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DCCJ 1944/2015
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 1944 OF 2015
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BETWEEN
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BANK MORGAN STANLEY AG
(a company incorporated according to the lawsof Switzerland) |
Plaintiff |
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and
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GOLDSTAR TRADING CO |
1st Defendant |
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NANYANG COMMERICAL BANK, LIMITED |
2nd Defendant |
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| Before: Deputy District Judge WY Ho in Chambers (Open to Public) |
| Date of Hearing: 14 May 2015 |
| Date of Decision: 14 May 2015 |
| Date of Reason for Decision: 20 May 2015 |
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REASONS FOR DECISION
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1. This is the Plaintiff’s summons asking for the injunction order and disclosure order made by His Honour Judge Li on 5 May 2015 be continued until trial or further order.
2. I heard the Plaintiff’s summons on 14 May 2015. After hearing the submissions of the Plaintiff’s solicitors and considering the evidence before me, I made an order in terms of the draft orders provided by the Plaintiff. In effect, I ordered the ex-parte injunction made by His Honour Judge Li to continue until trial or further order and I ordered the 2nd Defendant disclose to the Plaintiff the documents listed in the draft order. I reserved my reasons for decision. I now set out the reasons for my decision.
PROPRIETARY INJUNCTION
3. The relief sought in paragraph 1(b)(i) of the Plaintiff’s draft injunction order, namely, to restrain the 1st Defendant from removing the sum of EUR67,000 (the sum transferred by the Plaintiff into the 1st Defendant’s bank account), is more properly considered as an application for a proprietary injunction.
4. The appropriate test to consider whether to grant the proprietary injunction is set out in the case of American Cynamide Co v Ethicon Ltd (No 1) [1975] AC 396.
Serious issue to the tried
5. The Plaintiff claims the 1st Defendant committed the tort of deceit and/or fraud. The proceeds of the fraudulent act are now with the 2nd Defendant under the bank account held by the 1st Defendant.
6. The Plaintiff is a bank incorporated in Switzerland. On 9 February 2015, the Plaintiff received an email purportedly sent from the Plaintiff’s client (“Mr. Tavares”) asking the Plaintiff to transfer a sum of EUR67,000 from Mr. Tavares’ account to the 1st Defendant’s bank account (account number 043-494-0800-6750) held with the 2nd Defendant (“the Bank Account”). The Plaintiff believed the instructions were genuine and caused the said sum to be transferred into the Bank Account.
7. On the same day, the Plaintiff discovered Mr. Tavares’ email was hacked and that the instructions were in fact fraudulent. Although the Plaintiff immediately took steps to recall the funds transferred to the Bank Account, the 2nd Defendant was unable to return the funds. Up until the date of this hearing, the said sum of EUR67,000 has not been returned to Mr. Tavares or the Plaintiff.
8. The matter was reported to the Hong Kong police on 13 February 2015.
9. On 5 May 2015, the Plaintiff on behalf of Mr. Tavares made an ex-parte application, by way of affirmation, for an injunction order against the 1st Defendant and a disclosure order against the 2nd Defendant. The orders were granted by His Honour Judge Li on the same day.
10. Having considered the matters affirmed by the Plaintiff and the documents produced in support of their allegations, I am satisfied the evidence before me discloses a viable cause of action against the 1st Defendant. I am satisfied there is a serious issue to be tried.
Balance of convenience
11. In considering where the balance of convenience lies, the court must consider, amongst other things, the preservation of status quo and adequacy of damages.
12. The Plaintiff submitted there is a high risk that the sums of money would be transferred out of the bank account. Once the money is transferred out of the bank accounts, it would be almost impossible to trace the said sums. At the hearing of the present application, the Plaintiff submitted letter dated 12 May 2015 from the 2nd Defendant (“the Letter”). The Letter states the Bank Account has been closed down on 16 February 2015. Although the contents of the Letter have yet to be verified by way of affirmation and production of account documents, the Letter is a strong indication the timely preservation of the sums transferred by the Plaintiff is paramount.
13. Having considered the Plaintiff’s submissions and in absence of any evidence to the contrary, I accepted the Plaintiff’s submissions that the circumstances of the case are such that it is pertinent to restrain the said sum. By reason of the need to preserve the said sum transferred into the 1st Defendant’s bank account and upon the Plaintiff’s undertaking as to damages, I am satisfied that the balance of convenience lies in favour of the Plaintiff in having the ex-parte injunction made by His Honour Judge Li continue until trial or further order.
Just and convenient to grant the injunction
14. In the absence of any evidence to the contrary and by reason of the matters set out above, I fail to see any injustice or inconvenience that would be caused to the 1st Defendant if the injunction was granted.
MAREVA INJUNCTION
15. The requirements that must be satisfied before a mareva injunction could be granted are succinctly set out in paragraph 29/1/65 of Hong Kong Civil Procedure 2015, Vol. 1.
Good and arguable case
16. Having considered the evidence and submissions made by the Plaintiff’s solicitors, I am satisfied the Plaintiff has a good and arguable case against the 1st Defendant. I am satisfied the Plaintiff has produced sufficient evidence to show it remitted the said sums into the 1st Defendant’s bank account and that such remittances were procured by deceit. I am satisfied the Plaintiff’s case is “more than barely capable of serious argument.” (see Akai Holdings Ltd and others v Ho Wing On and others (unrep, HCCL 37/2005 and 40/2005, 2 February 2009)
Assets in the jurisdiction
17. According to the Letter, the 1st Defendant still has assets in the jurisdiction, albeit in another bank account held with the 2nd Defendant. I am satisfied that there is prima facie evidence that the 1st Defendant has assets in this jurisdiction capable of being restrained.
Real risk of dissipation
18. In respect of whether there is a real risk of dissipation of the assets, I accepted the submissions of the Plaintiff’s solicitors that the circumstances of the case point to a real risk of dissipation of assets. The evidence submitted by the Plaintiff suggests that the said sums were perpetrated by fraudulent emails. Up to the date of the hearing, the said sums have been transferred into the 1st Defendant bank account for almost 3 months. However the 1st Defendant has failed to contact the Plaintiff or return the said sums to the Plaintiff. Moreover, though the contents of the Letter have yet to be verified, the Letter indicates the 1st Defendant closed 3 bank accounts with the 2nd Defendant on 16 February 2015, including Bank Account.
19. By reason of the matters set out above, I am satisfied it is highly likely the said sum will be dissipated in the near future, if not done so already. In all the circumstances, I accept there is a real risk the 1st Defendant will dissipate his assets up to the amount of the said sum.
Balance of convenience
20. For the same reasons given at paragraphs 10 – 12 hereinabove, I am satisfied that the balance of convenience lies in favour of granting the injunction.
LOCUS STANDI
21. The Plaintiff asserts they have locus standi to bring these proceedings by reason of being expressly authorized by Mr. Tavares to sue the 1st and 2nd Defendants.
22. Although I have some doubt as to whether Mr. Tavares is entitled to authorize another party to bring proceedings on his behalf and thereby confer locus on the Plaintiff, I note the Plaintiff itself could maintain a separate cause of action against the 1st and 2nd Defendant for any loss caused by the fraudulent instructions. I therefore accept the Plaintiff, prima facie, has locus standi in these proceedings.
23. For reasons given hereinabove, I am of the view that the injunction made by His Honour Judge Li should be continued until trial or further order. I therefore made an order in terms of the draft injunction order provided by the Plaintiff’s solicitors.
DISCOVERY AGAINST THE 2nd DEFENDANT
24. The Plaintiff seeks an order for discovery against the 2nd Defendant in the terms of the draft order submitted. In support of their application, they cited the cases of Norwich Pharmacal v Customs and Excise Commissioner [1974] AC 133, Bankers Trust Co v Shapira [1980] 1 WLR 1274, and P v T Ltd [1997] 1 WLR 1309.
25. In the case of Bankers Trust, Lord Denning allowed for early discovery against a bank on its customer’s accounts and other related documents. He stated at page 1282C, “The Plaintiff who has been defrauded has a right in equity to follow the money. He is entitled ……. to lift the latch of the banker’s door …… If the Plaintiff’s equity is to be any avail, he must be given access to the bank’s books and documents – for that is the only way of tracing the money or of knowing what has happened to it.”
26. Hence in cases where there is strong evidence of fraud, the court should not hesitate to order early discovery.
27. I note the 2nd Defendant has complied with the first paragraph of His Honour Judge Li’s order. Hence the Plaintiff’s solicitors have amended the draft order accordingly to reflect the outstanding disclosure orders the 2nd Defendant has yet to comply with.
28. Having considered the cases, I accept the circumstances of this case warrant a disclosure order in terms of the draft order.
29. I therefore made an order in terms of the draft disclosure order provided by the Plaintiff’s solicitors.
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( WY Ho )
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Deputy District Judge |
Mr. SK Cheng, of Tanner De Witt, for the Plaintiff
The 1st and 2nd Defendants were not represented and did not appear
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