Gainfield Investment Ltd and Another v. Lam Yi Lai and Others

DCCJ3736/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3736 OF 2014

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DECISION

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Introduction

1.This year sees the 7^th anniversary of the Civil Justice Reform.  Order 1A rule 4 of the Rules of the District Court (“RDC”) confers the court with power of active case management for the purpose of furthering the underlying objectives under Order 1A rule 1 of RDC.  Identifying the issues at an early stage is an essential element of active case management.  Fixing timetables or otherwise controlling the progress of the case is another.

2.Yet, from time to time, the court is still required to deal with last minute application.

3.Today is the first day of the trial of this case.  Before entering into the trial proper, this court is required to consider the plaintiff’s application to amend the pleadings.

The plaintiffs’ application

4.On 4 August 2016, the plaintiffs took out a summons under Order 20 rules 5 & 8 of RDC to re-amend the Amended Reply and Defence to Counterclaim of the 1^st defendant and to re-re-amend the Re-amended Reply and Defence to Counterclaim of the 2^nd and 3^rd defendants (collectively as “the Reply”).  Interestingly, the legal representatives of the plaintiffs are asking for an order that the costs of the application be costs in the cause.

5.The proposed amendments can simply be described as:-

(1) the additional estoppel points, which is based on a Consent Order in FCMP 107 of 2011;

(2) the acknowledgment point, which is based on 5 documents disclosed by the 1^st defendant.

The defendants’ objection

6.The application is objected to by the defendants on grounds of lateness; that the amendments have introduced new defences and are prejudicing the position of the defendants.

Legal principle

7.Bharwaney J in Parsad v Great Wealthy Engineering Co Ltd [2012] 3 HKLRD 705 had this to say:-

“5. ... whether or not to accede to a party's late application to rely on a witness statement deposing to relevant and admissible facts, must be exercised within the ambit of the Court's management power and in the light of the objectives of Civil Justice Reform, including the need to ensure the cost-effectiveness of the proceedings; to ensure that the case is dealt with expeditiously; to ensure reasonable proportionality having regard to the amount of money involved, the importance of the case, the complexity of the issues, and the financial position of each party; to ensure procedural economy in the conduct of the proceedings; and to ensure fairness between the parties.

6. ... The Court must also have regard to other relevant circumstances, such as the potential disruption to the trial, the prejudice to the other parties, and the explanation offered by the applicant for the late application.”

Discussion

8.I shall deal with the 2 proposed amendments separately.

Additional estoppel points

9.The primary fact upon which the additional estoppels points are raised, namely, a Consent Order made in FCMP 107 of 2011, is already pleaded in the Reply.

10.As submitted by Mr Paul Lam, SC, appearing with Mr Anthony Chow, for the plaintiffs, it is not essential to plead points of law.  Even the point of law is not pleaded, the plaintiffs may still raise it at the trial: see para 18/11/1 Hong Kong Civil Procedure 2016, vol 1.

11.That being the case, I do not see the need of the amendment although it is a convenient course to do so.  At this late stage, however, the amendment should not be allowed.

Acknowledgement point

12.This point is based on 5 documents which were disclosed by the 1^st defendant at the interlocutory stage on 8 February 2015 and 13 July 2015 respectively.

13.It was not pleaded anywhere in the Reply, though the same was last amended on 25 November 2015 with leave of Master M Lam, on the day of the setting down.

14.Mr Lam, SC submitted that the said documents were disclosed by the 1^st defendant.  There cannot be any issue on their authenticity.  Whether they constituted acknowledgements within the meaning of the Limitation Ordinance depends on the proper construction of the documents.  It is a matter of legal submissions.

15.Mr Lam, SC submitted that under Order 20 rule 8(1A) of RDC, the court should allow the amendment so that the matter can be disposed of fairly.

16.Mr Lawrence Ng, appearing together with Mr Kim McCoy, counsel for the defendants, submitted that the amendment raises new defence which is only heard of at the doorstep of the court.  The defendants are required to deal with it by filing supplemental witness statement relating the background of those documents and how they came into existence.  Further, the legal representative will need to deal with the new issue raised.  The filing of a Rejoinder may be required.  In that respect, an adjournment is necessary.  This course of action will defeat the 2^nd limb of Order 20 rule 8(1A) of RDC, namely, the saving of costs.

17.It is trite that the function of the pleadings is to identify the issues in dispute so that the parties will be able to know what case he or she has to meet.

18.To that end, a party is required to state the material facts relied on which give rise the issue or point of law: see para 18/7/7 Hong Kong Civil Procedure 2016, vol 1.

19.In my view, in order to raise the point, the plaintiffs must state in the Reply which documents were to be relied on by them so that the defendants would be in a position to know their opponents’ case.  The defendants should not be put in a position of only to know which several documents are to be made use of by the plaintiffs at the commencement of the trial.  This is not a trial by ambush.

20.Although the said documents were only disclosed at the interlocutory stage, the plaintiffs still have ample opportunity to seek amendment of the Reply before setting down.  I note that in the last amendment of the Reply, the acknowledgement point was not added thereto.

21.I am told by Mr Lam, SC that the amendment was considered necessary after he was instructed in July 2016 and had sight of the documents.  However, change of legal team is not a justification of a late application, which Mr Lam, SC has fairly accepted.

22.Mr Lam, SC submitted that even if the amendment is allowed, there should not be a need to adjourn the trial as it is only a matter of construction of the documents.

23.Whether or not an adjournment is needed is a matter for the parties affected by the amendment.  As in the present case, I can see the need for the 1^st defendant to explain why those documents came into existence.  At the end of the day, the court is required to determine whether those documents constitute an acknowledgement on the part of the 1^st defendant for the purpose of the Limitation Ordinance.  That being the case, there is no doubt in my mind that if the amendment is allowed, the scheduled trial dates will be disrupted.

24.Therefore, I would not allow the amendment in respect of the acknowledgement point.

Conclusion and order

25.For the above reasons, the plaintiffs’ summons is dismissed.

26.The plaintiff shall pay the defendants’ costs of this application in any event with certificate for one counsel, on a party and party basis, to be taxed if not agreed.

27.For taxation purpose, the plaintiffs’ application is concluded at 12.40 pm.  

Mr Paul Lam SC and Mr Anthony Chow, instructed by Zhong Lun Law Firm, for the 1^st and 2^nd plaintiffs

Mr Lawrence Ng and Mr Kim McCoy, instructed by Au Yeung, Cheng, Ho & Tin, for the 1^st to 3^rd defendants