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Richardson Greenshields Of Canada (Pacific) Ltd. v Tze Yim

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date10 May 1991
Year1991
Judgement NumberHCA6690/1987
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA006690/1987 RICHARDSON GREENSHIELDS OF CANADA (PACIFIC) LTD. v. TZE YIM

HCA006690/1987
1987 No. A6690

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

____________

BETWEEN

RICHARDSON GREENSHIELDS OF CANADA (PACIFIC) LIMITED Plaintiff

AND
TZE YIM (a male) Defendant

AND BETWEEN

TZE YIM (a male) Plaintiff
(by Counterclaim)
RICHARDSON GREENSHIELDS OF CANADA (PACIFIC) LIMITED 1st Defendant
(by Counterclaim)
RICHARDSON GREENSHIELDS OF CANADA LIMITED 2nd Defendant
(by Counterclaim)
LI KA SHING (a male) 3rd Defendant
(by Counterclaim)
PENKILAN LIMITED 4th Defendant
(by Counterclaim)

(by Counterclaim)

___________

Coram: Kaplan, J.

Dates of Hearing: 24 & 25 April 1991

Date of handing down of Judgment: 10 May 1991

-----------------

JUDGMENT

-----------------

1. I have had before me no less than 15 summonses in respect of this action and counterclaim which is due to commence on 25th June 1991. The bulk of these deal with interrogatories and particulars. I have delivered a separate judgment on the Defendants application to vacate the June date.

2. This is another action brought about by the Stock Exchange crash of October 1987. In essence, the defendant (the client) claims that when liquidating his account for alleged failure to comply with the terms of his margin account, the plaintiff (broker) did not sell a large number of his shares at a reasonable or market price. In fact, on 27th October 1987, the broker sold a parcel of shares deposited by the client for the sum of nearly $95m by private sale to Mr. LI Ka-shing and/or to a company or companies with whom he was associated. In essence, the client says that this private sale was not bona fide, and that it was entered into at advantageous terms to Mr. LI. He pleads that the shares were sold some 26% below market price. Over 4,000,000 Cheung Kong shares were included in this private sale as were just over 3,000,000 Hutchison shares. It is said that before the crash the defendant owned shares worth approximately $250m. After his account was liquidated, the plaintiff contended that he owed some $64m which with interest now stands at approximately $85m. I should add that the client also denies that such shares listed in schedules B & C were ever purchased by the brokers on his behalf or on his instruction. In respect of shares sold in the market on 26th October and listed in schedule D, the client alleges that the brokers acted in breach of the Customer Trading Agreement and/or acted in breach of duty.

Interrogatories

3. Before dealing shortly with each individual interrogatory, I should set out the principles which have guided me. Firstly, the interrogatory has to be relevant. By this, I mean relevant to the pleaded issues.

4. Secondly, fishing interrogatories are not allowed.

5. Thirdly, the interrogatories must not be oppressive. An interrogatory which requires an enormous amount of work to answer it must be looked at with care specailly when I bear in mind the proximity of the hearing date.

6. Further, an interrogatory which is prolix or imprecisely formulated will be disallowed. Still further, the proximity of the hearing is itself a factor to take into account because a late interrogatory may well interfere with the preparation for trial.

7. Order 26 rule 1 of the Hong Kong Rules of the Supreme Court makes clear that only interrogatories which are necessary either

"

(a)

 for disposing fairly of the cause or matter, or

(b) for saving costs."

should be ordered.

1. By summons dated 27th February 1991 (folio 144) the client seeks leave to serve interrogatories on the broker's parent company.

These are consented to and I made an order by consent that these interrogatories be provided within 14 days of 25th April in an unsworn version with the sworn version being provided 14 days thereafter.

2. By summons dated 27th February 1991 (folio 145) the client seeks (1) further and better particulars of the broker's reply to the fresh defence and defence to counterclaim; and (2) further and better particulars of the amended reply defence to counterclaim dated 18th May 1988.

As to (1), there are 68 requests. Mr. Chain for the client abandoned the following;

13(f), 20, 28, 29, 55, 56 & 63.

Apart from request 67, Mr. Smith for the broker consents to all the others. I therefore made an order by consent for the provision of all these particulars within 14 days of the 25th April 1991. I refuse request 67. It is not a proper request to ask whether other matters, save those pleaded, are relied upon.

As to (2), requests 1, 8, 9 & 21 are abandoned. Save for requests 5, 6, 11, 12, 18-20, 22-24 & 27, the rest are agreed. (Each request has been consecutively numbered for ease of reference.)

Request 5 is refused. The broker pleads that the prices obtained were the best that could have been obtained in the circumstances. They were asked to specify the circumstances. They listed seven matters including

"The consideration as at 27th October 1987 that the possibility of a substantial recovery by the Hang Seng Index was most unlikely in the ensuring months."

To ask them how to specify what they mean precisely by 'substantial recovery' is asking them to speculate with precision when they have relied upon a general consideration which they took into account.

Request 6 is refused. This is similar to request 5, in that it asks the number of months referred to in 5.

Requests 11 & 12 are allowed. These are relevant to the matters complained of by the client.

Requests 18-20. These deal with delivery of the shares the subject matter of the private sale. Mr. Smith contends that as the private sale is admitted, there is no need to go into questions of delivery. However bearing in mind the allegations that have been made by the client, I think that these requests are reasonable and I so order.

Request 22-24. I propose to allow these by parity of reasoning with 18-20 above.

Request 27 is refused. This is asking the broker to speculate with precision, and I consider the matter is clear as particularized.

I therefore make a consent order in respect of those requests admitted. They will be supplied within 14 days from 25th April 1991.

I made an order in respect of requests 11 and 18-24. These will also be supplied within 14 days of handing down of this written judgment.

3. By summons dated 27th February 1991 (folio 149) the client seeks (1) an order requiring the broker to state whether it has or has had in its custody power or possession the documents set out in schedule 1 thereto; and (2) an order that the client to be at liberty to serve on the broker 104 interrogatories.

(1) discovery

The parties have agreed that the broker will serve on the client the affidavit sought but they have agreed to amend the terms of schedule 1 so that it now reads as follow;

"All correspondence, memoranda, papers, writings and other documents or communications or records of communications, agreements, statements of whatever nature or description concerning or relating to the opening of or operation of or transactions in connection with the accounts (if any) maintained with the plaintiff by

(a) Mr. LI Ka-skiing

(b) Penkilan Limited

(c) any other company associated with (a) or (b) above

concerning or involving shares or securities as those listed in schedule E of the fresh defence and counterclaim or any transactions connected thereto."

I make an order in the terms of that part of summons as amended above. The affidavit will be supplied within 14 days from 25th April 1991.

(2) Interrogatories

The broker agrees to answer the following interrogatories contained in schedule 2 to the summons. 1-6, 8-12, 13 (except the last nine words thereof), 15-18, 22-33, 35-40, 45-51, 54, 56-58, 61-62, 64, 75-78, 83, 85, 87, 89(d) & 92. (35 was agreed in the form of the hand-written version placed before me.)

The client abandoned the following;

the last six words of 13, 34, 52, 59, 63(a)-(c), (e), (f), (n)-(r), 62, 69, 70(a), 71, 73-74, 79, 84, 86, 89 (save (d)), 90, 91(a)-(h), 93-97, 99-101.

The interrogatories in issue are thus the following.

No. 7

This is a very long interrogatory which seeks information as to whether the broker's various executives involved in this matter had their own dealing accounts with the broker and, if so, whether they had in their portfolio any shares in the same companies as the client's portfolio, and how these accounts stood at various stages.

This is a classic fishing interrogatory. It is not, in my judgment, relevant to any pleaded issue in the case. It is an attempt to find material upon which to base the argument that these executives, or some of them, had their own personal interests to serve in selling the client's portfolio privately rather than on the open market. It is also late in the day and is bordering on the oppressive because if they did have such accounts, it might well be difficult to extract all the necessary information in the limited time available. This interrogatory is refused.

No. 14

This interrogatory seeks information relating to whether the brokers between 19th October 1987 and 6th November 1987 executed any purchases in the market of securities of a type included in the client's portfolio. The relevance of this is not made out. It seems likely that most purchases were made on behalf of clients and on their instructions, and thus I do not see the relevance of this question. This interrogatory is refused.

No. 19-21

These interrogatories attempt to trace the schedule E securities, i.e. those sold by private sale to Mr. LI and/or Penkilan. They seek to discover whether and, if so, when,...

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