CHEUNG CHI MING, TOMMY v. LAI CHI MING, JOSEPH

HCA 17730/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17730 OF 1999

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JUDGMENT

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1. There is before the court today a summons dated today from the plaintiff seeking orders against the defendant caused, it is said, as a result of the defendant's non-compliance with an existing order for discovery made against the defendant.

2. This action arises out of two partnerships. The partnerships have become, as sometimes happens, septic. The matter has broken down and the plaintiff has brought proceedings seeking, inter alia, a declaration that partnerships be dissolved; that the partnerships be wound up and other consequential orders. This case was set down in the running list on 10 April, having been warned and on pre-condition that all interlocutories were completed.

3. The history of orders in relation to discovery against the defendant makes for desultory reading. The defendant, as far back as 19 April 2000 produced 14 documents pursuant to an order for discovery. This was supplemented on 27 January this year when an additional 13 documents were provided, provided after the Registrar of this court had made an Unless Order against the defendant in relation to discovery. The defendant, by affirmation, acknowledged that these 13 additional documents had to be properly brought to the attention of the plaintiff.

4. The proceedings today were intended to be the first of a three-day trial. Yesterday, at approximately 5 pm, this court received three large box files containing what is agreed to amount to approximately 1300 additional pages of evidence produced by the defendant as additional relevant materials. The plaintiff's solicitors apparently received the same quantum of documentation about the same time. Naturally counsel for the plaintiff only saw those documents thereafter. This has generated a number of summonses.

5. The plaintiff, in effect, and understandably, requires the defendant to carry out a thorough and diligent search for documents in his possession. The plaintiff says, by the fact that piecemeal, the defendant has produced documents, this is the best evidence that to date the defendant has not comprehensively and diligently sought to comply with his responsibility to this court under orders for discovery. This volume of documents has imperilled this trial. It would not, in my view finish, but, in my view it cannot fairly start, because whatever the motivation of the defendant, the effect has been that the plaintiff has been significantly and materially prejudiced by the enormous quantity of documents which Mr Shum, very properly admits, are, in the great bulk, critical or material for the proper disposition of this action.

6. Mr Shum, very helpfully, went through the items which have been produced and, in a generic way, made submissions to the effect that some of these documents had probably been known to the plaintiff as recently as 7 September of this year, but he accepted and said, quite properly, that he could not deny that the defendant had not made complete disclosure. In mitigation of the defendant's apparent non-compliance with orders for discovery, he pointed out that the defendant, unfortunately, had been the victim of carcinoma of the stomach towards the end of last year and had certainly been under some form of medical observation for some months of this year. He accepted, however, that since approximately May or June of this year the defendant had been able to honour his obligations in terms of his ongoing responsibility in this litigation which separates the parties.

7. Mr Shum commended that the court ought to proceed; if necessary, the court could adjourn to enable the plaintiff to take instructions, from time to time, as the matters which had been recently produced became material in the litigation. This is an utterly unsatisfactory way for civil procedure to be conducted. It cannot be a moving feast. The plaintiff is plainly entitled to know, in advance of coming to court, the case that has been brought against it. Not only did the defendant produce 1,300 new pages of evidence but three additional witness statements. A second detailed one from the defendant, in which the defendant acknowledged his own shortcomings to the plaintiff and the court to date. The defendant said, in terms, that he had not thought certain of the documents were important or when he thought about it he now only realised that they may be important. I find this to be unimpressive. The statement of claim shows undoubtedly that matters from October 1984 are relevant to the relationship between the parties. There was, in my judgment, no proper basis upon which the defendant could have concluded that these documents were not material in the well-known Peruvian Guano sense.

8. It has to be said that at all times the defendant's solicitors have acted properly as officers of the court. No responsibility lies on them to do any more than they have done. It falls on the defendant in this case to comply with the spirit and the requirements of the court's rules and he has hopelessly failed to do so in this case. The parties are entitled to an early adjudication of this case which has meandered since 1999. Some of the correspondence betrays less than enthusiasm by the defendant, it appears to me, although I reach, of course, no final view in relation to that.

9. Mr Wright, in his attractive submissions, has invited me, pursuant to Order 24 rule 16, to give judgment for the plaintiff by, in effect, debarring the defendant from defending this action. That is not a course I intend to follow, as I believe by a combination of adjournment and a suitable costs order the plaintiff can be adequately, albeit belatedly, compensated. Mr Wright pressed in the alternative that I should make an order under Order 24 rule 7 setting out a tight deadline by which the defendant ought to now properly comply with his obligation to the court. This is, despite the able submissions made by Mr Shum in opposition, a course I do intend to follow.

10. The orders that I make in this case are effectively in terms of a draft order helpfully handed to me by Mr Wright in the course of his submissions. It is common ground between the parties that I should make a declaration that the partnership conducted by the plaintiff and the defendant, under the name, Perfection Audio-Visual Company, was dissolved on 31 October 1998. I can see no reason at all why I should not therefore make this order now, even though I intend to adjourn the remainder of the litigation.

11. Secondly, I declare that the partnership conducted by the plaintiff and the defendant, under the name, Perfection AV Technology Company, was also dissolved on the same day, 31 October 1998. Therefore the court declares both partnerships to have been dissolved.

12. I further order that the defendant in this case do, within five days, carry out a thorough search for the documents listed in the schedule to the order, which is:

1. All letters, notes, memoranda, bank statements, bank passbooks, cash books, ledgers, expenses records, sales contracts, stock records, invoices, reports and other documents in relation to the affairs of Perfection Audio-Visual Company;

2. The second item in the schedule is identical save that it refers to the affairs of Perfection AV Technology Company.

So the defendant will do that within five days.

13. I also order that the defendant do, within five days, make and serve an affidavit stating whether he has, at any time, had in his possession, custody or power, any of the documents specified in the schedules that I have read and if the said documents or any of them have been but are not now in his possession, custody, or power, stating when he parted with the documents and what has become of them.

14. I also order that the defendant do, within ten days, permit inspection of such documents as are listed in the schedule and which are within his possession, custody and power. In terms of the discovery orders which I have just made these will be in the form of an unless order; that is, unless the defendant complies within those time limits, I order that his defence and counter-claim be struck out with judgment to the plaintiff.

Costs:

15. It is an extraordinary thing that on the eve of litigation, 1,300 documents should materialise. It appears to be common ground that about a thousand pages of those documents are crucial, possibly even, decisive. I say nothing of the witness statements but clearly the witness statements themselves would have formed a significant and proper basis for the adjournment of these proceedings. One finds now that the defendant's wife intends to give evidence, in part supporting his version of events. The defendant has now, it seems, located a former employee whose evidence appears to contradict, in part, some of that of the plaintiff. Had I been asked to, simply on the basis of these witness statements alone, I probably would have adjourned these proceedings so that the plaintiff would have had sufficient time to deal with this case.

16. It is most regrettable that a case which was fixed for trial has to be adjourned in the interests of fairness, but I feel, as a matter of judgment, there is simply no responsible alternative. This case at the moment is in the warned list. I jettison it from that list. Now that the parties have properly expended costs in retaining learned counsel, it would be a significant forensic disadvantage that could not be compensated if other counsel had to be retained. That would simply make an aggravated situation even worse.

17. Therefore this case, by my order, pursuant to the inherent jurisdiction or indeed otherwise, is now jettisoned from the warned list will go into the action list. However, I compensate the parties by directing that the Registrar give this case its own priority so that it be heard as soon as practicable as long as it is in consultation with counsels' diaries.

18. I specifically give liberty to apply in relation to counsels' diaries if it is found that any of the diaries is over-extended and that a trial cannot be heard within a reasonably short period of time. Three days may now not be sufficient for the hearing of this action. I will direct that four days be reserved, but I would commend the parties to seek in every way to try and shorten that if it can be done consonant with the best interests of the their own clients.

19. The final issue is costs. The defendant has caused this adjournment and he has caused it, in my view, in a spectacular way. Mr Wright asks for indemnity costs. I am not persuaded that indemnity costs should be granted. Mr Shum says, almost to the other extreme, that the only proper order is costs in the cause. I am also certainly not minded to adopt that. However, I will make an order that the plaintiff get his costs, occasioned by the plaintiff's summons dated today (including costs thrown away by the adjourned hearing), on a solicitor and own client basis, and I direct that those costs be paid forthwith by the defendant to the plaintiffs.

20. In my judgment that is redolent of the justice of the situation, deals with the significance of what appears to be the issues between the parties and is compelled by the fact that the defendant's systemic failure has occasioned exclusively this adjournment of these proceedings.