ALLIED GROUP LTD AND ANOTHER v. THE SECRETARY FOR JUSTICE AND ANOTHER

CACV 1/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1 OF 2003

(ON APPEAL FROM HCA NO. 4246 OF 2001)

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J U D G M E N T

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Hon Rogers VP:

1. This is an appeal from a judgment of Madam Justice Chu given on 13 December 2002. The judge ordered that the amended statement of claim in the action should be struck out, that the plaintiffs' application to re-amend the statement of claim be refused and also that the motion for retrospective leave to use the documents that were referred to in the amended statement of claim should also be refused. At the conclusion of the hearing of this appeal, this court reserved its judgment which we now give.

2. In this action the plaintiffs seek a remedy for what they claim was a judgment entered on the basis of false evidence. It is said that the evidence was highly material to the decision sought to be impugned. Because of the nature of those proceedings, the evidence was given on paper. It was, therefore, prepared before the hearing. In those circumstances, the parties on whose behalf it was given would have had a choice as to whether to file it or not. It is the plaintiffs' case that those parties, as well as the relevant witnesses, must have known that the evidence was incorrect.

3. The defendants obtained the order to strike out the statement of claim on the basis that the plaintiffs in their pleading had used documents that they were not entitled to use. Specifically, it is said that the documents were subject to an implied undertaking that bound the plaintiffs. It was said that not only had the commencement of these proceedings been an abuse but the statement of claim was a contempt. For that reason costs were subsequently ordered against the plaintiffs on an indemnity basis.

The 1993 proceedings

4. In August 1992 the Financial Secretary appointed the 2nd defendant as an inspector under section 143(1)(c) of the Companies Ordinance, Cap. 32, to investigate the affairs of the plaintiffs and 3 other companies. That list was subsequently expanded, but nothing turns on that. As part of the investigations the activities of the directors came under scrutiny. One of the directors was Mr Lee Ming Tee ("Mr Lee").

5. Prior to the appointment of the 2nd defendant as the inspector, the Financial Secretary had formed a committee, which has been variously referred to as the Steering Committee and Steering Group and which will be referred to as the "Steering Committee". As far as was known at the time, the Steering Committee comprised Mr Tam Wing Pong, who was then the Deputy Secretary for Monetary Affairs, Mr John Allen, who was with the Attorney General's Chambers, and Mr Gerard McMahon ("Mr McMahon") who was an Executive Director of the Enforcement Division of the Securities and Futures Commission.

6. In May 1993, the plaintiffs together with Mr Lee commenced judicial review proceedings directed to setting aside the appointment of the 2nd defendant as the inspector and challenging the appointment and existence of the Steering Committee. The Financial Secretary was named as the 1st respondent and the 2nd defendant was the 2nd respondent. The application in respect of the 2nd defendant's appointment was not proceeded with. The plaintiffs' application in respect of the Steering Committee was founded on the basis that the existence of the Steering Committee was unauthorised under the statute and was likely to compromise the independence of the inspector, leading, at the very least, to a perception of bias. Various orders were sought in respect of the Steering Committee; the object was to have the Committee disbanded. One of the issues that became relevant in considering what influence the Steering Committee might have brought to bear on the inspector was to determine the composition of that Committee.

7. Affidavit evidence was filed on the respondents' behalf to contest the application for leave to apply for judicial review. Amongst others who made such affidavits were the Financial Secretary, the inspector and Mr McMahon. In the amended statement of claim there are extensive quotations from the affidavits given by those persons on the basis of which it is alleged that they had "deposed to the fact and/or gave the overwhelming impression and/or appearance that at all material times, the composition, and attendance of meetings with the 2nd defendant, of the Steering Group were restricted to 3 (or possibly 4) members only."

8. Similarly, it is the plaintiffs' pleaded case in this action that the affidavit evidence "deposed to the fact and/or gave the overwhelming impression and/or appearance that at all material times, there had been no attempt by any person improperly to influence the 2nd defendant or to prevent him from adopting an independent approach to the investigation, and that the 2nd defendant as inspector acted completely independently, free of any influence, opinions or views of any outsiders particularly of the Steering Group and the SFC." Amongst other passages the plaintiffs referred to that in Mr McMahon's affidavit dated 2 June 1993 where he said:

"... I can assure the applicants that the Inspector has not sought my opinion in relation to the conclusions he is reaching in respect of the inspection and nor have I offered my opinions in relation thereto. ... I have not sought to nor have I in any way improperly influenced the Inspector or prevented him from adopting an independent approach to his investigation."

9. On 11 June 1993 Kaplan J dismissed the application for leave to apply for judicial review and ordered that the applicants should pay the respondents' costs. It is evident from Kaplan J's judgment that he accepted and relied heavily on the affidavit evidence. In particular, he accepted, without qualification, the evidence directed to showing that there had been no attempt to influence the inspector as to the conclusions that would be reached. It suffices to quote one passage from his judgment:

"I do not propose to go into the question whether an Inspector carrying out his statutory inquiry is liable to an order for prohibition. I propose to rest my decision simply on the basis that on the materials presented to me, there is insufficient evidence upon which the Applicants can base their allegation of a real risk of or the probability of bias. Had there been direct evidence of a compromise of the Inspector's independence or had there been sufficient evidence from which at this stage it could be inferred, I would have unhesitatingly given leave. In my judgment, given the nature of the inspection and the evidence placed before me, I am not satisfied that the Applicants get anywhere near to establishing a prima facie case based on the perception of bias."

The Court of Appeal upheld Kaplan J's judgment. In doing so Penlington JA concluded his judgment by saying:

"However having considered all the matters that were before Kaplan J. I am quite satisfied that he was right to conclude that there was no prospect of the applicants being able to show that, having reviewed the manner in which the steering committee was set up and the evidences as to the role it has played in the inspectors enquiry and the production of his report, a reasonable minded person would conclude that there was a real danger of his report being bias."

10. Bokhary JA (as he then was) said:

"Both Mr Chan for the individual applicant and Mr Graham for the corporate applicants concede that their clients would have no cause for complaint unless the Steering Group or any one or more of its members has strayed beyond the group's terms of reference so as to compromise the inspector's independence or objectivity and create a real danger of bias on his part. This being the leave stage, the question is whether it is arguable that that has happened."

On the basis of the evidence he came to the conclusion that it was not so arguable.

The prosecution of Mr Lee

11. Arising out of the investigation, information was obtained which led to Mr Lee being charged, in August 1998, jointly with one of the other directors, with 2 counts of conspiracy to defraud contrary to common law and 4 counts of publishing a false statement of account. As part of the prosecution process Mr Lee and his solicitors were provided with what is commonly referred to as "unused material" i.e. material disclosed by the prosecution but which it did not intend to use in the criminal proceedings. That material included, amongst other things, minutes, or notes, of meetings of the Steering Committee and copies of various correspondence including a letter dated 12 February 1993 from Mr McMahon to the inspector enclosing a copy of a draft chapter of the inspector's report on which he had made approximately 58 different handwritten comments. Interestingly, the letter requested that the copy of the draft chapter should be returned to the writer. The solicitors were requested to give an undertaking not to use the materials supplied for any other purpose than defending their clients. The solicitors refused to give a specific undertaking but said that it was implied that there was an undertaking in the terms referred to by Lord Hoffmann in the case of Taylor and another v Director of The Serious Fraud Office [1999] 2 AC 177 at 212E. The implied undertaking referred to in that passage is an undertaking not to use the documents for any collateral purpose.

12. In the course of the criminal prosecution, application was made on behalf of both Mr Lee and his co-defendant for a permanent stay of the prosecution. As part of that stay application the unused material was provided to the judge and much of it was read and referred to in open court during the course of submissions. Amongst the issues that arose in the course of that stay application was the exact involvement of the Steering Committee and as to whether any of the members or other persons, and by then it was clear that others had taken part in the meetings of the Steering Committee, had sought to influence the inspector in his findings.

13. In giving his ruling (see HKSAR v Lee Ming Tee & Another, HCCC 191/1999, unreported, 21 July 2000), Pang J made reference to the fact that from time to time officers of the Commercial Crime Bureau and Crown Counsel responsible for the prosecution had also attended the meetings of the Steering Committee. In the course of the submissions reference, had been made to the notes, or minutes, of the Steering Committee meetings. The judge then went on to refer to the fact that in opposing the application for judicial review, the inspector had assured the court that none of the conclusions he had reached had been subject to the opinions of members of the Steering Committee nor had he consulted the Committee individually, or as a group, in relation to his conclusions. The judge went on to refer to the passage from Mr McMahon's affidavit cited above. His conclusion (at page 9 of the ruling) was:

"... At the very least, Mr McMahon appeared to have a poor memory. This apparent forgetfulness appeared to have been a problem of the Inspector as well. The contents of the affidavit referred to above, in the light of the unused material now available before this court, are inaccurate at best. It also came to light that one Stephen Tisdall had redrafted a chapter concerning one of the share placings in the present indictment in March 1993. The document was passed on to the Inspector via a covering note from the Inspector's legal advisors.

Had Kaplan J been privy to such information, he might have arrived at a very different conclusion."

The matter then went on appeal to the Court of Final Appeal. In the course of making their submissions, Counsel for both parties referred to and read out parts of the minutes, or notes, of some of the meetings of the Steering Committee. Mr McMahon's letter enclosing the copy of the draft chapter in respect of which he had made comments featured quite significantly in Counsel's submissions. In particular, Mr Thomas SC, on behalf of the prosecution, made specific reference to that letter and the handwritten comments made by Mr McMahon. He said at page 1688M of the transcript:

"First of all, my general submission is that nearly everything he says is really an editorial type suggestion, and it's no more than a suggestion. He's suggesting clarification, or he's suggesting something to avoid incompleteness, or for better understanding, or to improve the grammar in one or two cases, or sometimes to raise a question for the inspector to consider. That is how we would categorise virtually everything that appears.

Can I now give you what I understand to be the three main points that the other side would wish to emphasise."

Counsel then went on to quote 4 passages from the draft chapter of the report and sought to analyse the handwritten comments that had been made by Mr McMahon. Those 4 passages were referred to, with quotations of Mr McMahon's handwritten comments, in the judgment of Ribeiro PJ, a judgment with which all other members of the court agreed. Ribeiro PJ then went on to say at (2001) 4 HKCFAR 133 page 181B:

"Pang J was severely critical of Mr McMahon's affidavit and of the fact that it had been put forward to the Court on the Inspector's behalf. The Judge's criticism was entirely justified. There is no doubt that it was inaccurate and highly misleading of Mr McMahon to state that he had not offered his opinions or sought to influence the Inspector's views. He clearly had. The draft chapter and comments by members of the Steering Group had not been forgotten as they were mentioned (in anodyne terms) by the Inspector in his own affidavit filed contemporaneously ....

The respondents point out that in the final report, certain changes along the lines suggested by Mr McMahon were in fact made. One is obviously unable to say why this occurred or whether the changes resulted from Mr McMahon's comments, particularly since the Inspector swore an affidavit saying that he had reached his conclusions independently. That, however, is not the point. The court is entitled to expect candour and honesty in evidence presented to it by public officials acting as regulators and guardians of the public interest. Mr McMahon's affidavit fell far short of what was required."

The present action

14. In the light of that background it is, perhaps, not surprising that the plaintiffs now wish to seek some redress in respect of what they may justifiably feel was a judgment obtained on the basis of inaccurate evidence. The judgment of the Court of Final Appeal was given on 20 March 2001. The writ in this action was issued on 25 September 2001. Whereas it is not pretended that it would be possible to obtain relief by way of judicial review after such a long period and having regard to the fact that such relief could no longer be relevant, the plaintiffs contend that they are justified in bringing these proceedings to set aside a wrongly obtained judgment on the basis of which, if nothing else, they were compelled to pay a substantial amount in costs.

15. The plaintiffs' solicitors were of the view that the plaintiffs could make use of the various documents which had been passed to the solicitors in the furtherance of Mr Lee's prosecution and had been used in the stay application. They were of the view that the material was no longer subject to the restrictions as to its use. It had been given to Pang J as part of the submissions. As pointed out above, important parts of that material were read in open court. In particular, the most material parts of the comments made by Mr McMahon on the draft chapter of the report had been read and emphasised by the prosecution in the course of submissions in open court in the Court of Final Appeal. What is more, the judgment of the Court of Final Appeal quoted what were considered to be the most relevant parts.

16. The plaintiffs' solicitors did not rely simply on their own view of the matter. They went to the 2 senior leading counsel who had represented Mr Lee on the stay application. Both leading counsel as well as the solicitors were of the view that the documents that had been used in the stay application were available for the plaintiffs to use in the present proceedings. A further senior leading counsel was instructed by the solicitors prior to the commencement of the present proceedings. He saw no objection to settling the statement of claim and the amended statement of claim referring to this material. This was all set out in an affidavit made by the solicitor acting for the plaintiffs.

17. I, for my part, cannot accept that there are grounds for considering that those views were formed otherwise than in good faith. Counsel for the defendants has sought to undermine the effect of the solicitor's affidavit by suggesting that the instructions to counsel may have been defective. But that suggestion has no substance. The 2 leading counsel who had represented Mr Lee were the 2 people who knew most about the use that had been made of the material. Having been the counsel representing Mr Lee, it would be surprising if they did not know more about the details of the facts than anybody else. It cannot be suggested that they were otherwise than the most appropriate people to consult. The suggestion that counsel's advice may have been qualified is nothing short of an attack that the solicitor's affidavit only told a misleading half-truth. There is no ground for any such allegation.

The statement of claim in this action

18. The primary relief sought by the plaintiffs is that the judgments of Kaplan J and the Court of Appeal should be set aside because they were obtained by fraud. As already indicated, the amended statement of claim pleads the facts and events which have been referred to above in considerable detail. The crucial part of the pleading as regards this application is contained in paragraphs 25 to 28. Stripped of the particulars paragraph 25 reads as follows:

"25. In fact, the Defendants' evidence referred to in paragraph 17 above was false and highly misleading. In truth: -

(a) Contrary to the assertions that the Steering Group was set up to deal with and in fact only dealt with format and/or publication of the 2nd Defendant's report and/or policy and/or administrative and/or budgetary matters, the Steering Group actually discussed a very broad range of topics which were not limited to such matters. Moreover, comments were given to the 2nd Defendant and/or on the 2nd Defendant's draft chapters of his report by members of the Steering Group and/or attendees of the Steering Group meetings including Mr McMahon, Mr Crosby and Mr Johnson at their regular meetings which influenced or were intended clearly to influence the 2nd defendant. Detailed minutes were kept of the meetings in which the various comments made by the detainees were duly recorded.

(b) Contrary to the assertions that the 2nd defendant as inspector had not received opinions and/or views from members of the Steering Group and/or the SFC, and that such opinions and/or views had not been proffered by members of the Steering Group and/or the SFC with a view to influencing the 2nd defendant in his investigation, the 2nd defendant as inspector had received opinions and/or views from members of the Steering Group and/or attendees of the Steering Group meetings including representatives from the SFC."

19. Paragraph 26 of the amended statement of claim is directed to the complaint that the Steering Committee did not at all material times comprise or have only in attendance 3 or, at most, 4 members. Paragraph 27 of the statement of claim refers to a letter, which it is understood was never sent.

20. The particulars of all those allegations are extensive. In addition to quoting the extracts and comments, which were themselves quoted by Ribeiro PJ in his judgment, reference is made to, and there are quotations of, extracts from the minutes, or notes, of the Steering Committee meetings and from the remainder of the 58 comments made by Mr McMahon on the copy of the draft chapter of the report.

21. The judge below reviewed the authorities relating to unused material supplied for the purposes of criminal proceedings. In coming to her conclusion that the amended statement of claim should be struck out because use had been made of the "unused material" which the plaintiffs were not entitled to do, the judge said, at paragraph 74, that she did not consider that the amended statement of claim could have been drafted by reference to what had been said before Pang J and the Court of Final Appeal and what had been said in their judgments. That is a matter which this court took up with Mr McCoy SC, who appeared on behalf of the plaintiffs, at the commencement of the hearing of this appeal. His submission was that the pleading could be drafted simply with reference to what had been said in open court and what was contained in the judgments.

22. In paragraphs 73 and 74 of her judgment, the judge indicated that it was her view that a person who had received "unused material", and thus was subject to an implied undertaking not to use the documents and material for any collateral purpose, could never thereafter use the material despite the fact that the contents of those documents and materials might have been revealed in open court and set out in judgments. As I will refer to below, I take a different view of the matter. I consider that, at the very least, the distinction can be drawn between, on the one hand, use of the documents and other material provided as "unused material" and, on the other hand, use of material which has become freely available by reason of having been referred to in open court and in judgments. The 2 categories may well overlap, but I fail to see how an undertaking in respect of the first category can prevent use of material in the second. In my view the authorities binding on this court do not support such a proposition, nor does a logical deduction lead to it.

23. On this appeal it was strenuously argued on behalf of the defendants that the question of the use of "unused material" was a matter of principle and that there should be no compromise of that principle. This court's attention was drawn to the passages in the judgments of Kennedy LJ and Lord Hoffmann at pages 184-5 and 210-212 respectively of the report of the Taylor case. It is unnecessary to examine those passages in detail. It is however to be observed that foremost amongst the reasons for the existence of the implied undertaking is the need to ensure that the criminal investigation process is not constrained by concerns as to what may happen if details of the process and materials used in that process could be used as the basis for retaliatory action. It is, therefore, to be observed that a principle founded upon the basis that it is there to protect those involved in investigations and in providing evidence directed to those investigations is now prayed in aid in a situation where it has been strenuously argued in the Court of Final Appeal that what is sought to be protected was no more than editorial comment.

24. In the course of his submission Mr Jat SC, on behalf of the 1st defendant, argued that the limit as to the use of material which had come into the public domain was that "if a party who is himself not under any undertaking who did not derive the information from a person who is under an obligation, if he is able to obtain the information independently from a public source then there is nothing to stop him using it."

25. The starting point for any consideration as to the common law in relation to the implied undertaking in relation to unused material in criminal cases must, now, of course be that such an implied undertaking not to use the material for any collateral purpose will be held to exist: see the Taylor case at page 212E. It is an undertaking which is founded both in confidentiality and privacy.

26. The purpose of the undertaking is, as has been set out in the cases, in short, to protect the integrity of the criminal investigation process. The undertaking is impliedly given by the person, or persons, who receive(s) the unused material. As with any other undertaking, the undertaking binds those who give it. Technically no one else, either expressly or impliedly, gives that undertaking. Naturally, if a person receives material that he knows is subject to an undertaking that it should not be used except for a specific purpose, he himself will become subject to similar restrictions as to its use. Those restrictions would include not being able to publish the material if it be confidential; nor to breach any privacy attaching to the document; nor to publish it in circumstances which would amount to aiding or abetting the person who originally received the document, the subject of the implied undertaking, in breaching that undertaking. Thus the person who so receives the document will be treated in many respects as one who had given an undertaking. Nevertheless, as has been recognised there is still a distinction between a person who gives an undertaking and one who does not.

27. The question nevertheless remains as to what happens once the information or material has been made known to the public. In this respect, I avoid the use of the word "published" since it can have other connotations. As will be noted below, there is high authority in Australia that similar undertakings in relation to civil matters are subject to the qualification that once the material is used in court it becomes part of the public domain. Even on the basis that the English authorities would tend to the view that the undertaking continues, that is not the end of the matter. There is a distinction, which is well recognised in the law of confidential information, that once confidential material has been made known to the public, the duty of confidence or the undertaking may not, as such, be lifted by reason of that fact, but any person may freely use information that is in the public domain.

28. In this respect, the courts have recognised the distinction between the use of the original material and the use of the published material. As long ago as 1948 Lord Greene MR considered the matter in the case of Saltman Engineering Co. Ltd v Campbell Engineering Co. Ltd (1948) 65 RPC 203. That case related to confidential information which comprised the original drawings for making tools. The defendant had been contracted to make tools according to the drawings. The plaintiffs commenced their action against the defendants on the basis that they used those drawings to manufacture tools on their own account. At page 215 of the report Lord Greene dealt with the question that the leather punches made from the tools were items of commerce which were readily available. He then pointed out that there was a distinction between using the drawings, which in themselves were confidential, and using publicly available information which, by reverse engineering, could have provided all the information contained in the drawings. He said at line 20:

"No doubt, if they had taken the finished article, namely, the leather punch, which they might have bought in a shop, and given it to an expert draughtsman, that draughtsman could have produced the necessary drawings for the manufacture of machine tools required for making that particular finished article. In at any rate a very material respect they saved themselves that trouble by obtaining the necessary information either from the original drawings or from the tools made in accordance with them. That, in my opinion, was a breach of confidence."

29. Turning to a case relating specifically on discovery, in Harman v Secretary of State for the Home Department [1983] AC 280, the House of Lords was concerned with the misuse of documents which had been disclosed on discovery in other proceedings. Although the documents, or at least material parts of them, had been read out in open court, what was at issue was the use which had been made of the documents themselves. In his speech Lord Diplock drew the clear distinction between use of the documents, which that case involved, and use of a transcript, which that case did not involve. At page 303 he referred to the rule that, except in exceptional circumstances, court hearings should be in public. He went on to say that one of the side effects of that rule was that any document or portion of a document that was read out orally in open court could be taken down by anyone confident of his ability to do so and published as part of a report of the proceedings. Later on at pages 304-5 he referred to this side effect as being an anomaly. Nevertheless, as did Lord Greene in relation to confidential information, he noted the distinction between the use of the material itself and use of a record of the court proceedings. On the facts of that case, Lord Diplock regarded it as hypothetical in the extreme that there could have been a transcript of those proceedings.

30. In the present case, of course, the plaintiffs do have full transcripts of the proceedings both before Pang J and before the Court of Final Appeal. The question then arises as to why the plaintiffs should not be free to use those transcripts. In my view there can be no possible fetter on their use. In deference to Lord Diplock and the House of Lords it might be said to be anomalous but to prevent the use of the transcripts, and the information contained therein, not to speak of the judgments, would be absurd.

31. Insofar as the position is dealt with in the binding authorities it would seem that there can be no fetter on the use of material derived from open court proceedings. In the case of Mahon v Rahn [1998] QB 424 the Court of Appeal was concerned with the use of "unused material" supplied in relation to criminal proceedings. As part of their holding the Court of Appeal held that there was no implied undertaking in respect of "unused material". That holding has been disapproved in the Taylor case, but as a separate matter the Court went on to say that the undertaking would not continue to apply after the material had been used. On that basis the court expressly dissented from Brooke J, who had been the judge in the court below. In doing so Otton LJ said at page 452B:

"I prefer: (1) the reasoning and approach in civil proceedings: see R.S.C., Ord. 24, r. 14A and Derby & Co. Ltd. v. Weldon (No. 2), 132 S.J. 1755, but excluding Singh (Tejendra) v. Christie, The Times, 11 November 1993; (2) the rationale of section 17 of the Act of 1996; (3) an approach rooted in common sense that there should be no impediment on the use of information which is in the public domain subject to the very rare invocation of public interest immunity; and (4) the basic concept encapsulated in article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953)."

32. The House of Lords' decision in the Taylor case, of course, as has just been noted, overruled the effect of the first part of the Mahon v Rahn decision. The Taylor case involved documents which had not been read in open court. Hence, the second ground upon which the Court of Appeal had ruled in the Mahon v Rahn case was not in issue. Nevertheless, in his speech Lord Hoffmann did refer to that part of the Court of Appeal's decision. At page 212F he said:

"I do not propose to express a view on the further points which arose in Mahon v. Rahn (1998) QB 424, namely whether the undertaking applies also to used materials and whether it survives the publication of the statement in open court. I do not do so because these questions may well have been overtaken by the express provisions of the Criminal Procedures and Investigations Act 1996. But I would draw attention to the comments of Brooke J. in Mahon v. Rahn on the question of whether the provisions of Ord. 24, r. 14A (which was introduced in response to a decision of the European Court of Human Rights holding that the previous law unduly limited freedom of expression) and, by parity of reasoning, section 17(3)(b) of the Act of 1996, are not too widely drawn. There seems to me much force in his view that the court should nevertheless retain control over certain collateral uses of the documents, including the bringing of libel proceedings."

33. It would seem that Lord Hoffmann's comments were directed to the question of the bringing of defamation proceedings. Whether that is so or whether Lord Hoffmann had in mind that the undertaking given to the European Commission in the Harman case, to which I shall refer shortly, was only in relation to the use of the document not being a contempt is not certain. It may be that the law of contempt could have been changed whilst at the same time still preventing use of documents, for example, for the purposes of defamation proceedings. A point might also be made that Order 24 rule 14A made no distinction between the whole document being the subject of disclosure in court and only part of the document. That distinction might be important in that, if it existed, it could maintain a distinction between using what is public knowledge on the one hand and on the other hand the undertaking being lifted. Lord Hoffmann may also have had in mind the fact that the undertaking given to the European Commission was in the context of civil proceedings. On that view of the matter, the change in the law in respect of criminal proceedings was perhaps unnecessary as regards the undertaking given.

34. In the second Mahon case, Mahon and another v Rahn and others (No 2) [2000] 1 WLR 2150, Brooke LJ, who by then was in the Court of Appeal, said at page 2189:

"The House of Lords in Taylor v. Director of Serious Fraud Office [1999] 2 AC 177 did not advert to this particular point, although Lord Hoffmann's observations at p. 212 E-G, indicated which way his sympathies would lie in connection with the use of disclosed material in open court, as in this case, before the Act of 1996 was passed. If the defendants wish to pursue this aspect of the case, which they cannot on the present interlocutory appeal, they would need a further ruling of the House of Lords on this specific point."

35. In the case of Ruddy v Mercury Personal Communications Ltd, (unreported) 2000 WL33348707, in a judgment given in the Queen's Bench Division on 31 July 2000, Eady J considered that the second ruling in Mahon v Rahn remained good law after the decision of the House of Lords in the Taylor case.

36. Before leaving this aspect, mention should be made of the case of Sybron Corporation v Barclays Bank Plc. [1985] 1 Ch 299. In that case Scott J (as he then was) held that the person who had given an implied undertaking as part of the discovery process in civil proceedings remained bound by that undertaking not to use documents in other proceedings, notwithstanding that they had been read in a judgment and the use was a use of the judgment. This was, of course, before the introduction of Order 24 rule 14A. The decision in that case should not affect the outcome of this case because Scott J specifically held that anybody who had not given an undertaking was free to use material contained in a judgment. In the present case the plaintiffs have not given any undertaking. In those circumstances it might be said, therefore, to be strictly unnecessary to consider whether that part of Scott J's decision restricting the recipients of unused material from using transcripts and judgments should be followed. Nevertheless, because the firm of solicitors presently representing the plaintiffs is the same firm that represented Mr Lee, it could be said that the solicitors would be bound, even if the plaintiffs would not be if represented by another firm. Out of caution, therefore, I go on to consider the further point.

37. Scott J's view was based on the proposition that the undertaking covered not only the documents but any derivation of those documents, for example, their citation in a judgment or in speeches of counsel. Even then, it was acknowledged that if information contained in discovered documents were to become the subject of public discussion, so that its confidential nature had vanished, that fact would have to be taken into account by a court which was asked to give leave to use that document for other purposes.

38. I would not, as at present advised, be disposed to follow the full extent of the decision in Sybron. In the first place, it seems to me that for the proposition to hold good it requires an extension of the terms of the undertaking to include not merely use of the documents or material supplied, but also use of information derived from the use of the documents in public. In the second place, it seems to me that the decision is at variance with the view expressed by Lord Diplock when he indicated at page 305 B-G of the Harman case that the solicitor, who was subject to the undertaking, could have provided a transcript containing the "identical" words. That, he said, was an anomaly. He also thought it highly unlikely, but it is clear that he thought it could have been done. In the third place, it seems to me that an application of such a rule as was applied by Scott J would be at variance with the law of confidentiality and privacy since what would be used would be material in the public domain, not the documents supplied. In the fourth place, it seems to me, that there would be no confidentiality or privacy left to protect once the documents or other materials had been disclosed in open court, not to say contained a judgment. Finally, the suggested liberalisation of the criteria for deciding whether to give leave to use such material is, in itself, a recognition that a restriction extending to use of transcripts and judgments could well lead to unacceptably illogical results. The proposed remedy would add uncertainty to an unsatisfactory situation.

39. Partly because the question of the disclosure of unused material has only come to the fore in recent years, it was not until 1999 that it was finally established that there was an implied undertaking as to its use. The scope of that undertaking is yet to be fully explored. In this connection, I would also draw attention to the decision of the High Court in Australia in the case of Esso Australia Resources Ltd and others v Plowman and others [1994-1995] 183 CLR 10. The case concerned arbitration proceedings but in relation to the question of the implied undertaking not to disclose documents made available on discovery in such proceedings, Mason CJ made reference to the law in relation to discovery in court proceedings. At pages 32-33 of the report he indicated that it was his understanding that the implied undertaking was subject to the qualification that once material had been used in evidence in court proceedings it became part of the public domain unless the court restrained publication of it. In so saying he was expressing a very similar view to that expressed by Lord Scarman in the Harman case: see especially page 313 B-C.

40. One might also mention the decision of Kirby P, as he then was, in Ainsworth v Hanrahan [(1991) 25 NSWLR] 155 where, at page 164, he clearly expressed his preference for the dissenting speech of Lord Scarman in the Harman case. In addition to the passage just referred to, at page 314F-G of the report of the Harman case, Lord Scarman went on to say:

" We have already stated our view that the mere fact of enforceability by way of committal proceedings for contempt cannot, by itself, determine the nature or duration of the duty. Unless, therefore, there are cogent reasons associated with the law of discovery why the obligation should survive the disappearance of the privacy and confidentiality of the documents concerned, we would conclude that the general law, as stated in Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd., 65 R.P.C. 203 and by the Law Commission, does apply to the termination of the duty in respect of documents disclosed in litigation."

41. Quite apart from the general proposition that something said or done in open court is in the public domain, which stems as a logical conclusion from the system of open justice, there are now other considerations which would lead to the same conclusion. In particular, the provisions of the International Covenant on Economic, Social and Cultural Rights, which now forms part of the law of Hong Kong, relating to freedom of expression would militate against any unwritten law preventing use of material which had come into the public domain and thus would cover material disclosed in open court: see Article 16 of the Hong Kong Bill of Rights Ordinance, Cap. 383.

42. I have already cited the observation of Otton LJ which contained a point with regard to the rather different concept encapsulated in Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms (1953). Importantly, the very result of the Harman case before the European Commission only serves to emphasise the point as to freedom to use information. When the United Kingdom government was challenged as to the law, it undertook as part of a settlement to seek to change the law as it had been held by the House of Lords to be in the Harman case, so that it would no longer be a contempt of court to make public material contained in documents compulsorily disclosed in civil proceedings once those documents had been read out in open court: see the Report adopted by the Commission on 15 May 1986. Part of the settlement also included the payment of a substantial sum in costs by the United Kingdom government. It could hardly be supposed that the United Kingdom government would enter into such a settlement if it did not feel obliged to do so. Mr Bunting SC, on behalf of the 2nd defendant, characterized this settlement as being political. When pressed as to the meaning of political in the context, he said that it was general public pressure from those who thought that the law as interpreted by the House of Lords in the Harman case was clearly wrong. That had persuaded the government of the day to undertake to change the law. It will be noted that what was considered generally unacceptable and required change was the interpretation of the law which merely prohibited use of the unused materials themselves. It can hardly be imagined that an interpretation which prevented use of material that had been ventilated in open court, recorded in a transcript and published in a judgment would be considered acceptable. If that be so, it underlines the basic unsoundness of a supposed rule that information which had been disclosed in open court, without any suggestion of abuse of process or any order suppressing dissemination, was not free in law and equity to be used in other court proceedings.

This Case

43. I am prepared to decide this case on the basis that at the highest in favour of the defendants, they could prevent the use by the plaintiffs of documents disclosed as "unused material" to Mr. Lee, but they could not prevent the plaintiffs from making use of the transcripts, which the plaintiffs clearly have at their disposal. I do so with some diffidence because I consider that, as a practical reality, Mason CJ's approach may well prove to be that in relation to the implied undertaking in relation to criminal proceedings the undertaking is limited. It is unnecessary however to decide the matter in this case. As already noted, although the approach that I take might, with deference to the House of Lords, be characterized as applying an anomalous rule, it avoids what, in my view, would be an absurd rule, that the plaintiffs could not use the documents and materials derived from the transcripts and the judgments.

44. I consider that the bare allegations in paragraphs 25 to 27 of the amended statement of claim could be based on the transcripts and the judgments and other background facts which have been public knowledge. In so saying, it is evident that the particulars of the allegations would, in a number of respects, have only come from the unused materials themselves. The question then arises as to whether the pleading should be struck out and the action dismissed or whether retrospective leave to use the material should be given so that the particulars may remain.

45. The judge refused to give retrospective leave. In doing so, she approached the matter first of all, on the basis that the plaintiffs were not entitled to use the transcripts and the judgments insofar as they replicated the unused material. For that reason alone, I consider that this court is entitled to reconsider the exercise of the discretion.

46. I would also point out that in exercising the discretion, the judge appears to have been heavily influenced by her holding that no satisfactory reason had been given as to why leave had not been obtained before the action had been launched. As already indicated, I part company with the judge in her criticism of the solicitor's affidavit in which he refers to having taken the advice of leading counsel. I also find difficulty in associating myself with the criticism that has been made of the fact that the statement of claim was endorsed upon the writ. Mr Bunting SC, on behalf of the 2nd defendant, maintained the submission which he made in the court below that that constituted "Pearl Harbor" tactics. He sought to pray in aid of that submission a reference to defamation proceedings being commenced with a generally endorsed writ. Whatever may be the practice in relation to defamation proceedings, and in this respect I would draw attention to Order 82 rule 2 which requires the writ to be endorsed with a statement giving sufficient particulars of the publications in respect of which the action is brought, I can see nothing wrong in endorsing a statement of claim on a writ in the present proceedings. The damage, if damage there be, was occasioned by the judgments of Pang J and the Court of Final Appeal. Those are authoritive indictments of the presentation of the respondents' case on the judicial review application.

47. I have no hesitation in saying that, in my view, retrospective leave should be given to the plaintiffs to use and rely upon the documents to which reference has been made in the amended statement of claim. The underlying merits of the 1993 application for judicial review are not in issue at this stage. Neither is the necessity for an investigation of relevance at the moment. The Court of Final Appeal has indicated in clear terms that the application to bring judicial review proceedings was dismissed on the basis of inaccurate and highly misleading evidence. In the light of that, it seems to me that justice requires that the plaintiffs be at liberty to apply to set aside the judgments on the basis that they were fraudulently obtained. Whether they are successful in that attempt, again, is not a matter for this court at this stage. But it would be wholly wrong, where there are grounds for alleging the judgment was obtained by fraud, that the plaintiffs should be deprived of an opportunity of using documents which have already been extensively referred to in open court and in judgments. Even if the plaintiffs relied upon erroneous advice, that should not alter the position. The rule of law, which is universally acknowledged to be of prime importance, cannot be maintained if a technical application of rules is allowed to prevent a legitimate investigation as to the validity of a judgment where there are sound grounds for seeking to challenge that judgment on the basis that it was obtained through the use of false evidence.

48. Furthermore, once the conclusion is reached that the basic allegations made in the amended statement of claim can be maintained there is little purpose in refusing retrospective leave. Nothing can stop the plaintiffs making the essential allegations. It is also pertinent to note that although the particulars to the paragraphs of the amended statement of claim which are sought to be impugned would, on the approach that I have taken, contain some matters which were in the unused material but not referred to in open court, the important parts of the unused material had been so used. Specifically, I would draw attention to the fact that, in addressing the Court of Final Appeal, Mr Thomas, on behalf of the 1st defendant, albeit acting in another capacity, addressed the court in terms which made clear that he intended to draw the court's attention to the 3 or 4 most damaging passages. The documents that are alleged to have been used wrongly would, on my analysis, be discoverable in this action.

49. It is also to be observed that whereas the submissions in the Court of Final Appeal were on the basis that Mr McMahon had only been making editorial suggestions, the prosecution of Mr McMahon this year demonstrates that that view must have changed and that after proper and serious consideration has been given to the matter, the 1st defendant has formed the view that Mr McMahon was, indeed, attempting to offer his opinions to the inspector in relation to the conclusions that the inspector would reach and that he had sought improperly to influence the inspector in his investigation. The underlying basis of the principle so heavily relied upon by counsel for the 1st defendant and supported by counsel for the 2nd defendant, that the prevention of the use of the documents disclosed as unused material would be important if they came into existence as part of the investigatory process, also highlights the purpose of this action. If the documents concerned came into existence as part of the investigatory process it would be difficult to escape the inference that Mr McMahon and others were attempting to take part in, if not influence, the process being conducted by the inspector.

The claims made in the action

50. I have no doubt that, provided there are reasonable grounds for alleging that a judgment has been obtained by fraud, the party against whom that judgment has been obtained is entitled to bring proceedings to set that judgment aside. That, in my view, is what has happened here. If the judgment were set aside then any order of costs which was made as part of that judgment would fall with it. Hence if the plaintiffs are successful in setting aside the judgments of Kaplan J and the Court of Appeal, the orders as to costs made against them will go. At the very minimum, therefore, they would be entitled to reimbursement of the costs that they have paid to the defendants in this action.

51. In the court below the defendants relied upon the proposition that the plaintiffs' claim for loss and damages could not be sustained because of the principle of immunity from suit enjoyed by a party or a witness for anything said or done, whether falsely or maliciously, in the ordinary course of any proceedings in court. It seems to me that it may be open to the plaintiffs to argue that they are entitled to an award of damages as a consequence of the judgments having been obtained by fraud as distinct from the damages awarded because false evidence having been given. In this respect, I would simply draw attention to the speeches of Lord Morris and Lord Wilberforce in Roy v Prior [1971] AC 470 at 477B-480A and 480C-G. Having regard to the fact that this action will continue, I consider that the plaintiffs should be allowed to raise this point at trial and this aspect of the pleading should not be struck out.

The Pleading Point

52. There remains finally what has been referred to as the pleading point. In this respect, in short, the defendants seek to draw a distinction between the fraud of the various witnesses in giving their evidence and the position of government servants. It is said that even if the witnesses such as Mr McMahon gave false evidence it has not been properly alleged the Financial Secretary, who was the 1st respondent in the judicial review application, knew that the evidence was false. The 2nd defendant in these proceedings, who was the 2nd respondent in the judicial review application, was not a government servant. The plaintiffs sought to answer this argument in part by seeking to re-amend the statement of claim by alleging that Mr McMahon and others were acting as agents and on behalf of the Financial Secretary and that as a consequence, the Financial Secretary was vicariously liable for their actions.

53. As I have already made clear, the application for judicial review was made on affidavit. The evidence was thus prepared in advance of the hearing. The parties had a choice whether or not to file and use the evidence that had been prepared. It was their duty to check that any evidence that was filed was accurate. I have no hesitation in saying that if false evidence is filed on behalf of a party, that party cannot shield behind the fact that the affiant was not the party himself. The party chose to use the evidence as a tool. If it was a false or fraudulent tool that party must take responsibility for its use.

54. The importance of the accuracy of evidence on affidavit cannot be overemphasized. In many types of proceedings the court will not contemplate cross-examination and affidavit evidence is accepted implicitly. As can be seen in the present instance, Kaplan J and the Court of Appeal took the evidence filed as being accurate. The increasing incidence of judicial review proceedings where oral evidence is not usual and where the application for leave is dealt with on paper evidence highlights the importance of this aspect. The courts are entitled to expect scrupulous attention to accuracy in affidavits that are filed. An affidavit is the place for accurate and true evidence. There is no place in an affidavit for what might euphemistically be termed persuasive advocacy.

55. In this regard, on the face of the matter as it appears at the moment, everything that is now available to the Financial Secretary in the way of information, documents or other material was available to the Financial Secretary in 1993. The 1st defendant, on behalf of the Financial Secretary, has taken the view that Mr McMahon did attempt to influence the inspector in his findings. The prosecution of Mr McMahon was based on that proposition. That change of attitude has only, seemingly, been brought about because of the judgments of Pang J and the Court of Final Appeal. No new material has come to light that the Financial Secretary and the Attorney General did not have in 1993. In my view, therefore, the pleading is sufficient without any amendment.

56. The amendment sought by the plaintiffs is, however, fully justified. Paragraphs 5 and 10 of the affidavit of the Financial Secretary sworn on 2 June 1993 in the judicial review proceedings demonstrate that the members of the Steering Committee were appointed by the Financial Secretary on his behalf to assist him and to avoid the Financial Secretary himself having to undertake the work which the Steering Committee was dealing with on his behalf. Were that not sufficient on its own, mention could also be made of Mr McMahon's affidavit sworn on the same day. In that affidavit he said that he was "one of three members of the Steering Group appointed by the Financial Secretary to assist him in monitoring the progress of the Companies Ordinance Inspection ...". Furthermore, in a document headed "Representation to the Secretary of Justice by Gerard Joseph McMahon" dated the 13 February 2001, which was very shortly prior to the hearing in the Court of Final Appeal, Mr McMahon said that the draft chapter of the inspector's report had been sent to him because the inspector "wanted to ensure that the representatives of the Financial Secretary were happy with the presentation." There is thus ample justification for permitting a plea of vicarious liability, at this stage.

Conclusion

57. I would therefore allow this appeal. I would make an order permitting re-amendment of the statement of claim. The order of costs in the court below would be set aside. I consider that the plaintiffs should have one half of their costs in the court below, to take into account the set off in respect of the retrospective leave and that the plaintiffs should have their costs in this court. I would make an order nisi accordingly.

58. For completeness it will be noted that after the draft of this judgment had been prepared, this court's attention was drawn to the case of British American Tobacco Australia Services Ltd v Cowell (as representing the estate of Rolah Ann McCabes, deceased) [2003] VSCA 43 (28 April 2003). It would appear that the Court of Appeal in that case reached a similar conclusion as to the law as that to which I have arrived.

Hon Le Pichon JA:

59. I agree with the judgment of the Vice-President.

Hon Cheung JA:

Application to strike out

60. The defendants succeeded in striking out the plaintiffs' action. The central theme of the defendants' argument is that the plaintiffs had in breach of their undertaking to the court misused in their action materials disclosed by the prosecution in a previous criminal proceeding. Hence they are in contempt of court. As a result their action discloses no reasonable cause of action, it is an abuse of the process of the court and is scandalous and vexatious.

61. Ultimately the case will turn on whether the plaintiffs have a reasonable cause of action. This being a striking out application it is important to bear in mind and give effect to the caution that has been repeated by judges in the past, namely, that what the defendant is seeking to do is in effect to drive the plaintiff from the judgment seat. Such a remedy is so drastic that no court should give effect to it unless it is satisfied that the legal basis of the claim is unarguably bad and it must be impossible, not just improbable, for the claim to succeed.

Summary of the law

62. The current law relating to the use of disclosed documents in civil and criminal proceedings can be summarised as follows :

Civil cases

Criminal cases

Other jurisdictions

Good arguable cause of action

63. In my view it cannot be said that the plaintiffs' claim is unarguably bad or would be impossible to succeed at the trial. While none of the authorities in these common law jurisdictions are binding upon the Hong Kong courts, there is the persuasive authority, namely Mahon v Rhan, which shows that the implied undertaking ceases upon the disclosed documents being used in the criminal proceedings. I am contented to say that in Hong Kong a stronger, if not equally strong, argument can be mounted in the light of the Basic Law upon which the constitutionality and compatibility of the relevant law are to be judged. Further reliance can also be made of the International Covenant on Civil and Political Rights ("ICCPR"). In my view a good arguable cause of action has been shown by the plaintiffs.

The Basic Law

64. Freedom of speech is guaranteed to Hong Kong residents under Article 27 of the Basic Law. They also have the right to access to the courts under Article 35 including the right to institute legal proceedings in the courts against the acts of the executive authorities and their personnel.

ICCPR

65. Similar rights are provided for in Articles 19 (freedom of expression) and 14 (right to a fair and public hearing) of the ICCPR which applies to Hong Kong by the Hong Kong Bill of Rights Ordinance. The entrenchment of the ICCPR is expressly provided for by Article 39 of the Basic Law.

Freedom of speech and expression

66. Freedom of speech is only one aspect of freedom of expression. This has been described as a fundamental freedom in a democratic society. It lies at the heart of civil society and of Hong Kong's system and way of life. The courts must give a generous interpretation to its constitutional guarantee. This freedom includes the freedom to express ideas which the majority may find disagreeable or offensive and the freedom to criticize governmental institutions and the conduct of public officials : HKSAR v. Ng Kung Siu & Another [1999] 2 HKCFAR 442.

67. As pointed out by Lord Scarman and Lord Simon, who held the dissenting view in Harman, that this freedom involves the right to receive information which will also generally involve a right to impart information. In the context of this case this will involve the use of the disclosed materials.

Access to the court

68. Likewise, in my view, the right of access to the court or the right to have a fair hearing will necessarily enable a party to rely on materials in its possession so as to advance its own case or to destroy its opponent's case.

Limitations on such rights

69. It is clearly recognized that such fundamental rights are not absolute. In the context of this case the issue is whether the continuous undertaking is compatible with these fundamental rights. This is concerned with the proportionality and necessity of the restriction. The restrictions must be narrowly interpreted and strictly scrutinised : Ming Pao Newspapers v. AG [1996] A.C. 907 and Ng Kung Siu & Another.

Is the restriction unnecessary and not proportionate to its legitimate aim?

70. In my view it is clearly arguable that the requirement of the continuous undertaking despite the use of the materials in open court is unnecessary and not proportionate to its legitimate aim.

71. The starting and fundamental point is that a substantial part of the material had actually been used in the court in that they had been read out both before the Court of First Instance and the Court of Final Appeal and the courts have referred to some of these materials in their judgments. With the hearing open to the public and the press and the modern practice of having judgments published in the judiciary website, the information is disseminated and readily available to the public. The information is in the public domain.

72. The public interest argument relating to the protection of privacy and confidentiality loses much of its force once the disclosed materials has been used in the court and referred to in the judgments. If the public can readily access the information contained in the disclosed materials, the continuous restriction on the litigant who received the material may not serve any legitimate purpose. Any attempt to restrict the use of the material will be artificial to the extreme. In this case some of the disclosed information are now readily available to the public in a permanent form in the judgments of the courts. Access to these judgments would not even require the approval of the court.

73. Furthermore under section 79(2) of the Criminal Procedure Ordinance, a record taken of the criminal proceedings is open for inspection by, among others, any person interested or any person who can show that "such inspection is reasonably required in connection with actual or potential civil or criminal proceedings by or against that person".

74. Such record was actually obtained by the plaintiffs' solicitor in the recent criminal trial of Mr. McMahon, one of the key figures in this litigation. The result of that trial is that Mr. McMahon was acquitted. The trial judge found that he had no case to answer.

75. If the restriction is simply based on a mechanical application of the undertaking without the need to consider the rationale of such an undertaking, then equally an arguable case can be mounted on whether such a sweeping approach is compatible with the guaranteed rights.

76. In particular, in this case the plaintiffs themselves did not give the undertaking. They received the documents from Mr. Lee Ming Tee who had given the undertaking. While the plaintiffs were aware of the undertaking that was given, clearly it is arguable that the undertaking would only bind those who had given it. See : Sybron Corporation v. Barclays Bank PLC [1985] 1 Ch. 299.

77. In Taylor the plaintiff received documents from the solicitor of one defendant in a criminal trial who received them from the prosecution. The documents were not used in the criminal trial. The plaintiff brought an action against a third party and relied on the documents. The action was struck out. The decision to strike out was affirmed by the House of Lords.

78. That case proceeded on the basis that the undertaking given by the defendant extended to the plaintiff. While it may be used as an authority for the extension of the undertaking to the person who received the documents, one distinguishing feature is that in that case the documents were not used in the criminal trial at all. The House of Lords' decision did not specifically address the position of the party who received the documents from the person who gave the undertaking. Where the documents had actually been used, its impact on persons who received the documents directly from the party who gave the undertaking but without themselves giving the undertaking highlights the point that the plaintiffs' case cannot be described as unarguably bad.

79. In order to give true effect to the principle that the restriction of the guaranteed rights must be "narrowly interpreted and strictly scrutinised", it is certainly arguable that the restriction infringes the fundamental rights of expression and access to court.

Changes in the United Kingdom

80. The best illustration of this point is the introduction of section 17(3) of the 1996 Act which removes the restriction on the use of such documents. If the rationale of this rule is to achieve a balance between the conflicting public interests then I can see no legitimate reason for the removal of the restriction. If the public interest of preserving the privacy and confidentiality of those who gave assistance to the police, and also those whose identity and conduct are referred to in the information is of such paramount importance, all the more such protection should continue despite the use of the materials in court. Yet section 17(3) was introduced in 1996.

81. I do not regard this as being done to simply meet the peculiar local need of the United Kingdom or to appease local opinion expressed by the press as submitted by Mr. Bunting S.C. There is a wider picture involved. United Kingdom is subject to the Convention for the Protection of Human Rights and Fundamental Freedoms ("the European Convention") which contains, among other things, under Article 10(1) provisions on the right of freedom expression. The litigant in Harman applied to the European Commission on Human Rights to challenge the decision of the House of Lords on the ground, among other thing, that the requirement of the continuous undertaking despite the use of the disclosed material in the court, infringes the right of freedom of expression guaranteed by the Convention. She was found guilty of contempt of court by reason of the breach of the undertaking. The Commission accepted her application for adjudication.

82. The challenge, however, was eventually resolved when the United Kingdom government agreed to introduce a law to remove the requirement of the continuous undertaking after the material had been read out in court : see Harman v. UK (1984) European Commission of Human Rights Decisions & Rights, Vol. 38, pp. 53-63 (11.5.1984) and Vol. 40, pp. 57-61 (15.5.1986).

83. The equivalent of Order 24 rule 14A was then introduced in England : see the history set out in Bibby Bulk Carriers v. Cansulex Ltd. [1989] 1 Q.B. 155; Smithkline Beecham v. Connaught [1999] 4 All ER 498 and Taylor.

84. In my view the introduction of Order 24 rule 14A was clearly a recognition by the United Kingdom that the continuous undertaking was not compatible with the Convention.

85. Likewise in my view the introduction of section 17(3) was only a natural progression in order to remove such restriction in respect of disclosed documents used in criminal cases.

86. It should be noted that while in both the Hong Kong and English civil procedure rules the use of the disclosed documents may still be restricted by the court on the application of a party or a person to whom the documents belongs, section 17(3) contains no such restrictions at all. Furthermore in the civil procedure rules, the starting point is that the implied undertaking ceases after the documents have been read to or by the court or referred to in open court.

87. Lord Diplock in Harman had stated that the case was not concerned with freedom of speech or the Convention. In my view the subsequent action of the government of the United Kingdom clearly demonstrates that his view was unduly restrictive.

State of flux

88. In the developing field of human rights jurisprudence, the current law can only be described being in a state of flux. For the purpose of a striking out application, and with respect to Mr. Jat S.C., who had tried gallantly to maintain the defendants' position, one really has to pay heed to the principle that this drastic remedy should only be acceded to in the clearest cases where the plaintiff's claim is plainly unarguable. This is not such a case.

Retrospective leave

89. As I am of the view that the plaintiffs' action should not be struck out, I would only deal with the question of retrospective leave briefly.

90. The learned judge refused to grant retrospective leave to the plaintiffs to commence the action. She referred to Miller v. Scorey [1996] 1 WLR 1122 which held that retrospective leave is rarely given, particularly where the applicant has abused the process by breaching an undertaking to the court.

91. Miller was decided before the Court of Appeal decision in Mahon. How the leave should be considered when the disclosed material had been used in the public domain again deserves fuller consideration in a final proceedings.

92. In Kyuquot Logging Ltd., where the law of British Columbia allows the court to restrict the subsequent use of the disclosed material, one factor to be considered by the court in deciding whether the restriction should continue is whether the information discloses wrongdoing in the nature of fraud.

93. In Capital Television Group and Another v. Northern Rivers Television Pty. (unreported, Commercial Division No. 50004/94, 4 September 1995, Supreme Court of New South Wales), in an application to relieve a party from its undertaking in respect of the use of disclosed documents, the court clearly recognized that it was more important to maintain justice by discouraging and punishing false evidence being given in the courts than maintaining an undertaking as to confidentiality.

94. In Lily Icos Ltd. v. Pfizer Ltd. (No. 2) [2002] 1 WLR 2253, in respect of an application under rule 31.22(2) of the Civil Procedure Rules to maintain confidentiality of disclosed documents, the English Court of Appeal held that the court will require specific reasons why a party would be damaged by the publication of a document.

95. In the present case the contention of the plaintiff is that the defendants had obtained a judgment by fraud. This is an extremely serious allegation and if proven, the deceit would clearly have damaged the administration of justice. I would have thought that this is such an important factor that it could tip the balance in favour of granting leave.

Immunity and No Useful Purpose ground

96. The action was also struck out on the basis that the plaintiffs' claim for damages against the defendant could not stand because of the immunity from suit rule. The rule is that no action will be made against a party or a witness for anything said or done, although falsely or maliciously and without any reasonable or probable cause, in the ordinary course of any proceeding in a court of justice : Munster v. Lamb (1883) 11 QBD 588.

97. It is argued that if the claim for damages falls away, no useful purpose is served by allowing the plaintiff to set aside the judgment given by Kaplan J. in 1993 because even if the judgment was obtained by fraud, the court will not have given leave to apply for judicial review.

98. In my view it is clearly arguable that the plaintiffs' claim is in substance a claim to set aside a judgment obtained by fraud by parity of the reasons stated in Roy v. Prior [1971] A.C. 471 and Suzur Overseas Ltd. v. Koros and Others [1999] 2 Lloyd's LR 611. As such the plaintiffs are not suing the defendants for damages on or in respect of the evidence given by or on their behalf which is clearly not sustainable by the immunity rule. It has been well established that fraud unravels all and a judgment obtained on such a basis cannot be allowed to stand : Lazarus Estates Ltd. v. Basley [1956] 1 Q.B. 702. The question of whether leave would have been granted in the first place will assume secondary importance.

Pleading

99. On behalf of the 1st defendant it is argued that the allegations of fraud against the Financial Secretary are vague and not properly particularised or supported by evidence.

100. Under section 4(1) of the Crown Proceedings Ordinance it is provided that the government represented by the Secretary of Justice is only liable for the tortious acts of government servants or agents. An issue arises as to whether Mr. McMahon, Mr. Crosby and the 2nd defendants were agents of the Financial Secretary. The Financial Secretary set up the Steering Group ("the Group") for the purpose of dealing with all matters on his behalf which otherwise he had to deal with personally. These matters include the monitoring of the progress of the investigation and dealing with issues arising during the course of the inspection. Mr. McMahon was a member of this group. When he gave evidence clearly he was not simply giving it only as a witness for the Financial Secretary. In my view it is clearly arguable that Mr. McMahon was an agent of the Financial Secretary by reason of his membership and the activities he had carried out for the Group. The allegations of fraud against him are attributable to the Financial Secretary.

Conclusion

101. I have the benefit of reading the draft judgment of Rogers VP. I agree with his views and the orders he proposes.

102. Accordingly, I would also allow the appeal.

Hon Rogers VP:

103. The appeal will therefore be allowed. There will be an order as set out in paragraph 57 herein above.