HENGSHI INTERNATIONAL INVESTMENTS LTD v. BAYSPRING INTERNATIONAL LTD AND ANOTHER

HCMP 1916/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO1916 OF 2015

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D E C I S I O N
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1.  This is D2’s application (“the Production Summons”) for the plaintiff to produce 2 emails in native electronic format so that D2 could do forensic examination. It is opposed by the plaintiff on the ground that the production and inspection are not necessary for the fair disposal of any cause or matter or for saving costs.

Legal principles

2.  The principles are not in dispute and I gratefully adopt the summary in the skeleton submission of Mr Wong SC (leading Mr Kok).

3.  An order for production of documents for inspection can be granted if the applicant can satisfy the court that the order is necessary either for disposing fairly of the cause or matter, or for saving costs: Order 24, rules 11(1) and 13(1) of the Rules of the High Court, Cap 4A.

4.  There is no rigid, inflexible rule that production of a document referred to in a pleading or affidavit will always be ordered: Moulin Global Eyecare Holdings Ltd v Olivia Lee Sin Mei [2013] 3 HKLRD 72, §39, per Fok JA (as he then was). 

5.  The inquiry under RHC O.24, r.13 “necessarily imports an evaluation of the circumstances in order to determine whether an order for inspection should be made”: see Moulin Global, §40. 

6.  The fair disposal of a cause or matter must entitle and require the court to make an assessment of the degree of relevance or importance of the document to that matter. This is an important safeguard deliberately put in place to allow the court to assess each case in its context and determine whether production is warranted under the particular circumstances of the case: Moulin Global, §56.

7.  The Court would not allow “fishing” applications, nor would it permit an applicant to seek discovery of materials to see if it might be able to turn a non-issue into an issue: see HKFE Clearing Corporation Limited v Yicko Futures Limited, CACV400/2005 (unrep, 8 March 2006), §§15-17, per Yuen JA.

8.  Nor would the Court offer the applicant an opportunity to hunt around the documents in the hope that they would reveal some improprieties on the respondents’ part or would provide information for them to pursue more enquiries: Annabell Kin Yee Lee & ors v Lee Wing Kim (May Lee) & anor, HCAP5/2003 (unrep, 5 March 2003), §16, per Chu J (as she then was).

9.  In the context of an injunction application, the sheer lateness of a defendant’s application for production could itself be sufficient to demonstrate that the document sought was not necessary for the fair disposal of the application: Taihan Electric Wire Co Ltd & anor v Lee Chi Yuen Arctic & ors, HCA 454/2013 (unrep, 8 October 2013), §§24-27, per Au‑Yeung J. In that case, an application for production of documents made 9 days before the injunction hearing was dismissed.

Background

10.  The emails in question were dated 29 July 2015 and 24 June 2015 (“the 2 Emails”) respectively, both from a Mr Greenspoon to a Mr Chen. They were exhibits to an affirmation of Leung Hongying Li Ziwei filed on behalf of the plaintiff in support of an application to continue an ex parte injunction.

11.  The 2 Emails corresponded to 2 emails exhibited in the affidavit of Mr Greenspoon (“the Greenspoon Emails”) save for some identified discrepancies.  Mr Greenspoon denied sending the 2 Emails.

12.  D2 seeks production of the 2 Emails in electronic format to confirm their authenticity by way of forensic examination.  The purpose was allegedly for the fair disposal of the continuation of the ex parte injunction order. If the 2 Emails were confirmed to be fabricated, no reliance could be placed on them.  The injunction, being equitable in nature, would not be available to the plaintiff who did not come with “clean hands”.

13.  The plaintiff has provided the copies of screenshots of the 2 Emails but declined to provide the electronic version.  Its grounds are:

(1) Delay in the application;

(2) Lack of necessity for fair disposal of a cause or matter;

(3) Fishing exercise;

(4) Minimal degree of relevance; and

(5) Wrong avenue.

Delay in the application

14.  I agree with Mr Wong SC that this application is far too late. The 2 Emails were disclosed by the plaintiff on 9 September 2015.  D2 produced the Greenspoon Emails on the following day. The hearing for continuation of the injunction took place 6 days later on 16 September 2015 (“the Hearing for Injunction”).

15.  There was no application by D2 for adjournment in order to investigate the authenticity of the 2 Emails.  Paragraphs 19-24 of the 3^rd affidavit of Greenspoon dated 10 September 2015 was admitted only after argument at the Hearing for Injunction . 

16.  It was about a month after the Hearing for Injunction that D2 took out the Productions Summons.  There was great delay.

Lack of necessity for fair disposal of the cause or matter

17.  This court has already handed down the decision on 18 December 2015 continuing the ex parte injunction (“the Decision”).  This hearing on the Production Summons could serve no useful purpose. 

Fishing exercise

18.  D2 stated on affirmation that pending forensic examination of the 2 Emails, it was simply not in a position to confirm whether or not the Plaintiff has fabricated or tampered with the 2 Emails. With that position and there being no pending application to set aside the injunction, the Production Summons is plainly a fishing exercise.  D2 is clearly hunting round the documents in the hope that they will reveal some improprieties and turn a non-issue into an issue: Annabell Kin Yee Lee;HKFE Clearing Corporation.  The court should not allow such abuse.

Minimal relevance of the 2 Emails

19.  At the Hearing for Injunction, the plaintiff had deployed:

(a) The 29 July 2015 Email to refute any inference of its knowledge (as alleged by D2) that the subject shares had been hypothecated by D2 to a third party.

(b) The 24 June 2015 Email to found an inference that D2 knew about agreements that the plaintiff was about to enter into with D1.

20.  Mr Beresford submits that where freezing orders are obtained, it is important that the court is not misled, whether deliberately or not, and whether on an ex parte or inter parte basis.  Once there is a duty of disclosure, the duty is a continuing one: Vernon v Bosley (No 2) [1999] QB18.  He submits that the duty continued, not only before but also after the Hearing for Injunction and until the proceedings have concluded: Commercial Bank of the Near East plc v A, B, C and D [1989] 2 Lloyd’s Rep 319.  He submits that there it is not fair that the injunction should be permitted to continue on a false basis. 

21.  Saville J in the Commercial Bank case was talking about the duty of disclosure of an applicant for an ex parte order (page 323).  Here, there is no evidence of breach of this duty by the plaintiff, or that the injunction was wrongly granted on a false basis because of those 2 Emails. As can be seen from the Decision, this court ordered, after an inter-partes hearing, the continuation of the injunction on the grounds that the plaintiff had a strong case on the merits in its proprietary claim (at §§82, 84 and 85).

22.  In his oral submission, Mr Beresford goes further to say that the 2 Emails are relevant to credibility and reliability of the plaintiff.  With the greatest respect, that is not his client’s case on affirmation.  In any case, issues on credibility and reliability are for the arbitrator and not for this court: Taihan Electric Wire, at §26.

23.  The 29 July 2015 Email was relevant only to the so-called “waiver defence” put forward by D2 (§§47 to 50 of the Decision). That defence might be relevant to whether D2 had breached the III Dune Loan Agreement.  It had minimal relevance to the plaintiff’s proprietary claims in respect of the subject shares, and hence the court’s decision to continue the injunction.

24.  The 24 June 2015 Email was only relevant to the conspiracy claim, on which this Court did not place any reliance in reaching its conclusion (§64 of the Decision). That Email had minimal relevance to the plaintiff’s proprietary claim and, therefore, could not have affected the Decision to continue the injunction.

Wrong avenue

25.  The injunction was granted to aid foreign arbitration proceedings.  At the time of the Hearing for Injunction, the arbitrator was not yet appointed.  The arbitrator has since been appointed on 18 November 2015. Any application for discovery should be made to him rather than to this court.

Conclusion

26.  The Production Summons was issued very late after the relevant matter, ie the continuation of the injunction, was determined.  Inspection of the 2 Emails which had minimal relevance, is not necessary for the fair disposal of any cause or matter.  The application is a fishing exercise.  In any case, the application is made at the wrong avenue.  I therefore dismiss the Production Summons.

27.  Since the application is wholly unmeritorious, I make an order nisi for D2 to pay costs to the plaintiff on indemnity basis.  As the Production Summons was heard together with other matters which warranted the engagement of 2 counsel, I grant certificates for Mr Wong SC and Mr Kok for the Production Summons. 

28.  The matter will be adjourned to 1 April 2016 for summary assessment on the papers without the need for attendance.  The plaintiff is to file and serve its revised costs statement, if deemed fit, by 24 March 2016.  D2 is to file and serve its grounds in opposition by 31 March 2016.

29.  I thank counsel for their assistance.