Akbank T.A.S. v. Mainford Ltd and Others
Read the full judgment text of HCA 3264/2016 on BabelCite. This High Court CFI judgment was delivered on 9 February 2018.
1. Counsel for the plaintiff and counsel for the 16 th defendant (“D16”) appeared before me on 9 February 2018 on two summonses as follows:
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HCA 3264/2016 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 3264 OF 2016 ______________
______________ Before: Deputy High Court Judge N Francis in Chambers Date of Hearing: 9 February 2018 Date of Decision : 9 February 2018 Date of Reasons for Decision: 2 March 2018 ______________________ REASONS FOR DECISION ______________________ The parties 1.Counsel for the plaintiff and counsel for the 16th defendant (“D16”) appeared before me on 9 February 2018 on two summonses as follows:
2.HSBC did not appear at the hearing having previously written to the solicitors for the plaintiff indicating that the application would not be contested and that it will comply with any court orders served on it. Background to the application 3.The previous injunction order which both the plaintiff and the D16 sought to further vary (in different respects) is one of a whole series of injunction orders obtained by the plaintiff in the action seeking to restrain and trace a very substantial sum of money of which it was allegedly defrauded on or about 7 or 8 December 2016. 4.As varied the previous injunction order restrained D16 from dealing with the total sum of US$1,604,031.74 held in an account or accounts in its name with Standard Chartered Bank (“SCB”) in Hong Kong. The sum was made up of two separate identified amounts of US dollars which the plaintiff claims it can show, relying in a large part on disclosures obtained regarding the dealings and bank accounts of other defendants or third parties, are traceable proceeds of the alleged fraud. 5.The terms of the previous injunction order required that D16 make disclosure to the plaintiff of any assets of an individual value of more than HK$20,000 whether within or outside Hong Kong within three days of service of the order but in the event this was not done. The best that counsel for D16 was able to offer by way of explanation was that apparently at the time D16 was unrepresented. However, it had secured legal representation by no later than February 2017 and thereafter has participated in the proceedings. Even if the lack of legal representation was justification for the initial default, which, of course, it is not, this still does not explain the long delay in giving disclosure as ordered. Though in fairness I should observe that it does not appear that the plaintiff had pressed for disclosure. 6.In any event, by the affirmation of Xu GaoFeng made on behalf of D16 and filed on 25 January 2018 in support of D16’s summons, it was revealed, seemingly for the first time, that D16 holds other monies, in different currencies, in accounts with HSBC in Hong Kong, including the sum of US$218,001.12. 7.Not surprisingly this revelation has led to the plaintiff’s summons applying to vary the previous injunction order to extend it to cover the monies in D16’s account with HSBC, in support of which it filed the affidavit of Jeffrey Ho on 6 February 2018. In that affidavit, it is deposed that the plaintiff’s solicitors had been provided through a telephone call with information by the Commercial Crime Bureau of the Hong Kong Police that a sum of US$210,000 was paid into D16’s account with HSBC on or about 9 December 2016. This is only the day following the alleged fraud. The plaintiff’s application limited to US dollar sum with HSBC 8.The undisputed evidence before the court shows that D16’s accounts with SCB and HSBC hold, in addition to the amounts of US dollars which are specifically identified in the previous injunction order and the US dollar amount currently held with HSBC that I have already referred to, a number of amounts in other currencies, in particular Euros. However, counsel for the plaintiff clarified to me during the course of the hearing that though sums of Euros and Hong Kong dollars are referred to in the plaintiff’s summons the application before me was limited both specifically and in total to the identified sum of US$218,001.12. Pending obtaining disclosure from HSBC by way of the ancillary application included with the plaintiff’s summons, it is the plaintiff’s case that this sum may represent the current balance of the monies it has learnt from the police were paid into the account on or about 9 December 2016. 9.The limiting of the claim for injunctive relief in this way is consistent with the approach of the plaintiff in relation to SCB where again there are monies held in the name of D16 in other currencies which are not identified in the injunction order, and the order is limited to two specific identified sums of US dollars and in total to the aggregate of those two sums. 10.In short, for the present the plaintiff has limited its claims for injunctive relief against D16 to those of a proprietary nature where it believes it can trace the flow of monies to the destination account. While the plaintiff’s pleaded claims in the proceedings also include claims in personam seeking damages for unjust enrichment these were not relied upon for the purpose of the application before me. D16 summons 11.I can deal with D16 summons shortly as in a very large part it was not pursued by counsel at the hearing. Following the withdrawal of a number of items all that remained was the application of D16 that it be given leave to pay the sum of US$1,604,031.74 currently held with SCB (and, if the previous injunction order were extended as sought by the plaintiff, also the sum of US$218,001.12 currently held with HSBC) into court such that, according to the terms of paragraph 15 of the previous injunction order, the order will cease to have effect. 12.Arguably no such order should be necessary as it is clear, at least to the lawyers, that this is already provided for by paragraph 15. However, counsel for D16 explained that an order in express terms would likely be more readily given effect to by the banks, which very possibly is the case. 13.The plaintiff did not oppose D16’s application to pay the monies into court and, with the making of the order I refer to below as sought by the plaintiff to extend the injunction to the sum of US$218,001.12 currently held with HSBC (and also with the addition of provision for the placing of the monies on receipt on deposit), I ordered accordingly. Particulars of the court bank account 14.Subsequent to the hearing, the solicitors for D16 raised with the court the need to obtain details of the High Court bank account to which SCB and HSBC could make direct electronic transfers. It is understandable that a bank, even if acting pursuant to a court order, would prefer to make a payment into court by direct electronic transfer to the bank account of the court itself rather than by another intermediary means which might involve even a small risk of money going astray. I therefore made an order providing that D16 be at liberty to obtain the necessary details of the High Court bank account so that they could be provided to SCB and HSBC. The plaintiff’s application to extend the previous injunction 15.Counsel for D16 sought to resist the plaintiff’s application to extend the previous injunction order to the sum of US$218,001.12 currently held with HSBC but he was without any evidence from D16 to assist him. Indeed, it was D16’s position before me that it could not produce any information or better still documents, no bank statements, no bank transfer records, no contracts or other evidence of business dealings, that it might rely on to show that the sum was derived from another, an ‘innocent’, source and was not as claimed by the plaintiff (supported by evidence obtained from the police) part of the proceeds of the fraud committed on it. The best that counsel for D16 could argue was that the mere coincidence of the date of receipt (being 9 December 2016, when the fraud is alleged to have been committed on or about 7 or 8 December 2016) was not sufficient. 16.The only other evidence before me, which was provided by way of the affirmation of Xu GaoFeng made on behalf of D16 and filed on 25 January 2018, was originally intended to be relied upon on behalf of D16 in support of its own application to show that there was an innocent explanation for the receipt of the two sums of US dollars with SCB which the plaintiff had already injuncted. The explanation took the form of producing invoices addressed to claimed customers showing amounts payable to D16 which closely match the US dollar sums received into D16’s account with SCB. 17.As I say, in the event, those items of D16’s summons to which this evidence might have been relevant were not pursued before me. The evidence also is of no direct relevance to the plaintiff’s summons seeking injunctive relief in respect of D16’s account with HSBC. Therefore, I am not required to make any finding in this regard. However, I will observe that I agree with counsel for the plaintiff that the evidence is very far from compelling. Other than the two invoices no other documents to support the existence of the underlying contract and supply of the goods identified were produced. The terms of the invoice also refer to a mix of different types of goods which it seems inherently implausible would be bought by a single customer or indeed supplied by a single supplier. No evidence was produced regarding D16’s sourcing of the items to be supplied. Finally, as counsel for the plaintiff pointed out, that the same typographical error in relation to the format of the date was repeated on both invoices must at least raise a question regarding the genuineness of the documents. 18.When considering the plaintiff’s summons I have had regard not only to the recent evidence filed on behalf of both D16 and the plaintiff but also that filed on behalf of the plaintiff at the time it first obtained injunctive relief and filed subsequently as the order was varied. I have also had regard to the pleadings of the parties, the defence of D16 being notable for the sparsity of the particulars provided in support of its claim to be an innocent third party. I have particularly noted that the evidence shows that in addition to the involvement of D16 itself the alleged movements of the proceeds of the fraud included transfers totaling some US$2 million to an account in China in the name of a director and shareholder of D16. 19.After considering the totality of the evidence, and notwithstanding the limited extent of the direct evidence currently available as regards the origins of the specific sum of US$218,001.12 currently held in D16’s account with HSBC, I was of the view that the plaintiff had shown a sufficiently good arguable case to justify the extension of the previous injunction order to D16’s newly revealed accounts with HSBC and specifically the identified sum of US$218,001.12. I therefore ordered that the previous injunction order be amended accordingly. Discovery order HSBC 20.On D16 revealing the existence of the accounts with HSBC, the solicitors for the plaintiff wrote to D16 solicitors seeking account and other information to demonstrate the source of the funds in the account. However, as I have already observed, D16 position in response was that it is unable to provide any such documentary evidence. Not surprisingly, this has led to the application of the plaintiff for a bankers’ book evidence type order in respect of D16’s account with HSBC. That application was not opposed by counsel for D16 and I ordered in the terms of the plaintiff’s application save for the amendment of the time period for provision of information and documents from 14 to 28 days. Costs 21.I need not deal with the subject of costs in this decision as the parties were able to reach agreement in this regard.
Mr Tom Ng, instructed by Dentons Hong Kong LLP, for the plaintiff Mr Steve Cheng, instructed by Yu Hung & Co, for the 16th defendant The 3rd Garnishee, The Hongkong and Shanghai Banking Corporation Limited, was not represented and did not appear | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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