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Ohed Wines (Hk) Ltd And Others v Fung Lai Kwan Windy And Others

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date23 October 2019
Neutral Citation[2019] HKCFI 2566
Judgement NumberHCA1532/2016
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA1531/2016 OHED WINES (HK) LTD AND OTHERS v. FUNG LAI KWAN WINDY AND OTHERS

HCA 1531/2016 and
HCA 1532/2016 (Consolidated)

[2019] HKCFI 2566

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOs 1531 AND 1532 OF 2016

________________________

BETWEEN

OHED WINES (HK) LIMITED 1st Plaintiff
OHED WINES (SHENZHEN) LIMITED 2nd Plaintiff
PANG WING WAH JOHNNY 3rd Plaintiff
OHED HOLDINGS LIMITED (a company incorporated in the British Virgin Islands) 4th Plaintiff (withdrawn)
and
FUNG LAI KWAN WINDY 1st Defendant
LAU KA LING CARINA 2nd Defendant
CARINA INTERNATIONAL E-COMMERCE LIMITED 3rd Defendant

________________________

(Consolidated by Order of Master Ho dated 5 March 2019)

Before: Mr Recorder Manzoni SC in Chambers
Date of Hearing: 8 October 2019
Date of Decision: 8 October 2019
Date of Reasons for Decision: 23 October 2019

_______________________________

REASONS FOR DECISION

_______________________________

A. Introduction

1. The defendants appeal from a decision of Master Kate Li dated 28 February 2019 in which the Master refused to grant unless orders in relation to discovery and, instead, accepted the undertakings made by the plaintiffs to produce the classes of documents listed in an annex to the Master’s order.

2. The defendants contend that it was wrong for the Master to refuse to grant an unless order, or the order for specific discovery which was sought in the alternative, in light of the plaintiffs’ persistent failure to comply with previous orders for discovery dating back to October 2017.

3. The order sought on this appeal is that unless the plaintiffs do give discovery of various classes of documents specified, the claim in the action be dismissed with costs, or alternatively certain paragraphs of the Statement of Claim be struck out.

4. As a further alternative, an order is sought for specific discovery, together with a verifying affidavit.

5. At the end of the hearing, following considerable discussion between the parties and the court as to the appropriate order, I refused to grant an unless order, but I did make an order for specific discovery. The reasons for making that order were largely articulated during the course of discussion, but I set them out briefly in these reasons for my decision.

B. Background

6. The 1st and 2nd plaintiffs are companies carrying on business trading wine. The 3rd plaintiff, Mr Pang is the ultimate shareholder of the 1st and 2nd plaintiffs. He appeared before me in person and because of the fact that he is named himself as a plaintiff I heard his submissions, and I have accepted that they are submissions made also on behalf of the 1st and 2nd plaintiffs despite the fact that those plaintiffs are limited companies.

7. The statement of claim is long and complex, containing many and varied allegations relating to joint ventures, verbal agreements, variation agreements and loans made between the various parties. I do not purport to set out or address each and every allegation. It is not necessary.

8. Essentially, the defendants have joined together in business in order for the 3rd defendant to sell wine under a brand known as “CARINA LAU”, taking advantage of the well-known name of the 2nd defendant. The plaintiffs sold the wine on behalf of the defendants between June 2015 and May 2016 (“the Agency Period”), but thereafter authorisation was apparently withdrawn. The plaintiffs have sued the defendants for an “operational service fee” calculated at 15% of the Gross Revenue of the 3rd defendant during the Agency Period, which the plaintiffs say was HK$19,797,080, as well as other various sums incurred during the course of the business or otherwise said to be due.

9. The defendants have counterclaimed, amongst other things, for unreturned sale proceeds allegedly wrongfully withheld, and damages for conversion of wine inventories.

10. The documents which the defendants seek essentially relate to the records of sales of all of the wines during the Agency Period as well as thereafter. The proposition of the defendants appears to be that in fact far more wine has been sold, particularly after the end of the Agency Period and the defendants are entitled (by way of counterclaim) to check all the figures for sales and to an account of the revenue generated from the sales.

C. The plaintiffs’ failures in discovery

11. Discovery in this action has a long history. It has been set out in the affidavits which were before me and in the skeleton argument of the defendants in this appeal.

12. I am satisfied that the plaintiffs have not diligently complied with their discovery obligations, although I do not seek to set out every instance of non-compliance in these reasons. They have been summarised in paragraph 20 of the defendants’ skeleton argument.

13. As a result I am satisfied that some sanction is appropriate as against the plaintiffs for their continued non-compliance with those obligations.

14. Mr Pang stressed before me that as far as he was concerned the plaintiffs had done everything that they reasonably could, at least recently, to comply with their obligations. He explained to me the great financial strain that the action was having upon the plaintiffs, and that many of the staff had left. As a result, the burden fell to him personally and he was not able to operate the computers and the software in a way which would allow him properly to check the work that his staff had previously done in relation to discovery. He stated that he was doing his best and he believed that he had done all that he could.

15. Following the order made by the Master, the plaintiffs served their 5th supplemental list of documents, in which they purported to comply with the undertakings given to the Master.

16. Despite that 5th supplemental list of documents, the defendants contend that the appeal is significant for two primary reasons:

(1) First, if the order of the Master is overturned the costs order she made will need to be revisited, with the clear implication that the defendants believe that they should be awarded their costs.

(2) Secondly the defendants do not accept that the plaintiffs’ 5th supplemental list of documents discloses all the documents...

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