GUANGZHOU GREEN-ENHAN BIO-ENGINEERING CO LTD AND ANOTHER v. GREEN POWER HEALTH PRODUCTS INTERNATIONAL CO LTD AND OTHERS

HCA  4651/2002
HCA 2802/2003
HCMP 74/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4651 OF 2002, 2802 OF 2003 and

MISCELLANEOUS PROCEEDINGS NO. 74 OF 2004

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(The Consolidated Action)

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REASONS FOR DECISION

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1.  The trial of this action commenced on 5 July 2004.  After PW1 Professor Liu Xin completed his evidence in chief, but before his cross-examination, Ms Tam applied on the 5^th day of trial for an order seeking the production of a 1999 diary of the professor [“the Diary”] for inspection.  The application was made orally without any summons or motion.  Nor was it supported by any affidavit or affirmation.  In the skeleton submission placed before the court, Ms Tam identified the application to be one seeking production under Order 24 Rule 10 and the scope of inspection was the part of the Diary for the period from January to June 1999.  Ms Tam further confined the application as follows,

“For the time being and subject to further application (if need be), for the eyes of the Defendant’s legal advisors (counsel and solicitors) only.”

2.  Parties were given some time to prepare for the application and the matter was argued before me in the afternoon of 9 July and the morning of 12 July 2004.  On 12 July 2004, I ruled that upon the undertaking given by the Plaintiffs to this court to allow the Defendants’ solicitors and counsel to inspect those parts of the Diary containing the entries referred to by Professor Liu in Paragraph 15 of his witness statement dated 1 April 2004, the application be dismissed.  I now give reasons for this decision.

3.  Both Ms Tam and Mr Ling (who appeared as junior counsel for the Defendants and addressed this court in reply to the submissions of Mr Yan on this application) categorically stated that this application was made solely pursuant to Order 24 Rule 10 and they disavowed any intention to seek discovery or inspection under other rules.  Their contention was that reference was made to the Diary in the witness statements of Professor Liu and therefore the Defendants were entitled to seek inspection.

4.  Although Ms Tam referred to two different paragraphs in the statements of Professor Liu in support of the application, the second reference (viz. Paragraph 10 of the statement of 21 April 2004) was essentially a cross-reference to what was said in the first statement.  Paragraph 15 of the first statement stated as follows (the statement was in Chinese and no translation had been prepared),

“本人參照本人的護照及筆記簿記錄，列出本人與鍾志強在1999年初之會面記錄大約如下:

[Then a chronology between early January and 22 May 1999 was set out.]”

The 筆記簿 mentioned in that paragraph was actually the Diary.

5.  My reading of that paragraph in the statement of Professor Liu was that the witness had made reference to the Diary and his passport in order to compile the chronology in that paragraph.  In the course of his evidence in chief, Professor Liu had corrected himself in respect of an entry in the chronology.  In the chronology in the witness statement, Agreements B and C were said to be signed in the afternoonof 13 April 1999.  In the witness box, Professor Liu said after subsequent checking, it was found out that these agreements should be signed in June 1999.  But there was no amendment to the witness statement and the application under Order 24 rule 10 had to be decided by reference to the witness statement as it is.

6.  The Defendants also understood that the reference to the Diary was by way of corroborative evidence.  Hence, in Paragraph 17 of their skeleton submissions of 9 July 2004, Ms Tam and Mr Ling said the entries in the Diary were prayed in aid by Professor Liu “as corroborating evidence for his version of events”.

7.  It is important to bear in mind that the present application was grounded upon Order 24 Rule 10 although the court’s power to order inspection stems from Order 24 Rule 11.  It was held by the majority in the Court of Appeal in Shun Kai Finance Co Ltd v Japan Leasing (HK) Ltd (No. 2) [2001] 1 HKC 636 that there are fundamental differences between inspection under Order 24 Rule 10 and other forms of discovery.  In that case, the majority (Rogers VP and Le Pichon JA) followed the approach adopted in England as laid down in the following cases: Derby v Weldon (No. 2) (The Times, 20 October 1988, unreported); Prudential Assurance Co Ltd v Fountain Page Ltd [1991] 1 WLR 756 and Eagle Star Insurance Co Ltd v Arab Bank plc 25 February 1991, unreported.  It was held that documents disclosed pursuant to Order 24 Rule 10 do not attract the protection of any implied undertaking restricting the use of the documents for the purposes of the litigation.  The rationale was that the documents were disclosed voluntarily instead of being disclosed under compulsion of law.  Le Pichon JA explained at p. 643 to 644 why documents ordered  to be produced in an Order 24 Rule 10 situation do not fall within the “compulsion exception” and Her Ladyship cited the following dicta of Hobhouse J in Prudential Assurance,

“The compulsion exception is confined to documents and information which a party is compelled, without any choice, to disclose.  Where a party has a right to choose the extent to which he will adduce evidence or deploy other material, then there is no compulsion even though a consequence of such choice is that he will have to disclose material to other parties.”

The emphasis is on the right of the party to choose the extent to which he will adduce evidence or deploy other material.

8.  In Eagle Star Insurance Co Ltd v Arab Bank plc (a transcript of the judgment was supplied to me), Hobhouse J (as he then was) explained the difference between Order 24 Rule 10 inspection and the other types of inspection under Order 24.  After referring to Quilter v Heatly (1883) 23 Ch D 42, Hobhouse J said the following regarding Order 24 Rule 10,

“It is essentially a matter of enabling the opposite party to understand fully what is in the other side’s pleading and, in effect, to have it fully particularized.  If a document is just referred to without the document being conclusively identified, and its full terms identified, then the opposite side does not have the full particularity of the other side’s pleading to which he is entitled.  The machinery by which he obtains that particularity is to entitle him to have produced to him the document which is referred to in the pleading.  The same type of reasoning applies, as is set out in [Quilter v Heatly], to affidavits as well.  If you choose to refer to a document in an affidavit, whether or not you exhibit it, you can be required, in order to enable the other side, so as to identify the full terms of the statement on oath of the other side, to see that document.  It may be, in that category, that it is viewed not so much as a matter of particulars but as a matter of the application of the best evidence rule; in other words, if you are going to refer to a document in your evidence, you must produce it.

It will be appreciated from this that, although on a number of occasions this machinery has been referred to as an exercise of discovery … it is not, in essence, a discovery exercise.  Its history is different, its function is different.” (My emphasis)

9.  Hobhouse J agreed with the reasoning of the Vice-Chancellor in Derby v Weldon (No. 2) that the party who chose to refer to a document in pleadings or affirmations destroyed the privacy of the document.  Hence, it was held that there was no compulsion to support the existence of implied undertaking.

10.  Hoffmann J (as he then was) highlighted the voluntary nature as to what were to be included in a witness statement in Comfort Hotels Ltd v Wembley Stadium Ltd  [1988] 1 WLR 872 at 877-8,

“Anything which he does not wish to disclose he may still keep to himself.  It is only if he wants to disclose the information by way of evidence at the trial that he may now be required as a precondition to disclose it in written form in advance.  What the rule therefore does is to advance the moment at which a party must examine the information he has gathered for thepurposes of the trial and decide what he is going to use and what he is going to withhold.”

11.  The question that calls for determination in the present case is this.  Given this rationale for an inspection under Order 24 Rule 10, should the Plaintiffs be permitted to seal off or cover up entries in the Diary which were not alluded to in the chronology under Paragraph 15 of the witness statement?    

12.  Even in the context of usual discovery, it is permissible to blanked out irrelevant parts of a documents disclosed, see GE Capital Corporate Finance Group v Bankers Trust [1995] 1 WLR 172.  In the context of an inspection under Order 24 Rule 10, in Quilter v Heatly (1883) 23 Ch D 42 at p. 49, the Master of the Rolls gave the disclosing party “the usual liberty to seal up such parts of [the documents] as do not contain the entries referred to by [that party in his pleadings]”.  This approach was applied by Peter Gibson J (as he then was) in Savings Bank v Gasco BV [1984] 1 WLR 271 at p. 286.

13.  In my judgment, having regard to the underlying purpose of inspection under Order 24 Rule 10 as identified in these authorities and the fundamental differences between this sort of inspection and that by way of discovery, the requirement under Rule 10 is satisfied by a production of the document with the parts not containing the entries referred to in the pleadings, affidavits or witness statements sealed up.  That was the extent to which the party filing the pleadings, affidavit or witness statement can fairly be said to have chosen to put forward that document voluntarily whilst the rest of the document were being withheld. 

14.  That does not mean that the other side could not have access to the whole document at all.  They can still apply for normal discovery in respect of the same document if they can satisfy Order 24 rule 11(2) and demonstrate the relevance and need for it.  If discovery and inspection is ordered as a result of such application, the document would be protected by the implied undertaking.

15.  In view of this conclusion, it is not necessary for me to consider whether the test under Order 24 Rule 13 has been satisfied.  It was accepted by Mr Ling that the burden still rests on the Defendants to show that inspection was necessary either for disposing fairly of the cause or matter or for saving costs.  I have some doubts if the Defendants succeed in so doing as I cannot see how the other entries could assist in resolving the various matters set out in Paragraphs 17 and 18 of the skeleton submissions of the Defendants dated 9 July 2004 bearing in mind that discovery on credibility should generally be disallowed.

16.  Further, I would in any event be disinclined to exercise my discretion to order inspection at this very late stage of the action.  Directions for speedy trial were given in this case because the court considered that the disputes between the parties should be resolved as early as possible.  A tight timetable had been prescribed and every effort had been made by all concerned (including this court by way of case management in dealing with various interlocutory applications) in the past few months to ensure that the trial would not be derailed.  The witness statement in question had been filed on 1 April 2004 but nothing had been done on the part of the Defendants to seek inspection of the Diary until 30 June 2004, less than a week before the trial.  This is wholly unacceptable and Mr Ling had not been able to offer any satisfactory explanation for such delay.

17.  The argument of this application took up one and a half days of the 15 days allocated to this trial.  If inspection of the Diary as requested by Ms Tam is ordered, there is a risk that the trial will further be prolonged or even postponed since I was told by Mr Liao that because the Diary was a private document kept by Professor Liu instead of the property of the Plaintiffs, those acting for the Plaintiffs had not had full opportunity to consider all the entries (some of which were said to be recording private matters and secrets relating to inventions and business dealings that the professor did not wish to disclose to others).  If all the pages up to end of June 1999 were to be shown to the defence lawyers, it is natural that those advising the Plaintiffs would need to go through all those pages at length.  They are disadvantaged in that exercise due to their inability to take instructions from the professor at this stage because he has commenced his evidence.  I was also told by Mr Yan that the professor was unwilling to show the other parts of the Diary to others and if an order is made, the Plaintiffs might not be able to comply with it.  This is certainly a factor I should take into account (see Rafidain Bank v Agom Universal Sugar Trading Co Ltd [1987] 1 WLR 1606 at p. 1611B to G).  The professor might also wish to be heard given the lack of protection of implied undertaking in the event that the Diary is ordered to be produced under Order 24 Rule 10.  Further, Ms Tam reserved the right to make further application regarding the showing of the Diary to her clients for taking instructions.  All these would take more time than that is available within the 15 days allocated for the trial.

18.  Moreover, since the witness statement had been adopted in evidence-in-chief, the Plaintiffs were deprived of the option of excising the reference to the Diary from the witness statement instead of giving inspection (see Quilter v Heatly).  This is a prejudice that could not be compensated by costs.

19.  Given the marginal relevance (if any) of the other entries in the Diary, I think the balance is against the exercise of the discretion to order inspection even if I were wrong in the analysis as to the sealing up of irrelevant parts.

20.  In all the circumstances, the application was dismissed for these reasons.