China Construction Realty Ltd v China International Club Ltd [2007] WSSC 52 (3 July 2007)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

IN THE MATTER:

of Section 227 (5) of the International Companies Act 1987

AND:

BETWEEN:

CHINA CONSTRUCTION REALTY LIMITED
a company incorporated in British Virgin Islands.
First Plaintiff

AND:

GOLDEN PEBBLE BEACH DEVELOPMENT LIMITED
a company incorporated in British Virgin Islands.
Second Plaintiff

AND:

CHINA INTERNATIONAL CLUB LIMITED
a company incorporated in Samoa having its registered office at the offices of AsiaCiti Trust Samoa Limited, Lotemau Centre, Vaea Street, Apia
First Defendant

AND:

LUCKY DRAGON LIMITED
a company incorporated in Samoa having its registered office at Portcullis TrustNet Chambers Maxkar Building, Convert Street, Apia
Second Defendant

Counsel: R Drake for first and second plaintiffs
S Leung Wai for first and second defendants

Judgment: 3 July 2007

JUDGMENT OF SAPOLU CJ

Present proceedings

The present proceedings were concerned with a motion dated 5 April 2007 and filed on 10 April 2007 by counsel for the first and second defendants to stay until further order of the Court or discharge an order for Norwich Pharmacal relief which had been granted on 9 March 2007 on an ex parte motion for such relief by the first and second plaintiffs on 10 April 2007. I granted a stay of the order for Norwich Pharmacal relief until further order and set the matter down to hear submissions from opposing counsel. This was done in view of the urgency involved insofar as the defendants were concerned.

Background
The relevant background circumstances may be briefly stated. On 9 March 2007, on an ex parte motion filed by counsel for the first and the second plaintiffs which are companies incorporated in the British Virgin Islands, I granted an order for Norwich Pharmacal relief against the first and second defendants, which are international companies under the International Companies Act 1987, and their respective resident agents in Samoa. The ex parte order for Norwich Pharmacal relief that was sought and granted reads insofar as relevant:

" The First Defendant and/or its Registered Agent....and the Second Defendants and/or its Registered....must each serve on the Plaintiffs’ solicitors and affidavit or affidavits giving the information set forth in Schedule 2 to the Order with full particularity and exhibiting documents within their respective custody, possession or power evidencing such information within 28 days after receipt of notice of the terms of this Order by each Defendant and/or their respective Registered Agents and/or solicitors."

Schedule 2 to the Order then reads:

"So far as is within the knowledge of each Defendant and/or ability to ascertain full details of the legal and ultimate beneficial ownership of the shares in each Defendant and the identity of all authorized signatories or persons providing or involved in giving instructions in relation to each Defendant and exhibiting documents within their respective custody, possession or power including without prejudice to the generality of the foregoing...."

A long list of the particular information sought then follows. I have not found it necessary to set out that list for the purpose of this judgment.

On 10 April 2007, a motion dated 5 April 2007 was filed by counsel for the defendants seeking a stay and/or discharge of the so-called order for Norwich Pharmocol relief granted ex parte to the plaintiffs. The resident agent in Samoa for the first defendant also filed a similar motion on 10 April 2007 seeking a stay and/or discharge of the said Norwich Pharmacal order. A stay was immediately granted until further order. Subsequently, a motion dated 17 April 2007 was filed by the resident agent in Samoa for the second defendant also seeking a stay and/or discharge of the same Norwich Pharmacal order. A date was then set for hearing submissions from counsel for the opposing parties. There was some slight delay in hearing those submissions as the defendants were awaiting further information from overseas.

In all three motions by the defendants, the resident agent for the first defendant and the resident agent for the second defendant, counsel in support is very critical of counsel for the plaintiffs. He submitted that the main and specified ground upon which the plaintiffs by their motion had sought Norwich Pharmacal relief on an ex parte basis was an order dated 24 March 2006 made by the Court of First Instance of the High Court of Hong Kong against the second defendant. That order by the Court of First Instance of the High Court of Hong Kong, as it appears from an affidavit filed by the resident agent for the second defendant, was a default judgement entered in Hong Kong against the second defendant. However, that default judgment was subsequently set aside by the Court of First Instance of the High Court of Hong Kong in a decision dated 2 February 2007 on an application by the second defendant.

The complaint by counsel for the defendants was that the main and specified ground of the plaintiffs’ motion for Norwich Pharmacal relief was the said order by the Court of First Instance of the High Court of Hong Kong against the second defendant. However, that order, which was a default judgment, was set aside by the same Court in Hong Kong on 2 February 2007 and counsel for the plaintiffs was informed of that fact on or about 25 February 2007 by her instructing principals in Hong Kong. Counsel for the defendants then submitted that counsel for the plaintiffs did not disclose that material fact to this Court when she was informed by the Registrar on 12 March 2007 that the Court had granted her motion for Norwich Pharmacal relief on 9 March 2007. This was before the final order for Norwich Pharmacal relief was prepared by counsel for the plaintiffs and signed by me. It was then further submitted by counsel for the defendants that as the order by the Hong Kong Court which provided the foundation for the plaintiffs’ motion had been set aside, the Norwich Pharmacal order granted on the basis of that motion should also be set aside.

In the memorandum dated 26 March 2007 by counsel for the plaintiffs, she says that on or about 25 February, counsel (apparently Mr Drake) was informed by their instructing principals that the order dated 24 March 2006 by the Hong Kong Court had been set aside on the application of the second defendant in a decision dated 2 February 2007. At the time the copy of the decision by the Hong Kong Court was received by Mr Drake, he was fully committed to a major trial which commenced in American Samoa on 5 March 2007 and was originally scheduled for the whole of that week. While this provides the explanation by counsel for the plaintiff as to why it was not mentioned in the plaintiffs’ motion for relief that the order dated 24 March 2006 of the Hong Kong Court had been set aside, the fact still remains that the plaintiffs’ motion did not disclose that fact.

Counsel for the plaintiffs’ further states in her memorandum that the order dated 2 February 2007 made by the Hong Kong Court is not the end of the matter as there is still to be a hearing of the substantive proceedings. Counsel then submits that the order made by this Court and the information provided in response thereto will be of considerable assistance to the final determination of proceedings before the Hong Kong Court. If I understand counsel for the plaintiffs correctly, she is implying that the Norwich Pharmacal order should continue.

Relevant law

As these proceedings are concerned with an ex parte motion by the plaintiffs for Norwich Pharmacal relief which was granted and the motions by the defendants and their respective resident agents in Samoa to discharge such relief, it would be helpful to refer by way of analogy to the principles which apply to an ex parte application for an interlocutory injunction. In Equity and Trusts in Australia and New Zealand (2000) 2nd ed by Dal Pont and Chalmers, the learned authors state at p.813:

"In any ex parte application, the plaintiff must act bona fide and make a full and fair disclosure of all material facts, the importance of which can scarcely be overemphasised. An ex parte injunction obtained without such disclosure is liable to be dissolved so as to restore the defendant to her or his pre-injunction position (although the plaintiff may apply de novo for an injunction upon the merits). This is because it is no defence to the dissolution of an ex parte injunction that the plaintiff was unaware of the importance of certain undisclosed facts which the plaintiff should have known had he or she made proper inquiries. To this end, it has been said that the applicant should err on the side of excessive disclosure, such that if a matter is of uncertain relevance, it ought to be the Judge and not the applicant or her or his solicitors who determines relevance".

The learned authors then go on to mention two riders to the above statement. They said:

"Two riders must be added to the foregoing statements. First, an injunction granted ex parte will not be automatically discharged; rather ‘there needs to be a consideration of whether or not the materiality was sufficient to justify discharge without examination of the merits and of the circumstances generally. Whether the fact not disclosed is of sufficient materiality to justify or require the immediate dissolution of the order without examination of the merits depends on its importance to the issues which were to be decided by the Judge on the application. Where, for instance, the lack of disclosure does not stem from a deliberate lack of candour, and is not of a major character overall, such that the injunction would in any event have been granted, the Court may exercise its discretion to uphold it...

"Secondly, the disclosure obligation does not extend to facts outside of which the applicant knew or should have known. The extent of the requisite inquiries depends on the circumstances of cash case, including the type and probable effect of the order on the defendants, the degree of legitimate urgency and the time available for the making inquiries."

The same statements of principles would probably also apply to an application for a Mareva injunction. In Civil Remedies in New Zealand (2003) with Blanchard J as the consulting editor, it is stated at p.263:

"Where service of an application for an interlocutory injunction would cause undue delay or serious detriment, the plaintiff may apply for an interlocutory injunction on an ex parte basis. Because the plaintiff asks the Court to grant the injunction without hearing from the defendant, the Court imposes onerous obligations on the plaintiff and its legal advisers. Such an application must be made in good faith, and the plaintiff and its legal advisers must provide full disclosure of any defences to the claim the defendant might have or other facts that may be material to the exercise of the Court’s discretion to grant an injunction. [In United People’s Organisation (World Wide) Inc v Rakins Farms Ltd (No.1) [1964] NZLR 737 (at p.738), it is stated]:

‘"It is well settled that it is the duty of a solicitor certifying to an ex parte application to make the fullest disclosure to the Court of all matters relevant to such an application, whether or not such solicitor considers any such matter unimportant. He has a duty to disclose to the Court the defence to the action if he knows it, and the facts on which it is based, so that the Court can judge for itself whether they are material or not. Failure to do so may in itself furnish ground for dissolving the injunction.’’’

"Clearly, a party cannot be required to disclose that which it does not know, or could not reasonably have discovered. However, the fact that the plaintiff’s legal advisers do not consider the defence likely to succeed, or that they have forgotten about the relevant matter, is no excuse."

Further on at pp. 263-264 it is stated:

"Traditionally, the fact of non-disclosure of a material fact was in itself a sufficient ground on which to set aside an injunction obtained on an ex parte basis. However, there is a line of authority that suggests that non-disclosure is simply a consideration for the Court to take into account in deciding whether to set aside the ex parte injunction.

[In Tucker v News Medin Ownership Ltd [1986] NZHC 216; [1986] 2 NZLR 716 (at p. 730) it is stated]:

‘"Unless it is necessary to punish deception, there generally is little point in looking back in anger. It is better to look forward constructively. There is no suggestion in this case of bad faith. Moreover, the interim injunctions were obtained under conditions of extreme haste in which some oversights are excusable. To simply discharge the interim injunctions on the technical basis of non-disclosure or misrepresentation, without examining the merits of or need for further injunctive restraint could lead to a grave injustice.’

"Given the breadth of the Court’s discretion to review ex parte applications and the plaintiff’s ability to refile its application for an interlocutory injunction inter partes, it is suggested that there is some merit in the comment above. Where the plaintiff has grounds for obtaining the injunction inter partes, there is probably little to be gained by setting aside the ex parte injunction on the purely technical ground of non-disclosure in the absence of some particular need to punish the non-disclosure."

I have referred to the principles which are applicable to a motion to discharge or rescind an interlocutory injunction that was granted on an ex parte basis in order to gain some guidance on how to deal with the defendants’ motion to discharge the order for Norwich Pharmacal relief which was obtained ex parte by the plaintiffs. In my view, the principles relating to a motion to discharge an injunction obtained ex parte provide relevant and helpful guidance. But it must be borne in mind that the ex parte order sought to be discharged is a Norwich Pharmacal order which is not the same thing as an interlocutory injunction.

The legal principles which apply to a motion for Norwich Pharmacal relief were established by the House of Lords in the case of Norwich Pharmacal Co v Customs and Excise Commissioners [1973] UKHL 6; [1974] AC 133 and developed in subsequent English cases some of which will be referred to in this judgment.

In Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC133, the plaintiffs wanted to bring proceedings against the importers of certain chemicals manufactured abroad whom they claimed were infringing their patent. The identity of the importers was unknown to the plaintiffs but was known to the Customs and Excise Commissioners who, in the execution of their statutory responsibilities, were involved or got mixed up in the importation of goods. The plaintiffs then brought an action against the Commissioners to compel them to disclose the identity of the importers who were importing the chemicals claimed to be infringing their patent. Lord Reid, in what is now an often-cited passage from his judgment, states at p. 174.

"They [the authorities] seem to me to point to a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrongdoing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. I do not think that it matters whether he became so mixed up by voluntary action on his part or because it was his duty to do what he did. It may be that if this causes him expense the person seeking the information ought to reimburse him. But justice requires that he should co-operate in righting the wrong if he unwittingly facilitated its perpetration.

Even though the above passage states that a person, who through no fault of his own gets mixed up in the tortious acts of others so as to facilitate their wrongdoing, comes under a duty to assist the person who has been wronged by giving him full information that will disclose the identity of the wrongdoers, subsequent cases have not restricted ‘wrongdoing’ to tortious acts: see Ashworth Security Hospital v MGN Ltd [2002] UKHL 29; Campaign Against Arms Trade v BAE Systems Plc [2007] EWHC 330.

The most recent statements by the House of Lords on the Norwich Pharmacal principles is to be found in Ashworth Security Hospital v MGN Ltd [2002] UKHL 29. In that case, the medical records of a patient in the Ashworth Security Hospital were leaked by someone to a journalist who published an article in an English newspaper citing verbatim extracts from those medical records. Ashworth Security Hospital brought proceedings against the publisher of the newspaper to provide information identifying the employee of the Hospital and the name of the person or persons who were involved in the newspaper acquiring possession of the said medical records. Lord Woolf CJ who delivered the leading speech states at para. 26:

"The Norwich Pharmacal case clearly establishes that where a person, albeit innocently and without incurring any personal liability, becomes involved in a wrongful act of another, that person thereby comes under a duty to assist the person injured by those acts by giving him any information which he is able to give by way of discovery that discloses the identity of the wrongdoer. While therefore the exercise of the jurisdiction does require that there should be wrongdoing, the wrongdoing which is required is the wrongdoing of the person whose identity the claimant is seeking to establish and not that of the person against whom the proceedings are brought."

Lord Woolf CJ then goes on to explain the two stage approach to be applied when considering a motion for Norwich Pharmacal relief. The first is to be satisfied about the requirement of ‘involvement’ on the part of the party from whom discovery is sought. The second is the exercise of discretion by the Court. As Lord Woolf states in paras 35, 36:

"35. Although this requirement of involvement or participation on the part of the party from whom discovery is sought is not a stringent requirement, it is still a significant requirement. It distinguishes that party from a mere onlooker or witness. The need for involvement... is a significant requirement because it ensures that the mere onlooker cannot be subjected to the requirement to give disclosure. Such a requirement is an intrusion upon a third party to the wrongdoing and the need for involvement provides justification for this intrusion.

"36. It is not the only protection available to the third party. There is the more general protection which derives from the fact that this is a discretionary jurisdiction which enables the Court to be astute to avoid a third party who has become involved innocently in wrongdoing by another from being subjected to a requirement to give disclosure unless this is established to be a necessary and proportionate response in all the circumstances: see John v Express Newspapers [2000] EWCA Civ 135; [2000], 1 WLR 1931. The need for involvement can therefore be described as a threshold requirement. The fact that there is involvement enables a Court to consider whether it is appropriate to make the order which is sought. In exercising its discretion the Court will take into account the fact that innocent third parties can be indemnified for their costs while at the same time recognising that this does not mean there is no inconvenience to third parties as a result of becoming embroiled in proceedings through no fault on their part."

In the recent case of Campaign Against Arms Trade v BAE Systems Plc [2007] EWHC 330 an e-mail which contained privileged legal advice to the applicant from its solicitors in relation to proposed judicial review proceedings to which the applicant and the respondent were to be opposing parties was leaked by someone to the respondent. Proceedings for Norwich Pharmacal relief were brought by the applicant against the respondent to discover the source of the leak to the respondent. In discussing the exercise of the Court’s jurisdiction in relation to an application for Norwich Pharmacal relief, King J says at para 6:

"Under the principles referred to, the Court in exercise of its discretionary equitable jurisdiction has the power to order a person who has become involved or mixed up in some way in the wrongful acts of others, to assist the person wronged by providing information as to the identity of the wrongdoers. In the case of a wrongful leak of privileged or otherwise confidential information to an innocent third party, which is how this present application was originally presented, the Court if it is mindful to grant the relief in principle, has a general discretion which must of course be exercised judicially, as to the manner in which the assistance should be rendered. It is for example not uncommon for the Court to order that the appropriate person file an affidavit containing the relevant information. This is particularly the case where the original source materials leaked to the third party have been destroyed or mutilated but it is not confined to such a situation. All will depend upon the view of the Court as to the sort of information in the possession of the respondent likely to assist in the identifying of the wrongdoer. See for example the orders made in X Ltd v Morgan-Crampian (Publishes) Ltd [1991] 1 AC 1, HL and in Ashworth Hospital Authority v MGN Ltd [2002] UKHL 29; [2002] 1 WLR 2033, 11L"

The two stage approach followed by the Courts in dealing with an application or motion for Norwich Pharmacal relief is reflected at para 82 of the judgment where King J says:

"[My] earlier finding of the Respondent’s involvement in the wrongdoing, albeit as an innocent party, means that the jurisdiction of the Court to grant Norwich Pharmacal relief has been triggered. I proceed therefore to consider whether in all the circumstances it would be appropriate for the Court to exercise its discretion in favour of such grant."

There are two other English cases I wish to refer to. The first is Mitsui & Co Ltd v Nexen Petroleum UK Ltd [2005] EWHC 625 (Ch). In that case the claimant company made an application for Norwich Pharmacal relief in order to obtain from the defendant company information which it required to determine whether to sue another company for breach of contract. At para 21 of his judgment, Lightman J states the three conditions which in his pinion must be satisfied for the Court to exercise its power to order Norwich Pharmacal relief. He says:

"The three conditions to be satisfied for the Court to exercise the power to order Norwich Pharmacal relief are:

(i) a wrong must have been carried out, or arguably carried out by an ultimate wrongdoer;

(ii) there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and

(iii) the person against whom the order is sought must (a) be mixed up in so as to have facilitated the wrongdoing, and (b) be able or likely to be able to provide the information necessary to enable the wrongdoer to be sued."

In the second case of Yuri Nikitin & Others v Richards Butler LLP & Others [2007] EWHC 173 (QB) the applicants sought Norwich Pharmacal relief and pre-action disclosure against the respondents who were private investigators and their instructing solicitors. The aim of the application was to obtain from the respondents documentation and information in order to ascertain the full extent, scope and results of the alleged unlawful investigations carried out by the respondents into the personal and confidential affairs of the applicants. The important point for the purpose of this judgment is that Langley J in that case applied the three conditions which must be satisfied before Norwich Pharamacal relief can be granted as set out by Lightman J in Mitsui & Co Ltd v Nexen Petroleum UK Ltd [2005] EWHC 625.

I have, for the purpose of this judgment, referred to only some of the legal principles concerning Norwich Pharmacal relief which are discussed in Ashworth Security Hospital VHGN Ltd [2002] UKHL 29; Campaign Against Arms Trade v BAF Systems Plc [2007] EWHC 330; Mitsui & Co Ltd v Nexen Petroleum UK Ltd [2005] EWHC 625; and Yuri Nikitin & Others v Richards Butler LLP & Others [2007] EWHC 173. However, it is recommended that any counsel who is desirous of having a sound understanding of this important area of the law should read those cases in full. They, together with other English cases, have developed and explained the legal principles relating to Norwich Pharmacal relief.

Law applied to the facts

As earlier mentioned, the motion by the plaintiff for Norwich Pharmacal relief was made ex parte. The main ground of the motion was an order by way of a default judgment entered by the Court of First Instance of the High Court of Hong Kong against the second defendant on 24 March 2006. That order of the Hong Kong Court was subsequently set aside on 2 February 2007 on application by the second defendant. On 9 March 2007 I granted an order for Norwich Pharmacal relief upon the plaintiffs’ ex parte motion and counsel for the plaintiffs was accordingly informed by the Registrar on 12 March 2007. Counsel for the defendants pointed out that counsel for the plaintiffs was informed by her instructing principals on 25 February 2007 about the order by the Hong Kong Court being set aside on 2 February 2007. However, this Court was not informed by counsel for the plaintiffs that the order of the Hong Kong Court had been set aside before the order for Norwich Pharmacal relief was signed by me. Counsel for the plaintiffs has explained in her memorandum of 26 March 2007 that it was her partner who received the advice from their instructing principals. As her partner was fully committed to a major trial in American Samoa at that time, that was the reason for the oversight to inform this Court that the order by the Hong Kong Court had been set aside.

As pointed out in Equity and Trusts in Australia and New Zealand (2002) 2nd ed by Dal Pont and Chalmers, at p. 813 in relation to an ex parte injunction, in an ex parte application, the plaintiff must act bona fide and make full disclosure. I have taken into consideration the explanation for non-disclosure given by counsel for the plaintiffs. However, as earlier mentioned, the order by the Hong Kong Court was the main ground for the plaintiffs’ ex parte motion for Norwich Pharmacal relief. As that ground of the motion has turned out to be no longer valid, the order that was granted on the basis of the motion is liable to be set aside.

I have given consideration to the question of whether the ex parte order for Norwich Pharmacal should remain notwithstanding the non-disclosure of the order by the Hong Kong Court. Having regard to the materials placed before the Court by the plaintiffs and the cases on Norwich Pharmacal relief cited in this judgment, I am not satisfied that the order for Norwich Pharmacal relief should remain. I am not persuaded that the requirements for such relief have been satisfactorily made out for the plaintiffs. The best course to take would be to discharge the order for Norwich Pharmacal relief and let the plaintiffs re-file a motion inter partes on the merits if they wish to do so. The authorities cited in this judgment on Norwich Pharmacal relief should be helpful to the plaintiffs in determining whether it is worthwhile to re-file such a motion.

Conclusion

The order for Norwich Pharmacal relief that was granted ex parte on 9 March 2007 is discharged.

CHIEF JUSTICE

Solicitors
Drake & Co. for first and second plaintiffs
Leung Wai Law for first and second defendants