Gmt Industrial Ltd v. Fan Rong Li and Yau Paul As the Administrator of the Estate of Selvam Selvaraj, Deceased

HCA 546/2015

[2026] HKCFI 6018

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 546 OF 2015

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BETWEEN

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D E C I S I O N

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Introduction

1.At the conclusion of the hearing on 17 September 2025 (“the Hearing”), in which Madam Fan appeared in person, this court, by the Decision (“the Bankers’ Book Decision”), granted P’s application by summons dated 4 August 2025 for a post-judgment bankers’ book order (“the Disclosure Order”) pursuant to section 21 of the Evidence Ordinance, Cap. 8 (“the EO”).

2.By summons dated 6 November 2025 (“the Summons”), D seeks leave to appeal against the Disclosure Order out of time and a stay of execution pending the determination of its appeal.

3.Before the Disclosure Order was made, this court by the judgment dated 22 May 2025 (“the Judgment”) entered judgment against the defendant after a 3-day trial.

4.It was only after the making of the Disclosure Order that D issued a summons dated 31 October 2025 for its application for an extension of time to serve a notice of appeal against the Judgment and a stay of execution (“the Judgment Appeal Summons”). By the decision dated 2 April 2026, this court dismissed the Judgment Appeal Summons. D made a renewed application to the Court of Appeal, and by the judgment dated 14 August 2026 (“the CA Judgment”), the Court of Appeal dismissed the renewed application of D.

5.For the purpose of the Summons, the parties were given directions to file written submissions for paper disposal. Mr Tai together with Mr Ip represented P and Mr Li SC leading Mr Kwok represented D. I am thankful for their written submissions.

6.In this Decision, I shall adopt the abbreviations used in the Judgment and the Bankers’ Book Decision. All the background facts are set out in the Judgment and I shall not repeat the same here.

7.Mr Tai, in his skeleton submissions lodged for the Hearing, provided a summary of background facts leading to the application for the Disclosure Order. The summary is as follows:

a) P is a company in voluntary liquidation. P commenced an action against the estate of Mr Selvaraj, who was P’s former managing director, alleging, inter alia, that Mr Selvaraj misappropriated US$7 million of P’s assets, in breach of trust and fiduciary duties.

b) This Court handed down the Judgment finding in favour of P and, inter alia, declared that Mr Selvaraj and his estate hold the sum of US$7 million and its proceeds on constructive trust for P, order all necessary accounts and enquiries be made for tracing the misappropriate funds as well as equitable compensation in the sums of US$2 million and US$5 million together with interest.

c) Whilst P has repeatedly demanded D to pay the judgment debt as well as sought disclosure of the Deceased’s assets, D failed to respond to any of P’s demands.

d) As things stand, the judgment debt remains outstanding, and interest of approximately HK$7,649,231.73 has accrued (as of 2 July 2025).

e) Separately, with a view to obtaining more information about the assets of Mr Selvaraj’s estate, P wrote to Messrs Tam, Pun & Yipp Solicitors, the solicitors of Mr Paul Yau, i.e. the former administrator of the estate of Mr Selvaraj. Whilst TPY has responded by letter dated 25 July 2025, no information was given in relation to the bank accounts and funds of the estate.

f) Against the above background, P took out the summons to seek disclosure from the Banks with the hope of identifying assets of Mr Selvaraj which can be amenable to enforcement.

Applicable legal principles

8.The relevant legal principles relating to D’s belated application are well-settled. What Chow JA said in the CA Judgment (at §17) is agreed by the parties and is apposite:

“In the exercise of its discretion whether to extend time to appeal, the court will take into account the length of the delay, the reasons for the delay, the chances of the appeal succeeding if an extension of time is granted, and the degree of prejudice to the other party if the application is granted. Where the delay is substantial and not wholly excusable, the applicant must show a real prospect of success on the merits, not merely a reasonable prospect of success: Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125, at 129I”

9.Mr Tai points out that the Summons was 5 weeks late. I do not understand why the Summons could not be issued any earlier. At least, when D issued the Judgment Appeal Summons, it should have issued the Summons. Yet, there is no explanation whatsoever for the lateness.

10.I am of the view that the 5 weeks of unexplained lateness are both substantial and inexcusable in the circumstances. D must show a real prospect of success on the merits in this application.

Merits of D’s Intended Appeal

11.A draft Notice of Appeal is annexed to the Summons and it contains 11 grounds with a number of sub-grounds. In this Decision, I only deal with the grounds elaborated by Mr Li in his written submissions.

12.Mr Li, at the outset, submits that a banker should not be ordered to make disclosure given the duty of confidentiality owing to its clients. He further submits that the bankers’ trust jurisdiction and the Norwich Pharmacal jurisdiction are two separate jurisdictions conferring the court the right to lift the confidentiality of a banker. Section 21 of the EO is merely procedural in nature and does not confer a new right of discovery.

13.I am unable to accept the dichotomy drawn by Mr Li between the bankers’ trust jurisdiction and the Norwich Pharmacal jurisdiction. As pointed out by Mr Tai, Ma J (as he then was) in A Co v B Co [2002] 3 HKLRD 111 at §11, explained that the Norwich Pharmacal jurisdiction is wide and is not restricted to the disclosure of the names of wrongdoers only. It includes a discovery order of a bank’s books and documents where a plaintiff wishes to investigate the passage of monies in and out of bank accounts in aid of a tracing claim.

14.Next, Mr Li submits that this court is wrong to follow Yaron Brown and Ors. v Lexinta Limited and Ors. [2018] HKCFI 2302 in which DHCJ William Wong SC allegedly applied the wrong test in his determination of an application made pursuant to section 21 of the EO. There, the learned deputy judge held (at §20) that there must be a nexus between the bank accounts to be discovered and the misappropriated funds.

15.In the Bankers’ Book Decision, this court indicated that such a nexus existed on the facts of the present case.

16.Mr Li says that the misapplied test is applicable to the Norwich Pharmacal jurisdiction only. The correct test for the bankers’ trust jurisdiction should be whether there are good grounds for concluding that the money or assets about which information is sought belonged to the claimant and whether there is a real prospect that the information sought will lead to the location or preservation of such assets.

17.Mr Li refers to the judgment of Neuberger J (as he then was) in Murphy v Murphy [1999] 1 W.L.R. 282 in which the learned judge referred to A. v. C. (Note) [1981] Q.B. 956 in which Robert Goff J. concluded that in an action in which the plaintiff seeks to trace property which in equity belongs to him, the court not only has jurisdiction to grant an injunction restraining the disposal of that property; it may, in addition, make orders to ascertain the whereabouts of that property. Neuberger J called this as the equitable jurisdiction and pointed out that this equitable jurisdiction and the Norwich Pharmacal jurisdiction are “in reality, two separate jurisdiction, albeit that in many cases they will overlap”.

18.Mr Li submits that the threshold for a Norwich Pharmacal order is lower than that of a bankers’ book order. He submits that this court applied the wrong test and hence accepted that P met the lower threshold and made the Disclosure Order.

19.I find no merits in this ground.

20.First and foremost, it has to be borne in mind the orders that this court made in the Judgment. I ordered that, among other things, a declaration to the effect that Mr Selvaraj misappropriated an aggregate sum of US$7 million from P in breach of his fiduciary duties and a declaration that Mr Selvaraj and his estate do hold the amount of such sums and the traceable proceeds and substitutes thereof on constructive trust for P. I further ordered that all necessary accounts and inquiries to enable P to trace and recover the misappropriated funds and such traceable proceeds and substitutes thereof be taken.

21.Second, the application was supported by the uncontradicted evidence of Cosimo Borrelli, one of the liquidators of P.

22.Third, I indicated that I had taken into account the guidance of DHCJ Poon (as CJHC then was) given in CTO (HK) Ltd v Li Man Chiu & Ors [2002] 2 HKLRD 875.

23.The nexus between the bank accounts sought to be discovered and the misappropriated funds is not the only conclusion reached by this court. I did not apply the test for Norwich Pharmacal orders. Such a finding can support the grant of a bankers’ book order as well. Conversely, if the bank accounts had nothing to do with the misappropriated funds, I would have had no reasons to order disclosure in respect of these bank accounts.

24.Pertinently, I also concluded that P genuinely needed such disclosures from the banks for its enforcement of the Judgment and to carry out the tracing exercise.

25.On this basis, I believe that this court legitimately exercised the discretion to grant the Disclosure Order to assist P to find out information to locate and preserve the misappropriated funds and for the purpose of its tracing exercise. This is one of the conventional uses of a bankers’ book order: see A Co v B Co, supra.

26.In the premises, I do not accept that I have applied the wrong test. I should add that Mr Li diligently refers to some other authorities relating to the bankers’ trust jurisdiction such as Bankers Trust Co. v. Shapira [1980] 1 W.L.R. 1274, Arab Monetary Fund v Hashim [1992] All ER 811, South Staffordshire Tramways Co v Ebbsmith [1895] 2 QB 669 and Stanford Asset Holdings v AfrAsia Bank [2024] 1 WLR 1118, etc.. Despite my appreciation of the customary industry of Mr Li, I do not find it necessary to go through these authorities in this Decision.

27.Mr Li goes on to argue that P fails to meet the requirements of a bankers’ book order on the evidence of Cosimo Borrelli.

28.Mr Li complains that there is no evidence that the misappropriated funds were ever transferred to the accounts of Mr Selvaraj. He further asserts that, even if they had been, after the demise of Mr Selvaraj, his bank accounts should have been closed shortly afterwards. It is, thus, well-nigh impossible to trace and ascertain the whereabouts of the misappropriated funds now by looking at the documents of the bank accounts. They would have been transferred elsewhere over the years. It was far too late for P to apply for the Disclosure Order.

29.There is no merits in this ground, either.

30.To begin with, Madam Fan opted not to file any evidence to oppose P’s application.

31.The misappropriated funds were of a sizeable amount. It is reasonable to expect that Mr Selvaraj had transferred them or a part of them into his personal accounts after misappropriation and that D has done likewise into her personal accounts as administrator of the Estate of Mr Selvaraj.

32.With or without any part of the misappropriated funds remaining in the bank accounts of Mr Selvaraj, there is a real prospect that the Disclosure Order should enable P to obtain useful information for its tracing exercise.

33.Madam Fan now has the audacity to claim that the misappropriated funds should have been dissipated from the bank accounts of Mr Selvaraj over the years. If there had been such dissipations, Madam Fan should have given P a full account of such dissipations to the best of her knowledge.

34.In addition, even if there had been such dissipations, such disclosure is still of utility for the purpose of tracing.

35.All in all, I do not think that the exercise of my discretion is plainly wrong, that I took into account irrelevant matters or failed to take into account relevant matters.

36.In the premises, D has failed to meet the threshold to show that her intended appeal has a real prospect of success on the merits. I refuse to grant an extension of time for leave to appeal.

37.This being my conclusion on the merits of D’s intended appeal, there is simply no ground for my exercise of discretion to order a stay of execution.

38.Mr Tai informed this court that the banks have complied with the Disclosure Order and made the disclosures already. Madam Fan does not allege any irreparable prejudice caused to D.

39.The stay application is equally baseless. I refuse to grant such a stay accordingly.

Conclusion and orders

40.For the reasons given, I conclude that the intended appeal of D is unmeritorious. The Summons falls to be dismissed in its entirety.

41.There is no reason why costs should not follow the event. D should bear the costs of P to be summarily assessed on paper. P has already lodged a statement of costs together with its written submissions and I have considered the same. Adopting a broad-brush approach, my preliminary view is that HK$100,000 would be an appropriate amount. In the event of disagreement, D should file and serve her list of objections (limited to 1 page) within 7 days from the date of this Decision. This is a costs order nisi.

Mr Terrence Tai and Mr Kenneth Ip, instructed by Messrs Oldham, Li & Nie, for the plaintiff

Mr C.Y. Li SC and Mr Kenny Kwok, instructed by Messrs Tam, Pun & Yipp, for the defendant