TRENUS OCEANWAY LTD v. RICHLAND INTERNATIONAL LTD AND ANOTHER

HCCW 352/2014

[2021] HKCFI 767

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING-UP PROCEEDINGS NO 352 OF 2014

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D E C I S I O N

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1.  The 1^st Respondent controlled by Lau Wing Yan has applied by summonses filed on 19 October 2020 for third party discovery against HSBC and DBS Bank (“Banks”) of documents in their possession, which Mr Lau contends are relevant to the present Petition. In the case of HSBC the documents fall into the following categories:

(1)  Documents relating to the receipt of money by the seven companies and individuals identified in sub-paragraph 1(4) of the summons in respect of the transactions listed in the Annex to the summons, which is the same as the schedule referred to in previous decisions in these proceedings relating to discovery [1].

(2)  Documents relating to payments made between 4 August 2003 and 31 December 2013 including the transactions referred to in the Annex by the companies and individuals identified in the summons.  There are 32 in total, which include the seven relevant for the purposes of the first category.

In the case of DBS the scope of the application differs only in the identity of the companies and individuals, which to some degree overlap.  Both Banks are neutral in respect of the application against them.

2.  The 1^st Respondent says that the applications are justified because of the Petitioner’s unsatisfactory compliance with the discovery order that I made on 29 April 2020 (“April order”).  I will not repeat the history of the disputes concerning the Petitioner’s compliance with the discovery orders.  They are adequately explained in previous decisions.  It will suffice to say that on 16 September 2020 Chu Kong, who controls the Petitioner, filed his 10^th affirmation verifying the specific discovery given pursuant to the April order, compliance with which had been extended on three occasions, but disclosing very few documents.  Mr Chu says that he is not in possession of the substantial number of documents, which the April order directed the Petitioner to disclose.  In these circumstances the 1^st Respondent argues that it has no choice but to seek an order that the Banks disclose the documents that they have, which the 1^st Respondent has unsuccessfully sought to obtain from the Petitioner.  The principal difference between the formulation of the application against the Banks and my April order is that rather than refer to documents in the possession, custody or power of “Chu Kong or any company directly or indirectly controlled by him” the 1^st Respondent has identified in the body of the order not just in the Annex, all the relevant companies and individuals. The lists of entities contained in the body of the order includes some entities not expressly referred to in the Annex.

3.  As it transpired it proved possible to agree at the hearing the form of any order that I might make and some of the disputes raised in the skeleton arguments fell away.  What remains for determination is one issue, namely, whether or not the 1^st Respondent has demonstrated that the Banks are likely to have any of the documents of which third party discovery is sought [2]. The Petitioner says that Mr Chu has written to both Banks seeking the documents and has been told that they do not have them because they do not keep documents any longer for the relevant period: April 2003 to June 2013.  In these circumstances Mr Wong it cannot be said that either Bank is likely to have the documents even if at one time they did.  The contrary arguments advanced by the 1^st Respondent are, first, that in response to the summonses neither Bank has written saying that the applications are pointless because they no longer have the documents and, secondly, it cannot be presumed that simply because the Banks told Mr Chu that they do not have the documents that when placed under the greater compunction of a court order it will not transpire that they have at least some of the documents of which discovery is sought.

4.  Section 42 of the High Court Ordinance, Cap 4, provides that the court has the power to order discovery by a person who is not a party to the proceedings and who appears to the court “to be likely to have or to have had in his possession custody or power any documents…..”.  The 1^st Respondent is not seeking discovery of documents that it is likely the Banks have had in order to establish that documents once existed.  The application is directed only to those they currently have and will assist in determining the issues to which they are relevant, which is explained in my previous decisions.

5.  I accept that despite what Mr Chu has been told the Banks may have more documents.  However, it does not seem to me that the 1^st Respondent has demonstrated that it is likely that the Banks have them more than seven years after the most recent of them will have come into existence.  In order to satisfy the test it was necessary for the 1^st Respondent to obtain from the Banks a statement that suggested that if they searched thoroughly something more might be found. I do not think I can read into the letters that have been written, as Mr Joffe invited me to do, the conclusion that because neither Bank has replied saying we have nothing that it is likely that they do have some of the documents. Common sense suggests in my view that the bank staff probably gave little thought to the substance of the application and their answers are standard responses to applications of this sort reflecting a fairly perfunctory consideration of the material.

6.  For this reason the applications fail and I will dismiss the summonses with an order that the 1^st Respondent pays the Petitioner’s costs of the application with a certificate for two counsel.  Had I not reached this conclusion I would have ordered that the Banks make discovery of the documents in their possession, custody or power relevant to the transactions in the Annex only.  I would have amended paragraphs 1(1) to (3) of the summons to order disclosure of documents evidencing receipt or payment by the persons or entities referred to in the Annex in respect of the transactions listed in the Annex including instructions given in respect of them.  I would have deleted      sub-paragraphs (4) and (5), ordered that the Banks redact details of transactions other than those listed in the Annex, granted liberty to apply and reserved the costs.  As I have already mentioned I understand that both parties would have been content with an order framed in these terms.