Glory Sky Finance Ltd v. Chen Jianhua and Another

HCMP 2482/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2482 OF 2014

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D E C I S I O N

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The applications

1.By two summonses taken out on 16 March 2017 (“the 1^st summons”) and 22 June 2017 (“the 2^nd summons”) respectively, the 1^st and 2^nd defendants applied for specific discovery of certain documents[1].

2.The plaintiff opposed both summonses.

Background

3.According to the plaintiff’s case, it is a licensed moneylender carrying on moneylending business in Hong Kong.  It lent two loans of HK$10 million and HK$7 million to the 1^st defendant named as “Chen Jianhua” and the 2^nd defendant named as “Fan Hongwei” in February and May of 2014 respectively as secured by two mortgages of the property situated at Flat B, 41^st Floor with Balcony and Utility Platform of Tower 3 of Grand Promenade, No.38 Tai Hong Street, Hong Kong (“the subject property”) which is jointly owned by the two defendants as tenants-in-common with the 1^st defendant holding 99% share and the 2^nd defendant holding 1% share therein.

4.Messrs Ching & Co., i.e. the plaintiff’s solicitors (“Ching & Co”), was acting for the plaintiff in preparing the mortgages in respect of the two loans whereas Messrs Wong Fung & Co. (“WF”) was acting as the independent legal advisor to the two defendants in the entering of the two mortgages.  On both occasions, it was the 1^st defendant who approached the plaintiff and the 1^st defendant had signed on the loan agreements and the mortgages on behalf of the 2^nd defendant with a power of attorney from the 2^nd defendant. 

5.The plaintiff claims against the 1^st and 2^nd defendants for full repayment of the two mortgage loans together with interest and costs and possession of the subject property due to their default in repayment. 

6.On the defendants’ side, they are a couple and they denied ever entering into the two loan transactions or the said two mortgages. In gist, they said that this is a case of identity theft.  The plaintiff had mistaken the identities of the persons who approached and entered into the two loan agreements and mortgages with the plaintiff.  According to their current pleaded case, all the title deeds (which had been placed in the drawer of the bedside table of the master room of the subject property) were stolen by some fraudsters[2]. They have misused the defendants’ identities, and forged their signatures on various documents.  It was these fraudsters who have approached the plaintiff and entered into the subject transaction with the plaintiff.  The 2^nd defendant also denied ever appointing the 1^st defendant as her attorney as alleged or executing the subject power of attorney.

7.The defendants further aver that they could not have been the persons who entered into the mortgages with the plaintiff as the 1^st defendant was not physically present in Hong Kong on 12 February, 28 April and 8 May of 2014.  “12 February 2014” was the date when the 1^st defendant allegedly approached the plaintiff for borrowing the first loan.  “28 April 2014” was the date when the 1^st defendant allegedly approached the plaintiff for the second loan, and “8 May 2014” was the date when the 2^nd mortgage was dated and the second mortgage loan was drawn down.

8.After the hearing of the two summonses, the defendants’ solicitors lodged their letter dated 21 September 2017 (“the defendants solicitors’ letter”) with the court informing that after the plaintiff made their oral submission at the hearing that certain title deeds in their possession were taken by the police, the defendants’ solicitors took up such matter with the police to verify the plaintiff’s submission, and the police orally confirmed that the title deeds obtained from the plaintiff are found to be not authentic.  After that, they then brought up the matter with their clients, who now said that they have found ‘what they believe to be the original title deeds’ in the safety deposit / secured cabinet of the office premises of the Hengli Group (of which the first and second defendants are Chairman and Vice-Chairman) situated in Suzhou City, Jiangsu Province, the PRC.  The defendants’ solicitors also in such letter sought leave for the defendants to file and serve further affirmation to depose on such matters.  I shall return later to deal with this belated application by the defendants to introduce new evidence/matter at the appropriate juncture below.

Documents sought

9.Under the 1^st summons, the defendants sought for the following categories of documents:-

(1) Original of the title deeds of the subject property (“the 1^st category”).

(2) All and any documents in relation to client identification, verification and due diligence done by the plaintiff in respect of the alleged First and Second Mortgages and the alleged memoranda in writing of a loan agreement dated 12 February 2014 and 7 May 2014 respectively, including but not limited to:

(a) Copies of all identity documents of the alleged Mr Chen and/or Ms Fan; and

(b) Documents obtained / kept / produced by the plaintiff on customer due diligence in accordance with the Anti‑Money Laundering and Counter-Terrorist Financing Guideline issued by the Hong Kong Licensed Money Lenders Association Ltd (“the Guideline”)

(collectively called “the 2^nd category”).

(3) All and any bank records or receipts of financial transactions and dealings between the plaintiff and the alleged Mr Chen and/or Ms Fan, identifying the bank account number, payor, payee, paid amount and mode of payment, including the drawdown of the loans and/or repayments made under the alleged Loan Agreements and/or the First and Second Mortgages (“the 3^rd category”).

10.Under the 2^nd summons, they further sought for :-

(1) All notes, memoranda, letters, facsimiles, emails or other documents relating to the correspondence between the plaintiff (whether through its solicitors, Ching & Co or otherwise) and WF relating to the alleged First Mortgage and Second Mortgage (“the 4^th category”).

(2) All notes, memoranda, letters, facsimiles, emails or other documents relating to the correspondence between the plaintiff and Ching & Co relating to the alleged First Mortgage and Second Mortgage (“the 5^th category”).

11.None of the aforesaid documents sought have been disclosed in the plaintiff’s list of documents filed on 24 February 2017.[3]

The relevant rule and principles

12.Order 24 rule 7 of the Rules of High Court (Cap.4A) (“RHC”) is the governing rule for specific discovery.  In short, the applicant bears the burden under the rule to demonstrate there is sufficient evidence or prima facie case that (a) the documents or classes of documents sought exist but which the other party has not disclosed; (b) such documents relate to a matter in issue in the action; and (c) they are in the possession, custody or power of the other party. Once the above three prerequisites for jurisdiction do exist, the court has a discretion whether or not to order discovery.   In particular, the court will not make an order unless the discovery sought is necessary either for disposing fairly of the cause or matter or for saving costs. (See : Paul’s Model Art GmbH & Co KG v UT Ltd [2006] 1 HKC 238, per Cheung JA at para 24; RHC, Order 24 rule 8)

13.The Peruvian Guano test is the guiding test for relevance.  However, the exercise of specific discovery cannot be utilized as a fishing expedition in disguise seeking out possible claims or defences.  And the question of relevance of the documents under application is to be determined by pleadings. (See Hong Kong Civil Procedure 2018, para 24/7/2)

Application of the principles to the present case

The 1^st category

14.The gist of the Defence is that both defendants have not entered into the Loan Agreements or the two mortgage deeds, and the plaintiff was deceived by a rogue pretending to be the 1^st defendant, and had authority from the 2^nd defendant using a false power of attorney. 

15.As the heart of the pleadings, the real issue of controversy to be decided by the court is whether the defendants were indeed the same persons who actually entered into the loan agreements and the two mortgage deeds with the plaintiff.

16.At the hearing, it was also undisputed that the original title deeds and documents had been passed on by WF to Ching & Co. for safe custody before the two loans were drawn down[4].  In these circumstances, it would be of no relevance for the determination of the plaintiff’s claim or defence as currently pleaded by referring to the contents of these title deeds and documents.  The loan documents, the power of attorney and two mortgage deeds had already been disclosed in the plaintiff’s list of documents before the two summonses were taken out.  No question of title dispute was involved in this case.  It is only the identity of the parties who entered into the contractual transactions in question with the plaintiff that is hotly contested. 

17.Miss Bianca Yu, counsel representing the defendants, submits that the title deeds are clearly relevant because they are the subject matter of the counterclaim by which the defendants claim for inter alia the return of the title deeds.  With respect, I cannot accept such argument.  By reference to the current state of pleadings, the court is not required to rule on any matters in question as related to the contents of the title deeds or the title of the subject property in order to resolve the identity issue as explained above.  Neither can Miss Yu demonstrate or otherwise articulate what train of inquiry can be made out of these title documents to advance the defendants’ own case or damage their adversary.  I also agree with the submission of Mr Eric Ching (solicitor representing the plaintiff at the hearing) that if the court decides on defence of mistaken identity in the defendants’ favour at the end of the day, the loan agreements and mortgage transactions would not bind the defendants.  And subject to further investigation by the police, the title deeds and documents would be returned to the defendants.[5]

18.Miss Yu also submits that there is a vague reference of fraud made in the Reply[6] and due to the seriousness of such allegations of impropriety made against the defendants, this deserves the subject discovery in order to properly defend such allegations.  But this is not the proper test for specific discovery, nor would it offer a blanket approval for specific discovery.  The fact remains that Miss Yu cannot demonstrate to this court any matters in question as arisen out of such allegations would turn on the title deeds.  In this regard, the observation made by Chu J (as Her Ladyship then was) in Re Estate of Ng Chan Wah (unrep., HCAP 5 of 2003, 5 March 2003) is pertinent here.  At para 16 Her Ladyship said:-

“16. It is not sufficient for the plaintiffs to say that because there is on the pleading allegation of improper conduct against the defendants as executors, they are entitled to test the basis of the estate accounts generally or to check the accuracy of the items presented in the estate accounts, irrespective of whether they are in issue. It is not the purpose of discovery to give the plaintiffs an opportunity to hunt around the documents in the hope that they will reveal some improprieties on the defendants’ part or will provide information for them to pursue more enquiries.”

19.For completeness sake, the defendants’ handling solicitor also mentioned in his supporting affidavit that the defendants are entitled to know about the fact of the current whereabouts of the title deeds. With respect, that should be ascertained from the plaintiff by way of interrogatories instead, and specific discovery is not the appropriate method to pursue such information in the circumstances of this case.

The defendants’ late application for leave to adduce further evidence

20.The defendants’ solicitors after the hearing raised for the first time the issue of the authenticity of the title deeds and sought leave for the defendants to file and serve further affirmation to introduce such new matters as highlighted in para 8 above for the present two summonses.  This is an exceptional application made belatedly, and I reject the same for the following reasons. 

21.First, procedurally speaking, exceptional circumstances are expressly required in Order 32 rule 11A(4) of RHC, which is applicable here, to adduce further evidence for the determination of interlocutory application by way of adjourned hearing of the summons.

22.Order 32 rule 11A(4) provides that:-

“4) Where the determination of the application is adjourned for the hearing of the summons, no further evidence may be adduced unless it appears to the Court that there are exceptional circumstances making it desirable that further evidence should be adduced”

23.In this case, by way of Master Chow’s Order of 29 March 2017, the 1^st summons (by which the specific discovery for the original title deeds of the subject property is sought) was adjourned to a date to be fixed for argument.  In that order, the parties were also given direction to file and serve their affirmations, and para 3 thereof made it clear that no further affidavit/affirmation to be filed without leave of the Court.[7]

24.In Jose Miranda Da Costa Junior & Anor v Lorenzo Yih & Ors (unrep. HCA 156/2010, 28 April 2014), DHCJ Le Pichon has carefully considered the rationale behind Order 32 rule 11A(4) in light of the CJR objectives.  At paras 9 to 12, Her Ladyship had the following to say:-

“9. The October order made it abundantly clear that no further affidavit was to be filed without the leave of the court. In the post-CJR era, it is inconceivable that leave would be granted in the absence of genuine extenuating circumstances, for example, that the evidence was not available at the date of the earlier affidavit or only came into existence after the date for the filing of that affidavit. In other words, they would be exceptions that normally would fall within the rule in Ladd v Marshall.

10. Further, in exercising the discretion to grant leave, the court is bound to have regard to the objectives of the CJR set out in O 1A, r 1 and to seek to promote the attainment of such objectives.

11. For those reasons, where a direction prohibiting further evidence to be adduced without leave has been given, it has to be read with RHC O 32, r 11A (4). That provides that where the determination of the application is adjourned for the hearing of the summons, no further evidence may be adduced unless it appears to the Court that there are exceptional circumstances making it desirable that further evidence should be adduced.

12. It will be seen that the rationale of O 32, r 11A (4) is to ensure that a case is dealt with as expeditiously as is reasonably practicable and to ensure fairness between the parties (those being the objectives of the CJR stated in O 1A, r 1 (b) and (d)): Fortune Assets Development Ltd v De Monsa Investments Ltd, HCA 167/2009, (unrep) 21 August 2009 at §§10-11 and the annotation in Hong Kong Civil Procedure 2014 at 32/11A/3 which states that the sort of “exceptional circumstances” envisaged are likely to be along the lines of the exceptions laid down in Ladd v Marshall [1954] 1WLR 1489. ” (emphasis added)

25.A fortiori, if leave is sought to file and serve further affidavit evidence post hearing, in my judgment, the court should be even more vigilant in its exercise of discretion when dealing with such kind of application.

26.Notwithstanding it was so said in the defendants’ solicitors’ letter that they discovered the authenticity issue of the title deeds only after the hearing by making further enquiry with the police, the fact remains that so far I see no genuine extenuating reason that can be offered by the defendants to explain why they could not have discovered much earlier what they believe to be the original title deeds in their Suzhou office.

27.Not only that, the defendants’ account of their recent discovery of title deeds as related in their solicitors’ letter immediately causes one to raise one’s eyebrows when the defendants out of the blue can now somehow discover what they believe to be the original title deeds in their office in Suzhou City after being urged by their solicitors (following from their recent enquiry with the police) to search again thoroughly the whereabouts of the title deeds.  One must be mindful of the fact that the defendants had pleaded earlier in their Defence that they are both residents of Mainland China, and after becoming aware of the demand letter from the plaintiff as notified by their daughter on or about 3 November 2014, the 2^nd defendant came to Hong Kong on 4 November 2014 to investigate and discover that the title deeds originally placed in the drawer of the bedside table of the master bedroom of the subject property were missing[8].  On that basis, they pleaded that the original title deeds were stolen, and reported to the police about the matters of missing title deeds and some fraudsters misusing their identities to obtain loans from the plaintiff[9].  Whereas, now in fact (according to their solicitors’ recent letter) what they believe to be the original title deeds were actually kept in their office in Suzhou.  Or, if those title deeds were not in their Suzhou office when the 2^nd defendant conducted the search of the subject property on 4 November 2014, one would then rhetorically ask why such title deeds now miraculously re-appear in their office?

28.In this light, leave to adduce further affidavit evidence as per the defendants’ belated application can be refused on this procedural ground alone.

29.Second and more fundamentally, up to this moment there is no pleaded issue of authenticity of the title deeds raised.  And yet, the relevance of documents is to be decided by reference to pleadings.  By way of their letter dated 3 October 2017, the plaintiff’s solicitors responded to the defendants’ application for adducing further affidavit evidence and submitted to the effect that the defendants ought to have amended their Defence to properly plead their own case before they are allowed to file and serve any further affidavit evidence.  However, by their further letter dated 6 October 2017, the defendants’ solicitors submitted that the plaintiff should first amend its Statement of Claim so that they can know whether it is still the plaintiff’s case that it is holding the original title deeds and or otherwise maintaining that they are authentic.  Though, in passing, it is observed that the Statement of Claim does not actually make any reference to the title deeds, and in the Reply and Defence to Counterclaim, the plaintiff at para 2 thereof only made reference to the alleged theft of title deeds as pleaded in the Defence. So, strictly speaking, the plaintiff’s pleaded case does not actually touch on the authenticity of the title deeds.

30.In my view, it is incumbent upon the defendants to keep their own house in order so as to properly make their applications of specific discovery.  If they chose not to amend their pleadings to raise any issue of authenticity of title deeds before the plaintiff does so, the court has the unfettered discretion not to wait for the defendants to amend their pleaded case to raise such issue, but can proceed to determine the present two summonses basing on the current pleadings as it saw fit.  This is especially the case here because, as pointed out in the preceding paragraph, the plaintiff’s pleaded case does not hinge on the authenticity of the title deeds, and the trial court can still hold the defendants liable if at the end of the day after hearing all the evidence accept the plaintiff’s current pleaded case that it was the two defendants themselves who actually entered into the two loan agreements and mortgages with the plaintiff.

31.Apart from the aforesaid, it is also pertinent to recall that in the context of relevance, if a matter has not been identified in pleadings, it does not become an issue simply because it is hotly contested by way of materials from other sources such as affirmations in interlocutory proceedings, witness statements or expert reports.  See Bruce James Stinson v Gu Ming Gao, unrep HCA 2352 of 2012, 26 February 2016, per Au-Yeung J at para 56.

32.Third, as a matter of case management and after balancing the different overriding CJR objectives, I do not see it appropriate under the circumstances of this case to hold up the determination of the two summonses which involves specific discovery of other categories of documents.  At this stage, I do not see anything to prevent the defendants from seeking discovery of such title deeds in the possession, custody or power of the plaintiff at a later time if such discovery exercise can be justified by a properly pleaded case to raise the issue of their authenticity after the amendment of pleadings.  Putting it another way, before the defendants have properly formulated their own pleaded case on such authenticity issue in the present setting, their application for specific discovery of the title deeds is premature in any event.

33.In these premises, the defendants’ post hearing application to adduce further affidavit evidence is rejected, and the specific discovery of the 1^st category of documents is also refused.

The 2^nd category

34.Plainly, the documents related to the identification of the Mr Chen and Ms Fan in question who entered into the loan and mortgage transactions with the plaintiff and the verification of such identities by the plaintiff are relevant for resolving the identity issue in this case.  There is no question that the plaintiff would keep these kinds of documents since the identity of customers should be in the forefront of their mind, particularly to ascertain whether the Mr Chen and Ms Fan in question to whom they lent money are in fact the owners of the subject property that served as security for the loans.  The real question lies in the proper scope of discovery only.

35.In their letter dated 14 February 2017[10], the defendants’ solicitors foretold the plaintiff as to what they expected the plaintiff to include in their list of documents to be filed.  Among others, they mentioned about the “copies of ID documents of Mr Chen and Ms Fan as kept by the plaintiff when the loans were made”, and “copy application forms for the loans / mortgages kept by the plaintiff”.  According to the affidavit of Ms Lai Sau Lan (“Ms Lai’)[11], WF’s conveyancing clerk who attended the Mr Chen in question in signing the two mortgages, she had kept a copy of Mr Chen’s PRC ID card, and copies of PRC passport and PRC ID Card of the Ms Fan in question as provided to her by that Mr Chen.  In the course of making his oral submission, Mr Ching also admitted there are copies of such application forms for loans / mortgages (which in my view would likely contain information about the identities of the Mr Chen and Ms Fan in question).  Given the substantial loan amounts involved, and the two borrowers are apparently citizens of Mainland China, it would also be inherently probable for the plaintiff to ask for the address proof as a kind of due diligence check on their identities.

36.Mr Ching however submits that the identity documents are not necessary as WF have already disclosed them in response to the earlier third party discovery summons taken out by the defendants.  I cannot accept such argument because the plaintiff has its own primary obligation of disclosure to discharge. 

37.Further, in Matthews & Malek on Disclosure (5^th ed), the learned authors at para 8.22 dealing with “alternative sources for documents” stated that :-

“Similarly, the fact that the party seeking the disclosure can obtain the information elsewhere is not in itself an objection[12]. However, it is a factor to be taken into account by the court in deciding whether the disclosure sought would operate oppressively or whether confidential reports containing sensitive information should be disclosed.”

38.I do not see any oppressiveness on the defendants’ part to seek discovery of these documents as mentioned in para 35 above because the steps taken by the plaintiff with respect to their client identification, verification and due diligence check could be different from those as done by WF.  Also, in the normal course of things, the documents to look for disclosure under this category by the plaintiff are unlikely to be voluminous.  Nor does it appear to be a tedious process.  To say the least, I heard no submission from Mr Ching to those effects.

Any documents obtained / kept / produced by P in accordance with the Guideline?

39.The Guideline was published by an association called The Hong Kong S.A.R. Licensed Money Lenders Association Limited (“LMLA”) in March 2013 with reference to the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap.615) (“AMLO”).  The defendants’ supporting affirmations deposed nothing about the background of this association.  However, the “overview” section of the Guideline made it clear that money lenders (as defined under the Money Lenders Ordinance) are not one of the “authorized institutions” within the meaning of AMLO.  LMLA recommended its members to follow the Guideline with a view to maintaining, as far as applicable and practicable, the same regulatory standard against money laundering and terrorist financing.  Yet, there is no evidence that the plaintiff is one of its members, and Mr Ching submits that the Guideline is not applicable to the plaintiff. 

40.Given that there is no clear evidence of mandatory obligation of any kind for the plaintiff to obtain, keep or produce documents with respect to the due diligence check on their customers’ identities in accordance with the Guideline, the requirements as spelt out therein on these matters would appear to be of referential value for the plaintiff (as a licensed money lender) at best.  At worst, the plaintiff may not even have made reference to such requirements on customer due diligence check as provided in the Guideline at all.  In these circumstances, this court cannot be satisfied there is sufficient evidence or prima facie case to show that the documents as mentioned in para 9(2)(b) above do exist.

41.In the premises, I would allow specific discovery for the 2^nd category save and except for such class of documents as mentioned in para 9(2)(b) above.

The 3^rd category

42.As for this category, I agree with Miss Yu’s submission to such extent that banking records in relation to the payments and repayments of the two mortgage loans sought would relate to the identities of the persons who entered into the loan and mortgage transactions with the plaintiff.  It is also undisputed or indisputable that these documents do exist and are under the plaintiff’s possession, custody or power. 

43.In relation to the payments of the two mortgage loans, Ms Lai of WF exhibited in her 2^nd affirmation copies of the two cheques issued by the plaintiff in the respective sums of HK$9,994,650 and HK$6,993,000[13], being the plaintiff’s payments of the two mortgage loans in question (after deducting the relevant legal expenses charged by WF).  Copies of both cheques showed that the payee is “Chen Jianhua”.  It seems undisputed that these two cheques were sent by Ching & Co to WF on 14 February 2014 and 8 May 2014 respectively.[14]

44.As explained in para 36 above, copies of these two cheques (with the plaintiff’s cheque account number printed thereon) should likewise have been disclosed by the plaintiff and the fact that the defendants have already obtained the same from WF would not per se disentitle them to seek specific discovery of such copies from the plaintiff.  In my view, it would not be oppressive to require the plaintiff to disclose them in this case either.  Further, the plaintiff’s bank statement for such cheque account would also reveal when the two cheques were cashed.

45.In relation to the repayments of the two mortgage loans, it is plaintiff’s own case as supported by the affirmation of its general manager, Yeung Sau Han Fanny (“Ms Yeung”), that the 1^st and 2^nd defendants had made four interest repayments of HK$108,333 each month from 13 March 2014 to 13 June 2014 under the first mortgage, and one interest repayment of HK$116,667 on 7 June 2014 under the second mortgage.[15]  If any of such repayments was or were made by cheque(s), one should be able to trace for copy or copies of such cheque(s) according to the normal banking practice and the identity of the payor(s) of such cheque(s) can then be revealed.  If any of the repayments was or were made by way of bank transfer(s), the transferor(s)’ bank account(s) can then be traced and with further inquiry, the name(s) of such bank account holder(s)’ may also be revealed.  Viewed thus, I am satisfied that there is a prima facie case that the relevant bank statements of the plaintiff may contain the above information or through a train of enquiry lead to such information as related to the identity issue in this case.

46.Apart from that, since both defendants contended that they never received the two loans or made repayment of interests as alleged[16], technically the plaintiff is also required to disclose the aforesaid documents or classes of documents which are relevant to establish its own claim.

47.As such, the 3^rd category should in principle be allowed.  Having said that, I to a certain extent agree with Mr Ching’s observation that the description of this category is not too clear. However, if one reads such request together with the defendants’ supporting affidavit for the 1^st summons[17] and in light of the above discussion, the plaintiff should have no real difficulty in understanding the documents or classes of documents sought under this category.  Having said so, the defendants have the duty to identify with precision the documents or classes of documents as required to be disclosed, otherwise the plaintiff swearing the affidavit in relation to specific discovery of this category may find itself in serious trouble in swearing a false affidavit. See Paul’s Model Art case (supra), per Cheung JA at para 24(3). 

48.As such, the plaintiff should be ordered to swear its affidavit as referred to in para 1 of the 1^st summons with reference to the following documents or classes of documents instead of those originally described in para 3 of the Schedule attached to such summons:

“Copies of the two cheques issued to “Chen Jianhua” in respect of the first and second mortgage loans respectively, and all bank statements showing the dates when these two cheques were cashed as well as all bank statements showing the interest repayments as described in paras 10 and 17 of Ms Yeung Sau Han Fanny’s affirmation filed on 5 March 2015[18].”

49.By doing so, I see no unfairness to the defendants either for Miss Yu cannot draw my attention to the existence of any other documents or classes of documents as described in the 1^st summons under the 3^rd category which have not already been covered by such description as mentioned in the preceding paragraph.

The 4^th category

50.In respect of the 4^th category, the defendants in my view cannot provide sufficient evidence to demonstrate there exist such correspondences as between the plaintiff (whether through Ching & Co or otherwise) and WF on the two mortgages which would be relevant to the identity issue or other matters in question.  In my view, such request of specific discovery is in truth a fishing expedition.

51.Mr Fung Chi Man, the handling solicitor for the defendants, in his fourth affidavit (filed on 22 June 2017) deposed that the correspondences (under the 4^th category) “should contain evidence or information on whether the plaintiff had at any stage requested WF to provide identity proof of the alleged Mr Chen and Ms Fan and/or verified the identity of its customers with WF” prior to the execution of the two mortgages and the release of funds to them.  In other words, the defendants and their solicitors actually do not know whether the plaintiff had indeed made such requests or verifications.  It would be fishing for them under such circumstances to ask for the correspondences in question to see whether such requests or verifications were made or not and if yes, why and how they were made.

52.In Ngan In Leng v Chu Yuet Wah (No.1) [2013] 1 HKLRD 717, Queeny Au-Yeung DHCJ (as Her Ladyship then was) also cited the case of Re Estate of Ng Chan Wah (supra) and emphasised that specific discovery should not be deployed as a tool for fishing expedition.  Her Ladyship at para 26 said:-

“26. Fishing expedition with a view to hunting around the documents in the hope that they will reveal some improprieties on the defendants' part or will provide information for them to pursue more enquiries is not permitted: Re Estate of Ng Chan Wah (unrep., HCAP 5/2003, [2003] HKEC 317), 5 March 2003, Chu J (as she then was), at [16]. However, this must be distinguished from onerous discovery causing inconvenience to a party: Man Won Co Ltd v Tay Vi Bing.” (emphasis added)

53.Further, Miss Yu in her own skeleton submission in fact acknowledged that the plaintiff appeared to have vetted Mr Chen prior to its referral of him to WF, which in my view is likely for reasons as already discussed above under the heading of the 2^nd category.  The defendants cannot explain why the plaintiff on top of its own vetting, would still somehow ask WF to provide further information about the identity of the Mr Chen and Ms Fan in question.

54.In these circumstances, the specific discovery on the 4^th category is refused.

The 5^th category

55.For this category of documents, Miss Yu submits that Mr Ching being the handling solicitor for the plaintiff at the time should be alert of the risks involved in the subject mortgage transactions, especially the Law Society of Hong Kong had issued a circular to remind its members to beware of property fraud cases, and a practice direction to alert its members that the use of power of attorney in property transactions can be a suspicious transaction indicator under certain circumstances.

56.However, with respect, Miss Yu cannot articulate or otherwise demonstrate to this court how these matters would necessarily justify the specific discovery.  Again, the defendants cannot pinpoint to any concrete evidence to suggest the plaintiff would necessarily instruct Ching & Co to advise on the power of attorney or any other matters as related to the identity of the Mr Chen and Ms Fan in question.

57.In these circumstances, I am not satisfied that the defendants have made out a prima facie on the relevance of the subject correspondences sought.  The 5^th category is therefore disallowed.

Disposition

58.Due to the above reasons, I make an order in terms of paras 1 and 2 of the 1^st summons for specific discovery with respect to the documents mentioned in paras 2(a) and 3 of the Schedule thereto[19] save that the description of documents under para 3 of the Schedule be amended to that as described in para 48 above.  Whereas, application for specific discovery of documents as mentioned in para 1 and (2)(b) of the Schedule[20] to the 1^st summons are dismissed.

59.The 2^nd summons is dismissed in its entirety[21].

Costs

60.Since the defendants lost in the 2^nd summons, I order that the defendants do pay the costs of the 2^nd summons to the plaintiff forthwith to be taxed if not agreed.

61.As for the 1^st summons, the defendants only succeeded partially.  However, rather than adopting a mechanical score-sheet approach, I prefer to look at the matter as a whole having regard to the overall circumstances of this case in deciding on this costs issue. 

62.Among other things, it is observed that the efforts as spent by the defendants in successfully seeking the discovery of the documents in question would roughly be the same as those of the plaintiff in opposing those documents sought but ultimately refused by this court under the 1^st summons. 

63.Further, although the defendants have incurred additional fee by engaging counsel to represent them at the hearing whereas the plaintiff was only represented by their solicitor, Mr Ching, on the other hand the time spent by the parties in arguing over the 1^st category is the most substantial among the different categories sought under the 1^st summons but the defendants failed in the 1^st category.  Not only that, the defendants had also written several letters to the court after the hearing in relation to their application for seeking leave to adduce further affidavit evidence on matters about the authenticity of the title deeds.  This necessitated the plaintiff to write a letter in response, and the defendants also failed in such application.

64.In these circumstances, it is just and fair to make no order as to costs of the 1^st summons.

65.Lastly, it remains for me to thank Miss Yu and Mr Ching for their assistance rendered to the court.

Mr Eric Ching of Messrs. Ching & Co., for the Plaintiff

Miss Bianca Yu, instructed by Messrs. Holman Fenwick Willan, for the 1^st and 2^nd Defendants