Fishing expedition using foreign letters of request as bait not allowed under Hong Kong law, decides the Hong Kong Court of Appeal

In Re Evidence Ordinance (Cap 8) of the Laws of Hong Kong [2020] HKCA 766, [2020] HKEC 2911, the Hong Kong Court of Appeal upheld a decision to set aside an order granted pursuant to letters of request issued by the US Federal Court for the examination of non-party witnesses in Hong Kong. The Court of Appeal held that the purpose of the examination was not to obtain evidence for use by the US Federal Court which had requested the examination order, but to obtain information for investigation, which constituted impermissible “fishing” under Hong Kong law.

Background

The applicants had obtained judgment in the US Federal Court for US$100 million against multiple judgment debtors. One of those judgment debtors was allegedly owed receivables from two companies, SSG Capital Partners I, LP (SSG) and Value Team Corporation (VTC). The applicants were appointed as collection agent by a US state court to collect the alleged receivables.

The US Federal Court then issued letters of request to the Hong Kong courts, seeking an examination order to compel certain directors of SSG and VTC who resided and/or transacted business in Hong Kong to provide testimony on their knowledge regarding the alleged receivables in Hong Kong. Neither SSG nor VTC had been party to the US Federal Court proceedings. The requested order was initially granted, but was later set aside by the Hong Kong Court of First Instance (CFI) (see our previous blog post for a summary of that judgment).

Decision

The Court of Appeal upheld the CFI’s decision to set aside the order on the basis of section 76(3) of the Evidence Ordinance. This subsection directs the courts in Hong Kong to consider if the foreign court’s request (for steps to be taken in Hong Kong) is for the purposes of obtaining evidence for use in live foreign proceedings. The nature and purpose of a request would be considered by reference to relevant underlying materials and circumstances leading to the request.

The Court of Appeal held that, for the purposes of section 76(3), the question was whether the examination was sought (a) to obtain evidence which can be said to be relevant and necessary for use by the foreign requesting court to determine any live issue before it; or (b) for an investigatory purpose, to obtain information which might lead to a train of enquiry that may or may not produce evidence. The latter, in the context of oral examination of a non-party witness, would constitute impermissible fishing under Hong Kong law and therefore fall foul of section 76(3). The Court of Appeal emphasised that whether a proposed examination constitutes fishing is for the Hong Kong courts to decide by reference to Hong Kong laws, not by the US Federal Court or by reference to US laws.

On the facts, the Court of Appeal held that the purpose of the examination was clearly investigatory and constituted fishing, noting that (i) there was nothing in the relevant documentation to suggest that the examination would engage any determination by the US Federal Court in which the evidence requested would be relevant or necessary; and (ii) the examination was for the purpose of “plotting the course” of unspecified proceedings which may or may not be pursued in future.

Key takeaways

This case clarifies the Hong Kong courts’ position when deciding whether to accede to a foreign court’s request for an order to obtain pre-trial discovery from non-party witness in Hong Kong. The Court of Appeal’s observations on the substantial differences in the permissible scope of discovery in the US law and those permissible in Hong Kong are also interesting to note. There is likewise no permissible procedure under Hong Kong laws that would allow examination of non-party witness to aid the execution of judgment.

While US law allows non-parties to proceedings to be examined for information which might lead to evidence, Hong Kong law conversely prohibits the courts from making any order akin to pre-trial discovery against a non-party witness (other than those falling within the limited scope of Norwich Pharmacal discovery). Whether a request for an examination order falls foul of section 76(3) of the Evidence Ordinance is to be decided by reference to Hong Kong laws, therefore parties seeking discovery in Hong Kong against a non-party witness in aid of foreign proceedings should bear in mind the narrower scope that exists under Hong Kong law which in effect prohibits the making of an order serving the purpose of pre-trial discovery against a non-party witness.