CITIBANK N.A. v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD AND ANOTHER

HCMP 624/2018

[2018] HKCFI 1102

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 624 OF 2018

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REASONS FOR DECISION

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1.  At the hearing on 17 May 2018, I granted the above-named plaintiff (“Citibank”) Norwich Pharmacal relief against the above-named 1^st and 2^nd defendants (“HSBC” and “HSB” respectively) but of a scope that is much reduced from that sought by Citibank. I now give reasons for such decision.

Circumstances giving rise to the need for Norwich Pharmacal relief

2.  On 20 February 2018, as a result of a system logic which did not function as designed, Citibank mistakenly made duplicate payments by way of swift transfers in the total sum of HK$42,114,832.75 to various accounts maintained by different account holders with a number of banks including HSBC and HSB.

3.  Most of the duplicate payments have since been returned to Citibank.  As at 6 April 2018, there were 56 customers of HSBC and 5 customers of HSB, to whom sums totalling HK$966,717.50 and HK$350,897.04 respectively (“Outstanding Duplicate Payments”) were made, who refused and/or failed to sign the debit authorisation form for the return of the money to Citibank.[i]  The amounts withheld by these recipients varied greatly, ranging from HK$350,000 at the highest and HK$46.65 at the lowest.  38 of these accounts received less than HK$10,000 while 14 of them received less than HK$1,000.

4.  Citibank wishes, as it is entitled, to commence legal proceedings against these recipients to recover the Outstanding Duplicate Payments but runs into difficulty because, although Citibank has identified the bank accounts to which the Outstanding Duplicate Payments were made and the names of the holders of such accounts, it does not know where it can effect service of legal proceedings on these account holders.

5.  According to paragraph 12 of the affirmation made by Yang Chang Hao on 25 April 2018 in support of the originating summons, Citibank requires Norwich Pharmacal relief against HSBC and HSB “in order to serve legal proceedings on the Account Holders for recovery of the Duplicate Payment”.

Documents and information sought by Citibank and ordered by this court

6.  Against this background and given the said stated purpose for which Citibank requires assistance from HSBC and HSB, it is surprising that Citibank sees fit to seek from HSBC and HSB the following wide-ranging documents and information in respect of each of the accounts to which the Outstanding Duplicate Payments were made:

(1)  all bank statements, transaction records and correspondence relating to each such account from 20 February 2018 to the date of the order; and

(2)  all account opening documents and information relating to each such account, including all forms of identification provided by the account holder, including HKID, passport, business registration certificates and company incorporation documents, and all details, records and/or documents showing the current addresses of the account holder.

7.  In my view, the evidence before me justifies an order for HSBC and HSB to disclose to Citibank only the addresses that they have in their records on the account holders in question and the places of incorporation of those account holders that are corporate entities.  And I so ordered.

Relief sought unduly wide

8.  Practitioners should not have to be reminded of the extraordinary nature of the Norwich Pharmacal jurisdiction which the court does not exercise lightly.  Even where it is appropriate, the relief will be restricted to the discovery of documents and information that are necessary for the purpose for which the application is made.  See, for example, A Co v B Co [2002] 3 HKLRD 111 at [12]-[13] per Ma J (as the Chief Justice then was).

9.  In the instant case, Citibank has already identified the individuals and companies who received the Outstanding Duplicate Payments by the names in which they opened and maintain the bank accounts to which such payments were mistakenly made.  Knowing how banks in Hong Kong operate, one would expect such names to conform to the names appearing on the account holders’ personal identification documents (in case of an individual) or certificate of incorporation or business registration certificate (in case of a corporate entity).

10.  The only information that Citibank requires, but does not have, before it can commence and serve legal proceedings against the recipients of the Outstanding Duplicate Payments is their addresses.

11.  I utterly fail to see why Citibank should be given any documents that would disclose, for instance, how the accounts to which the Outstanding Duplicate Payments were made have been operated since the date of such payments.  The payments in question were not made as a result of fraud practised upon Citibank.  There is no suggestion that any of the recipients of the Outstanding Duplicate Payments could not or would not satisfy the judgments for repayment (which will in most cases be for very modest sums), if obtained, so that Citibank might have to trace such payments.

12.  The abuse is particularly stark if we think about the individual who received just HK$46.65.

Defendants’ position

13.  Further, it should have been apparent to the defendant banks that the scope of discovery sought by Citibank is far too wide and unnecessary for the stated purpose of the application.  Yet, neither of them appeared at the hearing on 17 May 2018 or otherwise rendered assistance to the court.  According to Citibank’s solicitors, HSBC has not responded at all since being served with the originating summons and the evidence in support of the same while HSB has by a letter dated 7 May 2018 to Citibank’s solicitors indicated neutrality towards the present application and merely asked for more time to comply with the order.

14.  The individuals and companies whose documents and information are sought by Citibank are not before the court (or even given notice) to speak for themselves or protect their own interests.  They are however customers of HSBC and HSB.  The banks owe each such customer a duty of confidentiality in respect of the documents and information applied for.  Any order for disclosure, whether wide or narrow, would involve a breach of confidentiality by the banks (though condoned by the court order).  

15.  That being the case, a respondent to a Norwich Pharmacal application in the position of the defendant banks here should not just sit back and wait and see how the court would dispose of the application.  Rather, I would expect it to fulfil its duty to the customer affected by scrutinising the application with care and, where there is a reasonable/proper ground of objection, to protect its customer’s interest and to render assistance to the court by raising and arguing such objection.  Needless to say, any costs reasonably incurred for such purposes would be recoverable from the applicant.