Hong Kong is a major international financial centre with a global network of individuals and entities utilising the region's sophisticated financial services. As such, a range of assets including liquid cash, securities, real property and tangible physical goods are all commonly held within, or routed through, Hong Kong.
The stability and success of the Hong Kong financial system, however, requires, inter alia, a well-functioning legal system that can reliably address any disputes, including those arising from fraud. Fortunately, Hong Kong's common law legal system and courts are well-positioned to determine such disputes, provide redress for claims sounding in fraud and facilitate asset investigation and recovery efforts. Generally, victims of fraud and dishonesty in Hong Kong may obtain compensation through civil tort claims, with requested relief in the form of damages, restitution, seizure of goods or property, injunctions, constructive trusts or account of profits. Victims of dishonest criminal activity may also be in line for compensation in connection with a criminal judgment through statutorily provided restitution.
Hong Kong law provides several avenues for discovering information germane to asset tracing and recovery. Although Hong Kong is a business and investor-friendly environment where banks and financial institutions typically strive to protect the privacy and confidentiality of their clients in accordance with local law and internal company policies, these companies do and must routinely obey court orders for disclosure. Hong Kong's sophisticated courts, however, do not issue such orders haphazardly and are frequently called upon to balance applications for disclosure against competing interests of privacy. Key legislation relevant to fraud-related civil asset recovery includes the High Court Ordinance, Evidence Ordinance, Rules of High Court, and Personal Data (Privacy) Ordinance, and each may affect the admissibility of evidence and access to evidence used in asset recovery efforts.
From a criminal case perspective, individuals and entities may look to the Hong Kong police force (particularly the Commercial Crime Bureau, the Organized Crime and Triad Bureau and the Joint Financial Intelligence Unit) or the Independent Commission Against Corruption, or both, to trace and confiscate proceeds of crime. Civil parties, however, should be aware that it is extremely difficult to obtain evidence from law enforcement and regulatory agencies for use in civil proceedings, as they are subject to the Personal Data (Privacy) Ordinance. Usually, law enforcement and regulatory agencies refrain from releasing data to any person unless that person is the subject of the data or a relevant person (e.g., parent of a minor). Legislation relevant to fraud-related criminal asset recovery includes the Organized and Serious Crimes Ordinance, which provides for restraint of assets or charge of property to preserve it for the purpose of satisfying a confiscation order, as well as the Mutual Legal Assistance in Criminal Matters Ordinance, which regulates assistance in criminal matters between Hong Kong and places outside Hong Kong, and thus may be relevant to the confiscation of proceeds of crime that has crossed borders.
II LEGAL RIGHTS AND REMEDIES
i Civil and criminal remedies
Civil actions against persons who committed a fraud
Depending on the specific circumstances of the matter, there are a few civil claims sounding in various types of tort that a victim of fraud may bring against the person who committed the fraud. These include the following, each with particular forms of relief.
Fraud generally involves some manner of deceit practised by the defendant and may take several forms, such as fraudulent misrepresentation, deceit and fraudulent inducement and, in the context of insolvencies, fraudulent conveyance and fraudulent trading.2 An action for damages is the most common relief sought for fraud, although other remedies, including those equitable in nature, may also be sought.
Breach of fiduciary duty
Breach of fiduciary duty, whereby a wrongdoer owes a duty to the victim (such as the type directors and officers owe to companies), yet acts in a manner that the wrongdoer does not honestly believe is in the victim's best interests or is for an improper purpose.3 An action for damages may be warranted for such a breach, but other remedies, including injunctive relief or an account of profits to recover any ill-gotten profits, may also be appropriate.
Unjust enrichment, whereby someone receives a benefit at the victim's expense such that it would be unconscionable for the defendant to retain the benefit.4 An action for money had and received seeks restitution for unjust enrichment, although in certain circumstances the relief sought may be stylised as a repayment of a loan.
Conversion, whereby a fraudster has effectively misappropriated the victim's property.5 An action for restitution or damages, or both, is the natural remedy, and where the property has been sold, a victim may pursue an action for money had and received.6
Civil actions against persons who assisted in the commission of a fraud
There may also be civil claims against persons who assist the primary fraudster in the commission of the wrongdoing as follows.
Conspiracy, whereby there is an agreement between the conspirator and the fraudster with intent to injure the plaintiff, acts carried out pursuant to that agreement and intention, and damage to the victim.7
Dishonest assistance, whereby the defendant dishonestly assists with another's underlying breach of trust or fiduciary duty, with resulting loss.8
Civil actions against third parties who may receive or help transmit the proceeds of fraud
Claims may also be brought against third parties that receive or handle the proceeds of fraud. In particular, plaintiffs may pursue constructive trust claims in pursuit of equitable relief against third parties who knowingly receive trust property or its traceable proceeds that were transferred in breach of trust. Claims may also be brought against third parties who knowingly assist in a trustee's breach of trust.9
Standards of proof
Under Hong Kong law, civil claims are adjudicated based upon the balance of probability test, which effectively is a 'more likely than not' standard. Stronger evidence is required to establish the balance of probability for allegations that are more serious in nature because the court presumes that the more serious the allegation, the less likely it is to have occurred.10 For example, fraud is usually less likely than negligence,11 so in cases alleging fraud, although the technical standard remains the same, what evidence is required to meet that standard is inherently greater. There are also strict rules in place when pleading allegations of fraud, such that the plaintiff must have an evidentiary basis before making such pleadings.
Criminal actions against persons who committed a fraud
Criminal claims related to fraud typically arise in connection to the following:
- where goods have been stolen and a person is convicted of any offence with reference to the theft, the court may order restitution;12 or
- the Criminal Procedure Ordinance provides for restitution where any person is convicted of an indictable offence (i.e., more serious offences) such as this.13
Criminal actions against persons who assisted in the commission of fraud
Criminal claims against persons who assist in fraud include:
- where the agreement itself is the crime; and
- where aiders, abettors and accessories, which the Criminal Procedures Ordinance identifies as any person who aids, abets, counsels or procures the commission by another person of any offence, are guilty of the underlying offence.14
Criminal actions against third parties who may receive or help transmit the proceeds of fraud
The Organized and Serious Crimes Ordinance, inter alia, creates offences relating to the proceeds of crime. For example, a person that knows, or has reasonable grounds to believe, that property in whole or in part directly or indirectly represents a person's proceeds of an indictable offence, such as the ones above, commits an indictable offence him or herself, which is subject to a restitution order.15
Standards of proof
For criminal actions, the prosecution bears the burden of establishing the charges beyond a reasonable doubt.16
ii Defences to fraud claims
Civil fraud claims must be brought within six years of the date on which the cause of action accrues, but in fraud matters, pursuant to the Limitation Ordinance, this clock does not begin to run until the plaintiff discovers the fraud or could, with reasonable diligence, have discovered it.17 Plaintiffs, however, cannot act against an innocent third party who purchased the property for valuable consideration and without notice of the fraud – in other words, at the time of the purchase, the third party did not know or have reason to believe that a fraud had taken place.18 Such innocent third parties instead possess defences to claims against them in connection with the property at issue, such as unjust enrichment arising from fraud, which otherwise might ensnare the blameless.
In criminal matters, for serious offences – which are likely to include matters relating to fraud – there is no formal time limit for the commencement of a prosecution (in contrast to minor 'summary offences', which generally have a six-month limitation period starting from the commission of the offence).19
III SEIZURE AND EVIDENCE
i Civil actions
Securing assets and proceeds
With respect to civil matters, there are several forms of interim relief available in Hong Kong to prevent the dissipation of assets by, and to seek discovery from, those alleged to be involved in fraud.
A Mareva injunction is a court order preventing a defendant from dealing with, moving or disposing of his or her assets. In other words, the defendant's assets are 'frozen' such that any attempt to transfer or dissipate those assets would violate the court's order, subject to contempt of court penalties. The order is also binding on third parties to the extent that any third party who is served with the order and subsequently assists the defendant in moving his or her assets will also be in contempt of court. Thus, in practice, Mareva injunction orders are routinely served on banks at which defendants maintain accounts, which results in the banks taking immediate steps to freeze the accounts.
The Mareva injunction also requires the defendant to make disclosures regarding all owned assets and may, in certain circumstances, require third parties, such as banks, to disclose information relating to the defendant's assets held by them. Because of the considerable restriction such an injunction places on a defendant, there are several hurdles a plaintiff must overcome before securing such an injunction. Among these are that the plaintiff establish:
- a good arguable case on the underlying merits of the action;
- that the defendant has assets within the jurisdiction;
- that there is a real risk that defendant will dissipate the assets; and
- that the balance of convenience is in favour of granting the application.20
Mareva injunction applications may initially be made ex parte, but ultimately the defendant will have an opportunity to challenge and set aside the order.21 Where an application for a Mareva injunction is made ex parte, the plaintiff has an obligation to make full and frank disclosure to the court of all relevant material facts, including those not in his or her favour.22 A failure to make full and frank disclosure may result in the injunction being discharged.23 Plaintiffs seeking a Mareva injunction must also give an undertaking to pay to the defendant any damages the defendant might suffer from the injunction should it later transpire that the injunction should not have been granted.24 The court may also require the plaintiff to fortify this undertaking by making a payment into court or providing some other type of security (such as a bank guarantee).25 Hong Kong judges may grant a Mareva injunction in support of proceedings outside Hong Kong, and, in certain narrow circumstances, a 'worldwide' Mareva injunction that applies to assets located both in and beyond Hong Kong.26
Anton Piller order
Where a plaintiff is concerned that a defendant may hide or destroy evidence, he or she may seek an injunction requiring the defendant to permit the plaintiff to enter the defendant's premises to enable the inspection, seizure and removal of documents relating to the underlying matter. This injunction is historically known as an 'Anton Piller' order and is aimed at preventing destruction of evidence. The plaintiff must establish that:
- there is a strong prima facie case for a cause of action;
- the potential or actual damage to the plaintiff must be very serious;
- there must be clear evidence that the defendant possesses the items at issue; and
- there is a real likelihood (more than a mere possibility) that a defendant might destroy the material.27
Prohibition against debtors leaving Hong Kong
Pursuant to Order 44A of the Rules of the High Court, a plaintiff or holder of a judgment in its favour (a judgment creditor) may apply ex parte to the court for an order prohibiting a debtor from leaving Hong Kong, thus ensuring the debtor cannot escape to a more judgment-proof jurisdiction.30 The court will grant the application only where the prohibition is reasonably and properly conducive to the enforcement of a judgment involving money or property.31 If the judgment amount is still to be assessed or property is to be delivered, the court will make the order only where there is probable cause for believing the debtor is about to leave Hong Kong and that enforcement will thereafter be impeded.32
Interim attachment of property
Order 44A also provides for the interim attachment of property of a defendant where a defendant, with intent to obstruct or delay the execution of a judgment, is about to dispose of property.33 In such a circumstance, the plaintiff may apply to the court for an order requiring the defendant to provide security sufficient to satisfy any judgment that may be rendered against him or her in the action.34 Failing provision of such security, the court may direct any property of the defendant to be attached as security.35
Appointment of receiver or provisional liquidator
Where just and convenient, the Hong Kong court may appoint a receiver to recover and protect assets that defendants obtain in connection with fraudulent activity.36 The receiver may then realise and distribute the assets among victims of the fraud.37 Similarly, in circumstances where fraud was perpetrated through a company that was, or has now become, insolvent by way of the fraud, the court may appoint a provisional liquidator to preserve that company's assets pending the determination of a winding-up petition against the company.38
ii Obtaining evidence
Prior to securing assets and proceeds, potential plaintiffs in civil proceedings may need more information and evidence about the assets and proceeds before bringing an action. Plaintiffs seeking information on assets of a putative defendant may do well by searching public resources such as land, companies, business, trademark and vehicle registries as part of their investigative efforts.
In addition, Hong Kong's Rules of the High Court provide statutory rules on discovery and inspection of records for parties to a proceeding. In general, this encompasses documents that are or have been in the parties' possession, custody or power relating to the matters in question.39 Parties are to serve lists of such documents within 14 days of the close of pleadings in the action.40 Outside these statutory rules, the court may also, upon application, make other discovery orders. A few of these orders, briefly described below, are often key to fraud actions in particular, as they seek information from third parties who may have evidence about a wrongdoer or the wrongdoer's assets that would be otherwise unavailable.
Norwich Pharmacal order
Before an action is commenced, a proposed plaintiff may seek a Norwich Pharmacal order from the court to obtain documents from an innocent party that unknowingly facilitated or was caught up in the wrongdoing of others. Such orders are often employed to identify wrongdoers previously unknown to the plaintiff, obtain evidence in support of proposed proceedings against wrongdoers or identify assets belonging to wrongdoers. For example, an innocent third party (such as a bank) may hold funds derived from fraud, and a Norwich Pharmacal order may require that third party reveal from whom the funds were obtained, and any documentation evidencing that transfer. The plaintiff may then take this information and use it as a basis of a cause of action against a defendant he or she can now identify. To obtain such an order, the proposed plaintiff must establish that:
- there is a prima facie case against the unknown alleged wrongdoer;
- the target of the order was involved in some way in the matter;
- the target of the order must be the only practical source of information available;
- the target will be compensated for his or her expenses in complying with the order; and
- the public interest in disclosure outweighs privacy concerns.41
Evidence from banks
A Bankers Trust order is effectively a Norwich Pharmacal order targeted at an innocent third-party bank to provide information that enables tracing of funds that is normally otherwise protected by the bank's duty of confidentiality.42
Similarly, under the Evidence Ordinance, a party to a proceeding may apply to the court to order that a bank's books be opened to that party for the purposes of discovery in a matter.43 There have been occasions where the court has allowed discovery orders to be obtained against banks as part of a Mareva injunction order, specifically in circumstances where the plaintiff maintains that it has a proprietary interest in the funds held in a specific account.
iii Criminal actions
With respect to criminal matters, law enforcement authorities have certain powers to gather evidence and identify, trace and freeze proceeds, while certain other actions to restrain and seize assets lie with the prosecutor.
The Hong Kong police force acts pursuant to the Police Force Ordinance with respect to evidence-gathering procedures and seizure of suspected property.44 Prosecutors are likely to have the benefit of receiving evidence gathered by law enforcement, and in particular circumstances may pursue their own applications to the court for evidence-gathering orders.
Restraint of assets or property
Under the Organized and Serious Crimes Ordinance, a prosecutor may move for the restraint of assets or property to prohibit a defendant that has benefited from an offence specified under the Ordinance – including those arising from fraud – from dealing with any realisable property.45 Where such a restraint order is in place, the court may appoint a receiver to take possession of any realisable property, or otherwise manage or deal with the property.46 In addition, an authorised officer may also seize restrained property to prevent its removal from Hong Kong.47
The Organized and Serious Crimes Ordinance also allows for the prosecutor to apply to the court for a charging order on realisable property that has the effect of securing payment to the government backed by the property charged.48 Such an application may be made ex parte but is subject to those affected by it applying for its discharge.49
IV FRAUD IN SPECIFIC CONTEXTS
i Banking and money laundering
Hong Kong has a specific anti-money laundering ordinance, the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institution) Ordinance, which came into effect in 2012.50 This Ordinance works together with other ordinances, such as the Organized and Serious Crimes Ordinance, to deal with specific money laundering issues that may arise in the context of potential fraudulent activity. For example, under the Anti-Money Laundering Ordinance, financial institutions are required to conduct customer due diligence and maintain certain records, whereas the Organized and Serious Crimes Ordinance requires reporting of suspicious transactions.51
Separately, Hong Kong's Banking Ordinance addresses fraudulent activity by making fraudulent inducement to make a deposit a basis for a claim of fraud.52
In the context of insolvency, a defrauded creditor has the option of issuing a winding-up petition and applying for the appointment of a provisional liquidator where a company is concerned, or presenting a bankruptcy petition where an individual is concerned. The liquidator or trustee can force the debtor to provide information on assets, and he or she can claw back fraudulently conveyed property. Specifically, where a transfer is deliberately made to place assets outside a creditor's reach, the conveyance is voidable and may be set aside, except where made in good faith for valuable consideration and without notice of intent to defraud creditors.53 In addition, a liquidator or trustee may challenge the validity of unfair preference transfers, which occur when an insolvent company or bankrupt individual repays a creditor prior to the commencement of its winding up or bankruptcy, thus putting that creditor in a better position than it would otherwise be in liquidation or bankruptcy.54 The applicable time period for these unfair preference transfers are two years prior to the commencement of the winding up if the creditors are 'associates' (such as directors or employees), or six months for any other creditors.55 These powers seek to prevent fraudsters from finding a way to funnel money to themselves or associates.
Furthermore, the Bankruptcy Ordinance criminally penalises debtors that intentionally do not fully disclose or deliver to the trustee all his property, make material misstatements or omissions, fraudulently convey property, or otherwise act in ways designed to intentionally frustrate the insolvency process.56
Under Hong Kong's Arbitration Ordinance, unless otherwise agreed to by the parties, a party can challenge an arbitral award on the ground of serious irregularity, which, inter alia, includes the award having been fraudulently obtained.57
iv Fraud's effect on evidentiary rules and legal privilege
Hong Kong law respects legal professional privilege, including a crime or fraud exception to the privilege, similar to other common law jurisdictions. This exception identifies communications made in furtherance of a crime as not privileged.58
V INTERNATIONAL ASPECTS
i Conflict of law and choice of law in fraud claims
With respect to the conflict of law, generally Hong Kong courts evaluate four issues in determining whether personal jurisdiction over a defendant has been satisfied. First, Hong Kong courts determine whether a defendant may be deemed to have submitted to Hong Kong jurisdiction.59 Second, Hong Kong courts review whether a defendant was effectively served with the originating process in Hong Kong.60 Third, in cases where service is not possible or applicable in Hong Kong, the Hong Kong courts examine whether the court has jurisdiction to grant leave for service outside Hong Kong.61 Fourth, Hong Kong courts evaluate the appropriateness of exercising jurisdiction in a given circumstance (e.g., issues of forum conveniens).62
With respect to the choice of law, Hong Kong courts apply Hong Kong law to issues of procedure. Where there is a choice of law issue as to substantive law, Hong Kong courts, like many commonwealth jurisdictions, apply lex causae principles – principles that evaluate the proper applicable law to a given issue.63 In fraud cases, this may require an evaluation of where particular misrepresentations or actions at issue occurred.
ii Collection of evidence in support of proceedings abroad
If a foreign proceeding has already commenced or is contemplated, plaintiffs may seek from the relevant foreign court a letter of request directed at the Hong Kong authorities, seeking assistance in obtaining evidence.64 Assuming the foreign court issues the letter of request, local Hong Kong counsel would then make an ex parte application in Hong Kong attaching that letter of request and seeking an order from the Hong Kong court for the discovery sought in the letter of request. Alternatively, where putative plaintiffs seek pre-action information or disclosure from an innocent third party in Hong Kong, they may apply to Hong Kong courts for a Norwich Pharmacal order in support of their contemplated proceedings abroad.65 The general requirements for such an application are discussed in Section III.ii.
iii Seizure of assets or proceeds of fraud in support of the victim of fraud
Overseas plaintiffs may utilise Section 21M of the High Court Ordinance to seize assets or proceeds of fraud located in Hong Kong. Specifically, Section 21M authorises Hong Kong courts to grant various forms of interim relief in relation to proceedings that have been or are to be commenced outside Hong Kong and are capable of giving rise to a judgment that may be enforced in Hong Kong, which is generally a final and conclusive money judgment.66 Therefore, interim relief mechanisms, such as those described in Section III.i, are available to victims of fraud provided that the requisite elements are met. For example, victims may wish to pursue a worldwide Mareva injunction to freeze a defendant's assets globally. A plaintiff that successfully secures this assistance can continue pursuing foreign proceedings without having concurrent proceedings in Hong Kong.
With respect to criminal matters, the Mutual Legal Assistance in Criminal Matters Ordinance provides for the cross-border restraint and seizure of property in Hong Kong in connection with an offence committed outside Hong Kong. The Hong Kong Secretary for Justice may request an appropriate counterpart authority outside Hong Kong to make arrangements to enforce Hong Kong confiscation orders, and similarly, foreign authorities may make requests to the Secretary for Justice to enforce external confiscation orders.67
iv Enforcement of judgments granted abroad in relation to fraud claims
Hong Kong law has established judgment enforcement rules with respect to judgments granted abroad. The technical process by which such enforcement occurs varies based on where the foreign judgment was granted. Judgments from 15 countries (Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Italy, Israel, Malaysia, the Netherlands, New Zealand, Singapore and Sri Lanka) can be registered in Hong Kong by statute pursuant to the Foreign Judgments (Reciprocal Enforcement) Ordinance.68 Where this Ordinance is applicable, this method of judgment enforcement in Hong Kong tends to be preferable to other routes as it is simpler – essentially, all that is needed is an ex parte application to the court, although potential defences include a foreign court's lack of jurisdiction, improper service, procurement of the judgment by fraud, public policy concerns and concerns that the rights under judgment are not vested in the person applying for the enforcement.
Judgments from mainland China are covered by its own ordinance, the Mainland Judgments (Reciprocal Enforcement) Ordinance. This Ordinance is similar to the Foreign Judgments (Reciprocal Enforcement) Ordinance and pertains to registration of money judgments for disputes arising out of commercial contracts (excluding employment and matrimonial contracts).69 The judgments at issue cannot be in respect of a tax, fine or penalty, and defences include those described above with respect to the Foreign Judgments (Reciprocal Enforcement) Ordinance.70
Where the above ordinances are not applicable, judgment creditors will need to commence substantive proceedings in Hong Kong by suing on the foreign judgment (and usually applying for summary judgment) to seek recognition of the foreign judgment and realisation of the assets. This tends to require proof that the foreign judgment is a final judgment, for a fixed sum and from a competent court.71 Defences include lack of jurisdiction, breach of natural justice, fraud and where enforcement is contrary to public policy.72
v Fraud as a defence to enforcement of judgments granted abroad
As noted above, a judgment obtained by fraud is a defence to the Foreign Judgments (Reciprocal Enforcement) Ordinance, the Mainland Judgments (Reciprocal Enforcement) Ordinance and common law actions in Hong Kong to enforce a foreign judgment.
VI CURRENT DEVELOPMENTS
i Court of Final Appeal (CFA) clarifies test for Section 21M applications
In late 2016, the CFA clarified the legal principles applicable in making an order under Section 21M of the High Court Ordinance, which enables plaintiffs to freeze assets located in Hong Kong in aid of foreign proceedings, notwithstanding that no substantive proceedings are contemplated in Hong Kong.
In Compania Sud Americana de Vapores SA v. Hin-Pro International Logistics Limited,73 the CFA set out a two-stage test in determining whether to grant such relief.
The starting point is to consider whether, if the proceedings that have been or are to be commenced in the foreign court result in a judgment, that judgment is one that the Hong Kong court may enforce.
Next, the court will consider the same questions as if a Mareva injunction were sought in support of a local proceeding, namely:
- whether the plaintiff has a good arguable case; and
- whether there is a real risk that the defendant will dissipate its assets if the Mareva injunction is not granted.
If the first stage is satisfied, the court will consider whether granting such relief would be unjust or inconvenient owing to the fact that the substantive claim is being litigated in a foreign court.
In relation to the first stage, the CFA found that the Court of Appeal had misinterpreted the English case law, and held that the correct test is whether the plaintiff had a good arguable case in the foreign court, rather than to consider the strength of the substantive claim under Hong Kong law.
ii Obtaining evidence in civil and commercial matters between mainland China and Hong Kong
As one of the milestones to the road to enhancing mutual judicial assistance between Mainland China and Hong Kong, the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the HKSAR74 (the Arrangement) came into force on 1 March 2017. The Arrangement provides a channel with greater certainty and efficiency for the courts in one jurisdiction to seek assistance from the courts in the other jurisdiction, by way of letter of request, to obtain evidence for use in civil and commercial matters in the requesting jurisdiction. Under the Arrangement, the request for assistance has been simplified as the letter of request no longer needs to go through intermediary bodies.75 It's also notable that the scope of assistance provided by the two jurisdictions are not identical (with the PRC courts having the ability to request a wider scope of assistance from the Hong Kong courts).76 The Arrangement is generally welcomed in the legal industry, but how this Arrangement would affect practice is yet to be seen.
iii Two consultations to enhance the anti-money laundering regime
At the beginning of 2017, the Hong Kong government announced two consultations to enhance anti-money laundering and counter-terrorist financing regulation in Hong Kong. One is a proposal to amend the Companies Ordinance (Cap 622) to require companies incorporated in Hong Kong to maintain beneficial ownership information.77 The other is a proposal to amend the Anti-Money Laundering and Anti-Terrorist Financing (Financial Institutions) Ordinance (Cap 615) to require designated non-financial businesses and professions to observe statutory customer due diligence and record-keeping requirements.78 With a combined consultation conclusions paper issued on 13 April 2017,79 the government decided to implement the proposals and aim to introduce the amendment bills into the Legislative Council by July 2017.
iv Revised Guide to Asset Recovery in Hong Kong
The Department of Justice revised its Guide to Asset Recovery in Hong Kong in March 2017. The Guide sets out the procedures for restraint, confiscation and repatriation of proceeds of crime pursuant to international request for legal assistance to Hong Kong.80
1 Randall Arthur is a partner, Joyce Xiang is a litigator and Calvin Koo is an associate at Kobre & Kim. The information in this chapter was current as of September 2017.
2 See, e.g., LexisNexis Halsbury's Laws of Hong Kong,  Misrepresentation and fraud, [275.057] Meaning of 'Fraud', [275.137], Misrepresentation and fraud in other connections.
3 Grand Field Group Holdings Ltd v. Chu King Fai and Ors  HKCU 1470.
4 See e.g., Yukio Takahashi & Anor v. Cheng Zhen Shu & Ors  HKCA 594,  1 HKLRD 603.
5 LexisNexis Halsbury's Laws of Hong Kong,  Tort, [380.431] Right of possession and property, [380.433] Fraud on the part of the owner.
6 LexisNexis Halsbury's Laws of Hong Kong,  Tort, [380.450] Recovery by action.
7 Tempa Virginia Pido v. Compass Technology Company Limited & Anor  2 HKLRD 537,  HKCU 616.
8 Ho Lai Ming T/A Tung Hing Transportation Co v. Chu Chik Leung & Anor  HKCU 1614; Hecny Shipping Limited & Ors v. Huang Chun Jen Jerry also known as Huang Chun Jen & Anor  HKCU 2118.
9 See, for example, LexisNexis Halsbury's Laws of Hong Kong,  Trusts, [400.095], Knowing receipt or dealing; recipient liability, [400.098], Knowing assistance in breach of trust: accessory liability.
10 Re H & Ors (Minors) (Sexual Abuse: Standard of Proof)  AC 563; see also A Solicitor (24/7) v. Law Society of Hong Kong  2 HKC 1.
12 Id. at Section 30.
13 Criminal Procedure Ordinance, Cap 221, Section 84.
14 Criminal Procedures Ordinance, Cap 221, Section 89.
15 Organized and Serious Crimes Ordinance, Cap 455, Section 25; Criminal Procedure Ordinance, Cap 221, Section 84.
16 See HKSAR v. Choi Kuk Shek, Kendy and Ors  HKCU 1026; see also A Solicitor (24/7) v. Law Society of Hong Kong  2 HKC 1.
17 Limitation Ordinance, Cap 347, Section 4.
18 Id. at Section 26.
19 New Chuan Kong Investment Co Ltd v. Securities and Futures Commission  1 HKC 164; Magistrates Ordinance, Cap 227, Section 26.
20 Sweet & Maxwell, Hong Kong Civil Procedure, 2016, Volume 1, Part A, Section 1 Rules of the High Court, Order 29 Interlocutory Injunctions, Interim Preservation of Property, Interim Payments, Etc. 1. Application for Injunction (O.29, r. 1), 29/1/65 Requirements for Mareva Injunction, 693; see also Lam Sik Ying, administrator for the Estate of Lam Tim alias Stan Lam Tim, deceased v. Lam Sik Shi & Anor  HKCU 100.
21 Sweet & Maxell, Hong Kong Civil Procedure, 2016, Volume 1, Part A, Section 1 Rules of the High Court, Order 29 Interlocutory Injunctions, Interim Preservation of Property, Interim Payments, Etc, 1. Application for Injunction (O.29, r.1), 29/1/72 Setting aside, 696.
22 Id. at 29/1/71 Full and Frank Disclosure, Balance of Convenience, 695–696.
24 Id. at 29/1/20 Introduction, 679.
25 Id. at 29/1/24 Fortifying undertaking, 680.
26 See, for example, Dadourian Group Int Inc v. Simms  3 All ER 48; see also RACP Pharmaceutical Holdings Ltd v. Li Xiaobo  3 HKCU 636.
27 Giant Electronics Ltd v. In-Tech Electronics Ltd HCA 15823/1999.
28 Anthony James Hatton v. Dorothy Jane Furness & Ors  HKCU 249.
29 Sweet & Maxell, Hong Kong Civil Procedure, 2016, Volume 1, Part A, Section 1 Rules of the High Court, Order 29 Interlocutory Injunctions, Interim Preservation of Property, Interim Payments, Etc, 8. Allowance of income of property pendent lite (O.29, r.8), 29/8/20 Anton Piller Orders – Search and Seizure, 707; 29/8/32 Setting aside and discharge of orders and appeals, 710.
30 Rules of High Court, Cap 4A (O44A, Rule 2).
33 Id. at Rule 7.
36 Organized and Serious Crimes Ordinance, Cap 455 Sections 15–17.
38 Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32 Section 193.
39 Rules of High Court, Cap 4A (O 24).
41 Sweet & Maxell Hong Kong Civil Procedure, 2016, Volume 1, Part A, Section 1 Rules of the High Court, Order 24 Discovery and Inspection of Documents, 2. Discovery by parties without order (O.24, r.2), 24/2/1 Action for discovery, 571–572.
42 Bankers Trust Co v. Shapira  1WLR 1274 CA; see also A Co v. B Co  2 HKC 497.
43 Evidence Ordinance, Cap 8 Section 21.
44 Police Force Ordinance, Cap 232.
45 Organized and Serious Crimes Ordinance, Cap 455, Section 15.
48 Id. at Section 16.
50 Anti-Money Laundering and Counter-Terrorist Financing (Financial Institution) Ordinance, Cap 615.
51 Id.; Organized and Serious Crimes Ordinance, Cap 455, Section 25A.
52 Banking Ordinance, Cap 155, Section 93.
53 Conveyancing and Property Ordinance, Cap 219, Section 60.
54 Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap 32, Section 266B.
56 Bankruptcy Ordinance, Cap 6, Section 129.
57 Arbitration Ordinance, Cap 509, Sections 99–102 and Schedule 2.
58 The Law Society of Hong Kong Hong Kong Solicitor's Guide to Professional Conduct, third edition, 2013,  Confidentiality, [8.01] Duty of confidentiality, commentary, Paragraph 9; see also Secretary for Justice v. Florence Tsang Chiu Wing & Ors  6 HKC 285.
59 Graeme Johnston, The Conflict of Laws in Hong Kong, second edition, Sweet & Maxwell, 2012,  Jurisdiction, [3.001] Overview, 67.
63 Id. at 2.008.
64 Evidence Ordinance, Cap 8, Sections 75–77.
65 Manufacturer's Life Ins Co of Canada v. Harvest Hero Int'l Ltd  HKCU 285 CA.
66 High Court Ordinance, Cap 4A, Section 21M; see also JSC BTA Bank v. Mukhtar Kabulovich Ablyazov  5 HKC 209.
67 Mutual Legal Assistance in Criminal Matters Ordinance, Cap. 525, Sections 11–12.
68 Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 319.
69 Mainland Judgments (Reciprocal Enforcement) Ordinance, Cap 597.
70 Id. at Section 5.
72 Id. at Section 18.
73 Compania Sud Americana de Vapores SA v. Hin-Pro International Logistics Limited  HKCFA 79; (FACV 1/2016).
74 Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the HKSAR.
75 Articles 2 and 3 of the Arrangement.
76 Article 6 of the Arrangement.
77 Consultation on Enhancing Transparency of Beneficial Ownership of Hong Kong Companies.
78 Consultation on Enhancing Anti-Money Laundering Regulation of Designated Non-Financial Businesses and Professions.
79 Consultation Conclusions of Consultations on Legislative Proposals to Enhance Anti-Money Laundering and Counter-Terrorist Financing Regulation in Hong Kong.
80 Guide to Asset Recovery in the Hong Kong Special Administration Region.