Zebra Industries (Orogenesis Nova) Ltd v. Wah Tong Paper Products Group Ltd

HCMP 436/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO436 OF 2013

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Before: Hon G Lam J in Chambers

Date of Hearing: 3 and 4 September 2014

Date of Decision: 27 October 2014

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D E C I S I O N

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1.There are before me four interlocutory applications taken out by the plaintiff, Zebra Industries (Orogenesis Nova) Ltd (“Zion”), in these proceedings, namely: (1) an application for leave to re-amend its statement of claim; (2) an application for leave to file and serve supplemental witness’ statements; (3) an application for leave to file an “Additional List of Documents”; and (4) an application for specific discovery.

2.In order to put these applications, in particular the application for amendment, in their proper context, it is necessary to examine the long and tortuous history of the dispute between the parties to these proceedings.

HISTORY OF DISPUTES AND PROCEEDINGS

The agreement

3.Zion is a company run by its director, Mr Elijah Saatori.  In 2003, Mr Saatori, having designed and developed two board games (called Galaxion and Psilink respectively), procured Zion to enter into an agreement with the defendant Wah Tong Paper Products Group Ltd (“Wah Tong”), a company that specialised in paper packaging products, for the development, manufacture and promotion of those board games.  The written agreement dated 31 March 2003 expressly provided that Wah Tong had to manufacture 2,000 pieces of each board game. 

4.The agreement also contained an arbitration clause in clause (5) as follows:

“This Agreement will be construed under the Laws Governing Hong Kong SAR. In the unlikely event of any breach or conflict, the Parties hereby agree to use every resource available to reconcile any disputes or breaches, in the spirit of friendship and integrity.

In the unlikely event of inability to resolve or reconcile any issues that may arise from the smooth implementation of this Agreement, the Parties hereby agree to employ the use of a professional, third party Christian Arbiter to resolve the issue, with such decision being final. If the decision of the Christian Arbiter is ignored, after 30 days, the aggrieved Party may then employ any legal method at their disposal to enforce full compliance, with all costs of enforcement being for the final account of the unsuccessful Party.  Any arbitration costs will also be the final responsibility of the unsuccessful Party.”

5.A dispute arose between the parties in 2004 in which Zion alleged Wah Tong had, in breach of agreement, failed to produce in time samples of the board games for them to be properly presented at the New York Toy Fair in February 2004.  On 20 April 2004, Wah Tong decided to withdraw from the agreement. 

6.A gentleman called Mr Edwin Leung was asked to assist the parties to resolve their dispute.  Subsequently there was an issue between the parties as to whether the process undertaken by Mr Leung was the arbitration contemplated by clause (5).

The action of HCA 1551/2004

7.In July 2004, Zion commenced an action in the High Court (numbered HCA 1551/2004) against Wah Tong for damages for breach of contract.

8.Relying on the arbitration clause in the contract, Wah Tong took out a summons in HCA 1551/2004 on 9 July 2004 for a stay of proceedings for arbitration pursuant to the Arbitration Ordinance.  That summons first came before Chu J (as she then was).  The judge adjourned the summons to a date to be fixed for hearing, and ordered costs against Zion in any event.

9.At the hearing of the summons on 17 December 2004, Burrell J considered that there had not yet been any arbitration as required and made an order staying all further proceedings in HCA 1551/2004 for arbitration.  In addition, he directed Wah Tong to “approach the HKIAC [i.e. Hong Kong International Arbitration Centre] and request the appointment of an independent, qualified arbitrator who is of the Christian faith within 14 days”.  He awarded costs to Wah Tong.

10.Apparently because of the lack of funds for engaging legal representatives, Zion did not seek to appeal against Burrell J’s order until almost 4 years later.

11.Belatedly, in 2008, Zion took out an application in HCMP 2044/2008 for leave to appeal out of time against Burrell J’s order of stay.  That application was refused by Rogers VP on 3 November 2008 with costs on the ground of the 4-year delay.  In giving his decision Rogers VP said:

“2. Had it not been for the delay I might have given leave to appeal in this matter because I am not sure that the so-called agreement to arbitrate really was enforceable. In any event, it seems to me clearly arguable that the Defendant in this matter has no intention of arbitrating.

3. But in my view, the four year delay is simply too long, and I say that in the light of the fact that I do not think anything really is going to come out of this case at the end of the day, looking at the documents that I have seen.  All that is going to happen is that an enormous amount of costs will be spent.  If I were to give leave today, the first thing that would happen is that there would be applications for security for costs on appeal, security for costs on the action, and so on and so forth.  As far as I am concerned, it is really doing the Plaintiff a kindness to refuse this application.”

12.Zion renewed its application before a two-man bench.  On 8 January 2009, Tang VP and Sakhrani J dismissed Zion’s renewed application with costs.  They agreed with Rogers VP’s decision though they did not agree that the arbitration clause was unenforceable.  As to Zion’s reliance on the attempt by Mr Edwin Leung to resolve the parties’ dispute, the court said:

“11. Mr Bell submitted that by letter dated 28 May 2004, Messrs W. K. To & Co, solicitors for the defendant, had repudiated the agreement to arbitrate even if there had been an agreement to arbitrate when Messrs W. K. To & Co wrote in a letter marked without prejudice that:

“Our client will not agree to another arbitration.  There is already the arbitration decision of Mr Edwin Leung.”

12. This argument had not been raised before Burrell J.  In any event, we do not believe that leave should be granted at such a late stage to enable the plaintiff to raise a new argument which at best is barely arguable.”

The Court of Appeal also rejected the application on the ground that they did not consider the intended appeal to have any reasonable prospect of success. 

The first award

13.As a result, the dispute eventually went to arbitration.  The substantive arbitration hearing took place before a single arbitrator (Mr Timothy Hill, a solicitor) on 15 April 2010.  After the hearing, Zion put in a statutory declaration dated 12 August 2010 containing additional evidence and further submissions and amending Zion’s claim from $58,000 to $268,000 with particulars.  On 1 September 2010, the arbitrator gave permission for Zion to rely on that statutory declaration.  Wah Tong did not lodge any reply to the statutory declaration. 

14.On 24 September 2010, the arbitrator issued his final award on all issues save as to costs.  He awarded Zion damages in the sum of $58,000 for Wah Tong’s breach of contract in failing to manufacture the first 2,000 pieces of the board games, but rejected Zion’s claim that Wah Tong was contractually bound to manufacture anything beyond the first 2,000 pieces. 

The appeal against the first award

15.Zion then applied to the High Court for leave to appeal against the arbitral award, though it was 5 days late.  Its application was dismissed at first instance by Saunders J on 11 March 2011, but succeeded on appeal to the Court of Appeal (in CACV 52/2011) which, by an order dated 11 October 2011, allowed the appeal and granted leave to Zion to appeal against the arbitral award out of time.  The Court of Appeal also directed Zion to bring its appeal against the arbitral award by an originating summons in fresh proceedings instead of in the original action of HCA 1551/2004. 

16.Accordingly, on 14 October 2011, Zion issued an originating summons in HCCT 46/2011 to appeal against the arbitral award.

17.The originating summons was heard by Au J who, on 20 June 2012, allowed the appeal and ordered the award to be remitted to the arbitrator for reconsideration in accordance with the court’s opinion on the questions of law identified in the judgment.

18.In essence, Au J allowed the appeal on the grounds that:

(1) The arbitrator erred in law in failing to take into account the statutory declaration of Zion submitted after the arbitral hearing on which he had given leave for Zion to rely.

(2) The arbitrator erred in law in failing to deal with certain clauses of the agreement which might suggest that the agreement between Zion and Wah Tong was intended to be a joint investment agreement providing for a long-term business relationship.

(3) The arbitrator had erred in law by failing to take into account Zion’s claim that Wah Tong’s breach had caused the failure to secure venture capital fund investment and the listing of the business. 

(4) The arbitrator had erred in law in failing to deal with Zion’s claim that Wah Tong had misrepresented that it had the necessary competence and ability to carry out the manufacturing obligations under the agreement.

19.However, in the same decision, Au J refused to grant a number of reliefs sought by Zion, such as a declaration that Wah Tong had breached Burrell J’s order for stay by not proceeding immediately to arbitration after the stay was granted and an order for the costs of the arbitration to be given to Zion.  His Lordship’s reasons included the following:

“66. In the originating summons, Zebra also asks for other various reliefs which effectively ask this court to revisit the outstanding issue of costs and Burrell J’s Stay Order made under HCA 1551. It has also asked the court to set aside and lift the Burrell J’s Stay Order.

67. On 9 January 2012, Zebra further sought to make a “Secondary Appeal Application” to ask for “a Final Court Order … to state that [Wah Tong] now owes [Zebra’s costs in the amount of] HK$764,340.00.

68. In my view these applications are unrelated to the appeal against the Award and are outside the scope of the present appeal under the AO. Further, some of these application also relate to matters which have already been judicially decided and Zebra is effectively seeking to re-open the issues again. The Court would not and cannot deal with these applications.

20.Dissatisfied with that aspect of the court’s decision, Zion applied out of time for leave to appeal against Au J’s refusal to grant those additional reliefs.

21.On 25 July 2012, Au J dismissed that application on the grounds that it was out of time and that the intended appeal did not have any prospect of success. 

22.Zion renewed its application for leave to appeal to the Court of Appeal (HCMP 1604/2012).  On 5 October 2012, the Court of Appeal (Kwan and Fok JJA) dismissed Zion’s application. 

The revised award and the settlement

23.Meanwhile, on 7 September 2012, pursuant to Au J’s order remitting the award to him, the arbitrator published an amended award.  He rejected Zion’s misrepresentation claim and maintained his decision that Wah Tong had no obligation to manufacture any further games beyond 2,000 pieces.  He awarded Zion the sum of $268,000 as damages (representing the entire sale proceeds of the 2,000 pieces of each of the board games) together with interest at 1% above prime with monthly vests from 21 April 2004 to the date of payment. 

24.On 2 November 2012, Zion, being dissatisfied still with the revised award, filed an “application to appeal sections of [the amended award]” in HCCT 46/2011. 

25.On 12 November 2012, however, there began a series of correspondence by e-mail between the parties in which various offers and counter-offers were made, culminating in a written settlement agreement signed by the parties and dated 29 November 2012.  The settlement agreement recited that the parties had agreed to come to an overall and global full and final settlement in respect of all the disputes arising out of their agreement dated 31 March 2003 and the various sets of legal proceedings arising out of their dispute as particularised in the recitals.  In essence, the settlement was that, in full and final settlement of their claims and disputes, Wah Tong agreed to pay Zion a sum of $400,000 and Zion agreed to withdraw or discontinue its application dated 2 November 2012 to appeal against certain sections of the revised award.

26.Pursuant to that agreement, both parties signed a consent summons which was filed with the court.  In light of the fact that Zion was not legally represented, the consent summons was heard by Au J on 11 December 2012.  Mr Saatori, who appeared on behalf of Zion, confirmed that Zion did sign the consent summons and agree to its contents, saying, “I’ve got no choice.  I can’t get paid if I don’t.” 

27.Accordingly, on 11 December 2012, Au J made an order by consent in HCCT 46/2011, inter alia, granting leave to Zion to discontinue its application to appeal sections of the amended award. The order was duly sealed.

28.At that time, Zion still owed the arbitrator part of his fees in the sum of $22,059 and there was correspondence on this subject between the parties and the arbitrator during the few days from 10 to 13 December 2012.  Eventually, on 14 December 2012, Wah Tong sent its solicitors’ cheque to Zion for the sum of $377,941 (being $400,000 less $22,059) and on 18 December 2012, sent another solicitors’ cheque to the arbitrator for $22,059.

Zion’s challenge to the settlement

29.Soon afterwards, by a summons taken out in HCCT 46/2011, Zion sought to set aside the consent order made by Au J on 11 December 2012, stating that it had been forced into giving consent by economic duress and that there had been a breach of the settlement agreement. 

30.On 6 February 2013, Au J dismissed that summons for procedural reasons, namely, that so far as HCCT 46/2011 was concerned, the court was functus officio and that an application to set aside the consent order ought to have been made by Zion in a fresh action taken out for that purpose.

31.Zion’s application dated 14 February 2013 for leave to appeal against Au J’s order of 6 February 2013 was dismissed by Au J’s on 7 March 2013. 

The course of the present action

32.As a result, Zion commenced the present action herein (ie HCMP 436/2013) by originating summons on 5 March 2013, seeking an order to set aside the consent order in HCCT 46/2011 dated 11 December 2012. 

33.The originating summons sought the following orders:

(1) $100,000 as damages for breaching and repudiating the settlement agreement and for putting Zion under economic duress;

(2) the balance still due on the revised award in the sum of $97,059;

(3) that the settlement agreement be set aside and rendered null and void and inoperable on the ground that it was obtained by economic duress;

(4) the consent order be set aside and the discontinued application in HCCT 46/2011 be restored; and

(5) a determination that Wah Tong owed Zion the proceeds of the revised award being $475,410.56 inclusive of costs, disbursements, but not including Zion’s time costs for the revised award arbitration hearing.

34.On 6 June 2013, Au J ordered, inter alia, that the originating summons herein do continue as if the matter had been begun by a writ of summons. 

35.On 13 June 2013, Zion filed its statement of claim as directed by Au J in which the claims in the originating summons were repeated.  On 20 June 2013, Wah Tong filed its defence.  On 26 June 2013, Zion filed its reply with the title “Plaintiff Reply to False Defence of the Defendant”.

36.On 17 July 2013, Zion filed statements of the following persons as witnesses: (i) Elijah Saatori; (ii) Roberta Coronetta; (iii) Karl Jurgen Thorwirth; and (iv) Martin Darryl Evans.

37.On 9 October 2013, Wah Tong took out a number of summonses for the following applications:

(1) An application for an order that Zion provide further and better particulars of its statement of claim pursuant to Wah Tong’s request dated 9 October 2013.

(2) An application for specific discovery of Zion’s balance sheet, profit and loss account and bank statements or passbook records relating to two specified bank accounts, all for the whole financial year covering the period from 12 November 2012 to 11 December 2012.

(3) An order that three passages in Zion’s statement of claim be struck out on the ground that they contain law and submissions rather than allegation of facts, and that two passages in the statement of claim be struck out on the ground that they contain irrelevant matters tending to prejudice or delay the fair trial of the action or are scandalous, frivolous, vexatious or an abuse of the process of the court.

(4) An application for an order that a number of passages in Zion’s reply be struck out on various grounds. 

38.The summons for further and better particulars and the summons for specific discovery were later withdrawn by Wah Tong by consent with no order as to costs.

39.On 11 December 2013, Zion issued an interlocutory summons in these proceedings for an order for committal of Wah Tong for contempt.  The bases of that application relate to:

(1) the allegation that Wah Tong and its solicitor, Mr But, perjured themselves in documents filed in HCA 1551/2004 between 1 July 2004 and 17 December 2004 by falsely claiming that Mr Edwin Leung was not hired by the parties to be the arbitrator of the dispute between them;

(2) the allegation that Wah Tong was in contempt of court between 1 January 2005 and 31 August 2009 by failing to arrange for the appointment of a Christian arbitrator as ordered by Burrell J on 17 December 2004 in HCA 1551/2004;

(3) the allegation that Wah Tong through its solicitor, Mr But, and counsel, Mr Chan, perjured itself on 15 April 2010 by stating that Wah Tong did not issue a document being Appendix C to the investment agreement, and that Wah Tong deliberately withheld the truth concerning the said Appendix C;

(4) the allegation that on 24 August 2012, Wah Tong through its solicitor, Mr But, and its counsel, Mr Chan, perjured itself by denying that it entered into a contract to manufacture all orders ever received for the life time of the two board games and by denying that it intended to print all printed materials relating to all other products described in the investment agreement; and

(5) the allegation that in around February or March 2013, in HCMP 436/2013, Wah Tong perjured itself through its solicitor, Mr But, by saying that Wah Tong had no knowledge of the financial state of Zion. 

40.On 18 December 2013, Wah Tong took out a further summons for an order that certain specified parts of the witness’ statements and affirmations filed by Zion be struck out on various grounds.

41.The outstanding interlocutory summonses all came before Au J for hearing on 9 January 2014.  The learned Judge decided to strike out a few passages from Zion’s statement of claim.  He also struck out parts of the reply as sought by Wah Tong’s summonses.

42.Wah Tong’s application to strike out parts of Zion’s witness statements and affirmations was “adjourned at the suggestion of the court to enable the parties to see if they could dispose of it by consent or agreement”.[1]

43.As regards Zion’s summons to commit Wah Tong for contempt, the learned Judge explained to Zion that it was wrong to make such application by interlocutory summons in these proceedings and that if the application was to be pursued, it should be done by way of fresh proceedings in accordance with RHC Order 52.  The Judge gave leave for Zion to withdraw that summons.  As I understand the position, Zion had since brought separate proceedings, with which Mimmie Chan J is now seised, seeking leave to commit Wah Tong for contempt.

44.Meanwhile, on 28 February 2014, Zion filed an application to set the case down for trial and to combine the amendments Zion wished to make to its statement of claim.  I shall refer below to the content of that application.

45.Since the parties were unable by agreement to dispose completely of Wah Tong’s application to strike out parts of Zion’s witness’ statement and affirmations, it was restored for hearing before the court again on 11 April 2014.  On that occasion Au J also dealt with a number of other interlocutory applications.  In the result, he ordered, inter alia, that Zion do have leave to re-file and serve its amended statement of claim by 14 April 2014 as per the draft amended statement of claim filed on 28 February 2014.  He struck out a number of passages from the witness’ statements and affirmations filed by Zion for the purposes of the trial of these proceedings.  In particular, he struck out an affirmation called “Reply Affirmation of Elijah Saatori to the Perjurious Affirmation of the Defendant” filed in these proceedings on 7 May 2013 save and except Exhibit 3 thereto.  I shall refer to this document as the “Reply Affirmation”.

46.Against the order striking out the Reply Affirmation except Exhibit 3, Zion lodged an application for leave to appeal.  In his decision dated 9 June 2014, Au J dismissed Zion’s application for leave to appeal.  Recently, on 19 August 2014, the Court of appeal (Cheung and McWalters JJA) also refused Zion’s renewed application for leave to appeal (HCMP 1503/2014). 

47.In the action itself, Zion issued an application and notice on 22 May 2014 to set the case down for trial.  On 29 May 2014, Au J gave leave to Zion to set the case down for trial.

The present summonses

48.Meanwhile, on 24 April 2014, Zion had taken out a summons in these proceedings for specific discovery against Wah Tong and another summons on 22 May 2014 for leave to re-amend its statement of claim and to file and serve an additional affirmation.

49.Those two summonses first came before me on 11 June 2014 and had to be adjourned because Zion had failed to put forward, whether at the same time of the summonses or at any time before the hearing, either a draft re-amended statement of claim or any additional affirmation which it sought leave to adduce: see Kayden Ltd v Securities and Futures Commission (2010) 13 HKCFAR 696 at §70; Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705 at §3.  Nor had Zion at that time filed any affidavit in support of its summons for discovery.

50.On 2 July 2014, Zion filed an amended summons seeking leave to file and serve supplemental witness’ statements and an additional list of documents, and leave to re-amend its statement of claim. The re-amendments for which leave is sought are shown in the draft re-amended statement of claim dated 8 July 2014.

51.I shall deal with Zion’s outstanding applications separately below in this order:

(1) the application for leave to re-amend its statement of claim;

(2) the application for leave to file and serve supplemental witness statements;

(3) the application for leave to file and serve an additional list of documents; and

(4) the application for specific discovery.

APPLICATION FOR LEAVE TO RE-AMEND STATEMENT OF CLAIM

Zion’s pleaded case and the amendments sought

52.On the basis of the existing amended statement of claim, Zion’s case is that the consent order dated 11 December 2012 should be set aside because it was obtained by economic duress exerted upon Zion during November and December 2012.  It is alleged that Wah Tong had repudiated and breached the settlement agreement by paying only part of the amount it had promised to pay, as a result of which “the entire foundation for the phony so called consent summons and the subsequent Court Order have been destroyed”. Zion seeks an order to set aside the consent order and the settlement agreement.  It also claims damages of $744,000 and additional damages of $46,500 per month from 11 April 2014 onwards (said to be Zion’s monthly operating cost), as well as a sum of $97,059 said to be the unpaid balance under the revised arbitration award.

53.The re-amendments that Zion seeks to make to its statement of claim are numerous and in some instances repetitive.  The principal amendments appear in three parts of the document intituled “Draught Re-Amended Statement of Claim” dated 8 July 2014.  The amendments at pages 2 to 11 of that document seek to introduce certain “additional heads of damages”; the amendments in pages 18 to 26 and 29 make a claim for damages for “duress of goods”; and the amendments in pages 34 to 43 set out the “conclusions” of the new draft pleading.

54.The facts and claims sought to be added may be broadly described as follows.

Claims for damages (pages 2 to 11)

(1) Zion alleges that the costs order made by Burrell J on 17 December 2004, when he ordered a stay of HCA 1551/2004 for arbitration, was obtained by fraud.  Zion claims that the costs order should be set aside, and seeks damages in the sum of $48,892.40, being an amount that “balances” Wah Tong’s taxed costs that it seeks to recover from Zion based on the costs order.  See paragraph (a) on pages 2 to 5 of the Draught Re-Amended Statement of Claim.  The basis of this claim is that:

(a) Zion and Wah Tong had entered into an agreement to arbitrate on 5 May 2004 and agreed to hire one Mr Edwin Leung as arbitrator.

(b) Wah Tong breached the agreement by refusing to meet to arbitrate.

(c) Wah Tong instructed Edwin Leung to write to Zion specifying that Zion owed at least $311,168 to Wah Tong.

(d) W K To & Co, solicitors for Wah Tong, wrote to Zion on 28 May 2004 stating: “Our client will not agree to another arbitration.  There is already the arbitration decision of Mr Edwin Leung.”

(e) In the affirmation of its solicitor (Mr But Sun Wai) and in two affirmations of its director (Mr Chan Kin Sang) and in the oral statements to the court on 17 December 2004, Wah Tong lied to Burrell J in saying that Edwin Leung was not the appointed arbitrator.

See “Special Note 5” on pages 9 to 11 of the Draught Re-Amended Statement of Claim.

(2) Zion alleges that the costs orders made respectively by Rogers VP on 3 November 2008 and by Tang VP and Sakhrani J on 8 January 2009 in HCMP 2044/2008, when they refused leave for Zion to appeal out of time against Burrell J’s order of stay in HCA 1551/2004, was also obtained by fraud.  Zion claims that the costs orders should be set aside, and seeks damages in the sum of $85,250, being an amount that “balances” Wah Tong’s taxed costs that it seeks to recover from Zion based on the two costs orders.  Zion also contends that these costs were caused by Wah Tong’s failure to comply with Burrell J’s order that it approach the HKIAC to appoint an arbitrator.  Zion claims “lost costs” of $50,000 relating to these unsuccessful applications for leave to appeal, together with compound interest from November 2008.  See paragraph (d) on pages 6 to 7 of the Draught Re-Amended Statement of Claim.

(3) Zion also claims “Plaintiff In Person’s Lost Costs” for the above hearings in 2004 and 2008 (and presumably 2009 as well), estimated to be in the sum of $90,000 at the minimum.  See “Special Note 2” on page 8 of the Draught Re-Amended Statement of Claim.

(4) Zion further claims that Wah Tong used the costs orders obtained to inflict economic duress on Zion, causing 76 months of lost time, ie from April 2004 (when HCA 1551/2004 was commenced) to September 2010 (when the arbitrator made his first award).  Based on a sum of $30,000 per month, Zion claims a total of $2,280,000 (together with compound interest at 3% per month above prime bank lending rates) to cover overheads expended during that time and “additional compensation for all the sufferings this count of economic duress wrought against Zion and directors and their families for the said 76 month period”.  See paragraphs (b) and (c) on pages 5 to 6 of the Draught Re-Amended Statement of Claim.

Duress of goods (pages 18 to 26 and 29)

(5) Zion alleges that on 21 March 2012, Wah Tong served on Zion two allocaturs in relation to the costs orders made by Burrell J in 2004 and by Rogers VP and by Tang VP and Sakhrani J in 2008 and 2009 respectively.  Zion contends that these allocaturs were obtained by fraud and non-compliance with Burrell J’s order directing Wah Tong to approach HKIAC to appoint an arbitrator.  On 3 August 2012, based on those allocaturs, Wah Tong served a statutory demand on Zion.  Zion alleges that this was an illegitimate attempt to bankrupt it. 

(6) Zion alleges that Wah Tong and its solicitors were guilty of further perjury at the resumed arbitration hearing which took place on 24 August 2012, after Au J allowed Zion’s appeal and remitted the case to the arbitrator and that Wah Tong also refused to pay the revised arbitral award unless Zion dropped its application to appeal against sections of the revised award.

(7) The service of the allocaturs and statutory demand was “a deliberate act by the defendant to wilfully inflict actual and illegitimate Duress against the Plaintiff’s Goods”, namely, the two board games, and that unless Zion is allowed to show that the demand for payment based on the allocaturs is the result of perjury, contempt of court and conspiracy to pervert the course of justice, the two board games will eventually become the property of Wah Tong.

(8) Zion claims damages for this act of duress of goods.  It is alleged that the minimum volume of lost sales caused by the economic duress and duress of goods inflicted by Wah Tong for 134 months (20 April 2004 to June 2015, being the predicted date of final judgment after the trial of these proceedings) is 8,375,000 units of both board games each. In arriving at this estimate, Zion has relied on a model based on a comparison with another board game called Cranium, which is said to have sold 6.5 million units in its first six years up to 2004.  Zion says that its gross profit for each set of two board games sold would be $29, and that a profit increase of 20% for every four years would be normal.  On this basis, it calculates the damages claimed as follows:

First four years: 3 million units × $29 each

Second four years: 3 million units × $34.8 each

Remaining period: 2.125 million units × $41.46 each

Total:   $279,502,500

Conclusions (pages 34 to 43)

(9) In the conclusions section, Zion repeats its allegations.  It also claims, in addition to the damages mentioned above, an order to set aside the appointment of Edwin Leung as arbitrator and to set aside all costs orders Wah Tong obtained as a result, presumably meaning the costs orders made by Burrell J in December 2004, by Rogers VP in November 2008 and by Tang VP and Sakhrani J in January 2009.  Zion also seeks the “confirmed opinion” of the trial judge that Wah Tong has “engaged in a complex campaign to pervert the course of justice” since 20 April 2004 using perjury and contempt, with the sole intention of preventing Zion from proving its claims.

55.It is plain that the re-amendments Zion seeks to make raise an additional and fundamentally distinct case.  The gist of that new case, hitherto not an issue in this action, is that Wah Tong had been pursuing a campaign of inflicting economic duress on Zion from April 2004 onwards using fraudulent means (ie perjury in front of Burrell J in December 2004 and before Rogers VP in November 2008 and Tang VP and Sakhrani J in January 2009) and breach of Burrell J’s order to approach HKIAC, and that Wah Tong continued to perjure itself in relation to the meaning of the contract during the resumed arbitration hearing.

THE PRINCIPLES

56.RHC Order 20 rule 5(1) provides:

“Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleadings, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct.”

57.Mr Chan submitted that RHC Order 20 rule 8(1A) is also relevant and requires that leave to amend should not be given unless the court is satisfied by the applicant that the order is necessary either for disposing fairly of the cause or matter or for saving costs.  However, I doubt that this sub-rule applies to an application by a party for leave to amend his pleadings under rule 5.  Rule 8 was originally about the amendment of documents other than pleading.  As part of the Civil Justice Reform in 2009, rule 8(1) was amended so as to apply to pleadings as well as other documents in the proceedings.  At the same time rule 8(1A) was added.  But it seems to me that so far as pleadings are concerned, the amendment of rule 8 was intended to empower the court of its own motion to order amendment, which it could not do under rule 5.  This seems also to have been the intention of the Chief Justice’s Working Party as appears from their Final Report on Civil Justice Reform: see §§265-267 and 273.  On this basis the better view seems to me to be that rule 8(1A) applies only in relation to the exercise of the power of the court to order amendments of its own motion.  (It is unnecessary to consider whether rule 8 also applies to amendments applied for by parties other than the party whose pleading is in question; such situations are rare.)  In this connection it seems to me that the Court of Appeal in Li Xiao Yun v China Gas Holdings Ltd, CACV 38/2013, 11 March 2013, merely assumed that rule 8(1A) applied to an application by a party for leave to amend his own pleading without expressing any view on that question: see §26.

58.The court’s power to “allow … any party to amend his pleadings” seems to me to remain governed by rule 5 and the principles established by the authorities decided under that rule.  One of the most oft-cited among these authorities is Ketteman v Hansel Properties Ltd [1987] AC 189 where Lord Brandon said at 212F-H:

“With regard to the principles on which his discretion to allow or refuse the applications to amend should be exercised, the judge referred to the notes to R.S.C., Ord. 20, r. 5, in The Supreme Court Practice 1982 and to the authorities there cited. The effect of these authorities can, I think, be summarised in the following four propositions. First, all such amendments should be made as are necessary to enable the real questions in controversy between the parties to be decided. Secondly, amendments should not be refused solely because they have been made necessary by the honest fault or mistake of the party applying for leave to make them: it is not the function of the court to punish parties for mistakes which they have made in the conduct of their cases by deciding otherwise than in accordance with their rights. Thirdly, however blameworthy (short of bad faith) may have been a party's failure to plead the subject matter of a proposed amendment earlier, and however late the application for leave to make such amendment may have been, the application should, in general, be allowed, provided that allowing it will not prejudice the other party. Fourthly, there is no injustice to the other party if he can be compensated by appropriate orders as to costs.”

59.This summary has not been doubted despite Lord Brandon’s was a dissenting speech.  However, it is as well to note that Lord Griffiths, with whom Lord Templeman (at 217D) and Lord Goff (at 223D) agreed, referred as relevant considerations to a number of factors which have perhaps become more prominent after the Civil Justice Reform:

“Whether an amendment should be granted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lies. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. …

Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. …” (at 220D-G)

60.The Hong Kong courts have generally continued to apply the principles summarised by Lord Brandon after the Civil Justice Reform subject however to the underlying objectives set out in Order 1A and the importance of not disturbing a milestone date: Li Shiu To v Li Shiu Tsang, unreported, HCA 416/2003, 14 August 2012 at §§16‑17; Topwell Corporation Ltd v Kwan Kam Kee, CACV 88/2013, 21 May 2013, §39.[2]  But the Court of Appeal has also emphasised in Topwell that

“… it cannot be assumed that once the principles in Ketteman are satisfied, the amendment would be allowed. The court would need to balance all relevant factors to decide how its discretion should be exercised, if the application is made in circumstances offending one or more of the underlying objectives”.

61.In addition, in giving effect to the underlying objectives, the court must “recognise that the primary aim in exercising the powers of the Court is to secure the just resolution of disputes in accordance with the substantive rights of the parties”; see Order 1A rule 2(2);厦門新景地集團有限公司v Eton Properties, HCMP 13 of 2012, 14 Feb 2012.

DISCUSSION

62.In the present case, exercising my discretion in accordance with the established principles, and taking into account the factors I explain below, I have concluded that the principal amendments mentioned above should not be allowed. 

63.First, the proposed amendments in question seek to raise entirely new claims.  The action up to the present is an action brought to set aside the consent order dated 11 December 2012 in HCCT 46/2011, on the ground that Zion was coerced by economic duress exerted by Wah Tong in November and December 2012 into giving its consent.  Zion now seeks to introduce claims concerning the validity of orders of the court made in different proceedings in 2004, 2008 and 2009 and claims for damages arising from different acts.  The proposed new claims seem to me to be quite different in nature, and based on different and separate facts, from the existing one.

64.Even before the Civil Justice Reform in Hong Kong and the Civil Procedure Reform in the UK, a distinction is drawn between amendments that amplify or clarify an existing case and those that raise a wholly new case: see per Lord Griffiths in Ketteman, supra, at 220C-D.

65.Secondly, while the amendment is not proposed during or at the end of the trial, as it was in Ketteman, the application for leave to amend was made at a late stage in these proceedings.  Witness statements have been filed in July 2013.  The case has been set down for trial on Zion’s own application and the trial has been fixed to commence on 2 March 2015 for 5 days. 

66.Thirdly, the attempt now to make the fundamental amendments sought is wholly inconsistent with Zion’s representations to the court in its application dated 28 February 2014 to set the case down for trial, where the following grounds were set out:

“(i) The issues of concern for the defendant, regarding the True Facts stated in the Plaintiff’s Affirmations and Witness Statements to date, in HCMP 436 of 2013, as they iterate in point (6) of their letter of Monday 24^th February AD 2014, need now no longer be a matter of concern for them at the Trial, as detailed herein below.

(ii) This Ground is entirely valid now, solely because of the New Development in this protracted Action, whereby the Issues that really bother them, regarding their various past and present perjuries, and their past contempt of Court item, are now being dealt with by a separate Judge, via the Plaintiff’s Ex Parte Committal Summons’ Application.

(iii) Consequently, the Entire Case File is currently with the new Judge. Therefore, it is not expedient for the Court to go through the unnecessary rigmarole of passing the File back and forth between the two Judges; ESPECIALLY as the defendant is seeking to expunge large tracts from the Plaintiff’s Affirmations and Witness Statements, that are ESSENTIAL to be understood by the Judge currently deliberating the Ex Parte Committal Summons’ Application.

(iv) FURTHERMORE, since the Court has already Directed that the Plaintiff can only refer to these perjuries and contempt of Court, by way of evidencing the past conduct of the defendant (their history), to evince the “character” of the defendant, in the sole context of this history – and NOT for the purposes of this Court Ruling on these Matters in HCMP 436 of 2013, the defendant should NOT be allowed to time-wise disrupt these Proceedings any further, nor any longer. As such, these are now Two Entirely Separate Matters.

(v) To allow the defendant to force the Plaintiff to expunge these multiple references to perjuries and contempt of Court, in the Plaintiff Affirmations and Witness Statements, is the exact definition of the words “unnecessary rigmarole” cited earlier, and is impracticable for obvious reasons: AS SUCH > This is wholly uncalled for now, in these New Circumstances.

(vi) This Court is Mandated to only Rule on the economic duress Claim; and the breach & repudiation of the so called “settlement agreement” Claim; and the Claim to Set Aside the so called “consent summons”, to revert to the Second Appeal.

(vii) The other Court is Mandated to only Rule on the perjuries and the contempt of Court Ex Parte Plaintiff Committal Summons’ Application.

(viii) The Plaintiff is fully well aware that she cannot Cite the Items the defendant seeks to expunge, other than as already Directed by Justice Au. As such therefore, the Plaintiff vigorously opposes the requested “expunging” for ALL the above reasons, as will be further expounded on, in detail, verbally at the April 11^th Friday Hearing.”

67.Evident from these grounds is that it was the very basis of Zion’s application for setting down that the only issue in the case was the effect of the alleged economic duress and breach and repudiation of the settlement agreement on the consent order in HCCT 46/2011.

68.Furthermore, at the hearing before Au J on 11 April 2014, the court expressly told Mr Saatori that he had to be realistic about the evidence he wanted to put in, if he wanted the trial of this action to take place as soon as possible (which he said he did).[3]  The learned judge also said that the costs order made by Burrell J in 2004 would not be re-opened in the trial of this action, and Mr Saatori expressly said: “I’m not asking you to reopen it.”[4] It was on this basis that the court struck out certain parts of the statements and affirmations filed by Zion, whilst allowing Zion to maintain the stance at the trial of this action that the costs orders in question had been obtained fraudulently[5], and set the matter down for trial.

69.Zion’s further application and notice dated 22 May 2014 to set the case down for trial confirmed that the agreed estimated length was five days and that there are no unusual features likely to prolong the trial beyond that estimate. 

70.In these circumstances it seems to me that to permit the amendments sought now would be to repudiate the whole basis on which the case had been managed by Au J up to June 2014.  Nothing has in my view occurred to justify such a course.

71.Fourthly, the scope of the action would be fundamentally changed if the amendments were allowed.  Further witnesses’ evidence would have to be filed, and further discovery might be necessary.  In all probabilities there would be further interlocutory skirmishes between these parties who have been locked in acrimonious disputes since 2004.  In any event, the time allotted for the trial would in my assessment not be sufficient for dealing with the action if it was expanded in the way proposed, and the trial would therefore be derailed.

72.Fifthly, Zion’s attempt to raise new claims in relation to the court orders concerned made in 2004, 2008 and 2009 has followed hot on the heels of Au J’s order on 11 April 2014 striking out the Reply Affirmation except Exhibit 3 thereto primarily on the basis of irrelevance, as referred to in paragraph 45 above.  In his subsequent decision dated 9 June 2014 refusing leave to appeal from that decision, Au J explained:

“17. The Reply Affirmation was filed by the plaintiff in reply to Mr But’s affirmation filed by the defendant before the matter was ordered by me on 6 June 2013 that it be continued as if the same had been begun by writ, and that the parties’ respective pleadings be filed and witness statements be exchanged.

18. I struck out the Reply Affirmation essentially on the following bases as submitted by the defendant:

(1) The defendant would not call Mr But nor rely on Mr But’s Affirmation at the trial. Thus, the Reply Affirmation is no longer relevant insofar as those parts are made to rebut or respond to Mr But’s evidence made in his affirmation.

(2) Further, most of the other contents of the Reply Affirmation refer to matters on the long and chequered litigation history between the parties, including what had happened in the arbitration between the parties. They also contain various allegations of fraud practised by the defendant and its legal representatives in obtaining the previous costs order before Burrell J. These matters are not relevant to the trial. This is particularly so as (a) the Court of Appeal and this court have repeatedly concluded previously that it is not open to the plaintiff to revisit the propriety of these costs orders; and (b) the plaintiff has in any event already applied for committal against defendant and its solicitors based on the same allegations of fraud. The committal proceedings are now seized by Mimmie Chan J.” (underlining added)

73.The Court of Appeal (Cheung and McWalters JA) upheld Au J’s decision and stated in their decision (HCMP 1503/2014) dated 19 August 2014 at §8:

“As to the merits of the appeal we fully agreed with Au J. Au J was exercising a case management function. He had to ensure that the issues in the forthcoming trial could be clearly identified and addressed. Apart from Exhibit 3 which addressed the issue of the defendant’s knowledge of the plaintiff’s impecuniosity, it is not conducive to an efficient and speedy adjudication of the action to rummage through the rest of the Reply Affirmation. Many of the topics referred to in the Reply Affirmation had been adjudicated upon.” (emphasis added)

74.Mr Saatori indicated that Zion intended to seek leave to appeal from the Court of Appeal’s decision to the Court of Final Appeal. Unless and until these decisions are reversed, however, they remain authoritative and binding upon the parties and must form the context in which the present application to amend is to be approached and determined.

75.An examination of the Reply Affirmation shows that it contains, among other things, the allegations of perjury in 2004 leading to the order of Burrell J in December 2004.  It was struck out by the court after the hearing on 11 April 2014 at which Au J explained to Mr Saatori, and he accepted, that the trial of this action would not be concerned about the various matters he complained of in the Reply Affirmation.  The effect of the proposed amendments, if allowed, would be to re-introduce many of those matters which the court has struck out as being irrelevant to these proceedings.  In these circumstances it seems to me that for Zion to try to add the claims in question based on the same expunged materials is little short of an abuse of the process of the court.

76.Sixthly, it follows from the decision of Au J on 11 April 2014, affirmed by the Court of Appeal, that the allegations in the Reply Affirmation (except Exhibit 3) have no relation with Zion’s existing pleaded claim.  The same may be said about the amendments sought to be made to the pleading.  They are not a necessary or relevant part of Zion’s case for the setting aside of the consent order on the ground of duress exerted in November and December 2012.  Even if Zion is determined to bring those intended claims, they do not have to be combined with the existing action which is in an advance stage of progress.

77.As a matter of case management, there is in my view much to be said for not allowing the existing action, in which a discrete claim is made to set aside a consent order, to be turned at this late stage into an action of a wholly different scope.  Refusing leave for the amendments will be consistent with the underlying objectives of ensuring that the existing action is dealt with as expeditiously as is reasonably practicable (Order 1A rule 1(b)) and that the defendant is also treated fairly (Order 1A rule 1(d)).

78.Seventhly, it seems to me that the existing claim in the action ought logically to be determined before the proposed new claims are considered.  If Zion prevails in the existing action and the consent order is set aside, its application for leave to appeal against parts of the revised award will fall to be dealt with.  If Zion has overwhelming merits in that appeal, as it contends, it should be left to seek relief in that context.  Conversely, if Zion fails in the existing claim in this action with the result that its settlement agreement with Wah Tong stands, then there will clearly be a live issue as to whether Zion can still bring any of the intended new claims despite the settlement. 

79.Eighthly, there seem to me to be numerous substantive defects in the proposed amendments. 

(1) The allocatur for the sum of $48,892.40 was in fact based not only on Burrell J’s order dated 17 December 2004 but also the order of Chu J dated 15 September 2004 (see §8 above) which was never appealed against by Zion and which is not said to have been obtained by fraud.  Zion has not said anything that could suggest that Wah Tong was not entitled to seek payment of the taxed costs based on Chu J’s order.

(2) As regards the allegation that the costs order made by Burrell J was obtained by fraud, it is well established that a judgment of the court cannot ordinarily be re-opened in later litigation or collaterally attacked.  Although the law exceptionally allows an action to be brought to set aside a judgment for fraud, it must be proved that the court was deceived into giving the impugned judgment by means of a false case known by the defendant to be false or not believed to be true, or recklessly without any knowledge of the subject: The Ampthill Peerage [1977] AC 547 at 591B-C; Re Maydwell, ex parte WFM Motors Pty Ltd [1999] 3 HKLRD 325. 

(3) It is not clear at all from the pleading how the relevant orders are said to have been obtained by fraud.  W K To & Co’s letter of 28 May 2004, which appears to be the main plank of Zion’s allegation of fraud, was actually referred to in Mr Chan Kin Sang’s second affidavit filed by Wah Tong in HCA 1551/2004 on 15 October 2004 for the purpose of the application for stay.[6] There it was said at paragraph 4:

“Thus … the Plaintiff wrote and came back with the same confusion between settlement discussion and arbitration. On the Defendant’s instructions, Messrs. W K To & Co by letter dated 28.05.04 (copy exhibited as Attachment 1 to the Affirmation of Arbitration Testimony (of Elijah Saatori) dated 30^th June 2004) notified the Plaintiff that the Defendant would not agree to another ‘arbitration’ i.e. the kind of settlement discussion which the Plaintiff mistakenly called arbitration as there was already the decision of Mr Edwin Leung for this purpose.”

This seems to me to tend to show that the relevant evidence was put before Burrell J and is contrary to any suggestion that the letter was suppressed by Wah Tong. Zion may take a different view about the nature of the decision of Mr Edwin Leung but that does not mean Burrell J’s decision was obtained by fraud.

(4) Furthermore, the order of Burrell J was the subject of Zion’s application for leave to appeal out of time, heard first by Rogers VP, and then again by Tang VP and Sakhrani J.  As far as I am able to see, there is no conceivable basis to suggest that the costs orders they made were obtained by fraud.  The argument about Mr Edwin Leung was run on appeal.  Tang VP said it was a new argument which was at best barely arguable, and dismissed Zion’s application for leave to appeal out of time.

(5) As regards Zion’s claim for $2,280,000 made on the ground that Wah Tong had failed to approach the HKIAC for the appointment of an arbitrator, the arbitrator had specifically dealt with the point in his decision on whether the arbitration agreement had been repudiated, recorded in a letter dated 16 December 2009, where he stated:

“As a matter of fact, I find that on the materials presented to me, [Wah Tong] made no sufficient steps after 17 December 2004 to proceed with the appointment of an arbitrator …

[A]lthough I am satisfied that [Wah Tong] did not proceed with anything approaching despatch in the discharge of the reference, the same is equally true of [Zion] and in such circumstances I am unable to conclude that [Wah Tong] has repudiated the arbitration agreement.”

No leave was given by the court to appeal against that decision of the arbitrator. 

(6) Zion claims for $279,502,500 for “duress of goods” but the alleged loss of profits arose, if at all, from the non-production of the board games under the agreement between the parties.  If Zion succeeds in its original claim herein for setting aside the consent order, then its application for leave to appeal against the revised award will fall to be dealt with.  Its claim for lost profit caused by the failure to produce the board games was a matter within the scope of the arbitration and fell to be dealt with in that context.  But if Zion fails to set aside the consent order, it is difficult to see on what basis it can then claim to be entitled to damages to the tune of $279,502,500 for “duress of goods”. 

(7) “Duress of goods” generally refers to a threat to destroy or damage property, or a threat to seize and detain goods unlawfully: Chitty on Contracts (31^st ed), vol.1, §7-013.  In essence, what is said to have happened is that Wah Tong sought to enforce certain costs orders of the court by serving a statutory demand on Zion based on the allocaturs obtained after taxation.  Even if the costs orders were wrongfully obtained, as Zion alleges, it is difficult to see how the acts pleaded amount to duress of goods.  If Zion was eventually wound up, it would be the liquidators who would be taking possession of Zion’s goods, for the benefit of all its creditors generally.  There is no suggestion that Wah Tong had itself threatened to take or detain Zion’s goods.  So even if damages are recoverable for duress to goods, Zion has not demonstrated any real basis for such a claim.

80.It is unnecessary for present purposes to come to a definitive view about these substantive defects.  What they illustrate is that the proposed new claims are fraught with difficulties.  In all the circumstances they should not be permitted to be lumped on to the existing, discrete, self-contained claim in the present action.

81.For the above reasons I refuse leave for Zion to make the re-amendments discussed above to its statement of claim. 

82.There are, however, a number of proposed minor amendments to the pleading which are unobjectionable and which I allow, including:

(1) the proposed re-amendments to paragraph (Z) on page 25 of the draft;

(2) the proposed re-amendments on page 26 except words “ALL COUPLED WITH … BY THE DEFENDANT” and the words “PERJURY, CONTEMPT OF COURT”;

(3) the proposed re-amendments on page 28;

(4) the proposed re-amendments on page 29 except the word “fraudulent”; and

(5) the proposed re-amendments on page 33.

ZION’S APPLICATION FOR LEAVE TO FILE SUPPLEMENTAL WITNESS STATEMENTS

83.Zion seeks leave to file the supplemental witness statements of Mr Saatori himself (which consist of 60 pages), Ms Roberta Coronetta (39 pages) and Mr Karl Jurgen Thorwirth (29 pages).

84.Having reviewed these supplemental statements, it seems to me that very large parts of them relate to and only to the new matters that Zion seeks to raise by way of re-amendment of its statement of claim.  I agree with Mr Chan’s submission that the more efficient and preferable way of dealing with them is to allow the parties to re-consider that application after I have disposed of Zion’s application for leave to amend its pleading, which I have now done.  I therefore formally adjourn the application relating to supplemental statements sine die with liberty to restore.  I expect the parties to be able to tell which (if any) parts of the supplemental statements remain relevant in light of my ruling on leave to re-amend the statement of claim.  If there are still differences the application may be restored for formal determination.

ZION’S APPLICATION FOR LEAVE TO FILE “ADDITIONAL LIST OF DOCUMENTS”

85.As I explained to Mr Saatori at the hearing, there is no requirement for leave for a party to file a list of documents by way of discovery. 

86.As to what documents should be included in the trial bundles and placed before the trial judge at the trial of this action, it is a matter for discussion between the parties and, ultimately, for management by the trial judge if there is disagreement.  By his order dated 11 April 2014, Au J has already given directions for the preparation of trial bundles.

87.Accordingly I need not make any order on this application.

ZION’S APPLICATION FOR SPECIFIC DISCOVERY

88.By its summons filed on 24 April 2014, Zion seeks discovery of the following documents:

“(A) PROOF of ALL PAYMENTS made to wk to & co, since the defendant FIRST HIRED wk to & co to handle ANY & ALL legal work for ALL ZION Related Matters, BEGINNING February 1st AD 2003 until the VERY LAST PAYMENT was made to wk to & co (whenever that may have been) from the Contract & MOU advising, thru ALL defence activities.

(B) PROOF of ALL defendant monies EXPENDED, for ALL breached Manufacturing & Investment Contract activities, from November AD 2002 thru April 20th AD 2004.

(C) DOCUMENTARY EVIDENCE of the defendant’s Insurance Policy, to Prove whether ALL of the above defendant expenditure, since November AD 2002, is, or has been, covered by the said Policy. ALTERNATIVELY (if no such Insurance Policy exists) an affidavit or affirmation to this effect, also confirming exactly HOW ALL of the above defendant expenditure, since November AD 2002, has been paid for by the defendant company.

(D) The Aforesaid Proof MUST consist of ALL Relevant Documents, Requisite invoices, Bills, Receipts, Debit Notes, and Sundry Costs; PLUS all defendant bank statements, itemising ALL of the Aforesaid payments MADE; Plus, All wk to & co bank statements itemising ALL the Aforesaid payments RECEIVED, since February 1^st AD 2003.”

89.While the summons fails to specify the rule under which the application is made, it may be taken to be an application for specific discovery under RHC Order 24 rule 7.  To obtain specific discovery, an applicant has to show that the documents or classes of documents sought (i) exist, (ii) are or have been in the possession, custody or power of the party from whom discovery is sought, and (iii) are relevant to the matters in question in the action.

90.The documents sought in category A above concern the legal costs spent by Wah Tong and the documents in category B relate to money spent by Wah Tong on the initial agreement with Zion up to its termination in 2004.  Zion contends that these expenses relate to the “motive” for Wah Tong to exert economic duress on Zion, so as to bring an end to the dispute and avoid having to pay further money to defend Zion’s claim.[7]  Zion argues that because of the losses Wah Tong had already incurred, it was “100% motivated and galvanised to do anything to stop any further financial haemorrhaging”[8], including the infliction of economic duress on Zion.  Zion alleges that once the amount of money lost by Wah Tong is known, the court will “more fully understand why the defendant has subjected the Plaintiff to such an obvious display of the wilful and deliberate infliction of severe Eco-Duress and Duress of Goods from March 21^st AD 2012 thru December AD 2012”.[9]

91.In my view, the crux of the action is whether Zion entered into the settlement agreement and signed the consent summons under economic duress.  It is what Wah Tong did or said to Zion, and its effect on Zion’s free will, that is relevant to this claim, not some alleged motive on the part of Wah Tong.  I have to say I am quite unable to see how the documents in categories A and B are relevant to the matters in issue. 

92.Likewise, Zion has failed to demonstrate, and I am unable to see, how the documents in category C are relevant to the matters in question.  It appears that the request for this category is again based on the wish to look into the “motive” of Wah Tong.  That is not relevant to the real issues.  Further, there is no evidence to show that the insurance policy referred to actually exists. The absence of a genuine belief in the existence of the documents is evident from the words “if no such Insurance Policy exists” in category C.

93.Paragraph D of the summons purports to include the bank statements of Messrs. W K To & Co within the documents sought.  Zion has wholly failed to demonstrate on what basis the documents of a third party such as Messrs. W K To & Co should fall within the scope of discovery in this action.

94.In any event, it seems to me that the discovery sought is not necessary either for disposing fairly of the cause or matter or for saving costs within the meaning of RHC Order 24 rule 8(1).

95.For these reasons Zion’s application for discovery must be dismissed.

DISPOSITION

96.For the foregoing reasons, there will be the following orders:

(1) Zion’s summons filed on 22 May 2014 and its “Amended Summons” dated 2 July 2014 insofar as they relate to its application for leave to re-amend its statement of claim are dismissed except for the amendments specified in paragraph 82 above in respect of which leave is given.  There will be a costs order nisi that Zion do pay Wah Tong the costs of the application to be taxed if not agreed.  Further, Zion has to pay the costs of and occasioned by the re-amendments allowed.

(2) Zion’s summons filed on 22 May 2014 and its “Amended Summons” dated 2 July 2014 insofar as they relate to its application for leave to file supplemental witness statements are adjourned sine die with liberty to restore, with costs reserved.

(3) There be no order on Zion’s “Amended Summons” dated 2 July 2014 insofar as it relates to its application for leave to file and serve an “Additional List of Documents”.

(4) Zion’s summons for discovery filed on 24 April 2014 is dismissed.  There will be a costs order nisi that Zion do pay Wah Tong the costs of the application to be taxed if not agreed.

Mr Elijah Saatori, the Director of the plaintiff company, for the plaintiff

Mr Chan Chung Ming Josiah, instructed by W.K. To & Co., for the defendant

Please refer to HCMP3280/2014 for the relevant appeal(s) to the Court of Appeal.