TO SIU LUN v. CHIU CHEE KAN PETER AND OTHERS

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. In these proceedings, the petitioner is seeking relief against the respondents on the ground that her interests in Pan Seas Holdings Limited (the company) have been unfairly prejudiced by the conduct of the respondents as majority shareholders.

2. I have a summons before me dated 31 January 1997 in which the respondents seek discovery from the petitioner of "All documents relating to the means and assets and financial position of the petitioner as at May 1990 and May 1995 respectively and all documents relating to her financial ability or inability (as the case may be) to take up the 900,000 shares and the 1,500,000 shares in Pan Seas Holdings Limited in May 1990 and May 1995 respectively ..."

3. In view of the fact that the petitioner has alleged that she did not have the resources to take up her pro-rata allotment of the increases in share capital, the respondents' desire to have discovery as thus far related above might seem entirely reasonable. Indeed, the petitioner now concedes this to be the case, although initially she took the view that she was not obliged to give such discovery.

4. However, the Schedule to the summons for discovery goes on to seek discovery of a large range of documents for the periods of three years prior to May 1990 and May 1995. When I queried the justification for this, Mr Cheung sought to explain that the petitioner had alleged that the respondents knew of her inability to pay, and, if the answers to interrogatories relating to this knowledge given by the petitioner revealed that she relied upon the respondents' knowledge at some point in time prior to May 1990 and May 1995, it was relevant to inquire into the petitioner's financial position at that time. I indicated to Mr Cheung that I was not prepared to allow the respondents to rely upon something the petitioner might possibly say in answer to the interrogatories to justify such a wide discovery. Mr Cheung then suggested that the respondents' request in relation to documents outside the relevant times of May 1990 and May 1995 should be adjourned until the petitioner's answers to the interrogatories were filed and served. Mr Barma was not happy to go along with this proposal. I am not happy to go along with it either. At this time, the respondents have no justification for a discovery in relation to any period of time outside those correctly identified by the respondents themselves as May 1990 and May 1995. It is not reasonable to expect the petitioner to wait until the respondents have more ammunition to enable them to present a better case. If the respondents thought that they needed to know what the petitioner would say in answer to the interrogatories in order to justify the wide discovery sought, they should have waited until they had those answers.

5. Although, as I say, the respondents correctly identified May 1990 and May 1995 as the relevant times, Mr Cheung argued that the relevant dates were 5 March 1990 and 3 March 1995. I do not understand this submission. The relevant dates are those on which the petitioner was required to come up with the money to take the shares that would be allotted to her. It was on 11 May 1990 and 22 May 1995, or thereabouts, that the petitioner was offered the shares, and that was when she had to produce the money.

6. Accordingly, there will be an order in terms of the summons of 31 January 1997, save that the period in respect of which the petitioner is required to give discovery is restricted to May 1990 and May 1995.

7. There remains the question of costs.

8. In the affirmation filed by the respondents in support of the application for specific discovery, no attempt was made to justify the extravagant range of the discovery sought. And when the respondents' solicitors requested the discovery by letter dated 14 January 1997 in much the same terms as it is now sought, it required this extraordinary discovery to be made within 14 days. In a reply dated 28 January 1997, the petitioner's solicitors took the view that the discovery sought went only to credit, and said that they had advised their client not to comply. The response from the respondents' solicitors pointed out, correctly, that discovery of the petitioner's financial position in May 1990 and May 1995 was relevant, but again made no attempt to say why the petitioner should discover documents relating to periods three years before these dates. The summons followed on 31 January 1997. On 10 April 1997, the petitioner filed her affirmation. She referred to a letter by her solicitors to the respondents' solicitors dated 9 April 1997, and said she was prepared to give the discovery mentioned in that letter, but not in respect of the earlier three year periods. The letter of 9 April 1997 said that the petitioner was prepared to make discovery as to her financial position at the time of the rights issues, but that the only relevant periods were 10 April 1990 to 11 May 1990 and 22 May 1995; not three years before these times. The letter went on to say - "We would also observe that, if discovery is so limited, the discovery sought in relation to the 22 May 1995 rights issue would appear to be unnecessary in the light of interrogatory 3(2) in relation to the PSH petition, which our client will be answering. We would therefore suggest that no order for discovery need be made in relation to our client's financial position at the time of this rights issue."

9. The petitioner's solicitors were right to say that the interrogatory mentioned covered the same ground; it asked the petitioner to state her net worth "as at the time when the 1.5 million shares in PSH were offered to you, i.e. 22 May 1995", and to state specific assets.

10. It seems to me that the letter of 9 April 1997 should have settled the matter. Thereafter, there was no justification for the respondents to pursue it. They were told they could have what I have found they were entitled to. Up to that date, although the respondents' claim was extravagant, it contained a claim to which the respondents' were entitled, and the petitioner did not concede it.

11. In the result, I believe the just order as to costs is that the petitioner pay the costs up to the receipt by the respondents' solicitors of the letter of 9 April 1997, and, thereafter, the petitioner's costs are to be paid by the respondents. I order accordingly.