Tdc Capital Solution Ltd v. Wong Sung King Dorothy and Others

HCA 1598/2022

[2025] HKCFI 4617

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1598 of 2022

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BETWEEN

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D E C I S I O N

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INTRODUCTION

1.On 22 May 2024, I struck out P’s SOC but gave it liberty to lodge and serve the Draft ASOC (“Strike-out Decision”).

2.After a consequential hearing following the Strike-out Decision, on 19 March 2025, I granted leave for P to amend its SOC as per the Draft ASOC (save and except §§29A and 29B thereof) together with consequential directions (“Amendment Decision”).

3.Pursuant to O59 r21(3) of the Rules of the High Court (Cap 4A) (“RHC”), Ds took out a summons dated 2 April 2025 (“Summons”) seeking (1) a direction that my order granting leave to P to file the Amended Statement of Claim as per the Draft ASOC is an order determining in a summary way the substantive rights of a party to an action, such that no leave to appeal is required; or (2) alternatively, retrospective leave be granted to Ds to appeal on the grounds set out in the Notice of Appeal filed in the Court of Appeal dated 2 April 2025 (“NOA”).

4.In response to the Summons, P took a neutral stance on whether leave to appeal is required and did not advance any submissions on the same, but contended that if leave were required, no leave to appeal should be granted.

5.This Decision should be read in conjunction with my Strike-out Decision and my Amendment Decision, which set out the relevant background. Unless otherwise stated, I will continue to adopt the abbreviations used in my two aforesaid decisions.

WHETHER LEAVE TO APPEAL IS REQUIRED

6.Notwithstanding P’s indication that it remained neutral, out of abundance of caution, Ds seek a direction and determination from this Court as to whether leave is required for Ds to appeal against the Amendment Decision.

7.Ds’ position is that leave to appeal is not required. Ds’ submissions may be summarised as follows:

a. Under s14AA(1) of the High Court Ordinance (Cap 4) (“HCO”) and O59 r21(1)(a) of the RHC, leave to appeal is required in respect of interlocutory judgments or orders save for, inter alia, “a judgment or order determining in a summary way the substantive rights of a party to an action”.

b. Ds submit that the Court should apply Securities and Futures Commission v Lu Ruifeng [2022] 1 HKLRD 1349 where the Court of Appeal held that an amendment to add a new cause of action, in the face of a limitation / time-bar contention, has the effect of determining that the defendant does not have a limitation defence – which is an accrued right. Accordingly, such an order allowing amendment should be characterised as determining in a summary way the substantive rights of a party.

c. Ds submit that the present case involves the unique situation where the Court’s order to allow the amendment involved adjudicating on both Ds’ limitation defence (where leave is not required) and the arguability or sufficiency of the Construction Plea in the Draft ASOC (where leave is required).

d. Notwithstanding the inability to find any direct authority on how this conundrum should be resolved (to the best of Ds’ research), Ds ask the Court to view the Amendment Decision as a whole and as a “judgment or order” that determines summarily the substantive rights of the parties falling within O59 r21(1)(a), such that no leave to appeal is required.

8.Having carefully considered the submissions and authorities of Ds, and in the absence of contrary submissions or authorities from P, I am of the view (in agreement with Ds’ submissions) that it is not necessary for Ds to obtain leave to appeal against the Amendment Decision. My reasons are as follows.

9.To begin, ss14AA(1) and (2) of the HCO provide that:

“(1) Except as provided by rules of court, no appeal lies to the Court of Appeal from an interlocutory judgment or order of the Court of First Instance in any civil cause or matter unless leave to appeal has been granted by the Court of First Instance or the Court of Appeal.

(2) Rules of court may specify a judgment or order of any prescribed description to which subsection (1) does not apply and accordingly an appeal lies as of right from the judgment or order.”

10.The relevant rules of court include O59 r21(1)(a) of the RHC, which provides that:

“(1) Judgments and orders to which section 14AA(1) of the Ordinance (leave to appeal required for interlocutory appeals) does not apply and accordingly an appeal lies as of right from them are the following—

(a) a judgment or order determining in a summary way the substantive rights of a party to an action;”

11.As to whether a judgment or order summarily determines the substantive rights of the parties under O59 r21(1)(a), the Court of Appeal provided guidance on this issue in the context of amendment applications in Securities and Futures Commission v Lu Ruifeng (supra) at §§33-45 per G Lam JA. For present purposes, the following passages are highlighted:

“33. The cases show that to decide whether an order falls within r.21(1)(a), one has to examine what the order actually determines, rather than its collateral practical effect. Thus, for example, it has been held that an order setting aside an extension of the validity of a writ of summons, which concerns the exercise of the court’s discretionary power under O.6 r.8(2) having regard to all the circumstances of the case, does not determine the substantive rights between the parties, notwithstanding that the collateral effect of the order is that the action fails: China Medical Technologies Inc (in liq) v Bank of China (Hong Kong) Ltd, supra, [23]. Likewise, a refusal to extend time for the payment of security of costs does not summarily determine the substantive rights of the parties, even though the effect is that the proceedings become permanently stayed: Lo King Yeung v Eddie Chu Hoi Dick [2017] 4 HKLRD 723 (Au J) and (CAMP 18/2017, 6 November 2017) (CA). These are cases where there is no decision on any issue of substantive merit between the parties, even though the effect of the decision may well spell the end of the proceedings in question.

34. It is plain that, ordinarily, an order giving leave to the plaintiff to join a defendant and amend the statement of claim is not one that determines any substantive rights. What it decides, usually, is merely that the plaintiff has an arguable case against the defendant. But an amendment that adds a claim based on a new cause of action or against a new defendant in the face of an objection that the applicable limitation period has expired stands on a different footing. Section 35(1)(b) LO means that, once added, the new claim relates back to the date of commencement of the original action. If the limitation period for the new claim had not expired by that earlier date, the time-bar defence would be lost to the defendant forever. This is why before such an amendment is to be permitted, the court has to be satisfied that the limitation defence is not reasonably arguable anyway: Sun Focus Investment Ltd v Tang Shing Bor [2012] 1 HKLRD 738, [11]–[15]; Global Bridge Assets Ltd v Sun Hung Kai Financial Ltd [2012] 4 HKLRD 474, [14]–[26]. As stated in Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409 at 1425G–H: ‘In such a case, leave to amend by adding a new claim should not be given unless the plaintiff can show that the defendant does not have a reasonably arguable case on limitation which will be prejudiced by the new claim, or can bring himself within R.S.C. Ord. 20 r. 5.’ It follows that a decision giving leave to amend in such a case necessarily determines that the defendant does not have a limitation defence.

…

39. Thirdly, with respect to the Judge, to say that a decision that finally determines the viability of a limitation defence falls outside r.21(1)(a) takes too narrow a view of both the rights enuring to a defendant from limitation statutes and the scope of the phrase ‘substantive rights’ in r.21(1)(a). The Judge said that there was no dispute that a limitation defence is ‘procedural in nature’. It is true that most of the limitation periods in the LO, upon expiry, simply bar the bringing of an action rather than extinguish the plaintiff ’s right or title, that limitation is a separate defence that needs to be pleaded rather than a constituent element of the plaintiff ’s cause of action, and that limitation, where it only bars a remedy, is regarded as a matter of procedure in conflict of laws. But even so, an established limitation defence is a most valuable right; it is a complete defence to an action. Once time has expired, the law regards the potential defendant as having an ‘accrued right’ based on the limitation statutes. …

…

44. In our opinion, the order below did determine in a summary way the substantive rights of a party, and therefore falls within O.59 r.21(1)(a). China United did not need leave to appeal, but issued a summons within time to seek a direction pursuant to r.21(3) as to whether the order was one within r.21(1)(a). In the circumstances we see no reason to differ from the Judge’s exercise of discretion (albeit on a contingent basis) that China United should be given an extension of time to serve a notice of appeal, and we therefore granted an extension of 7 days at the hearing.”

12.Applying these principles, I agree with Ds that the Amendment Decision (including the order allowing P to amend its SOC) determines issues that require leave to appeal and also issues that do not require leave:

a. On the one hand, the Amendment Decision decided on the arguability and sufficiency of the Construction Plea (at §§18-25) for which leave to appeal would ordinarily be required as accepted by Ds: see Lu Ruifeng at §34.

b. On the other hand, the Amendment Decision also decided on the time-bar / limitation contention of Ds, where at §§26-29 I held that the new amendments in the Draft ASOC did not raise any new cause of action such that there was no merit to Ds contention that P’s amendments in the Draft ASOC were already time-barred by virtue of the Limitation Ordinance (Cap 347). As the Amendment Decision determined that Ds did not have any applicable limitation defence (which was an accrued right if established), leave to appeal would not be required to appeal against such determination: see Lu Ruifeng at §§34, 39 and 44.

13.Given that the Amendment Decision encompasses matters that require leave and also matters that do not require leave, the next question is whether the Amendment Decision may be considered as a whole to be a “judgment or order” that summarily determines the substantive rights of the parties under O59 r21(1)(a) of the RHC such that leave is not required. I agree with Ds that the Amendment Decision and its orders should be viewed as a whole:

a. The wording of O59 r21(1)(a) focuses on whether the “judgment or order” appealed against (as opposed to specific issues) summarily determines the substantive rights of a party to an action.

b. It has been said that a “judgment or order” refers to the result of the hearing and not to the reasons given by the judge for reaching that result: Lo Kai Bun v Pong Man Yi & Ors (unrep, CACV 127/2006, 13 Dec 2006) at §18 per Stock JA (as he then was) which in turn cites Cie Noga d’Importation et d’Exportation SA v Australia and New Zealand Banking Group Ltd & Ors [2003] 1 WLR 307 at §53 per Hale LJ (as she then was).

c. Further, as noted in Lu Ruifeng at §33, in deciding whether an order falls within r21(1)(a), one has to examine what the order actually determines, rather than its collateral practical effect. See also China Medical Technologies Inc (In Liq) v Bank of China (Hong Kong) Ltd [2019] 2 HKLRD 710 at §§21-23 per Lam VP (as he then was).

d. Given that this Court’s rejection of Ds’ time-bar contention formed part of the Court’s reasoning in making the order allowing P to amend its SOC, I consider that the amendment order (along with the Amendment Decision) should be considered as a whole as being a “judgment or order” that determines in a summary way the substantive rights of a party under O59 r21(1)(a), and thus leave to appeal is not required.

14.For these reasons, I accede to Ds’ application and make a direction that leave to appeal is not required for Ds to appeal against the Amendment Decision.

WHETHER LEAVE TO APPEAL SHOULD BE GRANTED

15.However, in case I am wrong above and that leave to appeal is required for Ds to appeal against the Amendment Decision, I will go on to consider whether leave to appeal should be granted.

16.In the NOA, Ds contend as grounds of appeal that I erred and/or was wrong in failing to hold that:

a. The Construction Plea as pleaded in the Draft ASOC did not explain or provide proper particulars as to how the Conditions were satisfied (“Particulars Ground”).

b. Alternatively, the Construction Plea is bound to fail as it is (i) internally inconsistent as to when the Conditions were “satisfied” and/or (ii) unsupported by the “context and background” of the Service Agreement as pleaded in Draft ASOC §28A.1 (“Arguability Ground”).

c. The Construction Plea was time-barred under ss35(3) and (5) of the Limitation Ordinance (Cap 347), in that it raised a new cause of action and that the pleas did not arise out of the same or substantially the same facts as those in issue at the time of the application to amend (“Limitation Ground”).

17.Ds contend that the above grounds of appeal are reasonably arguable, and that insofar as necessary, it would be in the interests of justice for the appeal regarding arguability/sufficiency of the particulars of the Draft ASOC to be heard. However, P contends otherwise.

18.The applicable principles on whether leave to appeal should be granted are well-established:

a. The test for leave to appeal is whether the intended appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: s14AA HCO. Reasonable prospects of success means that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”: SMSE v KL [2009] 4 HKLRD 125 at §17 per Le Pichon JA.

b. Where the intended appeal is one against the exercise of discretion, the following principles as set out in Tao Soh Ngun v HSBC International Trustee Ltd [2018] HKCA 691 at §57 per Kwan JA (as she then was) are applicable:

“57. On well-established principles, the plaintiff has a very high hurdle to surmount to satisfy this court that the judge’s exercise of discretion in a matter of case management should be interfered with. As stated in Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887 at §31:

‘The appellant … must show that the Judge ‘has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task’, or if the Judge ‘erred in principle or the order was irrational having regard to the issues that had to be resolved’. It need hardly be emphasised that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the Judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible.’”

c. Such principles are applicable to a decision allowing amendments to pleadings as it involves an exercise of judicial discretion: Tao Soh Ngun at §56; and also to a determination on whether to strike out a claim on the ground that deficiencies in the pleading are such that the claim is obviously unsustainable: Dingway Investment Ltd v China City Construction & Development Co., (Hong Kong) Ltd & Ors [2023] HKCA 458 at §21 per Kwan VP.

19.Having considered the parties’ submissions and the authorities above, in the event that leave to appeal is required, I would have refused to grant leave for the following reasons.

20.In respect of the Particulars Ground, I do not consider that the same discloses any reasonable prospects of success:

a. I agree with P’s submission that the purpose of pleadings is to enable the opposing party to know the case against him, and that it is contrary to this purpose to seek particulars which are unnecessary when in truth each party knows the other’s case.

b. In the Amendment Decision, I have set out P’s case and the context and background relied upon in support of the contention that the Conditions were satisfied in the draft ASOC: Amendment Decision §§19-22. I held that a party reading the Construction Plea would know the construction that P contends, the factual basis of such construction, and its case on how the Conditions were satisfied: Amendment Decision §23.

c. As such, I do not agree with Ds’ submission that the Construction Plea does not plead to the level of compliance required and/or how the Conditions can be said to have been fulfilled.

21.In respect of the Arguability Ground, I also do not consider that the same discloses any reasonable prospects of success:

a. In the Amendment Decision, I rejected Ds’ submission that the Construction Plea was bound to fail on the basis that I had already ruled in the Strike-out Decision that P’s Construction was not bound to fail: Amendment Decision §§24, 25.

b. I do not consider that any of the matters raised by Ds (whether in §1.4 of the NOA or otherwise) detracts from my determination above. As to Ds’ contention that the adequacy of the Reply was not in issue before me, I agree with P’s submission that this is beside the point. The point is that I have determined that P’s Construction was not bound to fail in the Strike-out Decision, which is a determination that also applies to §28A of the Draft ASOC which mirrors P’s Construction as pleaded in the Reply.

22.In respect of the Limitation Ground, I do not consider that the same discloses any reasonable prospects of success:

a. In the Amendment Decision, I considered that the new amendments in the Draft ASOC did not raise any new cause of action, applying the relevant principles in Li Tin Sang v Poon Bun Chak (unrep, HCA 9296/2000, 11 Apr 2003) which were upheld by the Court of Appeal (unrep, CACV 119/2003, 12 Nov 2003): Amendment Decision §§26-29.

b. I do not consider that any of the matters raised by Ds (whether in §2 of the NOA or otherwise) detracts from my determination above.

23.Lastly, as to Ds’ contention that it is in the interests of justice that the Arguability and Particulars Grounds should be heard by the Court of Appeal as the Limitation Ground would also be heard by the Court of Appeal in any event, I do not agree. As none of the grounds in the NOA discloses any reasonable prospects of success, I do not consider it to be in the interests of justice for leave to be granted in such circumstances.

24.Overall, had it been necessary to decide whether leave to appeal should be granted, I would have refused leave for the reasons above.

DISPOSITION

25.For the above reasons, I allow the Summons to the extent of making a direction that leave to appeal is not required for Ds to appeal against the Amendment Decision.

26.As for costs, I consider that the proper order is for costs of the Summons to be in the cause of the appeal, and I so order.

Mr Victor Dawes SC and Mr Cedric Yeung, instructed by DLA Piper Hong Kong, for the Plaintiff

Mr Bernard Man SC, Mr Danny Tang and Mr Jonathan Fung, instructed by Gallant, for the 1^st to 5^th Defendants