Taihei Dengyo Kaisha, Ltd v. Bok Joeng Hong Kong Co Ltd and Others

HCA 88/2022

[2022] HKCFI [1322]

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 88 OF 2022

_________________________

________________________

_______________

D E C I S I O N

_______________

Introduction

1.This is the plaintiff’s application by summons of 19 April 2022 for production by the Standard Chartered Bank (Hong Kong) Limited (“SCB”) and the Hongkong and Shanghai Banking Corporation Limited (“HSBC”) of certain banker’s records in relation to accounts maintained with them by the 1^st defendant and the 9^th defendant respectively.  The banks are not party to the action, but they are served with the summons (and hence duly notified of the application) on 20 April 2022, whilst the 1^st and 9^th defendants have also been served with the summons.

2.The present application is made pursuant to section 21 of the Evidence Ordinance, Cap 8. The plaintiff has previously obtained disclosure and inspection orders against the 1^st to 14^th defendants’ respective banks (including SCB and HSBC) from the Honourable Madam Justice Lisa Wong on 28 January 2022.  I understand from the plaintiff’s solicitors that the plaintiff has already obtained a proprietary and Mareva injunction from the court, and this was also mentioned in paragraph 14 of Mr Fukura’s 4^th Affirmation (albeit without exhibiting the relevant court orders).  Having been notified of the present application, HSBC indicated that they do not intend to contest the application whilst SCB adopts a neutral stance.

Brief Background

3.The plaintiff is the victim of an elaborate email fraud starting on 5 January 2022.  The facts are detailed in the various affirmations of Mr Fukura Motohiro, the Project Manager and also Hong Kong Authorized Representative of the plaintiff.  In gist, on 5 January 2022, Mr Fukura received a call from a person purporting to be Mr Nojiri, who is also one of the directors of the plaintiff and the Representative Director, President and Chief Executive Officer of the plaintiff (“the Imposter”).  The Imposter instructed Mr Fukura to contact a purported lawyer who instructed Mr Fukura to make various payments for an acquisition (which was later found out to be a scam).  As a result, various payments were made to a particular bank account maintained by the 1^st defendant with SCB (“the 1^st Defendant’s Account”), totalling HK$49,773,787.32 (“the Lost Funds”).

4.On 12 January 2022, Mr Fukura learnt via his colleague that Mr Nojiri never made payment requests to Mr Fukura.  Mr Fukura then realized that he had fallen victim to an email scam, and he reported to police immediately.

5.Upon the investigation by Hong Kong Police Force, there have been transfers of part of the Lost Funds from the 1^st Defendant Account to the 2^nd to 14^th defendants’ respective accounts.  As mentioned, the plaintiff had obtained disclosure and inspection orders earlier, as a result of which the plaintiff realises that further transfers were made from the 1^st Defendant’s Account to another two accounts maintained by the 1^st defendant with SCB, and an account maintained by the 9^th defendant with HSBC – hence the present application.

Discussion

6.Section 21 of the Evidence Ordinance, Cap. 8, empowers a plaintiff to apply for an order to inspect and take copies of any entries in a banker’s record for any purposes of proceedings.  Strictly speaking, the bank in question need not be a party to the proceedings.  As observed by Deputy High Court Judge Keith Yeung SC (as he then was) in Akbank T.A.S. v Mainford Limited & Ors [2018] HKCFI 363 at paragraphs 5 to 8, it is clear from the wording of section 21(2) that there is no statutory prerequisite for an application pursuant to section 21 to be served on the account holder, although it will no doubt be fairer to serve an application under section 21 upon the person whose account is to be inspected.  In the usual circumstances, it would obviously be desirable (if not essential) that the banks be served to safeguard the relevant interests (including consideration as to privacy).  In the present case, as mentioned above, both SCB and HSCB have been notified of the application, and they sought to be excused from the hearing of the present application.

7.The relevant principles guiding the exercise of the Court’s discretion in granting a banker’s books order have been set out in Golden Brothers Inc v Medicare Asia Limited (unreported, HCA 2590/2016, 14 October 2016, Zervos J (as he then was)).  Such principles have been applied in other Hong Kong cases (see e.g. Hwang Joon Sang & Anor v Golden Electronics Inc & Ors [2021] 2 HKLRD 87, Coleman J), which I need not repeat here.  I would respectfully adopt the summary by Coleman J at paragraphs 8 to 10 of his judgment as follows:

“8. The primary purpose of a discovery order made under section 21 of the EO is to preserve the assets or property which might otherwise be dissipated notwithstanding an injunction not to do so. Though the court will not lightly use its powers to order disclosure of full information touching the confidential relationship of banker and customer, such an order may be justified where the plaintiff seeks to trace funds which, in equity, belong to it and of which there is strong evidence that it has been fraudulently deprived, where delay might result in the dissipation of the funds before trial.

9. There are three limits to the exercise of the power, being: (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) where documents are required to be disclosed, the third party should be entitled to the same specificity in the documents he is asked to produce as he would be if served with a subpoena; and (3) even if the application prima facie falls within the principle for disclosure, the court needs to balance the potential advantage of disclosure against the detriment to the person against whom the order is sought, not merely in terms of costs (for which he is ordinarily compensated on an indemnity basis by the terms of the order) but by way of invasion of privacy and requiring breach of obligations of confidence owed to others.

10.  Further, the plaintiff is ordinarily required to give an undertaking that whatever information is obtained would be used only for the purposes of the action to trace the funds, and not for any other purpose.”

8.Further, I take note that in Pacific King Shipping Holdings Pte Ltd v Huang Ziqiang [2015] 1 HKLRD 830, Poon J (as he then was), giving the judgment of the Court of Appeal, held that if a case falls within the well-established principles, the court would not hesitate in ordering disclosure against a third party bank.  In a similar vein, the plaintiff’s solicitors drew my attention to the observation made by Deputy High Court Judge Keith Yeung SC (as he then was) in Akbank T.A.S. v Mainford Limited & Ors (supra) at paragraph 16 that, Hong Kong being an international city, the law should be facilitative but not obstructive when a victim of a cybercrime comes to our courts for lawful redresses against the true culprits.

9.I have read the various Affirmations of Mr Fukura, and the affirmation of service filed in support.  I have heard submissions made by Ms Lam on behalf of the plaintiff.  I note the scale of the fraud, the amount of the Lost Funds at stake, and the close proximity in time between the transfers of the Lost Funds and the further transfers (or dissipations) to various other bank accounts.  I take a cautious approach, and note further that the courts have previously granted disclosure orders and a proprietary and Mareva Injunction in favour of the plaintiff, and the present application arises out of information discovered as a result of such disclosure orders, which necessitate further disclosure to complete the tracing exercise.  All in all, the information sought is clearly relevant to the fundflow of the proceeds of the fraud.  On the facts of this case, the balance tips clearly in favour of granting the order sought and I am satisfied that an order in terms of the summons sought (with minor modifications) ought to be made. 

10.The plaintiff’s summons seeks an order for disclosure by SCB and HSBC within 28 days from the date of the order.  HSBC has requested for a longer timeframe of 35 days, which is amenable to the plaintiff.  SCB has not indicated any objection to the period of 28 days sought.  In the circumstances, I accede to the timeframe of 35 days and 28 days respectively for HSBC and SCB as proposed by the plaintiff’s solicitors.  In order to allow for flexibility, I also add the alternative of such extended period as may be agreed in writing between the plaintiff and the respective banks.  This is not to suggest that the banks should delay in complying with the order because, unless the plaintiff otherwise agrees in writing and in the absence of a court order granting extension of time, the time limit remains applicable and must be duly complied with.

11.The plaintiff’s solicitors further submit that, if the court is minded to grant the banker’s book order, the court should exercise its discretion to allow the plaintiff to use the banking information obtained from the disclosure for the purpose of investigations and pursuing tracing and recovery actions in such jurisdictions as the monies concerned are to be found.  I agree.

12.I also agree that the costs of the present application should be in the cause.

13.It remains for me to thank Ms Lam, solicitor for the plaintiff, for her submissions and assistance rendered to the court.

Ms Lam Choi Yuk of Oldham, Li & Nie, for the plaintiff

The 1^st defendant and the 9^th defendant were not represented and did not appear

The third parties, Standard Chartered Bank (Hong Kong) Limited and the Hongkong Shanghai Banking Corporation Limited, were not represented and did not appear