DCCJ5004/2013
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 5004 OF 2013
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BETWEEN
LEUNG PO PO and
Plaintiffs
and
OLYMPIC LEADER INTERNATIONAL LIMITED
1st Defendant
HO LIN WAH
2nd Defendant
and
QBE GENERAL INSURANCE (HONG KONG) LIMITED formerly known as HANG SENG GENERAL INSURANCE (HONG KONG) COMPANY LIMITED
Third Party
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Before: Deputy District Judge Phoebe Man in Chambers (Open to Public)
Date of Hearing: 13 April 2016
Date of Decision: 19 April 2016
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DECISION
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1. This is an appeal by the Third Party (“QBE”) against the decision and order of Master Daniel Tang dated 16 February 2016, granting leave to Olympic Leader International Limited (the “1st defendant”) to serve on QBE Interrogatories and ordered QBE to serve an answer to the interrogatories within 14 days of the Order.
BACKGROUND
2. The plaintiff was at all material times the registered owner of Flat A, 16/F, One Robinson Place (“P’s Premises”).
3. The 1st defendant is and was at all material times the registered owner of Flat A, 17/F (“D1’s Premises”). D1’s Premises is directly above P’s Premises.
4. The 2nd defendant was at all material times the tenant and occupier of D1’s Premises.
5. On 10 August 2010, an incident of water leakage occurred from D1’s Premises to P’s Premises. There is no dispute between the 1st defendant and QBE that the water leakage was caused by the 2nd defendant’s failure to turn off the kitchen tap properly.
6. The plaintiff has allegedly suffered loss and commenced an action in the Small Claims Tribunal (SCTC 20245/11) on 17 May 2011. The plaintiff subsequently withdrew the Small Claims action and commenced the present district court action against the 1st defendant and the 2nd defendant.
7. The plaintiff has obtained a default judgment against the 2nd defendant as a result of the 2nd defendant’s failure to file an acknowledgment of service.
8. The 1st defendant issued a third party notice against QBE, which issued an insurance policy on 16 January 2010 from 6 February 2010 to 5 February 2011. Thereafter QBE appointed Toplis and Harding (Hong Kong) Limited (“Toplis”) as the loss adjuster for the water leakage.
9. The insurance policy provided that:-
“(1) [QBE] will subject to the Limit of Indemnity in respect of any one accident and any one year specified in the Schedule indemnify the insured or any of his or her family members against all sums for which they shall become legally liable …… (b) as owner of the Home …”
10. Thus QBE’s position is that the insurance policy does not provide coverage for the water leakage incident because:-
(i) the water leakage was caused by the 2nd defendant, who was not an insured under the insurance policy;
(ii) insofar as any liability is attached to the 1st defendant by virtue of the DMC of Robinson Place, the same is expressly excluded from the insurance policy.
11. Nonetheless, QBE has instructed Toplis to provide the 1st defendant with assistance in dealing with the water leakage incident.
12. The 1st hearing of the plaintiff’s claim took place on 28 June 2011 at the Small Claims Tribunal. Mr Terence Cheng (“Mr Cheng”), a director of Toplis attended the hearing. QBE says that Mr Cheng was there for the purposes of observing the progress of the proceedings and reporting to QBE. Mr Cheng says he was instructed by QBE “to provide assistance in dealing with the matter, such as acting on behalf [the 1st defendant] to decline the relevant third parties in order to elaborate the legal liability aspect on [the 1st defendant’s] part and/or your tenant, as well as, transfer/forward the third party claims to your tenant for its direct handling and attention.”
13. The 1st defendant says that Mr Cheng had advised them not to settle with the plaintiff at HK$50,000 when the claim was initiated at the Small Claims Tribunal. This representation was understood by the 1st defendant to mean that QBE would insure the 1st defendant should the plaintiff commence such proceedings in the District Court; or alternatively, an estoppel arose against QBE.
14. QBE denies that Mr Cheng ever advised the 1st defendant to reject the plaintiff’s settlement offer. Mr Cheng says he only reminded them that QBE would not pay any settlement sum for the 1st defendant. It was the Adjudicator/Officer of the Small Claims Tribunal who suggested that the plaintiff should, in light of the amount of their claim, discontinue their proceedings in the Small Claims Tribunal and commence an action in the District Court.
15. It is the dispute on the different versions of what transpired at the Small Claims Tribunal hearing, in particular, whether Mr Cheng made to the 1st defendant the representation or advice not to settle the claim in the Small Claims Tribunal that led to the 1st defendant taking out a summons under Order 26 Rules 1 and 2 of the Rules of the District Court to serve interrogatories on QBE.
THE INTERROGATORIES ALLOWED BY MASTER DANIEL TANG
16. The Interrogatories which were allowed by Master Daniel Tang are summarized as follows:-
(i) Interrogatory No 5 requires Mr Cheng to answer whether he had a telephone conversation with Mr Ng (of the 1st defendant) during the adjournment of the Small Claims Tribunal hearing on 28 June 2011, and if so did Mr Ng ask Mr Cheng of advice on the settlement proposal of the plaintiff’s; and whether Mr Cheng advised Mr Ng not to settle the claim at the time.
(ii) Interrogatory No 6 requires Mr Cheng to answer whether Toplis received an email allegedly sent by Ms Mok at 12:02 pm on 31 August 2011.
(iii) Interrogatory No 7 requires Mr Cheng to answer whether he had a telephone conversation with Mr Ng shortly after 12:02 pm on 31 August 2011, and if so, whether Mr Cheng advised Mr Ng not to instruct solicitors to deal with matters and not to reply to the letter from the plaintiff’s solicitors dated 30 August 2011.
(iv) Interrogatory No 8 requires Mr Cheng to answer whether Toplis sent a letter to Messrs Ho, Tse & Wai.
17. The Interrogatories were served on QBE but at the end of them there was a note which says: “Mr Terence Cheng, a director of Toplis and Harding (Hong Kong) Limited, the Third Party’s agent, is required to answer Interrogatories Nos 1 to 8 above.” (the “Note”)
The law
18. Parties agree that the relevant legal principles are governed by Order 26 of the Rules of the District Court.
GROUNDS OF APPEAL
(i) The Rules of District Court do not provide for witnesses or agent of a party to answer interrogatories
19. Counsel for QBE, Ms Szeto, accepts that the Interrogatories were deemed to have been served on QBE and that QBE would (subject to the 2nd limb of their argument) have no objections to them if:-
(i) they were to be answered by an officer of QBE (Ms Szeto accepts that QBE would be obligated to make enquiries with Mr Cheng); and
(ii) the Note did not specifically require Mr Cheng to answer them.
Ms Szeto submits that this is because under the Rules of District Court, Mr Cheng is not in a position to be compelled to answer Interrogatories for QBE.
20. Ms Szeto argues that under the Rules of the District Court, Rule 1(1) stipulates that interrogatories have to be served on parties, not witnesses or other third parties. The duty to answer interrogatories also rests on the relevant party. She submits that the Rules do not provide for witnesses or agent of a party to answer interrogatories.
21. Rule 1(1) provides:-
“(1) A party to any cause or matter may apply to the Court for an order—
(a) giving him leave to serve on any other party interrogatories relating to any matter in question between the applicant and that other party in the cause or matter; and
(b) requiring that other party to answer the interrogatories on affidavit within such period as may be specified in the order. ……”
22. Ms Szeto also relies on other references to “a party” in Rule 6 in support of her argument. Rule 6 provides:-
“(1) If a party against whom an order is made under rule 1 or 5(2) fails to comply with it, the Court may make such order as it thinks just including, in particular, an order that the action be dismissed or, as the case may be, an order that the defence be struck out and judgment be entered accordingly.
(2) If a party against whom an order is made under rule 1 or 5(2) fails to comply with it, then, without prejudice to paragraph (1), he shall be liable to committal.”
23. Ms Lee, counsel for the 1st defendant points out that Order 26 rule 3A of the District Court Rules expressly provides:-
“Where interrogatories are to be served on 2 or more parties or are required to be answered by an agent or servant of a party , a note at the end of the interrogatories shall state which of the interrogatories each party or, as the case may be, an agent or servant is required to answer, and which agent or servant.” (emphasis added)
24. Ms Lee submits that Rule 3A clearly and expressly provided and intended for an agent or servant of a party to answer interrogatories.
25. Ms Lee submits that in light of Rule 3A, there can be no complaint made on the Interrogatories as there is no dispute that:-
(i) QBE is a party for present purposes;
(ii) Toplis is QBE’s agent when dealing with the 1st defendant;
(iii) Toplis being a company, a natural person, (and in this case Mr Cheng, being the person handling the case) would need to answer any interrogatories served on it. In fact there is no suggestion that anyone other than Mr Cheng would be more appropriate to answer it.
(iv) The format of the Interrogatories (including the Note specifying for Mr Cheng to answer as the agent of QBE) is based on the exact format provided by Atkins Court Form, Form No 4 Under Volume 22(1) 1996 Issue.
st argument of QBE is contrary to the express wording of Rule 3A and does not stand.
26. In response, Ms Szeto relies on the case of Re Estate of Au Kong Tim (No 2) [2015] 4 HKLRD 471 where there are two wills in question and each party alleges the will relied on by the opposite side is a forgery and does not evidence testamentary intentions of the deceased. The defendant’s case is that the will produced by him was witnessed by two solicitors. These two solicitors were required by the plaintiffs to answer interrogatories. Although the interrogatories were served on the defendant in that case, the plaintiffs intend that the interrogatories are to be answered by the two solicitors. On the defendant’s application to set aside the Interrogatories, Chung J allowed the application:-
“11. First, O. 26 r. 1(1) stipulates that interrogatories have to be served on parties, not witnesses or other third parties. The duty to answer interrogatories is provided for by O. 26 r. 2(2): a party on whom interrogatories are served shall, …… be required to give within the period specified under paragraph (1)(a) answers, …… be on affidavit. …
12. That the duty to answer interrogatories lies with parties, not witnesses or other third parties can also be discerned from the language used by O. 26 rr. 5(2), 5(3), 6(1) and 6(2). In addition, Atkin’s Encyclopaedia of Court Forms in Civil Proceedings (1968) 2nd ed., Vol. 22, para.8, text to nn, d, f, g and h, said: It is the duty of the party answering to answer …… to the point of substance …… he must answer to the best of his knowledge, information and belief. …… a party must always use such means of knowledge as are reasonably available to him in order to answer …… For example, where the matters inquired into are such as would be known to the party’s servants or agents in the ordinary course of their employment, he must make inquiries of them and give the result of his inquiries. He is not, however, bound to inquire of persons who are no longer his servants or agents or under his control …… (p. 375 thereof). (see similar comments in Atkin’s Court Forms (1980), Vol. 22, para. 8, text to nn p and q (pp. 460-461 thereof))
13. Interrogatories have been replaced in England by “information requests” (Pt. 18, Civil Procedure Rules). Comments similar to those quoted in [12] above have been made in relation thereto in Atkin’s Court Forms (2014) 2nd ed., Vol. 15, para. 87, text to n 2 (p. 308 thereof).
14. The precedent form is also consistent with such a conclusion; see, for example, Atkin’s Court Forms (1996) 2nd ed., Vol. 22(1), Forms 4 (p. 532 thereof).”
27. Ms Lee seeks to distinguish the case of Re Estate of Au Kong Tim (No 2) by pointing out that whilst Chung J’s holding is that “The Rules of the High Court did not provide for potential witnesses to be compelled” to answer Interrogatories by affidavit, in the present case, Mr Cheng is not merely a potential witness, but was acting in the capacity of QBE’s agent.
28. Ms Szeto rebuts this argument by referring to paragraph 10 of Chung J’s judgment:-
“The plaintiffs argue that the above language shows that a party’s agent can be compelled to answer interrogatories. For the reasons set out below, I disagree with the argument.”
Ms Szeto says that this shows that although the two solicitors in Re Estate of Au Kong Tim (No 2) were witnesses, the plaintiffs in fact argued on the basis that they were the defendant’s agents.
29. Ms Lee in turn refers to paragraph 8 of Chung J’s judgment:-
“8. Two grounds of objection have been put forth by the defendant:-
(a) the statute does not provide for potential witnesses themselves to be compelled to answer interrogatories by affidavit;
(b) in any event, the interrogatories served by the plaintiffs are objectionable because they cover matters which ought to be matters of evidence and/or matters for cross-examination.”
Ms Lee says that from sub paragraph 8(a) that the defendants were arguing on the basis that the solicitors were witnesses and not agents. As such, Chung J’s observation does not apply to the present case where Mr Cheng is not only a witness but more importantly QBE’s agent with no dispute.
30. Ms Szeto does not agree and refers to paragraphs 9 and 10 of Chung J’s judgment:-
“9. As regards [8(a)] above, the plaintiffs relied heavily on O. 26 r. 2(1)(c) the relevant parts of which read:
Where interrogatories are served, a note at the end of the interrogatories shall specify … where the interrogatories … re required to be answered by an agent … of a party, which of the interrogatories … an agent … is required to answer, … which agent … (Emphasis supplied.)
10. The plaintiffs argue that the above language shows that a party's agent can be compelled to answer interrogatories. For the reasons set out below, I disagree with the argument.
Ms Szeto argues that from these 2 paragraphs it can be seen that the defendant in the case of Re Estate of Au Kong Tim (No 2) based their arguments on the fact that the two solicitors were agents of the defendant and as such Chung J’s judgment would equally apply to the present case – that a party’s agent cannot be compelled to answer interrogatories.
31. Ms Szeto further relies on the UK case of Stanfield Properties Ltd v National Westminster Bank Plc [1983] 1 WLR 568 at 570E to submit that the court would only allow interrogatories to be served on an officer or member of a corporate party, being a person who holds a position in relation to the company which enables him to give the answers. It does not go so far as to impose a duty on the agents themselves to answer interrogatories on behalf of the party.
32. As pointed out by Ms Lee however, Stanfield Properties seems to be focused on the equivalent Rule 2(1)(b) of the Rules of the High Court (which provides for where the party to be interrogated is a body corporate or unincorporate, the officer or member served should be specified) rather than Rule 2(1)(c), which is equivalent to Order 26 Rule 3A of the Rules of the District Court. Thus, observations therein cannot be taken out of context and support the contention that the court has no power to impose a duty on agents to answer interrogatories.
ANALYSIS
33. Despite Ms Szeto’s able submissions, I agree with Ms Lee that the 1st argument relied upon by the plaintiff does not stand.
34. QBE’s reliance on the case of Re Estate of Au Kong Tim (No 2) is misplaced because the fact of the matter is that the two solicitors in that case were at best agents of the deceased, and not agents of the defendant (As Ms Szeto has helpfully referred the court to paragraph 99 of the judgment in Re Estate of Au Kong Tim [2014] 4 HKLRD 730, the two solicitors were involved in the drafting of the will and were witnesses to the deceased’s execution of the will.)
35. Thus, despite the fact that in the case of Re Estate of Au Kong Tim (No 2) the plaintiff might or might not have argued that the solicitors were agents of the defendant, Order 26 Rule 3A of the Rules of the District Court (or Order 26 Rule 2(1)(c) of the Rules of the High Court) would not have been engaged for the simple fact that they were not the defendant’s agents.
36. It is unclear from the judgment whether this was argued before the Honourable Judge and it is undesirable for me to infer at this stage from one or two paragraphs of the judgment what was the basis upon which Chung J disagreed with the plaintiffs’ argument on Order 26 Rule 2(1)(c). Suffice it to say that there was nothing in the judgment to the effect that the two solicitors were found to be agents for the defendant AND under those circumstances Order 26 Rule 2(1)(c) still did not apply.
37. The Learned Judge merely discussed Order 26 Rule 1(1) and pointed out that under that sub-rule, interrogatories have to be served on parties, not witnesses. It was based on this sub-rule that the Learned Judge agreed with the defendant regarding their objection that the statute does not provide for potential witnesses to be compelled to answer interrogatories. No analysis was made on Order 26 Rule 2(1)(c). As such, it cannot be said that the case of Re Estate of Au Kong Tim (No 2) is authority that the court has no power to order an agent to answer interrogatories despite the provision in Order 26 Rule 3A of the Rules of the District Court (or Order 26 Rule 2(1)(c) of the Rules of the High Court).
38. Thus I am of the view that the case of Re Estate of Au Kong Tim (No 2) is distinguishable on the fact that in that case the solicitors were merely potential witnesses and not agents of the defendant. In the present case, Mr Cheng was not just a potential witness, but also acting in the capacity of QBE’s agent.
39. Order 26 Rule 3A clearly provides for an agent or servant of a party to answer interrogatories. There is no dispute that QBE is a party for present purposes and that Toplis as the loss adjustor appointed by QBE is QBE’s agent. This can be seen from the QBE’s own pleading (Rejoinder) that Mr Cheng of Toplis attended the hearing of the Small Claims Tribunal as an observer on behalf of QBE. QBE never suggested that Mr Cheng had no authority to represent QBE. Toplis had all along communicated with the 1st defendant as agent on behalf of QBE in relation to the 1st defendant’s claim and Mr Cheng signed off those correspondences a director of Toplis in that capacity.
40. As to how the court is to read Order 26 Rule 3A, Ms Szeto submits that the word “agent” is to have a limited definition so as to bring it to be consistent with the case of Re Estate of Au Kong Tim (No 2) . Ms Szeto submits that the word “agent” should only be read as an agent who can be at the same time an officer of the company, such as a liquidator of the company. With respect, I see no basis to read such a limitation to the clear word of “agent” in Rule 3A. Ms Szeto’s reading of it would also render Rule 3A as superfluous as a liquidator would already fall under Order 26 Rule 2 of the Rules of the District Court.
41. I am thus of the view that the 1st argument does not stand.
(ii) Interrogatories ordered by the Master are neither necessary for disposing fairly of the cause or matter or for saving costs in these proceedings
42. The parties agree that the Rule governing this objection is Order 26 Rule 1(2A) of the Rules of the District Court, which provides: “On the hearing of an application under this rule, the court shall give leave as to such only of the interrogatories as it considers necessary either for disposing fairly of the cause or matter or for saving costs ……”.
(b) Interrogatories Nos 5 & 7
43. Ms Szeto says that Interrogatories Nos 5 and 7 do not form part of the 1st defendant’s pleaded case on the alleged agreement and/or estoppel between QBE and the 1st defendant. As such, Ms Szeto says that they could not be regarded as necessary for disposing fairly of the cause or matter. Further, Mr Cheng would in any case be called at the trial by QBE and the 1st defendant can obtain an answer from Mr Cheng through cross-examination and the interrogatories would not save but add to costs.
44. Ms Szeto relies on the commentary in paragraph (a) and (b) under 26/4/12 of the Hong Kong Civil Procedure 2016 (p 647):-
“(a) Interrogatories will not generally be allowed where the object is to obtain an admission of a fact which can be proved by a witness who will in any case be called at the trial, and therefore the interrogatory will not save but add to costs.
(b) Interrogatories will not generally be allowed where it is plain that no admission can be obtained. Where, for example, there is on the pleadings a denial of fact alleged, based on a bona fide dispute or difference of recollection, an interrogatory designed to secure an admission of the fact will not be allowed.”
45. Ms Lee says that Interrogatories 5 and 7 are relevant to the issue as to whether or not Mr Cheng did in fact advise the 1st defendant not to accept the plaintiff’s offer. The existence and contents of the two telephone conversations have been put in issue in paragraphs 32 and 37 of the witness statement of Mr Ng for the 1st defendant. Since Mr Cheng has not mentioned anything in relation to these two telephone conversations, (through no fault of his own as the witness statements were exchanged at the same time), there is nothing in the witness statement to suggest what is Mr Cheng’s answer to the allegation:-, that there was no communication or there was communication but the contents of the communication were something else. Ms Lee submits that the answers provided are necessary to dispose of a cause and save costs.
46. The 1st defendant relies on the “all cards on the table” approach put forward by Mortimer JA (as he then was) in the case of Hui Sui Hop v Ng Chiu Construction Co & Anor [1995] 1 HKC 478. The same approach was endorsed by HH Judge Marlene Ng (as she then was) in the case of Khan Mirawas v Chu Kam Moon t/a SEI & Anor (DCEC 130/2006). At paragraph 16:-
“Mr Carey, solicitor for the Applicant, suggests that the 1st and 2nd Interrogatories deal with matters that can be elicited during cross-examination of the Applicant without causing prejudice to the requesting party, ie the Respondent. However, the essential purpose of interrogatories is to seek discovery of relevant facts and I respectfully adopt the view of Mortimer JA in Hui Sui Hop v Ng Chiu Construction Co. & anor CACV108/1994 (unreported, 16th November 1994) that “it is part of the developing procedure of the civil court where the parties are increasing expected to conduct their litigation “cards on the table”.” To say that the matters in the 1st and 2nd Interrogatories should be relegated for canvassing in cross-examination when they are relevant and may lead to further enquiries goes against the creed for modern civil litigation. Further, the Respondent’s interest may be prejudiced if, depending on the answer given by the Applicant under cross-examination, he is deprived of the opportunity to pursue enquiries. It may also lead to additional costs if the trial has to be interrupted for such enquiries to be pursued …...”
47. I agree that the courts have long been adopting this approach and with the implementation of Civil Justice Reform, it would be even more important now than at the time when the above two cases were decided, that parties should be left with no surprises as to their opponent’s case.
48. Here the interrogatories are focused on a particular issue, namely the two telephone conversations: If Mr Cheng says he did not have a telephone conversation with Mr Ng on either occasion the 1st defendant will know to put to him in cross-examination. However, if the answer were yes, what Mr Cheng says are the contents of the telephone conversations might enable or prompt the 1st defendant to pursue further enquiries and to collate further evidence in support of their contention or to rebut that of Mr Cheng’s.
49. I thus agree that Interrogatories Nos 5 and 7 are necessary for disposing fairly of the cause or matter or for saving costs in these proceedings.
(b) Interrogatories Nos 6 and 8
50. Ms Szeto submits that for Interrogatories Nos 6 and 8, they relate to whether Toplis has received an email or sent a letter. As both the email and the letter have both been disclosed by the 1st defendant and that there being no dispute on authenticity, the 1st defendant has failed to explain the litigious purpose served.
51. Ms Lee submits that they relate to the conduct subsequent to the Small Claims Tribunal hearing which would support or weaken whether Mr Cheng made the alleged representations. Mr Cheng’s witness statement is silent on these matters.
52. As to Interrogatory No 6, the email is allegedly sent by Ms Mok of the 1st defendant enclosing a letter from Messrs Ho, Tse, Wai & Partners. If Mr Cheng answers yes, that might be the end of the matter and submissions can be made at trial on the fact that Mr Cheng received the communication and his action or inaction thereafter. If however Mr Cheng’s answer is no, the 1st defendant might be prompted to pursue further and collate evidence to contradict. I am thus of the view that Interrogatory No 6 is necessary for disposing fairly of the cause or matter or for saving costs in these proceedings.
53. Interrogatory No 8 is however, different. The letter in issue is a letter sent by Toplis to Messrs Ho, Tse Wai & Partners. The Interrogatory asks whether Toplis sent the letter. With respect, there being no dispute on authenticity, the answer must be affirmative. I am thus of the view that Interrogatory No 8 serves no litigious purpose and ought not be allowed.
CONCLUSION
54. The appeal is therefore dismissed as to Interrogatories Nos 5, 6, & 7 and allowed as to Interrogatory No 8.
55. Given the majority of the arguments were made on the 1st Ground relied upon by the Third Party, I will make a costs order nisi that the Third Party bears 85% of the costs of the appeal; to be taxed if not agreed.
56. I thank both counsel for their valuable assistance.
( Phoebe Man )
Deputy District Judge
Miss Connie Lee, instructed by Mike So, Joseph Lau & Co, for the 1st defendant
Miss Kay Seto, instructed by Hastings & Co, for the third party