MOULIN GLOBAL EYECARE HOLDINGS LIMITED (IN LIQUIDATION) v. OLIVIA LEE SIN MEI

HCMP 2192/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 2192 OF 2012

(ON AN INTENDED APPEAL FROM HCA NO. 167 OF 2008)

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REASONS FOR JUDGMENT

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Hon Kwan JA:

1. I agree with the Reasons for Judgment of Fok JA.

Hon Fok JA:

2. This application for leave to appeal raises an issue as to the correct legal test to be applied for when production of a document referred to in an affidavit should be ordered pursuant to O.24 rr.10, 11 and 13.

The facts

3. In this action, the plaintiff claims against the defendant for damages for breach of duty by the defendant as a director.

4. In addition to the claim against the defendant, the plaintiff also brought claims against certain other parties for damages overlapping with the damages claimed against the defendant.  Settlements were entered into between the plaintiff and those other parties, for which recoveries the plaintiff has acknowledged it must give credit to the defendant, and the settlement agreements have been disclosed to the defendant pursuant to an order of Barma J dated 20 April 2012.

5. The Judge’s order limited the parties to whom the settlement agreements might be disclosed to members of a “confidentiality club” comprising the defendant, her solicitors and counsel but gave the defendant liberty to apply to vary the categories of persons within the confidentiality club.

6. The defendant then applied by summons dated 4 September 2012 for an order from Barma J to expand the confidentiality club to include the employees of the defendant’s insurer, XL Insurance Company Limited (XL Insurance).

7. In her affidavit in support of that application,[1] the defendant referred to and set out extracts of her insurance policy with XL Insurance.

8. By summons dated 10 September 2012, relying on the references to that insurance policy in her affidavit, the plaintiff in turn applied under O.24 rr.10 and 11 for an order that the defendant make that insurance policy available to the plaintiff for inspection and provide copies of it.

9. The two summonses both came on for hearing together by Barma J (as he then was) on 21 September 2012.  On the plaintiff’s invitation, he dealt with its application first.  At the conclusion of the hearing, the Judge gave an ex tempore judgment in which he dismissed the plaintiff’s summons.  Since there was insufficient time to deal with the defendant’s summons, that was adjourned to another date.

10. Immediately after the Judge dismissed the plaintiff’s summons, counsel for the plaintiff applied for leave to appeal. The Judge refused leave to appeal.

11. As it was entitled to pursuant to O.59 r.2B(3), the plaintiff renewed its application for leave to appeal to this Court by summons under O.59 r.2A dated 5 October 2012.  Directions were given for an oral hearing of the leave application on the basis that the hearing would be treated as the appeal itself if leave were granted.

12. At the conclusion of the hearing before us, we granted leave to appeal but dismissed the appeal and indicated we would hand down our reasons for doing so in due course, which we now do.

The proposed grounds of appeal

13. For leave to appeal to be granted, the plaintiff must show that the proposed appeal has a reasonable prospect of success or that there is some other reason in the interests of justice why the appeal should be heard.

14. The plaintiff contends that leave to appeal should be granted on the first limb, namely that the proposed appeal enjoys a reasonable prospect of success, and the proposed notice of appeal identifies two broad grounds of appeal, namely:

(1) First, that the Judge applied an incorrect legal test for when production of a document referred to in an affidavit should be ordered pursuant to O.24 rr.10 and 13;

(2) Secondly, that the Judge took into account irrelevant considerations and failed to give weight to relevant considerations.

The relevant rules of Court

15. O.24 r.10, which is headed “Inspection of documents referred to in pleadings and affidavits”, provides:

“(1) Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings, affidavits or witness statements served under Order 38, rule 2A, or experts’ reports, reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof.

(2) The party on whom a notice is served under paragraph (1) must, within 4 days after service of the notice, serve on the party giving the notice a notice stating a time within 7 days after the service thereof at which the documents, or such of them as he does not object to produce, may be inspected at a place specified in the notice, and stating which (if any) of the documents he objects to produce and on what grounds.”

16. Under the heading “Order for production for inspection”, O.24 r.11(1) then relevantly provides:

“(1) If a party … who is served with a notice under rule 10(1) –

(a) fails to serve a notice under … rule 10(2), or

(b) objects to produce any document for inspection, or

(c) offers inspection at a time or place such that, in the opinion of the Court, it is unreasonable to offer inspection then or, as the case may be, there,

then, subject to rule 13(1), the Court may, on the application of the party entitled to inspection, make an order for production of the documents in question for inspection at such time and place, and in such manner, as it thinks fit.”

17. O.24 r.13(1), under the heading “Production to be ordered only if necessary, etc.”, provides:

“(1) No order for the production of any documents for inspection or to the Court or for the supply of a copy of any document shall be made under any of the foregoing rules unless the Court is of opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.”

The defendant’s reference to the insurance policy in her affidavit

18. In the plaintiff’s affidavit in support of the application for inspection of the insurance policy, the following references in the defendant’s affidavit to the insurance policy were relied upon:

(1) In paragraph 5: “The insurance policy which provides coverage for the claim against me is a Blended Liability Reimbursement Coverage.”

(2) In paragraph 11: “The insurance policy which provides coverage for the claim against me specifies, inter alia, that: …”.

(3) In paragraph 12: “In accordance with the relevant provisions in the insurance policy (‘the relevant provisions’), My Insurer has since the commencement of the proceedings been closely involved in the conduct of my Defence.”

(4) In paragraph 16: “… the responsive insurance policies are in the nature of liability reimbursement coverage.  The relevant provisions of the policy have also been set out in paragraph 11 above.”

19. In addition, reliance was placed on the defendant’s quotation of provisions of the insurance policy in paragraph 11 of her affidavit.  The quoted provisions were set out as follows:

“[The Insurer] shall have the right to associate with any Insured in the defense and settlement of any Claim. An Insured shall not settle any Claim in whole or in part without [the Insurer’s] consent where Loss Amounts exceed, or giving effect to the settlement would cause the Loss Amounts to exceed, the applicable retention …”

“Upon [the Insurer’s] request the Insured shall provide copies of all pleadings filed, summaries of all discovery undertaken, and shall give [the Insurer] or [the Insurer’s] representatives such other information and cooperation as [the Insurer] may reasonably require.”

“The Insureds agree to provide the Insurer with such information, assistance and cooperation as the Insurer or its counsel may reasonably request.”

“Loss Amounts mean any damages including compensatory damages, monetary damages, statutory damages, judgments, settlements … which the Insured shall be obligated to pay to another by reason of judgment, settlement or arbitration award for liabilities on account of a claim.”

20. There was no dispute that the defendant’s insurance policy had been referred to in her affidavit and that such reference was within the terms of O.24 r.10(1).

The Judge’s approach

21. The Judge accepted that where a document is referred to in an affidavit in support of an application, the court will ordinarily order production because the purpose of requiring production is to give the opposite party the same advantage as if the document had been fully set out: see Matthews & Malek, Disclosure (4^th Ed.) at §§9.04-9.05.

22. He also considered that it was a theme running through many of the cases cited to him, including Quilter v Heatly (1883) 23 Ch D 42, Zida Technologies Ltd v Tiga Technologies Ltd [2001] 3 HKLRD 698 and Rubin v Expandable Ltd [2008] 1 WLR 1099, that:

“… for practical purposes, a court is likely to take the view that absent any special factors, where a document has been referred to, it would generally be appropriate to regard its production as being so necessary as being in the interests of fairness and equality of information.”

23. However, the Judge noted that information as to the defendant’s insurance arrangements and the contents of her policy were not relevant to the underlying dispute between the parties.  Instead, the only relevance of the insurance policy was that it supported the defendant’s contention that XL Insurance should be permitted to be added to the confidentiality club to whom the settlement agreements entered into by the plaintiff could also be disclosed.  Moreover, production to the plaintiff of the insurance policy would be prejudicial to the defendant.

24. In the context of a submission by the plaintiff that, the defendant having made use of the insurance policy to support her application, fairness required that the policy be produced to the plaintiff so that it had the same opportunity to examine the document as the defendant will have had, the Judge considered the decision in Zida Technologies.

25. He considered that the observations in that case were applicable to the very different circumstances where the document sought to be produced was unquestionably relevant to the underlying proceedings and the argument as to production depended on the issue of whether the document was in the possession, custody and control of a third party over whom the respondent to the application had no control.

26. In this context, having distinguished the facts of the present case, he said:

“Whether or not forensic examination of the document is required in the interests of a fair trial or disposal of the matter at hand depends, in my view, on an assessment of the degree of relevance or importance of the document to that matter.”

27. Applying this test, with the factors that had been urged on him by both parties in mind (some of which form the basis of the second proposed ground of appeal), the Judge went on to hold:

“I do not think that it can be said here that production of the whole policy is so critical that fairness demands that it be produced to the plaintiff.”

28. The plaintiff argues that the Judge thereby applied an incorrect legal test for when production of a document referred to in an affidavit should be ordered pursuant to O.24 rr.10 and 13.

Did the Judge apply an incorrect legal test?

29. In the proposed notice of appeal, it is contended that the Judge’s test was incorrect and inconsistent with authority in three respects, namely:

(1) First, it was inconsistent with the underlying rationale of O.24 r.10 which is “intended to give the opposite party the same advantage as if the document referred to had been fully set out in the pleadings” (see Quilter v Heatly at p. 50, approved in Shun Kai Finance Co Ltd v Japan Leasing (HK) Ltd [2000] 3 HKLRD 521 at pp. 525-526 and [2000] 3 HKLRD 539 at p. 543).

(2) Secondly, the Judge should have held that if a document is referred to in an affidavit, the onus is on the party resisting disclosure to show “very unusual circumstances” to justify an order for production not being made (see Dynamic Way International Ltd v Ho Kui Chee [2000] 4 HKC 138 at p. 141 and Matthews & Malek (supra) at §§9.04-9.05).

(3) Thirdly, the Judge was wrong to find that the requirement in O.24 r.13 that production will only be ordered where it is “necessary for fairly disposing of the cause or matter or saving costs” requires the court to assess the potential probative value of the document before production is ordered.  Rather, the Judge should have held that the fact the defendant chose to refer to and deploy the insurance policy in her affidavit to advance her application itself demonstrated that disclosure was necessary for fairly disposing of that application and no further inquiry as to the possible probative value was necessary or appropriate (see Dynamic Way at pp. 141, 142 and Rubin v Expandable Ltd at §24).

30. On behalf of the plaintiff, Mr Ashley Burns SC submitted that, on the correct legal test, if the court is satisfied that a document has been referred to in a pleading or affidavit, then an order for production of that document should follow absent “very unusual circumstances” and that the potential unusual circumstances identified in the authorities are limited to (i) that the document is not in fact relevant at all, or (ii) that it is privileged and privilege has not been waived by reference to the document.  Reliance for this submission was placed on Barr v Biffa Waste [2010] 3 Costs LR 291 at §§25-26 and 35-36 and Rubin v Expandable Ltd.

31. I have set out above the rules of Court relevant to the present appeal.  It is clear from those rules and from the authorities that have considered them (or the precursors to those rules) that there is a distinction between discovery of documents in an action in general and an application for production of documents referred to in pleadings or affidavits: see, in this respect, Quilter v Heatly per Lindley LJ at p. 49 and Shun Kai Finance Co Ltd v Japan Leasing (HK) Ltd per Rogers VP at pp. 523J-525B.

32. In the latter situation, where a party has referred to a document in his pleading or affidavit, the opposite party has a prima facie entitlement to see it, “unless good cause to the contrary is shewn” (per Jessel MR in Quilter v Heatly at p. 48), or “unless there is some sufficient ground for refusing production” (ibid per Lindley LJ at p. 50), or “unless he can shew good cause why he should not” produce it (ibid per Bowen LJ at p. 51).

33. Nevertheless, it is clear from the rules that any order for production for inspection under O.24 r.11 is expressly “subject to rule 13(1)” and that latter rule plainly places, on an applicant for an order for production, a burden to demonstrate to the court that “the order is necessary either for disposing fairly of the cause or matter or for saving costs”.

34. In Dynamic Way, Godfrey VP expressed the position thus (at p. 142B-D):

“We are concerned here with a document referred to in an affirmation, that is to say, the list of purchase orders mentioned in para 36. Although, prima facie, the party against whom it was sought to be used had a right to inspect this document and take copies of it, the court will not order production of the document for inspection unless the court is of the opinion that such an order is necessary either ‘for disposing fairly of the cause or matter or for saving costs’; see O 24 r 13 of the Rules of the High Court.”

35. There are thus two separate stages to be considered, although in practice these will usually be examined together. First, the party who has referred to the document in a pleading or affidavit bears the burden of showing good cause why an order for production should not be made. As a matter of practicality, at that stage, the fact of reference to a document in a pleading or affidavit will make it difficult for the referring party to contend that the document does not exist and it may also make it difficult for him to contend that it is not relevant.  However, that is not the end of the inquiry as there is not then a presumptive rule in favour of an order for production and the referring party may be able to show, for example, that the document is privileged from production.  In any event, under O.24 r.13 there remains, secondly, and independent of the first stage, a burden on the applicant for an order for production to show the court that the order is necessary either for disposing fairly of the cause or matter or for saving costs.

36. It is clear from the transcript of his judgment that the Judge did have in mind these two separate burdens as well as the underlying rationale of O.24 r.10 and the theme running through the cases cited by the plaintiff: see §§21 and 22 above.

37. The plaintiff’s appeal proceeds on the footing that it was impermissible for the Judge, once he had accepted that the insurance policy was relevant to the defendant’s application to expand the confidentiality club, to conduct any evaluation of the degree of relevance or importance of the document to that matter.

38. I do not accept the validity of that premise for a number of reasons.

39. It is clear that there is no rigid, inflexible rule that production of a document referred to in a pleading or affidavit will always be ordered.  On the contrary, the underlying rationale of O.24 r.10 and the theme in the cases both reflect a general rule and, as such, one to which there may be exceptions.  That there may be exceptions to the general rule is accepted by the plaintiff itself, albeit that it contends the exceptions are limited to two classes of situation only, viz. irrelevance and privilege.

40. As I have already noted, the rule providing for an order for production (O.24 r.11) is expressly subject to O.24 r.13 which requires the court to consider the necessity of an order for production in terms of the fair disposal of the cause or matter or the saving of costs.  That inquiry necessarily imports an evaluation of the circumstances in order to determine whether an order for inspection should be made.

41. The plaintiff’s reliance on Dynamic Way and the expression “very unusual circumstances” is, in my judgment, misplaced.

42. The facts in that case were that a party had placed a list of purchase orders placed by its customers in a sealed envelope which was exhibited to an affirmation in support of an application for an interlocutory injunction.  The purpose of the list was to demonstrate that the customers had been its regular customers. It requested that the list be kept confidential on the basis of the information was a trade secret pertinent to its business.

43. The court granted an order that the defendant be permitted to inspect the contents of the envelope.  The court held that, given the nature of interlocutory injunction proceedings, parties should not be permitted to put in confidential exhibits and deny the opposing party any opportunity whatsoever of looking at the documents.  The plaintiff had chosen to put its confidential information in evidence and to rely on it and there was therefore no reason for denying access to this by at least the solicitors and counsel of all parties.  In was in this context that Rogers VP said (at p. 141E-F):

“Except in very unusual circumstances, a party should not be faced with having to deal with evidence which it is not permitted to see.”

44. It was the, in effect, ex parte nature of the deployment of the contents of the sealed envelope, which was provided to the court but not to the opposing parties, that prompted Rogers VP to refer to the requirement of “very unusual circumstances” as a justification.

45. I do not believe that Rogers VP was there purporting to lay down a rule limiting the circumstances in which an order for production under O.24 r.11 would be refused.  That was plainly not the context of his remark and it is wrong to read it as such.

46. The plaintiff has, however, plainly elevated that reference to the status of the equivalent of a rule of Court albeit there is no such requirement or limitation in O.24 rr.10, 11 or 13.  Indeed, one can see from the plaintiff’s skeleton submissions how the dictum has been inflated.  From the reference to “very unusual circumstances” (§1), the phrase becomes, in turn, “narrow and exceptional circumstances” (§2) and “most exceptional and unusual cases” (§12).  And in the plaintiff’s reply skeleton, the phrase is interpreted to mean “extraordinary extenuating circumstances” (§7) and “all but exceptional circumstances” (§10).

47. Given the real reason and context for Rogers VP’s use of the phrase “very unusual circumstances”, I am quite satisfied that it is wholly wrong for the plaintiff to suggest that the decision in Dynamic Way constrains the court when it is considering, as it must under O.24 r.13, whether the applicant for an order for production has demonstrated that such an order is necessary either for disposing fairly of the cause or matter or for saving costs.

48. Such an approach would largely deprive the court of any discretion under O.24 r.13 when considering an application for production under O.24 r.11 and I do not accept that this is the effect of the rules or the authorities relied upon by the plaintiff.

49. There is nothing in Quilter v Heatly which suggests that “good cause” for non-production is limited to relevance or privilege.  Nor is that limitation supported by Shun Kai Finance Co Ltd v Japan Leasing (HK) Ltd, which was a case concerning whether the implied undertaking arising on discovery applies to documents supplied pursuant to a notice under O.24 r.10.  That was not a case about the burden on a party seeking to resist production.  There was no issue in Shun Kai as to whether an order for production should be made since the documents had already been produced; instead, the issue there was simply whether, having been produced, they were subject to the implied undertaking.  In contrast, Godfrey VP’s judgment in Dynamic Way is a clear statement of principle – which is binding on us – that an application for an order for production of a document referred to in an affidavit is subject to O.24 r.13.[2]

50. Whilst it is true that Rubin v Expandable Ltd and Barr v Biffa Waste Services Ltd identified privilege as a basis for a party successfully resisting an order for production under the CPR equivalent of O.24 r.11, I do not accept that those cases, which were decisions on their own facts, are authority for the proposition that production may only be resisted on grounds of relevance or privilege.  There is no suggestion to this effect in Matthews & Malek at §9.05 where those two cases are referred to.

51. On the contrary, Matthews & Malek there make the point that the court’s power to order production under the CPR is subject to the overriding objective in CPR r.1.1 which the court must seek to give effect to in exercising any power under the rules and that this may be compared with the former rule under O.24 r.13 that production should be necessary either for disposing fairly of the cause or matter or for saving costs.  Matthews & Malek also go on to comment that where a document has been mentioned, inspection can be resisted not only on grounds of privilege, but also on the more general grounds in CPR r.31.3, such as that the document is not within a party’s control or that an order for inspection would be disproportionate to the issues in the case.

52. In requiring the court to consider the necessity of an order for the production of a document for the fair disposal of a cause or matter, O.24 r.13 confers, in my judgment, a broad discretion rather than a narrow or fettered discretion as the plaintiff would suggest.  That the discretion is broad rather than narrow or fettered is supported by the following passage in the judgment of Sir Thomas Bingham MR in Taylor v Anderton [1995] 1 WLR 447 at p. 462, which the Judge quoted, namely:

“… The crucial consideration is, in my judgment, the meaning of the expression ‘disposing fairly of the cause or matter.’ Those words direct attention to the question whether inspection is necessary for the fair determination of the matter, whether by trial or otherwise. The purpose of the rule is to ensure that one party does not enjoy an unfair advantage or suffer an unfair disadvantage in the litigation as a result of a document not being produced for inspection. It is, I think, of no importance that a party is curious about the contents of a document or would like to know the contents of it if he suffers no litigious disadvantage by not seeing it and would gain no litigious advantage by seeing it. That, in my judgment, is the test.”

53. The plaintiff submitted that the Judge erred in relying on those remarks because they were made in the context of an application under O.24 r.13 for production of documents that had been disclosed in a list of documents.  I accept that this is a distinction in the context of the case but it is a distinction without a difference for present purposes because there is no doubt that O.24 r.11 is subject to O.24 r.13 and there is no reason to confine the application of Sir Thomas Bingham’s general observations as to the interpretation of the latter rule to one type of case rather than another.  As Mr Paul Shieh SC pointed out in his submissions on behalf of the defendant, O.24 r.13 is a general rule governing a number of different strands under O.24 by which an application for production of a document might be sought, for example following disclosure of a document by list under r.2, or by further and better list applied for under r.3, or by affidavit ordered under r.7, as well as by reference in a pleading or affidavit under rr.10 and 11.

54. I do not accept the plaintiff’s submission that the Judge’s test would open the floodgates to contested satellite litigation.  The Judge’s discretionary balancing exercise, of which the plaintiff complains, was of a type which courts customarily conduct in many interlocutory contexts.

55. Further, the suggestion that O.24 r.10 is “summary and self-executing in nature” is, with respect, a self-serving characterisation and one that is inconsistent with the structure of the relevant rules which provide for a mechanism to object to production and make an order for such production subject to consideration of the necessity for production by reference to the fair disposal of a cause or matter or for the saving of costs.  The plaintiff’s approach would, in contrast, make the words “subject to rule 13(1)” in O.24 r.11 redundant.

56. It seems to me that the concept of the fair disposal of a cause or matter must entitle and require the court to make an assessment of the “degree of relevance or importance of the document to that matter” as the Judge held.  As the defendant submitted, this is an important safeguard deliberately put in place to allow the court to assess each case in its context and determine whether production is warranted under the particular circumstances of the case.

57. I therefore conclude that the Judge did not apply an incorrect legal test for the purposes of determining the plaintiff’s application for an order for production of the defendant’s insurance policy.

Did the Judge have regard to irrelevant considerations and fail to give

weight to a relevant consideration?

58. The plaintiff further submitted that, so far as the Judge was exercising a discretion in refusing to order production of the insurance policy, he erred in taking into account three irrelevant considerations and failing to give proper weight to a relevant consideration.

59. The three irrelevant considerations it was said the Judge took into account were:

(1) That the defendant might be able to demonstrate that her insurer had a sufficient interest to be admitted to the confidentiality club without referring to the insurance policy;

(2) That the plaintiff would gain a possible tactical advantage in the litigation generally to the prejudice of the defendant if production of the insurance policy was ordered; and

(3) That the insurance policy was irrelevant to the issues between the parties in relation to the litigation generally, as opposed to the application before the court.

60. The matter to which it was submitted the Judge failed to give proper weight in the exercise of his discretion was the fact that the defendant had made inconsistent statements in prior correspondence and affidavits as to her insurance coverage thereby casting doubt on the veracity of the statements made by the defendant in her affidavit in which she referred to her insurance policy.

Was the Judge’s exercise of discretion flawed?

61. The first matter which it was said the Judge wrongly took into account was the fact that the defendant might have been able to demonstrate that her insurer had a sufficient interest in these proceedings without referring to the insurance policy.  It was submitted that it was not open to the Judge to speculate that the defendant might have presented her case in a different way and that he should have addressed the plaintiff’s application solely on the basis of what the affidavit said and not on a hypothetical basis of what it might have said.

62. The defendant’s application to vary the confidentiality club was plainly a relevant “cause of matter” for the purposes of O.24 r.13: see Dubai Bank Ltd v Galadari (No.2) [1990] 1 WLR 731 per Slade LJ at p. 737D-E, applied in Zida Technologies at §38.

63. I have already concluded above that the Judge did not apply an incorrect legal test in making an assessment of the degree of relevance or importance of the document to the cause or matter in question.  I therefore do not agree that this matter was irrelevant for the Judge to take into account in the exercise of his discretion.  It was plainly relevant to the degree of relevance and importance of the insurance policy to the defendant’s application to vary the confidentiality club.

64. The second matter which it is said the Judge wrongly took into account is the fact that the plaintiff would gain a tactical advantage to the prejudice of the defendant if it was informed of the coverage limit and other details of the defendant’s insurance arrangements.  It was submitted that the collateral effect of production of the document is irrelevant if production is otherwise required by the rules and that if prejudice results from a deliberate and voluntary deployment of the document that was something a party knowingly brought upon itself.

65. In my judgment, there is no substance in this complaint.  On the contrary, it is plain that the disclosure to the plaintiff of the defendant’s insurance policy would provide the plaintiff with a windfall and manifest advantage in respect of the main action.  This is no doubt the reason why this application is being pursued so vigourously by the plaintiff.  But once it is determined, as I have concluded above, that the court is required under O.24 r.13 to consider whether production is necessary for the fair disposal of the cause or matter, it becomes relevant to consider the relative advantages or disadvantages – which plainly go to the question of fairness – of ordering production of the document in question.

66. The plaintiff also raised as a separate proposed ground of appeal that the Judge erred in presuming that the defendant would suffer prejudice as a result of the disclosure of the insurance policy in the absence of any evidence to that effect from the defendant.

67. This point may be disposed of shortly.  I respectfully agree with the Judge’s response to this point which was that:

“… it is self-evident that the disclosure of the extent of her insurance coverage or details of the position in relation to the policy would be obviously disadvantageous to the defendant in the context of, for example, settlement negotiations and generally in the conduct of the proceedings in that it would place the plaintiff in a much better position than it otherwise and normally would be and so better able to press for particular terms of settlement that might be more advantageous to it and less advantageous to the defendant.”

68. The third matter which it is said the Judge wrongly took into account is that the insurance policy was irrelevant to the issues between the parties in relation to the litigation generally.  It was submitted that whether or not the document is otherwise relevant to or discoverable in respect of the issues to be addressed at trial is not a relevant consideration for the purposes of O.24 r.10 when a document is deployed in aid of an interlocutory application.

69. It was open to the Judge, in my view, to take this broader view of the “cause or matter” for the purposes of the exercise of discretion under O.24 r.13.  Since fairness to the disposal of the defendant’s application to vary the confidentiality club was a relevant consideration, I do not see how such fairness could have required him to ignore the irrelevance of the insurance policy to the action as a whole.

70. The final ground of complaint in respect of the Judge’s exercise of discretion was that he failed to give any weight to the defendant’s prior inconsistent statements as to the existence of her insurance.  In this regard, the plaintiff submitted that the defendant had made prior inconsistent statements to the effect that she was not insured and was of limited means.  It was said that these statements were inconsistent with the affidavit and this was a factor in favour of requiring disclosure of the insurance policy in order to test the veracity of the evidence.

71. The short answer to this point is that the Judge accepted that the defendant appeared to have suggested earlier that she might not in fact have insurance cover or had only limited cover that he did not think that these statements, made at a rather early stage of the proceedings, were such as to cast real doubt on the existence of the policy now referred to or that they should be given such weight as to render it necessary, in the interests of the fair disposal of the defendant’s application, that the policy should be produced.  The Judge therefore did take this matter into account but gave it little weight.  That was a matter for him and, for my part, I agree that he was right to do so.

72. For the above reasons, I do not therefore consider that the Judge’s exercise of discretion was flawed as contended by the plaintiff.

Additional considerations

73. Nothing in this judgment should be taken to suggest that, generally speaking, where a party refers to a document in a pleading or affidavit, he will not normally be required to produce it for inspection.  In most cases, the fact that he has referred to the document in his pleading or affidavit will be a strong indicator of the relevance of the document and also of the necessity for its production.

74. The circumstances of the present case are somewhat out of the ordinary: the Judge rightly observed that it is one that arises in an unusual situation.  As the Judge held, it was not really necessary for the defendant to refer in her affidavit to the insurance policy or to set out the provisions of that policy.  That was because there was in evidence before the court already the fact that XL Insurance had seen fit to expend resources on instructing a separate firm of solicitors to supervise the litigation and that it had, since the commencement of the proceedings, been closely involved in the conduct of the defendant’s defence.  It had confirmed in correspondence that it has extended coverage to the defendant in respect of the plaintiff’s action against her.

75. That being the case, the Judge might have considered whether it would have been appropriate to strike out the relevant paragraphs of the defendant’s affidavit containing references to the insurance policy.  However, since the plaintiff did not ask for this, it was not a matter which he was obliged to consider.

76. Another alternative that the Judge might have considered was whether partial production might have been ordered, limited to the provisions of the insurance policy which the defendant had quoted in her affidavit, with the rest of the insurance policy being redacted on the grounds of confidentiality.  Again, however, that was not a suggestion made to him and, given the plaintiff’s stance, it is unlikely it would have asked for this.  Mr Shieh was probably right in saying that it is clear that the plaintiff is not interested in the quoted parts but wants instead to see other parts of the policy.

77. Both of these alternatives are referred to in Rogers VP’s judgment in Dynamic Way (see p. 141H) and are means by which a court can achieve a balance of fairness in any given case involving an application for production under O.24 r.11.

Conclusion

78. The grounds of appeal as to the proper test to be applied in an application for production under O.24 r.11 being reasonably arguable, leave to appeal was granted but, for the reasons set out above, the appeal was dismissed.

79. The plaintiff could not resist an order for costs and so the costs of the application for leave to appeal were ordered to be paid by the plaintiff to the defendant.

[1] 11^th Affidavit of Lee Sin Mei, Olivia dated 10 August 2012.

[2] See also, to the same effect, the judgment of Tang J (as he then was) in Easewin Properties Ltd v Registrar of Companies [2004] 4 HKC 41 at §9.