Ser Kim Koi and Another v Fulton William Merrell and Others

[1] The numerous Registrar’s Appeals in this suit that came for hearing before me in November 2007 all involved issues relating to discovery of documents by the first and fifth defendants in this action.

[2] What had happened was that the first defendant, who is the Chief Executive Officer of the fifth defendant (sometimes hereafter “the Company”), and the Company had filed their respective (but identical) supplementary lists of documents on 8 August 2007. The plaintiffs, two individuals who are also directors of the Company, asked the first defendant to give them copies of the documents described in the lists. The first defendant refused to do so. The stand taken by him and the Company was that they had inadvertently included in the lists documents that were not in fact discoverable. Subsequently, the Company too refused to allow the plaintiffs to inspect 1006 of the 1651 documents on the lists.

[3] On 28 August 2007, the plaintiffs filed an application to compel inspection and production of the documents. The first and fifth defendants then filed applications for leave to amend their supplementary lists by deleting the documents they objected to produce. The stand taken by the defendants was that these documents were privileged or did not fall within the orders for discovery that had been made against them. On 15 October 2007, Assistant Registrar Mr Chew Chin Yee allowed the defendants’ application to amend their supplementary lists by deleting the documents listed as S/Nos 49,74, 81,86,88,97,104-106,139,168,170-173,178,189 and 442. The assistant registrar disallowed the remaining amendments sought by the defendants.

[4] Both the plaintiffs and the defendants appealed against the assistant registrar’s decision. After hearing the appeals, I decided:

The defendants have appealed against decision (b) while the plaintiffs have appealed against decision (c). I therefore give my reasons for the same below.

[5] The first and fifth defendants’ applications were taken out for leave to amend their lists of documents by deleting documents which they considered to be either privileged or irrelevant to the issues in dispute. The issue that arose was whether a party who has filed a list of documents to comply with his discovery obligations can thereafter be permitted to amend that list to delete some or all of the items described in it.

[6] The plaintiffs’ submission was that the applications were highly irregular as parties did not take out applications to amend their lists. There was no locally reported decision on this issue. Where documents of peripheral or even no ultimate relevance had been, by mistake, included in the list of documents, they would normally be left in the list and parties simply would not rely on them at trial.

[7] The plaintiffs had, however, come across two English cases in which the court had allowed parties to amend their lists of documents to exclude certain documents. In both these cases, however, the documents that were excluded were privileged documents. These cases were the English Court of Appeal case of Guinness Peat Properties Ltd v Fitzroy Robinson Partnership [1987] 1 W.L.R. 1027 (“Guinness Peat”) and the High Court decision in C.H. Beazer (Commercial & Industrial) Ltd. v R.M. Smith Ltd [1984] 1 Const LJ 196 (“CH Beazer”). In the latter case, Judge Newey, Q.C., allowed the plaintiffs to amend their list of documents by moving certain documents from part 1 to part 2 because the plaintiffs’ solicitors had made a genuine mistake and no prejudice had been suffered by the defendants as the defendants had not yet seen the documents.

[8] The first defendant, for his part, submitted that a party may correct any defect or error in his list of documents pursuant to O 20 r 8(1) of the Rules of Court (2006 Rev Ed) (“the Rules”) which provides that for the purpose of correcting any defect in any proceedings, the court may either of its own motion or on the application of any party order any document in the proceedings to be amended. The first defendant relied on the following passage from Disclosure by Matthews & Malek (3 Ed, 2000) at para 5.25:

[9] The first defendant emphasised that in this case, inspection had not taken place and therefore the court was still in a position to give leave to amend the list to correct errors. Noting that the text Disclosure had stated that after inspection had taken place, it would, as a general rule, be too late to correct the error, he submitted that the rationale for allowing corrections to the list of documents appears to be based on the principle that the law should not encourage litigants or their solicitors to take advantage of obvious mistakes made in the course of the process of discovery. In the course of submissions, counsel also referred to Guinness Peat and the decision of Hoffmann J in Re Briamore Manufacturing Ltd (In Liquidation) [1986] 1 W.L.R. 1429 (“Briamore”). The latter case was cited for the proposition that until inspection has taken place “there must be a right to correct the list, even if only by notifying the other side that there are documents which the litigant objects to produce” (at p 1431). It should also be noted that CH Beazer and Guinness Peat were the cases relied on by the authors of Disclosure for their statement of principle cited in [8] above.

[10] Having considered the authorities and the textbook, it is plain that the court does have power to allow the amendment of a list of documents under O 20 r 8(1) and that that power is usually exercised when the applicant has by mistake entered privileged documents in part 1 of Schedule 1 of the list when such documents should have been disclosed in part 2 of Schedule 1. The amendment sought is to remove the privileged documents from part 1 and to put them instead into part 2 of Schedule 1. There does not seem to have been a case, however, where the court has permitted a party to amend his list by deleting documents which he considers to be irrelevant.

[11] The various authorities that were cited by the parties dealt with a situation where the party who had filed a list later claimed that he had mistakenly included privileged documents in the wrong part of Schedule 1. In Guinness Peat, the defendants inadvertently included in Part 1 of Schedule 1 to a supplemental list of documents, a letter for which they had intended to claim privilege. Before serving the supplemental list, the defendants invited the plaintiffs’ solicitors to inspect the documents. The plaintiffs’ solicitors did so and copied the letter. The defendants later realised their mistake and issued a summons seeking an order restraining the plaintiffs from making any further use of the copy of the letter. The injunction was granted and upheld on appeal on the basis that the plaintiffs’ solicitors must have realised on inspection that they had been permitted to see the document by reason of an obvious mistake. Slade LJ who delivered the court’s judgment set out the principles that should be followed in the case where privileged documents had been disclosed by mistake. He said at p 1045:

[12] Guinness Peat is currently the main authority on what can be done when a document has been disclosed by mistake. It considered most of the earlier cases on this issue. It dealt only with privileged documents and made no mention of documents that were irrelevant but had been put in the list by mistake. The other cases cited, the CH Breazer and Briamore decisions, also dealt with the mistaken disclosure of privileged documents. In Briamore, however, Hoffmann J made some comments which could be regarded as referring not only to privileged documents but to other documents that had been mistakenly disclosed as well. Hoffmann J, however, did not indicate in his judgment that the list could be amended so as to entirely delete such documents from it. What he said was that there may be “an objection to production on the grounds that production would not be justifiable within that rule [ie O 24 r 13] and not simply on the ground of privilege” (at p 1431).

[13] The cases therefore indicate that before inspection, a party may apply to amend his list of documents by moving some documents from part 1 of Schedule 1 to part 2 of the same schedule. Additionally, even after inspection, if there has been fraud or it is clear that inspection of a privileged document was given by mistake, the party who saw it may be injuncted from making use of the knowledge gained from that document. The cases also suggest that where documents that are not privileged have been included in the list by mistake the listing party may object to producing them for inspection. That is the remedy he can ask the court for to correct his mistake. There is no suggestion, however, anywhere that he can apply to have the documents entirely deleted from the list. It will be up to the court to decide whether the documents should be produced for inspection or not and the court’s decision would depend on the relevance of the documents to the issues in the action.

[14] In this instance, there were two types of amendments to be made: those involving documents for which privilege was asserted and those involving documents which were alleged to be irrelevant. As far as the privileged documents were concerned, I decided after hearing the arguments whether the same were privileged or not and allowed or disallowed amendment accordingly. As far as the “irrelevant” documents were concerned, my view was that I could not and should not permit amendment of the lists to remove these documents. If the documents were truly irrelevant, however, they need not be produced for inspection and therefore I adjourned the matter so that I could inspect the documents and decide on relevance. In view of the number of documents involved, I gave directions for the preliminary sorting exercise I refer to in [4(d)] above.

[15] In the affidavit that he filed to support the applications made by himself and the fifth defendant to amend their supplementary lists of documents, the first defendant explained his reasons for his objection to produce document no. 442 as follows:

[16] Counsel for the first defendant submitted that item 442 was clearly privileged because it was sent in contemplation of litigation. This submission was echoed by counsel for the fifth defendant who pointed out that the test to be applied was that enunciated by Taylor LJ in Balabel v Air India [1988] Ch 317 as follows:

[17] Counsel submitted that the e-mail was sent in the context of a divided board of directors of the company. It was because of the operational difficulties caused by the position taken by the plaintiffs that Rainer Gumpert, the CFO of the Company, was communicating with the second defendant, another director of the Company, and his solicitor. Therefore, he submitted, the communication between Rainer Gumpert and the solicitor was clearly for the purpose of obtaining legal advice and it must necessarily be privileged. Further, there was a common interest between the management of the company and the majority directors comprising, inter alia, the second defendant. By virtue of the majority decision of the board of the company, the management was obliged to continue trading. This was the opposite position to that taken by the plaintiffs who were of the view that the company was insolvent and should cease trading.

[18] The plaintiffs submitted that it was wrong of the defendants to suggest that this e-mail was sent “in contemplation of litigation”. At the time of the e-mail in March 2006, there were no proceedings in progress. Prior to March 2006, the only thing that the plaintiffs had done was to send the e-mail of 18 January 2006 which alleged that the Company was insolvent. It was an exaggeration on the part of the defendants to suggest that that one e-mail caused the second defendant to contemplate litigation. The plaintiff further argued that there was no suggestion here that the e-mail contained any advice. It was an e-mail sent from Mr Gumpert to the first and second defendants dealing with issues on which, among other things, the second defendant himself wished to seek legal advice. It was copied to the second defendant’s lawyer so that the latter could subsequently give the second defendant legal advice. In the plaintiffs’ submission, the communication should be treated as a communication from the Company to the second defendant which provided him with certain information on which he wanted legal advice and should be disclosed as otherwise privilege would be used to cloak the directors’ own dealings with the Company.

[19] I accepted the plaintiffs’ submission on this point. From the circumstances, it did not appear to me that item 442 was privileged. First, no legal proceedings had been threatened as yet. Second, the e-mail apparently dealt with operational problems in the Company and those were matters which all directors had a right to know about, not just the first and second defendants. The plaintiffs, even if either of them had been the cause of the problems, were entitled to know what consequences their actions had had. Communications between the CFO of the Company and some of its directors should not be withheld from other directors. The fact that that one director might want to seek legal advice on the issues raised by the e-mail would not make the e-mail itself privileged in this context where all directors of the Company were entitled to know what was happening. This was a different situation from that contemplated in the Balabel case. It was not a communication between solicitor and client. It was information given to two persons and copied to the lawyer of one of them so that he could take advice on it. The person giving the information (by this I mean the Company) was not a party to any litigation and was not seeking legal advice for itself, nor was this e-mail sent to the Company’s own lawyer in the course of correspondence on a litigious matter.

[20] I also accepted the plaintiffs’ argument that there was no common interest between the management and the second defendant. This was confirmed by the second defendant in his affidavit dated 11 October 2007. In para 10 of the same, he said “[n]otwithstanding the Plaintiffs’ objections, the 5 Defendant’s management team was obliged to continue with the 5 Defendant’s business and trading activities in accordance with the decision of the majority of the board of directors”. The second defendant was part of the majority making the decision and the management had no choice but to comply with that decision. The fact that the management was required to obey the majority directors did not give it a common interest with the majority directors.

[21] For the reasons given above, I ordered item 442 to be disclosed.

[22] The Company has made a claim against Holland Leedon Pte Ltd (“HL”) arising out of a sale and purchase agreement made in June 2004 whereunder HL sold its business and assets to the Company. This claim is currently being resolved by arbitration proceedings between HL and the Company. The 16 documents in dispute are, allegedly, related to this claim.

[23] The first defendant explained in his affidavit how the 16 documents came into existence. He stated that by an e-mail dated 30 July 2005 (“the 30 July e-mail”), he wrote to several members of the Company’s senior management and staff to direct them to proceed to complete their investigations and collate the necessary documents and information in order to make a claim against HL for, inter alia, breaches of warranties pursuant to the sale and purchase agreement. The sale and purchase agreement provided that in the event the Company wished to make such a claim, it had to notify HL of its claim by 30 September 2005 in order to secure the sum of $25m which was being held in escrow as security for the Company in the event that a claim for breaches of warranties was made. According to the sale and purchase agreement, if HL was not notified of such a claim by 30 September 2005, the sum of $25m was to be released to HL.

[24] According to the first defendant, after he sent out the 30 July e-mail, various members of the management and staff of the Company sent out e-mails to each other. These e-mails are the 16 documents for which privilege is claimed. He asserted that the e-mails were sent out in the context of the contemplated litigation against HL (subsequently commenced in SIAC Arbitration No. ARB068/DA17/05). They related to the internal investigations and collation of documents and information that took place in order to substantiate the Company’s claim against HL. In the arbitration proceedings, the Company had, subsequently, asserted that the documents were privileged.

[25] The first defendant stated that he had been advised that the documents were also privileged as against the plaintiffs herein in view of the fact that the plaintiffs are directors and the majority shareholders of HL. Additionally, the plaintiffs have filed substantive witness statements in the arbitration on behalf of HL. Finally, the issue of the Company’s warranty claims against HL is not a matter which is in dispute in this action.