JOHN BAPTIST WU v. TSOI KAY AND ANOTHER

HEADNOTE

Practice & Procedure - summons to strike out defence under Order 24 rule 16 on grounds of non-compliance with order relating to discovery - whether cross-examination of deponents to be permitted.

1987, No. A4983

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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J U D G M E N T

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1. The defendants appeal against the decision of Master Yam given on the 6th March 1992 whereby he ordered that the plaintiff be at liberty to cross-examine the defendants at the hearing of a summons under Order 24 rule 16 whereby the plaintiff seeks the striking out of the defendants' defence. The Master also ordered that a subpoena be issued and served upon China Insurance Co. Ltd. requiring the production of all documents within their power or control relating to a fire at the defendants' premises which occurred in October 1988. The defendants also appeal from this part of the order.

2. If this appeal is not allowed, a master will, on the 18th July 1992, have to hear contested viva voce evidence which goes solely to the issue whether the defendants have made honest disclosure of their documentation. The defendants contend that documents relevant to this action were, or were possibly, destroyed in a fire at their premises in October 1988. The defendants contend that they have received compensation therefore from the insurance company. The plaintiff contends that the defendants are lying as to the destruction of these documents and he contends that the defendants have not complied with a consent order for discovery made by Bokhary J. on 12th November 1990.

3. Ought this trial within a trial be permitted?

4. Before going on to answer this question, I cannot resist quoting some observations of Kay J. in Hall v. Truman (1885) 29 Ch. D 307 at 312/3 where he said:

"Thirty years ago every motion day was much taken up by motions for the production of documents. They were far more numerous than any other kind of motions. At that time the practice was to interrogate. When a plaintiff filed a bill he put in interrogatories as to documents, and there was a common form which was used in those times, which was appended to every set of interrogatories filed, and the defendant, if he wanted discovery, filed his cross-bill, and interrogated in like manner, and in the answer which was sworn by the defendant there was included the answer to the plaintiff's interrogatories. Then came a regular war, which was carried on generally by motions in Court as to the sufficiency of the answers; or motions were made for production of documents which were alleged to be privileged, and so on. That flourishing of weapons before the parties got to the trial of a suit in equity became a most formidable inconvenience. It was a mode in which parties might be exceedingly embarrassed, and in addition large costs incurred, before the parties came into Court to have the question between them tried."

5. The learned judge could easily have been describing Hong Kong litigation some 107 years in the future. It seems to me that far too much time, costs and effort is put into embarking upon heavy interlocutory skirmishes frequently in connection with discovery which do nothing but deflect all concerned from getting the dispute between the parties resolved as expeditously and economically as possible. Whether it be extravangent Order 14 applications or hopeless strike out applications or contested applications for a stay in favour of arbitration or disputes about lists of documents or particulars or any combination thereof the simple fact remains that the resolution of the real issues between the parties takes second place to this interlocutory merry-go-round with which Hong Kong lawyers seem so pre-occupied. It is little wonder that in most common law jurisdictions, clients and lawyers alike are questioning the existing procedures and looking for new, more ecomonical and less confrontational ways of resolving disputes.

6. In my judgment, the present case presents a classic example of what I may term the interlocutory diversions. This case concerns a claim for commission made by the plaintiff against the defendants in relation to the introduction to them of customers for their dried flower business. They entered into an agreement in 1982 and all went well until 1986. Then they fell out and the plaintiff issued his writ as long ago as the 20th August 1987. Pleadings closed commendably early in October 1987, yet today the parties are still disputing the adequacy of a list of documents.

7. The plaintiff has never been satisfied with the defendants' discovery and his solicitors (all three of them) have pursued the defendants quite properly on this topic. I should add that there was also some District Court proceedings between the same parties.

8. On 12th November 1990, Bokhary J. made an order by consent "that the defendants within 21 days serve and swear an affidavit/affirmation stating whether any of the documents specified/described in the Schedule to the summons dated 13th March 1990 are or have at any time been in the possession, custody or power and if not in the possession, custody or power, whether they parted with them and what has become of them.".

9. By an affirmation dated 3rd December 1990, the 1st defendant purported to comply with this consent order. In that affirmation, for the very first time, the 1st defendant mentioned the destruction or probable destruction of certain documents caused by a fire in October 1988. I agree with Mr. Shaw that it is astonishing that no mention of this fire had been made earlier and I can well understand that the plaintiff will not find this answer acceptable and, on the contrary, it would excite his suspicion.

10. As soon as the fire had been mentioned, the plaintiff's solicitors started to investigate the matter. They pressed the defendants' solicitors for details but were not satisfied with the. responses. In early 1991, the plaintiff's solicitors instructed an investigator who has filed an affidavit upon which the plaintiff seeks to rely.

11. In September 1991, the plaintiff issued a summons under Order 24 rule 16 seeking the striking out of the defence on the grounds of non-compliance with the consent order to file an affirmation as to the whereabouts of the documents. Mr. Shaw for the plaintiff has submitted that as some documents have been disclosed and as these were in the same category as the ones allegedly destroyed, serious doubt must exist as to the veracity of the defendants' affirmation especially when this internal inconsistency is added to the evidence of the investigator.

12. In December 1991, the plaintiff issued the summons, the subject matter of this appeal, by which he sought, for the purposes of the Order 24 rule 16 hearing, the cross-examination of the defendants and the issue of the subpoena. That is the order the Master made and which is now appealed.

13. Mr. Shaw has fairly and properly conceded before me that he is unlikely to be able to persuade the Master in July 1992 that the defence should be struck out unless he has the opportunity of demonstrating by cross-examination that the 1st defendant is lying and unless he can have sight of the documents sought by the subpoena. Mr. Wong, who appears for the defendants, submitted that this shows beyond any doubt that this is no more than a fishing expedition. He submits that there is no evidence that the defendants or either of them have the documents in question in their possession and that the trial of a wholly collateral issue should not be permitted. I should have added that both sides agreed that if I dismissed the appeal I should make directions enabling the defendants to cross-examine the investigator and to call such other witnesses on this issue who can give relevant evidence. If I permitted this side-show to take place, I would be assisting the parties in avoiding the day of judgment for some considerable time.

14. Mr. Wong submits that there is no rule of court which permits cross-examination to take place in circumstances such as this. He concedes that in the very exceptional case the court would be able to exercise its inherent jurisdiction, but he submits that this case is nowhere near that. Mr. Shaw submits that unless the plaintiff is given the chance to prove that the 1st defendant is a liar, the plaintiff will be prejudiced by the non-production of these documents.

15. On 7th May 1992, the 1st defendant, at last, filed a more detailed affirmation giving far more detail of the fire and its consequences than hitherto. In my judgment,it is a pity that he did not do this earlier and it may have assisted in allaying some of the plaintiff's suspicion. If the defendants had nothing to hide, they should have made the fullest information available to the plaintiff's solicitors at the earliest opportunity.

16. Mr. Shaw further conceded that the order made by the Master was an unusual one. I cannot recollect a similar order during my career in the law not could Mr. Shaw. Discovery affidavits are invariably to be taken at face value. As an example, the court itself will rarely look at material said to be privileged and will usually accept the affidavit claiming privilege, at face value. (See Order 24 rule 13 and Westminster Airways v. Kuwait Oil Company (1951) 1 KB 134 at 146.) If the plaintiff in this case was able to show that the 1st defendant's affidavit was a lie because of other evidence filed by him or by reason of documents exhibited by the defendants themselves, then the plaintiff could still proceed under Order 24 rule 16 and would not require cross-examination or a subpoena. It is also to be noted that Order 24 rule 16(2) preserves the liability for committal if any party against whom an order for discovery is made fails to comply with it. However in this case the plaintiff concedes that he has insufficient evidence at the present time to justify a strike out or a committal and I am not prepared to let him embark on the trial of this wholly collateral issue. In my judgment, this would fly in the face of the practice of the courts over a number of years.

17. I do not propose to delve into the case law save to say that I have been referred to certain observations of Falconer J. in CBS v. Perrv (1985) FSR 421 in which he quoted from a judgment of Peter Gibson J in RAC Limited The thrust of both these authorities is that even in an Anton piller case, cross-examination of a deponent is a rarity. As Peter Gibson J put it:

" It cannot be right to allow a plaintiff the opportunity of a roving cross-examination merely because the plaintiffs harbour suspicion that the person sought to be made the subject of the order has not been entirely open in his disclosure. It will be apparent that in every Anton Piller case there will be grave suspicions about the persons served with the order. Some inconsistencies may well become apparent between what it said when they are taken by surprise when confronted with the order and what he said on affidavit, but it would be in my view quite wrong if it became the norm for an Anton Piller order to be followed by applications for cross-examination."

18. Falconer J. agree with that passage as indeed do I.

19. I was also referred briefly to Jones v. the Monte Videl Gas Company (1880) 5 QBD 556, the headnote of which reads as follows:

"An affidavit of documents made pursuant to Rules of the Supreme Court 1875, Order XXXI, rule 12, is conclusive against the party seeking discovery, unless it can be shewn either from the affidavit itself, or from the documents therein referred to, or from an admission in the pleading of the party swearing the affidavit, that other documents exist in his possession or power which are material and relevant to the action. In any of these instances, but not otherwise, a further affidavit may be ordered."

20. This case is interesting because Brett LJ makes it clear that all members of the Court of Appeal were consulted before they laid down the rule in this case and at page 558, he set out the rule at the following terms:

"Either party to an action has a right to take out a summons that the opposite party shall make an affidavit of documents: When the affidavit has been sworn, if from.the affidavit itself, or from the documents therein referred to, or from an admission in the pleadings of the party from whom discovery is sought, the master or judge is of opinion that the affidavit is insufficient, he ought to make an order for a further affidavit; but except in cases of this description no right to a further affidavit exists in favour of the party seeking production. It cannot be shewn by a contentious affidavit that the affidavit of documents is insufficient. This was the practice observed in the Court of Chancery, and the orders and rules under the Judicature Acts were made in imitation of it. It may be urged that a party seeking production may be injured by the wrongful withholding of the document, and that an affidavit in contradiction ought to be admitted under supervision. But this mode of proceeding cannot be allowed: the affidavit of documents must be accepted as conclusive. Another remedy, however, may be used by the party seeking production. He can administer interrogatories; and interrogatories properly framed may force a person to disclose what documents he has in his possession, and the party requiring the production will thereby avoid committing any breach of the practice as to affidavits of documents."

21. Cotton LJ made clear that the object of this practice "was to prevent a conflict of affidavits as to whether the affidavit of documents was sufficient".

22. Thesiger LJ felt more apprehensive about drawing a hard and fast rule with regard to affidavits but then agreed by adding this:

"But the costs of interlocutory proceedings ought to be kept down, and I think that the rule suggested by the other members of the Court is proper to be adopted."

23. I am not satisfied that an order for cross-examination was called for in this case. I am not satisfied that the 1st defendant has failed to comply with the letter of the consent order as to discovery. I am not prepared to allow these proceedings to degenerate any further into an investigation of precisely what was and was not destroyed in the fire or whether in fact there was a fire. The plaintiff can proceed in July with his Order 24 rule 16 application if he wishes to do so. If he has evidence to prove perjury he can always consider contempt proceedings which are referred to in Order 24 rule 16. The sooner all parties get down to the issue as to what sum, if any, the defendants owe the plaintiff the better. I make no comment whatsoever as to what use at trial the plaintiff may make of such evidence he may have on the fire issue. This will be a matter for the trial judge.

24. I therefore propose to allow the appeal and set aside the order of Master Yam. I propose to make the following costs order nisi. Both the costs before the Master and before me will be the defendants' costs in cause.