Evergreen International Storage & Transportation Corp. v. The Hong Kong and Shanghai Banking Corporation Ltd and Another
Read the full judgment text of HCMP 1619/2007 on BabelCite. This High Court CFI judgment was delivered on 9 July 2008.
1. Before the court is an application by Evergreen International Storage & Transportation Corp. (“Evergreen”) against HBZ Finance Limited (“HBZ”) for Norwich Pharmacal discovery, named after Norwich Pharmacal Co v. Customs and Excise Commissioners [1974] AC 133 (HL).
Cited by 7 cases · Cites 3 cases
|
HCMP1619/2007 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 1619 OF 2007 ----------------------
---------------------- Before : Deputy High Court Judge Lisa Wong, SC in Chambers Date of Hearing : 5 May 2008 Date of Judgment : 9 July 2008 ---------------------- J U D G M E N T ---------------------- 1.Before the court is an application by Evergreen International Storage & Transportation Corp. (“Evergreen”) against HBZ Finance Limited (“HBZ”) for Norwich Pharmacal discovery, named after Norwich Pharmacal Co v. Customs and Excise Commissioners [1974] AC 133 (HL). Background 2.Evergreen’s claims in these proceedings arose out of the business of Uniglory Marine Corporation (“Uniglory”) whose rights and liabilities Evergreen has assumed in a corporate merger in 2002. 3.Uniglory was the carrier of certain university uniforms (“the Uniforms”) from Shanghai, PRC to Um Qaser, Iraq under 52 bills of lading, variously dated between October and December 2000 (“the Uniglory B/Ls”). 4.The Uniforms were sold and delivered to the Ministry of Higher Education and Scientific Research of Iraq (“MHESR”) under the “oil-for-food” program established by the Security Council of the United Nations under Resolution 986 passed in April 1995 to allow Iraq to sell oil to finance, inter alia, the purchase of humanitarian goods in the midst of United Nations sanctions against Iraq following Iraq’s invasion of Kuwait in 1990. 5.The supply of the Uniforms to MHESR went through a chain of contracts:
6.BNP Paribas was the designated escrow bank for the “oil-for-food program” and as such responsible for the issue of letters of credit for the purchase of humanitarian goods using the proceeds from oil sales. In payment of the Uniforms, BNP Paribas (New York Branch) issued in favour of each of El Hosan, El Farse and Fast Trading a letter of credit (“the BNPP L/Cs”). The BNPP L/Cs in favour of El Hosan and El Farse required the Uniforms to be of Egyptian origin and to be shipped from Egypt to Baghdad via Um Qaser. Evergreen does not have a copy of the BNPP L/C of which Fast Trading was the beneficiary but expects it to specify Qatar as the origin of shipment. 7.There is no evidence as to how El Hosan, El Farse and Fast Trading paid for the purchase of the Uniforms from SMQ. SMQ itself arranged for Arab International Bank (El Tahrir Branch) (“AIB”) to issue in favour of Karim irrevocable transferable letters of credit (“the AIB L/Cs”) which Karim then transferred to ZTIEC though transferred letters of credit issued by HBZ (“the HBZ L/Cs”) on 7 and 8 August 2000. 8.The AIB L/Cs specified the ports of loading and discharge as Suez, Egypt and Um Qaser, Iraq respectively. An amendment dated 11 October 2000 added the conditions that “only ocean-marine carrier bills of lading acceptable showing load port as Suez to Um Qasr with freight prepaid B/L” and “that no forwarders or short form bill of lading acceptable”. By an amendment dated 28 September 2000, 31 October 2000 was fixed as the latest shipment date. 9.The HBZ L/Cs, as originally issued, also specified shipment from Suez to Um Qaser. However, by an amendment dated 21 August 2000, the HBZ L/Cs were revised to allow shipment from Shanghai. 10.Uniglory was engaged to ship the Uniforms from Shanghai to Um Qaser through a chain of freight-forwarders. The freight-forwarder with whom Uniglory dealt was Vast Ocean International Transportation Co. Ltd (“Vast Ocean”). According to Evergreen, in the course of the prior negotiation, Vast Ocean had requested Uniglory to state the port of loading as Suez in the bills of lading to be issued by Uniglory. Upon Uniglory’s refusal, Vast Ocean indicated that it would arrange for house bills of lading to be issued. Then, sometime around October 2000, Vast Ocean told Uniglory that it was no longer necessary for the port of loading to be stated as Suez and requested Uniglory to issue bills of lading. Hence, the Uniglory B/Ls were issued. 11.Beginning from 21 October 2000, Uniglory carried the Uniforms from Shanghai to Dubai where they were transhipped to Um Qaser by Simatech Shipping LLC (“Simatech”), a liner operator providing a “feeder” server to Iraq for Uniglory and a number of other carriers at the time. The Uniforms were then delivered in Iraq by Simatech to the custody of the Iraq State Company for Water Transport (“SCWT”) which had exclusive authority over all activities at Iraqi ports including Um Qaser and arranged and authorized the unloading of cargoes and acted as marine agent for all carriers at such ports. 12.SCWT, in turn, released the Uniforms to MHESR against “letters of undertaking” issued by MHESR and not the Uniglory B/Ls. It is Evergreen’s case that this was in accordance with the working practice for release of goods prevailing at Iraqi ports at the time and that Uniglory had advised Vast Ocean of such practice beforehand. 13.Apparently, El Hosan, El Farse and Fast Trading had all obtained full payment for the Uniforms under the BNPP L/Cs. The evidence adduced by Evergreen shows that El Hosan, El Farse and Fast Trading did so by submitting to BNP Paribas (New York Branch) bills of lading that were forgeries as none of the Uniglory B/Ls complied with the conditions as to the origin of shipment under the BNPP L/Cs. 14.ZITEC also obtained payment but only for the Uniforms shipped under 31 of the Uniglory B/Ls (“the Paid Uniglory B/Ls”), for which AIB had debited SMQ’s account under the AIB L/Cs. ZTIEC claimed to have been unable to obtain payment for the Uniforms shipped under the remaining 21 Uniglory B/Ls (“the Unpaid Uniglory B/Ls”). On the other hand, SMQ claimed to have been unable to obtain payment from El Hosan, El Farse and Fast Trading for the Uniforms for which it had paid under the AIB L/Cs as aforesaid. Both SMQ and ZTIEC had taken legal actions against Uniglory on the premises of such non-payment. 15.Taking these actions in reverse order, in 2002, SMQ sued Uniglory in Egypt for compensation for wrongful release of the Uniforms for which SMQ had paid under the AIB L/Cs without production of the original bills of lading. The Egyptian courts dismissed this action and SMQ’s appeal therefrom on the ground that SMQ was not a party to the Uniglory B/Ls. 16.Of greater relevance to this application is the action (“the ZTIEC Action”) commenced by ZTIEC against Uniglory in the Shanghai Maritime Court, PRC on 7 November 2001 for compensation for wrongful release of the Uniforms shipped under the Unpaid Uniglory B/Ls without production of the original bills of lading. On 25 December 2002, ZTIEC obtained judgment for the sums of US$2,602,562 being the value of the Uniforms shipped under the Unpaid Uniglory B/Ls and RMB3,393,537.44 being the amount of tax refund that ZTIEC was supposed to receive for such uniforms. Evergreen’s appeal and application for re-hearing were dismissed on 4 September 2003 and 5 February 2007 respectively. 17.Uniglory itself had also taken the offensive by suing BNP Paribas, BNP Paribas (New York Branch), HBZ, Simatech and ZTIEC in the Shanghai Maritime Court on 1 December 2003 for compensation for the loss and damage that it had suffered from shipping fraud (“the Uniglory Action”). The Shanghai Maritime Court dismissed the Uniglory Action on 23 February 2006, holding that the loss and damage suffered by Uniglory was caused by its own wrongful release of the Uniforms shipped under the Unpaid Uniglory B/Ls. Evergreen’s appeal was dismissed on 19 April 2007. Purpose of these proceedings 18.Evergreen intends to apply to the Supreme Court of the PRC for a re-hearing of the ZTIEC Action. The present application is made with a view to obtaining information that might assist Evergreen in overturning or, at least, reducing the judgment against Uniglory in the ZTIEC Action. 19.There is no dispute that as a matter of general principle, a Norwich Pharmacal order may, in an appropriate case, be made for discovery in aid of foreign proceedings or potential foreign proceedings : Manufacturer’s Life Insurance Company of Canada v. Harvest Hero International Ltd [2002] 1 HKLRD 828 (CA). 20.Initially, Evergreen left open the possibility of other actions that it may take (including applying for a re-hearing of the Uniglory Action to which HBZ was a defendant) and asked for leave to use the information obtained in these proceedings for the purposes of
21.Evergreen has since confirmed by a letter dated 23 October 2007 from its solicitors to HBZ’s solicitors that the purpose of this application is to obtain documents to assist in Evergreen’s intended application for a re-hearing of the ZTIEC Action and that Evergreen is prepared to undertake not to use the information disclosed to resuscitate old proceedings or commence fresh proceedings against HBZ. Documents sought 22.Against the aforesaid background, Evergreen requires HBZ to disclose the following documents :
It is Evergreen’s case, supported by an uncontradicted PRC legal opinion, that it could not have obtained and would not be able to obtain sight of any of these documents in any past or future proceedings in the PRC. I will proceed on this basis. Information expected to be revealed 23.Evergreen seeks the aforesaid documents to confirm by what means and in what amounts ZTIEC had got paid for the Uniforms. 24.Evergreen wants such confirmation because it suspects that ZTIEC had
25.Evergreen’s suspicion that ZTIEC had collected more payment for the Uniforms than it had disclosed is fueled by the following:
26.The bases upon which Evergreen surmises that ZTIEC had presented shipping documents other than the authentic Uniglory B/Ls are that none of the Uniglory B/Ls complied with the condition in the AIB L/Cs as to the port of loading and that 17 of the Paid Uniglory B/Ls were issued after 31 October 2000, the latest shipment date permitted under the AIB L/Cs. Evergreen believes that ZTIEC had not presented the Uniglory B/Ls and had never intended to rely on such authentic shipping documents as a means to secure payment by Karim. This was so because Uniglory had advised Vast Ocean, the freight-forwarder who arranged shipment of the Uniforms for ZTIEC, of the procedure for the release of goods delivered in Iraq so that ZTIEC would have realized that it could not rely on the bills of lading to be issued by Uniglory to secure payment of the Uniforms from Karim. 27.For the sake of completeness, I should also mention that
Overview 28.The suspected wrongs in respect of which Evergreen seeks Norwich Pharmacal discovery are :
29.Evergreen makes the present application not to discover the identity of the wrongdoer. It has identified ZTIEC as the wrongdoer. 30.What Evergreen does not know and wants to find out through these proceedings is whether the said wrongs it suspects to have been perpetrated by ZTIEC had indeed been perpetrated. 31.It is implicit in Evergreen’s evidence that on the material presently available to it, it has no or no sufficient basis to even assert, not to mention prove, that the said suspected wrongs had been committed. 32.I see serious objections going to the court’s jurisdiction (as opposed to discretion) to order Norwich Pharmacal discovery in this case:
Fishing application The Issue 33.It is now settled that the Norwich Pharmacal jurisdiction is not confined to the identification of a wrongdoer but extends to discovery of other information that will enable the person who claims to have been wronged to protect his interests: see, for example, Yew Seng Computer (HK) Ltd v. Computerland Corporation [1986] HKLR 283, per Cons JA at p.286D-E. 34.In particular, the grant of Norwich Pharmacal discovery of information showing that a wrong has been committed by a known third party against the applicant is not without precedent. 35.As I see it, the issue raised here is as to the standard to which the court has to be satisfied that a wrong has occurred to justify giving Norwich Pharmacal relief. The authorities 36.Taking the authorities in chronological order, the starting point is P v. T Ltd [1997] 1 WLR 1309. In that case, the plaintiff was in the employ of the defendant in a relatively senior position with responsibility to put out to tender major contracts. He was told by the managing director of the defendant at 2 meetings that serious allegations had been made against him by an unidentified external party. The managing director, however, refused to disclose the source of the allegations which had asked not to be named or the contents of the allegations since to do so would identify the party making them. The plaintiff was then required to attend a disciplinary hearing to consider allegations of gross misconduct which had been made by an external party against him. The plaintiff was given the opportunity to make representations but could not do so because again, the defendant disclosed no detail of the allegations save the defendant conclusion that they were evidence of gross misconduct in the way in which the plaintiff had conducted himself with external contractors. Sir Richard Scott VC described the disciplinary hearing as no more than a farce. The plaintiff was summarily dismissed at the conclusion of the hearing. The plaintiff appealed his dismissal. The appeal hearing was as farcical as the disciplinary hearing as it was conducted in the same manner with the case against the plaintiff being withheld from him. It had become known within the industry that the plaintiff had been dismissed for alleged impropriety. He was, however, unable to clear his name without knowing what the allegations against him were and who had made them. He could not obtain another job and his career had been wrecked. 37.In addition to pursuing the defendant for various relief for unfair dismissal, the plaintiff in P v. T Ltd also applied by motion for an order for disclosure to him by the defendant of the allegations made against him and their source with the express intention of using the information to bring a claim against the source in defamation and/or malicious falsehood. Norwich Pharmacal discovery was necessary because it was not possible for the plaintiff to know for certain whether he did or did not have a viable cause of action against the informant without knowing the information that was supplied. He gave affidavit evidence that he had not committed any act justifying the description of gross misconduct. 38.In ordering Norwich Pharmacal discovery, Sir Richard Scotts VC said at p.1318C-F :
39.P v. T Ltd was considered and distinguished at first instance by Rimer J in Axa Equity & Law Life Assurance Society Plc v. National Westminster Bank Plc [1998] PNLR 433, another instance of an application for Norwich Pharmacal discovery being put on the basis that it was required to confirm if the applicant had a case against an identified third party. 40.In that case, the plaintiffs were investors who had subscribed for some £19 million of mortgage debenture stock issued by a listed company which owned and managed hotels. The company defaulted in payment of the interest due on the stock and eventually went into administrative receivership. The managing director was subsequently convicted of a number of offences of knowingly making misleading, false or deceptive statements and of forging or falsifying documents for the issue. The investors had taken out a generally indorsed writ of summons against the company’s auditors who carried out certain works in connection with the listing particulars, including the preparation of a working capital report and works in relation to a statement of indebtedness and extracts from the company’s audited financial statements. The investors had formed the belief that some of the financial information in the listing particulars and the audited accounts was untrue or misleading or contained material omissions in that the company’s indebtedness had been understated by £7 million and its available cash assets overstated by £4 million. The writ claimed damages against the auditors for negligence or breach of duty under s. 150 of the Financial Services Act 1986. The writ was, however, not served upon the auditors because the investors thought they would be unable to plead an adequate case of inaccuracy or negligence. The investors then issued a notice of motion against, inter alia, the company and 2 banks which were the company’s principal lenders, seeking discovery of documents in their possession relating to the preparation by the auditors of the company’s accounts and the listing particulars. 41.Insofar as it is relevant for present purpose, the investors, by their solicitor, asserted in their evidence on the motion that they were not in position to plead a case against the auditors because while they believed they had a case, they did not actually know whether they in fact had one, or if they did, what its factual basis was and whether it was of sufficient quality to make it worth progressing to trial. Rimer J, accepting such evidence, dealt with the application on the basis that further prosecution of the action against the auditors was dependent upon obtaining sufficient discovery to enable the investors to know whether they had a case against the auditors. Rimer J further came to the view that the investors claim based on s. 150 was extremely weak and was more likely to fail than not. The claim in negligence was somewhat stronger but the investors faced major difficulty in proving a breach of duty. 42.Having taken such view, Rimer J dismissed the motion for discovery on grounds of, inter alia, the poor quality of the investors’ case against the auditors and did so as a matter of jurisdiction and not discretion. His Lordship concluded at p.457A-D :
43.In coming to this conclusion, Rimer J first noted that all members of the House of Lords in Norwich Pharmacal regarded the plaintiffs therein as having the strongest prima facie case of infringement against the importers. In particular, Rimer J referred to the citation by Lord Cross of Chelsea of a passage from Post v. Toledo, Cincinnati and St Louis Railroad Co (1887) 11 NE 540, a decision of the Supreme Court of Massachusetts, which included the statement that “a bill for discovery cannot be used to enable a plaintiff to fish for information of any causes of action he may have against other persons than the defendant” and said at pp.445C-446B :
44.Rimer J then considered submissions by counsel for the investors based on subsequent authorities, namely RAC Corp v. Reddingtons Rare Records [1974] 1 WLR 1445; Société Romanaise de la Chaussure SA v. British Shoe Corporation Ltd [1991] FSR 1; Bankers Trust Co v. Shapira [1980] 1 WLR 1274 and Mercantile Group (Europe) AG v. Aiyela [1994] QB 366 in which the wrongdoers were already identified and the purpose of the order was not to identify a wrongdoer. His Lordship observed that in none of those cases was discovery sought to ascertain whether the plaintiff had a cause of action against a suspected wrongdoer and that disclosure was ordered on the basis that the plaintiff did have a prima facie or strong prima facie claim against the identified wrongdoer. Rimer J summarized at p.444A-C :
45.Rimer J was also referred by counsel for the investors to P v. T Ltd, which case his Lordship described at p.454D as “fairly remarkable” and at p.457A as turning on its own “very unusual facts”. Rimer J cited the passage quoted in §38 above and said at pp.456B-457A :
46.The Court of Appeal ([1998] CLC 1177) upheld Rimer J’s decision to dismiss the motion but on the grounds that the orders for discovery sought against the banks and the company would infringe the ‘mere witness’ rule because the investors could plead an arguable case against the auditors such as to give rise to a trial in due course in which both the banks and the company could be compelled to produce the documents sought and also that the banks were not so mixed up in the alleged tortious acts of the auditors as to warrant an order for discovery against them. 47.Insofar as it is material to the case before me, Morritt LJ, with whom Brooke and May LJJ concurred, disagreed with Rimer J’s assessment of the prospects of the investors’ claim against the auditors both under s. 150 and in negligence. And bearing in mind that a party was required to plead the material facts on which he relied and not the evidence by which he hoped to prove them, Morritt LJ saw no problem in the investors pleading good causes of action against the auditors and concluded that the investors already had sufficient information to ensure that there was a trial of the case they sought to make against the auditors if they chose to make it. In this regard, Morritt LJ held (at p.1183A-B, §18) that the court must have regard to all the evidence and was not bound by the conclusion of the investors’ solicitors as to the ability of the investors to plead and prove their claim so far as it depended on matters before the court. 48.Towards the end of his judgment, at p.1185D-E, Morritt LJ said obiter in favour of an applicant seeking Norwich Pharmacal discovery, not of the identity of a wrongdoer, but of a fact without which he could not properly formulate a claim against a known suspected wrongdoer the following :
49.I pause to observe that the different conclusion drawn by the Court of Appeal as to the apparent merits of the investors’ case against the auditors and the investors’ ability to sufficiently plead such case without the assistance of the information sought to be discovered does not, in my opinion, detract from what Rimer J said regarding fishing applications properly so called. 50.Nor do I read the above quoted passage from Morritt LJ’s judgment as suggesting that Norwich Pharmacal discovery of a fact necessary for the proper formulation of a claim against a known suspected wrongdoer can be ordered regardless of the quality of the applicant’s case for such a claim. Before the Court of Appeal, counsel for the investors did not contend that this case was so similar on its facts to that of any previously decided cases as to be determined by that earlier decision. Counsel accepted that Rimer J’s analysis of the earlier decisions and the distinctions between those cases and this was right. See p.1181H. 51.P v. T Ltd was followed in Carlton Film Distributors Ltd v. VCI Plc [2003] FSR 876 in which the intended claimant had licensed the intended defendant to make licensed copies of a number of films. The intended defendant did not itself make the copies. These were made by the respondent on the intended defendant’s behalf. The licence agreement between the intended claimant and the intended defendant contained restrictions as to the quantities that could be manufactured. Although the intended claimant had a right for an audit to be conducted, the intended defendant had made it plain that they did not have in their records dates of manufacture. The respondent had records of what had been made and when in the form of daily machine lists. The application for Norwich Pharmacal discovery of these daily machine lists against the respondent (against whom the intended claimant had no cause of action) was based on what Jacob J described as “reasonable grounds for supposing” that there was over-production during the course of the licence agreement. The intended claimant admittedly did not have enough material to plead an allegation that there had been a breach of the licence agreement and to sign a statement of truth required by CPR 22.1(1)(a) without the documents sought. 52.In finding jurisdiction to make the order sought, Jacob J noted that things had moved on since Norwich Pharmacal. In particular, P v. T Ltd showed that Norwich Pharmacal extended to cases where there was a good indication of wrongdoing, but not every piece of what the claimant needed to plead a case was fully in position. This extension was supported by Morritt LJ’s above-quoted dictum which seemed to Jacob J to have considerable force. See pp.878-879, §§ 9-12. 53.The Norwich Pharmacal application in Mitsui & Co Ltd v. Nexen Petroleum UK Ltd [2005] 3 All ER 511 arose out of the sale by the defendant’s former holding company, EnCana UK Holdings Ltd, to Nexen Energy Holdings International Ltd of the entire issued share capital of the defendant. The defendant’s primary asset was its interest in the Buzzard Field, the most significant oil field to be discovered in the North Sea in the past decade. The claimant was in an advanced stage of negotiation with EnCana UK Holdings’ parent company, EnCana Corp., for the acquisition of the defendant’s interest in the Buzzard Field and contended that EnCana Corp. had entered into an oral protocol agreement not to solicit offers from third parties in relation to the defendant’s interest in the Buzzard Field (the first limb) and to advise the claimant of any bona fide offers from third parties in relation to the Buzzard Field assets and to allow the claimant an appropriate time to respond to any such offer (the second limb). EnCana Corp. announced the sale to Nexen Energy just before the claimant and EnCana Corp. were due to sign the legal documentation. It was common ground that the court must proceed on the basis that the claimant had a real prospect of establishing the existence and enforceability of the protocol agreement. It was also common ground that if the claimant established the existence and enforceability of the protocol agreement, there was established a breach of the second limb. The claimant suspected that EnCana Corp. had also, in breach of the first limb, solicited from Nexen Energy’s holding company, Nexen Inc, an offer to purchase the defendant and applied for Norwich Pharmacal discovery to obtain the necessary evidence to establish whether or not this suspicion was well-founded and to enable the claimant to determine whether to sue EnCana Corp. or not. 54.Lightman J observed, at pp.517f-518e, §§19-20, that the Norwich Pharmacal jurisdiction, as subsequently developed, encompassed circumstances where disclosure of crucial information or a missing piece of the jigsaw, other than the identity of the wrongdoer, was required to enable the applicant to bring a claim against a known wrongdoer. His lordship set out, at p.518e-f, §§21, three conditions to be satisfied for the court to exercise the extended power to order Norwich Pharmacal relief :
55.The application was dismissed on the grounds that :
56.There was no issue that the first condition had been satisfied. It appears from the report that the claimant had grounds for strong suspicion that EnCana Corp. ‘tipped off’ Nexen Inc about the proposed sale of its interest in the Buzzard Field and thereby or otherwise solicited interest and an offer by Nexen Inc. There was evidence that EnCana UK Holdings and the defendant claimed that Nexen Inc became interested in purchasing the defendant’s interest in the Buzzard Field on around 19 October 2004. The agreement for sale was signed on 29 October 2004 which meant that Nexen Inc formulated the bid by Nexen Energy from start-to-finish in approximately 10 days. That agreement contained a mutual covenant to keep confidential information relating to the negotiations leading to the agreement. Between 5 and 26 November 2004, the claimant tried to ascertain from EnCana Corp. how it completed the transaction with Nexen Inc so quickly and why it failed to notify the claimant about Nexen Inc’s offer. EnCana Corp. failed to provide satisfactory details of how Nexen Inc’s bid came about, claiming such information to be confidential. The transaction was completed on 1 December 2004. 57.Lastly, it was held in MacDoel Investments Ltd v. Federal Republic of Brazil [2007] JLR 201 that it was not unjust that a duty to disclose should arise where the court was satisfied that there was a reasonable suspicion that the third party had been mixed up in the wrongdoing. The Jersey Court of Appeal (Bailhache, Bailiff, Smith & Jones JJA) so held partly because they saw no reason to require a higher threshold in respect of the question whether or not the defendant was a person who had become mixed up in the wrongdoing given that something less than prima facie evidence of wrongdoing was sufficient to enable the court to order disclosure. Lord Kilbrandon’s speech in Norwich Pharmacal at p.205G-H and Jacob J’s decision in Carlton Film Distributors Ltd v. VCI Plc were referred to. The principles 58.In my view, the points of principle that can be derived from the above authorities are as follows. 59.The categories of information for which Norwich Pharmacal discovery can be ordered are not close. As said by Lord Woolf CJ in Ashworth Hospital Authority v. MGN Ltd [2002] 1 WLR 2033 (HL) at p.2049, §57, using P v. T Ltd as an illustration, new situations are inevitably going to arise where it will be appropriate for the jurisdiction to be exercised where it has not been exercised previously. 60.In an appropriate case where it is necessary in the interests of justice, Norwich Pharmacal discovery can be obtained, not on the basis of an actual tort, but to find out if a wrong had been committed against the applicant and if so, the precise nature of the wrong. 61.This, I believe, is not inconsistent with the summary of principles by Ma J in A Co v. B Co [2002] 3 HKLRD 111 at p.117G-H, §13(1), one of which is the requirement of cogent and compelling evidence that serious tortious or wrongful activities had taken place. I say so because in dealing with the defendant’s objection that the plaintiff before him was “fishing” for information, Ma J drew attention to P v. T Ltd as an instance where the court ordered Norwich Pharmacal discovery notwithstanding the plaintiff’s inability to demonstrate to the court’s satisfaction the factors he referred to at p.120F-H, §13 of his judgment. 62.However, this is not to say that Norwich Pharmacal discovery to verify wrongdoing is to be lightly ordered. Orders for this purpose must by their nature be exceptional and rare. Although the applicant is essentially not in a position to show a prima facie case of wrongdoing and is acting on no more than a suspicion that wrongdoing may have been committed, such suspicion must be founded upon facts and circumstances which plausibly give rise to the suspicion and which the court can reasonably act on. In this regard, in P v. T Ltd, in support of the possible causes of action in defamation and malicious falsehood, Sir Richard Scott V-C did have before him evidence that the unidentified third party had made an allegation of gross misconduct against the plaintiff and the plaintiff’s deposition on affidavit that he had done nothing that justified such allegation. The present case 63.The facts and circumstances summarised in §§25 and 26 above are, to my mind, insufficient to pass the “reasonable suspicion” threshold. 64.The fact that other parties in the chain of supply of the Uniforms had obtained payment under different letters of credit with the use of forged bills of lading is a red herring and irrelevant. As noted by Mr J.E. Jamison of Messrs Clifford Chance, solicitors for HBZ, the letters of credit under which ZITEC should apply for payment were the HBZ L/Cs, not the AIB L/Cs. The HBZ L/Cs had been revised to permit shipment from Shanghai. The Uniglory B/Ls were actually compliant. There was no need for ZTIEC to use any other shipping documents. 65.As for the amount that ZTIEC had got paid for the Uniforms, there is evidence of the payment that had been made by SMQ in the form of 2 copy letters dated 10 June 2001 (which was some 6 months after the last shipment of the Uniforms from Shanghai in December 2000) from AIB to SMQ, certifying that AIB had debited SMQ’s current account with it for various sums that AIB had transferred to the beneficiaries of the AIB L/Cs. The numbers of the bills of lading under which the goods paid for were shipped were listed. The 21 Unpaid Uniglory B/Ls were not among them, meaning that SMQ had not paid for the Uniforms shipped under such bills of lading. Also, SMQ’s letter before action to Uniglory dated 14 June 2001 referred only to the 31 Paid Uniglory B/Ls. Thereafter, SMQ claimed against Uniglory on the basis that it had paid for the Uniforms shipped under the 31 Paid Uniglory B/Ls but had not been able to recoup such payment from El Hosan, etc. Other than what was paid by SMQ under the AIB L/Cs, there is no evidence of any other funds out of which ZTIEC was paid. There is certainly no evidence that Karim had paid ZTIEC any sum which Karim had not been able to recoup from SMQ under the AIB L/Cs. In the light of the aforesaid evidence, I feel unable to attach any weight to :
HBZ not mixed up 66.The second objection mentioned in §32 above should be obvious and need no elaboration. 67.At the hearing, when I raised this objection, Mr Wong urged me to view the forgery and presentation of unauthentic shipping documents to obtain payment for the Uniforms and the making of a false or inflated claim against Uniglory by ZTIEC as a single transaction. I do not think this is right on proper analysis. 68.One cannot emphasize enough the extraordinary nature of Norwich Pharmacal relief (see, e.g., A Co v. B Co, per Ma J at p.116J, §12). In my view, there is no room for imprecision or approximation. The purpose of an order for Norwich Pharmacal discovery is to provide a party who has been wronged with the information that he requires to seek redress against the wrong by action or otherwise assert his legal rights against the wrongdoer in respect of such wrong. It is therefore important to identify the precise wrong or suspected wrong of which the applicant claims to be the victim and in respect of which he has legal rights to assert. 69.Nor can one emphasize enough the significance of the requirement of involvement in the wrongdoing on the part of the party against whom Norwich Pharmacal discovery is sought. As explained by Lord Woolf CJ in Ashworth Hospital Authority v. MGN Ltd, at p.880A-B, §§35-36, the need for involvement, though not stringent, is still a significant threshold requirement because it distinguishes the party against whom Norwich Pharmacal discovery is sought from a mere onlooker and justifies the intrusion to be occasioned to that party by an order for disclosure. 70.Uniglory has no locus to raise any claim out of ZTIEC’s alleged forgery and presentation of unauthentic shipping documents to obtain payment for the Uniforms. Uniglory only became a victim when ZTIEC allegedly made a false or inflated claim against it in the ZTIEC Action after having so obtained payment for all or part of the Uniforms shipped under the Unpaid Uniglory B/Ls. 71.The only things that HBZ had done were processing ZTIEC’s application for payment and making payment under the HBZ L/Cs. The point is not, as Mr Jamison puts it, that HBZ was merely doing what it does as a bank. In Norwich Pharmacal, the Customs and Excise Commissioners acted in performance of their statutory duties but they were held to have become “mixed up” in the importation of the infringing goods because without certain action on their part such infringements could never have taken place and they had therefore facilitated the commission of such tortious acts: per Lord Reid at p.174F. See also Lord Morris at p.181B-D; Viscount Dilhorne at p.188C-D; Lord Cross at p.197F-G and Lord Kilbrandon at p.204B-D. So here the real point is that HZB did not, by processing ZTIEC’s application for payment or making payment under the HBZ L/Cs, facilitate the making of the allegedly false or inflated claim by ZTIEC against Uniglory. On this, I refer to the third of the 3 conditions for the grant of Norwich Pharmacal relief as formulated by Lightman J in Mitsui & Co Ltd v. Nexen Petroleum UK Ltd at p.518e-f. I also refer to §21 of Morritt LJ’s judgment in Axa Equity & Law Life Assurance Society Plc v. National Westminster Bank Plc. 72.For the foregoing reasons, I dismiss Evergreen’s application against HBZ. 73.I also make an order nisi that Evergreen should pay HBZ the costs of this application, including costs previously reserved, to be taxed if not agreed.
Mr Jonathan Wong, instructed by Messrs Robertsons, for the Applicant Mr J E Jamison, of Messrs Clifford Chance, for the 2nd Respondent |
Cases cited in this judgment
Other judgments that cite this case