Hengshi International Investments Ltd v. Bayspring International Ltd and Another

HCMP 1320/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1320 OF 2016

(ON AN INTENDED APPEAL FROM HCMP NO. 1916 OF 2015)

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Before: Hon Kwan and Barma JJA

Dates of Written Submissions: 25 May and 8 June 2016

Date of Judgment: 8 July 2016

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J U D G M E N T

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Hon Kwan JA (giving the judgment of the court):

1.This is an appeal by the 2^nd defendant against the dismissal of its application for production of two emails in native electronic format, which had been referred to in an affirmation filed on behalf of the plaintiff for the continuation of an interim injunction. Au-Yeung J’s decision (“the Decision”) was handed down on 17 March 2016. In dismissing the application, the judge ordered indemnity costs against the 2^nd defendant, taking the view that the application is “wholly unmeritorious” (§27 of the Decision).

2.The 2^nd defendant’s application for leave to appeal to the Court of Appeal was dismissed by the judge on 11 May 2016 (“the Leave Decision”).  As noted in §11 of the Leave Decision, all of the grounds in the draft notice of appeal attack the exercise of discretion by the judge instead of the legal principles.  The judge again awarded indemnity costs to the plaintiff, which she assessed summarily at $80,000.

3.The 2^nd defendant renewed its application for leave to this court by a summons issued on 25 May 2016, with a draft notice of appeal settled by its new counsel, Mr Barrie Barlow, SC.

4.We think it appropriate to determine this application on the basis of the documents and submissions lodged in court without an oral hearing.

5.The applicable test for an application for leave to appeal to the Court of Appeal has been set out comprehensively in §2 of the Leave Decision, as acknowledged by Mr Barlow and does not require repetition.

6.He also recognised that the draft notice of appeal before the judge was considered defective and attempted to correct those defects in the new draft notice of appeal.

7.In the new proposed grounds of appeal, in particular in the 1^st ground of appeal, Mr Barlow sought to contend the judge had made errors of law.  In summary, the complaint was that the judge failed to give effect to Order 24 rule 10 which provides that a litigant whose opponent’s affirmation makes reference to a document “shall be entitled”, following service of a notice requiring production of the document for inspection, to inspect the document, unless, pursuant to Order 24 rule 13, inspection was not “necessary either for disposing fairly of the cause or matter or for saving costs.”  Here, the 2^nd defendant had served a compliant notice for production under Order 24 rule 10, and the plaintiff did not serve a compliant counter-notice setting out legitimate grounds for denying the plaintiff’s prima facie entitlement to have the documents concerned produced for inspection.  In support of his proposition, he cited Dynamic Way International Ltd v Ho Kui Chee [2000] 4 HKC 138 at 142B to D, and Woodworth v Conroy [1976] 1 QB 884 at 890E to 891E.

8.There is nothing of substance in the above arguments.  Dynamic Way was analysed and thoroughly explained by Fok JA (as he then was) in Moulin Global Eyecare Holdings Ltd v Olivia Lee Sin Mei [2013] 3 HKLRD 72, and Moulin Global was referred to by the judge when she set out the legal principles applicable to the application before her in the Decision at §§2 to 9.  Those principles as stated were not disputed by the former counsel of the 2^nd defendant (§2 of the Decision), nor have they been challenged by Mr Barlow.

9.As stated in Moulin Global at §33, “it is clear from the rules that any order for production for inspection under O. 24 r. 11 is expressly “subject to rule 13(1)” and that latter rule plainly places, on an applicant for an order for production, a burden to demonstrate to the court that “the order is necessary either for disposing fairly of the cause or matter or for saving costs.” ”

And at §35:

“In any event, under O. 24 r 13 there remains, secondly and independent of the first stage, a burden on the applicant for an order for production to show the Court that the order is necessary either for disposing fairly of the cause or matter or for saving costs.”

10.If Mr Barlow is seeking to reverse the burden in contending that the 2^nd defendant is prima facie entitled to have the documents concerned produced for inspection unless inspection was not necessary either for disposing fairly of the cause or matter or for saving costs, we do not accept that is the law as explained in Moulin Global.

11.This is clear from the following passages in §§39 and 40 of Moulin Global, which have been cited in the Decision at §§4 and 5:

“It is clear that there is no rigid, inflexible rule that production of a document referred to in a pleading or affidavit will always be ordered. On the contrary, the underlying rationale of O. 24 r. 10 and the theme in the cases both reflect a general rule and, as such, one to which there may be exceptions. …”

“… the rule providing for an order for production (O. 24 r. 11) is expressly subject to O. 24 r. 13 which requires the court to consider the necessity of an order for production in terms of the fair disposal of the cause or matter or the saving of costs. That inquiry necessarily imports an evaluation of the circumstances in order to determine whether an order for inspection should be made.”

12.There is nothing in Dynamic Way which constrains the court, when it is considering under Order 24 rule 13 whether the applicant has demonstrated that the order sought is necessary either for disposing fairly of the cause or matter or for saving costs (Moulin Global, §47).

13.And there is nothing in Woodworth v Conroy which advances Mr Barlow’s argument, production was ordered in that case as inspection was found necessary to dispose fairly of the issues raised.

14.As for the contention that the judge failed to recognise that the original of a document which is an email transmission is the original electronic transmission which, once received, is an “electronic record” for the purposes of the Electronic Transactions Ordinance, Cap 553, the judge was evidently well aware that the 2^nd defendant sought production of the two emails in electronic format to confirm their authenticity by forensic examination (§12 of the Decision).  Whether the judge should also have held that the original electronic transmission is an “electronic record” for the purposes of the aforesaid statute does not detract from the correctness of her conclusion in §26 of the Decision that the application should be dismissed in the exercise of her discretion.

15.Mr Barlow argued in the 2^nd ground of appeal that the judge erred in law in failing to recognise that Order 24 rule 13 was inapplicable here because, in the proceedings below, the entire “cause or matter” was the contest between the plaintiff and the 2^nd defendant over the interlocutory injunction.  The judge had reserved her decision on the continuation or discharge of the injunction after the contested hearing on 16 September 2015, so this “cause or matter” had not been adjudicated upon when the 2^nd defendant served its notice under Order 24 rule 10, or when the summons for production of documents for inspection was issued, or in the initial hearing of that summons.  If the 2^nd defendant is able to show by clear and compelling evidence that the plaintiff had obtained the interlocutory injunction by relying on forged documents, the 2^nd defendant would be entitled to seek a discharge of the injunction.

16.The judge handed down the decision on the interlocutory summons on 18 December 2015.  The substantive hearing of the summons for production of documents was on 10 March 2016.  The judge took the view that the hearing of this summons could serve no useful purpose (§17 of the Decision).  We are inclined to agree.  As stated in §18 of the Decision, the 2^nd defendant has deposed on affirmation that pending forensic examination of the two emails, it was simply not in a position to confirm whether or not the plaintiff had fabricated or tampered with the emails.  And with that position and there being no pending application to set aside the injunction ordered to be continued on 18 December 2015, the production summons is plainly a fishing exercise.

17.The arguments on the 3^rd ground of appeal may be disposed of shortly. In essence, Mr Barlow repeated the arguments that had been made before the judge and were rejected in the Decision at §§14 to 25 and in the Leave Decision at §§6 to 9.  It has not been demonstrated that the judge had erred in law or in principle.  There is no valid basis to attack the exercise of discretion of the judge in refusing to order production of documents.  Nor is there any basis for the appeal court to substitute its discretion for that of the judge.

18.The last ground of appeal is against the indemnity costs ordered by the judge.  The judge made this order on the basis that the application is “wholly unmeritorious”.  Huge Dragon Corporation Ltd v The Incorporated Owners of Lung Mun Oasis [2014] 3 HKLRD 286 at §13 is an example in which indemnity costs were ordered by the Court of Appeal where the proceedings in question should never have been brought but the party nevertheless unreasonably and unjustifiably persisted.  We fail to see how it could be said that the judge had acted in disregard of established principles.

19.As the threshold requirements for granting leave to appeal are plainly not met, we dismiss the 2^nd defendant’s summons.  And as the application is wholly without merit, we make a further order pursuant to Order 59 rule 2A(8) that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.

20.We think it appropriate that costs awarded to the plaintiff in this application should likewise be on an indemnity basis.  We make an order nisi that the 2^nd defendant is to pay the plaintiff’s costs of this application, which we assess summarily on an indemnity basis.

21.We agree with the judge in §12 of the Leave Decision that the application for leave to appeal has no complexity and does not justify the engagement of two counsel.  We note that costs for the leave application before the judge were assessed on an indemnity basis at $80,000.  The plaintiff’s statement of costs in respect of the application before us is for $95,220.  We will reduce the fees of senior and junior counsel from the composite sum of $65,000 to $50,000.  The amount of costs we assess on a gross sum basis is $80,220.

22.Any party who seeks to vary the costs order nisi shall lodge a written submission within 7 days hereof, failing which such order shall become absolute.

Written submissions by Mr Anson Wong SC and Mr Martin Kok, instructed by DLA Piper Hong Kong, for the Plaintiff (Respondent)

Written submissions by Mr Barrie Barlow SC, instructed by Reed Smith Richards Butler, for the 2^nd Defendant (Applicant)