VASTFAME CAMERA LTD v. INTERNATIONAL FREIGHT EXPRESS (HK) LTD AND OTHERS

HCCL8/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.8 OF 2003

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REASONS FOR RULING

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1. On 23 April 2004 I made the following orders :

(1) The plaintiff's summons for specific discovery dated 11 September 2003 be dismissed with costs to the 1st defendant on the common fund basis, to be taxed and paid forthwith.

(2) The plaintiff's summons for further and better particulars dated 15 September 2003 be withdrawn with costs to the 1st defendant on the common fund basis, to be taxed and paid forthwith.

(3) The plaintiff's summons for interrogatories dated 22 September 2003 be withdrawn with costs to the 1st defendant on the common fund basis, to be taxed and paid forthwith.

(4) The plaintiff's summons for specific discovery dated 29 September 2003 be withdrawn with costs to the 1st defendant on the common fund basis, to be taxed and paid forthwith.

(5) The 1st defendant's summons to strike out dated 8 April 2004 be withdrawn with costs to the plaintiff in any event.

(6) There be an order in terms of the plaintiff's summons for extension of time to exchange witness statements dated 22 April 2004.

2. I now give reasons.

Specific discovery

3. The court must be satisfied that documents exist which the party from whom discovery is sought has not disclosed; that they are relevant; and that they are or have been in that party's possession, custody or power. In addition the discovery must be necessary either for disposing fairly of the cause or matter or for saving costs.

4. By the summons dated 11 September 2003 the plaintiff sought specific discovery of six documents or classes of documents. At that stage, the parties had not reached the stage of giving general discovery, nor had witness statements been exchanged. (They still have not.) Such grounds as there are appear only in an affirmation filed two days before the hearing.

5. The 1st document sought was the Master/Ocean Bill of Lading issued by the actual carrier. It has now been discovered so there is no need for an order. However, it is noted that it would have been discovered as part of the general discovery in any event. So specific discovery was not necessary, when it was applied for.

6. The 2nd to 6th categories of documents are documents between the 1st defendant and its agent and the actual carrier. It appears that the basis for the request for these documents is Clause 11(b) of the Defence of the 1st defendant which reads :

"...if it is held to owe any duty to the Plaintiff, contractual or under law in respect of the Goods, which is denied, the Plaintiff has not claim against the 1st defendant as the Plaintiff suffered no loss in respect of the Goods..."

7. The plaintiff's argument is that the 1st defendant may be raising a defence that it is not liable by reason of itself being an agent. Therefore, documents are sought which may cast light on its role by going to show whether it took a profit from the difference between the freight it charged for the carriage and that which it paid the actual carrier. The plaintiff further points to the fact that the 1st defendant signed the bill of lading between the plaintiff and itself over a chop which reads "as agent".

8. The 1st defendant does not plead that it is an agent, whether of the plaintiff or of some other party further removed. Counsel says that this is not part of the 1st defendant's defence. I do not particularly rely on that assurance, because of course counsel can change, and so can a defendant's case, though it is to be noted that any attempt to put forward a defence of agency at trial, when it is not pleaded, and in the face of the record of counsel's assurance before me, would probably not get very far. The point is that there is no pleading of agency, and indeed, so far as I can see there is only a general denial of contractual liability rather than any denial of contractual relationship between the plaintiff and the 1st defendant. Further it is to be noted that in the conditions on the back of the bill of lading the "carrier" is defined as the 1st defendant.

9. I have to deal with the application on the basis of the pleadings before me. So far as I can see, the documents sought are not relevant. Further, there does not seem to be any cogent evidence that the documents in the 5th category sought are or have been in the custody, possession or power of the 1st defendant.

10. As to the 6th category of documents, the plaintiff now relies on an affirmation by the 1st defendant's solicitor that the plaintiff has failed to show relevancy and the fact that the documents exist but which goes on :

"In any event and without prejudice to whether the plaintiff is entitled to the documents, some documents have already been produced under various e-mails under the defendant's list of documents".

11. The argument seems to be that since "some documents" have been disclosed, others must have been hidden. It does not follow.

12. For these reasons, I dismissed the summons.

Costs

13. The above summons, plus the other three by the plaintiff which were withdrawn, were issued in September 2003, before general discovery or the exchange of witness statements.

14 .The 2nd summons for specific discovery was quite unnecessary. Documents were sought in extremely broad categories which would in any event have been covered by the 1st defendant's obligation to give general discovery. The summons was premature.

15. The summons for interrogatories was also premature. See The Practice and Procedure of the Commercial Court, Anthony D. Colman, 2nd edn, 1986, page 61, which says that, in commercial list actions in the English courts, applications for interrogatories should not normally be made until after inspection of documents. I do not see, nor has it been argued, that any different practice should apply in Hong Kong.

16. The summons for further and better particulars of the defence effectively seek particulars of admissions. This is not permissible. Also the plaintiff seeks particulars of matters on which the burden of proof lies on itself. In any event this summons was also obviously premature.

17. The 1st defendant sought costs payable forthwith on the indemnity basis, failing that the common fund basis. The plaintiff argued that there were no good grounds either for departing from the common practice of ordering costs in any event, or for ordering them to be assessed on any but the party and party basis. There was a considerable amount of discussion on the principles to be followed, which are, I think, not in dispute.

18. It is obvious that all four summonses were issued prematurely. In the case of the first, the plaintiff sought to correct that with a later affirmation but failed. In the other cases, the summonses were withdrawn, so it must have been recognised that they were unlikely to succeed. It seems to me that for a plaintiff to fire off a volley of premature and unnecessary summonses is simply a waste of time and costs.

19. To justify an order for costs on the common fund basis, the case has to have special or unusual feature : see the comments of Godfrey J (as he then was) in Overseas Trust Bank v. Coopers & Lybrand (a firm) & Ano, [1991] 1 HKLR 177. The court in that case considered the principles for awarding indemnity costs and set out various circumstances in which such an order might be made. Godfrey J suggested that in the course of ordinary hostile litigation indemnity costs should only be awarded when the court feels "a proper sense of indignation at the unsuccessful party's conduct".

20. In Sung Foo Kee Ltd v. Pak Lik Co. [1996] 3 HKC 570, the Court of Appeal further considered the principles and held that the circumstances particularised by Godfrey J were not to be taken as exhaustive of the conditions in which it might be proper to make the award. The principles were further analysed by Stock J in the Court of Appeal in Choy Yee Chun v. Bond Star Development Ltd [1997] 1 HKLRD 1327. His Lordship, in particular, seems to have adopted Godfrey J's criterion of a "proper sense of indication" (see page 1337J).

21. In the present case, it seems to me that the plaintiff's behaviour does not go so far to cause a proper sense of indignation at its conduct. There is no question of bad faith, ulterior motive or improper purpose. But there is certainly a sense of exasperation at the plaintiff's having taken out unnecessary summonses, and having wasted the court's time and its opponent's costs, for no good reason. I take the view that the plaintiff's conduct provides a special or unusual feature to justify an order for costs on the common fund basis even if it does not go so far as to cause a sense of indignation.

22. It also seems proper to me that the 1st defendant should, in circumstances where it has been put to expense for no purpose, have its costs forthwith rather than waiting for the end of the case and set-off of any costs which the plaintiff may be awarded if it succeeds at trial. There is, in my view a good reason from departing from the normal principle that costs should be dealt with at the end of the day.

23. As to the 1st defendant's summons to strike out, counsel admits that it was rather excessive because no "unless" order had yet been made. For that reason, I awarded costs in favour of the plaintiff, but in the context of the plaintiff's own repeated delays in exchanging witness statements there was no reason further to penalise the 1st defendant. The costs of this and the summons for extension of time therefore follow the normal practice.