RICHARDSON GREENSHIELDS OF CANADA (PACIFIC) LTD v. TSE YIM

-----------------------

-----------------

JUDGMENT

-----------------

Kempster, JA:

1. Chronologically the first of the three interlocutory appeals in this action argued before us is from an order of Kaplan J made on 25 April last dismissing the application of Tze Yim, the defendant, for a direction that the 25 days which, on 16 October 1990, had been fixed for the hearing and running from and including 25 June 1991, be vacated. The learned judge gave his reasons on 3 May.

2. The writ was issued on 3 November and the Statement of Claim served on 12 December 1987. The Statement of Claim was amended on 14 July 1989. The plaintiffs, Richardson Greenshields of Canada (Pacific) Ltd, who are brokers trading on the Hong Kong Stock Exchange, thereby claim from the defendant HK$64,825,631.54 said to be the balance owing on his account stated as at 31 October 1987. The plaintiffs also claim interest on that sum.

3. The Defence and Counterclaim, with lengthy schedules annexed, did not achieve its present and possibly final form until 22 November 1990 following an order made pursuant to RSC Order 20 rule 10. The defendant thereby claims that the plaintiffs exceeded their authority when they liquidated his shareholdings on 26 and 27 October 1987, after the collapse of the Hong Kong stock market and, in particular, by following the instructions or inducements of their parent company, Richardson Greenshields of Canada Ltd, and effecting sales of such holdings to Mr K.S. Li and to Penkilan Ltd privately at an under-value rather than on the Exchange. He counterclaims against the plaintiffs, their parent company, Mr Li and Penkilan Ltd, damages for conversion and breach of contract and trust and seeks all necessary accounts.

4. On 4 January 1991 Mr Li and Penkilan Ltd served their Defence to Counterclaim and on 7 February the defendant changed his solicitors. During the same month leading counsel instructed on his behalf died. Previously the defendant had instructed two other leading counsel in Hong Kong and one in England and three junior counsel other than counsel presently acting. On 18 February the pleadings appear to have closed with the service by the defendant of his Reply to the Defence of Mr Li and Penkilan Ltd to his counterclaim. Apparently of the twenty actions brought by the plaintiffs deriving from the stock market collapse in October 1987 only these proceedings still remain to be heard.

5. Before we can assess what further steps remain to be taken by any of the parties to this litigation so that they may be ready for trial and, therefore, before we can start to consider whether we should interfere with the exercise of the judge's discretion not to vacate the hearing dates, it is necessary, as at least one of the relevant Notices of Appeal acknowledges, to determine two further appeals brought by the defendant from decisions of Kaplan J made on 10 May refusing him leave to serve interrogatories on the plaintiffs and on Mr Li and Penkilan Ltd, and to order these last two defendants to counterclaim to give further and better particulars of their Defence. I should say at once that the order for further and better particulars sought was and is unsustainable and that this part of the appeal has not been pursued.

6. Turning to the interrogatories generally the learned judge properly directed himself as to the requirements of RSC Order 26 rule 1(3) and we have found no error of law or principle disclosed in his judgment. In relation to each interrogatory still sought on behalf of the defendant we have considered detailed submissions and the judge's specific rulings; an unusual exercise for an appellate tribunal. As regards those sought to be administered to Mr Li and to Penkilan Ltd I agree with the learned judge that to require details of discussions, of  purchases of shares in Cheung Kong (Holdings) Ltd between 6 and 17 November 1987, of the purchase by Penkilan Ltd of any shares during 1987, of the identifying numbers of Mr Li's accounts with the plaintiffs, including those of any company with which he was connected, as well as those of Cheung Kong (Holdings) Ltd and of any "off market" transactions between 19 October and 2 November 1987 is to go so far outside the parameters of the issues joined by the pleadings as to constitute an exercise in what is described by lawyers as "fishing". No more relevant to any issue presently joined are questions as to oral statements made by Mr Li or his agents in the course of negotiations to the effect that Penkilan Ltd were the principals, as to motives, as to documents dated 2 or 8 December 1987 or 17 March 1988, as to the time when agreements were first concluded between the plaintiffs and Penkilan Ltd or as to divers unpleaded transactions. Interrogatories as to credit are never permitted. Mr Wong for the defendant appreciated the difficulties and has wisely elected not to press for many of the interrogatories refused below.

7. The exacting interrogatories sought to be administered to the plaintiffs by summons dated 27 February 1991 include questions as to shares transferred to them by way of security, to their employee's dealing accounts, to the dates when securities admittedly sold to Mr Li or to Penkilan Ltd were transferred into the names of or delivered to the respective buyers or their nominees, to the circumstances of such sales and to the reason for the absence of the plaintiffs' chop on any instrument of transfer. They were properly disallowed. By summons dated 16 April 1991 the defendant also sought confirmation under .oath of a whole series of sales said to have been effected by the plaintiffs on the Hong Kong Stock Exchange on 26 October 1987 and posed a series of further questions which the judge also disallowed and stigmatised as oppressive. I agree with this description. The defendant's interests are, in my view, adequately served by the interrogatories which were agreed to or allowed at a late stage as "necessary either for disposing fairly of the cause or matter or for saving costs". As Kaplan J observed the question may fall to be reconsidered if an account be ordered in due course.

8. In the event I find no ground warranting interference with the judge's exercise of discretion insofar as he refused interrogatories. As Kay LJ observed in Peek v Ray [1894] 3 Ch 282 at P 288: -

No error of principle, as I remarked earlier, has been disclosed in the course of this appeal.

9. While the learned judge emphasised issues arising from events in October 1987 I cannot accept that, in finding the nine weeks left before the date fixed for the commencement of the trial just sufficient for adequate preparation, he overlooked those involving the validity or breach of the Customer Trading Agreement or breaches of duty by the plaintiffs in relation to the Canadian Eastern Finance Co Ltd shares pledged by the defendant. No more can I accept that he overlooked the possibility that the defendant might seek to join wabura Ltd as parties to the litigation. In fact an application to join wabura Ltd, tardily made, has already been granted by Kaplan J. this in itself will not preclude adherence to the dates fixed since that company is prepared to accept them and has already given discovery.

10. The important bearing of the orders made by Kaplan J on 10 May on the dates fixed for the hearing was the expedition with which the respective interrogatories would be answered. We have been told that Mr Li, Penkilan Ltd and the plaintiffs answered such interrogatories by 24 May last. In the circumstances I am not disposed to interfere with the exercise of the judge's discretion in relation to any of the matters canvassed before us and would dismiss each of the three appeals accordingly.

Sir Derek Cons, V-P:

11. I agree entirely with my Lord.

Clough, JA:

12. I also agree.