CHINA MEDICAL TECHNOLOGIES, INC (IN LIQUIDATION) AND OTHERS v. WU XIAODONG AND OTHERS

CHINA MEDICAL TECHNOLOGIES, INC (IN LIQUIDATION) AND OTHERS v. WU XIAODONG AND OTHERS

The ex parte bankers' books order was discharged because the plaintiffs lacked sufficient justification for proceeding without notice; however, on an inter partes basis a bankers' books order is appropriate for tracing and is re-granted on modified terms (limiting starting dates to the dates of first receipt into each account, adding liberty for BOC to apply if serious retrieval problems for documents older than seven years, and deleting paragraph 6), with a costs order nisi that BOC pay 50% of the plaintiffs' costs of the discharge summons.

Citation
[2021] HKCFI 286
Parties
1st Plaintiff: China Medical Technologies, Inc. (IN LIQUIDATION); 2nd Plaintiff: CMED Technologies Ltd; 3rd Plaintiffs: Cosimo Borrelli and Yuen Lai Yee (Joint and Several Liquidators of China Medical Technologies, Inc. (In Liquidation)); Applicant (discharge Summons) / Affected Third Party Bank: Bank of China (Hong Kong) Limited; 1st Defendant: Wu Xiaodong; 2nd Defendant: Samson Tsang Tak Yung; 3rd Defendant: Chen Zhong; 4th Defendant: Zhu Feng (Charles); 5th Defendant: Chong Wing Hip
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
3 February 2021
Case Number
HCA3391/2016
Procedural Posture
Civil Fraud and Tracing Proceedings With Bankers' Books Application Under S.21 Evidence Ordinance / Application by Bank of China to Discharge Bankers' Books Order; Inter Partes Hearing and Re Grant of Order; Costs Reserved (order Nisi)
Outcome
Original ex parte bankers' books Order of 11 December 2017 discharged; bankers' books Order re-granted inter partes on modified terms; costs order nisi that BOC pay 50% of plaintiffs' costs of the Discharge Summons
Legal Topics
Section 21 Evidence Ordinance, Bankers' Books Order, Ex Parte Application, Material Non Disclosure, Collateral Use Undertaking, Tracing Misappropriated Funds, Procedural Fairness
Source Language
EN
Civil Procedure Evidence Banking Law Trusts and Tracing Injunctions Section 21 Evidence Ordinance Bankers' Books Order Ex Parte Application +4 more

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Parties

China Medical Technologies, Inc. (IN LIQUIDATION)

1st Plaintiff

CMED Technologies Ltd

2nd Plaintiff

Cosimo Borrelli and Yuen Lai Yee (Joint and Several Liquidators of China Medical Technologies, Inc. (In Liquidation))

3rd Plaintiffs

Bank of China (Hong Kong) Limited

Applicant (discharge Summons) / Affected Third Party Bank

Wu Xiaodong

1st Defendant

Samson Tsang Tak Yung

2nd Defendant

Chen Zhong

3rd Defendant

Zhu Feng (Charles)

4th Defendant

Chong Wing Hip

5th Defendant

Procedural Posture

Civil Fraud and Tracing Proceedings With Bankers' Books Application Under S.21 Evidence Ordinance / Application by Bank of China to Discharge Bankers' Books Order; Inter Partes Hearing and Re Grant of Order; Costs Reserved (order Nisi)

Legal Issues

  1. 1 Whether the bankers' books order (BBO) obtained ex parte should be discharged for procedural irregularity
  2. 2 Whether there was material non-disclosure to justify setting aside the BBO
  3. 3 Whether a bankers' books order should be re-granted inter partes and, if so, on what terms (temporal scope; account opening/closing documents; administrative burden)

Ratio Decidendi

The ex parte bankers' books order was discharged because the plaintiffs lacked sufficient justification for proceeding without notice; however, on an inter partes basis a bankers' books order is appropriate for tracing and is re-granted on modified terms (limiting starting dates to the dates of first receipt into each account, adding liberty for BOC to apply if serious retrieval problems for documents older than seven years, and deleting paragraph 6), with a costs order nisi that BOC pay 50% of the plaintiffs' costs of the discharge summons.

Court Disposition

Original ex parte bankers' books Order of 11 December 2017 discharged; bankers' books Order re-granted inter partes on modified terms; costs order nisi that BOC pay 50% of plaintiffs' costs of the Discharge Summons

Orders

  • Discharge the bankers' books Order granted by L Chan J on 11 December 2017
  • Re-grant a bankers' books Order in terms of Annex I to judgment subject to modifications: (a) for transaction documents the Starting date for each account is the date on which the misappropriated funds were first transferred into that account; (b) include a proviso that BOCHK has liberty to apply if it encounters...