Hong Kong Space Shuttle Ltd v. Willis Hong Kong Ltd and Another

CAMP 35/2018

[2018] HKCA 329

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 35 OF 2018

(ON AN INTENDED APPEAL FROM HCA NO 468 OF 2013)

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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 the renewed application brought by the 1^st defendant for leave to appeal to the Court of Appeal against an interlocutory order refusing specific discovery.

2.In the summons issued by the 1^st defendant in March 2017, specific discovery was sought for 21 classes of documents.  When the application was heard by Deputy High Court Judge Seagroatt on 17 October 2107, the 1^st defendant reduced the scope of discovery to six classes[1].  Very prolix written submissions were placed before the court.  The judge did not call on the plaintiff’s counsel.  In the judge’s own words, he gave the 1^st defendant’s arguments “short-shrift”, taking the view that “such applications are not to be turned into a trial of the substantive issues or a wide-ranging forensic foray”[2].  He delivered an ex tempore judgment dismissing the summons, a transcript of which was placed before us.

3.The 1^st defendant issued a summons on 31 October 2017 seeking leave to appeal against the dismissal.  The intended appeal further reduced the scope of discovery to just one class of documents, namely, Class 3.  The application was dealt with by the judge on paper.  He dismissed it on 27 February 2018 and handed down his reasons on 13 March 2018 (“the Leave Decision”).

4.The 1^st defendant renewed its leave application to the Court of Appeal by a summons issued in these proceedings on 27 March 2018.  The grounds in the draft notice of appeal annexed to the summons are re‑organised and ground 1 is new.  Otherwise, there is no substantial difference between the grounds sought to be argued in the present application and the grounds placed before the judge.

5.We have considered the submissions filed on both sides.  The 1^st defendant sought an oral hearing and a hearing date to be fixed in consultation with counsel’s diaries.  It was contended that a hearing is appropriate in light of grounds 1 and 2 advanced in the draft notice of appeal.  These grounds argued that the judge failed to accord the 1^st defendant “its entitlement to the basic procedural right of a proper hearing and determination of its application” and that he failed to give proper reasons for his decision in respect of Class 3 of the documents sought.

6.We decline to hold an oral hearing.  We have been properly assisted by the statements filed on both sides required under Order 59 rule 2A, which have been prepared with the involvement of Senior Counsel.  The 1^st defendant’s statement in support of its application is a model of clarity.  An oral hearing would not serve any useful purpose in the circumstances.  We are satisfied fairness between the parties would not be compromised if an oral hearing is not held.  Bearing in mind that one of the underlying objectives in Order 1A rule 1 is to “promote a sense of reasonable proportion and procedural economy in the conduct of proceedings”, we exercise our power under Order 59 rule 2A(5) to determine this application without a hearing on the basis of written submissions only.

7.The 1^st defendant’s contention regarding the relevance of the Class 3 documents may be conveniently taken from the narrative in the 1^st defendant’s statement, which is as follows:

(1) The plaintiff claims against the 1^st defendant for alleged negligent advice as its broking agent regarding the placement of event cancellation insurance for a proposed space exhibition (“the Event”) planned to take place in Hong Kong in 2007.  When the Event could not take place the Underwriters disputed the plaintiff’s entitlement to cover under the policy.  The plaintiff brought a breach of contract claim against the Underwriters in HCA 2611/2008.  The limited disclosure made by the plaintiff of documents filed in HCA 2611/2008 shows that the Underwriters asserted that the plaintiff had, in breach of warranty, failed to disclose material facts of which it had knowledge prior to entering into the policy in May 2007 that the main exhibit for the Event, space shuttle “Buran”, was at risk of not being delivered because it was held up in Bahrain over a legal dispute as to its ownership.  HCA 2611/2008 was eventually settled in 2012 by the Underwriters paying a sum and each side bearing their own costs.

(2) The plaintiff asserts in this action that, had the 1^st defendant properly advised the plaintiff that the scope of the policy did not cover non‑delivery of the Buran by Mactus Far East Limited, the plaintiff would have obtained alternative insurance or insisted upon a performance bond from Mactus to protect itself and thus avoided loss.  Apart from denying negligent advice the 1^st defendant contends that the losses claimed by the plaintiff were caused by its own breaches arising, inter alia, from the same material non‑disclosure relied upon by the Underwriters and that the plaintiff could not have obtained such alternative cover or bond because it already knew the Buran was injuncted in Bahrain.  Thus, as a matter of causation, the reasons why the Underwriters refused cover and the plaintiff’s evidence and contentions in response on its prior knowledge of the Buran’s status are highly relevant in this action.

8.The description of the Class 3 documents reads:

“All witness statements including the witness statement of Karen Loh dated 10 November 2010 disclosed in HCA 2611/2008.”

9.The plaintiff has disclosed in its list of documents in this action the witness statement of Robert Wood of the Underwriters in HCA 2611/2008, but not the witness statement of Karen Loh (the plaintiff’s director and key witness) dated 10 November 2010 disclosed in that action.  The witness statements in that action were exchanged but not adopted as evidence as the action was settled before trial.

10.In the ex tempore judgment refusing specific discovery, the judge had this to say in respect of the Classes 1 to 4 documents:

“The application generally speaking and dealing with schedule 1, points 1, 2, 3 and 4, it’s too wide. They are covered by privilege for the most part. The undertaking exists. In any event, the relevance is highly dubious. If the defendants want certain information, they can at least start their approach by contacting the underwriters and seeing what the underwriters would be prepared to disclose to them; probably nothing, but at least that approach is open to them.”

11.The plaintiff argued that the witness statements in HCA 2611/2008 addressed the issues in that action and as the Underwriters sought to avoid the policy on a wide range of allegations[3], many of the issues in that action are plainly irrelevant to the issues in the present action.  It is submitted that even if part of the witness statements might debate the plaintiff’s knowledge (or the lack of it) of Mactus’ inability to deliver the Buran, the Underwriters’ witnesses will not be called in this action (as the 1^st defendant has filed no witness statement from them) so the probative value of such untested hearsay statements is negligible.  As for the plaintiff’s director Karen Loh, the plaintiff has filed a witness statement from her in this action[4] dealing with inter alia its knowledge of the material information as alleged and she will be cross-examined.

12.We agree with the plaintiff the discovery sought in respect of all witness statements in the other action is too wide.  The plaintiff has already disclosed the witness statement of Robert Wood of the Underwriters.  The relevance of any other witness of the Underwriters in respect of the issue of the plaintiff’s prior knowledge is not demonstrated.  We are also inclined to agree that the probative value of untested hearsay statements from any witness of the Underwriters is negligible.  We do not think discovery of any other witness statements of the Underwriters is necessary for disposing fairly of the cause or matter.  There is no reasonably arguable basis to impugn the judge’s exercise of discretion to refuse discovery in respect of all witness statements in the other action and in particular the witness statements of the Underwriters.

13.The witness statement Karen Loh in the other action is on a different footing.  It is reasonably arguable that that part of her statement dealing with the plaintiff’s knowledge of the alleged material information is relevant to some of the issues in the present action.  We cannot reject out of hand that the purpose of seeking discovery regarding that part of her statement is plainly to fish for materials to discredit this witness, as contended by the plaintiff.

14.On the premise that the relevance of part of Karen Loh’s witness statement is established (ground 3), it is necessary to consider if that statement is protected by litigation privilege and whether such privilege might have been waived (ground 4).  We think the 1^st defendant’s arguments on privilege and waiver of privilege reasonably arguable.

15.We do not think the other grounds of appeal are of any merit.

16.It cannot be said that the judge had not accorded the 1^st defendant a proper hearing and determination by treating all classes of documents sought as equivalent and deferring the entire matter to the trial judge (ground 1).  It is apparent from the transcript that the judge did not treat all categories of documents sought as equivalent.  As for his mentioning the trial judge’s eventual involvement, those parts of the exchange with counsel must be read in context.

17.Nor do we think there was failure by the judge to give proper reasons (ground 2).  Notwithstanding that the judge had treated Classes 1 to 4 of the documents together, the reasons given in the ex tempore judgment are adequate.

18.We have dealt with grounds 3 and 4.

19.The argument relating to Order 38 rule 2A(11) (ground 6) does not arise, as we do not think there is any reasonably arguable basis to impugn the judge’s exercise of discretion to refuse discovery of the witness statements of the Underwriters.

20.We reject the argument on selective disclosure and cherry picking (ground 5).  As submitted by the plaintiff, the complaint of unfairness assumed that the witness statements in the other action are all relevant to the issues in the present action, which is incorrect.

21.For the above reasons, we grant leave to appeal only in respect of seeking disclosure of that part of the witness statement of Karen Loh filed in HCA 2611/2008 relating to the plaintiff’s prior knowledge of the Buran’s status and limited to grounds 3 and 4 in the draft notice of appeal.  We refuse leave to appeal in all other respects.

22.We direct the 1^st defendant to file a notice of appeal in accordance with the limited leave granted within 14 days of the handing down of this judgment.

23.In respect of the refusal of leave to appeal in part of the intended appeal, 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 considered at an oral hearing inter partes, as that part of the application is wholly without merit.

24.We reserve the question of costs of this application to the hearing of the appeal.

Written submissions by Mr Charles Sussex SC and Ms Frances Lok, instructed by Shum & Co, for the Plaintiff (Respondent)

Written submissions by Mr Jeremy Bartlett SC and Ms Eleanor Yeung, instructed by Clyde & Co, for the 1^st Defendant (Applicant)

[1] Classes 1 to 4, 13 and 21

[2] Leave Decision, §§38 and 42

[3] The plaintiff has disclosed the pleadings in HCA 2611/2008.

[4] Relevant extracts of the witness statement of Karen Loh dated 1 November 2016 have been included in the application bundle. The plaintiff’s knowledge of any material risk that Mactus might not deliver is pleaded in §§40 and 41 of the statement of claim.