BELGIAN OVERSEAS CHARTERING & SHIPPING N.V. AND ANOTHER v. SUNKONGAO CO. LTD.

1994, No. CL-16

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

COMMERCIAL LIST

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D E C I S I O N

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1. There is before me today a Summons for Directions dated 23rd July 1997 taken out by the 1st and 2nd Plaintiffs.

2. This is a dispute between the 1st and 2nd Plaintiffs and the Defendant relating to the carriage of goods between Antwerp and Fangcheng. The only issue with which I am concerned at this interlocutory stage today is whether in fact the Defendant was a principal to that contract of carriage, and whether the Defendant became the other party to the contract of carriage by virtue of the acts of their alleged agents, Messrs. A. Cassiers R?hlig & Co. of Antwerp.

3. Thanks to the good sense of the solicitors for the respective parties all items in the Summons for Directions have been decided by consent, save and except for the one matter in issue which appears at paragraph 2(i) of the summons. It is an interesting discovery point.

4. The Plaintiffs seek an order that the Defendant within 14 days of today's date file a further and better list of documents containing the documents specified in Schedule A to the summons; Schedule A reads as follows:

"All relevant correspondence, internal notes and/or memoranda and/or notes of telephone conversations generated or received by and in the possession, custody or power of Cassiers Rohlig ("Rohlig") as Rohlig are obliged in the capacity of an agent and/or are willing to provide to the Defendant save as may already have been disclosed."

5. The difficulty is this. It involves the question of whether the documents which are sought by the Plaintiffs are in the possession, custody or power of the Defendant. Mr. Bennett, who has helpfully taken me through the case and who appears on behalf of the Plaintiffs, has drawn my attention to the notes in the White Book at 24/2/3 (at page 424), and in particular to item 4 digested therein, namely "Documents which are or have been in the possession, custody or power of any agent for him". As Mr. Bennett accepts, this category, one of a number of categories therein listed, is predicated on the fact of an undisputed agency. So that, for example, if the Defendant in this case had agreed that Messrs. Cassiers R?hlig were indeed their agent, then the documents sought in Schedule A would be documents within the possession or control (if not the custody) of the Defendant, and would accordingly be discoverable.

6. But here is the 'kink' in the present argument. The Defendant disputes that in effecting this contract of carriage R?hlig was indeed their agent. To the contrary, the Defendant is prepared to and does assert that R?hlig itself was the principal in the contract of carriage. Mr. Bennett tells me that although he perceives the argument, he has made no attempt to cover all the bases, so to speak, and to move to join R?hlig (whom I understand are based in Antwerp) pursuant to the provisions of Ord. 11. His argument is more subtle. He says that he recognises the Defendant's contention to the effect that R?hlig are principals, but that I need not worry about that. Not only does he maintain that R?hlig are agents, but he says that the Plaintiffs have documents emanating from R?hlig itself where R?hlig also maintained that they are booking agents; in this connection he draws my attention to a document at tab 10 of the bundle, which is a fax from R?hlig to the 1st Plaintiff. Ergo, he says there is really no dispute about the agency. The practical way forward is to order discovery, and that he should not have to go to the considerable trouble of attempting to join R?hlig to the action as an alternative. It is an enticing argument.

7. Mr. Wyatt appears on behalf of the Defendant. He says this. He has, or rather his clients have, made full and proper discovery of all communications that they have had with R?hlig. However, his contention is R?hlig are not his clients' agents and that the documents are not therefore in his clients' power, possession or control. He further goes on to say that if an order is made in these terms it would prejudice his case because first, his client will not be able to obtain the documents in question, given the absence of an agency relationship, and second, that if an order is made on the basis of the alleged agency relationship this will prejudice his case at trial because there will effectively have been a decision at a preliminary hearing with regard to whether or not R?hlig are indeed agents. In a nutshell, he says that the Plaintiff is asking for documents not in his possession, custody or power but in a third party's possession, custody or power, and therefore they are not so entitled to the order sought. He has discovered the documents that he has, and that should be the end of the matter. He stands on first principles.

8. He has also drawn my attention to The Times Report of 14th October 1992 Dubai Bank Ltd. and Another v. Galadari and Others (No. 6), one of the sequence of Galadari cases, where the Court of Appeal in England usefully set out the categories of situation where discovery of documents could be ordered.

9. I think that Mr. Wyatt is right. In my view this is an ingenious application, but one that begs a fundamental question, namely the status of R?hlig. I do not think it is correct as a matter of law to make a discovery order upon the basis of an assumed status of a third party, not a party to the action. Indeed the very question as to the status of R?hlig is a question for decision at trial on the basis of all the evidence properly adduced. I do not consider that I should make any order upon an assumed basis when that assumption impinges upon one of the very issues for ultimate decision. Of course if the Defendant was content to accept that R?hlig was its agent the matter would be different. But it does not.

10. In all the circumstances of this rather intriguing application I doubt that I have the jurisdiction to make the order sought, given the present dispute between the parties as to R?hlig's status qua agent. If I am wrong and it is not a matter of jurisdiction but of the exercise of discretion, then taking into account all the material before me, and reminding myself of all the relevant principles regarding discovery, I decline to exercise my discretion and to order the discovery which Mr. Bennett now seeks.

11. This is a somewhat odd situation, but as a matter of legal principle in my view the appropriate course in order to obtain the desired discovery is clear, although whether Mr. Bennett or his clients decide to take such course is a matter for them. But I do not think that the rules of discovery should be "bent" (I mean this in no perjorative way) to accommodate a deviation in principle.

12. Accordingly I dismiss this application, with costs in any event to be taxed if not agreed; I do this since all the other matters in the summons for directions were agreed, save and except slight variations in the number of days in paragraphs 4 and 5. I do not think that there should be any diminution of the costs of today simply because of the prior agreement on the other matters, which could in any event have been dealt with by consent summons. I leave it to the Plaintiffs who have the carriage of this order to draw up the order in terms both of this application and the engrossed order on the other directions as agreed.

13. I thank both solicitors for their assistance.