CHEN BEI v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD

DCMP 1591/2023

[2023] HKDC 788

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1591 OF 2023

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JUDGMENT

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1.  The plaintiff took out the present originating summons in Form 10, the expedited form, on 6 April 2023 against the defendant for a Norwich Pharmacal discovery order. The scope of the discovery is the disclosure of the addresses of Lum Ho Hin Marco and Law Oi Yi, the bank account holders. The defendant’s position is that it remained a neutral stance. At the same time, the plaintiff also took out an ex parte summons against the defendant for a gagging order. An affirmation of Au Yuen Kwan Able (“the supporting affirmation”) was filed in support of the ex parte application for gagging order and the originating summons. The gagging order application was refused by HH Judge KC Chan on 2 May 2023. The learned judge refused the application for gagging order mainly on the ground of lack of factual particulars. The learned judge, however, held that the refusal of the plaintiff’s application was without prejudice to the plaintiff’s right to make further submissions or filing supplemental evidence later on, including at the hearing on 5 June 2023.

2.  Au Yuen Kwan Able, an associate, was the assistant of Mr Chan Kin Ming, the handling solicitor, who had the conduct of this case and was also the partner of the plaintiff’s solicitors firm.  The supporting affirmation is a simple affirmation containing 10 pages and 4 exhibits.  The 4 exhibits are the plaintiff’s bank statements and transaction records, a copy of case report to the Singapore Police Force, copies of the email exchanges between the plaintiff and the Hong Kong Police Force and two letters issued by the plaintiff's solicitors to the Hong Kong Police Force.

3.  Au Yuen Kwan Able was authorized by the plaintiff to make the supporting affirmation.  At paragraph 3 of the supporting affirmation, it was acknowledged that the plaintiff had the duty to make full and frank disclosure of all matters relevant to the plaintiff’s ex parte application.  The plaintiff’s case is that she had been fraudulently and wrongfully induced to transfer the following sums from her bank account (Acc no 001-X-XXXXXX) in Singapore (“plaintiff’s Bank Account” hereinafter) to two bank accounts maintained with the defendant who is a bank in Hong Kong.  The particulars are set out below:-

1^st Transfer

On 20 December 2021, the plaintiff transferred a sum of SG$60,055.01 to a bank account (Acc no 138-XXXXXX-XXX) (“Bank Account 1” hereinafter) in the name of Lum Ho Hin Marco maintained with the defendant in Hong Kong.

2^nd Transfer

On 24 December 2021, the plaintiff transferred a further sum of SG$69,395.61 to a bank account (Acc no 081-XXXXXX-XXX) (“Bank Account 2” hereinafter) in the name of Law Oi Yi maintained with the defendant in Hong Kong.

3^rd Transfer

On 27 December 2021, the plaintiff transferred a further sum of SG$72,293.98 to Bank Account 2.

4.  Thereafter, the plaintiff was further fraudulently induced to transfer money from the plaintiff’s Bank Account to two companies who maintained a bank account with another bank in Hong Kong.  The particulars were as follows:-

(a)  On 30 December 2021, a sum of SG$81,496.66 was transferred from the plaintiff’s Bank Account to the bank account of Hongkong Fengzhong International Trade Co Ltd maintained with a bank in Hong Kong (“4^th Transfer”).

(b)  Also on 30 December 2021, a further sum of SG$122,354.02 was transferred from the plaintiff’s Bank Account to the bank account of HK Cuang Sen Trading Limited maintained with the same bank as mentioned hereinabove in Hong Kong (“5^th Transfer”).

The plaintiff confirmed that these two companies were not part of the current application as their registered address could be ascertained from their latest annual returns.

5.  According to the exhibit of the supporting affirmation, it should be noted that a fixed sum of SG$55 was charged as “Outward Telegraphic Transfer Comm & Charges” for each of 1^st Transfer, 2^nd Transfer and 3^rd Transfer.  Hence, for the three transfers, the recipient actually received SG$55 less than the stated sum.  According to the exhibit, the recipient got the following amount of money:-

1^st Transfer

The recipient actually got US$43,649.86 (exchange rate 0.727497) (SG$60,000.01 x 0.727497)

2^nd Transfer

The recipient actually got US$50,824.00 (exchange rate 0.732961) (SG$69,340.61 x 0.732961)

3^rd Transfer

The recipient actually got US$53,038.00 (exchange rate 0.734202) (SG$72,238.98 x 0.734202)

6.  According to the supporting affirmation, Au Yuen Kwan Able deposed to the facts:-

(a)  The plaintiff, a mainland Chinese, resided in Singapore.  She held a university bachelor degree.  At the time of the alleged fraud, she was      a housewife. 

(b)  In late October 2021, the plaintiff came to know a person named “Jack Xie” (“Xie” hereinbelow) who claimed that he engaged in investing in stocks and funds for his clients.  The plaintiff and Xie chatted in Facebook Messenger, an online social media application, occasionally.

(c)  In November 2021, Xie asked the plaintiff to chat in another online social media application called Line App instead.  They then continued to chat in the platform of Line App as if they were very close friend.  The plaintiff had trust towards Xie.

(d)  In early December 2021, Xie claimed that he was doing an investment which was worth HK$2,000,000 and was facing some fund raising difficulty.  Xie initially claimed that he would try to look for funding by himself.

(e)  In late December 2021, Xie purported to borrow HK$430,000 from the plaintiff. At the same time, Xie guaranteed that there would be “earnings” and offered to repay the borrowed sum together with “additional earnings” to the plaintiff in one week's time.  Initially, the plaintiff declined to lend money to Xie.  But Xie kept on asking the plaintiff for money every day.  The plaintiff was slightly annoyed but she thought that HK$430,000 was not a huge sum, she was then willing to assist her close friend and agreed to lend money to Xie as requested.  The plaintiff claimed that she only requested Xie to return the principal to her.

7.  Then, Xie provided the bank account number of Lum Ho Hin Marco, ie Bank Account 1, to the plaintiff via Line App.  The plaintiff said that Xie did not provide his own bank account number because he did not want his company to know that he was doing his own investment, he could only make investment on behalf of his clients.

8.  On 20 December 2021, the plaintiff made the 1^st Transfer, involving SG$60,055.01 as mentioned above.

9.  On 24 December 2021, the plaintiff was notified by Xie that she was required to pay an administrative fee of HK$810,027 before she could withdraw the “earnings”.

10.  Following the instructions of Xie, she effected the 2^nd Transfer on 24 December 2021, involving SG$69,395.61 as mentioned above.  On 27 December 2021, the plaintiff effected the 3^rd Transfer, involving SG$72,293.98 as mentioned above.

11.  Soon after the 2^nd Transfer and 3^rd Transfer, Xie informed the plaintiff via Line App that he had banked in SG$1,400,000 to the plaintiff’s Bank Account.  Xie also sent a screenshot of the bank-in record to the plaintiff as proof.  Xie told the plaintiff to wait for two days and the sum of SG$1,400,000 would be credited to the plaintiff’s Bank Account.  But the plaintiff said that Xie’s screenshot image was no longer in her possession. 

12.  The plaintiff waited for two days but the sum of SG$1,400,000 was not credited to the plaintiff’s Bank Account.  She therefore enquired with Xie via Line App.  Xie said that he had to check with his colleague at the finance department of his company.  Later on, a male who claimed to be Xie’s colleague called and informed the plaintiff that the Hong Kong Monetary Authority had frozen the sum of SG$1,400,000 for investigation as it was a large sum transaction.  In order to release the money, plaintiff had to make a security deposit in the sum of US$150,000.

13.  Due to the fraudulent representation by Xie and his colleague, the plaintiff made two transfers to the two companies in the sum of SG$81,496.66 and SG$122,354.02 both on 30 December 2021 as mentioned above.

14.  From 7 January 2022 onward, the plaintiff started finding it difficult to get in touch with Xie via Line App, especially after she refused Xie’s further monetary requests.  The plaintiff also found out that Xie’s Facebook account was deactivated.  The plaintiff talked to her relative about the transfers of money, she then realized that she had been fraudulently induced to make the transfer in a total sum of SG$405,595.28 (equivalent to about HK$2,395,766.53)

15.  On 18 January 2022, the plaintiff made a report to the Singapore Police Force about the fraud practised by Xie.

16.  The plaintiff made an online report to the Hong Kong Police Force about the above incidents of fraud on 19 April 2022.

17.  By an email sent by the Hong Kong Police Force to the plaintiff dated 31 July 2022, Hong Kong Police Force informed the plaintiff that a team of Mongkok Police District had been assigned to investigate that suspected money laundering case and the plaintiff was required to attend the police station for verification of her identity and giving a witness statement.  The Hong Kong Police Force also informed the plaintiff that she had to reply to the police regarding the date on which she would attend the police station.  If the plaintiff did not make the reply, the police would cease the investigation due to lack of witness statement.

18.  However, the plaintiff replied to the Hong Kong Police Force on 31 July 2022 that she was in Singapore and due to the pandemic and the fact that she had to look after her child, she wondered if she could authorize and assign her lawyer to assist her.  On about 17 August 2022, the plaintiff made the similar enquiry with the Hong Kong Police Force.

19.  On about 6 January 2023, the plaintiff’s solicitors wrote to the Hong Kong Police Force.  The plaintiff’s solicitors enquired with the latest investigation progress and purported to ask for the addresses of Lum Ho Hin Marco and Law Oi Yi.  On about 1 February 2023, the plaintiff’s solicitors reiterated their request.

Norwich Pharmacal Discovery

20.  Where innocent parties are caught up or have become involved in the tortious or wrongful activities of others, thus facilitating the perpetuation (or continuation) of such activities, justice may require that such innocent persons come under a duty to assist the victim of the tort or wrongful activities, by the provision of full information even though such innocent persons cannot be shown to incur any personal liability at that stage.  The foundation of the court’s jurisdiction to make such orders of discovery was confirmed by the House of Lords in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133: see also A Co v B Co [2002] 3 HKLRD 111, per Ma J at para 10 at 116.

21.  According to A Co v B Co (above), the Court of Appeal pointed out the extraordinary feature of the relief of Norwich Pharmacal order and held that:-

“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: Re H (Minors) (Sexual Abuse: Standard of Proof) [1996] AC 563 at p.586 C-H. All the more so when the alleged wrongdoer is not and will not likely be 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. …

(3) The discovery sought must not be unduly wide. …” (at para 13)

22.  The Court of Appeal also held that:-

“29. …I would hope that in future applications for Norwich Pharmacal relief, given the requirements I have set out above, the persons who have direct knowledge of the relevant facts should be asked to depose to affidavits and that correspondingly, hearsay or multiple hearsay is avoided as much as possible. …” (at para 29)

23.  According to Re H (above), it was held that the more serious the allegations the more cogent the evidence must be to prove it.  The logic is that the more serious the allegation, the less likely it is that the event occurred.

24.  With these principles in mind, I now turn to the quality of evidence in this application:-

(a)  An allegation of fraud is a very serious one.  The plaintiff did not disclose any of the alleged chat records between Xie and her, whether on Facebook messenger or Line App.

(b)  No proper explanation was offered by the plaintiff as to why she failed to produce the chat records between Xie and her.  The only explanation offered by the plaintiff was that Xie had deactivated his Facebook Messenger and Line App account and the plaintiff had also deleted both apps from her mobile phone.  I do not regard this as a proper explanation because deleting the applications from a mobile phone is quite different from deleting the relevant chat records from the application.  The plaintiff did not explain why she did not re-install the two social media applications again and log into her accounts to retrieve the relevant chat records.

(c)  The plaintiff failed to provide any particulars of the alleged “additional earnings”.  It is the plaintiff’s case that Xie borrowed HK$430,000 from her and Xie guaranteed that there would be “additional earnings” in one week’s time.  Hence, the plaintiff’s case is not found on investment, but on a loan of HK$430,000.  It is the duty of the plaintiff to make full and frank disclosure as to the nature of the dealing between Xie and her by providing full particulars, including the particulars of the alleged “additional earnings”.

(d)  Regarding the 1^st Transfer, the amount involved was SG$60,055.01 (or US$43,649.86).  The plaintiff’s evidence was that she thought HK$430,000 was not a huge sum and so she agreed to assist her close friend Xie.  However, the SG$60,055.01 (or US$43,649.86) did not represent the alleged loan of HK$430,000. No explanation was given by the plaintiff as to why she was asked to transfer US$60,055.01. 

(e)  The plaintiff claimed that on 24 December 2021, Xie notified her that an administrative fee of HK$810,027 was required before she could withdraw the “earnings”.  The plaintiff did not state by what means Xie notified her.

(f)  Regarding the 2^nd Transfer and the 3^rd Transfer, the plaintiff had failed to explain why she would agree to pay a substantial sum of HK$810,027 as administrative fee, given the fact that the loan was only HK$430,000 (or SG$60,055.91).  It in turn depends on the amount of the alleged “additional earnings” which would justify such a substantial amount of money as “administrative fee” as alleged.

(g)  The plaintiff’s evidence was that soon after the 2^nd Transfer and the 3^rd Transfer, Xie informed her that he had banked in SG$1,400,000 to the plaintiff’s Bank Account.  Bearing in mind that the plaintiff’s case was that it was a loan of HK$430,000 to assist her close friend, it was quite unusual that Xie would deposit SG$1,400,000 to the Plaintiff’s Bank Account in about one week.  Bearing in mind that the investment that Xie allegedly engaged was worth HK$2,000,000 only.  The plaintiff had failed to make full and frank disclosure as why the dealing and the communications between Xie and her when Xie purported to bank in the alleged SG$1,400,000.

(h)  Concerning the 4^th Transfer and 5^th Transfer, the plaintiff failed to provide the particulars as to why she would agree to make those transfers as US$150,000 as security money.  There was no explanation as to how long the alleged security money would be kept and how it would be released to the plaintiff.  The plaintiff did not explain why she would agree to pay the security money to two limited companies, as opposed to Hong Kong Monetary Authority.

(i)  Concerning the exhibit, I do not find the print out of the Plaintiff’s Bank Account statement helpful.  The plaintiff exhibited, inter alia, a total of 12 pages of her bank statement.  But all of the transactions were redacted, save and except a few entries concerning the 1^st Transfer to 5^th Transfer.  I find that this is undesirable.  It seems that there were many other transactions that the plaintiff did not want the court to see. The plaintiff claimed that she was a housewife, but she did not explain the reason why there were many bank transactions in the Plaintiff’s Bank Account which had all been redacted.

(j)  The plaintiff did not explain why there was no chop or signature by anyone on the printout of the Singapore Police Report.

(k)  The plaintiff’s explanation of not returning to Hong Kong to make a report to the Hong Kong Police Force was not convincing.

(l)  No explanation is given by the plaintiff as to why she did not depose to affirmation by herself.

(m)  From all of the exhibits, the reference to Xie was nowhere to be found.

25.  In conclusion, I am not satisfied that the requisite threshold in establishing an entitlement to Norwich Pharmacal relief is met.  The plaintiff’s case that she was fraudulently and wrongfully induced by Xie to make the 1^st Transfer to 5^th Transfer is devoid of particulars and/or suspicious.  I am not satisfied that the plaintiff has made a full and frank disclosure in this case.  In other words, I am not satisfied that the first condition specified in A Co v B Co (above) has been met, i.e. there must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place, especially a fraud or a scam was alleged in the present case.  I, however, accept that the second and third conditions specified in A Co v B Co (above) are met.

26.  Further, at the hearing, the plaintiff re-applied for a gagging order. By the Order of HH Judge KC Chan dated 2 May 2023, the plaintiff’s application for gagging order was refused.  According to the learned Judge’s order, the plaintiff’s application for gagging order was refused, but without prejudice to the plaintiff’s making of further submissions or filing supplemental evidence to apply for the same later on.  However, the plaintiff chose not to file any supplemental evidence in support of her application for gagging order.

27.  For the same reasons as stated hereinabove, I find that the plaintiff’s case is devoid of particulars and/or suspicious.  The application for gagging order is also dismissed.

28.  Hence, the plaintiff’s applications are dismissed with no order as to costs.