HCMP 2773/2015
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
MISCELLANEOUS PROCEEDINGS NO 2773 OF 2015
(ON INTENDED APPEAL FROM HCA 167 OF 2008)
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BETWEEN
MOULIN GLOBAL EYECARE HOLDINGS LIMITED (IN LIQUIDATION) ( formerly known as MOULIN INTERNATIONAL HOLDINGS LIMITED)
Plaintiff
and
OLIVIA LEE SIN MEI
Defendant
and
KPMG (A FIRM)
1st Third Party
ERNST & YOUNG (A FIRM)
2nd Third Party
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Before: Hon Lam VP and Barma JA in Court
Date of Hearing: 10 March 2016
Date of Decision: 10 March 2016
Date of Handing Down Reasons for Decision: 14 March 2016
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REASONS FOR DECISION
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Hon Barma JA (giving the Reasons for Decision of the court):
1. This was an application for leave to appeal against the order of Ng J dated 16 October 2015, by which he made an unless order requiring the plaintiff to file an answer to the defendant’s request for particulars and documents in respect of the plaintiff’s IND claim (contained in paragraph 399A of the Further Amended SOC) by 27 November 2015, failing which that claim would be struck out. As appears from the order, an application for leave to appeal was refused by Ng J, although he granted a stay of execution to enable an application for leave to be made to this court. At the conclusion of the hearing, we dismissed the application with costs to the defendant, but granted a further stay of 49 days before Ng J’s order would take effect, in order to afford the plaintiff time to comply with it. We indicated that we would hand down the reasons for our decision, together with a gross sum assessment of the defendant’s costs, in due course, and now do so.
2. The IND claim seeks damages in respect of the increase in the net deficiency of the plaintiff’s liabilities over its assets which is alleged to have flowed from the fact that the plaintiff continued to trade at a time when it was allegedly insolvent, as the result of the alleged negligence and breach of duty of the defendant. The amount of the claim is said to be “at least HK$1.23 billion”. It was pleaded in a single paragraph, but was amplified in the witness statement of Mr Roderick Sutton, one of the liquidators of the plaintiff.
3. The IND claim was the subject of a contested application for leave to amend the plaintiff’s claim which was eventually resolved in the plaintiff’s favour by the Court of Final Appeal on 17 July 2014. Some two months later, the defendant sought (among other directions) a direction that the plaintiff should file and serve further and better particulars of that claim. The request for such particulars took the form of a document dated 17 October 2014, which called itself a request for particulars and documents.
4. The defendant’s summons was heard by Ng J on 14 November 2014. In a letter prior to the hearing dated 29 October 2014, the plaintiff stated that it was considering the request, and in the plaintiff’s skeleton argument delivered shortly before thehearing, the plaintiff indicated that its position was that it would deliver its response to the request by the end of January 2015, providing further documents and particulars to the extent appropriate. At the hearing, Mr Manzoni SC, appearing for the plaintiff, having questioned the form of the request, said:
“We will deal with it on its merits. We’re not going to take a point, we’re going to address it. We will do that by 30 January, we’ve said that we will do that and that’s fine.”
5. A draft order had also been produced by the plaintiffas an annexure to its skeleton argument, the relevant part of which read:
“The plaintiff do deliver by 30 January 2015 its answers to the defendants request for particulars and documents in respect of the plaintiff’s IND claim dated 17 October 2014.”
6. Having heard Mr Manzoni, Mr Shieh SC for the defendant said of this paragraph:
“… we have no problem because that is the plaintiff providing us with information and also responsive evidence.”
And a little later:
“Our experts want the information. So … we are content for the plaintiff to provide the information to us by the stipulated date.”
7. In the result, Ng J made the order in the terms set out above.
8. Thereafter, the time for answering the request was extended by consent to 27 March 2015. On the plaintiff’s failure to meet that deadline, the defendant took out a summons seeking an unless order. At the hearing of that summons on 14 April 2015, Ng J made an unless order, requiring the request to be answered by 15 May 2015. On that occasion, the plaintiff was represented by its solicitor Mr Kentish, who indicated that the plaintiff did not necessarily accept that the defendant was entitled to answers to all of the questions asked. Ng J took the view that this was not a matter that was appropriate for consideration at this hearing.
9. The plaintiff filed a response to the request on 15 May 2015, in which it objected to answering certain requests because they were said to be not necessary for the fair disposal of the matter or for the saving of costs. This led to an application by the defendant on 21 September 2015 for a declaration that the IND claim be struck out by reason of the plaintiff’s alleged failure to comply with the unless order. That application was heard on 14 November 2015, resulting in the making of the order against which leave to appeal is now sought.
10. Before us, Mr Manzoni submitted that there were three grounds on which leave should be granted. They can be summarized as follows:
(1) There had been a denial of procedural fairness by Ng J at the 14 April 2015 hearing, when he refused to hear Mr Kentish’s submissions as to the propriety of the request.
(2) In any event, Ng J had misconstrued the 14 November 2014 order, by failing to read into it a reservation by the plaintiff of its right to decline to answer such parts of the request as it considered the defendant was not entitled to make.
(3) The effect of requiring the plaintiff to answer the request would be to confer an unfair and unwarranted litigation advantage on the defendant by compelling the plaintiff to disclose details of its financial resources.
11. With respect, we do not think that any of these grounds are arguable.
12. As to the first, it seems to us that while Ng J may not have been receptive to the plaintiff’s attempts to reopen the question of whether or not it was entitled to decline to answer parts of the request, this was a question that was to be answered by reference to the order made on 14 November 2015, by which it was dealt with. That order having been made, whether or not the plaintiff could take this course depended on the proper construction of the order. So understood, this point merely leads on to the second ground, and does not provide an independent basis for seeking to set aside the order in respect of which leave to appeal is sought.
13. Turning to the second ground, we do not consider that it is reasonably arguable that the order of 14 November 2015 should objectivelybe read in the manner proposed by the plaintiff, so as to treat the plaintiff as having reserved its position as to the propriety of any particular request, with a view to declining to provide an answer to such requests as it thought were not justified.
14. The order required the plaintiff to deliver its answers to the defendant’s request by the date indicated. A response to the effect that the defendant is not entitled to make the request and that the plaintiff will therefore not provide a substantive answer to it cannot in our view be properly described as an answer to the request.
15. Mr Manzoni submitted that the order should be construed in its context, having regard to the background to it. This is correct, but this does not assist the plaintiff either. While it is fair to say that the plaintiff may have had in mind that it would consider whether or not it was obliged to answer each request made by the defendant, and let the defendant have substantive answers only to those requests the plaintiff considered were proper in due course, we think it necessary also to keep in mind how the order would objectively be understood – i.e. as we have described above. This would also appear to be how the defendant in fact understood the order as proposed in the draft put forward by the plaintiff, as appears from the comments of Mr Shieh when agreeing to it.
16. Such an interpretation of the order seems to us to be objectively correct, bearing in mind that the plaintiff had, by the time of the hearing on 14 November 2015, had four weeks to consider it, had initially (in its 29 October 2014 letter) stated that it was still considering the request, but did not so state in its skeleton argument, where it said that it would provide responses to the extent appropriate, and provided a draft order in the form of the order eventually made. One would have expected the plaintiff to have informed the judge and the defendant that there were aspects of the request that it considered objectionable, if that were its position, or at least to have made it known (if it were the case) that it was still considering its position in relation to whether or not it should be required to answer parts of it. This would have enabled the court and the parties to know where matters stood, to give appropriate directions to ensure that those requests not in dispute were answered within a reasonable timeframe, and to make arrangements to hear any argument that might be necessary in respect of any disputed requests. But this was not done.
17. In these circumstances, it seems to us that the order made is to be construed as the judge and the defendant construed it, andwe see no reasonable prospect of the plaintiff succeeding in its argument to the contrary.
18. Finally, the third ground takes matters no further either. It is in substance a complaint that in making the order, the judge failed to keep in mind the requirements of RHC Order 18 rule 12(3B), which provides that no order for particulars should be made unless the court is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs. However, in circumstances where a party is reasonably to be understood as being prepared, without the need for argument, to answer a request for particulars, the court will take it that no point is being taken to the effect that the order is not necessary for either of those purposes, and will not need to be troubled further by that requirement.
19. The application for leave was therefore dismissed. However, having regard to the stay that was granted in respect of compliance with the order of 16 October 2015, and to the consequences of not granting any further stay to enable the plaintiff to comply with the order, it seemed to us that it would be appropriate for the plaintiff to be granted the indulgence of further time to comply with Ng J’s order of 16 October 2015. Mr Shieh did not object to this course being taken, and accordingly, we granted a further stay of that order so that it should not come into effect until 49 days from today, on 28 April 2016.
20. So far as costs of this application are concerned, these must be paid by the plaintiff to the defendant. Having considered the statements of costs submitted by the parties for the purpose of this hearing, we assess the defendant’s costs of this application in the amount of HK$350,000.
(M H Lam)
(Aarif Barma)
Vice-President
Justice of Appeal
Mr Charles Manzoni SC, instructed by Lipman Karas, for the plaintiff
Mr Paul Shieh SC and Ms Janet Ho, instructed by Carpio, Mak & To, for the defendant