Honor Engineering Ltd v. Hing Fat Machinery & Electrical Engineering Co Ltd

DCCJ 3397/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3397 OF 2012

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DECISION

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1.This is the plaintiff’s application for specific discovery of the “complete copy of the contract between the defendant and REC Engineering Company Limited dated 15 December 2011” (hereinafter referred to as “the REC Contract”).

2.By consent of the parties, the plaintiff’s application is determined by way of paper determination based on the parties’ written submissions.

Background

3.The plaintiff took out a summons dated 5 November 2013 for specific discovery of 10 classes of documents including the REC Contract.

4.On 18 November 2013, Master SP Yip ordered, inter alia, that the plaintiff’s application for specific discovery of item 2, namely the REC Contract, was adjourned for argument and the matter was fixed before this court.  

5.On 15 January 2014, pursuant to a consent summons filed by the parties, I ordered that the plaintiff’s application be dealt with by way of paper determination based written submissions and the oral hearing was dispensed with.

The documents covered by the present application

6.Pursuant to Master SP Yip’s order, only the discovery application regarding the REC Contract was to be argued before this court.

7.However the plaintiff submitted that this court should determine the discovery application of the REC Contract and item 3 in the Schedule attached to their summons. Item 3 refers to “all interim payment applications including final account submitted by the defendant/Full Harvest on behalf of the defendant to REC in respect of the CIC project and the corresponding assessments and interim certificates issued by REC” (hereinafter referred to as “the Interim Payment Applications.”).

8.The plaintiff submitted the defendant failed to disclose the Interim Payment Applications, despite being so ordered by Master SP Yip Order on 18 November 2013.  The plaintiff asks this court to make a ruling on the discovery of the Interim Payment Applications on the basis that the plaintiff’s summons included an application for discovery of the Interim Payment Applications. Hence this court has the power to make the determination.  

9.The defendant disagreed and submitted this court was only required by Master SP Yip’s order to deal with the discovery application for the REC Contract only.

10.Having read the submissions of both parties and reviewing the order of Master SP Yip, I am of the view that the plaintiff’s real complaint is that there has been non-compliance of Master SP Yip’s order regarding the alleged non-disclosure of the Interim Payment Applications.

11.However the plaintiff’s present application regarding the Interim Payment Applications is misconceived. Firstly, the current summons before this court only relates to an application for discovery and inspection. There is no relief sought in the summons to canvas the non-compliance of any discovery order made or to be made. Secondly, the application for discovery of the Interim Payment Application was disposed of by Master SP Yip’s order.   It is clear that the only outstanding item to be determined was the discovery and inspection of the REC Contract. Hence this court was ordered to hear the plaintiff’s summons dated 5 November 2013 only in so far as it related to the REC Contract. I fail to see how the plaintiff can now argue this court has the power to (in effect) re-determine the discovery application on the Interim Payment Applications. Thirdly, Master SP Yip has already granted the relief as agreed between the parties on the discovery of the Interim Payment Applications, which is precisely the order sought in the plaintiff’s summons.   By asking this court to determine the plaintiff’s summons again, the plaintiff is effectively asking this court to “re-order” the order made by Master SP Yip. It is clear the plaintiff’s application is misconceived.

12.Hence I am in agreement with the defendant in that I am only required to deal with the discovery application of the REC Contract.

Whether the REC Contract is liable for disclosure.

13.The defendant does not dispute the REC Contract is relevant to the action and that it is discoverable.

14.In the second affirmation of Lai Koon Lun dated 28 November 2013 and the witness statement of Lai Koon Lun dated 15 August 2013, the defendant explained the REC Contract was no longer in its possession but was handed to their sub-contractor Full Harvest International Limited (“Full Harvest”).  A letter exhibited in the said affirmation shows that the defendant asked Full Harvest for a copy of the REC Contract.  However there was no response from Full Harvest.

15.Since the defendant had already, on its own initiative, disclosed the whereabouts of the REC Contract and provided the name of the company last in possession of the document, the plaintiff’s application for disclosure of the REC Contract falls away.

16.Therefore the only application that remains is whether an order for inspection should be made against the defendant for the REC Contract.

Whether an order for inspection should be made.

17.Pursuant to Order 24 rule 11 Rules of District Court, before this court will make an order for inspection of the REC Contract, the plaintiff must show the REC Contract is in the “possession, custody, or power” of the defendant.

18.Having read the plaintiff’s written submissions, supporting affirmation and the affirmation in reply, it is noted that the plaintiff only sought to argue that the defendant has “power” over the REC Contract.  It is not argued by the plaintiff that the defendant is currently in possession or custody of the said contract.

19.Hence the issue between the parties is whether the defendant has “power” over the REC Contract.  

Whether the defendant has “power” over the REC Contract.

20.I have read the authorities submitted by the parties.  In particular I have considered the meaning of “power” as explained in the case of Lonrho Ltd v Shell Petroleum Company [1980] 1 WLR 627 where Lord Justice Diplock stated:-

“ ……. in the context of the phrase “possession, custody or power” the expression “power” must, in my view, mean a presently enforceable legal right to obtain from whoever actually holds the document inspection of it without the need to obtain the consent of anyone else.”

21.It is trite law that the plaintiff must demonstrate a prima facie case that the defendant has a presently enforceable legal right to obtain the REC Contract from Full Harvest without its consent.

22.The defendant explained that it no longer has power over the REC contract after it was handed to Ms Ma of Full Harvest, “as it was Full Harvest who would undertake the sub-contract works and administer the sub-contract pursuant to the sub-contract arrangement between the defendant and Full harvest.”  It was further explained that the defendant “has no right to demand a return of the Sub-Contract by Full Harvest given that the defendant was contractually obliged to provide the Sub-Contract to Full Harvest, its sub-contractor, to enable it to carry out and administer the defendant’s sub-contract works with REC.”  See paragraphs 6 and 8 of the second affirmation of Lai Koon Lun.

23.Despite the defendant’s explanation, there is no evidence adduced by the plaintiff to rebut the defendant’s claim.  Although the plaintiff submitted that Full Harvest should be regarded as an agent of the defendant and the defendant continues to remain the “owner” of the said contract, there is no evidential basis for this assertion.  The only evidence produced by the plaintiff are “payment applications from the Defendant to REC and assessments by REC.” (See Exhibit SYC-2 of the second affidavit of So Yee Ching.) However these documents do not rebut the defendant’s allegation regarding its contractual arrangement and obligation to Full Harvest to provide the REC Contract.

24.Save and except what is asserted by the defendant in its affirmations and its witness statement, the contractual arrangements and obligations relating to the REC Contract between the defendant and Full Harvest are unknown. In the absence of evidence to the contrary, the plaintiff is unable to demonstrate a prima facie case that the defendant has a presently enforceable legal right over the REC Contract.

25.I therefore dismiss the plaintiff’s application for production for inspection of item 2 in the Schedule attached to its summons dated 5 November 2013, namely, the REC Contract.

Costs

26.I have considered the submissions on costs made by both parties.

27.I noted that the defendant had all along disclosed the whereabouts of the REC Contract. As previously stated herein, the defendant had all along maintained the same explanation in the witness statement of Lai Koon Lun and the second affirmation of Lai Koon Lun that the REC Contract was handed over to Full Harvest.

28.Moreover, in the second affirmation of Lai Koon Lun, the defendant clearly explained they no longer had any legal right to demand Full Harvest to return the REC Contract. In fact, the defendant went so far as to write to Full Harvest to ask them for a copy of the REC Contract, but to no avail.

29.Having considered all the matters, I could see no reason why the costs order should not be made against the plaintiff. Hence I make an order nisi that the costs of this application, including the costs reserved by Master SP Yip on 18 November 2013, be to the defendant, to be taxed if not agreed. Unless the parties make their objections to the costs order within the said 14 day period, the costs order nisi will become absolute after 14 days from the date of this decision.