CITYABILITY LTD v. TREASURE SPOT INVESTMENTS LTD

HCA 1604/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1604 OF 2007

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D E C I S I O N

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1.  This is an application by the plaintiff for leave to refer to and use the defendant’s bill of costs and schedule of communications in its applications for orders of committal against Ms Alice Veronica Hutchens and Mr Allan Peter Lee. Leave to commence the committal proceedings was granted on 21 July 2009 and the proceedings were commenced on 5 August 2009. The bill of costs and schedule of communications were filed by the defendant on 19 July 2010 for the purpose of taxation of the costs payable by the plaintiff to the defendant.

2.  The committal proceedings are in respect of an alleged failure by the defendant to comply with an order of discovery by failing to disclose certain documents pursuant to an order of specific discovery.

3.  Ms Hutchens has tried to explain on affidavit that the alleged failure was due to accidental oversight.  She made a further affidavit and said that she did not disclose some documents pursuant to the order because she had formed the view that those documents did not have to be disclosed after discussion with senior counsel.

4.  The plaintiff says that the bill of costs and the schedule of communications are relevant to the committal proceedings.  It further says that it is entitled to refer to both documents in those proceedings as these documents were not produced by the defendant under compulsion.  Hence, they are not subject to the implied undertaking of the plaintiff not to use them for a collateral or ulterior purpose.

5.  The plaintiff’s primary position is that it is entitled to refer to both the bill of costs and the schedule of communications as a whole.  Its secondary position is a narrower one and is confined to item 215 of the bill of costs and item 284 of the schedule of communications.  Item 215 of the bill of costs reads:

“215. 28.01.08 Conference.”

Item 284 of the schedule of communications reads:

“Conference with Counsel

284.    On 28^th January 2008 attending Senior Counsel to discuss the trial and various applications (20%) [C10-216/223]

AVH2 – 42 minutes

LNL – 42 minutes

LNL – preparing – 15 minutes”

6.  The plaintiff says that the various applications as referred to in item 284 included an application for specific discovery that led to the order allegedly breached by the defendant.

7.  The defendant opposes the application on two grounds.  The 1st ground is that the two documents are subject to the implied undertaking as applied to documents disclosed in discovery and that they are not to be used or referred to for any collateral or ulterior purposes.  The 2nd ground is that the two documents are covered by legal advice privilege. 

8.  The plaintiff disagreed.  For the 1st ground, the plaintiff submitted that the bill of costs and schedule of communications are not subject to the implied undertaking.  The bill and schedule are merely documents for claiming costs and not produced under compulsion. 

9.  The plaintiff referred to Phipson on Evidence (17^th edn. at para.27-05) and submitted that the key to the implied undertaking under our Rules of the High Court is the principle of disclosure by compulsion.  If a party puts forward evidence or documents voluntarily, the implied undertaking does not apply to such evidence or documents.  It is immaterial that a failure to put forward the evidence or documents might be fatal to the case of that party. 

10.  The plaintiff also referred to Derby v Weldon (No. 2) (20 October 1988) where Sir Nicholas Browne-Wilkinson, VC said (page 8 of Lexis Transcript):

“The voluntary disclosure of documents in the course of interlocutory proceedings by a party does not come within the rationale which is the basis of the implied undertaking relating to documents disclosed on discovery. In relation to documents voluntarily disclosed the Court has not invaded the privacy of the party. The party has, for his own purposes in defending a case, decided himself to use the documents rather than maintain his privacy. It is the party who has destroyed the privacy of the document, not the Plaintiff or the Court.”

11.  The defendant however referred to Burns Inc. v Raychem Corp. & Anor [1999] 1 All ER 908 at 916E-G by Laddie J and [1999] 3 All ER 154 at 154 at 171A-C by the English Court of Appeal.  These decisions say that the implied undertaking applies to the underlying documents that are produced under compulsion in taxation proceedings.  The defendants submitted that this principle should also apply to the items listed in a bill of costs and schedule of communications in taxation proceedings.

12.  In relation to item 215 of the bill and item 284 of the schedule, I disagree with the defendant.  These two items do not reflect the content of the underlying documents and are therefore not covered by the implied undertaking.  Hence, this ground of opposition fails. 

13.  The plaintiff has a further argument against this ground.  It submitted that even if the bill of costs and schedule of communications were subject to the implied undertaking, they can still be used for policing and enforcement or observance of orders and undertakings given to the court in the action and in contempt proceedings against a party to the action.  Such proceedings are an incidental step in the action.  The plaintiff referred to Crest Home v Marks [1987] 1 AC 829 were Lord Oliver said at 860E-G:

“… The proper policing and enforcement or observance of orders made and undertakings given to the court in an action are, in my judgment, as much an integral part of the action as any other step taken by a plaintiff in the proper prosecution of his claim. The normal procedure where the contempt complained of is that of a party to the action is to apply for committal by motion in that action as an incidental step in the action. There is, in my judgment, nothing ‘collateral’ or ‘alien’ about enforcement of the court’s order in the action in which discovery is obtained and I do not entertain any doubt at all that documents disclosed on discovery in the action can perfectly properly be used for the purpose of taking such a step without in any way infringing the implied undertaking and without the necessity of obtaining the prior leave of the court. …”

14.  I further say that the mere fact that these contempt proceedings are instituted under a different title and action number does not make this principle inapplicable.  Hence, the implied undertaking would not prevent these two items from being referred to in the contempt proceedings even if they were subject to the implied undertaking.

15.  For the 2nd ground, the defendant submitted that the said entries are subject to legal advice privilege as they reveal records of a conference with counsel and the nature of the discussion with counsel. Their production for the purpose of taxation amounts only to a limited waiver of the privilege for the specific purpose of taxation.

16.  I also disagree with this submission.  Only some of the documents produced for taxation are privileged.  They include instructions to counsel to settle documents, briefs to counsel with enclosures, counsel’s advice and opinions, solicitors’ correspondence and attendance notes (Pamplin v Express Newspapers [1985] 1 WLR 689 at 692).  The two items referred to above do not reveal any privileged content of the underlying documents.

17.  Furthermore, I agree with the plaintiff that even if the two entries were privileged from production, the privilege has already been waived by the defendant’s filing of the affidavit of Ms Hutchens. Ms Hutchens’s affidavit purportedly explained that her failure to produce the documents in question was because she had formed the view that those documents did not have to be disclosed after discussion with senior counsel. 

18.  I therefore hold that the plaintiff is entitled to refer to and use the two entries referred to above in the defendant’s bill of costs and schedule of communications filed on 19 July 2010 in the plaintiff’s application for orders of committal against Ms Hutchens and Mr Lee.

19.  I also make a costs order nisi that the defendant do pay the plaintiff half of the costs of this application with certificate for counsel and the costs are to be taxed and paid forthwith.

20.  I do not require the defendant to pay the full costs, because the scope of the application is too broad.  There are 287 items in the bill of costs and 2,506 items in the schedule of communications.  The plaintiff did not intend to refer to any of them save the two items above-mentioned.  The plaintiff relied on principles of law and asked for a declaration of right to refer to the two lengthy documents without going through their contents save the said two entries.  I cannot tell whether the other contents may or may not contain or have incorporated from the underlying documents any matter that is privileged or which is for any other reason the plaintiff should not refer to.  The unnecessarily extended scope of the application has generated some unnecessary arguments in the opposition.  It is also not right to seek a declaration of entitlement to use and refer to documents without going through their contents with the court.