Chinaplus Wines Ltd v. Berry Bros & Rudd Ltd and Others

HCA 1818/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1818 OF 2012

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BETWEEN

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J U D G M E N T

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1.This is the plaintiff’s (“CWL”) application for an interlocutory injunction against the defendants to enjoin them from making use of certain confidential information of CWL. The defendants belong to the Berry Bros & Rudd group of companies which is based in the UK (“BB&R Group”). The 1^st defendant is the holding company of the BB&R Group. There are a number of corporate entities within BB&R Group with similar names. To keep this judgment simple and to avoid confusion, I shall refer to BB&R Group without identifying the specific corporate vehicle unless it is necessary to do so [1]. BB&R Group is a world renowned 314 years old wine and spirits merchant headquartered in London. CWL and BB&R Group have been business partners in Hong Kong since 1998. Disputes have arisen between them since about late 2010 when BB&R Group wanted to continue with the business on its own.

2.Sadly, like so many similar cases which had come before the court, the separation of the parties has resulted in bitter disputes.  The conduct of this application is a reflection of the nature of such disputes and, for reasons which will be stated below, a considerable amount of the costs incurred in this application are unjustified and will be disallowed.

3.The factual disputes here are extensive.  This is of course an interlocutory application.  The court does not try the case on affidavits and the facts accepted by this court for the present purpose are based on an assessment of the evidence on paper.  I proceed to set out the relevant facts which I accept for the purpose of this application.

Factual background

4.Back in 1998, BB&R Group wanted to expand its business to China.  Hong Kong was seen to be the place where that venture should start.  Naturally, it looked for a partner with local knowledge.  BB&R’s representatives got in touch with Mr Mui (“Mui”) who was an established businessman with experience in doing business in China.  At that time, through a company controlled by him, Mui had a licence for importing wine into Hong Kong.  In due course, BB&R Group and Mui decided to co-operate so as to exploit the potential of the wine markets of Hong Kong, China and Macau (“the Market”).  They did so with a Distributor and Co‑operation Agreement dated 21 December 1998 (“the Agreement”) to govern their relationship.

5.The Agreement was entered into between a predecessor of the 2^nd defendant and CWL.  CWL was established for the purpose of operating the business to be created under the Agreement.  Under that document, CWL became a sole distributor of the wine supplied by BB&R Group for the Market.  However, the Agreement went further.  Although BB&R Group holds no equity in CWL, it bore 75% of the establishment costs of CWL’s business and is entitled to 75% of its trading profits.  Further, BB&R Group is involved in CWL’s management.  Since 1998, CWL has traded exclusively (under licences granted by BB&R Group) under various “Berry Bros. & Rudd” brand names and get-ups.  However, under the Agreement, the 2^nd defendant is entitled to terminate it on notice to CWL.

6.One of the services provided by BB&R Group at the time was the storage of the wine purchased from it by its customers. Clause 11 of the Agreement provided for the introduction of storage business by CWL to BB&R Group at a commission to be agreed.  BB&R’s wine storage facilities in England have been developed over the years into one of the best in the world and having one’s wine stored with BB&R Group serves to prove the provenance of the same.

7.Given these circumstances, the relationship between CWL and the 2^nd defendant is akin to that of a partnership with the former being the junior partner.  The evidence of the defendants that CWL was regarded as “Berry Bros. & Rudd Hong Kong” is justified.

8.CWL’s business, based in Hong Kong, is mainly the sale of fine French wine purchased from BB&R Group.  It also engages in wine brokerage (about 10% of its business).  Ancillary services, including wine storage, are provided to its customers.  The question whether it was CWL which provided such storage service to the customers or it simply passed on the business to BB&R Group is the central issue in this application.

9.At the beginning, CWL’s business was slow.  Some losses were made and they were borne by the parties in the same 75% and 25% ratio.  Later, the wine market took off in conjunction with the growing prosperity of the Greater China economy.  In 2005, the business generated profits in excess of HK$10 million with revenue of over HK$100 million.  The profits were doubled in 2006.  In 2008, with the advantage of the waiver of wine duty and the development of Hong Kong as the wine trading hub of Asia, CWL’s revenue more than doubled to over HK$500 million. In 2010, sales exceeded HK$800 million.

10.In the course of its business, CWL has acquired and collected information in relation to its customers.  Such information includes contact details, history of purchases and what wine is kept by them. Understandably, such information is considered highly valuable and jealously guarded by CWL.  Some of its customer information is stored in CWL’s computer system (“Dynamic Database”).

11.Turing to the wine storage service provided to CWL’s customer.  According to CWL, back in 1999 it was first asked by some of its customers to provide storage in England for the wine they purchased.  At that time, the business was quite slow and there were not many sophisticated consumers who bought wine to be stored.  It is alleged that Mui and Mr Coakley, who was the Development Director of one of the companies under BB&R Group, reached an oral agreement whereby BB&R Group would provide storage service to CWL so that CWL could in turn provide such service to meet the request of its customers (“Oral Agreement”).  It has been emphasised in CWL’s evidence that the responsibility over the storage fee charged by BB&R Group rests with CWL under the Oral Agreement.

12.In order to implement the Oral Agreement, records would have to be kept of the storage by various customers.  CWL alleges that it did not have the requisite computer system for the task but there was one being operated by BB&R Group.  Therefore, out of convenience CWL took advantage of BB&R Group’s system for the keeping of storage records.  That exercise involved the passing of confidential customer information by CWL to BB&R Group.  CWL says that such information (“Storage Data”), kept in BB&R Group’s computer system, was passed to BB&R Group pursuant to the Oral Agreement and for the sole purpose of wine storage for CWL.  Naturally, the Storage Data has grown over the years.  Currently, there are slightly over 3,000 active Hong Kong storage customers whose information can be found in BB&R Group’s computer [2].  It appears that most if not all of such customers are customers of CWL (“Hong Kong Storage Customers”).

13.Another consequence of the reliance upon BB&R Group’s system, CWL says, is that the invoices for the storage charges would be sent directly by BB&R Group to the customers.  It is common ground that in fact no commission has been paid to CWL by BB&R Group and no profit has been made by CWL out of the storage business.

14.The existence of the Oral Agreement is hotly contested.  The defendants contend that it is an invention.  They say that the Hong Kong Storage Customers are in fact also the customers of BB&R Group. Mr Huggins SC, who appeared with Mr Chan for CWL, has accepted that the Oral Agreement is the sole foundation for CWL’s claim for protection over the Storage Data.  I shall deal with this fundamental issue when I come to “serious issue to be tried”.

15.Three points should be noted at this juncture.  Firstly, there is no issue between the parties that the Dynamic Database is confidential information over which CWL is entitled to protection from misuse.

16.Secondly, in respect of the Storage Data, the position of Mr Burns SC, who appeared with Mr Alder for the defendants, is that the Storage Data was not passed onto BB&R Group in the circumstances alleged by CWL and therefore is not confidential information.  In his submissions, Mr Burns did not suggest that the Storage Data cannot be confidential information even if the court accepts CWL’s factual case.  I am unable to see any material distinction between the Dynamic Database and the Storage Data and I have no difficulty in accepting that the Storage Data is confidential information on the basis of CWL’s factual case.

17.Thirdly, with some persuasion from the court, the defendants have agreed to offer an undertaking not to make use of the Dynamic Database.  In fairness to them, it should be made clear that the defendants are adamant that they do not have any such information in their possession or the slightest intention to use them.  Indeed, they maintain that the application for injunction over the Dynamic Database is groundless.  The undertaking was given to narrow down the issues so that everyone can focus on the disputes over the Storage Data.  The undertaking is now contained in a letter from the defendants’ solicitors to the clerk of this court (sent at the request of this court) dated 6 December 2012.  In that letter, the defendants have offered a further undertaking to preserve, pending judgment in this action, the records of sales to the Hong Kong Storage Customers.  This second undertaking is also offered in response to a question from this court during the hearing.

18.To complete the picture, and the following events are relevant on the issue of whether there has been delay on the part of CWL in its application for interlocutory injunction, on 8 March 2011 the 2^nd defendant gave a written notice to CWL to terminate the Agreement with effect from 30 June 2011.  For reason(s) which this court is not concerned with, that notice did not ultimately take effect.  However, on 17 March 2011, through its solicitors the 1^st defendant informed CWL that it was entitled to make use of the Storage Data and would do so after termination of the Agreement.  On 22 March 2011, the 1^st defendant sent out letters to the Hong Kong Storage Customers informing them of BB&R Group’s intention to establish its own distribution company in Hong Kong (it is intended that the 3^rd defendant will fulfil this role), the termination of the Agreement and extending an invitation to the recipients to trade directly with BB&R Group.  There is no dispute that these letters were sent with the use of the Storage Data.

19.On 30 May 2011, CWL started an action against the defendants and an ex-employee, Mr Pegna (“HCA 905/11”).  One of the complaints in that action is the alleged misuse by the defendants in that case of the confidential customer information contained in an i-phone provided by CWL to Mr Pegna.  CWL’s application for an interlocutory injunction in HCA 905/11 has been disposed of by way of an undertaking given by the defendants in question.

20.Following HCA 905/11, CWL and BB&R Group became engaged in settlement negotiations.  There was an agreed moratorium over their disputes.  In furtherance of the settlement negotiations, a Term Sheet was signed by the parties on 22 August 2011.  Unfortunately, the settlement negotiations did not ultimately bear fruit.  On 6 June 2012, a fresh termination notice was served by the 2^nd defendant on CWL to determine the Agreement taking effect on 20 December 2012.  It was made clear in the notice again that BB&R Group would make use of the Storage Data after termination of the Agreement.  On 12 September 2012, emails in terms similar to the letters of 22 March 2011 were sent out to the Hong Kong Storage Customers by the 1^st defendant.  There is no dispute that the Storage Data was used for the purpose of sending those emails.  It is contended by CWL that the 12 September 2012 emails provided the impetus for this application.

21.I have been told by Mr Huggins that regardless of the validity of the latest termination notice CWL’s position is that it will not be able to work with BB&R Group any further and their business co-operation will come to an end on 20 December 2012.  For that reason, the parties are very keen to know the outcome of this application so that they will know where they stand in respect of the Storage Data.

22.Before dealing with the issues, I should mention that the evidence filed by the parties in this application is very extensive. There are altogether 13 box files of evidence, 1 box file of pleadings and court documents and 1 box file of correspondence.  In addition, there are 3 box files of pleadings and evidence filed in HCA 905/11.  The evidence is very detailed indeed.  However, with respect, much of the material is irrelevant or unhelpful for the present exercise.  I wish to acknowledge that I have been assisted by the very detailed written submissions from both sides (the length of the submissions is of course a reflection of the volume of the evidence) and with such assistance I have been able to draw out from the mountain of evidence the relevant facts necessary for the proper determination of this application.

23.The law which governs the grant of an interlocutory injunction is trite and undisputed by the parties.  There are three issues which call for examination – serious issue to be tried; adequacy of damages as a remedy; and balance of convenience (see Hong Kong Civil Procedure 2013, Vol 1, §29/1/8 & 29/1/11).

Serious issue to be tried

24.As stated above, the basis of CWL’s confidential information claim over the Storage Data is the Oral Agreement.  The existence of that agreement is denied.  Mr Huggins has made a forceful submission that the court has the evidence of the two persons who made the agreement.  This is, as Mr Huggins has rightly accepted, the high watermark of CWL’s case.  Whilst recognising the force of the submission, this court must maintain a healthy scepticism in examining this evidence and test it against the other evidence and plain commonsense.

25.I confess to having a good deal of trouble in accepting the existence of the Oral Agreement.  Firstly, the Oral Agreement does not sit comfortably with the business plan envisaged by the parties as embodied in the Agreement, which was signed not long before the Oral Agreement allegedly came to be made.  With the factual backdrop identified above, and in particular the existence of clause 11 of the Agreement, it seems unlikely that CWL would have wanted to embark upon a fresh line of business (wine storage) when its business partner had that area well covered and CWL was offered the opportunity to simply pass on the business with a share of the profits.  By the same token, more likely than not BB&R Group would not have been pleased for its local partner to get involved in the storage service.

26.Secondly, I find the arrangement suggested by CWL – with CWL interposing between the customers and BB&R Group – unusual and somewhat artificial, especially when CWL is making no financial gain out of the relationship.  The suggested matrix does not fit easily into any recognised legal relationship.  One has to bear in mind that the wine belong to the customers. Did CWL act as the agent of the customers in respect of the storage contracts? Mr Huggins was unable to enlighten me in this regard.  Perhaps inadvertently, Mr Burns alluded to a possible answer in the course of his submissions.  It may be the case that CWL has simply sub-contracted the storage to BB&R Group. However, this does not answer the point that there is little purpose for this unusual arrangement.  This unusual and artificial arrangement tends to suggest that it is an invention to prevent BB&R Group from using the Storage Data.

27.Thirdly, I accept Mr Burns’ submission that the documentary evidence and CWL’s inability to produce any to support its case militate against the existence of the Oral Agreement.  It is surprising that despite the years of dealings between the parties, there is not one piece of paper in which the Oral Agreement had been mentioned.  Further, the vast majority of the storage customers were directly invoiced by BB&R Group in respect of the storage charges.  The invoices referred to BB&R Group’s terms and conditions.  The customers were charged in Sterling.  For the small number of customers who paid the charges via CWL, more likely than not they did so for their convenience.  It is relevant to note that on the invoices the customers were given advice by BB&R Group as to the maturity of their wine.  This is an indication of a direct relationship and the value-added service provided by BB&R Group to cultivate a long term relationship with its customers.  In contrast, CWL has not been able to produce any documentation evidencing the storage contracts between itself and the customers.

28.Fourthly, I also accept Mr Burns’ submission that there is no business sense in the assumption by CWL of liability over the storage charges when it derives no benefit out of the arrangement.  I have not lost sight of the proposition that CWL might have been prepared to provide free service (at a relatively modest cost to itself) to the customers with a view to long term business.  However, that could only apply to the major customers. Further, one needs to remember that the Oral Agreement is alleged to have been made in about 1999.  Those were struggling days for the business.

29.Last but not least, Mr Burns has rightly taken this court to the further and better particulars in HCA 905/11 where CWL was asked in no unclear terms about particulars of the Oral Agreement and none has been given.  This is highly detrimental to the credibility of the Oral Agreement.

30.Although the merits of CWL’s case are hardly impressive, the threshold which it has to satisfy to demonstrate a serious issue to be tried is not very high.  The low threshold is consonant with the principle that the court does not decide factual disputes on affidavits.  I have been taken by Mr Huggins to the judgment of Deputy Judge To (as he then was) in AXA China Region Insurance Co Ltd v Pacific Century Insurance Co Ltd [2003] 3 HKC 1 at 13B where, referring to Alfred Dunhill Ltd v Sunoptic SA [1979] FSR 337 at 373, it was said that in the context of deciding whether there is a serious issue to be tried it is irrelevant whether the court thinks that the plaintiff’s chances of success in establishing liability are 90% or 20%.

31.In the premises, and not without considerable reluctance, I hold that CWL has a serious issue to be tried in respect of its claim over the Storage Data.

32.However, this is not the end of this issue because Mr Burns contends that the CWL has to satisfy a higher threshold – a good prospect of success.  The basis for the contention is that it will probably take two years for this action come to trial.  By that time, the Storage Data will be useless to BB&R Group.  Use of the Storage Data is required for a seamless transition between the existing business and the new one to be operated via the 3^rd defendant.  The inability to use the information will result in disruption and damage to BB&R Group’s business and reputation.  By the same token, two years from today, it will be unlikely for CWL to press for an injunctive relief over the Storage Data.  I see considerable force in the submission.  Competition in the wine market is strong.  Customers’ taste and loyalty can change.

33.There is no dispute that if the court agrees that the interlocutory injunction will have a finality effect, then a high burden has to be discharged by CWL.  On balance, I am inclined to accept Mr Burns’ submission in this regard.  It follows from the analysis above that I do not see a good prospect of success in CWL’s case.  With this conclusion, this application must be dismissed.  However, for completeness I shall deal with the rest of the issues.  The next issue would have arisen in the event that CWL had made out a serious issue to be tried.

Adequacy of damages as a remedy

34.There are two aspects here.  Adequacy of damages as a remedy and the ability to pay damages.

35.In respect of the first aspect, damages is clearly an inadequate remedy for the defendants [3] should it be found later that the court has wrongly granted an interlocutory injunction against them.  I have alluded to some of the relevant considerations in para 32 above.  BB&R Group is a very well established wine merchant and damage to its reputation cannot be taken lightly.

36.As regards CWL, the question is whether it would be adequately compensated by damages for any loss caused by the refusal to grant interlocutory injunction.  Despite Mr Burns’ submission on the inadequacy of the evidence over CWL’s business plan post 20 December 2012, I am satisfied that it has a genuine plan to continue with its wine business, which has become very profitable.  CWL must have developed a viable business operation over the years, it has collected a very useful client database and there is an experienced sales staff.  I am doubtful whether CWL will be in a position to secure a good supply of fine wine after 20 December 2012.  More likely than not, the lack of secured supply will restrict the scale of its business in at the least the short term after the parting of company with BB&R Group. Nevertheless, if CWL loses the exclusivity over the Storage Data, it is not difficult to see that there will be disruption over its business and probably loss of some of its customers.

37.There is a further consideration which is applicable to both sides, ie, it is very difficult to assess the damages for the loss suffered.  In the premises, damages will not be an adequate remedy for either CWL or the defendants.

38.The second aspect has not escaped the parties’ disagreement.  However, on the evidence, it cannot be disputed that BB&R Group has valuable landed properties in London to back up its ability to answer for damages.  On the other hand, Mr Huggins is unable to point to any assets owned by CWL except its business prospects.  I need not repeat the assessment above on CWL’s business prospects.  I am not satisfied that CWL has the ability to answer for the damages to compensate the defendants in the event that this application is wrongly granted.  However, this is an academic point given my conclusion that damages will not be an adequate remedy for either side.

39.The inadequacy of damages as a remedy would call for consideration of the next issue, assuming that CWL had made out a serious issue to be tried.

Balance of Convenience

40.In this exercise, the court is required to take into consideration all the circumstances of the case.  The court may, eg, revisit the issues of the strength of each party’s case and their financial ability to answer for damages.  It appears me to that there are good reasons for reconsidering these matters.  The grant of an interlocutory injunction is a discretionary remedy.  The decision is not to be made on a mechanical approach by going through the requirements. Instead, after appraising itself of the relevant factors to be considered, the court should take a step back and review the case before arriving at a decision which carries with it the lowest risk of injustice.

41.On balance of convenience, the picture is rather one-sided.  CWL has a weak case.  Further, the evidence of its intended business (post termination of the Agreement) is vague compared to that adduced by the defendants.  The weight of the evidence is that upon termination of the Agreement BB&R Group will continue with, if not improve upon, its Greater China business.  Such evidence is highly relevant on the likelihood of loss.  In other words, the inability to exploit the Storage Data is likely to result in loss to BB&R Group.  One cannot say with the same conviction that the inability to preserve the exclusivity over those information is likely to result in loss to CWL.  Furthermore, CWL’s ability to pay damages (notwithstanding that the inadequacy of the remedy and difficulty of assessment) is not established.

42.On preserving the status quo, there is disagreement as to what is the status quo to be preserved in this case. On CWL’s part, it is contended that it has already withdrawn the permission given to BB&R Group to make use of the Storage Data.  The status quo does not therefore allow BB&R Group to exploit such information.

43.On the other hand, Mr Burns has helpfully referred me back to American Cyanamide v Ethicon Ltd [1975] 396 at 408G where Lord Diplock said :

“Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial.”

44.Relying upon that passage, Mr Burns submitted that BB&R Group has been using the Storage Data freely and that is the status quo to be preserved.  With considerable skill, Mr Huggins countered the argument by submitting that BB&R Group has not in its own right been promoting its products to customers in the Market.  All its trading has been done with CWL pursuant to the terms of the Agreement.  On balance, I do not accept the argument.  To do so would be taking a blinkered view on the business conducted under the Agreement.  I have already pointed out that BB&R Group is entitled to 75% of the profits generated from the business and its relationship with CWL is akin to that of a partnership.

45.In the premises, had I been required to do so I would have held that the balance of convenience is in favour of rejecting this application.

Delay

46.There is no disagreement between the parties on the applicable law :

(i) an applicant for an interlocutory injunction must act promptly and without delay;

(ii) promptly means 6 weeks or so of unexplained delay and 3 months with an explanation given for the delay (see King Fung Vacuum v Toto Toys Ltd [2006] 2 HKLRD 785 at 792I‑J); and

(iii) the date from which the period runs is the date on which the applicant knew or ought to have been aware of the need for interlocutory relief.

47.In paras 18 to 20 above, I have set out the relevant events for purpose of deciding this issue.  On any view, by 17 March 2011 BB&R Group had made its position abundantly clear that it intended to use the Storage Data.  I am unable to accept Mr Huggins’ submission to the effect that CWL was not required to act until the end of the Agreement or until that was imminent.  If the threat of infringement of its right was real, it would not be right for CWL to sit on its hands.  Otherwise, CWL would be in a position to take advantage of its own delay by introducing urgency to its application for interlocutory injunction if it withheld the same until shortly before the expiration of the Agreement.  It is trite that in an appropriate case the court can grant a quia timet injunction.

48.However, I am prepared to accept that the attempt to settle the disputes after the institution of HCA 905/11 is a legitimate explanation for the delay until the second termination notice of the 6 June 2012.  This application was not made until 9 October 2012.  I do not agree that the emails by the 1^st defendant of the 12 September 2012 changed the picture in any material way and therefore cannot be relied upon to alter the date when the period should start to run.  There is no explanation for the 4 months of delay between June and October.  Had I been required to do so, I would have rejected this application on the ground of delay also.

Defendants’ undertaking

49.To avoid any unnecessary argument on costs, I should say that I have the benefit of Mr Huggins’ submissions on the Dynamic Database.  With respect, I find the case of CWL – that BB&R Group has in its possession confidential information originated from the Dynamic Database – a flimsy one.  I would not have granted an injunction in favour of CWL over such information.

50.There is a disagreement by the parties on the formulation of the defendants’ undertaking over the keeping of sales records.  In light of my decision on this application, the undertaking is not strictly necessary and I would accept the two undertakings from the defendants as set out in their solicitors’ letter to the clerk of this court dated 6 December 2012.  CWL is of course obliged to provide the usual undertaking on damages as suggested in that letter.

Conclusion

51.For the reasons stated above, I have no hesitation in dismissing this application with costs to the defendants with a certificate for two counsel to be taxed if not agreed.  The costs recoverable in this application are subject to the question of wasted costs which I shall address below.

Wasted costs

52.I have alluded to the amount of evidence filed in this application in para 22 above.  Both Mr Huggins and Mr Burns have fairly agreed that there is an excessive amount of evidence in this application.

53.With respect, the parties (and their lawyers) appear to have lost sight of the fact that this is an interlocutory application and the court is not required, and indeed will not be able, to make any finding of fact on the disputes before it.  It is plainly unhelpful to swamp the court with such a mountain of evidence for an application of this nature.  For example, there are no less than 8 affidavits from CWL’s customers to prove how they dealt with CWL in the purchase and storage of their wine.  Another example is the detailed evidence on how customer data was input into the computer system.  There is simply no chance that all the evidence will be read by the court.  During the hearing, it became apparent that counsel also struggled with the details in this case.

54.Over the years, on countless occasions the court had lamented upon the excessive volume of evidence.  I cite, as an example, the observation by Stone J in Jau-Hwa Stewart v E Excel Ltd & Ors, unrep, HCA 2493/01, para 3 :

“This is a case which is larded with detail. It has attracted a very considerable amount of paper, there being well over 30 affidavits and some 15 box files placed before the court at this inter partes stage, together with skeleton arguments from each camp each in excess of 100 pages. I am reminded of Lord Templeman’s celebrated observation that disputed interlocutory applications should be measured in hours, not days. …”

Advice like this has fallen upon deaf ears and such excesses would no longer be tolerated.

55.At the risk of explaining the obvious, it should not be forgotten that the court has limited time for pre-hearing preparation. Reading time will have to be found.  To put the matter in context, one of the affidavits filed by the defendants is 62 pages in length and it required over 2 hours to read.  It should also be remembered that the court has a duty to all the users.  Time wasted on irrelevant material means that the court has less time to read the useful material or to deal with other cases.  This kind of excess therefore impacts adversely on the system as a whole.

56.The professionals are obviously not free from blame in this regard.  It is the duty of solicitors, and counsel if they are involved, to temper the enthusiasm of the hot-headed litigant and to ensure that the court will be assisted rather than hampered in the performance of its duty.  Ironically, in the affidavits of both sides it had been said that some of the material adduced before the court was irrelevant and would therefore not be answered.  It is the professionals who should be controlling the conduct of court proceedings.  The same applies to other professionals in their fields.  If a bridge collapsed, the engineers would have to answer for it.  From now on, lawyers should be prepared to answer to the court for the failing of their duty in controlling the amount of evidence filed.

57.However, it ought to be recognised that it is not always easy to decide what is or is not relevant and how much detail is to be adduced in evidence.  Proper consideration will be given to such matters and costs penalty will only be imposed on clear case.

58.This is one such case.  I have given an opportunity to the parties to make submissions on what costs have been wasted and how they should be assessed.  However, I am unable to derive any assistance from the correspondence received by the court in this regard.

59.Doing the best I can with a broad brush approach, and erring on the side of conservatism, I disallow 25% of the total costs of preparing the evidence in this application.

Mr Adrian Huggins SC and Mr Anthony Chan, instructed by Ince & Co, for the plaintiff

Mr Ashley Burns SC and Mr Edward Alder, instructed by Bird & Bird, for the 1^st, 2^nd & 3^rd defendants