KADER INDUSTRIAL CO. LTD. v. GALCO INTERNATIONAL TOYS N.V.

HCA000477/1991

1991, No. A250

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Between
GALCO INTERNATIONAL TOYS N.V. Plaintiff
AND
KADER INDUSTRIAL COMPANY LIMITED Defendant

1991, No. A477

Between
KADER INDUSTRIAL COMPANY LIMITED Plaintiff
AND
GALCO INTERNATIONAL TOYS N.V. Defendant

1991. No. A320

Between
KADER INDUSTRIAL COMPANY LIMITED Plaintiff
AND
GALCO INTERNATIONAL TOYS N.V. Defendant
(Actions Consolidated)

Coram: The Hon. Mr. Justice Findlay, in Chambers.

Date of hearing: 22 January 1996

Date of handing down of judgment: 24 January 1996

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JUDGMENT

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1. In a pre-trial, or, more properly, a mid-trial, review of this matter, three matters of substance have to be dealt with by me.

2. The first of these can be disposed of immediately. This is a summons by the defendant dated 17 January 1996. This asks for an orderthat Galco make and file a list of documents of a particular kind and to make them available for inspection. That relief is containedin paragraphs 1 and 2 of the summons. The parties are agreed that this should be done, and I make an order accordingly. Paragraphs3 of the summons asks that, unless Galco comply with an order I made on 26 July 1995 within 14 days, Galco’s statement of claim bestruck out, and its action dismissed. Paragraph 4 seeks the costs. This relief is opposed by Kader, and the parties wish this aspectof the matter adjourned to another hearing, with the question of the costs of today reserved. I so order.

3. The second matter before me is a summons by Galco in which it asks for leave to file another hearsay notice out of time, and thatthe costs of the application be provided for. I emphasise; the costs are not tendered. Kader does not oppose the grant of the reliefsought, but asks for the costs of the application. Mr Bleach says that Galco should have the costs because Kader should have consentedto the grant of the relief earlier. Mr Barlow says that Galco is seeking the indulgence of the court, and should pay the price ofthat indulgence in the usual way. In any event, he says, the notice is unnecessary because the documents are those of Kader, andGalco does not need the vehicle of a hearsay notice in order to produce them. I am not sure that this point is clearly right on theface of it. It is true that, if the purpose for which Galco wishes to produce the documents is to establish some admission made onbehalf of Kader, the notice may be unnecessary, but it is not obvious to me, at this stage, that this is the only purpose. It maybe that Galco wishes to tender the documents as evidence of the other facts stated therein, apart any admissions they contain againstthe interests of Kader. On 12 January 1996, Galco’s solicitors wrote to Kader’s solicitors, explaining the failure to include thedocuments in the earlier hearsay notice, and asking for Kader’s consent to the late filing of the additional notice. There was noresponse to this letter. Galco’s solicitors did not tender any costs. There is no obligation on a party to consent to the grant ofan indulgence to an opponent. Although the courts prefer to see co-operation between parties to avoid costs, it cannot be right thata party at fault is able to foist an obligation on the other party to condone that fault or be mulcted in costs. If, of course, Kaderhad, before me, opposed the extension sought, without good grounds, I would probably have awarded Galco the costs incurred by reasonof that opposition, but that is not the case here. On my invitation, Mr Barlow indicated immediately that the order was not opposed,but that he sought the costs. The remainder of the time on this summons was taken up with argument about these costs. In my judgment,Kader is entitled to its costs in relation to this summons in any event, and I so order. Mr Barlow was here to argue other matters,so, in my view, it was reasonable to brief him on this summons also. Accordingly, I grant a certificate for counsel.

4. The last matter is a summons issued by Galco on 12 January 1996 by which is sought an order to produce for inspection two laboratoryreports, and the costs of the application be to Galco in any event. Galco does not wish to pursue this summons because it now acceptsthat the reports are covered by legal professional privilege, but it seeks an order for costs in its favour because the claim ofprivilege was not properly made out until Kader’s solicitors responded to the summons. In its supporting affidavit, Galco’s solicitorssay that, although the reports were identified in Kader’s second supplemental list, the ground of privilege was not identified. Thisis not so. Part 2 of this list identified the documents. In an affidavit of the 3 March 1994, Kader said that “. . . some tests werecarried out for the purpose obtaining legal advice in contemplation of legal proceedings. Accordingly, Kader pleads legal professionalprivilege and objects to disclosure of the reports relating to the same.” The affidavit of 15 November 1994 ties these documentsinto the second supplemental list. In relation to these reports, Kader’s solicitors said, in a letter dated 23 November 1994, thatthe laboratory “was instructed by our client to examine the dolls in question in November 1990 for the purpose of obtaining legaladvice of an anticipated legal proceedings between our respective clients. Examinations were carried out by [the laboratory] on 17November 1990 and [the test reports] were prepared accordingly. The said tests reports were sent to us under our client’s letterin November 1990 for the purpose of getting legal advice from us. In the circumstances, the said test reports are privileged fromproduction under legal professional privilege.” Galco’s solicitors replied by letter dated 23 November pointing out that “For thereports in question to be privileged, the ‘dominant’ purpose for which they were prepared needs to be ‘for the purpose of enablingsolicitors to advise . . .'”. In a letter dated 24 November 1994, Kader’s solicitors said – “. . . we confirm that the ‘dominant’purpose for which the reports were prepared is to be ‘for the purpose of enabling solicitors to advise . . .'” The paragraph of theaffidavit filed by Kader’s solicitors, which, Mr Bleach says, the proper claim to privilege was first made, says that – “In mid-November1990 my firm was approached by Kader and it was agreed between us that it would be prudent to have [the laboratory] run some testson the dolls in question so as to enable my firm to advise Kader. The two [reports] were received by Kader on the 30th November 1990and immediately passed to me so that I could advise on this dispute.” Mr Bleach says that it was not made clear until Kader filedthis affidavit that the purpose in Kader’s mind for seeking the reports was to enable Kader’s solicitors to advise. I do not agree.In my view, nothing could be clearer than Kader’s claim in the letters of 23 and 24 November 1994, and in the earlier affidavit,that it had obtained the reports to enable their solicitors to advise. Nothing new was claimed in the affidavit; no new ground formaking the claim was advanced. It follows, in my view, that Galco was not justified in issuing its summons. The summons is dismissed,with costs to Kader, including a certificate for counsel.

JK FINDLAY
Judge of the High Court

Representation:

Mr John Bleach, QC, instructed by Messrs Denton Hall, for Galco.

Mr Barrie Barlow, instructed by Messrs PC Woo & Co, for Kader.