IMRAN, HUMZAH v. HONGKONG AND SHANGHAI BANKING CORPORATION LTD

DCMP 2410/2023

[2023] HKDC 1781

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 2410 OF 2023

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DECISION

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INTRODUCTION

1.  This is an application brought by the plaintiff, by way of originating summons filed on 2 June 2023 seeking pre-action discovery against the defendant under the principles as laid down in Norwich Pharmacal v Customs and Excise Commissioners [1974] AC 133.

2.  The application was heard on 4 September 2023. The plaintiff was represented by counsel, Mr Edward Chin.

3.  During the hearing, the Court raised with Mr Chin some enquiries, which will be further addressed below.

4.  As a result, further evidence, supplemental submissions by counsel and an amended draft order have been lodged subsequent to the hearing.

BACKGROUND

5.  The facts relevant to this application have been summarised in the plaintiff’s affirmation filed on 28 June 2023.

6.  In gist, the plaintiff’s case is that he is a victim of an internet fraud scheme.

7.  In July 2022, through a social media platform, the plaintiff came across an invitation link, claiming to provide job opportunities. The plaintiff clicked into that link and was led to a message screen with a WhatsApp number.

8.  Text messages between the plaintiff and the user at the other end who claimed to be one “Aleena” (“Aleena”) ensued.

9.  Aleena said to the plaintiff that she could make arrangements to enable the plaintiff to take up a part-time job with a company known as A4lution.

10.  According to Aleena, the role of the plaintiff was to purchase luxury products on various platforms to help boost the sales figures of such products. In return, the plaintiff would earn commission(s), depending on the quantity and types of products purchased.

11.  Aleena told the plaintiff that, in order to place orders for the luxury products, he would need to deposit money into an account with WeLab Bank Limited (“WeLab Bank”) under the name of Wong Pui Kwan (a/c 1004142676) (“WeLab Bank 676 Account”) and several other bank accounts as directed by Aleena (or her colleagues) from time to time.

12.  The plaintiff complied with the requests, believing that he would receive commission(s) afterwards.

13.  From 5 to 12 July 2022, the plaintiff deposited several sums into the WeLab Bank 676 Account as well as other bank accounts as directed by Aleena or her colleagues.

14.  The plaintiff eventually came to the realisation that he had fallen victim to a fraud scheme. Despite repeated requests, he was unable to get back the sums deposited.

15.  He reported the matter to the police on 13 July 2022.

16.  Subsequently, he also instructed his solicitors to follow up the matter with and to request for information from the police.

17.  On 7 November 2022, the police wrote to the plaintiff’s solicitors indicating that part of the sums deposited was further transferred to someone in the name of LI Li-fang. It is stated in that letter, inter alia:

“The police investigation involving your client is still on-going. To facilitate your preparation of civil proceeding to recover your client’s loss, the detail of the bank account is listed below:-

S/N	Bank	Bank Account	Account Holder
1	HSBC	124145442292	LI Li-fang
2		108248543833

The information provided may be sufficient for the initiation of civil proceedings concerned. For more details of the bank accounts involved, you may approach the respective bank for subsequent enquiries….”

18.  In the 3^rd affirmation of Cheng Sze Ning, trainee solicitor of the solicitors’ firm representing the plaintiff, it is explained that, following the above letter, there was a telephone conversation between the trainee solicitor and the police, during which the police confirmed that a sum of HK$270,000 was transferred from the WeLab Bank 676 Account to “LI Li-fang’s HSBC bank account” (without however specifying which bank account).

19.  The plaintiff took out his first round of Norwich Pharmacal discovery application on 30 November 2022 in respect of the WeLab Bank 676 Account.

20.  On 27 February 2023, Deputy District Judge George Lam granted an Norwich Pharmacal order (“First Norwich Pharmacal Order”) requiring WeLab Bank to make disclosure of (i) name and address of the holder of the WeLab Bank 676 Account; and (ii) bank statements and details of transaction advice of the WeLab Bank 676 Account from 11 July 2022 up and until the date of the First Norwich Pharmacal Order.

21.  The plaintiff served the First Norwich Pharmacal Order on WeLab Bank.

22.  WeLab Bank provided the plaintiff with the necessary disclosure, including the bank statements of the Welab Bank 676 Account for the period from 1 July 2022 to 28 February 2023.

23.  From the statements, it can be seen that the plaintiff transferred a sum of HK$374,145 into the WeLab Bank 676 Account on 11 July 2022.

24.  On the same day, a sum of HK$270,000 was transferred from the WeLab Bank 676 Account to one LI L***** with a reference number “FT22192WHZZR” (“Second Layer Transfer”).

25.  Upon the plaintiff’s further enquiry, WeLab Bank provided some transaction records, which revealed that the recipient of the Second Layer Transfer was one “LI LIFANG” with “FPS ID 169875994” and the Second Layer Transfer was paid into an account with Hongkong and Shanghai Banking Corporation Limited (“HSBC”) (i.e. the defendant) with a transaction ID “Txn ID FT22192WHZZR” (“Subject Account”).

26.  The transaction records however did not reveal the bank account number or the registered address of the account holder of the Subject Account.

27.  On 9 May 2023, the plaintiff’s solicitors wrote to the police to seek more information of the two bank accounts of LI Li-fang, as previously provided by the police in the letter dated 7 November 2022.

28.  On 17 May 2023, the police replied by providing two addresses, each for the two bank accounts with HSBC under the name of LI Li-fang.

29.  It is against the above background that the plaintiff has taken out the present Norwich Pharmacal discovery application to seek more information about the Subject Account.

30.  In the originating summons, the plaintiff asks for all banker’s record, including (i) details, records and/or documents in connection with the opening of the Subject Account; and (ii) details and/or records of transactions involving the Subject Account including but not limited to bank vouchers, forms, instructions, transaction advices, cheques and correspondence between the banks and any person or entity involved in the above transactions from 11 July 2022 to present.

31.  At the hearing on 4 September 2023, the Court made some enquiries as to the scope of the order sought by the plaintiff and more specifically, whether it is too wide to order all transaction history and records of the Subject Account from 11 July 2022 onwards.

32.  The Court also invited submissions from counsel on how a second Norwich Pharmacal application regarding a second layer of transfer should be approached, bearing in mind that a Norwich Pharmacal order had already been made before.

33.  As noted above, the plaintiff filed supplemental submissions, further evidence and an amended draft order to narrow down the scope of the discovery sought.

34.  In the amended draft order supplied by counsel, the plaintiff now seeks only (i) the current bank balance of the Subject Account; (ii) the account number; and (iii) the last known address of Li Li-fang.

LEGAL PRINCIPLES

35.  The legal principles relating to Norwich Pharmacal applications are well-established. They were summarised by Ma J (as he then was) in A Co v B Co [2002] 3 HKLRD 111:

“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. 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, at 586C-H. 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 his assets or realistically lead to the discovery of such assets: see Arab Monetary Fund v. Hashim (No.5) [1992] 2 All ER 911, at 916D-E, 918J-919A.

(3) The discovery sought must not be unduly wide. There is no entitlement to general discovery (by general discovery is meant discovery in the Peruvian Guano sense): see Arab Monetary Fund at 918D-E, 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.”

DISCUSSION

36.  I am satisfied that there is cogent and compelling evidence of serious tortious or wrongful activities.

37.  The fraud scheme has been documented in the various WhatsApp records between Aleena and her “colleagues” on one hand, and the plaintiff on the other hand.

38.  These records show that the plaintiff was requested to place various orders for luxury goods.

39.  The statements of the WeLab Bank 676 Account also show that the plaintiff paid several sums of money into the WeLab Bank 676 Account as requested.

40.  I consider that there is sufficient evidence at the present stage to suggest that the plaintiff was misled into believing that he would earn commissions by placing orders for luxury goods on various platforms, which in fact was not the case.

41.  An online fraud is a serious tortious or wrongful act.

42.  I am also satisfied that the present application, if granted, will bring substantial and worthwhile benefits for the plaintiff.

43.  The plaintiff intends to commence legal action to recover the sums which he has been defrauded.

44.  The passage of defrauded sums of money in and out of different bank accounts is common in fraud cases, and the courts has the power to order, in appropriate cases, and with appropriate safeguards, discovery of the bank’s books and documents to assist a plaintiff in investigating the passage of monies in and out of bank accounts in aid of a tracing claim: see Bankers Trust Co v Shapira [1980] 1 WLR 124, at pp 1281F-1282F, per Lord Denning MR.

45.  Through the effort made so far, including the First Norwich Pharmacal Order, the plaintiff managed to obtain the name of the recipient of the Second Layer Transfer, the relevant FPS ID, and a TXN ID.

46.  The material received by the plaintiff up to now does not however reveal the bank account number of the Subject Account.

47.  I am satisfied that, without further information, the plaintiff will have difficulty in bringing his intended claim.

48.  The police provided the plaintiff with two bank account numbers under the name of LI Li-fang with the HSBC and the two registered addresses associated with each account.

49.  However, it remains unknown which of these two bank accounts was the sum of HK$270,000 deposited into. It is also possible that the sum was deposited into some other account under the name of LI Li-fang with HSBC.

50.  Without the address of the holder of the Subject Account, the plaintiff is unable to commence legal action against the said LI Li-fang. What the plaintiff currently has are just the name of LI Li-fang (as the account holder) and FPS ID.

51.  The plaintiff also has no knowledge whether the sum of HK$270,000 has been further transferred from the Subject Account to another account.

52.  I consider that this is a piece of necessary information to enable the plaintiff to assess whether it is worthwhile to commence any legal action against the holder of the Subject Account.

53.  Turing to the scope of the order sought, the first draft order submitted by the plaintiff sought disclosure of essentially all banker’s record, including transaction history and records of all payments, both into and out of the Subject Account from July 2022 onwards. This seems to me to be way too wide.

54.  Very sensibly, Mr Chin has substantially narrowed down the scope of discovery sought.

55.  The purpose of this Norwich Pharmacal application is to assist the plaintiff in potentially recovering the sum of HK$270,000 which he has been defrauded.

56.  With that in mind, I am satisfied that scope of discovery as presently sought in the amended draft order is appropriate and not unduly wide.

CONCLUSION

57.  Having considered all the above matters, I grant the Norwich Pharmacal order in terms of the amended draft order submitted by the plaintiff’s counsel on 13 September 2023.

58.  Lastly, I thank counsel for his helpful assistance.