Schutz, Gilles Yves Rene v. Hai Cloud Exchange (HK) Ltd

HCMP 2258/2020

[2023] HKCFI 387

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2258 OF 2020

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BETWEEN

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D E C I S I O N

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A. INTRODUCTION

1.By a summons of 24th May 2022 (“the Summons”), the Plaintiff seeks leave to use the documents and information disclosed pursuant to the order of DHCJ Jin Pao SC of 27th January 2021 and Linda Chan J dated 18th March 2021 (“the Documents”) to bring actions or claims against the Defendant or its employees overseas.

2.The Defendant opposes the Summons on the grounds that (1) it is an abuse of process, and (2) the intended action in the French courts for which the Documents would be used is bound to fail.

B. THE BACKGROUND

3.Unless otherwise indicated, the following is not disputed or otherwise incontrovertible.

B1. The Four Payments

4.The Defendant is a money service operator. It provides remittance services to its customers through an account it holds with DBS (Hong Kong) Limited (“DBS”). Within the bank account, the Defendant allocates sub-accounts to customers through which they can remit or transfer funds. One such sub-account was held by its customer Wenzhou Kuwen Electronic Commerce Co Ltd (“Wenzhou Kuwen”).

5.The Plaintiff met a person who introduced herself as “Jin Xin” via a dating website, and was persuaded by her to make four payments of funds (“the Four Payments”), either from his own personal account or the accounts of two companies owned by him and his wife (“BLC” and “PR”), to the Defendant’s account held with DBS in respect of Wenzhou Kuwen (“D’s Account”). Jin Xin had earlier persuaded the Plaintiff to open an investment account with a company which was purportedly regulated in Australia. The Plaintiff made the Four Payments under the belief that the funds would be transferred to the investment account to conduct online forex trading transactions on his behalf.

6.The Four Payments were as follows.

6.1 On 24th March 2020, the Plaintiff transferred 10,000 euros from his personal account to D’s Account.

6.2 On about 1st April 2020, the Plaintiff transferred 400,025 euros from his personal account to D’s Account.

6.3 On about 8th April 2020, the Plaintiff transferred 200,025 euros from the account of BLC to D’s Account.

6.4 On about 9th April 2020, the Plaintiff transferred 200,188.19 euros from the account of PR to D’s Account.

7.The Plaintiff discovered that he had been the victim of fraud in about May 2020. The matter was reported to the police in June 2020.

B2. Communications with the Defendant

8.The Plaintiff’s solicitors, Messrs ST Cheng & Co (“STC”), wrote to the Defendant on 5th June 2020, informing it that the Plaintiff had been induced by fraud to make the Four Payments into D’s Account, and demanding the return of the total amount.

9.The Defendant’s solicitors, Messrs Ashurst (“Ashurst”), replied on 10th June 2020, explaining that the Defendant received the funds in the course of its business as a money service operator. They were held for the benefit of a customer and could not simply be returned. The Defendant would likely take a neutral stance in the event that the Plaintiff was to seek court orders. The Defendant had also taken steps to preserve the status quo regarding funds held by it for the account of the customer on whose behalf the transfers had been made.

10.The Plaintiff’s French solicitors, Messrs SRDB (“SRDB”), wrote to Ashurst on 22nd July 2020, repeating the demand for return of the funds, and also indicating that it had received instructions to investigate whether the Defendant had complied with all legal and regulatory requirements relating to anti-money laundering.

11.Ashurst sent a letter of 31st July 2020 in reply, denying that the Defendant had been unjustly enriched by reason of the Four Transfers. It further explained that it would be a breach of duty for the Defendant to disclose documents relating to the Four Payments, but that in the event that a Norwich Pharmacal application were made, the Defendant would likely take a neutral stance. In response to SRDB’s indications regarding anti-money laundering regulations, Ashurst said that the Defendant was aware of its obligations, and pointed out that they were enforced by the relevant regulators, and did not give rise to legal duties directly owed to the Defendant.

12.On the same day, Mr Georges Sioufi, a partner of SRDB, called a partner at Ashurst, and threatened that if settlement could not be achieved, he had full authority to take other action which, amongst other things, would involve “going to the media, making complaints to regulators and commencing civil proceedings”.

13.Ashurst put the contents of the telephone call on record in its letter of 13th August 2020 and repeated that the Defendant received funds on behalf of its customers and not for its own account; accordingly, it was not liable to the Plaintiff. It repeated that the Defendant was aware of its obligations regarding anti-money laundering regulations.

14.STC wrote on 25th August 2020 reserving the Plaintiff’s rights to take further action. It did not deny Mr Sioufi’s telephone call. It noted the Defendant’s position regarding the compliance or non-compliance of regulations (presumably a reference to the anti-money laundering regulations).

B3. The Norwich Pharmacal application

15.On 8th December 2020, the Plaintiff applied for discovery against the Defendant, seeking documents and information relating to (inter alia) the Four Payments, the payment out of the Four Payments from D’s Account, and the identity of the persons authorised to give instructions in relation to the Four Payments.

16.The originating summons indicated that the application was made pursuant to RHC O.24 r.7A, in other words, against the Defendant as a form of pre-action discovery. However, the supporting affidavit stated that the application was to seek Norwich Pharmacal relief.

17.By a letter of 22nd December 2020, Ashurst pointed out that the Defendant had indicated that it would take a neutral stance towards any Norwich Pharmacal application, but the Plaintiff’s application was expressed to be made under O.24 r.7A(1). It asked for clarification as to the relief being sought by the Plaintiff. It also proposed various amendments to the orders being sought by the Plaintiff. One of these was an inclusion of an express prohibition on the use of the documents and information obtained to commence proceedings against the Defendant.

18.STC replied on 4th January 2021, confirming that the Plaintiff’s summons sought Norwich Pharmacal relief. It added a caveat that “Nevertheless, this shall not be construed as [the Plaintiff’s] waiver or release of [the Defendant] from any further claims or actions should it [be] further discovered that [the Defendant] shall be held liable to [the Plaintiff]”. It enclosed a draft consent summons for disclosure, without any prohibition on the use of the documents and information obtained to commence proceedings against the Defendant.

19.By a letter of 14th January 2021, Ashurst asked the Plaintiff to reconsider his position regarding the use of the documents and information.

20.By a letter of 21st January 2021, STC stated that the Plaintiff did not accept the Defendant’s request to waive further claims or action against the Defendant.

21.The Plaintiff obtained Norwich Pharmacal relief in relation to the two payments made from his personal account pursuant to the order of DHCJ Jin Pao SC of 27th January 2021, and in relation to the two payments made from BLC’s and PR’s account pursuant to the order of Linda Chan J dated 18th March 2021. (Consideration of the latter two payments was deferred by DHCJ Jin Pao SC to enable the Plaintiff to file evidence to show his entitlement to the funds made from the companies’ accounts.)

22.At the hearing before DHCJ Jin Pao SC, the Plaintiff had submitted that the discovery sought would facilitate the tracing and recovery of the Four Payments or their proceeds. The skeleton filed for the Plaintiff stated that “An order in the terms of the Summons would have the effect of facilitating the tracing and recovery of monies against the fraudster” and that “…the order sought in this application will reap substantial and worthwhile benefits for P in that it will enable P to take steps to trace and preserve money or traceable proceeds emanating from the four payments.”[1] The Plaintiff also reserved his rights to proceed against the Defendant. The order eventually made by the court prohibited the Plaintiff from using the Documents to bring actions or claims against the Defendant or its employees without further leave of the court. The order made by Linda Chan J contained a similar prohibition.

B4. Subsequent events

23.The Defendant provided documents and information on a number of occasions in February, March and April 2021. The last batch of documents was provided on 15th April 2021.

24.Two weeks later, on 29th April 2021, the Plaintiff instructed counsel to advise on whether the Defendant was in breach of any Hong Kong laws, regulation or guidelines, and in particular, those related to anti-money laundering requirements.

25.On 31st May 2021, counsel provided a written opinion, expressing the view that whilst the Defendant had not breached any money-laundering regulations in relation to the opening of D’s Account, there was a strong case that the Defendant was in breach of money-laundering regulations as there were three “red flags” which ought to have alerted it into taking further steps in discharge of its duty to monitor Wenzhou Kuwen’s transactions:

25.1 the Defendant was, at some point in time, in possession of both bank documents which suggested that the Four Payments were made for forex trading transactions, and contractual documents which suggested that the Four Payments were made for purchase of goods (masks);

25.2 the Defendant had WeChat records regarding the goods but they were inadequate in various aspects, for example in failing to mention the model, quantity or selling price of the goods;

25.3 the Defendant had copies of two of the contracts for which the signature for BLC and PR was not that of an individual but a mere handwritten form of the company’s name.

26.However, the Plaintiff was also (separately) advised that a breach of the anti-money laundering regulations did not give rise to a cause of action against the Defendant under Hong Kong law.

27.On 8th April 2022, almost a year later, the Plaintiff obtained an opinion from a French legal expert (“Prof Delebecque”). Prof Delebecque opined that the Plaintiff could bring proceedings against the Defendant in a French court; the applicable law ought to be Hong Kong law; however, Hong Kong law could be disapplied as it was contrary to French public policy, and French law applied instead. Under French law, any person who suffered damage by reason of a fault was entitled to compensation; Hong Kong law deprived the Plaintiff of compensation; Hong Kong law was therefore contrary to French public policy.

28.The Plaintiff then issued the Summons of 24th May 2022.

29.All along, no action has been taken to pursue Wenzhou Kuwen or any onward recipients of the Four Payments.

C. THE PRINCIPLES

30.It is not disputed that the court has jurisdiction to grant Norwich Pharmacal relief in aid of potential foreign proceedings: Manufacturer’s Life Insurance Co of Canada v Harvest Hero International Ltd & others [2002] 1 HKLRD 828 at [12] to [17].

31.It is also not disputed that whether or not to release a party from the undertaking given on the grant of a Norwich Pharmacal order is discretionary.

32.The rationale underlying the (implied) undertaking not to use documents obtained on discovery or pursuant to a court order for a collateral purpose was explained in Halcon International Inc v The Shell Transport and Trading Co [1979] RPC 97 at 121.

“…But it is in general wrong that one who is thus compelled by law to produce documents for purposes of particular proceedings should be in peril of having these documents used by the other party for some purpose other than the purpose of those particular legal proceedings and, in particular, that they should be made available to third parties who might use them to the detriment of the party who has produced them on discovery. And there is the further, practical, reason which has been stressed recently in the case of Riddick v. Thames Board Mills Ltd. [1977] 1 Q.B. 881, by the Master of the Rolls, Lord Denning: that it is important, for the administration of justice, that there should not be a disincentive to parties to make proper discovery, so that they are minded to hold back, and seek to avoid the disclosure of documents which may tell against themselves in litigation. One substantial disincentive would be if there was the danger that those documents, being disclosed, might be used for purposes outside the purposes of the particular action.”

33.Where a party seeks to be released from the undertaking, he has to demonstrate cogent and persuasive reasons as to why a release should be given. Each case turns on its own facts and no general principle can be formulated beyond stating that the court will not release or modify the implied undertaking save in special circumstances and where the release or modification would not occasion injustice to the person giving discovery. See Secretary for Justice v Florence Tsang Chiu Wing (2014) 17 HKCFAR 739 at [23].

34.Where a party seeks to be released from an undertaking in order to use the documents in a proposed action, the court would refuse leave if the proposed action was bound to fail or be struck out. It would otherwise not be appropriate to try to gauge the strength of the proposed action in order to decide whether or not to give leave to use the discovered documents for the purposes of that action – if an action was not an abuse of process or obviously unsustainable then prima facie a party was entitled to prosecute it. However, whether leave should be granted for the purposes of that action would depend on the nature of the first action, the circumstances in which discovery was given and the nature of the proposed new action. See Sybron Corporation and anor v Barclays Bank plc [1985] 1 Ch 299 at 326F-H.

D. WHETHER COGENT AND PERSUASIVE REASON SHOWN FOR RELEASE FROM UNDERTAKING

35.Counsel for the Plaintiff, Mr Kevin Lau, says[2] that the Plaintiff’s application is premised on the fact that disclosure of the Documents has enabled his lawyers to identify a feasible cause of action in the French courts, which was not previously known about. Mr Lau relies heavily on IFT SAL Offshore v Barclays Bank plc [2020] EWHC 3125 (Comm) as being “on all fours” with the present case and therefore a precedent for the grant of leave. In IFT SAL Offshore, leave was granted to the claimant, a victim of fraud, to use documents obtained from Barclays Bank in a Norwich Pharmacal application to bring proceedings against the bank. The court was satisfied that the claimant had demonstrated cogent and persuasive reasons for leave as (a) the claimant had no reason to believe that it had a case against the bank when it originally applied for Norwich Pharmacal relief, but the disclosed documents showed that there might in fact be a case, and (b) it had become clear that there was no realistic prospect of recovery from the fraudster, or tracing of the monies. In other words, the circumstances had changed in these two respects. The claimant also submitted that it was in the public interest that it should be able to pursue its claim, and that there be prevention and detection of fraud (by banks).

36.I do not read IFT SAL Offshore as seeking to lay down any criteria as to when leave ought to be given to depart from an undertaking not to use documents for a collateral purpose. Accordingly, whether or not the case is “on all fours” with the present is not the question which I should consider. In any event, as explained below, I do not consider that the case is “on all fours” with the present.

37.I come back to the reason put forward by the Plaintiff as being a cogent and persuasive one for release from his undertaking, namely, that he has identified a cause of action in the French courts not hitherto known of. In the circumstances of the present case, I am not persuaded that this is a cogent and persuasive reason.

37.1 The Plaintiff’s Norwich Pharmacal application was put forward to the court on the primary basis that it would enable the tracing and preservation of the Plaintiff’s money or its proceeds, and recovery against the fraudster. The court must have granted the orders for disclosure on this basis.

37.2 Yet it appears that the Plaintiff has not used the Documents obtained to carry out tracing and preservation of the Four Payments or their proceeds. No adequate explanation has been given for this. In oral submissions, Mr Lau said that on the basis of the available information, it seemed that “all the money has gone”. As to this, I have the following observations.

37.2.1 First, from the bank statements which Mr Lau referred to at the hearing before me, the balance of D’s Account at the time withdrawals were made was redacted, and other transactions for the account were redacted, so that it would not have been possible to apply the rules of tracing to establish what had become of the Four Payments. Indeed, Mr Lau at the hearing said that given that the DBS bank statements relating to D’s Account contained redactions, it was not possible to analyse the mixing of the funds. He also said that the Plaintiff did not even know, until the Defendant’s evidence in opposition to the current application,[3] that funds remained in D’s Account (as at the date of the evidence). It is therefore not clear to me how it can be determined from the Documents that all the money has gone.

37.2.2 Second, there is no evidence from the Plaintiff to say what, if any, tracing analysis has been carried out, and how the Plaintiff concluded that all the money has gone. It was said that legal advice sought by the Plaintiff as to his options was subject to privilege. However, matters such as the tracing of the Four Payments are simply factual, and could have been explained without reference to legal advice.

37.3 Nor, apparently, has the Plaintiff taken any other steps against the fraudster, or alleged subsequent recipients of the Four Payments, including the commencement of proceedings. As Miss Astina Au, counsel for the Defendant, pointed out, even if a proprietary claim might not be possible, there would nevertheless be a personal claim against the fraudster; proceedings could have been instituted against Wenzhou Kuwen, default judgment could likely have been obtained, and enforcement action been taken against D’s Account by way of garnishee proceedings. Again, the Plaintiff has not provided an adequate explanation of why such steps have not been taken, bearing in mind that the representation made to the court was that the Documents were sought for the purpose of seeking remedies against the fraudster and subsequent recipients.

37.3.1 In response to the Defendant’s evidence which alleged that the Plaintiff did not appear to have any real intention of pursuing the fraudster, the Plaintiff in his reply evidence only stated in rather general terms[4] that (1) he was advised that further investigations could be conducted in respect of various entities or individuals[5] as to whether there were causes of action against them, and (2) “upon advice to consider factors including (i) the jurisdictions in which the entities were formed / resident(s); (ii) the lapse of time; (iii) the cost-effectiveness; (iv) the need to avoid double recovery; and (v) the likelihood of enforcing any judgment obtained, [the Plaintiff] decided to, at that stage, take inter alia the actions [of seeking advice as to whether there was a cause of action against the Defendant], and not to institute proceedings against the entities / individuals named [above] yet”. In oral submissions, Mr Lau said that there would be difficulties in serving Wenzhou Kuwen in the mainland, but it appears that the Plaintiff has not even attempted to do so. In any event, there are established mechanisms for service of defendants in the mainland, which are regularly used by litigants. As to lapse of time, the Plaintiff would already have known by the time of his Norwich Pharmacal application that substantial time had elapsed since the making of the Four Payments. Similarly, regarding enforcement, whilst Mr Lau orally submitted that there was “no information” as to whether the possible defendants were “good for the money”, the lack of information would have been known by the time of the Norwich Pharmacal application. No explanation has been given as to what the considerations of “cost-effectiveness” and “the need to avoid double recovery” were, let alone how they justified not taking proceedings against the fraudster or subsequent recipients.

37.3.2 It was said that advice as to actions against other defendants was both irrelevant and privileged. In my view, on an application to use information obtained on a Norwich Pharmacal application for collateral purposes, it must be relevant for the court to consider what use has been made of the information in relation to the original purpose for which the information was sought. The Plaintiff could surely have given particulars as to what use was made of the information without disclosing privileged legal advice – for example, in relation to what (if any) tracing exercise was conducted.

37.3.3 Whilst it is right to observe that the Plaintiff did at the time of the Norwich Pharmacal hearing indicate that he reserved his rights to take action against the Defendant (and therefore refused to consent to an undertaking not to commence proceedings against the Defendant), the Plaintiff’s primary basis for asking for the Documents was that he sought to use them to pursue the fraudster.

38.In other words, in circumstances where the Plaintiff has not adequately explained why he has not used the Documents for the original purpose stated, I am not persuaded that he should be given leave to use the Documents instead for his intended collateral purpose. It is to be remembered that Norwich Pharmacal relief is “extraordinary”, “not a usual order” and “not one that a court would lightly grant in the absence of powerful factors” (per Ma J, as he then was, in A Co v B Co [2002] 3 HKLRD 111 at [12]). In my view, if an applicant seeks to use the information obtained on a Norwich Pharmacal application for a purpose different from the one originally represented to the court as being the primary purpose for which it was sought (and which purpose formed the basis of the court’s order for disclosure) it behoves him to give a proper explanation as why he no longer seeks to pursue that purpose and to use the information for another purpose instead. It is not sufficient to say that the details are the subject of legal professional privilege and that in any event they are not relevant.

39.In ITF SAL Offshore, in contrast to the present case, the evidence was that it had become clear that there was no realistic prospect of recovery from the fraudster, or tracing of the claimant’s monies, despite proceedings taken by the claimant (see [10(ii)]); the original purpose for which the Norwich Pharmacal order had been granted could no longer be realistically pursued. This change of circumstances (together with the change of circumstances in the realisation that there was in fact an arguable case against Barclays) constituted a cogent and persuasive reason as to why the claimant should be allowed to use the information obtained for the different purpose of pursuing Barclays.

40.The claimant in ITF SAL Offshore further argued that there was a public interest element in being allowed to pursue its claim against Barclays. The respondent submitted that there was a countervailing public interest in deterring speculative cases brought against banks. The court was not persuaded by the respondent’s argument as it considered that speculative claims would more appropriately be deterred by the striking out of any hopeless claims brought against banks, with a judgment being given, if necessary by the Supreme Court, so as to establish a precedent to deter other potential claimants. This would not be possible in the present case, at least not in the courts of Hong Kong, as the Plaintiff’s intended claim is in the courts of France.

41.Miss Au advanced submissions in relation to the Plaintiff’s lack of action against the fraudster under the rubric of abuse of process, it being said that the Plaintiff had in fact all along intended to pursue the Defendant, and dressed up what was in essence an application for pre-action discovery as a Norwich Pharmacal application, thus depriving the Defendant of the opportunity to properly oppose the application under RHC O.24 r.7A. It seems to me that even before one comes to the question of whether the Defendant has established a positive case of abuse of process (such as to disable the Plaintiff from obtaining a release from his undertaking), there is the prior question of whether the Plaintiff has shown a cogent and persuasive reason for the release in the first place. In my view, the Plaintiff has not discharged this burden.

E. ABUSE OF PROCESS

42.I consider that it does not assist in the determination of the Summons, nor indeed is it possible, to go on to decide (a) whether or not the Plaintiff all along intended to sue the Defendant, (b) whether the Plaintiff ought therefore to have sought disclosure under O.24 r.7A instead of under the Norwich Pharmacal procedure, and (c) what prejudice the Defendant has suffered as a result of the Plaintiff’s failure to proceed under O.24 r.7A. These points formed the crux of Miss Au’s submission that the Plaintiff had abused the Norwich Pharmacal procedure.[6]

43.It does not seem to me possible to determine whether or not the Plaintiff all along intended to sue the Defendant. The Defendant alleges that the Plaintiff “never” had the intention to pursue the fraudsters.[7] The Plaintiff says[8] that he was simply keeping his options open and that pursuit of the Defendant was always one possibility considered, but it was uncertain what proceedings might actually be taken in the light of the discovery to be provided by the Defendant. This is not an issue of fact that can be resolved on affidavit evidence.[9] The Plaintiff’s demands in the solicitors’ correspondence, refusal to give an undertaking not to sue the Defendant, and actions after the Norwich Pharmacal orders were granted do not inexorably give rise to the inference[10] that the Plaintiff had always intended to pursue the Defendant; they could conceivably be consistent with a course of action of keeping options open (although I agree that the Plaintiff has not properly explained why he has not used the Documents for the original purpose for which they were sought).

44.For the same reasons, it does not seem to me possible, on the current evidence, to determine whether the Plaintiff ought to have sought disclosure against the Defendant under O.24 r.7A. On such an application, the Plaintiff would have had to have shown, as a jurisdictional requirement, that a claim might or might well have been made if discovery were granted, and that the Defendant appeared likely to be a party to such proceedings: Zhang Shoufen v Standard Chartered Bank (Hong Kong) Limited, unreported, HCMP 682/2015, 15th October 2015 (G Lam J) at [21], [22]. The Plaintiff’s affidavit evidence is that when making the Norwich Pharmacal applications, it was uncertain what, if any, proceedings might eventually be instituted.

45.In any event, it does not seem to me that it would assist in the determination of the Summons to decide whether the Plaintiff ought to have proceeded against the Defendant under O.24 r.7A. Whilst Miss Au submits that the Plaintiff should have used O.24 r.7A, she does not say that the Plaintiff was not entitled to apply for a Norwich Pharmacal order to obtain the Documents (on the basis that there was, as yet, no evidence that the Defendant was anything other than an innocent party mixed up in the fraud of others). In this regard, I note that whilst the Plaintiff, through his solicitors, had threatened to sue the Defendant, no evidence of wrongdoing on the Defendant’s part had been identified, as the Defendant’s solicitors pointed out in correspondence. If the Plaintiff was entitled to obtain the Documents under the Norwich Pharmacal procedure, then it does not matter whether the Plaintiff might also have been able to obtain them under O.24 r.7A.

F. WHETHER INTENDED FRENCH ACTION BOUND TO FAIL

46.Miss Au submitted that the Plaintiff’s intended action in the French courts was bound to fail, so that the Plaintiff’s application for release from his undertaking should be refused. The submission is that:

46.1 both parties’ experts on French law agree, as a starting point, that the applicable law for the Plaintiff’s intended cause of action for breach of the duty of care is Hong Kong law, being the place where the alleged damage occurred;

46.2 the Plaintiff accepts that he has no viable cause of action against the Defendant under Hong Kong law;

46.3 whilst the Plaintiff’s expert Prof Delebecque argues that the French courts would disapply Hong Kong law for being contrary to French public policy, and would apply French law instead, which would provide a remedy to the Plaintiff, Prof Delebecque’s opinion in this regard is a bare assertion and “conceptually problematic”.

47.Specifically, in relation to the last point, Miss Au submits as follows.

47.1 Prof Delebecque expressed the view in paragraph 33 of his opinion that “Insofar as the Hong Kong law deprives the victim of actionable damage … of obtaining compensation, this law must therefore be considered as contrary to French public policy and must therefore be considered as inapplicable and set aside. Hence the application in this case of French law.” This is (a) not said to be supported by any authority and (b) begging the question of what is “actionable damage”, since there is simply no actionable wrong in Hong Kong law in the first place (as the breaches of regulation complained of by the Plaintiff do not ground any civil cause of action).

47.2 The Defendant’s expert on French law (“Prof Audit”) has explained that a mere discrepancy between the applicable provisions of foreign law and French substantive law does not suffice to invoke the international public policy exception. Prof Delebecque’s response is that the point is open as there is no decided case law on the issue.

47.3 The Plaintiff has therefore failed to provide sufficiently cogent evidence to justify the disapplication of Hong Kong law, and the court is able to conclude that the applicable law governing the Plaintiff’s intended action in the French courts would be Hong Kong law.

48.It will be apparent that there is a dispute between the parties’ experts as to whether Hong Kong law or French law applies in relation to the Plaintiff’s intended cause of action in the French courts. I do not agree that I can summarily decide that a French court would hold that by reason of French public policy, French law, rather than Hong Kong law, would apply to the Plaintiff’s intended claim for breach of a duty of care.

48.1 Prof Delebecque’s opinion should not be construed as a statute. Reading paragraphs 32 and 33 of his opinion, it is tolerably clear that his view is that under French law, a person who suffers damage by reason of the fault of another is able to obtain compensation, and insofar as Hong Kong law does not allow him to obtain such compensation, this is contrary to French public policy and would not be applied by the French courts. I do not agree that this view can simply be dismissed at this stage, on disputed expert affidavit evidence, as “conceptually problematic”.

48.2 Nor does the mere fact that Prof Delebecque cited no authority in support reduce his view to a bare assertion; he is a French legal expert expressing his opinion based on his knowledge and understanding of French legal principles.

49.Miss Au went on to submit that even if French law were to apply, the Defendant would not be found to be in breach of its duty of care, for example because there is currently no evidence as to the point in time at which the Defendant came to learn of the information which would have put it on notice of abnormalities in the transactions by Wenzhou Kuwen. This is an issue that clearly turns on the evidence that may be given at trial and cannot be determined at this stage.

50.I therefore cannot accept the Defendant’s submission that the proposed action is bound to fail. It would be inappropriate for me to go further to try to gauge the strength of the proposed action in deciding whether or not to give leave: Sybron Corporation.

51.However, it does not necessarily follow that the Plaintiff’s proposed French law action amounts to a cogent and persuasive reason for giving leave to the Plaintiff to use the documents in the action, which is a separate (and prior) requirement which the Plaintiff needs to establish. Successfully meeting the Defendant’s argument that the action is hopeless does not in itself establish a cogent and persuasive reason for the grant of leave to use documents for the action. Cf. Sybron Corporation at 326H – a plaintiff is prima facie entitled to prosecute an action that is not an abuse of process or obviously sustainable, but whether or not leave to use discovered documents (for this purpose) should be granted depends on the nature of the first action, the circumstances in which discovery was given and the nature of the proposed new action. In the present case, it is common ground that the proposed action is, prima facie, governed by Hong Kong law, and that for the Plaintiff to be able to bring his claim, he would need to persuade the French courts to disapply Hong Kong law. There is a dispute of French law as to whether the Plaintiff would be successful in doing so, and the Plaintiff’s own expert says that there is no decided case law on the issue. I am not in a position to form any view as to whether the Plaintiff has an arguable case in French law for the disapplication of Hong Kong law.[11] It therefore does not seem to me that the mere fact that the Plaintiff seeks to bring proceedings in France against the Defendant in respect of a claim which on the undisputed prima facie applicable law cannot succeed, but which may proceed if the French courts disapply Hong Kong law – an unknown contingency – amounts to a cogent and persuasive reason to give leave for the Plaintiff to use the Documents for such proceedings.

52.Thus even if I had been of the view that the Plaintiff has adequately explained his reasons for not using the Documents for the purpose for which he had originally sought them, I would nevertheless not have been persuaded that he has shown that the intended French action amounts to a cogent and persuasive reason for granting leave to use the Documents.

G. DISPOSITION

53.I therefore dismiss the Summons.  I further make a costs order nisi that the Plaintiff pays the costs of and occasioned by the Summons to the Defendant, to be taxed if not agreed.

Mr Kevin Lau, instructed by ST Cheng & Co., for the Plaintiff

Miss Astina Au, instructed by Ashurst Hong Kong, for the Defendant