XCHRX MILIBOW ASSETS SERVICES LTD. v. DOOYANG HONG KONG LTD.

HCA 3810/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3810 OF 2000

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J U D G M E N T

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1. This is a sequel to an interlocutory judgment handed down on 27 August 2001. I revert to that judgment for a description of the parties and the history of events which gave rise to this litigation.

2. The matters then dealt with were the joinder of a 2nd defendant by counterclaim, that is WBVI, and amendments to the pleadings in HCA 3810/2000 and amendments to the pleadings in HCA 3994/2000.

3. This judgment deals with nine further applications as follows:

A. Further & Better Particulars

(I) Milibow's application for further and better particulars (FBP) of the amended defence and counterclaim in 3810;

(II) Milibow's application for FBP of the amended statement of claim and of the reply and defence to counterclaim in 3994;

(III) RSL's application for FBP of the amended defence and counterclaim in 3994;

B. Discovery

(IV) Milibow's application for discovery in 3810;

(V) Milibow's application for discovery in 3994;

(VI) DHK's application for discovery in 3810;

(VII) RSL's application for discovery in 3994;

C. Interrogatories

(VIII) Milibow's application in 3810 that interrogatories served without order be withdrawn;

(IX) Milibow's application in 3994 that interrogatories served without order be withdrawn.

4. I propose to deal with these applications in the same order, because they are conveniently categorized.

A. Further and Better Particulars

5. These applications being made under Order 18 rule 12 RHC it is I believe appropriate to restate what at 18/12/1 in the White Book is said to be the effect of the rule:-

" Effect of rule - The requirement to give particulars reflects the overriding principle that the litigation between the parties, and particularly the trial, should be conducted fairly, openly, without surprises and, as far as possible, so as to minimise costs. In Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marsden [1994] 2 H.K.C. 264 Bokhary J.A. (as he then was) said at 269E-270E that the functions of properly particularised pleadings are as follows:

(1) to inform the other side of the nature of the case that they have to meet as distinguished from the mode in which that case is to be proved;

(2) to prevent the other side from being taken by surprise at the trial;

(3) to enable the other side to know with what evidence they ought to be prepared and to prepare for trial;

(4) to limit the generality of the pleadings, the claim and the evidence;

(5) to limit and define the issues to be tried, and as to which discovery is required;

(6) to tie the hands of the party so that he cannot without leave go into any matters not included (although if the opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings).

It is not the function of particulars to take the place of necessary averments in the pleading, nor "to state the material facts omitted ... in order by filling the gaps, to make good an inherently bad pleading" (per Scott L.J. in Pinson v. Lloyds, etc., Bank [1941] 2 K.B. 72 at 75).

The purpose of pleadings is not to play a game at the expense of the litigants but to enable the opposing party to know the case against him. There is a tendency to forget this basic purpose and to seek particulars which are not necessary when in truth each party knows the others' case (Trust Securities Holdings v. Sir Robert McAlpine & Sons Ltd (1994) The Times, December 21, CA)."

6. In the Hong Kong Court of Appeal case Wellfit Investments Limited v. Poly Commence Limited [1995] 3 HKC 56, an appeal against a refusal to amend pleadings which raised substantial issues not having adequate particularity was dismissed.

7. I quote from the headnote:-

"....

(3) Where amendments were made shortly before the trial hearing, it must be incumbent upon the party seeking them to ensure adequate particularity. The constraints of time, and the high risk of disruption of orderly conduct of trials by the courts and of prejudice to the other party must demand strongly that leave be refused. Therefore, there was no error of principle or other good reason for the Court of Appeal to intervene in the exercise of discretion by the judge. Perak Pioneer Ltd v Carrian Holdings Ltd (CA 59/85, unreported) and Re Unisoft Group (No 2) [1994] BCC 766 applied.

per Bokhary JA:

(4) The judge had a duty to hold the scales between the parties before him and also to preserve his court's capacity to serve the general body of court users efficiently. He was acting in discharge of that duty when he avoided the adjournment which the amendments sought would have necessitated. Such an adjournment would have resulted in prejudicial delay and an unwarranted loss of judicial time."

8. With these principles in mind I turn to consider the specific further and better particulars asked for.

I. Milibow's Application for FBP of the Amended Defence and Counterclaim in 3810 (B154)

II. Milibow's Application for FBP of the Amended Statement of Claim and Reply to Counterclaim in 3994 (B176)

III. RSL's Application for FBP of the Amended Defence and Counterclaim in 3994 (B238)

B. Discovery

9. The principles relating to applications for specific discovery can be summarised as follows:

(1) The party seeking specific discovery has to make out a prima facie case that:

(a) there is in existence a specific document or class of documents;

(b) the party against whom the order is sought has or had the document in his possession custody or power;

(c) the document or class of documents relates to a matter in question in the action; and

(d) discovery is necessary either for disposing fairly of the cause or matter or for saving costs.

10. In a contest for discovery it is for the court in the exercise of its discretion to rule whether or not a document or class of documents qualifies under all four heads.

11. I am told the parties have voluntarily disclosed the existence of a number of documents.

12. In the applications against RSL and DHK the main thrust of their opposition is that the documents sought to be discovered are not and have not been in their possession custody or power, by virtue of being documents belonging to other members including the parent of the Dooyang Group. The counter to that is that the Dooyang Corporation and its subsidaries including the parties in this litigation have not in fact operated as separate legal entities but have had common management; as Mr Yu SC for Milibow submitted, the relationship of parent and subsidiary was such that one was the alter ego of the other and it would be wrong to treat them as apart and distinct. Mr Carolan for RSL and DHK argued that it is wrong in fact and in law to lump the members of the Dooyang Group together; wrong to say a subsidiary has possession, custody or power over documents of its parents by virtue of its being wholly owned by it.

13. My view is that whilst it may well be that because of the way an operation is conducted a parent company might be said to have in its possession, custody or power documents of its subsidiary the converse is, whilst not impossible, far less likely to be so. In fact the affidavits filed reveal that there has been discovery of documents that on the face of them are or have been those of the parent. It is a part of Mr Yu's argument that this supports his contention that the Group has been operated as a single entity and the parties should yield up all that is asked for. On the other hand Mr Carolan countered that these were those of the parent's documents copied to the litigants or which in some other way came within their control; the corporate veil was not disturbed.

14. It is of course a matter of fact as to whether a party has had a document or class of documents in its possession, power or control. In the scenario of this litigation I am not prepared to fudge the legal principles which separate the parties before me in litigation from their parent or other of its subsidiaries. Thus I hold that those documents not already discovered that fall into these categories are not discoverable.

15. I turn now to consider the separate applications.

IV & V. Milibow's Applications for Discovery in 3810 and 3994 (B274, 296)

16. Aside from those documents already volunteered the applications are refused save as they refer to documents the party in question has or has had in its custody, possession or power in its own right. I do not propose to itemise the documents or categories of document that are not excluded by this dismissal save to reiterate that the fact that a document that is or has been held by the parent or another subsidiary of the parent does not exempt that document from the dismissal.

17. In case, notwithstanding this ruling, there is disagreement as to how a document shall be categorized there will be liberty to apply.

VI. DHK's Application for Discovery in 3810 (B340)

18. There are listed 12 categories of documents sought.

19. The thrust of Milibow's opposition to discovery is that there is no dispute about payment of fees paid by WBVI (1), bank statements, tax returns and other business related documents have already been disclosed to DHK's agents (2 to 8), communication between Milibow and potential witnesses are privileged (9, 10, 12) and otherwise there has been discovery.

20. In the circumstances I reject all the arguments mounted in opposition to this application. There is to be compliance in respect of all items scheduled.

VII. RSL's Application for Discovery in 3994 (B342)

21. In this application there are nine categories of documents sought to be discovered.

22. Milibow's opposition is that those in 1, 2, 3 & 5 have already been disclosed to RSL's agent; tax assessments for WBVI 1995-2000 (4) are irrelevant and/or do not exist; the remainder in 6, 7 and 8 are privileged.

23. These arguments are all rejected in this case as well; full compliance is ordered.

C. Interrogatories

24. The applications to withdraw are made under Order 26 rule 3 RHC. Under that rule the court may make such order as it thinks fit. In Lee Niu Foon v. Ocean Park Corp (No. 2) [1995] 2 HKC 395 Cheung J (as he then was) spelt out the parameters of permitted interrogatories. It is convenient to go to the headnote:

" (1) The interrogatories must relate to 'a matter in question' between the parties and must be 'necessary' either for disposing fairly of the cause or matter or for saving costs.

(2) The interrogatories must not be fishing, oppressive, prolix or imprecise. An interrogatory will be oppressive if the answer cannot be given without an examination of the respondent's record, with the expenditure of much time and trouble. Parker v Wells (1881) 18 Ch D 477 applied.

(3) The interrogatories must not be questions which went to the evidence the opposing party intended to adduce.

(4) The interrogatories must not be questions which required an answer which was a matter of opinion or for an expert.

(5) The interrogatories must not be questions which went to the facts which would assist in establishing the opposing party's case as opposed to the case of the party seeking to interrogate.

(6) The interrogatories must not be effectively asking for documents of discovery.

(7) If the interrogatories did not comply with the requirement of the rules under O 26, they might not be administered. Even if they did comply with the rules, nevertheless the court retained an overriding discretion as to whether or not to allow them to be administered. Where interrogatories without order were served, the court might order them to be withdrawn.

...."

(the final headnote covers how the judge dealt with the application to withdraw in the case before him.)

25. It is also appropriate to recite the White Book at 26/4/13:

" 4. Interrogatories as to the evidence of the party interrogated will not be allowed - So, interrogatories are not allowed which relate solely to the evidence which the party interrogated intends to adduce (as distinct from the facts which he alleges, Cheang Thye Gan v. Lim A Chen [1921] H.K.L.R. 19; Marriott v. Chamberlain (1886) 17 Q.B.D. 154, CA; Bidder v. Bridges (1885) 29 Ch. D. 29; Re Strachan [1895] 1 Ch. 439 at 445, CA; Knapp v. Harvey [1911] 2 K.B. 725 at 732) nor interrogatories as to the contents of his brief or the names of his witnesses (Knapp v. Harvey [1911] 2 K.B. 725 at 732, CA; Hooton v. Dalby [1907] 2 K.B. 18) nor asking how he intends to conduct (Lever v. Associated Newspapers [1907] 2 K.B. 626, CA) or make out his case (the Shropshire (1922) 38 T.L.R. 667, CA)."

The rationale behind this is that those seeking to interrogate must prove that the interrogatories are necessary for the purpose of disposing fairly of the cause or matter or for saving costs. It is therefore permissible to interrogate as to what the other side's case is but not as to how he is going to prove his case.

26. Mr Yu's primary submission was that the interrogatories sought do not satisfy this requirement; further that some are in the guise of a request for discovery, or to obtain the name of a potential witness.

27. I agree with these submissions as is reflected in the manner in which I come to deal with the applications to withdraw.

VIII. Application by Milibow under 3810 (B323)

28. 1(a)-(b) are disallowed; 1(c) is withdrawn; 1(d)-(h) are disallowed; 1(i) has been ordered through discovery; 2(a)-(b) are disallowed.

IX. Application by Milibow under 3994 (B330)

29. 1(a)-(b) are disallowed; 2(a)-(c) are withdrawn; 3(a)-(g) are disallowed; 3(h) is withdrawn; 4(a)-(e) are withdrawn; 5 is disallowed; 6(a)-(g) are disallowed; 7(a)-(c) are disallowed; 8(a)-(b) are disallowed.

Costs

30. The orders under this head shall be nisi at first instance. Subject to that they are made to reflect the general premise that the party wholly or substantially the victor shall be entitled to costs, which shall be taxed if not agreed. Where applicable, I decline to certify for two counsel.

AI - to DHK

AII - to RSL

AIII - to Milibow

BIV - to DHK

BV - to RSL

BVI - to DHK

BVII - to RSL

CVIII & IX - to Milibow.