CHENG CHEUNG WANG v. LO NOI YUNG AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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DECISION

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1. This is an application by the 6th Defendant for the discharge of an injunction made by Barnes J. on the 10th October, 1984. The injunction was obtained by the Plaintiff upon his ex-parte application. The injunction is in substance an Anton Piller order. Inter alias it requires the first 6 Defendants to deliver up or reveal the whereabouts of books, accounts and documents relating to the management of a multi-storey building, and to refrain from taking part in the management of the building pending the appointment by the Court of an administrator.

2. The matter arises out of the management of a multi-storey building known as the an Palace in King's Road. The owners of the building were incorporated in 1978 under the provisions of Chapter344 (the Ordinance). The Plaintiff is one of the owners. It is the Plaintiff's case, as made out on affidavit which was before Barnes J., that the Management Committee as constituted from time to time has been unsatisfactory from the date of incorporation. The principal allegations made by the Plaintiff are:-

3. In 1983 some owners withheld payment of the monthly maintenance fees in the hope that they would be able to air their grievances in Court. This led to distress proceedings in the District Court in both 1983 and 1984. The owners involved received the satisfaction of being able to make their complaints heard. But nothing else. To try and resolve the situation, the Plaintiff and the owners whom he represents sent notice dated 25th July, 1984 to the chairman of the then Management Committee calling for an extraordinary meeting of all owners in the building. As far as the Plaintiff was aware this notice was totally ignored.

4. In the circumstances the Plaintiff took formal legal proceedings. An originating summons was drawn up. The summons was endorsed with an application under Section 31 of the Ordinance for:-

5. It was necessary for the Plaintiff to proceed by way of originating summons because Section 31 under which relief is sought provides for an application to the Court.

6. The day before the originating summons was formally issued, application was made to Barnes J. for an order in the terms which I have described above. The evidence before the Judge was also as I have described.

7. For the 6th defendant, Mr. Bernacchi attacks the injunction on three grounds as follows:-

8. It will be helpful to consider the nature of Anton Piller orders. For this purpose it is difficult to do better than refer to the note in the Annual Practice 1985 at 29/2-3/6 to which Mr. Bernacchi drew attention during the course of his address. The note reads:-

".......the Court has an inherent power to make an order for the detention or preservation of the subject matter of a cause and of documents relating thereto. This power can be invoked on an ex-part  application in those rare instances where a Plaintiff can show an extremely strong prima faoie case,  that the damage, potential or actual, is very serious for the applicant, that the Defendant has in his possession incriminating documents or things and that there is a real possibility that he might destroy such material before an application inter-partes can be made. When such an application is made the Court sitsine camera since it is of the essence of the relief sought that the Defendant should not have advance knowledge of the application or the Court order and so have an opportunity of destroying the relevant material. In the enforcement of the order (which can compel the Defendant to permit the Plaintiff to enter his premises the Plaintiff should act with circumspection ........

 

            In a proper case, the Court may provide that in the execution of the order the Plaintiff is to be attended by his solicitor or some responsible person well aware of the extent and limitation of the legal remedy and the need to protect Defendants .......

 

            In an exceptional case the Court has power to grant the Plaintiff ex-parte relief, without notice to the Defendant, for the detention, custody or preservation of property, as to which there is a strong prima facie case that they consist of articles infringing the Plaintiff's copyright, trade mark or other rights, and to make an order that such articles be forthwith placed in the custody of a responsible person on behalf of the Plaintiff who will retain them in safe custody......

 

            Such applications should be heard in camera and the Court must be satisfied that the Plaintiffs are good for sums which may be due upon their cross-undertaking as to damages......" (My emphasis).

9. It is clear therefore that an Anton Piller order is a rare and exceptional creature. It will be made where, inter alias, incriminating documents or things are likely to be destroyed. Consequently, it is to be found most frequently in cases involving copyright and similar rights where the destruction of drawings, moulds dies or finished products might present the applicant with real problems in proving his case. Its oppressive nature is recognised by the undertaking as to damages and the manner in which it is to be executed.

10. I have now had the benefit of full argument by both parties. I have no hesitation in saying that there was nothing before my elder Brother and nothing before me that meets the criteria for an Anton Piller order.

11. In his originating summons, the Plaintiff seeks, inter alia, an account of all monies paid to the Management Committee since 12th January 1978. If an Anton Piller order is made in respect of such a claim it will be a short step to An to Piller orders being made in any case in which documents are involved. Discovery has generally served this purpose in the past; I see no reason why it should not do so in future.

12. In the present case, if the Plaintiff can establish that he is entitled to an account, the Defendants will properly have to verify income and expenditure or face the consequences.

13. The injunction must be discharged against the 6th Defendant. The Defendant is entitled to this notwithstanding that, as Mr. Pirie concedes, the injunction is largely spent. Where an Anton Piller is made on a wrong basis, the Court has jurisdiction to discharge the order ab initio - Randolph M. Fields & Anr. v. Watts & Ors. (C.A.) Times, 22 November 1984. The outstanding parts of the injunction are now otiose, in my view, an interim administrator having been appointed.

14. In deference to counsels' arguments, I should express my views on Mr. Bernacchi's first and second grounds.

15. The principle in relation to material non-disclosure is clear. The leading case is R. v The General Commissioners for the Purposes of the Income Tax Acts for the District of Kensington. Ex-parte Princess Edmond de Polignac. (1917) 1 K.B. 486. If an applicant obtains an ex parts injunction and in so doing, even by inadvertence, fails to disclose a material fact which is to the advantage of the person against whom the injunction is sought, the injunction must be discharged without regard to the merits of the case.

16. As I have already mentioned there were distress proceedings in the District Court in 1983 and 1984. In the 1983 proceedings, the District Judge heard evidence from the owners who were in default and who were applying to have the distress warrants discharged, and also from the 6th Defendant who was representing the Management Committee. The District Judge, so Mr. Bernacchi maintains, made three findings of fact which are very material. These findings are:-

17. The significance of the name Lily Law is that this is one of the aliases which it is alleged that the 6th Defendant uses.

18. In the 1984 distress proceedings a District Judge, who did not hear evidence but only submissions, also found the Management Committee to be properly constituted.

19. What would have been the position had my Brother been aware of the details of the distress proceedings? He would have known of these findings of fact by the District Judge. At first blush, he may well have paused before making the order.

20. Mr. Pirie, however, analysed the 1983 proceedings in some detail. From this analysis it is clear that my Brother would also have been aware of the depth of feeling by some of the owners; of the 6th Defendant's close involvement in the Management Committee, because she was representing the Committee; of other aliases used by the 6th Defendant; and that the finding in relation to Lily law was by no means unqualified. In my judgment these matters would have emphasised that the state of affairs in the building required urgent attention, and confirmed the 6th Defendant's involvement and the probability that she would have, or at least have access to, relevant documents.

21. Mr. Bernacchi also suggested that because the 1983 proceedings revealed that complaints about the Management Committee have been in existence for some years, there could have been no real urgency. However, I think that the Plaintiff's affirmation made plain the long standing dissatisfaction with the Management Committee.

22. I take the view that the non-disclosure was not material. The application on this ground would therefore have failed.

23. Mr. Bernacchi's second ground of attack is in two parts. First he contends that the Plaintiff is not entitled to an injunction. Secondly, that this is in any event not a suitable case for an Anton Piller order; I have dealt with this.

24. Mr. Bernacchi points out that the Plaintiff's originating summons is endorsed with an application under Section 31 of the Ordinance. Section 31 provides simply for the dissolution of a Management Committee and the appointment by the Court of an administrator of the building. Section 31 does not entitle the Plaintiff to seek an order for an account. Indeed the Ordinance confers no such right upon an owner other than a right to inspect the books of account under Section 27. Mr. Bernacchi says that under the Ordinance the only person entitled to call for the accounts and other documents would be the administrator upon taking over management of the building.

25. Where an injunction is claimed, and Mr. Bernacchi contends that it should be pleaded where it is substantial and oppressive, it must be justified by the relief sought by a Plaintiff. In the present case, Mr. Bernacchi says that the relief sought is statutory relief which is very precisely defined and which does not admit of an injunction of the nature obtained by the Plaintiff.

26. Mr. Pirie says that the Plaintiff was in procedural difficulties. The Plaintiff's principal object was to secure the appointment of an administrator for the building. Such appointment can only be made under Section 31 of the Ordinance which requires an application to the Court and hence an originating summons. However, it was, he contends, most necessary that the Plaintiff should be enabled to preserve accounts and other documents pending the appointment of the administrator so that it will be the more easy to trace what has happened to the management fees which should have been collected and disbursed upon maintenance of the building ever the years since incorporation.

27. In my judgment, Mr. Bernacchi is correct in his contention. I do not see how the question of preservation of documents can arise in relation to the narrow statutory relief to which the Plaintiff is entitled under Section 31.