Bga Holdings Ltd (in Liquidation) (Formerly Known As Beibu Gulf Ocean Shipping (Group) Ltd ) and Others v. Chu Kong and Others

CACV 546/2024, [2025] HKCA 807

On Appeal From [2024] HKCFI 2711

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 546 OF 2024

(ON APPEAL FROM HCA NO. 631 OF 2022)

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J U D G M E N T

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Hon Cheung JA (giving the Judgment of the Court) :

I.  The appeal

1.This is an appeal against the decision of Deputy High Court Judge Phoebe Man who refused the plaintiffs’ application to join, amongst others, the 12^th defendant TH Chu as a party to the action and to make consequential amendments to the Amended Writ of Summons and Statement of Claim to reflect the joinder (‘the Joinder Summons’). The plaintiffs now appeal.

II.  Factual background

2.The factual background of this case is succinctly summarised by the Judge as follows :

1)  Lau Wing Yan (‘Lau’) and Chu Kong (‘Chu’) were ex‑business partners who used to run shipping and logistics businesses together. Ocean Sino Ltd (‘OSL’) is a BVI company set up by Lau and Chu in 2009, in which they each held a 50% shareholding. PBM Asset Management Ltd (‘PBM’) is a wholly-owned subsidiary of OSL.

2)  PBM and Beibu Gulf Holding (Hong Kong) Co., Ltd are respectively the 49% and 51% shareholders of Beibu Gulf Ocean Shipping (Group) Limited (later renamed as the 1^st plaintiff).

3)  The 1^st plaintiff and its subsidiaries’ businesses included :

(1)  Dry bulk chartering business, carried on by Beibu Gulf Shipping Ltd (‘BBG Shipping’), which was wholly owned by the 1^st plaintiff;

(2)  Dry bulk trading business, carried on by Beibu Gulf Resources Ltd (‘BBG Resources’), which was wholly owned by the 1^st plaintiff;

(3)  Investments in dry bulk carriers. Two of these carriers were known as MV BBG Hope and MV BBG Glory.

(4)  MV BBG Hope was held by Hope BBG Shipping, which was wholly owned by The Palace Ltd (‘the 2^nd plaintiff’), which is in turn wholly owned by the 1^st plaintiff. MV BBG Glory was held by Glory BBG Shipping, which was wholly owned by Shining Centre Ltd (now in liquidation) (‘the 3^rd plaintiff’), which is also wholly owned by the 1^st plaintiff.

4)  Lau and Chu fell out. Lau petitioned for OSL to be wound up in the Commercial Court of the British Virgin Islands in May 2015. A long line of litigation ensued.

5)  On 31 May 2016, the 1^st plaintiff (represented by Chu) transferred BBG Shipping and BBG Resources to Cosmic Glory Ltd (also known as Ausca Group Limited and represented by TH Chu) (the ‘Ausca Group’) at the consideration of US$5.1 million (the ‘Ausca Transaction’). It is alleged by the plaintiffs that the Ausca Transaction was to divest the 1^st plaintiff’s interests in BBG Shipping and BBR Resources for the benefit of Chu. Of the many allegations raised by the plaintiffs in the present action, of relevance to the present application is only the Ausca Transaction.

6)  OSL was wound up in June 2017, a decision which was upheld by the Privy Council in October 2020.

7)  Following the winding-up order, the joint liquidators of OSL (‘OSL JLs’) took control of PBM and carried out investigations into the 1^st plaintiff’s affairs. In August 2019, upon taking legal advice, PBM issued a petition (HCCW 251/2019) (‘the 1^st plaintiff Petition’) to wind up the 1^st plaintiff on insolvency grounds, as well as just and equitable grounds, which included pleas relating to the Ausca Transaction.

8)  Whilst the appointment of the 1^st plaintiff’s liquidators was pending, an urgent application was made in May 2022 for leave to issue the Writ in this action. The application was allowed on 19 May 2022, and the Writ was issued by the Official Receiver on 27 May 2022. The timing of the filing of the Writ was such that the complaints in relation to the Ausca Transaction against the original defendants (including Chu) were made within the limitation period of six years from the transfer on 31 May 2016.

9)  However, the 12^th defendant, Hope BBG Shipping and Glory BBG Shipping were not defendants when the writ was issued on 27 May 2022.

3.The Judge summarised the plaintiffs’ claim again the existing defendants and the proposed claim against the 12^th defendant as follows :

1)  The claim against Chu and his associates is for misappropriation of assets and businesses from the 1^st plaintiff and its subsidiaries for their own personal benefit.

2)  In respect of the 12^th defendant, he was the shareholder and director of the Ausca Group. He, being Chu’s son, acted as Chu’s nominee and agent. He held shares in the Ausca Group for and on behalf of Chu and procured the Ausca Group to enter into the Ausca Transaction. In view of his involvement in the Ausca Transaction (including the execution of various documents), the plaintiffs seek to join him as an additional defendant and claim against him for dishonest assistance and unlawful means conspiracy.

4.The Judge observed that the proposed claim against the 12^th defendant may be time‑barred and the 12^th defendant may have a limitation defence :

‘ 7. As the involvement and act on the part of TH Chu in relation to the Ausca Transaction occurred on (or arguably before) 31 May 2016, on the face of it, the limitation period for bringing a claim of dishonest assistance and unlawful means conspiracy against him is 6 years and would have expired on 30 May 2022. Not surprisingly therefore, TH Chu is raising a limitation defence to [the plaintiff]s’ application to join him as a defendant.’

III.  The issue

5.The well‑established principle, as discussed by this Court in cases like Sun Focus Investment Ltd v Tang Shing Bor [2012] 1 HKLRD 738, Global Bridge Assets Ltd v Sun Hung Kai Finance Ltd. [2012] 4 HKLRD 474, Delco Participation BV v Chiho Environmental Group Ltd [2020] 5 HKLRD 712 and Securities and Futures Commission v. Lu Ruifeng [2022] 1 HKLRD 1349, is that where an amendment to plead an arguably time-barred claim would bring the ‘relation‑back rule’ in section 35(1)(b) of the Limitation Ordinance (Cap. 347) into operation, the amendment could deprive a party of an arguable limitation defence and so prejudice it. The correct approach is to refuse leave to amend, unless the party seeking amendment can show that the other party does not have a reasonably arguable case on limitation, or that the new claim arises out of the same or substantially the same facts as a cause of action in respect of which relief has already been claimed in the existing action. By the ‘relation‑back rule’, the new claim will be deemed to have been commenced on the same date as the date of the original action, thus depriving the other party of the ability to rely on the limitation defence. The Hong Kong Courts’ approach is based on the English decision of Welsh Development Agency v. Redpath Dorman Long Ltd [1994] 1 WLR 1409, see : for example, Global Bridge Assets Ltd at [21]. This is known as the conventional approach.

6.The issue in this appeal is whether the party seeking to amend its claim in such a situation can disavow its reliance on the ‘relation‑back rule’ so that the other party would not be prejudiced by not being able to rely on the limitation defence.

7.As mentioned earlier, the plaintiffs first commenced the action on 27 May 2022 against nine defendants in respect of, amongst other things, a cause of action that commenced on 31 May 2016. On 5 December 2023, the plaintiffs issued the Joinder Summons. The new claim raises an issue that the action against the 12^th defendant is out of time, in that it is beyond the six‑year limitation from 31 May 2016. If the amendment is allowed, then the ‘relation‑back rule’ will come into operation and the 12^th defendant will be deprived of the limitation defence. In the Court below, the plaintiffs recognized there is an arguable issue on the limitation defence. What they did before the Judge was to disavow the reliance on the ‘relation‑back rule’ by inviting her to adopt the following proposals :

‘ (1) to join TH Chu on the basis that for limitation purposes, [the plaintiff]s’ claim against TH Chu only relates back to the date of the Joinder Summons, or the date of the order to be made, as opposed to the date of the Writ.

(2) alternatively, to join TH Chu on the basis of [the plaintiff]s’ proposed undertaking not to pursue any claims against TH Chu if the Court finds at trial that the claim against TH Chu has become time-barred as at the date of the Joinder Summons or the date of the determination of the Amended Joinder Summons.’

8.Mr Man SC (together with Mr Ho and Mr Ng) for the plaintiffs also rely on same proposals in this appeal. The plaintiffs’ proposal is based on a line of recent English cases beginning from WM Morrison Supermarkets plc and others v MasterCard Incorporated and others [2013] EWHC 3271 (Comm) [MasterCard No. 1] and MasterCard Inc & others v Deutsche Bahn AG & others [2017] EWCA Civ 272 [MasterCard No. 2] that we will discuss later. We will call this approach the new approach.

IV.  The Judge’s decision

9.The Judge applied the conventional approach. She rejected the plaintiffs’ suggestion. She held :

‘ 42. I am of the view that in cases where the limitation issue has been determined or agreed by parties (in the sense that the new cause of action will not be defeated by a limitation defence), it is of course open to the court and indeed it would be advisable for the court to exercise its case management powers to limit any costs to be wasted by not insisting separate proceedings to be commenced, only for them to be consolidated afterwards. However, in the absence of any determination by the judge or agreement between the parties on a limitation issue, I am of the view that the court has no discretion in adopting the proposals by [the plaintiff]s in the present case.

43. I note that the prejudice envisaged to be caused to the plaintiffs in Sun Tian Gang, Wong Kam Lee and IBM United Kingdom Ltd in refusing leave to joinder/amendment can at most be said to be due to costs wasted in commencing fresh proceedings. As mentioned in the above cases, the plaintiff would still be entitled to commence fresh proceedings – it is not the case that in refusing leave to a joinder or amendment application the plaintiff would have lost their right to commence separate proceedings and to object to a defendant’s limitation defence.

44. Conversely, the prejudice caused by joining a defendant who has a reasonable limitation defence is real. This is particularly the case where [the plaintiff]s here have rejected to TH Chu’s fall-back or alternative position that the issue of limitation be tried as a preliminary issue in the joinder and amendment application. It is not necessary to go into the reasons put forward by [the plaintiff]s in rejecting such preliminary issue to be tried. Even if I were to agree that such were valid reasons (which I do not), it would mean that TH Chu would not be able to raise his limitation defence and have it determined until the main trial and would need to participate in the whole trial with all other defendants and together with other issues, incurring what would no doubt be very substantial legal costs, if the previous legal battles between Lau and Chu were anything to go by. This would clearly be an absurd result when I have come to the view (and [the plaintiff]s were prepared to accept for the purposes of the present application) that TH Chu has a reasonable limitation defence.’

10.The Judge at [32] described the second of the plaintiffs’ proposal ‘to be an empty one : if TH Chu’s limitation defence prevails, the plaintiffs would not be entitled to pursue any claims against him anyway.’

V.  Ground of appeal

11.The main ground of appeal of the plaintiffs is that the Judge erred in rejecting the proposals by the plaintiffs and not permitting the joinder of the 12^th defendant on terms that the plaintiffs do not have the benefit of the ‘relation‑back rule’.

VI.  The statutory provisions

12.The relevant part of section 35 provides that :

‘ 35. New claims in pending actions: rules of court

(1) For the purposes of this Ordinance, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced—

(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and

(b) in the case of any other new claim, on the same date as the original action.

(2) In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either—

(a) the addition or substitution of a new cause of action; or

(b) the addition or substitution of a new party,

...

(3) Except as provided by section 30 or by rules of court, the court shall not allow a new claim within subsection (1)(b), other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Ordinance which would affect a new action to enforce that claim.

(4) ...

(5) Rules of court may provide for allowing a new claim to which subsection (3) applies to be made as there mentioned, but only if the conditions specified in subsection (6) are satisfied, and subject to any further restrictions the rules may impose.

(6) T he conditions referred to in subsection (5) are—

(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment; and

(b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.

(7) The addition or substitution of a new party shall not be regarded for the purposes of subsection (6)(b) as necessary for the determination of the original action unless either—

(a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party’s name; or

(b) any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or defendant in that action.

...’ (emphasis added)

13.Section 35(1)(b) and section 35(3) of the Limitation Ordinance are the same as section 35(1)(b) and section 35(3) of the Limitation Act 1980 of the United Kingdom. The rules prescribed under section 35 of the Limitation Ordinance are Order 20, rule 5 of the Rules of the High Court which are similar to rule 17.4 the English Civil Procedure Rules 1998.

VII.  The New Approach

1)  MasterCard No. 1

14.The new English approach begins with MasterCard No. 1. The background of the case is usefully summarised by Fancourt J in The Duke of Sussex v News Group Newspapers Limited [2024] EWHC 1208 (Ch). The claimant sought to introduce by amendment an allegation of concerted practices, contrary to the Competition Act 1998, in relation to United Kingdom credit card multilateral interchange fees. The issue for Field J was whether this claim fell within section 35 of the Limitation Act and so could be permitted. He held that it did not as regards causes of action that arose more than six years before the application for permission to amend was issued. However, that was a case in which there was a continuing infringement of competition law alleged, from day to day, both before and after the relevant limitation date. He was, therefore, in a position where he could grant permission for the causes of action that arose after that date, but should refuse permission for those that predated it. Field J held that it would be an unnecessary wastes of costs for a separate claim to be brought :

‘ 20. Mr Sharpe accepted that an amendment whose effect was limited to a six-year limitation period could be brought by amendment of the Particulars of Claim. In my judgment that is a sensible approach; it would be a quite unnecessary wastes of costs for a separate claim to have to be brought and then for that claim to be consolidated with the present claim.

21. Accordingly, I will give leave for an amendment to plead the new claim on the basis that its effect is not to achieve a relation back to the start of the limitation period of the pre-existing claim but merely relates back to six years from today’s date, 8 October 2013.’

2)  MasterCard No. 2

15.MasterCard No. 2 is another case of continuing breach of the competition law. The first instance judge granted leave to the claimants to amend their claim form and particulars of claim to introduce a new claim, which was to be deemed for limitation purposes to have been commenced on the dates when the respective sets of proceedings were commenced by the claimants in December 2012 and February 2013 under the principle of relation back set out in section 35(1)(b) of the Limitation Act 1980. The claimants’ application for permission to amend was made pursuant to CPR Part 17.4. The judge held that the new claim ‘arises out of the same facts or substantially the same facts’ as claims already made by the claimants in the proceedings, within CPR Part 17.4(2), so as to justify the grant of permission for the amendment with the benefit of the doctrine of relation back. MasterCard submitted that he was wrong so to hold.

16.The Court of Appeal disagreed with the first instance judge. Sales LJ approved of the approach of Field J in MasterCard No. 1 :

‘ 3. It is common ground not just that the proposed amendment constitutes a new cause of action but also that there is at least a prima facie case that if permission to amend is not granted with “relation back”, the defendants would be able to claim the benefit of a limitation defence in respect of the new claim for part of the period to which the existing claims relate. The parties are therefore agreed that the judge was only able to grant permission to amend pursuant to CPR Part 17.4(2), so that the new claim relates　back to the date the original claim was brought, if the new claim “arises out of the same facts or substantially the same facts” as a cause of action in respect of which the claimants have already claimed a remedy in the proceedings. MasterCard are content to agree that the amendment may be made to introduce the new cause of action, but only if it is done in such a way that it does not have the benefit of relation back to the time when the original claim was brought in each set of proceedings, so that MasterCard are not deprived of any limitation defence they might have in respect of the new claim by operation of the “relation back” rule.

4. MasterCard have accepted in correspondence that the new claim can be introduced into the existing proceedings as an amendment which relates back to 7 August 2015, when the claimants’ application to amend was served. This was the approach adopted by Field J in William Morrison v MasterCard [2013] EWHC 3271 (Comm) to avoid the necessity of the claimants there having to commence a new claim with resultant waste of costs, where he had found that the new claim did not arise out of the same or substantially the same facts. This result can be achieved either by the court refusing permission for an amendment unless the new pleaded claim itself in terms pleads the new cause of action only from that date or by the court making an order stipulating the relevant date for limitation purposes, which is what both sides invited the judge to do and again invite us to do, depending on what date we decide is the proper one. As a fall-back argument, the claimants submit that even if their primary contention that they satisfy the test in CPR Part 17.2(2) is not accepted, the appropriate date for this purpose would be 27 March 2015, when the new cause of action was first pleaded pursuant to a consent order permitting service of amended particulars of claim.’ (emphasis added)

3)  Libyan Investment Authority

17.The MasterCard approach was adopted by the English Court of Appeal in Libyan Investment Authority and others v King and others [2021] 1 WLR 2659 and endorsed it as a useful practice to avoid lengthy and costly interlocutory battle. Nugee LJ held :

‘ 22. ... The amendments were not opposed by the second to seventh defendants (2018 Jmt at para 2); King Sturge did not oppose the amendments as such, on what is called the Mastercard basis (2018 Jmt at para 2), that is that for limitation purposes the amendments should be deemed not to date back to the issue of the claim form but to the date of the application to amend: see Mastercard Inc v Deutsche Bahn AG [2017] CP Rep 26, para 4, per Sales LJ where he held that the court can permit an amendment on terms that for limitation purposes it should not date back to the date of issue of the claim form (as provided for by section 35(1) of Limitation Act 1980) but should take effect from some later date. (This is a useful practice which avoids the need to issue a fresh action, and can have other uses; indeed in one of the last cases I heard in the High Court it was used to avoid what would otherwise have been a lengthy and costly interlocutory battle on CPR r 17.4(2) by the parties being persuaded to consent to an order permitting the amendment on terms that it would relate back either to the issue of the claim form or to a later date depending on whether the trial judge, who would be in a much better position to determine the point, concluded that it did or did not fall within CPR r 17.4(2).)’ (emphasis added)

4)  Advanced Control Systems Inc

18.In Advanced Control Systems, Inc. v Efacec Engenharia e Sistemas S.A. [2021] EWHC 914 (TCC), Deputy High Court Judge Mr Roger Ter Haar QC held that the disallowance of the ‘relation‑back rule’ is not confined to the agreement of the parties.

‘ 43. What is clear is that there is authority in the two cases in the Court of Appeal [i.e. the two Mastercard cases] that an amendment can be allowed on the basis that it does not “relate back” to a date earlier than that fixed by the court.

44. I do not understand the reasoning of the court in any of the three cases to limit the circumstances in which this course can be permitted to cases where there is agreement between the relevant parties: indeed the agreement of the parties could not validate a manner of proceeding if it were prohibited by statute.

45. Nor do I regard the reasoning in any of the three cases to limit the application of the “Mastercard exception” to particular types of claim.

46. Accordingly, I regard it as open to me in principle to permit amendments upon the basis that the Court orders that the doctrine of relation back is limited to a particular date.

47. The circumstances in which Field J. thought it appropriate to accede to this manner of proceeding was in a case where to do so would avoid a multiplicity of proceedings which would then have to be consolidated.

48. In this case the amendments to an almost complete extent raise the same factual and contractual issues as will be debated in the existing proceedings, as substantially the same case as is encompassed by the proposed Amended Particulars of Claim will feature in the Reply and Defence to Counterclaim. Thus to require the Claimant to pursue the claims it wishes to introduce into the present claim in separate proceedings would be an almost entirely wasteful exercise.’

5)  D R Jones Yeovil Ltd

19.In D R Jones Yeovil Ltd v Drayton Beaumont Services Ltd (2021) 197 (TCC) ConLR 167, Judge Russen QC sitting as a Judge of the High Court again recognized the MasterCard line of cases. But he expressed the view that the new approach should not apply to the cases where there is a limitation defence to the whole of the new claim.

‘ [60] The deputy judge in Advanced Control Systems [2021] EWHC 914 (TCC) went on to say, at [45]: ‘Nor do I regard the reasoning in any of the three cases to limit the application of the “Mastercard exception” to particular types of claim.’ It is on this point that I am not persuaded by his decision and, in my judgment, Mr Land’s objection to the decision finds a different expression in the context of the exercise of the court’s discretion.

[61] It is true that neither in Morrison v Mastercard nor Mastercard v Deutsche Bahn did the court expressly confine the Mastercard basis of amendment to cases involving an ongoing accrual of the cause of action into the six-year period prior to amendment. Nevertheless, it is obvious that its endorsement of the defendant’s acceptance of that position reflected the nature of the claim. The reasoning behind the defendant’s position in the Libyan Investment Authority case is more difficult to discern, as Floyd LJ appears to have found, but it is clear that the court assumed its limitation defence might not be a complete one.

[62] However, in my judgment there is a class of case where the court should not exercise its discretion in a way which side-steps the conventional approach to deciding the limitation point at the amendment stage. This is where the defendant contends it has a reasonably arguable limitation defence to the entirety of the new cause of action sought to be introduced, having regard to the date of its accrual, which cannot be overcome by recourse to CPR 17.4(2).

[63] Both the conventional approach and the Mastercard basis of amendment are aimed at preserving a defendant’s limitation defence. The conventional approach is in my judgment the appropriate one to adopt where the defendant has a serious argument that the whole of the new claim is statute barred. As the relevant works were undertaken in 2010 and 2011, that is DBS’s position on the present application.’ (emphasis added)

6)  IBM (United Kingdom Ltd)

20.IBM United Kingdom Ltd v LzLabs GmbH and others [2023] EWHC 3015 (TCC) adopted the MasterCard No. 1 and MasterCard No. 2 approach. O’Farrell J held :

‘ 75. The alternative approach, which is proposed by the claimant in this case, is to restrict its new claims against Mr Moores to such claims which are not statute‑barred under the Limitation Act 1980 so as to ensure that the claimant will gain no advantage from the relation back rule. This practice has been endorsed by the Court of Appeal in MasterCard Inc v Deutsche Bahn AG [2017] EWCA Civ 272 per Sales LJ (as he was then) at [4] and Libyan Investment Authority v King [2020] EWCA Civ 1690 per Nugee LJ at [22].’

7)  The Duke of Sussex

21.Fancourt J referred to the MasterCard line of cases. He held that the limit imposed by Judge Russen QC in D R Jones Yeovil Ltd is too restrictive. He suggested that the ‘relation-back rule’ may be side‑stepped when it is ‘just and convenient’ to do so, but such power must be exercised with caution.

‘ 85. Does the court have power to make that order, if one of the parties does not agree to it?

86. Literally, s.35 and rule 17.4 do not permit such an approach. I have considered whether to conclude, as Judge Russen QC did, that the procedure approved by the Court of Appeal should only be exercised in a true Mastercard case (as a means of defining the non-barred claims that can be added by amendment), and not where the new claims would remain subject to limitation defences. I think that may be too narrow an approach.

87. Where an ACS order is made, the purpose underlying s.35 can be achieved, in that the defendant is not deprived of its ability to rely on limitation as fully as if a new claim form had been issued, but the determination of that issue is deferred. S.35 itself is concerned only with preserving the ability of a defendant to rely on a limitation defence; it is not concerned with protecting the parties from having to investigate the facts relating to the new claim, as they may have to do to some extent if a new claim form is issued instead. On the other hand, the issue of a new claim would provide the defendant with the opportunity to seek to strike it out summarily on limitation grounds, or have a trial of a preliminary issue, without the need to prepare for a full trial on the merits. Early determination of a limitation issue is usually desirable because, if the defence succeeds, it saves the parties from the costs of investigating the merits of a stale claim.

88. It therefore seems to me that the court ought to have power to permit an amendment in ACS form where (but only where) that is just and convenient, even if a relevant party does not consent, because it gives effect to the purpose of s.35 and may be more convenient than requiring a new claim to be issued. Mr Hudson did not argue that the Court could not do it, only that it should not do so on the facts of this case. It is, in my view, nevertheless a power that should be exercised with caution, given its potential to subvert the purpose underlying the Limitation Act.

89. The discretion to permit an amendment in ACS form must be exercised with regard to any prejudice likely to be caused to the defendant, the extent to which in a particular case the purposes of the Limitation Act would be undermined by it, and the consequences for the future management of the trial, both as regards the existing claims and the new claims. If the defendant might be prejudiced by such a course, as compared with its position if a new claim has to be issued, or if it will encumber or possibly delay the trial or add to the burdens of case management, it is unlikely to be appropriate to make such an order. Whether it is appropriate to make an ACS order is likely to depend on the stage that the unamended proceedings have reached, when the trial is due, the nature of the issues for trial as matters stand, the impact of the new limitation issues on the trial, including what further disclosure or evidence might be required, and whether the respondent has a strong case for summary (or prior) determination of the limitation issue.’

8)  Viegas

22.In Viegas and others v Cutrale and another [2025] 1 WLR 1467, the defendants applied to disallow an amendment of the claim granted to the claimants. Newey LJ first identified the ‘evil’ that section 35(3) of the Limitation Act is aimed to prevent is the prejudice to defendants losing protection from the statute by way of limitation defence because of the ‘relation‑back rule’. The ‘evil’ cannot exist if the defendant will not be worse off in such a situation.

‘ 31 In all the circumstances, I agree with the Judge that an amendment should be disallowed or, as the case may be, refused where there is a prospect of relation back prejudicing a defendant. The mere fact that there may be an arguable limitation defence will not preclude an amendment. The defendant’s position for limitation purposes must be made worse as a result of relation back.

32 That, it seems to me, clearly emerges from Grimsby Cold Stores and Welsh Development Agency. It makes good sense, too. There is no evident reason why a new claim should not be permitted if the claimant would be no better off had the claim been made from the outset. As Purchas LJ observed, the “evil” which section 35(3) was passed to prevent was “prejudice to defendants losing protection from the Limitation Act by the reference back to the date of the original writ of any new claim which might otherwise be added”. That “evil” cannot exist where there is no danger of a defendant being any worse off as regards limitation as a result of relation back.’ (emphasis added)

23.At [43], Newey LJ recognized the possibility that the defendants may be prejudiced by relation back. But he rejected the defendants’ application to disallow the amendment that was given by reason of the undertaking given by the claimants that they would not rely on the ‘relation‑back rule’.

‘ 62 On balance, I would nonetheless have been minded to permit the defendants to pursue their strike out application but for one thing. In the course of the hearing before us, the claimants said that, if this were necessary for the amendments made to the Viegas Claim Form on 22 November 2019 and 23 January 2020 to be allowed to stand, they were willing to undertake to the court that they would not rely on relation back and would treat the amendments as effective from the dates that they were respectively made. On that basis, there can be no danger of relation back depriving the defendants of any limitation defence. In those circumstances, the just course is, I think, plainly to refuse the defendants permission to apply under CPR r 17.2.’ (emphasis added)

VIII.  The 12^th defendant’s objections

24.Mr Hui and Mr Lee for the 12^th defendant raised a number of objections to the plaintiffs’ reliance on the English cases.

1)  Wording of section 35(1)

25.First, he submitted that the wording of section 35 of the Limitation Ordinance has been described by the Courts is mandatory (Remedy Asia Ltd v Yick Shing Contractors Ltd [2014] 5 HKLRD 614 at [15(3)] per Thomas Au J) and, binding (Roberts v Gill & Co and another [2011] 1 AC 240 (UKSC) at [32] (per Lord Collins)) and it precludes the exclusion of the ‘relation‑back rule’. There is no room to depart from the strict statutory provisions. He disagreed with the plaintiffs’ contention that the purpose of section 35(1)(b) is to confer benefits of the ‘relation‑back rule’ on the plaintiff. He referred to Hassan Khan & Co and another v Al - Rawas [2017] EWCA Civ 42, [2017] 1 WLR 2301 at [26] - [27] and submitted that the legislative history can be traced back to section 28 of the Limitation Act 1939 that materially provided that any counterclaim should be deemed to be commenced on the same date as the original action. There was no mention of new claims which add new parties. That provision was enacted to prevent the injustice to the defendant that may be caused where a plaintiff, by timing his claim carefully, can deprive the defendant of an effective counterclaim on limitation grounds (if the date of the counterclaim was not so related back). He submitted that the doctrine of relation back for new claims (including but not limited to counterclaims) was introduced in section 35(1) of the Limitation Act 1980 amidst the debate surrounding the two competing ‘theories’ (both supported by English Court of Appeal authorities at the time) behind the pre‑existing rule of practice that an amendment should not be allowed for the joinder of an additional defendant in a situation where a relevant period of limitation has already expired : Ketteman and others v Hansel Properties Ltd; and others [1987] AC 189 (HL) at 199H 200D (per Lord Keith). He submitted that the effect of section 35 of the Limitation Ordinance is that it ‘effectively negatived’ the hitherto disputed common law position (prior to our section 35 and the equivalent English provision) that an amendment to add or substitute a party took effect, not from the date of the writ but from the date of the amendment. Since the expanded application of the ‘relation‑back rule’ in section 35(1) of the Limitation Act 1980 could have detrimental implications for the defendant, strict restrictions were placed on the circumstances in which new claims or new parties can be added – all in order to protect the defendant : see Hassan Khan [28]‑[29], [32]‑[34].

26.He submitted that the plaintiffs’ arguments also ignore other parts of section 35, which work together with the ‘relation‑back rule’ established by section 35(1). Section 35(1) expressly differentiates 1) the deemed date for ‘third party proceedings’ (which only relates back to the date of the fresh proceedings) and 2) other new claims (which relates back to the date of the original action), which was based on a considered recommendation from the English Law Reform Committee. Section 35(2) provides that ‘new claim’ in section 35(1) includes ‘claim by way of set off or counterclaim’. The statute thus ensures fairness between the claimant and the defendant, by relating both the new claim and the counterclaim back to the date of the original action. As stated above, this is to protect the defendant from tactically timed new claims.

27.Thus, it is not up to the plaintiffs to cherry-pick which subsection in section 35 to waive or ‘disapply’ out of the interlocking and holistic statutory regime, or to selectively disrupt the statutory regime which was enacted based on careful deliberation of different alternatives. He relied on the comments of Fancourt J in The Duke of Sussex that :

‘ 73. ....It is notable however that there was no issue of suspension of the primary limitation period under s.32 Limitation Act 1980 in that case and no remaining question of the validity of the limitation defence. The sole issue was whether the claim as pleaded, as a single claim for continuing infringement, should be allowed under s.35.

...

76. ...In Deutsche Bahn [i.e. MasterCard No. 2] too, therefore, once the issues arising under rule 17.4 had been decided on the application to amend, there was no remaining limitation issue to be tried. The permitted amendment defined only non‑barred claims: it did not leave an issue about limitation to be determined later, at trial.’

28.Mr Hui prayed in aid the view of the Judge who was referred to most of these cases. In respect of MasterCard No. 1, the Judge held :

‘ 41(1)(c) It can thus be seen that the issue of limitation had been decided and no live issue of limitation remained when leave to amend to allow claims within the limitation period to be added. It was on that basis that it was held that the claims within the limitation period could be introduced by way of amendment instead of a fresh action to save costs.

(d) Even though the wording adopted may be the similar: to “permit an amendment on terms that it does not have benefit of ‘relation back”, the circumstances in WM Morrison Supermarkets are markedly different from the present case where the limitation issue is contested and is still at large. I do not agree that WM Morrison Supermarkets supports the proposition that Mr Joffe advanced, which is unlimited and general in nature for case management for costs savings purposes.’

29.In respect of MasterCard No. 2, the Judge held that the issue there was the same as MasterCard No. 1 as the defendant had agreed to new claim to be added which was within the limitation period and no issue of limitation remained. She held :

‘ 41(2)(c) As such, if read in its proper context, I do not consider the above obiter in MasterCard Inc v Deutsche Bahn AG to be in support of Mr Joffe’s assertion that it is (without more) open for the court to accede to parties’ agreement to postpone the issue of limitation and allow amendment on that basis as a matter of “case management” in order to save costs. The courts in MasterCard Inc v Deutsche Bahn AG and WM Morrison Supermarkets clearly acceded to the application to amend only when the relevant limitation period had been agreed and no possibility of deprivation of a defendant’s limitation defence remained.’

30.In respect of IBM United Kingdom Ltd, the Judge referred to, amongst others, [72] and [83] of that judgment which stated that :

‘ 72. Where the merits of a limitation defence are obvious from the pleaded case, or the court is in a position to determine a disputed limitation defence on submissions or following a preliminary issue trial, the court can ascertain whether the proposed amendment is caught by section 35(3). If the proposed amendment is caught by section 35(3), there is no power to allow it; if it is not so caught, the court must consider the application to amend by reference to the general principles summarised above.

...

83. This is a paradigm case in which the sensible solution is to allow the proposed new claims against Mr Moores but expressly limited to claims which are not statute-barred under the Limitation Act 1980, as pleaded in paragraph 11A of the draft. Further, the undertaking proffered by Ms Vernon in respect of the contractual time bar should be incorporated into the pleading for the avoidance of any doubt.’

31.The Judge held :

‘ 41(3)(a) First of all, I am of the view that the present case falls within the scenario described in paragraph 72: the merits of a limitation defence are obvious from the pleaded case, or the court is in a position to determine a disputed limitation defence on submissions such that the defendants cannot be said to not have an arguable limitation defence. As such, the proper course should be to refuse leave to amend.

(b) Further, even if the ultimate merit of a limitation defence is unclear or cannot be decided, based on the Hong Kong Court of Appeal case law as analysed above and the principles as set out in WM Morrison Supermarkets, I respectfully decline to follow the solution proposed in paragraph 83 by the learned Judge. I am of the view that the learned Judge might not have appreciated the difference in IBM United Kingdom Ltd v LzLabs GmbH that there was no agreement between parties as to the limitation issue and in those circumstances the proper course would be to refuse leave to joinder/amendment and let the plaintiff commence fresh proceedings.’

2)  The new English approach

32.Second, Mr Hui further submitted that the plaintiffs did not distinguish between two lines of English authorities. The ‘MasterCard Approach’ (1) does not defer live issues of limitation to trial and (2) does not offend section 35(1) of the Limitation Ordinance. On the contrary, the ‘ACS Approach’ involves the Court (1) decreeing a date for relation‑back (which is different from the date under section 35(1) of the Limitation Act 1980) and (2) defers live issues of limitation to trial after joining the defendant to the action which is the plaintiffs’ proposal.

33.The MasterCard Approach was developed in cases involving a continuing breach, where a part of the claim fell within six years (‘non‑barred part’) and the remaining part of the claim is unquestionably time‑barred (‘time‑barred part’).

34.Mr Hui submitted that the MasterCard cases are explicable on their facts because the Courts there were dealing with a continuing breach where part of the claim was time - barred and the other part was not time - barred. There was no live issue on limitation after amendment was allowed. Hence, they do not involve any departure from the language of section 35(1). In any event, the revised amendments were consented to in both parties.

35.Mr Hui submitted that the English cases subsequent to the MasterCard cases that purported to rely on them were based on a false foundation and therefore in error.

IX.  Our view

1)  The conventional approach or the new approach?

36.We disagree that section 35(1)(b) leaves no room for the new approach to be adopted. The crucial sections are section 35(1)(b) and section 35(3). They must be read together. Whilst section 35(1)(b) deems the new claim to have been commenced on the date of the original claim after the amendment, section 35(3) expressly prohibits the Court from allowing a new claim after the expiry of the time limit. This is to prevent the prejudice to the other party if amendment is allowed in that it will lose its limitation defence as result of the operation of ‘relation - back rule’ provided by section 35(1)(b). We see no violence being done to the statutory provisions if the prejudice to the other party is removed by the amending party not relying on the ‘relation‑back rule’. As Newey LJ held in Viegas :

‘ “the evil” which [LA 1980] section 35(3) was passed to prevent was “prejudice to defendants losing protection from the Limitation Act by the reference back to the date of the original writ of any new claim which might otherwise be added”. That “evil” cannot exist where there is no danger of a defendant being any worse off as regards limitation as a result of relation back.’

37.We are of the view that, as a matter of principle, it is legitimate to sidestep the ‘relation‑back rule’ in such a way. Time has moved on and in an era when the Courts are expected to take a proactive role in case management, the Courts are entitled to adopt a more flexible approach in amendment applications involving limitation issues. The stricture requiring a party to issue a fresh writ with the consequence of creating duplicity of cases and wasteful costs is clearly a relevant factor in favour of the Courts allowing the ‘relation‑back rule’ to be sidestepped. The new approach avoids the wasteful nature of duplicity of proceedings and costs. Irrespective of the position of the plaintiffs below, if amendment is granted, there is nothing to prevent the 12^th defendant from seeking to strike out the claim against him or have the limitation defence tried as a preliminary issue in the present action. We disagree with the Judge that the proposal given by the plaintiffs is an empty one. On the contrary, giving up the operation of the ‘relation ‑ back rule’ is a surrender of a substantive advantage that otherwise will bring the rule into operation to the prejudice of the 12^th defendant.

38.It may be said that the new approach is simply based on the ‘just and convenient’ ground. But this is not a pejorative term if it achieves a more expeditious disposal of the cases and at the same time ensures that the defendant’s position is not prejudiced by disallowing the ‘relation ‑ back rule’ either by the Court’s order or by the amending party’s undertaking. There are some older Hong Kong cases such as Extramoney Ltd v Chan, Lai, Pang & Co (a firm) [1992] 1 HKLR 244 (CA) and Wong Kam Lee v. Shimizu Corp and others [1997] 1 HKC 61 where the Courts allowed amendment on new causes of action with limitation defence issues and directed that the question of limitation was to be argued at trial. These cases must be read subject to the view of this Court identified in [4] above. They do not provide a standalone authority that the Courts may allow the amendment in such a situation. In fact, Extramoney Ltd was expressly held by Kwan VP in Global Bridge Assets Ltd at [22] to be incorrect. Likewise, in our view, Wong Kam Lee is incorrect.

39.In respect of the English cases, we are unable to subscribe to Mr Hui’s view on the MasterCard cases. As Mr Man submitted, through disapplying the ‘relation‑back rule’ and holding that the claim did not relate back to the date of the writ, the Courts there effectively only allowed the non - barred part of the claims. Whilst there was no live limitation issue remained after the amendment, they unequivocally show that it is open to the Court to disapply the ‘relation - back rule’ notwithstanding the mandatory terms under section 35(1)(b). In our view, the MasterCard cases clearly establish that the Court has jurisdiction to order the ‘relation‑back rule’ not to take effect on granting amendments with limitation issues. Hence, the significance of the MasterCard cases goes beyond their factual context that the ambit of the amendment had been limited to those parts that fall within the limitation period.

40.It is of note that Welsh Development Agency that was relied upon by our Courts in propounding the conventional approach was also prominently featured in the two MasterCard cases. There is no argument that the English Courts were not aware of the stricture imposed by the Limitation Act as explained by Welsh Development Agency. In any event, none of the English cases decided subsequent to the MasterCard cases and applied them has expressed any view that there is no proper foundation for the new approach to be adopted. The English authorities are, of course, not binding on this Court but they are persuasive authorities, particularly when they are dealing with similar statutory provisions.

41.Accordingly, we reject any argument that the two MasterCard cases are wrongly decided and therefore do not provide a proper foundation for the new approach. The new approach is not confined to the agreement of the parties, but also includes an order made by the Court, disallowing the ‘relation‑back rule’ or by the undertaking of the party seeking amendment.

42.Mr Hui argued that we should not depart from the well - established conventional approach pronounced by this Court. It is plain that until this case, our Courts have not been addressed with the issue of a party seeking amendment that involves limitation issues disavowing its reliance on the ‘relation‑back rule’. If we are to adopt the new approach, it will not be a departure from the conventional view but rather to implement a fresh approach without straining the statutory provisions.

43.Mr Hui also argued that the conventional approach which he described as the ‘bright‑line’ approach provides more certainty, otherwise the Court in such a situation has to consider complicated issues such as whether the new causes of action involve limitation issues and arguments on how the discretion should be exercised. We do not consider these matters to be something that is beyond the ambit of consideration by judges dealing with amendment application involving limitation issues.

44.Although the Deputy High Court Judge in D R Jones Yeovil Ltd expressed the view that the conventional view should not be side‑stepped when the defendant contends it has a reasonably arguable limitation defence to the entirety to the new cause of action sought to be introduced, this view has not been endorsed by the English Court of Appeal. In any event, we consider this to be too narrow a view and we do not subscribe to it.

45.It is understandable for the Judge to follow the conventional approach stated by this Court, but in view of our acceptance of the new approach, it follows that her refusal to allow the amendment is wrong in principle and her discretion is erroneously exercised. Exercising the discretion afresh we will allow the amendment with the provision that the relevant date for limitation purposes is to be the date of the service of the Joinder Summons on the 12^th defendant : see MasterCard No. 2 at [67]‑[69].

2)  Section 26 of the Limitation Ordinance

46.There is an additional matter that we will only need to discuss briefly. Mr Man accepted that there is an arguable issue on the limitation. He relied on section 26(1) of the Limitation Ordinance (which provides, amongst other things, where the action is based upon the fraud of the defendant and the facts relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant, the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake, as the case may be, or could with reasonable diligence have discovered it), and argued that the limitation period in this case does not run until the plaintiffs discovered the fraud and concealment on 13 January 2023 (upon the appointment of the 1^st plaintiff’s joint and several liquidators) or alternatively, 6 December 2021 (upon the appointment of the 1^st plaintiff’s provisional liquidator). Prior to that the 1^st plaintiff was under the control of Chu.

47.Mr Hui, on the other hand, argued that the 1^st plaintiff could have discovered the fraud in relation to the Ausca Transaction on 23 December 2016 (when the AGM/EGM of the 1^st plaintiff was held to approve the Ausca Transaction) or on 29 June 2017 when the Commercial Court of the British Virgin Islands handed down the judgment concerning Chu’s transfer of the assets of BGAL to Ausca Shipping Ltd. That judgment described the transaction as having

‘ 79. ...no discernible commercial benefit or even any kind of proper or cogent due diligence or full and proper knowledge and approval of, or even explanation to, [Lau]. Ausca was seemingly operated by [Chu’s] son and a company of which [Chu] was and is a director ...’

48.In this case, whilst the Judge held :

‘ 26. I am thus of the view that [the plaintiff]s cannot rely on section 26 of [the Limitation Ordinance]. As such, I am of the view that [the plaintiff]s have not shown that TH Chu has no reasonably arguable case on limitation.’

it is clear that the Judge’s view on section 26 is only a provisional view because earlier on she expressly stated that the parties are not precluded from arguing the limitation issue substantially in the future :

‘ 15. Before embarking on an analysis on the applicability of section 26 of [Limitation Ordinance] to the present circumstances, it should be noted that both Mr Joffe and Mr Hui agreed that the court need not come to a definitive view on the limitation issue, albeit for different reasons:

(1) [The plaintiffs]: whether [the plaintiffs] could have discovered the fraud or deliberate concealment is a fact-sensitive issue, which should not be determined at this stage when the relevant evidence is not before the court.

(2) TH Chu: all that needs to be shown at this stage is that he has a reasonably arguable case on limitation and if so, leave to join him as a party should be refused.

16. This means that parties agreed that my view expressed herein would not preclude parties from arguing on the limitation issue substantively in future, if there is a need to do so.’

49.In this appeal, Mr Hui accepted that the Judge’s view on section 26 was provisional. Hence, the limitation issue remains an open issue. It is not necessary for us to express a view on the applicability of section 26.

X.  Conclusion

50.The appeal is allowed, and the order below is set aside. The Joinder Summons is allowed and the amendment is allowed on the basis that, for limitation purposes, the claim against the 12^th defendant only relates back to the date of the service of the Joinder Summons on the 12^th defendant. We will further require the term to be expressly stated in the amended pleadings. The parties are required to submit a draft order and the amendment incorporating the term for our approval.

XI.  Costs

51.We will direct the parties to provide written submissions within 14 days on the costs of the appeal and below and we will deal with the costs issue on paper upon receipt of the submissions.

Mr Bernard Man SC, Mr Justin Ho and Mr Jonathan Ng, instructed by Norton Rose Fulbright, for the 1^st to 3^rd Plaintiffs

Mr John Hui and Mr Adrian Lee, instructed by Michael Pang & Co, for the intended 12^th Defendant

Iu, Lai & Li for the 1^st Defendant, absent

Holman Fenwick Willan for the 5^th and 6^th Defendants, absent

Au & Associates for the 7^th Defendant, absent

M.C.A. Lai Solicitors LLP for the 9^th Defendant, absent

The intended 10^th defendant (unrepresented), absent

The intended 11^th defendant (unrepresented), absent