Chung Fung Ping v. Citibank (Hong Kong) Ltd
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DCMP 3797/2022 [2025] HKDC 19 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO 3797 OF 2022 --------------------------------
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------------------------------------ REASONS FOR DECISION ------------------------------------ 1.This is an application by the plaintiff by the amended originating summons dated 23 January 2024 for pre-action discovery of documents pursuant to section 47A of the District Court Ordinance (Cap. 336). 2.After considering the evidence put before me, and having heard the parties, I refused the plaintiff’s application. I indicated at the hearing that I should hand down my reasons in due course. 3.These are the reasons for my Decision. BACKGROUND 4.The plaintiff was a customer of the defendant’s Shatin branch. 5.Ms Cherry Lam of the defendant was assigned as the plaintiff’s client relationship manager. Whilst the exact timeframe during which Ms Lam looked after the plaintiff’s accounts is disputed, I believe the dispute does not affect the present application. 6.On the plaintiff’s case, she carried out the following 3 groups of transactions through her accounts maintained with the defendant:
7.For the ELNs, it is the plaintiff’s case that:
8.For the US$2 million loan, it is the plaintiff’s case that:
9.For the forex transactions, it is the plaintiff’s case that:
10.By this application, the plaintiff seeks pre-action discovery of the following 12 classes of documents. I shall group them according to their relevance to the above transactions, but retain the numbering adopted by the schedule to the amended originating summons. 11.With respect to the ELN transactions, the plaintiff seeks pre-action discovery of the following documents:
12.With respect to the US$2 million loan, the plaintiff seeks pre-action discovery of the following documents:
13.With respect to the forex transactions, the plaintiff seeks pre-action discovery of the following documents:
14.At the hearing, Mr Johnny So (together with Mr Eric Chau), counsel for the plaintiff, confirmed that item 12 did not relate to the transactions relied on by the plaintiff. He was content to have it left out. I thus say no more about item 12. 15.The defendant opposed to the plaintiff’s application. It denied any wrongdoing by any of its staff members. Needless to say, it disputes many of the factual allegations put forward by the plaintiff. For the present purpose, and being mindful of the possibility that the plaintiff may institute proceedings against the defendant in due course, I shall refrain from extensively commenting on the parties’ factual disputes. There is no need for me to do so anyway. LEGAL PRINCIPLES 16.Parties had no quarrel on the relevant legal principles. 17.In paragraph 44 of VTB Debt Centre LLC v Top Fuel Corporation Ltd HCMP 1543/2013 (Zervos J; 16 April 2014), the court set out the conditions for exercising the power to order pre-action discovery. As considered and refined in Zhang Shouen & Anr v Standard Chartered Bank (Hong Kong) Limited HCMP 682/2015 (G Lam J; 15 October 2015), the requirements may be stated as follows:
18.The first 4 requirements as stated above are jurisdictional conditions. Unless they are satisfied, the jurisdiction to order pre-action discovery does not arise. If they are satisfied, the court has a discretion to order pre-action discovery of the document in question. The court’s discretion is informed by the 5th requirement; but subject to that, the discretion is an unfettered one to be exercised in all the circumstances of the case. 19.There are in addition important requirements imposed by Order 24 rule 7A including, in particular, the need for an affidavit that satisfies the requirement of rule 7A(3) as modified by rule 7A(3A). The affidavit must:
20.Where there is relevant evidence to meet the requirement in rule 8(2) that discovery is necessary either for disposing fairly of the cause or matter or for saving costs, the affidavit should also cover those matters. 21.The court may order pre-action discovery of a class of documents, provided it is shown that all documents in the class meet the jurisdictional requirements including, in particular, that of direct relevance. The applicant has to show that each document in the class is a document that falls within section 47A and rule 7A. The wider the class is drawn, the more difficult it will be for the applicant to show that the documents within it all pass the threshold. 22.Pre-action discovery is not intended to be simply general discovery or specific discovery taking place before commencement of an action. The reference in rule 7A(3) to pleading and the requirement of a draft pleading “if practicable” underlines the particularity required of the allegation of relevance. In any event the affidavit should explain in sufficient detail what the intended claim is, what issues arise or are likely to arise out of it, and how the document sought is directly relevant to such issues in the sense defined in section 47A(4). The need to sufficiently particularize a potential claim is to avoid any unwarranted or fishing application. 23.In the context of pre-action discovery, if the documents can be shown to be “directly relevant” in the sense defined in section 47A(4), they will also necessarily be relevant in the Peruvian Guano sense, and can therefore be expected to be disclosed in the ordinary course of the action after proceedings have been commenced. Therefore, it is incumbent upon an applicant to show, not only that discovery of the document in question is necessary, but that discovery of the document before the commencement of the action is necessary. The precise justification will vary from case to case, but an obvious reason would be where a key document is needed by the plaintiff before he can properly plead a potentially good claim. As stated in paragraph 51 of 上海諾港科學集團有限公司 (formerly known as 上海諾港科技有限公司) v World Laureates Management Limited [2024] HKCFI 1540 (Deputy Judge Phoebe Man; 16 July 2024), pre-action discovery is not an investigative tool for assisting a claimant (i) to develop and finesse his cause of action; (ii) to obtain evidence to boost his case; (iii) to refine a pleading; or (iv) to avoid the need to amend pleadings later. Otherwise, it renders general discovery otiose. THE PRESENT CASE The ELN transactions 24.Mr So confirmed that the plaintiff’s intended claim against the defendant was one of misrepresentation. 25.In my decision, it is clear from the outline of the plaintiff’s case above that she already has enough materials to mount her claim. There is no difficulty for her to pinpoint the person making the alleged misrepresentation, and the way how that was done. For the loss she allegedly sustained, it is ascertainable by looking at the amount of her investment, the alleged interest income she would have been entitled to if the misrepresentation were true, and the market value of the underlying shares she obtained under the 5 ELNs. 26.I inquired with Mr So at the hearing as to the necessity of the documents sought, bearing in mind the current application concerned pre-action discovery but not specific discovery after proceedings were commenced. However, I did not find Mr So able to explain why the plaintiff was allegedly disabled from commencing her claim without the documents sought. If the plaintiff thought that she would be entitled to all the documents by way of this application solely because the defendant, in their correspondence, referred to their existence, she was wrong. The US$2 million loan 27.Mr So submitted that the plaintiff’s intended claim was, again, one of misrepresentation. 28.Similar to her claim with respect to the ELNs, it appears to me that the plaintiff is capable to formulate her claim here without the documents sought. She was able to identify with specificity Ms Lam as the person making the allegedly misrepresentation on the defendant’s behalf. The misrepresentation was alleged to be Ms Lam’s explanation that the plaintiff were signing documents to apply for a US$1.2 million loan; when in truth she was borrowing US$2 million. Her loss is plainly ascertainable from her own banking documents. I cannot see how the documents sought would enable her to formulate a claim which she currently cannot. 29.In my decision, the plaintiff’s application is misguided. The present application is not an avenue for her to inspect the merits of the defendant’s case as revealed during their pre-action correspondence. She can do so if she makes a formal claim against the defendant; by then, she is entitled to all the armours of discovery that the civil procedure rules afford her. However, without such a claim being extant, it is premature to allow her to do so in the context of the present application. The forex transactions 30.Mr So submitted at the hearing that the plaintiff’s intended claim with respect to these transactions was, again, one of misrepresentation. 31.In my decision, the plaintiff failed to identify a viable claim against the defendant. As shown by her affirmation evidence, she was the one asking Ms Yuen to look after her interest in the forex transactions. However, she did not go on to say whether (and if so, how) Ms Yuen replied. I find the plaintiff’s underlying claim defective to begin with. 32.With respect to Ms Yuen’s alleged recommendations, based on which the plaintiff entered into the corresponding forex transactions, the plaintiff did not say how they amounted to misrepresentations. Generally speaking, investment recommendation makes an informed prediction of market movement based on existing facts. The recommendation itself is an opinion rather than a statement of fact; it is not actionable as misrepresentation unless it is not honestly held, or the implicit factual basis is wrong. However, the plaintiff has not explained how those recommendations amounted to misrepresentation, or how the documents sought would enable her to make those recommendations actionable. I do not accept that the plaintiff’s general assertion that those documents are relevant suffices. 33.In any event, I do not find the plaintiff unable to mount a claim against the defendant, assuming Ms Yuen did say she would look after the plaintiff’s interest, and what she said amounted to actionable misrepresentation. The plaintiff is able to identify the misrepresentation; her loss is readily ascertainable as a matter of arithmetic, with reference to the exchange rate of the currencies she traded. 34.Further, in relation to item 11, the plaintiff has not even explained how Ms Yuen’s alleged misrepresentation is relevant to that transaction. There is also no allegation of misrepresentation made by Ms Lam that I can detect from the plaintiff’s affirmation evidence. With respect, the plaintiff’s application is a plain mess. Other matters 35.The plaintiff emphasized that she was a senior citizen[1], and she was not a professional investor. Based on how she presented her application before me, I do not think these are relevant to any of the items of documents sought. CONCLUSION 36.Based on the above reasons, I was of the view that the plaintiff fell far short of the requirements for pre-action discovery; it was appropriate to dismiss her application. I so ordered at the hearing. 37.I cannot see why costs should not follow the event. I grant an order nisi that the defendant do have the costs of the present case. I am mindful that the defendant had to deal with an application seeking an extensive pre-action discovery. I find it reasonable to spend time to prepare substantial affirmation evidence in opposition to the plaintiff’s claim. After considering the defendant’s statement of costs asking for more than $400,000.00, I summarily assess the defendant’s costs at $300,000.00.
Mr Johnny C M So and Mr Eric H C Chau, instructed by K T Lo & Co, for the plaintiff Mr Johnson C Y Ng of Johnson Stokes & Master, for the defendant | ||||||||||||||||||||||||||||
Cases cited in this judgment