A v. B

DCMP 1117/2019

[2019] HKDC 594

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1117 OF 2019

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DECISION

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Introduction

1.  By an Originating Summons dated 1 April 2019 (“the OS”), the plaintiff (“P”) sought these reliefs against the defendant (“D”): -

(1)   A Norwich Pharmacal Order compelling D to disclose bank records relating to a specific transaction to P; and

(2)   A Gagging Order restraining D from disclosing these proceedings to any third party.

2.  The OS was heard by me substantively today.  Ms Sabrina Ho appeared for P.  D was aware of this hearing but its attendance was excused.  My decision is to make an order in terms of the draft order lodged by those instructing Ms Ho, with some revisions.  My reasons are as follows.

The Law

3.  Section 52 of the District Court Ordinance (Cap 336) gave this Court statutory powers to grant “injunctions of whatsoever nature” in all matters affecting movable property, including money and choses in action, where the amount or value thereof did not exceed HKD 3 million.  Norwich Pharmacal and Gagging Orders are within the ambit of Section 52.

4.  In considering whether Norwich Pharmacal and/or Gagging Orders should or should not be made, a Judge of the District Court should be guided by what Ma J (as Ma CJ then was) had most aptly said in A Co v B Co [2002] 3 HKLRD 111, including paragraphs 13, 38 & 41 thereof.

5.  For a Norwich Pharmacal Order to be made, this Court must be fully satisfied, amongst other things:-

(1)   There was cogent and compelling evidence that serious wrongful activities had taken place;

(2)   The Order would “very likely” reap substantial benefits for the plaintiff; and

(3)   The discovery sought would not be unduly wide.

6.  For a Gagging Order to be made, there must be “a strong case” that the wrongdoer would take steps to frustrate the plaintiff’s claims or his investigations if he were to be told about the same.

7.  On 24 April 2019 (ie last Wednesday), DHCJ Maurellet SC had in paragraph 25 of his reasons for decision in Asiya Asset Management (Cayman) Limited v Dipper Trading Co., Limited [2019] HKCFI 1090 set out what in his judgment should be the correct procedure to be followed in cases where a victim of fraud wishes to obtain both a Norwich Pharmacal Order and a Gagging Order for the same subject matter.  In gist, the 1^st step should be to seek, on an ex parte without notice basis, an interim Gagging Order, pending the hearing of the Norwich Pharmacal application.  The 2^nd step should be to make an inter partes application for Norwich Pharmacal reliefs so that there will be a full inter partes hearing where the court will have the benefit of submissions from both sides.  The 3^rd step should be for the court to consider whether a further Gagging Order would be needed to enable the plaintiff to remain protected whilst he goes about taking further steps to protect his interests.

8.  I agree with what DHCJ Maurellet SC had said in Asiya Asset and would venture to suggest that in the absence of special reasons pointing to the contrary, the same procedure should be followed in the District Court.

Applying the Law

9.  P filed 4 affirmations in support of the OS, all of which I had read. In my judgment, they do contain compelling evidence, including but not limited to contemporaneous screen captures of electronic messages of various kinds, police statements, and company search documents, pointing towards a specific corporation and the natural persons behind it being part of a group of fraudsters, and of P being a victim of their email fraud.  The amount of money involved was substantial and it would have been beyond the jurisdiction of this Court had the OS been issued before 3 December 2018.

10.  As to the Norwich Pharmacal Order reaping benefits for P, I am satisfied on the evidence that that would be “very likely”.  The records sought, if produced, should show to P where the money had gone so as to enable P to take further steps to preserve and recover its assets.

11.  Previous concerns as to (1) the width of the discovery; and (2) the time for compliance had been completely resolved by correspondence.  D, acting most sensibly, no longer objects to a Norwich Pharmacal Order being made against it.

12.  On the Gagging Order, I am fully satisfied that a “strong case” had been made out.  The evidence, as filed, showed a strong case of fraud.  The fraud appeared to be sophisticated and carefully planned with insiders’ information.  In fact, a mole could have been involved.  This being the case, I have no hesitation in agreeing with Ms Ho’s submissions that on the facts of this case, it is highly likely that if the fraudsters were forewarned, they would take steps to frustrate P’s claims or its investigations and that as such, a Gagging Order is appropriate.

Conclusion

13.  By reason of the above, this case is clearly an appropriate case for (1) a Norwich Pharmacal Order; and (2) a Gagging Order to be made.

Costs

14.  P and D reached an agreement on costs as between themselves.  My decision is to give effect to the same – on the facts of this case there is no reason not to.

15.  As to P’s own costs, P asked for the same to be reserved with liberty to apply.  That was most sensible, as P may in the future be making an application to the effect that its own costs should be paid by a 3^rd party.  I reserve P’s own costs with liberty to apply accordingly.

16.  While solicitors have rights of audience in this Court engaging Counsel for this application is in my judgment reasonable, necessary and proper, having considered (1) the importance of this application to P; (2) the complexity of the background facts; and (3) the points of law which P must address irrespective of whether D would be opposing this application.  I certify the attendance of Counsel accordingly.

Final Remarks

17.  I direct that a copy of this judgment with P anonymized as “A” and D anonymized as “B” be uploaded onto the Judiciary’s website and be released for search, inspection and publication.  The remaining parts of the Court File shall remain sealed pursuant to the anonymity order previously granted by myself on the principles as set out by the Court of Appeal in (1) Re Bu [2012] 4 HKLRD 417 and (2) Asia Television Ltd v Communications Authority [2013] 2 HKLRD 354.

18.  I do thank Ms Ho for her most able assistance.