SCHINDLER LIFTS (HONG KONG) LTD v. THE INCORPORATED OWNERS OF SHUN CHI COURT

DCCJ 1797/2016

IN THE DSTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1797 OF 2016

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REASONS FOR DECISION

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1.  This is the Plaintiff’s appeal against a master’s decision of 31 July 2017 (“the said master’s decision”), by which the master dismissed the Plaintiff’s summons dated 17 July 2017 for an unless order compelling the Defendant to file a supplemental list of documents pursuant to a prior direction failing which the Defence and Counterclaim be struck out and judgment be entered for the Plaintiff with costs.

2.  The said master’s decision was drawn up in the following terms, namely,

i) There be no further documents be disclosed by the Defendant, as confirmed by the Defendant; and

ii) costs of this application including this hearing be paid by the Plaintiff to the Defendant in the agreed sum of HK$550, payable forthwith.

3.  Apparently, something might have been missing from paragraph 1 of the said master’s decision as its meaning is not exactly clear.

4.  By a Notice of Appeal dated 14 August 2017, the Plaintiff asked for setting aside of the said master’s decision, and making of the same unless order sought by it together with costs.

5.  After hearing the parties, this court made the following orders:

i) the said master’s decision (together with the costs order) is set aside to the extent that upon the confirmation by the Defendant’s solicitors that there be no further documents to be disclosed by the Defendant, the Plaintiff’s summons be dismissed;

ii) there be no further order made for filing by the Defendant of its supplemental list of documents for the time being;

iii) any application for specific discovery by the Plaintiff has to be made in good time before the next CMC hearing scheduled for 3 January 2018; and

iv) there be no order as to costs between the parties for the Plaintiff’s summons and the present notice of appeal.

6.  This Court indicated that brief reasons for the decision will be given, and here they are.

7.  By the present action the Plaintiff sues the Defendant for outstanding service charges. The Defendant admits liability but raises a counterclaim. It seeks to set off so much of its counterclaim against the Plaintiff’s claim. The nature of the parties’ respective claims is immaterial to the present application.

8.  After close of pleading the parties filed and served their respective lists of documents. The Defendant took out a case management summons on 22 May 2017 asking for, inter alia, filing and mutual service of a supplemental list of documents within 21 days of the order. When the case management summons was taken out, the Defendant’s solicitor filed a checklist dated 23 May 2017 stating its intention, inter alia, to file and serve such supplemental list.

9.  The summons went before a master on 19 June 2017. The Plaintiff’s representative indicated to the master that it had nothing further to discover. The master then made a list of directions, including this:

“1. The Defendant do file and serve a Supplemental List of Documents within 21 days from the date hereof. There be inspection of documents within 7 days thereafter.”

10.  This direction becomes the subject matter of the Plaintiff’s said summons before the master and the present appeal.

11.  The following was what had actually taken place after the making of the said direction on 19 June 2017. It is noted that Haley Ho & Partners (“HHP”), solicitors for the Plaintiff, and Lam Fung & Co (“LF”), solicitors for the Defendant, only exchanged 3 short letters on this matter:

i) HHP’s letter to LF dated 29 June 2017 -   

HHP stated its observation that given the supplemental list direction was requested by the Defendant, it should have considered its initial disclosure inadequate. HHP went on to ask for disclosure of 4 classes of documents more particularly set out in the same letter, and stated the request was without prejudice to the Plaintiff’s right to ask for specific discovery. HHP stated that they looked forward to receiving the Defendant’s supplemental list by the deadline, i.e. 10 July 2017.

ii) LF’s letter to HHP dated 12 July 2017 -  

The gist of the reply is this:

a) They had no instruction to file the supplemental list;

b) As regards the specific documents requested, their client was searching and locating the documents as the incoming and outgoing management committees of the incorporated owners as well as the management companies were then in the course of handing over. A reply would be given in 14 days, i.e. on or before 26 July 2017.

iii) 17 July 2017 -   

The Plaintiff took out the summons for an unless order returnable on 30 July 2017;

iv) LF’s letter to HHP dated 27 July 2017 -  

The Defendant did not have the documents and information requested in HHP’s letter of 29 June 2017;

v) 31 July 2017 -   

The Plaintiff’s summons was heard before a master. It was agreed by the parties that the master in effect dismissed the said summons at the hearing.

12.  It is fair to summarize Mr Shaw’s submission as this. It was the Defendant who asked for filing of the supplemental list. In fact, the Defendant had indicated on at least 3 occasions, namely, in the CMC summons, the checklist and at the hearing before the master on 19 June 2017 that it intended to file the supplemental list.  Since court orders are meant to be complied with, it is no answer that LF has no instruction to file the list.  The Defendant should comply with the said direction failing which the sanction of striking out the Defence and Counterclaim should follow. It would then be up to the Court, in exercise of its discretion, as to whether to grant time extension first before making an unless order. The Court may also, if considers necessary, order the Defendant to give an explanation as to why it cannot comply with the order. Explanation by letter or from the bar table should not be allowed. At least the Defendant should produce an affidavit explaining the situation.

13.  He added that LF’s letter of 27 July 2017 did not address documents which the Defendant may have had but now no longer has.

14.  Miss Tang, counsel for the Defendant, submitted that the direction for a supplemental list was basically a case management direction. The effect of the Defendant not filing such supplemental list should be taken as it had nothing further to discover. Accordingly, if the Plaintiff considered the Defendant not having made discovery of certain classes of documents it should take out an application for specific discovery instead of compelling filing of a supplemental list by way of an unless order.

15.  There is so far no explanation from the Defendant as to why it fails to comply with an order it sought. It appears, as set out in its 2 letters aforementioned and what had been recorded by the master in the said master’s decision, the Defendant now says it has nothing further to discover. The filing of the supplemental list is therefore, according to it, unnecessary. Whether or not the oral explanation given before the master was adequate depends on their contents and is a matter of judgment taking into account all the circumstances. However, the reply that it has no instruction to comply with a Court order is obviously insufficient. Taking the Plaintiff’s case to the highest, had it asked in the first place for an explanation from the Defendant by way an affidavit, this Court considers it would have a good case and an order would have been granted. Further, the sanction for a failure to file a supplemental list, if such failure amounts to a refusal to discover documents which it ought to have discover, is striking out of a claim or defence (as the case may be), and not what Miss Tang has submitted.

16.  However, by the Plaintiff’s said summons, the Plaintiff did not go along that line.  Instead, it asks for an unless order for filing of the supplemental list, with a view that an explanation for non-compliance, or time extension for compliance, may be ordered.

17.  The usual form of a list or a supplemental list of documents comprises 2 schedules. In the first schedule a party lists out the documents that are in its possession, custody or power relating to the matters in question. In the second schedule, a party sets out those documents which it has had, but now it has not had in its possession, custody or power. The category of documents said by Mr Shaw not being covered by LF’s letter of 27 July 2017, if really exist, should be listed under this schedule. However, a party has neither further documents under the “presently has” category nor the “has had” category, can still satisfy the requirement of filing a supplemental list, technically, by filing a list with “nil” stated under each schedule. Although such response is not what the Court wants to see post-CJR, it is also not the sort of interlocutory application this Court would expect from the Plaintiff in the first place.

18.  From what has been revealed so far, this Court is satisfied that obviously the Plaintiff intended to compel specific discovery and go about it by what, perhaps, appears to be a shortcut by asking for an unless order. From HHP’s letter of 29 June 2017, the Plaintiff was able to identify 4 classes of documents, and requested disclosure. The Defendant initially did not expressly deny their existence, nor their relevance. Instead, it asked for more time, presumably, to check for their existence or otherwise after the handover. Though subsequent answer of the Defendant is not a full answer because the “has had” category has not been dealt with, there is on the other hand no evidence from the Plaintiff so far suggesting their existence, no matter under the “presently has” or “has had” categories. If the Plaintiff intends to pin down the Defendant on the existence or otherwise of these documents, the only way is to go straight to making an application for specific discovery. Application likes the present one is, in the judgment of this Court, not helpful for the obvious reason that it may or may not bring about a result that helps focus on the issue in dispute. In the interest of time, costs, procedural economy and best use of court resources a party should be discouraged from going about its application indirectly or making tactical moves relying on some faults of his opponent with a hope that somehow something may crop up to his benefit. In the judgment of the Court, it is against the underlying objectives as set out in O.1A, r.1 of the RDC (particularly, r.1(a), (b), and (c)).

19.  This Court therefore dismissed the appeal. However, this Court has the following observations on the said master’s decision:

i) the said master’s decision was obviously couched in terms which apparently is difficult to understand. It only recorded the confirmation of the Defendant’s solicitor but it did not expressly state that the Plaintiff’s summons was dismissed. It is most unfortunate that the Plaintiff’s solicitors did not seek the master’s clarification after getting back the approved draft order from the master’s clerk but before re-lodging it for sealing. To this extent the said master’s decision should be rectified; and

ii) it is trite that a party to litigation has a continuing obligation to give discovery. The said master’s decision, as it now stands, may give an impression that the Defendant needs not make further discovery. Obviously, it is not the intention of the order. It only relieves the Defendant from filing a supplemental list for the time being. If the Plaintiff is successful in its specific discovery application, it is likely that the Defendant is required to file a supplemental list eventually.  

20.  Costs are entirely in the discretion of the Court, and can be made to reflect the dissatisfaction of the Court to a party’s conduct in the proceedings. Given this Court is not satisfied with conduct of both parties as set out above, this Court considers it fair to make a no costs order for both the hearing of the appeal and before the master.