BAI LING XIN v. LEUNG HO KWAN AND ANOTHER

DCCJ 2129/2022

[2024] HKDC 732

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2129 OF 2022

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BETWEEN

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DECISION

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Introduction and Background

1.  There are before me this afternoon 2 Summonses both dated 8 February 2024 taken out by the Plaintiff (“P”). They both seek disclosure of documents set out in the respective schedule to the Summons against 2 banks pursuant to s 21 of the Evidence Ordinance, Cap 8 (“EO”) and the court’s jurisdiction to grant Norwich Pharmacal relief.

2.  P claims to be a victim of online fraud and was defrauded to transfer sums of money to the accounts of the 1^st Defendant (“D1”) maintained with China CITIC Bank International Ltd (“CITIC”) and the 2^nd Defendant (“D2”) maintained with Hang Sang Bank Limited (“HSB”).

3.  By Orders of Deputy District Judge Kay Seto dated 19 May 2023, P obtained disclosure orders against CITIC and HSB. From the documents obtained pursuant to the disclosure orders, it was revealed:

(1) in respect of D1’s USD Account maintained with CITIC (into which P had transferred various sums of monies), there were several transfers of monies out of D1’s USD Account (corresponding to the sums transferred by P to D1 save for small discrepancies). Save for one transfer, they were all transferred into the HKD Saving Account (account number 788145514400) maintained with CITIC in the name of D1 (“D1’s HKD Saving Account”);

(2) in respect of D2’s account maintained with HSB, a USD sum (which more or less corresponds to the sum transferred by P to D2) was deposited into that account, converted into HKD and then transferred to a bank account under the name of Huang Ta Kuo (account number 012-561-20103272) (“HTK’s Account”) on the same day. Based on the Clearing Code and Branch Code List, it is believed that HTK’s Account is maintained with Bank of China (Hong Kong) Limited (“BOCHK”).

4.  P now seeks an order for disclosure: (1) against CITIC, for the monthly bank statements of D1’s HKD Saving account from 23 March 2022 to the date of the order; and (2) against BOCHK, for (a) copies of all documents showing the English and Chinese names, telephone number, email address and other contact information that can be used to locate the account holder of HTK’s Account (“the Account Holder”), (b) all identity documents and address proof of the Account Holder; and (c) the monthly bank statements of HTK’s Account covering the period from 8 April 2022 to the date of the order.

5.  Mr Yan, solicitor, appears on behalf of P. Both CITIC and BOCHK were duly notified of today’s hearing but have sought to be excused from attending.

6.  By letter of 29 April 2024, CITIC stated that it has no comments on P’s Summons against it and takes no position.

7.  By letters dated 29 and 30 April 2024, subject to the question of costs, BOCHK has indicated that it takes a neutral stance to P’s Summons against it.

Applicable principles

8.  The applicable principles governing an order under s 21 of EO are well-established. Although it has been said that a s 21 order is justified where the plaintiff seeks to trace funds which in equity belong to him and of which there was strong evidence that he has been fraudulently deprived, there are 3 limits:

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

(3) 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.

9.  The applicable principles governing applications for Norwich Pharmacal relief are also 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).

10.  The main requirements for Norwich Pharmacal relief were summarized by Coleman J in A1 and Another v R1 and Others [2021] HKCFI 650 at §56:

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

Analysis and Orders

11.  Applying the above legal principles to the facts of the present case, I am satisfied whether the jurisdictional basis is under s 21 of EO or Norwich Pharmacal, the orders sought should be granted.

Summons against CITIC

12.  From the documentary evidence before me, having considered the remittances, the amounts of those sums and the time proximity, there is cogent and compelling evidence that P had been defrauded to remit sums of monies to D1’s USD Account and the monies were then later internally transferred to D1’s HKD Account.

13.  The information sought by P are highly germane to the issue of fund flow and would likely reap substantial and worthwhile benefit to enable her to preserve and/or recover monies which she has made a proprietary claim against.

14.  The discovery sought is specifically defined and not unduly wide. There is no question that the account against which disclosure sought is that of D1’s. I have also taken into account the neutral stance adopted by CITIC. There is no suggestion by CITIC that there is any difficulty in complying with the orders sought.

15.  Having balanced the competing interest of the victim and the innocent party (the bank) caught up in the wrongdoing, and mindful that the power to order disclosure should be exercised with great caution, I would order that:

(1) CITIC do within 28 days from the date of service of this Order (or by such other time and date as may be agreed in writing between P and CITIC) provide P’s solicitors copies of the monthly bank statements of D1’s HKD Saving Account from 23 March 2022 to the date of this order;

(2) P do reimburse on an indemnity basis all costs and expenses incurred by CITIC in complying with this order, to be taxed if not agreed;

(3) P’s costs of this application be in the cause.

Summons against BOCHK

16.  From the documentary evidence before me, having considered the transferred sums, their amounts and the time proximity, there is cogent and compelling evidence that P had been defrauded to transfer her monies to D2 who later converted them into HKD and transferred the same to HTK’s Account maintained with BOCHK.

17.  The information sought are highly germane to the issues of fundflow and the identity of the second-tier recipient. It would facilitate the taking of legal proceedings for the preservation and/or recovery of P’s monies if so advised.

18.  I have reviewed the order sought and it is not unduly wide. No objections were taken by BOCHK to the terms of the disclosure sought by P.

19.  On balance, I am of the view that the orders sought as amended by me should be granted. I therefore order:

(1) BOCHK do within 28 days from the date of service of this Order (or by such other time and date as may be agreed in writing between P and BOCHK) provide to P’s solicitors:

(a) copies of all documents in its power, custody or possession showing the English and Chinese names, telephone number, email address and any other contact information that can be used to locate the account holder of HTK’s Account;

(b) all identity documents and address proof of the Account Holder; and

(c) copies of the monthly statement of HTK’s Account covering the period from 8 April 2022 to the date of this Order;

(2) P do reimburse BOCHK for all its costs and expenses (at the standard rate stipulated by BOCHK) of and incidental to complying with this order on an indemnity basis, to be taxed if not agreed;

(3) The costs and expenses of and incidental to this application incurred by BOCHK as summarily assessed by me at HK$4,500.00 shall be paid by P to BOCHK forthwith; and

(4) P’s costs of this application be in the cause.