AISAN CORPORATION OF AMERICA AND ANOTHER v. UNKNOWN BANK ACCOUNT HOLDER(S) WITH DBS BANK (HONG KONG) LTD AND OTHERS

HCA 1661/2022

[2023] HKCFI 567

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1661 OF 2022

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REASONS FOR DECISION

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Introduction

1.  This was the Plaintiff’s ex parte summons for discovery of bankers’ records pursuant to section 21 of the Evidence Ordinance, Cap 8 or the inherent jurisdiction of the Court. After hearing the Plaintiff, I granted a narrower order as sought. Here are my reasons.

2.  The Plaintiffs were the victims of a telephone and email fraud which took place from around 30 March 2022 to 7 April 2022, as a result of which a total of US$6,339,623 (“the Funds”) was being transferred out of the Plaintiffs’ accounts and misappropriated by the fraudsters. The sum was first transferred to 2 bank accounts in the name of HK Funqu Account and the Feng Gang Account (collectively, “1^st-tier bank accounts”). Based on police information and bankers’ records obtained on the 1^st-tier bank accounts in HCA 556/2022, it was discovered that part of the sum was subsequently transferred from the Feng Gang Account to various 2^nd-tier bank accounts in Hong Kong, including those of the 3 Defendants in this case.

	Date of Remittance	1st Tier Bank Account making remittances	2nd Tier Account receiving remittances	Amount remitted and frozen by the Police
1	1 April 2022	Feng Gang Account	D1’s Account	US$501,304
2	1 April 2022	Feng Gang Account	D1’s Account	US$467,000
3	1 April 2022	HK Funqu Account	D2’s Account	US$60,000
4	1 April 2022	Feng Gang Account	D2’s Account	US$90,000
5	31 March 2022	HK Funqu Account	D3’s Account	US$100,000

3.  The fraud was discovered on 7 April 2022. A report was made by the Plaintiffs to the FBI and the Hong Kong police on 8 April.

4.  D1’s bank account is with DBS Bank (Hong Kong) Limited (“DBS”). The Plaintiffs initially thought that the account holder was a company incorporated in Mainland China named WH-Wenzhou Dizhu Clothing Co Ltd and so that corporation was named as D1 initially with an address obtained from online company search. However, after DBS obtained a copy of the writ, it informed the Plaintiffs’ solicitors that it did not have a client in the name of WH-Wenzhou Dizhu Clothing Co Ltd and that it was likely that the name was adopted by the real account holder as a reference name under DBS’ virtual bank account function. Further information from DBS is required to uncover the bank accounts that received the remittances from the Feng Gang Account on 1 April 2022, the identity of the actual account holder, and the contact details of the actual account holder.

5.  D2’s bank account is with Standard Chartered Bank (Hong Kong) Limited (“SCB”).

6.  D3’s bank account is with The Hongkong and Shanghai Banking Corporation Limited (“HSBC”).

7.  The Plaintiffs not know the contact details of the Defendants.

8.  By the ex parte summons, the Plaintiffs sought bank disclosure.

Service of the summons

9.  As the Plaintiffs did not have the contact details of the Defendants, the summons could not be served on them. However, the Plaintiffs have given notice of the present application on the 3 Banks.

10.  The Banks have not appeared and remained neutral. They had entered into correspondence with the Plaintiffs over the terms of the discovery. There was largely no dispute over the terms.

Legal principles

11.  Section 21 of the Evidence Ordinance, Cap 8 (“EO”) provides, amongst others, as follows:

“(1) On the application of any party to any proceedings, the court or a judge may order that such party be at liberty to inspect and take copies of any entries in a banker’s record for any of the purposes of such proceedings.

(2) An order under this section may be made either with or without summoning the bank or any other party, and shall be served on the bank 3 clear days before the same is to be obeyed, unless the court or judge otherwise directs……”

12.  Service of the summons on the account holders is not a statutory requirement under section 21 EO. Whilst it is fairer to serve an application under section 21 upon or otherwise give notice to the account holder, that is not always possible. Any insistence that service or notice should be a prerequisite for an application under this section would impose unjustified fetters upon the court’s discretion that can be exercised under the section. The Court has power to make an order ex parte. Tiger Resort Asia Ltd v Kazuo Okada [2018] HKCFI 472, §22, DHCJ K Yeung SC (as he then was).

13.  Under section 21 EO, it must be shown that there is a probability that the account will contain materials germane to an issue to be tried between the parties. In short, the test is one of relevance. See Chan Wai Sun v Law Shiu Kai Andrew [2003] 3 HKLRD 954, §10, Chu J (as she then was).

14.  The privacy of the Defendants and the banker/customer confidence each has with the relevant bank have to be respected. The power for inspection under section 21 EO must thus be exercised with great caution. The power should only be exercised where it is clearly established that the account is really that of the party to the proceedings or that the party is so closely connected with it that it would be evidence against him: Chan Wai Sun, §9.

Application of the legal principles

15.  I approach the application with great caution. The Summons was not served on the Defendants as the Plaintiff simply did not know their contact details. It is not a statutory requirement for there to be service on the Defendants anyway.

16.  The underlying claims was proprietary in nature. The scale of the fraud was big. There was evidence of quick transfer of part of the Funds from the 1^st-tier recipients to the Defendants as 2^nd-tier recipients. D1’s identity was also concealed.

17.  The information/records sought were clearly germane to the issues in the present case. They helped to identify the person involved and trace the Funds belonging to the Plaintiffs. The accounts and the holders were closely connected with the fraud and may be used as evidence against the Defendants.

18.  The Banks have been served and did not seek to be heard but they had made comments on the terms of the order.

19.  While privacy of the Defendants and banker/customer confidentiality ought to be safeguarded, the law should facilitate discovery of the present kind in aid of a victim of cybercrime who comes to the Hong Kong courts for lawful redress against the true culprits on the other: AKBANK TAS v Mainford Limited [2018] HKCFI 363, §16, DHCJ K Yeung SC (as he then was).

20.  Balancing all the factors, I granted an order under section 21.

21.  Given my conclusion reached, it was not necessary to consider the inherent jurisdiction of the Court in this application.

Terms of the disclosure order

22.  Two proposed terms warranted comments.

23.  Firstly, with regard to SCB and HSBC respectively, apart from seeking discovery relating to the opening of and balance amount in a specified account number, the Plaintiffs also sought discovery relating to “any other accounts” of D2 and D3, and the balance amount in them. I considered the discovery sought to be too wide as there was nothing in the evidence to show that any “other accounts” had received the Funds.

24.  Secondly, with regard to DBS and HSBC, there was a proposed term that after the disclosure by the relevant bank, the Plaintiffs were at liberty to identify specific/particular transactions on the bank statements provided by DBS/HSBC and that Bank shall provide further disclosure of the transaction documents as the Plaintiffs shall request.

25.  I believe this proposed term was for the purpose of identifying 3^rd and subsequent tiers of recipients, but there was no definition of “specific/particular transaction”. It was simply not appropriate to leave further discovery in the hands of the Plaintiffs and DBS/HSBC without any supervision by the Court, as there was a risk of compromising the duty of confidence between banker/customer further than was necessary. Where the Funds had been siphoned off by any of the Defendants to other persons, it was for the Plaintiffs to make an application similar to the present one for further discovery.

26.  I have therefore deleted the 2 proposed terms from the draft order.

27.  In summary, I granted an order for disclosure of the following documents in the possession of the respective Bank:

(1)  In respect of D1, records showing the bank balance in the account(s) held at DBS which received the remittances of US$501,304 and US$467,000 from the bank account of Feng Gang Industrial Limited, records relating to the opening of D1’s accounts, records showing the identities of persons authorized to operate the accounts, their updated correspondence addresses and contact details, and bank statements of those D1’s accounts.

(2)  In respect of D2, documents showing the last known addresses and contact details of D2 and the mandates; documents or records relating to the opening of a specified account of D2 held at SCB, documents identifying all sums transferred out of D2’s specified account and identifying for each transaction the name and bank account details of the transferee; and the balance of D2’s specified account.

(3)  In respect of D3, similar documents as in (2) save that the bank is HSBC.

28.  The period of discovery was from 1 April 2022 (31 March 2022 regarding D3) to the date of the order.

29.  The Plaintiffs have negotiated with the banks separately as to the number of days needed to make disclosure and I have approved them.

30.  Upon full compliance with the order, each bank was restrained from parting with possession of, destroying, deleting or removing any of the documents referred to in the order.

31.  The Plaintiffs do have leave to the use the documents or information obtained in support of such further actions, whether civil or criminal, whether in Hong Kong or elsewhere, as may be necessary to facilitate the Plaintiffs’ tracing of the Funds. I accepted the Plaintiffs’ undertaking not to use the documents or information obtained against any of the Banks or their employees.

32.  Without prejudice to the Plaintiffs’ right to recover costs from the Defendants, the reasonable costs and expenses incurred by the respective Bank incidental to this application and in complying with this order shall be borne by the Plaintiffs on indemnity basis, to be taxed if not agreed.

33.  Costs of this application is reserved. There be liberty to apply.

34.  I thank Ms Wong for her assistance.