Gobind Mohan and Another v. Brian Shane Mcelney and Others

HCA004611A/1978

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: The Hon. Mr. Justice Hunter.

Date of Hearing: 4 October 1984

Date of Delivery: 4 October 1984

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DECISION

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1. This is an application by the plaintiffs for leave to serve voluntary particulars under paragraph 39 of the Re-amended Statement of Claim, and also to make a slight amendment to paragraph 20.

2. The first question which arises, is whether the cause of action asserted in the proposed amended Statement of Claim by the new particulars and in the amendment arises on a specialty, because by section 4(3) of the Limitation Ordinance an action "upon a specialty" shall not be brought after the expiration of twelve years.  If the cause of action asserted can be said to be an action on a specialty, twelve years has not expired, and there is no obstacle in the way of granting leave to amendment upon the basis simply that this would enable the plaintiffs to circumvent an accrued defence under the Limitation Ordinance.

3. Now the first point to note on this, I think, is that the document in fact is executed underhand (as it appears to me) and I have the gravest doubt whether this document can be said to constitute a Deed, or whether the document can be said to constitute a specialty. But assuming that in one or other of those two ways the document can be said to be a specialty, I am quite satisfied that the proposed amendments do not raise a cause of action "upon a specialty" as I understand the words in the Limitation Ordinance. There are a great many causes of action which arise in connection with Deeds, including such obvious things as collateral warranties mis-representations and so on, all of which are governed by the six year and not the twelve year period. I am quite satisfied that this complaint is one of them. This is not an action upon a specialty which I take to mean founded upon a specialty. It is really a counter-claim or a defence to a possible action on that particular document. In my judgment the appropriate limitation period is six years and not twelve.

4. In those circumstances it seems to me that I am in the same position as I was on the 21st September, when an earlier application to amend the Statement of Claim was made. It was then conceded, and the same concession is made today, that the first matter for me to decide is whether or not the proposed amendment raises a new cause of action. That is because it was discovered at an earlier stage in this litigation that Order. 20 rule 5(5) did not achieve its purpose and was in fact ultra vires. The legislature has intervened for future actions and not in respect of pending actions. So again I have to apply the old common law rule as enunciated in the case of Reed v. Brown 22 Q.B.D. 128, where Lord Esher adopted a definition of cause of action to this effect: "every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court". That definition focuses on the facts which the plaintiff has to prove. The emphasis is on "every fact". This is a very wide definition, and it was to mitigate the consequences of that in the face of potential limitation act defences, that Order 20 rule 5(5) was introduced. But that is ineffective in this case. I have to apply the old, as it seems to me rigid common law rule. Therefore I have to ask myself: Does this amendment introduce new fact which the plaintiff would have to prove to justify paragraph 39 of the Statement of Claim.

5. Now Mr. Irvine's first answer to that for the bank is to say: "look at 39 as it stands now; it is totally valueless."  It is the sort of paragraph which the bank coming to trial was perfectly entitled to ignore, because it said nothing against it. What lies behind that submission is this. The complaint in paragraph 39 is that the bank requested the 1st plaintiff to purchase or re-purchase a certain number of shares and pursuant to a Notice of Assignment which the bank had already given. In other words the bank were enforcing their security against their debtor. That conduct is said to have been wrongful and in breach of duty. Now in order to see whether that allegation has substance one has to look at the facts relied upon in support of the allegation that this was wrongful or in breach of duty. What is the duty alleged?  What is the breach alleged?  What makes this conduct wrongfully?

6. Now particulars were requested of that allegation and given. All those particulars did is to repeat the allegation itself. You enforced your security against me. It did not start to put forward any facts which lay any sort of foundation at all, for the allegation that this was wrongful or in breach of duty. So what Mr. Irvine said in substance is this: This is meaningless as it stands and totally useless. Any attempt to give teeth to this paragraph now must be adding something new. Or to put it rather more shortly: nought plus one still equals one and not nought. For my part I cannot see any answer to that proposition, because I think his submissions upon the in utility of paragraph 39 are right.

7. What Mr. Eddis seeks to say is this: the new facts which he wishes to add by way of voluntary particulars under this paragraph are matters which had all been alleged in the past in other parts of these very compendious pleadings, and therefore there is nothing new vis-a-vis the bank. The trouble when you look at that contention is this. There are three crucial paragraphs in these particulars, (d), (e) and (h). If you look at each of those paragraphs in turn, you find that the present facts were at one time alleged against the bank in a totally different context, and having been alleged were then equally specifically and unequivocally abandoned. So that in respect of all those matters the bank was entitled to come to this court and say: Those allegations are dead as far as the bank is concerned.

8. This emerges quite specifically from (d) which was originally in paragraph 29 of the Statement of Claim, and went as soon as paragraph 29 was amended to exclude the bank. The same thing is true of (e) and paragraph 35 where the same thing happened. I may say it happened in the light of discovery, by the first amendment made after discovery. It is equally true of the vital plea of inducement, which is now being sought to be inserted by (h) and by way of amendment to paragraph 20. What emerges now is this: The original plea of inducement against the bank asserted that the inducement derived. from Mr. Purves and had nothing to do with the 1st defendant. The only particulars now relating to the 4th defendant were not delivered to the 4th defendant but in fact to the 1st defendant. We are in the position that Mr. Eddis has to ask for leave to amend paragraph 20 to delete his particulars against the bank on page 161, and to substitute half the particulars which were deleted on Monday against the 1st defendant, as against the 4th defendant's.

9. All this seems to me inevitably to be new fact. I cannot see any difference between something which is being inserted in the pleading for the first time at the trial, and something which was once inserted was then specifically abandoned against that particular party.  As far as the particular party is concerned he is entitled to say: that allegation is dead your attempt to revive now against me is new.

10. I can see no escape from the conclusion that the proposed amendment, by delivery of voluntary particulars to paragraph 39 is a new cause of action, and in those circumstances I am in effect precluded by authority from giving leave. But if I am wrong about that and it is a matter of discretion, then I am bound to say that my decision would have been exactly the same. This is a brand new case first adumbrated as far as I know on the documentation by Mr. Eddis in opening on the first day.  This was the first time any attempt has been made to put the case in this way. There is no hint of it in any of the documents which had passed between parties before. This action has been going on for a very long time, and I have only over 350 pages in the bundle of pleadings. In my judgment in a case like this enough is enough; and if ever an amendment is too late this is.

11. Secondly I cannot and do not seek to conceal that there is another motivating factor behind a discretionary refusal. Mr. Eddis has made it clear that the purpose of the new amendment is to found a submission based basically upon two decisions on the Court of Appeal in England in recent years. The most recent is National Westminster Bank v. Morgan (1938) 3 All E. R. 85: , the other was Lloyds Bank v. Bundy (1975) 1 Q. B. 326. Now those decisions turned on their very special facts, and were founded upon the existence of a relationship of confidentiality, defined by the Court in both cases, which led to a fiduciary duty of care and a presumption of undue influence in favour of the two plaintiffs.

12. Now the first thing to observe is that confidentiality, which is a very special concept indeed, is still not alleged by this new amendment and a case founded upon those two authorities simply cannot leave the ground unless it is alleged.

13. The second point to note is that upon the pleaded facts, it is, as far as I can see, totally impossible to get a case of confidentiality as defined in those cases off the ground. The first of those cases concerned an elderly smallholder in the west country in England. The second case involved a wife who had been put upon by her husband.  It is really absurd to suggest that there is any way in which the plaintiffs or either of them who are established businessman, and who had the benefit of advice from all quarters from solicitors, from accountants and from merchant bankers in this case, can be remotely put into that category in relation to the bank.  Therefore it seems to me there is no prospect whatever of a case on these lines ever leaving the ground. That is a factor which I am bound to say has influenced me in my conclusion that if the matter is one of discretion, and I am wrong on the first basis, I should refuse leave to amend. That is my ruling and the application for leave to amend under both paragraphs is rejected.

Representation:

Mr. Francis Eddis instructed by M/s Haldane Midgley & Co. for Plaintiffs.

Mr. Peter Scott, Q.C., Mr. D.A.L. Wright and Mr. Andrew Li instructed by M/s Lo & Lo for 1st and 2nd Defendants.

Mr. Alexander Irvine, Q.C., and Mr. Anthony Dicks instructed by M/s Baker & McKenzie for 4th Defendant.