LAO KI CHIT v. CITIBANK (HONG KONG) LTD

DCMP 4187/2022

[2023] HKDC 335

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4187 OF 2022

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BETWEEN

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JUDGMENT

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INTRODUCTION

1.  By the originating summons (“OS”) filed on 4 November 2022, the plaintiff is seeking pre-action discovery against the defendant under the Norwich Pharmacal[1] principle.

2.  The OS was originally listed for hearing on 3 March 2023 but for the plaintiff’s ex-parte application for paper disposal in lieu of oral hearing and the neutral stance of the defendant, this judgment is handed down without hearing.

BACKGROUND

3.  In gist, the plaintiff is a victim of a telephone fraud scheme involving several unknown individuals who were purportedly representing certain Mainland authorities (“the Fraudsters”).

4.  Based on the same set of facts, the plaintiff has previously succeeded in obtaining a Norwich Pharmacal order against Citibank (Hong Kong) Limited as the 1^st defendant and the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) as the 2^nd defendant in DCMP 670/2022.

5.  The common background of these two proceedings is set out in paragraphs 3 to 7 of Affidavit of Lau Kar Wah in this case filed on 4 November 2022 and paragraphs 5 to 38 of the Affidavit of Lau Kar Wah filed on 14^th February 2022 in DCMP 670/2022.

6.  As a result of the matters set out therein, a total of HK$2,436,000 (“the Defrauded Sum”) was transferred from the plaintiff’s account with the Bank of China (Hong Kong) Limited, bank account number 033-661-1-036914-2 (“the plaintiff’s BOC Account”) without the knowledge of the plaintiff as follows:

(a) On 16^th April 2020, HK$400,000 was transferred to Lin Qin Xian’s account (a/c no.: 0092827160) with the defendant (“Subject Account”);

(b) On 16^th April 2020, 2 sums of HK$395,000 and HK$599,000 were transferred respectively to the same account held by Yang Yi Chen with the defendant (a/c no.: 0092827969); and

(c) On 22^nd April 2020, 2 sums of HK$447,000 and HK$10,000 were transferred respectively to the same account held by Chen Mei with HSBC (a/c no.: 121779904833).

LEGAL PRINCIPLES

Norwich Pharmacal Order

7.  The legal principles of Norwich Pharmacal order are well settled and discussed in the commentary of the Hong Kong Civil Procedure 2023[2] as follows:

“… if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of wrongdoers. ”

8.  In A Co v B Co[3], Ma J (as he then was) outlined the following 3 criteria for making such order:

(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. 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. Where, as in the present case, the plaintiff is likely to make a tracing claim, there must be a serious possibility that the discovery sought must either allow the plaintiff to preserve what may well be his assets or realistically lead to the discovery of such assets: …

(3) The discovery sought must not be unduly wide. There is no entitlement to general discovery … . It follows therefore that not only must any order be specific, it must also be restricted to those or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets. This is not to say that discovery orders cannot be wide; what is important is that the discovery, whether wide or narrow, is necessary”.

9.  In Danone Asia Pte Ltd v SB Chow & Co[4], Burrel J held that Norwich Pharmacal order was a remedy of “last resort”. If there are other avenues which the plaintiff can properly and reasonably pursue in order to get the information, a Norwich Pharmacal order should be resisted.

10.  Section 32 of the District Court Ordinance (Cap.336) provides that the District Court has jurisdiction to hear and determine any action found on contract, quasi-contract or tort where the amount of the plaintiff’s claim does not exceed HK$3,000,000.

11.  Section 37 of Cap.336 provides that the District Court has jurisdiction to hear and determine proceedings for relief against fraud or mistake where the damages sustained or the estate or fund for which the relief is sought does not exceed HK$3,000,000 in proceedings which do not involve or relates to land.

12.  The present application is within the ambit of the above sections of the District Court Ordinance.

Summary Disposal

13.  According to Order 28 Rule 4(1) of the Rules of the District Court (Cap.336H), the court by whom an originating summons is heard may, if liability of the defendant to the plaintiff in respect of any claim made by the plaintiff is established, make such order in favour of the plaintiff as the nature of the case may require.

14.  According to Order 28 Rule 6 of the Rules of the District Court (Cap. 336H), where in a cause or matter begun by originating summons an application is made to the court for an order affecting a party who has failed to acknowledge service of the summons, the court hearing the application may require to be satisfied in such matter as it thinks fit that the party has so failed.

15.  The legal principles on the summary disposal of originating summons are discussed in the commentary of the Hong Kong Civil Procedure 2023[5] as follows:

(a) “At the hearing of an originating summons, the action may be disposed of summarily where the court is satisfied that there are no triable issues.”

(b) “In accordance with O.28 rr.3 and 4, if the judge / Master decides that the matter can be dealt with summarily, then an order disposing of the entire proceeding can be made.”

DISCUSSION

Serious Tortious or Wrongful Activities

16.  The telephone fraud scheme has been documented mostly by the QQ conversation records between the plaintiff and each of the Fraudsters.

17.  The financial loss of the Plaintiff totalling HK$2,436,000 is grave and is well documented in the transaction records of the plaintiff’s BOC Account.

18.  The evidence before me indicates that the transfers are made without the plaintiff’s knowledge or authorization. Such telephone fraud scheme only came to light when the plaintiff’s son discovered it on 23^rd April 2020. As the plaintiff does not know Lin Qin Xian, Yang Yi Chen and Chen Mei (“the Intended Defendants”), but for the telephone fraud scheme, the plaintiff would not have transferred the Defrauded Sums to the Intended defendants.

19.  In the circumstances, I am satisfied that there exists cogent and compelling evidence to demonstrate that the plaintiff is a victim of a telephone fraud scheme, which is a serious tortious or wrongful activity, as a result of which he has suffered grave financial losses of HK$2,436,000.

Substantial and Worthwhile Benefits for the Plaintiff

20.  The plaintiff was orally informed by the Hong Kong Police Force that the Subject Account has been frozen. However, the plaintiff has no knowledge as to how much in the Subject Account was being frozen.

21.  I accept that a Norwich Pharmacal Order which allows the plaintiff to ascertain the latest balance in the Subject Account and to track the transfer of the said HK$400,000, if any, would or would very likely reap substantial and worthwhile benefits for the plaintiff, namely, allowing the plaintiff to preserve, discover and/or recover the HK$400,000 transferred to the Subject Account.

22.  As Chen Mei’s account with HSBC and Yang Yi Chen’s account with the Defendant have been closed, the plaintiff does not seek the latest balance of the said accounts in the present case.

Documents Necessary for the Plaintiff to Preserve or Discover Assets

23.  The Plaintiff is seeking the following documents:

(1) the latest bank statement of the Subject Account which would show the latest balance of the Subject Account; and

(2) the transaction records of the Subject Account from 16^th April 2020 (date of the transfer) until the Subject Account was frozen by the Hong Kong Police Force.

24.  I am satisfied that the documents sought are necessary for the plaintiff to ascertain whether he would be able to recover the HK$400,000 transferred to the Subject Account, together with interest and costs, and to properly identify any onward transfers from the Subject Account for the plaintiff’s intended proprietary and tracing claim.

25.  As the documents sought have been clearly identified, the discovery sought is not unduly wide, and it is restricted to the documents and/or information that are necessary to enable the Plaintiff to preserve and to discover his assets.

Any Other Proper and Reasonable Avenues

26.  The plaintiff’s solicitors have made enquiry with the Hong Kong Police as to the amount frozen in the Subject Account but the police replied that they did not hold any information regarding the latest balance of the Subject Account.

27.  Furthermore, the plaintiff’s solicitors have also made enquiry with the defendant about the latest balance of the Subject Account and the transaction records of the Subject Account from 16^th April 2020 until it was frozen. The defendant replied that it would require a court order or search warrant to disclose information relating to the Subject Account or to seek or retrieve banking records of the Subject Account.

28.  In the circumstances, all proper and reasonable avenues have been exhausted before resorting to the present application.

The Defendant’s Stance

29.  The defendant has not filed any Acknowledgement of Service. Certificate of Non-Acknowledgement of Service, Notice of Appointment to Hear Originating Summons and the 2^nd Affidavit of Lau Kar Wah were served on the defendant on 8^th December 2022.

30.  Two respective letters from the defendant dated 9^th November 2022 and 14^th December 2022 have confirmed the defendant’s neutral stance in relation to the Originating Summons and the Order to be made by the court, provided that the plaintiff will pay its costs and expenses for complying with the court order on an indemnity basis. In the said letters, the defendant also indicates that it does not intend to attend the hearing of the Originating Summons in order to save costs.

31.  The plaintiff has no objection to paying the defendant’s costs on an indemnity basis pursuant to paragraph 3 of the OS.

CONCLUSION

32.  Having considered all the above matters, I find that there are no triable issues in the present case. In the circumstances, I make a Norwich Pharmacal order in terms of the OS.