Volly Best Investment Ltd v. Joinland Holdings Ltd

HCA 1438/2013

[2018] HKCFI 977

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1438 OF 2013

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Before: Madam Recorder Yvonne Cheng SC in Chambers

Date of Hearing: 25 April 2018

Date of Decision: 25 April 2018

Date of Reasons for Decision: 7 May 2018

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REASONS FOR DECISION

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THE APPLICATIONS

1.At the hearing on 25 April 2018, there were before me two applications:

(1) the Defendant’s summons of 12 March 2018, seeking leave to re-amend its Defence and Counterclaim (“the Defendant’s Summons”); and

(2) the Plaintiff’s summons of 26 March 2018, seeking leave to amend its Statement of Claim and to file a supplemental expert report (“the Plaintiff’s Summons”).

2.I dismissed both summonses at the hearing.  I now set out my reasons for doing so.

THE BACKGROUND

3.The following are undisputed facts, taken from the parties’ statement of agreed facts of 11 April 2018, or otherwise not disputed.  The Plaintiff is the owner of a development known as “Celestial Heights” at 80 Sheung Shing Street, Ho Man Tin, Kowloon.

4.On 4 June 2008, the Defendant entered into formal sale and purchase agreements for the purchase of nine units (“the Units”) in the development (“the Agreements”).  Clause 3(1) and Schedule 4 of each of the Agreements provided for payment of the purchase price to the Plaintiff’s solicitors in the following manner:

(1) the preliminary deposit (equivalent to 5% of the purchase price of each of the Units) had been paid on 30 May 2008;

(2) the 1^st part payment (equivalent to 5% of the purchase price) was to be paid on or before 4 July 2008;

(3) the 2^nd part payment (equivalent to 5% of the purchase price) was to be paid on or before 2 September 2008; and

(4) the balance was to be paid within 14 days of notification to the Defendant that the Plaintiff was in a position to validly assign the property to the Defendant.

5.The Defendant paid the 1^st part payments due under the Agreements.

6.The Defendant did not pay the 2^nd part payments due under the Agreements.

7.By letters dated 16 June 2009, the Plaintiff’s solicitors gave notice to the Defendant that the Plaintiff was in a position to validly assign eight of the nine Units to the Defendant and required it to complete the purchase on or before 2 July 2009.

8.By a letter dated 19 June 2009, the Plaintiff’s solicitors gave notice to the Defendant that the Plaintiff was in a position to validly assign the last of the Units to the Defendant and required it to complete the purchase on or before 6 July 2009.

9.By letters dated 15 July 2009, the Plaintiff’s solicitors referred to the Defendant’s failure to pay the 2^nd part payments and to complete the purchase of the Units on the completion dates, and notified the Defendant that unless the purchase was completed within 21 days, the Plaintiff might enforce its rights to determine the Agreements.  The letters were issued pursuant to clause 16(1) of each of the Agreements.  The last paragraph of each of the letters stated that “All our client’s rights under the Agreement, at common law, in equity or otherwise are expressly reserved.”

10.The Defendant did not pay the outstanding 2^nd part payments or complete the purchase within the time stipulated whereupon the Plaintiff exercised its right under clause 16(1) of each of the Agreements to determinethe Agreements and to forfeit the deposit paid.  This was done pursuant to the Plaintiff’s solicitor’s letters of 25 August 2009 (“the Determination Notices”).  The last paragraph of each of the letters stated that “All the Vendor’s rights and remedies whether under the Agreement, at common law, in equity or otherwise are hereby expressly reserved, and nothing herein shall prejudice or affect any rights or remedies of the Vendor against you arising from your breach of the Agreement.”

11.Between 1 and 12 March 2010, the Plaintiff resold the Units to third parties.

Procedural background

12.On 5 August 2013, the Plaintiff commenced the present action.  Its Statement of Claim pleaded:

(1) in paragraph 13, the market value of the Units as at the date of the Determination Notices of 25 August 2009;

(2) in paragraph 14, the market value of the Units as at the date of their resale in March 2010;

(3) in paragraph 15, an entitlement to recover “damages at common law”;

(4) in prayer (a), “damages under common law for breach of contract” in an amount representing the difference between the price under the Agreements and the market value of the Units as at the date of the Determination Notices.

13.The Plaintiff applied for summary judgment, seeking interlocutory judgment on liability, with damages to be assessed.  On 11 May 2015, Madam Recorder Linda Chan SC ordered that interlocutory judgment be entered for the Plaintiff against the Defendant, with damages to be assessed (“the 2015 Judgment”).

14.On 1 February 2017, Master J Wong gave leave to the parties toset down the assessment of damages with five days reserved.  Subsequently,the assessment of damages was set down for hearing before Anthony Chan J, to commence on 9 May 2018.

15.By a pre-trial review notice of 7 March 2018, the Plaintiff indicated that it would seek leave at the pre-trial review (of 14 March 2018) to file a supplemental expert report relating to the market values of the Units as at the completion dates (of 2 and 6 July 2009).

16.The Defendant’s Summons was issued on 12 March 2018.

17.At the pre-trial review on 14 March 2018, Anthony Chan J ordered, inter alia:

(1) that the Plaintiff and Defendant serve their opening submissionsfor the assessment of damages not less than 14 days and 7 days,respectively, before the commencement of the assessment; and 

(2) that save for the Defendant’s application for leave to re-amend its Defence and Counterclaim and the Plaintiff’s application for leave to file an additional valuation report (there was at that stage not yet any application for leave to amend its Statement of Claim), there be no further interlocutory application without the leave of the Court.

18.12 days later, the Plaintiff issued the Plaintiff’s Summons.

DEFENDANT’S APPLICATION TO RE-AMEND THE AMENDED DEFENCE AND COUNTERCLAIM

19.Clause 16 of the Agreements provided as follows:

“ (1) Should the Purchaser fail to observe or comply with any of the terms and conditions herein contained or to make the payments in accordance with Schedule 4 or any interest payable hereunder within 7 days of the due date, the Vendormay (subject to Clause 3(3)) give to the Purchaser notice inwriting calling upon the Purchaser to make good his default. In the event of the Purchaser failing within 21 days from the date of service of such notice fully to make good his default, the Vendor may by a further notice in writing forthwith determine this Agreement.

(2) Upon the determination of this Agreement pursuant to sub-clause (1):–

(a) the sum paid by the Purchaser under item (i) of Schedule 4 by way only of deposit shall be forfeited to the Vendor …

(3) Upon determination of this Agreement under sub-clause (1) the Vendor may resell the Property either by public auction or private contract subject to such stipulations as the Vendor may think fit and any increase in price on a resale shall belong to the Vendor.  On a resale, any deficiency in price shall be made good and all expenses attending such resale shall be borne by the Purchaser and such deficiency and expenses shall be recoverable by the Vendor as and for liquidated damages Provided That the Purchaser shall not be called upon to bear such deficiency or expenses unless the Property is resold within 6 months of the determination of this Agreement.”

20.The Defendant’s Summons sought leave to add new paragraphs 81A and 81B to the Amended Defence and Counterclaim, to plead reliance on clause 16(3) of the Agreements, and to take the point that since the Plaintiff had elected to resell the Units in March 2010, more than 6 months after the determination of the Agreements, the Defendant should not be called upon to bear any price deficiency or expenses relating to the resale.

Proposed argument based on clause 16(3) not arguable

21.The Defendant’s argument is that clause 16(3) of the Agreements is a liquidated damages clause; as a matter of law, this precludes a claim for common law damages; that factually, by the act of reselling the Units, the Plaintiff has elected the remedy of liquidated damages; and that since the resale took place more than 6 months after the determination of the Agreements, the proviso in clause 16(3) applies and no liquidated damages are payable.

22.Mr Ismail, counsel for the Plaintiff, submitted that the Defendant’s proposed argument was not fairly arguable, so that the amendment would be futile, and ought to be refused.  He cited VSC Building Products Company Limited v Kono Insurance Limited, unreported, HCA 947/2005, 9 September 2009, where Andrew Cheung J (as he then was) said:

“ 12. It is trite that an amendment should be refused if it is a futile one, particularly if it is a late application.

…

18. As presently advised, and in the absence of any authorities to support the proposition put forward by Mr Tam on behalf of the defendant, whilst the argument raised is ultimately a question of construction of the terms of the policy, I am not satisfied that the proposition is reasonably arguable.  I also bear in mind thatthis is a fairly late application.  Any doubt in this regard should be resolved in favour of the plaintiff, the recipient of this very late application to amend.”

23.Clause 16(3) of the Agreements is virtually identical to clause 17(3) of the sale and purchase agreement which was considered in King’s City Holdings Ltd v De Monsa Investments Ltd [2013] 4 HKC 450.  Fok JA, with whom Lam JA and McWalters J (as they then were) agreed, held in [24] to [27] that:

(1) the clause was a liquidated damages clause;

(2) the clause was in a standard form and provisions virtually identical to it had previously been considered by the courts;

(3) a substantially identical clause was considered in Woomera Co Ltd v Provident Centre Development Ltd [1985] HKLR 263.  In that case, the Court of Appeal had held that the clause was not an exhaustive statement of the vendors’ rights and did not preclude a claim for common law damages;

(4) the conclusion that clause 17(3) (in the agreement in King’s City Holdings Ltd) did not preclude a common law claim for damages against the defaulting purchaser was sufficient to support the grant of summary judgment for damages to be assessed.

24.Thus there are two Court of Appeal judgments which have construed a clause virtually identical to clause 16(3) of the Agreements as being a non-exclusive liquidated damages clause which did not preclude the vendor from claiming for common law damages as an alternative remedy — a construction which is directly contrary to the one sought to be pleaded by the proposed paragraphs 81A and 81B.  The Court of Appeal judgments are binding on the Court of First Instance as to the question of construction of clause 16(3) of the Agreements.

25.Counsel for the Defendant, Mr Jean-Paul Wou, accepted that this was the case.  However, he contended that the Defendant ought to be allowed its proposed amendment as it was entitled to challenge the Court of Appeal’s construction in the Court of Final Appeal.  In support of this, he cited note 18/11/1 of Hong Kong Civil Procedure 2018, which says “In a proper case, the court will allow a party to amend his pleading so as to … keep the point open for argument in the final appellate court, as in Cummings v. London Bullion Co. [1952] 1 K.B. 327 ….”

26.Mr Wou submitted that Polyset Ltd v Panhandat Ltd (2002) 5 HKCFAR 234 was an authority which supported his argument on clause 16(3) of the Agreements.  He referred to [76] to [79], where Ribeiro PJ compared the different intention and effect of deposit clauses and liquidated damages clauses.  Mr Wou relied on [77], where Ribeiro PJ said that where a breach is covered by a liquidated damages clause, the amount prescribed by that clause represents the agreed sum of damages payable, regardless of the quantum of actual loss, and [79], where Ribeiro PJ reiterated that a liquidated damages clause is definitive of the damages recoverable where the actual loss exceeds the amount payable under the clause.  Similarly, McGregor on Damages at paragraph 16-022 stated that the courts implement the intention of the parties in the case of liquidated damages by holding the claimant entitled to recover the stipulated sum, irrespective of the amount of actual damage.

27.I do not consider that Polyset (or the passage from McGregor) is authority for an alternative construction of clause 16(3).  All that Ribeiro PJ was saying was that where a liquidated damages clause applies, a claimant cannot receive more than the agreed amount of damages.  But the point about clause 16(3) is that it has been construed by the Court of Appeal as not precluding a claim for common law damages.  Where there is a such a claim, the liquidated damages clause, by definition, will not apply to fix the amount of damages recoverable.

28.Mr Wou also submitted that whilst the Plaintiff had stated that it was claiming common law damages, it had in fact elected, by the act of selling the Units, to claim liquidated damages only.  In support of this submission, he cited Talley and anor v Wolsey-Neech (1979) 38 P&CR 45 at 52, where Browne LJ cited Horsler v Zorro (1975) 29 P&CR 180, in which Megarry J was addressing a innocent contractual party’s right to choose between terminating a contract for the other party’s breach and suing for restitution to his former position, or affirming the contract and suing for damages.  Megarry J then dealt with the consequences of those alternative remedies.  If the innocent party decided to sue for damages, he could choose whether to resell or not, and the measure of damages would be different according tohis choice.  Browne LJ then went on to hold that as the plaintiffs had chosen to exercise their rights under condition 19(4)(c) in their contract, they were only entitled to recover the liquidated damages defined by that clause.

29.However, the clause in Talley was very different to clause 16(3) of the Agreements.  In Talley, clause 19(4)(b) first provided that without prejudice to any other rights or remedies available to him at law or in equity, the vendor might (i) forfeit the purchaser’s deposit (ii) resell the property; clause 19(4)(c) then provided for the quantum of liquidated damages payable on resale.  Thus the clause provided that the act of reselling would constitute an election of the remedy of liquidated damages.

30.I agree with Mr Ismail that the Defendant’s proposed argument on clause 16(3) is plainly unarguable.  The authorities cited by Mr Wou do not show that King’s City or Woomera were wrongly decided.  It is not a proper case for allowing the Defendant to make an amendment so that the point can be further argued in the Court of Final Appeal.

31.I therefore dismissed the Defendant’s Summons.

Res judicata / abuse of process

32.Mr Ismail submitted that the Defendant cannot raise clause 16(3) at this stage, as it was a matter which could and should have been pleaded earlier and dealt with at the time of the summary judgment application.  Mr Ismail relies on either the doctrine of abuse of process under Henderson v Henderson (1843) 3 Hare 100 or cause of action estoppel.

33.It seems to me that the Plaintiff has difficulty relying on res judicata in the traditional sense, since the 2015 Judgment did not deal with the construction of clause 16(3), the matter not having been raised by the Defendant at that stage.

34.Mr Ismail did rely on Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160 at [22], where Lord Sumption JSC said that cause of action estoppel is absolute in relation to all points which were had to be and were decided in order to establish the existence or non-existence of a cause of action, and also bars the raising in subsequent proceedings of points essential to the existence or non-existence of a cause of action which were not decided because they were not raised in the earlier proceedings, if they could with reasonable diligence and should in all the circumstances have been raised.

35.However, in the present case, it is not necessary for me to go further into the scope of the doctrine of cause of action estoppel, as the issue can be addressed under the Henderson principle.  In Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72, Ma CJ said at [82] to [83]:

“ 82. The abuse that is known as the Henderson v Henderson abuse (or res judicata in the wider sense …) is derived from the case of that name. … The essence of the doctrine is that a party ought generally not to be permitted to raise in subsequent proceedings matters which that party could and should have raised in earlier proceedings.

83. … For present purposes, it is sufficient just to refer to the following facets of the doctrine:

(1) The starting point is to recognise that the doctrine is founded on an abuse of process. …

(2) This concern (that a party ought not lightly to be deprived of the right to have serious matters litigated) was echoed by Lord Millett in Johnson v Gore Wood & Co : (p.59D–G).

(3) It must therefore be essential when striking out a claim on this basis (and thus preventing a litigation of that claim) that an abuse is found to exist in seeking to raise in subsequent proceedings claims or issues which could and should have been raised in earlier proceedings. This abuse will usually take the form of the other party being ‘vexed’ (or in some cases, the terms ‘oppressed’, ‘unjustly harassed’ or ‘unjustly hounded’ are used) by the subsequent set of proceedings: Johnson v Gore Wood & Co, 31A–B.

(4) The abuse can also take the form of the administration of justice being brought into disrepute: see Chiang Lily, 256D–G ([58]) referring to Hunter v Chief Constable of the West Midlands Police [1982] AC 529. …

(5) In examining aspects such as abuse, the court is concerned with balancing interests: not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice. It is important therefore here to emphasise that when the court is dealing with the HendersonvHenderson type of abuse, it is not looking at an absolute bar to litigation such as issue estoppel or cause of action estoppel. On the contrary, in considering this type of abuse, the court is required to assess a number of factors and balance competing interests. See here, Bradford and Bingley Building Society, 1490F–H. It is also worth making the following observations at this juncture:

(a) There is conceptually an important distinction between absolute bars such as issue estoppel and the type of abuse with which we are concerned. In the former situation, the party who seeks to re-litigate an issue or cause of action has already had his day in court, whereas in the latter situation, that party has not: cf Johnson v Gore Wood, 59D (‘It is one thing to refuse to allow a party to re-litigate a question which already has been decided; it is quite another to deny him the opportunity of litigating for the first time a question which is not previously being adjudicated upon’ (Lord Millett)).

(b) The assessment of different factors and balancing competing interests can be said to be an exercise of a discretion. … It is unnecessary for present purposes to decide whether or not a discretion is actually being exercised.  The more important point to bear in mind is that an appellate court is obliged to pay sufficient regard to the decision of the court below and should be reluctant to interfere where the decision is based on the assessment or balancing of a number of factors.  Nothing in the two said cases suggests otherwise; in fact, quite the contrary.”

36.I agree with Mr Ismail that the Defendant ought not to be allowed to raise clause 16(3) of the Agreements now for the argument that it precludes the Plaintiff’s claim for common law damages by reason of the fact that the Plaintiff resold the Units in March 2010.

(1) The Plaintiff made clear its position in the Statement of Claim in August 2013 that it was claiming common law damages (based on the difference between the price under the Agreements and the market value of the Units as at the date of the Determination Notices).

(2) In the Statement of Claim, the fact that the Units had been resold in March 2010 was also clearly pleaded.

(3) The Defendant took a variety of defences in opposition to the Plaintiff’s claim and application for summary judgment, but none were based on clause 16(3).  See 2015 Judgment at [21].  No reason has been given as to why the argument based on clause 16(3) was not advanced earlier, and at least by the stage of the summary judgment application, since (if correct) it would have afforded the Defendant a complete defence to the Plaintiff’s claim, and there simply would not be any assessment of damages to carry out.

(4) It cannot be said that the Defendant’s legal advisers were unaware of the possibility of the argument.  Mr Wou was junior counsel in King’s City, the defaulting purchaser in King’s City, where a similar defence based on a virtually identical clause was advanced.  Mr Ismail pointed out, and Mr Wou did not deny, that the defaulting purchaser in King’s City was in fact controlled by the same person who controls the Defendant in the present case, namely Mr Lauw Siang Liong.  The judgment of the Court of Appeal in King’s City was given in June 2013.  The Defence and Counterclaim in the present proceedings wasdated 22 November 2013, and it was amended on 18 September 2014.  Both the original Defence and Counterclaim and Amended Defence and Counterclaim bear Mr Wou’s signature. 

(5) The judgment on the Plaintiff’s application for summary judgment was given in May 2015.  Since then, the parties have been preparing for the assessment of damages, including the obtaining of expert valuation evidence, on the basis that the Plaintiff is entitled to pursue its claim for common law damages as pleaded all along in the Statement of Claim.

(6) There has been no appeal from the 2015 Judgment.  However, the effect of the Defendant’s proposed amendments is to challenge the result of that judgment.

37.In the circumstances, the defence based on clause 16(3) of the Agreements could with reasonable diligence have been raised much earlier, and should have been raised at the hearing of the summary judgment application before Madam Recorder Linda Chan SC.

38.Mr Wou does not suggest that the defence based on clause 16(3) of the Agreements could not have been raised before Madam Recorder Linda Chan SC.  Rather, he says that the point goes to quantum, whereas Madam Recorder Linda Chan SC was only concerned with the question of whetherthe Defendant could raise any arguable defence. However, the Defendant’s own case is that its construction of clause 16(3) precludes the Plaintiff’s claim for damages entirely.  If so, that must have been a matter which could have been put forward in defence to the application for summary judgment.  It matters not whether one describes it as a defence going to liability or to quantum.

39.Mr Wou further argued there is no abuse of process as firstly, the upcoming assessment of damages is not a separate set of proceedings with a different case number, and secondly, there has been no judgment on the construction of clause 16(3) of the Agreements.  However, the purpose of the Henderson v Henderson principle is to prevent abuse of the process of the Court.  Its application cannot depend on whether the upcoming assessment of damages bears a different case number to that of the 2015 Judgment.  Furthermore, the classic application of the principle is precisely in the situation where the issue in question was not dealt with in an earlier judgment, the point being that the issue could have been, but was not, raised for the Court’s consideration at that time.

40.Mr Wou also suggested in his skeleton argument that the argument based on clause 16(3) had been foreshadowed in the Defendant’s witness statement (paragraph 51 of the statement of Law Wai), and therefore that the Defendant could raise the point without pleading.  At the hearing however, he accepted that the Defendant did need to make the amendments if it was to advance this defence.  In any event, I do not accept that the point had been foreshadowed in the witness statement of Law Wai.  Read in context, paragraph 51 was addressing the Plaintiff’s failure to mitigate its loss.

41.I therefore refused the Defendant’s proposed re-amendment to its Defence and Counterclaim pursuant to the principle in Henderson v Henderson also.

Whether clause 16(3) of the Agreements goes to liability or quantum

42.Mr Ismail further submitted that clause 16(3) of the Agreements goes to the question of liability, which was already dealt with by the summary judgment application, rather than damages, with which the upcoming assessment before Anthony Chan J is concerned.  He submitted that the Defendant is not entitled to argue at the assessment of damages that he is not liable to the Plaintiff for damages at all, and can only take issue with the quantum of such damages.

43.I am not convinced that one can “categorise” clause 16(3) as one of “liability” or of “quantum”. As Mr Ismail submits (and as held in King’s City), clause 16(3) is a liquidated damages clause.  The clause wouldarise for consideration if there had been a claim for liquidated damages, and depending on the facts of the particular case, the clause might be relevant at the time of determining liability, or quantum, or both.

PLAINTIFF’S APPLICATION TO AMEND THE STATEMENT OF CLAIM AND ADDUCE SUPPLEMENTAL EXPERT REPORT

44.The Plaintiff’s Summons sought leave to amend its Statement of Claim, and to file a supplemental expert report, for the purpose of introducing an additional basis for the assessment of damages.  That basis is the difference between the price under the Agreements and the market value of the Units as at the date of the originally scheduled deadlines for completion in July 2009 (as opposed to the date of the Determination Notices). 

Principles on a late application to amend or introduce new evidence

45.The applicable principles are as follows.

(1) In this post-CJR era, a late application to amend or to introduce new evidence has a fairly high threshold to pass: Wise Union Industries Ltd v Hong Kong Science and Technology Parks Corporation, unreported, HCAL 12/2009, 21 September 2009, at [2], per Andrew Cheung J (as he then was).

(2) The prejudice which will be caused by refusing an application for late admission of evidence has to be balanced against the prejudice caused to the other party in allowing it in at a late stage: Chan Wing Cheung, Allan v Ho Shu Yee, Susana, unreported, CACV 393/2004, 10 January 2005, at [9(1)], per Ma CJHC (as he then was).

(3) Where an indulgence is sought from the Court, it would be a rare case that this would be given, even on terms as to costs, without a satisfactory explanation being given to justify the grant of the indulgence: Chan Wing Cheung, Allan at [9(4)].

Application of principles to the present case

46.The Plaintiff’s Summons, taken out on 26 March 2018, is clearly late.

(1) When the Plaintiff applied for summary judgment against the Defendant (in the 2015 Judgment), it did so on the basis that it was seeking the difference between the purchase price of the Units and the market value as at the date of the Determination Notices (see 2015 Judgment at [19]).

(2) As early as 1 February 2017, the parties had agreed that the reports of their respective experts (prepared in 2016) would beadduced as evidence at the assessment of damages, as recorded in Master J Wong’s order of that date.

(3) More than a year later, the Plaintiff had indicated for the first time in its Pre-Trial Review Notice of 7 March 2018 that it would seek leave (at the pre-trial review of 14 March 2018) to file a supplemental report regarding the market value of the Units as at the scheduled completion dates.  There was at that point no indication that an application would also be made to amend the Statement of Claim.

(4) At the pre-trial review, Anthony Chan J had ordered that the Plaintiff and Defendant should serve their respective opening submissions not less than 14 and 7 days before the commencement of the assessment, that is, by 25 April 2018 and 2 May 2018.

(5) Anthony Chan J had also ordered that save for the Defendant’s amendment application and the Plaintiff’s application to file a supplemental report, there should be no further interlocutory application made without leave of the Court.  The Plaintiff did not apparently indicate that it was going to apply to amend its Statement of Claim as well.

(6) According to the Defendant, the Court did not deal with the Plaintiff’s application for filing of a supplemental expert report at the pre-trial review as there was no summons before the Court.

(7) Yet the Plaintiff still did not act with expedition.  The Plaintiff’s Summons (to amend the Statement of Claim and file a supplemental report) was not taken out until 26 March 2018, and the intended supplemental report was not produced until the same date, as an attachment to the 3^rd Affirmation of Kwok Man Shun Wilson filed on that date.  The estimated time for the Plaintiff’s Summons was stated to be 3 minutes only, and was fixed for the time when the Defendant’s Summons was to be heard, that is, 25 April 2018.

47.Mr Ismail argued that no prejudice would be caused to the Defendant by the late amendment and supplemental report, as the Defendant’sown expert had indicated that he would be able to provide a responsive report by 2 May 2018.  However, I agree with Mr Wou that the Defendant would have suffered prejudice if the Plaintiff’s amendments had been allowed:

(1) the Plaintiff had filed its opening submissions on the day prior to the hearing.  Those submissions did not address the Defendant’s response (whether its pleading or evidence) to the Plaintiff’s supplemental report, putting the Defendant at a disadvantage.  It is not an answer to say that the matters can be dealt with by way of supplemental submissions — the Defendant was entitled to expect that the timetable ordered by the Court at the pre-trial review would be adhered to;

(2) even if the Defendant’s expert were able to prepare a responsivesupplemental report by 2 May 2018, this would have coincidedwith the deadline for the Defendant’s own opening submissions. The Defendant would have been pressed for time to deal with this new evidence in its submissions;

(3) after the Defendant’s expert provided his responsive report, the parties’ experts would have needed to meet on a without prejudice basis to narrow their differences, and to prepare a joint report to deal with the areas of agreement and disagreement.  The Plaintiff’s Summons provided that all of this was to be done within 2 days after the filing of the Defendant’s supplemental report.  The Defendant’s evidence was that 2 days would havebeen insufficient time for preparing the joint report, and at least a week would have been required, which would have meant that the joint report would only have been ready on 9 May 2018,that is, the first day of the assessment.  In order to address this complaint, Mr Ismail submitted that he would not, after all, pursue this part of the Plaintiff’s Summons.  But this would not have reduced the prejudice to the Defendant.  If anything, it would have aggravated it, as the Defendant would not then know which matters were agreed or not agreed between the experts;

(4) the burden of having to plead a response to the Plaintiff’s proposed amendments, to prepare a supplemental expert report, and to discuss areas of agreement and disagreement with the Plaintiff’s expert would all have been a distraction from the Defendant’s final preparation for the assessment.  This form of prejudice has been recognised by the courts.  See Li Xiao Yun v China Gas Holdings Ltd, unreported, CACV 38/2013, 11 March 2013, at [18] per Lam JA (as he then was); Star Industrial Co Ltd v Japan Home Centre (HK) Ltd, unreported, HCA 2294/2008, 21 December 2010, per Deputy High Court Judge Carlson at [2].

48.I also agree that the explanation given for the delay is not satisfactory.  In the 3^rd Affirmation of Kwok Man Shun Wilson at paragraph 5, the reasons given for the delay are that:

(1) in Richly Bright International Ltd v De Monsa InvestmentsLtd (2015) 18 HKCFAR 232, the Court of Final Appeal stated at [42] to [44] that the objective of an award of damages for breach of contract is to place the innocent party in the same position as if the contract had been performed, and in the case of a contract for the sale and purchase of property, where the purchaser defaults, the vendor will in the ordinary case be entitled to an award of damages equal to the difference between the contract price and the market value of the property at the completion date;

(2) the Court of Final Appeal’s judgment was given on 18 May 2015, after the close of pleadings and the 2015 Judgment (of 11 May 2015);

(3) the Plaintiff’s original pleaded claim was based on a judgment of the Court of First Instance in 2000 which was followed by the Court of Appeal in 2013 (neither are identified);

(4) as soon as the Plaintiff’s counsel became aware of the Court ofFinal Appeal’s judgment, he advised that leave be sought to file evidence of the market values of the Units as at the completion dates (in July 2009) in the Plaintiff’s pre-trial review notice filed on 7 March 2018.

49.However:

(1) Richly Bright did not establish any new principle for the assessment of damages.  At [42] to [44], Ribeiro and Fok PJJ were simply setting out the well-established measure of damages for a breach of contract. This cannot explain why the proposed amendments were not put forward earlier. Mr Ismail said in his skeleton that it was the only decision of the Court of Final Appeal, as far as the Plaintiff was aware, which dealt with the measure of damages to which an innocentvendor was entitled.  Even if that were the case, this would not explain why the Plaintiff (on its case) did not apply the general, well-established measure of damages for breach of contract in pleading its claim; [1]

(2) even if Richly Bright postdated the close of pleadings and the 2015 Judgment, this does not explain why the Plaintiff did not seek to amend the Statement of Claim between 2015 and 2018;

(3) even if the Plaintiff’s counsel was not aware of Richly Bright until recently—just how recently is not known—the proposed amendments could always have been made prior to that time based on the general, well-established measure of damages for breach of contract;

(4) even if the Plaintiff’s original pleaded claim was based on other judicial authorities, this would not have precluded the Plaintiff from pleading an alternative claim at the same time (as indeed the draft Amended Statement of Claim attached to the Plaintiff’s Summons seeks to do).

50.Therefore, even if it can be said that the claim in the Plaintiff’s proposed amendments is an arguable one, this is no answer to the Defendant’s complaint of delay and prejudice.

51.I bear in mind the fact that refusing leave for the making of the Plaintiff’s proposed amendments and filing of the Plaintiff’s supplemental report will mean that the Plaintiff will not be able to advance the case based on such amendments.  However, this prejudice is self-induced.

52.Given the unexplained delay in the making of the application and the prejudice which the proposed amendments and new evidence would cause to the Defendant, I dismissed the Plaintiff’s Summons.

COSTS

53.Given that both parties have been unsuccessful on their respective summonses, and that both summonses were the subject of substantial argument both in the written and oral submissions, I will make an order nisi that there be no order as to costs.

Mr Anthony Ismail, instructed by Chu & Lau, for the plaintiff

Mr Jean-Paul Wou, instructed by ONC Lawyers, for the defendant