YAU CHIN KWAN AND ANOTHER v. TIN SHUI WAI DEVELOPMENT LTD.

CACV 247/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 247 OF 2001

(ON APPEAL FROM HCA 11520 OF 1999)

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J U D G M E N T

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Hon Mayo VP (giving the judgment of the Court):

1. This is an appeal from an order for discovery made by Deputy High Court Judge Muttrie. The Judge made an order in relation to six items of discovery. The present appeal is confined to items 1, 2 and 3.

2. The parties entered into a sale and purchase agreement of a flat in Maywood Court Tin Shui Wai on 18 June 1997. At that time the flat was in the process of being constructed. The plaintiffs were the purchasers and the defendant the developer.

3. Under the agreement the defendant was required to complete the development in compliance with the Government Grant and the approved building plans by 31 December 1997.

4. There were further provisions in the agreement that if the development was not completed by 31 December 1997 the plaintiffs could rescind the agreement and the deposit which had been paid would be returned to them. If the plaintiffs did not rescind within 28 days there was a deeming provision that they had elected not to rescind the agreement. A similar provision was included if completion was not effected by 30 June 1998.

5. The defendant was required to apply to the Director of Lands for a certificate of compliance or a consent to assign the flats within 14 days of the completion of the development. He then had 28 days from the date of the certificate or the consent to notify purchasers of this. Completion was to take place within 14 days of the notification.

6. The certificate of compliance or the consent to assign was deemed to be conclusive evidence that the development had been completed.

7. On 22 December 1997 the project architect certified that the development had been completed and applied to the Director of Lands for consent to assign the flats. This was not forthcoming until 17 June 1998. Even then the consent was conditional upon the defendant entering into a bond in the sum of $55 million that various outstanding works would be completed by 30 September 1998.

8. It is the plaintiffs' case that the development had not been completed by either 31 December 1997 or 30 June 1998. They contend that the consent to assign which was given on 17 June 1998 was only conditional upon outstanding work being completed. They also contend that the defendant misrepresented the true state of the completion of the work and this being the case they are not precluded from asserting that the development had not been completed by 31 December 1997.

9. The parties have agreed that item 1 is now as follows:

"All correspondence with and documents submitted to the Director of Lands, Lands Department, Legal Advisory & Conveyancing Office (Yuen Long) and/or the District Lands Office, Yuen Long of the Lands Department by or on behalf of the Defendant in relation to the Defendant's application for the consent to assign units and car parking spaces at Blocks 1-8, Maywood Court, Kingswood Villas including those in relation or leading to the drawing up amendment modification and execution of the Undertaking and the Bond both dated 4th June 1998."

10. In determining whether the Judge was correct in ordering discovery of these documents it is necessary to consider the plaintiffs' pleaded case. The defendant argues that the only real issue between the parties is whether the development was completed on 31 December 1997. This is not so. The plaintiffs are claiming that the development was not completed even on 17 June 1998 as the consent to assign was only conditional. There is also the question of the alleged misrepresentation. It would appear that the plaintiffs are prima facie entitled to discovery for the period they are requesting.

11. It is obvious that there would have been numerous documents of the type referred to in this item. It is difficult to see how it would be possible to have a fair trial of this action unless all of these documents are discovered. Adopting the test laid down in Compagnie Financiere du Pacifique v. Peruvian Guano Co. (1882) 11 QBD 55 it is clear that relevance has been established.

12. The plaintiffs also have provided sufficient evidence of the existence of the documents and the fact that they are not embarking upon a "fishing expedition". In addition to this the documents have been defined with sufficient particularity that it cannot be said that the request is either vague or uncertain.

13. Item 2 is in this form:

"Minutes, attendance notes or other records in writing or records in a manner intelligible to the senses or capable of being made intelligible by the use of appropriate equipment of discussions or meetings which the Defendant and/or its employees and agents including its solicitors and architects had with the officers of the Director of Lands (Yuen Long) and the District Lands Officer (Yuen Long) of the Lands Department pertaining to the application for Consent to Assign and the execution of the Bond and Undertaking, including but not limited to minutes of site meetings or other meetings or attendance notes or other records of discussions in respect of the progress of the construction works of the Development on and from the date of the application for Consent to Assign (23.12.97) to the date of the Consent to Assign (17.6.98)."

14. The observations made in relation to documents in item 1 would be equally applicable to these documents.

15. The meetings and discussions would all have been relevant to the progress or lack of progress of ongoing work and the measures which were being required by the Director of Lands to ensure that the interests of all parties were sufficiently protected. In particular it would be of relevance to know what factors were being weighed in deciding the amount of the bond which was having to be entered into by the defendant.

16. Complaint is made by the defendant that the request which was being made was oppressive on account of the large volume of documents involved. The Judge recognised that compliance with the requests would occasion the defendant's some inconvenience. It was however necessary for him to weigh this against the possible injustice which would be caused if this material was not available to the plaintiffs at the trial.

17. It should perhaps be added that it has not been established that if the discovery is limited to the time indicated by the plaintiffs that there would be oppression. It can reasonably be assumed that the defendant and those advising him would have a sophistical system for the retention and retrieval of documents and there should be no undue difficulty in compliance with the order which is being sought by the plaintiffs.

18. Item 3 is in this form:

"Correspondence, reports, minutes, attendance notes or other records of meetings or discussions between the architect, the Defendant, the Defendant's contractors and sub-contractors, surveyors, or other parties involving in the construction of Blocks 1-8 of Maywood Court in respect of the progress of the construction works at Maywood Court between the application for Consent to Assign (23.12.97) to the date of the Consent to Assign (17.6.98)."

19. The main point to be borne in mind here is that under the agreement the defendant had to complete the development in compliance with both the terms of the Government Grant and the approved building plans. It is accordingly relevant to consider this development as a whole.

20. The observations made concerning the other items are equally applicable to this one.

21. For the reasons which have been given the Judge was right to make the orders he did and this appeal is dismissed. We will hear the parties on the question of the amount of time necessary to comply with the order and on costs.