Wendy Wenta Seng Yuen v. Philip Pak Yiu Yuen
Read the full judgment text of HCMC 18/1983 on BabelCite. This High Court CFI judgment was delivered on 24 February 1984.
1. In this matter Wendy Wenta Seng Yuen (the Petitioner) sought a decree of dissolution of her marriage with Philip Pak Yiu Yuen (the Respondent) in a petition filed on the 25th May 1983. A decree nisi was pronounced on that petition on the 7th June 1983 and the ancillary relief sought therein was transferred to the High Court.
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HCMC000018/1983 Production for inspection by a party of partnership documents when other partners are objecting. Court will not order production in face of bona fide objection. Onus lies on party to establish that there is a bona fide objection. Facts which must be disclosed to satisfy that onus.
BETWEEN
________ Coram: Hon. Power, J. Dates of Hearing: 9, 10 & 11 January 1984 Date of Delivery of Judgment: 24 February 1984 __________ JUDGMENT __________ 1. In this matter Wendy Wenta Seng Yuen (the Petitioner) sought a decree of dissolution of her marriage with Philip Pak Yiu Yuen (the Respondent) in a petition filed on the 25th May 1983. A decree nisi was pronounced on that petition on the 7th June 1983 and the ancillary relief sought therein was transferred to the High Court. 2. The parties came before me on an Inter partes Summons wherein the Petitioner asked that the Respondent be ordered to provide further and better particulars of his affidavit of means and to give answers, documents and details concerning his means as requested by the Petitioner's solicitors in their letter of the 27th October 1983. In that letter the Petitioner's solicitors asked, inter alia, that further and better particulars be provided by the production of audited accounts of the partnership Yung, Yu, Yuen & Co., solicitors of which the Respondent is a member. 3. In the outcome the only matter that fell to be resolved by this Court was whether the Respondent should be required to produce the audited partnership accounts for inspection for the previous five years in the face of objection to such production by the other partners. I must admit that I had considerable difficulty placing this application in the context of the rules of this Court. There was no dispute that the present application was brought under the Matrimonial Proceedings and Property Ordinance which deals with ancillary relief. There is provision under that Ordinance for the Chief Justice to make rules. None, however, have so far been promulgated thereunder. The matter does not, fortunately, rest there as the Rules of the Matrimonial Causes Ordinance, under which the divorce proceedings were commenced, can be properly applied to these proceedings and they include rules with regard to the preparation for trial. 4. It was formerly provided, by r. 28 of those rules, that the O.24 of the Rules of the Supreme Court, which deals with discovery and inspection of documents, applied to defended causes. However, r.28 was amended and it now states that the provisions of the District Court Civil Procedure Ordinance (General) Rules apply when the Court is dealing with discovery and inspection in defended cases. Rule 39 of those rules provides that the Court may make orders for discovery including the mode of discovery as it may consider necessary or desirable and it applies the provisions of 0.24 r.16 where there has been a failure to comply with any order of the Court. No order for discovery was made by a district court judge before the matter was transferred to the High Court and no order in that regard has ever been made in this Court. Rule 39(2) of the District Court Rules states that "nothing in this rules shall prevent the adoption by any party of the formal procedure prescribed by the Rules of the Supreme Court with reference to discovery". It was not expressly stated by either counsel that the Rules of the Supreme Court had been adopted. However, both seemed,in argument, to proceed upon the basis that those Rules should be adopted. 5. This being so it is necessary to examine the procedure under those Rules with care. O.24(1) requires discovery after the close of the pleadings by the parties of all relevant documents which are, or have been, in their possession, custody or power. O.24(2) requires that discovery be made without any specific order by exchange of lists within 14 days after the pleadings are deemed to be closed. As I indicated to counsel during the course of argument, one of the difficulties which faced me was that there has never been an exchange of lists. When the hearing commenced I was not aware of the exact basis upon which the Respondent resisted production. Was he saying that he has never had possession of the audited partnership accounts or that he had had possession thereof but that they were now in possession of some other person or was he saying that he presently was in possession of copies of the accounts but was entitled to refuse to produce the copies for inspection as they belonged to the partnership? 6. During the course of the hearing, Mr. Ching, who appeared for the Respondent, handed up an affidavit in which he stated that: "I have spoken to my partners on the issue of the production of any of the audited accounts of the partnership, and .......... my partners have stated that they object to the production of such accounts. I do not possess such accounts in my own right. They are all in the joint legal possession of the partners." I am not sure exactly what this means. Is the deponent saying that he has a set of accounts but regards them as being "in the joint legal possession of the partners" or is he saying, that he has no set of accounts in his possession at all? I think it should be made clear that Mr. Ching was never contending that the Respondent, if he had his own copy of the accounts, would not be required to discover and produce it. 7. Mr. Ching stated from the bar table that the deponent had meant to convey that he had never been given his own set of accounts. While I, of course, accept that those are Mr. Chin's instructions, it is far from satisfactory that this matter is not spelt out with particularity in an affidavit by the Respondent himself. 8. 0.24 r.3 gives power to the Court to order any party to make and serve on any other party a list of documents which are or have been in his possession, custody or power.Rule 4 allows the Court to order determination of issues before it makes any order under r.2 or r.3. Rule 5 is of particular importance as regards the present application as it provides that "A list ....... must enumerate the documents in a convenient order and as shortly as possible but describing each of them or, in the case of bundles of documents of the same nature, each bundle sufficiently to enable it to be identified". It goes on in sub-rule (2) to state "If it is desired to claim that any documents are privileged from production, the claim must be made in the list of documents with a sufficient statement of the grounds of the privilege". This has, of course, not been done in the present case. 9. 0.24 r.9 requires a party who has served a list, whether under rule 2 or rule 3, to allow the other party to inspect and copy the documents disclosed therein. 0.24 r.11 gives the Court power, in the appropriate case, to order production for inspection of any document to whose production objection has been taken. 10. The process of discovery involves 2 distinct stages. Firstly the party must discover the existence of all documents which have been in his possession, custody or power. He must at this time clearly state his objection to producing any documents which he says are privileged. Secondly he must produce all other documents for inspection. The Court will upon application rule upon any claim that documents are privileged. 11. Mr. Ching did not seek to argue that the Respondent was not required to discover the documents in question. What he contended was that once it was established that they were partnership documents, i.e. owned and controlled by the partnership, the Court had no power to order inspection. 12. Mr. Ching first referred to the 14th Edition of Lindley on Partnership where it states at p.563 that a person cannot be compelled to produce books which belong to himself and others who are not before the court". Mr. Ching then referred to Murray v. Walter(1) which is cited by Lindley as authority for the proposition set out above. This case, which was heard in 1839 concerned a set of jointly owned documents. 13. Mr. Ching next referred to Reid v. Langlois (2) which, in 1849, approved of and followed the decision in Murray v. Walters The Lord chancellor said at 636, "The authorities referred to, Murray v. Walters (CR. & PH 114), Taylor v. Rundell (CR. & PH 104) showed that where a document is not in the exclusive possession of the Defendant, but in the possession of somebody else jointly with him, the production cannot be ordered. This is a well established rule, and cannot be considered as now open to dispute. 14. In 1870, in Bovill v. Cowan(3) it was accepted that joint ownership was an answer to an application that documents be produced but in this case the Court required a further affidavit to show the "nature of the joint ownership". There can be no doubt then, that in 1870, the rule enunciated in Murray v. Walter was firmly established in the Chancery Courts. This was confirmed in 1872 in Hadley v. McDougall.(4) 15. After the Rules of the Supreme Court appeared as the first schedule to the Judicature Act in 1875 the established, practice in the Chancery Courts, as regards production of documents, continued to be followed. In 1882, in Kearsley v. Philips (5) the Court was called upon to deal with certain muniments of title belonging to the defendant and another person who was not a party to the action. The affidavit of the defendant stated that he objected to produce such documents and the Court held that the affidavit showed sufficient reason for not making an order for inspection. Field J. said at 40 -
Field J. further stated, at 40,
16. It is true that in 1913, in Forbes v. Samuel (6), where a partner was being asked to produce a partnership deed, Scrutton J. held that the partner must produce the deed. He did so, however, upon the basis that each partner has a property in his own copy. These documents are not mere copies of one original. Each copy is executed by all the partners and each is in the "possession of that partner for whom it was executed and to whom it was delivered." Mr. Ching, as I have already indicated, did not seek to argue that if the Respondent had property in his own copy" he could refuse to produce it for inspection. The importance of the above case, for the present purposes, is that Scrutton J., at p.722, affirmed the authority of Kearsley v. Philips and was thereby affirming the line of authority running from Murray v. Walter in 1839. 17. Mr. Ching contended upon the authority of these decisions that where a document is jointly owned by a party and another person not before the Court no order can be made in the face of an objection by that other person requiring the party to produce it for inspection. He submitted that the charge to the Rules of the Supreme Court in 1962 whereby a party was required to produce documents "in his possession, custody or power" rather than, as was formerly the case, documents "in his possession or power", did not affect the matter. 18. Mr. Rodway submitted that the law upon which Mr. Ching was relying has been swept away both by the change of rules in 1962 and by the modern approach of the courts. He submitted that the cases cited by Mr. Ching, which were heavily influenced by the chancery practice obtaining before the passage of the Judicature Act, had, by reason of the changes in the rules and the modern approach of the courts, lost whatever authority they had. He submitted that the modern approach was set out in Jackson's Matrimonial Finance and Taxation 1980 Edition at 102 where it is stated-
19. I do not find great assistance from this paragraph as the learned author is, to use his own words, talking of "documents in the possession of the other side". It seems to me that the paragraph is doing no more than saying that where there are documents in possession of the other side, it is no answer to a request to produce them for inspection to say that they involve disclosure of material relating to partners.No one would argue with this proposition. It does not, however, go to the problem facing this Court which is whether a Court will order that documents owned by a partnership be produced for inspection against the objection of the partners in circumstances where only one partner is a party to the litigation. 20. Mr. Rodway also relied upon B. v. B.(7). While that case contains clear and helpful general statements as to the right to discovery and inspection in matrimonial matters, it also does not address itself specifically to the problem before this Court. 21. To resolve this matter,we must look firstly at the meaning and function of discovery. In Halsbury's Laws of England, Fourth Edition, Volume 13 at para. 2 it is stated:-
22. It is clear that discovery and inspection relate only to documents in existence. There is no power to order a person, who does not have a document in his possession, custody, or power to go and obtain copy of document in the possession, custody,or power of another for the purpose of complying with the order. Further, if a document has ceased to exist or passed out of a party's hands, he could not be required, by the rules relating to discovery, to make and produce for inspection a copy thereof.
23. This passage correctly, in my respectful view, emphasizes the necessity to distinguish discovery from the process of interrogatories and from the process of compelling the disclosure of documents at the trial under a subpoena duces tecum. In the Practice Note 24/1/1A of the Supreme Court Practice 1976, it is stated: -
The note goes on to state that: -
It seems to me clear that if a document is in the possession, custody, or power of a stranger, a party cannot be ordered by the rules relating to discovery to produce that document for inspection. The rules are framed to ensure that each party discloses to the other party all of the relevant documents which are or have been in his possession, custody, or power and produces for inspection those which still are in his possession, custody or power. Books and documents of partnership will normally be in the joint possession, joint custody and joint power of the partners. No partner will have the right to sole possession, or sole custody or have power of control to the exclusion of the other partners over the books or documents. It may be that an objection by the other partners to the production of the books or documents on the grounds of confidentiality will, in the end, prove to have been fruitless because, if they are relevant,the party will be required to reveal their contents in answers to interrogatories or the partners will be forced to produce them under subpoena. This is, however, no ground for suggesting that power to order their production must be somewhere contained in the rules relating to discovery and inspection. 24. One need not look far to see the commonsense and common justice of the rule in Murray v. Walter.If a partner could be ordered to produce books and documents, the property of a partnership, against the objection of the other partners, substantial inconvenience and hardship might well be caused without the objecting partners ever having had the opportunity to be heard on the matter.If, however, the books are produced by way of subpoena duces tecum they can, at the time when they appear before the Court, make plain any objection they have to producing them. The Court might well feel it appropriate to allow sworn copies to be produced so that the originals can be returned and the work of the business continued without interruption. It may be that the partners, having been able to satisfy the Court that the confidential information, to whose disclosure they object, is not really relevant to the proceedings, will be allowed to black out the information before producing the books. I mention these possibilities only to illustrate how important it might be, in certain cases, to allow the partners to appear and make representations. 25. Mr. Ching did not refer to authorities after 1913 however the rule he was contending, for was once again affirmed in 1953 in Chantrey Martin v. Martin(8) at 291 where Jenkins L.J. said -
26. After the amendment to 0.24, in 1964, the line of authority was again recognized in Crompton Ltd. v. Customs_ and Excise Commissioners (9) at 134 where Lord Denning said –
27. Further the Supreme Court Practice states at 24/1/1; "By the Evidence Act 1851 and the Common Law Procedure Act 1854, the Common Law Courts were given power to order general discovery of documents and to allow interlocutories. Both under these acts and now under the rules made under Judicature Acts, the principles applicable, and powers exercised, in the old court of chancery, generally govern discovery in all divisions of the High Court........." 28. I am satisfied that a Court has no power to order a partner who is a party to an action to produce partnership documents in the face of a bona fide objection by the other partners I will turn shortly to the importance of the requirement that it be a bona fide objection. 29. Mr. Ching contended not only that once a party has established that the documents are partnership documents the Court has no power to order their production but also that, once this has been done, the party is not required to establish, that the partners have refused to consent or even that he has sought their consent. He contended also that if it is shown that the partners have refused to consent, he is not required to state their reasons for refusal. 30. In B. v. B.(7), Dunn J. set out the note under s.24/2/4 to the Supreme Court Practice 1976 pointing out that the terms of that note had been expressly approved by Lord Cross in Alfred Crompton Amusement Machines Ltd. v. Customs and Excise Officers (10) at 429 and that three of their Lordships in that appeal agreed with the speech of Lord Cross. The note reads as follows:-
31. This note recognizes the existence of a discretion as to production which would be properly exercised only after consideration of all of the facts disclosed at the time of discovery. 32. It was implicit in Mr. Ching's argument that there was no discretion in the Court once it was shown that the property was jointly owned by the party before the Court and another person. He submitted that the Court had never had any such discretion and that it could not be given it by a change in the rules such as took place in 1962. He submitted that the property rights of persons not parties to an action cannot be affected by changes in the rules of court and I would be slow to disagree with this submission. While this may be so, there can be no doubt that the rules of court are binding upon persons who are parties to the action and that such persons must comply with those rules. The Respondent must, therefore, comply with all of the requirements of 0.24 and particularly with the requirements of 0.24 r.5 which requires him, where privilege is claimed, to make a "sufficient statement of the grounds of the privilege". 33. Why, it might be asked, should the Respondent be required to say any more than that the documents are jointly owned if the Court has no power to order production for inspection once that fact has been established. To answer this question one must look at the much-maligned decision in Walburn v. Ingilby(11) which was decided in 1833. I have no hesitation in concurring with Mr. Ching's contention that this case cannot be taken as laying down any general rule that there is a power to order production for inspection of documents in jointly owned by a party and a non-party. In that case the documents, as to which production was sought, which were being held by one Gregson, a solicitor, were the joint property of certain defendants, who were before the court as parties to the application for production, and certain other defendants, who were not before the court in that application. Production was resisted upon the ground that two of the latter class of defendants had refused to give their consent thereto. The Lord Chancellor, Lord Brougham, stated, at 83, -
34. Courts have, I am respectfully satisfied, mislead themselves as to the real ratio of this case by lifting the words "The Court has a right ........ to the Plaintiffs" out of their context. This is, perhaps not surprising as the headnote of the case is guilty of this very error. It states:-
The headnote is stating, without any qualification that,as regards joint owner books and papers, the Court is entitled to give to the Plaintiff whatever access the Defendant himself would be entitled to. In 1839 the then Lord Chancellor, Lord Cottenham, remarked in Murray v. Walter, at 125, that
i.e. the rule that where jointly owned documents are held by an agent on behalf of the party to an action and another joint owners, the Court will not make an order for their production. This was, I am respectfully satisfied, a wrong reading of what was decided in Walburn v. Ingilby.When the sentence,"The Court has a right...... to the Plaintiffs" is read in context it seems to me clear that what Lord Chancellor Brougham was saying was that, where a party is entitled to access to jointly owned documents, to whose production an objection has been taken by the other joint owners, and where that objection has the appearance of a contrivance to evade or defeat the jurisdiction of the Court, the Court can order the party to produce the documents for inspection if it is satisfied both that the party has access and that the objection has the appearance of a contrivance to evade or defeat the jurisdiction of the Court. I am satisfied as to the existence of this power which, it is true is a limited one which can only be exercised in the narrow confines set out above. I will turn shortly to consider on whom the onus lies when an objection to production is made. 35. The view I have taken above of the decision in Walburn v. Ingilby was that taken by Byrne J. in Williams v. Ingram(12). On an appeal from that decision the Court of Appeal, (1900) 16 T.L.R. 451, at 451, recognized the "exception from the general rule as in Walburn v. Ingilby." 36. While it may well be that in this regard we are dealing with a question of a limited power rather than a discretion, I am satisfied that for the purpose of deciding whether this power should be exercised 0.24 properly requires that a party fully disclose the circumstances of the joint ownership and the nature of the objection to production. 37. It may be that the Court, once it has been established that there has been an objection by a third party joint owner made in good faith, has no power to order the production.The Court is however entitled to consider whether or not such an objection is being made and whether it is made in good faith. If, for instance, the Court was satisfied that the third party had no real objection but was simply lending his name to the making of an objection to help the party before the court, then the Court might well hold that this was a contrivance to defeat the jurisdiction of the Court. Halsbury, when discussing Production for inspection of documents not in the sole possession of a party", Volume 13 paragraph 60, uses the word 'discretion' but is clearly referring to the limited power to which I have just referred. This passage reads as follows:-
38. The statement as to the burden and as to the requirements that must be stated by the party claiming protection is in my view correct. I am satisfied that where there is an objection by joint owners of a document and where the Court is satisfied that there is no contrivance to defeat its powers, then the Court must refuse to order production for inspection. It is, however, for the Defendant to justify the ground of protection and he will fail to do so if he does not state the exact nature of the joint possession, whether or not he his tried to obtain consent from the joint possessor and why such joint possessor is objecting to the production. 39. I am satisfied that as regards audited partnership accounts which are relevant to matters in question in an action the party who is a partner must, in order to comply with 0.24, disclose:-
40. Does it lies in the mouth of the Plaintiff to suggest that, as the Defendant in the present has not furnished the above information, he has failed to justify his ground of protection and that an order requiring production for inspection should be made. 41. I am satisfied that it does not. It would in the circumstances obtaining be unfair and wrong to approach the matter upon that basis. I consider the Defendant should be given the opportunity to furnish an affidavit dealing with the matters set out above.I allow the Defendant 14 days to file such an affidavit. When that affidavit has been furnished, I will hear the parties further, if they desire to be heard, as to the application of the law to the facts revealed in the affidavit. I make it plain that it is not my intention to entertain further argument as to the law applicable but only as to how the law, as I have held it to be, should be applied to the facts revealed in the affidavit. Cost reserved.
(1) CR. & PH. 114. (2) 1 Mac. & G. 627. (3) (1870) 5 Ch. App. 495. (4) (1872) Ch. Ap. 312. (5) (1882) 10 Q.B. D. 36. (6) (1913) K.B.D. 707. (7) (1979) Fam. 181. (8) (1953) 2 Q.B. 286 (9) (1972) 2Q.B. 102 (10) (No.2) (1974) A.C. 405 (11) 1 M.K. 61 (12) (1900) 16 T.L.R. 434 Representation: Mr. Charles Ching, Q.C., Mr. Kotewall and Mr. Stone instructed by Yu, Tsang and Loong forRespondent. Mr. Gilbert Rodway, Q.C., and Mrs. Pennington instructed by Helen A. Lo & Co. for Petitioner. |