A v. B

DCMP 4191/2020

[2021] HKDC 413

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4191 OF 2020

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J U D G M E N T

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1.  This is the hearing of an originating summons by the plaintiff against the defendant bank (identified as “[A]” and “[B]” respectively in the title of this judgment^[1]) for relief in the form of Norwich Pharmacal discovery^[2] and a gagging order restraining the bank from revealing or disclosing to any persons the proceedings save for the purpose of ensuring compliance with the court order or seeking legal advice.

2.  At the beginning of the hearing, I raised with counsel for the plaintiff that there were slight discrepancies between the bank account numbers stated in §1(1)(c) and (i) of the originating summons and those stated in the plaintiff’s affirmation evidence, which appeared to be typographical errors.  Upon the application by counsel for the plaintiff, I gave the plaintiff leave to correct the aforesaid typographical errors in §1(1)(c) and (i) of the originating summons in relation to the bank account numbers stated therein.

Background

3.  The plaintiff is the victim of a cyber fraud whereby she was induced to transfer, amongst others, sums totalling approximately HK$1.8 million (collectively, the “Transfers”) to 10 bank accounts at the defendant bank (collectively, the “Accounts”) between May and September 2020.  There was a separate transfer made by the plaintiff, induced by the same fraud, to an account at another bank in July 2020 but it is not relevant for the present purposes.

4.  According to the plaintiff, she became acquainted with [C] on Instagram, a social networking service, in April 2020. Shortly thereafter, they developed an online romantic relationship.  Starting from May 2020, [C] represented to the plaintiff that he was in need of capital for a telecommunications project, and requested the plaintiff to transfer sums to the Accounts to support the alleged project.  [C] also showed the plaintiff a copy of the purported contract made between [C] and an English telecommunications company in respect of the project, endorsed by the “High Court of Judiciary [sic] Scotland”.

5.  The plaintiff says that she came to realise in late September 2020 that she had been defrauded by [C].  She discovered that there is no “High Court of Judiciary [sic]” in Scotland, and in any event, it is highly unlikely that a court would endorse a contract made between private parties.  She made reports to the police for investigation.  She has since instructed solicitors who issued the present originating summons on her behalf on 22 December 2020.

6.  By letters dated 4 January 2021 and 11 February 2021, the defendant bank stated that it does not intend to contest the present proceedings and it would comply with any court orders which are served on it.

Norwich Pharmacal discovery

7.  It is well established that where innocent parties are caught up or have become involved in the tortious or wrongful activities of others and 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 under a Norwich Pharmacal order even though such innocent persons cannot be shown to incur any personal liability at that stage: see A Co. v B Co. [2002] 3 HKLRD 111, §10, per Ma J (as he then was).

8.  The principles guiding the exercise of the power to grant a Norwich Pharmacal order can be found in A Co. (supra) and A1 and Anor v R1 and Others [2021] HKCFI 650, §56, per Coleman J, which may be summarised as follows:-

(1)  There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place.  And where fraud or similar serious allegations are made, the degree of proof must correspondingly be high: see In re. H (Minors) [1996] AC 563, 586C-H, per Lord Nicholls.  All the more so when the alleged wrongdoer is not and will not likely 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.  Where, as in the present case, the plaintiff is likely to make a tracing claim, there must be a serious possibility that the discovery sought must either allow the plaintiff to preserve what may well be her assets or realistically lead to the discovery of such assets: see Arab Monetary Fund v Hashim (No. 5) [1992] 2 All ER 911, 916D-E and 918J-919A, per Hoffmann J (as he then was).

(3)  The discovery sought must not be unduly wide. There is no entitlement to general discovery (by which is meant discovery in the Peruvian Guano sense): see Arab Monetary Fund (supra), 918D-E and 919H.  It follows therefore that not only must any order be specific, it must also be restricted to those or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets. This is not to say that discovery orders cannot be wide; what is important is that the discovery, whether wide or narrow, is necessary.

9.  With these principles in mind, I turn to the facts of the present case.

10.  The plaintiff has produced documents showing the purported contract shown by [C] to the plaintiff, the requests made by [C] to the plaintiff to transfer sums to the Accounts, and bank deposit slips evidencing the Transfers made by the plaintiff to the Accounts pursuant to [C]’s requests.  Based on the documentary evidence produced by the plaintiff, it appears to me that there is cogent evidence of deceit and forgery on the part of [C].  The defendant bank has become involved in [C]’s wrongdoing, in that [C] procured the plaintiff to deposit monies into the Accounts at the bank in the names of third party recipients designated by [C].  It is very likely that the discovery sought against the bank would allow the plaintiff to trace the passage of the Transfer sums and obtain information necessary to ascertain any additional wrongdoers so as to enable her to commence proceedings or to preserve assets.

11.  For the above reasons, I am satisfied that the plaintiff has met the requisite threshold in establishing an entitlement to Norwich Pharmacal relief.  I am also of the view that the discovery sought, which is limited to the names and addresses of the Account holders and the current balances standing in the Accounts, is necessary and appropriate.

12.  In the premises, I am satisfied that a Norwich Pharmacal order should be made in the present case.

13.  As to the terms of the order, I note that the bank has requested for 28 days to comply with the court order.  The plaintiff has no objection to the same.  I would therefore order that the bank do comply with §1 of the plaintiff’s originating summons (as amended) within 28 days of the date of the order.

Gagging order

14.  The principles applicable to the grant of a gagging order are also well settled.  Section 52B of the District Court Ordinance (Cap 336) gives the court a wide statutory jurisdiction to grant injunctions where the justice of the case requires.  The court therefore has the power to grant injunctions to ensure that the proceedings before it or its process are rendered effective and just: see A Co. (supra), §37.

15.  A gagging order is granted where there are grounds to believe that once a wrongdoer is aware he has been pursued, steps may be taken by him to frustrate any claim that may be made against him or any investigations being carried out.  Gagging orders are exceptional remedies, which may entail a serious intrusion into what otherwise would be a party’s basic rights.  In the circumstances, such orders will only be granted where there is clear and cogent evidence supported by compelling reasons.  What amounts to compelling reasons will depend on the facts of the case, but might include the real prospect that were a respondent or non-party to be notified they would take steps to defeat the purpose of the court order: see A Co. (supra), §40; A1 (supra), §61; X and Anor v Z [2020] HKCFI 826, §70, per Coleman J.

16.  In the present case, I am of the view that the plaintiff has satisfied the merits test on the materials before me.  One of the main purposes of the Norwich Pharmacal order granted is to enable the plaintiff to commence proceedings, and if necessary, to seek interlocutory and injunctive reliefs.  Should the wrongdoer or wrongdoers be forewarned that action is about to be taken or is being taken against them by the plaintiff, they may take steps to frustrate any claim that may be made against them.

17.  In the premises, I am satisfied that the gagging order sought is reasonable and appropriate, and should be made in the present case.

18.  For the same reasons, I think it is also appropriate to order that the court file shall not be made available for searching by third parties without the leave of the court.

Disposition

19.  In view of my decision above, I would make an order in terms of §§1 and 2 of the plaintiff’s originating summons, subject to some amendments.  I would also make an order that the court file shall not be made available for searching by third parties without the leave of the court.

20.  Norwich Pharmacal applications are not ordinary adversarial proceedings, where the general rule is that the unsuccessful party pays the costs of the successful party.  The costs incurred in Norwich Pharmacal proceedings should generally be recovered from the wrongdoer than from an innocent party.  Thus, the usual costs order is for the plaintiff to pay the costs of the party making the disclosure on an indemnity basis including the costs of making the disclosure: see Sanctuary Systems Limited v Orient International Holdings Hong Kong Co. Limited, HCA 479 of 2010 (unreported, 16 June 2015), §14; Stichting Rijskmuseum Twenthe v Hang Seng Bank, Limited [2018] HKCFI 2831, §6; Cinatic Technology Limited v Hongkong and Shanghai Banking Corporation Limited [2020] HKDC 278, §19.

21.  I would make an order that the plaintiff do pay the defendant’s costs of these proceedings, including the defendant’s costs of complying with the court order, on an indemnity basis, to be taxed if not agreed.