ANTHONY JAMES HATTON v. DOROTHY JANE FURNESS AND OTHERS

HCMP 838/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 838 OF 2007

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(Consolidated by the Orders of The Honourable Madam Justice Kwan
dated 31 May 2007 and 26 October 2007 respectively)

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D E C I S I O N

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The two applications

1.  There are two summonses before me in High Court Action No. 2712 of 2006 (“the High Court Action”).  The first is a summons of the plaintiffs issued on 6 December 2006 for the Anton Piller order granted by Lam J against the 1^st and 2^nd defendants on 5 December 2006 (“the Anton Piller Order”) to be continued until trial or further order.  I shall refer to this as “the Continuation Summons”. 

2.  The second is another summons taken out by the plaintiffs on 3 September 2008, for inspection of the electronic documents held by the supervising solicitor pursuant to the Anton Piller Order.  I shall refer to this as “the Inspection Summons”.

3.  Both are opposed by the 1^st and 2^nd defendants.

4.  I will first set out the relevant background matters.

The background

5.  The three plaintiffs are companies incorporated in Hong Kong.  The 2^nd and 3^rd plaintiffs have each operated a bar restaurant, the 1^st plaintiff has performed the function of a centralised management company for these plaintiffs and other companies set up by the same group of investors.  The plaintiffs have common beneficial owners.  They are Anthony James Hatton, Stephen Smout, and Dorothy Jane Furness or Raphael Homer Echaluce.  The last two are the 1^st and 2^nd defendants herein, they are a married couple.  Each of the beneficial owners owns one-third of the issued shares in the plaintiff companies.

6.  Corporate directors were appointed for the plaintiffs.  It is the plaintiffs’ case that the 1^st and 2^nd defendants were de facto directors of each of the plaintiffs and owed fiduciary duties to the plaintiffs at the material time.  In May 2000, the 1^st defendant was employed by the 1^st plaintiff as an executive and served as the operations director of the bar restaurants.  Until she was summarily dismissed in May 2006, she was specifically and solely responsible for cash management, stock purchasing and operational staffing.  From May 2000 to December 2006, the 2^nd defendant was employed by the 1^st plaintiff as an executive and was the musical director, responsible for the musical entertainment in the bar restaurants.

7.  On 5 December 2006, the plaintiffs obtained the Anton Piller Order against the 1^st and 2^nd defendants.  It was executed the next day and a search for the listed items in Schedule 2 of that order was made at the residence of these defendants in Sai Kung, New Territories (“the Sai Kung residence”).  On 7 December 2006, the search was carried out at the premises of Sticky Fingers Bar and Restaurant in Tsim Sha Tsui (“the Sticky Fingers premises”) and in office premises in Fenwick Street, Wanchai (“the Wanchai office”).  Pursuant to the Anton Piller Order, a computer expert retrieved and copied computer hard drives of the computers found in each of the premises.  The copied electronic records, which may be wider than the listed items in Schedule 2, were given to the supervising solicitor to hold until an agreement could be reached on how best to review the contents of the electronic records, as no provision was made for this in the Anton Piller Order.

8.  In the supporting affidavit of Mr. Hatton in the High Court Action sworn on 5 December 2006, it is alleged that from at least July 2004 to May 2006, the 1^st defendant, with the complicity and knowledge of the 2^nd defendant, had dishonestly misappropriated substantial funds from the two bar restaurants operated by the 2^nd and 3^rd plaintiffs.  She was dismissed summarily on 12 May 2006 after the misappropriations were found to be substantiated.  It is further alleged that the 1^st and 2^nd defendants had established in secret a competing bar restaurant called Sticky Fingers in 2004 when they were still under the employment of the 1^st plaintiff and when both were de facto directors of the plaintiffs, and their involvement in Sticky Fingers was not discovered by the plaintiffs until October 2006.  The timing of the initial misappropriations coincided with the commencement of business of Sticky Fingers in 2004.  The plaintiffs inferred that the funds misappropriated were used to establish or provide financial support for Sticky Fingers.

9.  The general endorsement of claim in the writ issued against the 1^st and 2^nd defendants on 6 December 2006 claimed damages for breach of fiduciary duties and breach of contract of employment, an inquiry and an account of monies received or profits made by them, and all necessary accounts and inquiries to enable the plaintiffs to trace and recover the monies and profits.

10.  On 22 December 2006, the statement of claim was filed.  Pending further discovery, the plaintiffs provided best particulars of the misappropriations from July 2004 to 4 May 2006, according to which the amount of outstanding cash takings un-banked as at 4 May 2006was $45,383.86.

11.  The writ was amended in July 2007 to join Entertainment Company Limited and Mad Dogs Wanchai Public House Limited as the 3^rd and 4^th defendants.  The 3^rd defendant is the operator of Sticky Fingers and the 1^st defendant is a beneficial owner of shares of this company.  The 4^th defendant has been operating a bar restaurant next to that operated by the 2^nd plaintiff in Wanchai, to be called Spicy Fingers, and the 1^st and 2^nd defendants were appointed as its directors in March 2007.  The amended endorsement of claim claimed these additional reliefs: an inquiry and an account of monies received, benefits derived, and/or profits and losses made by the four defendants in consequence of the breaches of duty by the 1^st and 2^nd defendants to the plaintiffs; equitable compensation for knowing receipt against the 3^rd and 4^th defendants; all necessary accounts and inquiries to enable the plaintiffs to trace and recover the monies and profits and all substitute assets and fruits thereof acquired by each of the defendants; declarations that the defendants hold the entire businesses and assets of the bar restaurants operated by them on constructive trust for the plaintiffs and subject to the plaintiffs’ proprietary claim; a declaration that the 1^st and 2^nd defendants hold the Sai Kung residence on constructive trust for the plaintiffs and subject to the plaintiffs’ proprietary claim; an order that each of the assets referred to above be sold by the court and the entire proceeds or such part as the court may determine be paid to the plaintiffs; an equitable charge or lien on each of such assets.  It is asserted that the 1^st and 2^nd defendants continued to owe fiduciary duties to the plaintiffs for at least two years from the termination of their de facto directorships in 2006. 

12.  On 13 December 2006, the 1^st and 2^nd defendants issued a summons to vary the Anton Piller Order.  Upon the undertaking of the defendants not to remove or destroy any listed items at the Wanchai office until the disposal of the Continuation Summons and the plaintiffs’ undertaking to perform no further execution of the Anton Piller Order until the disposal of the Continuation Summons, an order was made by consent by Yam J on the same day to adjourn this summons until after the disposal of the Continuation Summons.

13.  The Continuation Summons came before Lam J on 15 December 2006.  By consent, the judge ordered the summons to be adjourned to a date to be fixed, laid down a timetable for both sides to file evidence in opposition and in reply, and provided that the Anton Piller Order is to be continued until after the determination of the Continuation Summons or further order.  Counsel for the plaintiffs informed the court it was the plaintiffs’ belief that outstanding matters arising out of the execution of the Anton Piller Order, as outlined in his submission, might be resolved without having to come back to court.

14.  The 1^st and 2^nd defendants did not file any evidence in opposition of the Continuation Summons in 2007.

15.  In the meantime, pleadings were filed.  In the amended defence, the 1^st defendant admitted to “tardy banking” of some of the cash takings of the bar restaurants and to the taking of “unauthorised loans” to herself of some of the cash takings.  She averred she has repaid the sums identified by the plaintiffs and the final payment of $45,383.86 was made on 17 November 2006.  The 1^st and 2^nd defendants admitted they have been the beneficial owners of Sticky Fingers at all material times.  They denied the “unauthorised loans” were used in or mixed with funds used in the operation of Sticky Fingers or Spicy Fingers or their other commercial interests, or that the plaintiffs have suffered any continuing loss.

16.  The reply to the amended defence of the 1^st and 2^nd defendants was filed on 11 October 2007.  Discovery by list of documents followed.  On 29 April 2008, the 1^st and 2^nd defendants filed their first list of documents and a supplemental list of documents.  The plaintiffs are of the view that the discovery of the 1^st and 2^nd defendants is seriously deficient; they noted that very few documents related to the businesses of the 3^rd and 4^th defendants were disclosed.  They set out in the letter of their solicitors dated 24 July 2008 what further classes of documents should be disclosed.  The 1^st and 2^nd defendants replied by the letter of their solicitors dated 10 September 2008 declining to give discovery of the documents sought and claiming that the requests were a fishing exercise to find out information about the current business activities of the 1^st and 2^nd defendants, irrespective of whether they related to allegations in the proceedings.  So far, the plaintiffs have not issued a summons for specific discovery.

17.  Meanwhile, correspondence was exchanged between solicitors for the parties and with the supervising solicitor with regard to the plaintiffs’ request in June 2008 to inspect the electronic records held by the supervising solicitor under the Anton Piller Order.  The plaintiffs’ concern is that there are discoverable documents in the electronic records which have not been disclosed in the lists of documents of the 1^st and 2^nd defendants, and these documents will remain hidden unless the plaintiffs are permitted to inspect the electronic records.  The 1^st and 2^nd defendants’ initial position, as stated in the letter of their solicitors to the supervising solicitor dated 7 May 2008, was that any relevant documents contained on the copy disks in the possession of the supervising solicitor have already been disclosed in the lists of documents filed by these defendants.  Later, in August 2008, the defendants proposed to review the electronic records held by the supervising solicitor to ensure that all relevant documents have been disclosed, claiming that one of the hard drives was found to be corrupted when it was returned following the execution of the Anton Piller Order.  The plaintiffs have not agreed to this.

18.  The supervising solicitor was agreeable to allow inspection by the plaintiffs, subject to an agreement to be reached with the 1^st and 2^nd defendants as regards the confidentiality of material on the computer disks which has nothing to do with the disputes in the action.  The defendants proposed that before the plaintiffs’ inspection, they should have an opportunity to inspect the electronic records to identify documents which are privileged and irrelevant and should not be available for the plaintiffs’ inspection, and they would disclose any discoverable documents in a further supplemental list.  The plaintiffs counter-proposed that: (1) the electronic records in their entirety are to be searched by reference to keywords proposed by the plaintiffs with a view to identifying the items in Schedule 2 of the Anton Piller Order, and this process is to be reviewed by the supervising solicitor; (2) the defendants be allowed to review the documents that have been identified as relevant with a view to identifying any privileged documents; and (3) the supervising solicitor is to adjudicate on each claim of privilege by the defendants.  The counter-proposals are more or less the same as the orders sought in the Inspection Summons.

19.  The Inspection Summons first came before me on 12 September 2008.  The day before, the 1^st and 2^nd defendants issued a summons returnable at the hearing to discharge the Anton Piller Order, on the basis that they have given discovery and any inspection of the electronic records would be subsumed by the discovery that has already taken place.  I dismissed the application as I could not be sure that must be the case, but gave an extension of time to the 1^st and 2^nd defendants to file evidence to oppose the Continuation Summons pursuant to leave granted on 15 December 2006.  There is no appeal from that decision.  I also adjourned the Inspection Summons with directions to file evidence.

20.  The defendants filed evidence to oppose the Continuation Summons on 26 September 2008.  The plaintiffs filed evidence in reply on 17 and 20 October 2008.  Leave was given to the defendants to rely on one further affirmation made by their solicitor on 2 February 2009.

21.  The Continuation Summons and the Inspection Summons were heard together.  The Continuation Summons should be considered first.  If for any reason the Anton Piller Order were not continued, the Inspection Summons would fall away.

The defendants’ grounds of opposition

22.  The 1^st and 2^nd defendants opposed the continuation of the Anton Piller Order on three broad grounds:

(1) there was material non-disclosure of the plaintiffs in the ex parte application on 5 December 2006;

(2) the plaintiffs sought to execute the Anton Piller Order other than in accordance with its terms and in an oppressive manner; and

(3) at and about the time the Anton Piller Order was made, and thereafter, the defendants’ family was subjected to surveillance which was overt, oppressive and intimidating.

23.  The defendants’ solicitors had, in a lengthy letter to the plaintiffs’ solicitors dated 14 December 2006, complained of material non-disclosure in a number of respects.  Mr. Strachan for the defendants informed the court at the hearing that they would only rely on those aspects of material non-disclosure dealt with in his submissions.  Furthermore, he did not pursue an allegation of non-disclosure relating to an undated report prepared by RC Management Services Limited, after Mr. Chua, SC had made known to the court that according to his instructions the first draft of this report was only received by the plaintiffs on 22 December 2006.

24.  It would be convenient at this point to deal with an argument of delay and issue estoppel advanced by Mr. Chua on behalf of the plaintiffs.  He submitted firstly the 1^st and 2^nd defendants cannot run the argument on material non-disclosure to discharge the order now, after a delay of nearly two years from 15 December 2006, when they were given 21 days by consent to file evidence to oppose the Continuation Summons, relying on dicta in Columbia Picture Industries Inc. v. Robinson [1987] 1 Ch 38 at 86E to G.  Secondly, he argued that they should not have another bite of the cherry, having taken out an application to discharge the Anton Piller Order on 11 September 2008, albeit on another ground, and failed.  In support of this, he cited Sanyo Electric Trading Co. Ltd. v. Leung Kwok-hing [1993] 1 HKLR 253 at 256 to 257 and Chu Hung Ching v. Chan Kam Ming & Ors. [2001] 1 HKC 396 at 401E to 402E.

25.  On the first point taken by Mr. Chua, as mentioned in Columbia Picture, in most cases, an application to set aside an executed Anton Piller order for material non-disclosure was made reasonably soon after the execution of the order, where it was at least possible that the setting aside of the order could have some practical effect.  In Columbia Picture, the court declined to set aside a wholly executed order 18 months after the event, as that would be an empty gesture (at 86H to 87B).  Here, it does not seem to me there would be no practical advantage to the 1^st and 2^nd defendants if the Anton Piller Order were set aside.  As is recognised by all, the Inspection Summons would fall away if the Anton Piller Order were to be discharged.

26.  As regards his second point, the rules relating to res judicata in interlocutory matters are less stringent than those generally applicable.  The defendants’ unsuccessful application in September 2008 to discharge the Anton Piller Order was made on a limited basis, premised on an alleged change of circumstances in 2008.  At the same hearing, the court was given to understand that the defendants had not taken further steps to vary or discharge the Anton Piller Order since December 2006 due to lack of funds at the time, and that other issues in opposition might be raised by the defendants, so leave was given to them to file evidence out of time to oppose the Continuation Summons.  I could have adjourned the summons to discharge issued in September 2008 to be heard with the Continuation Summons, but in the exercise of my powers of case management, chose to dispose of that summons on a limited ground and gave time to the defendants to file evidence in opposition raising other grounds.  I do not think the rules of res judicata should apply in these circumstances.  This is not re-litigating the same question in another application or raising matters in a subsequent application that could and should have been litigated in the earlier application.

27.  I am mindful that the 1^st and 2^nd defendants renewed their efforts to oppose the continuation of the Anton Piller Order when the plaintiffs sought inspection of the electronic records under that order.  I note the explanation given in the 1^st defendant’s affidavit in September 2008 why the objection to the Anton Piller Order was not pursued before that time.  Whatever may be the motivation behind the opposition, I would still need to consider the opposition on the merits.

28.  I will first set out the terms of the Anton Piller Order before I consider each of the grounds of opposition.

The terms of the Anton Piller Order

29.  The draft order the plaintiffs placed before the court in the ex parte application followed the standard form in Practice Direction 11.2, with a number of amendments.  I understand that a marked-up version of the standard form order with the plaintiffs’ amendments was shown to the judge before he was asked to make the order.

30.  The salient terms of the Anton Piller Order for present purpose are as follows:

(1) By paragraph 1(1), the defendants are required to allow the supervising solicitor, the plaintiffs’ solicitors and the computer expert to “enter the premises mentioned in Schedule 1 to this Order together with any garages or outhouses thereto and any other premises used by the defendant [italics supplied; “defendant” is defined in the Order to mean both the 1^st and 2^nd defendants or each of them] and disclosed pursuant to paragraph 5(1) hereof and any vehicles under the defendant’s control on or around the premises” so that they can search for, inspect, photograph or photocopy, and deliver into the safekeeping of the plaintiffs’ solicitors all the documents and articles listed in Schedule 2 thereto (“the Listed Items”).  The premises mentioned in Schedule 1 are the Sai Kung residence.  The italicised words “used by” do not appear in the standard form.  The wording in the standard form is “any other premises of the defendant disclosed pursuant to paragraph 5(1) hereof”.

(2) The scope of the Listed Items is cast very wide.  They include not just documents relating or referring directly or indirectly to the three plaintiffs, Sticky Fingers and the 3^rd defendant but any transaction or business related communication with or involving any “Group Company” and all documents showing what has become of cash takings and assets of any Group Company.  “Group Company” is defined to mean the companies or any of them which are listed in exhibit 1 to the supporting affidavit of Mr. Hatton.  22 companies are listed in that exhibit.

(3) Under paragraph 4, the defendants are required to immediately hand over to the plaintiffs’ solicitors any of the Listed Items in their possession or control save for any computer or hard disk, and give the computer expert immediate access to any computers on the premises to enable him to retrieve, copy and preserve the information and data saved on storage devices and hard drives.  This is different from the provisions in the standard form.  The standard form does not provide for a computer expert, so for electronic records the plaintiff’s solicitors are to have effective access to the computers and to cause the listed items to be printed out or copied on a floppy disk to be given to the plaintiff’s solicitors.

(4) By paragraph 5(1), the defendants are required to immediately inform the plaintiffs’ solicitors where (i) all the Listed Items are and identify their author; and (ii) the proceeds of the monies and assets referred to in Schedule 2 are.

(5) By paragraph 6, they are prohibited from destroying, tampering with, or parting with possession, power, custody or control of the Listed Items otherwise than in accordance with the terms of the order.

(6) In paragraph 7, it is provided that the provisions in paragraphs 1, 4 and 5 shall have effect only in so far as the privilege against self-incrimination is not claimed by the defendants.

(7) Schedule 5 contains the undertakings given by the supervising solicitor.  In paragraph (5), he undertakes that any items given to the computer expert or the supervising solicitor pursuant to paragraph 4 of the order shall be held by the supervising solicitor or the computer expert, as the case may be, at his firm’s offices pending inspection by any party to these proceedings, and such inspection to be conducted in the presence of and under the supervision of the computer expert and the supervising solicitor prior to the return date being 15 December 2006.

Material non-disclosure in the context of an Anton Piller order

31.  I have been reminded that an Anton Piller order is “at the extremity of this court’s powers” and is “contrary to normal principles of justice and can only be done when there is a paramount need to prevent a denial of justice to the plaintiff” (Anton Piller KG v. Manufacturing Processes Ltd. [1976] Ch 55 at 61H, per Ormrod LJ; Lock International plc v. Beswick [1989] 1 WLR 1281G to H, per Hoffman J (as he then was)).  Mr. Strachan has emphasised its “Draconian and essentially unfair nature … from the point of view of respondents against whom they are made”, and “the traumatic effect and the sense of outrage likely to be produced by an invasion of home territory” (Columbia Picture, supra. at 76E and 73C, per Scott J (as he then was)).

32.  Because Anton Piller orders give compulsory rights of inspection and the situation is irreversible once inspection has taken place and the other side has obtained information from the inspection, it is very important that the ex parte judge should be fully informed of all matters that are relevant to the weighing operation in the exercise of his discretion whether to make the order.  Hence, the rule of full disclosure to the court is “almost more important in Anton Piller cases than in other ex parte applications” (Thermax Ltd. v. Schott Industrial Glass Ltd. [1981] FSR 289 at 298, per Browne-Wilkinson J (as he then was)), and “the nature of Anton Piller orders requires that the affidavits in support of applications for them ought to err on the side of excessive disclosure” (Columbia Picture, supra. at 77E).

33.  Further, legal advisers and counsel have a duty to bring to the attention of the ex parte judgematerial matters.  The requirement of full and frank disclosure is not met if significant information is immersed in a mass of papers placed before the judge who does not have the time to read and digest the material in detail (Intergraph Corporation v. Solid Systems CAD Services Ltd. [1993] FSR 617 at 625; Fenn Kar Bak Lily v. Goh Kim Lay [1995] 3 HKC 313 at 317B).  In this instance, the supporting affidavit of Mr. Hatton runs to 148 numbered paragraphs with documents exhibited taking up two lever arch files.

34.  Whilst the court must be vigilant and insist that full and frank disclosure must be made in supporting affidavits for an Anton Piller order, it is pertinent to bear in mind the true principle upon which this rule is based, as stated by Fuad J.A. in Citibank N.A. v. Express Ship Management Services Ltd. & Anr. [1987] HKLR 1184 at 1190I: “Unless the courts use the sanctions which the practice gives them only whenthe non-disclosure is of facts which are relevant to the ex parte judge’s ‘weighing operation’, an impossible burden would be placed upon applicants and their advisers, and affidavits, ex abundanti, will tend to contain all sorts of facts and exhibits which are not really necessary for the proper exercise of the court’s discretion when ex parte relief is sought.”

The allegations of material non-disclosure

35.  It is alleged that the plaintiffs had failed to draw to the attention of the court the following material matters:

(1) By the time the ex parte application was made, all the sums misappropriated according to the analysis of the 1^st plaintiff in May 2006 had been repaid, and by then the plaintiffs had plainly considered the matter involving the misappropriations to be closed.

(2) The Anton Piller Order was drafted so widely that it encompassed documentation which had nothing to do with the claims by the three plaintiffs against the 1^st and 2^nd defendants.

(3) Paragraph 2(a) of Schedule 2 to the Order required the defendants to disclose all documents showing what had become of the cash takings of any “Group Company”.  The plaintiffs did not draw the court’s attention to the fact that the 1^st defendant was not responsible for the cash takings of any “Group Company”, other than the 2^nd and 3^rd plaintiffs.

(4) The plaintiffs referred only to the 1^st defendant working from a “home office” in Sai Kung, they did not disclose to the court she worked out of the Wanchai office.

36.  I will consider these allegations in the order raised.

Repayment of misappropriations

37.  In Mr. Hatton’s supporting affidavit, he exhibited a report dated 12 May 2006 prepared by Grant Thornton on his instructions.  That report contained an analysis carried out by the head office of the 1^st plaintiff of outstanding cash banking between July 2004 and 4 May 2006 and it stated that the amount of outstanding cash banking as at 4 May 2006 was $45,383.86.  Mr. Hatton made no mention of the figure of $45,383.86 in his affidavit, so this information was not drawn specifically to the attention of the court.

38.  Under the heading of “Full and frank disclosure” in his affidavit, Mr. Hatton referred to an email he sent to the 2^nd defendant on 23 May 2006 in which he assured the latter that he and Mr. Smout would treat the misappropriations as a “family matter”.  He also exhibited a letter sent to Mr. Smout from the 2^nd defendant dated 17 November 2006 and challenged the accuracy of the matters set out in that letter.  Apart from that, he did not draw attention to the contents of the letter which alleged, among other things, that Mr. Smout had told the 2^nd defendant on 22 May 2006 the plaintiffs would not sue the 1^st defendant for the misappropriations, and that the 2^nd defendant had enclosed with his letter a bank deposit slip showing $45,383.90 was deposited into the bank account of the 1^st plaintiff on the same day, to “[close] this incident”.

39.  Further, no mention was made of the above matters in the skeleton submission of the plaintiffs’ counsel in the ex parte application.

40.  Mr. Strachan submitted that the above matters were material and should have been brought to the attention of the court, as they tended to show that the matters involving the misappropriations were closed, and a reason for seeking the Anton Piller Order was that Mr. Hatton believed the defendants to be in possession of necessary evidence required by the plaintiffs to substantiate their claims against them, including “accounting and corporate records pertaining to the Bar Restaurants [of the plaintiffs] which may well show further discrepancies and/or misappropriations”.  In his 8^th affidavit filed in reply to the 1^st defendant’s affidavit in this hearing, Mr. Hatton claimed that even in 2008, it is not known with certainty when the 1^st defendant began to misappropriate monies from the group of companies, nor how much she took and when, so the need to obtain and consider the evidence on misappropriations and the repayments was “one of the central reasons for applying for the Order.”

41.  I do not agree with his submissions that the matters not drawn to the court’s attention were material to the weighing exercise whether to grant the Anton Piller Order.

42.  The reason for granting the order was a real risk of concealment or destruction of evidence showing how the monies misappropriated were used and the nature and involvement of these defendants in Sticky Fingers, which may have been essential to the plaintiffs’ claims of, among other things, tracing and recovery of monies and profits.  Such risk was premised on the 1^st defendant’s attempts to hide her misappropriations on 21 to 22 April 2006 and subsequently and to cover her tracks by making significant deposits of money into the bank accounts of the plaintiffs, the discovery by the plaintiffs in October 2006 that the 1^st and 2^nd defendants had been secretly involved in the establishment and operation of Sticky Fingers since 2004, and the evasive response of the 2^nd respondent when he was asked about Sticky Fingers in a shareholders meeting in October 2006.  The fact that the defendants had caused repayment of $45,383.86 to be made in November 2006 did not minimise or reduce the risk of concealment or destruction of evidence, nor did it alter the position that the plaintiffs had a strong prima facie case against the 1^st and 2^nd defendants, and that actual or potential damage to the plaintiffs arising out of the defendants’ operation of a business in direct competition with the plaintiffs for two years could be very serious.

43.  As for the contention that the matter concerning the misappropriations was closed, this has to be looked at in the proper context.  At the highest, it was the defendants’ wish that the matter would be treated as closed when $45,383.86 was deposited in November 2006.  There was no suggestion that they had received any response from Mr. Smout or Mr. Hatton to the 2^nd defendant’s letter of 17 November 2006.  Mr. Strachan submitted the absence of response would suggest that the parties had considered the matter involving the misappropriations as closed when the application for the Anton Piller Order was made.  That was not the evidence in Mr. Hatton’s supporting affidavit.  Mr. Hatton had deposed that in May 2006, the plaintiffs were prepared to treat the misappropriations as an internal matter and did not report this to the police, as it was thought at the time the misappropriations had occurred because the 1^st defendant was short of funds for the purchase of her family home.  Later, the plaintiffs decided to take action against the defendants after they discovered the latter’s involvement in Sticky Fingers in October 2006, and inferred that the monies misappropriated might be used for Sticky Fingers.  The defendants’ thinking that the matter of the misappropriations would be treated as closed in November 2006 could not be regarded as a material matter for the purpose of the application. 

The wide scope of the Anton Piller Order

44.  The complaint here is that the plaintiffs sought and obtained an order the breadth of which was such as to entitle them to search for documentation which had nothing to do with their claims in the High Court Action, and in obtaining such an order they did not bring to the attention of the court the irrelevance to their claims of documents relating to a large number of extra companies that come within the definition of a “Group Company” in the order.

45.  As mentioned earlier, the scope of the Listed Items is very wide.  Paragraph (1)(a)(i) of Schedule 2 refers to all documents relating or referring directly or indirectly to any transaction or business related communication with or involving any “Group Company”.  22 companies are listed within that definition, only three of them are the plaintiffs, four are property owning companies in which the 1^st defendant had no day-to-day involvement, four are shelf companies, and the 1^st defendant was not even aware of the existence of two of the companies listed (Wise Eagle Development Limited and Wise Owl Development Limited) in which neither she nor the 2^nd defendant is a shareholder.  Wise Owl Development Limited was only incorporated less than a month before the application for the Anton Piller Order.  Three other companies related to the companies as listed, including Insomnia Live Music Pte. Ltd. (a company incorporated in Singapore and is the operator of a bar restaurant there), were not included as Group Companies.  It did not appear the court was alerted to the fact that the claims made against the defendants did not relate to the extra companies.

46.  Six months after the Anton Piller Order was made, Mr. Hatton caused 14 petitions to be brought under section 168A of the Companies Ordinance, Cap. 32 against the 1^st and 2^nd defendants and Mr. Smout, seeking relief that the 1^st defendant be ordered to sell her shares in each of the companies to the company concerned, alternatively to Mr. Hatton, at a value to be determined by the court to reflect the alleged unfairly prejudicial conduct. These petitions (four of which were struck out on 26 October 2007) were consolidated with the High Court Action.

47.  It is alleged by the 1^st defendant that the reason why Mr. Hatton included all of the extra companies in the Anton Piller Order was because he was already planning to launch the petitions against her and wanted to try to obtain further evidence in support of his petitions and to put pressure on the defendants to sell their shares at a significant discount.

48.  Mr. Strachan submitted that a “most serious responsibility” is borne by legal advisers in applying for an Anton Piller order and they owe an overriding duty to assist the court so as to ensure, as far as possible, “that the court does not make an order which perpetrates an injustice against the absent party” (Tamco Electrical & Electronics (Hong Kong) Ltd. v. Ng Chun-fai Stephen [1994] 1 HKLR 178 at 190 to 191, per Godfrey J (as he then was).  Here, the plaintiffs had failed to ensure that the court did not make an order which perpetrated an injustice on the defendants.  They should have sorted out which companies are relevant to the claims made against the defendants in the High Court Action when they applied to court instead of seeking a blanket order.  The Draconian and essentially unfair nature of Anton Piller orders from the point of view of a defendant against whom they are made requires that “they be so drawn as to extend no further than the minimum extent necessary to achieve the purpose for which they are granted, namely, the preservation of documents or articles which might otherwise be destroyed or concealed” (Columbia Picture, supra. at 76E).  “There must be proportionality between the perceived threat to the plaintiff’s rights and the remedy granted” (Lock International, supra. at 1281D).

49.  In Mr. Hatton’s affidavit in reply, he acknowledged there are inconsistencies in the list of companies defined as Group Companies, in that two companies should not be on the list (Wise Eagle Development Limited and Wise Owl Development Limited) but three other companies (including Insomnia Live Music Pte. Ltd.) should have been listed.  He explained that at the time of the application, he and his legal advisers “had not fully determined the precise status of all the various entities”, that the structure of the Group is complex, and that “minor inconsistencies” came about during the urgent preparations for injunctive relief.  He claimed that the inconsistencies have since been rectified and Group Companies have now been clearly defined in the petitions presented under section 168A.  He also stated it was clear from his supporting affidavit which Group Companies were the plaintiffs in the High Court Action and why.  He asserted the section 168A petitions were not in contemplation when the application for the Anton Piller Order was made, and the focus at the time was on identifying and preserving evidence in relation to the fraud committed by the defendants.

50.  Mr. Chua submitted it was obvious to the judge that only three of the Group Companies are the plaintiffs, but as it is apparent from the supporting affidavit there was interaction between the Group Companies and they are interdependent and interlinked, companies other than the plaintiffs might be involved in the fraud committed.  Furthermore, so long as full disclosure of all relevant material is made to the court, he asked rhetorically why solicitors and counsel should not apply for the most favourable order they can persuade the court to grant.  “The safeguard against orders that ought not to be made or against orders made in unnecessarily wide terms is, or ought to be, the judge.” (Columbia Picture, supra. at 82B to E).

51.  The crux of the matter is whether the duty of ensuring full disclosure of all relevant material to the court was discharged.

52.  In this instance, I am not persuaded that the duty was discharged.  It is not apparent, or not readily apparent, from the supporting affidavit how those Group Companies which are property owning companies or shelf companies might be involved in any way in the fraud committed, so that there was a risk that documents relating or referring to any transaction or business related communication with or involving such other Group Companies might be destroyed or concealed.  The skeleton submission of the plaintiffs’ counsel made no mention of these other Group Companies.  There was no reference to the list of 22 companies in the skeleton submission.  Under the heading of “Material evidence” in the submission, counsel had only mentioned communications between the 1^st and 2^nd defendants and Sticky Fingers, Entertain Company Limited (this would seem to be a reference to the 3^rd defendant) and two individuals; accounting and corporate records pertaining to the plaintiffs’ bar restaurants; evidence of the misappropriation of monies belonging to the 2^nd and 3^rd plaintiffs; and accounting and corporate records belonging to Sticky Fingers.  The judge was not put in a position to make a proper assessment if documentation relating to a host of Group Companies other than the plaintiffs should be included in the Listed Items.

53.  I hold that material non-disclosure is made out in respect of this complaint.

No responsibility for cash takings of other companies

54.  This is also a complaint that the Listed Items in the Anton Piller Order are too widely framed.

55.  Under paragraph (2)(a) of Schedule 2, the defendants are required to disclose all documents showing what has become of “the cash takings of any Group Company (including any assets that have been acquired using those sums or investments made)”.

56.  The 1^st defendant asserted she was responsible for and had access to the cash takings only of three bar restaurants, operated by the 2^nd and 3^rd plaintiffs and by another Group Company called Step In Limited (not the subject of any section 168A petition, the bar restaurant concerned had ceased trading in November 2005).  She was not responsible for and did not have access to the cash takings of the bar restaurant operated by Insomnia Live Music Pte. Ltd. in Singapore, or the bar restaurant operated by Step Further Limited (which only opened for business six months after she was dismissed).  Hence, she was not in a position to misappropriate cash takings and assets of all of the Group Companies.

57.  Mr. Strachan submitted that the plaintiffs did not draw the court’s attention to the fact that the 1^st defendant was not responsible for the cash takings of any of the other Group Companies, so that the defendants would not be subjected to an order which was too widely drawn.  Furthermore, a false impression was given in the supporting affidavit that she was responsible for all the cash takings of all the bar restaurants of the Group Companies, as “Bar Restaurants” were defined in that affidavit to mean bar restaurants in Hong Kong and Singapore operated by companies in “the Group”.

58.  Mr. Hatton in his reply affidavit disputed the 1^st defendant’s assertion that she was not responsible for the cash takings of Insomnia Live Music Pte. Ltd. Mr. Chua argued it is doubtful how the lack of cash in certain other Group Companies for the 1^st defendant to misappropriate would be a relevant consideration on the ex parte application.

59.  I am inclined to agree with Mr. Strachan paragraph (2)(a) of Schedule 2 is too wide.  There was no evidence to suggest the 1^st defendant was responsible for or had access to the cash takings of a Group Company that was not operating a bar restaurant.  Further, in the case of Step Further Limited, it is not disputed she was not involved in the cash takings of this company.  These matters which were not brought to the attention of the court are relevant to the consideration whether there was a risk that documents showing what has become of the cash takings of any Group Company might be destroyed or concealed by the defendants.  I hold that material non-disclosure is also made out in this instance. 

No disclosure of the Wanchai office

60.  It is alleged that the plaintiffs failed to disclose to the court they knew the defendants worked out of the Wanchai office, the supporting affidavit referred only and repeatedly to the 1^st defendant working from a home office, so as to justify an Anton Piller order directed at the defendants’ home.

61.  According to the report of the supervising solicitor, at the outset of the execution of the order on 6 December 2006, the plaintiffs’ solicitor, Mr. Angus Ross, asked the defendants whether they had a computer at the address of the Wanchai office.  That address was not mentioned in the Anton Piller Order.  Mr. Ross confirmed that the address had been identified from the surveillance of the 1^st defendant and stated that the order entitled him to “search any premises that were used, identified or disclosed by the defendants”.  Thereupon, the defendants’ solicitor, Mr. Mark Side, said if the plaintiffs had intended to search the Wanchai office, this should have been disclosed by them in accordance with the requirement of full and frank disclosure.

62.  Mr. Strachan argued the court might have felt disinclined to permit an intrusive and disruptive search of the defendants’ home, had it been made aware that the 1^st defendant worked from the Wanchai office.

63.  Mr. Hatton explained in his affidavit in reply that at the time the order was applied for on 5 December 2006, he was suspicious that the 1^st defendant was working out of the Wanchai office but did not have “conclusive evidence” either that such an office existed, or for what purpose any such office was being used.  He was informed at the time of preparing for the application that surveillance of the 1^st defendant had revealed apparent use by her of an address in Wanchai, but it was not clear why or how that address was used, or what was at that address.  It was not possible at the time to investigate the matter fully, and he honestly believed that the place where documents would most likely have been held was the defendants’ home, because for many years whilst the 1^st defendant was employed by the 1^st plaintiff, she had chosen to work from home rather than the Group’s head office in Central.  He had no real reason to suspect that a possible Wanchai address, about which he had no substantive details, would be a more likely location of documents.

64.  I see no reason to reject Mr. Hatton’s explanation.  I hold that material non-disclosure is not established for this allegation.

Execution of the Anton Piller Order

65.  The next broad ground of opposition relates to the execution of the Anton Piller Order.  There are two complaints.  Firstly, it was not executed in accordance with its terms.  Secondly, the execution was carried out in an oppressive manner.

66.  Mr. Strachan submitted that “subsequent events surrounding the execution of the Anton Piller order … could be properly considered when it comes to the stage of the exercise of the court’s discretion to discharge or uphold the order” (International Management Group (Overseas) Inc. v. Lun Sheung Mei Serina & Anr. [2006] 2 HKC 463 at 478F to H, para. 28).  See also Tate Access Floors Inc. v. Boswell [1991] Ch 512 at 533C, wherein it is stated that “if in the course of executing a Mareva or Anton Piller order the plaintiffs fail properly to observe any undertaking given to the court as a term of granting the ex parte order or otherwise act scandalously the court can and will take such conduct into account in deciding whether or not to set aside the ex parte order or grant further relief.”

67.  Mr. Strachan submitted the terms of the Anton Piller Order gave the plaintiffs’ solicitors no power to interrogate the defendants.  Paragraph 5(1) of the order merely imposed an obligation on the defendants to immediately inform the plaintiffs’ solicitors where all the Listed Items are and identify their author and where the proceeds of the monies and assets referred to in Schedule 2 are.  It did not legitimise any interrogation by the plaintiffs’ solicitors.

68.  He pointed to a number of instances recorded in the report of the supervising solicitors in which the plaintiffs’ solicitor Mr. Ross put questions to the defendants and their solicitor Mr. Side.  Mr. Ross had asked questions in relation to the computer equipment, if the defendants had a computer at the Wanchai office, and if there were any other premises used by them which contained a computer.  The 2^nd defendant was asked where he was at 10:10 a.m. that day, as the supervising solicitor had been told earlier by the domestic helper the 2^nd defendant was not at home when it transpired he was apparently sleeping upstairs in the premises.  Questions were asked about a paper shredder in the premises, and if the accountants of the defendants held any Listed Items.  Mr. Ross also directed questions at Mr. Side whether the latter held any Listed Items and whether any Listed Items were held in the Wanchai office.

69.  As a step down proposition, Mr. Strachan argued that because of the defendants’ obligation in paragraph 5 of the Anton Piller Order to immediately inform the plaintiffs’ solicitors where all the Listed Items are and where the proceeds of the monies and assets referred to in Schedule 2 are, the plaintiffs’ solicitors might be implicitly permitted to put some questions to the defendants, but limited to eliciting the information the defendants are obliged to disclose in paragraph 5.

70.  Mr. Chua submitted that under the Anton Piller Order, it is mandatory for the defendants to make immediate disclosure to the plaintiffs’ solicitors of the matters they are required to disclose under paragraph 5(1).  The defendants do not have an option whether to reveal these matters to the plaintiffs’ solicitors.  To facilitate the execution of the order, it is permissible for the plaintiffs’ solicitors to ask questions designed to find out what the defendants are obliged to inform them.  I am inclined to agree with this submission.  The plaintiffs’ solicitors should be permitted to ask questions to ascertain if there are any other premises that may come within paragraph 1(1), where Listed Items may be found, and whether there has been tampering with any Listed Items.

71.  It is alleged that the plaintiffs’ solicitors had also exceeded their entitlement under the Anton Piller Order with regard to the premises which they demanded to search and had duly searched.  Under paragraph 1(1), the defendants are required to allow a search of “the premises mentioned in Schedule 1 to this Order together with any garages or outhouses thereto and any other premises used bythe defendant and disclosed pursuant to paragraph 5(1) hereof”.  This form of wording is a departure from the wording in the standard form in the Practice Direction, which reads, “any other premises of the defendant disclosed pursuant to paragraph 5(1) hereof”.

72.  Hence, in respect of any other premises the plaintiffs were entitled to search, such premises must be used bythe defendants and disclosed bythe defendants pursuant to paragraph 5(1) where items listed in Schedule 2 were to be found.  The mere fact that these premises were used by the defendants is not sufficient.

73.  Mr. Strachan submitted that the plaintiffs’ solicitors asserted an entitlement to search the Wanchai office and the Sticky Fingers premises when neither premises fell within paragraph 1(1) of the Anton Piller Order.  The Wanchai office was not premises that the defendants had informed the plaintiffs’ solicitors where items listed in Schedule 2 were to be found.  Mr. Ross had known of the Wanchai office from the surveillance of the 1^st defendant and had asserted from the outset an entitlement to search the premises.  Mr. Side had made clear that the defendants’ permission to search that address was given without prejudice to the defendants’ contention that the premises were outside the order.  The entitlement to search the Sticky Fingers premises was likewise flawed in that the defendants had not informed the plaintiffs’ solicitors that items listed in Schedule 2 were to be found there.

74.  Looking at what was said between Mr. Ross, Mr. Side and the defendants during the execution of the order as a whole, I am of the view there was disclosure by the defendants of the Wanchai office and the Sticky Fingers premises so that these premises fell within paragraph 1(1).  In response to Mr. Ross’ questioning, the defendants had told him there was a computer at the Sticky Fingers premises and some “everyday documents” were kept there.  For the Wanchai office, the defendants had at first refused to answer, on the advice of Mr. Side, whether there was a computer kept at that address.  This withholding of information appeared to me to be unjustified.  Subsequently, at the Wanchai office, in response to Mr. Ross’ question whether there was any Listed Item in the premises, Mr. Side stated he did not know and clarified shortly afterwards he imagined there would be such items in the premises.

75.  The defendants have also complained that the manner in which the Anton Piller Order was executed was oppressive and designed to humiliate them.  The plaintiffs had arranged for others to be present at or near the defendants’ home and the Sticky Fingers premises when execution was taking place.  A female private investigator from the firm engaged by the plaintiffs to conduct surveillance was present at the front of the Sai Kung residence and an employee from one of the plaintiffs’ bar restaurants had entered the Stick Fingers premises when execution was carried out.  These persons left following Mr. Side’s objection, and the private investigator was not inside the Sai Kung residence at any time.  I have noted other complaints regarding the detailed search by the plaintiffs’ solicitors of the Sai Kung residence in the 1^st defendant’s affidavit and in the letter of the defendants’ solicitors dated 14 December 2006.

76.  For the execution to be carried out thoroughly, a considerable degree of intrusion would be inevitable.  It may require the plaintiffs’ solicitors to search for Listed Items in places, which, to the defendants, would regard as unlikely.  I am satisfied from the affidavit of Mr. Vincent Neicho filed on behalf of the plaintiffs’ solicitors and from the report of the supervising solicitor that the plaintiffs’ solicitors had done their best in difficult circumstances to carry out the execution in an efficient and professional manner, and to minimise distress to the defendants.

77.  I hold that the allegations and complaints in relation to the execution of the order are not established.

Surveillance of the defendants

78.  The last ground of opposition is that in the period leading up to the obtaining of the Anton Piller Order, during 4 to 6 December 2006, the 1^st defendant and her children were subject to surveillance by private investigators engaged by the plaintiffs.  It is alleged that the surveillance was overt, oppressive and intimidating and such surveillance has continued on occasions thereafter, in March and December 2007.  These allegations are found in the 1^st defendant’s affidavit and in the letter of the defendants’ solicitors dated 14 December 2006.  Mr. Strachan submitted that an Anton Piller order is an equitable remedy and it should be refused to those who have had unclean hands or who have not been willing to do equity.

79.  Mr. Hatton had disclosed in his supporting affidavit on 5 December 2006 that private investigators were engaged to observe the home address of the defendants and their two young children and that surveillance took place from 6 a.m. to 6:30 a.m. on 4 December and from 6 a.m. on 5 December.  This was in connection with his proposal of the time during which the order should be executed, in the interests of causing minimum disruption to the household, and to avoid the issue of children being present when the order is served.

80.  In the affidavit of Mr. Neicho, he stated that it was emphasised to the private investigators that the surveillance should be conducted strictly within the law and he had instructed them it was vital their actions were covert and no actions should be taken which may alert or arouse the defendants’ suspicion.

81.  Notwithstanding the 1^st defendant’s perception, I am not satisfied on the evidence that overt, oppressive or intimidating surveillance was carried out.

If the Anton Piller Order should be continued

82.  I turn to consider if the Anton Piller Order should be continued, despite I have found material non-disclosure established in respect of two of the matters alleged.  It does not necessarily follow the Anton Piller Order should automatically be discharged.  The court has a discretion, notwithstanding proof of material non-disclosure which justifies immediate discharge of the ex parte order, nevertheless to continue the order, or make a new order on terms.  In stating that this discretion is to be exercised “sparingly” in Brink’s MAT Ltd. v. Elcombe [1988] 1 WLR 1350 at 1358, Balcombe LJ also mentioned he would not wish to define or limit the circumstances in which it may be exercised.

83.  Strictly speaking, it is not correct to seek continuation of the whole of the Anton Piller Order until trial or further order, as parts of it were executed and had been complied with, before the return day of the Continuation Summons on 15 December 2006 (Tamco Electrical, supra. at 197).  Other than the inspection of the electronic records held by the supervising solicitor, I have not been told there is any other outstanding matter arising from the execution of the order.

84.  Apart from his argument that the Anton Piller Order should not be continued on the grounds already advanced, Mr. Strachan submitted that inspection of the electronic records under the order should not be allowed for two reasons.

85.  Firstly, he contended there is no reason why discovery of relevant documents should not now proceed in the ordinary way, if necessary by the 1^st and 2^nd defendants serving a further supplemental list of documents, as proposed by their solicitors in August 2008.

86.  Secondly, he argued that as a matter of construction, the plaintiffs have no right to inspect the electronic records under the terms of the Anton Piller Order.  Paragraph 4 of the order merely required the defendants to give the computer expert immediate access to any computers on the premises to enable him to retrieve, copy and preserve the information and data saved on storage devices and hard drives.  It did not go on to provide for a right to the plaintiffs to access the information and data so retrieved and copied in order to inspect the Listed Items.

87.  I do not think the second argument is a good one.  It seems to me the apparent omission in paragraph 4 is due to the change made to the relevant provision in the standard form by the plaintiffs.  It is clear from the undertaking given by the supervising solicitor in Schedule 5 to the Anton Piller Order that it is envisaged any items given to the computer expert or the supervising solicitor pursuant to paragraph 4 of the order shall be inspected by any party to these proceedings, and that such inspection is to be conducted in the presence of and under the supervision of the computer expert and the supervising solicitor, prior to the return date of 15 December 2006.  The Anton Piller Order should be read as a whole.

88.  Mr. Chua urged the court to exercise its discretion to re-grant an Anton Piller Order even if there was material non-disclosure.  He submitted it is appropriate and necessary to inspect the documents seized during the execution of the Anton Piller Order to ensure that discovery is complete, as it is apparent that the defendants’ disclosure by list of documents is seriously deficient in many respects.  As for the point made by the defendants that they should be entitled to screen out privileged documents contained in the electronic records prior to inspection by the plaintiffs’ solicitors, he contended that it would not be appropriate for the defendants’ solicitors to carry out this filtering exercise, as the defendants’ solicitors were involved in the setting up of the competing business by the defendants and it was noted that the place of the business of the 3^rd defendant stated in the business registration document was the office of the defendants’ solicitors.

89.  I decline to exercise my discretion to continue the Anton Piller Order, having regard to the importance and significance to the outcome of the application of the material matters which were not disclosed, and which led to the extremely wide scope of the Listed Items in the order (Behbehani v Salem [1989] 2 All ER 143 at 149g).  Nor do I think the punishment of discharging the ex parte order would be out of proportion to the failure of the plaintiffs to make full and frank disclosure (Arab Business Consortium International Finance and Investment Co v Banque Franco-Tunisienne [1996] 1 Lloyd’s Rep 485 at 492).  The scope of the Listed Items is far too wide; it is difficult to see how some of the Group Companies would have anything to do with the claims by the plaintiffs against the defendants.

90.  I agree with Mr. Strachan there is no good reason why discovery of relevant documents should not now proceed in the ordinary way.  Documents contained in the electronic records held by the supervising solicitor have been preserved.  It is the responsibility of the defendants’ solicitors to review the electronic records with the 1^st and 2^nd defendants carefully and advise and assist the defendants to make disclosure of all relevant documents contained in the records by a further supplemental list.

91.  I am mindful of the allegations of the plaintiffs that the defendants’ solicitors might have a conflict of interest in that they had been involved in some way in the setting up of the competing business by the defendants.  A solicitor acting for a party in litigation bears a heavy responsibility to see to it that proper discovery is made of all relevant documents.  He is required to take positive steps to ensure that the client appreciates at an early stage of the litigation not only the duty of discovery and its width but also the importance of not destroying documents which might possibly have to be disclosed (Rockwell Machine Tool Co. Ltd. v. E. P. Barrus (Concessionaries) Ltd. [1968] 2 All ER 98).  The solicitor would need to inspect and carefully go through the documents proposed to be disclosed, to ensure there are no omissions, and that duty is owed by the solicitor to the court, as an officer of the court (Myers v. Elman [1940] AC 282 at 293 to 294, 322 to 323; Woods v. Martins Bank Ltd. [1959] 1 QB 55 at 60; Guess? Inc. & Ors. v. Lee Seck-Mon & Ors. [1989] 1 HKLR 399 at 404).  It would be professional misconduct for a solicitor to permit his client to give discovery of documents which was inadequate in that the solicitor knew there were undisclosed relevant documents in the possession, custody or power of the client (Myers v. Elman, supra. at 300 to 301).

92.  I would leave it to the defendants’ solicitors to discharge their duty to the court in discovery.  I am not persuaded that the solicitors would not be able to do so.

93.  For the above reasons, I discharge the Anton Piller Order.  The Inspection Summons is dismissed.  I give liberty to apply in relation to the orders I make.

94.  I make an order nisi that the costs of both applications be to the 1^st and 2^nd defendants in any event, with a certificate for two counsel.