The Incorporated Owner of Yan's Tower v. Ho Kwai Yee

DCMP4124/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 4124 OF 2004

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BETWEEN

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Coram : Deputy District Judge E. Yip in Chambers

Date of Hearing : 24^th November 2006

Date of Handing down Decision : 8^th December 2006

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DECISION

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The summons

1.The plaintiff through a firm of solicitors, Solomon C. Chong & Co. (“SCC”) sued the defendant for management fees owed to the plaintiff.  The plaintiff got judgment and costs.  The defendant paid up the judgment debt.  The defendant also tendered the sum of the agreed costs as previously agreed between the plaintiff and SCC.  The plaintiff argued that the costs had to be assessed on a time-basis instead, which would be much higher than the agreed costs.  In this summons [p. 21 – 26], the defendant in essence sought an order for:

(1)  The plaintiff to make an affirmation to state the whereabouts of various documents as listed in the Schedule;

(2)  Interrogatories to be served on the plaintiff for answers and/or documents showing the circumstances between the plaintiff and SCC which resulted in an alleged change of the basis for charging legal costs;

(3)  Leave to the defendant to file further affirmations in reply to the plaintiff’s case upon further information obtained under paragraphs (1) and (2) hereof.

2.The plaintiff resists the summons on 2 grounds:

(1)   The documents were protected by legal privilege;

(2)   The interrogatories were oppressive, prolix or imprecise.

The background

3.The plaintiff was the incorporated owners of Yan’s Tower situated at No. 27 Wong Chuk Hang Road, Hong Kong.  The defendant was an owner of one of its units.  She was also the treasurer of the plaintiff’s management committee.  It is common ground that the defendant owed management fees to the plaintiff.  The plaintiff contemplated taking legal action against the defendant.   

4.On 8 January 2004, the plaintiff resolved to take action against the defendant for recovery of the management fees. 

5.On 19 March 2004, 3 bids for the tender to carry out the resolution were received from 3 firms of solicitors.  SCC quoted fixed costs of $28,000 excluding bailiff fee, security guard and valuation fee.  It was the lowest bid.  The others were $37,000 and $40,000 respectively [p. 60].  The retainer was awarded to SCC.    

6.On 18 November 2004, the plaintiff obtained a memorandum of charge against the defendant’s property.

7.On 7 February 2006, the plaintiff obtained a charging order nisi, an order for sale, and costs against the defendant. 

8.On 22 February 2006, the defendant paid up the judgment debt and costs ($28,000).

9.On 8 March 2006, the plaintiff sought to recover from the defendant SCC’s costs alleged to be $180,529, not $28,000.

10.On 19 April 2006, SCC’s bill of costs for Appointment to Tax showed $180,529.

11.On 13 June 2006, the defendant’s solicitors reminded SCC of the agreed costs of $28,000. 

12.On 16 June 2006, the preliminary issue of the basis for charging legal costs was adjourned for argument before this Court.  It led to this summons. 

The applicant defendant’s case

13.As an owner, the plaintiff was only a vehicle to run a body of principals which comprised the defendant and other owners.  Each of them had the right to attend any of the plaintiff’s meetings.  It appears that the plaintiff cannot claim confidentiality against the defendant.  Paragraph 10 of the Second Schedule to the Building Management Ordinance, Cap. 344, provides for the following mandatory procedure, among others:

(3)    At a meeting of the management committee, each member present shall have one vote on a question before the committee and if there is an equality of votes the person presiding over the meeting shall have, in addition to a deliberative vote, a casting vote.

(4)    The secretary shall keep minutes of the proceedings at every meeting of a management committee.

(4A) The minutes referred to in subparagraph (4) shall be certified by the person presiding over the meeting as containing a true record of the proceedings of the meeting of the management committee to which they relate.

(4B)  The minutes certified in accordance with subparagraph (4A) shall, within 28 days of the date of the meeting of the management committee to which they relate, be displayed by the secretary in a prominent place in the building.  

14.Paragraph 10 thereof provides as follows:

In the event of any inconsistency between this Schedule and the terms of a deed of mutual covenant or any other agreement, this Schedule shall prevail. 

The respondent plaintiff’s case

The documents were protected by legal privilege

15.Mr. Chong, of SCC, who also represents the plaintiff in this summons, submits that the defendant’s right to know what was going on in those meetings is defeated by the plaintiff’s claim of legal privilege.  He reads out various passages case of Pang Yiu Hung Robert v Commissioner of Police HCAL 133/2002.  I notice that those passages concerned the importance of having legal privilege at common law.  However, I do not think that that case, or other cases in Mr. Chong’s List of Authorities, is dealing with this specific right on the part of the defendant as now raised by me.   In short, Mr. Chong has no authorities for his submission.       

16.I refer to Phipson on Evidence 15^th ed. Para 22-02, which reads:

Loss of confidentiality is often referred to, misleadingly, as loss of privilege.  It is a precondition of a claim to privilege that the documents in question are confidential.  If particular documents are no longer confidential, then even if they would otherwise be privileged, privilege cannot be claimed.  Thus in NRG v. Bacon & Woodrow [1995] 1 All ER 976, NRG had been advised by merchant bankers and other professional advisers during the course of negotiations leading to an acquisition.  Numerous privileged documents were sent by NRG to their merchant bankers.  In subsequent proceedings against its professional advisers for negligence, it was accepted that NRG could not claim privilege for privileged documents which had been sent at the time to the merchant bankers, because there was no relevant confidence in those documents.  But the judge held it did not follow that the confidentiality was lost in other privileged documents which though similar in nature had not been shown to the merchant bankers; thus the claim to privilege was upheld. 

It is also important to remember that a document may be confidential as between some persons and not others.  Once a document is in the public domain, it loses confidentiality and no claim for privilege can be maintained.  If a document is shown by A to three friends, there is no confidentiality between A and the friends and no claim for privilege could be maintained against any of them.  But it would still be possible for A to claim privilege against others.  Thus NRG could have claimed privilege against the rest of the world even though the merchant bankers had seen the privileged documents and no privilege in those documents could be claimed against them.  It is often helpful to consider whether the recipient of the document in issue receives the document subject to an express or implied obligation of confidence.  The obligation of confidence may arise from the relationship between the parties.  If there is no obligation on the recipient to keep the documents confidential, then it may be difficult to contend that there is a remaining confidentiality which enables privilege to be claimed in a subsequent action.  (My emphasis)

17.I notice that where the defendant had a right to know what was going on in those meetings, the plaintiff could not claim confidentiality.  Further, there was no allegation by the plaintiff that other members present in the meetings were subject to an express or implied obligation of confidence.  Where the defendant had, in any event, a right to approach other members for a recount of those meetings, confidentiality could not subsist.  In my judgment, the plaintiff’s claim of legal privilege must fail.  

The interrogatories were oppressive, prolix or imprecise

18.Mr. Chong refers to the case of Lee Nui Foon v. Ocean Park Corp. (No. 2) [1995] HKC 395 for the proposition that interrogatories must not be fishing exercises, “oppressive”, “prolix” or “imprecise”.  I agree that this principle is apposite.   

19.I ask Mr. Chong to identify which requests are being “imprecise”.  He is unable to do so.  He says that they are somewhere between “precise” and “imprecise”.  This is Mr. Chong’s own criticism.  He is unable to demonstrate any basis for it. 

20.I ask Mr. Chong to identify which requests are being “prolix”.  He says that Requests (2), (4)(a)-(b), (6)(b), (7)(d) are being “prolix”. 

21.Request (2) asks about the plaintiff to give the dates Ms. May Tam of SCC attended any meeting(s) to talk about the progress of the case and the costs implication.  Mr. Chong submits that the defendant was present in those meetings.  He submits that the defendant, despite her absence, ought to have known what was going on in those meetings behind her back and thus should not now ask the plaintiff. 

22.Request (4)(a) asks the plaintiff to identify the occasions on which SCC told the plaintiff that the agreed costs would be replaced by time costs.  Mr. Chong submits that the answer would involve a long list.  It is therefore “prolix”. 

23.Request (4)(b) asks the plaintiff to give the manner in which the plaintiff was so told by SCC.  Mr. Chong repeats the same reasoning. 

24.Request (4)(c) asks the plaintiff to give the names of those people in the plaintiff’s side who were so told by SCC.  Mr. Chong repeats the same reasoning.  He submits that the defendant, despite her absence, ought to have known what was going on in those meetings behind her back and thus should not now ask the plaintiff.  It is therefore “prolix”. 

25.Request (7)(d) asks what agreement on costs was reached by the plaintiff and SCC in those meetings.  Mr. Chong anticipates a long answer to this request.  It is therefore “prolix”.

26.In my judgment, it is obvious that Mr.Chong does not comprehend the meaning of “prolix”.  As I see it, it refers to the request, not the answer, being burdensome and overloaded.  Mr. Chong is unable to point to any request being “prolix”. 

27.I ask Mr. Chong to identify which requests are being “oppressive”.  He says that Requests (2), (3), (6), and (7) are being “oppressive”. 

28.Request (2) asks the plaintiff to give the dates on which Ms. May Tam of SCC attended any meeting(s) to talk about the case and the costs implication.  Mr. Chong submits that the defendant, despite her absence, ought to have known what was going on in those meetings behind

her back and thus should not now ask the plaintiff.  It is therefore “oppressive”.  

29.Request 3 asks for a copy of the minutes of committee meeting(s) where which recorded the instance where Ms. May Tam of SCC attended any meeting(s) to talk about the progress of the case and the costs implication.  Mr. Chong submits that this is putting pressure on the plaintiff and SCC.  It is therefore “oppressive”.

30.Request (6)(a) asks the plaintiff to state whether the plaintiff and SCC entered into agreement to the effect that the previous agreement for agreed costs in the application for an order for sale had been cancelled.  Mr. Chong submits that this is fishing out of muddled water. 

31.Request (6)(b) asks the plaintiff to state whether the plaintiff and SCC entered into agreement to the effect that SCC was entitled to charge the plaintiff on time costs basis in the application for an order for sale.  Mr. Chong submits that this is fishing out of muddled water.  It is therefore “oppressive”.    

32.Request 7 asks for a copy of the relevant minutes authorizing the new agreement.  Mr. Chong submits that the defendant should not call upon the plaintiff or SCC to help to prove the defendant’s own case.  It is therefore “oppressive”.

33.As I understand from the authorities, the right to interrogate is not confined to the facts directly in issue but extends to any facts the existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue (per Lord Esher M.R. in Marriott v. Chamberlain (1886) 17 Q.B.D. 154 at 163).  Interrogatories include the getting of an admission of anything which a party has to prove on any issue which is raised between him and the other party (Att.-Gen. V. Gaskill (1882) 20 Ch.D. per Cotton L.J., at 528).  In short, interrogatories which go to support the applicant’s case or to impeach or destroy the opponent’s case are admissible (Plymouth Mutual Co-op. Society v. Traders Publishing Association [1906] 1 K.B. 403, per Stirling L.J., at 416).   

34.I think the existence or non-existence of an agreement to change the costs basis is central to the assessment of costs before the taxing master.  The plaintiff was present whereas the defendant was (compelled to be) absent during the relevant meetings.  Mr. Chong argues that the defendant should have known what happened behind her back.  This argument is plainly absurd.  In my judgment, none of the aforesaid requests are being “oppressive” in the way as described by Mr. Chong, or in any way at all. 

35.In sum, I find the requested answers and/or documents crucial in the taxing master’s assessment of the costs to be borne by the defendant. 

The conclusion

36.The defendant has withdrawn Request (1) of the Interrogatory before the hearing.  Save and except for Request (1), I order in terms of the applicant defendant’s summons.  I make an order nisi for the plaintiff to pay her costs.  This order shall become absolute 14 days from today.   

Representation:

Mr. Chong Chung Hing of Messrs. Soloman C. Chong & Co. for the Plaintiff.

Mr. K. M. Lam of Messrs. Clarence Wong, Cheung & Liu for the Defendant.