Professional Documents
Culture Documents
DECISION
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1. This matter has come before me for paper decision or resolution
O today, 27 February 2018. It is in the form of an application for leave to O
for leave is being advanced some four months after my ex tempore decision
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given immediately following the hearing. There is a transcript of that
U decision with exchanges in the course of it. U
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transcript of my decision of mid-October last year, it may be helpful to D
review the issues between the parties and any other relevant background.
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Karen) who was also a director of the other co-organiser and Sam Lam,
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who was the project manager for both organisers.
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4. The 1st defendant was the firm of brokers tasked by the co-
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organiser of the plaintiff (CSSW) with advising on the appropriate insurance
L for the event and, of course, as to the possibility of obtaining the necessary L
insurance for the event. The 1st defendant appointed the 2nd defendant
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(no doubt linked to it in some way) to act as a sub-broker in respect of any
N insurance sought. N
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Russian space shuttle named Buran. P
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8. Another business, Mactus Far East, was party to a meeting
E between the 1st defendant and Karen Loh, and also the beneficiary of the E
control.
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M 10. The 1st defendant confirmed that in the event of Mactus Far M
East being in breach of its obligations the insurer will have the right of
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subrogation to proceed against Mactus Far East after making any payment
O under the policy to CSSW and any other losing insured. O
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11. The following day Karen Loh made it clear to the 1 defendant
Q that CSSW required insurance cover, if the event had to be cancelled for any Q
reason, up to US$6 million being the cost of the event, and, if cancellation
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was due to failure on the part of Mactus Far East, for whatever reason,
S cover up to the amount of US$12 million being the loss of potential revenue. S
Her e-mail also included the possibility of Mactus sharing in the policy and
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needing extra policy cover to meet the provision for extra revenue loss.
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under the policy was “USD 6 million and in all being Expenses”. D
for a variety of reasons but not until July 2007 in respect of the limit of the
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indemnity. CSSW remained the insured under the policy with the plaintiff
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as one of the specified payees or beneficiaries under the policy.
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14. However the plaintiff or CSSW pursued the matter of cancellation
I cover for the extra revenue loss, being quantified up to US$12 million in I
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total and with effect from 25 July 2007. “The change in the basis of coverage J
results in an increase in the Limit of Indemnity from USD 6 million and in
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all being Expenses, to USD 12 million in all being Gross Revenue.” This
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was communicated to the plaintiff by the 1st defendant on 2 August 2007. L
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15. The defendant failed to inform the plaintiff that if Mactus Far
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East failed to deliver for any reason the Buran for the event in Hong Kong N
there was no insurance coverage and that the plaintiff should obtain
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alternative insurance or seek a performance bond or bank guarantee to
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16. In due course it became apparent that Mactus Far East was
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experiencing difficulties in securing delivery of the Buran for the plaintiff’s R
event and the plaintiff endeavoured to obtain a bank guarantee or a
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performance bond but Mactus Far East could not provide either.
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Far East in failing to deliver the Buran, provided the plaintiff had fulfilled D
its obligations under the policy. Mactus would not be able to make any
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claim itself under the policy as a loss payee by reason of its own default.
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18. The 1 defendant confirmed in an e-mail this advice on
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17 August 2007. The plaintiff then ceased to require from Mactus Far
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East any bank guarantee or performance bond, or pursue the possibility of H
alternative event cancellation insurance to cover the risk of default by
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Mactus Far East.
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19. Mactus Far East failed to deliver the Buran. The event was
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postponed and eventually had to be cancelled. The claim brought by the
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plaintiff under the policy was rejected by the underwriters who elected to L
avoid the Event Cancellation Policy ab initio.
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The crux of the allegations against the 1st defendant N
20. These are easily identified from the factual exchanges between
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the parties identified by the documentation with specific reference to the
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e-mails which passed between the parties’ representatives. They are in
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essence negligence and breach of duty of care. Q
S (1) representation that the policy would and did provide insurance S
cover for the failure of Mactus Far East to deliver the Buran
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for the event;
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and
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(4) other failures which were repetitions of the principal
I shortcomings set out above. I
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22. The quantification of the claim amounted to a net figure of
K HK$126,034,785 being largely lost revenue in one form or another. K
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The defence of the 1st defendant
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23. In answer to the 25-page statement of claim the defence
N consisted of 21 pages, filed on 31 October 2014. N
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24. It is a prolix document containing a large amount of irrelevant
P content and assertions, with a bald contention (at paragraph 3) that the P
Statement of Claim “fails to set out fully or adequately the case that the
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first defendant has to meet.”
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25. I do not find it necessary to review all the material pleaded in
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the defence or enumerate the many admissions as to facts. Essentially the
T pleading contains, at paragraph 50, its primary case that alleged losses were T
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26. The High Court action commenced by the plaintiff against
E specified underwriting consortia and two other defendants claiming E
The plaintiff in this action against the 1st defendant brokers also seeks to
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recover the costs of the settled action.
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Discovery / disclosure
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28. The plaintiff and the 1st defendant gave substantial discovery in
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December 2015. On 20 March 2017 the 1st defendant took out a summons
N for further discovery by the plaintiff which was initially returnable on N
7 April 2017 before the Master. This came before me on 17 October 2017.
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29. Initially the application was in respect of 21 classes of documents P
but this was reduced to 6 classes on the date of the hearing. The skeleton
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argument submitted on behalf of the 1st defendant at this hearing consisted
R of 34 pages, the first page of which at §3 clarified that the 1st defendant R
sought an order for specific discovery only in respect of 6 categories being
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1 – 4, 13 and 21.
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31. Before the hearing on 17 October I had read all the relevant
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papers and had regard to Ms Eleanor Yeung’s supplementary oral argument.
E I did not call upon the plaintiff’s counsel Mr Charles Sussex SC, having E
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I will continue to give a fuller account of my original decision as well as H
reasons for my decision in this application.
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The original categories pursued on 17 October 2017 J
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paying the sum of US$1,162,000 to the plaintiff, leaving each side to pay M
its own costs. They cover the pleadings, witness statements and affidavits,
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lists of documents and the documents disclosed therein, all witness
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statements (this is mere repetition of part of category 1) and correspondence O
and documents relating to the compromise settlement reached with the
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underwriters. In short the plaintiff asked for complete disclosure of all
Q material in that action which was terminated by a confidential agreement Q
between the parties to it. It is difficult from the outset to see how the
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1st defendant could be entitled to such material unless both parties to the
S settlement agreed to suspend or set aside the mutual confidentiality clause. S
It is quite impossible for the plaintiff to act unilaterally and, of course, for a
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court to act similarly. Such agreements reached by parties at arm’s length,
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decision to be made on an application for discovery. At trial there may— D
and I stress the word may — be considerations which the trial judge could
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entertain but from this standpoint I would not give any grain of comfort in
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that regard to the 1st defendant. F
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33. The 1st defendant’s argument proceeded along these lines:
dispute with the brokers, and it may not have been a reasonable
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sum so as to raise an argument that the credit or deduction
M pleaded in the Statement of Claim may not be adequate. M
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34. I find the whole of this argument fallacious and in parts illogical.
O The action against the underwriters was based on the policy itself including O
the construction of the terms and the extent of the cover. This is wholly
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different from the cause of action against the brokers which is premised
Q upon negligence, misrepresentation and breach of duty of care. Q
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35. The plaintiff has unequivocally stated the amount of the
S settlement and that the 1st defendant is to be given credit for it as it represents S
a portion of the loss suffered by the plaintiff consequent upon the cancellation
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of the event. There is no basis for the 1st defendant raising a suggestion
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that the settlement sum may not be adequate, or that it may have gone
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beyond the ambit of the dispute with the underwriters. This is tantamount
C to ventilating the causation and settlement as to damages, two issues which C
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concerned the compromised action against the underwriters. There can be D
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no justification for such a course. The authorities cited in the 1 defendant’s
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counsel’s skeleton argument are not apposite to the confidential agreement
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which terminated the action against the brokers. F
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36. The plaintiff is under no obligation to seek from the brokers the
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latter’s agreement to disclose to the 1st defendant any of the material it seeks. H
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The 1 defendant is of course at liberty to approach the underwriters to that
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end, and if it deems it wise or appropriate to subpoena the representative
Action” to the one against the 1st defendant. It is, or was, a discrete action
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with its distinctive cause of action.
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relevance, what other statements in other proceedings which she has made,
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should be disclosed. The same position applies to the affidavits. The
R reference to “cherry-picking” is not appropriate. R
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38. I gave the defendants’ argument on these four categories short-
T shrift. It was not necessary to descend into particulars. I have done so T
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in this exercise simply to repeat what I took into account at the hearing
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having read the voluminous paper submissions.
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plaintiff in its counsel’s argument raised the matter of the request being in
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effect an unauthorised interrogatory. There is no valid argument that it is
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relevant or that the potential witness Karen Loh has custody or control of
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the e-mail. I do not consider that, in the light of Ms Loh’s statement in H
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relation to this matter, that it can be properly pursued by the 1 defendant.
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40. Finally, category 21 calls for copies of e-mail threads for items J
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already disclosed by the plaintiff. The 1 defendant had already excluded
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item 215. I am satisfied that the plaintiff has already provided sufficient
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discovery / disclosure within the ambit of relevance (and power). It seems L
to me overall that this has been “fishing” exercise with no apparent relevant
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justification and is well wide of the substance of the issues in this case.
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41. In my ex tempore decision and exchanges with counsel, I set
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out my decision regarding the remaining six contentious categories.
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42. The brevity of my expression is of concern to the 1st defendant.
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It has to be understood that after considering 51 pages of submissions and
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counter-submissions it is quite unnecessary to regurgitate every argument R
and counter-argument as a background to the decision in an interlocutory
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matter. Such applications are not to be turned into a trial of the substantive
T issues or a wide-ranging forensic foray. T
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43. Having reviewed the material and arguments set out in this
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latest application, I am satisfied that there is no merit. Leave to appeal is
C refused with costs. C
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(Conrad Seagroatt)
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Deputy High Court Judge
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Ms. Frances Lok, instructed by Shum & Co., for the Plaintiff
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Ms. Eleanor Yeung, instructed by Clyde & Co., for the 1st Defendant
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