XCHRX STATE BANK OF INDIA v. SONIMEC INTERNATIONAL and Another

1997, No. A7760

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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J U D G M E N T

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The Ex Parte Application

1. On 8 July 1997, the plaintiff received an instruction purporting to have been issued by the High Commission of India in Nigeria asking for the sum of ￡25,500 to be paid to the second defendant in Hong Kong for "Account No,:-93-000-4011-8" and "Beneficiary:- SONIMEC INTL". The plaintiff acted on this instruction, asking American Express in London to remit this sum to its branch in Hong Kong. This was done.

2. The instruction purporting to emanate from the High Commission of India was a forgery.

3. On 21 July 1997, the second defendant was alerted to the position. The plaintiff's solicitors asked the second defendant to place "a stop" on the account, and that they be given 48 hours notice of any intention to remove the stop. The second defendant asked for confirmation that the transaction was fraudulent and for an indemnity. These were given to the second defendant on 22 July 1997. The second defendant advised that "while funds were still held to the credit of the Sonimec account, American Express had been advised that they could not indefinitely maintain a stop on the account and that if the restraint was to continue, then this could only be by a Court Order".

4. The ex parte judge was told that the plaintiff was not able to provide any details of the first defendant to the plaintiff's solicitors. As will appear later, this was not true. They conducted a company search without success. The solicitors told the second defendant on 23 July 1997 that they intended to apply for an injunction. On 24 July 1997, the solicitors told the second defendant that they could not ascertain the identity of the first defendant, asked the second defendant to notify the first defendant of the intention to apply for an injunction on the afternoon of the following day, and told the second defendant that, if the first defendant did not appear, they intended to ask for an order that the second defendant to disclose all relevant information concerning the first defendant.

5. The first defendant was not notified about the application, and, on 24 July 1997, the plaintiff obtained an ex parte Mareva injunction against the first and second defendants.

6. This was the evidence before the ex parte judge.

The Inter Partes Application

7. On 25 July 1997, the plaintiff issued its inter partes summons, and the matter came on for hearing before me on 1 August 1997. At that stage, both defendants were represented. The matter was resolved at that hearing, save for the matter of costs.

8. At that hearing, I had before me an affidavit sworn and filed by Mr Vinod Gope, a partner in the first defendant, on 31 July 1997. He says that he first knew about the payment of the ￡25,500 on 23 July 1997 when his wife telephoned him in the Philippines to say that the second defendant had made some inquiries. His wife reported that the second defendant said that the matter could wait until he returned to Hong Kong on 26 July 1997. He returned on that date and learned the details about the matter. He instructed the second defendant to return the money. He says he had no idea that the remittance was going to be made. Mr Gope says that on 21 July 1997 he received a telephone call from "a Ms Connie" of the State Bank of India. She asked for the address of the first defendant and he gave it to her.

9. Mr Gope mentions another occasion in about 1990 when the first defendant received a remittance from Nigeria for a similar amount. This money was remitted to the sender.

10. The plaintiff had not had the opportunity of dealing with this affidavit so I adjourned the matter so that it could do so.

11. At the resumed hearing on 6 August 1997, I had before me an affidavit by the plaintiff's solicitor.

12. The plaintiff now says that it was told by the second defendant that "if withdrawal instructions were received from the customer, they would be obliged to pay the money". The plaintiff says that it "did attempt to notify American Express and the 1^st Defendant through American Express of the intended application". It says this, but later in the same affidavit the solicitor says "There was never any intention on the Plaintiff's part to communicate directly with the recipient of the funds, viz. The 1st Defendant to discuss the return of the same. It is obvious that this could have placed the funds in jeopardy".

13. It appears that what Mr Gope had to say about the telephone conversation with "a Ms Connie" is true. Ms Connie Tam is a secretary to one of the managers of the plaintiff in Hong Kong. She was asked by the London branch of the plaintiff for information about the first defendant. She found the name in the telephone directory, telephoned Mr Gope on 21 July 1997, and she asked for and was given the first defendant's address. The plaintiff in London was informed of the first defendant's telephone number and address. The solicitors for the plaintiff say they were unaware of this telephone call. The solicitor also says, strangely, that the plaintiff's London office were also unaware of the telephone call. What I would like to know is, whether or not the plaintiff's London office were aware of the call, why the plaintiff did not pass onto its solicitors the information it had specifically requested and received from Hong Kong. There is no explanation for this.

The Issue

14. Mr Tan says that his client is entitled to its costs. This cannot be so, if only for the fact that the plaintiff, in its summons, asks for an order that the costs be plaintiff's costs in the cause. I would not make even the order asked for in the summons. The first defendant's liability to pay costs must depend on whether or not the firm was a party to the fraud. On the face of it, the circumstances are suspicious. It is not likely that a fraudster would obtain money in this way unless he thought he would thereafter have access to them. On the other hand, it would be very strange if the first defendant co-operated in a fraud that had to be discovered at some time and upon an investigation of which would lead straight to Mr Gope. That would be like a burglar leaving his calling card at the scene of the crime. Certainly, there is no way that I can at this stage find even on the probabilities that the first defendant is a guilty party in the fraud.

15. Mr Tan also suggests that the first defendant would be liable for costs even as a trustee. On the facts of this matter, this cannot be so.

16. Mr Levy says, on the other hand, that not only is the plaintiff not entitled to its costs, but the costs should be awarded to the first defendant on the basis that there was material non-disclosure in the application to the ex parte judge.

17. Mr Levy argues that, in order to obtain its injunction, the plaintiff had to show the ex parte judge that there was a reasonable fear that, if the injunction were not granted, the funds might disappear. He says that the ex parte judge was told, in essence, that the plaintiff could not contact the first defendant and knew no details about it, when the fact of the matter was that the plaintiff knew the telephone number and address of the first defendant, and had already communicated with the first defendant. This is undoubtedly so. The plaintiff now says that it had no intention of contacting the first defendant, but this directly contradicts the plaintiff's own evidence that it attempted to do so. It is difficult to understand why the plaintiff's solicitors went to some length to create the impression that the first defendant was a shadowy entity when its name appeared in the telephone directory, and it could have been contacted and its details ascertained by a simple telephone call, as was done by Ms Connie Tam. The disclosure of this telephone call by Ms Tam would have been material because a crook would be unlikely to sit tight after receiving a call from a victim of his fraud that would tell him that his victim was onto him. The plaintiff disposed to a belief that, unless an injunction was granted, the first defendant would dispose of the assets. That declaration of belief sounds less trustworthy when one knows that the plaintiff, declaring its identity, had, several days before the application, been in touch with the first defendant making inquiries about its address.

18. The facts that the first defendant was not a shadowy entity, that its name appeared in the telephone directory, that its details could have been discovered from a search of the business registration records, that the first defendant was prepared to disclose its address on a simple telephone enquiry, that the first defendant, having been contacted by a body it must have known was the victim of the fraud if it had been a party to it, did nothing about removing the funds thereafter, were most relevant to the "weighing operation" that the ex parte judge was required to conduct. The fact that the plaintiff's solicitors may not have known about Ms Connie Tam's telephone call is neither here nor there. The plaintiff knew about it, and it knew that its solicitors wanted to know details about the first defendant. It is difficult to understand why, the plaintiff having specifically asked its Hong Kong office to find out information about the first defendant and having been given the telephone number and address of the first defendant, did not pass this information onto its solicitors.

19. I conclude that there was material non-disclosure of important relevant facts to the ex parte judge. This non-disclosure is made all the more relevant because, before the ex parte judge, the impression was created that the second defendant would hold the position, but not indefinitely. The judge was not told that "if withdrawal instructions were received from the customer, they would be obliged to pay the money". This is apart from the fact that, if he had been told that, he might have doubted it in view of the facts that the second defendant had notice of the plaintiff's claim and an indemnity. That being the case, I can see no factors that should lead me to exercise my discretion not to award costs to the first defendant.

The Result

20. In the result, I order that the plaintiff pay the first defendant's costs of the application for the injunction.