The Bank of Tokyo, Ltd and Others v. Regentcourt Ltd and Others

IN THE COURT OF APPEAL

No. 86 of 1987
(Civil)

BETWEEN

Coram: Hon. Silke, V.-P., Kempster & Hunter, JJ.A.

Date of Hearing: 20 – 22^nd October 1987

Date of Judgment: 22^nd October 1987

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JUDGMENT

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Kempster, J.A.:

1. This is an appeal by 10 members of a joint property development venture (“the defendants”) against an order made by Rhind J. in chambers on 25^th June last, following an application for discovery of particular documents, insofar as he declined to require the members of a syndicate of lending banks (“the plaintiffs”) to disclose the files of solicitors acting for them not only in relation to the negotiations for a loan and to documents giving rise to the action between the parties but also to two slightly earlier transactions one of which was specifically referred to for its terms when the request for a loan was first made.

2. At the time the material documents were signed Linklaters & Paines, who had partners, staff and premises in common with Deacons, who were acting for the defendants, were the plaintiffs’ solicitors but for the purposes of this litigation the plaintiffs have themselves instructed Deacons. Mr. Oscar Lai, Deacons’ partner who dealt with the matter on their behalf, presently acts for the defendants on his own account. It is common ground, however, that no conflict of interest did or does arise even though these solicitors did not, it would appear from the pleadings, share a common understanding as to the basis of the transaction.

3. The documents pursuant to which the plaintiffs claim monies and damages from the defendants are a loan agreement, debenture, charge and overdraft-letter all dated 17^th August 1981 providing for the purchase and development of land by the building of blocks of luxury apartments, now known as “Regent on the Park”, in Kennedy Road. The relevant issue on the pleadings is whether or not the defendants are liable to the plaintiffs for the whole of their respective losses resulting from the defendants’ breaches of provisions in the documents, as expressly provided, or only pro rata their share in the enterprise as, the defendants contend, had been the common continuing intention of all parties prior to signature. Although the writ had been issued on 3^rd June 1985 this plea, with a consequential prayer for rectification, did not see the light of day until the service on or about 11^th December 1986 of an Amended Defence & Counterclaim which, it may be observed, does not comply with the relevant Practice Direction dated 28^th June 1985.

4. After an adjournment Mr. Waung, for the defendants, was able to define the continuing common intention with greater particularity namely that the several members of each of the 5 groups specified in the defendants’ pleading should jointly be liable to the plaintiffs in proportion to the contribution of their group to the overall enterprise as measured by the allocation of shares in the first defendants; being a company incorporated for the purposes of the transaction.

5. The two earlier loans involved different parties though, as well as being involved in the transaction giving rise to the present proceedings, the Bank of Tokyo Ltd. was a lender in each and Hang Seng Finance Ltd., Daiwa Overseas Finance Ltd. and Toronto Dominion Bank were lenders in one or other of them. But there are in all some 16 plaintiffs and 10 defendants. Documents relevant to the common intention of such parties as were involved in the earlier syndicated loans cannot help the Court in determining the intention of the parties to the documents dated 17^th August 1981 in which, unlike those drafted for the earlier loans, a class of “ultimate shareholders” with distinct obligations featured. Indeed, with such a multiplicity of parties a Court would take much persuasion to look beyond the outward expression of intent given by their signatures. Further, by paragraph 17 of the Amended Defence & Counterclaim the defendants state that their general intention in relation to finance was to adopt the terms of one of those earlier agreements; by then in draft and in the material particulars identical to that sought to be rectified.

6. The claim that documents relating to different agreements between different parties are also material on the issue of construction has not been abandoned by the defendants but once stated the proposition is demonstrably bad.

7. I am in any event satisfied that the only parts of the Linklaters & Paines files sought which have not already been disclosed and which could be relevant to the issue of rectification, in particular the file relating to the “Regent on the Park” loan which, prima facie, must be relevant were, as such of the plaintiffs’ affidavits of documents as we have seen aver, privileged from production as communications between solicitor and client for the purpose of seeking and giving legal advice and assistance. For my part I am not prepared to accept the hard-pressed submission that consideration of this aspect of the matter is premature and that, however inevitable the outcome may be, the Court should ignore it, make the order sought and leave it to the plaintiffs again to make the point in further affidavits.

8. There is also an appeal in relation to costs. In the exercise of his discretion Rhind J. ordered that the defendants should pay to the plaintiffs 2/3 of the costs of the application for specific discovery. It is true that the defendants had succeeded only in relation to two out of the five heads of particular discovery claimed but in my opinion the learned judge must have overlooked the fact that they did have to make an application to the Court to secure such discovery as he did order.

9. I would dismiss the appeal as to particular discovery but allow it insofar as it relates to costs by substituting an order that the costs of the application below should be costs in cause.

Silke, V.-P.:

10. I agree. That which my Lord has said so accords with my own view that there is nothing I can usefully add. I am in agreement with the order he proposes.

Hunter, J.A.:

11. I also agree.

Mr. William Waung (Oscar Lai & Ho) for 1^st, 3^rd-6^th, 8^th-12^th Applellants/Defendants

Miss Gladys Li (Deacons) for Respondents/Plaintiffs