Patriarch Partners Media Holdings Llc v. Wong Siu Wa, Sammy and Another

HCA 865/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 865 OF 2013

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D E C I S I O N

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1.The background to this matter has been set out in the Court of Appeal’s Reasons for Decision dated 22 May 2015 and I shall not repeat it. While the Court of Appeal dismissed the argument of the appellant as it agreed with Deputy Judge Mayo that the amended statement of claim was defective, a draft re-amended statement of claim was placed before their Lordships which, I think it fair to say, the Court of Appeal thought was capable of remedying the defects in the pleading under attack at that stage.

2.They were persuaded, however, instead of giving leave to amend, to let the plaintiff apply to the Court of First Instance for leave to amend.  Accordingly, on 13 May 2015 the Court of Appeal allowed the appeal to the extent of substituting a stay of the action and giving leave to the plaintiff to apply to the Court of First Instance for leave to re-amend the statement of claim.

3.By summons dated 2 June 2015, the plaintiff seeks leave to re‑amend the statement of claim substantially in the form of the draft placed before the Court of Appeal.

4.The pleaded claims are based on fraudulent misrepresentation and conspiracy.  On behalf of the 2nd defendant, Mr Anson Wong, SC opposed leave in respect of part of the proposed amendment.  In particular, he submitted that the second sentence to the end of paragraph 38, the whole of paragraph 39, and the clause “If Fredy Bush was not aware that the Convey Holding Company had been stripped of its ownership in the Convey Companies,” in paragraph 40 should be disallowed.

5.Mr Coleman SC for the plaintiff referred me to the Court of Appeal’s Reasons for Judgment (CACV 248/2014, 22 May 2015) at paragraph 16 where their Lordships said:

“For present purposes, we need not dwell on the judge’s reasoning or counsel submissions.  Suffice it to say, as we indicated in the course of the hearing, that the plaintiff’s pleaded case in the ASOC on both fraudulent misrepresentation and conspiracy is clearly defective.  In respect of fraudulent misrepresentation, the ASOC failed to provide the necessary factual context, in particular, the linkage between the 2007 Agreement and the 2008 Agreement on the one hand, and the Settlement Agreement on the other, to support the fraudulent misrepresentation complained of.  This also affected the claim on conspiracy which really stands on the fraudulent misrepresentation complained of.  However, these deficiencies can all be cured by amendments to be found in the RASOC : see paragraphs 27 to 33A on fraudulent misrepresentation and paragraphs 37 to 41 on conspiracy.  Specifically, the factual context in support of the fraudulent misrepresentation including the necessary linkage indicated above is now particularised in paragraph 27 (i)-(iii) of the RASOC.

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In our view, both causes of action are capable of being salvaged by the proposed amendments in the RASOC.”

6.I think that the matter does not amount to res judicata as such. The Court of Appeal did not give leave to amend.  They did not determine the question with which this court is seised.

7.Nevertheless, their Lordships’ views obviously carry weight.  Mr Wong said that the ambit of the Court of Appeal’s observations related only to the grounds on which Deputy Judge Mayo struck out the pleading.  But that is not entirely clear, given that there was a respondent’s notice before the Court of Appeal and given that, as the transcript of the Court of Appeal hearing shows, the point taken about the wording of the paragraphs now in question was mentioned by Mr McCoy to the Court of Appeal.

8.Turning to the way in which these paragraphs are formulated, Mr Coleman has clarified that in paragraph 38 of the draft pleading, the plaintiff is alleging that Ms Fredy Bush was part of the conspiracy.  This I think has been the position given the last sentence of paragraph 38.  But to make the position clearer I think the words “In the event that” in paragraph 38 should be removed and Mr Coleman is content to accept that suggestion. 

9.On that basis it is clear that on the pleading, the plaintiff is alleging Bush was part of the conspiracy, but if she was not, then in any event the 1^st and 2^nd defendants were in a conspiracy.  The 2^nd defendant has not sought to raise again the Said v Butt [1920] 3 KB 497 point namely that as a matter of law, the 1^st defendant, being the 2^nd defendant’s director, could not possibly be held to have conspired with the 2^nd defendant.  So the defendants must in any event face the claim that they conspired together, even without any suggestion that Fredy Bush knew anything about it.  In my view, there is nothing impermissible or demurrable in the form of that pleading.

10.As the argument developed, however, it became apparent that even with that clarification to paragraph 38, Mr Wong still objected to the amendments on the basis that there was no evidential basis to allege a conspiracy involving Ms Bush.  He did not oppose the plea as such that 1^st and 2^nd defendants conspired together but he made the point that to raise the alternative plea that Bush was also involved, under Order 18 rule 12A there have to be reasonable grounds for doing so.  He even said that the pleader (not Mr Coleman) would have been acting in breach of his or her professional duties in pleading the allegation of a fraudulent conspiracy against Bush without proper basis.

11.I confessed that I had not fully understood the ambit of his argument from the written materials.  Nor did Mr Coleman anticipate it.  In this circumstances, to allow the amendments simply on the basis that the pleading as expressed is not demurrable would, as Mr Coleman accepted, permit the defendants subsequently to mount an application to strike out on the basis that the relevant paragraphs are frivolous and vexatious or doomed to fail.  That would generate further delay in a claim that has already lacked real progress because of arguments about pleadings.  Further, Mr Coleman indicated that he himself had not personally reviewed the evidence (presumably because he had not been instructed to do so) to satisfy himself that there is basis for the allegation made against Ms Bush.

12.It seems to me in this state of play, what I should do is, having given this ruling on the form of the pleading, to stand over the application for leave to amend so that the plaintiff could have an opportunity of responding to the objections based on lack of evidence, and then hear the parties again if there is a need to do so.

13.I will give the plaintiff leave to file a supplemental affidavit before the further hearing, if necessary.  I will give leave to the parties to fix a date now before me for the resumed hearing in case it is necessary with an estimate of half a day.

Mr Russell Coleman, SC, instructed by Mayer Brown JSM, for the plaintiff

The 1^st defendant, represented by Fan Wong & Tso, did not appear

Mr Anson Wong, SC leading Mr Gary C C Lam, instructed by Stevenson, Wong & Co, for the 2^nd defendant