Yu Man Fung Alice v. Chau Sing Chi Stephen

HCMP 307/2015
and CACV 13/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 307 OF 2015

(ON AN INTENDED APPEAL FROM HCA NO. 1584 OF 2012)

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IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 13 OF 2016

(ON APPEAL FROM HCA NO. 1584 OF 2012)

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REASONS FOR JUDGMENT
AND DECISION ON COSTS

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Hon Lam VP (giving the Reasons for Judgment and Decision on Costs of the Court):

1.This is an application for leave to appeal against the decision of DHCJ Sakhrani on 24 November 2014 refusing leave to the Plaintiff to re-amend her Statement of Claim as per the draft attached to her summons of 5 May 2014. Her previous attempt to amend was refused by Chung J who also struck out the existing Amended Statement of Claim, and that decision was upheld by the Court of Appeal in CACV69 of 2013. Upon dismissing that appeal, the Court of Appeal gave leave to the Plaintiff to apply for re-amendment of the Statement of Claim, thus giving her another opportunity to put her house in order. The background of the case and the nature of the Plaintiff’s claims had been set out in the judgment in CACV 69 of 2013. That led to the application for re-amendment before the learned judge below.

2.The Plaintiff sought leave to appeal before the judge and on 26 January 2015 he refused to grant leave.

3.On 6 February 2015, the Plaintiff issued a summons for her application for leave before the Court of Appeal.  The application was opposed by the Defendant.

4.On 5 March 2015, at the same time when the court directed an oral hearing of the application, it also raised a query as to whether the case came within O59 r21(2)(i).

5.In response, Mr Whitehead SC (counsel for the Defendant) lodged a supplemental skeleton submission on 10 March 2015 contending that leave was not required by reason of O59 r21(2)(i) or alternatively O59 r21(1)(a).

6.After reading the supplemental submissions of Mr Whitehead, it would appear that the Plaintiff agreed leave was not required and she did not file any submissions to challenge the analysis of Mr Whitehead.

7.Given that the original Amended Statement of Claim had been struck out, the refusal to grant leave for the re-amended Statement of Claim to be filed had the effect of determining the substantive rights of the Plaintiff as she could not pursue her claims further.  Thus, it is a case coming within O59 r21(1)(a).  If an appeal was lodged within the time prescribed by the rules, leave would not have been required.

8.However, due to the unsuccessful and abortive application for leave, the time for appeal has expired.  The Plaintiff needs leave to appeal out of time.  The court therefore gave directions on 11 March to facilitate the processing of an application for extension of time on 17 March.  Pursuant to such directions, a summons for extension of time to serve a notice of appeal was filed by the Plaintiff on 12 March 2015.

9.One of the relevant considerations for determining whether leave should be granted is the merit of the intended appeal, see Norwich & Peterborough Building Society v Steed [1991] 1 WLR 449.  In the circumstances of the present case, this would be the most important consideration given the reason for the delay (due to the abortive attempt to pursue an unnecessary leave) and the steps taken to seek leave up to 5 March 2015 without any objection from the Defendant on the basis that leave was unnecessary.

10.At the hearing on 17 March 2015, the court canvassed with Mr Bell SC (appearing for the Plaintiff) certain unsatisfactory aspects of the proposed re-amended Statement of Claim.  Though the written judgment in CACV 69 of 2013 focused on the embarrassment in terms of the uncertainties and confusion as to the dates on which the Plaintiff’s contractual claim for commission arose, there were other problems in respect of that claim that were canvassed in the course of the appeal, see Transcript of the hearing on 25 March 2014 at p.3-12.  At the end of the day, the Court of Appeal gave another opportunity to the Plaintiff to reformulate her case properly and it is her duty (with the advice of her lawyers) to put forward a re-amended statement of claim which is sustainable as a matter of law.  That was precisely the reason why the court did not give leave to re-amend on the spot over the oral formulation of the amendment by counsel then appearing for the Plaintiff (not Mr Bell).  That was also the reason why the court stressed that leave to amend should not be given until a properly prepared draft was placed before a judge in the Court of First Instance.

11.The court would not tell a party how his or her pleadings should be amended.  The court would only decide whether the draft pleadings placed before it satisfied the rules of pleadings in the formulation of a sustainable cause of action.  Upon an earlier version being struck out, it behoves counsel who drafts the re-amendments to ensure a legally sustainable case is pleaded with proper particulars before an application is made for leave to amend or re-amend.

12.After some exchanges between the bench and the bar, Mr Bell realistically accepted that the statement of claim required further revisions.  In the end, the court saw scope for giving the Plaintiff yet another chance of putting her pleadings in order.  The court therefore adjourned the application for extension of time and gave leave to Mr Bell to put forward another draft Statement of Claim for the court’s consideration.  The court also dismissed the original leave application as it was unnecessary.  Thus, the only extant application is the application for extension of time under the summons of 12 March 2015.

13.The Plaintiff lodged a new draft Statement of Claim on 22 April 2015.

14.On 6 May 2015, solicitors for the Defendant wrote to inform this court that the Defendant would oppose leave being granted to the Plaintiff for filing the fresh Statement of Claim.

15.On 8 May 2015, the court gave directions for the filing of submissions by the Defendant opposing leave and the listing of the matter for a short hearing.

16.On 22 May 2015, the Defendant lodged the submissions of Mr Whitehead disputing the arguability of the new draft Statement of Claim.  The 16-page submissions fully set out the Defendant’s contentions and authorities relied upon.

17.Having read the new draft in light of those submissions, the court took the view that the matter could be dealt with on paper and the short hearing (originally scheduled for 23 June 2015) would not be necessary.  A proposal to that effect was made to the parties on 10 June 2015.

18.On 12 June 2015, solicitors for the Defendant wrote to the court asking for an oral hearing to explain the Defendant’s opposition to leave being granted for the fresh statement of claim to be filed.

19.By a letter of 15 June 2015, the court clarified the nature of the extant application before the court at that stage and the grant of leave would have to be decided in a substantive appeal after extension of time being granted. At the same time, bearing in mind the underlying objectives in Order 1A, the court enquired whether the parties would be agreeable to a rolled-up hearing with the substantive appeal being heard on the same date as the application for extension of time with directions to facilitate the same.

20.By a letter of 16 June 2015, solicitors for the Plaintiff consented to a rolled-up hearing and gave the undertakings as per the court’s directions. The undertakings were in the following terms:

“ [The Plaintiff] shall abide by the outcome of that oral hearing as if the substantive appeal is before the court notwithstanding that the Notice of Appeal could only be filed after that hearing. In that event, the [Plaintiff] shall lodge a draft Notice of Appeal by noon on 19 June with an undertaking to file the same forthwith upon extension of time being granted.”

21.By a letter of 17 June 2015, solicitors for the Defendant asked for a 2 hour hearing instead of the half hour hearing (scheduled for 23 June) for the rolled-up hearing.

22.The court acceded to that request by solicitors for the Defendant and fixed a 2 hour rolled-up hearing. The court also directed the Plaintiff to lodge a draft notice of appeal by 19 June 2015. To cater for the eventuality for the disposal of the substantive appeal, the rolled-up hearing was fixed before 3 judges instead of 2.

23.Solicitor for the Plaintiff lodged a draft Notice of Appeal on 18 June 2015. The relief sought in that draft Notice of Appeal included the setting aside of the judgment of Deputy Judge Sakhrani and the grant of leave to file and serve a fresh statement of claim as per the draft which was lodged on 22 April 2015.

24.At the rolled-up hearing, Mr Whitehead invited us to consider the different versions of the statement of claim put forward by the Plaintiff (confirmed either by statement of truth or affirmation). Counsel criticised the Plaintiff for not offering explanation for the changes in the various versions. He further submitted that in view of the significant departure from her previous versions verified by affirmation, the Plaintiff should have put in a corrective affirmation.  

25.With respect, it is quite clear from the history of the matter that most of the changes were attributable to different legal formulations of the cause of action of the Plaintiff. Mr Bell obviously had taken on board some of the observations by the court on the defects in the previous versions. Whilst we would not pre-empt counsel for the Defendant from challenging the credibility of the Plaintiff at the trial by reference to these changes, we do not regard this as a case where the Plaintiff had fundamentally changed her story and the amendments were made to support a hopeless case. In this respect, this case is different from the situations in Tong Kin Hing v Autron Mauritius Corp [2010] 1 HKLRD 77 and the unreported English case of Post Scriptum Ltd v Daral Watan Journalism Printing. In this area of exercise of discretionary judgment, much depends on the facts of each case and we do not find the citation of an unreported judgment concerning how discretion had been exercised on different facts to be of much assistance.  

26.With respect, we do not think Rogers VP in Tong Kin Hing, supra, intended to lay down any inflexible rule at §20. His Lordship made it quite clear that there is no hard and fast rule and it is a matter of discretion. 

27.Notwithstanding the submissions of Mr Whitehead, we are of the view that the new draft is arguable and leave should be granted for the Plaintiff to file the same. It is reasonably arguable that the relationship between the Plaintiff and the Defendant was not of the same nature as that of a commercial agent and principal and as such the principles in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108, assuming that they are applicable, may have to be applied with modifications in light of the circumstances leading to the agreement. We do not accept that the pleas relating to the quantification of profit by reference to a notional sale to be wholly devoid of merit. Again much depends on the circumstances surrounding the making of the agreement and such details would have to be resolved at the trial. The same observation applies to the meaning of “net profit” and the implication of lack of taxation in case of notional sale.

28.Whether the previous versions of the Statement of Claim (verified by statements of truth) would have the effect of discrediting the Plaintiff’s claim in the new draft is also not something that should be resolved at this stage. We have considered Mr Whitehead’s comprehensive submissions on the various changes in the different versions of the statement of claim. With respect, we do not accept that the changes are significant or radical.     

29.Mr Whitehead further reminded us that the court should not rewrite the contract for the parties and he contended that there was no proper basis for the construction of the agreement or to imply a term in the way as it is now pleaded in paragraph 4 of the new statement of claim. Counsel relied on the judgment of Lord Wright in Luxor, supra at p. 137. The modern approach to construction of contract and implied term places more emphasis on the underlying factual matrix and the context in which the agreement was made: ICS v West Bromwich Building Society [1998] 1 WLR 896; Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279; Fully Profit (Asia) Ltd v Secretary for Justice (2013) 16 HKCFAR 351; Attorney General of Belize v Belize Telecom Ltd [2009] 1 WLR 1988.  In the present context, much depend on the circumstances leading to the oral agreement and we cannot say at this stage that what has been alleged in paragraph 4 is not reasonably arguable.       

30.In the circumstances we granted an extension of time to the Plaintiff to appeal based on the new draft Statement of Claim. On the undertaking that the Plaintiff shall file the draft Notice of Appeal by 21 January 2016, we allowed the appeal, set aside the order of Deputy High Court Judge Sakhrani (in dismissing the summons) and granted leave to the Plaintiff to file and serve the fresh statement of claim (as per the draft of 22 April 2015 with the slight corrections as indicated at the hearing) by 29 January 2016. 

31.In view of the history of the matter, we would not disturb the costs order below. We further order the Plaintiff to pay the costs of the Defendant in HCMP 307 of 2015 up to 29 April 2015 (7 days after the service of the new draft statement of claim) with certificate for counsel.

32.In respect of the costs incurred after that date (including the costs of the appeal), though it is an indulgence granted by the court to the Plaintiff, the Defendant is unsuccessful in his opposition. In the circumstances, we shall order that each party shall bear his or her own costs incurred after 29 April 2015.

Mr Adrian Bell SC and Mr Minju Kim, instructed by Lam & Co, for the plaintiff

Mr Robert Whitehead SC, instructed by Herbert Smith Freehills, for the defendant