Wharf Properties Ltd and Another v. Eric Cumine Associates, Architects, Engineers & Surveyors (A Firm) and Others

HCA013431C/1983

Action 1983 No. 13431

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN:

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1985 No. CL48

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN:

Coram: Mortimer, J. in Chambers

Date of Hearing: 11 and 12 May 1987

Date of Judgment: 13 May 1987

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JUDGMENT

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1. This is an application for leave to amend the substituted statement of claim in the terms of the summons. It is resisted as to what have been called Items 2 and 3 by the defendants but not as to Item 1. That means in the substituted statement of claim, paragraph 28(27), the proposed sub-paragraph 1 is not resisted but paragraphs 2 and 3 and consequentially part of the rest of the proposed amendment are resisted.

2. This matter originally came before me on the 24th April on an application by the defendants to adjourn the hearing of the summons. As the hearing of this action is due to begin on the 2nd of June, I was reluctant to allow this adjournment, but I did so after Mr. Pirie for the defendants had conceded that the defendants would not contend that they would be prejudiced by the amendments in the sense that they were late and extensive, and that the defendants would not be able to prepare their case in respect of them if allowed. As it appeared that the lay client at that time was in the United Kingdom and the expert in France I genuinely praise his candour. I state this because these are late amendments and substantial ones in their effect. The defendants have, of course, not sought to resile from their position at that time.

3. The defendants now resist sub-paragraphs 2 and 3 of the proposed amendments. I summarise their case, I hope, without doing violence to it.

4. They submit that these two paragraphs are new causes of action. The original case pleaded relates to allegations of the defendants' failure to obtain exemptions in relation to plot ratio in respect of utility areas. Those are areas such as plant rooms, refuse chutes and so forth. It is clear that the original pleading was limited to those areas from a consideration of paragraph 28(27)(i) and the drawings to which that sub-paragraph refers. Sub-paragraph 2 is not comprehensible when one considers the drawings to which it purports to refer.

5. It is submitted by Mr. Thomas for the defendants that Items 2 and 3 relate to quite different matters in which it is alleged the defendant's ought to have sought exemptions in relation to the plot ratio. Those have been described as hotel bonus concessions and a dedication bonus. As these claims for exemptions arise under different legislative provisions, have different procedures and are subject to different policies it is submitted that the matters now raised are new causes of action.

6. Further, it is submitted that these claims do not arise out of the same facts or substantially the same facts as the original pleading. It was submitted by Mr. Thomas that if I acceded to his arguments on the cause of action point, it would be unlikely that I would be able to find that the new pleading arose out of the same or substantially the same facts under Order 20 Rule 5(5).

7. Further submissions were made that in any event the new claims were statute barred either before the writ, the 4th November, 1983, or before the 27th July, 1984. The relevance of the latter date is that as a result of a legislative error, before the 27th July, 1984, the provisions of Order 20 were held to be ultra vires in this jurisdiction and the amending provision was later held not to be retrospective in its effect. With respect, I agree on that point with Clough J's decision in WU Yin-kwan v. Modern Terminals Ltd. unreported High Court Action 1981, No. 7110.

8. Therefore, it is argued, if the defendants had acquired an accrued right, that is an accrued defence under the limitation statutes, before the 27th of July, 1984, that could not and should not be defeated by amendment. Indeed it was submitted that I do not have the power to allow an amendment. See Section 35(3) of the Limitation Ordinance. In order to deal with the matter at once, were I satisfied that this is a new cause of action and that it was statute barred before the 27th July, 1984 so that the defendant had then an accrued right under the Limitation Ordinance, I would find and hold that I have no power to allow the amendment.

9. As it is, however, I can deal with this summons, quite shortly. I am satisfied that the amendments in sub-paragraphs 2 and 3, as proposed, do not introduce new causes of action. A consideration of the pleadings shows that the duty pleaded in the substituted statement of claim is quite wide enough to cover these amendments. The strictly relevant passage in the pleadings is Section 28(27) where the breach is pleaded.

10. The paragraph reads,

"Furhter or alternatively, the 1st defendants were further negligent and/or in breach of duty, in that they failed to apply for and/or obtain exemptions from the application of plot ratio which exemptions the plaintiffs would or may have been granted."

11. And then particualrs were given. I have dealt with particular (2). Particular (1) relates to the utility areas.

12. The matters now sought to be added are properly regarded as further particulars of the breach alleged and not new causes of action. The breach alleged is the failure of the 1st defendants to apply for or to obtain exemptions from the application of plot ratio. That is the primary fact pleaded as part of the cause of action. This is properly regarded as the factual situation which gives rise to the cause of action pleaded.

13. See Letang v. Cooper [1965] 1.Q.B. 232, Diplock L.J., as he then was, at P.242(g),

"A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person."

14. I have in mind the rest of his extremely clear judgment.

15. Also, I have been invited to consider a number of other cases, a series of cases is which this matter was variously considered. Those cases do not set out any new principle. They are useful examples of decisions of the court on the question whether a particular factual situation gives rise to a new cause of action, or whether it is properly regarded as falling within the same cause of action as a related factual situation.

16. The cases cited are: Conquer v. Boot [1928] All ER 120; Idyll Ltd. v. Dinerman Davison & Hillman and others (1985) C.L.J. 294, Brickfield Properties v. Newton [1971] 3 All ER 328, Equitable Debenture Assets Corporation Ltd. v. William Moss Group Ltd. and others - (a fax copy of which is before me but I now do not know where that is reported); and London Congregational Union Incorporated v. Harris and Harris (a firm) [1985] 1 All ER 335. And finally, an unreported case of the English Court of Appeal, Steamship Mutual Underwriting Associated Ltd. and another v. Trollope and Colls (City) Ltd. and other 13th March, 1986. In that report there is a helpful analysis of the earlier cases in May L.J.'s judgment at 25 (A). Having dealt earlier with a number of cases, he says;

"I think it is necessary to adopt a broad approach to these cases. At the stage of the issue of the writ or the service of the statement of claim, in the present context one is not, as I think, concerned with the minutiae of the cause of action which will ultimately have to be investigated at the trial. In the Limitation Act context, one asks in quite broad terms whether the relevant factual situation (a reference to the dictum of Lord Justice Diplock's judgment in Letang - and a wide enough term itself) first came about, first was suable upon, more than the three, six or twelve years previously. In the res judicata context one has to ask whether the issues in the hypothetical second action were realistically before the court in the hypothetical first action."

17. And further, at p.29(C), he says,

"In the light of the definitions of a cause of action already referred to, I do not think one can look only to the duty on a party, but one must look also to the nature and extent of the breach relied upon, as well as to the nature and extent of the damage complained of in deciding whether, as a matter of degree, a new cause of action is sought to be relied upon. The mere fact that one is considering what are, as it is said, after all only different defects to the same building, does not necessarily mean in any way that they are constituents of one and the same cause of action.

Thus I conclude that whether there is a new cause of action in any circumstances is a mixed question of law and fact."

18. Applying those principles to this case the question is one of degree, it is one of mixed law and fact. The question whether Res judicata would be open is a test which I consider to be useful.

19. So far as this case is concerned, if the action proceeded on the pleading of a failure to apply for and obtain exemptions from the application of plot ratio, which exemptions the plaintiffs would or may have been granted, and Judgment was given on that pleading it would not be open to the plaintiffs to then pursue a second action in respect of a claim that the defendants ought to have applied for exemptions other than for the utility areas. The new matters would be Res judicata. That demonstrates to me that these new pleas are not new causes of action. Nor do I think they are new causes of action as a matter of degree applied to the mixed questions of law and fact involved.

20. That conclusion, carries the plaintiffs a long way because the court leans heavily towards allowing amendments, if they can be made without injustice to the other side. Even if there is some apprehended injustice, if such can be rectified either now or later by an appropriate order for costs, the court will lean heavily towards allowing the amendment. The reason is well-known. It is so that all the issues between the parties can be before the court.

21. Here, I note in passing the way in which the new pleas came about. I note, for example, the affidavit of Mr. Fell filed on 11th May in which he sets out on page 4, under paragraph 5, correspondence which has been drawn to my attention. It is not necessary for me to consider that correspondence further, nor to make any findings upon it. I am satisfied that there is no reason why I should not allow the amendment. I find that it is the only proper way in which these matters can now come before the court. They can come before the court, in spite of their lateness and extent, without injustice to the defendants, in the sense that the defendants are able to consider these matters and deal with them, then I allow the amendments to be made.

22. That is sufficient for the purposes of this decision. Out of deference to the arguments of counsel, I will indicate my views on some of those arguments.

23. First, on the question whether the action accrued on the date in 1974 as submitted by Mr. Thomas at the date when the plot ratio was finally settled. Prima facie in my judgment (and I believe it to be really trite) the architect's duty, where they are retained in circumstances such as the present is a continuing one, both in contract and in tort. I say prima facie, but because my view about this binds no one and because I am simply looking at the matter on the pleadings and on affidavits. It is unnecessary to cite authority for the pro-position.

24. The limitation period runs from the accrual of the cause of action. The cause of action in these circumstances does not accrue until damage has been caused. Exemptions can be claimed at any time and can be carried forward from one part of the site to the other - according to the information before me. It seems to me that if an action had been brought in 1974 as was submitted to be the date of accrual by Mr. Thomas, then on the information before me, that action would have been, as Mr. O'Brien submitted, premature. It would have been open to the defendants to say that applications for exemptions could still be made and still be incorporated in the building.

25. Prima facie, my view is, that the cause of action accrued at the time when it became impossible in a practical way to incorporate exemptions into the building.

26. So far as the limitation points are concerned, I am satisfied that the burden of proof when limitation is raised is on the defendants. There is a dearth of authority on that matter. It is not surprising. The defendant must plead limitation and the defendant must establish limitation. It follows on principle that the burden is on the defendants. On this matter I agree with his Honour Judge John (Newey) Q. C. when he expressed a similar view in London Congregational Union Incorporated v. Howis (Supra) at 343(g). There is no evidence before me to establish here, if these were new causes of action, that they were time barred at the date of the writ or before the 27th July, 1984.

27. In any event, unless the matter were clear beyond argument, it would not be appropriate to decide whether an action is time barred on affidavit where there are issues of fact as well as law. I respectfully agree with his Honour Judge Smoute Q.C.'s approach to that matter in Chelmsford District Council v. T.V. Evans and others; a report of which has been put before me.

28. I am comforted because if decisions on these matters become important hereafter and if the action is time barred on a full consideration of the evidence, the defendant can still raise that defence at trial. Further, if it succeeds, not only will that affect liability, but there would be an entitlement to costs whatever the result of the other issues.

29. Now, on those grounds, I allow the amendments applied for. (Discussion on costs between Court and Counsel).

Representation:

Dermod O'Brien, Q.C. & Peter Clayton (McKenna & Co.) for Plaintiffs.

Neville Thomas, Q.C. & Anthony Ismail (J.S.M.) for First Defendants.