ELLIOTT INTERNATIONAL, L P AND OTHERS v. THE BANK OF EAST ASIA, LTD AND OTHERS

HCMP 1812/2016

[2020] HKCFI 310

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1812 OF 2016

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D E C I S I O N

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1.  The 2^nd to 19^th Respondents (“Directors”) issued a summons dated 6 December 2019 (“summons”) seeking various interlocutory orders. Some have proved uncontroversial. Two applications for further discovery have been disputed. One is for a further list of documents and verifying affirmation under RHC O24 r3. The second is for an order under RHC O24 r10 for disclosure of documents said to be referred to in a witness statement.

2.  So far as the application for a further list is concerned the dispute would appear to arise from differing views on what is covered by [4] to [7] of Schedule to the order dated 28 August 2018 (“Order”).

“4. All letter, email or other communications (including, without limitation, minutes, notes or other records of any meetings, conference calls or other discussions) between any of the Petitioners and any third party relating to the Petitioners’ investment strategy in dealing in and/or holding any legal or beneficial interest in the shares of BEA or any derivative of shares in BEA from 15 January 2010 to the date of presentation of the Petition.

5. All documents (of whatever nature) relating to any preparation, plans or actions by any of the Petitioners to encourage, procure, facilitate, further or effect a takeover of BEA from 15 January 2010 to the date of presentation of the Petition.

6. All letters, email or other communications (including, without limitation, minutes, notes or other records of any meetings, conference calls or other discussions) between any of the Petitioners and any third party relating to any suggestion or proposal to encourage, procure, facilitate, further or effect a takeover of BEA from 15 January 2010 to the date of presentation of the Petition.

7. All documents (of whatever nature) to the date of presentation of the Petition relating to the Petitioners’ purpose, objective, intentions or strategy in presenting the Petition.”

3.  Mr Bernard Man, on behalf of the Directors, took me through a selection of documents which he argued demonstrated that Elliott had taken a restrictive view of the ambit of these classes of documents and that it was likely that documents falling within one or other of the classes had been omitted.

4.  Mr Sussex, on behalf of Elliott, submitted that these paragraphs require Elliott to disclose those documents that relate to its strategy to enhance the value of its investment in BEA and that “plans” in [5] has been read by Elliott’s legal team, correctly, as coming within the same rubric.  It cannot have been intended, says Mr Sussex, that Elliott disclose everything that it generated or received from third parties concerning BEA from 15 January 2010 to the presentation of the Petition otherwise the Order could, and would, simply have stated this and he points to [104] to [105] of my 28 August 2018 decision as demonstrating that this was clearly not what was intended.  It might also be said that given the Directors’ decision to seek disclosure of carefully formulated classes of documents rather than general discovery, they cannot have intended that everything in Elliott’s possession relating in some way to BEA had to be disclosed.  Insofar as Elliott have disclosed some documents that do not appear to relate directly to “strategy” and seem to be of more general provenance this is to be explained by the fact that [6] of the Order, which concerns attempts to procure a takeover of BEA, does not refer to strategy or plan and, therefore, Elliott and its legal team have cast the net wider     when assessing what is required to be disclosed, and disclosed all communications that relate to a takeover of BEA.

5.  I agree with Mr Sussex subject to this qualification.  Although, I recognise that Elliott’s plans and strategies might reasonably be assumed to focus on the enhancement in value of the investment, it seems to be that the paragraphs require disclosure of all documents relating to deliberations and communications concerning its plans in respect of acquisition, holding and selling of shares in BEA from 15 January 2010 until the date of presentation of the Petition, because necessarily this must touch on its “investment strategy in dealing in and/or holding any legal or beneficial interest in the shares of BEA….” [emphasis added].  It maybe that all such documents have been disclosed.  I cannot discern this from the evidence and submissions.  However, before making a further order the Court needs to be satisfied (RHC O24 r8) that the order is necessary.  I am not.  I am far from persuaded that given the extent of what has been disclosed and the issue to which they would relate (loosely Elliott’s strategy and purpose  in managing its investment in BEA and presentation of the Petition)  any material purpose is likely to be achieved by ordering a better list.  I, therefore, dismiss the applications in [2] and [3] of the summons.

6.  The second part of the application is the order sought for discovery pursuant to RHC O24 r10 for documents the Directors argue are referred to in James Smith’s witness statement of 11 October 2019 and identified in the schedule to the summons.  By the time that the summons came on before me last week a number of paragraphs of the schedule had been abandoned.  Paragraphs 1 to 1.5, 2, 3, 4, 6, 12 and 13 remain.

7.  Rule 10 requires the court to be satisfied that “reference is made to any document …” in the witness statement.  I proceed on the basis that this means that the relevant paragraph of the witness statement has to make “direct allusion to a document or documents.”[1] It is not sufficient that the witness statement contains statements that talk of matters, which might, but then again might not, have involved the production or receipt     of documents.  The statement must be such that the only sensible interpretation of what is said is that it contains reference to a document, rather than just reference to matters that one might commonly expect to have involved the production of a document.  I am satisfied that this is the case in respect of the following paragraphs of the witness statement and will make an order in the terms of [4] of the summons:

(1)     [20] “analysis and research”.

(2)     [24] “confidential quarterly updates” which have not already been disclosed from 15 January 2010.

(3)     [64] “internal presentations” and “considerable number of presentations and draft presentations over the years”.

(4)     [120] “Various lists and profiles setting out information about potential investors were prepared”.

(5)     [123] “materials”.

(6)     [154] “speaking points and approved responses to possible questions”.

(7)     [154] “open letters and presentation”.

8.  I would, however, note that it does not follow from my decision (that the relevant paragraphs do not make direct allusion to documents) that there are not documents and, if there are, I would have expected many of them to come within one or more of the classes ordered to be disclosed.  So if, for example, the analysis and research referred to by Mr Smith in [20] of his statement did include written material, which comes within one of the classes specified in the Order it should have been disclosed.  Also by way of example, if there were exchanges of emails between the persons referred to in [21], which address matters which come within one of the classes specified in the Order they should have been disclosed.

9.  I will hear counsel on the time for compliance with the order that I have made and various case management matters that need to be dealt with today, but before doing so I would add this general observation on discovery in this case.  During his oral submissions Mr Sussex volunteered the observation that it might have been better if the parties had started with general discovery.  This I took to be an allusion to my observation at the outset of the original specific discovery applications that it seemed to me that the parties wanted general discovery and perhaps it would be better to so order.  Unwisely I allowed myself to be persuaded that the well-trodden path of general discovery was far too straight forward a route to take in a case in which there was bound to be differences of views on what was relevant and something more sophisticated was necessary and befitting of a case involving sophisticated parties represented by sophisticated legal teams arguing over sophisticated issues. Discovery has become unnecessarily complex.  I think it highly unlikely that this case in going     to turn on discovery of obscure documents.  I would have thought it fairly obvious what is likely to be relevant and what is likely to be a best tangentially relevant.  I expect the parties to bear this in their preparation for trial.  A subject to which I now turn.