Circuitronix, Llc v. Kingboard Chemical Holdings Ltd and Others
Read the full judgment text of HCA 1506/2014 on BabelCite. This High Court CFI judgment was delivered on 29 December 2023.
1. At the hearing on 28th and 29th September 2023 before me, there were two summonses. First, the Plaintiff’s Amended Summons initially filed on 7th February 2022 and amended on 25th October 2022, seeking leave to re-amend its Amended Statement of Claim dated 13th August 2014 (“ the ASOC ”). Second, the Plaintiff’s summons of 29th August 2023 for further leave to re-amend the Amended Summons, so as to seek further re-amendments in relation to the ASOC (“ the Late Summons ”). I gave an order i
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HCA 1506/2014 [2023] HKCFI 3359 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 1506 OF 2014 ________________________ BETWEEN
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_____________ D E C I S I O N _____________ A. INTRODUCTION 1.At the hearing on 28th and 29th September 2023 before me, there were two summonses. First, the Plaintiff’s Amended Summons initially filed on 7th February 2022 and amended on 25th October 2022, seeking leave to re-amend its Amended Statement of Claim dated 13th August 2014 (“the ASOC”). Second, the Plaintiff’s summons of 29th August 2023 for further leave to re-amend the Amended Summons, so as to seek further re-amendments in relation to the ASOC (“the Late Summons”). I gave an order in terms of the Late Summons, and proceeded to hear the substantive application for re-amendment of the ASOC pursuant to the Re-Amended Summons (“the Summons”). B. THE FACTUAL BACKGROUND 2.The Plaintiff is a sales agent and distributor of printed circuit boards (“PCBs”). The 3rd Defendant is a manufacturer of PCBs. In 2005, the Plaintiff and the 3rd Defendant entered into a Manufacturer’s Agreement (“the MA”), pursuant to which the Plaintiff would promote and sell the 3rd Defendant’s PCBs to specified customers introduced by the Plaintiff. The customers were identified and listed in “Exhibit “1” ”, a document updated in September 2009 as “Exhibit A”. 3.Under the MA:
4.Two “Remarks” in Exhibit A modified the terms regarding exclusivity and commitment.
5.The parties agreed to terminate their cooperation from 31st October 2012. The separation agreement was recorded in a set of minutes of 6th March 2012, signed by the parties (“the SA”). 6.Under the SA:
7.The Plaintiff’s claims against the 3rd Defendant, including those which are sought to be introduced by the disputed amendments in the draft Re-Amended Statement of Claim (“RASOC”), are for:
C. THE PROCEDURAL BACKGROUND 8.The Writ, endorsed with a Statement of Claim, was issued on 5th August 2014. 9.The Statement of Claim was amended on 13th August 2014. 10.Four sets of further and better particulars of the ASOC (“the FBPs”), totaling some seventy pages, have been filed: in December 2014, in March 2015, in January 2016, and in June 2017. 11.In March 2017, Wilson Chan J ordered that leave to serve the Amended Writ on the 5th Defendant (“Techwise Macao”) outside the jurisdiction be set aside, and that the action against Techwise Macao be dismissed. The Plaintiff sought to appeal against the order but withdrew the appeal in August 2018, shortly before it was due to be heard. 12.In September 2019, Master Dick Ho ordered that the claims against the 1st, 2nd and 4th Defendants be struck out. The Plaintiff sought to appeal against the order, but withdrew the appeal in July 2020, shortly before it was due to be heard. The 4th Defendant will be referred to as “Techwise HK”. 13.Both the Plaintiff and the 3rd Defendant have applied for and obtained leave to adduce expert evidence on different issues. Pursuant to the order sought by the 3rd Defendant, both parties appointed experts regarding the PCBs industry and filed a joint expert report in September 2020 (“the Joint Expert Report”). The Plaintiff’s application concerned evidence as to quantum, and Master Hui made an order on 6th July 2020. On 5th February 2021, Anthony Chan J ordered that this be stayed and that the parties were to agree the terms of an order for a split trial, such that quantification of damage should be dealt with separately. 14.The terms of the order for a split trial made on 24th June 2021 were that the first trial was to determine all issues or questions in dispute in the action including issues of liability, causation, and (as the court might think fit) the proper parameters for quantification of damages. The issue of the numerical calculation of damages, if it arose following the decision in the first trial, was to be determined separately. 15.The parties filed their timetabling questionnaires in September 2021, indicating that they wished to file supplemental witness statements. 16.At a case management hearing on 4th October 2021, Master Dick Ho indicated to the parties that they should take the opportunity to tidy up their respective cases before proceeding with further interlocutory applications. The parties were ordered to take out an application to amend their pleadings, if so advised, within 49 days. The Plaintiff applied by summons of 7th February 2022 to re-amend the ASOC, culminating in the present application. The 3rd Defendant also took out a summons on 7th February 2022 to seek leave to re-re-amend the Re-Amended Defence. By consent, the 3rd Defendant’s amendment application was adjourned sine die with liberty to restore pending the final determination of the Summons. 17.No trial dates have been fixed for the trial yet. D. THE APPLICABLE PRINCIPLES 18.It is well established that, generally speaking, all such amendments ought to be made “for the purpose of determining the real question in controversy between the parties to any proceedings or of correcting any defect or error in any proceedings”: Ketteman v Hansel Properties Ltd [1987] 1 AC 189 at 212F-H (Lord Brandon); Natamon Protpakorn v Citibank NA [2009] 1 HKLRD 455 at [25] (Cheung JA). 19.In exercising its discretion, the court must also have regard to the underlying objectives in RHC O.1A, so it cannot be assumed that once the principles in Ketteman are satisfied, the amendment would be allowed. The court needs to balance all relevant factors to decide how its discretion should be exercised, if the application is made in circumstances offending one or more of the underlying objectives. In giving effect to the underlying objectives, the court must always recognise that the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties (O.1A r.2(2)): Topwell Corp Ltd v Kwan Kam Kee [2014] 5 HKLRD 1 at [39] (Kwan JA, as she then was). 20.Leave is readily granted to amend before the trial unless it can be demonstrated that the new claim based on the proposed amendment is bound to fail: Natamon Protpakorn at [25]. 21.If the proposed amendments are bound to fail, no leave to amend should be granted. In this regard, the court will take the applicant’s proposed pleaded case at its highest: Bank of China v Leigh Hardwick, unreported, HCA 1110/2006, 28th August 2023 at [2] (Anthony Chan J). 22.While the court is entitled to have regard to the merits of the case, it should only do so when the merits are readily apparent, and are so apparent as not to require prolonged investigation: Natamon Protpakorn at [25]. 23.In the case of a late application for amendment, absent any real prejudice, the application must be decided upon the general principle that the court seeks to adjudicate on the real issues and disputes between the parties and, if possible, technical and procedural rules should not stand in the way of allowing the parties to raise their real claims or defences before the court for adjudication: VSC Building Products Co Ltd v Kono Insurance Ltd, unreported, HCA 947/2005, 9th September 2009, at [22] (A Cheung J, as he then was). 24.Where prejudice is claimed, the burden is on the party opposing the amendment to show prejudice which cannot be compensated for by appropriate orders as to costs: Re Playmates Investments Ltd [1996] 4 HKC 577 at 582H, 584C (Le Pichon J, as she then was). 25.RHC O.20 r.8(1A) provides that the court shall not under r.8(1) order a pleading to be amended unless it is of the opinion that the order is necessary either for disposal fairly of the cause or matter or for saving costs. E. THE AMENDMENTS SOUGHT E1. Overview 26.Mr Alder submitted that the amendments were, by and large, simply to tidy up the pleadings, following on from the Master’s suggestion to undertake such an exercise. Key points from the four sets of Further and Better Particulars were sought to be put into the RASOC so that material facts would be consolidated in the RASOC; similarly, points from the witness were sought to be put into the RASOC. There were various other amendments sought to clarify the Plaintiff’s claims, and amendments of a tidying nature (for example, to reflect the fact that the claims against the all the other defendants had been struck out, or corrections of inadvertent mistakes). Mr Alder submitted that no new “broad factual causes of action” were being pleaded, although it might be said that new “legal causes of action” were being raised. 27.Counsel for the 3rd Defendant, Mr Bernard Man SC (leading Mr Jacky Lam), opposed a number of amendments mainly on the grounds that they were late and caused prejudice which could not be compensated for in costs (in now having to obtain evidence relating to events at least ten years ago); that incorporation of material from witness statements was not a good reason to justify amendment; and that some of the claims for which amendments were sought were unsustainable and even internally contradictory. 28.For the purposes of the hearing, the parties broke down the amendments into 165 items and prepared an “Index Table” setting out their respective positions in relation to each of them. 29.Prior to the hearing, the 3rd Defendant’s solicitors had written to the Plaintiff’s solicitors on 8th June 2022 to indicate that some of the proposed amendments were not opposed,[1] and on 16th August 2023 to withdraw its opposition against certain other proposed amendments.[2] The Plaintiff subsequently filed the Late Summons on 29th August 2023, seeking to make further changes to the proposed amendments.[3] Apart from the proposed amendments in RASOC paragraphs 8 and 13.6, the 3rd Defendant indicated that it would not oppose the amendments sought in these further changes, notwithstanding its stance that the delay had not been explained and that the further changes were not necessary. There were also minor amendments proposed to RASOC paragraph 7.7(a) which were said not to be opposed in principle, albeit that the paragraph itself was inconsistent with other paragraphs of the RASOC. I grant leave to the Plaintiff to make these four groups of unopposed amendments (“the Unopposed Amendments”). 30.The remaining amendments were opposed, and may be grouped into the following categories. Eight of these categories were identified by Mr Alder in his oral submissions as “new matters” (as indicated below), not having previously been pleaded elsewhere in the pleadings or particulars, or raised in the witness statements.[4]
E2. Purpose of factory audits (RASOC paragraphs 8, 13.6) 31.The current ASOC pleads (at paragraph 8) that the MA included an implied term that the 3rd Defendant would permit the Plaintiff’s Identified Customers to visit and/or inspect the 3rd Defendant’s Factory for the purposes of conducting factory or line audits, and (at paragraph 13) that the 3rd Defendant was in breach of this term. 32.The Plaintiff seeks to add a plea in RASOC paragraph 8 that the audits were necessary (1) for the Plaintiff’s customers to verify that the manufacturing of the of the orders continued to comply with their requirements, and (2) for the Plaintiff to transition its orders for existing customers to new manufacturers smoothly by ensuring that sufficient inventory was built up before the customers were informed of the Plaintiff’s termination of business with the 3rd Defendant (“the Transition Purpose”). In other words, they relate to the purpose of the factory audits. 33.Mr Alder accepted that both purposes were not originally pleaded, but he says that they merely give further particulars as to why the factory audits were necessary. He says that such particulars are based on what is already set out in paragraphs 46 and 58 of the Witness Statement of Rishi Kukreja dated 27th April 2017 (“Kukreja WS”) where the necessity of the factory audits are explained. He further submitted that there is already expert evidence addressing the topic. 34.It seems to me that the proposed additional plea in RASOC paragraph 8 is not a plea of material fact, and is rather more in the nature of evidence, which on the Plaintiff’s case has already been addressed in the evidence, both factual and expert. Therefore, it does not seem that the amendment is necessary for the fair disposal of the cause or matter or for saving costs. 35.Mr Man also submitted the plea as to the Transition Purpose would cause prejudice as it is in fact a new allegation. The parties’ experts had been asked to identify the different types of factory audits conducted on a PCB manufacturer and the purpose of each type of audit, and the Transition Purpose was not one of the agreed types of factory audit identified in the parties’ joint expert report.[5] It was said that to address it would require further expert evidence on an alleged practice dating 11 years ago.[6] Mr Alder submitted that any further expert evidence could be supplemented without difficulty. 36.Insofar as the plea raises a new allegation, I agree with Mr Man that this would cause prejudice which cannot be compensated for in costs as the experts would be asked to opine on the practice of the PCB industry back in 2012, and it is by no means clear that this could be done now. Mr Alder fairly acknowledged that there would be a question of whether the experts would remember the situation as it stood in 2012. There has been no explanation from the Plaintiff as to why the matter was not pleaded earlier (and indeed from the commencement of proceedings), if it was thought necessary to include it as a point of pleading. 37.Accordingly, I refuse leave for the amendment in the proposed RASOC paragraph 8. For paragraph 13.6 (main paragraph), I give leave for the amendment which simply seeks to make a cross-reference to paragraph 8. For the avoidance of doubt, no leave is given to the insertion of any reference to the purpose of the audits in paragraph 13.6 (which was proposed in the original Summons but then deleted in the Late Summons). E3. Breaches of the implied term regarding the allowing of factory audits (RASOC paragraphs 13.6(ab), 13.6(ac)) 38.A related amendment is the proposed relocation of the existing pleas in ASOC paragraphs 23 and 25 to the particulars under paragraph 13.6, proposed to stand as new paragraphs 13.6(ab) and 13.6(ac). These are pleas about the 3rd Defendant’s refusal of requests by customer Marquardt Switches to conduct a factory audit. 39.The pleas had originally been made in ASOC paragraphs 23 and 25 as breaches of the MA and SA by the 3rd Defendant which were induced by the 1st, 2nd, 4th and 5th Defendants. They are therefore not new factual allegations. 40.Mr Man submitted that the Plaintiff failed to identify how the refusals of factory audits contributed to the Plaintiff’s loss of the Chrysler Switch Parts business pleaded in paragraph 14.6(a), and that such business – even if awarded to the Plaintiff – would only have commenced after 31st October 2012 when the 3rd Defendant was no longer be obliged to produce those parts for the Plaintiff. 41.However, I note from paragraph 17 of the 5th Affirmation of Rishi Kukreja (“Kukreja 5th”) that the Plaintiff’s case is that the 3rd Defendant’s case last-minutes cancellations of the audits caused the Plaintiff to lose face and the confidence of its customers. Whether or not this led to the loss of business complained of is a matter for trial, rather than for summary determination at this stage. 42.I therefore give leave to amend to include the new RASOC paragraphs 13.6(ab) and 13.6(ac). E4. Loss and damage caused by breach of the implied term relating to the factory audits (RASOC paragraph 14.6) 43.The 3rd Defendant does not oppose the addition of the subheading “Loss and damage: Denial of factory audit” to RASOC paragraph 14.6. It is the Plaintiff’s case that this paragraph relates to the loss resulting from the denial of factory audits. The amendments to paragraphs 14.6(a) and 14.6(b) refer to alleged breaches of the non-solicitation covenant earlier pleaded in paragraph 14.1 in relation to Marquardt Switches and UTEC, and then plead that the 3rd defendants’ breach of the implied term regarding the allowing of factory audits was a contributing cause to the Plaintiff’s loss of profit in relation to these two customers. 44.Mr Man objected to the amendments on a number of bases.
45.I further note that paragraphs 14.6(a) and (b) have substantially been pleaded before. The ASOC at paragraphs 26, 27 and prayer paragraph 4 had contained a complaint similar to that in RASOC paragraph 14.6(a); and paragraph 16 of the January 2016 FBPs had set out the basis for the complaint of damage in relation to UTEC now claimed in RASOC paragraph 14.6(b) (albeit the figure claimed has changed). 46.In the circumstances, I grant leave to make the amendments in paragraph 14.6(a) and 14.6(b). E5. Pre-existing practice as to lead times before the SA (RASOC paragraphs 12.2, 13.5(b)) 47.The proposed amendments to RASOC paragraph 12.2 seek to plead that the lead times agreed to in cl.B of the SA (as set out in that paragraph) are “in line with the pre-existing agreement, understanding and/or practice between the parties”. 48.This is another of the eight matters which Mr Alder indicated were “new”, although he submitted that the plea simply provides further particulars of the existing plea against the 3rd Defendant for breach of cl.7.4 of the MA and/or cl.B of the SA for failing to deliver products ordered by the Plaintiff on time and/or within a reasonable time, as pleaded in RASOC paragraph 13.5 and Amended Annexure B, which covers the position in January and February 2012 (ie. before the date of the SA). 49.Mr Man submitted that the fact that cl.B of the SA prescribes certain lead times for orders released before and after 6th March 2012 does not mean that such lead times were in line with the alleged pre-existing practice. The 3rd Defendant’s evidence is that it is prejudiced by the late attempt to introduce this allegation, as it would have to locate relevant documentary and historical records from over 11 years ago. Its current employees and representatives are not in a position to address the allegations with any first-hand knowledge, and even if appropriate witnesses could be found, they may not be able to recall the relevant matters or locate the relevant documents.[8] Mr Man also complained that it is unclear what is meant by “pre-existing agreement, understanding and/or practice between the parties”, and the repeating of this phrase in paragraph 13.5(b) of the RASOC is objectionable for the same reasons. 50.All that the Plaintiff can say in response is that the 3rd Defendant would and should have preserved such evidence.[9] At the hearing, Mr Alder further submitted that it should not be surprising that the lead times in the SA accorded with the parties’ pre-existing agreement. However, this cannot be a foregone conclusion. 51.There is no explanation as to why the allegation of a pre-existing agreement was not earlier pleaded. I accept that the 3rd Defendant would be prejudiced if it had to respond to such an allegation at this stage. 52.I refuse leave to amend RASOC paragraph 12.2 and to insert the words “and/or the pre-existing agreement, understanding and/or practice between the parties” in paragraph 13.5(b). E6. Breach of obligation to deliver in reasonable time (RASOC paragraphs 13.5 and 14.5) 53.Apart from the proposed addition to RASOC paragraph 13.5(b) just addressed, the Plaintiff seeks to add other particulars to paragraph 13.5, relating to the 3rd Defendant’s alleged breach of cl.7.4 of the MA, cl.B of the SA and/or the implied term as to delivery within a reasonable time. It then seeks to add particulars in paragraph 14.5 as to the damages said to arise from the breach. 54.Mr Alder submitted that the amendments at paragraph 13.5(a) simply identify the relevant columns in Amended Annexure B, whereas paragraphs 13.5(b) to (d) supplement particulars as to the existing pleaded breach. 55.Mr Man submitted that the cross-references to Amended Annexure B in paragraph 13.5(a) are unhelpful and ambiguous as they merely refer to a table without narrative, and fail to explain how a delay beyond the purportedly agreed time-frames was unreasonable or caused loss to the Plaintiff. In the absence of averments going to the issue of unreasonableness in the delay, Mr Man submitted that the Plaintiff cannot make out the breaches alleged in paragraph 13.5(c). As regards the claims relating to Lutron set out in the Amended Annexure B, Mr Man also referred to the 3rd Defendant’s objections on the merits. 56.I note that all along, the ASOC had referred to Annexure B, and the proposed RASOC paragraph 13.5(a) simply seeks to identify more precisely the part of (the Amended) Annexure B being relied on. As for RASOC paragraphs 13.5(b) to 13.5(d) (apart from the part of paragraph 13.5(b) disallowed in the previous section), these plead more precisely the Plaintiff’s case regarding delay. Whether the delay complained of was unreasonable is a matter for trial. 57.As for RASOC paragraph 14.5, this is largely based on the Amended Annexure B (further below, I refer to how the Amended Annexure B came into being). In paragraph 14.5, it seems to me that the amendments simply seek to expand on the explanation of what Annexure B sets out, in narrative form. 58.I allow the amendments in RASOC paragraphs 13.5(a) to (d) and 14.5 (apart from the part of paragraph 13.5(b) disallowed in the previous section). E7. Meaning of “Circuitronix customers” in SA cl.D (RASOC paragraph 12.4A(a)) 59.Under cl.D of the SA, the 3rd Defendant agreed, for a period of about 2 years, not to contact “Circuitronix customers (which will be listed as an Exhibit)”. The terms of cl.D have already been pleaded (RASOC paragraph 12.4) and the Plaintiff’s further amendments thereto are not opposed. 60.It is common ground that no such list of “Circuitronix customers” was drawn up. The 3rd Defendant’s case is that cl.D contains an incomplete agreement which is unenforceable (Re-Amended Defence (“the RAD”) paragraph 29.5). The Plaintiff denied this allegation and pleaded that each of Jackie Lo of the 3rd Defendant and Mr Kukreja of the Plaintiff confirmed the parties’ agreement to the terms of the SA by signing a documentary print-out of the email of 6th March 2012 (Re-Re-Amended Reply dated 16th October 2019 (“the RRAR”) paragraph 15(4)). 61.It is in this context that the Plaintiff seeks to add a new paragraph 12.4A(a) to the RASOC, pleading that it was expressly agreed between Mr Kukreja on behalf of the Plaintiff and Jackie Lo on behalf of the 3rd Defendant during a meeting on 6th March 2012 that the “Circuitronix customers” would be those set out in the latest agreed version of Exhibit A together with Marquardt Switches Europe. The Plaintiff further seeks to plead that the agreement was made in the presence of Tyra Tsang and Villa Li of the 3rd Defendant. 62.Mr Alder submitted that the new paragraph 12.4A(a) merely incorporated what had already been set out in Kukreja WS paragraphs 57 and 63. 63.Mr Man submitted that the Plaintiff had not identified any evidence which supported the plea. On the contrary, the plea was in fact inconsistent with Kukreja WS paragraph 57, which asserted that it was explicitly discussed and agreed on 6th March 2012 that Exhibit A would continue to apply (so that Marquardt Switches Europe would not have been included), and no reference was made to cl.D of the SA. Mr Man further submitted that the proposed amendment is prejudicial as the 3rd Defendant would have considerable difficulty now in verifying what occurred during the meeting on 6th March 2012. The 3rd Defendant’s case is that by that time, Marquardt Switches was no longer an identified customer. Villa Lee is no longer available to give evidence, and Tyra Tsang joined the 3rd Defendant only after 6th March 2012. 64.Mr Alder accepted that what is sought to be pleaded in the new paragraph 12.4A(a) is a new fact, but he said that this did not add any new customer to the action, which remained confined to Marquardt Switches, Sanmina, ULT, UTEC and Lutron. He acknowledged that Exhibit A specified “Marquardt Switches (North America only)”, but submitted that Kukreja WS paragraph 57 should be read in conjunction with paragraph 50 and the relevant “Marquardt Switches Commitment Letter” dated 19th November 2009 which referred to Marquardt Switches’ accounts in both North America and Europe, which letter was pleaded in RASOC paragraph 9C. 65.At the hearing, Mr Alder also submitted that with the exception of Villa Li, who has since left the employment of the 3rd Defendant, all the other persons mentioned are available to give evidence on the matters alleged in the new paragraph 12.4A(a). 66.I accept Mr Man’s submission that to allow the amendment would cause prejudice to the 3rd Defendant which could not be remedied by costs. One of the 3rd Defendant’s potential witnesses is undisputedly not available to give evidence, and the other was not employed by the 3rd Defendant at the time of the meeting. Furthermore, even for those witnesses who may be available, and even if they were now to be asked about the 6th March 2012 meeting, this was a meeting that took place over eleven years ago. It is apparent that the parties have a substantial dispute as to what happened at the meeting and as to the status of Marquardt Switches. 67.I refuse leave to add RASOC paragraph 12.4A(a). E8. Whether SA cl.D is an unreasonable restraint of trade (RASOC paragraph 12.4A(b)) 68.Apart from its case that SA cl.D is an unenforceable agreement to agree, the 3rd Defendant has all along pleaded an alternative case that cl.D is unenforceable for being an unreasonable restraint of trade. The Plaintiff’s pleaded reply has all along simply been “Sub-para. 29.6 is ridiculous and it is denied.” 69.The Plaintiff now seeks to introduce a positive plea in RASOC 12.4(b) that cl.D is not an unreasonable restraint of trade as it protects the Plaintiff’s legitimate interests and goes no further than necessary to protect such interests. Various particulars are then set out to support this plea. Mr Alder acknowledged that the plea is new, not having been raised before in the particulars or witness statements. 70.Mr Alder submitted that the proposed amendments seek to raise a defensive plea that cl.D of the SA is not an unreasonable restraint of trade. As the point was first put in issue by the 3rd Defendant, Mr Alder says that the proposed amendments are only pleading “a defence to a defence”. He sought to justify pleading these amendments in the RASOC instead of in the RRAR on the basis that this would afford the 3rd Defendant an opportunity to respond to the Plaintiff’s case in its defence. Leaving aside the propriety of pre-emptively pleading a response to a defence in a statement of claim, I do not see that this reason can have any bearing on whether the amendments should be allowed. 71.Mr Man argued that the proposed amendments are prejudicial and cannot be cured by costs. He says that the Plaintiff could long ago have pleaded in its reply the matters now sought to be pleaded in paragraph 12.4A(b). Mr Alder submitted that the 3rd Defendant pleaded the issue of SA cl.D being an unreasonable restraint of trade; as this issue must be resolved at trial, the amendments are necessary.[10] 72.In my view, it cannot be enough for the Plaintiff to simply say that since there is a live issue as to whether cl.D is an unreasonable restraint of trade, the amendments are therefore “necessary”. It cannot be right that as a general rule a plaintiff can, by pleading that a defendant’s defence is “ridiculous and denied”, invariably keep his options open and choose not to plead any positive case in relation to that defence until eleven years later, if that delay causes the defendant prejudice. 73.Taken as a whole, if RASOC paragraph 12.4A(b) were to be allowed, it would cause prejudice to the 3rd Defendant. The particulars necessarily require a consideration of facts and matters at the time when the SA was made, back in 2012, which would present difficulties for the 3rd Defendant in responding, as it has explained. It is no answer to say that the parties will be giving evidence about the making of the SA anyway, when the 3rd Defendant’s witnesses would not have been focusing on the specific positive averments now being made. Moreover, the pleas being introduced are also in parts ambiguous, and in other parts their relevance is unclear.
74.I refuse leave to add RASOC paragraph 12.4A(b). E9. Proper construction of cl.D and implied term (RASOC paragraph 12.4A(c); and reference thereto in paragraphs 13.1, 14.1) 75.The proposed amendments under the new paragraph 12.4A(c) seek to plead two matters: first, what the Plaintiff says is the proper interpretation of cl.D of the SA, and second, that there is an implied term to the same effect by reason of business efficacy and/or obviousness and/or operation of law. 76.The Plaintiff characterised these amendments as elaborating upon cl.D, the terms of which have already been pleaded in ASOC paragraph 12.4. However, Mr Man submitted that in fact, the amendments seek to plead an entirely different cause of action based on a new construction of the clause, and is time-barred. Furthermore, Mr Man submitted that any other proposed amendments which cross-refer to or rely on paragraph 12.4A(c) should similarly be rejected. This would in particular affect paragraph 13.1, which is in turn cross-referred to by paragraphs 14.1, 14A and 14B. 77.Mr Man submitted that under the original pleading (see ASOC paragraph 12.4 and 13.1), the 3rd Defendant’s alleged breach of cl.D was restricted to its own misconduct if it directly solicited business from an identified customer. However, under the proposed amendments, the 3rd Defendant would be in breach if it failed to proactively deter or restrict its “related parties”[11] from solicitation. In other words, the Plaintiff now seeks to claim against the 3rd Defendant for any breaches of cl.D by its related parties. 78.Mr Alder denied that a new cause of action is being pleaded. He submitted that RASOC paragraph 12.4A(c) simply sets out the proper construction of cl.D, which is a matter of law. Moreover, the 3rd Defendant’s breach of cl.D has all along been pleaded, including breaches which involved related parties. He pointed to the existing paragraphs 13.1(a), (d) and (e) where it was respectively pleaded that:
79.At the hearing, Mr Alder explained that the Plaintiff would delete the cause of action originally pleaded (in ASOC paragraphs 18 to 27) against the 4th and 5th Defendants for inducing the 3rd Defendant to breach the MA and the SA by undermining the Plaintiff’s account with Marquardt Switches, but that the facts would be “re-used” in the form of RASOC paragraph 12.4A(c), pleading a duty that the 3rd Defendant had a duty to procure the 4th and 5th Defendant to comply with cl.D. 80.I agree with Mr Man that RASOC paragraph 12.4A(c) seeks to plead a new cause of action. The original pleading in ASOC paragraph 12.4(a) was that the 3rd Defendant had an obligation to comply with cl.D. The complaints of breach pleaded in the existing paragraphs 13.1(a), (d) and (e) are all about the 3rd Defendant’s own acts of solicitation in breach of cl.D, rather than the 3rd Defendant’s failure to prevent others from soliciting. Now, however, it is being said that the 3rd Defendant had a duty to procure other parties’ compliance with cl.D. 81.Mr Alder’s fallback position was that even if RASOC paragraph 12.4A(c) constitutes a new cause of action (and therefore time-barred), it arises out of the same or substantially the same facts as those already pleaded, and is therefore permissible. Mr Man submitted that it does not, as the new construction contended for would involve different factual inquiries as to whether the construction was merited. Even if the cause of action arises out of the same facts as those already in issue in the existing claim, the court retains a discretion to allow or refuse the amendments in accordance with general principles: Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd [2019] 2 HKC 175 at [74]. 82.I agree with Mr Man. Even if the facts relating to the solicitation are “re-used”,[12] the new cause of action involves inquiring into the facts as to why cl.D should be construed in the way now contended for, namely, as imposing an obligation on the 3rd Defendant to procure that third parties should not communicate with Identified Customers. This is not an inquiry that hitherto was called for. Nor is it an obviously straightforward one, given that:
83.I refuse leave to add RASOC paragraph 12.4A(c), or to add a reference to paragraph 12.4A(c)(ii) in paragraph 13.1. I also refuse amend paragraph 13.1(a) (save that leave is given to delete the reference to the 5th Defendant). I refuse leave to add the words “and/or wrongfully permitted or facilitated its Related Parties to do so” in paragraph 14.1(ag) and “and/or permitting its Related Parties to do so” in paragraph 14.1(ah). E10. Particulars of the 3rd Defendant (RASOC paragraph 4(c)-(e)) 84.These amendments relate to particulars of ownership of the 3rd Defendant and related companies. It is said that they had previously been set out in the RRAR and Kukreja WS. 85.Mr Alder submitted that the proposed amendments are relevant to the construction of the non-solicitation obligation, and in particular, the Plaintiff’s case that “related parties” under SA cl.D included Techwise HK and Techwise Macao. This presumably is to support the Plaintiff’s intended case that on a proper construction of cl.D, the 3rd Defendant was not to permit or facilitate its Related Parties to communicate with identified customers (intended amendments to RASOC paragraph 12.4A(c)), and that the 3rd Defendant acted in breach of such an obligation (intended amendments to RASOC paragraphs 13.1, 14.1(ag), 14.1(ah)). 86.I have however not given leave for the amendments which refer to the Related Parties at RASOC paragraphs 12.4A(c), 13.1, 13.1(a), 14.1(ag) and 14.1(ah), so that the stated purpose for the amendments at RASOC paragraphs 4(c) to 4(e) no longer stands. It is not apparent what, if any, remaining relevance the proposed amendments have. 87.I refuse leave to amend RASOC paragraphs 4(c) to 4(e). E11. Breach of non-solicitation obligation – Marquardt Switches (RASOC paragraphs 13.1(aa)-(ac) and 14.1(a)-(ai)) 88.These proposed amendments seek to plead further particulars regarding the 3rd Defendant’s alleged breach of the non-solicitation obligation in relation to Marquardt Switches, and damages arising therefrom. 89.Mr Alder’s position is that these proposed amendments simply supplement particulars to existing pleas, and that the attacks on the unsustainability of these existing pleaded breaches should be resolved at trial. Mr Alder further submitted, and I agree, that the matters pleaded are not new facts, and have in substance been previously raised in the pleadings, FBPs and evidence as follows, and that the proposed amendments help to consolidate in one place the Plaintiff’s case.
90.Mr Man contended that RASOC paragraphs 13.1(aa), 13.1(ab) and 13.1(ac) plead no particulars of any misconduct on the part of the 3rd Defendant and are ambiguous as to why the matters alleged therein would amount to illicit solicitations and/or how they are relevant to the damages sought.
91.Mr Man submitted that RASOC paragraphs 14.1(aa) and 14.1(ag) (alleging that had the 3rd Defendant not engaged in wrongful solicitation, Marquardt Switches would have continued ordering from the Plaintiff; alternatively that there was a real and substantial chance of the same) should not be allowed as it fails to consider how the Plaintiff could have continued obtaining such business beyond termination of cooperation (in the absence of the 3rd Defendant’s involvement), and failed to plead the particulars of what underlies the alleged “real and substantial chance”. However, the passages relied on from McGregor on Damages[16] do not suggest any particular form of pleading required. The Plaintiff’s complaint that the 3rd Defendant’s wrongful solicitation has deprived it of continued business from Marquardt Switches has already been tolerably clearly pleaded. Whether or not the Plaintiff could have continued obtaining business beyond termination is a matter for trial. 92.I give leave for the amendments in RASOC paragraphs 13.1(aa), 13.1(ab), 13.1(ac), and 14.1(a) to 14.1(ai).[17] E12. Defensive plea regarding Marquardt Switches (RASOC paragraphs 13.1(ad)-(af)) 93.These parts of the particulars of the complaint of non-solicitation relating to Marquardt Switches is acknowledged by Mr Alder to be “new”. 94.One of the defences pleaded by the 3rd Defendant is that the Plaintiff had no exclusivity over business from Marquardt Switches since no “business” had come through the Plaintiff to the 3rd Defendant within six months of the date of the Marquardt Switches Commitment Letter of 19th November 2009, and the parties had earlier agreed that the agreement evidenced by the letter would be cancelled if there was no business within that six months (RAD paragraphs 19.7 to 19.9). 95.The new sub-paragraphs 13.1(ad)-(af) seek to plead that there was in fact “business” from Marquardt Switches within six months from the date of the Marquardt Switches Commitment Letter. They do so by alleging that the Plaintiff was, to the knowledge of the 3rd Defendant, awarded the “JL/JL Gang Project” by Marquardt Switches in or around late 2009, and that this meant that the Plaintiff did obtain business from Marquardt Switches although no purchase orders were placed. The Plaintiff also seeks to contend that the 3rd Defendant waived its own release from the non-solicitation covenant by (1) not providing an updated Exhibit A removing Marquardt Switches, (2) the fact that the 3rd Defendant was “at all points in time” kept informed of the progress on the Marquardt Switches account and the Plaintiff continued to receive implicit and verbal approvals to continue developing the account in exchange for exclusivity, and (3) that between 6th July 2010 and 12th October 2012, the 3rd Defendant accepted a series of 81 purchase orders by the Plaintiff in respect of Marquardt Switches. 96.Mr Alder submitted that the proposed amendments elaborate on existing pleas in the RRAR (although he acknowledged that they were matters newly raised). He said that paragraph 13.1(ad) elaborates on RRAR paragraph 30B, and paragraph 13.1(af) on the existing plea in RRAR paragraph 9(3). He disagreed that these matters should have been pleaded in the Reply, and submitted that the Plaintiff’s approach affords the 3rd Defendant an opportunity to respond to these proposed amendments in its Defence. He also submitted that the level of particularity of these amendments was sufficient for the 3rd Defendant to be informed of the case it has to meet. 97.Mr Man opposed these amendments on a number of grounds. One of these is that it would be prejudicial if the 3rd Defendant were now to have to deal with whether certain events in 2009 and 2010 constituted “business”, it being asserted in paragraph 13.1(ad)(iii) that in the automotive industry, business means the award of a project, and does not require the placing of a purchase order. I agree. This is particularly so in the light of Kukreja WS paragraph 69 which asserts and accepts that it was indeed the case that no business came from Marquardt Switches through the Plaintiff to the 3rd Defendant within six months from the Marquardt Switches Commitment Letter. The amendments therefore represent a radically different position sought to be taken by the Plaintiff. 98.Furthermore, paragraph 13.1(af) claims that the 3rd Defendant had waived any entitlement to be released from the non-solicitation covenant by reason of, inter alia, the fact that “at all points in time, the 3rd Defendant was kept informed of the progress on the Marquardt Switches account and the Plaintiff continued to receive implicit and verbal approvals to continue developing the account in exchange for exclusivity”. This vague plea would involve inquiry into the facts “at all points in time” regarding the “implicit and verbal approvals”, which is another area in which the 3rd Defendant would suffer prejudice. 99.Waiver is also pleaded on the grounds that the 3rd Defendant had accepted a series of purchase orders between 6th July and 12th October 2012. However, as Mr Man points out, this argument had already been rejected in Wilson Chan J’s decision of 21st March 2017 setting aside leave to serve the Amended Statement of Claim on Techwise Macao, the learned judge observing that the acceptance of the orders was consistent with both exclusivity and non-exclusivity (see [47]). Whilst the 3rd Defendant was not party to that application, the logic of the analysis equally applies to the Plaintiff’s reliance on waiver as against the 3rd Defendant. The Plaintiff has not explained how the plea of waiver is nevertheless sustainable. 100.I refuse leave to introduce RASOC paragraphs 13.1(ad), 13.1(ae) and 13.1(af). E13. Restriction against commercial use of Trade Secrets – Marquardt (RASOC paragraphs 7.7(b)-(c), 13.1A and 14.1A) 101.The proposed amendments to paragraphs 7.7(b) and 7.7(c) plead that under MA cl.6, the 3rd Defendant agreed not to make use of confidential information and/or Trade Secrets of the Plaintiff, and that this section of the MA was to survive for two years after termination of the MA. Breaches of MA cl.6 are introduced at RASOC 13.1A and particulars of damages at RASOC 14.1A. 102.Mr Man submitted that RASOC paragraphs 7.7(b)-(c) seek to introduce a new cause of action, which is by now time-barred. He says that the Plaintiff’s original case regarding the Trade Secrets was simply to say that the 3rd Defendant acknowledged their existence; the Plaintiff had not previously pleaded any obligation regarding the handling of such Trade Secrets, or how long MA cl.6 would survive after the termination. 103.Mr Alder submitted that no new cause of action was raised, as MA cl.6 had all along been pleaded in ASOC paragraph 7.7, and the use of Trade Secrets had been pleaded in ASOC paragraph 27 and in paragraph 30 of the January 2016 FBPs. I do not agree.
104.This is just one example of the unsatisfactory state of the Plaintiff’s pleadings, on which I have thus far refrained from commenting. No cause of action against the 3rd Defendant for wrongful use of Trade Secrets was ever properly pleaded against it, despite four sets of voluminous particulars filed over four years, but there were various ambiguous and scattered references in other contexts which might be said to hint at such a complaint, which are now sought to be drawn together to say that all along, a case was pleaded against the 3rd Defendant for wrongful use of Trade Secrets. 105.Mr Alder’s fallback position is that the cause of action arises out of the same or substantially the same facts as those already pleaded, and is therefore permissible despite being time-barred. Mr Man submitted that the 3rd Defendant would be seriously prejudiced in having to verify matters which occurred over ten years ago regarding the 3rd Defendant’s purported usage of the Plaintiff’s Trade Secrets. 106.Despite the unsatisfactory way in which the Plaintiff has put forward its case, I would accept that the cause of action does arise out of the same or substantially the same facts as those already pleaded. In particular, in paragraph 30(b) of the January 2016 FBPs, which is specifically relied in RASOC paragraph 13.1A(c), the Plaintiff did allege, factually, that the 3rd Defendant shared the Plaintiff’s Trade Secrets in email communications and meetings with Marquardt Switches from February to July 2012. The 3rd Defendant should have had adequate opportunity to address the factual allegations. 107.For RASOC paragraph 13.1A, Mr Alder abandoned part of the intended amendment under paragraph 13.1A(b) after various inconsistencies were pointed out, and clarified that the Plaintiff only pursues damages in respect of 2012-13 events concerning the Chrysler Switch Parts as set out in paragraphs 14.1(ae) to (ai) (and repeated in paragraph 14.1A).[18] Mr Man raised various objections that the Plaintiff had not identified evidence in support of the misuse of the Trade Secrets, or that the Plaintiff lost business to the 3rd Defendant, Techwise HK or Techwise Macao. However, these are matters to be addressed at trial. 108.I give leave for the amendments in RASOC paragraphs 7.7(b), 7.7(c), 13.1A (save the abandoned part) and 14.1A. E14. Breach of non-solicitation obligation – Sanmina (RASOC paragraphs 13.1(b)-(bc) and 14.1(bb)) 109.These proposed amendments seek to plead further particulars as to the 3rd Defendant’s breach of the non-solicitation obligation in relation to Sanmina, and particulars of the 3rd Defendant’s waiver of any expiry of the Plaintiff’s exclusivity period in respect of Sanmina. 110.For the amendments in paragraph 13.1, Mr Alder submitted, and I accept, that these have previously been pleaded elsewhere. The amendments seek to consolidate in one place the Plaintiff’s case.
111.Mr Man submitted that the 3rd Defendant has never done any business with Sanmina directly. Insofar as the 22 shipments are concerned, they relate to 11 purchase orders placed by Sanmina through another agent, Axcel Electronics Europe Ltd (“Axcel”), for an end customer, PACE. Mr Man criticised the Plaintiff for failing to explain why the 3rd Defendant is disentitled from providing PCBs to PACE. However, the Plaintiff’s pleaded case is that Axcel was acting as a conduit for the 3rd Defendant in communicating with Sanmina (June 2017 FBPs answer 1(f)). I accept Mr Alder’s argument that the attacks on the unsustainability of the existing pleaded breaches should be resolved at trial. 112.As for the alleged waiver, the 3rd Defendant says that it should at most be in the Reply. I consider that the point about waiver could acceptably form part of the narrative in paragraph 13.1 as to why shipments to Sanmina (or at the request of Sanmina) are said to be in breach of a non-solicitation covenant. 113.As regards the damages claimed in RASOC paragraph 14.1(bb), Mr Man submitted that it is unclear what business was lost by the Plaintiff as a result of these matters, when the 3rd Defendant’s revenue from Sanmina through the Plaintiff was only HK$37,422.74 with no further purchase orders for mass production from Sanmina through the Plaintiff since June 2010. He submitted that the alternative plea that the Plaintiff had “a real and substantial chance” of continuing business with Sanmina fails to address how the Plaintiff could have done so without the 3rd Defendant as its designated manufacturer after 31st October 2012, and lacks the requisite particulars to support such a plea. 114.I agree with Mr Alder that these are matters for trial. 115.I give leave for the amendments in RASOC paragraphs 13.1(b), 13.1(ba), 13.1(bc) and 14.1(bb). E15. Breach of non-solicitation obligation – ULT (RASOC paragraphs 13.1(d)-(dc) and 14.1(da)-(dd)) 116.These proposed amendments seek to plead further particulars as to the 3rd Defendant’s breach of the non-solicitation obligation in relation to ULT and the damages arising therefrom. 117.Mr Alder contended, and I accept, that these paragraphs plead no new factual averments, or alternatively were raised by the 3rd Defendant itself, and consolidate the Plaintiff’s case in one place.
118.Mr Man submitted that these pleadings as ambiguous and unsustainable. He contended that there is no plea as to how any alleged instances of solicitation actually caused its claimed losses. In respect of paragraph 13.1(db), it is said that the documentary evidence actually shows that it was ULT which wanted to do business directly with the 3rd Defendant and ULT was no longer in the Plaintiff’s good graces because of the Plaintiff’s own issues. 119.I agree with Mr Alder that these are arguments for trial. 120.As for the damages in paragraphs 14.1(da) to (dd), the Plaintiff’s position is that they are essentially based on facts pleaded at paragraphs 19 to 21 of the January 2016 FBPs and do not prejudice the 3rd Defendant. Moreover, the 3rd Defendant has already dealt with them in RAD paragraph 44F. The amendments are therefore putting the Plaintiff’s claim for damages properly into the RASOC. I accept that this is the case. 121.I therefore give leave for the amendments in RASOC paragraphs 13.1(d) to 13.1(dc) and 14.1(da) to 14.1(dd). E16. Breach of non-solicitation obligation – UTEC (RASOC paragraphs 13.1(f)-(g) and 14.1(e)-(h)) 122.RASOC paragraph 13.1(f) is another of the eight matters which Mr Alder indicated were “new”, although he says that the cause of action has already been pleaded in RASOC paragraph 13.1(e), and that paragraphs 13.1(f) and 13.1(g) are simply particulars of paragraph 13.1(e). 123.In RASOC paragraph 13.1(e), the Plaintiff pleaded that the 3rd Defendant communicated with UTEC and directly attempted to solicit business for itself or for other companies within the Kingboard Group. 124.However, paragraph 13.1(f) is not about communication with UTEC, but about the 3rd Defendant doing business with UTEC’s subsidiary, Shanghai Yileng Carrier Air Conditioning Equipment Company Limited (“Shanghai Yileng”). There is no plea that the MA or SA prohibited the 3rd Defendant from doing business with subsidiaries of UTEC (and the 3rd Defendant says that it did not in fact do business with Shanghai Yileng in any event). I agree with Mr Man that paragraph 13.1(f) cannot stand as particulars of paragraph 13.1(e) or as a breach of some other pleaded obligation. It is true that Kukreja WS paragraphs 140 and 141 alleged that UTEC representatives told Mr Kukreja that the 3rd Defendant was doing business with Shanghai Yileng, but this has not been a pleaded allegation thus far, and even if it were, it is not an allegation of a breach of any pleaded obligation. Whilst Kukreja 5th at paragraph 30(5) then went on to assert that UTEC and Shanghai Yileng “cannot functionally be regarded as separate companies for the purposes of the Non-Solicitation Clause”, so that the 3rd Defendant was prohibited from doing business with Shanghai Yileng, this allegation of “functional non-separation” has not been (nor is proposed to be) pleaded. 125.As for RASOC paragraph 13.1(g), this is based on paragraph 6 of the June 2017 FBPs and was specified as particulars of RASOC paragraph 13.1(e). I would accept that the amendment is to consolidate an allegation from the particulars into the pleadings. Whilst Mr Man objected on the basis that there were no merits in the claim, this is a matter to be considered at trial. 126.Regarding the damages claimed, Mr Alder submitted that RASOC paragraphs 14.1(e), (g) and (h) consolidate the existing pleas from the January 2016 FBPs.
127.Mr Man advanced arguments against the sustainability of these claims. Again, as these matters have effectively already been pleaded, the issue of sustainability should be considered at trial. 128.I refuse leave for the amendment to add RASOC paragraph 13.1(f). I give leave to add RASOC paragraphs 13.1(g), 14.1(e), 14.1(f), 14.1(g) and 14.1(h). E17. Alternative calculation of damages for breach of non-solicitation (RASOC paragraphs 14A and 14B) 129.RASOC paragraph 14B seeks an account of the 3rd Defendant’s profits from its breaches of the obligations of non-solicitation and breaches of confidence. It was originally pleaded in prayer (7) in the ASOC (and remains in the RASOC prayer). The Plaintiff objects to the 3rd Defendant’s reservation of rights (in the last sentence) to plead further particulars after discovery and interrogatories, pointing out that the action is already at an advanced stage. It seems to me that the last sentence of paragraph 14B adds nothing – whether or not the Plaintiff may be entitled to plead further is a matter that can be considered if and when it actually arises. 130.As to RASOC paragraph 14A, the Plaintiff seeks “hypothetical bargain damages” for the 3rd Defendant’s breaches of its obligations of non-solicitation and breaches of confidence. This is a different basis for calculation of damages to that in paragraph 14B, the two paragraphs being pleaded in the alternative. Mr Alder cited One Step (Support) Ltd v Morris-Garner and another [2019] AC 649, saying that the Plaintiff should be entitled to a percentage of the 3rd Defendant’s profits, being a hypothetical fee to release the 3rd Defendant from its contractual obligations. 131.Mr Man submitted that this would call for a new set of factual enquiries as to matters relevant to how the parties would have bargained before 2012. However, an assessment of damages on this basis would be a notional exercise, not based on any actual bargaining between the parties. The 3rd Defendant cannot point to any area of actual factual inquiry which would be called for and which, by reason of the passage of time, can no longer carried out. 132.As with paragraph 14B, the Plaintiff objects to the last sentence, in which the 3rd Defendant reserves its rights to plead further particulars after discovery and interrogatories. Again, it seems to me that this sentence adds nothing to the Plaintiff’s claim. 133.Mr Man further submitted that both RASOC paragraphs 14A and 14B proceeded on the mistaken assumption that the Plaintiff would have been able to continue obtaining business beyond termination of the MA, without taking into account the fact that the 3rd Defendant would no longer be the designated manufacturer, regardless of whether any breach had occurred. It is said that the 3rd Defendant had unique qualities which would have been difficult for the Plaintiff to replicate without an equally unique or capable supplier, and this difficulty would have affected the Plaintiff’s ability to maintain business relationships with customers without the 3rd Defendant’s continued support. Attempts to extrapolate loss of profits based on historical revenue was therefore commercially unrealistic. This seems to me to be an argument as to merits which ought to be considered at trial. Whether or not the Plaintiff can establish an entitlement to this head of damage is not a matter which can be determined summarily on this application to amend the RASOC. 134.I give leave to amend the RASOC by adding paragraphs 14A and 14B (except for the last sentence of each of those paragraphs). E18. Breach of agreement against change of credit limit and imposing a minimum order value without advance notice (RASOC paragraphs 13.2 and 14.2) 135.These proposed amendments seek to plead further particulars of the Plaintiff’s existing plea in paragraph 13.2 that the 3rd Defendant changed the credit limit without providing the requisite 6 months’ written notice to the Plaintiff.[19] 136.Mr Man objected to the amendments on the grounds that they were prejudicial, relating to events happening in 2012 but not having previously been pleaded, so that the 3rd Defendant has not been on notice to plead, or preserve or prepare evidence, in response thereto. 137.RASOC paragraph 13.2(a) simply sets out the relevant clauses of the MA and SA, saying that they did not contain a credit limit or minimum order value. For the amendments in the other paragraphs, Mr Alder submitted, and I agree, that the relevant facts have previously been raised.
138.Whilst it may be said that the particulars have not previously been pleaded, they have been raised in the Plaintiff’s witness statements, so that I am not persuaded that the prejudice complained of has been made out. The Plaintiff simply seeks to plead more specifically the events which it relies on in support of its complaint that the 3rd Defendant wrongly changed the Plaintiff’s credit limit without the necessary notice period. This ought to have the effect of narrowing, rather than broadening, the scope of the issues which the Plaintiff can raise at trial. 139.As for RASOC paragraph 14.2, this originally referred to an “Annexure B” setting out losses complained of arising from the complaints in paragraph 13.2. This was replaced by a “Replacement Annexure B” in the March 2015 FBPs. The Plaintiff’s current application is to amend RASOC 14.2 so that it refers to an “Amended Annexure B”. The 3rd Defendant’s evidence is that there are no significant changes between it and the Replacement Annexure B.[20] 140.The 3rd Defendant has previously pleaded to the Replacement Annexure B, in RAD paragraphs 40A and 40B, in defence to the complaints made under ASOC para 13.5. The 3rd Defendant’s complaints regarding the Replacement Annexure B are raised more in the context of the Plaintiff’s reliance on Replacement Annexure B in relation to RASOC paragraphs 13.3(c) and 14.3(c) (these being about the 3rd Defendant’s refusal to accept purchase orders) and paragraphs 13.5 and 14.5 (these being about the 3rd Defendant’s failure to deliver products within a reasonable time), and I will consider these elsewhere. As regards RASOC paragraph 14.2, the 3rd Defendant’s complaint is simply that it is ambiguous as to how the pleas in paragraphs 13.2 and 14.2 lead to the losses set out in Amended Annexure B. However, the headings of the columns in Annexure B (for example, “air freight expenses … for goods … shipped late…”) seem to me to be a sufficient plea of material facts for the purpose of a pleading. Whether or not there is any merit in those claims is a matter for trial. 141.I give leave to amend RASOC paragraphs 13.2 and 14.2. E19. Breach of agreement by refusal of orders (RASOC paragraphs 13.3 and 14.3) 142.These paragraphs seek to plead further particulars of the 3rd Defendant’s alleged refusal of orders and/or unreasonable delay in delivery, in breach of cl.5.5 of the MA and/or cl.E of the SA, and the damages arising therefrom. 143.Mr Alder submitted that the particulars were drawn from the existing pleadings and FBPs.
144.Mr Man objected particularly to the amendments in RASOC paragraph 13.3(c) relating to Lutron, a customer, on the grounds that the pleading was inherently ambiguous and unparticularised, as could be seen from a comparison with paragraphs 13.3(a) and 13.3(b). 145.I have some sympathy for this complaint. Paragraph 13.3 pleads that the 3rd Defendant refused to accept various purchase orders, and then seeks to give particulars of such refusals. In paragraph 13.3(a), the Plaintiff sets out a narrative of the orders refused by ULT and seeks to identify the purchase orders in question by drawing, from the FBPs, the order numbers in question. In paragraph 13.3(b), the Plaintiff identifies the purchase orders refused by UTEC, again by drawing, from the FBPs, the order numbers in question. In para 13.3(c), all that is done is to say “See the third column in Amended Annexure B and the corresponding breakdown.” The third column in Amended Annexure B is entitled “air freight expenses for goods sourced from substitute manufacturers which D3 wrongfully failed and/or refused to produce in respect of … Lutron”. It is only in the separate breakdown in the Amended Annexure B that three purchase order numbers are listed. Unlike paragraph 13.3(a) and 13.3(b), no attempt was made to set out the purchase numbers in paragraph 13.3(c). It is not clear why this was the case, given that the avowed intention of the amendment exercise was to move key points from the particulars to the main body of the pleading. Be that as it may, it is reasonably clear that paragraph 13.3(c) (read in conjunction with the main paragraph 13.3) seeks to complain about the 3rd Defendant’s refusal to accept the three purchase orders in the breakdown of column 3 in the Amended Annexure B. 146.Mr Man submitted that new causes of action were being raised as Lutron was “barely mentioned” in the original pleading and then “only in passing” in the ASOC.[21] It seems to me that the cause of action being relied upon, broadly speaking, is the complaint that the 3rd Defendant refused to accept the Plaintiff’s purchase orders, and that the purchase orders relating to Lutron fall within this category of complaint. Of course it may also be said, at one level, that any additional purchase order referred to under this category can in itself constitute a distinct cause of action. However, these three purchase orders relating to Lutron have been pleaded in the Replacement Annexure B attached to the March 2015 FBPs (albeit in relation to the then ASOC paragraph 13.5 relating to the related complaint of late delivery), and I am not satisfied that the 3rd Defendant has established prejudice in relation to their inclusion under the complaint in RASOC paragraph 13.3. 147.As to paragraphs 13.3(a) and 13.3(b), Mr Man’s objections went to the merits of the complaint, which is a matter for trial. It is inappropriate for the court to now summarily decide (for example) whether or not a certain PCB was actually manufactured and whether its delivery date was so late as to constitute a breach of contract. In any event, the matters have already been pleaded in the existing particulars, and responded to. The 3rd Defendant’s stance is effectively ask the court to make a finding that certain pleas are unarguable, yet without at the same time seeking to disturb the existing pleas which raise the same issues. 148.Mr Man complains that the 3rd Defendant is prejudiced by the proposed amendments in paragraph 14.3 as they related to events happening over ten years ago. However, it seems to me that no new events are being relied upon, as the amendments are based on matters that have been previously pleaded. It is also said that the cross references to Amended Annexure B are unhelpful and ambiguous as the table describes purchase orders without narrative. The relevant narrative, however, has been provided in the body of RASOC paragraph 14.3. Furthermore, the 3rd Defendant has been able to plead to the Amended Annexure B in RAD paragraphs 40A, 40B and Annexure 2. True it is that some of those pleas are to the effect that the Plaintiff has provided insufficient information, and that is a complaint repeated by the Plaintiff now. However, this would appear to go to the merits of the Plaintiff’s claim. 149.I give leave to amend RASOC paragraphs 13.3 and 13.4, subject to the purchase orders which are complained of in paragraph 13.3(c) being expressly identified in that paragraph. E20. Breach of warranties as to merchantable quality and fitness for purpose (RASOC paragraphs 13.4 and 14.4) 150.These amendments relate to the 3rd Defendant’s complaint that the 3rd Defendant delivered products that were not of merchantable quality and not fit for their known purpose as PCBs. 151.The proposed amendments to paragraph 13.4 are, in effect, seeking to replace Annexure A to the ASOC with Replacement Annexure A annexed to the March 2015 FBPs, whereas the proposed amendments to paragraph 14.4 mainly seek to replace Annexure C to the ASOC with Replacement Annexure C annexed to the March 2015 FBPs. 152.Mr Alder submitted that there is no scope for the 3rd Defendant to complain about these amendments since they only cross-reference Replacement Annexures A and C (save for a clarification in RASOC 14.4 as to the basis of the loss and damage sought), which were already included in the March 2015 FBPs and are not being amended; moreover, the 3rd Defendant has already pleaded to them in RAD paragraphs 39A and 44E. 153.Despite there being no new facts raised, Mr Man nevertheless objected to the amendments, on the basis that if the purpose of an intended amendment is to clarify or particularise previously pleaded matters, then particulars should be provided. It was said that the Replacement Annexure A has been the subject of serious contention between the parties, the 3rd Defendant’s case being that it was impossible that negligible quality issues would have caused the substantial losses claimed, and that the Plaintiff’s case was internally contradictory since if the defects were as serious as alleged, then the Plaintiff would not have been threatened by the 3rd Defendant’s solicitation of business. 154.It seems to me that these arguments over merits cannot be determined summarily at this stage. 155.I give leave to amend RASOC paragraphs 13.4 and 14.4. E21. Breach of obligation to return Tooling Equipment (RASOC paragraphs 16 and 17) 156.These proposed amendments relate to the Plaintiff’s claim that the 3rd Defendant breached SA cl.F by failing or refusing to return the Tooling Equipment (already defined in ASOC paragraph 15) to the Plaintiff within 72 hours of being requested to do so, and a breakdown of the loss and damage of US$85,450 (which amount was pleaded in ASOC paragraph 17). 157.Mr Alder submitted that these particulars are incorporated from the FBPs and are supported by the Plaintiff’s evidence.
158.These particulars and evidence are to the effect that the 3rd Defendant refused to return the Tooling Equipment within 72 hours of being requested to do so, and despite repeated demands, so that the Plaintiff issued 38 debit notes as set out in Annexure C, totaling US$85,450 and representing the value paid by the Plaintiff when the equipment was ordered. I accept that RASOC paragraphs 16(a), (b), (d) 17 (main paragraph) and 17(a) could be said to be drawn from the existing particulars and evidence. 159.However, paragraphs 16(c) and 17(b), 17(c) and 17(d) introduce a new and somewhat inconsistent point (as would appear to be acknowledged in paragraph 17(d) itself).
160.Neither the 2016 FBPs nor the Kukreja WS have given particulars of the loss said to arise from the transfer of business to other suppliers. I accept that it would be prejudicial for the 3rd Defendant to have to deal with such allegations now, particularly when they have not even been properly particularised. 161.I give leave to amend RASOC paragraphs 16, 17 (main paragraph) and 17(a). I refuse leave to amend RASOC paragraphs 17(b), 17(c) and 17(d). E22. Updates to list of identified customers (RASOC paragraphs 7.1 and 9A) 162.The Plaintiff seeks to amend RASOC paragraphs 7.1 and 9A to refer to “Exhibit 1” rather than “Exhibit A”, and to add a plea that the exhibit was to be updated from time to time. 163.Mr Alder submitted that the amendments are necessary to clarify that the list of customers in the MA at the time of signing was Exhibit 1, not Exhibit A, and that the list was then updated by agreement from time to time. He also submitted that the amendments are not new averments, but taken from RRAR paragraph 7(2) and the December 2014 FBPs paragraph 2, and (in relation to how the details of how the updates were made) Kukreja WS paragraphs 48 to 50. 164.Mr Man submitted that the intended amendment to RASOC paragraph 7.1 is “hopeless” because it suggests that there was an agreement in the MA itself that Exhibit “1” was to be updated from time to time, when there was not. Whilst I agree that the amendment could have been better drafted, I would accept that it could mean that the exhibit was to be updated from time to time (independently of any agreement in the MA to do so). It is also reasonably clear from paragraph 2 of the December 2014 FBPs that this is what the Plaintiff meant. In any event, the wording of MA cl.1.2(a) arguably envisages updating of the exhibit. The amendment is not therefore hopeless. 165.Mr Man submitted that the alleged updating would have taken place during the period from 1st August 2005 and 31st October 2012 and would have required the 3rd Defendant to locate evidence from eleven to eighteen years ago, which would be prejudicial to the Plaintiff. However, I note that the Plaintiff had already indicated in paragraph 2 of the December 2014 FBPs its case that there was periodic negotiation and variation of the exhibit after 1st August 2005 (and Kukreja WS paragraphs 48 to 50 dealt with this in more detail). 166.Mr Man’s final objection was that the amendments were not necessary as there is no dispute as to which identified customers were on the list. Rather, the dispute is how, and whether, the customers were removed from the list. However, Mr Alder submitted, and I accept, that the amendments set out part of the facts as to how the relevant customers were identified, including the Plaintiff’s case as to Marquardt Switches as pleaded in RASOC paragraphs 9B to 9D (which form part of the Unopposed Amendments). 167.I give leave to amend RASOC paragraphs 7.1 and 9A. E23. Prayer 168.The amendments proposed to the prayer are consistent with the leave given above. I give leave to amend the prayer. F. DISPOSITION 169.I give leave to the Plaintiff to re-amend the ASOC as indicated above, within 14 days. I make consequential directions for the filing of further pleadings in accordance with paragraphs 2 and 3 of the Summons. 170.The Plaintiff accepts that the costs of and occasioned by the amendments should be paid by it to the 3rd Defendant in any event. 171.The amendments also have the effect that the Plaintiff’s claim in ASOC paragraph 13.1(c) in relation to Ingersoll Rand have been withdrawn. It seems only right for the Plaintiff to bear the costs of and occasioned by this claim, and I so order on a nisi basis.
173.In the circumstances, it seems to me that the fairest order to make is that there be no order as to the costs of and occasioned by the Summons, including the costs reserved at the hearing of 31st October 2022, and I so order on a nisi basis.
Mr Edward Alder and Miss Jasmine Cheung, instructed by Clyde & Co., for the Plaintiff Mr Bernard Man SC leading Mr Jacky Lam, instructed by Sidley Austin, for the 3rd Defendant [1] Shaded light green on the Index Table. [2] Shaded dark green on the Index Table. [3] Shaded blue on the Index Table. [4] Mr Alder had in fact identified nine new matters, but the first was not opposed by Mr Man (and falls under the Unopposed Amendments already dealt with above), being the deletion of ASOC paragraphs 13.1(c) and 14.1(c), which had alleged that the 3rd Defendant breached its obligation against soliciting orders from a customer, Ingersoll Rand, causing loss and damage. [5] See section A paragraph 3 and section E1 of the Joint Expert Report of Paul Pluta and Yash Sutariya of 14th September 2020. [6] Skeleton paragraphs 50-51. [7] Kukreja 5th paragraph 13. [8] 2nd Affirmation of Lam Tung Tat Tommy (“Lam 2nd”), paragraphs 7, 15. [9] Skeleton paragraph 47; reply skeleton paragraph 39. [10] Reply skeleton paragraph 40(3). [11] Defined in cl.D as “All related parties including parent company, subsidiaries, affiliates, sister divisions”. [12] Although in fact the Plaintiff seeks to raise a raft of amendments in this regard also, which I consider below. [13] Affirmation of Wong Lo Yiu (“Wong 1st”) paragraph 35. [14] Save that I do not agree that the parts of paragraphs 14.1(ag) and 14.1(ah) which refer to the 3rd Defendant wrongfully permitting or facilitating its Related Parties to solicit business are matters which have previously been raised. [15] Inconsistency Table exhibited as WLY-4 in Wong 1st setting out alleged inconsistencies in the proposed RASOC Amendments, item 3. [16] Paragraphs 10-052 to 10-52A (2nd supplement to the 21st edition). [17] Save for the parts of paragraphs 14.1(ag) and 14.1(ah) which refer to the 3rd Defendant wrongfully permitting or facilitating its Related Parties to solicit business, for which I have refused leave above. [18] Reply skeleton paragraph 29(4). [19] At the hearing, the Plaintiff abandoned the amendment originally sought for the main paragraph of RASOC paragraph 13.2. [20] Wong 1st paragraph 138. [21] Skeleton paragraph 128. [22] Skeleton paragraph 2. |
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