BRISILVER INVESTMENT LTD. v. WONG FAT TSO AND ANOTHER and LIGHT TIME INVESTMENTS LTD. (Intervener)

CACV 251/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 251 OF 1999

(ON APPEAL FROM HCMP 2038 OF 1997)

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J U D G M E N T

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Mayo, J.A.:

1. This is an interlocutory appeal. The Defendants are appealing against the decision of Chung, J. who set aside a subpoena duces tecum which they had issued and served upon the Secretary to the Town Planning Board. By the subpoena, the Secretary was required to attend at the trial of the cause and produce the following documents:

"1. The application documents for permission under Section 16 of the Town Planning Ordinance (Cap. 131) by Light Time Investments Limited （光時投資有限公司）which led to the permission granted by the Town Planning Board in the meeting on 3rd October 1997 as set forth in the letter attached hereto (Ref: TPB/LM/A/NE-SSH/007).

2. The Town Planning Board paper in relation to the application referred to in (1) above.

3. Minutes of the Town Planning Board meeting on 3rd October 1997 in relation to the application referred to in (1) above.

4. All application documents for permission (including, but not limited to, (Ref: TPB/LM/A/NE-SSH/010) submitted by Light Time Investments Limited （光時投資有限公司) subsequent to the application as referred to in (1) above together with the Town Planning Board paper(s) and the minutes of the Town Planning Board in relation to such subsequent applications."

2. The Secretary was not a party to the litigation.

3. The parties to the litigation are tenants in common of 24 Lots of land in the New Territories.

4. The Plaintiff is a subsidiary company of Sun Hung Kai Properties Limited ("S.H.K.") a land developer. The 1st Defendant is a Tso and the 2nd Defendant who acts in a representative capacity is the manageress of the Tso. The intervener is also a subsidiary of S.H.K. They are hoping to develop some of the Lots in question. As can be seen from the documents referred to in the subpoena they made an application to the Town Planning Board for permission to develop the land. Planning permission was granted. However this was according to an affidavit filed by Mr. Y.L. Chan, project manager for the Plaintiff, subject to various conditions.

5. The Defendants are desirous of obtaining detailed information concerning this application hence their issuing the subpoena.

6. The main action was commenced by the issuance of an originating summons. The Plaintiff claimed relief pursuant to the Partition Ordinance, Cap. 352. The relief they are seeking is the sale of the Lots.

7. S.H.K. acquired a two-third interest in the Lots and the Tso owns the remaining one-third.

8. The Lots are situated at Shap Sz Heung, Sai Kung. Twelve of them form a single parcel of land. The others are in the vicinity of this parcel. Six of them are affected by a proposal to widen Sai Sha Road ("the Road Lots").

9. The main objection made by the Defendants to the proposal that the land be sold is that the sale would substantially reduce the Tso's land holding.

10. Issue is also joined on the value of the land and what would be an appropriate reserve price for the land should an order be made for the land to be sold by public auction. In this connection the Defendants have expressed a willingness to sell the Road Lots to S.H.K. or to their order and to partition the remainder of the Lots. This contemplated an exchange of various Lots which would eventually become two large contiguous Lots. The Plaintiff rejected this proposal.

11. The Judge set out at p.5 of his judgment what he understood to be the issues the Defendants were claiming had to be resolved by the main action:

"(a) whether the Plaintiff is entitled to an Order for Sale ... (as opposed to an Order for Partition), regard having had to the fact that the Subject Properties consist of Tso land and the disinclination of the Tso to alienate such land;

(b) If a sale were, whether in relation to all or part of the Subject Properties, to be ordered, what should be the terms and method of sale; and

(c) In the event of a sale, who should be appointed as trustee under Section 6 of the Ordinance to receive and deal with the proceeds of sale."

12. These issues have to be borne in mind when considering the relevance of the documents the subject matter of the subpoena.

13. The parties appear to be in agreement concerning the legal principles underlying the propriety of issuing subpoenas in a situation of this nature. The Court of Appeal accepted Yam, J.'s assessment in To Kan-chi v. Pui Man-yau [1998] 3 HKC 371:

"In his judgment, Yam J set out the general principles applicable to the issue of subpoena duces tecum with extensive supporting citations ...

1. There shall be no discovery from a non-party to an action [subject to certain exceptions ... ] ... ;

2. A subpoena should not be used for making discovery only [and the Court of Appeal observed that the reference to the word 'only' can be misleading] ... ;

3. A subpoena should not be used as a fishing exercise for documents nor speculative ... ;

4. A subpoena should not be oppressive to the witness when, say for example, the terms are too wide. The party issuing the subpoena ... has to show that these witnesses are required to produce relevant and admissible evidence for trial and that those documents to be produced must be required and are necessary for the fair disposal of the case ..." (at pp. 377-379)

14. I also am satisfied that this is a correct statement of the law.

15. It will be noted from this that essentially two hurdles have to be surmounted for the Defendants to establish that they are entitled to subpoena the documents.

16. The first is that it must be demonstrated that the exercise is not akin to obtaining discovery from a party who is not a party to the litigation.

17. The second is that the documents must be relevant and admissible.

18. The main point made by the Defendants on the first issue was that it would be of considerable assistance to have the documents referred to in the subpoena in determining what might be the most satisfactory method of partitioning the land. Also they would be of assistance in determining the value of the land thus enabling the Judge to more accurately ascertain a proper reserve price if an order for sale was to be made and the land was to be sold by public auction.

19. In this connection it needs to be borne in mind that while the Defendants may have some idea what information may be derived from the documents they do not have specific knowledge in any detail. It is accordingly the case that the process of extracting the relevant evidence by obtaining the subpoena has many of the characteristics of obtaining discovery from a party who is not a party to the litigation. In a similar manner it would not be wholly inaccurate to describe what the Defendants are attempting to do as a fishing expedition.

20. On the question of relevance it is difficult to see how the evidence contained in the documents is likely to be of assistance bearing in mind that the Plaintiff is now only concerned with the sale of the property rather than its partition. This evidence would only relate to the particular application which had been made to the Planning Board. No doubt there are numerous different ways in which the land could be developed. In each case the value of the land would be different.

21. Be that as it may the Judge was not satisfied that the conditions referred to in To Kan-chi had been fulfilled.

22. This was the subject matter of the first ground of appeal which is framed in this way:

"1. The learned Judge was wrong in setting aside the said subpoena as being irrelevant to the determination of the issues in the Originating Summons. He ought to have ruled that the documents subpoenaed for, namely documents in respect of applications for planning permissions and the Town Planning Board's decisions in respect of such applications, are relevant at least to the issues as to how the suit property is to be partitioned (if the Court is minded to make an order for partition) and how the suit property should be valued for purpose of fixing the reserve price (if the Court is minded to make an order for sale)."

23. The answer to this ground of appeal is that having regard to the issues in this litigation the Defendants do not have any right to be acquainted with the details of the proposals being made by the intervener to the Planning Board. Their proposals are just one way in which the land might be developed. As it would appear that conditions were imposed by the Planning Board it may be the case that the contemplated development may never materialise.

24. It is by no means certain that any of the information derived from the documents would be of relevance particularly as it seems likely that the Court will in due course only be concerned with the question as to whether or not it should order that the land be sold.

25. Perhaps most important of all is the speculative nature of the exercise being embarked upon by the Defendants. As has already been indicated they do not have any accurate knowledge of the contents of the documents and are unable to demonstrate any convincing reason why they should be allowed to have access to this information which of necessity is of a confidential nature.

26. In my view there is no merit in this ground.

27. The second ground is as follows:

"2. The learned Judge was wrong in law in holding that the making of an order for partition needed to be considered only if it was asked for by the Plaintiff. He ought to have held otherwise because :

(a) on a proper construction of section 4 of the Partition Ordinance (Cap.352) the Court is empowered to make an order for partition of the subject property in any proceedings instituted under the Partition Ordinance irrespective of whether partition is the relief sought by the Plaintiff in the proceedings; and

(b) having regard to the position adopted by the Defendants in the proceedings, the Court has to consider the merits and feasibility of the Defendants' proposal of partition of the suit property (other than the Road Lots) in determining whether in all the circumstances the relief sought by the Plaintiff is the one most conducive to the interests of justice."

28. While it is undoubtedly true that the Court may make an order for the partition of the property the Plaintiff is not now seeking such an order. Indeed it appears that if the Defendants were to attempt to persuade the Court to partition the property this would be resisted by the Plaintiff. There can be no justification for the Defendants being allowed to use the Plaintiff's own material in an endeavour to defeat their opposition to partition.

29. The third ground states that:

"3. The learned Judge was wrong in law in holding that if an order for sale of the suit property is to be made, the reserve price to be fixed for the purpose of such sale (if the residual value method is adopted) is the theoretical development value of the suit property which can only be limited to one's creativity and imagination and accordingly it is unnecessary to have regard to the planning permission documents submitted to the Town Planning Board on behalf of Sun Hung Kai Properties Limited (the parent company of the Plaintiff and the Intervener). He ought to have held that such documents and the Town Planning Board papers offer the most useful information upon which an appraisal of the development value can be made."

30. Both sides have put forward valuations prepared by experts. The values they respectively put on the land vary enormously.

31. It is apparent that the main reason for this large divergence is that the valuers adopt different methodologies.

32. There is no reason to suppose that even if the planning documents were made available they would necessarily be of assistance to the Judge in determining a proper reserve price.

33. What the Judge will be concerned with is the methodology to be adopted. There is no merit to this ground.

34. The fourth ground is that:

"4. The learned Judge erred in attaching undue weight to the fact that the Defendants' valuer has been able to value the suit property and formulate partition proposals without sight of the documents subpoenaed for in deciding whether the said documents are relevant at the Trial."

35. I do not think this complaint can be substantiated if the judgment is read as a whole. Obviously a valuation can be undertaken even though no application has been made for planning permission. In my view there is nothing in this ground.

36. The fifth ground is that:

"5. The learned Judge erred in refusing to consider whether he should lift the corporate veil of the Intervener and treat the Plaintiff and the former as one and the same entity and he erred in finding no justification to do so even if he were to consider such issue."

37. The simple question to be considered is whether cause has been shown to justify lifting the corporate veil. I can see no justification. No misconduct on the part of the intervener has been established and they are entitled to their privacy.

38. The complaint made in the sixth ground has already been dealt with in this judgment. It is not necessary to deal with the matters raised in the Plaintiff's notice.

39. For the reasons given I consider that this appeal should be dismissed.

Rogers, J.A.:

40. I agree that the Judge below correctly set out the principles as Mayo, J.A. has already said and, in my view, he correctly applied them. In particular, those principles are that there should be no discovery from a non-party to an action. Secondly, a subpoena should not be used for making discovery only and thirdly, a subpoena should not be used as a fishing exercise.

41. Our attention has been drawn, in particular, to the decision of Sir Donald Nicholls, V.C. in Panayiotou and others v. Sony Music Entertainment (U.K.) Ltd [1994] 2 W.L.R. 241. That was a case where a well-known pop singer was suing a United Kingdom company. Letters of request were issued which were treated as equivalent to a subpoena duces tecum so that the secretary or other officer of the American company should bring certain documents. There has already been citation in the To Kan Chi v. Pui Man Yau case from this Judgment but the passage at page 248 to page 250 which I do not propose to set out verbatim, in my view, clearly shows how the rule, that a subpoena duces tecum should not be used as a discovery exercise, should be applied. Indeed, the Vice-Chancellor cites also from Rio Tinto Zinc Corporation v. Westinghouse Electric Corporation [1978] A.C. 547, the Lord Diplock speech, where he referred to the fact that :-

"Classes of documents provided the description of the class is sufficiently clear, may be required to be produced on subpoena duces tecum. The requirements of subsection (4)(b), however, are not in my view satisfied by the specification of classes of documents. What is called for is the specification of 'particular documents' which I would construe as meaning individual documents separately described."

He went on to give an instance in relation to bank statements. Provided that it was shown that there were regular monthly statements from a particular bank account, they might be specified in a subpoena duces tecum by reference to all statements of that account for a particular period, but it was not appropriate to specify all bank statements of a particular person without identifying the account.

42. The general principles are, in my view, clear and when one turns to the subpoena in the present case, it is, in my view, undoubtedly a discovery exercise. Taking the first paragraph to begin with, that specifies :-

"The application documents for permission under section 16 of the Town Planning Ordinance, Cap. 131 by Light Time Investments Ltd which led to the permission granted by the Town Planning Board in the meeting on 3 October 1997 and set forth in the letter attached hereto. Then, follows a reference number."

43. Our attention was directed by Mr. Yau in the course of his submissions to a letter of 2 June 1999 from the Secretary of the Town Planning Board in which there is set out all the various types of documents which are contemplated to fall within that description. That runs to three pages of close typescript itself but they alone, on the face of it, would comprise more documents. Many of these documents must, in my view, be totally irrelevant. What is more, many of the documents, when one looks at it, have almost certainly been superseded because the letter in itself discloses that there have been no less than two applications before the application referred to and one subsequent application which is, in itself, the subject of paragraph 4 of the subpoena duces tecum. All the typescript of documents, set out in the letter, relating to all 4 applications were identified as being relevant.

44. The more Mr. Yau explained the purposes of the exercise, the more it became clear that the argument amounted to little more than speculative assertion that there may be material which would show that the Plaintiff has no alternative but to use part of the land in question for the purpose of providing access to the development. For example, it was suggested that there would, perhaps, be a master layout plan, in the end, it transpired there almost certainly was not. The non-existence of the master layout plan is, in my view, evident from the fact that if there were a master layout plan, the Chairman of the Board would have to certify it and it would have to be lodged with the Land Registry and open to inspection.

45. There is no indication that any of the documents which would fall within the very broad ranges of documents which are specified in the subpoena duces tecum would actually provide information which the Defendant says would exist or assist the Court. I am quite convinced, having heard Mr Yau, that this no more than a speculative fishing exercise which would probably be inadmissible on a discovery application but is certainly inadmissible for purposes of a subpoena duces tecum.

46. I, too, would dismiss this appeal.

Mayo, J.A.:

47. The appeal is dismissed with costs to the Plaintiff.