AKAI HOLDINGS LTD v. JAMES HENRY TING

HCCL 42/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 42 OF 2005

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D E C I S I O N

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Introduction

1.  This is the hearing of the plaintiff’s summons dated 25 July 2016 (the “Summons”), seeking non-party discovery against Robertsons, the former solicitors for the 4^th defendant.

2.  By letter dated 6 September 2016, Robertsons have informed the plaintiff that they neither consent nor object to the orders sought in the Summons and take a neutral position, subject to costs being awarded in their favour.

Background

3.  The background to the proceedings commenced by the plaintiff against the 4^th defendant is set out in the detailed and comprehensive Judgment of Bharwaney J dated 16 December 2015 (the “Judgment”).

4.  Pursuant to the Judgment, the 4^th defendant, the plaintiff’s former Executive Chairman and CEO, has been adjudged to pay the plaintiff the sum of US$1,209,731,677 (plus interest) and costs on an indemnity basis.

5.  The 4^th defendant’s liability to the plaintiff arises as a result of the 4^th defendant’s fraudulent misappropriation of the plaintiff’s assets in breach of trust and in breach of fiduciary duties.

6.  On 3 March 2016, the plaintiff obtained a worldwide injunction restraining the 4^th defendant from disposing of his assets up to the value of the Judgment sum, as well as an order for disclosure of all of his assets with a value of US$50,000 or more (the “Mareva Order”).  However, the 4^th defendant is in breach of the Mareva Order and has made no disclosure.  Neither has any repayment been made by the 4^th defendant to date in respect of the Judgment.

7.  Messrs Robertsons were the solicitors on record for the 4^th defendant in respect of these proceedings during the period from 23 June 2011 until 3 March 2016.  In particular, Robertsons were the 4^th defendant’s solicitors throughout the conduct of a trial set down for 20 days before Bharwaney J where the 4^th defendant was represented by three counsel.

8.  Robertsons were also the 4^th defendant’s solicitors in related bankruptcy proceedings commenced by the plaintiff against the 4^th defendant in respect of unpaid costs orders from at least 20 February 2013 until 3 March 2016.

9.  Since 3 March 2016, the 4^th defendant does not have any solicitors on the record.  The Liquidators of the plaintiff are unaware of the current whereabouts of the 4^th defendant.  The Liquidators are also not aware of the extent or current location of the 4^th defendant’s assets.

Documents sought

10.  The plaintiff seeks an order that Robertsons do provide the plaintiff with copies of all cheques, bank drafts, bank inward remittance advices or other documents evidencing the mode in which Robertsons was funded by or on behalf of the 4^th defendant during the past seven years (the “Payment Documents”).

11.  Since 6 May 2016, the plaintiff has written to Robertsons to request for copies of the Payment Documents. As set out in their letter dated 6 September 2016, Robertsons adopted a neutral position in respect of the Summons, but have sought to highlight certain issues relating to confidentiality, privilege and costs.

Applicable legal principles

12.  The court may order discovery against a non-party under section 42(1) of the High Court Ordinance, Cap 4, where the non-party is likely to have or to have had in his possession, custody or power any documents which are relevant to an issue arising out of a claim in an action.

13.  The jurisdiction to order non-party discovery exists both before and after judgment, having regard to the general policy of the court to come to the assistance of judgment creditors [see: Golddecade International Ltd v Huang Ziqiang, HCA 1521/2015 (Decision of DHCJ Marlene Ng dated 14 December 2015), at paragraphs 11 to 13].

14.  The legal principles on non-party discovery are uncontroversial.  The applicant is required to show that the documents sought are in existence, in the possession of the non-party against whom discovery is sought, and are relevant to the issues; and that discovery is necessary for fairly disposing of the cause or matter [see: Hong Kong Civil Procedure 2016, Practice Note 24/7A/6].

15.  In their letter dated 6 September 2016, Robertsons raised issues as to client confidentiality and legal professional privilege.  In this regard, I agree with the plaintiff that:

(1) To the extent that the Payment Documents sought contain confidential information belonging to the 4^th defendant, it is well-established that confidentiality per se is no bar to the discovery of documents [see: Science Research Council v Nasse [1980] AC 1028, per Lord Wilberforce at 1065D–1066F].  In any event, it does not lie in the mouth of the 4^th defendant, who is indebted to the plaintiff for a judgment debt in excess of US$1.2 billion, and who is in continuing breach of the Mareva Order and ancillary disclosure order to raise concerns as to any alleged confidentiality issues.

(2) Further, there is no issue of overriding any legal professional privilege because the Payment Documents sought are not privileged as a matter of law.  The objective fact of a client making payments to his or her solicitor is not covered by legal professional privilege, to the extent that the documents sought stand in isolation from advice given or sought [see: Pang Yiu Hung v Commissioner of Police [2003] 2 HKLRD 125, per Hartmann J (as he then was) at paragraphs 28–34].

16.  In the circumstances, I agree that neither confidentiality nor legal professional privilege impact upon the court’s discretion to order non-party discovery against Robertsons of the Payment Documents.

Conclusion

17.  For the reasons set out above, I order as follows:

(1) Messrs Robertsons, the former solicitors for the 4^th defendant, do within 21 days from the date hereof provide the plaintiff with copies of all cheques, bank drafts, bank inward remittance advices or other documents evidencing the mode in which Robertsons were funded by or on behalf of the 4^th defendant during the past seven years; and

(2) Costs of and incidental to the Summons (including costs for production of the documents) be paid by the plaintiff to Robertsons, such costs to be taxed if not agreed.