SOUTH CHINA FINANCIAL HOLDINGS LTD AND OTHERS v. NANHUA FUTURES (HONG KONG) CO., LTD AND OTHERS

HCA 2510/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2510 OF 2014

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AND

HCMP 100/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 100 OF 2015

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(Consolidated pursuant to the Order of the Honourable Madam Justice
Mimmie Chan dated 23 February 2015)

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DECISION

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Background

1.  The plaintiffs took out a summons to apply for specific discovery under Order 24 rule 7. Prior to this hearing, due to certain information provided by the defendants to the plaintiffs, the plaintiffs no longer pursued their application. This court is asked to determine the issue of costs only. Inevitably, I have to assess the merit of the plaintiffs’ application.

2.  The plaintiffs brought this passing off action to restrain the defendants from using the trade names incorporating the Chinese characters “南華” and/or the English names “Nanhua” in their business. The plaintiffs are companies belong to the South China Group (南華集團) having a long history in the business carried on under/by reference to their trade names incorporating “南華” and/or “South China” in Hong Kong.

3.  One of the major contentions of the defendants in their Amended Defence is that the plaintiffs are estopped from making any claim against the defendants in respect of their trade names by reason of acquiescence and delay.

4.  In line with this contention, the defendants filed an affirmation of Li Lingfang dated 19 December 2014 for the purpose of resisting the plaintiffs’ interlocutory injunction application. Madam Li is the director of the defendants. There, she stated that she and her colleagues had a meeting with Mr Chan Hing Wah (“Steve Chan”) who was the Chief Executive Officer of the plaintiffs in late November 2014 (“the Meeting”). She alleged that in the course of their conversation during the Meeting, Steve Chan told her that he was aware of the existence of the defendants in the Hong Kong market for a long term and acknowledged that the plaintiffs and the defendants were clearly distinguishable by their different English names and logos. Thus, the plaintiffs had allegedly decided not to take issue with the defendants.

5.  Without the knowledge of Steve Chan, Madam Li made an audio recording of the Meeting with her mobile phone (“the Recording”). The Recording comes in two separate audio files (“the Audio Files”). There is a black out period of about 15 to 20 minutes owing to first an incoming call lasting about 2 minutes and thereafter Madam Li’s oversight to resume recording.

The specific discovery application

6.  The defendants by way of their List of Documents on 21 May 2015 disclosed to the plaintiffs a CD-ROM containing the Recording in the Audio Files and a transcript of the Meeting. The plaintiffs are not satisfied and now apply for the disclosure of (a) the original audio recording files of the Meeting, (b) the mobile phone of Madam Li (“the Mobile Phone”) and (c) the original itemized telephone call records of the Mobile Phone giving details of all calls made and received on 13 November 2014 (“the Call Records”).

7.  The present application is supported by two affirmations of Chan Ka Pong Andrew. Mr Chan is the solicitor acting for the plaintiffs. He explains the relevance and necessity of the specific discovery sought in the following terms.

8.  First, Mr Chan maintains that the disclosure of the Mobile Phone is necessary to verify that the Audio Files were in fact sourced from the Mobile Phone.

9.  Second, Mr Chan contends that the Mobile Phone needs to be examined to verify that there are in fact two separate recordings of the Meeting, rather than a single recording which has been manually edited to become the two Audio Files.

10.  Third, Mr Chan contends that the plaintiffs want to verify the date and time, and length of each of the recordings in the Audio Files.

11.  Lastly, the plaintiffs want to find out whether Madam Li did receive a telephone call in the course of the Meeting and hence cause an interruption of the Recording.

12.  For the four reasons given above, the plaintiffs want to carry out a forensic examination of the Mobile Phone.

13.  In regard to the Call Records, the plaintiffs do not give further explanation as to why it is needed. Apparently, the Call Records can show whether an incoming call was received during the Meeting as alleged by Madam Li.

14.  The plaintiffs first made a request for such discovery by a letter dated 4 June 2015. The defendants’ solicitors replied by their letter dated 10 June 2015 enclosing two screen captures from the Mobile Phone showing records of the two Audio Files reproduced in the CD-ROM previously disclosed to the plaintiffs and two other screen captures of file properties of the two Audio Files shown in iTunes.

15.  The plaintiffs were still unsatisfied and hence took out the summons. On 12 August 2015, the defendants’ solicitors sent them a letter indicating that the Mobile Phone was lost on 19 June 2015 and Madam Li had already reported loss to the police. It was further indicated that Madam Li would make an affirmation to explain the loss of the Mobile Phone. On the same day, the defendants provided a redacted copy of the Call Records to the plaintiffs. It was the first time that the defendants had mentioned the loss of the Mobile Phone.

16.  Madam Li filed her 4^th Affirmation on 14 August 2015. She exhibited thereto a police report dated 19 June 2015 in respect of the loss of the Mobile Phone.

17.  Having received the redacted copy of the Call Records and the proof of the loss of the Mobile Phone, Mr Ling for the plaintiffs indicates that the plaintiffs wish not to pursue the specific discovery application.

Discussion

18.  The main debate between Mr Ling and Mr Clark, for the defendants, is whether the Mobile Phone is discoverable under Order 24 rule 7. Mr Clark submits that the Mobile Phone could not be a document within the meaning of the provision. Whilst he agrees that a computer database can be a document: Derby & Co Ltd v Weldon (No.9) [1991] WLR 652, he submits that the Mobile Phone is not a computer database. He further relies on the definition of “document” in section 3 of the Interpretation and General Clauses Ordinance, Cap.1.

19.  Mr Ling submits that the Mobile Phone is indeed a computer database.   

20.  In my view, a computer database simply means a database which can be assessed by computers. It is common knowledge that nowadays a mobile phone has some applications and such applications do contain databases in the form of electronic files. These files can be assessable by computers. However, strictly speaking a mobile phone itself cannot be said to be a computer database.

21.  A computer database in the Mobile Phone can be a document within the meaning of Order 24 rule 7. It is discoverable in law.

22.  Even if I take a liberal approach and accept that the plaintiffs are in fact asking for the discovery of all the electronic files in the Mobile Phone and not the Mobile Phone itself, I am not convinced at all that there is a prima facie case for the relevancy of the discovery sought for the following reasons:

(1) In the reply affirmation of Steve Chan, he admitted that he had a meeting with Madam Li in November 2014 but he denied having said the alleged matters. He made this denial before Madam Li revealed that the Recording was made in her subsequent affirmation and the disclosure of the Audio Files to the plaintiffs some months later.

(2) There is no evidence of any objection of Steve Chan to the Recording disclosed to him in March 2015 at all. He does not allege that after listening to the Audio Files, he is still adamant that he did not say such things as now contained in the Audio Files and/or he indeed also said something very different but was not included in the Recording. There is no evidence that Steve Chan has any reasonable suspicion about the authenticity and integrity of the Recording.

(3) I am not aware that the plaintiffs have ever served on the defendants a notice of non-admission of the authenticity of the Audio Files under Order 27 rule 4(2).

(4) There being no genuine issue of the authenticity and integrity of the Audio Files and there being no allegation of deliberate omission in the Recording, the discovery sought is not necessary for disposing fairly any cause or matter or saving costs at all. This is particularly so after the defendants gave the screenshots to the plaintiffs showing that there were indeed two separate audio files for the Meeting. A prima facie case for relevance is not made out.

23.  In any event, I agree with Mr Clark that the specific discovery sought is both disproportionate and unreasonable. It is obvious that there should be some other databases in the Mobile Phone which contain information not germane to the Meeting. Such information can be private and confidential in nature. There is no good reason why the plaintiffs should be allowed to intrude the privacy of Madam Li.

24.  It is also unreasonable to ask for the disclosure for the call records of Madam Li for the entire day of 13 November 2014 when the Meeting, according to Steve Chan only lasted less than an hour.

25.  For the reasons given above, I would not have exercised my discretion to accede to the plaintiffs’ application.

26.  As an alternative, Mr Ling submits that the application is also made pursuant to Order 24 r.10. He says that both the Audio Files and the Mobile Phone were referred to in the 3^rd Affirmation of Madam Li, which was served but not filed.

27.  I do not think the plaintiffs can take this course. Their summons was not taken out on this basis in the first place.  The 3^rd Affirmation of Madam Li is not even included in the hearing bundle. In any event, I would not have exercised my discretion to order inspection for want of necessity and proportionality.

28.  I therefore conclude that the plaintiffs’ application should not have been made. I make an order nisi that the defendants should have their costs of this application. I make an order nisi that the plaintiffs do pay costs of this application to the defendants forthwith.

29.  Summary assessment is appropriate in my view. I direct the defendants do lodge their statement of costs within 7 days from the date of this Decision and the plaintiffs do within 14 thereafter lodge their objections, if any. The parties will be notified of my assessment by way of correspondence.

30.  Lastly, I thank counsel for their succinct and helpful submissions.