KOZE INVESTMENTS, LLC AND ANOTHER v. FANTUNE INTERNATIONAL (HK) CO LTD AND ANOTHER

HCA 419/2025

[2025] HKCFI 1012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 419 OF 2025

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BETWEEN

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D E C I S I O N

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Introduction and Background

1.  This is an application by the Plaintiffs (“Ps”) for:

(1) continuation of the ex parte order of DHCJ Alan Kwong on 3 March 2025 (“the Order”) until trial or further order; and

(2) a disclosure order against: (a) Industrial and Commercial Bank of China (Asia) Limited (“ICBC”); and (b) Hongkong and Shanghai Banking Corporation Limited (“HSBC”) (collectively, “the Banks”) pursuant to s.21 of the Evidence Ordinance, Cap.8 (“EO”),

by Summons filed on 4 March 2025 (“the Summons”).

2.  According to Ps they were deceived by fraudster(s) into making various transfers for the alleged purpose of settling certain fees/taxes/duties to the Defendant’s accounts in Hong Kong in a monetisation scheme as arranged by the fraudster(s) which they later realized was a scam. In total, between 1 May 2024 to 23 December 2024, Ps transferred: (1) US$7,573,650 into the 1^st Defendant’s account maintained with ICBC No.954530002938 (D1’s Account”); and (2) US$2,921,000 into the 2^nd Defendant’s account maintained with HSBC No.098-536923-838 (“D2’s Account”).

Service and non-attendance of parties

3.  D2 and the Banks have not appeared today.

4.  From the affirmations of service, I am satisfied that the Banks have been properly served the Summons as well as the Writ of Summons, the Order and other relevant documents. However, Ds were served those documents slightly after 4pm on 4 March 2024 and, strictly speaking, there is no two clear days between service and today’s hearing: see O.65, r.7 of the Rules of the High Court, Cap.4A.

5.  Whilst this should not affect Ps’ application for disclosure orders against the Banks, as under s.21(2) of EO an order under s.21 may be made without summoning the bank or any other party, in so far as the application for continuation of the Order is concerned, and notwithstanding the appearance of Mr Hon, counsel for D1, that application should be adjourned to a further return date on 14 March 2025 at 10am. I accordingly so order. I further order that the Order shall continue until 14 March 2025 or further order of the court.

6.  The attendance of ICBC was excused in light of the stance indicated in correspondence to the court. ICBC has indicated that it maintains a neutral stance towards the application for disclosure order against it save that if the court is minded to grant the order, it had certain comments on the terms of the order to be made.

7.  By letter dated 5 March 2025, HSBC has indicated its neutral position. Save for comments on the time period within which to provide the requested documents, they have no substantive comments on the order to be made.

8.  Mr Liu, counsel for Ps, appeared today and have submitted to me a draft order incorporating the comments received from the Banks.

Applicable principles

9.  The applicable principles governing an order under s.21 of EO are well-established. Although it has been said that a s.21 order is justified where the plaintiff seeks to trace funds which in equity belong to him and of which there was strong evidence that he has been fraudulently deprived, there are 3 limits:

(1) First, the plaintiff must demonstrate a real prospect that the information may lead to the location or preservation of assets to which he is making a proprietary claim;

(2) Secondly, the documents sought to be disclosed must be identified with some specificity as would be expected of a subpoena; and

(3) Thirdly, the court needs to balance the potential advantage against the detriment to the person against whom the order is sought, not merely in terms of costs but by way of invasion of privacy and requiring breach of obligations of confidence to others.

See CTO (HK) Ltd v Li Man Chiu & Others [2002] 2 HKLRD 875, §§12-13 as approved by the Court of Appeal in Pacific King Shipping Holdings Pte Ltd v Huang Ziqiang [2015] 1 HKLRD 830 at §29.

Analysis and Orders

10.  Applying the above legal principles to the facts of the present case, I am satisfied that the disclosure orders sought in terms of the draft order as amended by me should be granted.

11.  There is a real prospect that the information and documents sought may lead to the location and preservation of monies to which Ps have made a proprietary claim. The information sought concerning the balance, name and address of the beneficial owner of the accounts, records and/or documents in connection with the opening of the accounts and all transactions in the accounts of Ds maintained with the Banks could enable Ps to: (a) trace the monies that were transferred from their accounts; (b) ascertain their whereabouts; and (c) ascertain the identity (identities) of any second layer recipients against whom proceedings might be commenced.

12.  The discovery sought is specifically defined and not unduly wide. It is temporally limited to the period of the first transfer to D’s respective bank accounts to the date of the order. I have also taken into account the objection of ICBC that disclosure should be limited to D1’s Account and not other bank accounts of D1 maintained with ICBC. However, I accept that given the amount in D1’s Account according to the police is much less than the amount transferred by Ps, there may have been transfers to other accounts of D1 maintained with ICBC and the disclosure sought is necessary for Ps to trace their monies.

13.  Having balanced the competing interests of the victim and the innocent party (the Banks) caught up in the wrongdoing, and mindful that the power to order disclosure should be exercised with great caution, I would make an order in terms of the draft order as amended by me.

14.  Costs of today as between Ps and Ds should be reserved.