailing in the particular case: see Leung Yiu Ting v MTR Corp Ltd at §§13-14, citing, inter alia, Rugby Football Union v Consolidated Information Services Ltd (formerly Viagogo Ltd) [2012] 1 WLR 3333.

21.  In the present case, whilst CNG has already gathered some evidence in support of its case, the onward transfers (if any) of the funds remitted to Kehong Investment’s account, including in particular whether they were ever paid to Mr Tong or his vehicles, remain entirely opaque and are likely to be a significant area of contest in the further proceedings between CNG and the Gerald Parties. Neither side appears to have any direct legal right of access to such information. The alternative of an application for discovery from third parties made in the context of the new arbitration (such as an application to the court for assistance in taking evidence pursuant to section 55 of the Arbitration Ordinance (Cap 609)) may not be practical given the timing of the stay applications. Kehong Investment has been notified of but has not opposed or even responded to the application. It does not appear to have any need for protection of the confidentiality of any ordinary business operations. Nor have the Gerald Parties opposed the application. The defendant, HSBC, has taken a neutral stance and is well equipped to provide the information sought. In all the circumstances, we consider it just and appropriate to grant Norwich Pharmacal relief.

22.  Thirdly, in respectful disagreement with the judge, we do not consider the draft order unduly wide. It is not uncommon for a single customer to maintain multiple accounts at a banking institution. It is not illegitimate for CNG to seek disclosure beyond the account with the specific number it had found out. Nor is the draft order overly wide by extending beyond information specifically on the destination of funds, having regard to CNG’s permissible purposes in pursuing this application. Finally, although the first relevant payment into the account was, on the available evidence, made on 21 April 2014, the alleged wrongdoing started at least in May 2013 when the consultancy agreement was executed. In the circumstances of this case, seeking disclosure from November 2013 onwards (date of incorporation of Kehong Investment) is in our view justified.

23.  For these reasons, we allowed the appeal and granted the order sought.