Bai Yang v. The Hongkong and Shanghai Banking Corporation Ltd and Others

HCMP 42/2025

[2025] HKCFI 3965

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 42 OF 2025

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BETWEEN

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J U D G M E N T

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A. THE APPLICATION

1.This is the adjourned hearing of an Originating Summons (“OS”) taken out by the Applicant (“Madam Bai”) on 9 January 2025 for a Norwich Pharmacal Order (“NPO”) against each of the Respondent banks or securities companies. The purpose is to seek disclosure of transaction records of Madam Bai’s ex-Husband (“Mr Ye”) and Morgold International Investment Co Ltd (“HK Morgold”), a company incorporated in Hong Kong of which Mr Ye held 99%. Madam Bai intends to use such records to aid Mainland legal proceedings (“the Mainland Proceeding”) brought by her to re-open a Mainland settlement agreement reached between her and Mr Ye in 2017 (“the Settlement”). Her allegations are that Mr Ye had concealed from her assets that were divisible upon divorce.

2.At the ex parte stage, in order not to prejudice her potential application for a Mareva injunction, Madam Bai obtained a gagging and anonymity order from DHCJ Kent Yee on 13 December 2024 (“the Gagging Order”).

3.The number of Respondents has since been reduced from 16 to 6 (“R1-R6”) as the others have replied stating that Mr Ye or Morgold did not hold accounts with them. R1-R6 remain neutral to the application but ask for time to comply with an NPO and R5 seeks costs.

4.The OS came first for a call-over hearing before Tam J on 19 February 2025, who queried whether Mr Ye and HK Morgold ought to be notified of the application to enable them to make representations.

5.At the 2^nd call-over hearing on 3 March 2025, this Court ordered that the OS be adjourned pending (a) information on service of the papers of this OS (“the OS Papers”) in the Mainland Proceeding by the First Instance Court on Mr Ye; and (b) notification of Mr Ye and HK Morgold of this proceeding.

6.Upon hearing the Court’s indication during the 2^nd call-over hearing on 3 March 2025, Madam Bai has now significantly reduced the period of disclosure to 2 years up to the date of the divorce on 12 May 2017.

7.Meanwhile, Madam Bai has instituted the Mainland Proceeding on 14 June 2024. The trial has been completed and judgment is pending.

8.On 13 August 2025, Mr Ye issued a summons seeking to be joined as an intervener and directions to defend the OS.

9.At this hearing, having heard Mr Raphael Leung, acting for Madam Bai, and Mr Derek Chan, acting for Mr Ye, I gave directions granting leave to Mr Ye to be joined as R7, and for him to file and serve affirmations to resist the OS. After all, he has a right to make representations before anyone should have access to his records. I also discharged the Gagging Order since Mr Ye and HK Morgold already had notice of the OS.

10.As explained in Section D below, HK Morgold has been validly served. There is some urgency now because, according to Mr Ye, the Mainland Court is likely to hand down judgment within August (although there is no documentary proof of such). It would be best if the disclosure can, if ordered, be made by the Respondents before judgment is finalized or, before any review/appeal period expires in the Mainland. In view of the urgency, I therefore decided to deal with the application first as regards HK Morgold and adjourn the part in relation to Mr Ye.

B. BACKGROUND

B1 The divorce

11.Madam Bai and Mr Ye were married between 1986 and 2017. They have one son (“the Son”).

12.On the suggestion of Mr Ye, Madam Bai became a full-time homemaker since around 2000 and entirely entrusted Mr Ye to manage the family finance. Madam Bai only had a vague idea about Mr Ye’s business, which included HK Morgold and a corporate vehicle with a similar name in Shanghai engaged in private equity investment (“SH Morgold”).

13.Since 2016, Madam Bai has been having health issues. Her relationship with Mr Ye deteriorated.

14.Madam Bai eventually agreed to have a divorce. She was told by Mr Ye that SH Morgold was heavily in debt, whilst HK Morgold was only a “shell” company. He had no other assets.

15.The settlement, by agreement was that Madam Bai was to keep 2 Mainland properties already under her name (“the Shanghai Property” and “the Fuzhou Property”); other assets were to be kept under their respective names. The divorce was finalised on 12 May 2017.

16.After the divorce, Madam Bai initially returned to her hometown in Fuzhou for rehabilitation whilst Mr Ye continued to reside in the Shanghai Property.

17.In April 2023, Mr Ye moved out and Madam Bai moved back to the Shanghai Property. When clearing that Property, Madam Bai came across documents that apparently showed that Mr Ye had had substantial assets in both Mainland China and Hong Kong, totalling over RMB 360 million. The documents showed that Mr Ye held accounts in R1-R5; and HK Morgold held an account with R6.

18.Subsequently, in February to April 2024, Madam Bai further learnt from her Son that Mr Ye had an affair with another lady (“Ms Fang”), who gave birth to a son of Mr Ye in 1996. The Son further told Madam Bai that Mr Ye had spent millions for the benefit of Ms Fang and that family and that Mr Ye spent millions buying a villa in Fuzhou where Mr Ye and Ms Fang still lives.

B2 Commencement of the Mainland Proceeding for redistribution of family assets

19.On 14 June 2024, Madam Bai commenced proceedings in the 福州市鼓樓區人民法院 for redistribution of family assets which Mr Ye had allegedly concealed from her upon their divorce, pursuant to Article 1092 of the Civil Code of the People's Republic of China (中華人民共和國民法典). Her Amended Claim is for 70% of the value of the concealed assets and damages of RMB 100,000 for mental suffering.

20.Her Mainland lawyers obtained an Investigation Order from the First Instance Court in (2025) 閩102民初4095 號 (“the Mainland Proceeding”) to investigate into Mr Ye’s assets, covering a period of 2 years up to the date of the divorce, ie from May 2015 to May 2017.

21.The Investigation Order revealed that shortly before their divorce, Mr Ye had (a) purchased investment products in excess of RMB 25m and (b) transferred RMB 50m from his Mainland Bank of Communications account offshore, but the money was not traceable into any of Mr Ye’s Mainland accounts and the recipient account could not be identified. Madam Bai is of the view that the recipient accounts might be in Hong Kong.

22.It was also revealed from her Mainland lawyers’ report dated 10 December 2024 that Ye’s Mainland assets at the date of divorce were reduced to just about RMB 50k. Three days after this report, Madam Bai obtained the Gagging Order.

23.However, the Investigation Order does not enable Madam Bai to investigate into Mr Ye or HK Morgold’s accounts and assets in Hong Kong. She thus needs the assistance of an NPO.

B3 The OS Proceeding

24.On 9 January 2025, Madam Bai issued the OS for NPOs against 16 financial institutions, based on what she discovered from the home search. The Respondents are later cut down to the current 6 entities in Hong Kong. Madam Bai only knew HK Morgold was applying for deregistration at the time. Unbeknown to her, HK Morgold was de-registered on 28 February 2025, just 9 days after the first call-over hearing of the OS.

25.On 3 March 2025, the hearing of the OS was adjourned as this Court took the view that Morgold and Mr Ye should be notified of these proceedings. Both Mr Ye and HK Morgold had been served, latest, by June 2025.

26.On 4 August 2025, Mr Ye took out the Joinder Summons. Leave was given to join him as a party.

C. PROGRESS OF THE MAINLAND PROCEEDING

27.On 6 March 2025, having served the papers on Mr Ye, the First Instance Court proceeded to the first instance trial stage.

28.During the first hearing of the Mainland Proceeding before the First Instance Court on 20 May 2025, both Madam Bai and Mr Ye were legally represented. Madam Bai’s Mainland lawyers informed the First Instance Court and Mr Ye’s Mainland lawyers of the existence of the present proceeding (“OS Proceeding”). Despite the request of Madam Bai’s Mainland lawyers, Mr Ye’s Mainland lawyers refused to receive the OS Papers on behalf of Mr Ye. Madam Bai’s Mainland lawyers had to include the OS papers as evidence in the Mainland Proceeding so that the First Instance Court could assist in serving the same on Mr Ye through his lawyers. The Chinese translated version was provided to the First Instance Court on 30 May 2025.

29.On 3 June 2025, Madam Bai’s Hong Kong lawyers, Allbright Law (Hong Kong) Offices LPP (“ABHK”), attempted to notify Mr Ye of the existence of the these proceedings and to provide him with the OS papers through 6 channels, ie through 2 last known email addresses of Mr Ye, SMS to 2 of his last known phone numbers and courier to Mr Ye’s Mainland residential address and office address of SH Morgold. The courier posts to Mr Ye’s Mainland residential address and office address of SH Morgold were returned, with the courier staff expressly informing ABHK’s staff of Mr Ye’s express refusal to receive the same.

30.On 4 June 2024, the First Instance Court confirmed that the OS papers together with the Chinese translations had been served on Mr Ye’s Mainland lawyers.

31.The 2^nd and 3^rd hearings of the Mainland Proceeding took place on 26 June and 17 July 2025, respectively. During the 3^rd hearing, Madam Bai’s Mainland lawyers requested the First Instance Court to stay the Mainland Proceeding pending determination of the present OS, but that was declined. The trial has ended and judgment is pending.

D. SERVICE ON MORGOLD

32.I have insisted on notice being given to Mr Ye and HK Morgold. This is because the application for an NPO in this case is for a historical period dating back to 2015 to 2017. There was no secrecy then as Madam Bai was not seeking an injunction. There was no indication that someone would tamper with the documents sought. Mr Ye and HK Morgold plainly have a right to make representations over the discovery.

33.Morgold was deregistered after the OS was filed. ABHK initially attempted to serve the OS papers on the correspondence address provided by Mr Ye in Morgold’s Application for Deregistration of Private Company on 12 June 2025.

34.Upon the Court’s requisition as to whether that was a proper mode of service on a defunct company, ABHK served the papers on the Registrar of Companies on 8 July 2025.

35.Under section 752(1) of the Companies Ordinance (Cap. 622), upon dissolution of a company every property and right vested in the company immediately before the dissolution is vested in the Government as bona vacantia, and in such a case the Registrar would act on behalf of the Government and should be named as defendant: Yang Zhenghong v Registrar of Companies [2016] 3 HKC 247 at §5, G Lam J (as he then was).

36.Such right includes chose in action to enforce a contractual right: Tong Kin Ming & Anor v The Registrar of Companies [2023] HKCFI 1789 at §3, Recorder Eva Sit SC.

37.The right in question is to the records in the Respondents. No application has been made, not even by Mr Ye (a 99% shareholder having notice of the application), to restore HK Morgold. I do not see the need either, as no substantive relief is sought against HK Morgold.

38.The Registrar of Companies has also been notified of the date of this adjourned hearing. She informed ABHK that she took the view that, being dissolved, Morgold could not properly be a recipient of the notification. Neither could the Registrar of Companies be. Moreover the Registrar was not in a position to take a stance nor to determine whether the right of customer-banker confidentiality is to be enforced. She did not attend this hearing.

39.Applying Yang Zhenghong, I am satisfied that HK Morgold has been validly served and the Court could proceed with the hearing.

E. LEGAL PRINCIPLES ON NORWICH PHARMACAL ORDER

40.In A Co v B Co [2002] 3 HKLRD 111, at §12, Ma J (as he then was):

(1) An NPO is made against an innocent party whose only involvement is to become mixed up in the tortious or wrongful activities of others; and

(2) There will usually also exist a legal relationship between the innocent party and the alleged wrongdoer where the innocent party owes duties such as confidentiality to the wrongdoer.

41.The principles for granting an NPO, have been recently reiterated in The Joint and Several Liquidators of Green Elite Ltd (In Official Liquidation in the British Virgin Islands) v Standard Chartered Bank (Hong Kong) Ltd [2024] HKCFI 259 at §23, Fung J:

(1) It is not a usual order and there should be powerful factors in favour of the grant;

(2) There must be cogent and compelling evidence that serious tortious or wrongful activities have taken place;

(3) It must be clearly demonstrated the order will very likely reap substantial and worthwhile benefit for the plaintiff, eg in a tracing exercise, there must be serious possibility that the discovery will realistically lead to discovery of the plaintiff;

(4) The scope of discovery must not be unduly wide. The order must be specific, and restricted to documents or classes of documents necessary to enable the plaintiff to preserve or discover assets;

(5) The plaintiff must have exhausted other proper and reasonable avenues for obtaining the information sought.

42.An NPO may be made for discovery in aid of existing or potential proceedings outside Hong Kong: Ren Wenlong v BOCI Securities Ltd [2021] HKCFI 3782, §§6, 8. Ren Wenlong was similar to the present OS where the ex-husband sought discovery in Hong Kong in order to aid review proceedings in Mainland China for division of assets upon divorce.

43.However, this jurisdiction to aid foreign proceedings should not be lightly exercised either by reason of comity or because there is no necessity justifying an NPO. These considerations would generally require the foreign court seised of the substantive dispute to control the discovery process. See Guangdong Shirong Zhaoye Co Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2022] 4 HKLRD 536 at §§8 and 15 DHCJ Jonathan Chang SC.

44.The relevant factors relating to necessity include:

(1) The issue of necessity in a Norwich Pharmacal application is a matter to be considered as part of the Court’s discretionary exercise. There is no formal requirement for an applicant to show that he has no other way of accessing the information sought (§10(1));

(2) However, if the applicant has a straightforward and available means of obtaining the information by some other route, it would probably not be reasonable in most cases to exercise the discretion in his favour (§10(2));

(3) It would be a matter for the Court to determine, in the exercise of its discretion, whether it is appropriate to make an order on those grounds, and it will do so if it considers that such is convenient in the interest of justice (§10(3));

(4) Norwich Pharmacal relief is available in order to identify a person who might be a defendant in foreign proceedings or to establish the cause of action or a tracing claim for the purposes of foreign proceedings, but generally one would otherwise allow the foreign court to exercise its jurisdiction over the disclosure which it required for the purposes of doing justice in the case before it (§10(4));

(5) Norwich Pharmacal relief is not to be available to a property “if the predominant purpose is to supplement the disclosure process which exist in the foreign Court where a substantive action is already taking place (§10(5)).

45.On the question of comity,

(1) where a party has made the tactical decision not to take advantage of the foreign discovery process, this may militate against a grant of NPO in Hong Kong;

(2) where the NPO sought overlaps with any ongoing discovery relief sought in a foreign court, the Hong Kong Court may need to consider the scope and the extent of the overlap;

(3) where the foreign Court has denied a request for discovery, the Hong Kong Court has to consider the reasons for the denial and whether such reasons have any bearing on the application of NPO in Hong Kong.

See Guangdong Shirong Zhaoye at §§12, 18-20.

F. COGENT AND COMPELLING EVIDENCE OF WRONGFUL ACTIVITIES

46.According to the Mainland legal opinion obtained by Madam Bai (“the 1^st Legal Opinion”),

(1) S.1092 of the PRC Civil Code provides that, if, after divorce, it is discovered that a party, amongst others, concealed or transferred family assets, the other party may apply to the court to re-divide the family assets.

(2) The Interpretation of the Supreme People’s Court on the Application of the Part on Marriage and Family of the PRC Civil Code (I) (“the Interpretation”), article 70, provides that the People’s Court shall accept requests for annulment of property partition agreement; and

(3) The Interpretation of article 83 provides that the Court shall accept requests for re-division of family assets after divorce if there are family assets which have not yet been processed.

47.The current state of evidence shows that Mr Ye had substantial assets before the divorce and yet they had not been disclosed to Madam Bai during the divorce in 2017. Objective evidence obtained through the Mainland Investigation Order shows that Mr Ye dealt with his assets shortly before the divorce by diminishing the total balances in his Mainland accounts by at least RMB 75 m, leaving only RMB 50k. The remainder of Mr Ye’s RMB 360m worth of assets have been unaccounted for.

48.There is a strong basis for inferring that Mr Ye had actively concealed his assets from Madam Bai in the course of the divorce proceeding, to avoid a proper division of assets; that he retained more than he was entitled to upon divorce and continued to enjoy the benefits of his concealed assets by maintaining another family with Ms Fang. I am satisfied, on balance of probabilities that there is cogent and compelling evidence of wrongful activities on the part of Mr Ye.

G. NPO LIKELY TO REAP SUBSTANTIAL AND WORTHWHILE BENEFITS

49.The concealed assets were at least worth RMB75m, practically the entire balance in his Mainland accounts. Even half of it, distributable to Madam Bai, is substantial. It would be all the more so if the Mainland courts were to find that he had another RMB285m unaccounted for.

50.The 1^st Legal Opinion shows that previous decisions of the Mainland courts have, on re-division awarded the “innocent party”, in the case of asset concealment, 60-100% of the concealed assets.

51.I am satisfied that an NPO is likely to reap substantial and worthwhile benefits for Madam Bai.

H. NECESSITY FOR AN NPO

52.The test for necessity is plainly satisfied. The documents sought are necessary to assist Madam Bai in showing to the First Instance Court that Mr Ye was in possession of substantially more assets than he claimed in 2017 so as to arrive at a proper order for re-division of assets.

53.This Court notes that Madam Bai and Mr Ye had been divorced for 8 years by the time of the OS. The trial in the Mainland Proceeding has also concluded. Madam Bai’s request to stay the Mainland Proceeding pending disposal of this OS was refused. It may be argued that the discovery now sought is a futile exercise.

54.However, the supplemental legal opinion (“the 2^nd Legal Opinion”) obtained by Madam Bai makes it clear that:

(1) Even if the documents sought are obtained after judgment was delivered in the First Instance Court, they can still be adduced before the Second Instance Court on Madam Bai’s appeal.

(2) The documents sought can be used to commence proceedings afresh against Mr Ye seeking re-division of family assets on the strength of the new evidence. Such proceedings would not be barred by the doctrines of res judicata and/or abuse of process under Mainland Law.

55.In my view, an NPO is not a futile order for the existing Mainland Proceeding and any future appeal or review. There is no reason why the documents sought should not be obtained.

I. COMITY

56.The Mainland Court did control the discovery process by issuing and executing the Investigation Order. The Mainland Court did not find the documents sought under the OS irrelevant. It was due to lack of jurisdiction that the Mainland Court could not ask the Hong Kong financial institutions to provide discovery. There is no overlap between the Investigation Order and the NPO in this respect. Madam Bai is not seeking to supplement her case. The documents sought go to the very core of her case. The issue of an NPO does not offend the comity principles. The discretion remains with the Mainland Court to decide whether and how to use the documents disclosed under the NPO. Comity has not been offended.

J. DISCOVERY NOT UNDULY WIDE

57.The discovery sought is for 2 years from 12 May 2015 to 12 May 2017, ie for 2 years before the divorce. This mirrors the discovery period under the Investigation Order.

58.Insofar as HK Morgold is concerned, the NPO is only directed against R6 who remains neutral to the application.

59.I have not lost sight of the fact that there was no evidence of apparent transfer of money from Mr Ye’s Mainland accounts to any of the accounts with R6. However, such huge assets of Mr Ye could not have disappeared over night. If the Mainland accounts did not show deposits from or into Mr Ye’s then known accounts, it would not be far-fetched to draw the inference that the money had been transferred to his accounts in Hong Kong and that would include HK Morgold.

60.I am satisfied that the NPO sought is not unduly wide in scope.

K. ORDER OF LAST RESORT

61.The Investigation Order by the First Instance Court bore minimal fruit, identifying only RMB 52k in Mr Ye’s Mainland accounts.

62.According to Madam Bai’s 2^nd Legal Opinion, under Mainland law, Mainland courts do not have jurisdiction to compel a party to Mainland proceedings to disclose documents maintained by institutions situated beyond Mainland China. Despite that, Madam Bai still attempted to apply to the First Instance Court, on 7 July 2025, to seek disclosure of the documents now sought. As expected, it was not entertained.

63.There is no other avenue for Madam Bai to obtain further information via Mainland proceedings.

64.Discovery under sections 41 and 42 of the High Court Ordinance, Cap 4, are unavailable to Madam Bai because (1) R6 is unlikely to be a party to subsequent proceedings in Hong Kong for section 41 to apply; and (2) there are no existing Hong Kong proceedings for section 42 to apply.

65.Madam Bai has exhausted all other avenues for obtaining the information sought in the OS. This is plainly her last resort. It is not an abuse on her part.

L. R6 AS AN INNOCENT PARTY

66.The evidence shows that HK Morgold only holds an account in R6. Madam Bai seeks no personal relief against R6, who is a plainly innocent party who got mixed up in the wrongful activities of Mr Ye (and/or via HK Morgold) assets of Ye which may well be subject to division as family assets have passed into his and/or HK Morgold account(s) in the Respondent. An order for discovery against R6 would enable Madam Bai to trace the whereabouts of such assets: Cf. Ren Wenlong (above) at §30. R6 is likely to be able to provide the information necessary to enable the ultimate wrongdoer to be sued: Ren Wenlong (above) at §28. R6 had a legal relationship with HK Morgold which involved strict duties of confidentiality between them.

M. NO INEXPLICABLE DELAY

67.There has not been inexplicable delay on the part of Madam Bai in coming to the courts after she discovered documents at her home search. The time taken by her has been accounted for in Section B above.

N. EXERCISE OF DISCRETION

68.Having regard to the analyses above, I am satisfied that I should exercise my discretion to grant an NPO to aid the Mainland Proceeding.

69.Paragraphs 2 and 3 of the draft order are in these terms:

“2 The Applicant or her solicitors shall be at liberty to identify specific transactions from the Bank Statements (“Specific Transactions”) and notify the 6^th Respondent (or its solicitors) in writing of the need for further disclosure of the transaction records (i.e. transfer application forms, withdrawal or deposit slips, electronic transfer instructions, cheques and electronic entries showing the transaction) of the Specific Transactions (“Transaction Records”) within 28 days from the date of delivery of the Bank Statements to the Applicant’s solicitors (or such other time as may be agreed between the Applicant and the 6^th Respondent) (“Notice”);

3 Within 14 business days upon receipt of the Notice (or such other time as may be agreed between the Applicant and the 6^th Respondent), the 6^th Respondent (or through its solicitors) do provide to the Applicant’s solicitors the Transaction Records that are in possession, custody or power of the 6^th Respondent.”

70.These 2 terms are so wide as to take away the control and discretion of the Court over an NPO and I decline to grant them. If Madam Bai needs further discovery upon studying the disclosed documents, she may come back to the Hong Kong Court under the liberty to apply provision.

71.Paragraph 4 of the draft order provides that there be leave to use the documents obtained from R6 for the purpose of:

“(1) Investigating into the matters described in the Affirmation of Bai Yang filed in these proceedings; and

(2) Commencing and pursing proceedings, whether in Hong Kong or elsewhere, against persons or entities implicated in any wrongdoing by such information, documents or investigation.”

72.In my view, it is appropriate to spell out the matters for which leave is granted rather than to incorporate an affirmation by reference. Further, as this discovery is in aid of the Mainland Proceeding and probably any related appeal/review, the current drafting of paragraph 4 is casting too wide a net. There is as yet no other potential wrongdoer (other than Mr Ye and/or HK Morgold) or cause of action identified. Accordingly, I reduce the scope of paragraph 4 so that the purpose of the discovery should be for:

“(1) Investigating into the matters in (2025) 閩0102 民初 4095 號 and/or any appeal(s) and/or re-re-trial(s) arising therefrom (collectively as the “Mainland Proceedings”); and

(2) Pursuing the Mainland Proceedings against persons or entities implicated in any wrongdoing by such information, documents or investigation.”

73.Subject to the preceding paragraph and some clerical amendments to the draft terms, I grant an order in terms of the draft order in respect of the 6^th Respondent.

74.I give retrospective leave to Madam Bai to file and serve on the Registrar of Companies the 4^th Affidavit of Gan Zihao. The filed version shall stand. This is an affidavit to update the Court on the latest position. It would not cause any prejudice to HK Morgold or the Registrar of Companies.

75.On costs, Madam Bai does not seek costs against R6. On a nisi basis, I make no order as to costs.

76.I thank counsel for their assistance.

Mr Raphael Leung, instructed by Allbright Law (Hong Kong) Offices LLP, for the Applicant

Mr Derek J Y Chan. instructed by P.C. Woo & Co, for the Intended 7^th Respondent

Wilkinson & Grist, for the 6^th Respondent, attendance was excused