Hong Kong Tramways Ltd and Others v. Realty Development Corporation Ltd and Others

HCA005643/1981

Action for discovery in Norwich Pharmacal principles not maintainable when identity of wrongdoer known and subpoena available.

BETWEEN

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1981, No. 7473

BETWEEN

(Consolidated by Order of Mr. Justice Hunter dated 10th February 1982)

Coram: Hon. Hunter, J.

Date: 7 July 1982

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RULING

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1. I have before me no less than three separate summonses asking for a ruling on discovery. The matter is one of some importance and it raises important issues of principle. If time permitted, I would have preferred at this stage of the afternoon to rise, and say I would give my decision in writing later. Unfortunately it does not permit, because the trial of this action has already been fixed for the 1st of November. By this action, I mean the action which is proceeding against the other five defendants. If I take time to put my reasons in writing, it could well have the effect, that it would give nobody time to challenge my ruling, in time to do anything about it before the 1st November. So I feel constrained to give reasons for my ruling extempore and however inadequate.

2. The claim arises under paragraph 36 of the Statement of Claim before me. That paragraph simply claims discovery against the M.T.R. The claim in that paragraph is repeated in paragraph 8 of the prayer. It is asking for discovery of all matters, materials, documents, minutes of meetings and memoranda in relation to the said negotiations with the M.T.R. and the Hong Kong Government. The said negotiations are defined in paragraph 33. What in brief is alleged there is that, in breach of their obligations under the Joint Venture Agreement, the Tramway Company and the Subsidiaries attempted to procure Hong Kong Government to exchange The Tramway Depot for a site in Kowloon. And that in further breach they had discussions with the M.T.R. and Hong Kong Government without (and there are the important words) the agreement, knowledge or concurrence of the developers i.e. it was secret, it was in breach of the obligation of good faith. This Statement of Claim proceeds upon the hypothesis that the M.T.R. were innocent participators in this transaction.

3. A number of documents were put in and exhibited to an affidavit and read to me in earlier stage of this application. The purpose of those documents as I understood it, was to show this. The M.T.R. originally approached Tramway or Tramways' parent, the Wharf Company, with a proposal that they enter into a consortium in relation to the building over the Causeway Bay Station. At that time, M.T.R. knew nothing about the Joint Venture Agreement. They were given some information about it then, but not sufficient, certainly as far as the documents show, so as to pin them with knowledge that this agreement was still in force and binding, and that the Wharf Company had not cleared its position under it. They went on talking. As I understood the case, it was being put like this; they were unwittingly seduced Wharf into this position, because wharf were then more attracted by the prospect of a consortium with M.T.R., and possibly with the land transfer referred to in paragraph 33, than honouring their obligations, that is assuming that they still existed, under the Joint Venture Agreement. In other words the case that was being made, against M.T.R. was of innocent participation.

4. Now it is common ground between counsel that the answer to this application is to be found in the House of Lords decision in Norwich Pharmacal v. Customs and Excise which is reported in 1974 Appeal Cases at page 133. I think it is convenient first to consider the case, which until quite recently was the only case that I frankly had in mind - I readily admit that the fault was mine and not that of the counsel - the case made out on the pleadings that M.T.R. were innocent participants in what happened. Really the issue here turns on what Lord Reid meant in a particular passage which one finds at page 175. That passage reads as follows:

"They seem to me to point to a very reasonable principle that if through no fault of his own,"

I pause then to emphasise those words. It is quite obvious that the learned judge is dealing with innocent participation,

"a person gets mixed up in the tortious acts of others so as to facilitate their wrong doing, he may incur no personal liability but he'-comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration." (My emphasis).

Now from those words, it is quite obvious that Lord Reid was talking about the innocent person who had assisted a wrongdoing, who had a duty to give information, but who was entitled to have his expenses paid. He put it that way because this was a case of precisely that. Although an attempt was made in the course of the action to prove that Customs and Excise were infringers, that attempt had wholly failed and had been rejected. So that no point could be taken at all of the Customs and Excise's conduct. In fact all they had done in pursuance of their statutory duty, had been to exercise some measure of control for a brief period over the goods which were imported. That was the Customs and Excise's position in that case.

5. Conversely Norwich Pharmacall’s position was this. They had what was admitted to be a valid patent. I say admitted, because that was expressed admitted on the pleadings by the defendants, the Customs and Excise. They had, from the, information Customs had given them, information that a commodity described under their patent name had been imported in quantities over the proceeding six months. They were able to know precisely who they had licensed to do this. If they had the names of those importers, they would automatically know; first of all whether they had a cause of action whether the importer was licenced or not; and secondly if they were not their licencees who they could sue. But as things stood they had not got that information and therefore they could not sue.

6. Those were the circumstances in which that case came before the court, and it seems to me essential to bear those circumstances in mind because it is quite wrong to attribute to any speech, even in the House of Lords, validity outside the context in which it is made. I return to what Lord Reid said in the passage that I have just cited. It was at one stage certainly submitted by the applicants here that in order to bring themselves within that principle, only two things had to be shown: first that there was some tortious act committed against them, and secondly that the person against whom the discovery was sought had participated in that tortious act. What was being said there, as I understood it was this; the tortious act here-was inducing the breach of contract, the behaviour of the Wharf Company in inducing these negotiations with the M.T.R. and the Government, in inducing the co-adventurers and its subsidiaries to carry on these negotiations in breach of the Joint Venture Agreement. Conversely it was said, as I understood it, that the M.T.R. had blundered into this, and inadvertently become mixed up in it because they were at the other end of these negotiations. Those two factors it was said entitled the plaintiffs to this discovery against the M.T.R.

7. In answer to that proposition, it was argued on behalf of M.T.R. that this was reading Lord Reid's speech out of its context. There was another very important third element which had to be brought into account, before this principle started to operate. That third element was ignorance, coupled with and resulting in an inability to take proceedings against the wrongdoer. From this it followed that if that third element was vital to this principle, it had no application at all to pending proceedings such as those before me. Two things were particularly advanced in support of that argument. The first was the facts of the case of Norwich Pharmacal which I have already briefly recited and which indeed support it. The second was its context in Lord Reid's speech. He emphasised on the proceeding page from the passage that I referred to and again in a passage immediately following, that this remedy was necessary to identify the wrongdoer. On the proceeding page, page 174, he refers to the rule that you cannot get discovery, from a person who in due bourse can be compelled to give that information as a witness or on a subpoena duces tecum. It is apparent from his reference to the rule that he was not much enamoured of it but he said it was settled and it was much too late to shake it. That is a rule which plainly applies to any pending proceedings such as this. He went on to point out that the purpose of refusing discovery in such circumstances was not to prevent but to postpone the recovery of the information sought. In other words justice did not require discovery in such circumstances to be given because the evidence would be made available on subpoena. But he pointed out that in the case before them that had no application at all, because there were no proceedings, and that could be no proceedings until such time as information was given by Customs and Excise. He then goes on to consider against whom an order for discovery might be made in order to provide the information necessary to enable the victim to start those proceedings. It is in that context that he draws a distinction, as I read his speech, between the innocent bystander, the spectator, the pure witness, and the person who inadvertently has become involved in the wrongdoing. He goes on to enunciate his principle that it is only the person who is inadvertently involved in the wrongdoing who may be ordered to give discovery at the applicant's expense. The purpose of that is to enable the applicant to pursue his remedies against the wrongdoer.

8. I believe that that is the true reading of Lord Reid's speech. It is in my judgment supported by the fact that I think he had already read in print the speeches of Lord Cross and Lord Kilbrandon. It seems to me that they were both saying exactly the same thing at pages 196- 7 and 203 - 4; namely that this was a somewhat exceptional remedy available against the person who was a participator, who stood in some special relationship to the wrongdoer, to require him to give information leading basically to the identity of the wrongdoer. Again I think Viscount Dilhorne is saying exactly the same thing at page 188 between letters A and C.

9. In those circumstances, it seems to me that the objection raised by Mr. Saville that the Norwich Pharmacal principle has no application to pending proceedings is in fact well founded; and that the answer to a plaintiff in pending proceedings seeking information is basically a subpoena and not discovery. So my first conclusion is that if M.T.R. are viewed as innocent participants, which is what is alleged in the pleadings, they cannot have an order for discovery made against them because the pending proceedings exist; because the name of the tortfeasor is known; because the action is proceeding again that tortfeasor, i.e. Wharf; and because their evidence is available on subpoena of the persons concerned in the negotiations as witnesses or on subpoena duces tecum directed no doubt to the secretary of the company to produce all the available documents. The interests of justice require no further assistance to this plaintiff.

10. I then turn to consider the next hypothesis, which is the one I had earlier overlooked, that M.T.R. were not innocent participants but were guilty participants, and that the Norwich Pharmacal principle applies to enable discovery to be obtained against a person to see if a cause of action exists against him. I am bound to say I did express surprise when this was put to me, and this surprise was somewhat mixed with horror. I do not really apologise for it. Because it seems to me a really remarkable proposition that a party can come to court on a pleading which alleges innocent participation and then say I now entitled to discovery against you to see if I can pin upon you (I am putting the matter fairly crudely I know), the same cause of action as I am asserting against other people. You produce your documents to me; let me cull through them; and I will then make up my mind whether I can sue you. It seems to me that the members of their Lordship's House who decided Norwich Pharmacal would be astonished if they thought that the principles they were laying down there could be used in this way. I have always understood the current practice at least to be, that you cannot get prospective discovery against a party save for the special exceptions introduced certainly in the U.K. by the Administration of Justice Act 1970, by Act of Parliament. I think I am inferentially supported in this view by the fact that an Act of Parliament was thought to be necessary to bring this exception about. Otherwise everybody, as far as I can see, would be able to come to court and say I am thinking of suing A, B and C, will you please make orders for discovery against them, so I can makeup their mind whether I have got a good cause of action or not. It is suggested that this is what happened in Moodalay v. Morton back in 1785 when the procedural situation was in fact to ally different, and you had to go to the Chancery Court to get your order for discovery on a bill of discovery, and then when you got that proceed in the Common Law Court for your action at law. It seems to me that those sort of principles can have very little application indeed to present day realities. This I can only condemn as a wholesale fishing expedition which I think would have horrified the parties to the decision in Norwich Pharmacal. For my part I am quite unwilling to give approval to it.

11. Thirdly, it said that on any view the plaintiffs are entitled to the names and addresses of the negotiators, and to an order for discovery limited to that, not for the purposes of suing them but for purposes of knowing who can be subpoenaed. Again this seems to me to be way outside Norwich Pharmacal, where the whole object of the exercise was to enable action to be brought. Again, if this be right, it would follow that it is open to any party in any action to claim this sort of relief. I had always understood that there was no property in a witness. If you were aware, as can be ascertained from the other defendants discovery, that A, B or C had participated in negotiations, you were perfectly entitled to approach him for assistance and proof him. If he proved recalcitrant again I always understood that almost the only remedy was to serve him with a subpoena, get him to the door of Court and then try and proof him. This does not always work; but in most cases it does, because the prospect of being kept hanging around the court for various days is usually the best persuader. Whether that is necessarily in the interests of justice, is perhaps another point. But it is the way these things, I am afraid, usually work. I   can see no basis for supporting a special action for discovery in an action of this nature.

12. I have obviously said enough already to make it clear that in my judgment this claim for discovery fails.

13. There were a number of subsidiary points which arose particularly on the question of the standard of proof necessary. I think it is sufficient for me simply to say this, I cannot accept that on a procedure like this an applicant has to prove his case in the sense that Mr. Saville was arguing or submitting. I think that the concluding words in Lord Reid's speech at page 176C and also in Lord Cross's speech at page 199F, negative that proposition. Lord Reid plainly thought that there could be doubtful cases, and Lord Cross said that one of the matters to be taken into consideration was the strength of the applicant's case against the unknown alleged wrongdoer. It must be a matter of balancing, it must be a matter of a prima facie case, in the interests of justice.  A more difficult question arises here as to whether the applicant has shown a sufficient prima facie case, Not without some doubt I think he probably just did. What troubles me about the matter in this context is this. This is a principle which has developed in the patent and trade mark fields, in circumstances were one person A holds or owns the industrial property in some product and somebody else is trafficking or trading in something in breach of that proprietary right. Once you have that sort of situation, then it is fairly simple to say that someone is in all probability acting in breach of A's rights, because you got there two solid foundation, the contravening article and the definition of A's right is something like a patent. It seems to me that it may be very difficult to extend that outside that field, where you got what I can only describe as a much more doubtful or woollier cause of action such as inducing a breach of contract which we got in this case. This requires the important incidents of intent and procurement which can be more difficult to establish. It may be that it would just have been sufficient for the plaintiffs to be able to point to the Joint Venture Agreement and its admission on the pleadings, not by this defendant but by the other defendants, which governed the development at this site; coupled with the proposals put in evidence in the documentation before me for different conflicting proposals at the self-same site. I think that it may have sufficed that they are able to point to those two, and really then say, this gives rise to a prima facie case against the wharf Company in those circumstances, unless it is shown hereafter that that Joint Venture Agreement no longer bound because it has been frustrated as it has alleged in that defence.

14. So I do not think that I would have rejected the application on that ground but I accept that it is a somewhat a grey area. What seems to me to be fatal is that, in my judgment at least, the whole concept here is outside the Norwich Pharmacal decision.

Representation:

Mr. Andrew Leggatt, Q.C., Mr. Arjan Sakhrani, Q.C., and Mr. D.A.L. Wright, instructed by Tang & So for the Plaintiffs.

Mr. Packwood of Slaughter & May for 1st to 5th Defendants.

Mr. Mark Saville, Q.C., and Mr. Robert Tang, instructed by Deacons for 6th Defendant, M.T.R.