Chan Ping Che v. Gao Gunter
Read the full judgment text of HCA 2134/2013 on BabelCite. This High Court CFI judgment was delivered on 13 March 2019.
1. This is an appeal by the Defendant (by original action) against the order of Master Chang dated 28 September 2018 granting the Plaintiff (by original action) leave to amend his Statement of Claim.
Cited by 5 cases · Cites 10 cases
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HCA 2134/2013 [2019] HKCFI 670 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2134 OF 2013 ________________________
________________________ (By Original Action)
________________________ (By Counterclaim)
________________ DECISION ________________ 1.This is an appeal by the Defendant (by original action) against the order of Master Chang dated 28 September 2018 granting the Plaintiff (by original action) leave to amend his Statement of Claim. 2.For present purposes, the parties have handed up an agreed chronology. The agreed chronology explains the background of the case which will be elaborated later in this decision when necessary. 3.At the hearing before Master Chang, two major proposed amendments respectively termed the “Breach of Warranties Claim” and the “Rectification Claim” were raised. The Defendant objected to both. 4.At this hearing, Mr Andrew Liao SC (together with Mr Kenneth Chow, Miss Grace Tam, and Mr William Tse) confirmed that the Defendant no longer objects to the Plaintiff’s proposed amendments relating to the “Breach of Warranties Claim”. An Amended Statement of Claim showing the respective parts to which amendment were agreed and disagreed was handed up. This document was prepared based on the version of the Amended Statement of Claim which was filed on 4 October 2018 after leave to amend was granted by Master Chang. Those parts highlighted yellow are the objectionable parts and which require resolution at this appeal. BACKGROUND 5.The Plaintiff commenced this action against the Defendant by writ endorsed with a statement of claim on 7 November 2013 for moneydue and owing under three loan agreements, with the 1st and 2nd loans dated 16 December 2010 and the 3rd loan dated 27 January 2011 respectively. 6.It is the Plaintiff’s pleaded case that in purported repayment, the Defendant drew two cheques for partial settlement of the outstanding amount together with part payment of interest, which cheques had subsequently been dishonoured. The Plaintiff therefore claimed the outstanding amounts owing under the three loans, alternatively for amounts plus interest under the dishonoured cheques. 7.The Defence and Counterclaim was filed on 13 March 2014. The major complaints were, inter alia, first, that the three loan agreements were unenforceable because the Plaintiff was an unlicensed money lender,contrary to section 23 of the Money Lenders Ordinance (“MLO”). Secondly, the loan agreements were illegal in that they charged an effective rate of interest in excess of 60% per annum, in breach of section 24 of the MLO. 8.On 14 April 2014, the Plaintiff applied for summary judgment under Order 14. 9.On 30 April 2014, the Plaintiff filed a Reply and Defence to Counterclaim. 10.Hearing of the Order 14 application came before DHCJ Seagroatt on 9 October 2014. His Lordship gave judgment on 17 October 2014 granting the Defendant leave to defend his claim upon payment of HK$124,471,243 (representing the entire outstanding debt less repayments made) within 28 days. 11.The Defendant immediately applied for variation of the payment condition and leave to appeal plus a stay of execution of DHCJ Seagroatt’s order. 12.Leave was refused at first instance but was granted by the Court of Appeal on 11 December 2014. 13.On 16 June 2015, the Court of Appeal allowed the appeal to theextent of varying the condition such that the Defendant would be permitted to defend upon payment of $30 million. Essentially, it was the Court of Appeal’s ruling that the 1st and 3rd loans were offensive to section 24 of the MLO in that they charged an effective rate of interest exceeding 60% per annum and hence irrecoverable. The same, however, could not be said of the 2nd loan which charged an effective rate of interest of 38.7%. Section 24 of the MLO was disengaged leaving (mainly) the defences under section 22(1)(a) and (c) and section 23 of the MLO. The written decision of the Court of Appeal was handed down on 5 June 2017. 14.On 21 March 2018, the Plaintiff issued the summons for leaveto amend his statement of claim, introducing what the parties agreed to call the Breach of Warranties Claim and the Rectification Claim. RELEVANT LEGAL PRINCIPLES — LEAVE TO AMEND 15.There is no dispute on the relevant legal principles governing an application for leave to amend. They can be found in Hsu Ming Chi v Lam Shu Chit & others HCCL 8/2013, unreported, 22 October 2014. In this case, Ng J said as follows:
DEFENDANT’S GROUNDS OF OBJECTIONS A. Bound to fail 16.On behalf of the Defendant, Mr Liao and his team submit thatthe Plaintiff’s Rectification Claim is bound to fail for the following reasons:
The legal principles 17.Mr Liao has cited many authorities relating to the law of rectification, for which I am grateful. Having gone through the authorities, I do not find any major divergence on the applicable legal principles between Mr Liao and Mr Kenneth C L Chan (together with Mr Fung Pak Kay) for the Plaintiff. 18.The authority upon which Mr Chan places heavy weight is the Court of Appeal decision in Kowloon Development Finance Ltd v Pendex Industries Ltd [2012] 5 HKLRD 11 where the Court of Appeal set out the legal principles for rectification due to common mistake. This case went to the Court of Final Appeal: see Kowloon Development Finance Ltd v Pendex Industries Ltd (2013) 16 HKCFAR 336. Lord Hoffmann NPJ gave the judgment of the Court with which all the other members agreed. At §31 Lord Hoffmann NPJ said:
19.The present proposed amendment also advances a case about the parties’ common intention which by mistake was not correctly reflected in the written instrument. 20.Kowloon Development Finance involves a settlement of a mortgagee action between the plaintiff money lender and the defendants debtor (D1) and guarantors (D2 and D3) by a Tomlin order in 2004 and a subsequent order in 2005, both drafted by the plaintiff’s solicitors. When there was a dispute over whether the instalment payments under the 2004 and 2005 orders had discharged the defendants’ liabilities under the entire loan, the plaintiff brought an action seeking, inter alia, rectification of both orders to reflect the common mistake premised upon the common intention that the loan was not to be discharged simply upon payment of the instalments under the orders. 21.The following paragraphs laid down the principles:
22.Both parties referred me to Rectification, 2nd ed, by David Hodge QC:
23.It is the Defendant’s submission that even taking the Plaintiff’scase to its highest, “the common intention to comply with the relevant law,regulations and rules of Hong Kong and China” (“Purported Objective”) istoo general. It does not “point to any specific common intention as to how the parties’ Purported Objective was to be achieved, and this flaw is fatal to P’s claim”—§32, Defendant’s skeleton submissions. The Defendant says that “only a ‘specific intention’ is capable of giving rise to a claim for rectification”—§40, Defendant’s skeleton submission. He criticised the Plaintiff’s pleading of common intention as being too general and non‑specific in that the Amended Statement of Claim failed to identify what the common mistake was—§46, Defendant’s skeleton. He said the rectification was not one for the purpose of correcting a mistake made in recording any specific intention but rather, it was substituting a different bargain into the loan agreements—§44, Defendant’s skeleton. 24.To examine the validity of the Defendant’s complaint that the common intention pleaded by the Plaintiff was too general, it is important to look at what is really required of for a claim of rectification as a matter of legal principles. 25.It would be useful to refer to Neuberger J’s (as he then was) remarks in Swainland Builder Ltd v Freehold Properties Ltd (p 73):
26.It is also worth revisiting Peter Gibson LJ’s observations in the same case as follows:
27.Swainland Builder was quoted with approval in Kowloon Development. Thus, it seems clear that while the common intention oughtto be clear, communicated and continuing, it does not have to be as specific to the extent as suggested by the Defendants. The exact form of words is immaterial so long as the substance of the common intention can be ascertained. I do not accept the Defendant’s opposition to the Plaintiff’s amendment on this ground. 28.It may be one thing to say that the lack of a specific common intention (as opposed to a general common intention) is not fatal to rectification if the substance of the common intention can be ascertainedclearly; it is quite another thing to suggest that any claim of rectification can besubstantiated despite a common intention lacking any specificity. In my judgment, each case depends on its own facts. The essence lies in whether or not the substance of the common intention in question can be ascertained clearly. I find that, as a matter of pleading, the substance of the common intention in this case can be ascertained in a sufficiently clear manner. 29.As said, I must consider whether or not the rectification claim is bound to fail as a matter or amendment of pleadings. 30.In this context, it is important to look at this particular Amended Statement of Claim and the entirety of the document to see if, considered as a whole and taking the pleading to its highest, the common intention was so general as to doom the rectification claim a destined loser. 31.The relevant parts of the Plaintiff’s pleaded amendments read as follows, with my emphases italicised:
32.The pleading of the parties’ intention did not end here. It was further pleaded as follows:
33.It can be seen that taking §2(d), §41(a) and (b) and §42 together, the Plaintiff’s pleaded case is that it was the common intention of the partiesthat the loan agreements would be enforceable and compliant with the law. It was specifically pleaded that it was never intended that default interest on any sum would be charged, the original intention being that default interest would only be charged on the outstanding principal amount. Furthermore, there was no intention to compound the default interest. Clauses 13.1 and 13.2 contained unintended flaws, or flaws which contravened the original common intention of the parties. Hence, they need to be rectified as in the Schedule to reflect the parties’ common intention. 34.Taking the Plaintiff’s pleading at its highest, one cannot readily come to the conclusion that the common intention pleaded by the Plaintiff was too general to the extent that it renders the rectification claim doomed to fail. In fact, the pleading identified parts of the particular provisions of the loan agreements (Clauses 13.1 and 13.2) which were never intended to be so written and contained errors (or unintended flaws as said in the Amended Statement of Claim) which did not reflect the intention pleaded under para 2(d). 35.The plea of rectification is not doomed to fail. 36.The Defendant contends that the alleged common mistake relates to the legal consequences of the loan agreements rather than the way the documents had been recorded in writing. He refers to the Plaintiff’s pleading which pleads a “mistake of facts common to [P and D] that the Loan Agreements would be enforceable and in compliance with the law, regulations and rules of Hong Kong and China” as the common mistake: see §§30(b) and 48 of Defendant’s skeleton submission. 37.In Hodge on Rectification, 2nd ed, it says:
38.The Defendant says that in the Amended Statement of Claim, the Plaintiff has referred to Clauses 13.1 and 13.2 respectively in respect of all three loans in §§5(c), 8(c), 16(c); and §§5(d), 8(d), 16(d), having also made clear that he would rely on the full terms and effect of the loan agreements in §§10 and 19 of the Amended Statement of Claim. The Plaintiff had affirmed the original statement of claim, the Amended Statement of Claim, and had affirmed the loan agreements again in his Reply and Defence to Counterclaim. Thus, the Defendant argues there could be no mistake on the part of the Plaintiff in respect of the language, terms, meaning or effect of the loan agreements: §53, Defendant’s skeleton submission. Any mistake at best relates to the legal consequences arising from the application of unidentified or unidentifiable law, regulations and rules of Hong Kong and China to the loan agreements: §54, Defendant’s skeleton submission. 39.With respect, I think the Defendant has ignored that even though the Plaintiff has made reference to Clauses 13.1 and 13.2, and his reliance on the loan agreements, there can be no dispute that whether in the original statement of claim or in the Amended Statement of Claim, the Plaintiff has consistently pleaded and only claimed interest, including default interest on the principal amount, on simple calculation, and not compounded calculation:see §16 of the original statement of claim and §31 of the Amended Statement of Claim. This is at least, on the face of the document, and the court needs no more than that at this stage, consistent with the pleading of the common mistakes as alleged. 40.As said above, the Plaintiff has articulated the mistakes, or “unintended flaws” as he puts it in the Amended Statement of Claim. For Clause 13.1, the unintended flaw or mistake which did not reflect the prior accord was that default interest would apply to the outstanding principal amount; whereas for Clause 13.2, the mistake was that compound calculation should not be applied to default interest. 41.These were clear references to mistakes relating to the terms, meaning or effect of the loan agreements. As a matter of pleading, it was sufficiently pleaded that the mistake lies in the written instrument not reflecting the common intention of the parties. While a mistake may havean implication on the legal consequences, that however does not mean that it was a mistake about the legal consequences itself. 42.This argument fails. 43.Finally, under this section, the Defendant contends that the Common Intention and the common mistake constitute a device to circumvent the MLO. 44.Mr Liao suggested that section 24 of the MLO would be rendered otiose, and the floodgate for money lenders to get round the sanction under section 24 opened if the Plaintiff’s amendments were allowed. Any money-lender who charged in excess of 60%, said Mr Liao, could in the future raise common intention to comply with the law to seek rectification, thereby circumventing the prohibitions (including criminal) under section 24 of the MLO. 45.Mr Liao relies on Lei Shing Hong Credit Ltd v San Tong Lee Co Ltd HCMP 2525/2013, unreported, 26 May 2017, a decision of DHCJ Sakhrani; and Yang Long Shan v Chan Hau Kong HCA 1265/2011,unreported, 5 June 2015, a decision of Registrar Lung which was approved in Lei Shing Hong. 46.The plaintiff in Lei Shing Hong’s case was a money lender. He applied to amend his claim to add a new alternative cause of action for money had and received. The amendment was refused on the ground thatto allow the same would circumvent the operation of section 22 of the MLO:
47.In Yang Long Shan:
48.It is Mr Liao’s submission that in similar veins to the plaintiff in Lei Shing Hong, the Plaintiff in the present case was maintaining the primary case that the loan agreements were valid, but in the alternative, if the loan agreements were found to be in contravention of the MLO, he would seek rectification on the basis of the pleaded Common Intention. 49.There is also force in the floodgate argument. As Mr Liao pointed out, no one will ever say the agreement was intended to be illegal. Whenever a money-lender contract was charged with illegality, it would be easy enough to invoke such a general common intention to rectify the offending terms. This might produce the absurd result that the defence of illegality will be effectively rendered unavailable. 50.That having said, I must consider the Amended Statement of Claim as a whole, and what it is really about that the no one should be allowed to circumvent the sanction of the Ordinance. 51.First, the Plaintiff in the present case all along denied he was amoney lender at all material times: §3, Reply and Defence to Counterclaim whereas the plaintiff in Lei Shing Hong was a money-lender: see §6 and §39 of Lei Shing Hong. By pleading money had and received which is an equitable relief, it is my view that the plaintiff in Lei’s case was changing the entire case from money lending to not money lending in an attempt to rid the governance by the MLO. The plaintiff in Lei Shing Hong was disallowed to bring about the amendment because he was circumventing his capacity as a money lender, in which capacity he commenced the action in first place. The attempt to circumvent the MLO was readily apparent as manifested in the pleading alone. Thus it was a finding that could be made in that case based on the pleadings without a trial. In this case, the Plaintiff is not seeking to circumvent his capacity as a money lender outright by the amendment. As suggested by Mr Chan, it is for the court to determine at trial whether the Plaintiff is a money lender and whether the loan agreements had breached sections 22, 23 and 24 of the MLO. 52.I accept Mr Chan’s submission that the present action does not concern a proposal to add “money had and received” as a new cause of action to circumvent the relevant provisions of section 22 in Lei Shing Hong and section 24 in Yang Long Shan. The Plaintiff in the present action pleads rectification. In essence, he is saying there were mistakes orerrors in the loan agreements which ought to be corrected. 53.Unlike money had and received, which involves the claimant averring alternative claims based on the same terms of the relevant loan agreements (which are illegal by virtue of s. 22 and s. 24 of the MLO), here the Plaintiff was effectively saying the offending terms in the loan agreements were incorrectly recorded. 54.In the former, the claimant was saying that his loan agreement was legal and did not contravene the MLO, but alternatively, if it did contravene the MLO, then the claimant relied on money had and received to claw back the principal amount. Such alternative case will only arise when the primary case fails. This would clearly constitute a device to get round the vigours of the law. 55.In the latter, which is the rectification case here, there is no alternating between “legal” and “illegal”. The Plaintiff all along maintains a legality case only. He has clearly pleaded by way of amendment that the offending clauses had to be rectified as they were incorrectly recorded in that they did not reflect the true intention of the parties, namely that the loan agreement should be legal and enforceable. The nature of a claim for rectification and money had and received is very different. If someone is saying that they had all along intended to be law-abiding, the unlawful terms in the agreement were mistakes only, and hence rectification is required, how can it be concluded that they seek to circumvent the law? 56.It has not escaped unnoticed the Plaintiff pleaded rectification by way of a “further or alternative” claim: see §40 (set out above) of his Amended Statement of Claim. But the pleading was not averring “further or alternatively, if, which is denied, the Loan Agreements were in breach of any law regulation and rules of Hong Kong or China …”. Reading the entire §40, it seems tolerably clear that the Plaintiff was simply seeking rectification if the terms of the agreements infringed the MLO, and not a denial that they were actually infringing terms. 57.Furthermore, I must look at the entire pleading and cannot ignore his plea of simple interest in both the original statement of claim and Amended Statement of Claim. On the face of it, this plea seems consistent with his case that he was not a money-lender and the references to charging default interest and compounding the same were errors which did not reflect the prior accord to comply with the law of Hong Kong. 58.I do not, and it is not appropriate for me to pass a conclusion at this stage. My obligation is to take the Plaintiff’s pleading to its highest. 59.I find that at this stage there has not been enough for me find on the pleading that the Plaintiff is seeking to circumvent the MLO. This is different from Lei Shing Hong in which it was sufficient to find that the plaintiff was seeking to circumvent the MLO on pleading alone ie frommoney lending to not money lending. Although the Plaintiff might still be found to be “circumventing” the MLO after the respective parties’ cases and evidence have been filed, it is plainly a matter for the trial judge. B. Advancing two inconsistent alternatives contrary to Order 18, rule 12A 60.Order 18, rule 12A provides that:
61.In gist, the Defendant argues that the Plaintiff is advancing two inconsistent factual scenarios by pleading in the alternative a case on rectification. It is suggested that the primary case of the Plaintiff must rest on the full terms and effect of the loan agreements, including the full rigours of Clauses 13.1 and 13.2 which stipulate default interest to apply to any outstanding sum and a compound calculation to the default interest. On the other hand, by the new plea, the Plaintiff must be seeking to establish in the alternative, a case that default interest only applied to the outstanding principal amount with no compound calculation. The aforesaid two sets of facts are inconsistent with each other. The Plaintiff must possess personal knowledge as he verified upon oath the veracity of both the original and the Amended Statement of Claim. As such, it is contended that he must know which alternative is the correct version. He should not be allowed to add this inconsistent allegation of facts. 62.I agree with Mr Chan that there is no inconsistent allegation of facts. By way of amendment, the lunch meeting at Fook Lam Moon was pleaded: §2(c) and (d), Amended Statement of Claim to support the claim for rectification. The Plaintiff was merely supplying additional facts. There is no change of story. In the original claim he has all along pleaded and only claimed default interest for the outstanding principal amount based on simple interest. This is consistent with his case that there was a Common Intention that the contracts were lawful and enforceable. 63.The Plaintiff’s case is that Clauses 13.1 and 13.2 are parts of a binding agreement which remain binding unless and until the additional facts are established, in which case, they will be rectified. Whether or notthe provision is enforceable is not a matter of fact, it is a matter of opinion. 64.If A first contended he signed on an agreement, but then further or alternatively contended that he did not sign on that agreement. These are inconsistent allegations of fact. On the other hand, if A first contended he signed on a binding agreement, but then further or alternatively contended that he did sign on the binding agreement but the same is not binding. These are not necessarily inconsistent allegations of fact ie A could still have signed on the agreement. 65.In this action, before or after the Plaintiff’s amendment, the Plaintiff has been consistently claiming against the Defendant for the money lent to the latter. I do not find that the Plaintiff has abused the process especially when we compare the present case with Lei Shing Hong (where on pleading the plaintiff therein sought to change outright hiscapacity from money lending to non–money lending). This is particularly so when the fact remains that since the original Statement of Claim, the Plaintiff has been consistently claiming default interest on simple calculation not compounded calculation. It was not a shift from claiming compound interest to simple interest. Even if that was the case, the change itself might still reflect a genuine mistake. C. Abuse of process and waiver 66.In short, the Defendant’s complaint is that the Plaintiff had knowingly omitted to plead the underlying facts in support of his rectification claim. Those facts were all along within his knowledge. There is no evidence suggesting that they only came to light until recently. With such knowledge, the Plaintiff chose to suppress this rectification case and proceeded to apply for summary judgment under Order 14. Had this been told at the Order 14 stage, the Plaintiff’s Order 14 application would have been bound to fail. This is because the pleading of the Verbal Agreement at the Fook Lam Moon lunch was bound to give rise to factual disputes which would result in unconditional leave to defend being grantedto the Defendant. Notwithstanding all this, the Plaintiff pressed on with hisOrder 14 application, meting out serious prejudice to the Defendant in thatthe Defendant almost had to fork out $124 million odd within four days tocomply with the condition for obtaining leave to defend. It was no excuse, said the Defendant, that this was later reduced to $30 million by the Court of Appeal. 67.It is common ground that the facts underlying the Fook Lam Moon lunch meeting wherein the Verbal Agreement was made and the Common Intention was sketched, were available to the Plaintiff at all times. The Defendant’s complaint about the Plaintiff being unforthcoming in the Order 14 application might be relevant to the latter’s credibility. However, if any, this is again plainly a matter for the trial judge. I have notbeen taken to any authority which suggests that an amendment of pleadingsought not be allowed following an Order 14 application, or an unforthcoming Order 14 application. To formulate such a rule in a rigid fashion would only defeat the fundamental objective for amendment of pleadings ie the determination of the real question in controversy between the parties. 68.Of importance to note is that this is just an application for amendment of a pleading. There will be a full assessment of the Plaintiff’s credibility at the trial. As stated above, the Plaintiff is not running an inconsistent case on the pleadings. Whether or not he was a money-lender, whether there was a common intention / prior accord that the agreements should comply with the law and regulation of Hong Kong, whether it was intended by the parties that default interest would apply to any sum or only the outstanding principal, whether the parties never intended to apply compound calculation to the default interest are all factual matters which can and should only be resolved at the trial, and not at this stage. 69.As observed by Ng J in Hsu Ming Chi:
70.Quite obviously, if leave to amend is allowed, the Defendant would have to deal with the plea. But the trouble that he is put through will be compensated by an appropriate costs order against the Plaintiff. 71.I am aware that he paid $30 million to secure a chance to defend, which would not have been necessary had the Plaintiff pleaded his rectification claim before proceeding with his Order 14 application. This submission necessarily involves, inter alia, a conclusion of this court that the Defendant would have obtained unconditional leave to defend or a lesser condition to defend or a dismissal of the Plaintiff’s Order 14 application. This does not seem to be possible, nor is it necessary, and the Court declines to do so. 72.As regards waiver, this can be dealt with relatively swiftly. 73.The basis of this ground of objection stems from the argument that one should not be allowed to assert an inconsistent stance with his previous position thereby leading to a change in relationship between the parties. In this case, the party taking such an inconsistent stance should be taken as having waived his right to raise the inconsistent case or is estopped from running the inconsistent plea. The Defendant relies on Commonwealth v Verwayen (1990) 170 CLR 394 at 481–2. 74.As this Court finds that the Plaintiff is not asserting an inconsistent case by raising rectification, it follows that there is no waiver or estoppel of his right to plead this case. 75.This ground of objection fails. D. Limitation 76.There is no dispute between the parties that six years had already elapsed since the accrual of the Plaintiff’s claim for rectification. 77.At the hearing, the parties agreed that the only issue which theCourt has to decide is whether the new cause of action arises out of the same or substantially the same facts as are already in issue in the existing claim. 78.Section 35 of the Limitation Ordinance provides that:
79.In Shenzhen Futaihong Precision Industry Co Ltd & others v BYD Co Ltd & others HCA 2114/2007, unreported, 18 July 2016, Ng J summaried the principles as follows:
80.On behalf of the Defendant, Mr Kenneth Chow submits that the Plaintiff seeks to introduce the following new facts in the Amended Statement of Claim, necessitating investigation, hence it cannot be said that their case arises out of the same or substantially the same facts:
81.Mr Chow refers the Court to the following provisions under Order 20, rule 5(2) and (5):
82.Mr Chow says that the Plaintiff has never claimed rectificationas a relief in the original statement of claim and so he is barred from raising this new claim. 83.In Leung Kin Fook & Ors v Eastern Worldwide Co Ltd (No 2) [1997] 1 HKC 524, the appellants were plaintiffs in an action for breach of contractual duty and tortious liability against the respondent as first defendant, for the loss of a dumb barge chartered to the respondent for a voyage from Hong Kong to Macau. Some eight years after the writ was issued, the appellants sought to amend the statement of claim seeking,inter alia, a new averment of breach of duties. 84.Litton VP (as he then was) said:
85.Godfrey JA (as he then was) said:
86.In Sun Focus Investment Ltd v Tang Shing Bor and Liu Su Kei HCA 538/2007, a decision of Anthony Chan J dated 22 January 2013, the legal principles were re-visited:
87.Applying the principles, and comparing the original statement of claim with the Amended Statement of Claim, it is readily discernable that the original claim was for breach of loan contracts, the new claim to which the Defendant opposes is the claim for rectification based on the same loan contracts. 88.I agree with Mr Chow that new facts have been pleaded to support the new cause of action. But it is obvious they are additional facts necessary to support the new cause of action. The new additional facts raised mainly concern the Fook Lam Moon lunch meeting, viz, the Verbal Agreement and the Common Intention. 89.I agree with Mr Chan that the lunch meeting was first raised by the Defendant at §52 of the Defence and Counterclaim. At §16 of the Reply, the Plaintiff admitted there was this meeting although he denied what took place as pleaded in §52. As such, facts and matters surroundingthe Fook Lam Moon meeting—what was discussed, between whom, what was agreed or not agreed, etc—was something which both parties would have gone into and scrutinized at trial anyway. These are “factual issues [that] are in any event going to be litigated between the parties, [hence] theparties should be able to rely upon any cause of action which substantially arises from the same facts.” 90.Furthermore, the Defendant must have done investigation relating to this lunch meeting before the time-bar when he first raised it in his Defence and Counterclaim. The lunch meeting was not only referred to by the Defendant first, it also concerned the discussions leading to the conclusion of the written instruments which were the subject of the original Statement of Claim already. He suffers no prejudice of having to start investigation of facts after the long lapse of time which is impermissible by statute. 91.I note that new or additional facts in support of rectification have also been pleaded under §41 of the Amended Statement of Claim in relation to the discovery of the unintended flaws and the parties’ intention that default interest would only apply to the outstanding principal amount and not to be compounded. These are quite separate and distinct averments from the Common Intention or Verbal Agreement which took place at the Fook Lam Moon lunch meeting. Investigation may need to be undertaken to ascertain how the circumstances under which the unintended flaws came about. 92.They may be new facts, but nonetheless are only facts relating to the same loan agreements which have all along been the subject matter of the present action. In other words, the Defendant would have already investigated the same or substantially the same facts for the purposes of tackling the pre-existing claim of breach of contract in relation to the three loan agreements. Indeed, the very reason why he consented to the new Breach of Warranties Claim is testament to the absence of prejudice which he might suffer, as any new investigation which might need to be undertaken relates to the same loan agreements. Similarly, the investigation in respect of the circumstances relating to the unintended flaws concerns the same three loan agreements. The Defendant “against whom the proposed amendment is directed will not be prejudiced because [he] will, for the purposes of the pre-existing matters [in] issue, already have had to investigate the same or substantially the same facts.” 93.Accordingly, this limitation objection also fails. CONCLUSION 94.The Defendant’s appeal is dismissed and I make an order thatthe Defendant shall pay the Plaintiff’s costs of and incidental to the appeal with certificate for two counsel. 95.I am indebted to counsel for their helpful submissions.
Mr Kenneth Chan, Mr Fung Pak Kay, instructed by Mason Ching & Associates, for the plaintiff (by original action) Mr Andrew Liao SC, Mr Kenneth Chow, Miss Grace Tam and Mr William Tse, instructed by Wellington Legal, for the defendant (by original action) | |||||||||||||||||||||||||||||||||||||
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