XCHRX PETER DE KRASSEL and Another v. FRANCIS ROXAS MORAN and Others

M.P. No. 3209 of 1995

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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D E C I S I O N

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1. This is an application for specific discovery and for leave for the parties to adduce expert evidence and for me to give a ruling about the applicability of certain evidence.

2. I can deal with the further discovery very briefly, it falls into two parts. The first is that the party who I shall refer to as "Cal International Limited" has asked that all audited and management accounts of Cal Media Limited for the period between 21st January 1994 to 18th May 1995 together with all ledgers, cash books and bank statements of the company for that period.

3. One can first of all exclude audited accounts because the only audited accounts which the Respondents to this application would have had were passed over on the completion of the sale of Cal Media Limited on the 31st of May 1995. That leaves management accounts, together with ledgers, cash books and bank statements. From Mr. Moran's evidence, it seems to me, prima facie, that Cal International Limited does indeed have all the books in so far as they ever existed of this company which the Respondents ever had.

4. Furthermore, I am not satisfied that there were any management accounts. Having seen the bank statements, I must say that the making of any management accounts would have been a very quick process as far as this company was concerned. I am therefore not satisfied that these documents actually exist on the evidence that is before me. Nevertheless, despite the fact that I would therefore be disposed to dismiss this application which I therefore do, Mr. Tong, Q.C. on behalf of the Respondents, has said that he has no objection to further confirmatory affidavits being made to confirm that there are indeed no such documents in the Respondents' possession.

5. I then come to the question of item (b) which is all board minutes and documents in respect of management decisions relating to the business activities undertaken by Bozell Asia Holding Limited, Bozell Limited or any of their subsidiaries or associated companies in China in connection with media advertising and in particular relating to Carlsberg, Mary Kay Cosmetics, Cheong Kong/Hutchison - Beijing Plaza and Sunkist.

6. Dealing first of all with the broadness of the application, Mr. Whitehead, on behalf of Cal International Limited, has resiled from seeking any order which includes the words "and in particular"; therefore the application relates simply to the 4 specific companies. Indeed "Sunkist" was abandoned during the course of the hearing or at any rate very early during that period. That left Carlsberg, Mary Kay Cosmetics, Cheong Kong/Hutchison - Beijing Plaza. In respect of Mary Kay Cosmetics and Cheong Kong Hutchison - Beijing Plaza, again I am not satisfied that there are any such documents, let alone Board minutes relating to any business by either of those two companies. For that reason, specific discovery, it seems to me, is not available.

7. Relating to Carlsberg, I am in some doubt. What is said in para. 39 of Mr. Moran's fourth affidavit, is that, it is true that Carlsberg was one of the customers of Bozell in Hong Kong, by that is meant Bozell Asia (Holdings) Limited. "In March 1995 the clients in Hong Kong sought and rates were obtained from both CBSC and Tong Da Li in connection with an advertising project in the PRC. The quotes from Tong Da Li were much better and we had no alternative but to recommend Tong Da Li to act as the media buyer". That, it seems to me, is the sum total of any specific allegation which the Applicant can rely on. Even then I am not entirely clear, and there is some doubt when I look at that wording, as to whether the quotes were obtained by the clients themselves or obtained by Bozell; they were probably it seems to me obtained by Bozell because that was part of Bozell's function to obtain those sorts of quotes.

8. I am disposed to order that there be discovery of documents relating to that specific incident. Mr. Tong, Q.C. on behalf of the Respondents to this application, has very ably sought to show that in any event the issues raised by the allegation in respect of the diversion of business are (a) logical and (b) irrelevant. As to the illogicality, he may be right but that seems to me to be a matter of argument. As to irrelevancy on a strict analysis of whether Cal International Limited, or anybody else, and in particular the company concerned, would have any claims in respect of what Bozell is alleged to have done, I agree with Mr. Tong that they are irrelevant. However, Mr. Tong had some grounds for suggesting that there were moving goal posts because it seems that the real reason for these allegations is not to show that there is any claim on any of these persons' parts, but that a winding up order should not be made in the Court's discretion. It seems to me really the case is put on the basis that, first of all it would be contrary to the joint venture agreement which founded the company, but furthermore, that one when looks at the conduct of the parties the presentation of this petition was an abuse and misuse of the court's process of winding-up.

9. Since the trial of this matter is so close, I wish to say no more about it at this stage. I have laid down now very strict time tables as to exchange of lists of issues, which regrettably has not taken place yet and also for the filing of written submissions for use at the hearing which is to take place in less than 3 weeks' time. Once those have been filed, I consider it will be relevant to deal with the further application which is made by the Respondents to this application that certain parts of Mr. De Krassel's evidence be struck out or not be relied upon. They would, at first blush, appear to relate to the just and equitable ground and as Mr. Tong pointed out a kind of reverse just and equitable basis, but I do not propose to rule on the matter until I have seen what submissions Cal International Limited will be putting forward. I consider that is best dealt with at the beginning of this trial which, as I say, is due to take place in less than 3 weeks' time. I will therefore adjourn that matter until I have seen the written submissions and will deal with it then and will be a position then to permit the inclusion or exclusion of the evidence.

10. As regards the expert report, this relates to certain matters of Chinese law. I do not at the moment see that it is appropriate to expand this case to include that. I am not satisfied that it is necessary on the hearing that is to take place in 3 weeks' time that this evidence should be included. It relates, as I understand it, to two matters. First of all the permission which the company subject to the joint venture has from the authorities in the People's Republic of China, to establish branch offices rather than one single office. Secondly, as to the by-laws and rules and regulations which permit it to charge local clients 15% rather than 10%. That it seems to me, at first blush, is wholly irrelevant, since any issues relate to overseas clients or international clients and not local clients. In any event, this evidence would marginally go as to the value of the Chinese subsidiary company. I do not consider it is important to establish the exact value at the hearing. One could not do it with precision in any event. I consider that the inclusion of the evidence at this stage would cause undue difficulty in the preparation of the case and therefore I am not prepared to order that.

(Anthony G. Rogers)

Judge of the High Court