INTERNATIONAL MANAGEMENT GROUP (OVERSEAS) INC. v. LUN SHEUNG MEI SERINA AND ANOTHER

HCA 2174/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2174 OF 2005

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J U D G M E N T

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1.  This is the Defendants’ application to discharge the Anton Piller Order granted by Pang J on 3 November 2005.  The broad ground of the application is that the Anton Piller Order should not be granted because to do so would infringe the Defendants’ privilege against self-incrimination.

2.  The writ of this action was issued on 4^th November 2005.  The Plaintiff’s claim against the 1^st Defendant as endorsed on the writ was for damages for (1) breach of an implied term of the contract of employment to act in good faith, (2) breach of fiduciary duty as a senior officer of the Plaintiffs and (3) deceit.  The claim against the 2^nd Defendant was damages for conversion and conspiracy and also for money had and received. 

3.  The 1^st Defendant is the wife of the 2^nd Defendant.  Broadly, the Plaintiff’s case is that the 1^st Defendant was employed by the Plaintiff from12 July 1979 to 31 August 2005.  By the time when she left the Plaintiff’s employment she was Senior Vice President and Director of Finance & Administration of the Plaintiff.  She was a joint signatory of the Plaintiff’s bank accounts since 1990 to late 1998 and since then she became the sole signatory for 4 of the Plaintiff’s accounts within a certain limit.  The limit was $160,000 since February 2000.  The Plaintiff’s case is that in 1966 and 1967 the 1^st Defendant created on the Plaintiff’s accounting system 10 entities purporting to be vendors supplying goods and services to the Plaintiff but in fact none of them ever did.  Further in April 2005 the Plaintiff created another such vendor entity by the name of Nora Li Juan which again has never supplied any goods or services to the Plaintiff.  The 1^st Defendant purported to process invoices alleged to have been received from these entities for goods or services supplied and she caused cheques to be made for the payment of these invoices.  In fact either the invoices were bogus or they were in fact never received and no goods or service was supplied by these entities.  Furthermore although in the Plaintiff’s records the cheques were said to be made payable to these entities, in fact with the exception of one, they were not.  They were either drawn for cash, or were in favour of the 1^st Defendant or 2^nd Defendant or Sunray Resources Ltd, (being the landlord of the Defendants’ premises) or American Express International Inc, and even if they were originally drawn in favour of any of these entities on record, the cheques were subsequently altered so that they became drawn for cash or in favour of the Defendants or the other persons as aforesaid.  In relation to one of the entities called “Eternity International Services” (“Eternity”), the Plaintiff’s case is that there were cheques drawn in its favour but in fact there was no dealing between the Plaintiff and Eternity giving rise to any obligation on the part of the Plaintiff to pay Eternity.  On top of all these false transactions, the Plaintiff also alleges that the 1^st Defendant had caused cash to be withdrawn from the Plaintiff’s bank accounts by the 2^nd Defendant, or person employed by a company controlled by the 2^nd Defendant, or a messenger employed by the Plaintiff for the 1^st Defendant’s own use and in no case was the cash drawn for the Plaintiff’s business.  The Plaintiff also claims that in some instances the 1^st Defendant also caused to be recorded some transactions for the issuance of cheques for payment of some genuine suppliers of the Plaintiff but in fact the cheques were not so issued to these genuine suppliers but were used for the Defendants’ purpose.  Most of the cheques in question were signed by the 1^st Defendant. 

4.  In broad terms the case against the 2^nd Defendant is that he cashed and received some of the cheques prepared and signed by the 1^st Defendant, and received the proceeds of those cheques prepared and signed by the 1^st Defendant made payable to him or to Eternity, which was a company to which he was the sole proprietor.  Also one of the employees of Asia Power International Ltd., a company controlled by him, was amongst the persons collecting cash on the cash cheques.  In fact it is the Plaintiff’s case that of the 11 entities which were created in the account system of the Plaintiff by the 1^st Defendant, some of them were either companies to which the 1^st Defendant has an interest or were companies or proprietorship owned by him. 

5.  From the nature of the Plaintiff’s claim, it is clear that there were suggestions of massive acts of fraud, theft, falsification of documents and conspiracy.  The nature of the conspiracy was not just between the 2 Defendants but other third parties or companies were also involved. 

6.  On 3 November 2005, before the issuance of the writ, the Plaintiff obtained a world wide Mareva Injunction Order and also an Anton Piller Order against the Defendants. 

7.  In the affidavit in support of the application, the Plaintiff’s officer deposed to the details of how the monies were unlawfully taken away from the Plaintiff and how the Defendants’ fraudulent acts were discovered.  In particular on the point of the justification for the prayer for Mareva and Anton Piller relieves, the deponent said :

“73.   I have a real fear that without the injunction, the Defendants will move their assets to avoid paying any judgment the Intended Plaintiff obtains, thereby making it a fruitless exercise.  I also believe there is a real possibility that without the order, the 1^st Defendant will destroy evidence and property relating to the claim to avoid incurring civil liability towards the Intended Plaintiff.  She had removed or destroyed records of the Intended Plaintiff to disguise her activities, and I believe she will do so again.  Given the extreme difficulty in locating the whereabouts of the misappropriated money and the critical nature of the evidence that may lead to the location of the assets, I believe it is highly necessary to search the 1^st Defendants residential premises.  In particular, I am mindful of the fact that the 1^st Defendant has acted fraudulently and dishonestly on repeated occasion and over an extended period of time and is therefore highly likely to seek to avoid the consequence of civil liability.” (emphasis added)

Plainly, the risk of destruction of the evidence and property relating to the Plaintiff’s claim was the main reasons for the application and grant of the Anton Piller Order.

8.  The terms of the Anton Piller were adapted from the form set out in the Practice Direction PD11.2, a copy of which could be found at pages 1411 to 1415 of vol 1 of Hong Kong Civil Procedure 2006.  The premises in respect of which the entry and search order was given was an address in Kowloon which was the Defendants’ residence.  There were 12 items set out in Schedule 2 to the Anton Piller Order where the target items for the search and discovery were set out.  The list was extremely wide.  Some of the items as listed were not necessarily documentary in nature, e.g. item (4) - “Details of any investments of whatsoever nature, that the Defendants hold, or previously held, in Hong Kong or elsewhere”, and item (7) - “Evidence relating to any properties that the Defendants own, whether in their own names or jointly, whether legally or beneficially and whether in Hong Kong or elsewhere” when properties were not confined to any particular kind of property.  The discovery part of the Anton Piller Order would require the Defendants to immediately inform the Plaintiff’s solicitors (a) where all the items listed in Schedule 2 were, and (b) in so far as was not apparent on the items themselves and so far as the Defendants are aware (i) the name and address of everyone who had supplied the Defendant, or offered to supply the Defendant, with the listed items; (ii) the name and address of everyone to whom he (the Defendant) had supplied, or offered to supply, the listed items; and (iii) full details of the dates and quantities of every such supply and offer.  The Order also required the Defendant to swear an affidavit within 7 days confirming the information.

9.  The Anton Piller Order was served on the 1^st Defendant and was executed on 4 November 2005.  In fact prior to the commencement of the search the 1^st Defendant was able to secure the presence of a solicitor acting for her.  Before the search took place, the 1^st Defendant and her solicitor had about an hour to isolate documents and items which the 1^st Defendant had concerns over self-incrimination and/or other professional privilege.  During the search the 1^st Defendant’s solicitor continued to consult with the 1^st Defendant on the possibly privileged documents items.  The result was that documents to which the 1^st Defendant would claim privilege were put inside 2 seal envelopes, and where there were doubts as to whether privilege did or did not apply, the documents were put inside 3 other seal envelopes separately marked for identification. 

10.  There were problems with the taking of copies of computer hard discs.  The 1^st Defendant and her solicitors objected to the whole scale copying of the whole of the hard discs of the computers found in the premises because some of the documents and information inside were privileged.  The Plaintiff’s computer experts taking part in the search took the view that it was impossible or rather impractical only to copy parts of the hard discs.  It was not possible for the Defendants to delete those incriminating documents from the disc before allowing the disc to be copied because paragraph 6(2) of the Order expressly prohibited the destruction, tampering or canceling any documents set out in the 2^nd Schedule.  While it was possible to look through each and every item stored in the disc and decide whether or not it was privileged, this was impractical and would take days.  Moreover if this was done, it would mean that the Plaintiff’s solicitors and experts would have access to the privileged documents.  Furthermore, the evidence was that even if an attempt was made to look through each and every item in the discs, the Plaintiff’s experts could not be sure that every item stored on the computer had in fact been examined and copied.  Hence the Plaintiff would like to copy the whole of the hard discs.  Eventually the parties agreed to an interim measure.  Two copies of the hard discs were taken and were retained by the 1^st Defendant’s solicitors on his undertaking to keep them safe and unopened. 

11.  Finally there were also some problems relating to documents found at the premises which appeared to refer to the 2^nd Defendant.  There was disagreement as to whether they were covered by the Anton Piller Order.  At the end of the day, the parties managed to agree on an interim measure, i.e. by putting them into a seal envelope to be kept by the 1^st Defendant’s solicitors on his undertaking to keep it in safe custody and not to open it. 

12.  On 10 November 2005 the Defendants issued the summons for the discharge of the Anton Piller Order. 

13.  Before me the Plaintiff stressed that the Plaintiff had satisfied the usual requirements for the grant of an Anton Piller Order.  It was contended in paragraph 17 of the Plaintiff’s skeleton submission before me that the Plaintiff had satisfied the following criteria:

(a) The Plaintiff had shown a strong prima facie case.  The Plaintiff had adduced clear evidence on the fraudulent activities of the Defendants, which would support numerous causes of action.  The Defendant had not shown any defence.

(b) The Plaintiff had shown a serious danger of removal or concealment or destruction of evidence.  The Defendants’ record of repeated and sophisticated dishonesty justified and demonstrated that there was a real danger that the Plaintiff “would be deprived of vital evidence in proving its case, and tracing its assets.”

(c) Any harm caused to the Defendants would not be disproportionate in that in the present case the concern was directed at records and documents and not things like trading stocks.

14.  The Defendants did not challenge that the Plaintiff had satisfied the usual criteria for the grant of an Anton Piller Order.  It is an inevitable conclusion that at least one of the main reasons for the grant of the Anton Piller Order was to enable the Plaintiff to obtain the evidence which the Plaintiff would otherwise be deprived of through the Defendant’s acts of concealment or destruction of the evidence.  However it is equally clear that in the present case, the evidence in question is likely to be or may consist of evidence of the Defendants’ criminal activities or, even if it is not direct evidence of the Defendants’ criminal activities, it may lead to the revelation of the Defendants’ criminal activities.  The Defendants’ contention is that since the Anton Piller Order would inevitably lead to the infringement of the Defendants’ privilege against self-incrimination, the Order should not have been made at all.  In particular the Defendants contended that the following 3 paragraphs of the Order were objectionable: (a) Paragraph 1 - the permission to enter, search and seize documents and articles, (b) Paragraph 4 - the requirement that the Defendants should deliver up items listed in Schedule 2 and also computer printouts and also allow access to any computers, data storage devices and hard drives, and (c) Paragraph 5 - the requirement that the Defendants were to disclose and verified on oath the information on the location of the items listed in Schedule 2.  It is the Defendant’s contention that each of these Paragraphs of the Order would infringe the Defendants’ privilege against self-incrimination.

15.  The privilege against self-incrimination is subject to some exceptions.  It is provided in section 33(1) of the Theft Ordinance that:

“(1)   A person shall not be excused, by reason that to do so may incriminate that person or the wife or husband of that person of an offence under this Ordinance –

(a)     from answering any questions put to that person in proceedings for the recovery or administration of any property, for the execution of any trust or for an account of any property or dealings with property; or

(b)     from complying with any order made in such proceedings,

but no statement or admission made by a person in answering a question put or complying with an order made as aforesaid shall, in proceedings for an offence under this Ordinance, be admissible in evidence against that person or (unless they married after the making of the statement or admission) against the wife or husband of that person”

Thus if the only concern is the incrimination in respect of offences under the Theft Ordinance, the privilege against self-incrimination could not be relied on as a reason for not answering questions or complying with any order made in proceedings falling within section 33(1)(a) of the Theft Ordinance, i.e. for proceedings for the recovery or administration of property or for the execution of trust or for an account of any property or dealing with property.  In the present case, it is highly arguable that since the causes of action relied on are for damages and not for the recovery of property, section 33(1) would have no application at all.  I consider that there is force in this argument.  In any event, the Defendant would contend that the exception created by section 33 is only applicable if the incriminating offences are offences under the Theft Ordinance only.  In the present case, the Defendants had legitimate concern in relation to offences other than those under the Theft Ordinance such as conspiracy, the offences relating to forgeries under the Crimes Ordinance, and the offence of dealing with property known or believed to represent proceeds of indictable offence under the Organized and Serious Crimes Ordinance.  Accordingly I am of the view that section 33 does not apply in the present action to make the Defendants compellable to give incriminating answers to questions or to comply with orders made in this action when to do so would infringe the Defendants’ privilege against self-incrimination. 

16.  In Rank Film Ltd. v Video Information Centre [1982] AC 380, it was held that an Anton Piller order directing the defendants to produce documents and articles and to give discovery and answer questions relating to the supply and sale of infringing copies should be set aside because to comply with such order would expose the defendants to the danger of self-incrimination.  The Court did not set aside the part of the order enabling the plaintiff to go into the defendants’ premises to search and seize infringing copies because the Copyright Act 1956 gave the plaintiff as owner of the copyright proprietary rights in such infringing copies and to enter and seize was just an enforcement of those proprietary rights. 

17.  It is important to note the decision of the Court of Appeal in Rank Film Ltd. recognized that the right against self-incrimination would mean that there was also a right to conceal evidence which may lead to the discovery of the crime, and that it was no answer to say that there was a general restriction on the use of material discovered or obtained in a civil proceedings.  Bridge L.J.(as he then was) said: (at page 413C-F):

“This is the formidable barrier [i.e. the right against self-incrimination] which confronts Mr. Nicholls, for the plaintiffs, and which he has to surmount if he is to sustain the judge’s order [the Anton Piller Order].  He attempts to do so by both a broad and a narrow submission.  Mr. Nicholl’s broad submission, in reliance on a line of authority culminating in Riddick v Thomas Board Mills Ltd.[1977] Q.B. 881, can be thus shortly summarized.  It is to the effect that the implied restriction which the law imposes on the use which can be made of material disclosed on discovery in civil proceedings are sufficient to ensure that such material can never be used in any criminal proceedings against the party making discovery.  Accordingly, it is said, material disclosed on discovery, no matter what its nature, cannot tend to incriminate and all material is discoverable.  I am wholly unconvinced that the premise on which this proposition is based is sound.  There are many ways in which incriminating material once disclosed may directly or indirectly lead to or support the prosecution of the party who has been compelled to incriminate himself.  But, this apart, Mr. Nicholl’s broad submission, if it were right, would have the effect, at a stroke, of abolishing the privilege against self-incrimination in relation to discovery in civil proceedings or, to put the matter in another way, of introducing into the law a general and unlimited exception to the privilege having the same effect as the particular and limited exception or provided for by s 31 of the Theft Act 1968.  This is, to my mind, a sufficiently starting and revolutionary result to be self-evidently unacceptable.”

18.  On the same point, Templeman L.J. (as he then was) said (at page 420 B-F):

“So far as the wider attack is concerned, the law biding on this court entitles the defendant in a civil action who is guilty of a criminal offence to conceal the evidence of his guilt and to remain silent notwithstanding that the evidence might be vital to the plaintiff.  The right to concealment and silence extends to a defendant who is not guilty of a crime but has been guilty of conduct which invites prosecution.  It is unnecessary and impossible to decide at this stage which category applies to the present defendants.  It is sufficient that they appear to have indulged in conduct which invites prosecution.

Mr. Nicholl’s wider attack on the ambit of the doctrine against self-incrimination is based on the decision and implications of Riddick v Thames Board Mills Ltd. [1977] Q.B. 881.  In that case the principles was established or reaffirmed that a party to litigation who discloses a document on discovery is entitled to the protection of the court against any use of the document otherwise than in and for the purposes of the action.  Therefore, it is now argued, the documents and information which may be obtained as a result of orders for discovery and interrogation cannot be made available to prosecuting authorities and will not lead to self-incrimination.

In my judgment, the doctrine against self-incrimination entitles the defendant to concealment and silence.  Effective concealment cannot be maintained once discovery has taken place.  Any other conclusion would in practice make a mockery of the doctrine against self-incrimination…... ” (emphasis added)

Both Bridge L.J. and Templeman L.J. considered that in circumstances when the compliance of the order would in all probabilities infringe the right against self-incrimination, the Court should decline to make the order.  Bridge L.J. said (at page 416B-E):

“…. It has long been the practice of judges hearing oral evidence to warn witnesses who are in apparent danger of incriminating themselves that they are entitled to claim privilege from self-incrimination.  It would not be practicable, in my judgment, to embody an effective warning of that kind in a typical peremptory Anton Piller order in such terms as to ensure that the recipient of the order fairly understood his position, what he was required to do and what were the options open to him.  It must follow, I think, that the only satisfactory practice will be, when the court invited to make an Anton Piller order can see from the strength of the applicant’s evidence that the proposed defendant is in danger of self-incrimination, to abstain from making any order ex parte requiring immediate answers to questions or disclosure of documents.  The practical consequence of this view may well be that whenever the evidence in a copyright case is strong enough to justify the making an Anton Piller order, it will also give rise to apprehension of self-incrimination on the part of the defendant so that the ex parte order will effectively have to be limited to authorizing the search for and seizure of infringing copies.  This may be regrettable but seems to me inevitable.” (emphasis added)

Templeman L.J. said (at 419G):

“In my judgment, an order ex parte or otherwise for discovery or interrogatories under threat of committal for disobedience should not be made if it is obvious that compliance with the order will involve the danger of self-incrimination.  In the present case Mr. Ross-Munro on behalf of the defendants adroitly and properly reveled in the alleged wickedness of his clients.  The more criminal their apparent behaviour, the greater their claim to be protected against self-incrimination.  While not admitting tort the defendants seek the concealment and silence allowed to crime by the doctrine against self-incrimination.”

19.  However even in Rank Film Ltd. case, the Court of Appeal and subsequently, the House of Lords, would appear to consider that if it is possible to device a means so that the defendant served with the order would not be exposed to the danger of self-incrimination then there would be no objection to making the Anton Piller Order.  In the Court of Appeal, the passage from the judgment of Bridge L.J. quoted in the paragraph above appeared to suggest that it was only in the context of the typical peremptory Anton Piller order that the apprehension of the infringement of the privilege against self-incrimination should lead the Court to refuse to grant the order.  At the time of the decision, the typical peremptory Anton Piller order did not contain any warning given to the defendants of the privilege or any liberty to withdraw any documents from being the subject matter of the search if the defendant would consider them to be incriminating or privileged.  Likewise in giving the specific reasons on why he did not agree with the reasons given in the Court below for refusing to discharge the order, Templeman L.J. said

“Thirdly, Whitford J. held that the mere disclosure of the whereabouts of infringing copies and the names of customers and suppliers engaged in the production and sale of infringing copies cannot give good grounds for believing that such disclosure will result in self-incrimination.  In my judgment, the discovery and interrogatories ordered in the present case plainly involve the danger of self-incrimination.  No attempt was made in this court to limit and as at present advised I do not think it would be possible to omit the scope of the orders so as to eliminate any danger of self-incrimination.” (emphasis added).

20.  The decision of the Court of Appeal (by majority with Lord Denning dissenting) was upheld unanimously by the House of Lords.  It is important to note from the observation by Lord Wilberforce that the concern of self-incrimination in this context could not be sufficiently addressed by the plaintiff’s giving undertakings not to use the materials in criminal proceedings or by the civil court sitting and hearing the matter in camera whenever the incriminating materials were revealed (see page 443 C & E).  Nor could it be an answer to say that it was really for the defendant to claim the privilege when faced with the peremptory order.  As to the point that it was really for the defendant to claim the privilege, Lord Wilberforce said (at page 443F-H):

“… Thirdly, there are some procedural considerations.  The appellants argued that even, if, in principle, the privilege against self-incrimination is capable of attaching in cases such as the present, that should not prevent the order for information and production being made: the defendant should be left to raise the question of privilege, if he wishes, and if necessary the court should rule upon it.  The difficulty is, however, that the orders are intended to take effect immediately upon the arrival of the plaintiff’s representatives (including, under existing practice, a solicitor) at the defendant’s premises, and if the defendant were to refuse to comply, even in reliance on the privilege, he might, at least technically, be liable in contempt.  I do not think that this problem is for the House to resolve.  Attention can merely be drawn to it, and in due course, no doubt, forms of order will be worked out which will enable the orders to be as effective as practicable while preserving the defendant’s essential rights.  All that this House can do is to decide that the privilege against self-incrimination is capable of being invoked.  I would so decide.” (emphasis added).

21.  The question as to impact of the privilege against self-incrimination on the part of an Anton Piller order allowing the plaintiff to enter and search was considered by Browne Wilkinson VC in Tate AccessFloors Inc v Boswell[1991] Ch 512.  The facts in Tate Access bore great similarities to the present case.  It was an action brought to recover monies fraudulently misappropriated by former senior employees.  The plaintiffs’ case was that the employee defendants had in the course of their employment fraudulently obtained large sums from the plaintiffs and had created the corporate defendants to make false invoices to obtain the payments.  The plaintiffs duly obtained a world wide Mareva injunction and an Anton Piller order against all the defendants.  The defendants applied to set aside both the Mareva and also the Anton Piller orders.  The application to set aside the Mareva injunction failed.  The application by the natural person defendants in respect of the Anton Piller Order succeeded on the ground that the order should not have been made in view of the defendant’s privilege against self-incrimination.

22.  The Anton Piller order in Tate Access case also consisted of 3 parts.  First the order enjoined the defendants to disclose and deliver up information and documents identified in a schedule to the order upon the service of the order on them.  Second, the order enjoined the defendants to permit the plaintiffs and certain of its agents to enter an identified premises “and any vehicles or other premises which are in the power possession custody or control of those defendants for the purpose of searching for inspecting and taking into plaintiffs’ solicitors custody all and any items or documents listed in the second schedule hereto or which appear to be such items or documents”.  Third, the order enjoined the defendants to verify on oath the information and documents produced under the first part within 10 days of the service of the order.  Borwne-Wilkinson V.C. took the view that although the defendants would have been at risks of being guilty of offences under the Theft Act, on the facts as alleged by the Plaintiff, they were also at risk of being charged for the offence of conspiracy.  It was no answer to this concern to say that because the evidence produced before the Anton Piller order was so strong that the defendants would not be exposed to any increased risk of self-incrimination.(see page 529B).  The court has no difficulty in concluding that the first and the third part of the Anton Piller would expose the defendants to the risk of self-incrimination.  In relation to the 2^nd part, i.e. the part which authorized the entry and search, the court reviewed the decision of the Court of Appeal and the House of Lords in Rank Film case and said (at page 530C-D):

“….Therefore, in my judgment I am bound to hold that where the defendant’s privilege against self-incrimination may arise the making of an ex parte order for the seizure of documents form that defendant’s premises is improper.  That accords with my own sense of justice: if a man is entitled to refuse to produce documents, it would be strange if the law permitted an order to be made which forced him to admit others to his house for the purpose of seizing those documents.”

23.  In answer to the point that there was nothing wrong with the making of an Anton Piller order because at the time when the order was executed, the defendants could always claim the privilege, Browne-Wilkinson V.C. said: (at page 530 D-F):

“In the ordinary case, it is up to the defendant to put forward the claim to privilege.  However the Rank Film case [1982] A.C. 380 establishes that, where an ex parte order is sought which might in practice preclude the defendant from raising the claim to privilege before the order is executed, the judge should not have made the ex parte order at all: see per Bridge L.J. at p.416c and per Templaman L.J. at p. 419g.  The Court of Appeal set aside the ex parte order and the House of Lords upheld their decision.  Therefore, in any case in which the Rank Film decision applies, an Anton Piller order should not be made at all.” (emphasis added).

24.  Having considered the authorities cited to me, I consider that the Brown-Wilkinson V.C. has correctly summarized the law in the passage quoted above. 

25.  The Plaintiff did not dispute the legal principles applicable.  The Plaintiff however contended that the terms of the Anton Piller Order in the present case were such that it would not in practice preclude the Defendants from raising the privilege against self-incrimination before the Order was executed.  The Plaintiff’s counsel drew my attention to IBM United Kingdom Ltd. v Prima Data International Ltd [1994] 1 WLR 719 where the court held that an Anton Piller order which would otherwise expose the defendant to a real risk of prosecution could be properly made if it contained a proviso clearly safeguarding the defendant’s right to claim privilege against self-incrimination.

26.  In the IBM United Kingdom Ltdcase, the Anton Piller order contained the usual provision that the order must be served by a solicitor who was to explain to the defendant the effect of the order in everyday language and was also to advise the defendant the right to take legal advice and the right to claim privilege against self-incrimination.  It further contained this proviso - “so that the provisions of paragraphs (1), (2) (3) and (4) of the order shall have effect only in so far as such privilege [against self-incrimination] is not claimed by the defendant”.  Paragraph (1) of the order was to permit the plaintiff to enter the defendant’s premises for the purpose of looking for, inspecting etc all documents specified in the schedule to the order.  Paragraph (2) of the order was to order the defendant to disclose forthwith to the plaintiff’s solicitors the whereabouts of all specified items which were in his possession, custody or power.  Paragraph (3) was an order ordering the defendant to forthwith deliver to the plaintiff’s solicitors all specified items in his possession, custody or power.  Paragraph (4) said that if any of the specified items existed in computer readable form only, the defendant shall forthwith cause them to be printed out and shall deliver the print-out to the plaintiff’s solicitors in any readable form.  With this form of order, Sir Mervyn Davies J (at page 730D-F) held that the right and interest of the defendant were adequately protected.  He held that the overall effect of the order was that although the order may be served, it may not be executed until after the defendant was told of his privilege right and the defendant expressly declined to claim the right.  The judge also held that with this proviso there would be no entry if the defendant claimed privilege.  The order was upheld.

27.  The Plaintiff contended that there were sufficient provisions in the Anton Piller Order in the present case to protect the right and privilege of the Defendants.  While conceding that the terms built into the Order designed for protection of the privilege against self-incrimination were different from those in the IBM United Kingdom Ltd.case, the Plaintiff contended that the effect was the same.  Furthermore the Plaintiff contended that even assuming that the terms of the order were not sufficient to protect the Defendants, the test was whether the order might in practice preclude the Defendants from raising the claim to privilege before the order was in fact executed.  In the present case, the Plaintiff contended that in the present case, the evidence on the way that the Order was executed showed that although it was not required by the Order, a copy of the Order was in fact faxed to the Defendants’ solicitors before the Order was executed and that the 1^st Defendant had in fact made claims of privilege to some documents which might be incriminating to her.  Also the documents referring to the 2^nd Defendant were sealed up separately during the search.  It was thus also contended that whether the terms of the Anton Piller Order contained sufficient protection of the privilege right or not, in fact the Defendants’ rights against self-incrimination were not infringed and there was no reason to set aside the Anton Piller Order.

28.  I am of the view that in considering whether the Anton Piller Order ought to have been made, no account should be taken of the subsequent event concerning the service and execution of the order.  If the terms of the order are such that a defendant is put to some real risk of infringement of his privilege against self-incrimination, I could not see how the making of such order could be justified simply by the plaintiff’s generosity in not insisting on his rights under the order or on the defendant’s full compliance with the order when the order is executed.  However it does not mean that the subsequent events surrounding the execution of the Anton Piller Order are wholly irrelevant.  In my view, they could be properly considered when it comes to the stage of the exercise of the court’s discretion to discharge or uphold the order. 

29.  In the present case, the Plaintiff relied principally on 2 provisions in the Order to support its contention that the Defendants’ privilege against self-incrimination was well protected.  The first one is paragraph 7 of the section headed “Important Notice to the Defendant” (hereinafter called the § 7 Advice) which said:

“7. You may be entitled to refuse to permit disclosure of any documents which may incriminate you (“incriminating documents”) or to answer any question if to do so may incriminate you.  It may be prudent to take advice, because if you so refuse, your refusal may be taken into account by the court at a later stage.”

The second provision in the Order relied upon by the Plaintiff was paragraph 3 of the Order under the heading “Obtaining legal advice and applying to the court” which said :

“Before permitting entry to the premises by any person other than the Plaintiff’s solicitors or the supervising solicitor, the Defendant or other person appearing to be in control of the premises may:

(1) seek legal advice and apply to the court to vary or discharge this Order provided he does so at once; and

(2) gather together any documents he believes may be incriminating or privileged and hand them to his solicitors or the supervising solicitor for the solicitors to assess whether they are incriminating or privileged as claimed.  If the solicitors or the supervising solicitor conclude that any of the said documents may be privileged documents or if there is any doubt as to their status the Defendant’s solicitors or the supervising solicitor shall exclude them from the search and shall retain the documents of doubtful status in his possession pending further order of the court.

While this is being done, the Defendant may refuse entry to the premises by any other person and may refuse to permit the search to begin, for a short time (not to exceed two hours, unless the Plaintiff’s solicitors agree to a longer period).  If the Defendant wishes to take legal advice and gathers documents as permitted, he shall first inform the Plaintiff’s solicitors and shall keep him informed of the steps being taken”.

30.  The Plaintiff pointed out that these 2 provisions were directly adopted from the wordings of the form set out in Practice Direction PD11.2.  The Practice Direction came into effect on 1 March 1998.  It is directed in the Practice Direction that in the absence of good reason, an Anton Piller Order should follow the form set out in the Practice Direction.  The Plaintiff submitted that since the Practice Direction was given in 1998, the Chief Justice in giving the direction must have taken into consideration the various English decisions like Rank Film Distributors Ltd, Tate Access Inc and also IBM United Kingdom in formulating these protections which were aimed at striking a balance between the need for the grant of the Anton Piller Order to protect the plaintiff’s interest and the need to protect the defendant’s privilege against self-incrimination and his other legitimate interest.  The Plaintiff’s counsel submitted that while the fact that the wordings were taken from the Practice Direction did not per se mean that the Order was infallible, the fact that the wordings were prescribed in the Practice Direction and this form of wordings had been in use since 1998 and there had not been any reported decision where the wordings were held to be insufficient to protect the privilege against self-incrimination, would be the strongest indication that the presence of these provisions was sufficient to protect the Defendants’ privilege against self-incrimination so as to make the Anton Piller Order immune from being attacked on that ground. 

31.  While there is force in the Plaintiff’s counsel’s submission, I am of the view that there is nothing in the Practice Direction to suggest that the actual wordings of an Anton Piller Order must follow slavishly those set out in the form in the Practice Direction.  The form of wordings should be adapted whenever the circumstances of the case require.  While no doubt, the 2 provisions relied upon by the Plaintiff are designed to eliminate the objection to the making of the order on the ground that the order may give rise to a real risk of infringement of the defendants’ privilege against self-incrimination, whether they have succeeded in do so would have to be examined in the light of the circumstances of each case.

32.  In relation to the § 7 Advice, there is a note in the Practice Direction itself that this should normally be omitted in intellectual properties cases.  This is obviously so because in 1998 the High Court Ordinance was amended by the addition of section 44A which had the effect of taking away the right to decline to give discovery or to answer questions on the ground of privilege against self-incrimination in intellectual properties cases.  It may also be the case that the § 7 Advice could also be omitted in a case where there is no question of any self-incrimination issue arising or where it could be certain that even if there is any question of self-incrimination it will only be in relation to offences under the Theft Ordinance. 

33.  It is to be noted that the § 7 Advice merely says “you may be entitled to refuse to permit disclosure of any document which may incriminate you… or to answer any question if to do so may incriminate you…”.  In a case such as the present where it is abundantly clear that the Defendants would be at risk of self-incrimination in relation to offences other than those under the Theft Ordinance, I am of the view that the advice is not sufficient because it is not a case where the Defendants “may be” entitled to refuse to permit disclosure or to give incriminating answers to questions put, it is a case that the Defendants “are” entitled.  Moreover the § 7 Advice goes on to say that “it may be prudent to take advice, because if you so refuse, your refusal may be taken into account by the court at a later stage”.  This further advice is not wholly appropriate because right from the beginning it is abundantly clear that the Defendants’ would be entitled to claim privilege against self-incrimination and the further advice rather suggests that the Defendants may be visited with some adverse consequence if they should claim privilege and the overall effect of this § 7 Advice would appear to be to discourage the Defendants from claiming any privilege. 

34.  Furthermore, prima facie, the words used “to refuse to permit disclosure” would not cover the situation of refusing entry to search because “disclosure” connotes a voluntary act on the part of the Defendants whereas “to search” is an active act on the part of the Plaintiff.  The choice of the words “to refuse to permit disclosure” would also give rise to certain uncertainties as to whether this could apply to paragraph 4 of the Order which enjoins the Defendants to immediately hand over to the Plaintiffs’ solicitors the items specified in Schedule 2 because paragraph 4 in effect directs the Defendants to give disclosure of the items rather than “to permit disclosure” of the documents, although on the whole I am inclined to the view that no sensible distinction ought to be drawn between “to disclose” and “to permit disclosure” in the context of the Order.  However, the words “to answer any question if to do so may incriminate you” clearly would only refer to situations where questions were put to the Defendants.  This is not apt to deal with the requirement of paragraph 5 of the Order where by the term of the Order itself and without any questions being put, the Defendants are ordered to supply information to the Plaintiff’s solicitors. 

35.  Paragraph 3 of the Order is mainly directed at protecting the privilege at the stage of entry and search.  In so far as it is relevant to the Defendants’ application for discharge of the Order, the following points are noted:

(1)     This paragraph does not have the effect of excluding the Plaintiff’s solicitors or the supervising solicitors from the Defendants’ premises.

(2)     If the Defendants do not have their own solicitors at the premises when the Order was executed, then he will have to disclose the documents which he intends to claim privilege to the supervising solicitor.  This is because by the terms of sub-paragraph (2) of this paragraph, it is only when the supervising solicitor has concluded that the documents picked out by the Defendants may be incriminating that the documents would be excluded from the search.  The privilege against self-incrimination should mean that the Defendants are not obliged to disclose anything incriminating to anyone at all.  To make it a condition for the claim of the privilege that the Defendants must disclose the documents to the supervising solicitors before the documents could be exempted from the search by the Plaintiff would mean the destruction of the privilege. 

(3)     This protection of this paragraph would be appropriate if the privileged documents are physical documents which are capable of being separated from where they are kept.  It would not be operable at all if the privileged document is contained in a computer disc which also contains other non privileged documents. 

(4)     The protection given could only extend to documents which are physically present in the premises to be searched.  The paragraph does not enable the Defendants to refuse to give the information required under paragraph 5 of the Order even though the giving of such information would be self-incriminating.

36.  On the whole, I am of the view that while the Order does contain reminders to the Defendants on their rights to seek legal advice and their rights against self-incrimination, the protection built in the Order is not sufficient. 

37.  In relation to the paragraph 1 of Order enjoining the Defendants to give permission to the Plaintiff’s agents to enter to search for, inspect, photograph or photocopy, and to take into the Plaintiff’s solicitors’ custody documents specified in Schedule 2 of the Order, I do not think that the Defendants’ privilege has been adequately protected by the § 7 Advice or paragraph 3 of the Order.  For reasons given above, I consider that the wordings of the § 7 Advice to be inappropriate and inadequate for the circumstances of this case.  The protection given by paragraph 3 is meaningful if (which is not the case) the Order could only be served and executed when the Defendants’ solicitors are present.  Furthermore even if the Defendants were to seek advice from their own lawyers, the Order allowed the Defendants only a maximum of 2 hours to instruct lawyers to obtain advice and to sort out all documents which the Defendants intended to and could properly claim privilege.  The time allowed was quite short and the Defendants were under the mercy of the Plaintiff if they should want further time.  At any rate, the protection was wholly inappropriate in relation to documents contained in computer discs.

38.  Furthermore it is envisaged in the Order that the Order may be served on someone other than the Defendants, viz. on someone who appeared to be in control of or responsible for the premises.  If the Defendants were not present when the Order was served, there would simply be no one to claim the privilege.  Indeed as it happened in the present case, the 2^nd Defendant was not present or served when the Order was executed.  There may be documents which he intended to claim privilege which the Plaintiff’s team had managed to lay their hands on during the search.  Even though at the end of the day, the Plaintiff agreed to put all the documents which appeared to refer to the 2^nd Defendant and which the 1^st Defendant contended were not covered by the Order in a sealed envelope, since undoubtedly the Plaintiff’s team had had access to these documents and their contents, the privilege attaching to these documents could well have been lost. 

39.  In relation to paragraph 4 of the Order, the Defendants’ counsel attacked this paragraph on inter alia the ground that it enjoined the Defendants to “immediately hand over” the documents.  It was said that that would not give the Defendants much time to consider whether any documents or items within Schedule 2 was privileged or not.  Although on its strict wordings, paragraph 3 of the Order only enabled the Defendants to exclude documents from the search after obtaining the confirmation from their solicitors or the supervising solicitors, I think that since the purpose of the search is to enable the Plaintiff to take away the documents, the Order should not be construed as enabling the Plaintiff to demand the handing over the documents which were to be excluded from the search. 

40.  I think the greatest objection to this paragraph of the Order is that it is clearly intended to direct at all kinds of documents including particularly those contained in computer discs.  Where it is not possible or practicable to separate the privileged documents from the non privileged, the protection given by paragraph 3 of the Order is illusionary.  One must also remember that by paragraph 6(2) of the Order, it is not possible for the Defendants merely to delete those privileged documents from the computer discs.  Paragraph 4(2) allowed the Plaintiff in effect free access to any computer, data storage devices and hard discs found inside the premises.  Even if the privileged documents were deleted, the Plaintiff had the right to restore and have access to them under paragraph 4(3) of the Order. 

41.  In relation to paragraph 5 of the Order directing the Defendants to give certain specified information to the Plaintiff, as I have mentioned above, neither the § 7 Advice nor paragraph 3 of the Order is appropriate to protect the Defendants’ privilege against self-incrimination in complying with this paragraph.  Since the privilege against self-incrimination would include the privilege of concealment, I could not see how the Defendants’ dilemma could be resolved by the advice given in terms of the § 7 Advice or the proviso contained in paragraph 3 of the Order.

42.  For the above reasons, I am of the view that the Anton Piller Order obtained ex parte by the Plaintiff did not contain sufficient safeguard to protect the Defendants’ privilege against self-incrimination and might in practice preclude the Defendants from the protection of the privilege, and should not have been granted. 

43.  The Plaintiff however contended that I should also have regard to what in fact had happened since the grant of the Order both in deciding whether the Order was rightly granted and also for considering whether to exercise the discretion to uphold or discharge the Order.  I have already held that in my view what happened after the grant of the Order could not be taken into account in deciding whether the Order should be granted.  However the events subsequent to the grant of the Order may be looked at in considering whether the Order should be discharged.  In this respect the approach of the Court should be similar to the case when the Court is considering whether to discharge an ex parte injunction order granted with material non disclosure or to grant a fresh order after the discharge of the ex parte order.  In my view, prima facie the Anton Piller Order ought to be discharged unless the subsequent events give rise to some good and compelling reasons for me to refuse to discharge the Order. 

44.  The Plaintiff’s main contention in this respect is that as it happened the Defendants had not actually suffered from any prejudice.  The Plaintiff contended that as it happened, the 1^st Defendant did have a solicitor present to advise her when the Order was executed and the documents that had been identified as privileged were excluded from the search before it began.  To this extent the Plaintiff submitted that there was no real prejudice caused.  However I also note that during the search there were documents being located which the 1^st Defendant would also like to claim privilege.  Although eventually it was agreed that these documents would be put inside a sealed envelope it was not entirely clear from the evidence as to whether the Plaintiff’s team or the supervising solicitor had ever had the opportunity of seeing the contents of these documents before the same were put inside the sealed envelope.  Furthermore the 2^nd Defendant was not present or represented at the time of the search.  It was totally unclear as to whether the Plaintiff had obtained access to any documents by reason of this Order which the 2^nd Defendant would and could claim privilege. 

45.  In relation to paragraph 5 of the Order, the Defendants had in fact filed affirmations declining to give any information required by that paragraph on the ground of privilege against self-incrimination.  In effect no information was given on oath under paragraph 5 of the Order at all.  It has never been argued before me that the Defendants were not entitled to claim the privilege or that the Defendants were guilty of contempt in failing to comply with paragraph 5 of the Order.  In favour of the Plaintiff it might be said that this would show that the Order had not in fact cause the Defendants any prejudice.  On the other hand, if one were to have the wisdom of hind sight and were to take this subsequent event into account, this would also show that there was no point in the Plaintiff’s obtaining paragraph 5 of the Order because the Plaintiff could not reasonably expect to and did not in fact obtain any information at all. 

46.  In my view, once it is shown that the ex parte Anton Piller Order should not be made it is up to the Plaintiff to show why it should not be discharged.  In this respect there is no burden on the part of the Defendants to show that the Defendant had actually suffered from some prejudice by reason of the grant and execution of the Order.  If the Plaintiff should rely as a reason for its contention that the Order should not be discharged because the Defendants did not suffer from any prejudice, it is for the Plaintiff to satisfy the Court that this was the case.  While I do not consider that the fact that a defendant does not in fact suffer from any real prejudice by reason of the grant and execution of an Order is per se sufficient for the court to uphold an order which should not have been granted, in the present case, I do not think that the Plaintiff has satisfied me that the Defendants have not suffered from any prejudice from the grant and execution of the Order. 

47.  For the above reasons, I will order that paragraphs 1, 4 and 5 of the Order to allow entry and search of premises granted on 3 November 2005 be discharged.  I would not discharge paragraph 6 of the Order because in my view, the Plaintiff has sufficient evidence to be concerned that the Defendants may tamper with or destroy documents and this paragraph of the Order would not be affected by the privilege against self-incrimination. 

48.  The Defendants also asked in paragraphs 2 and 3 of the Defendants’ summons dated 10 November 2005 for the return of the documents seized.  Since the Anton Piller Order is discharged, it must follow that unless there is some good and compelling reasons to the contrary, the documents or items obtained from the execution of the Order should be returned and the Plaintiff could not rely on them to support a fresh application (see Jordache International (H.K.) Ltd. v Guess ? Inc.,and others[1987] HKLR 314).  I will thus also make an order in terms of paragraphs 2 and 3 of the Defendants’ summons.  However in anticipation that the Plaintiff may like to appeal against my order, I will grant a stay of execution of my order on the return of the documents until the expiration of the time limited for appeal and if there should be an appeal, until the disposal of the appeal or further order. 

49.  The Defendants are essentially the successful party before me, I will make an order nisi that the Defendants shall have the cost of this application.