HIP LIK PACKAGING PRODUCTS FACTORY LTD v. THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD

DCMP 1555/2024

[2024] HKDC 856

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1555 OF 2024

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DECISION

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Introduction and Brief Background

1.  This is an application by the Plaintiff (“P”)  by Originating Summons dated 18 March 2024 (“the OS”)  for a Norwich Pharmacal order against the Hongkong and Shanghai Banking Corporation Limited (“the Bank”)  pursuant to the inherent jurisdiction of the court.

2.  P, believing that International Printing Machinary Ltd (“IPML”)  would sell and deliver a printing machine to it, was deceived into transferring the following sums of money from P’s bank account into IPML’s bank account (account number 652329293838)  held with the Bank (“the Receiving Account”)  on the following days:

(1)  On 18 February 2022, EUR 82,800 (“1^st Sum”);

(2)  On 7 April 2022, EUR 138,000 (“2^nd Sum”); and

(3)  On 15 November 2022, EUR 55,200 (“3^rd Sum”).

3.  When the printing machine was never delivered to P, and upon inquiries with the shippers, P realized that it had been defrauded.

4.  P commenced an action against IPML in DCCJ 1389/2023.  On 3 August 2023, P obtained default judgment against IPML. It was adjudged and declared inter alia that IPML holds 1^st Sum, 2^nd Sum and 3^rd Sum or its traceable proceeds on trust for P and that IPML shall repay EUR 276,000 (or its HKD equivalent at the time of payment), with interest, to P.

5.  By the OS, P seeks order for disclosure of documents or records that are in the possession, custody or power of the Bank containing transaction details of all bank account(s)  of IPML held with the Bank (including but not limited to the Receiving Account)  from 18 February 2022 until date of the order, in particular:

(1)  the amount of each transaction;

(2)  the identity of the persons making payment into such account(s); and

(3)  the identity of the recipient(s)  of any money transferred out of such account(s).

6.  Mr Leung, solicitor, appears on behalf of P.

7.  By letter dated 20 March 2024, having been served with the OS, the Bank has stated that, subject to their comments therein, its position is neutral and asked for its attendance at future hearings of the OS be excused.  Accordingly, the Bank did not appear today.

Applicable principles

8.  It is now well-established that the court has inherent jurisdiction to grant Norwich Pharmacal relief against a bank who is not a party to any action.  It is not a usual order and will not be lightly granted in the absence of powerful factors:

(1)  It is made against an innocent party whose only involvement is to become mixed up in the tortious or wrongful activities of others;

(2)  The wrongdoing exists only on the part of a person or persons against whom no relief may be sought at the stage of the application and against whom there is probably insufficient evidence to found an action;

(3)  There will usually be a legal relationship between the innocent person against whom a discovery order is sought and the alleged wrongdoer, and the relationship may involve strict duties to be observed on the innocent party’s part.  Any discovery to be made will involve a breach of confidentiality and may expose the innocent party to civil liability and possibly even criminal liability; and

(4)  The court must accordingly balance the competing interests of the victim of the alleged wrongdoing and an innocent party caught up in the wrongdoing.

See A Co v B Co [2002] 3 HKLRD 111 at §12 per Ma J (as he then was).

9.  In A v P Co & Ors [2018] HKCFI 907, Recorder Yvonne Cheng SC (as she then was)  at §5 summarized the main requirements for granting relief as follows:

(1)  There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place (the degree of proof required being commensurate with the seriousness of the allegations);

(2)  It must be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff. Where the plaintiff is likely to make a tracing claim, there must be a serious possibility that the discovery sought will 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.  The order must be specific, and be restricted to those documents or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets; and

(4)  The plaintiff must have exhausted other proper and reasonable avenues for obtaining the information sought.

Analysis and Disposition

10.  Applying the above principles to the facts of this case, I am satisfied that an order in terms of the draft order (as amended by me)  should be granted.

11.  Firstly, I am satisfied that from the default judgment obtained and declarations granted against IPML that that there is cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place.

12.  Secondly, the documents sought will very likely reap substantial and worthwhile benefit to P.  In the garnishee proceedings against the Bank, it was revealed that the net balance of the account(s)  of IPML held with the Bank was in debit.  The documents sought is likely to reveal the identity of any subsequent layer recipient(s)  of P’s monies so as to facilitate the taking of legal proceedings for the preservation and/or recovery of P’s monies.

13.  Thirdly, having reviewed the draft Order, I am satisfied that the discovery sought is specific and not unduly wide.  The documents sought are limited to documents necessary to enable P to preserve or discover assets.  No objection has been taken by the Bank on the scope of the disclosure sought.  The comments received from the Bank (relating only to timing for compliance and details required to be provided in the request for documents from P)  have all been taken into account in the draft Order.

14.  Fourthly, I am satisfied that P has through its solicitors exhausted other reasonable avenues to seek the information sought and the Bank has previously indicated that the information cannot be provided without relevant court orders.

15.  Having balanced the competing interest of the victim and the innocent parties (the Bank)  caught up in the wrongdoing, and mindful that the power to order disclosure should be exercised with great caution, I would make an order in terms of the draft Order as amended by me on costs.

16.  On costs, I would make the usual order that P do pay to the Bank the reasonable costs of and occasioned by this application, which includes the costs and expenses incurred by the Bank in complying with this Order, on an indemnity basis, to be taxed if not agreed.