HSIN CHONG CONSTRUCTION COMPANY LIMITED v. THE HONG KONG AND KOWLOON WHARF AND GODOWN COMPANY LIMITED AND ANOTHER

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HEADNOTE

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                In granting an application to set aside a subpoena duces tecum and ad testificandum issued under section 14(4) of the Arbitration Ordinance held :-

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

IN THE MATTER OF THE ARBITRATION ORDINANCE 1982 CAP. 341

and

IN THE MATTER OF AN ARBITRATION

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J U D G M E N T

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1. This summons is taken out by Mr. Breton Clyde Penman to set aside a subpoena issued against him by the Hong Kong and Kowloon Wharf and Godown Company who are the defendants in a pending arbitration between them and Hsin Chong Construction Company Limited. The subpoena is a subpoena ad testificandum as well as one dunes tecum. The subpoena was issued under Section 14(4) of the Ordinance which entitles a party to a pending arbitration to use the Court's powers of compulsion to secure the attendance of a witness at the arbitration. Like any other subpoena, it is issued in the first instance as an administrative act in this building, and only comes before the Court at all if an application is made to set it aside.

2. At the outset of the hearing, an issue arose as to the form of the application; and in particular whether it should be regarded as an application in the arbitration, to which all parties in the arbitration should be made a party; or whether it should have been issued as a personal matter between Mr. Penman and the Wharf Company to the exclusion of the plaintiffs in the arbitration. I then ruled that it was a matter which should be issued in the arbitration itself, with or without (a point which does not seem to me to be very material) the addition by the High Court of any proceedings number. It seems to me that in respect of all the matters dealt with in Section 14 of the Ordinance, the Court is being asked to intervene in support of the arbitration by, in a sense, providing procedural muscle which the arbitrator himself may not have. In those circumstances, it is acting in the arbitration, in support of the arbitrator. Therefore it seemed to me right that this summons was entitled, as it was, and issued in the arbitration, and that the plaintiffs were entitled to address argument to me upon the subject-matter of the summons, and indeed did so.

3. Now the matter is one of some importance and difficulty. It is a branch of the law upon which sadly there is not a great deal of authority. The only clear statement of principle is to be found in a decision of the Court of Appeal in England in Senior v. Holdsworth (1976) 1 Q.B. 23, in the judgment of Lord Denning. That was an application to set aside a subpoena duces tecum, or more correctly perhaps it was an appeal from what was treated by the Court of Appeal as such an application. In the course of his judgment, Lord Denning offered two tests as to the Court's attitude. He says at p. 31 :-

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The summons will be set aside (that is the witness summons) if the witness has no material documents or if it is oppressive or there is any other sufficient reasons to set it aside",

and he cites Steele v. Savory (1891) 8 T.L.R. 94 and Reg. v. Lewes Justices (1972) 1 Q.B. 232. At a later stage in his judgment in dealing with whether the Court should grant a request in the first instance, which is the other side in the same coin, he says : "If the judge considers that the request is irrelevant, or fishing, or speculative or oppressive, he should refuse it. " p. 35. In the course of his judgment, Scarman, L.J. expresses a test upon on page 40 C & D in slightly narrower terms drawing a distinction between a subpoena ad testificandum and a subpoena duces tecum. I have also noticed that the editor of Phipson on Evidence 13th Edn. at p. 687 para. 13-25, whilst expressing the view that the Court has inherent power to prevent an abusive of its process, questions the extent of this power and questions the decision in Morgan v. Morgan, 1977 Fam 122, which was one of the few cases where a subpoena ad testificandum has in fact been set aside.

4. I think one can conclude from that, that this is a case where the Court has jurisdiction to prevent abuse, but that it is a jurisdiction which should be exercised in any event sparingly. It should be exercised even more sparingly where the subpoena is a subpoena ad testificandum. But that the matters to which Lord Denning refers, "irrelevant", "fishing", "speculative" or "oppressive" must be very relevant subject-matters of enquiry. Perhaps not for the first time Lord Denning has pointed the way for others to follow.

5. That is the first problem arising out of this application. The second is this. These proceedings involve a pending arbitration, indeed one continuing today before the arbitrator. It is much easier for a trial Judge to deal with an application like this, in a trial which is proceeding before him. Because he then has total control of the action. He can do all sorts of things; test the temperature of the water; see how things go; and perhaps even postpone his decision until the decision is made for itself by the course such proceedings take.  No such courses are available to me here. I have to make up my mind. I am, as it happens, the Judge who is in charge of the subpoena; it is the arbitrator who is in charge of the proceeding. That is a fundamental distinction although there may be a certain element of overlap. I have got to take a decision this afternoon, in relation to proceedings where this intervention today will be my only part in them.

6. I take first, the subpoena duces tecum. This is expressed in a very wide terms as requiring Mr. Penman : "to bring ........... and produce all files, papers, documents, notes, memoranda and other writings relating to or having a relevance or bearing to Phase III of the Harbour City Development." That formula almost certainly covers a roomful of documents. The parties to the arbitration have already disclosed and copied a roomful of documents. It is accepted that what Mr. Penman is being asked to do, really by this subpoena, is not to add another roomful of documents. What he is being asked to do, is to go to his own files; and sort out the documents that he has got there; sort out the documents which he thinks are relevant to the various claims, which are made in this arbitration and bring those along to the hearing. It was said by Mr. Lane for the defendants that he must surely know now what the relevant documents are.

7. I cannot accept that approach. First, I do not accept that a party has any entitlement to issue a subpoena in these terms for the very limited real purpose which lies behind it. There is ample authority for the proposition that you cannot get general discovery by a subpoena in this way. That in itself is sufficient to discharge this part of the subpoena. Likewise, I have great difficulty in accepting as realistic, this hypothesis that Mr. Penman must surely know what this case is all about, and must surely be able without difficulty to put his finger on all the relevant documents. This part of the case points to some of the problems which arise on the other aspect; problems like why was not all this done months ago; why were not these documents identified months ago? As things now stand, it is quite obvious that it would be a very careful, lengthy process to ascertain which documents there are, which are relevant and which exists in the architect's files, as against those which are already in evidence and disclosed before the arbitrator. No one can start with that process without having a complete list of the documents before the arbitrator. With that in front of him, he will then have to go through the architect's files; find out what is there which is not in the list and consider whether any of those documents are privileged or relevant or what. This is a very lengthy process. I cannot accept that any witness can be required to go through that process. Still more I cannot accept that any witness can be required to do that without his proper charges being provided for in advance. I need say no more about the duces tecum aspect of this because that seems to me really to collapse under its own weight.

8. The ad testificandum part is very much more troublesome: and involves very much more difficult and complex considerations. To understand this, it is necessary to point to some of dates in the time table which I have been given. It seems to open on 28th May 1979 when work started on phase III. phase III was in fact the first part of Harbour city to be constructed. There was a certificate given by the architect, I have been told, on 14th April 1981, saying that that should have been the date of practical completion; whereas his actual certificate of practical completion was dated 2nd September of that year. The next material certificate was what was called the maintenance certificate, alias final certificate under this contract, which was given on 25th November 1983. I mention that for this purpose only. This seems to me from the documents, and I am bound to say from recollection, to be the date when architect and building owner started to fall out. Not long after that, on 13th January 1984, as I have been reminded from a copy judgment which was put in before me, a writ was issued by this contractor against the Wharf Company for the balance of the retention monies, less the deduction arising out of the difference in time between the certificates of the 14th April and 2nd September. This chanced to come before me under Order 14. I can remember that on that occasion, what the Wharf Company was seeking to do was to go behind the certificates of the architect and use other evidence in support of a defects case. I, therefore, am minded to conclude that the two parties had already started to distance themselves one from the other. This is again perhaps not surprising, because the writ to which I shall have to refer again in more detail, to which the architect was the 1st defendant, was issued on 4th November 1983.

9. This arbitration started, I am told, in March or April 1984. Points of claim were served on 15th June, and the Points of Defence and Counterclaim on the 12th October. That document was settled without reference at all to the architect. The Points of Claim were sent to him in November and the correspondences that ensued has been put before me. It came to an abrupt halt in March 1985 when solicitors on his behalf came on the scene and laid down conditions for the architect's future co-operation. They-involved : 1) payment of fees on Phase III; 2) an undertaking about future Phase III fees; 3) the agreement of the rate for the investigation into documents and copying; and 4) an undertaking as to the use to which those documents were going to be put. That was, I understand, not answered and tacitly or explicitly rejected by the Wharf Company, with the result that there were no further dealings, the one with the other, in respect of Phase III in the context of this arbitration.

10. I am told that in October 1985, the defendant's counterclaim was stood over. On 15th November 1985, the hearing date for the hearing of the arbitration from 28th April as the start, up to and including, and if necessary beyond, 6th June, was fixed. There was provision for exchange of expert's report. Then on 21st March, there was another approach by the Wharf Company to the architect asking for his assistance in respect to the pending arbitration on two bases: one that he had a duty to assist, and secondly that it was in his own interest to assist, because if he did not assist, he would be paying the resulting bill. The architect's solicitor replied that this was unreasonable; there was no duty and everything was happening too late. Those variations were repeated in the course of letters passing between then and the start of the arbitration, on Monday, 28th April.

11. On Friday of that week, this subpoena was issued, and it was returnable today. I was told on Friday that by then what might be called the plaintiff's evidence in chief on liability in respect of the 40 claims for extensions of time which formed the heart of this arbitration had been concluded, as had the cross-examination and the re-examination of those witnesses. The evidence has been taken in chief in writing. That writing is contained in no less than ten large files, which contain a number of pages of proof at the beginning and likewise extracts from the original documents appended to that part of the proof and relied upon by the author in support of each particular claim. That documentation, if I remember right, was sent to Mr. Penman early last week.

12. In those circumstances, I think certain things could be seen from this time table. First probably from about November 1983, there was a complete break between Wharf Company and architect in relation to Phase III, in the sense that the Wharf Company were no longer showing that they had any confidence in what the architect had done and were going elsewhere for advice. That situation ruled right through the pleading period in this suit. The defence was certainly settled without any reference. It survived until 21st March which was the eve of the hearing. On the eve of the hearing, there was this fresh approach which was abortive. This ended up with the issue and service of the subpoena before me. What has emerged is that the Wharf Company want to take the risk of calling the architect completely blind. They have very little idea what evidence that he can give. This is, as far as I can see, upon the basis that they have something possibly to gain and nothing to lose. If his evidence creates some impact on the arbitrator, then that will be benefical. If it creates no impact, then the evidence may be used on the alternative case which the Wharf Company had advanced which is against the architect personally.

13. That case, as I have said, was initiated in November 1983. It related to Phase I of the Harbour City Development which followed Phase III in point of time. The architect was the first of eighteen defendants named in that writ. The present state of that action, seems to be, that there is one outstanding arbitration because the 3rd defendants successfully got a stay of the action against them, but as against everybody else, the claim has been settled. The lst defendants are now the surviving and only defendants in the action. The action includes specific claims for all the monies paid to all the other defendants by way of settlement. What I gather is the third edition of the Statement of claim in that action, and which has been called the substitute Statement of Claim, was first served on 24th January of this year and reserved on 22nd February. By this document, the architect/defendants had for the first time to face a claim relating to Phrase III, which picks up all the claims being made by the plaintiffs in the present pending arbitration, and seeks to lay those at the door of the architect. I think that apart from an allowance of something like twenty-two days for weather, the theme of the Statement of Claim is that the Wharf Company is entitled to an indemnity in respect of all the claims payable by them to the claimants in the arbitration, and to damages for the very considerable difference in point of time, between twenty-two weather days and 400 or 500 additional days, I forget which it is, that this Phase took to complete. The claim is a very large claim indeed.

14. It is the existence of that claim which founds the architect's basic objection to this subpoena and the reason why it is principally asserted on his behalf that this proceeding is oppressive. There are no doubt a number of occasions when a person can find himself at the receiving end of either two claims, or two subpoenas, or two witness summonses, and find himself forced to give evidence in Action 1 which may thereafter be used to his disadvantage in Action 2. This is quite a common-place where Action 1 is a criminal proceeding because there the Crown is compelling his or her attendance. It can also occur where the proceeding is taken by a 3rd party. But the occasions must I think, be very rare in which the same party can bring about this result as against any particular individual. In the ordinary way, a plaintiff to an action cannot get leave to examine orally. We know nothing like the United States system of depositions before trial. All the plaintiff can do is to get leave to interrogate. This is fairly sparingly given, and then the answers are drafted by the witness with his legal advisers at his elbow. There is no way in which a party can ever get the sort of examination of a witness which would follow from implementation of this subpoena. This would involve the witness being asked questions in chief by his opponents counsel, questions which would be formulated on the basis of the criticism and comments made extensively in these proofs by the present contractor; and which the witness would have to answer without benefit of any advice, without the benefit of the attendance of his legal advisers and without the benefit of re-examination.

15. That is therefore a matter which is calculated to give rise to particular anxiety and a feeling of exposure by the witness concerned. It is certainly a very unusual situation. The nearest parallel I can think of, which is certainly not by any means unknown, is where you get both the parties in the same proceedings, with alternative claims being brought against say, a contractor and the architect. But that is a totally different situation. In that case, all the proceedings are going on with everybody there; and everybody hears all the evidence; everybody has a chance of cross-examining. The suggestion here is some distance removed from that. It seems to me that I have got to look at this with some care, before allowing what I regard as very unusual exposure. I have to consider whether this is being done because the witness can give vital and essential evidence and can be compelled to give such evidence; or whether upon examination, it looks as though words like irrelevant, fishing, speculative or oppressive, can be said to apply.

16. There are three points when looking at this which trouble me particularly. The first is that in the light of the history I have recited, it is plain that this architect was never regarded by the Warf Company in the formative stages of this arbitration as an essential witness at all. This in some respects is remarkable, because it was this gentleman who had in fact given his certificate in respect of time, both the extention certificate and the certificate of practical completion, and he was the architect named in the contract. It was somewhat surprising to find that the defence was settled in this case without any reference to him at all. The only explanation that I can think of for that, is that by the time that it happened there was a complete lack of confidence by the Wharf Company in this man and that that was a situation which ruled certainly until the eve of this hearing. In those circumstances, it now seems to me impossible for the Wharf Company to assert with any degree of conviction that this architect is now, and always was an essential witness. On the other hand, what was being said to me by Mr. Lane, more than once on their behalf, was that if this architect knows something, if there is a defence we must have it. If the architect has a document showing a good defence to this claim, we must have it. Now this seems to me to constitute an attempt to introduce the architect, by a process of trying to discover if he has anything useful to say which can then be engrafted upon the original defence. I do not know quite what Lord Denning had in mind which he uses the words "speculative" and "fishing". But it does seem to me that those two adjectives can properly be used to describe a process which is purely a process of trying to find out what, if anything, this architect now thinks can be said in support of his certificates, when no serious attempt was made to find out what his views were at the relevant time. That is the first problem as I see it.

17. The second is this. This subpoena is returnable tomorrow. I have the greatest difficulty in seeing how any effective evidence is likely to be given by the architect to the arbitrator tomorrow. This problem mirrors or echoes that which arises on the documents. It is perfectly apparent from reading that part of the points of claim which has been incorporated in Part 23 of the substitute Statement of claim, that this is a very complicated matter. I have heard talk of a critical path analyses, computer printouts and all the other hand maids of this art which give practitioners who have been around as long as I have grey hairs. It is perfectly plain that serious and proper consideration of the formulation of the contractor's present claim, is going to involve very careful study by Mr. Penman. He is going to have to start by reading ten volumes of Mr. Chan. At the same time he must read the supporting documents which Mr. Chan thinks support his case. He has then got to consider what other documentation exists which may bear upon the various claims, either as disclosed in the arbitration or as lies in the architect's file. This is a matter which is going to take days. It is something which has not even yet started. It seems to me self-evident and not really disputed, that this is not something which -a professional man like Mr. Penman can be required to do at all without a promise of proper award along the same lines as was asked for in two of the paragraphs back in March 1985, and swept aside. So there is no way in which Mr. Penman, today, can be criticised for not having started on that process.

18. Secondly, I personally have considerable doubts how far a witness who is giving evidence of an expert character can be compelled to undertake this process at all. The only case I know of where the court has considered the subpoena ad testificandum in the context of an expert evidence, is Harmony Shipping Co. v. Davies (1979) 3 All E.R. 177, where a handwriting expert, to his considerable embarrassment, found himself having given views to two different people in the same case. As it was his professional practice never to advise two people in the same case, he raised his hands in horror when the second of his clients subpoenaed him. He said that this was all wrong, and the subpoena must be set aside. Lloyd J. declined to do so, and the court of Appeal said he was right. It is very interesting to see that that was done upon the basis that all Mr. Davis, the expert, was being asked to do, was to express opinion upon two (or possibly four) short documents, which he had in fact seen. He was asked to speak as to "observed" facts. In the words of Lord Denning again at p. 181 : "It seems to me on principle that Mr. Davis can be subpoenaed. He can be seen beforehand and give a proof on those limited matters I have mentioned".

19. I have the utmost difficulty in seeing how an expert, and by expert in this context I include anybody who has got to do a great deal of homework to qualify himself to give evidence, can be forced to do that homework for the benefit of another party against his will. The ordinary sanction when a witness is recalcitrant in the witness box is contempt. If the witness has observed fact and is refusing to answer questions that is contempt. But I have a great problem in seeing how that can be extended to an expert. It seems to me that he is perfectly entitled to say : I have not done this homework : until I do that homework, I cannot give any intelligent or useful evidence. Putting the matter in the context of Mr. Penman in this case, he might say : "It is totally ridiculous for me to express a view on this case without reading all these files and all supporting documents pleaded. I have not done so because I do not want to do so. Until I do so, I can give no useful evidence at all". Unless the Court can say "Go away, Mr. Penman and do your homework", it is powerless to commit him for contempt. I know of no power under which I could, if Mr. Penman was in this Court, give him any such direction. Switching the old analogy a little, I think Mr. Penman would be entitled to say : "You can drag me to the trough, but you cannot make me drink". So I do not at the moment see how any sensible evidence could be extracted or compelled to be given in any event from Mr. Penman tomorrow.

20. I then move onto the third point. This is the programme which it is envisaged should be pursued, as I understand it, in the next few days, before the arbitrator, if I am wrong in what I have just said about Mr. Penman's compellability. It seems to me that what in substance would have to happen would go something like this. First Mr. Penman would have to be taken claim by claim through the ten volumes of Mr. Chan's proof to find out what his views are upon those claims, assuming as I am for the sake of this argument that he has done his homework. At the end of that examination in chief, which seems to me to be aptly described as a form of proof taking under oath, the matter would have to be adjourned for the defendants to consider how much of Mr. Penman's evidence they were proposing to adopt and to use and how much they were going to wish to incorporate in an amendment to the defence. They would then advance that amendment. I assume for this purpose that the arbitrator would have given leave for this evidence to be given, despite its expert nature and despite his earlier rulings, and will give leave to allow this amendment to be made. The next stage would have to be either the cross-examination of Mr. Penman by the claimant builders, or to the recall by the builders for further examination in chief and cross-examination of Mr. Chan and anybody else on the basis of this new defence.

21. I ask myself, because it is the only direct test I have; would that be permitted in any Court of Law? Would I permit it if this was happening before me? I have absolutely no doubt that I would not. No one could persuade me to sit through what would be several days of proof taking, whilst we discovered what Mr. Penman's view were on these various claims and wrote it all down. This seems to me to be totally unacceptable, and indeed it is a sort of procedure which is really beyond my contemplation. If pressed with the injustice of that, I think my answer to counsel would be; you cannot have everything both ways in this world. You have to treat your witness as either friend or foe. If you have treated him as a foe, you cannot come before the Court and compell him to assist you in this sort of way and by this sort of process.

22. I would have no doubt that that would have been my view. I accept that is not the right test. The right test here is whether this arbitrator would permit this to happen. With the greatest respect to him, for my part I cannot see how it could be regarded by any arbitrator as proper to allow this sort of procedure to take place after many days of hearing, and after the arbitration has been formulated on paper for nearly two years.

23. In those circumstances, it seems to me that this subpoena is oppressive. It will lead to something, which I minded to think Lord Denning would have described as fishing or speculative. It comes really too late in this whole exercise for there to be any effective change of course. It does not seem to me to be an effective, a compellable or on acceptable way of taking evidence in this arbitration. In my judgment, this whole subpoena has to be set aside, both the duces tecum part and the ad testificandum part. I have delivered this ruling as quickly as I could, because nothing else would have worked for the parties, I apologise if it is rather longer and more rambling than I would otherwise have wished.