Banco De Chile v. Boruida Trading Co Ltd and Others

HCA 1621/2018

[2018] HKCFI 2294

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1621 OF 2018

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D E C I S I O N

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1.This is the plaintiff’s application by summons dated 30 August 2018 (“the 2^nd application”) for an order that the Standard Chartered Bank (Hong Kong) Limited (“SCB”) produce further documents.

2.On 10 July, the plaintiff, a victim of cyber fraud, obtained a Mareva injunction from DHCJ S Leung, inter alia, freezing the assets within Hong Kong of Tech Giant Limited (“Tech Giant”) up to the value of €1,998,044.06. 

3.On 20 July 2018, the plaintiff obtained an order from DHCJ K Yeung SC (“the 1^st order”) for the production of documents by SCB relating to a specific bank account (“the 1^st SCB account”) of Tech Giant into which funds of the plaintiff held with the Deutsche Bank (“the DB funds”) were paid.

4.The 1^st order contained a provision granting the plaintiff leave to use the documents and records obtained for the purpose of commencing and pursuing proceedings in Hong Kong or elsewhere against (except SCB) persons implicated in the wrongdoing relating to the DB funds. 

5.For the background giving rise to and the rationale for the 1^st order, reference should be made to the judge’s decision dated 20 July 2018. 

6.SCB’s records disclosed in compliance with the 1^st order revealed that on 24 May 2018, the DB funds were immediately withdrawn from the 1^st  SCB account.  Approximately 38% of the DB funds was converted into US dollars and transferred from the 1^st SCB account to another SCB account (“the 2^nd SCB account”) held in the name of Tech Giant.

7.The present applications, made on the basis that the plaintiff’s beneficial proprietary interest in its funds is traceable into the 2^nd SCB account, is for disclosure of SCB’s records of all bank accounts with SCB held by Tech Giant for the period from 23 May 2018 until compliance with the order sought in this application save and except any document or record which has been ordered to be produced by the 1^st order.

8.The question that arises is whether the fact that the plaintiff expressly abandoned its proprietary remedies on 12 September 2018 when it obtained a default judgment against Tech Giant (against whom both personal and propertiary claims had been made) is an impediment to granting the order sought.  Tech Giant (which was served with the proceedings) appears to be a shell company with no operations or business in Hong Kong and whose shareholders reside in the PRC.  It has not entered an acknowledgment of service stating its intention to defend the proceedings.

9.In principle, the express abandonment by the plaintiff of its proprietary claims against Tech Giant should not affect the plaintiff’s proprietary claims against the ultimate recipients of the DB funds paid out of the 2^nd SCB account, subject to issues of double recovery.  There can be no doubt that the information sought is relevant to the plaintiff’s cyber fraud claims.  It would reveal the fund flow of the DB funds that have been misappropriated and enable steps to be taken against 3^rd parties for their recovery.

10.The information sought is clearly relevant to the plaintiff’s proprietary claims against 3^rd parties: see Heitkamp & Thumann KG v Living Profit [2018] HKCFI 1006, 103 (b).  Further,  disclosure is also warranted as an exercise of the court’s power ancillary to and in support of the Mareva injunction and, independently from the injunction, as a power to support the execution of the judgment against Tech Giant that the plaintiff has already obtained.

11.The plaintiff also seeks a release from the implied undertaking not to use documents disclosed for collateral purposes, similar to that granted in the 1^st order and preserving SCB’s privilege against self-incrimination. 

12.For those reasons, I make the order sought in this application.

Mr Jason Yu, instructed by Linklaters, for the plaintiff

The 2^nd defendant was not represented and did not appear

Standard Chartered Bank (Hong Kong) Limited, unrepresented, absent