P v. D1 and Others

HCMP 1085/2022

[2022] HKCFI 3644

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1085 OF 2022

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DECISION

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1.This is the plaintiff’s application for Norwich Pharmacal relief against the 1^st, 2^nd and 3^rd defendants for disclosure of information and documents relating to accounts maintained in Hong Kong.

A.  THE RELEVANT BACKGROUND

2.According to the plaintiff:

(1)  the plaintiff is a company incorporated in the Bahamas, has its principal place of business in Houston, Texas, and is in the business of marketing and distribution of plastics and chemicals;

(2)  AD was organised under the laws of Indonesia, has its principal place of business in Bekasi, Indonesia, and is in the business of producing oleochemicals derived from palm oil and coconut oil;

(3)  on 4 May 2009, the plaintiff obtained an arbitration award against ADTN (a trading name of AD) granting a total sum of US$6,133,800 plus interest at the rate of 5% per annum (“the Award”);

(4)  on 9 January 2010, the Award was confirmed by the United States District Court for the Southern District of Texas, Houston Division;

(5)  on 10 May 2010, the Award was registered in Indonesia through a Deed of Registration (“Indonesian Registration”);

(6)  after various attempts on the part of AD to challenge the validity of the Indonesian Registration, on 28 November 2014, the Supreme Court upheld the Indonesian Registration;

(7)  thereafter, the plaintiff started enforcement proceedings before the Central Jakarta Court to enforce the Award and the Indonesian Registration against AD/ADTN;

(8)  for a period of over 11 years, AD has successfully and wilfully evaded any attempts by the plaintiff to enforce the Award and has not voluntarily made any payments to the plaintiff under the Award, and AD has been able to avoid enforcement of the Award by the following means: (a) making spurious and unmeritorious arguments on multiple occasions that it is a different legal entity than that which the Award is against, notwithstanding the substantial amount of evidence proving otherwise and the numerous Indonesian court decisions rejecting such arguments; (b) obstructing and provoking the plaintiff’s lawyers and the court Bailiffs on several occasions during the plaintiff’s attempts to enforce the Award and Indonesian Registration through court enforcement orders; (c) making public announcements through Indonesian newspapers that AD had requested the Supervisory Board of the Supreme Court to investigate court orders made by the Indonesian courts; (d) making an unsubstantial criminal complaint against the plaintiff’s lawyers;

(9)  in January 2021, the plaintiff obtained third party discovery in the United States in order to aid its enforcement proceedings in Indonesia and elsewhere, and the discovery prima facie showed amongst other things that (a) 9 payments from a Hong Kong company by the name of PTTL (“PT”) from its Hong Kong bank account held at the 1^st defendant to one of several bank accounts held by AD in Indonesia, (b) 11 payments from a Taiwanese entity called CH to a Hong Kong bank account held at the 2^nd defendant ostensibly in the name of ADTNL using a bank account (maintained with the 2^nd defendant), (c) 7 payments from PT’s Hong Kong account held at the 3^rd defendant to one of several bank accounts held by AD in Indonesia; and (d) 6 payments made by AD to a Hong Kong account held at HSBC by the 4^th defendant.

3.On 4 August 2022, upon an ex parte application of the plaintiff, Mimmie Chan J made a gagging order against all 4 defendants until the hearing of the plaintiff’s Originating Summons to be issued or further order of the court.

4.On 9 August 2022, the plaintiff filed the Originating Summons herein seeking amongst other things Norwich Pharmacal relief.

5.On 22 September 2022, Mimmie Chan J amongst other things gave leave to the 2^nd defendant to file affirmation evidence, gave the parties liberty to set down the Amended Originating Summons for argument, and continued the gagging order until the adjourned hearing of the Amended Originating Summons or further order of the court.

B.  THE DEFENDANTS’ RESPECTIVE POSITIONS

6.The 1^st defendant has indicated that it takes no stance on the plaintiff’s application and that it would not file the Acknowledgement of Service and would not attend the hearing.

7.The 2^nd defendant has filed an affirmation and full skeleton submissions to oppose the orders sought in the plaintiff’s application.

8.The 3^rd defendant has filed short submissions to indicate that it would not oppose to the terms of the Amended Originating Summons in the event that the court is satisfied that the plaintiff has proved its case.

9.The plaintiff and the 4^th defendant have agreed certain orders and the court is therefore not concerned with the plaintiff’s application against the 4^th defendant.

C.  PLAINTIFF’S APPLICATION

10.It is well-established and undisputed between the parties that where innocent parties are caught up or have become involved in the tortious or wrongful activities of others, the court may order by virtue of Norwich Pharmacal relief that such innocent persons come under a duty to assist the victim of the tort or wrongful activities, by the provision of full information even though such innocent persons cannot be shown or incur any personal liability at that stage: A Co v B Co [2002] 3 HKLRD 111 at §10 (Ma J).

11.The plaintiff contends that (1) it is the award creditor and its attempts to enforce the Award have been continually frustrated by AD in Indonesia by conduct which can be described as wilful evasion of the Award, (2) through recent discovery obtained in the United States, AD has been conducting business in Hong Kong and is likely to also have established a bank account and potentially corporate vehicles in Hong Kong and (3) there is a very real possibility that AD has restructured its affairs to avoid enforcement and payment of the Award and the defendants have thus become innocent parties mixed up in the conduct of AD.

12.In the affirmation filed on behalf of the plaintiff to support the application, it is said that the plaintiff requires the information sought in order to (1) ascertain whether there may be any assets in Hong Kong which the plaintiff may be able to enforce against, (2) identify any other potential enforcement targets either in or outside of Hong Kong, and (3) identify parties that may be connected with AD (such as customers or business entities established inside or out of Hong Kong) who may lead to further avenues of information and/or enforcement.

C1.  The 2^nd defendant

13.The 2^nd defendant has filed affirmation evidence and full skeleton submissions to oppose the plaintiff’s application for Norwich Pharmacal relief against it.  Its evidence discloses that (1) it owes a duty of confidentiality to its customers, (2) the bank account identified by the plaintiff in the Amended Originating Summons maintained at the 2^nd defendant is held by an entity called “ADTNL” (“D2 Account Holder”), which was not incorporated in Indonesia or the United States, and at a time much later than the date of the Award, (3) no corporate personnel in the name of Mr AK (the President and a director of AD) or Mr MB (a director of AD) was revealed in its records.

14.The effect of the evidence adduced by the 2^nd defendant is therefore that the D2 Account Holder is not the same entity as AD.  I do not believe the plaintiff has adduced sufficient evidence to rebut this.  Nor do I think there is sufficient basis for the court to currently make an inference that AD and the D2 Account Holder are one and the same.

15.In order to invoke the Norwich Pharmacal jurisdiction, the plaintiff must establish that the 2^nd defendant is caught up or have become involved in the tortious or wrongful activities of others.  The plaintiff has submitted that the relevant wrongful activities are AD’s wilful evasion of the enforcement of the Award in Indonesia.  On the basis of the evidence adduced by the plaintiff, I think there is sufficient cogent and compelling evidence that AD has been committing wrongful activities in Indonesia as alleged.

16.However, the difficulty faced by the plaintiff is to establish a connection between the 2^nd defendant and the alleged wrongful activities such that it can be said that the 2^nd defendant is caught up or have become involved in such wrongful activities of AD.  If no bank account of AD is maintained by the 2^nd defendant and the D2 Account Holder is not AD (which is supported by the 2^nd defendant’s evidence), it seems to me that some additional evidence would need to be adduced by the plaintiff in order to suggest a connection that the D2 Account Holder has been involved in the alleged wrongful activities of AD.  The 2^nd defendant is of course not obliged to adduce any evidence on the background of the D2 Account Holder given its duty of confidentiality owed to its customers.

17.At the hearing, I understood from Mr Arthur that the plaintiff has no evidence to suggest that the Taiwanese entity (CH) from which 11 payments were made to the D2 Account Holder is connected to AD.  Even though Mr Arthur asked the court to infer that the D2 Account Holder is a wholly or partially owned subsidiary of AD (by virtue of their similarity in name), I do not believe this would provide a sufficient basis for the inference to be made that there is a connection between the D2 Account Holder and the AD’s alleged wrongful activities in Indonesia: a related company of a wrongdoer may or may not be involved in the wrongdoer’s activities.  The plaintiff has not made out a case that the court should disregard the separate corporate personality of different companies (i.e. to lift the corporate veil) for this purpose.

18.If there is no sufficient basis to suggest that the D2 Account Holder has been involved in the alleged wrongful activities of AD, then it follows that there is no basis to contend that the 2^nd defendant has been caught up or have become involved in the tortious or wrongful activities of others.

19.For these reasons, I am not satisfied that I should grant the Norwich Pharmacal relief sought against the 2^nd defendant.

20.For the sake of completeness, I should mention certain observations made by Jacobs J in Arcelormittal USA LLC v Essar Steel Ltd [2019] 2 All ER (Comm) 414, an authority cited by the plaintiff.  In §159, Jacobs J said:

“… I consider that in principle the court can make orders for the provision of information in aid of enforcement of a judgment in circumstances where there is evidence that a judgment debtor has taken steps to dissipate his assets or attempt to make himself judgment-proof. In view of the decisions in [R (on the application of Omar) v Secretary of State for Foreign and Commonwealth Affairs [2013] 1 All ER 161] and [Ramilos Trading Ltd v Buyanovsky [2016] 2 CLC 896], I am not persuaded that it would be appropriate to make such orders where the sole purpose was to facilitate enforcement proceedings abroad. However, in the present case there exists a different reason for making the orders sought, namely to support and make effective the WFO which the court has granted …”

21.In this passage, it appears that Jacobs J indicated that he would not as a matter of principle have granted the Norwich Pharmacal orders on the ground that the information was being sought for the sole purpose of facilitating enforcement abroad.  However, given that I have not received full submissions on the effect of the above passage, I express no view on the observations made by Jacobs J.  My decision to refuse Norwich Pharmacal relief against the 2^nd defendant is therefore entirely based on the reasons as set out in paragraphs 13 to 18 above.

22.Finally, it is right for me to comment on the approach taken by the 2^nd defendant to oppose the present application.  Apart from adducing very limited evidence on the identity of the D2 Account Holder, the 2^nd defendant and its legal representatives have seen fit to advance a number of extensive submissions and arguments (including those relating to the enforceability of the Award in Hong Kong and whether the enforcement of the Award is time-barred) to positively oppose the granting of Norwich Pharmacal relief, on which I derived no assistance. In my view, the 2^nd defendant has acted beyond its duty of preserving the confidentiality of its customers in opposing this application. This will be relevant to the question of costs to be dealt with at the end of the decision.

C2.  The 1^st and 3^rd defendants

23.The plaintiff acknowledges that its application for Norwich Pharmacal relief against the 1^st and 3^rd defendants is not as strong as that against the 2^nd defendant, and accepts that PT (which maintains accounts with both the 1^st and 3^rd defendants) on the face of it is simply trading with AD.  However, the plaintiff has submitted that the court should infer that PT “is somehow involved in AD’s Hong Kong business operations”.  I do not consider that there is sufficient basis to infer that PT has been involved in AD’s alleged wrongful activities.  It has been held that a company doing business with a judgment debtor is too remote to be considered sufficiently involved to justify Norwich Pharmacal relief: NML Capital Ltd v Chapman Freeborn Holdings Ltd [2013] 1 CLC 968 at §30 (Tomlinson LJ).

24.Accordingly, I also decline to accede to the plaintiff’s application to grant Norwich Pharmacal relief against the 1^st and 3^rd defendants.

D.  DISPOSITION

25.For the reasons given above, I dismiss the Amended Originating Summons as against the 1^st, 2^nd and 3^rd defendants.  I also discharge the gagging order made by Mimmie Chan J dated 4 August 2022 as against the 1^st, 2^nd and 3^rd defendants.

26.If the person giving the disclosure is not himself a wrongdoer, the plaintiff would normally have to indemnify him against his costs incurred in assisting him in an application for Norwich Pharmacal relief.  It follows that where the plaintiff’s Norwich Pharmacal application fails, the costs of the non-wrongdoer respondent should be paid by the plaintiff on an indemnity basis.  Accordingly, I make an order nisi that the 1^st and 3^rd defendants’ costs incurred in the Amended Originating Summons are to be paid by the Plaintiff on an indemnity basis to be taxed if not agreed.

27.As far as the costs of the 2^nd defendant are concerned, I repeat what I said in paragraph 22 above regarding the arguments and submissions which have been inappropriately advanced by the 2^nd defendant to oppose the plaintiff’s application.  I consider that the plaintiff should not be responsible to bear a large bulk of the 2^nd defendant’s costs.  Looking at the matters in the round, I make an order nisi that 25% of the 2^nd defendant’s costs incurred in the Amended Originating Summons are to be paid by the Plaintiff on an indemnity basis to be taxed if not agreed.

Mr. Randall Ivan Arthur & Mr. Phillip Loukis Georgiou, of Messrs. Georgiou Payne Stewien LLP for the Plaintiff

1^st Defendant (China Citic Bank International Limited), absent

Ms. Chow Po Yee of Messrs. Yu, Chan & Yeung for the 2^nd Defendant

Mr. Liu Chung Yin Terry of Messrs. Tang & So for the 3^rd Defendant