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Taihan Electric Wire Co Ltd And Another v Lee Chi Yuen Arctic And Others

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date08 October 2013
Year2013
Judgement NumberHCA454/2013
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA454C/2013 TAIHAN ELECTRIC WIRE CO LTD AND ANOTHER v. LEE CHI YUEN ARCTIC AND OTHERS

HCA 454/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 454 OF 2013

____________

BETWEEN
TAIHAN ELECTRIC WIRE COMPANY LIMITED 1st Plaintiff
TAIHAN GLOBAL HOLDINGS LIMITED 2nd Plaintiff

and
LEE CHI YUEN ARCTIC (李志源) 1st Defendant
LEE TSZ HUNG AMME (李紫紅) 2nd Defendant
YUANZHI INTERNATIONAL TRADING COMPANY LIMITED (源智國際貿易有限公司) 3rd Defendant
WINFUL HOLDINGS LIMITED
(永利豐集團有限公司)		 4th Defendant
WIN SEASON DEVELOPMENT LIMITED 5th Defendant
VICTORY LEGEND CORPORATION LIMITED
(浚域有限公司)		 6th Defendant
FIRST SHINE CORPORATION LIMITED
(御首有限公司)		 7th Defendant
LO YING KING (羅英瓊) 8th Defendant
YUEN KWOK YAN (袁國欣) 9th Defendant
WIN STEP ENTERPRISE LIMITED
(凱譽企業有限公司)		 10th Defendant
SKY GLOBAL INTERNATIONAL HOLDINGS LIMITED
(天豐國際集團有限公司)		 11th Defendant

____________

Before: Hon Au-Yeung J in Chambers
Date of Hearing: 29 August 2013
Date of Decision: 8 October 2013

_____________

D E C I S I O N

_____________

1. This is an application by the 1st, and 4th to 7th defendants (collectively "the defendants") for an order that the plaintiffs do produce the settlement agreement made between the plaintiffs and a non-party, Mr Lau Siu Ming (“Mr Lau”).

The relevant court rules

2. This application is taken out under Order 24, rule 10 of the Rules of the High Court, which provides that any party to a cause or matter shall be entitled at any time to serve a notice on any other party in whose affidavits reference is made to any document, requiring him to produce that document for the inspection of the party giving the notice and to permit him to take copies.

3. O 24 r 11(1) provides that if the respondent to the notice under rule 10(1) objects to production, the court may, subject to rule 13(1) and on the application of the party entitled to inspection, make an order for production of the documents in question for inspection, and in such manner, as it thinks fit.

4. No order for the production of any documents for inspection or to the Court or for the supply of a copy of any document shall be made unless the Court is of opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs: rule 13(1).

5. There are two separate stages to be considered.

“First, the party who has referred to the document in a pleading or affidavit bears the burden of showing good cause why an order for production should not be made. As a matter of practicality, at that stage, the fact of reference to a document in a pleading or affidavit will make it difficult for the referring party to contend that the document does not exist and it may also make it difficult for him to contend that it is not relevant. However, that is not the end of the inquiry as there is not then a presumptive rule in favour of an order for production and the referring party may be able to show, for example, that the document is privileged from production. In any event, under O.24 r.13 there remains, secondly, and independent of the first stage, a burden on the applicant for an order for production to show the court that the order is necessary either for disposing fairly of the cause or matter or for saving costs.” Moulin Global Eyecare Holdings Ltd (in liquidation) v Olivia Lee Sin Mei, HCMP 2192/2012, 8 May 2013, at para 35, per Fok JA.

6. A party cannot use or rely upon the probative value of a document, yet deny the other party of the same forensic advantage: Zida Technologies v Tiga Technologies [2001] 3 HKLRD 698, 716E, per Deputy Judge McCoy SC.

7. The respondent may rely on privilege to refuse production. However, if he has deployed the contents of a confidential document, any privilege is waived: Matthews and Malek, Disclosure (4th ed), paras 16.21 and 16.22:

“The general rule is that:

‘Where a person is deploying in court material which would otherwise be privileged, the opposite party and the court must have the opportunity of satisfying themselves that what the party has chosen to release from privilege represents the whole of the material relevant to the issue in question. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood.’

The key word is “deploying”. A mere reference to a privileged document in an affidavit does not of itself amount to a waiver of privilege and this is so even if the document referred to is being relied on for some purpose, for reliance in itself is not the test. Instead, the test is whether the contents of the document are being relied on, rather than its effect.”

See also Goldlion Properties Ltd v Regent National Enterprises Ltd [2006] 1 HKLRD 793.

8. The court even has power to order disclosure of a settlement agreement involving the plaintiff and an ex-defendant. Relevance is not sufficient but the guiding principle is one of justice as regards the trial. If without the material the applicants have a reasonable apprehension that they might not have a fair trial that should outweigh any questions of confidentiality. The confidentiality could be preserved by appropriate means but ultimately if that was not effective then the disclosure must nevertheless be ordered: Cadogan Petroleum Plc v Mark Tolley [2009] EWHC 3291.

9. Where the court is minded to make an order for production, it may impose conditions. For example, it may afford the other party to the settlement agreement an opportunity to make representations: Akai Holdings Ltd v Ernst & Young, HCCL 29/2004, 17 July 2009, Stone J, para 81.

10. The court may limit the production to only such parts of the settlement agreement as are necessary for the applicants to be able to conduct their defences fairly at the trial. It may restrict disclosure only to the court and certain specified persons within the applicant’s team. It may require an undertaking to be given by any person inspecting the document that he will not disclose the information to any other person. See Cadogan Petroleum Plc v Mark Tolley [2010] EWHC 1107, paras 6 and 7; Akai Holdings, at para 81.

The background

11. The facts have been set out in my decision dated 15 April 2013. So far as relevant, they are set out below. The 1st plaintiff is a Korean manufacturer of copper rods and 2nd plaintiff (TGH) is its wholly owned Hong Kong subsidiary which managed the sales business of the 1st plaintiff in Hong Kong and Southern China. Between 2008 and 2011 a fraud was perpetrated by Mr Lau, the 1st defendant (“Mr Lee”), 3rd defendant (“Yuanzhi”) and 4th defendant (“Winful”) on the plaintiffs, resulting in loss to the plaintiffs of about US$36m. The 2nd to 10th defendants were said to be persons or entities holding properties acquired with proceeds of sale belonging to the plaintiffs.

12. Yuanzhi and Winful acted as sales agents for the plaintiffs. Having received the proceeds of sale (which allegedly belonged to the plaintiffs), Mr Lau and Mr Lee diverted part of the money to their own money making venture and shared the profits. The relationship between Mr Lau and Mr Lee fell apart towards the end of 2010. By October 2011 the fraud was...

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