Lai Dominic Yuk Tsun v. Hanwood Enterprises Ltd and Another

HCA 2708/2016

[2021] HKCFI 1249

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2708 OF 2016

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BETWEEN

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Before:  Deputy High Court Judge MK Liu in Chambers

Date of Hearing:  29 April and 3 May 2021

Date of Decision:  3 May 2021

Date of Reasons for Decision:  6 May 2021

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REASONS FOR DECISION

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1.At the end of the hearing, I dismissed the appeal (“the appeal”) lodged by the 2^nd defendant (“D2”) against the decision of Master Winnie Tsui (as she then was) (“the Master”) dated 19 June 2020 (“the 19 June Hearing”), by which the Master dismissed D2’s application for specific discovery (“the Specific Discovery Application”) by her summons filed on 8 November 2019 (“the Discovery Summons”). I also ordered that costs of the appeal, including all costs reserved, be paid by D2 to the plaintiff (“P”) forthwith[1]. These are my reasons for the decision.

2.By the Specific Discovery Application as set out in [2] of the Discovery Summons, D2 is seeking an order to compel P to provide “the transaction summary including transaction date, quantity and profit amount for the aluminium extrusion businesses” that P had with the following companies (“the Companies”) during the period from November 2010 until 26 October 2016:

(1)  Clayton Metals, Inc

(2)  Dayco Industries AA Metal Inc

(3)  Shapes Unlimited

(4)  OKNA Windows Corporation

(5)  Rollac Shutter of Texas, Inc

(6)  Qualitas Manufacturing Incorporated

(7)  American Shutter Products, Inc

(8)  AA Metals Inc

BACKGROUND

3.P is and was at all material times a merchant of aluminium extrusion products (“the Products”).   The 1^st defendant (“D1”) is a Hong Kong company supplying the Products (with P being one of its customers). D2 is its sole director.

4.P commenced these proceedings against D1 and D2 (collectively “Ds”) in October 2016.

5.P’s case is as follows:

(1)  Pursuant to an agreement between P and D1 (acting through D2) in or about October 2010, P agreed to refer his customers of the Products to D1, and for each order from such customers, P would be entitled to 50% of the gross profits from D1 (“the Profits Sharing Agreement”).

(2)  D1 has failed to honour the Profits Sharing Agreement. P therefore commenced these proceedings to claim against D1 for, inter alia, the said gross profits in the total sum of US$639,778.48 pursuant to the Profits Sharing Agreement.

(3)  Further, by introducing P’s customers to Ds, P communicated P’s confidential information or trade secrets (“the Confidential Information”) including names of customers, their contact details, pricing, preferences, requirements, specifications, purchaser or order terms to D2 acting on her own behalf and for and on behalf of D1.  In breach of the duty of trust and confidence, Ds have unlawfully used the Confidential Information to entice away or solicit P’s customers introduced to Ds and made profits for themselves.  In relation to this claim, P seeks an injunction against Ds and an inquiry as to damages for breach of trust and confidence.

6.Ds’ case is as follows:

(1)  P was at all material times the sales representative of D1 under an agency agreement between D1 and P (“the Agency Agreement”), and that the said 50% gross profits was a commission, which had either been paid in full or that P was otherwise not entitled to the same by reason of his own breach of the Agency Agreement.

(2)  Being D1’s agent, P1 had the duty to report the information obtained by him in the performance of his duties under the Agency Agreement.  It is denied that D1 owes any duty of confidence to P in relation to the information provided by P to D1.

(3)  At all material times, D2 was acting bona fide within the scope of her authority for and on behalf of D1, and had never assumed personal liability towards P.

(4)  D1 has also raised a counterclaim against P, claiming that P is liable to D1 to account of profits obtained by P through his dealing with D1’s customers.   The Companies as set out in the Discovery Summons are alleged to be D1’s customers.  

(5)  D2 has not raised any counterclaim against P.

7.In reply, P denies that he has been an agent of D1, and that the Companies were in fact P’s own customers which were introduced by P to D1.  P admits that he had dealings with the Companies.

8.Upon the close of pleadings in June 2017, the parties have further exchanged witness statements, further and better particulars, and answers to interrogatories in 2018 and 2019.

9.Ds were previously legally represented until November 2018.  Thereafter, D2 has been acting in person.  D2’s application to represent D1 in these applications was refused by the court.

10.On 26 November 2018, D2 filed a Notice to Act in Person (“the Notice to Act in Person”), in which she put down an office in a commercial building in Wanchai (“the Wanchai Office”) as her address for service.

11.The key events leading to the appeal are as follows:

Date	Event
18/9/2019	Master J Wong made an unless order (“the Unless Order”) for D2 to file and serve any further interlocutory application by 5:00pm on 8/11/2019.
8/11/2019	D2 took out the Discovery Summons.  No supporting affirmation was filed.
20/11/2019	Master Kot adjourned the Discovery Summons for substantive arguments and gave leave for D2 to file and serve her supporting affirmation by 18/12/2019.
10/1/2020	D2 filed her 1-page supporting affirmation out of time (“D2’s 1st Aff”).
18/3/2020	P filed and served his 1st affidavit (“P’s 1st Aff”) in opposition to D2’s 1st Aff.
11/6/2020	P filed and served his 2nd affidavit in opposition (“P’s 2nd Aff”).  Leave to file and serve P’s 2nd Aff was granted by consent.
19/6/2020	The Master dismissed the Discovery Summons.  She further dismissed D2’s oral application made at the hearing to file and serve evidence in reply to P’s 2nd Aff.
3/7/2020	D2 lodged the appeal.
6/10/2020	At the hearing before Recorder Pow SC, D2 contended that she was not served with P’s 1st Aff (and thus had no opportunity to make a reply) as she was not in Hong Kong at the time of service and that she had instructed her colleagues (“D2’s Colleagues”) not to accept service.  According to the 2nd Affirmation of Poon Wai Ki (“Poon”, a clerk working in P’s solicitors’ firm) dated 19 March 2020, P’s 1st Aff was left at the Wanchai Office on 18/3/2020. At the end of that hearing, the learned judge adjourned the appeal and gave directions for the filing and service of further evidence from D2’s Colleagues and Poon on the circumstances of the Service.  The learned judge further ordered Poon and D2’s Colleagues to attend the adjourned hearing for cross-examination. The learned judge also directed D2 to set out the “new evidence” which she intended to rely on for the appeal.  Leave for D2 to rely on such evidence shall depend on the court’s resolution of the disputes surrounding the Service.[2]
9/10/2020	D2 filed four affirmations from 4 colleagues concerning the circumstances of the service of P’s 1st Aff.
19/10/2020	P filed the 6th Affirmation of Poon in response to the said the affirmations from D2’s Colleagues.
21/10/2020	D2 filed her affirmation setting out the “new evidence”, which was served on P on 8/1/2021 out of time[3] (“D2’s 2nd Aff”).
22/1/2021	P filed and served his 3rd affirmation in response to D2’s 2nd Aff (“P’s 3rd Aff”).

THE NEW EVIDENCE APPLICATION

12.D2 made an application for leave to rely upon new evidence in the hearing of the appeal (“the New Evidence Application”). Whether this application should be granted hinges on my finding on the service issue as set out below.

The Ladd v Marshall requirements

13.Order 58 rule 1(5) provides:

“No further evidence (other than evidence as to matters which have occurred after the date on which the judgment, order or decision was given or made) may be received on the hearing of an appeal under this rule except on special grounds.”

14.The phrase “special grounds” requires that all the conditions laid down in Ladd v Marshall[4] be satisfied, namely:

(1)  The evidence could not have been obtained with reasonable diligence for use at the hearing below.

(2)  The evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive.

(3)  The evidence must be such as is presumably to be believed.

The service issue

15.D2 claims that P has not served P’s 1^st Aff on her on 18 March 2020, and as a result, she has been deprived of the opportunity of filing evidence in reply to that affidavit.  As a result, she should be given an opportunity to rely upon evidence in reply to P’s 1^st Aff in the appeal hearing.

16.The dispute has been succinctly summarized by the Recorder Pow SC in the October Decision.  In that decision, the learned judge said:

“6. According to an affirmation of service from Mr Poon dated 19 March 2020, he said he attempted to serve documents including [P’s 1^st Aff] at [the Wanchai Office] on 18 March 2020. The staff of [D2] refused to accept service but he left the documents at the office.

7. [D2] said she was not in Hong Kong at the time. According to what she was told by her colleagues, they had told the document server that they refused to accept the documents and that the documents were not left in [the Wanchai Office] at all. [D2] said she can ask her colleagues to give evidence about that. They are still working for her. Their evidence would therefore contradict the evidence of service by Mr Poon.

8. Miss Lee argued that [D2] could have adduced evidence from these colleagues on 19 June 2020 which she did not. I cannot agree. It is [D2]’s evidence that no documents were left at her office on 18 March 2020. She did not even know that the Specific Discovery application would be heard on 19 June 2020. She went to court that day because of another summons issued by [P] seeking leave to adduce [P’s 2^nd Aff] which summons was returnable on 19 June 2020. Therefore, [D2] could not have anticipated that she need to prepare evidence to challenge Poon’s service affirmation on 19 June 2020.

9. [D2] also points out that [P’s 1^st Aff] was prepared on 3 March 2020. Under the previous court order directing the filing of evidence in respect of the Specific Discovery application, [P] was to file his affirmation in opposition 28 days after [D2]’s affirmation. [D2] filed her affirmation on 10 January 2020. 28 days thereafter means 7 February 2020. [P’s] 1st affirmation should have been filed by 7 February 2020. That would be before the imposition of the GAP period on 10 February 2020. [P]’s 1st affirmation was thus filed without leave. Master Tsui should not have relied on this affirmation according to [D2]’s argument.

10. In order to decide on whether Ladd v Marshall criterion (1) is established, I must first resolve the disputed evidence of service between Mr Poon and staff members of [D2]. Due to the fact [D2] is acting in person, understandably, she may not understand the real focus. In support of her application to rely on new evidence, she needs to adduce affirmations from her colleagues giving their evidence that no documents were left at [D2]’s office on 18 March 2020.

11. Then, such dispute of fact can only be resolved under cross-examination of Poon and these colleagues. Only then would I be able to find whether documents had in fact been left at [D2]’s office on 18 March 2020. If I find that they were, then [P] will be right in saying that Ladd v Marshall criterion (1) is not satisfied. On the other hand, if I find that documents had not been left at [D2]’s office, then when [D2] returned to HK and after her quarantine period ended on 15 June 2020, [D2] would have no knowledge of [P’s 1^st Aff] and its contents. Then, it can be said that the new evidence could not have been obtained with reasonable diligence for use at the hearing below.

12.  In the circumstances, I must allow [D2] the opportunity to ventilate this issue.  This means that the appeal cannot be heard today before determining whether [D2] should be allowed to rely on new evidence.  I have to adjourn the hearing of this appeal and give directions on further conduct.”

The evidence

17.In respect of the service issue, the evidence filed by the parties is as follows:

(1)  Evidence filed by P:

(a)  2^nd Affirmation of Poon dated 19 March 2020 (“Poon’s 2^nd Aff”)

(b)  6^th Affirmation of Poon dated 19 October 2020 (“Poon’s 6^th Aff”)

(2)  Evidence filed by D2:

(a)  Affirmation of 鄧梅香 (“Tang”) dated 9 October 2020

(b)  Affirmation of 吳嘉敏 (“Ng”) dated 9 October 2020

(c)  Affirmation of 梁秋玲 (“Leung”) dated 9 October 2020

(d)  Affirmation of 陳嘉美 (“Chan”) dated 9 October 2020

18.Both Poon and D2’s Colleagues have been subject to the cross-examination of the other side, and I have heard their viva voce evidence.

19.Poon’s evidence is as follows:

(1)  On 18 March 2020 at about 4:45 pm, he went to the Wanchai Office to serve (a) a summons taken out on 18 March 2020[5] and (b) P’s 1^st Aff (collectively “the Documents”) on D1 and D2.

(2)  He rang the bell situated on the outside wall of the office.  A woman then answered the door.

(3)  Poon told the woman that he had a summons and court documents to serve on D1 and D2, and Poon showed the Documents to the woman.

(4)  The woman replied that D2 was not in the office, and the woman refused to accept the Documents.

(5)  Poon indicated to the woman that he would leave the Documents at the entrance of the office.  The woman then closed the door. Poon placed the Documents immediately outside the office.  The Documents were not in an envelope and were physically touching the door.

(6)  On 24 March 2020, P’s solicitors received the Documents.  The Documents were returned to P’s solicitors by post.  Copies of the returned Documents (including the envelope containing the returned Documents) were produced as exhibit “PWK-4” in Poon’s 6^th Aff.

20.The contents of the affirmations made by D2’s Colleagues are brief.  I would set out the contents of those affirmation in full in the below:

(1)  Tang

“我是HANWOOD ENTERPRISES LTD 的員工，在香港灣仔軒尼詩道303號2102室上班。在2020年3月18日，我拒絶代第二被告人接收NIXON PEABODY 律師行送來的文件，因當時被告人不在香港，而我當時亦已告知送信人第二被告人不在香港，我是不可以代她接收文件，及不允許送信人進入公司，文件也沒有送進公司。”

(2)  Ng

“我是HANWOOD ENTERPRISES LTD 的員工，在香港灣仔軒尼詩道303號華創大廈2102室上班。於2020年3月 18 日，我上班工作時，期間有聽到有律師樓送文件來，由於我不是坐近大門所以不是我接待，但我聽到我同事CONNIE跟對方說我老闆(第二被告)不在港，而老闆(第二被告)在離港前已囑咐我們在她不在港期間不能接受律師樓之文件，所以我聽到我同事拒絶接受該律師樓文件，最後我也看到該律師樓員工也離開了而我們沒有接受任何文件。”

(3)  Leung

“本人為第一被告Hanwood Enterprises Ltd 員工，並於灣仔軒尼詩道303號2102室上班。本人在此宣誓於2020 年3月18日，同事拒收原告律師Nixon Peabody送來的文件，清楚告訴對方葉小姐不在香港，不可以代她收任何文件，這是葉小姐離開香港前吩咐好的，最終送件人被拒於門外，文件沒有送進公司。”

(4)  Chan

“本人是HANWOOD ENTERPRISES LTD 員工，於灣仔軒尼詩道華創大廈21樓2102室上班，在3月18日當我正在工作時，有位律師樓職員送遞文件給葉蓁小姐，但由於葉蓁小姐不在香港，在她離開香港前已經再三叮囑在她不在香港期間不能替她收取任何文件，故此我親眼見到我同事鄧梅香把文件及該律師樓員工拒於門外，沒有收到任何文件。”

21.In D2’s colleagues’ oral evidence, the following are revealed:

(1)  Tang has an English name, Connie.  Tang was the woman having conversations with Poon on 18 March 2020.

(2)  Ng, Leung and Chan did not have conversation with Poon.  However, they heard the conversations between Poon and Tang.

(3)  From time to time, there would be documents placing outside the office if the office was closed.  This would be so especially if the documents were bulky and could not be inserted under the door.

(4)  Documents left outside the office would be picked up by the staff and brought back to the office.  The documents would not be thrown away.  However, there was no designated staff in the office responsible for picking up documents left outside the office.

(5)  They do not know whether Poon has placed the Documents outside the Office.

(6)  None of them has recollection that whether she has personally dealt with the Documents.

My factual findings

22.I am of the view that both Poon and D2’s Colleagues are honest and reliable witnesses. However, in my judgment, Poon’s evidence has not been contradicted by D2’s Colleagues’ evidence in any aspect.

23.In view of the evidence given by Poon and the evidence given by D2’s Colleagues, it is clear that Poon did go to the Wanchai Office to serve the Documents on 18 March 2020 at about 4:15 pm.  He rang the bell and Tang opened the door.  Poon told Tang he had a summons and court documents to serve on D1 and D2.  Tang refused to accept the service of the Documents.  Poon told Tang that he would leave the Documents at the entrance of the office.

24.As revealed by D2’s Colleagues’ evidence, Tang refused to accept the Documents because D2 had given an instruction that the staff in the office could not accept service of any legal documents while D2 was not in Hong Kong.

25.As to whether Poon has placed the Documents immediately outside the office after being refused by Tang, there is no evidence contradicting Poon’s evidence.  D2’s Colleagues’ evidence is that they did not know what happened outside after Tang closing the door.  I have no reason to doubt Poon’s evidence.  I find that after Tang closing the door, Poon did leave the Documents immediately outside the Office.  The Documents were not in an envelope and were physically touching the door. 

26.As to whether the Documents have been returned to P’s solicitors by post, there is no evidence challenging what has been said by Poon. According to D2’s Colleagues’ evidence, documents left outside the office would not be thrown away and would be picked up by the staff and brought back to the office.  Although none of them has a recollection that she has personally dealt with the Documents, there is no evidence showing that there is no other staff member in the office apart from the 4 of them.  Having considered all the evidence, I find that the Documents placed outside the Wanchai Office were later returned to P’s solicitors by post.

My ruling on the New Evidence Application

27.D2 contends that the service of P’s 1^st Aff is governed by Order 10 rule 1, and P has failed to effect service of P’s 1^st Aff in accordance with the said rule.  With respect, this is not correct.

28.As submitted by counsel for P, Order 10 rule 1 concerns the service of a writ of summons.  In respect of the service of P’s 1^st Aff, the applicable rule should be Order 65 rule 5.  In accordance with that rule, P’s 1^st Aff can be served on D2 by leaving the same at the Wanchai Office.

29.Leaving a document at an office does not mean that the document must be left inside the office.  In 深圳巿均翔房地產經紀有限公司v Hongkong Zhongxing Group Co Ltd[6], Barma J held that that by “leaving [a statutory demand] at the registered office of the company”, all that is required is for the statutory demand to be left at the registered office, which could be easily done by “either inserting the statutory demand under the door at the entrance to Unit 102, or by leaving it outside, at the foot of the door”.

30.I am of the following view:

(1)  Having taken out the Specific Discovery Application, and having filed and served D2’s 1^st Aff in support of the application, D2 should expect that there would be affidavit evidence in opposition from P.  The Wanchai Office is the address for service given by D2 in the Notice to Act in Person.  D2 should expect and should allow P to serve legal documents in these proceedings on her by delivering the same to that address.  However, D2 deliberately instructed her colleagues not to accept service of any documents from P.  This is most unreasonable.  Having deliberately refused to accept service of the evidence from P, D2 cannot say that she has not been given an opportunity to file and serve evidence in reply.

(2)  Further, P’s 1^st Aff has been left outside the Wanchai Office on 18 March 2020.  I hold that this is a valid service.  By choosing not to pay attention to P’s 1^st Aff, D2 can only have herself to blame.

31.In my judgment, D2 has failed to satisfy the 1^st requirement in Ladd v Marshall.  I therefore dismissed the New Evidence Application. 

Other matters

32.As a result of the dismissal of the New Evidence Application, the evidence relevant to the appeal would be same as the evidence before the Master and is as follows:

(1)  D2’s 1^st Aff

(2)  P’s 1^st Aff

(3)  P’s 2^nd Aff

33.Although D2’s 1^st Aff was filed out of time, with no objection from P, I allowed D2 to rely upon that affirmation in the appeal hearing.  As a matter of fairness, I also allowed P to rely upon P’s 1^st Aff, which is the affidavit in response to D2’s 1^st Aff.   P’s 2^nd Aff was placed before the Master by consent.

THE APPEAL

The principles

34.An appeal hearing under Order 58 is a de novo hearing.  Subject to the restriction in Order 58 rule 1(5), the hearing before me is an actual rehearing as if the application came before me for the first time[7].

35.As recorded in [8] of the October Decision, D2 alleged that she did not know that the Specific Discovery Application would be heard in the 19 June Hearing.  She went to the court that day merely because of a summons issued by P.  In my view, the truth of this allegation is in grave doubt.  Regarding the 19 June Hearing, this court has sent a notice of hearing dated 28 May 2020 to the Wanchai Office (ie the address for service given by D2 in the Notice to Act in Person) by post.  There is no evidence showing that the mail could not reach the Wanchai Office.  Further, after taking out the Specific Discovery Application, it is inherently improbable that D2 would not pay any attention to when the substantive hearing of that application would take place.  In any event, the appeal hearing before me is a de novo hearing and I have approached the Specific Discovery Application as if the matter came before me for the first time. D2 had ample opportunities to present her arguments in the appeal hearing.  In the circumstances, even if D2’s allegation that she did not have prior notice of the 19 June Hearing is true, that would have no impact on the appeal.

36.The principles concerning specific discovery have been succinctly summarised by DHCJ Marlene Ng (as she then was) in Lee Sai Nam v Li Shu Chung and Another[8], which are as follows:

(1)  Under Order 24 rule 7, a party may apply for an order requiring any other party to make an affidavit stating whether any document or any class of document specified or described in the application is or has at any time been in his possession, custody or power, when he parted with it and what has become of it. 

(2)  But if the court is satisfied that discovery is not necessary, or not necessary at that stage of the cause or matter, it may dismiss or adjourn 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 either for disposing fairly of the cause or matter or for saving costs (see Order 24 rule 8).

(3)  There is no jurisdiction to make an order unless (i) there is sufficient evidence that documents exist which the other party has not disclosed; (ii) the document or documents relate to matters in issue in the action; and (iii) there is sufficient evidence that the document is in the possession, custody or power of the other party.  The burden lies on the applicant to demonstrate a prima facie case of each of them. 

(4)  A prima facie case on existence may be established on showing the probability arising from the surrounding circumstances or on specific facts deposed to. 

(5)  When it is established that those three prerequisites for jurisdiction do exist, the court still retains a discretion whether or not to order disclosure.  In particular, the court should always bear in mind the objectives of cost effectiveness, expeditious disposal of cases, proportionality, procedural economy and ensurance of fairness between the parties.  The increasing emphasis is for the court to limit discovery in the context of its duty actively to manage the case.

(6)  The affidavit of the respondent deposing that he in fact does not have the documents in his possession, custody or power is, in general, invariably taken at face value, and subject to limited exceptions, it is conclusive as to relevance and existence or otherwise of documents at the interlocutory stage so that the applying party cannot seek to go behind the statements or assertions in the affidavit either by way of a further contentious affidavit or by applying to cross-examine the deponent.

(7)  The limited exceptions of showing insufficiency of an affidavit of discovery include where such insufficiency can be demonstrated by (i) the pleadings, the list and affidavit of documents themselves, or documents referred to therein; (ii) any other source that constitutes an admission of the existence of a discoverable document not so far discovered; and (iii) an apparent exclusion of documents from discovery by a party under a misconception of the case.

37.As to the conclusive effect of the affidavit made by the party against whom discovery is sought, the learned judge in Lee Sai Nam said (footnotes omitted):

“55. The making of an order for specific discovery does not preclude the other party from deposing in the affidavit that he in fact does not have the documents in his possession, custody or power. Generally speaking, the affidavit in answer is invariably taken at face value, and subject to limited exceptions, it is conclusive as to relevance and existence or otherwise of documents at the interlocutory stage so that the applying party cannot seek to contravene the statements or assertions in the affidavit either by way of a further contentious affidavit or by applying to cross-examine the deponent.

56. In Edmiston v British Transport Commission, there was already on the file an affidavit sworn by the defendant’s staff setting out certain documents and deposing to the fact that there were no other relevant documents before the application for further discovery was made. Singleton LJ found there was nothing in the supporting affidavit for the application which enabled the court to go behind the conclusiveness of the discovery affidavit, and discovery was refused.

57. But if the affidavit is shown to be insufficient by its content or by admissions made in the proceedings, in such a case a further affidavit may be ordered. “[The discovery] affidavit is not regarded as conclusive only where it can be shown that there has been insufficiency of discovery. The insufficiency can be demonstrated by (a) the pleadings, the list and affidavit of documents themselves, or documents referred to therein; (b) any other source that constitutes an admission of the existence of a discoverable document not so far discovered; (c) an apparent exclusion of documents from discovery by a party under a misconception of the case: Matthews & Malek, §6.43”.

No merit in the Specific Discovery Application

38.On the face of the Discovery Summons, it was issued pursuant to Order 24 rule 3.  This is procedurally incorrect.  By the Discovery Summons, D2 is seeking an order to compel P to disclose some specific documents, not a list of documents.  The applicable rule therefore should be Order 24 rule 7.

39.Having considered the admissible evidence, I am of the view that there is no merit in the Specific Discovery Application.  The Master is plainly correct in dismissing the application.

40.Firstly, in my judgment, D2 has not established a prima facie case of the existence of the documents sought in the Discovery Summons, let alone the same being or having been in P’s possession, custody and/or power:

(1)  In D2’s 1^st Aff, she did not state her belief that P has, or at some time had, in his possession, custody or power, the documents (or class of documents) specified in the Discovery Summons in accordance with Order 24 rule 7(3), which is as follows:

“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 or described in the application and that it relates to one or more of the matters in question in the cause or matter.” (Emphasis added)

(2)  The requirement as set out in Order 24 rule 7(3) is not a mere formality but is a mandatory requirement prescribed in the statute, which goes to the core of an application for specific discovery.

(3)  Further, in D2’s 1^st Aff, D2 did not provide any factual basis as to the existence of the documents sought.  The only relevant paragraph is [5], in which D2 said:

“[P] has admitted in his “Witness Statement”, “The Plaintiff’s Answers to further and better particulars served by [D2]”, and “The Plaintiff’s Answers to the Interrogatories served by [D2]” that he has made transactions with the customers listed in [[2] of the Discovery Summons] through his own company. The profits should be considered as damages to [D1] and [D2].”

(4)  Plainly, D2 has failed to depose to at least some specific facts or surrounding circumstances from which the existence of a “transaction summary” mentioned in [2] of the Discovery Summons may be established.  The fact that a party has dealings with his customers does not necessarily mean that he must have prepared any sort of summary of such dealings.

(5)  Further, P has already denied the existence of the documents sought by D2 on oath, both in [14] of P’s 1^st Aff and [3] of P’s 2^nd Aff.  D2 alleged that P’s statements made on oath have been contradicted by P’s own evidence filed in these proceedings.  Ample opportunities have been given to D2 to show the alleged contradictions in the appeal hearing.  However, D2 has failed to do so.  In my judgment, D2 has failed to show any reason why this court should go beyond the answers given by P in his affidavits.  The answers given by P should be regarded as conclusive at the interlocutory stage.

41.Secondly, D2 has no locus to pursue the Specific Discovery Application.  According to what D2 said in [5] of D2’s 1^st Aff, the documents sought would be relevant to “the profits”, which “should be considered as damage to [D1] and [D2]”.  However, according to Ds’ pleaded case, the Agency Agreement is an agreement between P and D1 (ie D2 is not a party to that agreement).  Only D1 (not D2) has raised a counterclaim against P concerning the alleged illegitimate profits earned by P in breach of the Agency Agreement.  Any matter concerning the alleged illegitimate profits can only be raised by D1, not D2.

42.Thirdly, the documents sought are also not relevant to the dispute between the parties.  There is no dispute between the parties that P has had dealings with the Companies.   The only dispute was the capacity in which P conducted those dealings, ie whether P was a sales representative of D1 as contended by Ds.  The documents sought are plainly irrelevant to the resolution of this dispute.

43.Fourthly, it is neither necessary for disposing fairly of the cause or matter nor for saving costs to grant the Specific Discovery Application.

(1)  In Ds’ Amended Defence and Counterclaim filed in April 2017, it was already pleaded that P has had dealings with the Companies, which P did not deny in his Reply and Defence to Counterclaim filed in June 2017.  Hence, D2 could have made the discovery application at least by June 2017.  However, D2 did not do so until November 2019, more than 2 years later. No explanation was given by D2 as to such substantial delay.

(2)  I agree with counsel for P that but for the late discovery application (which was only taken out at the eleventh hour before the expiration of the deadline stipulated in the Unless Order), the present action, which was commenced back in October 2016, would have been set down for trial.

(3)  Bearing in mind that the Specific Discovery Application is a very late application and no explanation as to the substantial delay has been offered, and bearing in mind that the documents sought by D2 in fact are not relevant to the dispute between P and D2 (see [41] and [42] above), I am of the view that it is neither necessary for disposing fairly of the cause or matter nor for saving costs to grant application.  Accordingly, the application must be refused.[9]

44.Fifthly, even if I were wrong in all the analysis set out in the above, in light of what has been disclosed in P’s 2^nd Aff, it would not be appropriate nor necessary to order discovery in any event.

(1)  In P’s 2^nd Aff, P further explained in detail why he has never done any so-called “transaction summary” in respect of his previous transactions (if any) with any of the Companies during the Period, and thus such summary simply does not exist in the first place.

(2)  In any event, to avoid further dragging on of the present action indefinitely, P disclosed all the information and documents pertaining to his previous transactions with each of the Companies (if any) during the Period which he was able to locate with best efforts.

(3)  Hence, P has already provided all that he was able to disclose in P’s 2^nd Aff, and he has expressly confirmed on oath that “nothing more could be disclosed”.  Such affidavit has in substance served the purpose of providing what is being sought by D2, which renders the order of specific discovery not only inappropriate but also unnecessary.

45.For all these reasons, there is no merit in the Specific Discovery Application at all.  The Master is plainly correct in dismissing the application.  The appeal must be dismissed.

46.Costs should follow the event.  D2 argued that P’s 1^st Aff was filed and served out of time, and as a result, P should be penalized on costs.  I cannot accept this submission.  D2’s 1^st Aff was filed and served out of time, but indulgence was given to D2, so that D2 was allowed to rely upon D2’s 1^st Aff in the 19 June Hearing and in this appeal hearing.  While indulgence has been given to D2 without any adverse consequence on costs as a result of the late filing of D2’s 1^st Aff, there is no reason why the same indulgence should not be given to P.  In my judgment, costs of the appeal (including all costs reserved), should be paid by D2 to P forthwith.  Those costs would be summarily assessed on the papers

No merit in the Proposed Amendment Application

47.In [6] of her written submissions dated 26 April 2021, D2 raised a new application.  According to D2, the new application is only introducing some amendments to the Specific Discovery Application (“the Proposed Amendment Application”):

“6. To avoid doubt, D2 respectfully ask this court to grant the leave for her to amend the Discovery Summons as follows:

The Plaintiff do within 14 days from the date of the order make and file an affidavit or affirmation stating whether the documents referred to and specified in the schedule are or have at any time been in his, her or its possession, custody or power; and if the said documents or any of them are not within his, her or its possession, custody or power, stating when they parted with them and what has become of them. The application is made pursuant to Order 24 R3 and or R 7.

Schedule 1

(a)  All transaction summary/records including transaction date, quantity, and profit amount for the aluminum extrusion businesses with Clayton Metals, Inc that the Plaintiff/his affiliate/his companies commenced for the period Nov 2010 and 26^th October 2016 without the consent of the Ds.

(b)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminium extrusion businesses that the Plaintiff has commenced without the consent of the Defendants with Dayco Industries LLC during the period of Nov 2010 and 26^th October 2016.

(c)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminum extrusion businesses that the Plaintiff has commenced without the consent of Ds with Shapes Unlimited during the period of Nov 2010 and 26^th October 2016.

(d)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminum extrusion businesses that the Plaintiff has commenced without the consent of Ds with OKNA Windows Corporation during the period of Nov 2010 and 26^th October 2016.

(e)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminum extrusion businesses that the Plaintiff his companies and his has[10]commenced without the consent of Ds with Rollac Shutter of Texas, during the period of Nov 2010 and 26^th October 2016.

(f)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminum extrusion businesses that the Plaintiff has commenced without the consent of Ds with Qualitas Manufacturing Incorporated.

(g)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminum extrusion businesses that the Plaintiff has commenced without the consent of Ds with Qualitas Manufacturing Incorporated.

(h)  Transaction summary/transaction record including transaction date, quantity, and profit amount for the aluminum extrusion businesses that the Plaintiff has commenced without the consent of Ds with AA Metals, during the period of Nov 2010 and 26^th October 2016.

Definition of Plaintiffs’ affiliates and companies:

The company that Plaintiff that directly or indirectly controlled by the Plaintiff and or his family members, to handle the sales of aluminum extrusion products. They are:

(1)  Guang Cheng Aluminum Industries (USA)

(2)  Guang Cheng Aluminum Inc.

(3)  Tony Construction Inc.

(4)  Y & L Industries, Inc.

(5)  U-Sourcing, Inc.

(6)  Turner Terrance LLC

(7)  Atlas Alliances Limited

(8)  E1 Camino Trads, Inc.

(9)  ADD Imports

(10)  Eco-Co Inc.

(11)  INE-Solutions Inc

(12)  AE Plus Inc

(13)  Sando Metals, Inc

Schedule 2

Category	Document/Class of Document
Category 1	All other Physical or electronic documents related to the police report (“LYDT-3” of the Plaintiff’s 2nd Affidavit filed on June 12, 2020)
Category 2	1  Correspondence among P and Dayco in respect the commission agreement/ arrangement for factory direct orders between Dayco and East Asia, PT Indal, HP Metals and ALCA during the period of discovery
	2 Correspondence between East Asia aluminum and P regarding the settlement of quality issues for the 3 defective containers shipped to Dyaco
	3  Correspondence among P and Dayco in related to offsetting the loss with P’s commissions stated in P’s 3rd Affidavit
	4  Shipping record for Dayco’s customer Unirack during the period of Discovery
Category 3	1  Copy of the hosting plan or contract for the Plaintiff’s Google Hosting account, and any legitimate document that shows the activation date of the Plaintiff’s Google hosting account
	2  Copy of the payment records for the hosting plan
Category 4	1  Payment notice sent by Clayton Metals via email
	2  Transaction records of Clayton Metals by purchasing from ALCA, East Asia, and HP Metals
	3  copy of the emails and or attachments in relating to the transaction records between P and the companies listed in the Discovery Summons
	4  Accounting records of GCAI
	5 Transaction records of the following companies in related to the business conducted between the following companies and the companies listed in D2’s Discovery Summons (a)  Guang Cheng Aluminum Industries (USA) (b)  Guang Cheng Aluminum Inc. (c)  Tony Construction Inc. (d)  Y & L Industries, Inc. (e)  U-Sourcing, Inc. (f)  Turner Terrance LLC (g)  Atlas Alliances Limited (h)  E1 Camino Trads, Inc. (i)  ADD Imports (j)  Eco-Co Inc. (k)  INE-Solutions Inc (l)  AE Plus Inc (m)   Sando Metals, Inc
	6  Email correspondance prior to P’s the changing of email hosting to google
Category 5	PO Log sheet, shipment report, transaction records stored in Herman and Alan Chan’s computer and email boxes
Category 6	1  Evidence such as payment slips and or payment receipts or any other legitimate documents to proof that Hanwood has received the full payment of the transactions stated in the Plaintiffs Amended Statement of Claim. Paragraph 8, Table B, Binder Tab# 208, Table C, Binder Tab# 027, 035 – 041, 043 – 049 within the period of agency agreement of the Amended Statement of Claim
	2  Full set of documents relating to the cost of the transactions, including but not limited to the purchasing order to the suppliers, and or payment to the suppliers, shipping cost, custom clearance cost, import duty, or any other documents related to the cost of purchases under Paragraph 8 Table C, Binder Tab# 039 – 041, 043 – 049 of the Amended Statement of Claim
	3 evidence documents that Hanwood received a refund and held as a profit as alleged in P’s Amended Statement of Claim under paragraph 8 Table C “Share of US custom refund” of the Amended Statement of Claim

……”

48.I must say that the Proposed Amendment Application is very different from the Specific Discovery Application as per [2] of the Discovery Summons.  I am of the view that the Proposed Amendment Application is an entirely new application.  It would not be permissible for D2 to make a new discovery application in the appeal hearing.  By trying to make a new discovery application in the appeal hearing, D2 is in fact trying to circumvent the Unless Order through the backdoor.  In my judgment, by the operation of the Unless Order, D2 cannot make any new interlocutory application (including any new discovery application), unless relief from sanction is obtained from the court.

49.Even if D2 is able to obtain leave to allow her to make a new discovery application, D2 should properly make the application by a summons, and the parties should have time to file and serve evidence relating to the application.  The merits of the application can only be considered by the court after all these have been done.

50.For these reasons, I refused to deal with the Proposed Amendment Application in this appeal.

DISPOSITION

51.For the reasons above, I made the order as set out in [1] above.

52.D2 has filed a summons on 22 April 2021 to make various interlocutory applications, including a further discovery application against P and an application for leave to serve interrogatories on P.  That summons was scheduled to be heard by Master SH Lee on 4 May 2021 at 11:30 am, and that hearing would be a 3-minute hearing.  At the end of the hearing of the appeal, I took the view that my decision on the appeal and my reasons for the decision might affect that summons.  I therefore directed that the hearing of the summons be adjourned for directions before a master on a date to be fixed, with 3 minutes reserved.  Costs of that summons be reserved.  After seeing these reasons, the parties may consider what should be their next steps regarding that summons.

53.Lastly, it remains for me to thank counsel for the helpful assistance rendered to the court.

Ms Rosa Lee, instructed by Nixon Peabody CWL, for the plaintiff

The 1^st defendant was not represented and did not appear

The 2^nd defendant was not represented and appeared in person