Intercontinental Industries Inc v. Ford Hing Polythene Wares Mfy Ltd

HCA000150/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 150 of 1971

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Coram: Mr. B.L. Jones, Assistant Registrar, in Chambers.

Date of Judgment: 19th day of July, 1971.

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DECISION

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1. This is an application by the defendant that the plaintiff within 14 days serve on the defendant a further and better list of documents supported by affidavit limited to the documents relating to the plaintiff's inter-office correspondence with its head office in New York from and after 31st July 1970 and that there be inspection of documents within 14 days of the filing of the affidavit. However, the application is in reality to determine whether the documents in question are privileged, for the plaintiff in any event is bound to serve a further and better list of documents.

2. The plaintiff objects to the production of the correspondence on the grounds that it is privileged having been made at a time when litigation was anticipated.

3. The plaintiff's claim against the defendant is for damages for breach of contract arising as a result of the sale of goods by sample and description for re-sale by the plaintiff to a customer in New York. It is alleged that the goods did not correspond with the sample and were not of merchantable quality. The defence refers to an inspection certificate that was signed by an authorised representative of the plaintiff before the defendant was entitled to receive payment of the purchase price of the goods thereby implying that the goods were satisfactory.

4. It is the correspondence between the plaintiff and their head office in New York after the alleged defects became known that the defendants seek an order for production and inspection.

A letter dated the 31st July 1970 from the New York Office of the plaintiff to the Hong Kong office which is exhibited to an affidavit made by a director of the defendant company sets out details of the defective nature of the subject matter of this action. In order to enable the head office to ascertain full particulars of the defects an explanation was requested from the Hong Kong Office. Subsequent to this letter there was further inter-office correspondence although at first the plaintiff denied that this was the case but such denial was made in error. No question of improper motive for the denial was alleged by the defendant and I accept that it was an oversight on the part of the plaintiff.

5. The general rule relating to the production of documents is that confidential communications passing between a client and his legal adviser made for the purpose of obtaining or giving legal advice are generally privileged from disclosure. Confidential communications other than those passing between a client and his legal adviser are not privileged from disclosure.

6. Various authorities were cited but the one most closely similar to the facts of the present case is Anderson v. Bank of British Columbia, 1875-76 2 Chancery Division, page 644 where the general manager of the bank in London requested full particulars of a transaction that subsequently became the subject of litigation from his agent in Oregon. On page 648 Jessel, M.R. said 'Now, there is not a syllable there which shows that any communication, direct or indirect, expressed or implied, was made to the agent to the effect that his communication was to be a confidential one for the purpose of being submitted to the professional man - that is, the solicitor - for advice. If it had been so, I apprehend that it would have been protected upon principles well understood. If you ask your agent to draw out a case for the opinion of your solicitor, or for the opinion of your counsel, that is a confidential communication made for that purpose. Here there is nothing of the sort. Nor is it suggested or alleged that, without being requested, the agent did make the communication with the object of its being laid before the solicitor for advice. He therefore did not make it as a confidential communication in any other sense than that in which every communication from an agent to his principal, or from a sub-agent to the chief agent of the principal, is confidential. Every such communication, no doubt, is in a sense confidential, but not in the sense in which we call a communication to a professional man confidential.'

7. The decision of the Master of the Rolls that the document was not privileged was upheld by the Court of Appeal.

8. In the Court of Appeal, James L.J. at page 656 said '.... as you have no right to see your to see adversary's brief, you have no right to see that which comes into existence merely as the materials for the brief. But that stems to me to have no application what ever to a communication between a principal and his agent in the matter of the agency, giving information of the facts and circumstances of the very transaction which is the subject-matter of the litigation. Such a communication is, above all others, the very thing which ought to be produced. Look at the circumstances of the present case. A man makes a claim against a bank in London, the bank in London not having all the facts in their knowledge, send out to their agent who transacted the business a telegram to this effect, "Give us the fullest information that you have of all the facts and circumstances of the case, all about the shipping documents, and everything of the kind connected with it." That is exactly what they ought to do. It is the duty of a man, in the ordinary course of business, to do it, and it is not necessarily connected with the litigation either actually commenced or expected. It is the information of the agent, and the principal ought to know what the agent knows. The knowledge of the agent in the matter of the agency is, or ought to be, the knowledge of the principal; and even if, after the bill had been filed, the Defendant had said, when asked for discovery, "I do not know, all the knowledge is in the possession of my agent in Oregon," this Court would say, "That is no answer; it is your duty in making the discovery to use your best efforts bona fide to obtain all the information that your agent can give you, and, whether it is before or after litigation, you ought to write to him, if necessary, and get from him the information; and if you get the information, you must tell us what it is, so that we may know the exact facts and circumstances of the case."

9. The case of Westminster Airways Ltd. v. Kuwait Oil Co. Ltd. 1951 1 K.B.D. page 134 can be distinguished on the grounds that in that case privilege was accorded to correspondence between the defendants and their insurers entered into when a claim was anticipated. In this case at page 146 Jenkins, L.J. said 'In my judgment, prima facie those documents are of a character in respect of which the claim to privilege is justified. The insurers, after all, are concerned in the matter only because they have agreed by the contract of insurance to indemnify their assured against claims of the character in question. That is how they come into it. That being so, the very fact that the insurance company are communicated with at all indicates that a claim is anticipated. Moreover, in the present case the circumstances were such that there could be no doubt, even before a formal claim was lodged, that a claim would ensue. Prima facie in such circumstances a communication between the assured and the insurance company, whether direct or through the assured's brokers, would be directed to the question whether the claim should be disputed or admitted, and if it was to be disputed, how be…(illegible) to conduct the defence.'

10. In this case the head office of the plaintiffs was seeking information from its Hong Kong office upon the subject matter of the transaction now in issue between the parties. No reference was made that the information was required for the use of legal advisers nor was it made in the nature of a confidential communication in the sense referred to by Jessel, M.R. in Anderson v. Bank of British Columbia. In these circumstances I do not consider that the inter-office correspondence is privileged.

11. There will therefore be an order for the plaintiff to produce this correspondence for inspection by the defendant within 14 days.

12. The defendants are entitled to the costs of and incidental to this application with a certificate for counsel.

13. Liberty to apply.

14. Date this the 19th day of July, 1971.

Representation: