ADVERSE INFERENCE FOR FAILING TO COMPLY WITH DISCOVERY ORDER
In the recent decision of Hai Jiao 1306 Ltd and others v Yaw Chee Siew [2020] SGHC(I) 03 (“HJ1306 v YCS”), the Singapore International Commercial Court drew an adverse inference against the defendant for his repeated breaches of discovery orders.
Background. The plaintiffs sued the defendant for, inter alia, breaching his obligations to take any steps or to exercise best endeavours to ensure that evidence satisfactory to the plaintiffs was provided to them that a valid mortgage over a hotel in Bintulu (“Hotel”) had been granted and registered in favour of the plaintiffs ([15] HJ1306 v YCS).
Procedural history. The plaintiffs obtained an eDiscovery Order on 17 April 2019 for disclosure within 2 weeks of repositories and devices owned or used by the defendant to enable a search of the repositories to be done using a search protocol which contained a list of specified search terms or phrases. The plaintiffs had targeted information relating to the hotel at the outset. ([18] HJ1306 v YCS)
On the deadline to provide discovery, the defendant applied for extension of time until 20 May 2019 to comply and was denied. ([20]-[21] HJ1306 v YCS)
At a case management conference, the defendant was made to file an affidavit to confirm that he had surrendered all relevant electronic devices in his possession to PricewaterhouseCoopers Malaysia (“PwC”) (which had been retained by the defendant to assist in the retrieval of electronic information to be made available pursuant to the eDiscovery order). The defendant filed the affidavit on 14 May 2019 which was 1 day late. ([22]-[23] HJ1306 v YCS)
The defendants sought a further extension of time to 28 May 2019 to comply with the eDiscovery Order and was denied again. ([24] HJ1306 v YCS)
On 28 May 2019 the plaintiffs then applied for a peremptory order for the defendant to comply within 3 days. ([25] HJ1306 v YCS)
The defendant filed a list of documents on 29 May 2019. However, the discovery provided was incomplete as the documents revealed that there were other devices and email accounts which fell within the scope of the eDiscovery Order but were not made available to PwC. Significantly, not a single email was disclosed even though one of the repositories identified in the eDiscovery Order was the defendant’s OML email address. ([27] HJ1306 v YCS)
The Court gave the defendant “one final opportunity” to comply with the eDiscovery Order and ordered that the defendant file a supplementary list of documents by 5 August 2019. Six repositories were identified, which included the defendant’s email accounts at Perdana. The defendant did not object that these repositories were not within his possession custody or power. ([28] HJ1306 v YCS)
The defendant filed the supplementary list of documents on 9 August 2019, which was again incomplete. The plaintiffs thus proceeded with an application for another peremptory order. ([30] HJ1306 v YCS)
Separately, on 23 July 2019, an Asset Discovery Order was made against the defendant to disclose tax returns, bank account records, financial statements, etc., by 20 August 2019. The defendant only attempted to do so on 3 September 2019, and in an inadequate manner. ([31] HJ1306 v YCS)
Court’s decision. The Court held that the defendant’s conduct in breaching his discovery obligations was contumelious. ([41] HJ1306 v YCS)
Not within power? In this regard, the defendant argued, for the first time, that some of the email accounts were not within his power as he required permission from the family-owned business in control of the repositories before discovery of the information there could be provided. ([43] HJ1306 v YCS)
The Court held that any argument on possession custody or power ought to have been made when the eDiscovery Order was made. Possession, custody or power was prerequisite to the Court’s power to order inspection. It was not open to the defendant to take issue with possession, custody or power at the stage when compliance with the order was sought. ([44] HJ1306 v YCS)
In any event, the Court held that the defendant did have power over the email accounts as the defendant had used them before the discovery order was made, and also because the defendant had practical access to the accounts. The defendant was the executive chairman of the family-owned business and had an unfettered right to access the email accounts, and it was for him to procure any approvals that might be necessary as a matter of corporate policy. ([46]-[47] HJ1306 v YCS)
Another opportunity to comply. Nonetheless, the Court allowed the defendant another opportunity to comply by 7 October 2019. ([49] HJ1306 v YCS)
However, the defendant continued to maintain that the email accounts controlled by the family-owned business could not be disclosed because the board decided it could not agree to the defendant’s request and because of concerns over confidentiality. The Court held that this was no answer to complete non-compliance, as there were ways to address confidentiality concerns such as by redacting portions of the documents. In any case, the defendant could not re-litigate the issue of possession, custody and power. ([54]-[55] HJ1306 v YCS)
Consequence of failure to provide discovery. In the circumstances, the Court ordered that the proportionate consequence for the defendant’s failure to provide discovery was to draw an adverse inference that the defendant failed to exercise his best endeavours to procure the mortgage over the Hotel in favour of the plaintiffs, and that, but for such failure, the mortgage would have been procured, with the consequential inference that such failure had occasioned loss and damage to the plaintiff. ([57]-[58] HJ1306 v YCS)
Significance. It is well established contumelious non-compliance with discovery obligations can lead to adverse inferences against the party in breach, or that party’s case being dismissed. This case illustrates that the possession, custody and power over documents for disclosure must be raised at the outset, and it is too late to do so once a discovery order is made. Not having possession, custody and power is not a reason to excuse non-compliance with discovery orders.
Tags: Civil procedure; e-discovery
This publication is not intended to be, nor should it be taken as, legal advice; it is not a substitute for specific legal advice for specific circumstances. You should not take, nor refrain from taking, actions based on this publication. Chancery Law Corporation is not responsible for, and does not accept any responsibility for, any loss or damage that may arise from any reliance based on this publication.