NEC TOKIN HONG KONG LTD v. HONG KONG PROPERTY SERVICES (AGENCY) LTD

HCMP453/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 453 OF 2013

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D E C I S I O N

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1. This is the plaintiff’s application for Norwich Pharmacal relief pursuant to its Originating Summons dated 7 March 2013. The defendant is taking a neutral stance in these proceedings. However, a set of written submissions has been placed before the court by the defendant this morning. The submissions are helpful in dealing with the law and the potential fragilities in the plaintiff’s application.

2. The background can be briefly stated.  The material before this court shows that the plaintiff is the victim of fraud practised on it by an ex-employee (“Cheung”).  A total sum in excessive of US$6.6m had been stolen from it by Cheung during a long period of time from about 2004 to 2012.  Cheung had a partner by the name of Yip.  It is the plaintiff’s case that Cheung and Yip conspired to steal from it and that much of the money stolen from it had been dissipated with the help of Yip.

3. After the discovery of the fraud, proceedings were brought against both Cheung and Yip.  In particular, on 19 October 2012, a mareva injunction was obtained against both of them.  In the course of the subsequent inquiry as to what had happened to the plaintiff’s money, it was discovered that a sum of HK$248,190 (“Sum”) was paid from a credit card account (“Account”) of Yip into that of the defendant, which was and is an estate agent, on about 8 October 2012.  It is plaintiff’s case that the Norwich Pharmacal relief sought against the defendant would assist in tracing the money stolen from it by Cheung and Yip.

4. First and foremost, whilst the court has considerable sympathy to the predicament which the plaintiff is in, I agree with Mr Cheung, who appeared for the defendant, that the Norwich Pharmacal relief is not to be granted lightly. Further, the law should be applied faithfully so that its integrity and certainty are maintained.

5. Mr Yung, who appeared for the plaintiff, has rightly conceded that there is no direct evidence linking the Sum to any of the money belonging to the plaintiff.  However, he submitted that the circumstantial evidence is sufficient to give rise to an inference that the Sum is likely to have come from the plaintiff. 

6. I must confess that this is not a clear case.  However, after careful consideration I am prepared to draw the inference suggested by Mr Yung. Firstly, the evidence does show that a considerable amount of the stolen funds had been used to purchase or to pay the mortgages in connection with four landed properties.  Secondly, it appears that the Sum was used to pay for commission owed to the defendant.  The size of that payment suggests that the underlying transaction was a substantial one.  Thirdly, some of the stolen funds were channelled through the Account, although there appears to be no such activity in 2012.  Fourthly, to date the plaintiff has only been able to identify assets to the total value of about HK$40m as traceable to its money.  In other words, there is a shortfall of about HK$11m. 

7. Once I accept that the evidence gives rise to the said inference, it takes little persuasion to agree that the information sought from the defendant is likely to assist in identifying assets which can be traced to the money stolen from the plaintiff. 

8. In the premises, I am satisfied that the requirements under the Norwich Pharmacal principle have been made out.  As regards the terms of the order which should be made, they have either been agreed by the parties or decided by the court at the end of the hearing.  I expect the parties to be able to agree to a set of terms which reflects the foregoing for the court’s approval.  

9. Finally, I should mention that I have declined the gagging order sought in para 4 of the Originating Summons before me.  The court must balance the need for such an order against the burden on the defendant if the same is granted.  I am not satisfied that a gagging order is justified because there is a mareva injunction in place against Cheung and Yip for some time and it must be obvious to them that the plaintiff is doing everything in its power to find out what has happened to its money.  On the other hand, it is plain that a gagging order is likely to be onerous to the defendant in terms of ensuring its compliance.  Further, Mr Cheung has informed the court that the defendant intends to provide the information in question to the plaintiff at once.  In light of the above, I see no strong reason for a gagging order.