DEAK AND COMPANY (FAR EAST) LIMITED (2nd Defendant) v N.M. ROTHSCHILD AND SONS LIMITED (1st Plaintiff)

CACV000028/1981

IN THE COURT OF APPEAL

Coram: Yang, Barker, JJ.A. and Garcia J.

Date of Judgment: 4 November 1981

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JUDGMENT

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Barker, J.A.

1. This is an appeal from a Judgment of Zimmern J., whereby he refused to grant discovery to the Second Defendants, the Appellants herein, of items numbered one to six inclusive in the letter of the 2nd October 1979 from the Appellants' solicitors to the Respondents' solicitors, which refusal forms the subject of the Appeal, and whereby he granted to the Appellants discovery of items numbered 17 and 18 of the said letter, which grant forms the subject of the Cross-Appeal.

2. The Respondent companies are owned and/or controlled by the Rothschild family, a famous name in the financial world. From about 1969 or 1970 they sought to obtain business in Hong Kong, for which purpose they appointed one Ross as their representative in Hong Kong. He regularly received cheques or cashier orders in favour of the Respondents, the intention of the drawers thereof being that the cheques or orders should be invested, for example in Eurodollars or in bonds or in managed portfolios.

3. The First Respondents had bank accounts with the First Defendants, and with the Bank of China, but there was no authorised signatory on these accounts registered in Hong Kong. Indeed, such documents as have been disclosed suggest, so it is alleged, that there was relatively little use made of these accounts by the Respondents.

4. On the 1st October 1971 Ross opened a 100 day deposit account No. 56555 with the Appellant's in his own name. Into this account Ross would from time to time pay cheques and money orders received from clients of the Respondents, and if these were made out in favour of the Respondents, he would endorse these over and pay them into the account.

5. Since the Appellants were not licensed bankers, they arranged for the 1st Defendant to collect these cheques etc. and to credit with the proceeds of these cheques an account which the Appellants had with the 1st Defendants. The Appellants in lieu credited Account No. 56555 with the value of the cheques in money.

6. This action is brought in respect of nine such cheques. Its total value of which is alleged to be, with interest, of the order of HK$25,000,000, which Ross is alleged to have indorsed over, and then eventually made away with. The Appellants and the 1st Defendant are both alleged to have converted these cheques.

7. The main planks on which this appeal is founded are -

8. This knowledge, express or implicit, is relevant, say the Appellants, to (a) and lack of it to issue (b).

9. The application for discovery under the aforesaid items 1 to 6 was made under Order 24 rule 7(1) of the Rules of the Supreme Court which reads:

"Subject to rule 8, the Court may, at any time, on the application of any party to a cause or matter, make an order requiring any other party to make an affidavit stating whether any document specified in the application or any class of document so specified is, or has at any time been, in his possession, custody or power and if not then in his possession, custody or power, when he parted with it and what has become of it."

10. Rule 7(3) reads:

"An application for an order under this rule must be supported by an affidavit stating the belief of the deponent that the party from whom discovery is sought under this rule has, or at some time had, in his possession, custody or power, the document or class of document, specified in the application and that it relates to one or more of the matters in question in the cause or matter."

11. Rule 8(1) reads:

"On the hearing of an application for an order under rule 7 the Court, if satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, may dismiss ... the application and shall in any case refuse to make such an order if and so far as it is of opinion that discovery is not necessary for disposing fairly of the cause or matter or for saving costs."

12. Thus in order to obtain an order for discovery under Order 24 rule 7 the party seeking it has to make out a prima facie case:

13. We agree with and adopt the test of relevancy propounded by Brett L.J. (as he then was) in Compagnie Financiere Et Commerciale Du Pacifique v. The Peruvian Guano Company ⁽¹⁾, where he said at page 63:

"It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may - not which must - either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words 'either directly or indirectly', because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead to a train of enquiry ......"

14. These words were followed and discussed by Tomlin J. in Astra National Productions v. Neo Art Productions Ltd. (2) where he said, at page 220:

"A document might be relevant either by reason of its character - for instance the mere fact that it was a document of a particular kind - or it might be relevant by reason of its contents, and if the applicant was relying upon a particular class of documents because they might have certain contents, in his view it was not enough for him to say 'they must be this particular class of documents' unless the mere fact that they belonged to the class was sufficient to constitute relevancy. If the mere fact that they belonged to the class was not sufficient to constitute relevancy, but the relevancy had to depend on the particular contents, then it seemed to him there must be a prima facie case for particular contents made before, under the rule, discovery could be granted."

15. It is unfortunate that this passage is quoted oratione obliqua, but its meaning is clear.

16. Moreover, it has to be remembered that, even if existence, possession etc. and relevancy are established, discovery will still only be granted if it is necessary for fairly disposing of the cause or matter: of Lord Wilbeforce in Science Research Council v. Nasse ⁽³⁾ at page 1066 where he said:

"The ultimate test in discrimination (as in other proceedings) is whether discovery is necessary for disposing fairly of the proceedings."

And in deciding that question one of the matters which a Court has to bear in mind is whether it would be oppressive to order discovery - that is oppressive on the party required to give it. What is oppressive must depend upon the particular circumstances of each case. Example of oppression can be found in the cases of the Attorney General v. The North Metropolitan Tramways Company⁽⁴⁾ and Dampskibs v. Arcos Ltd.⁽⁵⁾. As the Court of Appeal said in John Henry Andrew & Co. Ltd. v. Kuehnrich⁽⁶⁾:

"The Court, of course, never makes an oppressive Order causing a person to make a search for and discover an enormous amount of documents, but makes some more reasonable Order."

17. What is meant by 'a class of document"? There is no definition in the Rules. It was argued on behalf of the Appellants that the word 'class' is used to enable the Court to order discovery of a group of documents which go to a particular issue. We disagree. In our judgment 'a class of documents' must be classified by its nature. Thus, for example, in Seabrook v. British Transport Commission⁽⁷⁾, it was held that the description of the documents of which discovery was required as "correspondence between and reports made by the Defendant's officers and servants relating to the accident" was a sufficient identification so as to form a class.

18. With the foregoing principles in mind we turn to consider the various items in respect of which discovery is claimed. We can conveniently take items 1, 5 and 6 together. They are as follows:

19. These items are all tainted with the same vice. They do not form a class. They merely bear on an issue. Therefore they do not fall within Order 24 rule 7, and we accordingly decline to order discovery in respect of them.

20. Item 2 reads as follows:

"All documentary records maintained by the Plaintiffs and/or Ross in respect of each of the clients introduced by Ross including documents recording the details of these accounts, the making of deposits and the movement of funds into and withdrawals of funds from such accounts."

21. In our judgment the Appellants have not shown that prima facie these documents relate to any issue in the action either by their nature or by their content or that their discovery is necessary fairly to dispose of the action.

22. Item 3 reads as follows:

"All instructions and/or requests by Ross and/or by clients introduced by Ross relating to the placement of clients' funds."

23. Stricto sensu, these documents do not form a class within the meaning of Order 24 rule 7, but the Respondents accept that they would if for 'relating to' there were substituted the word "for", and they therefore did not take the point. Nor do we. But in our judgment the Appellants have not made out a prima facie case of relevancy, and their discovery would not directly or indirectly advance the case of the Appellants or weaken the case of the Respondents. The discovery of these documents is not necessary fairly to dispose of the action.

24. Item 4 reads as follows:

"All remittance advices from banks (whether or not those banks were members of the Rothschild group) relating to the placement of clients' funds (i.e. clients introduced by Ross.)

This, as item 3, is unlimited as to time and is in our judgment a fishing request. The Appellants have not made out a prima facie case that these documents relate to any issue either by the nature or their contents, nor that their discovery is necessary fairly to dispose of the action.

25. In any event, we are of the view that it would be oppressive to order such discovery. We are of the view that the probative value of the discovery would be so slight as not to justify the very considerable inconvenience to which the Respondents would be put if discovery was granted.

26. In the result the appeal is dismissed. We turn then to consider the cross-appeal.

27. Item 17 reads:

"Minutes of the executive committee of the 1st Plaintiff in so far as they relate to the activities of the Plaintiffs in Hong Kong between May 1969 and March 1974."

28. The final order as drawn up orders discovery on this item in its terms. But the final order did not reflect the judgment. What the Judge said was that the Appellants were entitled to all of the minutes relating to the matters in question, and we agree with him.

29. The final order so far as item 17 is concerned will therefore be varied by the addition of the words 'relating to the matters in question' to the discovery ordered under that paragraph.

30. Item 18 reads:

"Documents and correspondence passing between the Hong Kong and London offices of the Plaintiffs at or immediately after Ross's departure from Hong Kong."

31. In our judgment, Item 18 does not constitute a class within the meaning of Order 24 rule 7. It is not good enough merely to specify documents going from place to place. It is, at least, necessary to specify the kind of documents referred to. Moreover the words 'immediately thereafter' are far too wide. And no prima facie case has been made out that such documents are by their nature or contents relevant.

32. Accordingly, and to the extent hereinbefore set out, we allow the cross-appeal.

33. There is one further matter to which we must advert. We were asked to look at a document, page 97 of the agreed bundle, entitled 'Memorandum' which is clearly the advice given to the Appellants by their solicitors as to the merits of the case. Objection was taken to our seeing this document on the ground that it was handed over to the Respondents during negotiations and on a without prejudice basis. There is a dispute as to whether it was so handed over. We nevertheless ruled that it was permissible for us to see it, not as going to the merits of the case, but as to tending to support the Appellants' plea of knowledge. And in so ruling we followed the case of Waldridge v. Kennison Et Alt. ⁽⁸⁾, which held that a without prejudice document could be adduced in evidence for a purpose ancillary to the merits of the case. Having looked at this document, we did not find it of any assistance in arriving at our decision.

34. For the foregoing reasons the Appeal is dismissed and the cross-appeal allowed, in each case with costs. There will be a certificate for two counsel.

Representation:

Robert Alexander, Q.C., R. Mills-Owens, Q.C., Mrs. Kaplan & Robert Ribeiro (Johnson, Stokes & Master) for Appellant.

Conrad Dehn, Q.C. & Audrey Eu (Wilkinson & Grist) for Respondent.

(1) (1882) 11 Q.B. 55

(2) (1928) W.N. 218

(3) (1980) A.C. 1028

(4) (1895) 72 L.T. 340

(5) (1934) 48 LL.L.R. 117

(6) (1912) R.P.C. 698

(7) (1959) 1 W.L.R. 509

(8) 1 Esp. 143