TAI FOOK FUTURES LTD v. CHEUNG MOON HOI JEFF

HCA9932/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9932 OF 1999

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DECISION

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1.  By summons issued on 30 March 2005, the defendant applied for inspection by him and his authorized representative of “the originals of telephone records as well as tapes as disclosed by the plaintiff per item 16 of the Plaintiff’s List of Documents and item 1 of the Plaintiff’s Supplementary List of Documents”.  At the hearing on 11 April 2005, the defendant was absent.  The Master therefore adjourned the summons sine dine with liberty to restore. 

2.  The summons was restored for hearing on 25 July 2005 before the Registrar, who adjourned it for argument before me and gave directions for filing of evidence.

3.  Subsequently on 8 August 2005, the defendant filed his supporting affirmation.  In it, the defendant indicated that due to “new developments of the Action” after the filing of the summons on 30 March 2005, he would seek the following orders instead, namely:

“(i)     Unless the plaintiff do within 7 days from the date of this order to comply with the Order of Master Woolley given on 11 April 2003 to disclose all the original telephone conversations records of both 28^th and 29^th April 1999 inclusively between the defendant and/or the defendant’s wife and/or Ms Mica Mak of the plaintiff, in particular (1) the said particular telephone conversation record and the loss of 7-second records of the telephone conversation happened from 9:45:37am to 10:11:28am in the morning of 29 April 1999, 

(2) the telephone conservations regarding the disposal of China Merchant shares and (3) the telephone conversation records regarding the fax of the Reuter report, which were recorded by the plaintiff’s computer-operated system and were captured and stored in the computer at source, at the material time; the plaintiff’s claim against the defendant be struck out; the defendant is allowed to enter judgment against the plaintiff for the defendant’s counterclaim.

(ii)   The plaintiff do within 7 days from the date of this order to disclose the computer-operated system “the said system”, as mentioned per paragraph 23 of page 7 of the Reason of Decision given by Hon Chu J on 30 March 2005, with sufficient details so as to enable the defendant to engage an expert for inspection under Order 24 of the Rules of the High Court.

(iii)  The plaintiff, do within 14 days of disclosure of item (i) and (ii) above, to allow the defendant to inspect item (i) and (ii) with the defendant’s authorized representative(s), including the defendant’s wife and expert(s) in computer-operated system, at the plaintiff’s office located at New World Tower, Central.

(iv)  The plaintiff do allow the defendant to produce copies from the original telephone conversations records per item (i) above, using the same computer-operated telephone recording system, and per item (ii) under Order 24 of the Rules of the High Court and the defendant shall undertake to pay the reasonable charges.”

4.  It is not altogether clear as to what precise content and nature of the defendant’s application.  At the hearing, upon my request for clarifications, the defendant explained that his application was for the following relief:

(1)   Under (i), an Unless Order on the basis that the plaintiff has failed to comply with the Order of 11 April 2003 (“11-4-2003 Order”) in that it has not disclosed the originals of the relevant telephone recordings on 28 and 29 April 1999.

(2)   Under (ii), an order compelling the plaintiff to disclose the name of the plaintiff’s telephone recording system.

(3)   Under (iii), an order allowing the defendant to inspect the originals of the relevant telephone recordings on 28 and 29 April 1999, and the defendant’s expert to be present to hear and observe the playing of the relevant telephone recordings on the plaintiff’s telephone recording system.

(4)   Under (iv), an order allowing the defendant to record the original telephone recordings either by means of a recorder or using the plaintiff’s computer system.  

Developments since the hearing on 7 March 2005

5.  The relevant background and the developments in the action had been set out in paragraphs 3 to 16 of the Reasons for Decision handed down on 30 March 2005, which I do not repeat.  The Decision relates to two summonses filed by the defendant on 28 February and 2 March 2005 respectively, which I heard and dismissed on 7 March 2005.

6.  Since then, the only further developments in the action are:

(1)     The defendant is appealing against the dismissal of his two summonses under CACV 103/2005. The appeal has yet to be set down. 

(2)     The parties had exchanged witness statements on 6 April 2005 as per the final extension given on 7 March 2005.  

(3)     On 29 June 2005, the checklist hearing was ordered to be adjourned sine dine, presumably because of the present outstanding interlocutory application.

The application for an Unless Order

7.  I turn now to deal with the defendant’s application.  The first part of the application is for an Unless Order to comply with the 11-4-2003 Order.   Paragraphs 1 to 3 of the 11-4-2003 Order, which are relevant for the present purpose, provide:

“(1)    The plaintiff do within 14 days from the date of this order provide to the defendant copies of 2 tape recording cassette of the telephone conversations per item 16 of the plaintiff’s List of Document filed on 22 September 2000.

(2)     The plaintiff do within 14 days from the date of this order, disclose by way of filing a 2^nd Supplementary List of Document, audio tape record of the telephone conversations between Ms. Mica Mak of the plaintiff and/or the defendant and defendant’s wife on 29 April 1999.

(3)     The plaintiff, by an officer familiar with the facts of this case, to file and serve an affidavit within 14 days from the date of this order, verifying the fact the recording of telephone conversations supplied to the defendant are a complete record of all such conversations on the relevant dates.” 

8.  It is the defendant’s case that the Unless Order is necessitated by the plaintiff’s failure to comply with paragraphs 1 and 2 of the Order.  In paragraph 14 of his affirmation filed on 8 August 2005, the defendant deposed that a copy of the 28 April 1999 telephone conversations record was sent to him by a cassette tape, and a copy of the 29 April 1999 telephone conversations record was sent in the form of a CD-ROM.  He went on to say: “At that time, I suspected that the plaintiff had failed to comply with the order made by Master Wolley on 11 April 2003 to disclose the ‘Original’ of the telephone conversation on 28 April 1999 and 29 April 1999.” 

9.  In the affirmation, the defendant also accused the plaintiff and its solicitors of twisting the meanings of the 11-4-2003 Order, making selective disclosure of edited versions of the recordings: see paragraphs 38-41.  Although the defendant had also stated in his affirmation that the plaintiff had not disclosed all the telephone conversations on the two days, he confirmed at the hearing of the application that the basis of his complaint of non-compliance was the plaintiff’s failure to disclose the original of the telephone recordings.

10.  In my view, the application for an Unless Order is misconceived.  Firstly, the defendant has not established that the plaintiff has not complied with the 11-4-2003 Order.  Secondly, there is no justifiable basis for making the Unless Order sought by the defendant  

11.  On the matter of compliance with the 11-4-2003 Order, the Order does not specify the disclosure of the original recordings.   Under paragraph 1, the plaintiff is directed to supply “copies of 2 tape recording cassette of the telephone conversations per item 16 of the plaintiff’s List of Document filed on 22 September 2000” (emphasis added).  It does not direct the disclosure of original recordings. The supply of cassette tape is also in accordance with the terms of the Order, although the defendant seemed to think otherwise.  As a matter of fact, item 16 of the plaintiff’s List of Document also refers to “tape recording cassette on the telephone conversations between Ms Mica Mak and Ms Jessie Yung” on 28 April 1999.  Jessie Yung is the defendant’s wife.   

12.  Further, paragraph 2 of the 11-4-2003 Order requires disclosure of the audio tape record of the 29 April 1999 telephone conversation between Mica Mak and Jessie Yung by Supplementary List of Document.  The plaintiff had filed and served a 2^nd Supplementary List of Document on 22 April 2003.  The plaintiff had also provided to the defendant a CD-Rom containing the telephone recording.  As noted in the Reasons for Decision, the plaintiff maintained a computerized telephone recording system.  The conversations were captured and stored in the computer. There would not be an original audio tape.  Any audio tape has to be a duplicated copy.  

13.  By providing the cassette tape and CD-Rom, the plaintiff has duly complied with paragraphs 1 and 2 of the 11-4-2003 Order.  Indeed, the plaintiff’s directors had twice gone on oath to verify that the recordings supplied to the defendant were the complete records of all the conversations between the defendant and/or his wife and Mica Mak on 28 and 19 April 1999. The two verifying affirmations were filed and served in April and May 2003.  It is not open to the defendant to go behind the plain and unambiguous wording of the Order and to subscribe to it meanings that are not apparent.

14.  As to the grant of an Unless Order in the terms sought by the defendant, Deputy Judge Poon had observed in Pang Po King Cannie v. Celestial Securities Limited (unreported) HCA3319 of 2002, 29 August 2005 that (at para.19):

“It is only in rare and exceptional circumstances that the court would exercise its discretion under Order 24 rule 16 to strike out a defence on the ground of failure to comply with discovery orders.  The court will have to consider whether or not there’s a real, substantial, or serious risk that a fair trial of the plaintiff’s claim is no longer possible and that the court would be prevented from doing justice between the parties as a result of the breach of the order; and whether or not the defendant has deliberately suppressed discovery of documents in circumstances amounting to abuse of process.” 

15.  The defendant argued that the conversations between Mica Mak and him or his wife on 28 and 29 April 2003 were highly important.  This argument must be considered against the issues in dispute.  The conversations arose in the context of the defence that the plaintiff had acted contrary to the oral instruction related by the defendant’s wife to Mica Mak on 28 April 1999.  On this defence, the central issue is the meaning or construction to be given to the oral instruction, and what did the words mean in the trade: see paras.17 and 18 of the Reasons for Decision handed down on 30 March 2005.  From the voluminous affirmations and letters the defendant made since 2003, it is evident that he considered the conversations (other than the giving of the oral instruction), especially those on 29 April 1999, would demonstrate that Mica Mak was untruthful or unreliable, rather than aiding in the construction and understanding of the meaning of the oral instruction.

16.  It follows that this is not a case where it can be said that without disclosing or allowing inspection of the original telephone recordings, there is a real substantial or serious risk that a fair trial is not possible.  Hence, even if the defendant can make out a case of non-compliance, which I do not accept, it does not follow that the court should order the striking out of the plaintiff’s claim.

The application for the name of the plaintiff’s telephone recording system

17.  In the defendant’s summons filed on 28 February 2005, he had sought information on the vendor, brand name and model number of the plaintiff’s telephone recording system.  The reason for requiring the information was that it would assist him to engage the appropriate expert to examine the recording to see if it had been tampered with. 

18.  The defendant’s present request is for the name of the plaintiff’s system. It is said that this will assist the expert to conduct the inspection of the recording. 

19.  Clearly, the present request is a variation of the previous application under the summons filed on 28 February 2005.   It is a renewed attempt to obtain information about the plaintiff’s telephone recording system.

20.  The defendant’s previous application had been dismissed.  My reasons for the dismissal apply equally to the present request for the name of the system: see para.25 of the Reasons for Decision.

21.  Additionally, the present request must also be refused as an attempt to re-open an interlocutory application that had been determined.  In Chanel Ltd v. Woolworth & Co Ltd [1981] 1 WLR 485, 492H-493A, Buckley LJ held that:

“Even in interlocutory matters a party cannot fight over again a battle which has already been fought unless there has been some significant change of circumstances, or the party had become aware of facts which he could not reasonably have known, or found out in time for the first encounter.  The fact that he capitulated at the first encounter cannot improve a party’s position.”

22.  The defendant has not demonstrated any significant change of circumstances since the decision of 7 March 2005.  On the contrary, it was readily open to him to include the name of the system as part of the information sought under his previous summons.  To the extent the defendant seems to suggest that he did not previously know that the plaintiff’s system was computer-operated, that is hardly relevant or material.

23.  The defendant also argued that it was customary for securities companies to provide the name of the recording system, relying on the case of Pang Po King Cannie v. Celestial Securities Limited, supra, as an example.  While in that case, the securities company had supplied to the other side the name of its system, it is in no way demonstrative of the practice contended by the defendant.   Clearly, the court’s discretion under Order 24 must be exercised with regard to the facts of the case and the issues in dispute.  There is no inflexible rule.

The application to inspect and take copy of the original recordings etc.

24.  It is convenient to deal with items (iii) and (iv) of the application together.  In summary, the defendant is seeking permission to go to the plaintiff’s office with his wife and expert for the purposes of (a) listening to and (b) watching the original recordings being played on the plaintiff’s system as well as (c) taking a copy of the recording while they were being played.

25.  The underlying reason for the applications is the defendant’s contention that the recordings of the telephone conversations as disclosed and supplied by the plaintiff had been tampered with and were not the complete records of all the conversations on 28 and 29 April 1999. 

26.  The defendant’s case, as appeared by paragraphs 20 and 21 of his affirmation filed on 8 August 2005, is that in respect of the telephone conversations recordings on 29 April 1999 disclosed by the plaintiff, two conversations were contained in four sound files, bearing file references of 198-094537 am, 198-100821 am, 197-085938 pm-2 and 198-090226 pm-2.  The defendant said he did not understand why a piece of conversation had to be “cut” into two halves.  He also said that for first conversation in question, the first sound file began at 9:45:37 am finished at 10:08:14 am, while the second sound file began at 10:08:21 am, hence there was a loss of a 7-second record.  This he contended showed that a “7-second record was deliberately cut” by the plaintiff.  According to him, the deleted part was where Mica Mak told his wife that the instruction was not executed because Hang Seng Index Futures did not hit the 13,700 position.

27.  The defendant further stated that the plaintiff had not disclosed the recordings of two pieces of conversations.  The first conversation is said to take place on 28 April 1999, during which the defendant’s wife discussed with Mica Mak the disposal of “China Merchant shares”.  It is also said that the recording bearing sound file reference 198-103530 am was a conversation following this discussion.  The defendant said this conversation was relevant because the plaintiff had sold the “China Merchant shares” to reduce the loss of his trading, and he is counterclaiming for the wrongful sale of his shares.

28.  The second conversation is said to take place on 29 April 1999 when his wife called Mica Mak to ask whether the latter had received the Reuter trading records (also referred to as the trade recaps) for 28 April 1999 that she had faxed over.  The defendant stated that the plaintiff had disclosed the conversation in which Mica Mak asked for a copy of the Reuter trading records, but not this second follow up call from his wife.  The defendant had by his previous summons filed on 2 March 2005 sought to have the plaintiff confirmed on oath whether it had the trade recap faxed by his wife to Mica Mak. The defendant indicated at the hearing of the summons that whether Mica Mak had received the trading record was relevant to her credibility. 

29.  I am of the view that this part of the defendant’s application cannot be allowed for a number of reasons. 

30.  Firstly, it is in substance a renewed attempt by the defendant to establish his contention that the plaintiff’s discovery is incomplete.  Ever since the early stage of these proceedings, it has always been the defendant’s contention that the plaintiff has not disclosed and supplied to him all the recording of the telephone conversations between Mica Mak and him and/or his wife. It is because of this contention that the defendant made the application for specific discovery leading to the 11-4-2003 Order. To further establish the point, he made a subsequent application that led to the second order of Master Wolley dated 21 May 2003, under which the plaintiff was required to make another affidavit verifying the completeness of the recording disclosed and supplied to the defendant. 

31.  Notwithstanding the plaintiff’s verifying affidavits, the defendant remains firmly of the view that the recordings disclosed and supplied by the plaintiff were not the complete and true records of the conversations that had taken place between his wife and Mica Mak.  To further pursue the matter, he issued the summonses that were heard and dismissed on 7 March 2005.

32.  The defendant argued that the previous summonses were for discovery whereas the present application is for inspection.  The distinction has no difference in substance.  They are all set out to test and challenge the truthfulness of what the plaintiff had stated on oath with regard to discovery, which is not permissible as a matter of law. 

33.  It is trite that in an application for specific discovery, the respondent may answer the application by an affidavit stating that he does not have the documents sought. This will be conclusive at the interlocutory stage and the applicant cannot seek to controvert what is sworn therein by a further contentious affidavit. The same principle applies to affidavits verifying list of document.

34.  The position was stated by Brett CJ in Jones v. Monte Video Co. (1880) 5 QBD 556 at 558 as follows:

“Either party to an action has a right to take out a summons that the opposite party shall make an affidavit of documents : When the affidavit has been sworn, if from the affidavit itself, or from the documents therein referred to, or from an admission in the pleadings of the party from whom discovery is sought, the master or judge is of opinion that the affidavit is insufficient, he ought to make an order for a further affidavit; but except in cases of this description no right to a further affidavit exists in favour of the party seeking production.  It cannot be shewn by a contentious affidavit that the affidavit of documents is insufficient.  This was the practice observed in the Court of Chancery, and the orders and rules under the Judicature Acts were made in imitation of it.  It may be urged that a party seeking production may be injured by the wrongful withholding of the document, and that an affidavit in contradiction ought to be admitted under supervision.  But this mode of proceeding cannot be allowed: the affidavit of documents must be accepted as conclusive.” 

35.  The purpose of this well established rule is to avoid repeated and protracted rounds of interlocutory applications. Such satellite litigation is in no way conducive to the proper and early determination and resolution of the real disputes.

36.  In the present case, not only had the plaintiff’s directors made two verifying affirmations in 2003, the plaintiff had also on 24 October 2005filed an affirmation in answer to the present application.  In this latest affirmation, the plaintiff’s director reiterated that all the conversations between the defendant and/or his wife and Mica Mak on 28 and 29 April 1999 had been filly disclosed and there was no “cutting” or editing whatsoever.  The matter is therefore conclusive at this interlocutory stage.

37.  Secondly, the defendant cannot keep coming back on this issue of the completeness or otherwise of the recordings disclosed and supplied by plaintiff.  The recordings were supplied in 2003 and the time sequence of the 13 sound files for the conversations on 29 April 1999 was supplied on 29 December 2003.  There is no reason why the defendant could not have noticed the 7-second gap during all these years.  It is for him to include all the available information when he made his previous applications on 28 February and 2 March 2005.  It must be oppressive and vexatious to rely on this 7-second gap and to make a fresh application, after the earlier summonses were dismissed.  As Buckley LJ said, he cannot fight over again a battle already fought: Chanel Ltd v. Woolworth & Co Ltd, op cit.  There is no significant change of circumstances or new facts that the defendant could not have reasonably known when he issued his previous summonses. 

38.  It should also be noted that in the letter supplying the time sequence, the plaintiff’s solicitors had stated in no ambiguous terms that there were 13 conversations on 29 April 1999.  In other words, each of the 13 sound files for 29 April 1999 represents one conversation.  This is in stark contrast to the defendant’s assertion that for two conversations, they had been split up into different sound files.

39.  Thirdly, for the analysis set out in the preceding part of this Decision and also in the Reasons for Decision handed down on 30 March 2005, the proposed inspection is not necessary for disposing fairly of the cause in dispute or for saving costs.  Admittedly, the defendant said in his submissions that without the proposed inspection, it cannot be shown whether there is anything wrong with the recordings disclosed to him.  This is a clear fishing attempt.

40.  Fourthly, even on the defendant’s affirmation and submissions, it has not been explained how the exercise could help him to disprove the plaintiff’s sworn statement that all the telephone conversations on the two days in question had been disclosed.  According to the defendant, at the inspection, it would be for the plaintiff’s people to operate the system and that neither him nor his wife or expert would check or touch the system. They would only be there to listen and to make a recording of whatever is being played by the system.  The defendant had to take this position in the light of the plaintiff’s legitimate concerns over the need to protect the privacy and confidentiality of it and its clients, given that the system had stored also other telephone conversations.  If all that the defendant and his expert would do is to watch and listen passively to the playing of the conversations under the operation by the plaintiff’s staff or technician, I cannot see the possibility of the defendant being able to establish with any certainty that the recordings were inaccurate or incomplete.  All that the defendant could say in submission was that there must be a way to verify the veracity and completeness of the recordings and his expert would be able to advise him in due course.  This is hardly sufficient for his application to succeed.

41.  This also brings me to the fifth point. It is that thus far, the defendant has not given any indication or details of the identity and expertise of his expert.  In fact, it is unclear whether he has already pinpointed and engaged any expert.  Given the vast data captured and stored in the plaintiff’s telephone recording system, the court will not sanction any inspection of the system without being satisfied that there will not be improper and unnecessary intrusion into the privacy and confidentiality of the plaintiff or infringement of the rights and interests of its clients, who are not parties to these proceedings.

Conclusion

42.  For the reasons above, the defendant’s summons and applications as set out in his affirmation filed on 8 August 2005 are dismissed. Applying the normal rule of costs follow event, there is an order nisi that the defendant pays the plaintiff the costs of the summons and the applications in any event, to be taxed if not agreed.