MIDDLESEX GASES & TECHNOLOGIES INC. v. FLYALS LTD

HCA 1158/2025

[2025] HKCFI 2798

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1158 OF 2025

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D E C I S I O N

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Introduction and Background

1.  On 19 June 2025, following an ex parte hearing before Recorder Eugene Fung SC, the Plaintiff (“P”) obtained a Mareva and proprietary injunction against the Defendant (“D”) (“the Injunction Order”).

2.  P, a Massachusetts USA company, carries on the business of selling industrial gases across several states of the USA. It is a wholly owned subsidiary of Linde Gas & Equipment Inc. which is an indirect subsidiary of Linde Plc, a publicly traded company with holdings spanning more than 80 countries and is a leading global industrial gas and engineering company.

3.  According to P, on 20 May 2025, a fraudster claiming to be a member of P’s bank called P’s treasurer and convinced the treasurer to access a scam website to check suspected fraudulent transactions. This scam website had a URL link and appearance similar to the real website of the bank. The treasurer was prompted to enter P’s e-banking login number and password onto the scam website, allegedly to decline the suspected fraudulent transactions. However, after doing so, the treasurer grew suspicious and amongst other things, logged onto the genuine e-banking website, where he notice a total of 8 unauthorised transfers being made out of P’s account to D’s account (“D’s Account”) maintained with China Citic Bank International Limited (“the Bank”). 7 of those transfers were recalled but the last one being the transfer of US$596,000 to D’s Account could not be stopped.

4.  P reported the fraud to the authorities including the Hong Kong Police and was informed that D’s Account had been frozen and there was about HK$4M left therein.

5.  Today is the return date of the Injunction Order. I have before me the following applications by P by: (1) an inter parte Summons dated 20 June 2025 for continuation of the Injunction Order and seeking ancillary disclosure order against D (“Continuation Summons”); and (2) by inter partes Summons dated 20 June 2024 (“Disclosure Summons”) against the Bank seeking disclosure of certain documents in respect of D’s Account with the Bank.

6.  Mr Lau, counsel, appeared on behalf of P. D and the Bank were all served the Summons but have not appeared. By letter dated 26 June 2025 to P’s solicitors, the Bank has indicate “no stance” to the Disclosure Summons save would like more time to provide the documents requested.

Discussion

Re: Disclosure Summons

7.  The applicable principles for Norwich Pharmacal relief are well-settled. 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).

8.  In A Co v B Co at §13, the main requirements for Norwich Pharmacal relief were set out:

(1)  There must be cogent and compelling evidence to demonstrate that serious tortious or wrongful activities have taken place (where fraud or similar serious allegations are made, the degree of proof must correspondingly be high);

(2)  It must be clearly demonstrated that the order will or will very likely reap substantial and worthwhile benefits for the plaintiff, and where a tracing claim is likely to be made there must be a serious possibility that the discovery sought will either allow the plaintiff to preserve what may well be his assets or realistically lead to the discovery of such assets; and

(3)  The discovery sought must not be unduly wide, so an order must be specific and also restricted to those documents or those classes of documents that are necessary to enable the plaintiff to preserve or discover assets.

9.  The applicable principles governing an order under s.21 of Evidence Ordinance, Cap. 8 (“EO”) are also well-established. Although it has been said that such order is justified where the plaintiff seeks to trace funds which in equity belongs to him and of which there was strong evidence that he has been fraudulently deprived, there are 3 limits:

(1)  Firstly, the plaintiff must demonstrate a real prospect that the information may lead to the location or preservation of assets to which he is making a proprietary claim;

(2)  Secondly, the documents sought to be disclosed must be identified with some specificity as would be expected of a subpoena; and

(3)  Thirdly, the court needs to balance the potential advantage against the detriment to the person against whom the order is sought, not merely in terms of costs but by way of invasion of privacy and requiring breach of obligations of confidence to others.

See CTO (HK) Ltd v Li Man Chiu & Others [2002] 2 HKLRD 875, §§12-13 per Deputy Judge Poon (as he then was); and Hwang Joon Sang v Golden Electronics Inc. (No 2) [2021] 2 HKLRD 87 at §§8-9 per Coleman J.

10.  I am satisfied that the requirements whether under the Norwich Pharmacal jurisdiction or under s.21 of EO are made out and it is appropriate for an order to be made in terms of the Disclosure Summons as amended by P and further amended by me.

11.  In the present case, P has made a proprietary claim to the Sum on the basis that it was the victim of a fraud. Given the learned Recorder in making the Injunction Order was plainly satisfied that there was a serious issue to be tried and good arguable case on the merits to grant the Injunction Order, he must have considered that there was prima face evidence to demonstrate that a serious tortious or wrongful activities have taken place. I have considered the skeleton submissions and evidence filed before the learned Recorder and am also so satisfied.

12.  P seeks the account opening documents, related supporting documents and details of all transactions in respect of D’s Account from 20 May 2025 to date of order. I am further satisfied the information sought will reap substantial and worthwhile benefit to P to ascertain the whereabouts of the Sum or its traceable proceeds. There is a real prospect the information sought will lead to the location or preservation of assets to which P has made a proprietary claim and for steps to be taken to preserve P’s monies.

13.  I am also satisfied that the discovery sought is specific and restricted to documents necessary to enable P to preserve or discover assets. It is limited to disclosure of documents from the date of transfer from P’s account to D’s Account to date of the order.

Re: Continuation Summons

14.  As I am satisfied that D has been properly served and D does not appear to contest the continuation of the Injunction Order, I will order the continuation of the Injunction Order until trial or further order of the court.

15.  I also accept as that the Mareva and the proprietary injunction is to be continued, it follows that the ancillary disclosure orders should be made in order to ensure the injunctions granted are effective to serve their purpose. As explained by DHCJ Winnie Tsui (as she then was) in Canton Plus Enterprise Limited & Anor v Tong Zhenjun & Ors [2021] HKCFI 181 at §§10-11, a Mareva injunction is granted to protect a plaintiff from the risk of having nothing or not enough to enforce if the plaintiff succeeds in obtaining a judgment after trial. An ancillary disclosure order would enable the plaintiff to find out the whereabouts of the defendant’s assets and take steps accordingly to make sure that those assets are effectively frozen. In the case of proprietary injunction, an ancillary disclosure order would enable the plaintiff to locate, trace and thus preserve and pursue assets which the plaintiff says it is beneficially his.

16.  Accordingly, I will make an order in terms of the Continuation Summons as amended by me.