趙春雨及另一人 v. 裘麗虹及另五人
Read the full judgment text of HCA 3071/2016 on BabelCite. This High Court CFI judgment was delivered on 22 January 2018.
1. This is the 1 st Plaintiff’s application by summons dated 5 September 2017 for a preservation order under Order 29, rule 2 of the Rules of the High Court (“RHC”) and inherent jurisdiction of the Court that the originals of certain documents be delivered into the custody of the Defendants’ solicitors and be retained and preserved by them. At the end of the hearing on 22 January 2018, I dismissed the Plaintiff’s summons with reasons reserved. I now give my reasons.
Cited by 1 case · Cites 2 cases
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HCA 3071/2016 [2018] HKCFI 118 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 3071 OF 2016 ________________________
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________________________ REASON FOR JUDGMENT ________________________ THE APPLICATION 1.This is the 1st Plaintiff’s application by summons dated 5 September 2017 for a preservation order under Order 29, rule 2 of the Rules of the High Court (“RHC”) and inherent jurisdiction of the Court that the originals of certain documents be delivered into the custody of the Defendants’ solicitors and be retained and preserved by them. At the end of the hearing on 22 January 2018, I dismissed the Plaintiff’s summons with reasons reserved. I now give my reasons. 2.The 1st Plaintiff’s summons relate to the following seven documents (the “Disputed Documents”):
3.The 1st Plaintiff also applies for leave to inspect and take photocopy or photograph of the Disputed Documents on reasonable notice given to the Defendants and in the presence of the Defendants’ solicitors. 4.At the hearing on 15 January 2018, the 1st Plaintiff’s counsel, Ms Li, clarified that her client is seeking order against the 1st, 2nd, 3rd and 6th Defendants only. The 3rd Defendant is the subject company whereas the 1st, 2nd and 6th Defendants are the current directors of the 3rd Defendant. 5.Also, at the hearing on 15 January 2018, Ms Li submitted a revision of the preservation order sought on the following terms:
6.On 15 January 2018, I adjourned the hearing to 22 January 2018 to enable the parties to make submission on a question I had raised, namely, whether the objective of the 1st Plaintiff under the present summons can be achieved by an application under Order 24 of RHC. 7.On 18 January 2018, the 1st and 2nd Plaintiffs filed an application returnable on the date of the adjourned hearing pursuant to Order 24, rule 11(2) of RHC seeking an order against the 1st, 2nd, 3rd and 6th Defendants for the delivery up of the originals of the Disputed Documents (or copies if the originals are not in the possession custody or power of the Defendants) to the office of the Plaintiffs’ solicitor for the Plaintiff’s forensic handwriting expert to inspect and examine. BACKGROUND 8.The 3rd Defendant is incorporated in Hong Kong. By a Co-Operation Agreement dated 10 July 1993 entered into between the 3rd Defendant and廣州地下鐵道總公司 (“Guangzhou Metro”), the 3rd Defendant through its wholly owned subsidiary in the People’s Republic of China (“PRC”) was given the right to develop and operate a real estate project held by Guangzhou Metro. Due to the lack of funding, the development of the project has been delayed until today. 9.The 2nd Defendant is the 1st Defendant’s husband. The 4th Defendant is a company owned by the 1st and 2nd Defendants. The 2nd Plaintiff is a company controlled by the 1st Plaintiff. 10.In 2008, the 1st, 2nd and 4th Defendants entered into an agreement (the “2008 Agreement”) and a supplemental agreement (the “2008 Supplemental Agreement”) with the 2nd Plaintiff whereby the 1st, 2nd and 4th Defendants agreed to sell to the 2nd Plaintiff the whole of the 3rd Defendant’s issued capital totalling 10,000 shares. 11.On 6 June 2008, pursuant to the agreements signed in 2008, 6,000 shares (60% of the entire issued share capital) in the 3rd Defendant were transferred to the 1st Plaintiff who also became a director of the 3rd Defendant. Apart from the 1st Plaintiff, the other director of the board was the 1st Defendant. 12.The 1st Plaintiff alleged that the remaining 4,000 shares were held by the 1st Defendant pending completion of the 2008 Agreement. 13.Four of the Disputed Documents were the board resolution of the 3rd Defendant:
14.The remaining three documents were purportedly signed by the 1st Plaintiff resigning from the board and transferring 6,000 shares in the 3rd Defendant to the 4th Defendant. 15.The 1st Plaintiff disputed that he had ever transferred his shares in the 3rd Defendant to the 4th Defendant. He also denied having resigned from the board of the 3rd Defendant. The 1st Plaintiff challenged the authenticity of the signatures on the Disputed Documents that were purportedly signed by him. He alleged that the Disputed Documents were forged. 16.There are other documents signed around that time. Suffice to say that the effect of those documents was that the Plaintiffs were no longer a shareholder or director of the 3rd Defendant. The 3rd Defendant is now held as to 60% by the 4th Defendant, 10% by the 1st Defendant and 30% by the 5th Defendant. The current board of the 3rd Defendant consists of the 1st, 2nd and 6th Defendants. 17.At the relevant time, the quorum for board meeting under the articles of association of the 3rd Defendant was two. The articles also provide that for a written resolution of the board to be valid, it has to be signed by all the directors. The 1st Plaintiff alleged that the board resolutions were passed without his knowledge, consent or agreement. 18.The Defendants’ defence was that all the 1st Plaintiff’s signatures on the Disputed Documents were genuine. 19.In about October 2016, the 1st Plaintiff commissioned a forensic examination of copies of four of the Disputed Documents (namely those set out in paragraphs 2 (a), (c), (e) and (f) above) that he obtained from the Companies Registry. The report showed that the 1st Plaintiff’s signatures on those documents were cut and pasted from other documents and thus they were all forged. 20.The Plaintiff commenced this action on 24 November 2016 seeking, inter alia, declaratory reliefs that the 1st Plaintiff remained the legal and beneficial owner of 6,000 shares in as well as a director of the 3rd Defendant. The Plaintiffs also sought order declaring that the Disputed Documents to be invalid. He also sought various injunction orders as well as order for the rectification of the information of shareholders and directors kept by the 3rd Defendant with the Companies Registry. 21.On 27 July 2017, the 1st Plaintiff’s solicitors wrote to the Defendants’ solicitors requesting the originals of the Disputed Documents to be delivered to the Defendants’ solicitors and be retained by them so that the 1st Plaintiff’s expert could inspect them. Despite reminders sent, the Defendants failed to provide any reply. On 5 September 2017, the 1st Plaintiff took out the present summons seeking a preservation order. ISSUES 22.The issue before me was whether a preservation order should be made under Order 29, rule 2 in respect of the Disputed Documents. I also had to deal with the latest summons taken out by the Plaintiffs under Order 24, rule 11(2). The applicable legal principles 23.Order 29, rule 2 sets out as follows:
24.I would refer to the case of Samtani v Samtani [2012] 4 HKLRD 872 for the relevant principles. In paragraph 75, DHCJ Au-Yeung (as she then was) said:
And in paragraphs 77 to 79 :
ANALYSIS 25.There is little or no dispute that the authenticity of the 1st Plaintiff’s signatures on the Disputed Documents would be crucial for the determination of the disputes in this action. The Plaintiffs have already indicated their intention to rely on expert evidence to prove forgery. I am satisfied that there are serious issues to be tried in this case. 26.There are a number of questions I have to consider in deciding whether to exercise my discretion to make an order under Order 29, rule 2. Whether the Disputed Documents fall within “property” under Order 29 and that they are the subject matter of the cause, or as to which any question may arise therein? 27.The 1st Plaintiff relied on the case of Re Saxton (dec’d) [1962] 1 WLR 859 and para 29/8/5 of Hong Kong Civil Procedure 2018 for the proposition that an order may be made in relation to a document where its authenticity is a crucial issue in the action. In Re Saxton, Wilberforce J (as he then was) said at page 861:
28.When the subject matter is a document, there ought to be a distinction between whether the applicant is seeking to preserve the medium or the physical object which carries the information (such as a document, a computer disc or a tape recording) or whether he is seeking a disclosure of the information contained in the document. In the latter case, Order 29, rule 2 has no application. The proper way is to seek disclosure under Order 24 of the RHC. 29.Where the document sought to be preserved is a medium containing the information, it could be considered as a property to be preserved under Order 29. In Saxton, the validity of the alleged agreement was directly challenged by the plaintiffs and an order was sought to have the document preserved and produced for forensic examination to determine whether it was forged. So in Saxton, the plaintiffs were not seeking the disclosure of the information in the document. Instead, they were seeking the production of the document for forensic examination. 30.In Huddleston v Control Risks Information Services Ltd [1987] 1 WLR 701, Hoffmann J (as he then was) discussed the Saxton case and the distinction between treating an agreement as a document or as a property:
31.And in Dun & Bradstreet v Typesetting Facilities [1992] FSR 320, the plaintiff brought an action for copyright infringement and breach of confidence relating to a computerized database. The plaintiff there sought an order for inspection of the defendants’ database prior to service of their statement of claim. Harman J said at pp 322–3:
32.In the Dun & Bradstreet case, Harman J refused to make an order under Oder 29, rule 2 as the plaintiff is not seeking to inspect the computer file. Rather it is seeking to inspect the information in the computer file. The proper course is to apply for discovery under Order 24. 33.It is clear that the purpose of the 1st Plaintiff’s application was to secure the Disputed Documents rather than for the information contained therein. The 1st Plaintiff was seeking to inspect the Dispute Documents and put them under forensic examination. As such they are “property” for the purpose of Order 29, rule 2 and they relate to one of the crucial questions to be determined in this case. 34.Having said that I would add this. Where the property that the applicant seeks to inspect is a chattel or a particular circuit board in a piece of mobile telephone testing equipment (as in the case of Smith Myers Communications Limited v Motorola Limited [1991] FSR 262 which was referred to in the Dun & Bradstreet case at p 329), the proper course is to apply for preservation and inspection under Order 29, rule 2. Order 24 would have no relevance to any party who wishes to inspect that piece of chattel or circuit board. 35.However, where the property in question is a document, as in this case, there is specific power under Order 24 for the Court to order inspection of the document, by the applicant or his forensic expert. Even the Plaintiffs acknowledged that such avenue was available to them as they had on 18 January 2018 filed an application for the production of the Disputed Documents for inspection. In the further submissions made by the parties, both sides agreed that the objectives of the Plaintiffs can be achieved by an application under Order 24. Whilst I shall deal with that application below, I would say that the existence of such power under Order 24 was a significant factor to be taken into account in the exercise of my discretion under Order 29. Whether the Disputed Documents are in the possession of the Defendants 36.By an affirmation of the 2nd Defendant filed on 29 September 2017, the 2nd Defendant deposed that the Disputed Documents were not in the possession of the Defendants as they had been handed over to the police in the PRC in connection with a complaint made by the Defendants on 5 July 2017 against the 1st Plaintiff for embezzlement. 37.The 1st Plaintiff raised a number of challenges against the credibility of the 2nd Defendant’s evidence. They include:
38.The Plaintiffs also said that they had written to the Defendants’ solicitors on 5 January 2018 proposing to adjourn and/or withdraw the present summons if the Defendants agreed to the following :
39.Although I find unsatisfactory the timing of and the explanations given by the 2nd Defendant on how the Defendants departed possession of the Disputed Documents, the 2nd Defendant had positively affirmed that he had given the Disputed Documents to the police in the PRC. In other words, the Defendants did not have possession of the Disputed Documents. On this issue alone, it would not be appropriate to make an order under Order 29, rule 2. Whether Damages would not be a sufficient remedy 40.The Court will usually refuse to make a preservation order if damages is an adequate remedy for the plaintiff (see the above case of Samtani v Samtani and para 29/8/7 of Hong Kong Civil Procedure 2018). 41.In a normal case where the property to be preserved is the very subject matter that the applicant is seeking to recover, it might not be difficult to argue that damages would not be a sufficient remedy if a preservation order is not made. In the present case, the purpose of securing the property, namely the Disputed Documents, was for the purpose of putting them under forensic examination in order to support the Plaintiffs’ claim that they are forgery. From that perspective and when the forensic examination is crucial for proving the applicant’s case, damages could hardly be argued to be a sufficient remedy. MY DECISION 42.Whether or not to make an order under Order 29, rule 2 is a matter of the Court’s discretion. As I have said, Order 29, rule 2 is disengaged as the Defendants did not have possession of the Disputed Documents. Even putting the question of possession aside, in the circumstances of this case including the matters I have set out above, I would decline to exercise my discretion to make an order under Order 29, rule 2. APPLICATION UNDER ORDER 24 43.As stated in paragraph 7 above, on 18 January 2018, the Plaintiffs filed an application under Order 24, rule 11(2). 44.Contrary to Order 24, rule 11(3), the Plaintiffs had failed to file an affirmation in support of their application under rule 11(2). At the hearing on 22 January 2018, I adjourned the Plaintiffs’ application with directions for the parties to file affirmations. 45.As I had indicated to Ms Li at the hearing on 22 January 2018, the Plaintiff should consider if the application should be made under other rules in Order 24, such as under rule 11(1) where the Defendants have failed to allow inspection of the documents either in their list of documents or pursuant to a notice served on them by the Plaintiffs pursuant to Order 24, rule 10. 46.Unlike Order 29, rule 2, some of the rules under Order 24 require a party seeking discovery and/or inspection to show, inter alia, that the documents are in the possession, custody and power of the party against whom the application is made. A document is in a person’s power even though it is not in his possession or custody, if it can be shown that he has a right to obtain the document from the person who has them. 47.Without in any way pre-judging the matter, I would expect the Defendants to at least produce a letter from them to the PRC police seeking the return of the original of the Disputed Documents for the purpose of these legal proceedings in Hong Kong. The Defendants should also produce the reply from the PRC police to their request. In the event that the PRC police refused to return the originals, the Defendants should request the police to issue a letter or document acknowledging their receipt of the Disputed Documents. 48.There was one other matter that I had raised with the Plaintiffs at the hearing on 22 January 2018. 49.As stated in paragraph 19 above, the Plaintiffs had already obtained copies of four out of the seven Disputed Documents from the Companies Registry for examination by a handwriting expert. Ms Li told the Court that she would like to get copies of the other three documents. Presumably, this would enable them to consult their handwriting expert on the authenticity of the documents. 50.The Plaintiffs had failed to give a satisfactory explanation as to why they had not served a notice on the Defendants under Order 24, rule 10 requiring inspection of six of the Disputed Documents and for copies of them. It would be a very straight forward exercise as six of the seven Disputed Documents were expressly referred to in paragraphs 8 and 12 of the Defendants’ Defence and Counterclaim. 51.Notwithstanding that there was no summons before me at the hearing on 22 January 2018 for copies of those six documents, I made an order the Defendants to provide copies to the Plaintiff within 7 days. Those documents had been referred to expressly in the Defence and Counterclaim and I saw no good reason in not providing the Plaintiffs with copies. Mr. Chin indicated that the Defendants had no objection to the order. ORDER 52.At the hearing, I made the following order:
COSTS 53.Generally speaking, costs should follow the event in respect of the 1st Plaintiff’s summons under Order 29, rule 2. However, having heard submissions by the parties and having considered all the materials before me and the conduct of the parties, I had decided to exercise my discretion to make no order as to costs. Without affecting what I have said, I would highlight two matters. 54.First, at the hearing on Monday, 15 January 2018, I learned for the first time that the Defendants had changed solicitors on Friday, 12 January 2018. Mr Chin of the Defendants’ solicitors tried to seek an adjournment of the hearing to enable him to take instructions on the matter. No explanation was given on why the Defendants chose to change legal team at the last minute. Mr Chin informed the Court that if his application were refused, he did not have any instructions from the Defendants to make any submission on the Order 29 application. I declined the application to adjourn. As a result, Mr Chin was not in a position to provide any assistance to the Court. 55.The other matter is in relation to the discussion on possession of the documents. The Defendants were aware that the Disputed Documents would form a material part of the dispute in this case. Six of them have been expressly referred to in the Defence and Counterclaim. Yet, the Defendants considered it appropriate to provide the original of the Disputed Documents to the police in the PRC. I refer to what I have said in paragraphs 36 to 39 above. 56.In the premises, I made no order as to costs of the 1st Plaintiff’s application by summons dated 5 September 2017 under Order 29, rule 2. 57.I reserved the costs of the Plaintiffs’ summons dated 18 January 2018 under Order 24, rule 11(2).
Ms Miranda Li, instructed by Henry Wan & Yeung, for the Plaintiffs Mr Gordon Chin of Chin & Associates, for the 1st to 6th Defendants | |||||||||||||||||||||||||||||||||||||||||
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