Zida Technologies Ltd. v. Tiga Technologies Ltd. and Others

HCA005617A/2000

HCA5617/2000

___________________________

H E A D N O T E

___________________________

The plaintiff sought pursuant to O.24, r.11(1) inspection of documents said to be referred to in an affirmation filed by the defendants.  In a subsequent affirmation the defendants denied having possession power or custody of the documents.  A Master made an Order for inspection.  The defendants, appealed, 26 days out of time.

Held: Extending time under O.58, r.1(3), but dismissing the appeal.

1.     Time should be extended Ratnam v. Cumarasamy [1965] 1 WLR 8 (PC) not followed.  Finnegan v. Parkside Health Authority [1998] 1 WLR 411 (CA) applied.

2.     Both jurisdiction and discretion required the Order to be sustained Rafidain Bank v. Agom Universal Sugar Trading Co. Ltd [1987] 1 WLR 1606 (CA) and Dubai Bank Ltd v. Galadari and Others (No.2) [1990] 1 WLR 731 (CA) applied.

HCA5617/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.5617 OF 2000

--------------------

--------------------

Coram: Deputy High Court Judge McCoy SC in Chambers

Date of Hearing: 27 September 2001

Date of Judgment: 8 October 2001

----------------------

J U D G M E N T

----------------------

1.This is an appeal against an Order of Master Jones, made at the behest of the plaintiff against the defendants, under O.24, r.11(1) RHC. The writ in these proceedings was issued on 5 June 2000 and the Statement of Claim is dated 3 July 2000. The plaintiff claims that it has at all material times carried on the business of designing, making, marketing and distributing a range of computer motherboards, including specific individual models. It claims that the original artistic and literary works relating to it's computer motherboards were made by authors employed by it (including some of the defendants) and the particulars of those works are given. The plaintiff claims that it is the owner of the copyright in the works and states that the defendants have extensively infringed its rights therein.

2.The 1st defendant is a company incorporated on 22 December 1999 when the 2nd, 3rd, 4th and 5th defendants were still under the employment of the plaintiff. The Statement of Claim shows and the Defence admits that the 2nd, 3rd and 4th defendants were all summarily dismissed on 19 May 2000 and the 5th defendant had given one-month notice of resignation to the plaintiff on 31 January 2000.

3.The particulars of the Statement of Claim show that the 2nd defendant was the senior manager in Research &Development employed by the plaintiff from 1 January 2000 in that capacity until the date of his termination, having been previously the engineering manager of the plaintiff from June 1997 until appointment as senior manager. The 3rd defendant was the assistant manager of Research & Development from 1 January 2000 until 19 May 2000, having previously been the electronic engineer of the plaintiff from July 1997 until that appointment. The 4th defendant was the PCB designer from November 1997 until December 1999 of the plaintiff and was thereafter the Engineer CAD & Simulation employee in the plaintiff. The 5th defendant was the assistant marketing/sales manager of the plaintiff from March 1995 until December 1999 when the 5th defendant became senior manger PRC Sales &Marketing from 1 January 2000 until resignation. In short, the claim is that the defendants have copied the plaintiff's copyright works. A number of causes of action are pleaded : including breach of copyright, breach of confidence, and breach of fiduciary duties. The plaintiff claims an injunction, damages and the other associated remedies.

4.A Defence was filed on 23 August 2000 settled by Ms Tam as counsel and it repeatedly puts the plaintiff to strict proof of its allegations and denies that the products being marketed by the defendants comprise a reproduction of substantial parts of the plaintiff's alleged copyright works.

5.A positive defence is given that the defendants' computer motherboards were created and designed by a Mr Fu Meng Dong, a free lance engineer residing in the Mainland. Mr Fu's input is said to have led to a significantly different design in terms of components placement, circuitry, and copper trace routings, and in its capabilities, the result of substantial and independent skill, labour and judgment on the part of Mr Fu.

6.By a consent Order of Deputy Judge A. To dated 23 October 2000, the defendants inter alia undertook to provide within 14 days of the Order an affidavit/affirmation setting forth the names and addresses of all persons, firms and companies :

"a) to whom the defendants or any of them have supplied, and

b) from whom the defendants or any of them have obtained supplies of motherboards or PCBs of the types referred to in Undertaking 1)a) together with the dates and quantities of each such supply, and do exhibit to such affidavit or affirmation copies of all documents in the possession, power, custody or control of the defendants or any of them relating thereto."

7.A dispute subsequently arose as to the meaning of the phrases "supplied", "supplies" and "supply" in that Order. The defendants maintained that they did not "supply" relevant motherboards or PCBs to the Mainland manufacturer (known variously as Gillette or Gilidi), or receive a "supply" of finished goods from Gillette, on the ground that property in the motherboards in PCBs had never passed to Gillette, so that there was no "supply".

8.By a letter of 13 November 2000, the plaintiff's solicitors wrote to the defendants' solicitors stating in part :

" We refer to your letter dated 8 November 2000 enclosing your clients' affirmations purportedly made in compliance with paragraph 2 of the Order of Deputy High Court Judge A. To dated 23 October 2000.

We take the view that your clients have, regrettably, failed to comply with the Order in several important respects. In particular, your client has failed to provide us with the specific dates on which it delivered Kits to, and received delivery of completed motherboards from, Gilidi or to state the quantities of each such supply. Likewise, your clients have failed to disclose fully the dates upon which it supplied finished motherboards to its customers.

Unless your clients file supplementary affirmations dealing with these omissions and exhibiting all relevant documents, including the documents set out below, we shall apply to Court for an Order compelling your clients to comply with the Order dated 23 October 2000:-

(i) Shipping documents including bills of lading/airway bills and delivery notes evidencing the delivery of finished goods to your clients' customers.

(ii) Customs & Excise Department documentation evidencing the importation of PCBs into Hong Kong and export of finished goods from Hong Kong.

(iii) Shipping documents, including delivery notes, evidencing receipt by Gilidi of Kits supplied by your client and receipt by your client of finished goods supplied by Gilidi.

(iv) Customs & Excise Department documentation evidencing the export of Kits to Gilidi and importation of finished goods.

(v) All other documents relating to paragraph 2 of the Order dated 23 October 2000."

9.An affirmation of Kong Siu Hung, the 5th defendant and a director of the 1st defendant ("Mr Kong") of 11 December 2000, stated in paragraph 4 :

"In paragraph 5 of my 2nd Affirmation, I have explained that : 'the 1st Defendant sent parts purchased by the 1st Defendant to Gilide [sic] Electronic Science & Technology (Shenzhen) Company Limited for assembling the motherboards [in issue] on various dates'. I had included this paragraph out of abundance of caution and to explain that there is no 'supply' or 'purchase' relationship between Gilidi and the 1st Defendant : Gilidi performs the service of assembling the parts for the 1st Defendant, and it was for this purpose alone that PCBs were sent to Gilidi. The parts (including PCBs to be assembled were collected by Gilidi in Hong Kong and taken across the border to China where assembly takes place. Custom clearance was done by Gilidi when parts were taken outside Hong Kong. The 1st Defendant possesses no document in that regard. The property in the PCBs (as well as the other parts falling outside the scope of the Consent Order) were all times vested in the 1st Defendant. It follows that the assembled product was also the property of the 1st Defendant when they were delivered back to the 1st Defendant. There was no 'supply' to speak of between the 1st Defendant and Gilidi as far as compliance with paragraph 2) of the Consent Order is concerned. In any event, the transfer of the finished motherboards from Gilidi back to the 1st Defendant in Hong Kong entails customs and excise procedures to be completed as between Gilidi and the Customs & Excise Department of Hong Kong. The 1st Defendant possesses no documentation in this regard."

10.Paragraph 10 of that affirmation states :

"Regarding the importation of PCBs into Hong Kong to the 1st Defendant, any Customs and Excise documentation, if they exist, would have been in the possession, power, custody or control of the PCBs supplier, not the 1st Defendant."

11.On 13 December 2000, the plaintiff's solicitors sought a number of responses from the defendants including :

"4. Pursuant to O.24 r.10 RHC please provide us with copies of the following documents referred to in the 3rd Affirmation of Kong Siu Hung:-

(i) Hong Kong Customs & Excise Department documentation relating to customs clearance done by Gilidi for relevant PCB's taken to China and finished motherboards imported into Hong Kong.

(ii) Hong Kong Customs & Excise Department documentation relating to PCB's imported into Hong Kong by PCB supplier."

That affirmation of Mr Kong is the source of the plaintiff's case that the Customs and Excise's documentation sought was "referred to" by the defendants, on whose behalf Mr Kong gave evidence.

12.The defendants' solicitors replied to the request on 18 December 2000 :

"The 3rd Affirmation of Kong Siu Hung has made it abundantly clear that the 1st Defendant possesses no documents other than those already exhibited in his affirmations. The Defendant is therefore unable to accede to your request because it does not and has never had those documents in its possession."

13.By a summons dated 12 January 2001, the plaintiff sought an Order pursuant to O.24, r.11(1) RHC that the defendants do within 14 days produce for inspection by the plaintiff and his solicitors at the office of the defendants' solicitors, the documents described in paragraph 4 of the plaintiff's solicitors letter of 13 December 2000.

14.By an Order dated 22 January 2001, Deputy Judge A. To ordered, after argument, that the defendants' interpretation of the word "supply" as given in the evidence of Mr Kong was an impermissible attempt to circumvent the intention of the Consent Order of 23 October 2000. It was therefore further ordered that :

"the Defendants do within 15 days of the date hereof in the case of the 1st Defendant by a director and in the case of the 2nd, 3rd, 4th and 5th Defendants by themselves, make and file an Affidavit or Affirmation (and serve a copy thereof on the Plaintiff's solicitors) setting forth the dates and quantities of each supply by the Defendants or any of them of PCBs of the types referred to in undertaking 1)a) in the Order herein dated 23 October 2000 ('the said Order') and the dates and quantities of each supply by Gilidi to the Defendants or any of them of motherboards of the types referred to in undertaking 1)a) in the said Order pursuant to the said Order.

AND it is further ordered that the costs of this application be paid by the Defendants to the Plaintiff forthwith costs to be taxed if not agreed."

15.By his 4th affirmation of 12 February 2001, Mr Kong stated :

"2. I make this Affirmation to comply with the Order of Deputy High Court Judge A. To on 22nd January 2001 ('the Order').

3. I hereby confirm that the 1st Defendant had sent bare PCBs referred to in the Order on various dates to Gilide Electronic Science & Technology (Shenzhen) Company Limited ('Gilide') and Wideland Electronic Company Limited ('Wideland') in mainland China for assembly of motherboards of the types referred to in undertaking 1)a) of the Order of Deputy High Court Judge A. To dated 23rd October 2000. There is now produced and shown to me marked 'KSH-9' a table setting out the respective dates and quantities.

4. I hereby confirm that the 1st Defendant had received finished motherboards referred to in the Order on various dates from Gilide and Wideland. There is now produced and shown to me marked 'KSH-10' a table setting out the respective dates and quantities."

Wideland, a Taiwanese entity, is also known as Ya Hsin in these proceedings.

16.On 20 April 2001, the summons was heard by Master Jones. The learned Master ordered the defendants do within 14 days from the date thereof produce for inspection by the plaintiff and his solicitors at the defendants' office, those documents and ordered that costs of and occasioned by the application be to the plaintiff in any event. From that Order the present appeal is brought.

Time : O.3, r.5 RHC : O.58, r.1(3) RHC

17.The appeal is 26 days out of time. Mr Coleman, for the plaintiff submitted that the Court should refuse to extend the time to appeal. In Mobil Petroleum Co. Inc. v. Registrar of Trade Marks [2000] 4 HKC 670 at 681D-685D Hartmann J analysed the two competing lines of authority in relation to the correct principles to be employed in exercising the discretion under O.3, r.5 RHC and therefore O.58, r.1(3) RHC.

18.He concluded that the strict, regimented approach of yore no longer should be maintained.

19.The modern approach to O.3, r.5 RHC is now found in Costellow v. Somerset County Council [1993] 1 WLR 256 (CA), Mortgage Corporation Ltd v. Sandoes, Blinkhorn & Co. and Gibson (1996) The Times, 27 December (CA) also reported at [1997] PNLR 263 (CA) and Finnegan v. Parkside Health Authority [1998] 1 WLR 411 (CA), all accurately, in my respectful view, reviewed by Hartmann J in Mobil Oil. The emphasis is no longer mechanistic; but evaluative. The court does not set any invariable pre-conditions for the exercise of its discretion.

20.In Hong Kong Civil Procedure 2001 at 58/1/4 the commentary reads "Where no explanation, excuse or reason is given for the delay in issuing the notice of appeal, the judge may refuse to extend time". That is correct but laconic. The explanation, excuse or reason has to appear from the evidence : Chiu Sin Chung v. Yu Yan Yan Angela [1993] 1 HKLR 225 per Keith J, unless the other party accepts the explanation, excuse or reason, as in Sanyo Electric Trading Co. Ltd v. Leung Kwok Hing [1993] 1 HKLR 253. There Keith J, at 258 L9-29, rejected the concept that any explanation had to be verified on affidavit or affirmation - "That criticism is far too refined for me to go along with it" - where there is no dispute as to the accuracy of the matter and it concerns "decisions taken by a party's solicitors" and the relevant express instructions related to the Court are not challenged. Now there are no other rules as such other than the general guidance that if "the delay is inexcusable, the party seeking an extension of time must show a real prospect of success on the merits" per Le Pichon JA in Secretary for Justice v. Hong Kong & Yaumati Ferry Co. Ltd [2001] 1 HKC 125, 129 I (CA). But there will be still exceptional types of cases such as analysed by Sir Thomas Bingham MR in Costellow v. Somerset County Council [1993] 1 WLR 256, 264, which will get the "special treatment" they deserve, namely :

"Cases involving procedural abuse (such as Hytrac Conveyors Ltd v. Conveyors International Ltd [1983] 1 WLR 44) or questionable tactics (such as Revici v. Prentice Hall Incorporated [1969] 1 WLR 157) may call for special treatment. So, of course, will cases of contumelious and intentional default..."

Nowadays, the discretion to extend time is unfettered by any clinical approach.

21.Ratnam v. Cumarasamy [1965] 1 WLR 8 (PC). In my judgment, with great respect, this decision of the Privy Council, on appeal from the Supreme Court of the Federation of Malaya (Lord Hodson, Lord Guest and Lord Donovan) is now outmoded and has been overtaken by a new jurisprudential approach to time limits in civil law, as exemplified by Finnegan v. Parkside Health Authority [1998] 1 WLR 411 (CA). I decline to follow it. Ratnam is a distinguished product of a different era where the Courts applied a more punitive approach to breaches of time-limits, (there the delay was four days), an approach which deflected attention from a merits-based assessment. A more structured, rules-driven approach was in force, whereas now a more evaluative, open-textured approach is ordained - one which eschews rigid formalism and which prefers to focus on ostensible merit in a principled way. The application of hard immutable rules for extensions of time are inconsistent with a more modern soft-focus approach that allows the court to concentrate on the potential or actual merit of the underlying process, which is out of time. In my respectful judgment, the approach of Hartmann J in Mobil Oil now correctly represents the current informed approach to O.3, r.5.

22.I apply Mobil Oil and conclude that :

a) despite the fact that the appeal is 26 days out of time;

b) and although the evidence demonstrates that the defendants have been less than enthusiastic about complying with the time limits sanctioned by the rules;

c) and despite the fact of the leisurely time taken by the legal advisers to finalise and file the court documentation for this appeal, which betrays no urgency (see Chiu Butt York v. Chiu Kwok Lim [1980] HKLR 459), an extension of time to appeal should be granted as :

1) the points at issue under O.24, r.11(1) RHC are as the English Court of Appeal stated in 1989 unusual : "Though the rule has existed for such a long time, there appears to be remarkably little authority on the point" : Dubai Bank Ltd v. Galadari and Others (No.2) [1990] 1 WLR 731, 737H-738A per Slade LJ. Indeed there is no reported (or unreported) Hong Kong decision dealing with the approach to the discretion;

2) although jurisdiction exists to make the Order against a party not in possession custody or power of the referred documents, the exercise of the relevant discretion needs to be closely analysed, (particularly as the Master gave no reasons for his decision);

3) the defendants argue they could potentially face committal proceedings under O.24, r.16 RHC arising out of non-compliance, if the Master's Order is affirmed by this Court;

4) the defendants did, albeit on the last day for potential compliance with the Order, on 4 May 2000, file a further affirmation "in compliance" with it; and

5) I cannot detect that there has been uncompensatable prejudice to the plaintiff.

23.In my judgment : Ratnam v. Cumarasamy [1965] 1 WLR 8 (PC) (four days delay); Revici v. Prentice Hall Incorporated [1969] 1 WLR 157 (CA); Savill v. Southend Health Authority [1995] 1 WLR 1254 (CA) (five days delay), the latter decision (which applied the first two) was particularly relied upon by Mr Coleman, do not represent (any longer) the law in Hong Kong. The approach espoused by those decisions has been emphatically eclipsed.

24.Still a Court will consider :

a) the prospect of injustice;

b) the length of the delay;

c) the reason for the delay;

d) the degree of prejudice to the other party.

Under the modern approach the first criterion (above) is the critical one. See generally the following authorities, which essentially identify these four criteria, although I have both reworded them and hierarchically arranged them in descending order of importance : Norwich and Peterborough Building Society v. Steed [1991] 1 WLR 449, applied by Keith J in Chiu Sin Chung v. Yu Yan Yan Angela [1993] 1 HKLR 225, 228L 9-12; Tong Yi Sang v. Fung Law and Ng [1993] 2 HKC 665, 670 G-H per Kaplan J; Wong Kam Hong (t/a Continental Knitting Factory) v. Triangle Motors Ltd [1998] 2 HKLRD 330, 336H per Cheung J. Lack of prejudice though is per se not a reason for granting an extension : Birkenhead Properties and Investments Ltd v. Leung Yiu & Ors [1998] 1 HKLRD 527, 539 C (CA) per Le Pichon J, noting that an additional period of uncertainty is prejudice in itself.

25.But the merit - the prospect of the appeal (or application) succeeding and/or its intrinsic importance from the perspective of justice - is now the dominant consideration, as "the overriding principle was that justice must be done" - per Millett LJ (Potter LJ and Sir Christopher Slade concurring) in Mortgage Corporation Ltd v. Sandoes (supra).

26.The rationale for departing from Ratnam, Revici, and Savill is that on those authorities lack of excusability is fatal - all common law, but no room for equity!

O.24, r.10 (1) RHC : O.24, r.11(1) RHC

"10.-(1) Any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose pleadings, affidavits or witness statements reference is made to any document requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies thereof."

"11.-(1) If a party who is required by rule 9 to serve such a notice as is therein mentioned or who is served with a notice under rule 10(1)-

(a) fails to serve a notice under rule 9 or, as the case may be, rule 10(2), or

(b) objects to produce any document for inspection, or

(c) offers inspection at a time or place such that, in the opinion of the Court, it is unreasonable to offer inspection then or, as the case may be, there

then, subject to rule 13(1), the Court may, on the application of the party entitled to inspection, make an order for production of the documents in question for inspection at such time and place, and in such manner, as it thinks fit."

27.As an initial premise, Ms Tam argued that the defendants had not, by the material affirmation, made "reference" to the documents that the plaintiff has sought and there was therefore no basis upon which inspection could be authorised. Further it was argued that in terms of O.24, r.13(1) inspection (and production for inspection under O.24, r.11) was not necessary for disposing fairly of the cause or matter.

What is a "reference" in O. 24, r.10(1) of the Rules of the High Court?

28.In Dynamic Way International Ltd & Anor v. Ho Kui Chee & Ors [2000] 4 HKC 138 (CA), an affirmation had been filed, in which a sealed envelope containing the list of purchase orders placed by various customers, formed an exhibit to the affirmation. It was objected that inspection of that sealed exhibit contained confidential information. Rogers JA at 141D said :

"Nevertheless, the plaintiff has chosen to, and decided that it is necessary to, put that in evidence and to rely on it. In those circumstances, I can see no possible justification for denying access to this by at least solicitors and counsel of all parties. Except in very unusual circumstances, a party should not be faced with having to deal with evidence which it is not permitted to see. The matter has been dealt with in a number of authorities, in particular, WEA Records Ltd and others v. Visions Channel 4 Ltd and others [1984] FSR 404 which was followed in a decision at first instance in Hong Kong: Interlego A.G. v. Tyco Industries Inc. [1985] HKLR at p.115."

29.Godfrey VP concurring at 142B-C added of O.24, r.10(1) RHC that :

"... prima facie, the party against whom it was sought to be used had a right to inspect this document and take copies of it ..."

In that case plainly no arguable issue arose as to whether the relevant document had been referred to (albeit in a sealed envelope) as it was actually exhibited, as in Re Hinchcliffe [1895] 1 Ch 117.

30.The thrust of the decision in Dynamic Way is possibly in gentle antagonism with the earlier decision of the Court of Appeal in Bank of India v. B.K. Murjani & Ors, (Cons VP, Clough and Hunter JJA), CA 84, 85 and 94/89, 11 July 1989, which appears to have held that a document referred to in an exhibit attached to an affirmation, was not itself a "reference" within O.24, r.10(1). The decision in Dynamic Way is in my judgment plainly correct. The commentary in Hong Kong Civil Procedure 2001 at 24/10/1 accurately states that Bank of India interpreted the sub-rule "too narrowly".

31.The judgment in Bank of India turned on unusual facts. It was an appeal by seven debtors from judgments given under O.14 - and in advance of the substantive appeals, applications were made for "a document referred to in a circular which had been exhibited to the evidence in the court below." Hunter JA delivering the oral judgment of the Court of Appeal stated that although the right to make the application "was spotted by the defendants very shortly before the O.14 hearing commenced" no application was made to the Judge. The Court of Appeal stated that it would be "very reluctant" to exercise the jurisdiction when no application was made to the Court. But Hunter JA, added, apparently as an obiter remark, that although Re Hinchliffe [1895] 1 Ch 117 (CA) correctly decided that a party is entitled to a sight of the exhibits to an affidavit, neither that decision, or O.24, r.10, specifically covers "discovery of documents referred to in the exhibits themselves". On an issue of relevance the Court concluded that the application failed as manifestly the appellants were "grasping" for a defence without substance. It should be noted that in Shun Kai Finance Co. Ltd v. Japan Leasing (HK) Ltd (In Liq) (No.2) [2001] 1 HKC 636, 641 (CA), Le Pichon JA accepted, relying on Re Hinchliffe [1895] 1 Ch 117, 120 that an exhibit does form part of an affidavit for the purposes of O.24, r.10. Rogers VP at 658D concurred.

32.The Bank of India approach appears to be less fulsome than that prescribed by the classic decision of Compagnie Financière du Pacifique v. Peruvian Guano Co (1882) 11 QBD 55(CA). But as Hobhouse J noted in Eagle Star Insurance Co. Ltd v. Arab Bank plc (English High Court, Queen's Bench Division, 25 February 1991, unreported), although O.24, r.10 appears in the Order intituled 'Discovery and Inspection of Documents' "... it is not, in essence, a discovery exercise. Its history is different, its function is different". The legitimacy of the limitation apparently imposed by Bank of India (excluding documents alluded to in an exhibit of an affidavit from O.24, r.10(1) RHC) will fall for determination in another case.

33.O.24, r.10(1) refers to the reference being in "pleadings, affidavits or witness statements".

Pleadings

34.Pleadings for the purpose of this rule includes particulars : Cass v. Fitzgerald [1884] WN 18 per Mathew J, Milbank v. Milbank [1900] 1 Ch 376 (CA), at 385 Vaughan Williams LJ stated "the defendant will be rash if he considers these particulars are not a pleading."

Affidavits

35.An affidavit filed in answer to interrogations is an "affidavit" : Moore v. Peachey [1891] 2 QB 707, 708 per Denman J and Willes J. So is an affidavit of documents filed under O.24, r.7 : Pardy's Mozambique Syndicate Limited v. Alexander [1903] 1 Ch 191, 195 per Kekewich J. An affidavit which has not been filed, but a copy of which has been furnished to the opposite party, is within the rule : In re Arbitration between Fenner and Lord [1897] 1 QB 667 (CA). Lord Esher MR stating at 669:

"The party on whose behalf the affidavit was made is no doubt not obliged to use it on the hearing of the motion, but he has procured it to be sworn in the matter and has shown it to his opponent."

An exhibit to an affidavit is included : Re Hinchliffe [1895] 1 Ch 117, 120 per Lord Herschell LC, Dynamic Way International Ltd & Anor v. Ho Kui Chee & Ors [2000] 4 HKC 138, 141D per Rogers JA and Shun Kai Finance Co. Ltd v. Japan Leasing (HK) Ltd (In Liq) (No.2) [2001] 1 HKC 636, 641 per Le Pichon JA. The purpose of the affidavit, in the litigation, is not the relevant test. Indeed, the "affidavits" referred to in this rule are not confined to a party's own affidavits but include any affidavits procured, filed or used by him but sworn by a deponent who is not even a party : Dubai Bank Ltd v. Galadari (No.2) [1990] 1 WLR 731, 737A (CA).

"... reference is made to any document ..."

36.Documents need not be identified or individually described - a general reference will suffice, as this is a compendious way of referring to a number of documents : Smith v. Harris (1883) 48 LT 869, 870 per Chitty J approved in Dubai Bank Ltd v. Galadari (No.2) [1990] 1 WLR 731, at 738C (CA) per Slade LJ. But a direct allusion to the document is required; where a document is not specifically mentioned its existence is prohibited from being inferred. In the present case the documents sought were clearly ones to which actual reference was made.

"at any time"

37.These words in the rule mean what they say, so that for example, even before a Defence is filed, a document referred to in a Statement of Claim may be sought. See generally : Dun and Bradstreet Ltd v. Typesetting Facilities Ltd [1992] FSR 320, 328-329 per Harman J, who held that even considerable delay in making an application for inspection does not logically affect the right to inspection "at any time".

Disposing fairly of the cause or matter : O.24, r.13 RHC

38.Ms Tam argued that, in effect, the documents would not conduce to the fair disposal of the cause or matter, but acknowledged that if liability were established that the documents would be relevant to quantum. She submitted, relying on Auto-Treasure Ltd v. Noble Diamond Ltd [1992] 1 HKC 117 (CA) that the plaintiff would not have been able to obtain discovery of the documents until liability for copyright infringement is heard and determined, had it applied for specific discovery. But see: Full Range Electronics Co Ltd v General-Tech Industrial Ltd [1997] 1 HKC 541, 545D where Cheung J correctly distinguished Auto-Treasure as the documents in the copyright action there were also relevant to the issue of liability, as here. I cannot on conceptual grounds accept Ms Tam's argument either. It is an attempt to disaggregate the proceedings into discrete components. The fair disposal of the proceedings is not properly examined by a view of only the (distant) horizon; the rule is not limited to the final disposal of the action as its target; the rule applies at all stages of the proceedings. It follows that production of a document may be ordered on the ground that it is necessary for the disposal of an interlocutory motion or summons as well as the action at trial. This broad, encompassing approach is endorsed by Dubai Bank Ltd v. Galadari (No.2) [1990] 1 WLR 731, 737 D-E per Slade LJ delivering the judgment of the court :

"We were not impressed by either of these two points. As to the first, the 'fair disposal' of a 'cause or matter', in our judgment, involves the fair disposal of all stages of that cause or matter as it progresses through the courts."

Relevance

39.There can be no doubt that the customs clearance documents are material. They are independent documents. Indeed, the defendants would never have referred to those documents themselves, unless they had taken the view that they were of material significance, to them, in the action. As independent documents they may be decisive in determining veracity, and whether there has been genuine compliance with Orders of the court. I have no doubt that Mr Coleman's claims to relevance are unassailable.

The Relationships

40.The 1st defendant has had substantial business dealings with Gillette, the manufacturer of the motherboards in Shenzen, China. Further the 1st defendant has also had substantial business dealings with Ya Hsin the manufacturer of the PCB's in Taiwan. The two third parties are locatable - one being very nearby in the Shenzen conurbation.

41.But before Deputy Judge To, it was the defendants' case that property in the motherboards had never passed, therefore it is more likely than not, that at least the documents said by the defendants to have been processed by Gillette are in the power of the defendants, as Gillette would have performed the customs clearance procedures as agent for the defendants. On the evidence to date, the defendants have adopted a simple expedient of appointing a party resident outside the jurisdiction to handle the paperwork on the defendants' behalf. All this is relevant to the exercise of the discretion.

O.24, r.11(1) RHC

42.In Rafidain Bank v. Agom Universal Sugar Trading Co. Ltd [1987] 1 WLR 1606 (CA), it was held that a court could under O.24, r.11(1) RHC, as a matter of jurisdiction, order discovery of documents referred to in an affidavit notwithstanding that those documents were not in the possession, custody or power of the party against whom the order was sought.

43.The fact of this jurisdiction was dealt with by Nourse LJ at 1610H, who stated that there was a significant and telling contrast between the language of O.24, r.10(1) and O.24, rr.11(2) and (3).

"... I find it impossible to hold that rule10(1) applies why to documents which are in the possession, custody or power of the party concerned. It seems to me, both as a matter of construction and as one of common sense, that the omission of such a requirement is deliberate."

44.However, the rationale for the jurisdiction is relevant to the formulation of a principled approach to the exercise of the underlying discretion. The thrust of the rule was emphasised by Lindley LJ in Quilter v. Heatley (1883) 23 Ch D 42, 50, namely that the intention was to provide the other party with the same advantage, just as if the document had been fully set out. In short one party could not use or rely upon the probative value of the document yet simultaneously deny the other party the same forensic advantage. That would be an approach to litigation that elevated the document into a status approaching that given to a privileged document. The net effect would be that the referring party could with relative impunity, in critical documents, namely "affidavits, pleadings or witness statements", purport to strengthen (or defend) its case by material which it conveniently and technically did not have in its possession, custody or control, but could tantalisingly "flourish".

45.As Nourse LJ aptly said in Rafidain Bank at 1611B :

"Doubtless the absence of possession custody or power will sometimes amount to a good cause. But why should it invariably do so? Suppose a case where there was a technical absence of possession, custody or power but nevertheless evidence that the thrust party who had possession of the documents would very likely make it available if only he was asked to do so. I can see no reason for thinking it was intended that the court should be powerless to make an order whose practical effect would be to require the request to be made to the third party."

46.Watkins LJ in the same case at 1613E noted the "broad scope of rules 10 and 11(1)". The decision is fundamentally a question of discretion to be exercised on the facts of each particular case. Ms Tam is left with the burden of satisfying the Court that Master Jones erred in principle or exercised his discretion in a manner that was plainly wrong.

47.In effect, despite the close business relationship between the defendants and Gillette and Ya Hsin, Ms Tam states that they are separate entities. No doubt that is legally correct. But that conclusion is not definitive of the reality of the matter. See : Nourse LJ in Rafidain Bank at 1612B-C. Gillette and Ya Hsin were active in their business relationships with the defendants. Indeed Gillette appears on the evidence, a point Mr Coleman properly stresses, to be nothing less than the customs agent for the defendants. To seek to put space between the defendants and these companies, as Ms Tam sought to achieve, is in my judgment unreal and non-commercial. It is an artifice to see these entities as exhibiting other than mercantile interdependence in terms of the material shipments and the associated documents in issue in this appeal.

Contempt : O.24, r.16(1)

48.O.24, r.16(1) expressly refers to non-compliance with an Order under O.24, r.11(1). Ms Tam, on a number of occasions foreshadowed that the defendants would be at risk of contempt proceedings if they did not comply with the Order, for want of capacity or otherwise. Mr Coleman correctly observed that that was an impermissible attempt to move beyond the present appeal and talk of the consequences of possible non-compliance with any Order made in it.

49.The complete answer to the defendants' supposed anguish is given by Nourse LJ in Rafidain Bank at 1612E :

"The attitude of the plaintiffs to the failure of the first defendants to produce these documents and the use which the plaintiffs can make of that failure are entirely irrelevant to the question whether or not the first defendants should produce them."

The discretion under O.24, r.11(1)

50.Quilter v. Heatly (1883) 23 Ch D 42 (CA). This decision was a successful appeal from an Order of Chitty J. At page 45 that learned Judge said of what is now O.24, rr.10 and 11 :

"... a new practice, and, as I have heard Sir George Jessel say, its main object was to prevent fictitious deeds or documents being invented by the pleader and inserted in the Statement of Claim."

(See also to the same effect the intervention of Jessel MR in the Court of Appeal to counsel for the respondent, reported at p.48)

51.In his judgment in the Court of Appeal, Jessel MR stated at page 48 :

"The applicant is to have such an order unless good cause to the contrary is shewn."

This coincides will what Godfrey VP said in Dynamic Way, namely that an applicant has a "prima facie" entitlement to the documents. Further Bowen LJ in Quilter said at page 51 :

"In my opinion the onus is on the refusing party ... " (Original emphasis)

The defendants have not here discharged that onus.

52.However, at page 49, the Master of the Rolls also said of certain copies of letters :

"If the summons had asked for the production of the letters themselves, the answer would almost certainly have been that the Plaintiff had not got them, and could not get them, which of course would have been a complete answer to the application as regards them." (Emphasis not in the original judgment)

53.In the same case, but reported sub nomine as Quilter v. Tod-Heatly (1883) 48 LT 373 (CA) there is a much fuller report of the judgments. Jessel MR at 375 said :

"a plainer rule than [O24 r10(1) RHC] has never been drawn, and a clearer right than the right to see the documents referred to in the pleadings was never established."

The dictum of Jessel MR reported in (1883) 23 Ch D 42, 49, "which of course would have been a complete answer to the application," does not appear in (1883) 48 LT 373, 375.

54.In any event, the Victorian conclusion that this was a "complete answer" no longer represents the law - see Rafidain Bank at 1611E and Dubai Bank Ltd at 741D. There is no such status of conclusiveness that puts the referred documents beyond the jurisdiction of the Court, and therefore of the other party.

The defendants efforts to obtain the documents

55.Mr Coleman rightly emphasises that the attempts to obtain the relevant documents have been undistinguished by zeal. There was some reference by the 2nd defendant in his affirmation of 4 May 2001 to an attempt by the 3rd defendant to approach Gillette and Ya Hsin "in or about December 2000" to obtain the documents. But, apparently, neither would co-operate as neither wished to be embroiled in the litigation.

56.The 2nd defendant further exhibited two letters, materially indistinguishable, one each to the third parties, both dated 3 May 2001 and written by the defendants' solicitors, asking to be provided "on or before 11 May 2001 the latest" (original emphasis), with the documents. That date is a week after the time for compliance had elapsed.

57.By an affirmation dated 26 September 2001 on the eve of this appeal, the defendants' solicitors state they have still received no reply from either correspondent.

58.The timing of the 3 May letters shows that an attempt to comply with Master Jones' Order was made only on the penultimate day for compliance. It all has the look of a set-piece. There are no chaser letters in evidence. There is no file note exhibited of any telephone or other communication from the solicitors. There is no evidence from the defendants that they have or have not communicated with the third parties about the Order since it was made. Indeed since this prospect was first contemplated, when the plaintiff asked for inspection in December 2000, there is no evidence from the defendants themselves (as opposed to their solicitors) as to whether this issue has been discussed before or since the 3rd defendant spoke to the third parties, "in or about December 2000".

59.In my judgment, the defendants certainly have not been robust about meeting the obligation of the Order and have been adroit in demonstrating only the lamest efforts in this regard from the start. This is a relevant consideration in the exercise of any discretion.

Conclusion

60.This appeal has well argued by both counsel but in my judgment, despite the fact that this particular area of the law of discovery is infrequently travelled in reported decisions, the answer is clear. I grant the appellants leave to appeal out of time, but I affirm the Order of Master Jones and dismiss the appeal. I make a forthwith costs Order nisi in favour of the plaintiff, in any event : O.42, r.5B(6).

Representation:

Mr Russell Coleman, instructed by Messrs Burney Wu-Scharsig, for the Plaintiff

Ms Winnie Tam, instructed by Messrs Ray Chong & Pan, for the Defendants