YEW SENG COMPUTER (HONG KONG) LIMITED v. COMPUTERLAND CORPORATION

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HEADNOTE

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Documents and information obtained as a result of Anton Piller order in another action -

Use of information as basis for application for leave to amend claim by including additional cause of action and additional parties in that same action.

Originating Summons in present miscellaneous proceedings by 2nd defendant seeking injunction to restrain plaintiff from making use of documents and information in the other action.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEELINGS NO. 1090 OF 1986

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JUDGMENT

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1. On the 7th June 1985 Computerland Corporation (hereinafter referred to as "Computerland") who is the plaintiff in another action A3636 (The Main Action) obtained from Garcia, J. an ex parte order against the 3 defendants in that action, one of whom is Yew Seng Computer (Hong Kong) Ltd. (hereinafter referred to as "Yew Sang") the plaintiff in the present proceedings. The order was to the effect inter alia:-

2. On the 9th June 1985 the Yew Seng unsuccessfully applied to the same judge to vary and/or discharge Part (3) of the order.

3. On 12th June 1985 on application by Yew Seng, the same judge ordered that execution of Part (3) of the order be stayed until appeal therefrom.

4. On the 14th June 1985 the inter partes summons came before Deputy Judge Saied who made a consent order that all previous orders "do remain in full force and effect" until further hearing of Computerland's application which was adjourned to a date to be fixed. On the 24th July 1985 the inter partes summons came before Mantell, J. who on Computerland's unopposed application adjourned it to a date to be fixed.

5. Yew Seng's appeal from the Part (3) of the ex parte order relating to use of documents and information was heard by the Court of Appeal on the 23rd and 24th July 1985. Judgment was given on 24th because it was understood that the summons would be heard the next day. The appeal was allowed and Part (3) of the order was struck out. The judgment of the Court of Appeal is reported in the Hong Kong Law Reports⁽¹⁾.

6. At this stage therefore all Computerland had in The Main Action was an injunction and an Anton Piller order but no order enabling it to use in Hong Kong or elsewhere the copies of documents and information it had obtained as a result of the Anton Pillar order.

7. So the position has remained.

8. On the 7th of April 1986 Computerland took out a summons in The Main Action for an order, inter alia, that it be at liberty to amend the writ of summons to add three new causes of action and to add a 4th and 5th Defendant. This application was originally fixed for the 17th of April but was eventually heard on the 19th of May 1986.

9. However in the meantime on the 17th of May 1986 Yew Seng commenced the present proceedings in this Court by way of Originating Summons seeking the following relief:

 

"That the defendant (Computerland) ......... be restrained from disclosing, publishing or in any way using any documents and/or information obtained as a result of the execution of the order of Mr Justice Garcia made herein ex parte on the 6th of June 1985 in High Court action No. A3636 of 1985. " (The Main Action)

10. On the 19th of May 1986 when Computerland's summons in The Main Action came to be heard before Master Woolley, leave was granted to amend the writ of summons to add two new causes of action but it was ordered that all other relief applied for in that summons be adjourned to be heard by a Judge in Chambers on a date to be fixed.

11. At this hearing Counsel for Computerland made a statement to the effect that pending discovery of documents in that action, or the determination of the Originating Summons in MP 1090 of 1986 (The Present Proceedings) or the remainder of the this summons, whichever shall be earliest or until further order of the Court, (Computerland) will not without leave of the Court make use of such information as has been obtained pursuant to the execution of the order of Garcia, J. dated 6th June 1985, which(Computerland)would not have but for that order.

12. It was noted that the statement was made without prejudice to the argeement of the parties as to the effect of the Court of Appeal decision and without prejudice to(Computerland's)contention that the Originating Summons was not a proper mode of determining the issue.

13. On the 2nd of June 1986 Computerland's Statement of Claim in The Main Action was served on Yew Seng and on the 28th of July 1986 Yew Seng's Defence was served. There has been no Reply filed and the pleadings are consequently closed.

14. On the 11th of October 1986 Computerland brought a summons as defendant in the present proceedings applying for an order that the Originating Summons be struck out and the proceedings dismissed on the grounds that:

15. The three applications came before me on the same day (16th October 1986) as follows: -

16. It is agreed between the parties that I should first determine the application to strike out the Originating Summons.

17. Mr Rogers who appears for the Computerland argues that the Originating Summons should be struck out under 2 heads:-

        (1)    that the Originating Summons is misconceived;

        (2)    that it is an abuse of process and vexatious.

18. His main ground is that the present proceedings are vexatious and an abuse of process. The control of the documents, he says, are part of ordinary discovery and is in the hands of the Court in The Main Action. It must be wrong to have an order in one action by which certain things are done or not done and in particular in which documents are dealt with and then to have quite a separate action to control the use of those documents; what use should or should not be made of those documents should be decided by the Judge who decides The Main Action. He points out that both applications need not necessarily have been heard at the same time.

19. In support of this contention he relies on a number of authorities: -

        (1)     Stephenson v. Garnett (1898) 1 Q.B. 677

        (2)     Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] A. C. 581

        (3)     MacDougall v. Knight (1890) 25 Q.B. 1

        (4)     Reichel v. Magrath (1889) 14 A. C. 665

        (5)     Hunter v. Chief Constable of West Midlands [1982] 2 A. C. 529

        (6)     Williams v. Hunt (1905) 1 K. B. 512

20. In the first case a litigant attempted to raise again in the High Court a matter which had been decided in the County Court. The High Court took the view that the second action was frivolous and vexatious and an abuse of the process of the Court.

21. In the Yat Tung Investment Co. Ltd. case the Privy Counsel emphasised that there is a wider sense in which the doctrine res judicata may be appealed to, so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.

22. In the MacDougall case two actions were brought in respect of the same publication relying on different defamatory statements in each case. On an application to dismiss the second action as frivolous and vexatious the Court of Appeal reversing the decision of the Queen's Bench Division, held that the second action should be stopped as frivolous and vexatious. In Reichel v. Magrath a defendant in a civil action sought to put up the same case as that in a previous action in which he had been defeated as the plaintiff. The defence was struck out as frivolous, vexatious and an abuse of process.

23. In the Hunter case it was held that when a final decision has been made by a criminal court of competent jurisdiction it was a general rule of public policy that the use of a civil action to initiate a collateral attack on that decision was an abuse of process of the Court.

24. Finally in Williams v. Hunt it was held by the Court of Appeal that as a mortgagee who brings an action in the Chancery Division for an account of principle and interest due under the mortgage has a complete remedy by claiming in that action a personal order for payment, a second action brought in the King's Bench Division. while the chancery action is pending, to recover principle and interest is improper and should be stayed.

 

Collins M. R. said at P. 514: -

 

"When two separate remedies are possible and a start is made by putting in force one of these remedies by a writ which could entitle the plaintiff to the relief he subsequently desires, he cannot by deliberately leaving that out of his claim, reserve his right to ask for it in another proceeding. Where proceedings have started it is an abuse of the process of the Court to divide the remedy where there is a complete remedy in the Court in which the suit was first started. "

25. Mr Rogers argues on the basis of these decisions that Yew Seng could have sought an injunction in The Main Action but didn't do so. In addition he argues that Yew Seng could have brought an application to set aside, vary or obtain other orders in The Main Action in relation to the documents and information obtained by Computerland.

26. Further Mr Rogers argues that the matter is governed by the general requirement of confidentiality of documents in discovery. In particular he relies upon the dictum of Scott, J. in Sybron Corp. and another v. Barclays Bank PLC.⁽²⁾ at P. 1063 in the following terms: -

"It is a rule established by several recent cases, to which I must later refer, that documents disclosed by a party under compulsion of court process, such as discovery, cannot be used by the party to whom they are thereby disclosed for any improper purpose. An implied undertaking not to use the documents for an improper, purpose is imposed by the court on that party. Breach of that undertaking would represent a contempt of court: see Home Office v. Harman [1983] 1 A.C. 280. A party who desires to use such documents for purposes outside those for which they have been disclosed ought first to seek the leave of the court authorising such use: see Halcon International Inc. v. Shell Transport and Trading Co. [1979] R.P.C. 97. "

27. Thus, says Mr Rogers, there is adequate protection in the ordinary proceedings in The Main Action.

28. Mr Litton argues that from the time of the Court of Appeal decision in The Main Action striking out Part (3) of the order relating to the use of documents and information obtained as a result of the Anton order, those documents and information were the property of Yew Seng and that Computerland was not entitled to use them and did not have the consent of the 2nd defendant to use them. Whether or not any of these documents might properly be the subject of discovery in The Main Action is not relevant, he says. There has been no order for discovery in The Main Action.

29. Mr Litton attempts to distinguish the cases relied on by Mr Rogers on the basis that in the second action in each of those cases an issue was raised afresh which had been determined in the first action, though perhaps not in the same form. In each case there had been a judicial determination.

30. Quite clearly, says Mr Litton, the effect of the judgment of the Court of Appeal is that Computerland are not at liberty to use the documents and information for any purpose and yet contrary to the determination of the Court of Appeal it proposes to use it in breach of the proprietary rights of his client. He expresses indignation that when his client seeks to restrain an invasion of it's proprietary rights, Computerland turns round and says that his client's action is misconceived and an abuse of process.

31. Mr Litton argues that the only determination of the Court of Appeal is that Computerland is not permitted to use documents and information obtained as a result of the Anton Piller order and asks how the Originating Summons in the new proceedings can be struck out when the cause of action is based on an invasion or threatened invasion of proprietary rights.

32. This contention is based on affidavit evidence which is not disputed that Computerland obtained the information upon which to base the proposed amendments of it's writ in The Main Action from the documents and information obtained on the Anton Piller order.

33. Mr Litton queries by what proceedings his client could have that litigated in The Main Action since his client is not a party to the franchise agreement upon which the action is based.

34. Finally Mr Litton says that if he is wrong the present proceedings could be consolidated with The Main Action.

35. Mr Rogers in reply stresses that the central issue is whether it is right to bring an action, the purpose of which is to control the use of documents which are the subject of an order in another action and under the control of the Court in the other action. He points out that Mr Litton did not distinguish the case of Williams v. Hunt in which there had been no decision in the earlier action which was still pending.

36. It seems to me that if Mr Litton is right about the effect of the order of the Court of Appeal, then his client has all the protection it needs in The Main Action.

37. However it is my view that the effect of the Court of Appeal decision is to render the situation the same as it would have been if no order had been made in terms of the Impeached Order (3). That means that there is an implied undertaking on the part of the Computerland and its solicitors not to permit the use of any of the documents or information obtained as a result of the Anton Piller order for any collateral or ulterior purposes.

38. The position is eloquently expressed in the judgment of Falconer, J. in the Customs & Excise Commissioner v. A.E. Hamlin & Co.⁽³⁾ at P.517 in the following terms:

"As to the implied undertaking of the solicitors to the Court, it is to be borne in mind that essentially the placing of the defendants' documents in the safe custody of A.E. Hamlin & Co. under an Anton Piller order to preserve them from destruction or defacement is really part of the process of discovery: see the observations of Templeman, J. in E.M.I. Ltd. v. Pandit [1975] 1 W.L.R. 302, 307.

It is common ground on this motion between Mr Mummery and Mr Baldwin, and I agree with them, that A. E. Hamlin & Co. holds the documents and the goods subject to the same implied undertaking as covers documents disclosed on discovery. As to that implied undertaking it was explained by Lord Diplock in the recent case of Home Office v. Harman [1983] 1 A.G. 280, in the relevant passage, at pp. 304-305:

39. It seems to me that this Court has ample powers at its disposal in The Main Action to control the use of the documents and information obtained as a result of the Anton Piller order and to prevent or punish improper use, The new proceedings between the same parties are therefore unnecessary and an embarrassment and vexatious and is an abuse of the process of this Court.

40. In the circumstances, I do not' think it is necessary to say anything on the other point to the effect that the Originating Summons is misconceived.

41. I therefore order that the Originating Summons in the present proceedings be struck out and award the costs of this application to Computerland.

(1)    [1986] H.K.L.R. 283

(2)    [1984] 3 W.L.R.1055

(3)    [1984] l W. L. R. 509