ELENBERG FRASER PTY LTD (a company incorporated in Victoria, Australia) v. SUTONG GLOBAL (HONG KONG) CO LTD

DCCJ 1404/2018

[2018] HKDC 435

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1404 OF 2018

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REASONS FOR DECISION

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Introduction

1.  The plaintiff is an Australian corporation.  According to the plaintiff’s case, it fell victim to an email fraud, in which persons unknown posed the director of the plaintiff and instructed the plaintiff’s finance manager by email to make a payment to an account maintained by the defendant in Hang Seng Bank Limited account numbered 395450075883.  Believing the instructions to be genuine, the plaintiff paid AUD109,821.61 to the defendant’s Account on 16 March 2018.  It was later discovered that the director did not in fact issue instructions to transfer monies as such.

2.  The plaintiff claimed against the defendant for misappropriation of AUD109,821.61 (approximately HK$670,000) transferred on 16 March 2018.  By an ex parte application, the plaintiff sought, and obtained on 10 April 2018, an injunction order to restrain the defendant from removing monies from the said Hang Seng bank account, money from other bank accounts and any assets in Hong Kong to the value of AUD109,821.61.

3.  On 10 April 2018, the court also granted the Norwich Pharmacal disclosure order against Hang Seng Bank.

4.  The matter came before me on 20 April 2018 by way of an inter parte Summons taken out by the plaintiff for continuation of the injunction order on the same terms.

5.  I have ordered that the injunction order be continued until trial or further order, subject to several variations, given the updated circumstances, all of which Mr Cheuk for the plaintiff sensibly agreed.  Here are the reasons for the decision.  

Scope of injunction order

6.  Pursuant to the disclosure order, the Bank revealed that the balance standing at the defendant’s bank account included USD279,176.60 and HK$0.94. Such being well more than the allegedly stolen sum in question, the scope of the injunction order necessarily ought to be narrowed down to only restrain removal from this particular Hang Seng Bank account money up to AUD109,821.61. There is no more need for the order to cover other accounts and other assets.

Fortification of undertaking as to compensate defendant’s loss

7.  The plaintiff has undertaken at the ex parte stage to compensate the defendant’s loss should the court later find such loss.  I am mindful that the plaintiff is a foreign corporation which has not disclosed any existence of assets in Hong Kong.  As such I consider that there is a need for fortification of the undertaking.  And I have also ordered that the fortification be by way of payment into court a sum representing 5% of the amount restrained.  In so ordering, I am guided by the following two references, to which Mr Cheuk’s attention were drawn to, and which Mr Cheuk did not dispute.

8.  On the issue of fortification and on the significance of any existence of the assets and residence of a plaintiff in the jurisdiction, Gee on Commercial Injunctions (6^th ed) reads in para 11-028:-

“It is relevant whether or not there are assets within the territorial jurisdiction of the Court which would be readily available to satisfy any liability under the undertaking. The relevance of the applicant being resident in the jurisdiction is that this may indicate that his assets are likely to be within the jurisdiction. On an inter partes hearing, if the Court considers that the unsecured cross-undertaking is not satisfactory, then it should go on to consider what security should be provided as a condition of maintaining the injunction.”

9.  In Narian Samtani v Chandersen Tikamdas Samtani [2012] 4 HKLRD 872, Deputy High Court Judge Au-Yeung, as she then was, at para 95 considered that fortification could be for an amount representing loss of the defendant’s ability to use the restrained funds pending trial.  She adopted a rate of 5% being the current best lending rate for borrowing funds to invest. 

10.  Accordingly, I order that the injunction order, as varied, is to continue until trial, on condition that the plaintiff put into court HK$33,500 within 21 days.

Other not usual terms of injunction order

11.  The plaintiff sought continuation of the injunction order with an exception that the order would not prohibit the bank from returning the money to the plaintiff when Judgment or a Garnishee order absolute is to be made in due course.  The plaintiff informs the court that the bank usually needs a discharge of the injunction order before it will return the money to the plaintiff. The exception in this injunction order will spare the plaintiff a need to separately seek discharge.  I consider that this term is not very usual and I consider that discharge can be applied for when needed.  On this basis, the application for this exception to be included in the injunction order is not acceded to.

12.  The same goes with the plaintiff’s application for a blanket leave to use the documents arising from this action in other criminal and civil actions.  As such general leave is not usual, the plaintiff can apply for it as and when the time comes in relation to any specific document.

13.  I have also ordered that the costs of the summons be reserved, as sought by the plaintiff.