Daniel Carlos Scenna & Anor v Persons Unknown using the identity “Nancy Chen” & Ors

Disclosure orders against foreign banks are exceptional because compliance may infringe foreign sovereignty, confidentiality duties and local law. The court must balance the applicant’s need for information against the bank’s potential prejudice, with particular weight given to any real risk of liability abroad and the availability of an equivalent local remedy. Hot pursuit is relevant but is not a strict requirement.

For service out, the applicant must establish a good arguable case within a jurisdictional gateway, a serious issue to be tried, and that England is clearly or distinctly the most appropriate forum. A bank receiving funds for a customer ordinarily obtains good title as a bona fide purchaser for value, preventing proprietary and knowing-receipt claims absent participation or sufficient unconscionability. Receipt of funds does not ordinarily enrich the bank where it assumes a matching repayment liability.

The claim arose from an alleged multi-jurisdictional fraud in which approximately US$2.9 million was paid into accounts held by recipient companies at banks in Hong Kong and Australia.

At an ex parte hearing, the court granted worldwide freezing orders against the alleged fraudsters and recipient companies, but refused such relief against the banks. It nevertheless made disclosure orders requiring the banks to provide account information.

The present hearing concerned continuation of the freezing orders, challenges by two Australian banks to the disclosure orders, challenges to service and jurisdiction in the substantive claim against those banks, and costs following withdrawal of a renewed freezing-order application.

1. Freezing orders. The requirements for worldwide proprietary and non-proprietary freezing relief continued to be satisfied against the first to sixth defendants. The orders were therefore continued.
2. Disclosure against foreign banks. The five Bankers Trust criteria identified in Kyriakou v Christie Manson and Woods Ltd applied. Because the respondents were foreign banks, the additional principle in Mackinnon v Donaldson, Lufkin & Jenrette Corp required exceptional circumstances before disclosure could be ordered. There was a real risk that compliance would breach the common-law duty of confidentiality and the Privacy Act 1988. The availability of an equivalent and unopposed procedure in Australia materially weakened the case for retaining the English order.
3. Hot pursuit was not a strict condition of Bankers Trust relief. Its significance was that urgent necessity could constitute an exceptional circumstance capable of outweighing the infringement of foreign sovereignty. The present case was not hot pursuit, and no other exceptional circumstance existed. The disclosure orders were discharged.
4. Service out. The gateway requirement under paragraph 3.1(25) of CPR PD6B was satisfied for disclosure orders. However, the Banks had no serious issue to be tried, and England was not clearly or distinctly the most appropriate forum. The permission to serve out the disclosure order was therefore set aside.
5. Substantive claims. The equitable proprietary claim failed because the Banks were bona fide purchasers for value and were not alleged to have participated in the fraud. The knowing-receipt claim could not proceed without a continuing proprietary interest, and the necessary knowing or unconscionable conduct was not properly particularised. The unjust-enrichment claim disclosed no serious issue because the Banks assumed matching liabilities to their customers and, in any event, had available defences.
6. The service of the Claim Form on the Banks was set aside. The renewed freezing-order application was not an abuse of process, but the Claimants were ordered to pay the Banks’ costs because they had withdrawn it after causing costs to be incurred.