Toyota Boshoku Europe N.V. v. Kingsville (HK) Enterprises Ltd and Others

HCA 452/2022

[2024] HKCFI 352

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 452 OF 2022

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D E C I S I O N

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Background

1.This is the inter parte hearing of a Summons against D21 for continuation of an Injunction Order and imposition of a disclosure order.

2.The Plaintiff is the victim of a large scale fraud in which approximately HK$500 million were paid to certain companies as a result of unknown fraudsters impersonating the CEO and President of the Plaintiff’s parent company. The Plaintiff has obtained injunctions against 47 defendants in HCA 2091/2019 (“2019 Action”), being the first to third layer recipients of the Plaintiff’s funds identified with the assistance of the Hong Kong police.

3.All of the Defendants, including D21 who is subject of the present Summons, are the next layer recipients of the Plaintiff’s funds from those defendants in the 2019 Action.

4.The Plaintiff obtained a substituted service order from a Master for various documents to be served on Standard Chartered Bank (“SCB”) who holds D21’s account into which the Plaintiff’s funds were paid (“the Substituted Service Order”).

5.The Plaintiff has served the documents on SCB.

6.The hearing proceeded in the absence of D21 and I have no hesitation in granting (i) an order for extension of the interim injunction initially granted on ex parte basis by B Chu J on 22 April 2022 and extended by various judges (“Injunction Order”), until conclusion of the trial or further order; and (ii) a disclosure order against D21 requiring her to disclose in writing the current location of the funds received by her and assets purchased by such funds.

7.The remaining order that the Plaintiff seeks is that any documents (including today’s order) be served by sending them to SCB and that shall be good and sufficient service on D21 (“Service Order”).

Circumstances relating to service

8.D21 has an address in the Mainland. In the past 2 years since the present action was commenced, the Plaintiff has been unsuccessful in trying to effect service of the writ and the interim injunction order on D2 through formal channels in the Mainland. The return form on service provided by the People’s Court of Shenyang City Heping District dated 29 May 2023 reported that the officers of the small district informed the process server that D21 did not reside at the address provided by the Plaintiff.

9.On 29 December 2023, the Plaintiff obtained the Substituted Service Order for serving various documents, including the writ, the Injunction Order and the present Summons on D21. The mode of service was sending those documents in electronic form contained in a USB flash drive and contained in a CD together with the Substituted Service Order to SCB and that shall be good and sufficient service of those documents on D21.

10.The Plaintiff has complied with the Substituted Service Order.

11.By a letter dated 17 January 2024 to the Plaintiff’s solicitors, SCB stated, amongst others, that it was not the agent of D21 and did not have instructions or authority to accept service on behalf of D21. It was not service that SCB would provide to its customers. SCB was not a party to the proceedings and were not notified that this order for substituted service would be sought.

12.However, SCB has helpfully forwarded the USB flash drive, CD-Rom and a sealed copy of the Substituted Service Order at the correspondence address of D21 in SCB’s records. SCB made clear that it would not accept further service of documents in relation to this action against any of the defendants in the action going forward.

13.It is in such context that the Plaintiff seeks the Service Order. The intention is to facilitate service so that the Plaintiff can then apply for default judgment and other reliefs.

14.Mr Yau submits that

(1)  The concern indicated by SCB appears misplaced, given that the Substituted Service Order was not made against SCB, i.e. SCB was not ordered to accept service on behalf of D21 or to further effect service on D21. SCB has merely been designated the recipient of the documents for the purpose of the Substituted Service Order made against D21.

(2)  It is not uncommon that substituted service is ordered by way of sending documents to a third party. In such cases it is beside the point that the third party does not provide a “service” or is otherwise obligated, whether as agent or as a service provider, to serve or accept service on behalf of the Defendant.

(3)  It remains the case that sending the service documents to SCB was (to the best of the knowledge of the Plaintiff) the best way of bringing the documents to the attention of D21 in the circumstances, in particular given (a) the banker client relationship, (b) the bank would normally and is expected to have ways of contacting or communicating with its own customers (and SCB has not indicated the contrary in its letter), and (c) it is also likely that D21 would reach out to SCB if she is unable to access her account or the funds therein, especially given the substantial balance of USD 662,844.86 and HK$ 53,552.09.

(4)  This is a practical solution which is necessary to enable these proceedings to progress against D21 and to do justice between the parties in circumstances where the ordinary rules of service would prevent the Plaintiff from recovering the defrauded funds from D21. There also appear to be reasons put forth to persuade the Master to make the Substituted Service Order.

Analyses

15.In the absence of challenge, I have not set aside the Substituted Service Order. However, I decline to make the Service Order in this action going forward for the following reasons:

(1)  I agree with the views of SCB set out in §11 above. Having regard to its protest, it should not be troubled again.

(2)  The submission of Mr Yau as set out in §14 above does not assist the Plaintiff. The basis for seeking substituted service is that the mode of service ordered will bring the writ or other documents to the notice of the defendant. The Plaintiff must have reasonably expected that SCB would not have sat on the documents received but (as it has properly done) informed D21 of the receipt of those documents. This Court is concerned that such a mode of service imposed on banks, once becoming prevalent, may eg create unforeseen duties outside the duty of the bank to its customer and create costs on banks which are not covered by a substituted service order.

(3)  By serving SCB in Hong Kong, the Plaintiff is effecting service on D21 who has an address outside Hong Kong. I query if that can be regarded as proper service out of jurisdiction: Deutsche Bank AG v Zhang Hong Li, CACV 277/2015, 19 May 2016, §5, Lam VP (as he then was).

(4)  In §§59-70 of the Deutsche Bank case, the Court of Appeal deals with, on obiter bases, the feasibility of substituted service in Mainland China that complies with the Mainland laws. It is up to an applicant to adduce suitable evidence to satisfy the court in Hong Kong and a Higher People’s Court in the Mainland that the alternative method or methods by which process is proposed to be effected in the Mainland by the judicial authorities is appropriate in all the circumstances (§70). In the present case, the Plaintiff has not addressed these matters.

(5)  The present case is distinguishable from Deutsche Bank in which it was considered appropriate to serve documents on the defendant’s solicitors who was handling another extant High Court action on behalf of the defendant as one of the plaintiffs in Hong Kong.

(6)  I notice that in Hong Kong Civil Procedure 2023, Vol 1, §65/4/2, it is stated that substituted service on persons with whom the defendant has been or is likely to be in communication, eg an agent or solicitor or bankers. However, no authority has been cited for this proposition, at least insofar as bankers are concerned.

(7)  Melco Crown Gaming (Macau) Ltd v Wong Yak Tak [2014] 3 HKLRD 267 does not assist the Plaintiff either. It is a case on substituted service in Hong Kong on a defendant resident in Hong Kong. There was no issue of service out of jurisdiction there.

16.It therefore remains the duty on the Plaintiff to consider what appropriate steps to take to seek out D21 and/ or to properly apply for an order for substituted service in Mainland China in its way forward.

17.I thank Mr Yau for his assistance.

Mr Jeremy Yau, instructed by C.P. Lin & Co, for the Plaintiff

The 21^st and 23^rd Defendants did not appear