XCHRX GALCO INTERNATIONAL TOYS N.V. v. KADER INDUSTRIAL CO. LTD.

1991, No. A250

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. In a pre-trial, or, more properly, a mid-trial, review of this matter, three matters of substance have to be dealt with by me.

2. The first of these can be disposed of immediately. This is a summons by the defendant dated 17 January 1996. This asks for an order that Galco make and file a list of documents of a particular kind and to make them available for inspection. That relief is contained in paragraphs 1 and 2 of the summons. The parties are agreed that this should be done, and I make an order accordingly. Paragraphs 3 of the summons asks that, unless Galco comply with an order I made on 26 July 1995 within 14 days, Galco's statement of claim be struck out, and its action dismissed. Paragraph 4 seeks the costs. This relief is opposed by Kader, and the parties wish this aspect of the matter adjourned to another hearing, with the question of the costs of today reserved. I so order.

3. The second matter before me is a summons by Galco in which it asks for leave to file another hearsay notice out of time, and that the costs of the application be provided for. I emphasise; the costs are not tendered. Kader does not oppose the grant of the relief sought, but asks for the costs of the application. Mr Bleach says that Galco should have the costs because Kader should have consented to the grant of the relief earlier. Mr Barlow says that Galco is seeking the indulgence of the court, and should pay the price of that indulgence in the usual way. In any event, he says, the notice is unnecessary because the documents are those of Kader, and Galco does not need the vehicle of a hearsay notice in order to produce them. I am not sure that this point is clearly right on the face of it. It is true that, if the purpose for which Galco wishes to produce the documents is to establish some admission made on behalf of Kader, the notice may be unnecessary, but it is not obvious to me, at this stage, that this is the only purpose. It may be that Galco wishes to tender the documents as evidence of the other facts stated therein, apart any admissions they contain against the interests of Kader. On 12 January 1996, Galco's solicitors wrote to Kader's solicitors, explaining the failure to include the documents in the earlier hearsay notice, and asking for Kader's consent to the late filing of the additional notice. There was no response to this letter. Galco's solicitors did not tender any costs. There is no obligation on a party to consent to the grant of an indulgence to an opponent. Although the courts prefer to see co-operation between parties to avoid costs, it cannot be right that a party at fault is able to foist an obligation on the other party to condone that fault or be mulcted in costs. If, of course, Kader had, before me, opposed the extension sought, without good grounds, I would probably have awarded Galco the costs incurred by reason of that opposition, but that is not the case here. On my invitation, Mr Barlow indicated immediately that the order was not opposed, but that he sought the costs. The remainder of the time on this summons was taken up with argument about these costs. In my judgment, Kader is entitled to its costs in relation to this summons in any event, and I so order. Mr Barlow was here to argue other matters, so, in my view, it was reasonable to brief him on this summons also. Accordingly, I grant a certificate for counsel.

4. The last matter is a summons issued by Galco on 12 January 1996 by which is sought an order to produce for inspection two laboratory reports, and the costs of the application be to Galco in any event. Galco does not wish to pursue this summons because it now accepts that the reports are covered by legal professional privilege, but it seeks an order for costs in its favour because the claim of privilege was not properly made out until Kader's solicitors responded to the summons. In its supporting affidavit, Galco's solicitors say that, although the reports were identified in Kader's second supplemental list, the ground of privilege was not identified. This is not so. Part 2 of this list identified the documents. In an affidavit of the 3 March 1994, Kader said that ". . . some tests were carried out for the purpose obtaining legal advice in contemplation of legal proceedings. Accordingly, Kader pleads legal professional privilege and objects to disclosure of the reports relating to the same." The affidavit of 15 November 1994 ties these documents into the second supplemental list. In relation to these reports, Kader's solicitors said, in a letter dated 23 November 1994, that the laboratory "was instructed by our client to examine the dolls in question in November 1990 for the purpose of obtaining legal advice of an anticipated legal proceedings between our respective clients. Examinations were carried out by [the laboratory] on 17 November 1990 and [the test reports] were prepared accordingly. The said tests reports were sent to us under our client's letter in November 1990 for the purpose of getting legal advice from us. In the circumstances, the said test reports are privileged from production under legal professional privilege." Galco's solicitors replied by letter dated 23 November pointing out that "For the reports in question to be privileged, the 'dominant' purpose for which they were prepared needs to be 'for the purpose of enabling solicitors to advise . . .'". In a letter dated 24 November 1994, Kader's solicitors said - ". . . we confirm that the 'dominant' purpose for which the reports were prepared is to be 'for the purpose of enabling solicitors to advise . . .'" The paragraph of the affidavit filed by Kader's solicitors, which, Mr Bleach says, the proper claim to privilege was first made, says that - "In mid-November 1990 my firm was approached by Kader and it was agreed between us that it would be prudent to have [the laboratory] run some tests on the dolls in question so as to enable my firm to advise Kader. The two [reports] were received by Kader on the 30th November 1990 and immediately passed to me so that I could advise on this dispute." Mr Bleach says that it was not made clear until Kader filed this affidavit that the purpose in Kader's mind for seeking the reports was to enable Kader's solicitors to advise. I do not agree. In my view, nothing could be clearer than Kader's claim in the letters of 23 and 24 November 1994, and in the earlier affidavit, that it had obtained the reports to enable their solicitors to advise. Nothing new was claimed in the affidavit; no new ground for making the claim was advanced. It follows, in my view, that Galco was not justified in issuing its summons. The summons is dismissed, with costs to Kader, including a certificate for counsel.

JK FINDLAY

Judge of the High Court