KONG SAI KING v. LONG BRIDGE HK LTD

DCMP 6779/2024

[2025] HKDC 131

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 6779 OF 2024

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REASONS FOR DECISION

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Introduction

1.  This is the Plaintiff ("P")'s application by Originating Summons filed on 5 December 2024 ("the OS") seeking Norwich Pharmacal discovery against the Defendant ("D"), a Hong Kong securities company, for documents and information in relation to D's customer(s) who are suspected to be involved in a fraud practised by some fraudsters on P.

2.  At the hearing of the OS on 17 January 2025, Mr K Y Kong (P's handling solicitor) appeared for P whereas D was absent. Before that, D's solicitors, Messrs Gallant, had sent a letter dated 14 January 2025 to P's solicitors indicating that D was taking a neutral stance on the reliefs sought by P. Messrs Gallant further asked P's solicitors to produce their letter to this Court to excuse their attendance.

3.  At the end of the hearing, I granted the order as sought, save with some amendments made, and I reserved the Reasons for my Decision to be delivered later, which I now do.

P's case

4.  P, who is 70 years old, claims to be a victim of a telephone fraud.

5.  According to P, some fraudster(s) procured transfers of various sums totalling HK$409,999 ("the Defrauded Sum") out of his account maintained with Hang Seng Bank ("HSB") into an intermediary bank account maintained by X with HSBC. Part of such money so transferred into X's account was subsequently wired out into D's bank account, which was used by D to receive funds from their customers for trading securities in their company.

6.  P said that on 1 August 2024 at about 4:05 pm, he received a birthday offer message[1] (a genuine one) from China Mobile (a telecommunication services provider) with a hyperlink to purchase cell phone with discount. He clicked the hyperlink leading him to China Mobile's webpage, which required him to type in his username and password for the online account with China Mobile to check further details of that offer. As P had long forgotten the said required information, he simply closed the web browser without proceeding further.

7.  When it came to about 7:42 pm that night, he got a call from the first fraudster pretending to be from China Mobile, claiming P had placed an order for a Huawei cell phone. Given P did receive a birthday offer earlier that afternoon from the official channel of China Mobile, his alertness was slackened at the time. P wanted to cancel the order, but the caller insisted that the order was placed when the hyperlink was clicked on and suggested transferring him to a "bank officer" to cancel the transaction.

8.  The 1^st fraudster then transferred the phone line to another unknown male, posing as a "Hang Seng Bank" officer. The 2^nd fraudster then contacted P via WhatsApp video call and asked for P's personal information, including his name, ID number, and e-banking details in the pretext of cancelling the purported transaction for P.

9.  The 2^nd fraudster guided P through several steps on the Hang Seng Bank website and instructed him first to reset his password and then go to the closest ATM for taking some further steps to cancel the purported transaction. Following his instructions, P was in fact tricked into revealing his private information and performing actions that enabled the fraudsters to access his bank account.

10.  After P had followed the 2^nd fraudster's instructions, the latter asked P about his other bank accounts to see if they have sufficient funds for the purported transaction. P mentioned two other bank accounts but said they had insufficient funds. The fraudster said he would block the purported transaction and instructed P to delete certain records from his phone, claiming it was necessary for the cancellation. He then told P that his HSB account would be suspended for two hours and ended the call around 9:30 pm.

11.  After the call was hanged up, P began to find it suspicious, especially that both fraudsters had an accent when they spoke in Cantonese, akin to mainlanders. He then contacted China Mobile, who confirmed no such call was made. P also contacted Hang Seng Bank later that night, who informed him that approximately HK$400,000 had been transferred from his account. In the following day, P reported the incident to the police.

12.  On 22 August 2024, P instituted a DCCJ Action ("the DCCJ Action") seeking, amongst others, recovery of the Defrauded Sum against X, a declaration that X holds such sum and/or any assets representing all or part thereof as may be in the hands of X as constructive trustee for P, and an account of all money and/or assets held by D on constructive trust for P.

13.  In the DCCJ Action, P had obtained an ex-parte injunction from Her Honour Judge Grace Chow on 23 August 2024 to prohibit X to remove from Hong Kong his money up to the amount of the Defrauded Sum. That ex-parte injunction was continued to 13 December 2024 by way of Deputy Judge Joseph Vaughan's order made on 30 August 2024 ("the Injunction Order"). On 13 December 2024, it was further extended by another order made by Judge Chow to 11 April 2025.

14.  It was through third party discovery made against HSBC in the DCCJ Action[2] that P found out two sums of HK$320,000 and HK$9,900 respectively ("the Subject Sums") had in fact been wired out of X's bank account on 1 August 2024 into D's account maintained with HSB ("D's Account").

15.  As further noted from X's bank statements, there were four ATM withdrawals of HK$20,000 each, made one after another immediately after the Defrauded Sum had been transferred into X's account, but immediately preceding the Subject Sums being wired out to D's Account. In other words, the Defrauded Sum was nearly withdrawn in toto (through inter-bank transfers and ATM withdrawals) out of D's Account (leaving only HK$90 behind) before the midnight of 1 August 2024.

Applicable principles

16.  The applicable principles for Norwich Pharmacal relief are well-settled, and they are succinctly summarised by Madam Recorder Yvonne Cheng SC (as she then was) in A v P Company & Ors [2018]

HKCFI 907 at paras 4 and 5, quoted as follows:-

"4. A Norwich Pharmacal order is not a usual order. It is not lightly granted in the absence of powerful factors:

(1) It is made against an innocent party whose only involvement is to have become mixed up in the tortious or wrongful activities of others.

(2) The wrongdoing exists only on the part of a person or persons against whom no relief may be sought at the stage of the application and against whom there is probably insufficient evidence to found an action.

(3) There will usually be a legal relationship between the innocent person against whom a discovery order is sought and the alleged wrongdoer, and the relationship may involve strict duties to be observed on the innocent party’s part. Any discovery to be made will involve a breach of confidentiality and may expose the innocent party to civil liability and possibly even criminal liability.

(4) The court must accordingly balance the competing interests of the victim of the alleged wrongdoing and an innocent party caught up in the wrongdoing.

See A Co v B Co [2002] 3 HKLRD 111 at [12], per Ma J (as he then was).

5. Given the extraordinary nature of the relief, in order for a Norwich Pharmacal order to be made:

(1) there must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place, the degree of proof required being commensurate with the seriousness of the allegations;

(2) it must be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff. Where the plaintiff is likely to make a tracing claim, there must be a serious possibility that the discovery sought will allow the plaintiff to preserve what may well be his assets or realistically lead to the discovery of such assets;

(3) the discovery sought must not be unduly wide; there is no entitlement to general discovery. The order must be specific, and be restricted to those documents or classes of documents that are necessary to enable the plaintiff to preserve or discover assets; and

(4) the plaintiff must have exhausted other proper and reasonable avenues for obtaining the information sought.

See A Co v B Co at [13]; Danone Asia Pte Ltd v SB Chow & Co [2009] 1 HKLRD 470."

17.  I would respectfully adopt the above principles to deal with the present application.

Cogent and compelling evidence requirement

18.  After carefully considering P's case and evidence adduced for supporting his present application, I am satisfied that P has indeed put forward cogent and compelling evidence to show that he was a victim of the telephone fraud for the present purpose.

19.  Although P's account of the subject fraud is rather brief in his present supporting affirmation. The court file for the DCCJ Action was called up, and it can be seen that P nonetheless deposed a much fuller account of the subject fraud with concrete detail in his supporting affirmation for the then ex-parte injunction application. Mr Kong craved leave for P to refer to the contents and exhibits in that affirmation in support of the present application as well. Leave was so granted.

20.  It is observed that P's account of the material events summarised at the outset above is well back up by contemporaneous documents he produced, which include the initial WhatsApp message from China Mobile, P's telephone log retrieved from his cell phone showing the relevant calls he made and received on 1 and 2 August 2024, the police record card, his subsequent statement to the police, all of which would appear to be consistent (particularly in terms of the timing of the material events) with his version so deposed.

21.  As for P's bank statements and DCP XACT Reports issued by HSB, they show that 11 transfers were swiftly made within 5 minutes (between 9:08 pm to 9:13 pm that night) out of P's account. Such pattern of withdrawals is consistent with the alleged fraudsters siphoning off P's funds out of his bank account within the window period before the 2^nd fraudster ended his last phone call with P.

22.  As can be discerned from X's bank statements, after the Defrauded Sum, through a series of 11 transfers, had been transferred into X's account, nearly all of which (save HK$90) were withdrawn therefrom shortly afterwards by 4 ATM withdrawals (totalling HK$80,000) and 2 inter-bank transfers (i.e. the Subject Sums totalling HK$329,900) into D's account, and such pattern of bank transfers and withdrawals also exhibits hallmarks of concerted efforts of dissipating the fraud proceeds (as contended) when viewed against the background circumstances of this case as a whole.

Substantial and worthwhile benefits for P

23.  It is unknown to P as to whose securities account(s) with D was/were credited following the transfers of the Subject Sums to D's Account. On the evidence before me, D appears to be an innocent party whose only involvement is mixed up with in the tortious activities of the alleged fraudsters.

24.  The information and documents as sought by P would in my view be highly relevant for him to find out the identity(ies) and contact details of the holder(s) / beneficiary(ies) of the securities account(s) for which the Subject Sums were transferred to D. In particular, they would be useful for investigating into the subsequent flow of funds in and/or out of, and any securities bought and/or sold through such account(s) as traceable to the Subject Sums.

25.  Viewed thus, the subject disclosure would likely reap substantial and worthwhile benefit to enable P to identify the holder(s) / beneficiary(ies) in relation to the aforesaid securities account(s) and their correspondence addresses, and decide afterwards whether they are potential recipient(s) or even tortfeasor(s) liable to pay back any sum(s) which P is entitled to trace into.

26.  Notwithstanding the present Originating Summons was issued some months after the occurrence of the alleged fraud in August 2024, I respectfully share the observation made by the learned Madam Recorder in A v P Company (supra) (at para 11), and come to the view that the present delay is not so long to suggest that the information and documents sought will not assist in preservation or discovery of the missing funds from P's account.

27.  Especially, I note that according to the Deposit Guideline published in D's website, D cannot accept incoming funds from third party, and can only accept funds originating from a bank account held in the same name of their client whose name had already been registered with D.

28.  In other words, there is a real chance that the securities account(s) in question may also be opened in X's name. In this connection, no sooner after the issuance of the present proceedings, P's solicitors also served the Injunction Order upon D first on 10 December 2024, and then on 13 December 2024 further notified them of Judge Chow's Order made on the same day continuing the Injunction Order to 11 April 2025.

29.  In these circumstances, these information and documents would also facilitate P to commence proceedings against the potential defendant(s) to preserve what may well be his assets or realistically lead to the discovery of such assets. P did depose to the effect that he intends to trace the whereabouts of the Subject Sums.

Other means for obtaining the documents and information?

30.  By way of their letter of 5 November 2024, P's solicitors made an attempt to ascertain from D the holder(s) of the securities account(s) in question and to seek for the documents/information sought in this case. Unsurprisingly, D refused to accede given the duty of confidentiality which they owe to their customer(s). As such, P would have no other proper or reasonable avenues to obtain the documents/information sought.

Scope of the discovery order sought

31.  I am satisfied that discovery sought is specifically defined and not unduly wide. I have also taken into account of D's neutral stance, as indicated through Messrs. Gallant's letters of 7 and 14 January 2025 respectively. Messrs Gallant had the chance of going through and proposing their suggested amendments to P's draft Order, and such amendments are incorporated in the final draft attached to Mr Kong's Skeleton Submissions.

Disposition

32.  Having balanced the competing interests of P (the victim) and D, being another innocent party caught up in others' wrongdoings, and also reminding myself that the power to order disclosure of the subject kind should be exercised with great caution, I nonetheless see it right and appropriate for this Court to exercise its discretion to make an order in terms of the draft Order as submitted by Mr Kong, save as amended and further subject to those undertakings proffered by P therein on the restricted uses of the documents to be provided by D.

33.  On that basis, this Court also ordered that P do pay D the costs of his application (i.e. the costs as mentioned at para 4 of the amended draft Order), which was agreed between the parties at HK$12,000.

34.  Lastly, it remains for me to thank Mr Kong for his helpful assistance rendered to the Court.