CHARLES TSU YEW WONG AND ANOTHER v. BERMUDA TRUST (HONG KONG) LTD.

HCA 10631/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 10631 OF 1998

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D E C I S I O N

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Introduction

1. This is the plaintiffs' application inter alia for the following order against the defendant:-

"the bundles of documents enumerated and described in Schedule 1 Part 1 of the Defendant's list of documents, be properly identified by enumerating and describing each of the documents within each bundle and properly describing each of and whether such document is a copy or original".

There were originally 2 paragraphs to this application. The other paragraph has already been dealt with, leaving only the paragraph set out above to be dealt with herein.

2. The above application is made pursuant to RHC Ord 24 r 5(1) (the title of which is "Form of list and affidavit") the relevant part of which reads:-

"A list of documents made in compliance with rule 2 ... must be in Form No. 26 in Appendix A, and must enumerate the documents in a convenient order and as shortly as possible but describing each of them or, in the case of bundles of documents of the same nature, each bundle, sufficiently to enable it to be identified" (emphasis supplied).

3. The issue which divides the parties is whether the documents set out in the defendant's list of documents are "bundles of documents of the same nature" within the meaning of the above rule: the plaintiffs argue that they are not while the defendant contends that they are.

The Relevant Legal Principles

4. The plaintiffs rely on the judgment in Sveriges Angfartygs Assnrans Forening v. The 1976 Eagle Insurance Company SA and others, unrep., 28 March 1990 Transcript (Hobhouse J. (as he then was)) in support of this application. The defendant does not dispute the validity of the reasoning or conclusion in that judgment. The relevant passages in the Sveriges Angfartygs Assnrans case are:-

"The question that I have had to consider is what is necessary to comply with the strict requirements of Order 24 rule 5(1) for the enumeration and description of the documents which are included in schedule 1 part 1 of the list. The Third Defendants served a list of documents on the Plaintiffs which included five items in schedule 1 part 1 each of which was described as a file having a certain number of pages. They are in almost identical terms. For example File number 1 is described as

'R/I Swedish Club Hull. Stop Loss 1/1/84 - 1/1/86' containing original or copy documents relating to 1984 and 1985 Stop Loss Reinsurance'

- pages 1 to 345.

File Number 3 is described as

'Swedish Club Stop Loss 1986/1987' containing original or copy documents relting [sic] to 1986 Stop Loss Reinsurance

- pages 1 to 291.

The Plaintiffs objected to this form of list and said that it did not comply with Order 24 rule 5(1). They said it is a disclosure of bundles of documents and that, since those documents are not all 'of the same nature', this does not suffice and that they should have delivered a list which enumerated the documents individually, describing each of them ...

I was provided with File No. 3 as a sample of the files listed. It is a fairly typical reinsurance broker's file. It contains a large number of diverse documents, though, because some of the documents run to more than one page, the total number of documents is probably about 200 not 291. They include telexes and faxes and draft telexes, notes of telephone calls, some working papers and other miscellaneous informal notes, some statements of account and invoices, an unsigned slip, a policy, various policy endorsements, confirmations of cover and cover notes, and finally certain certified accounts and financial statements. These are clearly not on any ordinary use of English all documents 'of the same nature'. Their common factor is that they are in the possession of the same firm and arise from or in connection with the same transaction. If such criteria were to be accepted as justifying the listing merely on a bundle without enumerating its contents, then, quite apart from its being contrary to the express language of the rule, the rule would cease to have its intended effect. There must be many instances of litigation where the documents to be produced by one side, although diverse in character and not of the same nature, could all be included in a single bundle if the Third Defendants' submission were right".

Hobhouse J later rejected the third defendants' submission in a subsequent part of his judgment.

5. In the course of argument, the third defendants in the above case relied on certain 19th century decisions of the court of appeal in England the effect of which was summarised in a quotation from Taylor v. Batten [1878] 4 QBD 85, 87:-

"All the Court requires, where there is no question of privilege or objection to produce the documents, is that they should be so far identified, that the Court can see that the documents referred to are produced if required".

Hobhouse J observed that the description of the documents in Taylor as being "numbered 50 to 76 inclusive" and "tied up in a bundle marked with the letter A and initialled by me" was held in Taylor to be sufficient. However, he found the earlier cases to be unsuitable for present day application for the following reasons:-

"The Rules of Court and the procedure in relation to the discovery of documents were different in the 19th century from that which has existed in the High Court since about 1964. In the last part of the 19th century the relevant Rules of Court was Order 31 which dealt with both discovery of facts, by ... interrogatories, and discovery of documents. Such discovery was to be given pursuant to a specific order by the Court, in the case of discovery of documents, requiring an affidavit to be sworn ... Neither the relevant rule nor the form were in the more precise terms that are presently in force. There was no rule which defined when bundles were or were not appropriate and even at that time there was more than one judicial view ... [referring to Milbank v. Milbank [1900] 1 Ch 383 to 384] ... If the only criterion was certainty, the Third Defendants' list in the present case would satisfy that test; but under the modern Rules of Court that it [sic] not the only criterion".

Later, he continued:-

"Decisions on procedural matters are governed by the Rules of Court in force at the time and the practical considerations pertaining at the time ... The procedure of the courts, subject to the framework of legislation ... has to develop and adapt ...

At the present day discovery of documents is part of the ordinary procedure of High Court actions ... The level of documentation that is now involved in business transactions is different in kind and amount from that which was involved in the 19th century. The assembly of relevant documents, and the sifting of the relevant from the irrelevant, ... is an essential part of the process by which the merits of the respective parties' contentions in the dispute are to be evaluated and if necessary determined ... ".

6. The learned judge also dealt with who should be responsible for ensuring the proper itemisation of documents which need to be discovered:-

"The organisation of the documents which have a bearing on the dispute is a major task for those representing the parties and a major burden of costs for the litigants ... Who is to do the work? Is it the party giving the discovery or the party to whom the discovery is being given. Clearly circumstances may differ from one case to another, but one of the purposes of the Rules of Court is to lay down what the ordinary division of responsibility shall be ... The Rules of Court require the party giving the discovery to itemise the individual documents with some description, however brief, of the document. The obligation is qualified by a limited exception regarding documents of the same nature ... " (emphasis supplied).

7. The importance of the discovery process was also discussed by the learned judge as follows:-

"... a party on whom a list of documents has been served is, unless the Court otherwise orders, deemed to admit that any document described in the list as an original document is such a document created as it purports to have been created and that any document described as a copy is a true copy.

This rule is an important part of the efficient preparation of the documentary evidence for use at a trial. As the Third Defendants admitted before me it cannot be effective unless an itemised list of documents is served ... Without such a list as the starting point a different procedure would have to be adopted. It also provides a safeguard against those (albeit rare) instances of excessive disclosure of documents which are not in fact relevant ... ".

8. Finally, having concluded that the party giving the discovery is responsible for properly itemising the individual documents, the learned judge observed that the court expects the legal representatives to co-operate with each other when using the procedures of the court so as to achieve an appropriate outcome to the litigation with expedition and economy. Thus, he said:-

"There must be an element of give and take between solicitors and common sense must be applied. Parties are perfectly at liberty to agree to informality when that is appropriate. There may be many cases where costs can be saved by adopting a flexible and fairly informal approach to discovery. But it must at the same time be appreciated that the discipline provided by the Rules and procedures of the Court exist because in general a disciplined appraoch [sic] is more efficient and, in the long term, more expeditious and economical and will better serve the ends of justice ... " (emphasis supplied).

The Present Application

9. The defendant's list of document contains 14 items. Although the plaintiffs' application has not stated if it covers all 14 items, it was agreed at the hearing that only items 7 to 11 in the defendant's list are in issue in this application.

10. It was also agreed that items 1 to 11 of the defendant's list can be categorised into 3 types of file. Because of the nature of the transactions for which the files were kept, they were called (for convenience) conveyancing files, accounts files and general administration files respectively. As the names imply, conveyancing files contain documents relating to conveyancing transactions and accounts files contain documents relating to accounts. As will be explained further below, this action was based on the defendant's alleged breach of trust in the administration of the estate of a deceased. The plaintiffs claim to be beneficially entitled to the said estate. The general administration files are related to the said administration of the estate. Items 7 to 11 fall within the general administration files category.

11. After the defendant's list of document was filed (on 14 November 2001), the plaintiffs inspected some of the files referred to therein on 21 and 24 December 2001. As a result, the plaintiffs compiled a list of the inspected documents ("the plaintiffs' inspection list"). The plaintiffs' inspection list sets out only the documents in items 7 to 11 of the defendant's list which the plaintiffs were able to inspect on the said 2 days and, according to the plaintiffs' solicitors, is not a list of all the documents in the files. The plaintiffs' inspection list states inter alia that:-

(a) 16 documents were inspected in relation to item 7 of the defendant's list of documents;

(b) 10 documents were inspected in relation to item 8 of the defendant's list of documents;

(c) 80 documents were inspected in relation to item 10 of the defendant's list of documents;

(d) 49 documents were inspected in relation to item 11 of the defendant's list of documents.

From the descriptions given in the plaintiffs' inspection list, the inspected documents include, by way of example, notes, letters, memoranda, documents for transfer of shares, resolutions, fax messages, debit notes, proxy forms, balance sheets, director report, accounts and schedules to accounts, estate profile, declaration of trust and form of discharge and indemnity. It is immediately apparent that a wide range of documents were found in the files in question.

12. Further, at the end of the hearing, defendant's solicitors have kindly provided me with one of the actual files (item 7 of the defendant's list of documents) as a sample. A cursory examination shows that the file contains diverse documents similar to those referred to above. Some of the documents are in Chinese while others are in English.

13. Whether discovered documents are "bundle(s) of documents of the same nature" and therefore can adequately be itemised as a bundle should not be determined solely by the character of the documents themselves. Consideration must also be given to the nature of the action in which discovery is made as well as the issues raised therein. This is because sometimes, by reason of the nature of the action and the issues raised, there is no proper need for itemising the individual documents. It is not desirable (if at all possible) to state generally when such a course is appropriate; each case depends on its own circumstances. With this in mind, I now turn to consider the nature of this action and the issues raised by the pleadings.

14. As stated above, the plaintiffs commenced this action alleging a breach of trust in the defendant's administration of the deceased's estate. The plaintiffs' allegations are contained in their Re-Amended Statement of Claim. The pleading is not a model of clarity when setting out the alleged breach of trust but I will try to summarise the relevant allegations as best I can. The deceased passed away in February 1983. The defendant was appointed the administrator of the deceased's estate in March 1983. Letters of Administration were granted to the defendant in February 1986. Events said to support or related to a breach of trust include the defendant's:-

(1) agreeing to change the company structures of WT Investment Co (Bermuda) Ltd and WT Investment Co (Panama) SA in November 1986;

(2) confirming the appointment of Wing Tak Steamship Co (HK) Ltd to manage the administration of the deceased's estate in March 1983 (in place of the defendant);

(3) failing to timeously administer the deceased's estate and failing to obtain estate duty clearance until 1994 resulting in a failure to distribute the estate until 1995. The delay in distribution was also said to be at the direction of 2 individuals through Wing Tak Steamship Co (HK) Ltd;

(4) distributing assets and moneys to a Panamanian company instead of the beneficiary who was entitled to such distribution;

(5) agreeing to a quantification of a beneficiary's share in the deceased's estate without proper enquiry;

(6) failing to give a full account of a beneficiary's entitlement to the deceased's estate in September 1992;

(7) failing to ensure that a beneficiary was properly and independently advised.

I have not included in the above summary various references in the pleading to company shareholdings, correspondence, company general and board meetings, valuation of properties, company accounts and the like which were relied upon as either in support of or related to the alleged breach of trust. In its Defence, the defendant defends this action essentially on the grounds that the deceased's estate has been fully and completely administered. It is further pleaded that the claim is in any event time-barred. The breach of trust is denied.

15. In view of the nature of this action, including the length of the period during which the alleged breach of trust is said to have taken place and the detailed events said to be in support of or relating to such breach, there is a need to properly discover the related documents and records. A mere reference to the files containing them is inadequate in view of the legal requirements (set out above) when they are applied to this action.

16. By reason of the above matters, an order should be made in terms of the plaintiffs' application (set out above) in relation to items 7 to 11 of the defendant's list of documents.

17. In the course of argument, defendant's solicitors submitted, among other things, in effect that I may have a discretion in refusing to make an order. With respect, I disagree with this submission because the legal requirements are laid down by Ord 24 r 5(1) and, once it is shown that the list of document is inadequate, the court should ensure that the legal requirements are complied with by granting the appropriate order. No discretion is involved. Solicitors for the parties also raised arguments relating to the reasonableness (or otherwise) of the plaintiffs taking out this application. Again, I do not find such arguments to be relevant to whether the order sought should be granted. They may be relevant to the question of costs of this application but that is a separate point.

18. In view of the arguments which the parties may wish to advance after perusing this decision, I do not consider it appropriate to make a costs order nisi.