VisionHealthOne Corp Pte Ltd v HD Holdings Pte Ltd and others (Chan Wai Chuen and another, third parties)

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 12 March 2010
• Neutral Citation: [2010] SGHC 78
• Plaintiff Counsel: Dhillon Dinesh Singh, Ong Boon Hwee William and Melanie Chng Ai Ling (Allen & Gledhill LLP)
• Docket Number: Suit No 678 of 2009 (Summons No 6230 of 2009)
• Date: 12 March 2010
• Hearing Date: 11 January 2010
• Subject Matter: Civil Procedure,Discovery of documents
• Year: 2010
• Citation: [2010] SGHC 78
• Defendant Counsel: Emily Su (Wong Partnership LLP) on watching brief,Nandwani Manoj Prakash(Gabriel Law Corporation)
• Court: High Court (Singapore)
• Published date: 30 March 2010

Chan Seng Onn J: Introduction

The plaintiff in the suit, VisionHealthOne Corporation Pte Ltd (“Plaintiff”), applied for discovery of documents against Bank of China Limited (“BOC”) in Summons No 5937 of 2009 (“the Discovery Application”) pursuant to O 24 r 6(2) of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“Rules of Court”). The Assistant Registrar (“AR”) allowed the Discovery Application and ordered BOC to produce the relevant documents.

The second defendant, Xing Rong Pte Ltd (formerly known as Huadi Projects Pte Ltd) (“2nd Defendant”) appealed against the AR’s order for discovery (“Discovery Order”) in Registrar’s Appeal No 449 of 2009 (RA449/09). The Plaintiff took out an application to strike out RA449/09 in Summons No 6230 of 2009 (the “Striking Out Application”).

On 11 January 2010, I allowed the Striking Out Application and the 2nd Defendant on 9 February 2010 filed an appeal against my decision.

Background Facts

The Plaintiff’s claim arose from the Cooperation Agreement dated 18 October 2003 between the Plaintiff and 2nd Defendant which object was to establish a network of medical facilities in and outside China. The funds for the joint venture would be provided solely by the Plaintiff.

The Plaintiff claimed that it had entrusted the sum of $2.125 million (the “Sum”) to the 2nd Defendant for the purpose of the joint venture. The Sum was transferred to the 2nd Defendant’s BOC account (“the Account”) in three tranches between December 2003 and January 2004.

The 2nd Defendant admitted that it had received the Sum. However, the 2nd Defendant alleged that the receipt was pursuant to a currency exchange transaction between the Plaintiff and the 2nd Defendant. Therefore, no funds were provided under the Cooperation Agreement to further any proposals for the purpose of the joint venture.

The Plaintiff claimed that, inter alia, it was wrongfully induced into transferring the Sum to the 2nd Defendant through the latter and/or its representative’s false and fraudulent misrepresentations.

Prior to March 2007, the 2nd Defendant represented to the Plaintiff that it had remitted the Sum to a third party Chinese company, Fuzhou Huadi Hebang Construction Renovation Engineering Company Ltd (“FHH”) in or about 2004 for the purposes of the joint venture to establish a medical facilities network in and outside China. However, the financial records of FHH obtained by the Plaintiff did not reflect any such receipt of the Sum.

It was the Plaintiff’s case that one of the main disputed issues in the suit was to whom the 2nd Defendant had transferred the Sum following its receipt of the said Sum between December 2003 and January 2004.

The Plaintiff in its Discovery Application sought production of documents from BOC relating to and/or evidencing the movements, ie, into and out of the Account.

The AR, after hearing the Discovery Application, allowed the Plaintiff to inspect and take copies of the following documents (the “Ordered Documents”) with BOC:

All bank statements, cheques, remittance slips, receipts, transfer instructions and correspondence relating to and/or evidencing the movements of the sum of S$2,125,000.00 which was deposited into the Account of the 2nd Defendant with Bank of China Limited by way of: (a) OCBC cheque no. 749325 dated 23 December 2003 for the sum of S$400,000.00; (b) UOB cheque no. 642852 dated 23 December 2003 for the sum of S$1,100,000.00; (c) UOB cheque no. 642853 dated 10 January 2004 for the sum of S$625,000.00

into and out of the Account.

Plaintiff’s case

The Striking Out application was on the grounds that: The 2nd Defendant had no locus standi to challenge an Order of Court which was solely directed to a third party ie, BOC; and/or The AR’s order was res judicata as between the Plaintiff and BOC as the time for BOC to appeal against the said order had lapsed. The 2nd Defendant’s appeal was therefore academic and served no practical purpose; and/or The 2nd Defendant’s appeal lacked substantive merits.

2nd Defendant’s case

The 2nd Defendant’s case was that the Discovery Order made against BOC would not determine the issue that was in dispute between the parties, ie, the purpose of transferring the Sum to the 2nd Defendant. If it was found that the purpose of the transfer of the Sum was for the Cooperation Agreement, as pleaded by the Plaintiff, the proper recourse as against the 2nd Defendant would be in respect of a breach of Cooperation Agreement in which disclosure of the Ordered Documents would be irrelevant and unnecessary as receipt of the said Sum was already admitted by the 2nd Defendant. If it was found that the purpose of transfer was for the currency exchange scheme, as pleaded by the 2nd Defendant, the 2nd Defendant’s position was that the Ren Min Bi (under the currency exchange scheme) was paid out in China and not out of the Sum in the account ie, the $2.125 million received in Singapore was not transferred to China.

The grounds for the 2nd Defendant’s appeal were as follows: The Discovery Order was too wide as it was not specific in time and did not state the exact period for which the discovery was allowed; and/or The Discovery Order was made before the 2nd Defendant had filed its defence. As the parameters of the dispute had not been drawn up properly by way of pleadings at the time of the hearing of the Discovery Application, matters of relevancy had not been adequately determined; and/or Discovery had previously been ordered against the 2nd Defendant of the same class of documents in favour of the fourth defendant under O 24 r 6 of the Rules of Court. Subsequently in Originating Summons No 383 of 2009 (Registrar’s Appeal No 171 of 2009) (“OS 383 of 2009”), Tay Yong Kwang J allowed the 2nd Defendant’s appeal and discharged it from its duty to provide discovery. The same issues were later rehashed before the AR and the AR’s decision effectively nullified Tay J’s decision.

Decision of the Court Lack of Locus Standi

The 2nd Defendant had filed the appeal against the AR’s decision despite being neither a party to the Discovery Application nor the subject of the AR’s order. Locus standi to appeal against any and/or all orders made in the Discovery Application against a third person who is not a party to the main suit (ie, BOC in this case) does not arise automatically from a person’s status (ie, the 2nd Defendant’s status) as a party to the main suit.

Order 24 Rule 6 of the Rules of Court stipulates as such:

Discovery against other person (O.24, r.6)

6. – (1) An application for an order for the discovery of documents before the commencement of proceedings shall be made by originating summons and the person against whom the order is sought shall be made defendant to the originating summons. (2) An application after the commencement of proceedings for an order for the discovery of documents by a person who is not a party to the proceedings shall be made by summons, which must be served on that person personally and on every party to the proceedings.

...

(6) An order for the discovery of documents may - (a) be made conditional on the applicant’s giving security for the costs of the person against whom it is made or on such other terms, if any, as the Court thinks just and (b) require the person against whom the order is made to make an affidavit stating whether the documents specified or described in the order are, or at any time have been, in his possession, custody or power and, if not then in his possession custody or power, when he parted with them and what has become of them.

...

(8) For the purposes of Rules 10 and 11, an application for an order under this Rule shall be treated as a cause or matter between the applicant and the person against whom the order is made.

The references to “the person against whom the order is made” in O 24 r 6(1), “a person who is not a party to the proceedings” in O 24 r 6(2) and the language employed in O 24 r 6(8) (in respect of inspection and production for inspection of the Ordered Documents under O 24 rr 10 and 11 respectively) indicate that an order for non-party discovery is directed solely against the non-party from whom discovery is sought, ie, it is clearly envisaged that an application for non-party discovery is a matter exclusively between the applicant and the non-party respondent. This principle applies across the board to both instances in which pre-action non-party discovery was made by way of originating summons (see O 24 r 6(1)) and by way of summons in ongoing proceedings between two parties (see O 24 r 6(2)).

Notably, although the 2nd Defendant was served with the application for non-party discovery and was heard by the AR below, this did not ipso facto confer upon it standing to file an appeal. All applications filed in an action are served on parties to the action (eg, under O 24 r 6(2)), who may be heard subject to the discretion of the court. This involvement, however, does not by itself transform such parties into parties to that specific application with standing to appeal the same. Such involvement per se has no bearing on the issue of locus standi.

In the case of Microsoft Corporation and others v SM Summit Holdings Ltd and another [1999] 3 SLR(R) 1017, Yong Pung How CJ held that the applicants who were prohibited by way of implied undertaking from using all documents and copies obtained pursuant to a search warrant and information extracted therein had locus standi to make an application to the High Court for the restriction to be lifted. Yong CJ held (at [18]) that:

As the applicants were parties directly affected by the restriction, they had a direct personal interest in seeking relief to vary the order of court and/or to be released from the implied undertaking. It followed they must have the locus standi to make an...