The Joint & Several Liquidators of Kong Wah Holdings Ltd (in Compulsory Liquidation) v. [Respondents]

HCCW 49/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 49 OF 2000

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BETWEEN

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AND

HCCW 50/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 50 OF 2000

____________

____________

BETWEEN

Before: Hon Kwan J in Chambers (not open to public)

Date of Hearing: 2 March 2006

Date of Decision: 2 March 2006

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D E C I S I O N

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1.This matter has come before me as an urgent appeal arising out of an application made to Master de Souza in the course of a private examination.

2.The examination has been stood down pending the disposal of this appeal.

3.A very short point is involved here, that is, whether the liquidators should be ordered to provide to the examinee additional documents in advance on questions he may be examined, so that the examinee may have some forewarning of the areas of investigation.

4.The liquidators’ position, as I understand it, is that the answers given by the examinee should be spontaneous, they should not be prepared or rehearsed.  So if there are any additional documents not included in the hearing bundles, they could be provided to [name of the examinee], the examinee, there and then, in the course of the examination, and he would be given an opportunity to refresh his memory and consider the documents while he is in the witness box, and then he should answer the questions put to him.

5.[The examinee’s counsel’s] position is that the examinee should not be taken by unfair surprise, he should not be trapped into giving answers he would not otherwise have given if he is made aware of additional documents kept up the liquidators’ sleeve, or driven to say he has no recollection of documents which may put him in a bad light of being unco-operative or evasive in his answers.

6.If this were a simple case, I see nothing wrong or objectionable that a witness is occasionally required to read a document for the first time in the witness box.  As stated in Mr Hunsworth’s submission, the extent to which an examinee may be forewarned of the matters to be canvassed at an examination will vary, depending on the factual circumstances of each case.  In the context of this case, I do not think the approach suggested by the liquidators is a sensible one for the following reasons:

(1)     The documents involved in this examination are voluminous; the transactions under investigation are complex.

(2)     The matters that the liquidators are investigating happened more than 10 years ago.  A witness cannot be expected to give a meaningful answer, if he is shown a document for the first time in the witness box, with very limited opportunity to react and try to re-construct or recall events or details of what had happened for over a decade.

(3)      I have no idea of the volume of additional documents involved.  If it is only a small number, I would expect to be told.  It may well be that the additional documents are not a small number.  That being the case, if a witness is repeatedly shown a document for the first time in the witness box, and he needs time to read it or check it against some other documents he had seen before in order to give a proper response, this may just slow down the progress of the examination and would be undesirable.

(4)     If any new avenue of inquiry should crop up in the course of the examination and, as a result, it is necessary to refer the examinee to other documents not provided before, then the court hearing the examination could assess the situation and decide on the best course to take, depending on the nature and volume of new materials to be shown to the examinee.

(5)     I do not think the quality of the evidence of the examinee would be compromised if additional documents are provided to him in advance without more, whether he is permitted to consult his lawyers on the additional documents is another matter on which the Master has not ruled.

7.It is a matter for the Master if permission should be given. The court does not know whether permission ought to be given in a particular situation, without knowing what additional documents are to be provided and what purpose is to be served by allowing the examinee to confer with his lawyers on the additional documents.

8.I do not wish to tie the hands of the Master.  He is obviously mindful of the need to ensure fair questions are put and fair procedures are observed in the examination, and he has strived to hold a proper balance between the competing interests of the examiner and the examinee throughout.

9.I would only wish to say the following.  I do not think it is as of right that an examinee would be allowed to confer freely with his lawyers in the middle of an examination, notwithstanding additional documents are provided.  Whether this is to be allowed would depend on what purpose is to be served by such consultation.  A blanket statement that it is necessary for the examinee to seek legal advice will not do.  It is recognised that drilling, coaching and colouring the evidence of witness are not permissible.

10.I have read the transcript and noted what the [examinee’s counsel] had said about the consultation that may have to follow.  At the moment it is not entirely clear to me what would be the purpose of such consultation.  It was mentioned by the [examinee’s counsel] that the lawyers of the examinee would need to make proper preparations in the light of any additional document provided.  At another point, the [examinee’s counsel] said that if consultation is allowed, perhaps the answers given by the examinee would be “with the benefit of some research”. It seems to me with the training and background of [name of the examinee], he should be perfectly able to understand the additional documents to be disclosed to him.  It has certainly not been made clear what sort of preparation his lawyers would be doing on his behalf if additional documents are given.  Perhaps it is not possible for them to be specific about this without seeing the additional documents.

11.For the above reasons, I dismiss this appeal and uphold the Master’s order.  The liquidators should provide the additional documents first to [name of the examinee] and his lawyers.  It would then be for [name of the examinee] to seek such reasonable time as the Master may grant for him and his lawyers to read the additional documents.  And if there is any need for [name of the examinee] to confer with his lawyers on the additional documents, an application could then be made to the Master.

Mr Nicholas Hunsworth, of Messrs Johnson, Stokes & Master, for the Joint & Several Liquidators, the Applicants

[Name of the counsel] instructed by [name of the solicitors firm] for [Respondents]