Re Ndt (Bvi) Trading Ltd

HCCW 49/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES (WINDING-UP) NO. 49 OF 2008

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Before: Hon Kwan JA (sitting as an additional Judge of the Court of First Instance) in Chambers (Not open to the public)

Date of Hearing:  30 September 2009

Date of Judgment:  30 September 2009

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D E C I S I O N

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1.This is a summons issued by the petitioners under Order 24 rule 14A of the Rules of the High Court, seeking leave of the court that part of the documents disclosed in these proceedings by the company being the subject of the petition, NDT (BVI) Trading Limited (“the Company”), may be used:

(a)  in HCA No. 342 of 2006 (“the Guarantee Action”);

(b)  to lodge a criminal complaint against two persons, Pang Kin Shing Michael (“Pang”) and Lo Chi Sum Andrew (“Lo”); and

(c)  to lodge a complaint to theLaw Society against [a firm of solicitors].

2.The summons was served on the Company. The present position of the Company is that it takesa neutral stance in this application, and it has been agreed between the Company and the petitioners no order is to be made as to costs.

3.The Guarantee Action was brought by the petitioners against Pang, Wyman Chan Chun Chung (“Chan”) and Lo. The petitioners’ solicitors have also provided copies of their summons and supporting affidavit to the solicitors for the defendants in the Guarantee Action. There is placed before the court a letter of objection from the solicitors of Pang and Chan. None of them has appeared today to make submissions.

4.Under Order 24 rule 14A, any undertaking, whether express or implied, not to use a document for any purposes other than those of the proceedings in which it is disclosed shall cease to apply to such document after it has been read to or by the court, or referred to, in open court, unless the court for special reasons has otherwise ordered on the application of a party or of the person to whom the document belongs.

5.Thus, the court has discretion to relax or modify the implied undertaking for special reasons. The general principle is that any release or modification of this undertaking should not occasion injustice to the person giving discovery (Crest Homes Plc v Marks [1987] 1 AC 829 at 860B to C).

6.In exercising this discretion, the court may have regard to many factors and they vary from case to case. It is not possible to give an exhaustive list. A number of these factors were mentioned in Mead Corporation v Carbonless Papers (Australia) Pty Limited & Others [2002] WASC 237 para 45. They include the nature of the document, the nature of the information in the document, any prejudice the author of the document may sustain, and the likely contribution of the document to achieving justice in the second proceedings.

7.Leave of the court is required before reporting any wrongdoings revealed by documents disclosed on discovery to the appropriate authorities (Disclosure by Matthews and Malek, 2^nd ed, para 13.21). It is a balancing exercise whether what is sought to be achieved by relaxing the implied undertaking is more important for the administration of justice generally, such as in discouraging and punishing false evidence, than in maintaining confidentiality so as not to operate as a disincentive to full and frank discovery.

8.In A v A; B v B [2000] 1 FLR 701 at 746H to 747A,whilst acknowledging the public interest in full and frank disclosure on discovery, Charles J stated that if a court is satisfied there had been illegal or unlawful conduct which it had no power to deal with itself, it should generally report the relevant material to the relevant public authority. In Marlwood Commercial Inc v Kozeny [2004] EWCA Civ 798 at para 52, the English Court of Appeal stated that in the absence of any other factors argued to constitute some injustice, the public interest in the investigation or prosecution of serious fraud should take precedence over the general concern of courts to control the collateral use of compulsorily disclosed documents. It was reasoned that the court’s exceptional permission for relaxing the rule against collateral use in cases of serious fraud in the international context does not give cause for thinking that proper disclosure in the general run of cases will be undermined. See also Capital Television Group v Northern Rivers Television Pty Limited [1995] NSWSC 75 at para 10.

9.Miss Ismail has placed before me a detailed submission with meticulous analysis of the issues in the petition and the Guarantee Action. I also have from the petitioners’ solicitors in a separate document a table listing each of the documents disclosed in the petition sought to be used in the Guarantee Action, to lodge a criminal complaint and a complaint to the Law Society, and what particular issue or issues each document is relevant to. Five issues are listed in that table. Issues A to C are relevant to issues in the Guarantee Action. Issue D is relevant to the complaint of perjury by Pang and Lo, and Issue E is relevant to the complaint against [a firm of solicitors] to the Law Society.

10.I do not propose to recite counsel’s arguments. I am satisfied each of these documents are material and relevant to one or more of the identified issues. There is a close factual connection between the issues in the petition and the Guarantee Action. The validity of a settlement agreement is a key issue common to both proceedings.

11.I am also satisfied there is a prima facie case that these documents would appear to contradict parts of the witness statement and affirmation of Pang, the witness statement and affirmation of Chan, the witness statement and affirmation of Lo filed in the Guarantee Action, as well as parts of the amended defence in the Guarantee Action. These contradictions and inconsistencies were set out at paragraphs 34 to 40 of Miss Ismail’s submission.

12.I am persuaded special reasons are made out in this case for relaxing the implied undertaking for use of the documents in question in the Guarantee Action. In the interest of justice, the court determining the Guarantee Action should have available to it the documents in question to enable the court to arrive at the truth. As mentioned earlier, the Company has taken a neutral position. It does not appear to me the Company would suffer any prejudice if the implied undertaking of the petitioners not to use the documents disclosed in other proceedings is relaxed.

13.I would also allow the documents to be used for making a criminal complaint against Pang and Lo and for lodging a complaint to the Law Society against[a firm of solicitors]. In view of the stark contradictions in the witness statements and affirmations in the Guarantee Action, it may be appropriate for there to be an investigation by the relevant authorities into the complaints of perjury. As for [a firm of solicitors], it would appear from the documents that the firm had purported to act for the Company without a retainer letter and had without proper authority commenced 6 High Court actions in September 2006, contrary to the provisions in the Solicitors’ Guide to Professional Conduct Rules and the Solicitors Practice Rules. This would appear proper to be looked into by theLaw Society.

14.I make an order in terms of paragraph 1 of the petitioners’ summons as amended. The documents that may be used in making a criminal complaint and a complaint to the Law Society are restricted to those documents in the table prepared by the petitioners’ solicitors indicating that they are relevant to Issues D and E respectively.

Miss Roxanne Ismail, instructed by Messrs Robertsons, for the Petitioners

Mr Patrick Tsang, instructed by Messrs Chau & Associates, for the Company