NGAN IN LENG AND OTHERS v. CHU YUET WAH

HCA 388/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 388 OF 2006

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BETWEEN

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D E C I S I O N

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1.  By an order dated 7 December 2012, Kingston Financial Group Ltd (“Kingston”) was ordered to make discovery of certain documents. The plaintiff was to provide an express undertaking of confidentiality in terms agreed with Kingston or, failing agreement, as settled by the court.

2.  There is no dispute on the precise contents of the confidential obligations.  The bone of contention between the plaintiff and Kingston is whether or not the plaintiff should be required to provide an express undertaking (“the further undertaking”) in these terms:

“We acknowledge that any breach of the said undertaking or obligation by us or any of us will entitle you to seek appropriate relief (including, but not limited to, injunctions and/or damages) from the Court of HKSAR or from any other appropriate court(s).”

The legal principles

3.  There is no dispute on the applicable principles:

(1)  The court has jurisdiction to exact an express undertaking as to confidentiality from the party seeking disclosure such terms which go further than the automatic obligations under the implied undertaking.

(2)  Where an express undertaking going further than the automatic obligation is sought, it must be justified by the circumstances of each case: Matthews and Malek on Disclosure, 4^th ed, at 15.29.

(3)  The duty under the undertaking is owed to the court: Home Office v Harman [1983] 1 AC 280, 307F.  The remedy for breach of an implied undertaking as to confidentiality (and hence, an express undertaking which does not include the further undertaking) is civil contempt which may be restrained by injunction: Matthews and Malek on Disclosure, at para 19.45.  It does not give rise to a private cause of action, in particular an action founded in breach of contract: Independiente Ltd and ors v Music Trading On-Line (HK) Ltd [2007] 4 All ER 736.

(4)  There is no wider private duty of confidentiality owed to the party giving discovery: Matthews and Malek on Disclosure, at para 19.07.

(5)  There is no established principle that a third party ordered to provide discovery will invariably be entitled to a remedy beyond the automatic remedy.

Application of the legal principles

4.  Kingston’s bases of application are two-fold: (i) on the basis of paragraph 84 of my decision dated 7 December 2012; and (ii) special circumstances of this case.

5.  With regard to the first basis, Mr Wong for Kingston submits that on a proper analysis of the decision, it appears to be the view of this court that the implied undertaking was insufficient.  In order to overcome the confidentiality obligation the plaintiffs offered to give an express undertaking.  Hence on a proper analysis, the express undertaking was effectively a price which the plaintiffs offered to pay for the discovery in addition to the implied undertaking. 

6.  With respect to Mr Wong, I do not think that is the correct reading of paragraph 84 of the decision.  The discovery was ordered against the opposition of Kingston.  The plaintiffs have not offered anything beyond what was the same implied undertaking in Mr Barber’s 7^th affirmation in the discovery proceedings.  The intention of paragraph 84 was only to make express what was implied.  The need to pay a “price” for the discovery was not advanced at the hearing.  The first basis for this application fails.

7.  With regard to the 2^nd basis, there is no bar to Kingston raising the need for the further undertaking provided there is sufficient justification.  I shall not repeat each party’s written submission.  Kingston is a non-party having no interest in the outcome of this case. The documents to be discovered may be confidential or commercially sensitive even though the transactions were completed many years ago.  Upon misuse of the documents, it is of no practical use to Kingston to commit the plaintiffs, who reside out of this jurisdiction and have no known assets in Hong Kong, for contempt of court.  Kingston may have to suffer the prejudice of having to go through what might be a cumbersome process of service outside jurisdiction and costs for the committal proceedings which might not be covered by the indemnity costs order given in this case.  This violates the spirit that discovery against non‑parties is the exception rather than the norm and that non‑parties should be adequately protected against prejudice when making discovery.  These matters, taken together, are weighty in persuading me that the further undertaking should be given.

Conclusion

8.  I order the imposition of the further undertaking as proposed by Kingston and grant the extension of time sought by the plaintiffs.  I order that the plaintiffs do bear the costs of Kingston on the same indemnity basis as ordered.  Such costs shall be assessed on the papers on 17 January 2013.  Kingston should provide the costs statement by close of play on 14 January 2013 and the plaintiffs should provide grounds of objection by 16 January 2013.

9.  I thank Mr Wong and Mr Barber for their assistance.