Tao Soh Ngun (also known as Lo To Li Kwan or Lo To Lee Kwan) v. Hsbc International Trustee Ltd
Read the full judgment text of CAMP 136/2018 on BabelCite. This Court of Appeal judgment was delivered on 8 October 2018 before Kwan JA, Barma JA.
Civil procedure – pleadings – rule against departure – Order 18 rule 10(1) of the Rules of the High Court – trust case – family trust established for estate duty planning to hold the controlling shareholding in Great Eagle Holdings Limited – plaintiff in her personal capacity and as sole executrix of her late husband's estate alleged trustee had breached its duties by failing to act on her 2016 Letters to purchase further shares to maintain the Trust's controlling shareholding in the face of KS's increasing shareholding – whether impugned parts of the reply (concept of "dominant and/or de facto controlling shareholding" and the "aggregate shareholding" of the Trust and the Lo family members) constituted allegations of fact or new grounds of claim inconsistent with the statement of claim – court applies Herbert v Vaughan [1972] 1 WLR 1128 that "inconsistent" means "new" or "different", not merely "mutually exclusive" – pleading of a different factual basis for an existing cause of action can amount to a "new ground of claim" – adding "dominant and/or de facto" to "controlling shareholding" introduced a new or different concept constituting a departure; the remaining averment could stand with those offending words struck out – pleading of aggregate shareholding of the Trust and the Lo family members and the alleged alignment of their interests prior to the fourth quarter of 2015 and absence of alignment thereafter was a clear new ground of claim inconsistent with the case pleaded in the statement of claim, which focused on preservation of a controlling shareholding "within the Trust" – appeal largely dismissed with limited modification – case management – amendment of pleadings – whether trial judge erred in allowing the plaintiff's late amendments to the statement of claim and reply, and consequential amendments to the defence, on the first day of trial – court applies the high threshold for appellate interference with a case management discretion (Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887) and the principles on amendment of pleadings from Igal Dafni v CMA CGM SA [2013] 2 HKLRD 73 – trial judge had found that the amendments concerned matters already in issue and covered in the evidence, that the plea of "gross negligence" was a legal conclusion and not a new factual averment, and gave consequential directions to manage prejudice – no duty to address every submission or authority cited (English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409) – leave to appeal refused – costs ordered accordingly with certificate for three counsel in each set of applications.
Legal issues: Application of rule against departure to impugned reply averments · Interference with trial judge's case management discretion to allow late amendments
Outcome: For CAMP 135 and 136/2018, leave to appeal was granted to the plaintiff and the appeal was largely dismissed, with the modification that §56AA(3)(i) of the reply was permitted to remain with the words "dominant and/or de facto" struck out. For CAMP 139 and 140/2018, leave to appeal was refused to the defendant.
Cited by 7 cases · Cites 8 cases
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CAMP 135/2018, CAMP 136/2018, CAMP 139/2018 AND CAMP 140/2018 [2018] HKCA 691 CAMP 135/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO 135 OF 2018 (ON AN INTENDED APPEAL FROM HCA NO 3246 OF 2016) ________________________
________________________ CAMP 136/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO 136 OF 2018 (ON AN INTENDED APPEAL FROM HCA NO 355 OF 2018) ________________________
________________________ CAMP 139/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO 139 OF 2018 (ON AN INTENDED APPEAL FROM HCA NO 3246 OF 2016) ________________________
________________________ CAMP 140/2018 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO 140 OF 2018 (ON AN INTENDED APPEAL FROM HCA NO 355 OF 2018) ________________________
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__________________________ REASONS FOR JUDGMENT _________________________ Hon Kwan JA (giving the Reasons for Judgment of the Court): 1.There are before this court four applications for leave to appeal to the Court of Appeal from the decisions of Wilson Chan J on the pleadings in two actions (HCA 3246/2016 and HCA 355/2018). As the trial in the two actions has been adjourned part‑heard on 15 June 2018 and will resume before him on 8 November 2018, we have ordered rolled‑up hearings to be held for these leave applications so that in the event leave to appeal is granted, the hearings will be treated as the substantive appeal and the process expedited to minimise any disruption to the trial. 2.For present purpose, the pleadings in HCA 3246/2016 and HCA 355/2018[1] may be treated as identical. Unless otherwise stated, all references to pleadings in this judgment are to the pleadings in the former action. 3.CAMP 135 and 136/2018 are the plaintiff’s applications for leave to appeal against the decision of the judge on 7 September 2018 in the two actions. He refused leave to appeal to the Court of Appeal at the same hearing. By his orders on that day, the judge struck out parts of the reply in each of the actions[2]. The judge made clear he did so on the sole basis that the offending parts[3] (§56AA(3); the second sentence of §56AA(4); and the words in parentheses in §56AA(5)) contravene the rule against departure in Order 18 rule 10(1) of the Rules of the High Court. 4.CAMP 139 and 140/2018 are the defendant’s applications for leave to appeal against the decisions of the judge in the two actions on 1 June 2018 and his consequential directions on 15 June 2018. By the orders and consequential directions, the plaintiff was given leave to amend the statement of claim[4], the defendant had leave to make consequential amendments to the defence[5] and the plaintiff had leave to amend the reply[6] consequential upon the amendments to the defence. The defendant objected to a substantial part of the amendments allowed. On 7 September 2018, the judge refused the defendant’s application for leave to appeal to the Court of Appeal. 5.At the conclusion of the hearing, we reached these decisions. 6.For CAMP 135 and 136/2018, we granted leave to appeal to the plaintiff. We upheld the judge’s decision. Of the parts of the reply he ordered to be struck out, we only permitted §56AA(3)(i) to remain but with the words “dominant and/or de facto” struck out. Save as aforesaid, we dismissed the appeal. 7.For CAMP 139 and 140/2018, we refused leave to appeal to the defendant. 8.These are the reasons for our decisions. CAMP 135 and 136/2018 The rule against departure 9.The judge struck out parts of the reply on the ground that they set up a new case which is inconsistent with the statement of claim. 10.Order 18 rule 10(1) provides as follows:
11.We have been referred by the parties to quite a number of authorities on this provision. Mr Benjamin Yu, SC relied in particular on these passages in Bullen & Leake & Jacob’s Precedents of Pleadings (18th ed) vol 1 at §1-37, which read as follows:
12.Mr Yu contended that the impugned amendments in the reply should fall within the first paragraph in the extract and not the second. 13.We do not think it helpful to put a gloss on the plain meaning of “inconsistent with a previous pleading” in Order 18 rule 10(1) by extensive citation of authorities. It is necessary only to say this. 14.Both the phrases “any allegation of fact” and “any new ground of claim” in that provision are subject to the words “inconsistent with a previous pleading of his”. “Inconsistent” here does not mean “mutually exclusive” but merely “new” or “different” (Herbert v Vaughan [1972] 1 WLR 1128 at 1131H). And, as pointed out by Mr Paul Girolami QC, the words used in the provision are not “new claims” or “new causes of action”, but “new ground of claim”. 15.Not every new averment that is different from a previous pleading would necessarily offend the rule against departure. It must be a question of degree whether an averment is sufficiently “new” or “different” to make it “inconsistent” with a previous pleading. So even if the reply does not introduce a “new claim” or “new cause of action” but pleads a different factual basis for maintaining a cause of action already made in the statement of claim, this would constitute a “new ground of claim” that is “inconsistent with a previous pleading” and would contravene the provision. In that situation, the statement of claim should be amended. 16.It does not appear to us the judge had misconstrued Order 18 rule 10(1). We turn to consider the submissions of Mr Yu that the judge had misapplied this provision. The averments in the statement of claim 17.We start with the relevant averments in the statement of claim. They are §§52(4)(i), (iii) and (iv). 18.§52(4)(i) alleged that the defendant failed to take into account “the purpose of the Trust (as pleaded in paragraph 5 above and paragraphs 2(1)‑(4) of the [reply].” §§2(1) to (4) of the reply (which remained unchanged in the latest amendment) stated that:
19.§52(4)(iii) alleged that the defendant failed to take into account “that the most important asset in the Funds is and has been the block of controlling shareholding in the Company, and the importance of maintaining it (as pleaded in paragraph 15(3) of the [reply]).” §15(3) of the reply (which remained unchanged in the latest amendment) stated that:
20.§52(4)(iv) alleged that the defendant failed to take into account “that KS[8] had been gradually and continuously increasing his holding in the Company, and that the controlling shareholding in the Company held by the Trust was at risk of being jeopardised (as pleaded in paragraph 52E(I)(1) below).” 21.As pleaded above, the plaintiff’s case is that it is a purpose of the Trust that “the controlling shareholding in the Company” shall be “preserved within the Trust” and the Trustee should have taken this, and the importance of maintaining “the block of controlling shareholding in the Company”, into account. The averments in the defence 22.The averments in the defence in answer to §§52(4)(i), (iii) and (iv) of the statement of claim are in §102(2)(c) to (d), which read as follows:
The averments in the reply 23.In reply to the above averments in the defence, §56AA of the reply pleaded as follows (we have italicised the impugned averments struck out by the judge):
24.In contrast to the statement of claim, which pleaded the preservation of a “controlling shareholding” “within the Trust”, §§56AA(3)(i) and (ii) pleaded a “dominant and/or de facto controlling” shareholding or stake. Furthermore, §56AA(3)(ii) pleaded “the aggregate shareholding” held by the Trust “and the Lo family members” as representing a “dominant and/or de facto controlling stake”. The second sentence of §56AA(4) alleged that “some of the Lo family shareholders’ interests in the Company” were no longer “aligned with that of the other Children or that of the Trust”, and the words in parenthesis in §56AA(5) are to like effect. The judge’s decision 25.The judge took the view that the impugned parts in the reply plainly set up a new case inconsistent with the case pleaded in the statement of claim. The concept of a “dominant and/or de facto controlling shareholding” in these amendments has not been pleaded in the statement of claim and is inconsistent with the previous pleading, which exclusively referred to the Trust as having a “controlling shareholding” in the Company. 26.Even more importantly, the amendments clearly went beyond the case as pleaded in the statement of claim by making a new allegation that the “aggregate shareholding” held by the Trust and the Lo family members represented a “dominant and/or de facto controlling stake” in the Company. The statement of claim had nothing to do with any notion of the aggregation of the shareholdings held by the Trust and the Lo family members. It was alleged there that the purpose of the Trust was to preserve a controlling shareholding “within the Trust”. The plaintiff was seeking to run a new case in the reply premised on the alleged “alignment” of interests of the Lo family members and those of the Trust prior to the fourth quarter of 2015, and the alleged absence of such alignment after the fourth quarter of 2015. 27.The judge summed up his analysis in this way:
28.He therefore held that the impugned amendments constituted a departure from the statement of claim and should be struck out. The plaintiff’s submissions 29.Mr Yu submitted that the plea of “a dominant and/or de facto controlling shareholding” in the Company is not a new ground of claim, and is also entirely consistent with the plaintiff’s case as pleaded in the statement of claim that the Trustee continues to retain “a controlling shareholding” in the Company notwithstanding that such shareholding is less than 50%. 30.He drew attention to certain paragraphs in the statement of claim (§§52(4)(iii) and (iv), 52D(3), (4), (6) and 52E(IV)(9)) in which it was pleaded that: (1) the Trust held and continues to hold (even after July 2004) a controlling shareholding in the Company, and that such controlling shareholding (hence its value) is at risk of being jeopardised by reason of the continued accumulation of shares by KS; (2) the Trust’s shareholding in the Company, which has at all material times after July 2004 been less than 50% (i.e. approximately 33%) nonetheless constitutes a controlling shareholding; and (3) the defendant had acted in breach of its duty not to allow itself to be placed in a position of conflict and such conflict had arisen by the time the plaintiff issued her instructions under the 2016 Letters which KS did not support, and the duties of the defendant owed to the plaintiff and the beneficiaries of the Trust are not “aligned with” the interests of KS. 31.Further, the judge had understood §56AA(1) of the reply as an acknowledgment by the plaintiff that “a controlling shareholding” in the Company meant a shareholding of more than 50%, such that when the impugned §56AA(3) was read with §§56AA(1) and (2), he took the view that §56AA(3)(i) should be regarded as an averment of a new case. Properly read, §56AA(1) was only stating that before 2004 when the Trust had an effective shareholding of more than 50% in the Company, it represented a controlling shareholding. This does not mean that a controlling shareholding can only be constituted by a holding of over 50%. 32.Hence, Mr Yu submitted that none of the factual averments in §56AA(3) give rise to any new causes of action, nor are they inconsistent with any facts pleaded in the statement of claim. 33.We do not agree with Mr Yu. 34.The judge has not made the error as contended by Mr Yu of treating a “controlling shareholding” as pleaded in the statement of claim to mean a majority shareholding of over 50%. 35.The phrase “a controlling shareholding” was the subject of debate before the judge. The defendant contended this must mean a majority shareholding of over 50%[11]. The plaintiff argued to the contrary[12] and submitted there is no basis to contend that the original pleaded case of “a controlling shareholding” was only referable to a majority shareholding of over 50% prior to 2004, when the pleadings consistently referred to the Trust’s shareholding (even where it was less than 50%) as controlling shareholding whether before or after 2004. The plaintiff prayed in aid the definition of “control” in the Codes on Takeovers and Mergers and Share Buy‑Backs, and this is defined to mean “a holding, or aggregate holdings, of 30% or more of the voting rights of a company, irrespective of whether that holding or holdings gives de facto control”. 36.The judge was careful to emphasise that for the avoidance of doubt, by his decision he has not made a ruling as to whether the reference to a “controlling shareholding” in the statement of claim must mean a majority shareholding of over 50% in the Company[13]. He expressly stated that the pleading of “controlling shareholding” in the statement of claim by itself does not prevent the plaintiff from arguing that a “controlling shareholding” can be constituted by something less than a majority shareholding[14]. 37.The phrase “controlling shareholding” has been used consistently in the statement of claim. We do not accept the adding of the words “dominant and/or de facto” to “controlling shareholding” in the reply is not meant to convey a new or different concept or an additional layer of meaning to “controlling shareholding”, or that there is no or no significant difference between “a dominant and/or de facto controlling shareholding” and “a controlling shareholding”. 38.We would therefore strike out the words “dominant and/or de facto” in §56AA(3)(i) of the reply as this allegation of fact is a departure from, and for this reason inconsistent with, the previous pleading. With these offending words struck out, there is no reason why the averment in §56AA(3)(i) cannot remain. We differ from the judge to this limited extent. 39.As for §§56AA(3)(ii) and (iii), Mr Yu submitted that they do not constitute a new ground of claim or cause of action. The averments in these sub‑paragraphs are not “essential components” to the plaintiff’s cause of action. They are just allegations of “relevant facts” and merely recite historical facts based on shareholdings in the Company held by the Trust and the Lo family members in the past, which are well known to the defendant and are matters of public record. Such factual averments are not inconsistent with any plea in the statement of claim. They merely serve to clarify the plaintiff’s case. 40.Mr Yu submitted that the court should take a broader approach and have regard to the totality of the pleading. He pointed to various parts of the statement of claim (§§52D(3), (4) and (6); the opening sentence of §52E, §52E(IV)(9)) and the original reply (§§2(5), 2(13), 2(14), 46(1), 46(2), 52) to bring out the point that the plaintiff’s case has all along been that the interests of some of the Lo family members (including in particular KS) have not been “aligned with” that of the plaintiff and the Trust, and her complaint all along is that the defendant should have acted on her letters of request and purchased more shares in the Company as the controlling stake was under threat and at risk of being jeopardised. The impugned parts of the reply did not effect any change in the cause of action pleaded in the statement of claim. For good measure, he added that the judge did not appear to have considered that the defendant did not seek to challenge the first sentence in §56AA(4) of the reply or other parts of §56AA(5). 41.We are not persuaded by Mr Yu. It matters not whether the impugned amendments are “essential components” to the plaintiff’s cause of action or just allegations of “relevant facts”, as he has submitted. We agree with the judge that the pleading of “aggregate shareholding in the Company held by the Trust and the Lo family members”, the alignment of interest prior to the fourth quarter of 2015 and the absence of alignment of interest since the fourth quarter of 2015 represented a clear departure from the plaintiff’s case in the statement of claim. Even if the cause of action should remain unchanged, as contended by Mr Yu, they constitute at least a “new ground of claim” in the sense that they pleaded new and different factual basis for maintaining a cause of action already made in the statement of claim. This cannot be explained away by arguing that those amendments are merely historical background facts. 42.The fact that the first sentence in §56AA(4) or other parts of §56AA(5) were not challenged is immaterial. As for the various paragraphs of the statement of claim referred to by Mr Yu, the focus and context of those parts of the statement of claim are different. The fact remains that those other paragraphs pleaded for wholly different purposes had not hitherto been invoked or relied on as the factual basis specific to the pleading in the impugned paragraphs of the reply. 43.Mr Yu complained that the judge did not explain in his reasons (given ex tempore) why he struck out the second sentence of §56AA(4) and the words in parenthesis in §56AA(5). We think it is apparent that these parts are struck out because they relate to a new ground of claim based on the absence of alignment of interests of the Lo family shareholders, and are therefore inconsistent with the existing pleading. We agree with the judge. 44.We do not find it necessary to deal with the respondent’s notice, in which the defendant sought to contend that the judge’s decision should be upheld on two alternative grounds. Conclusion and costs 45.The plaintiff’s main contention was that the judge had misapplied the rule against departure in Order 18 rule 10(1). The challenge was not mounted against an exercise of discretion of the judge or a case management decision. We granted leave to appeal upon being satisfied that the prospect of the intended appeal is “reasonable” and therefore more than “fanciful”, without having to be “probable”. We dismissed the appeals for the reasons given above. 46.We ordered the costs of each of the leave applications to be in the cause of the appeal. We awarded the costs of the appeals to the defendant as it is the successful party as the judge’s decision has been upheld save to a very limited extent. We also gave a certificate for three counsel. CAMP 139 and 140/2018 47.The trial on liability in the two actions commenced on 29 May 2018[15]. The plaintiff lodged the opening submission on 15 May. On 22 May 2018, the defendant lodged its opening submission and took objection to unpleaded claims and allegations in the plaintiff’s opening[16]. On 28 May 2018, the day before the commencement of trial, the plaintiff issued summonses to amend the statement of claim and the reply, in an attempt to put matters beyond doubt and to meet the defendant’s pleading objection. The judge dealt with the summonses on 1 June (the fourth day of trial) and made the orders allowing the amendments and consequential directions on 15 June that are the subject of the present applications. The trial continued before the judge until 15 June and was adjourned to 8 November 2018, with further trial dates reserved in January and March 2019. By the time the trial was adjourned part-heard, the plaintiff had closed her case and the defendant’s first witness had completed her evidence. The subject amendments 48.It would be convenient to divide the subject amendments into the three broad categories as submitted by Mr Yu. We will first summarise the parties’ contentions in respect of each category before we return to the general grounds of opposition of Mr Girolami which would apply across the board. (1) The first category 49.They are §§52(4)(i), (iii) and (iv), 52F of the statement of claim and §23 of the reply. 50.The defendant’s contentions were as follows. The amendments involved a fundamental change of the plaintiff’s case in relation to the alleged purpose of the Trust in that the plaintiff sought to convert what was previously pleaded in §2(2) to (3) of the reply as mere “intentions and wishes” of the Father and the plaintiff into an alleged “purpose” of the Trust. The plaintiff raised new issues in alleging that the defendant failed to take into account relevant considerations, namely, that the most important asset in the Trust Fund is and has been the block of controlling shareholding in the Company and the importance of maintaining it, and that KS had been increasing his shareholding putting the controlling shareholding held by the Trust at risk of being jeopardised. Further, a new case was raised in that the defendant had taken into account an irrelevant consideration, namely the concentration risk posed by the Trust’s shareholding in the Company. 51.The plaintiff’s answer was that the amendments did not raise a new case but merely referred to matters which have already been pleaded and already in issue and canvassed in evidence. They were merely “additional particulars” of the allegations that the defendant failed to take into account relevant considerations when considering the plaintiff’s requests or took into account irrelevant considerations. (2) The second category 52.They are §§52, 52C and 52E of the statement of claim and §§54A and 56A of the reply. They were introduced to include the averment of “gross negligence” to the existing allegations of inter alia negligence and wilful breach or wilful neglect. 53.The defendant contended the amendments introduced a new case, requiring the defendant to rebut an entirely different standard. The plaintiff’s answer was that they merely stated an additional legal consequence or conclusion based on existing pleaded facts, in respect of which the parties have already addressed in their evidence. (3) The third category 54.This comprised §52A of the statement of claim, which made reference to paragraphs in the reply in relation to allegations that the defendant had misdirected itself on the effect of the documents pleaded therein. 55.The defendant contended that the amendment raised a new case that it had misdirected itself on the effect of various documents and was significant in that they sought to introduce such allegations as part of the plaintiff’s claims against the defendant for breach of trust. The plaintiff’s answer was that the amendment did not introduce any new factual matters but merely referred to matters which have already been pleaded in the original pleadings. A case management decision 56.The judge’s decision to allow the subject amendments was made in the exercise of his case management powers. As explained in his short ruling of 1 June 2018 (given on the same day he heard the applications), he permitted the amendments by reason that they concern matters which had already been pleaded in other parts of the plaintiff’s pleadings (and thus were already in issue between the parties, and dealt with by them in the evidence) and there could be no element of surprise or prejudice; the amendments to plead “gross negligence” do not introduce any new factual matters or allegations, and/or are merely legal consequences arising from existing pleaded facts and do not give rise to any prejudice to the defendant[17]. 57.On well‑established principles, the plaintiff has a very high hurdle to surmount to satisfy this court that the judge’s exercise of discretion in a matter of case management should be interfered with. As stated in Wong Kar Gee Mimi v Severn Villa Ltd v Severn Villa Ltd [2012] 1 HKLRD 887 at §31:
58.We will first deal with the general grounds of opposition advanced by Mr Girolami before turning to the specific grounds of appeal in the written submission which is the essentially same as that considered by the judge in refusing leave to appeal. The general grounds of opposition 59.Mr Girolami emphasised that the allegations made against the defendant in the two actions are of the utmost seriousness. The defendant should be able to conduct this litigation on the basis that all the relief and remedies claimed against him have been set out in the statement of claim. The plaintiff only took out the amendment summonses the day before trial, and that in itself was prejudice to the defendant. He complained that the scope of the allegations in the amendments is unclear and seems to be “still developing”. He pointed out additional discovery was necessitated by the amendments and this has an impact on the defendant’s witnesses. He castigated the procedural disadvantage the defendant has suffered as an ambush and totally unfair to the defendant. 60.To make good his submission, he took us through salient parts of the defendant’s opening in which objection was taken to unpleaded issues involving a factual allegation that substantial blocks of shares in the Company are “valued at a premium from the exchange price and the premium increases with the relative size of the holding and extent of control”[20]. It was submitted in the opening that this allegation, which is “completely unevidenced”, is disputed by the defendant and if it were a live issue would require further detailed factual evidence as well as expert evidence. 61.To further illustrate his point, Mr Girolami took us to the amendments in §52(4) of the statement of claim. He pointed out the “intentions and wishes” of the Father and the plaintiff pleaded in §2(2) and (3) of the existing reply were transmogrified into the “purpose” of the Trust in §52(4)(i) of the amendments to the statement of claim and this featured in an allegation of the relevant considerations which the defendant knew but failed to take into account. By the amendments, the plaintiff sought to expand her case to raise a separate breach of duty arising from the alleged premium attaching to the block of controlling shareholding and the importance of maintaining the controlling shareholding and this is a free‑standing claim for damages. And similar considerations also applied to the other amendments the defendant had objected to. 62.Mr Girolami submitted that the judge had fallen into error in allowing the amendments to the statement of claim just because they relate to matters already pleaded in the existing reply. The judge failed to take into account that the matters pleaded in §2 of the existing reply were in the context of the plaintiff’s reasons for issuing the 2016 Letters, but not in the context of breach of duties alleged in §52 of the statement of claim. Further, in allowing the amendments, the judge failed to take into account other litigation. Mr Girolami pointed to the separate action brought by Lu against the defendant trustee making similar claims, and the application of KS for joinder in the present proceedings (in fairness to the judge, the joinder application was taken out on 10 August 2018, after the judge had granted the amendments). 63.Mr Girolami and Mr Eugene Fung, SC had appeared for the defendant before the judge on 1 June 2018 in opposing the plaintiff’s applications for amendment. We have no reason to think that in the submissions made on the defendant’s behalf before the judge, counsel would not have mentioned most, if not all, of the important points submitted to this court. We do not think counsel would have forgotten to dwell on the seriousness of the allegations against the defendant, the nature and extent of the new case raised in the amendments to the statement of claim, the lateness of the applications, and all the prejudice that would be suffered by the defendant as a result. The fact that the judge did not expressly mention those matters urged upon him by the defendant’s counsel in a short ruling of four pages given on the same day of the hearing does not mean he had not taken the submissions of counsel into consideration. 64.Insofar as the bulk of the amendments the defendant objected to are in the statement of claim and not the reply, the court is not concerned with the rule against departure in Order 18 rule 10(1). It is a matter of discretion for the trial judge to assess where justice lies, having regard to many factors, whether to allow extensive amendments to be made to the pleadings. The discretion to grant an amendment may be exercised notwithstanding the lateness of the application, and despite the raising of a new claim (as contended by Mr Girolami). The judge had cited to him Igal Dafni v CMA CGM SA [2013] 2 HKLRD 73, in which the relevant principles on the amendments of pleadings were comprehensively set out in §§18 to 22, and the judge had distilled and set out some of the relevant principles in his ruling[21]. 65.We are not persuaded that the judge had failed to take into account relevant matters or had taken into account irrelevant considerations or had misunderstood the law or that the exercise of his discretion went plainly wrong. The judge, who had prepared for the trial and presided over it, has a clear advantage over this court. We were taken by the parties to selective parts of the pleadings they wished to rely on, and we had the benefit of a helpful summary table prepared by the plaintiff’s legal team[22] which summarised in respect of each amendment the averment in the amendment and the existing materials in support of the averment in terms of pleadings, witness statements and oral evidence, documentary evidence and the opening submissions of the plaintiff. In the exercise of case management power, our grasp of and feel for the case can be nowhere as good as that of the trial judge, who would be thoroughly familiar with the pleadings, the opening submissions lodged by the parties, the evidence filed by the parties and the oral evidence given at that stage of the trial. 66.The judge would have borne in mind the broad picture of the entire conduct of these proceedings, the general direction in which the trial was heading, the likely impact on the factual evidence and any expert evidence that might be required when he exercised his discretion in allowing the amendments. Before the trial was adjourned part-heard on 15 June 2018, he gave directions consequential to the amendments, requiring the parties to adhere to a timetable if they intended to give further discovery, and to seek leave to adduce further factual evidence or expert evidence. 67.We are not satisfied there is any valid basis to interfere with the judge’s exercise of discretion in a case management matter on the general grounds of opposition in the oral submissions of Mr Girolami. The specific grounds of the intended appeal 68.The first specific ground was that the judge failed to mention various essential principles regarding a late application to amend pleadings and must have failed to have regard to them. There is nothing in this contention. 69.There is no duty on a judge to deal with every submission made by counsel or set out all the cases cited to him in giving reasons. All that the judge is required to do is to identify the conclusion and explain the manner in which he resolved vital matters in contention to enable the parties to understand why he reached his decision (English v Emery Reimbold & Strick Ltd [2002] 1 WLR 2409 at §19). This the judge had done adequately in his ruling. He had set out the issues necessary for his conclusion. As mentioned above, we have no reason to think he had not taken into consideration the matters urged upon him (similar to those submitted before us) by the defendant’s counsel. 70.The second specific ground was a complaint that the judge took a “simplistic approach” and allowed the amendments simply because they involved “incorporation” into the statement of claim of matters already pleaded in the existing reply. The judge had failed to realise that the amendments sought to raise new claims by introducing matters pleaded in the reply in a different context and for a different purpose. Reliance was placed on Magic Score Ltd v HSBC, HCA 11077/1994 at §§20 to 21 for the statements that a defendant to an action is entitled to know from the statement of claim the precise limits of the claims he is faced with, and should focus on the same and put forward his case in defence, prepare for the evidence and conduct the litigation by reference to those claims. 71.We have considered the above contention when we discussed the more general grounds of opposition in Mr Girolami’s oral submissions. We do not think the judge had taken such a simplistic approach in weighing up all the factors before arriving at the decision to allow the amendments. Not all of the amendments can properly be regarded as raising new claims as opposed to merely clarifying issues already raised. And even if some of the amendments do raise new claims by introducing matters already pleaded in the reply albeit in a different context and for a different purpose, it is within the discretion of the judge to allow these amendments, having regard to other considerations, such as to facilitate the determination of the real question in controversy, the extent to which the subject matter of the averments had been pleaded in the existing pleadings and covered in available evidence so as reduce the element of surprise and prejudice. We would reject this ground of appeal as well. 72.The third specific ground was in relation to the contention that the amendments introduced new claims of “gross negligence”. The complaint was that the judge did not explain how it was thought that the existing pleaded facts would support a claim of gross negligence, or why he thought such a claim was adequately particularised, as it is arguable that gross negligence requires a mental element of which no particulars had been given, see The Ardent [1997] 2 Lloyd’s Rep 547 at 586. 73.No new factual averments have been added in support of the plea of “gross negligence” in the amendments. The judge rightly held that the plea of “gross negligence” is a legal conclusion on the existing pleaded facts and that the difference between negligence (already pleaded) and “gross negligence” is only one of degree and not kind[23]. The defendant can put it no higher that a mental element may be required for “gross negligence”. Even if particulars may be sought, this is not a sufficient reason for disallowing the amendments. 74.There were several contentions in the fourth specific ground. It was submitted that there was no explanation on affidavit for the extreme lateness of the applications to amend pleadings. The defendant had suffered prejudice as a result of being distracted from its trial preparations by the late amendment applications. And there would be further prejudice in that the defendant would have to face substantially altered claims in the amendments. 75.The plaintiff had given the reasons for the lateness of the applications in solicitors’ correspondence and in the submissions placed before the judge for the hearing on 1 June. Any prejudice that might be suffered by the defendant as a result of allowing the amendments would have to be considered in the totality of all relevant circumstances. There is no sufficient indication that the judge had failed to consider all relevant factors. It cannot be said that his decision was outside the generous ambit within which a reasonable disagreement is possible. Conclusion and costs 76.For the above reasons, we refused to give leave to the defendant to appeal against the decision of 1 June and the consequential directions on 15 June. 77.We ordered the defendant to pay the plaintiff’s costs of the leave applications, with a certificate for three counsel.
Mr Benjamin Yu SC, Miss Sara Tong and Miss Andrea Yu, instructed by Li & Partners, for the Plaintiff in HCA 3246/2016 and HCA 355/2018 (Applicant in CAMP 135/2018 and CAMP 136/2018, Respondent in CAMP 139/2018 and CAMP 140/2018) Mr Paul Girolami QC, Mr Eugene Fung SC and Ms Janet Ho, instructed by Clifford Chance, for the Defendant in HCA 3246/2016 and HCA 355/2018 (Applicant in CAMP 139/2018 and CAMP 140/2018, Respondent in CAMP 135/2018 and CAMP 136/2018) [1] HCA 3246/2016 is in respect of the defendant’s breaches of duties in failing or refusing to accede to P’s requests and instructions in letters from January 2016 to September 2016. HCA 355/2018 is a new action commenced to seek relief in respect of the defendant’s breaches of duties as from December 2016. [2] In HCA 3246/2016, it is the Re-Re-Re-Amended Reply. In HCA 355/2018, it is the Re‑Amended Reply. For ease of reference, we will refer to the pleadings as the reply. [3] We only give the paragraph references of the reply in HCA 3246/2016. [4] The latest version as amended in HCA 3246/2016 is the Re-Re-Amended Statement of Claim. The latest version as amended in HCA 355/2018 is the Amended Statement of Claim. For ease of reference, the pleading will simply be referred to as the statement of claim. [5] The latest version as amended in HCA 3246/2016 is the Re-Re-Amended Defence. The latest version as amended in HCA 355/2018 is the Amended Defence. For ease of reference, the pleading will simply be referred to as the defence. [6] The latest version as amended in HCA 3246/2016 is the Re-Re-Re-Amended Reply. The latest version as amended in HCA 355/2018 is the Re-Amended Reply. For ease of reference, the pleading will simply be referred to as the reply. [7] Great Eagle Holdings Limited [8] Lo Ka Shui, one of the Children [9] Lu, Archie, Nina, Annie and Gwen are some of the Children. [10] Transcript, p 5 lines F to M [11] Defendant’s skeleton submissions dated 4 September 2018, §8 [12] Plaintiff’s skeleton submissions dated 5 September 2018, §73 [13] Transcript, p 5 lines Q to R [14] Transcript, p 6 lines H to I [15] There is an order for a split trial on liability and quantum. The parties also agreed to an order for expedited trial in view of the advanced years of the plaintiff. [16] §§36 and 37 [17] The Ruling, §§7, 8, 12 to 14 [18] Lee Tak Yee v Chen Park Kuen [2001] 1 HKLRD 401 at 403E to H [19] Kan Miu Wah v Aeroflot Russian International Airlines, CACV 142/2006, §11; Chan Wing Cheung v Ho Shu Yee, CACV 393/2004, §8 [20] §§36 and 37 [21] §§5 and 6 [22] This was annexed to the plaintiff’s submissions dated 5 September 2018 for the hearing before the judge on 7 September 2018, in which the plaintiff opposed the defendant’s application for leave to appeal the amendment orders. [23] The Ruling, §§13 to 15 |
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