NICHOLAS TIMOTHY CORNFORTH HILL v. ALVAREZ & MARSAL ASIA LTD

CACV 290/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 290 OF 2008

(ON APPEAL FROM HCA NO. 56 OF 2007 AND HCMP NO. 2461 OF 2006)

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HCA 56/2007

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HCMP 2461/2006

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Before: Hon Tang VP in Chambers

Date of Hearing: 22 September 2008

Date of Decision: 22 September 2008

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DECISION

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1.  This action arose out of the termination of a partnership between 4 individuals.  They are the plaintiff Mr Hill, Mr Borrelli, Mr Flynn and Mr Poole.  Mr Hill wanted to retire, and the other 3 partners decided to buy him out.  In the end, the defendant was formed to acquire the partnership assets and assume the obligations to pay Mr Hill.  The terms of the agreement between the 4 partners were contained in a number of documents.  According to the learned judge, the central document is known as the Asset Transfer Agreement.  The learned judge said in para. 12 of his decision:

“12.   … Throughout the whole of the period relevant to the interpretation of the documents Messrs Borrelli, Flynn and Poole were the only shareholders and directors of A&M Asia.  Thus, when the dispute arose, it was between Mr Hill and A&M Asia, with whom lay the primary responsibility to make the payments due to Mr Hill.”

2.  The trial started on 16 September 2008.  The plaintiff’s opening is completed.  However, earlier, the plaintiff had issued a subpoena dated 17 July 2008 against Mr Martin Robertson of Messrs Johnston Stokes & Masters.

3.  On 17 September 2008, Mr Borrelli and Mr Flynn, the applicants, applied to discharge the subpoena.  The learned judge gave leave to Mr Robertson to make a similar application which was duly made.

4.  The basis of the application was that the evidence required of Mr Robertson is protected by legal professional privilege.  It was also argued that his evidence would be irrelevant.  The learned judge held that the 4 partners and the defendant had jointly instructed Mr Robertson, or rather Messrs Johnston Stokes & Masters, and that by reason of the joint retainer, no privilege ever existed among them.  I might add that the learned judge came to such conclusion with the benefit of the oral evidence of Mr Robertson on the circumstances of the retainer.

5.  The Notice of Appeal was filed today.  In fact on Friday, there was an request for an expedited hearing of the appeal which was refused.  This afternoon the applicants applies for a stay pending appeal.  My understanding is that Mr Robertson has not appealed the learned judge’s decision.

6.  It is said that if a stay is not granted, the appeal would be rendered nugatory, and I have been referred to the well-known decision of Ma J (as he then was) in Wenden Engineering Service Co. Ltd. v. Lee Shing Yue Construction co. Ltd., HCCT 90/1999, unreported, 17 July 2002.  That is certainly a very important consideration and very often, it is the decisive consideration. 

7.  On the other hand, if a stay is granted, the trial would have to be adjourned, and the court discourages interlocutory appeals during an ongoing trial for that very reason.  I should add that Mr Alder, appearing for the applicants, has emphasised that here, we are concerned with a claim for legal professional privilege, which is a fundamental right.  It is also protected by the Basic Law. 

8.  I have had the opportunity of reading Saunders J’s judgment.  I am aware that I have not had the benefit of any detailed submission on the judgment, or I should say I have not had any substantial submission on the correctness of the judgment although I have been taken through the grounds of appeal which is settled by counsel and which I have read.  I have to say that on the material available to me and on the basis of what must be described as an admirable judgment, I believe this appeal is highly unlikely to succeed.  Obviously that can only be a tentative view.  In all the circumstances, I think I should proceed on the basis that this appeal is not totally unarguable. 

9.  I turn therefore to consider whether in fact if a stay is not granted, the appeal would be rendered nugatory.  As the learned judge has explained, the evidence of Mr Robertson is said to be part of the factual matrix surrounding the Asset Transfer Agreement, and that such evidence may be relevant to its interpretation.  That being the case, if the evidence turns out to be irrelevant to the interpretation of the Asset Transfer Agreement, no harm would have been done.  If the evidence turned out to be relevant to the interpretation, and this appeal succeeds, then the document would have to be interpreted without reference to it.  No doubt if a stay is not granted, the judge is likely to interpret the agreement, both with the benefit of Mr Robertson’s evidence if it should turn out to be relevant, and without.

10.  In the circumstances, I do not think this is a suitable case for a stay to be granted. 

11.  I have not overlooked the argument that since the right is a fundamental right any breach of it is serious.  I agree that it is important for legal professional privilege to be preserved, but in deciding whether or not to grant a stay, in the circumstances of this case, I think it is also permissible to take into consideration the practical consequence if no stay is granted. 

12.  I might add that another reason for not granting a stay is that the appeal might never have to be heard except, possibly for the cost consequence, if the evidence of Mr Robertson should turn out to have no significant impact on the outcome of the trial. 

13.  So for these reasons, I would refuse a stay. 

14.  The applicants are to pay a gross sum of $23,500 to the plaintiff for the costs of this application.  This is ordered without opposition from the applicants.