DEACONS (a firm) v. WHITE & CASE LTD LIABILITY PARTNERSHIP AND OTHERS

HCA2433/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.2433 OF 2002

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REASONS FOR DECISION

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INTRODUCTION

1. This is an application by the defendants for further and better particulars of the Amended Statement of Claim. The request for the particulars was served on the plaintiff's solicitors on 14 February 2003. There were altogether 65 requests. Some had been disposed of by correspondence. Some had not. By a summons dated 27 February 2003 and amended pursuant to leave granted at the hearing on 1 April 2003, the defendants sought answers to requests 3, 4, 8 to 39, 41 to 51, 53 to 54, 56 to 60, 63 to 65. At the conclusion of the hearing, I allowed the application with the exception of requests 22, 23, 27, 28, 43, 44, 63 and 64. I also gave leave to the plaintiff to supplement the particulars within 14 days after discovery and inspection has been completed. These are my reasons.

2. The background facts leading to these proceedings and the issues involved are set out in the judgment that I handed down on 13 March 2003. I do not propose to repeat them here.

THE LAW

3. Before dealing with the requests individually, it is convenient to first summarise the applicable legal principles and deal with the parties' general submissions on the law.

4. The functions of well particularised pleadings are well settled. They serve :

(a) 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;

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

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

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

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

(f) 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.

See Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden [1994] 2 HKC 264, per Bokhary JA (as he then was) at pp.269E-270E.

5. These are not controversial. The debate that took place before me concerns whether further and better particulars should be ordered when the opponent contends that :

(1) the applicant knows the case pleaded against him; and

(2) the facts are within the applicant's own knowledge.

I will deal with the contentions in turn.

(1) The applicant knows the case pleaded against him

6. Mr Rogers for the plaintiff submitted that there is no question that the defendants know the case pleaded against them. Had there been any genuine doubt on their part, the particulars would and should have been sought months earlier. In this connection, he relied on Trust Securities Holdings v. Sir Robert McAlpine & Sons Ltd (1994) TLR, 21 December where the English Court of Appeal said :

"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 other's case."

7. That case has since been fully reported as British Airways Pension Trustee Ltd (formerly British Airways Pension Fund Trustees Ltd) v. Sir Robert McAlpine & Sons Ltd and others (1994) 72 BLR 26. It concerned the cost of remedying a number of alleged defects in a building. The defendants applied to strike out the statement of claim and for dismissal of the action on the ground (1) that the statement of claim did not set out the remedial cost of each alleged defect and did not ascribe to each alleged defect the amount by which it contributed to the alleged diminution in value; and (2) that the plaintiffs had failed in breach of an unless order, made by consent to provide details of the allegation that the assignor of the plaintiff was liable to the plaintiff for the defects. The first instance judge allowed the application. The plaintiffs appealed although they accepted that their pleadings were not sufficiently particularised.

8. On the first ground, the English Court of Appeal held that despite the fact that the plaintiff's pleadings as to damage was embarrassing in the sense that it was open to further particularisation, it was not seriously prejudicial to the defendants who were able to know the case they had to meet and were not facing an unfair hearing. In this connection, Saville LJ said at pp.33A-34D thus :

" The judge described this part of the pleadings as embarrassing, though not sufficiently so on its own to justify striking out the claims. This conclusion is not challenged on this appeal, in the sense that it is accepted that the pleading as it stands is open to a request for further and better particulars which the plaintiffs offered to supply during the course of the hearing. The various defects alleged by the plaintiffs might not all be attributable to all the defendants, the cost of remedying the individual defects was not given and no attempt was made to ascribe to each defect the amount by which it contributed to the alleged diminution in value. At the same time I have some difficulty in seeing how the defendants could fairly be said to be seriously prejudiced by these omissions. The pleading alleges that the defects respectively attributable to McAlpine and PDP each caused the alleged diminution in value. The alleged defects themselves were set out in some detail, McAlpine and PDP had been on site for a considerable time after practical completion and so had their own means of knowledge of the alleged defects. Thus it seems to me that it can hardly be said that these defendants were in any real fashion placed in a position where they were unable to know what case they had to meet or were facing an unfair hearing. They could, in my view, each prepare to deal with the allegation that they were responsible for the defects and could each assess the cost of remedying any particular defect. They could also investigate with their own experts to what extent (if at all) any particular alleged defect or class of defects would diminish the sale value of the building. It is true that the pleading does not seek to apportion liability between the active defendants, but this is because it was the plaintiffs' case (good or bad does not matter in this context) that the defects attributable to each defendant caused the whole of the diminution in value. In any event it seems to me that the defendants themselves, if they were minded to make any offer to settle the proceedings or to pay money into court, could calculate without difficulty their respective responsibility for defects and a proportionate amount of the diminution in value (if any) attributable to those defects. The decisions to make a payment in or an offer of settlement does not depend so much on what the plaintiff is claiming as on what the defendants calculate the claim is worth.

The basic purpose of pleadings is to enable the opposing party to know what case is being made in sufficient detail to enable that party properly to prepare to answer it. To my mind it seems that in recent years there has been a tendency to forget this basic purpose and to seek particularisation even when it is not really required. This is not only costly in itself, but is calculated to lead to delay and to interlocutory battles in which the parties and the court pore over endless pages of pleadings to see whether or not some particular point has or has not been raised or answered, when in truth each party knows perfectly well what case is made by the other and is able properly to prepare to deal with it. Pleadings are not a game to be played at the expense of the litigants, nor an end in themselves, but a means to the end, and that end is to give each party a fair hearing. Each case must of course be looked at in the light of its own subject matter and circumstances. Thus general statements to the effect that global or composite claims are embarrassing and justify striking out. ... are not automatically applicable to every case. With regard to the particular pleadings in question, I remain unpersuaded that either McAlpine or PDP were put to any sort of material unfair disadvantage by the way the matter had been set out by the plaintiffs."

9. On the second ground, the English Court of Appeal held that the plaintiffs' failure to provide proper particulars of the allegation that the assignor was liable to the plaintiffs was embarrassing and the defendants were unable in this respect to know what case they would have to meet. However, that failure could not reasonably justify the order striking out the action because the failure only related to the claim asserted by the assignor; the plaintiffs had been willing to provide further particulars if necessary, and it was not a case in which it could be said that the plaintiffs' claims were fundamentally flawed in the sense that no further particulars could assist their case nor was it a case in which there had been an express refusal to provide particulars or a contumelious disregard of court orders.

10. I fully accept the proposition that pleadings are not a game to be played at the expense of litigants and that there are cases where it would be wrong to seek particulars which are not necessary when in truth each party knows the other's case. But British Airways Pension Trustee Ltd (formerly British Airways Pension Fund Trustees Ltd) does not, in my view, weaken the rigour of the fundamental requirement that pleadings must be properly particularised to enable the opposing party to know the case that he has to meet. (Indeed, in connection with the second ground of complaints raised by the defendants, the English Court of Appeal held that the pleadings were embarrassing and they were in that respect unable to know what case they had to meet.) This requirement is long established. It is a reflection of the overriding principle in our civil justice system that litigation should always be conducted fairly, openly, free from surprise, without unnecessary delay or expense and as far as possible, so as to minimise costs: see Aktieselskabet Dansk Skibsfinansiering at pp.269E-G.

11. The necessary particularity of pleadings is inevitably a matter of degree, dependent on the subject matter and circumstances of each case. A party opposing an application for particulars must demonstrate that in the circumstances of the case, the particulars sought are not necessary because the applicant already knows his case. It is not sufficient for him to simply rely on the dicta of Saville LJ quoted in paragraph 6 above. This is particularly so when he imputes fraud, negligence, or misconduct to his opponent. For it has long been established as a special rule that such allegations must be pleaded distinctly with the utmost particularity. This special rule arises in the present case.

(2) The facts are within the applicant's own knowledge

12. Mr Rogers submitted that most of the requests sought information solely and peculiarly within the knowledge of the defendants. In short, the relevant paragraphs of the amended statement of claim are based entirely on documents disclosed by the 1st and 2nd defendants as part of their original discovery. Mr Smith, SC, for the defendants, relied on paragraph 18/12/61 of the Hong Kong Civil Procedure, 2002, Vol.1 at p.295 :

"It is sometimes urged as an objection to an application for particulars that the applicant must know the true facts of the case better than his opponent (Harbord v Monk (1878) 38 L.T. 411; Keogh v Incorporated Dental Hospital of Ireland [1910] 2 Ir.R. 166, CA). But this objection is misconceived: each party is entitled to know the outline of the case that his adversary is going to make against him, and to bind him down to a definite story."

Mr Smith argued that the objection of the plaintiff is thus not valid.

13. In reply, Mr Rogers considered the two cases referred to in the above commentary in some length. He submitted that the above commentary is on its face not supported the two authorities. But he did not argue that the commentary is wrong if and insofar as it is simply saying that a party cannot oppose an application for particulars simply on the basis that the applicant "knows the true facts better than his opponent".

14. I have already considered the two authorities carefully. But I do not propose to deal with them in detail. In my view, the starting point is always the fundamental principles set out in paragraph 4 above. Under those principles, each party is entitled to know the case of his adversary and tie his hands accordingly. The above commentary in the Hong Kong Civil Procedure in my view represents the correct position and should be followed.

15. Mr Rogers submitted that the plaintiff does not have, or could obtain, knowledge of the particulars sought. To the contrary, the plaintiff's pleading is fundamentally that there was a common design between the defendants to acquire the business of its insolvency group or a substantial tranche thereof. It is unsurprising from the nature of this claim that the plaintiff is not privy to the mechanical detail of what occurred between the defendants. Instead, the plaintiff's claim against the 3rd and 4th defendants is primarily based on documents discovered by the 1st and 2nd defendants in August 2002. And the plaintiff will be asking the court to draw the necessary inferences from the documents.

16. In my view, if that is the plaintiff's position, it is not sufficient simply to say that the defendants know what they had done better than the plaintiff. The plaintiff should be able to give the best particulars which it can at present by making use of the documents discovered so far. If necessary, the plaintiff can supplement them within a reasonable time, say 14 days, after discovery and inspection has been completed.

REQUESTS

17. With the above in mind, I now turn to consider the individual requests. They can be put under three main groups. The first group consists of requests 3, 4, 8, 13 to 15, 16 to 19, 24 to 26, 29 to 30, 31, 32 to 34, 42, 45 to 48, 49, 56 to 57, 59 to 60 and 65. Mr Smith took the point that Mr Rogers has already provided answers to these requests in his written submissions. I have considered Mr Rogers's submissions. I agree with Mr Smith. The answers must however be provided formally in an answer. I therefore allowed the application in respect of these requests.

18. The second group consists of requests 22, 23, 27, 28, 43, 44, 63 and 65. They all relate to the loss and damages that the plaintiff has alleged suffered. Mr Rogers submitted that as a matter of law it is sufficient for the plaintiff to establish the circumstances form which damage can be inferred. There is no requirement on a trial of liability only for it to plead and particularise special damages. The court can and should infer that the plaintiff has suffered loss and damage from the fact that it has lost staff and client. The Amended Statement of Claim is thus more than adequate for the purpose of pleading that damage was suffered in fact. I agree. As I understand Mr Smith, he did not seriously dispute Mr Rogers's submissions. In fact, given the order of spilt trial of liability and damages, these requests are at the moment premature. Accordingly, the application for these requests was refused.

19. The third group consists of requests 20-21, 35-39, 41, 50-51 and 58. They are considered below.

Of: 'in consultation with, and with the agreement of the Third and Fourth Defendants ... the First and Second Defendants met representatives of two of the Plaintiff's clients to secure agreement of the clients to support fully the move of the Recruits and the transfer of instructions from the clients from the Plaintiff to the First and Second Defendants.'

Request

20. Please provide full particulars of all facts and matters relied upon in support of the assertion that the meetings referred to were for the purpose of securing the agreement of the Plaintiff's clients to support fully:

(1) The move of the 'Recruits'; and

(2) The transfer of instructions from the clients from the Plaintiff to the First and Second Defendants.

21. Please provide full particulars of all facts and matters relied upon in support of the allegation that each of the Third and Fourth Defendant agreed that each of the First and Second Defendant should meet with two of the Plaintiff's clients for the purpose pleaded in paragraph 34.7A of the Amended Statement of Claim:

(1) Insofar as such agreement was made orally please provide full particulars of when, where and between whom the alleged agreement was made providing full particulars of the import of the words used.

(2) Insofar as the alleged agreement was made or evidenced in writing please identify and produce copies of all relevant documents which are in the possession, custody or power of the Plaintiff."

21. No particulars have been given in support of the allegation that the purpose of the meetings was to secure the agreement of the plaintiff's clients to the transfer of instructions from the plaintiff to the 1st and 2nd defendants. Mr Rogers submitted that the defendants know the case against them because of the pleading in paragraph 48(4) of the Defence of the 3rd and 4th defendants and certain paragraphs in the statements of Mr Fairbairn and Mr Cairns. However, as rightly pointed out by Mr Smith, what is pleaded and stated in evidence by these defendants is that the 1st and 2nd defendants sought and obtained the permission of the 3rd and 4th defendants to take up references from clients, and that the 1st and 2nd defendants met with representatives of two clients for this purpose. The plaintiff's allegation that the meetings were for the purpose of seeking the clients' approval to transfer instructions to the plaintiff is denied. But it should not prevent them from obtaining the particulars sought. In my view, according to the special rule referred to in paragraph 11 above, the particulars sought must be given.

Of: 'The Third and Fourth Defendant ... were engaged in procuring or inducing or encouraging or facilitating employees of the Plaintiff to leave their employments to join a competitor ...'

Request

35. In relation to each of the Third and Fourth Defendant please provide full particulars of how and when it is alleged that they were engaged in procuring employees of the Plaintiff to leave their employment to join a competitor.

36. In relation to each of the Third and Fourth Defendant please provide full particulars of how and when it is alleged that they were engaged in inducing employees of the Plaintiff to leave their employment to join a competitor.

37. In relation to each of the Third and Fourth Defendant please provide full particulars of how and when it is alleged that they were engaged in encouraging employees of the Plaintiff to leave their employment to join a competitor.

38. In relation to each of the Third and Fourth Defendant please provide full particulars of how and when it is alleged that they were engaged in facilitating employees of the Plaintiff to leave their employment to join a competitor.

39. Please confirm that 'employees' is intended only to be a reference to Messrs Darton, Leifer and McDonald. If other employees of the Plaintiff are intended to be referred to, please identify them.

Under Paragraph 38I(b)

Of: '...the Third Defendant and the Fourth Defendant prepared a written business plan for the First and Second Defendants containing information confidential to the Plaintiff...'"

23. The allegations in paragraph 38I(a) of the Amended Statement of Claim are serious allegations. They are all denied by Mr Fairbairn and Mr Cairns in their witness statements. Mr Rogers submitted that the defendants know the case they have to meet because they have addressed these allegations in their witness statements by denying the same. I am unable to accept this submission. I agree with Mr Smith that if the plaintiff is saying that it relies on all (or any) of the facts and matters to be found in paragraphs 34, 37 & 40-41 of Mr Fairbairn's statement and paragraphs 28, 31 & 33-36 of Mr Cairns' statement, then this should be pleaded and/or properly explained.

Of: 'The Third Defendant and the Fourth Defendant contacted clients of the Plaintiff for the purpose of ascertaining whether those clients would transfer their business to the Second Defendant in the event of the Recruits joining the Second Defendant and thereby solicited work on behalf of the Second Defendant ...'

Request

41. In relation to each of the Third and Fourth Defendant please provide full particulars of :

(1) The identity of the clients (and representatives of those clients) of the Plaintiff which it is alleged were contacted by the Third and Fourth Defendants;

(2) How such clients were contacted:

(i) Insofar as the said contact was made orally, please identify where, how and between whom such contact was made giving the import of the words used.

(ii) Insofar as the said contact was made or evidenced in writing, please identify and produce copies of all relevant documents which are in the possession, custody or power of the Plaintiff.

(3) All facts and matters relied upon in support of the allegation that such contact was for the purpose of ascertaining whether those clients would transfer their business from the Plaintiff to the Second Defendants."

25. These are proper requests and must be answered. The plaintiff is under a duty to plead its case with utmost particularity : see paragraph 11 above.

Of: 'induced and encouraged the Third and Fourth Defendants to negotiate with them terms for the recruitment of not only the Third and Fourth Defendants themselves but the team of Recruits ...'

Request

50. In relation to each of the First and Second Defendant please provide full particulars of how and when it is alleged that they induced each of the Third and Fourth Defendant to negotiate with them terms for the recruitment of themselves and the other 'Recruits'.

51. In relation to each of the First and Second Defendant please provide full particulars of how and when it is alleged that they encouraged each of the Third and Fourth Defendant to negotiate with them terms for the recruitment of themselves and the other 'Recruits'."

27. Mr Rogers submitted that the Court will be asked to draw inferences from specific documents. However, I agree with Mr Smith that inferences are drawn from facts and it is incumbent on the plaintiff to plead the facts on which it relies. If a document is relied on, the effect of the document must be pleaded.

Of: 'themselves met with two (2) clients of the Plaintiff for the purpose of securing the agreement of the clients to support fully the move of the recruits [sic] and the transfer of instructions from the clients from the Plaintiff to the First and Second Defendants.'

Request

58. Please provide full particulars of all facts and matters relied upon in support of the assertion that the meeting or meetings referred to were for the purpose of securing the agreement of the Plaintiff's clients to support fully :

(1) The move of the 'Recruits'; and

(2) The transfer of instructions from the clients from the Plaintiff to the First and Second Defendants."

29. Again, by reason of the special rule mentioned in paragraph 11 above, these requests are proper and must be answered.

30. For the above reasons, I made the order as stated in paragraph 1 above.