KAN WAI CHUNG AND OTHERS v. HAU WUN FAI AND OTHERS

HCA 811/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 811 OF 2010

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D E C I S I O N
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Introduction

1. This is the plaintiffs’ appeal against the master’s order dated 3 September 2014 whereby Master Lai made no order on their application for discovery of documents (taken out pursuant to RHC Ord 24 rr 10(1) and 11A (which ought to be Ord 24 r 11(1)).

Background

2. To properly understand how this appeal came about (and how it should be determined), it is necessary to understand the two actions taken out by the plaintiffs: HCA 811/2010 (“the main conspiracy claim”) and this action.  Although only 4 defendants are sued in the main conspiracy claim, but 5 defendants are sued herein, for present purpose, they can be treated as the defendants (for reasons which will become apparent below).

3. The plaintiffs are male indigenous villagers, and owned pieces of land in Hang Tau (in the Sheung Shui area).  As such, they enjoyed a right under the government’s “Small House Policy” to build village-type houses.  The first 4 defendants herein are a firm of solicitors, whereas the 5^th defendant is a clerk employed by them.

4. The gist of the plaintiffs’ complaint in the main conspiracy claim is pleaded as follows:

“… from about April to June 2005, the Defendants, wrongfully and with intent to injure the Plaintiffs by unlawful means, conspired and combined … to deprive the Plaintiffs of their rights and interests in the Plaintiffs’ Land by selling the small houses or part(s) of the small houses erected thereon without the Plaintiffs’ prior knowledge or consent” (para 3, statement of claim).

(“the main conspiracy”)

5. The principal means for carrying out the main conspiracy was the use of false documents.  These are described as follows in the statement of claim of the main conspiracy claim:

(a) formal sale and purchase agreements (particulars given under para 4 thereof);

(b) powers of attorney purportedly executed respectively by the 1^st and 3^rd plaintiffs (para 7(a) thereof).

6. It is further averred the defendants encountered difficulties in carrying out the main conspiracy in that the plaintiffs:

(1) had sold their respective land lots and houses to third party purchasers;

(2) refused to convey their respective land lots and houses to the defendants’ co-conspirators who purportedly sold their said properties to some other third party purchasers.

7. In order to further the main conspiracy, the defendants conspired to:

(a) commence false claims against the plaintiffs (HCA 1517 to 1521/2005) (“the 2005 false claims”);

(b) adduce false evidence (including a witness statement and court testimony from the 5^th defendant) to obtain relief in the 2005 false claims.

This conspiracy is the subject-matter of this action (“the false claim and evidence conspiracy”).

8. Although it is not expressly so pleaded in the statement of claim herein, in essence the plaintiffs’ case is that, through the use of false evidence in the 2005 false claims, the defendants successfully obtained:

(1) a court order authorizing the defendants’ co-conspirators to convey the plaintiffs’ said properties to third party purchasers;

(2) a court order releasing the related sale proceeds to the defendants’ co-conspirators;

(3) a consent order in October 2010 whereby the 2005 false claims were discontinued (and the plaintiffs’ counterclaim therein was also discontinued) with no order as to costs.

(see para 2 and 3, statement of claim herein)

9. Insofar as is relevant to this appeal, the false evidence alleged in the statement of claim herein as having been used by the defendants in the 2005 false claims (and hence used as a means of carrying out the false claim and evidence conspiracy) was:

“… the sale and purchase agreements marked collectively as ‘TY-35’ of [the] Exhibits with the Plaintiffs named therein as the vendors … ” (para 3(c), statement of claim herein);

Their complaint in this action is:

“The Defendants applied to court to prosecute for injunction order to give effect to the [above] sale and purchase agreements … ” (para 3(c), statement of claim herein),

and that:

“In making the Injunction Application, the Defendants never disclose to the Court that the [above] sale and purchase agreements (i.e. the Falsified Documents) with the Plaintiffs named therein as the vendors were forged and among other specifically the attestation and interpretation were forged by the 2^nd and 3^rd Defendants … ” (para 3(d), statement of claim herein).

(emphasis supplied) The term “Falsified Documents” has been defined in the statement of claim herein as the sale and purchase agreements referred to in para 3(c) thereof.

This appeal

10. As stated above, this appeal is brought pursuant to Ord 24 rr 10(1) and 11(1).  Ord 24 r 10(1) says:

“Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings, affidavits or witness statements served under Order 38, rule 2A, or experts’ reports, reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof”.

Ord 24 r 11(1) provides:

“If a party … who is served with a notice under rule 10(1) … objects to produce any document for inspection, … then, subject to rule 13(1), the Court may, on the application of the party entitled to inspection, make an order for production of the documents in question for inspection … ”.

11. It is accepted that Ord 24 r 11(1) has conferred upon the court a discretionary power.  In view of Ord 24 r 13(1), that discretion is to be exercised with the necessity (i) for disposing fairly of the cause or matter, or (ii) for saving costs, in mind.

12. The documents sought by the plaintiffs in this appeal (and in the application before the master) are the powers of attorney executed by the 2^nd, 4^th and 5^th plaintiffs (“the subject documents”).

13. When queried why the subject documents fall within the criteria laid down by Ord 24 r 13(1), the plaintiffs first draw attention to the defence of the 1^st to 4^th defendants:

“Pursuant to the express term [of the Co-operation Agreements between the land developer and the plaintiffs], upon the orders and directions of the Developer … , between 1995 and 1996, the 1^st to 5^th Plaintiffs signed and executed … the following documents … Powers of Attorney appointing the nominees of the Developer as their attorneys … ” (para 12(a) thereof).

14. Based on the above averment, the plaintiffs contend that the subject documents fall within Order 24 r 13(1) because:

“One of the issues to be tried, … is ‘Whether the 1^st to 4^th Defendants have conspired with the 1^st and 2^nd Third Parties (the Developers) to use unlawful means, i.e. using forged conveyancing documents, to injure the Plaintiffs’ interest in the Land Lots (if any)?’ … ” (para 20, plaintiffs’ skeleton argument).

15. But this is a mis-description of this action, which subject-matter is the false claim and evidence conspiracy (rather than the main conspiracy).  Further, the loss allegedly having been suffered in this action by the plaintiffs was the legal costs which the plaintiffs incurred in defending the 2005 false claims, whereas the loss allegedly having been suffered in the main action by them was the value of their respective properties.

16. In addition, as can be seen from para 9 above, the subject documents are not part of the false evidence relied on by the plaintiffs as part of their pleaded case concerning the false claim and evidence conspiracy.  The part of the defence referred to in para 13 above does not advance this appeal; the focus of that part is about the background leading to why the documents referred to therein came to be executed, rather than on the documents themselves.  In any event, it should also be noted here that mere relevance does not by itself satisfy either of the purposes mentioned in Ord 24 r 13(1): Hong Kong Civil Procedure 2015, Vol 1, para 24/13/1.

17. Taking the plaintiffs’ case in this appeal to the highest, the subject documents can at most be useful for establishing the credibility of the plaintiffs’ witnesses and/or undermining that of the defence witness.  But specific discovery for the purpose of impeaching the credit of the opposite party is not generally allowed: Tai Fook Futures Ltd v Cheung Moon Hoi [2005] HKEC 587, para 30 (see also CACV 103/2005 (23 October 2006), para 29) and this also applies to the subject documents.

18. For completeness, I pause to note that the subject documents may or may not be relevant to the main conspiracy claim.  But because that claim is not part of this appeal, it is unnecessary (perhaps even inappropriate) for them to be considered in that perspective.

Conclusion

19. The appeal is dismissed; the master’s order is to stand.

20. The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

Costs order

21. The parties agree that costs should follow the event. There will accordingly be a costs order that the costs of this appeal be paid by the plaintiffs to the defendants.

22. I consider summary assessment of costs to be appropriate.  The above costs shall thus be so assessed.  For this purpose:

(a) the defendants be at liberty to lodge with court and serve a statement of costs within 7 days from today;

(b) the plaintiffs be at liberty to lodge with court and serve a statement of objections within 7 days thereafter.