KOMAL PATEL AND OTHERS v. CHRIS AU AND OTHERS

HCA 183/2014 &
HCA 2063/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 183 OF 2014

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AND

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2063 OF 2015

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APPLICATION TO VARY TERMS OF ORDER

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1.  The 1^st defendant opposes a variation of an order this Court made on 4 August 2016 following its decision on 29 July 2016 that references to “another” in paragraph 50 of the decision be taken as a reference to the 1^st and 3^rd plaintiffs (by original action). Paragraph 50 reads:

“50. I will grant the application to the extent that Essence is to file and serve a list of documents which are or have been in its possession, custody or power, consisting of its bank records in relation to (1) the payments of funds from Kudeta BVI, namely, remittances of dividends or distributable profits, to Essence and any payment or transfer of those funds to another from September 2010 to October 2012 and (2) the payment of the proceeds of sales of Essence’s shareholding to L Capital and any payment or transfer of those funds to another from January to February 2014.” (Emphasis added)

2.  This paragraph concerned the Court’s order that the 5^th defendant (by counterclaim) (Essence) file and serve a list of documents in relation to the payment or transfer of funds by Essence to “another” of funds received from Kudeta BVI from September 2010 to October 2012 and from the proceeds of sale of Essence’s shareholding to L Capital from January to February 2014. 

3.  The 1^st defendant argues that the references to “another” in paragraph 50 should not be taken as a reference to the 1^st and 3^rd plaintiffs only, and should be taken to mean “any individual or entity that has received such funds from Essence which Essence in turn received from (1) Kudeta BVI and (2) L Capital as referred to in paragraph 50”. 

4.  The 1^st defendant argues that the term “another” had been used in a previous order in relation to Rocky Cape.  That discovery order was sought by the 1^st defendant to ascertain whether the 1^st, 2^nd and 3^rd plaintiffs had an interest in Rocky Cape.  As I understand it, the present discovery order was sought by the 1^st defendant to ascertain whether the 1^st or 3^rd plaintiffs had an interest in Essence as pleaded by him.  Although it is submitted by the 1^st defendant that it was to show or establish the beneficial ownership of Essence. 

5.  I made it abundantly clear in my decision that this application for specific discovery was made very late in the proceedings when it could have been made a lot earlier.  I was very conscious of the potential disruption it would cause to the proceedings and the burden it would place on the disclosing parties at this late and critical stage of the action.  This was all the more reason to ensure that this exercise of discovery was not a fishing expedition placing an unreasonable and unnecessary burden on the disclosing parties. 

6.  The terms of the order were made bearing in mind its purpose and context.  The purpose of the order as I understood it was to ascertain whether the 1^st and 3^rd plaintiffs have an interest in Essence.  The context of the application was that it was made when the case had reached an advanced stage and was about to go to trial.

7.  The 1^st defendant’s pleaded case is that Essence is owned by the 1^st plaintiff, the 3^rd plaintiff and the 6^th defendant (by counterclaim) (Yew).  The pleaded case by the opposing parties is that Essence is wholly owned by Yew.  It appears that Dr Knut Unger is the sole shareholder and director of Essence who holds the shares on trust for Yew. 

8.  It is argued by Essence that the 1^st defendant should not obtain discovery of documents that show the transfer of funds to other parties which are not relevant to the pleaded case of the parties or any issues in dispute in these proceedings and that the disclosure ordered should be confined to the 1^st and 3^rd plaintiffs as they, in the context of this order, are the only parties relevant within the terms of the pleaded cases and the issues in dispute. 

9.  The 1^st defendant argues that the order should be directed to any other parties in order to ascertain the full picture.  I find this argument indicative of a fishing exercise in search of materials in the hope of uncovering a matter or raising allegations, as opposed to eliciting evidence through the justifiable pursuit of documents relevant to issues in dispute. 

10.  The 1^st defendant also argues that the 1^st plaintiff, the 3^rd plaintiff or Yew may have used nominees for the receipt or payment of funds but this opens up the possibility of further discovery.  The 1^st defendant seems to acknowledge that there should be some limit on the scope of discovery and submits in the alternative that the references to “another” in paragraph 50 should be taken as a reference to “bank account(s) held or controlled by the 1^st Plaintiff (by Original Action) or the 3^rd Plaintiff (by Original Action) or the 6^th Defendant (by Counterclaim)”.  I agree with this alternative suggestion.  Essence in its submission does not oppose the alternative suggestion. 

11.  Having considered the submissions and the issue before me, I do not see there being justification to direct the order to any other parties (“another”) and I order that the word “another” should be replaced by (i) the 1^st plaintiff, 3^rd plaintiff or Yew; and/or (ii) bank accounts held or controlled by the 1^st plaintiff, the 3^rd plaintiff or Yew. 

12.  I anticipate that the disclosing parties are able to comply with the order relatively promptly and I order that compliance with the order be made within 7 days from the date hereof.

In respect of HCA 183/2014:

In respect of HCA 2063/2015: